Italian minister in Algeria to discuss energy

MILAN, June 25 Wed Jun 25, 2014 7:02am EDT

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MILAN, June 25 (Reuters) - Italy's Industry minister Federica Guidi landed in Algeria on Wednesday to discuss issues including energy supplies from the gas and oil producer.

Italy, which derives more than 40 percent of its electricity from natural gas, is increasingly dependent on Russia as Algerian imports decline and Libyan supplies remain vulnerable.

But unrest in Ukraine, a major transit route for Russian gas into the European Union, has also raised a question mark over the stability of future gas flows from Moscow.

Guidi's visit, the first to Algeria by an Italian minister since November 2012, will be the chance "to confirm the strategic importance Italy attaches to Algeria, especially as regards oil and gas supplies," the ministry said.

Italian oil and gas group Eni said it had won three permits from Algeria's state-owned energy group Sonatrach to prospect work in the south of the country.

Algeria used to be Italy's biggest gas supplier but, as the North African country earmarks increasing amounts of production for domestic use and ships more gas to more remunerative Asian markets, volumes have declined.

In 2013 Italy imported 40 percent of its gas needs from Russia, 18 percent from Algeria and 8 percent from Libya.

Last year state-controlled Eni, embroiled in a corruption case in the country involving its 43 percent owned subsidiary Saipem, renegotiated its long-term gas contracts, with Algeria agreeing to cut its imports.

Rome is now placing increasing importance on completing the Trans Adriatic Pipeline (TAP) that will bring Azeri gas to Italy in 2019.

But at the same time it is supporting the massive South Stream pipeline project that will transport Russian gas into Europe while bypassing Ukraine.

On Tuesday Russia's Gazprom said it was in constructive talks with the European Commission about South Stream which Brussels has disputed.

In her visit on Wednesday Guidi is meeting with Algerian Prime Minister Abdelmalek Sellal as well as the industry and energy ministers.

Italy takes over the EU presidency in July and the centre-left government of Matteo Renzi has placed relations with the Mediterranean area and energy on its agenda. (Reporting by Stephen Jewkes, editing by William Hardy)

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