Algeria, Italy, and BASF to Fund Feasibility Study on Subsea Pipeline

Strategic Insights -

Italian electricity giant Enel, Algerian state Sonatrach, and BASF's oil and gas unit Wintershall have teamed up to fund a feasibility study on a subsea pipeline from El Kara on Algeria's northeast coast directly to the Italian island of Sardinia. The planned capacity of the pipeline is substantial, with reports indicating a capacity of 10 billion cubic meters per year, translating to 967 million cubic feet per day. While the feasibility study is at a preliminary stage, funded 50% by Sonatrach, 35% by Enel, and 15% by Wintershall, the prospects for such a pipeline remain uncertain. The study is a significant development, especially considering Italy's growing demand for gas.

Key Takeaways:

  • The feasibility study is funded by Sonatrach (50%), Enel (35%), and Wintershall (15%) to assess the viability of a subsea pipeline from El Kara in Algeria to Sardinia in Italy.
  • The proposed pipeline has a planned capacity of 10 billion cubic meters per year, equivalent to 967 million cubic feet per day.
  • The prospects for the pipeline are uncertain, despite the study being a step towards potential implementation.
  • Enel had previously announced plans to either build a subsea pipeline from Algeria to Sardinia or two LNG import terminals, but not both.
  • Enel has agreed to buy an additional 2 billion cubic meters of gas from Sonatrach, increasing Italy's total Algerian gas purchases to 6 Bcm.
  • A senior Sonatrach official disputed the new gas sale commitment, potentially due to pressure from Enel to advance on the pipeline project.
  • The project's scope is unclear, with uncertainty over whether the pipeline will serve only Sardinia or extend to the mainland.
  • Sardinia's power distribution is currently based on coal and oil, with minimal connection to the Italian gas grid.
  • BASF's involvement in the project may lead to expanded sales in Southern Germany, contingent on the pipeline's extension to Northern Italy.

Statistics:

  • 10 billion cubic meters per year: planned capacity of the subsea pipeline
  • 967 million cubic feet per day: equivalent daily capacity of the pipeline
  • 50%: Sonatrach's funding share in the feasibility study
  • 35%: Enel's funding share in the feasibility study
  • 15%: Wintershall's funding share in the feasibility study
  • 2 billion cubic meters: additional gas Enel agreed to buy from Sonatrach
  • 6 Bcm: total Algerian gas purchases by Italy
  • 2 Bcm: Enel's previous gas purchases from Sonatrach

Sources:

  • WGI (Oct.24, p3)
  • WGI (Oct.31, p8)
  • WGI (Jul.25, p3)