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Algeria’s gas exports to Italy through the Transmed pipeline have shot up since the start of the year. Average daily volumes of 1.74bn cfd to mid-February (17.9 bcm on an annualized basis) are two and a half times 2015’s 7.2 bcm (see graph).
The jump in gas flows coincides with an increase in gas demand in Italy in January, especially from the power sector due to colder than average temperatures. But there is an additional, more structural, reason: the return to regular contractual terms with the end of an agreement, under which Italian buyers had been able to reduce volumes from Algeria without facing take-or-pay penalties.
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