Algeria-Italy Trade Reaches €12.98 Billion (~$96.15 Billion) in 2025, Diversifying Beyond Energy
Takeaway
The 13.8% increase in Italian exports to Algeria signals growing opportunities for Italian manufacturers and service providers in the Algerian market. Investors should monitor Eni (ENI.MI) and Sonatrach's joint ventures for potential upside, as well as companies involved in renewable energy infrastructure projects like the SoutH2 Corridor. European utilities should also track Algerian gas supply dynamics, as increased commitment to Italy may impact spot market availability.
Economic relations between Algeria and Italy are expanding beyond energy into investment and industry, with trade reaching €12.98 billion (~$96.15 billion) in 2025. Natural gas remains a key component of this exchange, solidifying Algeria's position as a strategic supplier to the Italian market. Italian exports to Algeria increased by 13.8% compared to 2024, reaching €3.2 billion (~$23.7 billion).
This partnership has become increasingly vital for Italy since February 2022, as it seeks to reduce reliance on Russian energy following the invasion of Ukraine. In 2021, Italy imported 29 bcm of gas from Russia, compared to 22.5 bcm from Algeria. By 2023, Russian volumes decreased to 2.9 bcm, while Algeria maintained strong supplies at 25.5 bcm, valued at $14 billion. This shift has cemented Algeria's role as a crucial energy anchor for Italy. In May 2022, Algerian President Abdelmadjid Tebboune made a state visit to Italy, solidifying relations and signing cooperation agreements.
The energy cooperation includes the proposed SoutH2 Corridor, a 3,300 km pipeline to transport green hydrogen from Algeria to Europe, aligning with the EU's goal of importing 10 million tons of renewable hydrogen by 2030. In July 2025, Italy's Eni signed a $1.35 billion deal with Algeria's Sonatrach to boost hydrocarbon exploration in Algeria. The Trans-Mediterranean pipeline, with a capacity of 33 bcm annually, further strengthens energy ties. A memorandum of understanding was signed to develop a 2 GW high-voltage undersea power cable to link electricity grids by 2030.
Italian Prime Minister Giorgia Meloni has emphasized Algeria's strategic importance for Mediterranean peace and prosperity. The partnership extends beyond energy to include sectors like circular economy, infrastructure, transport, agriculture, industry, and pharmaceuticals. In July 2025, the two countries committed to enhanced security cooperation, including dismantling terror networks and countering financial support for terrorism.
Looking ahead, Italy and Algeria are set to explore further investment opportunities across various sectors. Upcoming decisions and potential catalysts include the progression of the SoutH2 Corridor and the development of renewable energy projects in Algeria, which aims to source 30% of its national energy mix (approximately 15 GW) from renewables by 2035. Risks to monitor include Algeria's gas export capacity and domestic political factors.