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Interview

Michele Giacomelli – Italian Ambassador to Algeria

30.07.2015 / Energyboardroom

Ambasciatore Giacomelli 006

The Italian ambassador to Algeria explains the partnership between Italy & Algeria and describes how the relationship between the two countries has evolved in the last years, especially in the oil and gas sector.

Can you start by describing the activities of the Italian Ambassy in Algeria, and tell us how diplomatic relations between the two countries have evolved over time?

The relationship between our two countries is very strong and very strategic. Strenghtened by the 2003 friendship agreement, it covers every area including the economy, politics, culture, mobility of citizen sectors and many others. This relationship has its roots far in the past; it already existed before independence in civil society, with strong support for the Algerians’ struggle for independence from trade unions, political parties, personalities and business leaders such as Enrico Mattei. From independence onwards, diplomatic relations between the two countries began. We are fortunate to be neighbors, and there has been no dispute. This relationship thus has taking shape smoothly over time, and is structurally strong and highly strategic.

What is the strategic importance of Algeria compared to other countries in the region?

The interest of Italy is expressed towards every country in this region; in fact we have important and structured relationships with many other neighboring countries. To us, these countries represent our neighborhood, for we share the same Mediterranean space and therefore, their welfare is also that of Europe and thus that of Italy. Having good relationships with these countries is essential. In this context, Algeria holds a place of strategic importance, for economic reasons that go well beyond hydrocarbons and for its stabilizing role in the region.

In interviews, you emphasize the importance of tightening the partnership between these countries in order to best exploit the area’s potential for trade. How does Italy intend to strengthen its partnership with Algeria?

There are so many things to do. The action of the embassy focuses on a number of major axes. First of all, political action, because Algeria is a key country with regards to certain regional issues. Dialogue and consultation are therefore permanent, and will be strengthened even further in the future. In the field of culture, we are very committed in many areas. Indeed, thanks also to the work of the Italian Cultural Institute, we have cooperation programs in place that range from developing archeological sites and museums to promoting classical music and cinematography. In addition to these initiatives, much appreciated and recognized in the country, Italy will organize other events within the course of the “Constantine Capital of the Arab Culture” program.

Regarding the economic dimension, I have already mentioned the importance of oil and gas, but we can also mention Italian public works companies, which have been present in Algeria since the very beginning of the industrial and infrastructure development of the country. There are works of art, bridges, tunnels and galleries in Algeria today that were all built through provision of Italian know-how. However, the country will less and less need foreign companies because the Algerian national capabilities will have expanded and improved in the area.

Finally, there is a very large sector that we need to talk about, which is the growth of industrial cooperation and within it, the role of small and medium-sized businesses, yet underutilized. From this side, we need to work more in order to better identify the sectors and better communicate the existing opportunities. Actually, this is about complementarity, because the logic that should animate our relationship is that of co-development and co-investment. Algeria has enormous potential: a large domestic market of 39 million inhabitants whose purchasing power is increasing in all areas! To meet this demand, we must encourage Italian companies to invest here and increase the capacities of Algerian companies, so that we create an industrial fabric that will in turn bring development, jobs and wealth to the country, as well as the Mediterranean area. We are aware of this necessity and we share the thinking that leads the Algerian government to insist on the need for partnership.

Lastly, there are exchanges that take place on the military level, especially in the navy with a strong cooperation tradition with the Accademia Navale di Livorno.

Enel, the Italian national company, was recently awarded two new production licenses during the last major call for tenders, but to what extent are Italian entrepreneurs willing to engage in the oil and gas sector in Algeria?

The first contract in upstream for ENI dates back to 1981; it was one of the first companies, if not the first, to conclude such a contract. So this is a historical relationship, which obviously manifests itself through the concrete connection of the pipeline, linking Algeria and Italy through Tunisia. Given this connection, we are certainly encouraged to resolve any issues amicably to avoid litigation, as is customary in a true partnership.

Enel’s venture into upstream in Algeria represents a new dimension to the company, and a new chapter in its history. This company, which already imports large quantities of gas, is well equipped to expand its presence. But there are also all the companies working up and downstream further down the value chain, for instance producing valves, turbines, drilling equipment, pipelines and pipes – a whole system revolving around the strategic relationship in the oil and gas sector.

You strongly encourage SMEs. To what extend does the Algerian regulatory framework inhibit, maybe, the deployment of their activity in the country?

For large companies, it may not be a problem. For example, the 51/49 rule is a sovereign decision of the Algerian government that we respect. Yet we have to admit that for SMEs, especially family-run ones, of which there are many in Italy, this rule may hinder the development of partnerships. That said, one has to adapt to this rule and I am pleased to note that many do so without any problem.

What about governmental bilateral initiatives in the field of hydrocarbons?

We have a link through this uninterrupted relationship. The ministers of both countries meet quite often. A few recent visits include the Italian minister of economic development coming to Algiers last June, on this occasion she also met the Minister of Energy Yousfi, who was himself in Italy in November on the occasion of the Euro-Mediterranean conference and a second bilateral meeting; the Italian minister of infrastructure and transport, together with the minister of defense came to Algiers, as well as the foreign minister in February, not to mention the visit of Prime Minister Matteo Renzi in December.

On top of this, the organization of the third bilateral summit is planned this year. This is a major event that will bring together several ministers from both countries. When such summits are organized, everything gets moving, for there is a deadline that brings things forward, makes a synthesis of everything that has been done so far and opens a new page in our cooperation. This is a mechanism that allows best enriching of the relation.

What is the added value brought by Italian companies in the energy sector in Algeria?

Some of our companies have niche capabilities. Saipem, beyond the recent scandal, has excellent know-how in deepwater cable laying, one unique expertise in the world. I also think of other specific capacities in the field of production turbines or drilling machines. Many companies working in the sector are state-of-the-art and carry out subcontracting assignments for larger contractors.

What were the implications of this Saipem scandal?

The implications were relatively small. This is mainly due to the fact that players in the oils and gas industry were able to make a distinction between the alleged misdeed of a few individuals –who under the principle of presumption of innocence are yet to be found guilty – and the activities of Italian companies.

The plan for energy security in Europe is changing. Relations with Russia have changed and for its part, Libya lives in instability. How do you analyze the geopolitical situation in this regard and the consequences for Italy, Europe, and also Algeria?

Italy has undertaken, in recent years, efforts to diversify its energy supply. We have gas coming from Algeria, Russia, but also Norway and Qatar. Such diversification aims to shelter us in case of dramatic change. We hope that Russia will take the right steps towards re-establishing a strong relationship, as before. The door is open.

With Algeria, we are bound by a cord that cannot be severed. Our relationship is immune to market conditions. Algeria has a large production capacity and access to deposits that will come into operation in the future. Simultaneously though, I believe the decision to develop other sectors has now been taken, such as renewable energy and shale gas, because the country itself is growing: internal consumption is growing quickly and the country needs its own energy. Algeria will make new discoveries in conventional and non-conventional power generation through renewables, for in the end, it is not only about supply, but also demand!

How would you assess the security situation in the country since the 2013 attacks?

Measures have been implemented on the Algerian side; even foreign companies have got themselves organized, so I do not perceive any particular concern at the moment on security issues. Of course, adaptations were made in accordance to the 2013 scenario and the attacks in In Amenas; certain points that were fragile have been reinforced. The Algerian government has taken measures to counter such situations.

What are the short and medium term objectives of the Italian embassy in Algeria?

It has been three years in office for me and I hope to see, in the final year of my term, the fruits of this experience materialize in the best way, especially regarding the success of the upcoming third bilateral meeting summit. Algeria and Italy share excellent bilateral relations; but we must work hard, and everyone must do their part, to strengthen them even further, because there are many possibilities for mutual development available to us. Often I hear that Italy is a friendly country that was present during difficult times; this is quite true, but we must nurture this relationship every day with new initiatives, which will give substance to this friendship and mutual respect.

Click here to read more articles and interviews from Algeria, and to download the latest free oil and gas report on the country.

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