Algerian national oil company Sonatrach has agreed a deal to buy the Augusta refinery in Italy from the US-based oil major Exxon Mobil.

The refinery deal includes three fuel terminals as well as pipelines.

The terminals are located in Augusta, Palermo and Naples.

Acquiring the refinery and associated infrastructure will allow Sonatrach to ship Algerian crude to Italy to be refined then ship refined products back to Algeria.

This is Sonatrach’s first investment in refining outside of Algeria and fits with its broader goal of refining more Algerian oil.

“It will also be able to process directly products that are surplus in Algeria in order to re-import products that are in deficit like diesel and petrol,” Sonatrach said in a statement.

The Augusta refinery has a capacity of 175,000 barrels a day (b/d).

Algeria is seeking to refine more of its own oil in order to cut its fuel import bill.

It paid $800m for fuel imports in 2016 but that more than tripled in 2017 to a record $2.5bn, because of refining problems.

The deal is expected to close at the end of 2018.