By Valentina Za and Maria Pia Quaglia

MILAN (Reuters) -Italy’s state-controlled Snam has agreed to buy a floating regasification terminal with capacity of 5 billion cubic metres a year from Golar LNG, as Rome works to cut its reliance on Russian gas.

After Germany, Italy is the European country most dependent on Russian gas, which accounts for 40% of its total imports. The government has been scrambling to broaden its energy supplies in light of the Ukraine war and Western sanctions against Russia.

Snam said it had agreed to buy the Golar Tundra floating storage and regasification unit (FSRU) for $350 million and was working on a second FSRU acquisition which it expected to finalise by the end of June, having entered exclusive talks.

“Snam completed the transaction quickly and effectively in a highly competitive market due to the scarcity of supply,” CEO Stefano Venier said.

“With the purchase of the Golar Tundra, Snam is taking a decisive step to enhance the security and diversification of Italy’s energy supplies.”

Built in 2015, the Golar Tundra can also serve as a liquefied natural gas (LNG) carrier with a storage capacity of 170,000 cubic metres.

To make the most of its regasification capacity, Snam will locate the vessel in a port in central-northern Italy, close to the areas with greatest gas consumption.

The Golar Tundra is expected to start working as an FSRU during the spring of 2023 and will require the construction of infrastructure connecting the terminal to the existing gas transportation network.

Golar will lease Golar Tundra from Snam as an LNG carrier for a limited period of time after closing, and support Snam in laying the groundwork to then install the vessel in the selected port.

The acquisition will “contribute to about 6.5% of domestic needs, thus bringing the country’s regasification capacity to over 25% of the demand,” Venier said.

Italy currently has three working LNG terminals.

In mid-May Snam signed another contract with Golar LNG for a vessel to be converted into an FSRU that will be installed in a southern port of Sardinia.

(Editing by Giulia Segreti; Editing by Kirsten Donovan)