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12.10.2017 12:56

Soon Italy May Not Be One of Europe's Most Expensive Gas Markets

AUTHOR: publics.bg

© shannonpatrick17, flickr.com

Italy is looking to shed its status as one of Europe’s most expensive gas markets according to Bloomberg.

Lawmakers are aiming to turn a proposed national energy strategy that would overhaul the country’s gas sector into law by the end of the month. The plan, put forth by Economic Development Minister Carlo Calenda would see the nation buy pipeline capacity in neighboring Switzerland, and could cut gas prices by 5 percent.

Calenda’s proposal to use the Swiss capacity to try to boost liquidity and lower prices in Italy has led to a backlash from most of Europe’s major energy companies. Italy’s intervention would have repercussions far beyond its borders, it says.

“It shouldn’t be implemented at all,” said Pietro Baldovin, a Brussels-based adviser at the European Federation of Energy Traders. “Any gas hub should simply function according to the rules of supply and demand.”

EFET, whose members include companies and traders from Exxon Mobil Corp. to Gazprom PJSC and Vitol Group, has been examining the proposal since June, when it was first laid out. Lobby groups have already helped stymie one attempt by a member of parliament to turn the measure into law and are closely watching further legislative moves, Baldovin said.

Italy pays more for gas than other countries in Europe because about a quarter of its fuel enters the country via Switzerland, which isn’t subject to European Union rules on access to transport capacity that help damp costs across the continent. Under the “liquidity corridor” plan, the government would assign a company, such as gas grid operator Snam Rete or another regulated entity, to buy unused Swiss transportation capacity and sell it at a discount to companies that ship fuel to Italy.

The plan might mean transport capacity is bought at market value and sold for less, creating a financial loss. It’s not clear how the capacity would be priced, EFET’s Baldavin said.

According to Green Network, an Italian electricity and gas trading company, it seems fair for Italy to make steps to reduce costs for gas consumers, but market participants are now looking for more clarity.