The issue of natural gas continues to hold its own on the financial markets. Yesterday the future expiring in October of Dutch TTFthe European gas price benchmark, has come to yield over 10% in the 185 euro area per megawatt hour, i.e. a third less than the levels of 280 euros it had reached on 5 September despite the Nord Stream pipeline 1, after the problems of August, is still out of order. The Russian infrastructure that brings methane to Europe has also registered “unprecedented” damage to three lines and at this moment it is “impossible to estimate the timing of the restoration operations”. According to German government sources, the pipelines “could also be unusable forever”. All this also worries our country and many are wondering whether or not it is ready for the arrival of winter.
According to the estimates of the Mazziero Research, we will be able to make it through the winter, if it is not too severe, even in the event of the zeroing of Russian gas supplies. It is what emerges from the 47th Quarterly Observatory on Italian Accounts, in which a study was conducted on the dynamics of consumption, imports and use of stocks with encouraging results. This is not a trivial matter if we consider the difficult situation generated in gas procurement and which is possible thanks to the Italian determination in storage filling, which has reached 90% albeit at high costs.
Efforts to replace Russian gas
The table above shows the gas balance in Italy reporting the comparison of the current July with that of last year and the development from January to July comparing 2022 with 2021. Observing gas imports by entry point, Mazziero Research notes that:
- The imports from Russia (via Tarvisio) were reduced by half and in the future they are destined to disappear.
- L’increase in imports from Algeria (via Mazara del Vallo) is still modest, but currently it represents the primary source of gas imports.
- Imports from Azerbaijan (via Melendugno) have strongly increased and constitute an important contribution, together with regasifiers, to the replacement of Russian gas.
- Strong increase also in imports from Northern Europe, Holland and Norway (via Passo Gries).
- Strong increase in the use of the three regasifiers: Cavarzere, Livorno and Panigaglia.
- Imports from Libya (via Gela) are down compared to last year and are unreliable due to the country’s political instability.
- Imports from Eastern Europe in transit from Slovenia (via Gorizia) are of little importance.
It is possible to see in the variation of the stocks how these have strongly increased compared to last year. As Mazziero Research explains, the inevitable implication of this aspect is that large quantities of gas continue to be bought at high prices. The update on September 26 indicates that Italian stocks have reached 90% of the filling which corresponds to just over 22% of annual consumption. Estimates and projections conducted by Mazziero Research indicate that, in the case of total elimination of gas from Russia, keeping imports at current levels and using the accumulated stocks, it should be possible to survive the winter, provided that it is not extremely rigid.
The gas budget estimated for winter 2022-23
The table above shows the estimated gas balance for the winter of 2022-23 in Italy. The hypotheses on which these estimates by Mazziero Research are based are:
- Monthly consumption equal to the previous year.
- National production slightly lower than in the last three months.
- Exports moderately higher than those of July and equal to those of December 2021, in this regard it must be remembered that the Vatican City and San Marino are fed by us.
- Complete elimination of imports from Russia, currently there are still minimal flows, and partial reduction of the contribution from Northern Europe compared to July volumes.
- Operation of regasifiers on July volumes.
- Stock replenishment as of September 26 to 15,870 million cubic meters, set to increase again during the month of October.
The result, the report reads, is a modest inventory margin in March 2023 for 101 million cubic meters, insufficient if there were unforeseen events or the winter was harsh, but not such as to make us enter into a deep crisis. And if supplies from Russia continue to flow even if at minimal levels, Algeria were able to increase volumes a little and, above all, the regasifiers were able to work at full capacity, we could spend the winter without surprises. From next year, adds Mazziero Research, it should then one of the floating regasification plants purchased by Snam will come into operation.
The figure below shows in graphical terms the data in the table above and gives the idea of the contribution of stocks in satisfying a consumption higher than imports.