Italy may trigger emergency gas plan if Russian curbs continue

Italy may trigger its emergency gas plan as soon as next week if Russia continues to curb supplies, a move that may involve a bigger reliance on dirtier fuels.

If Gazprom PJSC doesn’t restore its gas supplies to Italy by mid-week, the government may initiate an emergency phase for its market, according to people familiar with the situation. That may pave the way for a greater output of the six coal plants that are already operational in Italy, but are due to be shut by 2025 to meet climate change goals. 

Russia slashed supplies to Germany, France, Austria and Italy this week, prompting a 60% surge in gas prices. Moscow has cited technical glitches to justify the reduced flows, an assertion called “a lie” by Italy Prime Minister Mario Draghi, who said Russian President Vladimir Putin is politicizing the use of energy.  

Italy’s contingency plan for natural gas emergencies may also involve requesting companies to voluntarily limit energy consumption, but wouldn’t affect industrial production, said the people, who asked not to be identified because the plans are private.  

A spokesperson for the Italian government declined to comment.

Eni SpA said Friday it only received half of the gas requested from Gazprom, the third day in a row that demand was not met. The reduction in gas flows poses a serious challenge for Italy, which relies on Russia for 40% of its gas imports and which during summer months uses gas purchases to fill stocks for winter. 

More days of reduced flows would make it harder to replenish reserves, which are currently 51% full. Gas accounts for about 40% of Italian electricity production which is then used by companies and households.

The government has been moving quickly to diversify its energy sources to shun the use of Russian gas since Putin’s invasion of Ukraine. It has signed energy deals in Algeria, Angola, Egypt and other countries, and it has boosted its regasification capacity with the purchase of a new LNG unit, but the impact of those new measures will take several months to reach capacity.