Italy has become the largest importer of LNG in Europe, while other countries lag behind in purchases - Bloomberg
Kyiv • UNN
Italy became the largest importer of liquefied gas in Europe in July thanks to government incentives. Neighboring countries reduced purchases due to rising prices, leading to a lag in storage levels.
Italy became the largest importer of liquefied natural gas (LNG) in Europe in July, as traders took advantage of government incentives and continued to purchase gas cargoes despite rapidly rising prices. At the same time, neighboring countries reduced expensive purchases and allowed storage levels to lag behind. This is reported by Bloomberg, writes UNN.
Details
As the publication notes, the different strategies are essentially opposing bets on how the gas crisis in Europe will develop before winter. If disruptions in the Middle East continue and prices keep rising, Italy's expensive stockpiling may prove to be the right decision. Meanwhile, countries with low reserves could face an even greater deficit in winter and higher costs. If supply recovers and prices fall, Italy risks filling its storage with expensive gas at the expense of consumers.
The war and supply disruptions in the Middle East have caused European gas prices to roughly double since the beginning of the year. This has limited LNG purchases in the region, although Europe is under pressure to build up reserves before winter. Italy became a rare exception — for the first time since 2017, when Bloomberg began vessel tracking, the country outpaced its European competitors in import volumes.
Italy's energy sector is the most gas-dependent among European countries, and electricity demand increased during recent heat waves. In addition, Italian traders continued to take advantage of government incentives to purchase LNG and replenish gas storage, giving the country an edge over Germany and France, which are lagging behind. Italian gas storage rules impose strict filling targets and penalties for non-compliance.
Italy became a rare exception among European LNG buyers in July
This situation is likely to intensify the question of whether other European governments should intervene and support gas purchases if supplies through the Persian Gulf remain blocked. Other major buyers in Asia have also begun to divert gas cargoes that could have been destined for Europe, which could lead to competition for supply in the coming months if the situation does not improve.
Tensions in the gas market are likely to persist in the coming months, starting as early as the next few weeks
According to him, Germany and other European countries will likely have to accelerate gas injections into storage in the near future. The company confirmed that Italy is moving toward meeting its target of filling storage to 90%.
European gas futures have risen more than 30% since the beginning of this month. The reason was new US strikes on Iran in recent days and general uncertainty in global markets.
Winter gas contracts are currently trading slightly cheaper than summer ones, making stockpiling economically unviable for most traders. At the same time, many analysts warn of increasing risks before winter. In particular, Goldman Sachs Group Inc. suggests the possibility of prices rising to 100 euros per megawatt-hour in December — about 75% above current levels if the market deficit persists.
Currently, Italy's gas storage facilities are 75% full — lower than the average of the last five years for this period, but at the same time the highest level among the largest European markets.
In Germany, storage is only 47% full — the lowest utilization rate for this time of year since records began in 2009.
France's gas reserves are 56% full after the country faced capacity constraints at LNG terminals this summer