(Bloomberg) -- Italy has sourced sufficient alternative supplies of gas from North Africa to make up for any shortfalls this winter if Russia were to immediately cut off all exports to the country, according to people familiar with matter.
A boost of expected gas deliveries from Algeria and Egypt will be able to cover the remaining supplies Italy still gets from Russia, said the people, who asked not to be identified because the estimates are private. Italy originally expected to achieve independence from Russian gas by spring 2025, but it must expand its regasification capacity to ensure a repeat of this winter’s results, the people said.
Russian gas currently accounts for about 10% of Italian imports, down from around 40% before Russia invaded Ukraine in February, according to the people. A very cold winter, pipeline damage or a delay in the newly sourced supplies could also hamper Italy’s effort, the people said.
Outgoing Prime Minister Mario Draghi has been scouring the globe to secure gas supplies to protect Italy from potential supply interruptions from Russia, which has been putting pressure on the European Union over several rounds of sanctions in response to the invasion. Italy has been one of the most successful countries to source alternative supplies.
A spokesperson for the Italian government declined to comment.
In contrast, Germany the biggest importer of Russian gas, is struggling to secure extra supplies, with Chancellor Olaf Scholz returning from a trip to the Middle East with an agreement for just one cargo of liquefied natural gas. The cost of replacing Russian flows with higher-priced gas from the market will cost gas giant Uniper SE about 18 billion euros ($17.3 billion) this year, which is why it is being bailed out by the government.
Russia’s Gazprom PJSC on Tuesday warned that one of two remaining routes bringing gas to Europe -- via Ukraine -- was at risk because of a legal spat. Gas prices jumped almost 20% as traders factored in the prospect that Europe will have to live without Russian gas this winter.
Italy’s improved outlook is dependent on the successful installation of a new floating regasification unit in Piombino by the spring of 2023, the people said. The unit can process 5 billion cubic meters of gas per year, but opposition from local authorities risks delaying its operations.
Algerian exports to Italy are expected to double in 2024 to 18 billion cubic meters per year, while LNG imports from Egypt will increase by the end of the year to match the amount currently sent from Russia, according to the people.
Russian flows have been essential to fill gas storage to 90% before the start of winter. The next season “could be worse if the we don’t add regasification capacity” by next spring, Eni SpA’s Chief Executive Officer Claudio Descalzi, said at a Sept. 24 at a conference in Rome.
(Updates with Gazprom warning in seventh paragraph)
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