Italian suppliers struggle to comply with emergency decree
Italian suppliers say they are very unlikely to comply with the ministry’s August emergency decree which told them to have at least 10% of their direct industrial customers on interruptible contracts.
There was a 30th October deadline for suppliers to inform the ministry and network operator Snam of the names and volumes of their interruptible clients. According to AIGET, Italy’s Association for energy traders and wholesalers, its members are unlikely to have succeeded in making this month’s deadline, if at all.
Italy’s ministry for economic development may change the emergency decree as a result. “We are waiting for the final communication and then we’ll look at the data,” Gilberto Dialuce, director of gas at the ministry told EGM. “If it is impossible then we will find another solution,” he said. He said the ministry would issue a revised emergency decree after 31st October which would mainly address the interruptible customer rules.
The import maximisation rules (also part of the August emergency decree) will not be changed, he said. He could not clarify, however, whether Eni will be penalised under these rules for the volumes of Transitgas pipeline capacity (through Switzerland) that may remain unsold. “We are waiting for the energy regulator to establish use-it-or-lose-it rules for capacity not used by shippers,” Dialuce said. “I think this Delibera will be issued in one or two weeks.”
Dialuce said the 10% figure has been based on the amount of interruptible supply the ministry was able to bring forth during last winter’s emergency. He said the ministry was able to buy 7 to 8 million cubic metres a day throughout the winter from industry. He also pointed out that the emergency decree only calls for the option to interrupt for a four-week period, starting on 29th January. He suggested that suppliers were not offering enough discount to entice their industrial customers: “it’s a matter of price,” he said. “They have to offer lower prices.”
He also pointed out that even if a company does not manage to reach the 10%, they will be able to buy the volumes on a secondary market, from suppliers with over 10%.
The sellers themselves tell a different story. The rumour on the market is that even Eni and Enel are struggling to reach 10%, meaning there is unlikely to be any secondary market at all. Eni is reportedly offering to give customers back the value of the full penalty they would incur under the emergency decree – this has been set by the ministry at the cost of using gas from strategic storage.
But most say customers won’t switch at any price. This is because, firstly, at the same time that the ministry was trying to motivate interruptible buying, it was saying Italy faced a supply crisis this winter. When you think you are bound to be interrupted and you have no back-up, it seems like a question of either paying top dollar or shutting your plant, and most will take the former option.
Secondly, some sellers pointed out that that the possibility of fuel switching from oil has almost died out at Italy’s industrial sites and is no longer a physical possibility as oil tanks have been disused for so long. And lastly, they say the emergency requirements came out too late in August, as most contracts with industrial customers had already been signed.
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