Italian producers and importers to sell gas to OTC market
Italian gas producers and importers may be forced to sell a portion of their gas to the OTC market, the Economic Development Ministry announced this month.
The proposal forms part of the government’s new package of liberalisation laws aimed at cutting public costs and modernising public services and retailers.
Gas producers and importers are currently obliged to pay state royalties in the form of taxation. In the future, both will have to renounce a portion of gas — the amount is yet to be decided by the energy regulator — to the Italian OTC market, Punto Scambio Virtuale (PSV), which is managed by the country’s gas transmission operator, Snam Rete Gas. Consequently, gas producers and importers in Italy will pay the government revenue from the market sales.
Liquidity boost for small and medium companies
The move is aimed at boosting gas liquidity and trading, particularly among small and medium-sized companies in Italy’s current monopolistic gas market. However, the devil is in the detail and the government has yet to publish how this measure will be managed; most notably how much gas will have to be surrendered to the market and at what price.
This is not likely to appeal to gas producers and importers. Italian gas and oil incumbent, Eni, currently operates over 90% of gas production in Italy. Moreover, it is unlikely to boost trading activity as the volumes will simply be recycled, argued one Italian trader. “This will not be new gas,” he argued, highlighting that new gas and new pipeline infrastructure is needed to change the status quo. A member of Italy’s Association for Energy Traders and Suppliers, AIGET, said the move was potentially positive, but it depended on the fine print. He conceded that Italy needed new sources of gas, but that the proposal was a good temporary measure. The proposal is in place, but the government has three months to make amendments or oppose the decision, he said. The government was unavailable for comment at time of going to press.
Gazprom and Sonatrach plan to directly market their gas in Italy in the next gas year, while the new Rovigo LNG terminal is due to be operational by the first half of 2008, as the first of several new infrastructure projects planned in Italy.
A total of 14% of Italy’s gas consumption was met by domestic production in 2005.
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