Italian PSV: Market turns bearish amid thin liquidity
The Italian market, although fairly illiquid, is definitely becoming more bearish. “If I could renegotiate my contracts, I would do it straight away,” one trader said. Another expressed concern for the fact that after being pleased with some big Gas Year ‘09 contract few months ago, has the feeling now that some customers would like to renegotiate.
Most traders expected Gas Year ‘09, during the last two weeks, to converge with the Eni Gas Release formula 2007, but not below: “The gas release formula went further down with oil, and at the moment is a floor which will be not easily broken,” one trader said. “Unless oil is going to crash, it should not go below that,” the trader added.
SNAM Rete Gas tender of five lots of 40.23Mm3 to be provided at the PSV from October 1st 2009 to September 30 next year generated some interest between shippers, as it will give a good indication of the price of as for next year.
Irrespective, availability of gas is not going to be a problem going forward (at least, in theory) as Italy has a choice of new import projects on the table. The Italian minister for economic development Claudio Scajola confirmed this month during the European Summit on Gas, in Sofia, Qatar’s interest in supplying LNG via the regasification plants of Rovigo and Porto Empedocle. Edison, this month, made assurances that Rovigo will start on September 2009, and a failed referendum in Porto Empedocle, this month, brought the plant closer to completing the authorisation process. “We are, indeed, scared by the entry of new [foreign] operators in the market,” said one trader, who considered the estimate of future imports made by Scajola of 21 billion m3/year in the next few years (about one fourth of the annual consumption) to be grossly exaggerated.
Others still believe that even with a hot summer and a new regasification plant, and with industry reducing its production more than 10% year on year, operators will have to fill their storage for the next winter. Storage that this year (by the end of March) stood at just one third the storage levels of the previous year.
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