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Sonatrach signed supply agreements with German and UK-based companies, and MoUs with ENI and Equinor Algeria is strengthening its position as energy supplier to Europe Additional supply agreements can be expected in near future LONDON (ICIS)–Algerian state-owned gas producer Sonatrach in March signed a new memorandum of understanding (MoU) with Italian supplier Eni and Norway’s Equinor aimed at closing hydrocarbon contracts in the regions of In Salah and In Amenas. This is just one of the plenty agreements signed by Algeria with the aim to increase its presence as a gas supplier to Europe. This commitment started with an MoU signed in 2013 with the European Union. The Algerian government seems to be accelerated this push in 2024 so far. A gas trader told ICIS that Algeria is in a favourable position for closing deals with European companies given the current geopolitical circumstances. While most of the Russian volumes to Europe have been replaced by LNG, that supply is not as flexible or reliable as piped flows, which are usually the preferred option. In addition, LNG cargoes from Algeria might also be considered more stable and possibly cheaper than LNG coming from the US due to a shorter route not affected by cyclones on the US east coast or freezing temperatures affecting terminals in the winter. ICIS data shows that Algerian exports to Europe have risen greatly in the last two years compared to pre pandemic levels. Piped flows via Italy increased to 23 billion cubic metres (bcm) in 2023, more than double compared with 2019, while piped volumes entering the continent via Spain have also increased to about 8.5bcm in 2023, about 38% more compared with 2019. Algeria LNG exports to Europe also increased to 7.3million tonnes in 2023, about 6% higher compared to 2019 figures. Medgaz, a company operating the pipeline between Algeria and Spain, announced in an operational notice that it will increase available capacity in its daily auctions from 1 January 2025. The document detailed that current bookable firm capacity is 1.3 million cubic metres (mcm)/day until 31 December 2024, after which it will increase to 1.4mcm/day during the whole 2025 calendar year. A second source involved in Algerian gas production told ICIS they believe available capacity could be updated in the future in accordance with new requirements and changes in Algerian gas production. Early in February 2024, Sonatrach had signed a mid-term gas contract to supply German-based VNG Handel & Vertrieb GmbH. In January, Sonatrach signed a new agreement with the UK-based Grain LNG terminal extending storage and redelivering capacity from January 2029.

20-Mar-2024

Note: this article is no longer updated and is held on the ICIS archive.  LONDON (ICIS)–Ukraine and Russia are locked in negotiations over the transit of gas that could change the supply dynamics to Europe and Turkey from 1 January 2020. While Ukraine would like to retain its historical role as Europe’s most important transit route, Russia plans to divert supplies to its new pipelines, Nord Stream 2 and TurkStream. In this dedicated topic page, ICIS brings updates on discussions as well as supporting material to help stakeholders navigate latest developments. LATEST UPDATES 3 January, 17:52 Mild weather, gas supply to cap energy price gains European gas and power prices gained on 3 January due to growing tensions in the Middle East sparking oil supply concerns, as well as a sharp decrease in Russian gas flows to Europe via Ukraine. But weather forecasts predicting lower chances of an extensive cold spell, combined with ample LNG and higher storage withdrawals should cap energy price gains over the coming week. 2 January 18:00 Russian gas supplies shipped to Europe via Ukraine plummeted in the first two days of 2020, lifting hub prices and prompting central European countries to ramp up storage withdrawals and off-takes from Norway to compensate for the sharp decrease. Russian exports to Slovakia dropped nine-fold from an average 162million cubic metres/day throughout December to 17mcm/day on 1 January, while volumes on the Ukrainian-Hungarian border dropped from an average 41mcm/day in December 2019 to 6.8mcm/day on 1 January. 2 January 17:40 The new Ukrainian transit deal may keep bearish pressure on European natural gas prices in the coming months, which could increase Winter ‘20 premiums to Summer ‘20 at markets including the Austrian VTP and Italian PSV. Market participants polled by ICIS on Thursday said that the new transit agreement will provide larger stability on the supply side but storage fullness will be another key driver for prices in the summer. 31 December 09:44 Ukraine and Russian officially signed the new transit agreement that will cover a minimum of 65 billion cubic metres (bcm) per year in 2020 and 40bcm/year between 2021-2024. 27 December 16:47 Ukraine's new TSO has been certified ahead in time for the 1 January 2020 deadline, with transmission tariffs on most border points also set. 27 December 14:00 Turkish gas companies are expecting to off-take Russian volumes from a new delivery point from January 2020,  as volumes will be diverted from the Trans-Balkan line to the new TurkStream corridor. 23 December, 16:50 An updated story with full details on the transit agreement protocol and what it will mean for both Ukraine and Russia is available here. 23 December, 16:16 Ukraine transit deal pressures gas curve as uncertainty moves to Nord Stream 2 European natural gas prices for 2020 delivery fell on Monday 23 December after an agreement was signed for the future transit of Russian gas to Europe via Ukraine. The Dutch TTF Q1 ‘20 contract opened 5% below the close on Friday 20 December, with January ‘20 down by 4%, according to trades submitted to ICIS. “Nord Stream 2 is the issue now,” one trader said, adding that delays would lead to a premium on the Summer ’20 contract, cutting its spread to Q1 ’20. POWER MARKET REACTION European power markets closely tracked gas prices in December as speculation intensified over the transit negotiations. By 12:00 London time on 23 December the German power January ’20 baseload had shed 5% from the previous close, with the same French product dropping 6%. With gas-for-power generation ramping up across Europe in 2019, power traders have increasingly looked to gas markets for pricing signals. 23 December, 12:02 Ukraine, Russia sign gas transit, legal claims protocol Ukraine and Russia signed on Friday a protocol for the transit of gas to Europe from 1 January 2020. As expected, the document covers the key issues of transit over the upcoming five years as well as the settlement of outstanding Gazprom debt to the Ukrainian incumbent Naftogaz and the cancellation of its ongoing multi-billion dollar legal claims. It also includes a controversial arrangement where Gazprom would sign the transit agreement with Naftogaz, which would in turn sign an interconnection agreement with the new transmission system operator of Ukraine. Naftogaz is also expected to book capacities on behalf of Gazprom and take on any transit tariff risks. Under the document officially published on 21 December, Russia’s Gazprom will transit 65 billion cubic metres (bcm) of gas for the first year of the transit in 2020. The volumes will then be reduced to 40bcm/year between 2021-2024. The parties can renew the contract for another 10 years from 2025. The volumes will be only half of what Russia has been shipping via the Ukrainian system under the existing 10-year contract which expires at the end of this year. An unofficial English translation of the protocol was published by consultancy Tumbleweed Partners here . 20 December, 16:45 Ukrainian and Hungarian gas interconnection deal signed Hungarian gas transmission system operator FGSZ and its Ukrainian counterpart Gas TSO announced an interconnection agreement at the Berehove and Beregdaroc interconnection points on 20 December. The agreement will take effect from 1 January 2020, with “standard business rules” now applying to the Berehove interconnection point, which was previously unable to be used by other market participants due to Russian Gazprom’s long-term contract, according to a statement from Gas TSO. Source: Gas TSO 20 December, 10:55 Prices tumble after 'in principle' Ukrainian gas transit deal reached Ukraine and Russia have ‘in principle’ reached an agreement on all key elements for the transit of gas via Ukraine from 2020 although, the European Commission vice-president Maros Sefcovic said on Thursday. However, a source close to discussions told ICIS that no agreement had been signed yet and that negotiations were ongoing. Speaking briefly after nearly nine hours of negotiations in Berlin, the EU mediator said the deal was still to be discussed in Kyiv and Moscow on Friday. PRICE REACTION The news late on 19 December saw a lot of risk premium drain from contracts for delivery in the first quarter of 2020. On 19 December the TTF Q1 ’20 closed at €15.025/MWh and opened the session the next day trading at €13.95/MWh. The product had moved up slightly to €14.05/MWh by 10:00 London time, just under a euro lower than the previous close. The TTF January ’19 contract started trading at €13.750/MWh on the morning of 20 December, after closing at €14.975/MWh the day before. By 10:00 the Dutch front month was had risen slightly to €14/MWh, which was still below the previous close. 18 December, 17:13 'Close to zero' chance of gas transit deal – Naftogaz CEO The Dutch TTF January ’20 contract spiked this afternoon after the CEO of Ukrainian state gas company Naftogaz said the probability of agreeing a new transit deal with Russia’s Gazprom before the end of the year was “close to zero”. Transit jitters drive TTF front-month spike “It seems to me that now we can say that the probability of the signing of the transit contract by the 1 January is very close to zero, very small,” Andriy Kobolyev said. “It’s continuously approximating towards zero with every minute.” 18 December, 14:57 Transgaz agrees to release Ukraine-Romania capacity Gas TSO of Ukraine and Romanian system operator Transgaz signed an interconnection agreement to offer capacity on the Trans-Balkan pipeline to the market from 1 January 2020. In the new year shippers will be able to access 17.8 million cubic metres (mcm) per day from Ukraine to Romania via the Isaccea 1-Orlovka point. Access to 15.8mcm/day for flows in the opposite direction will be made available from the same date. This will allow shippers to move volumes north into Ukraine and Moldova via countries like Turkey and Greece. 17 December, 17:11 TTPC offers emergency Algeria-to-Italy gas capacity until March 2020 LONDON (ICIS)–The Availability of additional export capacity to Italy on the Trans-Tunisian pipeline could reduce the risk of price spikes and increase Italy’s security of supply in the first quarter of 2020, Italian gas traders told ICIS. According a statement released by the Trans Tunisian Pipeline Company (TTPC) on 16 December, shippers who hold transport capacity on the Trans Tunisian pipeline will be able to book additional capacity in the event of a “system critical situation” and for the duration of the same. This would be triggered for the Alert or Emergency Levels of the emergency plan for the Italian natural gas system issued by the Italian Ministry of Economic Development. The TTPC is an onshore pipeline that crosses Tunisia owned by Italian energy major ENI and is the main route for Algerian pipeline deliveries to Italy. The announcement made by the TTPC on 16 December came as uncertainty surrounds the renewal of the Russia –Ukraine transit deal for the upcoming year –a key supply route to Italy. The arrangements are made available to shippers from 16 December until further notice or at the latest by 31 March 2020, TTPC said. 16 December, 14:49 Trans-Balkan gas capacity sold through RBP On 16 December the Hungarian Regional Booking Platform sold all 169GWh/hour of capacity offered for use in January 2020 on the Negru Voda 1-Kardam point on the Trans-Balkan pipeline, which allows shippers to move natural gas between Bulgaria and Romania. This may have been an indication that gas from the TurkStream pipeline may be shipped to southeast Europe in reverse along the Trans-Balkan line in January next year. 13 December, 17:34 Ukraine may extend capacity booking deadline for Russian transit Russia’s Gazprom may have until 31 December to book capacity for the transit of Russian gas via Ukraine after the deadline is set to be extended, Yuriy Vitrenko, executive director of Naftogaz confirmed to ICIS on Friday. Under a resolution by the Ukrainian regulator NERC published on 14 November 2019, the Russian producer was expected to book annual capacity of up to 14 years by Friday, 13 December, However, following another round of talks in Vienna on Friday, Naftogaz, the Ukrainian gas grid operator and Gazprom agreed to continue discussions. FRANTIC SELLING Earlier reports by the Russian wires on Friday had suggested that a preliminary agreement may have been reached. A Gazprom statement published later in the day appeared to reject the claims, merely stating that the parties had discussed cooperation in the gas sector from 2020. Nevertheless, the reports led to frantic selling on European markets around 15:00 London time, when the TTF Q1 ’20 price dropped by around €0.50/MWh in less than 20 minutes to deal below €14.00/MWh. PODCAST With less than a month until a 10-year contract for the transit of Russian gas to Europe and Turkey via Ukraine expires, it is still unclear whether Ukraine and Russia would agree to sign a new agreement from 1 January. In this podcast, Aura Sabadus, Ben Samuel and Patrick Sykes discuss the latest developments, their impact on gas prices and the gas and LNG outlook for January 2020. RECENT COVERAGE US sanctions against Nord Stream 2 up for final sign-off Turkey opens first ever spot import capacity booking on Trans-Balkan pipeline Ukraine may extend capacity booking deadline for Russian transit US sanctions on Nord Stream 2 gas link unacceptable – German MPs Romania offers reverse gas capacity on Trans-Balkan pipeline Ukraine's Naftogaz ready to buy Russian gas, drop legal claims if long-term transit agreed Ukraine, Turkey emerging as eastern European gas transit options Swedish court rejects Gazprom's $80bn Naftogaz claim For an in-depth explanation of the details of the negotiations, click here: ICIS EXPLAINS: EU, Russia and Ukraine’s gas transit negotiations

02-Feb-2024

LONDON (ICIS)–Versalis has acquired the remaining 64% of Novamont’s shares previously held by Mater-Bi for an undisclosed sum, the Italian producer said on Wednesday. Versalis – energy firm Eni's chemical business – now holds the entire share capital of the Italian bioplastics maker. “The acquisition of Novamont will allow us to drive our strategy towards chemistry from renewables through the integration of the two portfolios,” said Versalis CEO Adriano Alfani. Mater-Bi is a company controlled by private equity funds Investitori Associati II and NB Renaissance.

18-Oct-2023

SINGAPORE (ICIS)–South Korean producer LG Chem and Italian energy firm Eni on Thursday said they are jointly exploring the possibility to develop and operate a new biorefinery at LG Chem’s Daesan chemical complex. The two companies are examining the technical and economic feasibilities for the proposed project, the company said in a joint statement. "Final decision for the investment is scheduled by 2024 and the plant will be completed by 2026 at the existing integrated petrochemical complex in Daesan, Korea," they said. The potential biorefinery is designed to process around 400,000 tonnes/year of bio-feedstocks using Eni's Ecofining process, developed in collaboration with Honeywell UOP. The biorefinery will have the flexibility to process renewable bio-feedstocks and produce multiple products including Sustainable Aviation Fuel (SAF), Hydrotreated Vegetable Oil (HVO), and bio-naphtha. The proposed biorefinery is aimed at meeting the "growing demand for more sustainable fuels and plastics produced by low-carbon processes, as well as to help progressively decarbonize the energy and mobility sector", the two firms added. Eni will provide the South Korean biorefinery with sustainable feedstock mainly based on waste and residues from the processing of vegetable oils, used cooking oil, and also vegetable oils from drought-resistant crops in degraded, semi-arid, or abandoned soils not in competition with the food chain.

14-Sep-2023

LONDON (ICIS)–The Saudi-listed Acwa Power developer and investor in power generation signed a Memorandum of Understanding (MoU) with Italian energy major Eni and five other Italian companies to bolster cooperation in renewable hydrogen, as well as water desalination. The agreement was reached on the sidelines of the Saudi-Italian Investment Forum held in Milan on 4 September. Under the terms of the MoU, Eni and ACWA Power will cooperate in renewable hydrogen research and development of sustainable technologies. Other companies ACWA Power has signed agreements with include the Chamber of Commerce Confindustria, utility and waste management firm A2A, industrial solutions provider Industrie De Nora, specialty additives manufacturer Italmatch Chemicals, and classification and engineering solutions provider RINA. A2A and ACWA Power will assess the potential for renewable hydrogen projects in their areas of mutual interest, and renewable hydrogen imports in Italy. RINA and ACWA Power will investigate the potential use of renewable hydrogen and its derivatives in sea-borne shipping. ACWA Power and Industrie de Nora will cooperate on electrochemistry and sustainability technologies and will investigate possible partnerships in the operations and maintenance of renewable hydrogen applications. According to ACWA Power, bilateral trade between Italy and Saudi Arabia currently stands at around $11bn. A joint study released in June by Alfry and Rina showed that renewable hydrogen from the Gulf could reach Europe through a pipeline beginning in Qatar, via Saudi Arabia, Egypt, and the Mediterranean Sea. Saudi Arabia is among the list of Middle Eastern countries that have previously expressed their interest in exporting hydrogen in the coming years. Oman and the United Arab Emirates are also possible hydrogen exporters. According to an announcement in June last year, Saudi petroleum refinery Aramco planned to produce 11m tonnes/year of blue ammonia by 2030 — produced from about 2m tonnes of low carbon hydrogen, which is produced from fossil gas with carbon capture, utilisation, or storage (CCUS). These volumes could potentially aid Italy, in the long run, should supply agreements be reached. Italian hydrogen demand is set to reach 85.TWh/year by 2050 as Europe moves closer to its decarbonisation targets. Of this, only 7TWh will be met through internal production and alternative supply sources, leaving a hydrogen supply shortfall of 79TWh/year in place, data from ICIS showed.

05-Sep-2023

Additional reporting by Luka Dimitrov Algerian producer Sonatrach may be looking to fill some of the gap left by dropping Russian flows to Europe by increasing its own piped supplies to Italy via the Transmed pipeline transiting Tunisia. Sonatrach started offering more flexible supply deals but the uncertainty of Tunisian transit fees remains a key obstacle for smaller shippers. LONDON (ICIS)–Italian-Algerian pipeline operators Transmed and Trans Tunisian Pipeline Company (TTPC) started offering firm transportation capacity on 28 June on the PRISMA platform. The Transmed pipeline has a nameplate capacity of more than 100 million cubic meters (mcm)/day and around 35mcm/day could now be booked by participants through these auctions. The offer contains multi-year, yearly, quarterly and monthly products, as well as weekly and weekly working days products on a first-come-first-served basis. Annual and multi-annual capacity to 2029 will be offered from 28 June to 15 September while Q4 ‘23 and October ‘23 capacity will be offered from mid-September. Requirements for this auction do not strictly follow European standards for transparency as the operators are based outside Europe, therefore offered capacity and price of the auction were not disclosed ahead of the round. Results of the first round of auction could be available by 30 June. As this is a bundled capacity offer on both interconnected transmission systems, interested shippers must have an assignment in place not only with Transmed but also with TTPC. Shippers registration begun in early June. Transmed joined PRISMA as transmission operator earlier in June, increasing its presence in the European gas market. Multiple sources said they expect this auctions to boost Italian and European supply amid drastically diminishing pipeline flows to the continent from Russia. Algerian flows In 2023 to date Algerian flows to Italy at the Mazara del Vallo entry point have averaged 62mcm/day, accounting for 35% of Italian imports during the period, according to data published by Italian transmission system operator Snam. This was in line with the previous two years but three times higher than in 2020. ICIS understands that out of the current volume flowing on the Algerian route around 30mcm/day is under long-term contracts running from 2019 to 2026 and 2027, while the rest may be split between a previous long-term deals (around 60%) and spot flows (40%). Additional capacity on the north African route could help improve supply to Europe even if competition for LNG between Europe and Asia increases and reduces European LNG sendout. Tunisian transit fees Small players have historically faced obstacles in accessing the pipeline due to complex registration processes along the way. The pipe crosses Tunisia before entering Italy, which means higher transportation costs for shippers but also uncertainty around the level of transit fees. Participants said Tunisian operator Société Tunisienne de l’électricité et du gaz (STEG) that sets transit fees on the route sometimes makes abrupt changes in transit cost based on a complex formula, limiting shippers’ visibility on actual hedging activity costs. ICIS understand STEG has also overriding powers on existing import agreements between Algerian producer Sonatrach and shippers, which means that if Tunisian demand picks up STEG can keep some of the flows already being secured by others to meet its domestic demand. Big players have a better negotiating position because they have a variety of agreements in place and can boost their imports from other routes to make up for lower flows from north Africa – Austria and Germany to mention two – but also Azerbaijan and the newly expanded LNG capacity. Small players, however, do not have the same flexibility becoming more exposed to unexpected price spike and flow reduction on the import route. More clarity on the Tunsian factor in the route price formation requires a great deal of confrontation between market participants, the transmission system operators and the local government. ICIS asked STEG about the transit fee underpinning formula and how frequently it gets updated but it did not receive an answer by the time of writing. The transit fee to Italy is currently Tunisia’s biggest source of revenue. Sonatrach supply Another condition for accessing the Transmed pipeline is heaving a supply agreement in place with Algerian producer Sonatrach. Sonatrach owns 50% of the Transmed pipe along with SeaCorridor (a joint venture owned by ENI-SNAM), in order to book capacity at the new auctions. The company has already increased its presence in the European market as a supplier and is working towards expanding its LNG capacity. As Russian gas has left a supply gap, Sonatrach could have a chance to further expand Algerian share in the European gas market. In the year to date Italian imports via the Austrian TAG pipe, which traditionally brought Russian flows to Italy, have averaged 11mcm/day, mostly in line year on year but 84% lower than in 2021. Participants reported more shorter-dated and long-term contracts with a greater percentage of hub indexation signed in the past with Sonatrach and the producer has been making available more frequently shorter term products compared to previous years under these new terms. This, in theory, increases the possibility for shippers to secure spot volumes from Sonatrach and access transport capacity in the new Transmed auction on Prisma. However, the uncertainty around Tunisian fee affecting the route could prevent market players from signing agreements with STEG for a time frame shorter than three months at least to minimise potential cost issues, a source told ICIS. ICIS understands the first Transmed auction attracted mainly big companies with significant capacity already booked on the route. SeaCorridor was commissioned in January with providing strategic development directions for the commercial offer of both Transmed and TTPC. Snam acquired a 49.9% stake directly and indirectly held by Eni in companies operating two groups of international gas pipelines connecting north Africa to Italy. The transaction included TTPC and Transmediterranean Pipeline Company Ltd. (TMPC). Eni and Snam exercise joint control of SeaCorridor under joint governance arrangements. Eni Neptune deal The Italian utility Eni could also bring an additional 4 billion cubic metres of (bcm) to the continent, the company chief executive Claudio Descalzi said on 23 June, as it reached an agreement with Norwegian energy firm Var Energi to acquire independent exploration and production Neptune Energy. Neptune operates oil and gas fields across several countries including the UK, Norway, Germany, Algeria, Egypt, Netherlands and Indonesia. “[The deal] will contribute predominantly gas resources to Eni’s portfolio,” said Descalzi. However, the additional volumes would not be deliverable to Europe in the short term due to existing capacity restrictions and bottlenecks between the southern and northern regions of Italy. This could make less palatable booking additional capacity on the Transmed pipeline. “Flows via 10bcm/year Trans Adriatic Pipeline (TAP,) Lybia, and Algeria should not get higher than 130mcm/day,” one participant told ICIS. At the moment, combined gas flow from the southern routes rarely surpass 120mcm/day, Snam data showed. “The Italian government is swinging much political weight on the redesigning of the Italy-Africa energy connections,” added a third source. In January Eni announced a new $8bn deal with Libyan state-owned company NOC committing to developing Structures “A” and “E” gas fields off the Libyan coast by 2026. “Eni’s seeking to expand Mellitah complex in Libya could boost further Italian and European supply,” added a gas trader. Under the terms of the proposed deal, Eni will acquire Neptune (excluding the German assets), while Var Energi — Eni’s Norwegian listed subsidiary — will acquire the Neptune’s operations in Norway. Italian utility owns 63% shares in Var Energi. The transaction is expected to be completed by the end of first quarter of 2024, contingent on regulatory and governmental approvals GALSI revival Developers never really started working on the 8bcm/year Gasdotto Algeria–Sardegna Italia (GALSI) pipeline project, which was firstly envisioned in 2005 and intended as a Transmed extension that would connect Algeria directly to Italy. This was in part due to some financial challenges throughout the years, including the European Commission's decision to halt its financial support to the project, but also due to the wider market condition at the time. The project would have allowed to remove uncertainty of Tunisian transit fees and grant Sonatrach direct access to the European market, giving shippers a better opportunity to hedge their positions. A renewed interest in the pipe seems to come from Eni and Sonatrach increased partnership in the fields of green hydrogen, carbon dioxide storage, and renewable energies developed over the past years. In this context the GALSI projected could be upgraded to accommodate hydrogen transit, meeting both Algerian and European transition goals. In its 2020 Ten Year Network Development Plan (TYNDP), the European Network of Transmission System Operators for Gas (ENTSOG) listed GALSI pipeline among the infrastructure projects, although in the 2022 release this does not appear.

30-Jun-2023

LONDON (ICIS)–Small-scale nuclear fusion reactors could provide much needed power for the chemical industry as the transition is made towards cleaner and greener production technologies. Dow has signed a joint development agreement with X energy for a small modular reactor (SMR) at one of its US Gulf Coast sites. It would be the first grid-scale nuclear reactor for an industrial site in North America the partners have said, and it would enable Dow to take a major step in reducing carbon emissions and the carbon footprint of Dow products for customers. The OECD’s Nuclear Energy Agency (NEA) highlighted this week that there is substantial momentum towards commercialisation of various SMR designs globally. It has released an SMR Dashboard as a tool to help decision-makers navigate this complex area of new technology. Stakeholder acceptance of new small-scale nuclear power production is critical and is not likely to be easily won. Dow has been incentivised by the funds made available through the US Inflation Reduction Act for the development of SMRs. An advanced SMR was deployed in Russia and over two years ago the International Atomic Energy Agency said it had catalogued more than 70 SMR designs under development or construction in 18 countries. The first edition of the NEA SMR Dashboard tracks 21 SMR designs towards first deployment, the NEA says, and will help policymakers make informed decisions about the future. There is little doubt that nuclear power offered at this scale is a potential game changer in the race to net zero. SMR technologies could be deployed for on and off grid power production, for desalination and large-scale water treatment. One current project in Canada is linked to the production of blue hydrogen. Whether we are heading back to the 1960s when prospects for nuclear power generation appeared so bright, however, is questionable. Technically, policy makers can be overwhelmed by the variety of designs on offer. The NEA says its tool also looks beyond technical feasibility and the technology readiness of each SMR design to track progress across parameters such as licensing readiness, siting, financing supply chain, societal engagement and fuel availability. “The next five to ten years is going to be pivotal in terms of getting these new technologies to market,” says William Magwood IV, NEA Director-General. The EU’s stance on SMRs and the deployment of new nuclear power alongside renewables comes to the fore this week with the expected release of the European Commission’s proposals on the centrepieces of the Green Deal Industrial Plan, the Net Zero Industry Act and the Critical Raw Materials Act. The two acts are expected to facilitate the development of clean power and technologies in the EU, and have arisen as part of the EU’s response to the incentives offered under the US IRA. Whether new nuclear is included in the proposals, and to what extent, remains to be seen. For the much longer term, the drive for usable and scalable nuclear fusion technologies is making progress and Italy’s Eni was far-sighted enough last week to commit further funds to nuclear fusion development. The energy giant has a long-standing relationship with Commonwealth Fusion Systems, a spin-out from MIT (the Massachusetts Institute of Technology) and has just signed a Collaboration Framework Agreement with, it says the aim of accelerating the industrialisation of fusion energy. It will provide global engineering and project management support to a series of projects for CFS and the industrial-scale development of fusion energy. CFS’s SPARC project could become the world’s first magnetic confinement pilot plant with net production of fusion energy. It is in construction and expected to be operational by 2025. A plant called ARC will be the first commercial power plant capable of feeding electricity to the grid, the partners say, and is projected to be operational in the early 2030s. "We will see the first CFS power plant based on magnetic confinement fusion at the beginning of the next decade, with then almost two decades ahead to deploy the technology and achieve the energy transition goals by 2050, Eni’s CEO Claudio Descalzi said. Insight by Nigel Davis

15-Mar-2023

The Russia-Ukraine war revived Italy’s Eni’s desire to engage further with Libya following the security concerns in the wake of Muammar Gaddafi’s overthrow in 2011 and the resulting political instability. Renewed interest culminated in a new $8bn deal between the Italian energy giant and state-owned Libyan company NOC announced in January, with Eni committing to developing Structures “A” and “E” gas fields off the Libyan coast by 2026. In addition, Italy has been looking at Libya to boost gas supply throughout 2022, promoting lower tariffs to encourage gas imports via the GreenStream pipeline. Efforts in this sense started to pay off in the last quarter of the year. While annually imports from Libya remained 19% lower in 2022 than in 2021, in the fourth quarter they rose by 9% year on year to 851 million cubic metres (mcm). Early into the first quarter this year, imports remained higher year on year but reduced from the levels hit in the fourth quarter of 2022, hitting 400mcm in the year to date. GAS PRODUCTION POTENTIAL Political instability could weaken Eni’s projects in the country, although the large chunk of unused gas in Libya is likely to make investments profitable in the long term due to the resilience of the Libyan hydrocarbon industry, an expert told ICIS. Richard Barltrop, author of “Oil and Gas in a New Libyan Era” published by the Oxford Institute for Energy Studies, told ICIS the Russian-Ukraine war likely sharpened any search to secure gas supply and the motivation of some companies. “Libya has unfulfilled oil and gas production potential. It is then reasonable to think it could become a bigger supplier to the bloc, although the pattern in the last two decades has been quite limited growth,” he said. The country plunged into political turmoil with the overthrow of Gaddafi in 2011. Two opposing governments are currently fighting for power, one in Tripoli and the other in Sirte. “Broadly, Libya’s hydrocarbon industry over the past 50 years has proved relatively resilient to the political crises that have affected Libya domestically. Evidence of that is the continuity of operations in terms of oil and gas fields and exports. Production disruptions and export suspensions have been short, in the wider picture, and are risks priced to calculations of investments and any new gas deals,” he said. HIGHER IMPORTS IN 2023 Gas imports to Italy via the GreenStream pipeline have dropped since Gaddafi’s fall in 2011, shrinking from 9.4 billion cubic metres (bcm) in 2010 to 2.3bcm in 2011, according to data from the energy ministry. Gas continued to flow towards Italy, but at a much lower rate. Eni aims to use the 11bcm/year pipeline at its full capacity in 2023, the company said on earlier this month. This would mean average imports into Italy of 30.1mcm/day – well above the average 6.8mcm/day imported in the year to date. But higher imports in recent months hint Libyan supply is likely to grow. “Gas production and exports have been less disrupted than oil in general but even so, the long-term outlook for oil and gas is positive,” Barltrop said. “External factors would not be pushing international companies away from Libya much more than they would be doing from other countries in which companies operate such as in the Middle East or other North Africa regions.” Camilla Vitanza .

01-Mar-2023

SINGAPORE (ICIS)–Italian producer Eni, Japanese biotech firm Euglena and Malaysian state-owned energy major PETRONAS on Wednesday said that they are jointly studying the possibility of developing and operating a biorefinery at the Pengerang Integrated Complex (PIC) in southern Malaysia. "The three firms are currently carrying out technical and economic feasibility assessments for the proposed project, with the investment decision expected to be reached by 2023 and the plant targeted to be completed by 2025," they said in a joint statement. The biorefinery will be located adjacent to PETRONAS’ existing integrated refinery and petrochemical facilities. The biorefinery is expected to have a flexible configuration to maximise production of sustainable aviation fuel (SAF) for aircraft, as well as hydrogenated vegetable oil (HVO) for on-road vehicles, diesel-powered trains, and marine transportation. The biorefinery is expected to have the capability to process about 650,000 tonnes/year of raw materials to produce up to 12,500 bbl/day of biofuels, namely SAF, HVO, and bio-naphtha. "The raw materials to be used will not compete with those in the food chain such as used vegetable oils, animal fats, waste from the processing of vegetable oils, and other biomass including microalgae oils to be explored in the mid-term," the firms said. The planned biorefinery will use technology licensor Honeywell UOP’s Ecofining process, which was developed by Eni in cooperation with Honeywell UOP.

14-Dec-2022

LONDON (ICIS)–Versalis is on a journey to marry green chemicals technologies and recycling capabilities with products and markets to further enhance its well-developed presence in renewables, according to its CEO. In a conversation with ICIS before accepting the ICIS Power Players – Emerging Leader Award for 2022, Adriano Alfani stressed the importance of developing the company’s technological, production, and marketing position in green chemistry as its parent company, Italy’s energy major Eni, addresses the energy transition. Versalis started on its green chemicals industrial and business approach more than 10 years ago and is working alongside Eni to create new green feedstock chemicals and recycling capabilities. Alfani strongly believes that, in order to address the challenges of circularity, one technology is no better than another, the CEO said in London. And, as he accepted the ICIS award, he pointed to investments Versalis is making in mechanical and chemical recycling. “One technology is not better than another one, or it is not one or the other: We’re looking at all possible types of technology that enable us to create circularity,” he said. Versalis is well known for its drive into ‘green’ or biotechnologies as it strives to reduce its reliance on hydrocarbon feedstock and build viable, alternative process routes and markets for certain chemicals and polymers. As far as recycling is concerned, Versalis has said it will invest in mechanical recycling at the Eni site in Porto Marghera, on the Venice lagoon. It has also announced it is to build a first pilot chemical recycling plant in Mantua, north Italy. “We ae not looking on mechanical or chemical [recycling] as better, but as fully complementary, because we have to recycle. Circularity is very important for us,” said Aflani. Versalis acquired technology from Ecoplastic to recycle styrenic plastics at the site. Subsequently, phase two of the recycling project is based on the acquisition of Forever Plast. That gives Versalis the capability to recycle waste from rigid and expandable styrenics to polyethylene (PE). Porto Marghera is a key site for Versalis and its parent company Eni, where transformation of the oil refinery into a bio-refinery has been ongoing since 2014. The decision was taken in 2021, however, to make this a more green and sustainable site, Alfani said, by closing the steam cracker and increasing bio-refining capacity, as well as to invest in new technologies, such as one to produce isopropyl alcohol (also known as isopropanol, IPA). The transformation of the refinery means that Versalis’ carbon dioxide (CO2) footprint across all its assets is reduced by 20%. Versalis obtained in 2021 the International Sustainability & Carbon Certification (ISCC) Plus for monomers, intermediates, polymers, and elastomers produced from bionaphtha and chemicals recycling at Porto Marghera and at its Italian plants in Brindisi, Mantua, Ferrara, and Ravenna. The downstream products can be marketed as a ‘bio-attributed’ when made from bionaphtha and ‘circular- attributed’ when made from pyrolysis oil obtained from chemical recycling. Versalis counts a lot on investing in chemicals from renewables, or what some call biobased chemicals, Alfani said. The CEO said the journey started 10 years ago with the decision to transform the company’s production site in Porto Torres in Sardinia into a green chemistry hub. “We have worked very hard over the last 10 years in order to develop this type of technology, but also to develop not only the technology, but the marketing and the product that goes in this specific market. And we've been very happy with the success,” Alfani said. There has been investment in alternative technologies to make chemicals from renewables. Versalis was successful in acquiring the Mossi & Ghisolfi Group’s ‘green’ chemicals activities in 2018 and move into second generation bioethanol (ethanol from biomass) to tackle markets like advanced biofuels and also products based on bioethanol and disinfectants that were extremely useful through the pandemic. In March 2022, it increased its stake in Novamont and subsequently its commitment to the Matrica joint venture (JV) in Porto Torres that was established in 2011. “We are extremely happy of where we are in our journey,” he said in his conversation with ICIS. “Of course, the journey is a journey, so it means that we are still not finished.” Watch the ICIS Emerging Leader Award interview with Versalis CEO Adriano Alfani here Interview article by Nigel Davis

05-Dec-2022

20MW, 10MW PEM electrolysers to be built in Italy South Italy Green Hydrogen to receive grant REPowerEU target of 10m tonnes/year by 2030 LONDON(ICIS)–Both Enel and Eni will receive public funding from the Important Projects of Common European Interest (IPCEI) via its Hy2Use fund for electrolysers in Italy, Enel confirmed on 13 October. One of the projects will be based at the biorefinery in Gela, Sicily, where a 20MW electrolyser will be installed, with the second near Eni's refinery in Taranto where a 10MW electrolyser will be installed. Both of the technologies will be polymer electrolyte membrane (PEM) technology, Enel said. South Italy Green Hydrogen, a joint venture set up by the two energy companies, will be the recipient of the funding, however, no amount specific to the funding was announced. The announcement comes on the same day as the European Commission announced a €220m funding package for the support of COBRA in Spain for the production of renewable hydrogen, as well as one day after Smartenergy received consent for the construction of a 200MW renewable hydrogen plant in Sardinia. With the Russian military invasion of Ukraine, the European Union has committed to phasing out reliance on Russian energy by 2027, with hydrogen seen as a key component of the strategy going forward. Renewable hydrogen — hydrogen produced from energy sourced from renewable generation assets — has seen several projects receive backing recently, with the REPowerEU directive setting a target of 10m tonnes/year of domestic renewable hydrogen production by 2030.

13-Oct-2022

LONDON (ICIS)–The spot gas price in Europe dropped 45% from late August to late September, with the ICIS TTF month-ahead falling from almost $94/MMBtu on 26 August to just over $51/MMBtu on 23 September. The sharp decline has led some to hope that the worst of the energy crisis may be over. LNG tankers have diverted course to Europe to replace Russian pipeline flows, onshore storage sites have made good progress at filling up towards targets and companies are scrambling to start up new supply projects. However, prices remain at damagingly high levels for households and industry and are unlikely to return to the more ‘normal’ levels of early 2021 for some years to come. And while it is to be hoped that a mild, windy winter will see prices continue to drift lower over coming months, it remains quite possible that the market will be even tighter in 2023 than it was in 2022. RUSSIAN FLOWS The biggest driver of the increase in prices has been the decline over the past year in Russian pipeline gas to Europe. There was a downturn in the second half of 2021, followed by growing concerns after the start of the war in Ukraine in early 2022, and then over the last month a complete cessation of flows through the Nord Stream 1 pipeline through the Baltic Sea to Germany. Despite that ongoing decline, Europe still received a lot of Russian gas over the past year, which helped to supply it over Winter 2021/22 and helped to refill storage over Summer 2022. From September 2021 to August 2022 ICIS data shows that Russian pipeline gas supplied Europe and the UK with around 99 billion cubic metres (bcm) out of a total 461bcm of supply, some 21% of the total. Russian flows could be substantially lower than that across Winter 2022/23 and into Summer 2023. This could soon drain the stored gas that Europe has built up, potentially leaving storage largely empty at the start of next summer and leaving a real struggle to fill it back up for Winter 2023/24. Modelling by ICIS’ team of cross-commodity analysts shows that Europe needs to cut its gas demand by some 15% to maintain security of supply even in a scenario of average winter temperatures and some limited Russian volumes continuing. A colder-than-normal winter, a failure to make targeted energy savings, or further reductions to Russian supplies raises concerns not just for the coming winter, but for the one after too. 10% SHIFT IN LNG Europe, including the UK, took in an extra 10% of global LNG supplies during January-August 2022 compared with the same period of 2021, increasing its market share to 28% from 18% the year before, according to ICIS LNG Edge ship-tracking. Over the year as a whole that extra 10% of the global LNG market could amount to additional supplies into Europe of 40 million tonnes, equal to some 55bcm of pipeline gas. However, while that is a massive shift, it has come at huge expense, driving spot prices higher, and taking much needed supply away from other importers, such as India, Bangladesh and Pakistan, and China, who have been cutting back on production of fertilisers and increasing their consumption of dirtier fuels like coal. And while 55bcm of extra supply might be enough to compensate for the decrease in Russian flows over the past 12 months to 99bcm from the 145-150bcm/year level seen in Calendar Years 2020 and 2021, it would not be enough to compensate for further declines. Changes in the LNG market have largely been a redistribution of existing flows. It takes several years to build new liquefaction facilities, and while the market is responding with final investment decisions in new projects and renewed attention to upstream production, there is limited new gas due to reach the market in 2023. Italian ENI is expected to start up its 3.4 million tonnes per annum Coral South project offshore Mozambique before the end of 2022, with all its output being sold to BP. For the following year, BP as operator could start up both the 2.5mtpa Tortue project offshore Senegal and Mauritania and the 3.8mtpa Tangguh train 3 project in Indonesia. Major new US projects have gained approval in recent months, but they, and Qatar’s giant North Field East and North Field South projects that will raise Qatar’s output from 77mtpa to 126mtpa, will not be producing cargoes until the second half of the decade. It’s commonly said in commodity markets that “the best cure for high prices is high prices.” Markets are cyclical in nature, and extreme price spikes spur a great deal of innovation and investment in new supply, which should bring gas prices down over time. Measures are also being taken to cut consumption and boost alternative energy sources. But new supply requires complicated commercial negotiations, massive construction projects and new fleets of ships. While spot gas prices will fall over time, a return to more “normal” levels may not come soon. KEY FACTORS Apart from Russian flows, key factors to watch over coming weeks and months will be whether the 15mtpa US Freeport LNG plant restarts on time in November after shutting due to a fire in June, the availability of nuclear power generation in France after recent maintenance issues and, as always, the weather, with the difference in demand between a mild winter or an unusually cold one being the biggest remaining variable of all.

26-Sep-2022