Italy calls for EU gas price cap at 60 euros per megawatt hour

By Giuseppe Fonte and Francesca Landini

ROME (Reuters) -The European Union should extend its emergency cap on gas prices and set a ceiling of 60 euros per megawatt hour to prevent a possible energy price shock, Italy's Energy Minister Gilberto Pichetto Fratin said on Friday.

Fears of an energy shock have risen after Ukraine refused to renew a gas transit agreement with Russia, marking the end of decades of Moscow's dominance over Europe's energy markets.

The EU's existing price cap expires at the end of this month and only applies if European gas prices exceed 180 euros per megawatt hour, a level that has not been reached since the early days of the Russia-Ukraine conflict.

"I think the EU should at this point renew the price cap -- and we asked for it -- but not at 180 euros, now it should be set at 50 or 60 euros," the Italian minister said during a radio interview.

"This would put a brake on purely financial transactions, which have nothing to do with the raw material but burden households and businesses."

The benchmark front-month gas contract at the Dutch TTF hub was up 0.4 euros at 50.17 euros per megawatt hour at 1334 GMT, the highest level in over a year, according to LSEG data.

The halt in Russian gas flows and colder-than-average weather could drive the price towards 84 euros, Goldman Sachs said in a report.

Italy's energy minister said the country had enough gas reserves to ensure there would be no disruption over the next two months.

"I reassure everyone, we have no problems. The country's gas storage system is filled to almost 80%" of its capacity.

Italy has gradually increased liquefied natural gas import capacity since 2022 as part of plans to replace Russian supplies.

With a new floating terminal due to start commercial operations early April, Italy expects to be able to import up to 28 billion cubic metres of liquefied natural gas a year, the same amount it got via pipeline from Russia in 2021.

Total gas demand for the country is estimated at around 61 billion cubic metres for last year, with Algeria and the Nordics among the main suppliers.

(Editing by Christina Fincher)