Finance
Fearing price moves, Italy to act quickly to build gas stockpiles
Published by Global Banking and Finance Review
Posted on January 23, 2025
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Published by Global Banking and Finance Review
Posted on January 23, 2025
ROME (Reuters) - Italy plans to make an early start on filling strategic gas stockpiles in 2025, the country's energy minister said on Thursday, as Rome expects gas wholesale prices to spike higher in the summer.
Gas is usually bought and stored between April and October when demand and prices are lower, to be sold later in winter when prices rise.
But Minister Gilberto Pichetto Fratin said in parliament Rome would start filling procedures as early as February to avoid risks of getting caught out by unusual price movements.
"Due to ongoing geopolitical tensions and possible speculation, there is a risk for 2025 that wholesale gas prices next summer will be higher than next winter, as was the case during the energy crisis of 2022," he added.
Germany is acting in a similar way as it is studying the possibility of contractors receiving subsidies to refill gas storage sites.
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 on Europe's energy markets.
The benchmark front-month contract at the Dutch TTF hub was little changed at 49.67 euros per megawatt hour (MWh), hovering near the highest levels for over a year, according to LSEG data on Thursday.
Pichetto also renewed calls for the European Union to extend an emergency cap on gas prices and prevent a possible energy price shock.
Brussels introduced a price limit of 180 euros per megawatt hour (eur/MWh) in December 2022, after months of cripplingly high energy prices caused by Russia slashing gas supplies following its invasion of Ukraine.
The scheme has never kicked in and the European Union intends to let it expire as scheduled at the end of this month.
"We are campaigning for structural mechanisms to be put in place to prevent speculation from driving up gas prices on the TTF," Pichetto said.
(Reporting by Giuseppe Fonte; Editing by Keith Weir)