May 2024, Vol. 251, No. 5
Features
Italy's Gas Pipeline Renaissance: A Strategic Move Towards Energy Dominance
By Eugene Gerden, P&GJ International Correspondent
(P&GJ) – Italy plans to actively develop its gas pipelines’ network in years to come with the intention of serving as the biggest gas hub in Europe and the entire Mediterranean region.
The achievement of this goal will be part of ambitious plans lain out by the country’s Prime Minister Giorgia Meloni to increase the influence of Italy in the Mediterranean through a more active imports and exports of pipelines’ gas. In addition, the country is also increasing its energy security and eliminating gas supplies from Russia, which, according to recent statements of CEO of the Italian gas Eni Claudio Descalzi, should occur by the winter of 2024-25.
Prior to Russia’s invasion in Ukraine, the gas pipelines’ sector of Italy was primarily oriented toward gas imports from Russia – the main gas supplier to Italy for many years However following the events of Feb. 24, 2022, the situation changed, as most of these supplies were suspended.
While Italy has not yet stopped buying gas from Russia, according to data of Snam (the company that manages the Italian gas pipeline network), in the first 10 months of 2023 Russian gas accounted for only 4.5% of Italian gas imports. The decline is significant, given that Russian gas accounted for 40% in the overall structure of gas imports to Italy in 2021.
Since the second half of 2022, the Italian network, which consists of about 22,370 miles (36,000 km) of pipelines (94% of which operated by SNAM) has been transforming, switching on the supplies of gas from the countries of Mediterranean Africa.
Given Italy’s geographical location between Central Europe and Mediterranean Africa, many local experts frequently reported on the possibility of Italy becoming the main “collector” of African gas, and supplying of Europe, as a natural hub. With the supplies of Russian pipeline gas to the EU have declined to minimum levels, conditions for achieving this are much greater.
So far, implementation of these plans has begun through the existing Mattei Plan – a state decree, which involves the increase of gas supplies from major Mediterranean gas-producing nations.
Since Italy is one of the largest gas consumers in Europe with 2.58 Tcf/a (73 Bcm/a) and a major importer – 90% of the gas it consumes.
With Italy’s domestic gas production standing at 106 Bcf (3 Bcm), the expansion of its pipelines’ network to the south is of obvious strategic importance for the country.
Italy’s proximity to Algeria, Libya and Egypt – three strategic gas suppliers in the region – creates conditions for more active imports of gas from pipelines from these potential sources. The Mattei Plan involves signing agreements with major African gas-producing nations for the imports to Italy for export to various European states, both in central and northern regions of the continent.
Currently, Italy receives 529 Bcf (15 Bcm) directly through regasifiers and is connected to North African suppliers via two gas pipelines, the Transmed 1.06 Tcf (30 Bcm of capacity) for Algerian gas and the Greenstream 282.5 (8 Bcm) of Libyan gas capacity.
The Greenstream connects the Libyan Mellitah field to Gela, Sicily. The Greenstream gas pipeline was inaugurated in 2004 by the former Prime Minister Silvio Berlusconi and Muammar Gaddafi.
The success of making Italy a large European gas hub will depend on the possible expansion of existing pipelines, such as the Trans-Adriatic Pipeline (TAP) from Azerbaijan, the development of EastMed Poseidon from the Eastern Mediterranean, the regasifiers in southern Italy and the GALSI gas pipeline from Algeria.
Concerning TAP, which is the gas pipeline that transports Azerbaijani gas to Italy, at present TAP’s capacity is about 353 Bcf/a (10 Bcm/a), but the Italian government plans to double it by 2027.
According to statements, from Italian Minister of Economic Development Adolfo Urso implementation of these plans and increase of the supplies of gas from Southern direction is of strategic importance for Italy.
“By 2027 we will completely suspend gas supplies from Russia and begin massive supplies of pipeline gas to other countries,” Urso said. “This will allow Italy to become the European gas hub already in the short-term.”
Already, some progress in this field has already been achieved. According to official state data, pipeline gas, entering Italy from the south, more than doubled in 2023 by volume vs. 2020. A little more than half of the 2.24 Tcf (63.4 Bcm) of gas supplied to the country’s network in 2023 was shipped to Southern Italy through the Transmed, TAP and Greenstream pipelines, compensating for the poor flows coming from the entry points in Northern Italy.
As Massimo Derchi, chief operations officer of Snam recently told the Italian Ilsole 24 business publication, the importance of south for the entire Italian pipelines’ sector has significantly increased in recent months.
“Currently, the South of Italy is a center of a great energy revolution, which ensures energy security of the entire country,” Derchi said. “Southern Italy is turning into a strategic gate of entry of gas for today and for hydrogen tomorrow.”
According to some Italian analysts, such transformation is especially surprising given the traditionally large social stratification between highly industrialized northern Italy and the primarily agrarian southern provinces of the country.
While the plans of SNAM and the Italian government to create conditions that further increase gas supplies via southern Italy grow, there remains a lack of requisite infrastructure in place and questions concerning the political and economic stability of major supply markets of North Africa, especially Libya.
Italy has three regasification terminals – the onshore one of SNAM in Panigaglia (La Spezia), the offshore one of LNG Adriatic in Porto Viro (Rovigo) and the FSRU of Livorno – with a capacity of 600.35 Bcf (17 Bcm) – close to capacity.
Recently SNAM spent about $1.52 billion (1.4 billion euros) for two units in Piombino (Golan Tundra) and Ravenna (BW Singapore), with the aim to increase capacity by 37%.
Still, despite such expansions, analysts say at least three more FSRUs should be launched, and that further upgrades and expansions should be made to Italy’s pipeline network.
Key to this would be the elimination of the bottleneck in the Apennines region, which limits the potential of more active gas flows from the southern to northern part of the country.
In the North, there is a possibility that the problem has been addressed for now with plans by SNAM to build the Linea Adriatica. SNAM spokesperson Luigi Maria told P&GJ that there will be an alternative backbone to the one that currently exists.
“We plan to invest 2.5 billion euros [$2.71 billion], while additional transport capacity will be equivalent of more than 10 Bcm of annual flow,” he said. “This represents the most important Italian gas transport infrastructure intervention in the last 10 years.”
SNAM said it plans to will add more than 265 miles (425 km) of new hydrogen ready pipelines. The first phase of work (approved and eligible for REPowerEU funds) is scheduled to begin in May and be completed by 2026. It will increase daily transportation capacity from 4.44 Bcf/d (126 MMcm/d) to 4.63 Bcf/d (131 MMcm/d).
The second phase will be completed by 2027 and will increase daily transport capacity another 12.7% to 5.3 Bcf/d (150 MMcm/d).
Successful implementation of the project will unblock the bottleneck between Abruzzo and Umbria and to bring gas from the south to the north of Italy and to Central and Northern Europe in significant volumes.
Due to the planned acceleration of pipeline construction, local analysts expect a significant growth of demand for pipe and related materials within the country, which could result in supply chain issues that will need to be addressed.
This has been recently confirmed by Raffaella Marcuccio, Procurement and Material Management director of Italgas – Italy’s leading distributor of natural gas told P&GJ.
“The Italian pipelines’ sector is quite active, and it is involved in production of PE, PP and steel pipelines,” Marcuccio said. “Major pipeline suppliers and vendors are not linked solely to the gas distribution sector.”
He cited the sector’s involvement in producing and delivering pipelines for various purposes such as water supply, fuel gas distribution, industrial applications, telecommunications, irrigation, geothermal, district heating, and sewerage systems.
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