The natural gas market in Italy (2004)

Natural gas consumption has grown rapidly in Italy in the past decade. Italy produced 0.5 Tcf of natural gas in 2004, while consuming 2.8 Tcf. An increase in the construction of combined-cycle, gas-fired turbines has driven the increase in natural gas consumption.

Italy’s natural gas imports supplied 84 percent of the country’s domestic consumption in 2004, versus 59 percent in 1985. The largest sources of these imports in 2004 were Algeria (38 percent), Russia (32 percent), and the Netherlands (14 percent).

Italy had proven natural gas reserves of 5.8 trillion cubic feet (Tcf) in 2007.

Sector Liberalization

Natural gas liberalization has slowly eroded Eni’s dominant position in the sector, with Eni’s share of total natural gas delivered to the national grid declining from almost 100 percent prior to liberalization to 68 percent in 2003.

Eni controls a large share of Italy’s natural gas production and owns and operates the domestic natural gas transportation system (Snam Rete Gas). Another Eni subsidiary (Stogit) manages most of the natural gas storage facilities in the country. Eni subsidiary Italgas controls one quarter of the retail natural gas distribution market.

Exploration and Production

Eni controls a large share of Italy’s domestic natural gas production and exploration, both offshore and onshore. Besides Eni, new domestic and international operators are developing exploration and production opportunities.

Pipelines

Italy has the third-largest natural gas transmission system in Europe, consisting of 19,000 miles of pipelines. Italian law guarantees open and non-discriminatory access to the system.

Most of Italy’s natural gas imports enter the country through international pipelines:

• Transmed from Algeria, having a capacity of 2.33 billion cubic feet per day (Bcf/d), expandable to 3.48 Bcf/d
• Trans-European Pipeline (TENP) and Transitgas pipeline from northern Europe (Netherlands and Norway)
• Trans-Austrian Gas Pipeline (TAG) at Tarvisio, and via Slovenia at Gorizia
• Greenstream pipeline linking Mellitah, Libya to Gela having a capacity of 970 million cubic feet per day (Mmcf/d) and connecting Italy with the Western Libya Gas Project.

Proposed new pipelines:

• Galsi, from Algeria to Italy (970 Mmcf/d)
• New pipeline from Greece and Turkey

Liquefied Natural Gas (LNG)

Imports of LNG constitute a very small portion of Italy’s total natural gas imports (at the La Spezia terminal with a capacity of 300 MMcf/d).

Natural gas companies are planning to construct several LNG receiving terminals in Italy, in order to meet estimated future demand.