Italy set to tap into strategic gas reserves

| Wed, 02/15/2006 - 05:36

Italy is expected to tap into its strategic gas reserves on Tuesday or Wednesday because of rising demand caused by continued cold weather and chronic reductions in natural gas arriving from Russia.

Italy has some 5.1 billion cubic meters of gas in its strategic reserves and government experts forecast that at least two billion will be needed to deal with the current shortage.

Russia delivered 12.2% less gas than Italy ordered on Tuesday while demand jumped by 22.2%, the result of a 31.5% increase for industrial use, a 24.6% jump for the production of electricity and a 19.4% rise for domestic use.

The increase followed several days of falling demand brought on by the application of government restrictions regarding thermostat levels and the number of hours central heating systems can operate.

If Italy has to dip significantly into its strategic reserves, then its exports of gas-produced electricity will be cut back to help cover domestic needs. Tuesday's 12.2% cut in gas from Russia followed five days of over 16.% reductions and several days of reductions in the neighborhood of 8%.

taly usually taps into its normal gas reserves during the winter but this year these reserves were significantly depleted because of a major reduction in gas from Russia in January.

Russian gas imports in January fell by an average of 3.7%, with a peak of 23.8% at the start of the month, mostly because of a political flap between Moscow and Kiev after Russia hiked up what it charges Ukraine for its gas.

Ukraine responded by siphoning off gas heading to Europe when its supplies were cut back.

Reductions in the gas flow later in the month were due to a long and severe cold snap in Russia and were in line with seasonal cutbacks to meet domestic needs. This situation extended into February and was aggravated by Ukraine allegedly again taking Russian gas from pipelines running through its territory to make up for its shortages.

Italy's gas crisis has spilled into the political arena with the center-left's candidate for premier in April's elections, Romano Prodi, criticising the energy policies of incumbent Premier Silvio Berlusconi. Italy, Prodi said on Tuesday, is the only European country being forced to tap into its strategic reserves even when its neighbors have been subject to similar reductions in gas arriving from Russia.

Industry Minister Claudio Scajola repeated on Tuesday that the problem was due to the unusual cold and the cutbacks and that the situation should return to normal once winter ends.

In order to meet Italy's electricity demands, the government has authorized the reopening of power plants
closed down two years ago because of environmental concerns about their fuel.

Italy gets just over a third of its gas from Algeria and just under a third from Russia. Other suppliers include
Norway and Libya.

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