11556 Italy planning a nuclear renaissance

Of Europe's large industrialised countries, Italy has to fight the toughest battles to secure its energy supplies. For many years hopes have been pinned on gas – but now nuclear is back in the picture, Martin Quinlan writes
IN 1987, a year after the nuclear accident at Chernobyl, Italians voted to shut down and decommission their nuclear power stations – and the country became the only large industrialised state to do so. But now, the tide has turned. The government has set its sights on a new nuclear construction programme under which between eight and 10 reactors will be built, with the aim of supplying a quarter of Italy's electricity needs in 2030.
According to Claudio Scajola, minister for economic development, in October, the shut-down decision was a "terrible mistake", which cost the country €50bn ($72bn), has resulted in electricity prices "one-third higher than in most of Europe" and has led to a very high reliance on gas, most of it imported. He wants the legal, regulatory and technical frameworks for a new nuclear business to be in place in time for construction to start by 2013.
Enel, the country's largest electricity producer, is likely to be first away in the nuclear construction race. The 31.2% state-owned firm has announced plans for its first new facility to be at either Garigliano, Latina or Montalto di Castro – all previous nuclear sites, although the two units at Montalto di Castro, nearly completed, never started up. Enel has a co-operation agreement with Electricité de France under which it is rebuilding its expertise in nuclear technology and participating in ventures involving the European Pressurised-water Reactor (EPR).
Paradoxically, the shut-down of Italy's nuclear power stations – there were four in operation and others were under construction and planned – has not freed the country from nuclear electricity. It has led to high electricity imports – in recent years about 14% of Italy's electricity requirements have been imported, mostly from highly nuclear-dependent France and Switzerland. The country has become the world's second-largest importer of electricity, after Germany.
Vulnerability in energy, because of its small indigenous resources, has always been the main theme of Italy's energy planning – and was behind the creation of Eni in 1953 as the first state-owned integrated oil company, with ambitions of competing head-to-head with the majors. (After successive privatisations, the state interest has fallen to 20.3%.) State control and government-to-government political links gave Eni great leverage – but critics argue that vulnerability was not reduced.
The firm's emphasis initially was on oil, searched for particularly in north African countries and refined at numerous new facilities constructed in Italy. However, the consequence of its efforts was that, when oil prices escalated in the early 1970s, Italy was one of the most badly affected countries with an oil reliance that had built up to 75% of primary energy consumption.
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The emphasis then switched to gas, imported initially from Algeria through the world's first deep-water pipelines and later from as far as Russia and Norway. According to the BP Statistical Review of World Energy, gas covered 39.0% of Italy's primary energy consumption in 2007 – the highest gas reliance in western Europe. The oil share had fallen to 46.4%, with coal and hydro-electricity providing 9.7% and 4.9% respectively (see Figure 1). Italy's own production of gas, never vast, is declining rapidly and amounted to only 8.9bn cubic metres (cm) in 2007. Accordingly, import dependence is high: in 2007 the country's pipeline imports amounted to 23.8bn cm from Russia, 22.1bn cm from Algeria, 9.2bn cm from Libya, 9.0bn cm from Norway, 6.1bn cm from the Netherlands, 1.5bn cm from Germany and 0.8bn cm from the UK – a total of 72.5bn cm. In addition there were liquefied natural gas (LNG) imports, all from Algeria, of 2.4bn cm (see Figure 2, p24).
Eni has built up an elaborate gas-import infrastructure and, despite the planned reintroduction of nuclear electricity, is still expanding it – the firm forecasts that Italy's annual growth in gas demand, driven mainly by use in electricity generation, will average 2% to 2020, when demand will have reached 111bn cm. Eni is in the course of a €5.6bn investment programme running until 2011, as a result of which its international gas-pipeline capacity will increase by 15bn cm/y by the end of this year.
Capacity for Russian and Algerian gas will see the largest increases. The TAG pipeline, which carries Russian gas across Austria to Tarvisio on the Italian border, is to have its capacity raised from 37.0bn cm/y to 43.5bn cm/y in two stages, with completion due at the end of 2009. The TTPC pipeline, transporting Algerian gas across Tunisia for delivery into the Trans-Mediterranean (TMPC) pipeline, will see capacity increase from 27.0bn cm/y to 33.5bn cm/y, with completion delayed from October 2008 to the first quarter of this year. Transport capacity for gas from the Netherlands will also rise, with an increase in the capacity of the TENP pipeline, crossing Germany, from 15.5bn cm/y to 17.5bn cm/y by the end of the year.
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Eni says the subsea TMPC pipeline already has the necessary 33.5bn cm/y capacity to handle the increased flow through the TTPC line. There is also enough capacity in the 20.0bn cm/y Transitgas pipeline across Switzerland, through which gas from the Netherlands and Norway enters Italy at Passo Gries, but a 2.0bn cm/y expansion is being considered for part of the line. Also planned is an upgrading of the Greenstream pipeline, through which Libyan gas flows under the Mediterranean to Sicily, with capacity due to rise from 8.0bn cm/y to 11.0bn cm/y by 2012. Eni's competitors are also increasing their import capacity. Edison, the country's second-largest gas marketer with sales of 4.4bn cm in 2007, is the lead company behind the planned Gasdotto Algeria-Sardegna-Italia (Galsi) pipeline, planned to run from the eastern Algerian coast to Sardinia and to continue subsea from the north of the island into northern Italy.
After long delays, the Galsi project seems to have impetus again, but there are still uncertainties about whether the revised start-up target – 2012 – will be met. Galsi is due to flow 8.0bn cm/y to the mainland with, eventually, about 2.0bn cm/y being taken out in Sardinia. Backers are Edison, 20.8%, Algeria's state-owned Sonatrach, 41.6%, Enel, 15.6%, Sfirs (the Sardinian regional government's investment authority), 11.6%, and local Hera Trading, 10.4%.
Edison is also optimistic that its planned Greece-Italy pipeline will move into construction this year, with start-up planned for 2012 and initial deliveries of 8bn-10bn cm/y. The line will connect to the Turkish network, giving access to gas from Caspian Sea and Middle East sources, and will cross northern Greece, entering Italy at Otranto after a 200 km crossing of the Ionian Sea. Last year, Edison and Greece's Depa set up a 50:50 subsidiary, Poseidon, to own the subsea section, and have agreed that Depa will own the 600 km section in Greece.
[B]LNG – still planning[/B]
In view of Italy's high gas reliance, it is surprising that LNG imports are not greater – but the explanation is the extreme difficulty potential importers have experienced in winning planning approvals for regasification terminals from local and regional governments. Eni has its Panigaglia terminal, on the northern Mediterranean coast, which was completed in 1970 and now has a capacity of 3.5bn cm/y. There are plans to raise this by 4.5bn cm/y by 2014.
The only other terminal, due to start-up in the early months of this year, is the Edison-led Adriatic LNG facility – the world's first offshore LNG-import terminal, constructed 15 km off Porto Levante on the northern Adriatic coast (PE 10/08 p30). Adriatic LNG – made up of Qatar Petroleum and ExxonMobil with 45% each and Edison with 10% – was holding an open-season process last month for prospective third-party users of the terminal, saying it expects third-party capacity to be available "during 2009". Edison has the right to use 80% of the terminal's 8.0bn cm/y capacity, leaving 1.6bn cm/y available for third-party users.
Edison had a long battle to win permits for its offshore terminal – but even more troubled is BG, which launched a plan to build an 8.0bn cm/y onshore terminal at Brindisi in the late-1990s. After intense opposition from local groups, authorisations were granted and construction work started in 2005. Opposition continued, however, and in February 2007 a criminal investigation was launched into allegations that BG staff had acted improperly to obtain the authorisations. The site was seized by the authorities and all work has stopped.
BG says the terminal's authorisations were suspended pending a full environmental-impact assessment, a process it started in January 2008. Last month, there were hopes that the environmental approval could be secured in the first quarter. BG says it is committed to the project and points out that, in contrast to Italy's other planned import terminals, the Brindisi facility has a dedicated source of LNG – the BG-operated liquefaction complex at Idku, a short tanker-journey away on the Egyptian coast. However, with construction work having reached only an early stage, start-up within the next two years looks unlikely.
These problems have not deterred others from planning LNG import schemes. Numerous plans for terminals have been announced – invariably to a welcome from national government, but to opposition from powerful regional and local authorities. Most have now stalled.
Plans continue to be announced – most recently, France's GdF Suez has proposed a floating terminal 30 km off Ancona, on the Adriatic coast, targeting authorisation by the end of this year and start-up in 2012. Other plans involving larger companies include: Shell and Erg, for a facility at Erg's Priolo Gargallo refinery in Sicily; Gas Natural, for facilities at Trieste and Taranto; and E.On and Iride, for a facility off Livorno, near Pisa. Edison is still optimistic for a terminal at Rosignano, on the northern Mediterranean coast, which it plans to build with BP and Solvay, despite the environmental-impact assessment having been submitted over three years ago.