The first annual gas storage auction for the fallwinter 202223 season was almost deserted and does not speak to the government’s goal of having high inventories at a time when commodity imports from Russia hence we are 38% dependent on consumption they are at risk because of the crisis with Moscow after the invasion of Ukraine, especially now that Russian President Vladimir Putin has asked to pay in rubles. The storage auction, held on March 21st by Stogit (Snam Storage, the Snam company that manages the storage), provided 6.76 billion cubic meters for free, an auction basis set by ‘Arera that represents a very favorable condition for represented companies that could have stored the purchased gas without paying the storage rent.
The abandoned auction
Well, out of 6.76 billion cubic meters of space, only 215.7 million have been requested and allocated. For what reason? Because the operators, i.e. the suppliers, explains Gionata Picchio, deputy director of Staffetta Quotidiana, have no economic interest in joining. Gas is now costing more than what is expected based on the current future for next winter. So why buy and stock today when the price is going down?
Storage, 12 billion cubic meters
Storage has always been functional for the industry, which actually took advantage of it last year when prices weren’t crazy. In 2021, Staffetta Quotidiana reports that at the first Stogit auction for seasonal modulation, in view of a supply of 6.76 billion cubic meters of space, almost 10 billion cubic meters of space were in demand with final allocations of “only” 3.8 billion cubic meters of space. But now storage has become a strategic issue of energy independence. The more gas there is in reserves, the less we have to import. There are about fifteen storage facilities and over 90% of the capacity is owned by Snam Storage (which offers about 12 billion cubic meters of capacity), then there is Edison Storage (with about 900 million cubic meters) and then Italgas Storage (230 million cubic meters). Meter). Then there is the strategic storage of over 4.5 billion cubic meters explains Picchio to which everyone is invited to contribute and which is a reserve that is never touched except in extreme emergency situations.
Cingolani: Ad hoc regulation or subject of last resort
The inconvenience of today’s gas storage was mentioned by the same Minister for Ecological Transition, Roberto Cingolani, in a report to the Chamber. If we had to store 10 billion cubic meters he said last year it was 23 billion, now it’s 15 billion, and there is an extremely significant economic obligation problem that discourages storage. The result of the first auctions shows that the critical points are real and that for the filling it will be necessary to intervene with an ad hoc regulation that requires a response from the operators, and failing that with an issue of last resort.
Visco: gas, big burden for consumers and industry
But in addition to the lack of storage facilities, the exploding gas prices threaten to plunge families and businesses into a crisis. The alarm sounded by Bank of Italy Governor Ignazio Visco at the Bloomberg forum on the Italian economy: With gas prices up 10fold in two years, there is a lot of stress for consumers and the industry involved with those prices cannot survive. Visco stressed how to respond to this difficulty is not responsible for monetary policy. On the other hand, strong coordination in response to the Russian invasion of Ukraine was important.