Italy Takes Top Spot as Europe's LNG Importer Amid Soaring Prices
Italy has become Europe's top importer of liquefied natural gas (LNG) in July, bucking the trend across the region where purchases have slowed due to soaring prices. The country's traders have been taking advantage of government incentives to buy LNG and fill up storage sites, despite the high costs.
According to ship-tracking data compiled by Bloomberg, Italy leapfrogged its peers this month for the first time in records going back to 2017. The power sector in Italy is heavily reliant on gas, with energy needs jumping during recent heat waves. However, traders have continued to buy LNG using incentives, giving Italy a significant leg up on nations like Germany and France, which are lagging behind.
Italy's storage regulation contains strict refilling targets and fines for not meeting them. The country's facilities are currently 75% full, the highest among Europe's top markets, but still below the five-year seasonal average. In contrast, Germany's gas inventories are at a record low of 47%, while France's are 56% full after facing some capacity restrictions.
Gas prices have roughly doubled so far this year due to war and supply disruptions in the Middle East. European gas futures have added more than 30% this month, with analysts warning of mounting winter risks. Goldman Sachs Group Inc. has predicted a possibility of prices shooting up to €100 a megawatt-hour in December, 75% above current levels.
Agostino Scornajenchi, CEO of Italian gas network operator Snam SpA, said that 'it's likely that gas prices will continue to be in tension over the coming months.' Germany and other European countries may need to accelerate storage injections soon, he warned.