Gas supplies to Europe still face geopolitical risks, Italian TSO warns

Although the situation on energy markets has eased considerably over the past two years, Europe’s energy security still faces a number of risks. Italy’s gas transmission system operator recently said it was taking additional measures to guard against geopolitical risks ahead of next winter. One of the main risks for Europe remains the Russia-Ukraine conflict and uncertainty over gas transit through Ukraine after the end of this year.

Europe is not currently facing an acute shortage of natural gas, but the continent’s energy security remains a frequent topic of discussion. In addition to changes to the rules governing gas storage filling at European level, capacity to import liquefied natural gas (LNG) has also been significantly expanded in recent years.

"In Italy, we are preparing for winter in the best possible way, including by filling underground storage facilities, which are now more than 92% full, giving us an adequate safety buffer," said Stefano Venier, CEO of Snam.

He said Italy’s energy security could be further strengthened by the additional flexibility provided by the LNG terminals the country operates. One of them is the Livorno terminal, which is expected to return to service during October after a planned outage.

Venier told Montel that further steps to strengthen energy security were necessary given rising geopolitical instability amid developments in Ukraine and the Middle East in recent months. These have also led to an uncertain outlook for gas supplies.

"It is difficult to make forecasts in a context as unstable as the current one, particularly with the contracts for gas transit through Ukraine nearing their expiry," Venier said.

One of the main uncertainties for the European gas market is the aforementioned transit of Russian gas through Ukraine. The current five-year contract expires at the end of the year, and it remains unclear whether Russian gas will continue to flow through Ukraine in January. Although Russian gas supplies now account for only a fraction of their historical levels, a possible end to flows through Ukraine would still affect the European market.