Italy to begin gas refilling next month to avoid price spikes

Rome: Italy, the EU’s third-largest economy and the country holding the second-biggest natural gas storage space in the bloc, plans to begin refilling its sites as early as February, to avoid price spikes later in the year, Italian Energy Security Minister, Gilberto Pichetto Fratin, said on Thursday.

“Due to ongoing geopolitical tensions and possible speculation, there is a risk for 2025 that wholesale gas prices next summer will be higher than next winter, as was the case during the energy crisis of 2022,” Pichetto told Parliament.

Countries and companies typically buy gas to refill storage between April and October, the so-called injection season, when household gas demand is lower after winters in the northern hemisphere end.

But Italy now wants to avoid a surge in prices, which could materialize in the summer as Europe has been going through its gas storage at the fastest pace in years.

The Dutch TTF price, the benchmark for European gas trading, hit earlier this week levels last seen in October 2023, amid the halt of Ukrainian transit of Russian gas, and the sub-zero temperatures in many of the biggest gas-consuming economies in northwest Europe that are depleting storage levels at the fastest pace in eight years.

Italy’s Pichetto also urged the EU, again, to extend the cap on natural gas prices but set the cap at a much lower level, to avoid fresh shocks in energy bills.

“We are campaigning for structural mechanisms to be put in place to prevent speculation from driving up gas prices on the TTF,” the Italian minister told Parliament.

The cap on gas prices, the so-called “market correction mechanism,” will be triggered if the month-ahead price on TTF exceeds $185 (180 euros) per MWh for three working days.

According to the Italian minister, the cap on natural gas prices needs to be lowered to $51-$62 (50-60 euros) per MWh.