ROME: A spike in Italian natural gas imports from northern Europe and Austria in September, paired with a dip in supply from North Africa, shows that short-term delivery contracts are getting more competitive compared to longer-term contracts, traders say.
Italy’s grid is supplied with gas from Algeria, Libya, Russia via Austria and northern Europe via Switzerland. Traditionally, the bulk of these imports have been based on long-term contracts, particularly supply from North Africa and Russia via Austria. But supply from shorter-term contracts has jumped as European prompt prices plummeted this September due to high levels of gas held in storage sites across the continent, reducing demand.
Gas imports from northern Europe to Italy through the Swiss Gries Pass entry point have been 35 million cubic metres (mcm)/day in September so far, 12.4mcm/day higher than the previous month and 10.5mcm/day higher compared to the same period last year. Supply via Switzerland tends to be more affected by the prompt price.
Imports through Austria’s Tarvisio entry point also rose by 22.4mcm/day to 74.6mcm/day month on month in September. Russian imports via Austria are typically derived from long-term contracts, although there is some flexibility to increase imports from short-term contracts when Austrian prompt prices are cheap enough. Flow from Algeria through the Mazara del Vallo entry point, also mainly based on long-term contracts, fell by 19.9mcm/day to 35.1mcm/day month on month in September.
