According to OGJ, Italy had proven natural gas reserves of 8.0 trillion cubic feet (Tcf) in 2006, the fourth-largest in the EU. In 2005, Eurostat reported that Italy produced 421.5 billion cubic feet (Bcf) of natural gas, a decrease of 4 percent from 2004. The country consumed 3.0 Tcf of natural gas in 2005, 8 percent above 2004 levels. An increase in the construction of combined-cycle, gas-fired turbines (CCGFT) has been the principle driving force behind the increase in natural gas consumption. The maturation of Italys natural gas fields and the rapid advance in domestic consumption have increased the countrys reliance upon natural gas imports. According to Eurostat, Italys natural gas imports supplied 84 percent of the countrys domestic consumption in 2004, versus 59 percent in 1985. The largest sources of these imports in 2004 were Algeria (38 percent), Russia (32 percent), and the Netherlands (14 percent). In early 2006, Italy experienced a severe shortage of natural gas, caused by 1) a demand surge to meet heating needs caused by extremely low temperatures, and 2) shortfalls in Russian imports. The shortages forced the country to dip into its strategic natural gas reserve, and the experience highlighted Italys dependence upon external energy supplies.
Eni is the dominant actor in all aspects of the natural gas sector. The company controls almost all of Italys natural gas production. An Eni subsidiary, Snam Rete Gas S.p.A. (Snam), owns and operates the domestic natural gas transportation system. Another Eni subsidiary, Stoccaggi Gas Italia S.p.A. (Stogit) manages most of the natural gas storage facilities in the country. Finally, Eni subsidiary Italgas controls one quarter of the retail gas distribution market.Italy has mostly brought its natural gas sector into compliance with EU regulations concerning liberalization. These areas include the opening of the sector to new entrants; the unbundling of production, distribution, and transmission activities; and the freeing of gas prices from state control. Natural gas liberalization has slowly eroded Enis dominant position in the sector, with Enis share of total natural gas delivered to the national grid declining from almost 100 percent prior to liberalization to 68 percent in 2003. Besides Eni, the other major players in the Italian natural gas sector include Edison (majority-owned by Italian automaker Fiat and Frances Electricite de France) and Enel, the fomer electricity monopoly. There are also numerous, small companies in the retail distribution market that have arisen to challenge Italgas. One outstanding issue in Italys liberalization plans is Enis majority ownership of Snam; in 2005, the Italian government introduced legislation that would require Eni to reduce its holdings in Snam from 50 percent to 20 percent by 2007.
Eni controls over 80 percent of Italys domestic natural gas production, with the company reporting that it produced 350.5 Bcf in 2005. Important offshore natural gas fields operated by Eni include include Barbera, Porto Garibaldi/Agostino, Angela/Angelina, Cervia/Arianna, Porto Corsini, Mare Ovest, and Luna. The company is currently developing the onshore Pizzo Tamburino, Fiumetto, and Samperi fields in Sicily.
Italy has the third-largest natural gas transmission system in Europe. According to Snam, the system consists of 19,000 miles of pipelines carrying over 2.7 Tcf of natural gas per year. Italian law guarantees open and nondiscriminatory access to the system.
Most of Italys natural gas imports enter the country through international pipelines. The 670-mile Trans-Mediterranean (Transmed, also called Enrico Mattei) line runs from the Hassi RMel gas field in Algeria to Sicily, via Tunisia, where it interfaces with the domestic gas network. Completed in 1983 and doubled in 1994, Transmed has a capacity of 2.33 billion cubic feet per day (Bcf/d). There are plans to construct an additional compressor station along the Transmed that could increase capacity to 3.48 Bcf/d. The Trans-European Pipeline (TENP) and the Transitgas pipeline bring natural gas from northern Europe (mostly the Netherlands and Norway) into Italy, entering the country at the Passo Gries transit point near Milan. Italy imports natural gas from Russia at two entry points: via the Trans-Austrian Gas Pipeline (TAG) at Tarvisio, and via Slovenia at Gorizia.
In October 2004, natural gas flowed for the first time through the Greenstream pipeline linking Mellitah, Libya to Gela, Sicily. Majority-owned by Eni, the 370-mile Greenstream has a capacity of 970 million cubic feet per day (Mmcf/d) and connects Italy with the Western Libya Gas Project. In order to comply with Italian energy regulations, Eni has agreed to sell all gas supplied by Greenstream to other natural gas companies. Proposed Pipelines.In 2002, Algerias Sonatrach signed a deal with Italys Enel and Germanys Wintershall to form Galsi, a consortium to build another natural gas pipeline from Algeria to Italy. Current plans call for an onshore pipeline from Gassi RMel to El Kal, Algeria, then an underwater section to Cagliari, Sardinia. This is to be followed by an onshore section to Olbia, Sardinia, then a final, offshore pipeline to C.D. Pescaia, Italy. Galsi estimates initial capacity on the 910-mile line will be 970 Mmcf/d, and there are plans for a parallel power cable. In May 2005, Sonatrach signed letters of intent with twelve potential natural gas purchasers, covering the entire planned capacity of the system. Galsi plans to complete the $2-billion project in 2009-2010.In November 2005, government officials from Italy and Greece signed an agreement to build a $1.3-billion natural gas pipeline between the two countries. Current plans call for a 500-mile pipeline from northern Greece to south-eastern Italy, under the Strait of Otranto. The system will be an extension of a natural gas pipeline currently under construction between Greece and Turkey, allowing Italy potential access to natural gas supplies in Central Asia and the Middle East. The first natural gas shipments through the pipeline could occur by 2010.