Italy was one of the first European countries to completely stop domestic coal production, with the last facility closing in 2001. The importance of coal in Italys energy needs declined to only 7.3 percent in 2003, one of the lowest levels in the EU. The country consumed 24.2 million short tons (Mmst) of coal in 2003, the bulk of which fueled electricity generation. According to Eurostat, Italian imports of coal during the first ten months of 2005 came principally from South Africa (20 percent), Colombia (13 percent), and Australia (12 percent).
Italy had 69.5 gigawatts of installed electricity generating capacity in 2003. In that same year, Italy generated 270 billion kilowatthours (Bkwh) of electricity, while consuming 302 Bkwh. Most generation comes from conventional thermal sources (82 percent), with smaller amounts from hydroelectricity (13 percent) and other renewables (4 percent). Electricity imports made up for the countrys supply shortfalls, and according to Eurostat, the largest sources of these imports in 2003 were Switzerland (51 percent), France (35 percent), and Slovenia (9 percent). Italy began liberalizing its electricity sector in 1999, initially allowing only large customers to choose their own supplier. Liberalization has now spread to the majority of the retail market. As part of the liberalization, the Italian government began to privatize Enel, the former, state-owned power monopoly that previously controlled all aspects of the electricity sector. In 2000, the Italian government forced Enel to sell 27 percent of its generating capacity, and to that end, Enel created three new, independent companies: Elettrogen, Eurogen, and Interpower. Along with removing Enels monopoly on electricity generation, distribution, and transmission, the Italian government began to divest its holdings in the company: as of April 2006, the government held 31 percent of the companys shares.

Imports of LNG constitute a very small portion of Italys total natural gas imports. The country has a single LNG receiving terminal at Panigaglia, located on the countrys western coast near La Spezia. According to Snam, the terminals operator, the Panigaglia facility produced 240.9 Mmcf/d of natural gas in 2005.Natural gas companies are planning to construct several LNG receiving terminals in Italy, in order to meet estimated future demand. BG plans to construct an LNG receiving terminal in Brindisi, along Italys southeast coast. In late 2004, it awarded a contract for construction of the facility to Italys Tecnimont. BG expected the facility to begin operations in 2009, with an initial output capacity of 770 Mmcf/d. In March 2006, the federal government overturned a ban by local authorities on the construction of the project, who had opposed the terminal on environmental grounds. BG has already secured a supply of LNG for the terminal from its own integrated production-gasification project in Egypt.

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.

According to the Oil and Gas Journal (OGJ), Italy had proven crude oil reserves of 622 million barrels in 2006, the third-largest in the EU behind the UK and Denmark. The country consumed 1.8 million barrels per day (bbl/d) of oil in 2005, a 3 percent decrease from the previous year. A general slowdown in economic growth was the principle cause of the decline in oil consumption. Italys domestic oil production in 2005 (total liquids) was 155,000 barrels per day (bbl/d), sufficient to meet only 9 percent of domestic oil needs. As a result, according to Eurostat, Italy imported 1.8 million bbl/d of crude oil in 2005, with the largest sources of these imports being Libya (25 percent), Russia (23 percent), and Saudi Arabia (13 percent).
Eni is the largest oil and natural gas company in Italy. In 1992, the Italian government passed legislation to transform Eni from a wholly state-owned enterprise into a joint-stock company. The government has slowly reduced its holdings in the company since the 1990s, but it still remains the single-largest shareholder with about one-third of total shares. In 2005, Enis global hydrocarbon production (including liquids and natural gas) amounted to 1.7 million barrels of oil equivalent per day (boe/d), making it one of the largest oil and gas companies in the world. The companys hydrocarbon reserves totaled 6.8 billion boe in 2005, spread throughout the globe.

Italy is one of the worlds largest economies and a founding member of both the European Union and the North Atlantic Treaty Organization. Italy relies on imports for almost all of its oil needs. Natural gas consumption has grown rapidly in Italy in the past decade. The last coal mine in Italy closed in 2001. Italy has faced chronic blackouts during peak electricity usage, due to shortage of domestic generation capacity. Italy does not generate electricity using Nuclear energy and actually imports it from Slovenian nuclear power plant.  To overcome these deficiencies Italy is looking for alternative viable fuel replacements. As Italy is well endowed with renewable energy resources, such as solar, biomass and geothermal energies, which can very well be captured and utilized for Generating Power. Italy as a signatory of Kyoto Protocol must reduce its Carbon-dioxide emissions by 6.5 Percent below the 1990 levels before 2012, but struggles hard with 20 percent above the target.

Environmental awareness has grown in Italy in recent years, though air pollution remains a serious problem. Because of Italy's heavy reliance on imports to meet its energy needs, energy security and diversification of energy sources are a top priority in Italy's energy strategy. Italy is well endowed with renewable energy resources, such as solar, biomass and geothermal, which could be captured and utilized for energy.

Imports of LNG constitute a very small portion of Italy's total natural gas imports. The country has a single LNG receiving terminal at Panigaglia, located on the country's western coast near La Spezia. According to Snam, the terminal's operator, the Panigaglia facility produced 190 Mmcf/d of natural gas in 2004.

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.

Eni controls over 90 percent of Italy's domestic natural gas production, with the company reporting that it produced 432 Bcf in 2003. Almost half of the company's production comes from offshore fields in the Adriatic Sea, including Barbera, Porto Garibaldi/Agostino, Angela/Angelina, Cervia/Arianna, and Porto Corsini Mare Ovest.

According to OGJ (1/1/05) , Italy has proven natural gas reserves of 8.0 trillion cubic feet (Tcf), the fourth-largest in the EU. In 2004, Eurostat reported that Italy produced 440 billion cubic feet (Bcf) of natural gas, a decrease of 7 percent from 2003 and an 11 decline percent from 1985.