Libyan Gas Flows to Italy Climb as Russian Supplies Threatened

Libya is shipping the most natural gas to Italy in 11 months as Ukraine sanctions threaten to disrupt supplies from Russia, which meets almost a third of the southern European nation’s needs.

Libyan gas exports to Italy rose to 573 million cubic meters (20 billion cubic feet) in July, the most since August 2013 and about 15 percent of the country’s consumption, according to Italy’s grid operator Snam Rete Gas. Last month’s flows from Libya, which ships all of its pipeline gas to Italy, were still 14 percent below the same period in 2010, before the violent ouster of Muammar Qaddafi halted exports.

Ukraine passed a bill yesterday that may allow it to impose sanctions against Russia, increasing the risk of disruptions in gas transit to Europe. Italy uses 9 billion to 10 billion cubic meters of gas a month on average in winter, with Russian supplies making up an estimated 2 billion to 2.5 billion cubic meters, according to consultants Energy Aspects Ltd.

“It’s unlikely that Libya can ramp up gas exports to Italy to 2010 levels any time soon, so Italy will continue to depend on Russian flows that cross Ukraine,” Moses Rahnama, an analyst at Energy Aspects, said by e-mail Aug. 13. “With current storage levels, a cut-off to Russian flows means Italy would have to compete for Norwegian and Dutch flows.”

Italy’s gas inventories were 14.7 billion cubic meters as of yesterday, meaning storage facilities were 89 percent full, according to Gas Infrastructure Europe.

Flows Halt

Libyan gas flows to Italy halted for seven months in 2011 and for about a week in November, when protesters attacked the Mellitah oil and natural gas station 80 kilometers (50 miles) west of Tripoli. Russia’s OAO Gazprom boosted supplies to Italy during the November cut-off.

Italy shouldn’t count on gas flows from Libya as the political situation there isn’t improving, according to Thierry Bros, an analyst at Societe Generale SA in Paris. Feuding militias having been battling for weeks in the capital Tripoli and the eastern city of Benghazi in the worst unrest since 2011.

“Recent events suggest there is a greater risk of damage to oil and gas infrastructure,” Morgan Stanley analysts including Haythem Rashed said in an Aug. 6 report. “Damage to critical infrastructure in the last month such as Tripoli airport and Libya’s largest fuel storage depot are a clear sign of a deteriorating security situation.”

The Greenstream gas pipeline, owned by Rome-based Eni SpA and Libya’s National Oil Corp., links the Mellitah compressor station to the reception terminal at Gela, Sicily, where the fuel is let into the Italian gas transport network, according to Eni’s website.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Andrew Reierson, Rob Verdonck

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