European Gas Remains Vulnerable to Disruptions, Snam CEO Says

(Bloomberg) -- The possible end of the Russian gas transit agreement to Europe will have a “very negligible” impact on Italy. Still, the continent remains vulnerable with its increased reliance on imported cargoes, according to Snam SpA Chief Executive Officer Stefano Venier. 

“We are in a fragile situation given geopolitics and now — in Italy and Europe — we have exposure to LNG trading,” Venier said in an interview with Bloomberg TV’s Francine Lacqua. Tensions in the Middle East are keeping the market “nervous” with 20% of global gas transiting through the Strait of Hormuz, he added.

Europe’s reliance on global flows of liquefied natural gas — also vulnerable to outages and competition from other regions — keeps the region exposed to potential price spikes, especially as its heating season gets underway. Geopolitical risks have also kept prices volatile.

Venier’s comments come as the region’s gas traders have their eyes on the end of a key gas transit agreement between Moscow and Kyiv that expires on Dec. 31. Negotiations to keep flows coming through the pipeline are ongoing with less than three months left to run. Both sides have said they’re willing to find a solution that could involve Azerbaijan, though fears have been raised about Russian supplies being mixed in.

“The stop of the transit agreement will not have a significant impact on the available gas Italy has for next winter, given also the storage levels,” Venier said but added that discussions were on to guarantee some volumes to places like Austria, which are heavily dependent on Russian flows. 

Europe should cut its dependence on Russian flows, he said, adding that already the percentage of Russian gas transported through Snam’s pipelines, responsible for natural gas transportation across Italy, is only about 5-6% of global consumption. 

“Next year we will have a second LNG terminal on stream that will provide and increase the LNG capacity,” Venier added. 

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