Italy gas storage rescue plan can save the day

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Rome's Palazzo Chigi, the seat of the Italian government, is lit up with the colours of the Italian flag on Jan. 15, 2021. REUTERS/Remo Casilli/File Photo

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MILAN, July 1 (Reuters Breakingviews) - Rome’s intervention to boost gas storage could work. Reluctance from private operators to inject gas into storage sites given current high prices was threatening a plan to boost stockpiles before the winter. That will likely change after Prime Minister Mario Draghi’s government lent 4 billion euros to state operator Gestore dei Servizi Energetici to replenish gas reserves.

Italy has so far stored 113 terawatt hours (TWh), or about 59% of total capacity, a similar proportion to German storage levels but well below those of Poland and Denmark. Reaching a 90% storage goal set by the European Commission’s REPowerEU Plan requires adding some 60 TWh. If Italy were to add 70 million cubic metres (mcm) a day to its stockpile, equivalent to its estimated current daily excess capacity, it should hit the target. But it would cost a hefty 9 billion euros if TTF gas prices remain at 150 euros per megawatt hour. And the excess capacity can vary. In June, operators were injecting barely 30 mcm per day. Without Rome’s helping hand, Italians risked suffering a colder winter. (By Lisa Jucca)

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Editing by Dasha Afanasieva and Streisand Neto

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