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ENERGY

Italian energy company to start paying for Russian gas in rubles

Italian energy company Eni confirmed it is opening accounts in rubles with Gazprombank to pay for gas supplies, complying with Moscow's demands.

Italian energy company to start paying for Russian gas in rubles
The headquarters of Italian oil and gas giant Eni in San Donato Milanese, near Milan. Photo by MARCO BERTORELLO / AFP

Eni said in a statement on Tuesday it was opening accounts in rubles and euros with Gazprom Bank “on a precautionary basis” as “deadlines for the payment of gas supplies are scheduled for the next few days”.

It was not immediately clear whether the move would fall foul of European Union sanctions, although Eni said it was “not incompatible”.

The company said its decision to open the accounts was “taken in compliance with the current international sanctions framework” and that Italian authorities had been informed.

READ ALSO: Italy will ‘soon’ stop buying gas from Russia, says minister

Vladimir Putin demanded at the end of March that payment be made in rubles or the gas supply to European countries would be cut off, as he hit back at sanctions placed on Russia by EU countries following its invasion of Ukraine.
 
Eni’s CEO Claudio Descalzi said at the time that his company would not comply with the demands, saying “Eni doesn’t have rubles” and “the contracts say fuel payments should be made in euros”.
 
But many European companies and their lawyers have since been looking at ways to meet the demand without breaching sanctions aimed at punishing Russia for the war in Ukraine, reports Bloomberg.
 
EU officials had said opening a ruble account would breach sanctions. But its latest guidelines, to be published this week, are expected to stop short of banning bank accounts in rubles and  therefore allow companies to keep buying Russian gas, Bloomberg reports.
 
 
Like other European countries, Italy says it is working to reduce its heavy reliance on Russian energy imports in the wake of the Ukraine war.
 

But the Italian government has so far resisted calls to boycott Russian oil and gas.

Italy is highly dependent on Russian gas, importing 95 percent of the gas it consumes, of which around 40 percent comes from Russia.

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ENERGY

Drought hits Italy’s hydroelectric plants amid energy crisis

Hydroelectric power production in Italy has plunged this year thanks to a severe drought that has also sparked water restrictions and fears for agriculture, industry sources said on Friday.

Drought hits Italy's hydroelectric plants amid energy crisis

Hydropower facilities, mostly located in the mountains in the country’s north, usually cover almost one fifth of Italy’s energy demands.

But the ongoing lack of rain is causing problems at a time when Rome is desperately trying to wean itself off its dependence on Russian gas due to the war in Ukraine.

READ ALSO: Italy’s heatwave to last another week and get even hotter, say forecasts

“From January to May 2022, hydro production fell by about 40 percent compared to the corresponding period in 2021,” a spokesman for Utilitalia, a federation of water companies, told AFP.

“Hydro production has been steadily decreasing since July 2021,” he said, blaming “the severe shortage of water even at high levels”.

An industry source told AFP that while the situation was constantly changing, estimates for the first six months of 2022 suggest nationwide hydroelectric generation will be almost half the equivalent period of 2021.

One small plant near Piacenza, southeast of Milan, was shut indefinitely on June 21st due to low levels on the River Po that feeds it, the Enel energy company said.

READ ALSO: How long will it take Italy to wean itself off Russian gas?

“Considering the current drought situation, other hydro plants are not operating at full capacity,” a spokesman added, without giving further details.

The Po River, which stretches across the north of the country, is Italy’s largest reservoir of fresh water. Much of it used by farmers, but the area is suffering its worst drought for 70 years.

Italy’s largest agricultural association, Coldiretti, said the drought is putting over 30 percent of national agricultural production and half of livestock farming in the Po Valley at risk.

Local authorities say the situation in the area has been “extremely delicate” since last week, with four regions asking the national government to declare a state of emergency and hundreds of towns now rationing water.

In the northwest region of Piedmont, water is being rationed in more than 200 municipalities according to the ANSA news agency.

Drought in Italy: What water use restrictions are in place and where?

The Maggiore and Garda lakes are both far lower than usual for this time of year, while further south, the level of the Arno, Aniene and Tiber rivers have also dropped.

Arid conditions are set to worsen as the heatwave currently gripping Italy is expected to last until the end of June, with temperatures around the country of “up to 40°C in the shade” forecast early next week.

In Milan and Turin, a massive increase in electricity usage for cooling day and night has pushed the electricity grid beyond its limits over the past week, leading to blackouts.

With many parts of Europe experiencing unusually high temperatures for this time of year, experts have repeatedly warned that longer, earlier heatwaves are a consequence of global heating.

“As a result of climate change, heatwaves are starting earlier,” said Clare Nullis, a spokeswoman for the World Meteorological Organization in Geneva.

“What we’re witnessing today is unfortunately a foretaste of the future” if concentrations of greenhouse gases in the atmosphere continue to rise and push temperatures towards 2 degrees C above pre-industrial levels, she added.

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