Russia’s Gazprom cuts gas supply to Italy

Italian energy giant Eni said Russia had delivered less gas than usual on Wednesday after the closure of a major pipeline, in the latest interruption to European energy supplies.

Russia’s Gazprom cuts gas supply to Italy
Russia's energy giant Gazprom cut supplies to Italy by more than a quarter on Wednesday and will reportedly halt all deliveries to some EU countries. Photo by Kirill KUDRYAVTSEV / AFP

The amount of gas delivered to Italy from Russia dropped by 26 percent following the closure of the Nord Stream 1 pipeline, Italy’s main energy provider Eni confirmed.

“Gazprom has announced that today it will deliver a volume of gas equal to about 20 million cubic metres,” down from daily deliveries of around 27 million cubic metres, Eni said in a statement on Wednesday morning.

Gazprom reportedly suspended gas deliveries to Germany on Wednesday, and also said it would halt supplies to France’s main provider Engie from Thursday after it failed to pay for all deliveries made in July.

Gazprom said supplies via Nord Stream 1 were “completely stopped” for “preventative work” at a compressor unit, AFP reported, shortly after the pipeline’s operator, ENTSOG, announced that deliveries had halted.

The move came as European countries faced soaring energy prices, with costs rising sharply across the region following Russia’s invasion of Ukraine in late February.

READ ALSO: Italy to bring in new aid measures as energy prices soar

Italian government ministers had not commented on the latest cut on Wednesday morning, though Prime Minister Mario Draghi has previously said Russia’s reasons for cutting gas deliveries were “lies”.

Germany, which is also heavily dependent on Russian gas, also accused Moscow of using energy as a “weapon”.

But Gazprom said three days of maintenance work were “necessary” and had to be carried out after “every 1,000 hours of operation”.

The logo of Russia’s energy giant Gazprom is pictured at one of its petrol stations in Sofia in 2022. (Photo by Nikolay DOYCHINOV / AFP)

With winter around the corner, European consumers are staring down the barrel of huge power bills.

Italy’s outgoing government was on Wednesday reportedly finalising plans to bring forward new energy-saving measures amid concerns about energy security due to repeated interruptions to the gas supply from Russia.

Italy is one of Europe’s biggest consumers of gas, which currently represents 42 percent of its energy consumption, and it imports 95 percent of the gas it uses.

READ ALSO: Energy crisis pushes nuclear comeback in Europe

Draghi’s government has been working to lessen the country’s reliance on Russian gas, with ministers predicting Italy will be “independent” from Russia’s gas supply by the middle of 2023.

The European Union is meanwhile preparing to take emergency action to reform the electricity market in order to bring prices under control, with energy ministers scheduled to hold talks next week.

Asked if gas supplies would resume after the three-day works were completed on Saturday, Russian government spokesman Dmitry Peskov said “there is a guarantee that, apart from technical problems caused by sanctions, nothing interferes with supplies”.

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EXPLAINED: What will your Italian energy bills look like in 2023?

Italy’s energy regulator has now announced the latest price changes affecting bills from January. Here's what that will mean for household energy costs this year.

EXPLAINED: What will your Italian energy bills look like in 2023?

After gas and electricity prices in Italy reached record figures in 2022, households and businesses are hoping things will improve in the coming year.

But the latest price estimates show that, while things are expected to slightly improve over the course of 2023, the situation is unpredictable and the European energy crisis will continue to hit consumers hard well into the new year.

Here’s what you need to know about the latest forecasts.

Gas prices: no decrease (yet)

Italy’s power regulator Arera announced earlier this week that gas bills increased by 23.3 percent on average in December – which came as a surprise to many given the comparatively low gas tariffs registered in the last month of 2022.

“Gas prices only started decreasing around December 17th”, explained Arera president Stefano Besseghini, and the high tariffs recorded in the first half of the month (around 140 euros per megawatt hour) effectively inflated January bills.

READ ALSO: Energy crisis: The Italians reviving nonna’s traditions to keep costs down

As a result, consumers will have to wait a little longer to see a decrease in their monthly gas bill, with some degree of respite potentially coming in February, provided that European gas prices stay under 80 euros per megawatt hour (they’ve been hovering around 70 over the past week).

Gas stove

Italian residents might see a decrease in their monthly gas bill in February. Photo by Ida Marie ODGAARD / Ritzau SCANPIX / AFP

Prices will also be tamed by the much-anticipated EU price cap, which from February 15th will protect consumers from gas price spikes over 180 euros per megawatt hour.

This should prevent gas prices in Italy and anywhere else in Europe from reaching the eye-watering figures recorded last year, though analysts say tariffs will still remain far from pre-crisis levels.

Besseghini warned consumers not to jump to “hasty conclusions”, saying: “the markets are still characterised by marked volatility, seasonality will affect gas price variations, and absolute values ​​are still extraordinarily high”.

READ ALSO: EXPLAINED: When can you turn your heating on in Italy this winter

Electricity prices to decrease

As for electricity prices, Arera has recently estimated that, in the first quarter of 2023, consumers with ‘protected market’ (mercato tutelato) contracts will see their bills decrease by an average 19.5 percent compared to 2022’s last quarter.

Light bulb

Residents with ‘protected market’ contracts will see a 19.5-percent decrease in their electricity bill in the first quarter of 2023. Photo by Fabrice COFFRINI / AFP

The expected decrease will be driven by greater market stability – EU gas storage is currently at around 80 percent – as well as by the extension of state aid measures introduced by former Prime Minister Mario Draghi, which benefit lower-income families and businesses.

READ ALSO: At what time of day is electricity cheapest in Italy?

But electricity prices will still be up overall, as tariffs in the first quarter of 2023 are expected to be 15.4 percent higher against last year’s first quarter. 

What about the rest of the year?

While it’s worth keeping in mind that the energy market is historically very volatile and radical changes, for better or for worse, can happen overnight, early estimates regarding the remainder of 2023 aren’t exactly overflowing with hope.

The average Italian household will spend a whopping 4,724 euros (nearly 400 euros a month) on gas and electricity bills combined in 2023 – that’s 2,500 euros more than in 2021 – according to estimates from Italian consumer group Codacons.

Codacons also said households on protected mercato tutelato contracts will collectively spend 40.5 billion euros on energy alone this year, marking an 18.5-billion increase against 2021.

But industry analysts continue to warn that the energy market is liable to quick changes and a number of factors, including local temperatures, national demand and Italy’s transition to energy sources other than Russian gas, will ultimately determine price oscillations over the course of the year.