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    Snam eyes Spanish connections for Italian gas imports


Snam's CEO said the Italian gas transmission operator is looking at a new offshore pipeline from Spain to transit regasified LNG imports.

by: Callum Cyrus

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Snam eyes Spanish connections for Italian gas imports

Italian gas transport operator Snam revealed March 17 it is progressing infrastructure spends to help alleviate Europe's Russian gas dependency, focusing on a new Spanish subsea pipeline and LNG receiving route from Spain to Italy.

Snam CEO Marco Alvera told a conference call that the Ukraine war had a "profound impact" on the gas market as supply insecurity drives volatility beyond the price spikes that resulted from strong Asian LNG demand last year.


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"Given Russia's importance in the European gas market policy makers across Europe are focused on supply security and diversification. I'm encouraged by the level of cooperation between companies, between member states and with the Commission that I'm seeing in these difficult weeks," Alvera said.

Alvera also spoke on the recent EU mandate requiring 90% capacity to be held at European gas storage facilities before this winter. He noted that it is "uneconomical" for European shippers to store gas today, but said Snam had entered talks with EU officials "about the right instruments to make sure storages are full."

Snam is also eyeing a pre feasibility-stage offshore pipeline from Spain to Italy. Spain has Europe's leading regasification capacity at 68.9bn m3/year.

A subsea connection to Italy could thus give Europe an alternative to the proposed MIDCAT link from Spain via France, which continues to stall. Floating a MIDCAT alternative would also offer further upside to the merger of BP and Eni's Angolan operations. The Angola merger includes the Chevron-led 5.2mn metric tons/year Angola LNG liquefaction and export facility.

It will take time to construct a subsea pipeline and Alvera didn't go into specifics on the final investment decision. Near-term, Snam is focusing on a "virtual pipeline" that would connect small-scale Spanish LNG traffic to Italy's 3.5bn m3/yr Panigaglia receiving and regasification terminal. "There's a renewed focus on supply diversification maximising pipe imports from the south and particularly additional LNG," Alvera said.

With no end in sight to the 23 days-old Ukraine conflict, Rome is anxious to find alternatives to Russian suppliers that provide around 40% of its gas imports. Rome believes it can replace about 50% of Russian imports by the middle of this year. In recent weeks, it has entered key agreements with Algeria, Congo-Brazzaville, Angola and Qatar.

On November 27, Snam agreed to buy Eni's 49.9% stake in the 39.6bn m3/yr Transmed pipe, connecting Algeria to Italy.  Alvera said he believed the deal "strengthens" Snam in the "strategically important" North African gas market. 

Snam also participates in the 10bn m3/yr Trans Adriatic Pipeline from Azerbaijan, and lifts 20bn m³/yr of Russian gas via Austria through the Trans Austria Gas (TAG) link to Arnoldstein, on the Austria-Italy-Slovenia border.

Russian gas deliveries to Snam via TAG have been "uninterrupted" by the tightening gas market so far, Alvera said. He confirmed TAG deliveries have one year of "contract guarantees", but will then experience a "structural change" in gas flows.

"This would reduce the profitability and value of the asset in the near term. However [TAG] would continue to be a strategic asset given its potential to run into reverse flow of gas supplies, but also [to deliver] hydrogen from Italy to Austria. Either way, TAG remains a key asset for Austrian security of supply," Alvera said.