Ukraine crisis is closely followed by the international observers and by the governments not only because of its strictly political relevance and the destiny of the pro-Russian region of Crimea. The most interesting topic is the one related to the energy balances of the region and the impact on the whole of Europe.
Russian gas, more than oil, is the energy source on which Europe relies the most for its needs. Russian gas accounts for about 40% of what comes in the European Union which, it should be reminded, shows an energy dependence rate[1] of 53,3%. Twelve pipelines supply Europe, and five of these pass through the Ukrainian territory[2].
This current crisis is not the first episode of political tension and unrest between the Russian Federation and Ukraine, and just like the previous of 2006 and 2009, it has raised fears about a possible interruption of gas supplies. In 2006, for example, Italy, France, Germany and Austria, net Russian gas importers, experienced a decrease in the flow rate very close to the 30%[3].
However, for several reasons, these interruptions seem merely hypothesis rather than a real possibility. First of all, winter is now coming to an end was one of the mildest in recent years. Then, in the last years the gas demand in the EU countries has slowly decreased for the economic crisis. Furthermore, after the 2006 crisis many European countries considered the option to find alternative source of supply in order to assure themselves the energy security. Last but not least, Russia itself would see a large part of its revenues lost for the reduction of export in Europe[4]. Basically, despite its dominance as a supplier, Russia depends in a certain way from Europe so we can talk about a mutual dependence between these actors.
Italy is no exception in this sense. Eurostat statistics prove that in 2012 the country’s energy dependence rate was 80,8% and that the 30% of gas that is imported by Rome comes from the Russian monopolist Gazprom. This situation could be the first reason why Italy seems quite reluctant to take strong political sanctions against Russia. In this sense Italy is aligned to the German position, given that Germany presents very similar energy needs. But both the government and Paolo Scaroni, chief executive of ENI, the largest Italian industrial firm, have ruled out the possibility that Italy would be affected by the events in Ukraine because the infrastructure should be able to meet the gas demand[5].
Who are the main gas suppliers to Italy? What are these infrastructures? Algeria and Libya are the major Italian suppliers apart from Russia. Algeria has proved natural gas reserves for 4.5 trillion cubic metres (tcm), the 2.4% of the world proved reserves[6]. In 2012 Italy imported from Algeria 21.6 billion cubic metres (bcm) of natural gas, the 32,3% of its total imports, much more than the amount of gas imported from Russian Federation (20,3%). In the same year Algeria exported 34.8 bcm of natural gas, so Italy is the main destination of Algerian gas counting for 62.0% of trade movements (via pipeline) to foreign countries. Other 15.3 bcm of natural gas exported by Algeria are exported as LNG (Liquefied Natural Gas), but just one of these billions reaches Italy, so the total percentage of Algerian gas exported in Italy is 43,1%.
Transmed (or ‘Enrico Mattei[7] pipeline’) is the name of the pipeline through which Algerian gas arrives in Italy. It came on line in 1983 and runs about 2200 km from Algeria to Italy via Tunisia[8] and transports the gas from the layer of Hassi R’Mel to the Italian town of Minerbio, near Bologna. The Italian company ENI is now planning an enlargement of the pipeline[9]. Algerian gas arrives in Italy also through the LNG terminal of Panigaglia, near La Spezia, one of the only two in the Italian territory, but this terminal is also used to receive LNG from Norway, and anyway receives just the 5% of total gas imported from Algeria.
Libya is one of the most important energy sources trader in the world. It is the Africa’s largest holder of oil proved reserves with 48.0 thousand million barrels (2.9% of total world reserves) and Italy is the main recipient of its oil exports[10]. For what It concerns natural gas, Libya is less relevant since It has proved reserves for 1.5 trillion cubic metres, the 0.8% of global reserves. In 2012 Italy was the only buyer of Libyan gas by pipeline since It received 6.5 bmc of natural gas, which is the 10,9% of gas imported in Italy by pipeline. Furthermore Libya didn’t export LNG so the country revealed itself totally dependent on Italian demand. Prior of 2012 Libya exported also small volumes of LNG to Spain.
In 2004 Greenstream, a pipeline built by ENI, became operational, dramatically increasing the export capacity of the North African country. The pipeline links Mellitah with Gela, in Sicily, and It is fed by two fields, the onshore field of Wasa and the offshore field of Bahr Es Salam.
Considering that Italy imports gas not only from Russia, Algeria and Libya, but also from Netherlands, Norway and other European countries, one can say that Italy has been giving the adequate importance to the issue of energy security, in particular by ensuring the diversification of its source of supply. Planned pipelines like Galsi[11] and Trans Adriatic Pipeline (TAP)[12] move in the same direction. The first one should open another way to the Algerian gas to Sardinia; the second one would deploy Shah Deniz fields importing Azeri gas through Georgia, Turkey, Greece and then Italy.
The energy game in the Mediterranean is still open to new developments since the economic crisis in Italy, and the chaos followed to the so-called Arab spring in North Africa, have definitely slowed down the implementation of each one of this projects and may be governments priorities have been changing.
Francesco Angelone
Master’s degree in International Relations (LUISS “Guido Carli”)
[1] Eurostat (2012), http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tsdcc310, Energy dependency shows the extent to which an economy relies upon imports in order to meet its energy needs. The indicator is calculated as net imports divided by the sum of gross inland energy consumption plus bunkers.
[2] Conti D. (2014), “In Ukraine Crisis, Italy’s Hunger For Russian Gas Weakens Western Coalition”, in International Business Times, 6th March, http://www.ibtimes.com/ukraine-crisis-italys-hunger-russian-gas-weakens-western-coalition-1559914.
[3] Henley J. (2014), “Is Europe’s gas supply threatened by the Ukraine crisis?”, in The Guardian, 3rd March, http://www.theguardian.com/world/2014/mar/03/europes-gas-supply-ukraine-crisis-russsia-pipelines.
[4] De Luca D. (2014), “La questione del gas russo”, in Il Post, 6th March, http://www.ilpost.it/davidedeluca/2014/03/06/la-questione-del-gas-russo/.
[5] Manacorda F. (2014), “Gas, per ora niente rischi ma l’UE cambi strategia”, in La Stampa, 8th March, http://www.lastampa.it/2014/03/08/economia/gas-per-ora-niente-rischi-ma-lue-cambi-strategia-KRumoF289fDhb2K5RtTKlO/premium.html;jsessionid=3CE0D21850E37B10D531405F5385A81D.
[6] These figures refer to 2012 and are present in BP (2013), Statistical Review of World Energy, http://www.bp.com/content/dam/bp/pdf/statistical-review/statistical_review_of_world_energy_2013.pdf. From now to the end of the article, when not specified, figures are taken from this review.
[7] The founder of ENI.
[8] http://www.eia.gov/countries/cab.cfm?fips=AG.
[9] Pescini D. (2013), “Italia: la geopolitica dei gasdotti di un paese che importa il 90& del proprio fabbisogno”, Notizie Geopolitiche, 15th April, http://www.notiziegeopolitiche.net/?p=27133.
[10] http://www.eia.gov/countries/country-data.cfm?fips=LY.
[11] Project official site http://www.galsi.com/.
[12] Project official site http://www.trans-adriatic-pipeline.com/it/.
