Italy Weighing State Of Alert Amid Russian Gas Supplies Squeeze

Italy may declare a heightened "state of alert" on gas next week if Russia continues to curb its supplies, two government sources said on Friday after energy company Eni reported a shortfall in flows from Moscow for the third day in a row.

The state of alert would trigger a series of measures aimed at reducing consumption, including rationing the gas to selected industrial users under existing contracts, ramping up the production at coal power plants and also asking for more gas imports from other suppliers under existing contracts.

Italy's existing gas emergency protocol envisages three stages going from a state of pre-alert, imposed at the end of February after the Russian invasion of Ukraine, before moving to one of alert and then to a state of emergency.

A meeting of the emergency technical committee for gas is due to take place on Tuesday or Wednesday to review the situation, one of the sources said.

An industrial source said that the groups that would be involved in implementing measures to reduce gas consumption under the state of alert are ready to act.

In the last few months Italy's coal power plants have accumulated the coal they would need to ramp up their production, the industrial source said.

In case of a further worsening of situation, for example with big difficulties in replenishing its gas storage, Rome could switch to the full state of emergency and adopt even more aggressive measures.

Earlier on Friday Eni said it would receive only half of the gas supply volumes it had requested from Russia's Gazprom.

"Against a daily gas demand by Eni of around 63 million cubic meters, Gazprom announced that it will only supply 50% of what was requested, with actual quantities delivered almost unchanged from yesterday," the energy giant said on its website.

Italy's state-owned energy exchange said Gazprom had warned of continued restrictions on Saturday, but gave no further details.

Kremlin spokesperson Dmitry Peskov said on Thursday that reductions in supply were not premeditated and were related to maintenance issues, but Italian Prime Minister Mario Draghi has dismissed this explanation.

"Both Germany and us, and others, believe these are lies. In reality they are making a political use of gas like they are using grain for political use," Draghi told a news conference on Thursday during a visit to Kyiv.

Russian gas flows to Europe fell short of demand again on Friday, coinciding with an early heatwave gripping its south and boosting benchmark prices on concerns the continent may struggle to build up storage ahead of the winter.

Italy aims to have the country's gas storage system filled to at least 90% of capacity in time for next winter. Storage stands at 54% of capacity as of Thursday.

Italy has been reducing its reliance on gas supplies from Russia following the invasion of Ukraine in February.