Page 5 - EurOil Week 11 2022

EurOil COMMENTARY EurOil

three years to build. It is currently unknown at least one other European country were also
whether the project’s design would stay the same seeking FSRUs, resulting in rising competition
if it is revived, though keeping it unchanged in the market. FSRUs are cheaper to build than
would help avoid any new permitting hurdles. onshore terminals, as well as taking less time
Given the urgency with which new regasifica- to bring online, so it would not be surprising if
tion capacity is now being treated, it would not demand for the vessels rises further still.
be surprising if Enel sticks to previous plans if it Snam owns stakes in Italy’s existing three
wants to kick-start construction soon. LNG import terminals, while Eni has a global
Little is known about the circumstances LNG business. The companies have not com-
under which plans for Porto Empedocle LNG mented on speculation that they could be
were previously abandoned. There was no involved in the FSRU project.
public announcement, but Sicily’s Regional The permitting process in Italy is complex
Councilwoman for Energy, Daniela Baglieri, and this has held back development of new
was quoted by Reuters as saying the project regasification capacity beyond the three existing
had been cancelled at the start of the year on terminals, which account for around 20% of Ital-
the grounds that it was unsustainable. The ian gas imports. There could also be challenges
Russia-Ukraine war and Italy’s pivot away related to local opposition to the development of
from Russian gas, however, appear to have new import terminals – indeed, this was some-
prompted a rethink on sustainability con- thing Porto Empedocle LNG had previously
cerns related to the project. struggled with.
Few further details have been provided so LNG infrastructure is not the only type of
far, so the industry will have to wait for new gas project to be facing challenges as Italy seeks
announcements from Enel on what to expect to find new gas supply sources. Reuters cited
next from Porto Empedocle LNG. analysts as saying chronic underinvestment
in recent years meant the country would also
What next? struggle to use more capacity on its existing gas
It is possible that Porto Empedocle LNG will not pipelines from various countries. They were
be the only new LNG project that Italy brings referring specifically to underinvestment in new
online in the coming years. Cingolani also said production.
the government was planning to install a floating The Russia-Ukraine crisis, though, is leading
storage and regasification unit (FSRU) in Italian dramatic changes, for both energy policies and
waters by the middle of this year. specific projects. Approaches that were previ-
A source familiar with the matter told Reu- ously considered out of the question could sud-
ters that energy firm Eni and infrastructure denly start appearing viable giving how rapidly
company Snam had been asked to help with the situation is changing and how much pressure
the logistics, including seeking out an FSRU to European countries are under to respond effec-
charter. The source added that Germany and tively. ™

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