To prevent future gas price shocks, Italian Energy Minister Gilberto Pichetto believes the European Union must urgently extend the gas price cap. The EU needs to set a price cap of 60 euros per megawatt hour of gas to prevent price increases.
Fears of an energy shock were heightened after Ukraine refused to extend a Russian gas transit agreement when it expires on December 31, 2024, Reuters reported. The agreement, which came into effect in 2019, transports Russian gas through Ukraine to Europe. European countries such as Austria, Slovakia and many others still depend on Russian gas transiting through Ukraine.
The cessation of Russian gas transit through Ukraine marks the end of decades of Russian influence in the European energy market.
The current EU price ceiling on gas is set to expire at the end of January 2025. It only applies if gas prices in Europe exceed 180 euros per megawatt hour. However, in practice, gas prices in Europe have not exceeded this price since the early days of the Russia-Ukraine conflict in February 2022.
Calling for a new price cap on gas in Europe, Italian Energy Minister Gilberto Pichetto said: "I think at this point the EU should extend the price cap. We have asked for it, but not at 180 euros. Right now, the price cap should be at 50 or 60 euros."
The Italian Energy Minister also said that imposing a price cap on gas would limit financial transactions unrelated to raw materials, thereby reducing the burden on households and businesses.
Italy has enough gas to meet domestic demand for the next two months, Minister Gilberto Pichetto said, adding that Italy's gas storage facilities are close to 80% capacity.
Most European countries have increased imports of liquefied natural gas (LNG) since the Russia-Ukraine conflict broke out in an effort to escape dependence on Russian gas.
Italy is set to start construction on a new LNG terminal in April this year that will be able to import up to 28 billion cubic meters of LNG a year, the same amount of gas Italy imported from Russia via Ukraine in 2021.
Italy's total gas demand was estimated at 61 billion cubic metres last year, with Algeria and northern Europe being the main suppliers.
