Berliner Boersenzeitung - Italy's Draghi walks sanctions tightrope over Russian energy

Italy was criticised by some European allies for dragging its feet before agreeing to impose tough sanctions on Russia, but is now firmly on Moscow's blacklist for supporting them along with other EU neighbours.

Like Germany, the other major European economy reluctant to turn off the Russian gas spigot overnight, Italy would not look favourably on a European embargo of Russian gas and oil, similar to that announced Tuesday by US President Joe Biden.

Italy imports 95 percent of the gas it consumes, about 45 percent of which comes from Russia. For Germany, 55 percent of gas purchases are supplied by Moscow.

But if gas represents 42 percent of Italy's energy consumption, it only represents a quarter for Germany.

All that means that Rome's stated objective is to reduce its dependence on Russian gas "as quickly as possible".

"It is not an obvious task, but it must be done," Draghi told parliament Wednesday. "Our security and our freedom are at stake."

Italy, which exited nuclear power more than 30 years ago, plans to boost its production of natural gas from 3.34 billion to 5 billion cubic meters annually and increase imports of liquefied natural gas (LNG) from the United States.

Meanwhile, Rome is conducting an all-out diplomatic offensive to free itself from energy dependence on Russia. Foreign Minister Luigi Di Maio went to Algeria, Italy's second largest gas supplier, at the end of February to arrange increased deliveries.

- War economy -

Other producers from unstable states could also be increasingly tapped by Italy, such as Azerbaijan, Tunisia and Libya.

Draghi has spoken by telephone with the emir of Qatar, Tamim bin Hamad Al-Thani, to obtain increased deliveries of LNG.

But those are "not enough to compensate for a possible cut in gas from Russia," Roberto Bianchini, director of the Observatory of Climate Finance at Milan Polytechnic, told AFP.

Italy's undersecretary for foreign affairs, Manlio Di Stefano, said Italy was "preparing for a war economy, hoping not to get there."

"If the gas supply were cut off, we would have two weeks of full autonomy, two weeks without industry, and then total darkness," he said.

Others see this as exaggerated.

Simone Tagliapietra, professor of energy at the Catholic University of Milan, told AFP that Italy's gas reserves are one of the largest in Europe, filled to 30 percent of capacity.

"It can import more LNG and reactivate coal-fired power plants to avoid this scenario, so there will be no blackout," Tagliapietra said.

But for Milan Polytechnic's Bianchini, an interruption in Russian deliveries "could lead to the need to temporarily suspend certain companies' consumption".

There are other reasons, too, to reduce dependence on Russian gas and oil, such as its currently soaring prices. According to Tagliapietra's calculations, the EU would pay, beginning in April, 1 billion euros per day to Moscow for its energy needs.

- Return of coal? -

Italy's environment minister, Roberto Cingolani, admitted that ending dependence on Russian gas would not happen overnight.

Out of the 29 billion cubic meters of gas imported by Italy from Russia each year, 15 billion will arrive from other countries in late spring.

"It will take us 24 to 30 months to become totally independent," Cingolani said.

And while Draghi is betting on increasing renewable energy, he has not ruled out reviving the half-dozen coal-fired power plants still in operation but due to close in 2025.

"To avoid a blackout, the only alternative is to use the capacity of coal-fired power plants," despite their harmful impact on the environment, Bianchini said.

In the meantime, Draghi has pressed for sanctions to "target restricted sectors, without including energy".

As it tries to establish a cohesive response on sanctions, Italy's government ministers have sometimes appeared to be working at cross purposes.

While Di Maio was pressing Brussels last month to exclude Russia from the SWIFT banking messaging network, Economy Minister Daniele Franco was cautioning Italy's Western allies that "some countries, including Italy, continue to pay for Russian natural gas".

(G.Gruner--BBZ)