Italy’s gas outlook

Europe may have weathered the worst of the storms of the covid pandemic and the energy crisis, but the continent’s gas market remains fragile. In this episode, we talk to the CEO of gas transit operator Snam and one of Italy’s most respected energy experts about the role gas will play for the country as it looks to wean itself off Russian gas. Italy looks set to become more dependent on the vagaries of global markets as it commits to an LNG future. And what is the outlook for gas demand among Italy’s industry?  

 Host: Snjólfur Richard Sverrisson, Editor-in-Chief, Montel
 Guests: Stefano Venier, CEO of Snam, Massimo Nicolazzi, University of Turin.

Transcript

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 0:06

Hello listeners and welcome to the Montel Weekly podcast, bring You Energy Matters in an informal setting. This week's pod takes a closer look at Italy and the role gas will play as the country looks to move from pipeline gas to LNG amid a backdrop of decarbonization as it has weaned itself off Russian pipe gas. Would Italy risk locking into a dependence on LNG? And what is the outlook for gas demand in the country? Has Italy also managed to speed up some of its permitting processes in order to build new gas infrastructure? We have divided this special episode into two parts. In the first joining me, Richard Sverrisson is Stefano Venier, CEO of Snam, Italy's gas transit operator. A warm welcome to you, Stefano.

Stefano Venier, CEO of Snam: 0:51

Good morning to everyone.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 0:53

Stefano, let's start off by talking about the situation we find ourselves these day. There's lots of geopolitical concerns. But at the same time, we've had two very mild winters. Gas storage is fairly full, l and g has saved the day. Where are we out of the energy crisis, would you say? Stefano?

Stefano Venier, CEO of Snam: 1:13

I think we are still in a very fragile situation. I mean, definitely we are. We have overcome, we eased the, let's say, de tension and the crisis we lived into in 2022 and first part of 2023, thanks to the actions that has been undertaken along of the last. 24 months. Of course we eased the crisis. But I think that generally speaking, we are not in a situation that put us in a safe position in the sense that of course we are now realign more, much more on LNG. But the LNG market is a global market, is a market with two, three parts of the world that has very high demand, especially in Asia. Demand is growing very fastly, therefore. I mean, the balancing between the liquification capacity and regas capacity is very tight. So going forward the, since we don't have, at least in the next couple of years, sizable capacity coming on stream, I think the situation will be pretty tight. Of course, much will depend on the growth of demand in Asia. Rather than in Europe. And that is one point on the other side, I think the geopolitical crisis that is spreading across the world, of course can have a certain influence. We haven't seen clear implications from the Middle East crisis in the short term not even from the closing of the SW channel. But I think this situation might delay certain investment decision in that area. That in the future could play a significant role in the balancing, especially of Europe. And that is a point we have to bear in mind.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 2:55

You mentioned, So LNG infrastructure, Stefano what's the status at the moment of new capacity in Italy and how soon can that be brought online?

Stefano Venier, CEO of Snam: 3:04

Two years ago we were in a situation where we were. Really dependent from gas Russian gas supplies for almost 40% of the global demand. At that time, we have, we had a very limited LNG capacity due to the fact that Italy differently from other European countries has five. Interconnecting pipes from D five different sources of gas, and that put us in a very, let's say, resilient situation. Of course, with the let's say curtailment of the Russian supplies, we had to look on a further diversification and we received from the government the request to sell. At least additional 10 BCM capacity on LNG and we started buying two LNG vessels. The first one is already on stream since mid of last year. The second will be on stream beginning next year. At the end of this process, almost 40% of the Italian demand. Could be supplied with LNG. Last year we reached 25%. And the 40% is I think an appropriate balancing between the options we, we ha we will have from pipe supply and the options on LNG supply.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 4:20

So will Italy then depend on spots LNG or will it sign long-term contracts? W what's the outlook there? Stefano?

Stefano Venier, CEO of Snam: 4:27

I think the majority of the supply will be on long-term contracts. And I'll tell you why. When we made, we sold the capacity of the first LNG vessel, the one that is located in Tuscany. We sold it for 90% for 20 years. So those above that capacity for 20 years means they have a portfolio of contracts that cover that period. And so I think all that capacity will be used in the long run, short term and long run on the basis of long term supply contracts. And we do expect. A similar situation for a second vessel. I think the reason why is because we have two, three large players in the country, starting from E and I, but as well as Aon and NL that has a portfolio of long-term contracts. Large part of this portfolio is based on LNG, and that, of course induce this sort of strategy Finally. ENI, as is a large oil and gas companies that has, that owns large amounts of equity gas. Therefore they have the optionality to rely on, let's say contracts with some large suppliers like Qatar or other countries. Plus the equity gas they have specifically in the in Africa.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 5:49

I think that's all. Absolutely. They're very interesting, I think. But if you set it against the ambitions that Italy has to decarbonize its economy, not just its energy sector, is there a risk that Italy could lock itself into kind of an LNG future here into the next sort of 10, 20 years?

Stefano Venier, CEO of Snam: 6:07

I don't think so. I think the there is one core element that will allow or will easy the transition that is flexibility in the infrastructure. So the great opportunity we can have in this transition pathway comes from the North Africa. And the possible production of green hydrogen, those countries to ship that androgen. Of course, the pipeline is the most suitable way and the most effective way. Therefore, if we use part of the pipeline infrastructure to ship in the future, hydrogen, we. Let's say consequently reduce the capacity for grass transportation that has to be supplied via LNG. So you have a sort of complementarity between the two means, and here comes, I think the great opportunity the country has to play a role not only within its own. Boundaries, but also for the rest of Europe and in the folds. The PCI project called South Edge to Corridor that aims to connect North Africa, Algeria, Tunisia, and Libya to the central part of Europe and that. For deploying that project, we will devote one of the three pipes that goes from South North exactly to ship hydrogen as a first step. Then consequently on how the consumption will evolve on both molecules, I means hydrogen and natural gas. We will retain the flexibility to repurpose a second pipe.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 7:48

I'd like to turn to hydrogen in a moment. Stefano, but before we get to that, let's talk about a little bit about domestic demand in Italy. It obviously took a big hit in the pandemic, the COVID pandemic, but also in the energy crisis. What's the status now and what does it look like into 2025 and beyond?

Stefano Venier, CEO of Snam: 8:08

I think we had a very let's say a strong hit, as you said in the last couple of years. And the reason behind that hit are pretty different. Let me say on one side, the let's say restrictions that has been induced by the European commissions add certain effect on domestic consumption. The level of. Prices, of course, had certain implications on the industrial consumption at the same time. And the third, the recovery of the nuclear production in France, specifically for Italy. Add as a consequence, the reduction of the thermal gen, domestic thermal generation. I think part of this effects will be overcome over the next two to three years, but part will remain in terms of expectations, I think. For 2024, we do expect consumption in line with last year or slightly above, and for the next year, of course, an additional say, stabilization on that level. Of course, for 2030, there will be a further reduction as a consequence of the deployment of the renewable production, but not as much as we might. Let's say figure out looking at 2021 consumption, I think large part of that reduction has been already achieved in the last couple of years. So to sign numbers, if in 2021 we had more than 70 BCM of consumption last year we had 62 63. What we do expect for 2030 is something around the 58 and for 2040 something around the 50 45. So it's, of course it is a reduction. But it's not as dramatic as someone might figure out or was expected a couple of years ago. And that has of course, another implication in the sense that more and more gases taking the role of the transition fuel for. Toward de carbon neutrality.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 10:18

And that, that reduction, where is that happening? Is that happening industry or in the sort of household business segment?

Stefano Venier, CEO of Snam: 10:24

I think first on thermal generation and second domestic production. When I say industrial consumptions, I primarily refer to our toba industries that are those who cannot be electrified and therefore they have to use molecules for their processes. And that can decarbonize on two, let's say simple ways on one side that they might capture the CO2. Or they substituted the let's say natural phos, natural gas with green molecules like hydrogen or a blend of the tooth.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 10:59

I'd like to turn to storage Stefano. And stocks seem to be fairly robust after the winter. Where are we now? Are we outta the woods. The winter. The storage is decent. It's all good news. Is it?

Stefano Venier, CEO of Snam: 11:10

Yeah, it is a good news. We work hardly to keep the gas in the storage. In the short. In the short. I will come back to that. I think there is one core point that has been understood in the last two years. The role of storage is not only to fulfill the peak in demand during winter. But has a strategically role to, let's say, smooth the volatility in the gas prices. And that was clear also few months ago when we had the Middle East crisis. We saw the price not reflecting in any way the, let's say, the possible implications, or let's say the speculation on the consequences of that situation because we had large amounts of gas in the storages available or across Europe. Okay. On one side keeping gas in the storages also at the end of the winter season, like in this weeks has two implications. Smooth volatility and make easier the summer fulfillment. The opportunity to reach the 99% let's say storage levels by the summer, by the end of the summer period, putting the different countries in a very favorable position also to tackle with let's say unexpected events.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 12:37

In terms of regulation for storage. Are any changes you'd like to see here, or are you happy with the current situation?

Stefano Venier, CEO of Snam: 12:43

We did a lot of work with the authority. We introduced several different let's say optionalities in terms of flexibility. We now have set up infra day options for capacity. We develop. And was one of the reason why we could, let's say, keep such a high level in the storages this winter, the reverse flow. So we reinject during winter gas to maintain offering this optionality to the traders and shippers that like to, let's say, inject the gas for the next winter and these kind of services. Of course made the storage much more, let's say, attractive in the strategies of traders and shippers not losing the role that storages has, as I mentioned before.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 13:37

In, in terms of pipelines Stefano, a section of the pipeline on the Adriatic coast will need to be built between Abso and Amelia Romania to allow a increased flow from these two regions of Italy. When will that building construction work start and how much transport will that allow you to add to the system?

Stefano Venier, CEO of Snam: 13:58

Thanks to the fact that this pipeline has been deemed strategic for the European security, not only for Italian security. We had the sort of shortcut in the authorization steps and that we led us to, let's say open the first site works by next May in two months. And we have to. End up the first step one in the development by mid of 2026 to be consistent with the Repower EU schedule with the second part will be completed just one year after. So by the end of 2027, this new backbone that is for more than 400 meter long 400 kilometer long will be available. Tripling the corridors from south to north and increasing from 125 million cubic meter per day to 150 million cubic meter per day, providing additional flexibility for the south and flows. But as I said before, also the flexibility that will be. Let's say we'll represent an advantage in the repurposing process for shipping the hydrogen.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 15:18

Absolutely. I think that, that's quite a substantial addition. And it, from what you're saying, Stefano, it seems that you managed to fast, fast track some of the permitting process to get that into place and to allow for a building to start in May.

Stefano Venier, CEO of Snam: 15:31

Yeah exactly. The fact that, as I said, the fact that this was deemed as a strategic infrastructure for the energy security for Europe allowed us to have a sort of fast track, of course, doing all the jobs we usually do in the permitting process, but with, let's say an accelerating, accelerated approval process. And that happened also. For the two floating vessels in where we had a specifically commissioner that completed the authorization process in 120 days, that is a record. This record allowed us to put on, on, in operation the first vessel within an a year.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 16:12

I'm sure some renewables developers would be very envious of the fact that can be done so quickly. Stefano, but let's move on to hydrogen. I, I think I'm just like to, we've seen. Certain projects across your put on ice delayed. Is there still that enthusiasm? There is? Is there, I mean I've talked to you guys before about green hydrogen. Are you still very enthusiastic about it? Do you see that It makes economic sense?

Stefano Venier, CEO of Snam: 16:37

I think more than enthusiastic. I'm pragmatic in the sense that we need to have these green molecules, but to get these green molecules, we need to build up an entire market from designing the market. Setting the rules, preparing the infrastructure, and of course developing the production and consumption. That is not something you can do in one day, and it requires some time. Of course, in some cases you might have some advantages in terms of time to market, and I'm referring to the. That, for instance, for the south to corridor, we can leverage upon on the fact that more than 50% of this infrastructure can be repurposed from existing gas pipelines. That is, of course an advantage that can shorten the time required for having this transportation in on stream. But of course, it takes some time and we need also to develop. The adequate scale for this production to get to a competitive production cost, that is a prerequisite because at the end of the day, at the end of this transition, we need to have plenty of energy available decarbonized. But the competitive cost, otherwise, we will keep on subsidizing this new energy at the cost of the final customers. That is not something that we can afford for a long time. So I think, I'm not surprised. That this kind of solution is taking a bit more time, but at the same time I see a window opportunity for other options that are available, like the carbon capture, the CO2 capture. That is definitely a solution for power generation and r to abate industries that can help to fulfill. The timeframe within bridging the timeframe between now and when the competitive hydrogen will be available? I think we now. Going through a situation in where everyone is getting aware about the fact, two major facts. The first one, we don't have a silver bullet. Solve all the, that solve all the problems in the transition. And second, that each country across Europe has to find the best mix of technologies for leading this. Journey to net zero.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 18:59

Absolutely. I mean, just a final question, Stefan, on the physics, maybe the engineering side I'm certainly no expert, but is it is it a straightforward matter substituting natural gas for green hydrogen in the gas infrastructure here and in the pipelines? Just you, you change from gas to hydrogen? Does there need to be some mixing? Does there need to be modifications to the pipelines? What needs to happen for in order for that to happen?

Stefano Venier, CEO of Snam: 19:24

You can, you can't play on off. You need to prepare the infrastructure. You need, of course, to make some some interven given the fact that the molecule of hydrogen is much thinner and smaller than the CH four, and therefore you need to prepare certain parts of the pipeline. Of course, the core of the pipeline that is made of still, you just need to have it in the right material, in the right kind of still. But where you have the junctions, where you have the compressing units of. Course you need to, let's say, let me say in a very simple words, reinforce the, let's say imp and the impermeability of those infrastructure. And that is, I think the job we have to do when we otte a ur those infrastructure for hydrogen. And that's the reason why I see also a. Another good opportunity in blending hydrogen with gas because it, to that extent you can kick off this, the production of hydrogen without having the barrier of large investment for transportation. So there are, there is a mix of optionalities we need to play with to make this journey as much competitive as possible.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 20:42

Stefano. Very interesting indeed. I think the future that certainly is very exciting. There won't be many boring parts of the, as we go forward into the new energy future. So thanks again, Stefano.

Stefano Venier, CEO of Snam: 20:53

Thank you. Thank you very much to you Richard, and to all the audience.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 20:57

And in the second part of this episode, we talk to Massimo Nicolazzi of the University of Turin. A warm welcome to you, Massimo.

Massimo Nicolazzi, University of Turin: 21:07

Thank you very much for the opportunity.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 21:09

Perfect. Massimo, can you tell me a little bit first, we've had the COVID crisis and the energy crisis. Are we out of the woods?

Massimo Nicolazzi, University of Turin: 21:18

Who knows. We thought we were out of the woods when the COVID crisis seemed to be over, and we won a war just thereafter. So I suppose nobody can predict what's coming next. You plan business as usual, hoping it is as usual. You can ask no more. And that absolutely no. No, you have, today, Gaza, you have today, you still have the war in Ukraine. What could be comfortable, I don't know, for how long is that in the midst of this mess? Gas TTF and the European market was around 30 this morning. Brent stood below 90. So basically there is an indication that there are enough resources on offer. To survive the crisis if it doesn't get worse.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 22:07

Exactly. That's the big if. But in terms of gas prices now they have normalized, you mentioned 30 euros. Yeah. Compared to they're much lower than they were, just a year ago. Do, would you, we say they've normalized now that what can we expect over the coming weeks and months?

Massimo Nicolazzi, University of Turin: 22:24

Amen. Net of the unexpected. What you see when you look at future quotations and the forward quotation is that the market is more or less believing that it could be stabilizing around today. Prices, whether this is going to prove true or not will depend on a number of factors concerning next year, basically next winter. But there we see there will be the test. But we've been very lucky. We've had two very mild winters in a row. Absolutely. But next winter, if I look at the new liquefaction capacity coming on stream in the next two or three years, and the new rega capacity coming on stream, for example, in Europe in the next few years I think next year. Is the last potentially troublesome one. Okay. In terms of availability of supply and this is going to be predicated on two factors one of which is weather And the other one is China.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 23:25

Okay? Yeah. Okay. So what you think Chinese l and g demand is a crucial factor here, of course, as well as potentially cold weather.

Massimo Nicolazzi, University of Turin: 23:31

They go together. They go together. If if Chinese demand remains at medium levels and we get a decent winter you can have the prices stabilized, but many things may happen in between. I think these last few years have, advised us not to make medium long term predictions.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 23:51

Exactly. Certainly the recent to recent experience tells us that, but how in terms of, Italy. Was very dependent on Russian gas. It's now, it now needs to turn to LNG. Is it locking itself into to an LNG future here for the coming years or decades?

Massimo Nicolazzi, University of Turin: 24:09

I think everybody does. Italy has tried to answer the crisis via pipelines by increasing imports from Algeria. We have a new. Liquid affection capacity more than another one is coming in the sea next year, et cetera, et cetera, et cetera. Do we need more? There is a sort of conflict there in terms of our policy statements between deification in de carbonization, because basically by five or six years we should be able to decrease. Our consumption of natural gas, according to Brussels of volumes which are more or less equivalent to the volume. So we were importing from Russia. Would you build a new pipeline in a situation like that? You may never be able to amortize it to the extent that you install fruiting facilities in China Serious. In Dublin, its consumption. Why we are saying we are going to harm ours. Someone that floats may be sold as away a fixed pipeline cannot change the direction.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 25:22

But so the answer is there. Floating LNG, you're saying, and certainly do, we've seen a number of them being built Northern Europe, some in Southern Europe. But will, is there a danger that these could be under underutilized?

Massimo Nicolazzi, University of Turin: 25:35

Not for the time being. If we grow more, the answer may change. In Italy, we are talking about doing the two unsure 30 years old project of Regas facilities, one in Sicily and the other. Enjoy a tower. I think these are going to be grossly underutilized if we build them.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 25:58

Okay. Yeah, no, that's interesting. As part of the move to net zero part of the energy transition or just that they, the Italy doesn't have the demand for the gas anymore.

Massimo Nicolazzi, University of Turin: 26:05

Demand will also be a test for next year. What we know now is that in the last two years, our internal consumption decreased from around 74 to slightly more than 61 billion cubic meters a year. Where is going to stand the next year is going to answer your question because this has to stabilize as well. One issue with that is that part of it is gas for industrial production. The ft published a piece couple of days ago saying industrial consumption of gas will be restored between 20. In 2027 or something like that. I seriously doubt it because if I look at the decrease is more or less concentrated, mostly in steel, in chemical and in paper, which are ECT three sectors such as to issue you have in Europe. A competitive question, so to speak. So the decrease could be out of competitive factors and not only of the price of gas.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 27:13

Is that where something like the CAM comes in the carbon border tax that's making these companies uncompetitive or other factors like moving to the US or other parts of the world?

Massimo Nicolazzi, University of Turin: 27:22

I think it's a old story, of the difficulty of the steel industry in Europe. We are just a. Slightly worse soft than the American industry. On that, talking about Pittsburgh, so that this is structural chemical, what is the future of chemical with shale gas and that chip in the states are you going to be able to survive in competition in petrochemicals with oil made European etan? No way.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 27:53

So this drop in demand is more permanent, is that what you're saying? Massimo?

Massimo Nicolazzi, University of Turin: 27:56

The industry bit. I am pessimistic as to the potential for recovery. Some is going to be recovered, but not the whole of it. That a crucial factor will be the reaction of domestic consumption to next winter. Have we been saving something or it was just too warm to light it up?

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 28:20

Yeah, absolutely.

Massimo Nicolazzi, University of Turin: 28:21

But this is something we would understand better next winter, I believe.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 28:24

So that's a very interesting perspective because as prices are falling, you would expect maybe demand to pick up as well, especially both in the household and the industrial sectors.

Massimo Nicolazzi, University of Turin: 28:34

I expect next year, this year to go above 61, so to speak. If it is not as warm as last year was, some billion of industrial consumption, we are probably not going to be able to recover.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 28:50

That's very interesting. And I think people are talking about green hydrogen being a stimulus and for certain parts of the industry, especially for green steel, but you don't do see that as being a factor here, moving from natural gas to maybe gray hydrogen. Green. Hydrogen is that

Massimo Nicolazzi, University of Turin: 29:03

green hydrogen is something that then initi, I call normally even. In the most aggressive scenario, we will have to wait for the second Gulf of the next decade to have a material and substantial possibility of producing green hydro hydrogen. And I'm talking about the most aggressive scenario I've seen so far. If you need hydrogen in the meantime, pick up a different color, make it orange, white whatever. But green for a while will stay as

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 29:37

okay. Okay. So absolutely. So there you're saying that's a long way off, I think. There has been we talked a little bit about l and g. Now there, there is a talk within some European member states of basically prohibiting the use of Russian LNG. Where do you stand on that?

Massimo Nicolazzi, University of Turin: 29:54

This is an interesting story because historically. The only commodity production we haven't sanctioned coming from Russia is gas. Russian gas has dropped by explosion and not by sanctioned, so to speak, because it was never sanctioned and it is not sanctioned yet. And behind, official speeches and the like. I think even in Brussels, they are scared that for another year at least they're going to need some if this is we will probably sanction rationale and g when we are sure that enough equifact is being completed some elsewhere.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 30:39

Okay. Yeah. So we need to be on the safe side before that happens.

Massimo Nicolazzi, University of Turin: 30:42

I'm not saying we need to be, I'm saying. Brussels has shouted many times that they were going to sanction everything, but they never sanctioned gas, and they have helped increasing prices by announcing they would've sanctioned it, but they have not. Are they going to feel enough on the safe side to change their attitude or not? I don't know as far as the system is concerned. You may be doing without also LNG, because the good thing about LNG is that it floats. It is not a fixed installation. So same, you may project projected scenario like the one in oil. It doesn't come here, it goes elsewhere. It is shipped. Pipeline gas goes where the pipeline takes it. LNG goes where the price takes it. So if we sanction it, they're going to export some elsewhere and we are going to import from some elsewhere. I think we can balance. I think if there is a political decision to go forward.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 31:57

Absolutely. You mentioned ships and a crucial element here is what's happening in the Red Sea some of the attacks. Do you see this, is there a danger of a wider escalation of the conflict, which could then also cause imports of LNG to be drastically reduced?

Massimo Nicolazzi, University of Turin: 32:12

The issue there basically is Qatar, but to the extent that the conflict miss, just the ut I don't think, you could have an increase of transportation cost in the short term but if the crisis remains within the present perimeter, I do not expect dramatic consequences on our ability to supply. To be supplied and don't get our ability to supply.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 32:38

We've discussed on several previous episodes of this podcast about what could eventually happen if the Straits of ous were closed what's your view here?

Massimo Nicolazzi, University of Turin: 32:48

We could find that it is a Chinese problem to start with. And and this will be an interesting fighting because it would mean that, we have concentrated importers interest, in keeping the highway free for sure.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 33:04

I think I'd like to turn now to, to Italy and what's happening in this country. Massimo. There are still not many details out on the government's plan to become a gas hub for Europe. Nearly half of the Italian power production is gas fired. How do you see the energy transition playing out in Italy, do you think? Gas or. Continue to play a big role in Italy's power generation going forward?

Massimo Nicolazzi, University of Turin: 33:28

Yes. I see for the first time a not sufficient acceleration, but an acceleration in 2023 in renewables installation. What is going to be the curve of gas for the future? I don't know. I would keep for sure we are going to need it long term for the capacity market. Because we have no substitute for that for the time being. What is going to be the rate of decline in, in, in other destinations, so to speak, is going to depend from a number of factor. Our resilience plan is putting almost 2 billion in capital contributions. To new biogas plants. We should go for doubling our production from intermittent renewables by the under decade. We have to see how much of that is matched. The only thing I say there is that the only form. Even in the age of digitalization, the only form of security we have been able to build conceptually and in practice is redundancy. Eh? So let's keep our ability to be supplied of gas redundant, please. Then we may use it or we may not. We may use it or we may not, but the redundancy has been our own insurance in the last few decades in terms of our energy needs.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 35:08

Absolutely. And I think you are right in terms of the backup in a, in our capacity mechanism or some kind of market of that sort is, there's certainly will be need. And we see in other countries as well. So it may be better just to burn gas for a few hours every year. Rather than some other fields, any, anyway, Massimo a final really question. There's the, there's a talk of across Europe of some nuclear renaissance. Swedes is looking at it again, France, the uk. Is this a Poland? Is this a solution for Italy? I know it's been talked about many times before.

Massimo Nicolazzi, University of Turin: 35:37

I don't talking about solution de carbonization is going to be a Russian salad of a number of ingredients. It depends on how you put it together, so to speak. If you ask me whether nuclear could play a role, my Maya is in principle, yes, but let's see where we stand. Today, all, we can only build the third generation, whatever the press says. And we are seeing what's happening in Kel Point and Inflamma in terms of the increase of power price necessary to fund it. Small modular reactors may come in the future. But basically the is on plan presented in Italy. As for small modular reactors, third generation in turn until the the mid of the next decade. And then maybe we will have a four generation with some circular ability to absorb, to utilize waste. So yes, but let's try to plan it properly and let's try to see who is investing in what. Let's talk concrete projects and not the theory of nuclear safeguarding us on theory. It is very simple on theory. It is very simple. Nuclear, if you adopt it is not something that you adopt in opposition to renewables. You adopt it in opposition to hydrocarbons. You adopt. To the extent that you feel that with renewable salon, you are not going to get there into the labor. If you accept this spray, Mr. Then let's talk concrete projects.

Snjólfur Richard Sverrisson, Editor-in-Chief, Montel: 37:28

Can't say further than that. Massimo. Thank you very much for being a guest on the Montel Weekly podcast.

Massimo Nicolazzi, University of Turin: 37:32

Thanks for you. It was a real pleasure.