Gas, who will pay for the 4 billion hole in the balance sheets of Snam and GSE?
The race to fill gas storage in the summer of 2022 has generated losses of 4 billion euros in the balance sheets of Snam and GSE. Which the government will now have to repay. Here's what happened
Last week Arera, the regulatory authority for energy, networks and the environment, announced that in 2022 Snam (the company that manages the Italian gas network) and the GSE (Energy Services Manager ) have suffered losses of 4 billion euros for the purchase of natural gas for storage.
The gas was bought in the summer of 2022 at very high prices – at any cost, essentially – in order to avoid fuel shortages in the following winter: a scenario that was considered possible, given the compromise in relations with Russia after the invasion of 'Ukraine. However, when that gas was resold at prices much lower than the purchase prices, Snam and the GSE reported billions in losses. Which the state will have to pay off, Arera recalled.
Snam's largest shareholder (31.4 percent) is Cdp Reti, which in turn reports to the Ministry of Economy; the GSE is directly controlled by the Ministry of Economy.
WHAT ARERA SAID
With the 2023 budget law, the government has allocated 802 million to cover the losses (capital losses, in jargon) generated by the sale of gas at prices much lower than the purchase prices.
Already in June Arera had explained to MF-Milano Finanza that "the government's financial compensation intended to cover the losses of Snam and GSE is not sufficient", and that the state will have to allocate further resources to close the deficit in the balance sheet of the two companies; deficit that, in fact, it created. “Significant losses emerged linked to the significant differences between the purchase price, which is very high, and the realized or expected sale price of the same gas, which is much lower following the easing of tensions on energy commodity prices recorded and expected in 2023”, the authority had explained.
THE ROLE OF THE DRAGHI GOVERNMENT IN THE GAS RACE
The then government of Mario Draghi feared that it could not guarantee Italy's energy security during the winter months, and so asked Snam and GSE to purchase gas on the market to fill stocks. “Thanks to this measure it was possible to fill the basins up to 93% of their capacity, but it also contributed to amplifying the opportunistic behavior of speculators,” write Andrea Greco and Giuseppe Oddo in the new book L'arma del gas . In August 2022, European gas prices exceeded 300 euros per megawatt hour; a year earlier it was around €50/MWh.
“The result was that, when the methane from storage, paid between 100 and 300 euros per MWh, was put back on the market, the GSE and Snam recovered figures up to seven times lower, with losses of hundreds of millions”, the two journalists continue.
Il Fatto Quotidiano wrote that "the largest speculator that operated on the [gas, ed. ] market in August 2022 was Snam […], which had the mandate to control the price of gas and instead pushed it upwards , making Italians pay the cost of the operation twice: the first time in the form of the cost of the energy component (July and August 2022) and now in the form of system charges which will be transferred to gas bills from January 2024."
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/riempimento-stoccaggi-gas-buco-4-miliardi-snam-gse/ on Mon, 09 Oct 2023 09:39:20 +0000.