Russia's invasion of Ukraine in February caused a decrease in natural gas exports to Europe, cutting off the continent's access to an essential fuel for heating, electricity generation, and industry. In a Saturday notification to Italian ENI, Russian Gazprom said it could not provide any gas deliveries via the Austrian network. Croatia might be important in assisting the incoming Italian Prime Minister, Georgia Meloni, in navigating her country's bureaucratic maze. The Croatian LNG floating terminal was purpose-built to assist Italy in weaning off Russian energy, and the recent agreement of a pipeline to span from Omisalj to Trieste is more evidence of this.
Weaknesses in the supply chain's consistency have been recently exposed, thanks to disruptions and control systems. Oil and gas production in Italy has been severely hampered by excessive bureaucracy and environmental laws enacted by Italian lawmakers. By eliminating the regulatory overhang that has plagued the infrastructure and energy industries, the next government hopes to put an end to energy market disruptions.
Italy only recently removed a moratorium on oil and gas prospection and exploration that had been in place while the government worked to finalize a strategy to promote environmental, social, and economic sustainability in the country's energy exploitation operations. The Italian Parliament voted in February 2019 to halt all hydrocarbon exploration activities, including the submission of permission applications. The law mandated the establishment of a commission to examine all land and sea regions for their potential use in hydrocarbon exploration and production.
The purpose of this exercise was to assess the viability of these actions in relation to various environmental, social, industrial, urban, and water-related aspects. Suitability would also be determined in offshore locations based on how the operation will affect the coastal ecology, marine life, and transportation routes. After 18 months of analysis, a Hydrocarbon Plan was supposed to be put into motion, outlining a course of action for further exploration and development. Experts in the field believe Italy has some of Europe's largest reserves untapped due to bureaucratic obstacles that have delayed research for years. When the initial 18 months were up, there was an agreement to extend it twice.
As both energy use and costs continue to climb throughout the world, a stable supply infrastructure has become increasingly important. Gas is crucial to the functioning of the Italian economy. Even while Italy imports less of the more expensive Russian gas than Germany does, gas prices are increasing everywhere due to a combination of factors including the stoppage of supply pipes for maintenance or sabotage, and the fact that demand is outstripping supply. A gallon of gas today costs 480% more than it did in the year 2020. When prices rise, it can have a chilling effect on economies all throughout the world, including Italy's.
Furthermore, the current setting is illustrative of a strategy maturing across Europe. Since Russia's invasion of Ukraine sparked a domino effect of supply issues, Europe has learned it cannot continue to rely only on Russian deliveries of natural gas and must diversify supply mechanisms. EU member nations are making concerted attempts to wean themselves from Russian gas, and the European Commission has suggested a 15% cut in EU gas usage by early 2023.
Demand and supply perspectives must be considered if a solution to the current challenge is to be found. In order to reduce demand, the market mechanism must provide for the public and promote energy efficiency. Supply should be bolstered with a resource that doesn't rely on natural gas imports from Russia. It is crucial to develop new means of delivering energy and generating new energy sources.
The job of a politician is not to do what is agreeable, but rather what is required. Strong leadership is the key to ending the present energy crisis. Italy's new prime minister has promised to establish a strong Italy and has pledged to safeguard national interests, so eyes will be on the country as it moves forward as a responsible member of the European Union, and a voice for Italian citizens amidst rising personal energy costs.
When gas supplies to Europe were disrupted by a series of disputes between Russia and Ukraine in recent decades, the EU began seeking out alternate gas supply sources, with LNG becoming a significant component of its energy policy. The European Commission released a plan for liquefied natural gas (LNG) and gas storage in 2016. This plan aims to end the reliance of some member states on a single gas supply source by identifying the necessary projects and constructing the requisite infrastructure.
An LNG development project was first proposed in 1992 to supply Croatia, central and south-eastern Europe, and Italy with LNG. Due to its deep waters, proximity to a gas pipeline, and little environmental consequences, the island of KRK in Croatia was identified as a promising location. The location is also conveniently close to the Middle Eastern and North African suppliers. The first LNG terminal in Croatia and the Omisalj-Zlobin gas pipeline that connects them make it possible to link the Croatian national LNG transmission network with both EU and non-EU nations, allowing for the transit of gas in the direction of Hungary, Slovenia, Italy, and Serbia and Montenegro. Investment of EUR 180M in a new gas pipeline to build the KRK LNG terminal was a "strategic move," as stated by Croatia's energy minister.
When considering the larger picture of bolstering the European energy market and increasing the security of gas supply to European Union countries, and especially to Central and Southeast European countries, including Italy, that want to secure a new reliable gas supply route, the terminal takes on a geopolitical and strategic importance. The LNG terminal and gas pipeline cost €124 million to build, with €100 million coming from the EU's Connecting Europe Facility (CEF). With the help of CEF's study and construction funds, an additional €182 million in investment was made. Because of its importance in maintaining a steady energy supply in the region, the terminal was ranked as a CESEC top priority.
When it comes to safety and environmental protection, the FSRU vessel that makes up a significant portion of the CROATIA LNG terminal is among the most advanced options available. The floating LNG terminal is the safest technological implementation of an LNG terminal since it meets all safety requirements, including those imposed by the SAVESO Directive and other international directives, as well as tight marine conditions and environmental and nature protection measures.
The dimensions and layout of the FSRU are comparable to those of LNG carriers; it has LNG regasification equipment and a means of connecting to the onshore pipeline and uses cutting-edge technical solutions in its design and construction, such as the use of specific materials for key structures and components, stringent testing, and fail-safe technology implementation, to reduce its impact on the environment and on society as a whole.
~Anne Charman, Vice President Market Research - Brightside Industries Group, LLC
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