Italy Surpasses Turkey As Second-Largest Russian Gas Importer

Italy has leapfrogged Turkey to become the second-largest importer of Russian gas, according to Gazprom CEO Alexei Miller on 15 June.

"In 2016, Italian consumers have increased their demand for gas from Russia," Miller said in a brief statement cited by S&P Global Platts. Demand grew by 5.3 percent to 24.2 billion cubic meters (bcm) of gas from 2014 to 2015, which was the second highest volume in its history. Purchases from Italy continue to rise this year with a first trimester yearly increase of 28 percent, though growth continued in the second quarter at a slower pace of 5.3 percent.

In contrast, Turkish imports have faltered in the early part of this year purportedly amid strained diplomatic relations stemming from the downing of a Russian fighter jet in November 2015. Turkey bought 6.42 Bcm from Gazprom in the first three months of this year, representing a 15 percent dip compared to the first quarter of 2015.

Italy isn’t the only country suffering from a slowdown of Russian gas imports in the second quarter of this year. The latest Gazprom data also revealed that sales of gas to Europe and Turkey (not including ex-Soviet Union states) were practically unchanged in the first five months of 2016 compared to the same period in 2015. But supplies to several key European markets including top Russian gas importer Germany grew at a gradual pace in the early part of this year.

A silver lining to the easing of imports is the expectation of increased purchases by European countries due to the possibility of pricing under oil-indexed mechanisms falling from current levels.

Related: Conoco-Philips Pipeline Leak Threatens Wildlife Area In Alberta

In addition, the Italian market may also benefit in the long run from greater availability of natural gas from Russia. Russian plans for the construction of a new pipeline route across the Black Sea to Greece and Italy continue to run their course. Energy Minister Alexander Novak further claimed the implementation of the Trans-Adriatic Pipeline project from the Caspian Region and the Middle East would not interfere with the delivery of gas to Italy.

By Erwin Cifuentes for Oilprice.com

More Top Reads From Oilprice.com:

• Will This Commodity Rebound Continue?
• Rebels And Tax Avoidance: Chevron’s Problems Pile Up
• Kurds To End Oil Standoff With Baghdad For $1B