Snam signs an agreement to study the Spain-Italy gas pipeline

A view of a section of a Snam gas compressor station near the Russian gas entry point near the Austrian border in Malborghetto, Italy, in this undated photo. Snam/Document via REUTERS

MILAN, May 12 (Reuters) – Italian gas group Snam (SRG.MI) has agreed with Spain’s Enagas (ENAG.MC) to explore the construction of an offshore gas pipeline between the two countries, as that Europe is trying to diversify its energy mix and wean itself off Russian gas.

Spain has the largest capacity in Europe to regasify liquefied natural gas (LNG) imported from suppliers such as the United States, but transporting gas to Europe through the Pyrenees has been a problem.

The pipeline, if approved, would have a capacity of up to 30 billion cubic meters per year, Snam’s new chief executive, Stefano Venier, said on a first-quarter earnings conference call.

“Being offshore, it’s easier to be deployed than on the ground,” he said, adding that the feasibility study for the project is expected to take three to four months.

Venier said the group would also consider a possible relaunch of the Midcat project of 8 billion cubic meters per year to transport Spanish LNG to France.

“This is a significant opportunity that we see in the reasonable near future,” he said, adding that the government’s previous opposition to the project had transformed. Snam is a shareholder of Midcat through its Terega unit.

Snam, whose main investor is public lender CDP, is also seeking to acquire two floating regasification vessels to handle the additional LNG supply.

Venier said he expects one of the vessels to be commissioned next year and the second in 2024. Italy currently only has three LNG terminals.

Earlier on Thursday, Europe’s largest gas pipeline group said its core profit in the first three months rose 5.2% to 588 million euros ($618 million), boosted in part by the increase in the volumes of gas transported.

The group, which handles almost all of Italy’s gas transmission and storage business, said it expected lower gas demand in Italy this year partly due to rising energy price.

($1 = 0.9517 euros)

Reporting by Stephen Jewkes; Editing by Agnieszka Flak and Jan Harvey

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