Edison, an Italy-based gas company, is set to enhance its flexibility in managing demand by substituting some gas volumes from pipeline contracts with liquefied natural gas (LNG), reported Reuters, citing the company’s CEO Nicola Monti.
The company also entered into a 15-year deal with Shell to procure approximately 700,000 tonnes per annum (tpa) of US LNG, commencing in 2028.
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European operators like Edison are increasingly turning to LNG to better navigate uncertain consumption patterns in Italy and across Europe, capitalising on the ability to redirect cargoes to different markets when demand dips.
At the Gastech conference in Milan, Monti spoke to the news agency about the upcoming expiry of two pipeline contracts, one for around one billion cubic metres (bcm) per annum from Algeria and another for roughly 4.4bcm, partially sourced from Libya.
Monti said: “We will probably reduce the overall volumes from these two contracts, with the intention of replacing those volumes with more LNG.”
The Shell contract is a key component of this strategy, aiming to provide Edison with the agility to supply either the Italian or European market or to channel volumes to emerging economies.
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By GlobalDataThis move follows another long-term gas contract Edison secured with US-based Venture Global LNG.
Since Venture Global commenced deliveries in April 2024, shipments have been consistent.
However, Edison is currently engaged in arbitration with Venture Global over an alleged failure to initiate LNG deliveries in late 2022, amidst the energy crisis spurred by Russia’s invasion of Ukraine.
Monti expects a decision on the case by the end of 2025.
The outcome of a similar dispute between Venture Global and Shell, which Venture Global won last month, was unexpected for Edison.
Monti said: “We were very, very surprised with the result of Shell’s arbitration.
“Our arbitration case is different, because the court is different.”
Venture Global faces additional claims from other companies including BP and Galp, which accuse it of profiting from spot market sales rather than fulfilling contracted LNG deliveries from its Calcasieu Pass facility in Louisiana.
Venture Global has refuted these claims and anticipates a favourable resolution in all pending arbitration cases.
