Intermittent Russian gas flows will not end in rationing for Italy

We expect Italy to avoid gas rationing this winter and next, with our key scenario showing that at the end of this winter gas storage will be comfortably over 30% of capacity. While the outlook for next winter is less positive, with gas storage lower, it will still be above the 25% threshold, meaning a sharp recession scenario is less likely.

What you will learn:

• Despite the cut in Russian natural gas flows, quick adaptation in supply routes reduced the impact on total gas supply in 2022. Next year, though, will see a bigger supply drop. But high prices, regulatory measures, efficiency gains, and fuel switching should keep a lid on gas demand.
• That said, risks remain. Our assumption is that erratic Russian pipeline flows continue; but Russia could put a stop to gas flow overnight. Moreover, it’s possible that efficiencies may be less than expected, while a colder winter or a decline in electricity production from non-gas sources could result in greater gas demand. This would flip the balance towards a negative scenario.