The CEO of Italian power firm Enel told CNBC Tuesday that turbulence in energy markets was likely to persist for some time.
“Things are extremely turbulent, as they have been the whole year, I would say,” Francesco Starace said.
“The turbulence we’re going to have will remain — it might change a little bit, the pattern, but we’re looking at one or two years of extreme volatility in the energy markets,” he added.
Starace’s comments, made on the sidelines of Goldman Sachs’ Carbonomics conference in London, come at a time of uncertainty for the energy sector following Russia’s invasion of Ukraine in Feb. 2022.
Russia was the biggest supplier of both natural gas and petroleum oils to the EU in 2021, but gas exports from Russia to the European Union have slid this year.
“Despite available production and transport capacity, Russia has reduced its gas supplies to the European Union by close to 50% y-o-y since the start of 2022,” the International Energy Agency said in its Gas Market Report last month.
“In the current context, the complete shutdown of Russian pipeline gas supplies to the European Union cannot be excluded ahead of the 2022/23 heating season — when the European gas market is at its most vulnerable.”
Given this fall in Russian imports, major European economies have been attempting to shore up supplies for the colder months ahead. According to data from industry group Gas Infrastructure Europe, the EU’s gas storage is estimated to be 93.9% full.
During the interview, Enel’s Starace painted a mixed picture when it came to gas storage.
“I think we will get through the winter because of all the storage we were able to fill in, and then we’ll find out that we’ll have to refill the storage for next winter … without Russian gas,” he told Steve Sedgwick.
“Let’s not forget we had it in ’22 — less and less — but we had it,” Starace said, adding that a huge amount of work was needed in the coming months. “Too many things need to happen so that next winter is safe.”
He said Europe needed to save gas “every time we can, consume less of it, get rid of those uses of gas that make no sense and leave it for the industry that needs it.”
This was the “big fight that we have to really focus on during ’23,” he added.
Iberdrola CEO Ignacio Galan said he broadly agreed with Starace, adding that he expects the volatility in oil and gas markets to continue over the next few months.
“But I think what we need … is to accelerate, as much as we can, the construction of infrastructures in electricity,” Galan said, referencing both renewables and interconnections. “I think we are far from what is needed.”
He went on to stress the importance of reducing reliance on third countries and third parties in favor of boosting self-sufficiency within Europe.
“The only way for that … is to accelerate our investment in more renewables, in more interconnections, in more digital grids,” Galan added.
Source: CNBC
Image source: F. Starace
