Italy leapfrogged its European neighbors to become the continent's largest importer of liquefied natural gas in July, the first time it has held the top spot in ship tracking data compiled by Bloomberg going back to 2017. Traders kept buying cargoes even as prices roughly doubled over the year, using government incentives to keep refilling the country's storage sites ahead of winter.
Italy's gas storage is now 75 percent full, below its five year seasonal average but the highest share among Europe's major markets. By contrast Germany sits at 47 percent, the lowest for this time of year in records going back to 2009, while France is 56 percent full after capacity restrictions at some of its LNG terminals this summer. Italy's storage rules set strict refilling targets and impose fines when they are missed.
War and supply disruptions in the Middle East have driven European gas prices up sharply this year, with futures adding more than 30 percent this month alone. Italy's power sector is the most reliant on gas in Europe and demand climbed further during recent heat waves, giving traders extra reason to keep purchasing even at elevated prices.
The divergent strategies amount to opposing bets on how the winter plays out. Agostino Scornajenchi, chief executive of Italian gas network operator Snam SpA, said prices are likely to stay tense in the coming months and that Germany and other countries will need to accelerate storage injections soon. Snam confirmed it remains on track to reach a 90 percent refilling target.
The move sharpens the question of whether other governments should step in to support purchases if flows from the Persian Gulf stay constrained. Asian buyers are also drawing cargoes away from Europe, raising the prospect of a bidding war later in the year. Goldman Sachs has warned that prices could climb toward 100 euros a megawatt hour by December, about 75 percent above current levels, if the market stays tight.