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Europe gets more Russian gas, Italy critically short

By Reuters

Italy took emergency measures to deal with what it called critical shortages of Russian gas on Monday following icy weather, while supplies to other members of the European Union mostly improved at the weekend but remained below normal.     
Russia, which supplies about a quarter of Europe's natural gas, reduced westward flows through pipelines across Ukraine last week citing greater domestic demand because of the extreme cold.     
Although Bulgaria, Slovakia, Hungary, Poland and Greece were receiving normal import levels of natural gas from Russia by Monday, shipments to Austria, Romania, Germany and Italy were not fully restored, EU energy spokeswoman Marlene Holzner said.     
"It has become better over the weekend. We are in close contact with the member states," Holzner told a regular briefing.      
The European Commission said the gas situation did not constitute a crisis, as countries were able to meet their needs using storage facilities and other market measures.       
In Italy, however, where demand reached all-time highs following a sixth straight day of curtailed supply from Russia, industry minister Corrado Passera said the situation was "critical" as government and industry officials met for crisis talks in Rome.      
After the meeting, the Italian Industry Ministry said it had decided to enforce deals which allowed it to interrupt supplies to certain industrial clients and switch on oil-fired power stations to partly replace gas-fired plants.     
Italy's gas crisis committee, which will meet again on Tuesday, has already called for more gas to be pumped out of storage, the country's own gas production to be stepped up and alternative sources of gas imports used.     
The country received nearly 20 percent less gas from Russia on Monday while stormy seas delayed the arrival of liquefied natural gas (LNG) tankers from Qatar and cut output from the Rovigo terminal by half.     
Italy's LNG terminal at Rovigo halved output on Saturday as bad weather since Friday prevented tankers from berthing, Roberto Poti, director of development at Edison, which controls the terminal, said.     
Gas consumption hit a record high on Sunday, as Italians turned up heaters against the cold, which has killed hundreds of people across Europe.     
Italian consumption is expected to peak between Monday and Tuesday.      
Although Italy received nearly 30 percent less gas than requested from Russia on Friday and Saturday, it has offset drops with increased imports from Algeria.      
"We reacted with more gas from Algeria, and this allows us to say that there won't be problems for the next few days. We'll make another assessment Thursday or Friday," the chief executive officer of Italian energy company Eni, Paolo Scaroni, told state radio GR1.      
A mild winter leading up to the current cold snap means Italy's storage is well stocked to handle above-average demand, at more than 60 percent full, market sources said.      
Italy has about 10 billion cubic metres (bcm) of working gas storage, and 5.2 bcm in strategic reserves, which can only be tapped following an official decree.     
Italy depends on imports for 90 percent of its gas needs and gets around 30 percent of its imports from Russia.
The gas shortfalls in Europe served as a reminder of the Russian gas supply halts to Europe in deep winter in 2006 and 2009 that stemmed from rows over prices between Moscow and Ukraine, across which pipelines carry gas to the EU.     
On Friday a Russian gas company official accused Ukraine of taking more than its contracted share, a charge denied by Kiev.     
Russian pipeline gas export monopoly Gazprom told  Prime Minister Vladimir Putin on Saturday it had brought supplies to Europe back to normal after reducing them "for a few days", but could not meet increased demand in the freezing weather.      
Its chief financial officer, Andrey Kruglov, told Putin the company had cut gas supplies to Europe by up to 10 percent for a few days before returning them to normal levels.      
However, Russian supplies to Austria showed little sign of improvement, after reductions of 27 percent, the European Commission reported on Monday.     
Slovak utility SPP said Russian gas supplies were down 22 percent on Monday, compared with a 27 percent drop on Sunday, adding it was able to meet demand.     
Arctic temperatures set gas prices soaring at European hubs.
In Britain, Europe's biggest gas market, spot gas prices rose to their highest since early 2005, up more than 20 percent day on day.      
British prices later pared the gains but remained at around their highest in six years. The rally was powered chiefly by bitter cold and supply losses from domestic gas fields.     
Gas flows from British utility Centrica's South Morecambe gas field dropped to zero on Monday, due to an unplanned outage, amplifying supply shortages as the UK struggled to meet rising demand. The company was not immediately available to comment on the field's status.