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Italian LNG imports slow markedly as coronavirus takes hold

Italian LNG demand is facing a drastic monthly decrease as public health measures including an emergency decree by the Italian government have halted the majority of public and industrial activities in March. 

Italy’s y/y demand took a hit

Italian LNG imports have slowed considerably by 19% following the coronavirus outbreak. Imports at the country’s three import terminals amounted to 0.75mmt for the past 30 days, compared to 0.93mmt for the same period last year. Italy’s March imports this year to date have reached only 51% of last year’s full month imports, with our LNG Market Tracker indicating LNG imports this month will not even reach two thirds of the import volumes seen in March last year.

Overall te­­rminal utilisation is down, though picture is nuanced

However, the picture for the period is nuanced. The Rovigo Adriatic terminal offshore Venice – Italy’s busiest LNG terminal by volume – saw LNG deliveries arriving during the period drop by 22% from 0.38mmt in 2020 from 0.49mmt in 2019 whilst at Panigaglia on Italy’s western shore offtakes plummeted by 52% to just 0.11mmt. However, the OLT Toscana facility offshore Pisa saw an increase of 30% to 0.26mmt on account of a Sabine Pass cargo aboard the Exemplar in late February.

Italy is subject to sweeping public health measures to slow coronavirus advance

The country has seen some of the earliest and most comprehensive public health measures in response to the coronavirus pandemic in Europe, weighing on power demand as movement and public life were severely restricted to slow the spread of the virus. Accordingly, Italian power consumption is likely to see another drop this week as an emergency decree on Sunday, 22 March put a halt to all non-essential economic activity until at least 3 April. During that period, only industrial activities deemed vital to national cohesion – including utilities, supermarkets, pharmacies and banks as well as public transport – will continue to operate.

Market visibility indicates to more cargoes en route

Current market visibility indicates two additional cargoes have yet to arrive in Italy, though the final destination of one of them involves some uncertainty. The LNG Alliance carrying a 0.07mmt Cove Point LNG cargo is scheduled to arrive at the OLT Toscana terminal by 29 March. However, the LNG Alliance arrived and stopped at the anchorage just outside Cartagena on 21 March, raising the possibility that the vessel and its cargo were diverted. Meanwhile, the Lusail remains en route to Venice’s Rovigo Adriatic LNG terminal, approaching the Suez Canal at the time of writing.

Additional Algerian cargo a possibility but not likely

We also highlight the possibility of at least one additional cargo making its way from Algeria’s Arzew terminal to either the OLT Toscana facility or Panigaglia before the end of the month. Both the Berge Arzew and the Cheikh El Mokrani are currently on their ballast legs with anticipated arrivals at Arzew in time for another laden trip to Italy. Nevertheless, given Italy’s likely power demand trajectory for the remainder of the month we do not currently consider this likely, Moreover, even if either of those vessels were to make one more trip to Italy before month-end, this year’s March imports would still fall more than a third short of last year’s March imports.