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Gas area

Regulatory framework 

REFORM OF THE NATURAL GAS MARKET P-gas and M-gas (trading platforms for the exchange of natural gas)

Within the context of the natural gas reform, art.  30 of law no. 99/09 assigned to the Energy Market Authority (the GME) the economic management of the market itself and the responsibility for managing the services involving the purchase and sale of natural gas according to economically beneficial criteria.

In order to enforce the provisions of the law, last April the Ministry of Economic Development issued a decree that provides for the introduction of an exchange platform (P-gas) managed by the GME for the offering of imported gas subject to restrictions on transferral or additional prices offered by entities other than the obligated entities. The platform has been in operation since 10 May last year and has been managed by the GME which acts exclusively as a broker rather than as a central counterparty. In regard to the operation of the platform, it is noted that only entities that are accredited by the Virtual Exchange Point as operators that are sellers are allowed to operate on the platform (entities subject to the obligation to offer imported natural gas and others) or operators  that are buyers (all who are not accredited as sellers). Contracts for lots deliverable on an annual or monthly basis are traded in each session.

Though the P-gas was intended to be an initial form of the natural gas exchange, its functions never evolved and the spot-market was launched last December with the introduction of M-gas in which the GME’s role is that of central counterparty in the transactions concluded by the operators.

M-gas has evolved into a Day-Ahead Market for natural gas (MGP-gas) and an Inter-Day Market for gas (MI-gas).

The Day-Ahead Market is organized in one continuous trading session (which is opened three days before the gas-day and closed the day before the gas-day the offers refer to) and a closing auction that is carried out in a single session, the day prior to the gas-day that the offers refer to.

On the MI-gas, those offers for purchase or sale of natural gas are selected which relate to the gas-day that corresponds to the day  the session ends. The MI-gas trading session is opened after the closing of the MGP-gas and ends on the gas-day the offers refer to. 

Finally, the M-gas provides for the establishment of a forward market which is currently being set up.


As part of the reform of the gas industry and pursuant to the proxy given through Law no. 99/09, the Ministry of Economic Development issued a decree for the revision of the “antitrust ceilings” and the measurement procedure, in order to promote access to storage services also to industrial customers through the realisation of new capacity. Firstly, the ministerial provision replaces the antitrust ceiling mechanism with a threshold system based on which each entity that declares holding a market share higher than a predefined threshold must either be subjected to an administered disposal procedure or carry out projects aimed at implementing storage capacity.

In particular with reference to projects that increase storage capacity, the Ministry publishes a list of interventions that can be carried out/implemented by obligated entities, which then select and present a project that must be approved by the Ministry itself, on the recommendation of the Antitrust Authority.

These new provisions also give the possibility to other third party industrial entities who are large consumers of natural gas to participate in the realization of projects as investors. The investor entities which are selected through a tender procedure are granted the right to use future capacity in proportion to the commitment they assumed through their investment.

In order to forecast the benefits for investors of having the new capacity available, the decree provides that the Authority will introduce measures that, through an exclusively financial mechanism, will allow procurement and storage of virtually significant volumes of gas in the periods of greatest availability or lower prices to then be used in the winter months.

The possibility of participating in the realization of projects as investors is also extended to producers of electricity, only for plants that are powered exclusively by natural gas, while no benefits can be gained while the investment is pending.


As mentioned, the reform of the gas market as defined by the regulator provides for a review of the balancing mechanisms to which economic criteria must be applied starting from 1 April 2011, according to Law 130/2010.

In fact, the review of the balancing mechanisms had already begun last year by the Authority with Resolution ARG/gas 165/09. This resolution introduced a new weekly market session in order to promote the ex post balancing of users who will be then able to adjust their positions with respect to the previous week. Furthermore, the resolution also introduced the “user balancing service” for all users of the transport service, in order to create new balancing capacities for those entities which are usually excluded after having reached the limits provided by the regulation currently in force. The newly introduced mechanism is based on weekly auctions during which the storage businesses and the storage users exchange capacities relating to space, introduction and assignment.

In order to fulfil the regulatory requirements for the beginning of economic balancing starting from 1 April 2011, the Authority recently put up a document for consultation (DCO 45/10) in which it proposes the introduction of a simplified balancing system that allows for the gradual replacement of the current storage system. Based on the mechanism that was introduced, the system’s current physical dispatching procedures which are focused on using the stored natural gas remains as it is and a daily session is introduced for the reserve in which operators offer storage availabilities. In this market session, the balancing users are required to offer to the Grid Operator an amount of withdrawn or introduced gas that corresponds to the capacity due to them net of the quantities used for that gas day. 

Offers will be presented to the GME managed reserves market from 7.00 pm on day D until 11.30 am of day D+1; this will render the weekly balancing mentioned in the Authority’s resolution ARG/gas 165/09 redundant.


With its resolution ARG/gas 177/10, the Authority defined the conditions for application of the new natural gas transport tariff components which had been established with the previous ARG/com 93/10. These components which are required for the “gas bonus” (GST) and the financing of energy savings measures and the development of renewable sources (RET) are applied from 1 July 2010 to the withdrawals of final customers that are directly connected to the transport network. However, they were defined and activated only starting from January 2011 and therefore it is provided that during the entire year the withdrawals  tariff will recover the amount necessary to cover the lack of withdrawals in the last half of 2010.

The ARG/gas resolution 218/10 therefore defined the value of the new components in effect from the first quarter of 2011, which will be updated every three months on the basis of the expense forecasts for the accounts they refer to.

RESOLUTION ARG/gas 89/10 AMENDMENT to Energy prices (QE)

On 28 December 2009, through resolution 173/09, the AEEG started an investigation into the procedures and conditions for the procurement of natural gas for supply to protected categories and to promptly assess possible structural changes which may occur to those conditions.

The objective was essentially to assess to what extent SPOT supplies, available on the market consistently since 2009, affect long-term agreements taken as a reference for the procurement terms in question.

Upon completion of this investigation and starting from update for the fourth quarter of 2010, with its resolution 89/10 the Authority amended the formula for calculation of the QE by inserting a value abatement coefficient of 0.925 which will be removed in the fourth quarter of 2011, except in the case of a further extension or amendment.

Significant events


During March, the contracts with STOGIT and EDISON STOCCAGGIO for the modulation storage service for the 2010-2011 thermal year were renewed.


Procurement contracts for modulated gas to REMI were finalised in March and May for approximately 1,700  Mmc for thermal year 2010-2011.

Further procurement contracts for non-modulated SPOT gas were concluded in the same period and the months that followed, with supplies abroad, at national borders, and at the virtual exchange point.

As regards sales, starting in April and for a 12 month period, Hera Trading succeeded another Hera Comm REMI supplier for approximately 145 Mmc.

Subsequently, for the 2010-2011 TY, the direct procurement to the Forlì (Hera Comm) and Pesaro (Hera Comm Marche) REMIs was confirmed for approximately 270 Mmc as were the intermediate supplies to remaining Hera Comm REMIs of 1,700 Mmc. 

During the summer, the evolution of the market and the particular aggression of major operators who were subject to stringent Take or Pay restrictions, made it impossible to confirm the outstanding supplies for TY 2009-10 to thermoelectric operators totalling approximately 200 Mmc.


At the end of July the TRANSITGAS pipeline was closed and emptied due to significant erosion and an uncontrollable landslide following a flood in the Swiss Alps. The work to restore the safety of the pipeline required several months and operations began again at the end of December, although on a provisional basis.

This event did not affect the safety/continuity of the country’s procurement but it did make the situation of the smaller, more unbalanced operators (in terms of their portfolio) difficult on that pipeline. In particular, Hera Trading did not experience any negative effects as its portfolio is almost entirely set up along the Austrian TAG pipeline.


Despite the Transitgas interruption, during summer, streamlining of agreements gave remarkable economic advantages thanks to flexibility and Spot prices, which were lower on the European market. In Hera Trading’s case, this was facilitated by the availability of capacity on the TAG pipeline and the fact that it traded on the Austrian gas exchange at Baumgarten as from the end of 2009.


During 2010, the operations of FLAME ENERGY were consolidated even further on the Italian market, though the expected introduction of market balancing will require a review of operations during 2011.


As regards 2010-2011 winter, in spite of the climate trend, which was less severe compared to the  standard, the management is continuing without any particular problems. The portfolio position is maintained continuously balanced through transactions, even daily transactions, on the market to carry out the necessary adjustments.

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