Italy’s Path to Gas Liberalisation

Corporate Power, Monopoly Distortions and the Russia Factor

Abstract

Existing studies show that, on average, national champions in energy-rich states tend to ‘stick around’ by maintaining strong links with their respective governments in the distribution of rents. Yet the foundations of preference formation—the particular role of national champions, their relationship to their respective governments and a limited number of third suppliers in that process—have neither been theorised nor investigated empirically in countries that are net importers of gas. This article takes a substantial step in that direction. I examine the dynamics among ENI (the Italian national champion), the Italian government, and Russia, their external supplier, focusing on the Italian gas sector and its path to liberalisation. More specifically, I test whether there is positive causality between Italy’s bumpy road to gas market liberalisation and the country’s close energy partnership with Russia. I find that in Italy it is corporate actors, rather than a carefully managed government policy, that affect the level of symbiosis with Russia, and the degree to which energy governance is integrated with the rest of the EU. I test this hypothesis through my examination of the Italian government’s energy policies over time, and through an analysis of the degree to which ENI’s specific strategies have affected its positioning vis-à-vis Russia. I begin by looking at past developments in the Italian gas market, focusing on Italy’s efforts to liberalise the gas market. I then look at Italy’s more recent developments in gas and their links with the country’s deep dependence on Russian gas. Next, I examine the role of exogenous factors influencing these long-term relations (e.g. the changing gas pricing structures in Europe, which result from the American shale gas breakthrough). The final section provides a comprehensive picture of the evidence gathered and draws the conclusions.

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