New Delhi [India], May 26 : QatarEnergy notified Italian utility Edison on Monday that it will cancel five additional liquefied natural gas (LNG) cargoes, extending a force majeure from early July until mid-August, according to a Reuters news report.
The extension further complicates the supply chain for Edison, Europe's longest-standing energy operator, which holds a long-term contract with QatarEnergy for the supply of 6.4 billion cubic meters of liquefied natural gas per year to Italy. The deliveries have faced consistent disruptions since April due to conflicts linked to the Iran war.
According to the news report, the continuous disruptions heavily impacted the financial performance of the Italian utility during the early months of the year.
Edison first-quarter operating profit halved mainly due to the negative effect of the force majeure declared by QatarEnergy, the news report said.
The escalating cargo cancellations forced the energy firm to adjust its financial expectations for the remainder of the year.
As per Reuters, the group also trimmed its full-year guidance as a consequence of the uncertainty over the conflict in the Middle East.
With the latest round of cancellations, the total volume of missing fuel grew significantly, forcing the company to secure alternative energy sources from across the Atlantic.
"Taking into account Monday's notification, a total of 17 LNG cargoes scheduled for delivery to Adriatic LNG terminal in northern Italy are subject to force majeure, representing a volume of approximately 2.2 billion cubic meters of gas (bcm)," the news report said.
To mitigate the shortfall, the utility, which operates as a unit of French energy group EDF, diverted its procurement strategy toward American suppliers.
"The utility, a unit of French energy group EDF, has been working on replacing the volumes, mainly via LNG coming from the United States," the news report said.
Edison made steady progress in securing these alternative supplies prior to the latest extension notice.
"As of March 25, it replaced nine out of 17 cargoes cancelled by QatarEnergy, representing a volume of around 1 bcm of gas," the news report said.
Despite the heavy drop in its first-quarter operating profit and the volume of missing gas, the utility maintained that retail consumers will not experience supply shortages.
According to Reuters, the Italian company confirmed on Monday that "it did not anticipate any impact on its end customers."
Italy will likely begin receiving LNG from the Golden Pass LNG facility in the United States, a joint venture between QatarEnergy and Exxon Mobil, from June, two sources familiar with the matter told Reuters in April.