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Eni says default gas supply agreement with Ilva ends December
December 17, 2014 / 7:07 PM / 3 years ago

Eni says default gas supply agreement with Ilva ends December

ROME/MILAN, Dec 17 (Reuters) - Italian oil major Eni said on Wednesday it was supplying gas to troubled steelmaker Ilva under a special default supply agreement that would end in December, raising concern the plant could face a possible shut down.

“Eni has no commercial gas supply relations with Ilva,” the major said in a statement.

Privately-owned Ilva, Europe’s biggest steel plant by output capacity, was placed under special administration last year after being accused of failing to contain toxic emissions.

Eni said it could not take on Ilva as a regular client because of the steelmaker’s high credit risk and the lack of payment guarantees.

Reports in some Italian newspapers on Wednesday said that Ilva did not have cash to pay for the gas and had started the process of shutting down its furnaces.

Closure of the plant, which is losing tens of millions of euros a month, would threaten the jobs of its more than 16,000 employees.

Italian Prime Minister Matteo Renzi, battling with high unemployment, will discuss Ilva at a cabinet meeting on Dec. 24, a political source said on Wednesday.

Eni said Ilva had been placed in default supply mode on Oct. 1, adding under Italian rules this regime lasted up to 90 days.

Earlier on Wednesday, Ilva’s special administrator Piero Gnudi told parliament he did not believe Eni would suspend supplies since “it would be a catastrophe”.

ArcelorMittal, the world’s biggest steelmaker, has submitted a non-binding offer with Italian steel processor Marcegaglia for Ilva.

Ilva has suffered from weak demand for steel in Europe since the 2008 financial crisis. Its main production site has a capacity of more than 11 million tonnes of steel but in 2013 produced only 5.7 million. (Reporting by Stephen Jewkes and Massimiliano Di Giorgio; Editing by Mark Potter)

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