Rome: Italy is drafting a proposal for a regulated European bourse for physical oil trade in order to cut speculation, the country's energy regulator chairman, Alessandro Ortis, said in his annual speech yesterday.

"We are putting together a specific proposal with the help of experts in the sector," Ortis said, adding it should help to restrict volatility and favour long-term investment.

Members of the Organisation of Petroleum Exporting Countries (Opec) and some consumer nations have long expressed concern about the role of speculators in energy markets, which some experts say exaggerate price swings beyond what fundamentals justify.

Ortis said the idea was for a European platform for selected players to trade physical barrels with products and contracts standardised and regulated. The contracts would be long term with physical delivery in Europe, he added.

Gas market

Turning to Italy, Ortis highlighted the differences between the electricity market, where liberalisation has been more successful, and the gas market which is still dominated by state-controlled oil and gas major Eni SpA.

He said the liberalisation of the gas market was still not satisfactory with Eni still owning 92 per cent of the import infrastructure.

He said transferring ownership of the gas distribution network Snam Rete Gas SpA from Eni to state financing agency CDP would "certainly benefit the market, consumers and the development of Snam itself."

Snam could see benefits outside Italy, Ortis said, and he pointed to the positive impact on power producer Enel SpA of separating it from electricity grid operator Terna SpA.

Ortis said Italy's renewable energy incentives, excluding Cip6 assimilated sources, would cost more than 3 billion euros (Dh14 billion) in 2010. He said they should be reviewed to avoid about a 20 per cent rise in power bills by 2020.

"For energy from incentives, we're paying about three times the price of conventional energy," Ortis said. "We need a review of the duration and the level of incentives, with particular attention to solar energy," he added.