Il Metanino Statistical Data

Transcription

1 Il Metanino 2017 Statistical Data

2 SNAM: the mission Snam is a European leader in the construction and integrated management of natural gas infrastructure. It fosters the right conditions for fair energy costs by managing the gas system efficiently, developing infrastructure and providing integrated services for the market. It promotes the integration of the European networks, including through strategic partnerships with the biggest operators in the sector, along the main continental energy corridors. Snam follows an ethical and socially responsible business model, that can create value for the Company and for the communities in which it operates, with acknowledged professionalism and transparent dialogue with all its stakeholders, while respecting the environment and the regions. A clear and sustainable long-term development strategy, based on one of the most substantial investment programmes in Italian industry, has enabled the Company to attract Italian and foreign capital, boosting growth and employment. With around 3,000 employees, Snam is active in natural gas transportation, storage and regasification. It manages a national transportation network encompassing more than 32,000 kilometers, nine storage sites and one regasification facility. 1

3 INDEX The Energy Environment... 5 Natural gas reserves in the world (2016)... 6 Natural gas production in the world (2016)... 8 Natural gas consumption in the world (2016)... 9 Natural gas: Trade movements 2016 by pipeline...10 Gas prices in the world...12 The main LNG streams in LNG worldwide in 2016: areas of interest...16 LNG in Europe: re-export...18 LNG in Europe: plants...19 Storage capacities in the world at the end of EUROPE Main gas reserves supplying Europe...22 Energy consumption by source in the main countries...23 Natural gas consumption by country ( )...24 ITALY Natural gas consumption by sector...25 Natural gas supply in Italy in Snam in the European scenario...27 The pipelines towards Europe...28 International development, overview...30 Snam, the European scenario...32 Snam in the Italian gas system...35 Snam, the company profile...36 The journey of natural gas in Italy through Snam infrastructures...37 (Snam Rete Gas, GNL Italia, Stogit) Regulatory framework: businesses tariff scheme...41 Main economic-financial data...42 Snam in the bond market...43 Snam in the bond market: the credit rating...44 Appendix...45 Glossary...46 Reference heat capacity...48 Units of measurement...49 Transported natural gas composition...50 References

4 The Energy Environment 5

5 The Energy Environment The Energy Environment Natural gas reserves in the world (2016) Trillion m 3 Total: OECD countries: 9.5% Non OECD countries: 90.5% * Source: BP statistical review of world energy *Of which 49.8 in Russia and Turkmenistan. 4.1% S. & Cent. America 6.0% North America 7.6% Africa 9.4% Asia Pacific 30.4% Europe & Eurasia 42.5% Middle East 6 7

6 The Energy Environment Natural gas production in the world (2016) 3,551.6 billion m 3 The Energy Environment Natural gas consumption in the world (2016) 3,542.9 billion m 3 AFRICA: 208.3; 6% ASIA PACIFICO: 579.9; 16% NORTH AMERICA: 948.4; 27% ASIA PACIFICO: 722.5; 20% NORTH AMERICA: 968.0; 27% AFRICA: 138.2; 4% MIDDLE EAST: 637.8; 18% SOUTH AND CENTRAL AMERICA 177.1; 5% MIDDLE EAST: 512.3; 15% SOUTH AND CENTRAL AMERICA 171.9; 5% EUROPE AND EURASIA: 1,000.1; 28% EUROPE AND EURASIA: 1,030.0; 29% Usa Russia Iran Qatar Canada China Norway Saudi Arabia Algeria Australia Billion m Usa Russia China Iran Japan Saudi Arabia Canada Mexico Germany UK Billion m 3 Source: BP Statistical review of world energy, Source: BP Statistical review of world energy,

7 The Energy Environment The Energy Environment Natural gas: Trade movements 2016 by pipeline FROM FROM To North America USA Canada Messico S. & C. America Europe Austria Belgium France Germany Italy Netherlands Spain Turkey UK Other Europe v CIS Middle East Africa Asia Pacific Total exports Source: BP statistical review of world energy Billion m 3 10 US Canada Bolivia Netherlands Norway UK Other Europe Azerbaijan Kazakhstan Russian Federation Turkmenistan Uzbekistan Iran Qatar Algeria Libya Others Total imports 11

8 The Energy Environment Gas prices in the world The Energy Environment Henry Hub (USA) (January 1, June 30, 2017) GNL (Asia) (January 1, June 30, 2017) /MWh: % /MWh: 8.8 /MWh: % /MWh: jan feb mar apr may jun jun 2017 PSV (Virtual exchange point) (January 1, June 30, 2017) Zeebrugge TTF (EU) (January 1, June 30, 2017) /MWh: /MWh: % jan feb mar apr may jun jun jan feb mar apr may jun jun 2017 /MWh: /MWh: % jan feb mar apr may jun jun

9 The Energy Environment The main LNG streams in % of the gas is consumed in the production countries, the residual 30% is traded: 347 (325 in 2015) billion m 3 by LNG (Liquefied Natural Gas) and 737 (709 in 2015) billion m 3 by pipeline. Billion m 3 14 Export 19 export countries. Qatar, Australia, Malaysia, Nigeria and Indonesia: 70.4% of total LNG exports Gas liquefaction plants across the world Global utilization 82% Global liquefaction capacity increased in 2016, thanks to the start-up of LNG export from the Gulf of Mexico (first cargoes shipped from Sabine Pass), and to new Australian capacity, which has activated new lines in three plants. Several plants under construction in USA and Australia. * Of which: Belgium 2.8 France 9.7 Italy 5.7 Spain 13.2 Turkey 7.7 UK 10.5 USA Trinidad Tobago 14.3 South America Europe Europe 56.4* Algeria 15.9 Europe Source: BP statistical review of world energy 2017, GIIGNL, The LNG Industry 2016 and IGU World LNG Report Europe Nigeria 23.7 Europe Qatar Japan Japan Import 39 import countries (+ 4 compared to 2015: Colombia, Finland, Jamaica and Poland). Asia: 73% of total LNG imports (60% in 2010). LNG regasification plants across the world 11 new terminals in 2016: 6 onshore (China, Finland, France, Japan, Poland, and South Korea) and 5 are based on floating solution (Colombia, Indonesia, Jamaica, Turkey and United Arab Emirates). 19 new terminal under construction (of which 5 in China) and 7 expansion projects underway (China, Greece, India, Singapore, Taiwan and Thailand). South Korea Taiwan India India 22.5 China 34.3 South Korea 43.9 South Korea Taiwan 19.5 Indonesia 21.2 Malaysia 32.1 Japan Australia ,5% of LNG trade flow, compared to 2015, due to several factors: new Australian volumes, the resumption of production in Angola and Egypt, the start-up of exports from the Gulf of Mexico. Like in 2015, 28% of LNG trading is spot/short-term. Most of the demand comes from Asia (73%), most of the offer comes from Asia-Pacific Area (45%) and Qatar (30%). China Taiwan Japan Japan The Energy Environment 15

10 The Energy Environment LNG worlwide in 2016: areas of interest Europe Against expectation, Europe did not function as a sink for the production increase in The largest decline in imports was recorded by the UK (-26% year-on-year), due to higher domestic gas production. Belgium and the Netherlands also recorded declines of respectively -58% and -42%. France showed an opposite trend: +28% compared to 2015, net of re-exports. The Energy Environment Asia Demand soared in China (+37% LNG imports compared to 2015), due to an increase in demand from the industrial sector and in gasfired power generation. Thanks to low spot prices and to a price sensitive LNG demand, Indian imports also jumped (+ 30%), confirming the country s rank of 4 largest LNG buyer worldwide. In Japan LNG imports declined, due to the restart of several nuclear units and to energy conservation efforts. Asia-Pacific The Pacific area reconquered the top position among producing regions of LNG, with 45% of global supply, followed by the Middle-East (35.5%) and the Atlantic Area (19.5%). Australia: mainteined its position as the second largest exporter in the world, behind only Qatar, thanks also to the launch of new lines in three liquefaction plants. 5 projects are under construction and are expected online by USA The USA started to export LNG from Sabine Pass liquefaction plant (Gulf of Mexico). 5 expansion and upgrade projects are under construction. Export from this projects are scheduled to begin in Decline in the production in Trinidad for shortage of feed gas. Source: GIIGNL, The LNG Industry 2016 and IGU, World LNG Report Africa Decline in the production in Nigeria for political uncertainty. This decline was partially offset by the restart of the export in Angola, after a two-years shutdown. Steep increase, almost tripling from its 2015 level, of Egypt import. Qatar Qatar is the main exporter: 30% of the worldwide liquefaction capacity. 17

11 The Energy Environment LNG in Europe: re-export LNG in Europe: plants The Energy Environment Re-exported volumes remained relatively stable in 2016 compared to The reloading countries remained at 10: however this included no re-exports by India and a restart of re-export activity in Brasil, especially to South America. Europe registered a decrease of the activity, with a collapse of Spain, from 26% in 2015 to 3% in It is worth mentioning the increase in France (from 8% in 2015 to 26% in 2016), Belgium (from 19% to 22%) and Uk (from 5% to 9%). 10 reloading countries Liquefaction plants Regasification plants Snohvit - Statoil France Belgium Netherlands UK Singapore Brasil South Korea Portugal Spain USA 8% 5% 9% 3% 3% 4% 4% 15% 22% 26% Milford Haven - South Hook LNG Milford Haven - Dragon LNG Frederikstad - Skangas Pori - Skangas Lyselik - Skangas Nysahamn - AGA gas Isle of Grain - National Grid Grain LNG, Ltd Klaipeda-Hoegh LNG Rotterdam - Gate Terminal Zeebrugge - Fluxys Dunkerque - Gaz Opale Fos Cavaou - Fosmax LNG Fos Tonkin - Elengy Montoir - Elengy Bilbao - BBG Panigaglia - GNL Italia Porto Levante - Adriatic LNG OLT - Offshore LNG Toscana Mugardos - Reganosa Marmara Ereglisi Huelva - Enagas Barcellona - Enagas - Botas Sagunto - Saggas Aliaga Arzew - Sonatrach Skikda - Sonatrach Revithoussa - DESFA Marsa-el-Brega - Sirte oil Co. Sines - REN Atlantico Cartagena - Enagas Source: GIIGNL, The LNG Industry 2016 e IGU, World LNG report

12 The Energy Environment The Energy Environment Storage capacities in the world at the end of 2016 billion m MAJOR EUROPEAN COUNTRIES * *of which 16.5 of Snam (+0.6 compared to 2015, thanks to the start of Bordolano). Source: Stogit (Offered capacities TY ) Source: IEA, Report «Natural gas information», For Turkey: Ministry of Energy and Natural resources. For Russia: Management report PJCS Gazprom. 21

13 The Energy Environment EUROPE Main gas reserves supplying Europe* Energy consumption by source in the main countries FRANCE: Mtep Gas: 15.7% Coal: 3.4% Other: 0.5% Nuclear: 41.9% The Energy Environment GERMANY: Mtep Other: Nuclear: 0.3% 6.9% Coal: 23.5% Renewable: 12.6% Norway 1.8 Netherlands 0.7 Russia 32.3 Oil: 28.1% Gas: 22.7% Renewable: 10.4% Source: Ministère de l environnement, de l énergie et de la mer. SPAIN: Mtep Coal: 10.4% Other: 5.7% Nuclear: 12.0% Renewable: 5.6% ITALY: Mtep Oil: 34.0% Source: AG Energiebilanzen. Coal: 7.0% Other: 5.0% Renewable: 20.0% Algeria Libya Egypt Qatar 24.3 Gas: 18.3% Oil: 48.0% Source: Rivalry, European energy scenarios IHS, July Gas: 34.0% Oil: 34.0% Source: MSE, Situazione energetica nazionale Nigeria 5.3 Trillion m3 UK: Mtep Coal: 6.5% Other: 1.0% Nuclear: 8.2% Renewable: 9.5% NETHERLANDS: 74.7 Mtep Nuclear: Other: 1.2% 1.8% Renewable: Coal: 4.6% 13.8% Source: BP Statistical Review of World Energy, June Gas: 39.8% Oil: 35.0% Gas: 40.5% Oil: 38.1% * Europe Source: UK Government. Source: StatLine Statistic Netherlands. 23

14 The Energy Environment Natural gas consumption by country ( ) ITALY Natural gas consumption by sector The Energy Environment Italy* France UK Germany Spain Netherlands Bcm Demand by sector Residential Thermoelectric Industrial* Other Gas Demand Bcm Billion m Billion m Italy France UK Germany Spain Netherlands Residential Thermoelectric Industrial* Other Source: EUROSTAT, Supply natural gas, short term monthly data. *Source: Snam, Annual Reports * Includes the consumption of the Industrial, Agriculture and Fishing, Chemical Synthesis and Automotive sectors. Source: Snam annual reports. 25

15 The Energy Environment Il contesto energetico di riferimento Natural gas supply in Italy in 2016 GAS DEMAND: 70.9 billion m 3 Domestic production: 5.8 Storage balance, export and other: -0.2 Import: 65.3 of which 6.4 by LNG. Snam in the European scenario Origin details (billion m 3 ) Other 5.3 Norway 1.1 Russia 27.0 Netherlands 2.2 Algeria 19.1 Libya 4.8 Qatar 5.8 Source: MSE, Situazione energetica nazionale 2016 (april 2017)

16 Snam in the European scenario The pipelines towards Europe Snam in the European scenario Available capacity, bcm Main active pipeline Planned pipeline Turkstream: 32 bcm/year (2 lines). Offshore way 100% Gazprom; onshore way 50% Botas and 50% Gazprom. Agreement signed between the parties, works started in May TANAP: 16 bcm/year, shared by Socar 58% Botas 30% and BP 12%. Estimated start TAP: 10 bcm/year, shared by Snam 20%, Socar 20%, BP 20%, Fluxys 19%, Enagas 16%, Axpo 5%. Works started in 2015, estimated entry into operation in STEP (ex Midcat): 8 bcm/year, is a community interest project that strengthens the connection between Spain and France and allows additional flows from the Mediterranean (Algeria, LNG) towards central Europe. Estimated start Eastmed: 10 bcm/year extendable to 16 bcm. Shared by Edison 50% and Depa 50%. In phase of the feasibility study. Supply route from the gas fields in the East Mediterranean. 136 bcm from North Sea* Netherlands UK Germany Italy 4 STEP Spain Medgaz: 8 Meg: 14 Transmed:33 Morocco Northstream** Belarus Poland Moldova Ukraine Romania 1 Turkstream 3 TAP 2 TANAP Greece Turkey Greenstream: 10 5 Eastmed Yamal Brotherhood Trans Balkan Bluestream Around 280 bcm coming from Russia Algeria Libya Source: IHS, PCI List European Commission. 28 * 86 towards the Continent, 50 towards UK. ** An expansion of about 55 billion m 3 is under discussion. 29

17 Snam in the European scenario International development, overview Snam holding indirectly 15.75% in joint venture with Fluxys (50%-50%) Snam in the European scenario Interconnector Represents last section of the South- North corridor connecting to the continental grid one of the major European gas markets. Bi-directional flow capacity provides flexibility and diversification of supply sources to UK and Continental Europe. Snam holding indirectly 19.6% In joint venture con Allianz (Snam 40%) GCA Integrating the East-West gas corridor. With its strategic positioning in Central Europe, it plays a key role in the transport of gas toward many markets adjacent to the Austrian market. National Networks International Assets LNG terminal TAG Integrating the East-West gas corridor. TIGF Key position along the East-West energy corridor. Snam holding 84.47%* *Equal to 89.22% of economic rights Strategic opportunity to establish reverse flow capability to Southern Germany and Eastern Europe. Snam holding 40.5% Interconnects the French and Spanish markets with Central and Northern Europe. Represents a strategic infrastructure for achieving greater integration at a European level. Snam holding 20% Tap Contributes to the full-scale development of the South-North corridor in Italy. It allow for diversification of supply, through the importation of gas from Azerbaijan

18 Snam in the European scenario Snam in the European scenario Snam, the European scenario Within the european energetic policy, Italy holds an important role, as it is placed in the middle of the main European gas routes. In line with the principles of the European Third Energy Package, which promotes the integrated development of infrastructures and common rules for network access in different countries, and in order to take advantage of the privileged position it enjoys in Europe s gas corridors, Snam, from 2012, has increased its focus on strategic partnership and M&A operations. With the positioning of its domestic and international assets, Snam will have a leading role in the investment projects that will be needed in the next years in Europe. JANUARY 2012 Snam and Fluxys agree to evaluate future joint strategies, which aim to promote cross-border flows and to link the most important gas trading infrastructures in the North-West and South of Europe. DECEMBER 2016 It was completed in December the sale of 49% of Gas Connect Austria from OMV, the international integrated oil and gas company based in Vienna, to the Consortium composed of Allianz and Snam. The transaction is a unique opportunity for Allianz and Snam to invest in a well-established gas transportation network and essential infrastructure delivering gas to the Austrian domestic market. Given its strategic Central European location GCA also fulfills an important transportation function for several other adjacent markets. FEBRUARY/SEPTEMBER 2012 Acquisition of a 31.5% stake of Interconnector UK (16.41% from eni and 15.09% from E-on), of a 51% stake of Interconnector Zeebrugge and of a 10% stake of Huberator through a joint ventury with Fluxys. This joint acquisition is a first important milestone in pursuing the aim of an integrated European gas network and follows the announcement in January 2012 FEBRUARY/JULY 2013 Acquisition of a 45% stake of TIGF, heading a consortium in which GIC holds a 35% stake and EDF the remaining 20%. TIGF represents a strategic platform with the aim to develop the integration of European gas markets, and can contribute to increase their liquidity and guarantee the security of supply in France and Europe. DECEMBER 2015 In 2015 Snam s international development continued with the acquisition of a 20% stake in Trans Adriatic Pipeline AG (TAP), the company responsible for developing the pipeline that will run from the Turkey-Greece border to Italy along the Southern Corridor, enabling gas produced in Azerbaijan to reach European markets, through the italian infrastructure. DECEMBER 2014 Completion of the acquisition of the stake (84.47%) held by CDP GAS in Trans Austria Gasleitung GmbH (Tag), approved by the Board of Directors on 12 September Tag represents a strategic opportunity to realize reverse fl ow capacity with South Germany and Eastern Europe

19 Snam in the Italian gas system 34 35

20 Snam in the Italian gas system Snam, the company profile Snam in the Italian gas system Consolidation perimeter Group Insurance Services 100% GASRULE INSURANCE LIMITED INTERNATIONAL ASSOCIATES TIGF: 40.5% TAG: 84.47% IUK: 15.75% JV with Fluxys TAP: 20% GCA: 19.6% JV with Allianz Transport 100% Regasification 100% Storage 100% Distribution 13.5% SNAM RETE GAS GNL ITALIA STOGIT PRISMA: 14.7% Snam, shareholders at May 2017 Shareholding Geographical Break Down at May % 8.1% 5.4% 2.4% Italy- Strategic holders* 53.2% 30.1% 2.4% 0.5% CDP Bank of Italy Treasury Shares Institutional Investors Retail Investor Minozzi 15.1% 11.4% 30.6% 13.8% Italy-Retails** Italy-Institutional Continental Europe UK and Ireland USA and Canada Rest of the world Treasury shares 17.4% 3.9% 36 * Italy-Strategic holders includes Bank of Italy and CDP. ** Italy-Retails includes the participation of Romano Minozzi equal to 5.7% 37

21 Snam in the Italian gas system Snam in the Italian gas system TRANSPORT: Thanks to investments to develop and upgrade infrastructure, the network transportation capacity has always grown in the past years. In line with the provisions of the EU Third Energy Package, the Company is committed, through specific investments, to facilitating trans-european flows, thanks to the development of reverse-flow transport infrastructure. The gas from abroad is injected into the national network via eight entry points where the network joins up with the import pipelines (Tarvisio, Gorizia, Gries Pass, Mazara del Vallo and Gela) and with the LNG regasification terminals (Panigaglia, Cavarzere and Livorno). Once imported or regasified, gas is transported to local distribution networks, to withdrawal points along the Regional Network, or to large final clients, either thermoelectric plants or industrial consumers. Snam Rete Gas allocates transportation capacity to the shippers upon their request. Then they gain the right as Users to inject and withdraw at any time during the thermal year, a quantity of gas not greater than the daily capacity allocated. Terms to access the transportation service are set out in the Network Code, which is updated by Snam Rete Gas on the basis of the criteria issued by the Authority. Shippers may sell and trade gas injected into the National Network, at a Virtual Trading Point, thanks to a supporting computer platform developed and made available by Snam Rete Gas. LNG REGASIFICATION: Through the Panigaglia regasification plant, Snam provides the Italian gas system with the proper diversification of sources, while ensuring a high degree of flexibility in terms of supply. The process for the extraction of natural gas from the fields, its liquefaction for transportation by ship and subsequent regasification for use by the users, forms the LNG chain. The process begins in the country of the exporter, where the natural gas is brought to a liquid state by cooling it to -160 C and subsequently loaded onto tankers for shipping to the LNG regasification terminal. At the regasification terminal, the LNG is unloaded, then heated and returned to a gaseous state before being injected into the natural gas Transportation network. National (9,590 km) and regional (22,918 km) gas pipeline grid: 32,508 km Gas injected into the grid: bcm Gas imported: bcm Gas production: 5.57 bcm Import by entry points (bcm/year) Tarvisio Mazara del Vallo Passo Gries Gela Cavarzere (LNG) Livorno (LNG) Panigaglia (LNG) Gorizia Panigaglia terminal Gas liquefied: 0.21 bcm Tankers loads: 5 Daily regasification capacity: 17,500 m 3 of LNG Yearly maximum capacity of injection into the grid: 3.5 bcm PASSO GRIES PANIGAGLIA (LNG) LIVORNO OLT (REGASIFICATION TERMINAL) SNAM National pipeline network Compression stations TARVISIO GORIZIA CAVARZERE (REGASIFICATION TERMINAL) Regasification terminal Import points MAZARA DEL VALLO 38 GELA 2016 data 39

22 Snam in the Italian gas system Snam in the Italian gas system Regulatory framework: businesses tariff scheme STORAGE: Snam storage capacity has sizeably increased over the last decade, thanks to relevant investments both to increase capacity of existing fields and to develop new sites. The gas storage system fulfils different requirements between supply and consumption that are derived from the seasonality of demand. The injection phase into the National Network is generally concentrated between April and October, while the withdrawal phase from fields, treatment and delivery to users via the Transportation Network is usually concentrated between November and the following March. Storage also ensures that strategic quantities of gas are available to compensate for any lack of or reduction in non-eu supply or crises in the gas system. Stogit is the major Italian operator and one of the leading European natural gas storage operators, via eight storage fields in Lombardy (four), Emilia-Romagna (three) and Abruzzo (one). Stogit, the largest operator in Italy and one of the main operators in Europe, was incorporated in 2000 as part of the eni Group and acquired by Snam in It operates under a concession system. According to economic and technical efficiency criteria, the Company uses an integrated infrastructure system made of storage fields, treatment plants, compression stations and an operating dispatching system. RAB Real WACC pre-tax INCENTIVES on new investments TRANSPORT Re-valued historical cost STORAGE Re-valued historical cost Deduction of restoration costs 6.5% 2016/18 20% withholding for 8 years for revenues in excess of revenue recognised resulting from insolvency procedures Return on investments t-1 to offset the regulatory time lag (from 2014) REGASIFICATION Re-valued historical cost 5.4% 2016/17 6.6% 2016/17 +1% for 7 years (regional network development investments) +1% for 10 years (national network development investments) +2% for 10 years (entry point development investments) WACC +1% on new investment carried out after 31 December 2013 to offset the regulatory lag +2% over 16 years (new terminals or increasing capacity at existing terminals by more than 30%) WACC +1% on new investment carried out after 31 December 2013 to offset the regulatory lag Gas moved into the system: bcm Gas injected: 9.96 bcm PASSO GRIES Gas withdrawn: bcm Strategic storage capacity: 4.5 bcm Available storage capacity : 12.0 bcm Concessions: 10 (9 active) 2016 data PANIGAGLIA (LNG) LIVORNO OLT (REGASIFICATION SNAM Storage sites TERMINAL) TARVISIO GORIZIA CAVARZERE (REGASIFICATION TERMINAL) EFFICIENZA X-factor The AEEGSI has regulated the tariff system in each business, defining the criteria for setting the tariffs in different regulatory periods. The rate of return on regulatory invested capital (WACC) has been in force since 1 January For the regulations of the infrastructural gas services, the Authority has established a regulatory period lasting six years ( ); moreover, a mechanism of infra-period WACC update has been envisaged, based on the trend of the macroeconomic scenario. TRANSPORT* REGASIFICATION* STORAGE 2.4% on operating costs 1.4% on operating costs 0% January 2014 / December 2017 January 2014 / December 2017 January 2015 / December MAZARA DEL VALLO GELA * The regulator proposed a two years extension of the regulatory period (up to December 2019) for both transport and regasification. 41

23 Snam in the Italian gas system Snam in the Italian gas system Main economic-financial data Snam in the stock market Snam (million) Total revenue 2,578 2,627 2,560 Regulated revenue excluding Pass-through 2,372 2,384 2, % Snam Adjusted EBITDA 2,054 2,057 1,987 Adjusted EBIT 1,496 1,481 1, % Stoxx Europe 600 utilities Adjusted Net profit * Net debt 13,652 13,779 11,056 Capex *Adj. Net profit proforma. Year to date (January 1, 2017 / June 30, 2017) 7% 0% 2% 4% 6% 8% FTSE MIB Snam Rete Gas, 2016 (transport) GNL, 2016 (regasification) Regulated REVENUES: 1,779 million Regulated REVENUES: 18 million CURRENT YIELD*: 5.5% TSR ( )**: 504.0% Stogit, 2016 (storage) Regulated REVENUES: 502 million 42 * Calculated as the ratio between the 2016 dividend and the share price at 30/06/2017 (3.816 ). ** Considers the reinvestment of the dividends in the Snam share calculated on the share price at 30/06/2017 (3.816 ). 43

24 Snam in the Italian gas system Snam in the bond market: the credit rating At 2016 year-end net financial debt totalled 11,056 million euro. The separation of Italgas, effective from 7 November 2016, led to a reduction of Snam indebtedness of around 3.6 billion euro. Following the demerger, Snam recalibrated and redesigned its liabilities structure. In this context, the Company successfully concluded, for example, a Liability Management transaction, the largest to date in Europe, through the buyback on the bond market for a nominal value of approximately 2.75 billion euro, with an average coupon of ca. 3.3% and a remaining term of around 3 years; and the simultaneous issue of two new bond loans for a total of 1.75 billion euro (average coupon of 0.625% and an average maturity of around 8.3 years). A financial efficiency that allows Snam to enjoy of the positive evaluation by the credit rating agencies. The Italgas separation did not change the credit standing of the Company, which remains at the investment grade level. Appendix Glossary Reference heat capacity Units of measurement Transported natural gas composition References Snam in the Italian gas system LAST UPDATE 19 December 2016 LAST UPDATE 29 November 2016 LAST UPDATE 29 July 2016 > > > RATING FOR LONG-TERM DEBT Baa1 RATING FOR LONG-TERM DEBT BBB RATING FOR LONG-TERM DEBT BBB+ > > > RATING FOR SHORT-TERM DEBT Not assigned RATING FOR SHORT-TERM DEBT A-2 RATING FOR SHORT-TERM DEBT F2 > > > OUTLOOK Negative OUTLOOK Stable OUTLOOK Stable 44 45

25 Appendix Appendix Glossary Economic and financial terms Economic and financial terms: net investments made for operating reasons, being the sum of net working capital and non-current assets. Weighted Average Cost of Capital (WACC): indicates the remuneration of the invested capital as recognised by the Authority (RAB). Net debt: Indicator of the ability to meet financial obligations. Represented by gross financial debt minus cash and cash equivalents as well as other financial receivables not held for operations. Incentives on investments: remuneration on the investments to be added to the base return. Capex: costs of long-lasting assets where useful life does not expire over one reporting period. Gross Operating Margin (EBITDA): unit of measurement to assess the group s operating performance, as a whole and in the individual business segments, in addition to EBIT. Determined by the difference between revenue and operating costs. Leverage: Indicator of financial structure. Measures a company s level of debt and is calculated as the percentage ratio of net financial debt to net invested capital. Regulated revenues: revenues from the regulated activities of the company. Net profit: EBIT minus result from financial operations and income taxes Operative profit (EBIT): difference between revenues and costs in a given period; therefore the income from operations before costs and revenues from financial operations and taxes. Regulatory terms Negotiated access: access system to the network based on individual contracts at prices freely negotiated between the parts (producer/suitable client and network operator). Regulated access: access system to the network based on individual contracts (producer/suitable client and network operator) at prices regulated by a proper agency (Autority for Electricity Energy and natural Gas). Unbundling: ownership, corporate and accounting separation of import, transportation, distribution and storage activities of the vertically integrated companies of the gas, aimed at the beralisation of the market. Regulatory period: period of time (usually four years) for which criteria are defined for setting tariffs for transport and dispatching, storing, distributing, regasifying liquefied natural gas. We are currently in the third regulatory period for all the four business.naturale e di rigassificazione del gas naturale liquefatto. Tariff: unit prices applied to the natural gas business. Commercial terms Thermal year: period of time into which the regulatory period is divided, currently coinciding with the calendar year. National Network: set of pipelines, compressor stations and infrastructures that, at national level guarantee the transport of natural gas, through interconnection with international transport networks, production sites, to the delivery points for the distribution and use of natural gas. Liquified Natural Gas, LNG: Natural gas comprised essentially of methane liquefied by cooling at around -160 C, at atmospheric pressure, to make it suitable for tanker transportation or reservoir storage. In order to be injected into the transportation network, the liquid must be reconverted into a gas at regasification plants and brought to the operating pressure of the pipelines. Upstream: activity of reserch, drilling and coltivation of hydrocarbons. Downstream: activities following the reserch and drilling of oil. In more details it regards the refining and processing of the oil to obtain products ready to be used; the storage and transport of oil products; the distribution and commercialization of fuel and lubricant through the distribution network Gas chain: totality of activities concerning the natural gas market, from the production/importation to the distribution to the final client. Natural Gas: is a gas consisting primarily of methane and, at lower level, ethane, propane and higher hydrocarbons. The natural gas injected into the transportation network must respect a specific quantity to guarantee the interchangeability of the gas

26 Appendix Appendix Reference heat capacity Units of measurement CONVERSION FACTORS LHV (MJ/kg) HHV LHV (kcal/kg) HHV Vapour coal 26.1 / 6,250 / Sulcis coal 22.3 / 5,330 / Green lumber 10.5 / 2,500 / Coke of coal 29.3 / 7,000 / Reference crude oil ,000 10,600 Dense combustible oil ,600 10,150 Fuel oil ,200 10,800 Virgin Naphta ,500 11,400 LPG ,000 12,000 To convert in multiply for inch in millimeters mm 25.4 feet ft meters m statue mile mi. kilometers km nautical mile mile kilometers km short ton sh. ton ton t long ton long ton ton t pound lb. kilometers kg kilogram kg newton N 9.81 pound per square inch psi bar bar 68.95x10-3 kilogram per square cent. kg/cm³ bar bar atmosphere atm bar bar cubic feet ft³ m3 m³ 28.32x10-3 gallon U.S. gal liters l barrels (42 gal. U.S.) m kilocalories kcal joule J 4,185 kilocalories kcal kilowatt hour kwh 1.163x10-3 british thermal unit Btu joule J 1,055 horse power (meters) CV kilowatt kw horse power hp kilowatt kw gas m3 m3 kilowatt hour kwh gas m3 m3 tons of oil equivalent toe EQUIVALENCES 48 To convert in multiply for oil barrels bbl oil tons t daily oil barrels bbl/d yearly oil tons t/a 50 Btu millions MMBtu kilowatt hour kwh 2.93 liquid methane tons t m3 methane gas m3 1,400 daily cubic feet ft3/d yearly m3 m/a kilocalories kcal gas m3 m3 0.11x10-3 Btu millions MMBtu gas m3 m megajoule MJ gas m3 m gas m3 m3 megajoule MJ

27 Appendix Appendix Trasported natural gas composition References Algeria North Russia LNG Nat. Libya Europe Prod. Helium % Mol Nitrogen = Carbon dioxide = Methane = Superior hydrocarbons = High heating value MJ/Smc Low heating value MJ/Smc Wobbe index MJ/Smc Volume mass kg/smc Z Web sites: Energy Information Administration: International Energy Agency: BP global: Ministero Sviluppo Economico: Snam: Ihs: Report: Snam Annual report Natural Gas information 2016, IEA report BP statistical Review of World Energy, June 2017 World LNG Report Edition, International Gas Union The LNG Industry , International Group of LNG Importers (GIIGNL) Bloomberg data Supply natural gas, EUROSTAT Situazione energetica nazionale 2016, MSE 50 51

28 Piazza Santa Barbara, San Donato Milanese (MI) Tel Limited Company Full paid-up capital: euro 2,735,670, Milan Company Register - Tax code and VAT No R.E.A. (Economic-Admin. Roll) No Graphics Inarea and Gosmarty Pre-printing Gosmarty Printing AG Printing This publication, a consulting handbook which collects data on the natural gas sector, is the new edition of a manual issued between 1978 and 2000 that in the course of the years has been named by the people of the business metanino. July 2017