Outlook

Gas demand

Based on the most recent estimates, domestic natural gas demand is expected to grow by an annual average of more than 2% in the four years from 2010 to 2013. The predicted growth is due to consumption in the thermoelectric sector, which is expected to increase annually by an average of more than 5%.

Smaller increases are predicted in residential, tertiary and industrial consumption.

Investments

The integration of Italgas and Stogit enables Snam Rete Gas to confirm a solid and significant investment plan, equal to around €6.4 billion (net of expected grants) at consolidated level in the four years between 2010-2013, aimed at developing the gas system in Italy and sustaining and increasing the group’s growth opportunities in the medium and long term. The main features of the investment plan, by business segment, are as follows:

TRANSPORTATION AND REGASIFICATION

  • satisfy the requirements linked to evolving gas demand in the medium and long term, and make the Italian transportation system safer and more flexible;
  • continue to improve transportation service quality;
  • promote the development of a European gas hub.

The measures planned should allow the company, in the period in question, to increase the length of the transportation network by around 4% (31,531 km in 2009) and to increase the installed power at its compressor stations by around 20% compared with 2009 (857 MW in 2009).

DISTRIBUTION

  • optimise the concessions portfolio to maximise profit;
  • continue to improve gas distribution service quality.

The planned measures will enable the company to continue to support the growth of the business, with an estimated light growth of around 8% in user numbers in 2013 compared with 2009 (5.8 million in 2009).

STORAGE

  • improve the overall safety and flexibility of the storage system by increasing modulation service capacity and managing point capacity;
  • optimise balancing and promote the liquidity of the gas system in Italy.

It is predicted that the planned projects will, in the period in question, increase modulation capacity by around 35% (8.9 billion standard cubic metres in 2009) and point capacity by around 13% (270 million standard cubic metres in 2009).

Efficiency

The integration of Stogit and Italgas will give the company the chance to generate cost synergies of around €40 million in 2010, (calculated, in real terms, on the basis of costs for 2008 and at constant business structure).