Liquefied Natural Gas (LNG) regasification

The service of regasifying LNG

Natural gas injected into the transportation network also comes from the Panigaglia (La Spezia) LNG terminal, owned by the group company GNL Italia, which is able to regasify 17,500 cubic metres of LNG a day. This means that it injects more than 3.5 billion cubic metres of natural gas a year into the transportation network, at maximum operating conditions. The regasification service includes unloading the LNG from the tankers, storing it for the period necessary for vaporisation, regasifying it and injecting it into the gas transportation network at the entry point in Panigaglia. The service can be either continuous for the entire thermal year or provided on a spot basis. Auxiliary services, such as correcting the calorific power of natural gas to comply with the quality requirements for its injection into the transportation network (correcting the Wobbe index), are also available.

Key performance indicators (€ millions) 2007 2008 2009 Change % change
Core business revenue(*) (**) 43 37 36 (1) (2.7)
Operating costs (**) 35 30 27 (3) (10.0)
EBIT 7 5 5
Net profit 5 2 2
Investments 3 6 7 1 16.7
Volumes of LNG regasified (billions of cubic metres) 2.38 1.52 1.32 (0.20) (13.2)
Tankers loads (number) 73 42 38 (4) (9.5)
Employees in service at 31 December 2009 (number) 87 93 87 (6) (6.5)

(*) Core business revenue includes the recharging to customers of costs relating to the natural gas transportation service provided by Snam Rete Gas S.p.A, For purposes of the consolidated financial statements, these revenues, together with transportation costs, are charged to GNL Italia S.p.A to show the scale of the operation.
(**) Before consolidation adjustments

Results

EBIT for 2009 was unchanged from 2008, at €5 million.

Operating review

In 2009, the Panigaglia (SP) LNG terminal regasified 1.32 billion cubic metres of natural gas (compared with 1.52 billion cubic metres in 2008), unloading 38 tankers - of which five were on a spot basis (compared with 42 loads in the previous year - of which one was on a spot basis).

Volumes of LNG regasified and number of tanker loads


Graph showing Volumes of LNG regasified and number of tanker loads

Quantities of LNG regasified by shipper
(billions of m³)
2007 2008 2009 Change % change
Enel Trade 1.25 1.23 1.01 (0.22) (17.9)
Eni 1.11 0.29 0.10 (0.19) (65.5)
Others 0.02 0.21 0.21
2.38 1.52 1.32 (0.20) (13.2)

Regulation

Resolution ARG/gas 92/08 “Criteria for defining tariffs for the regasification service and amendments to resolution nos. 166/05 and 11/07”.

The Electricity and Gas Authority defined the tariff criteria for the regasification service for the third regulatory period (1 October 2008 to 30 September 2012) in this resolution published on 9 July 2008.

It substantially confirmed the mechanisms in place during the second period for determining the core revenue, including the net invested capital remuneration rate of 7.6% in real terms before tax. With respect to the tariff structure, the breakdown of revenue between a regasification capacity component and a regasified volumes component was maintained, but the ratio was changed from 80/20 in the second regulatory period to 90/10.

Tariffs are updated with a price-cap methodology applied only to the operating costs component, with a productivity recovery coefficient of 0.5%.

The revenue component related to remuneration and amortisation and depreciation is updated using an annual recalculation of invested capital and additional revenue arising from incentives received for investments made in previous regulatory periods.

New investments were incentivised by payment of a remuneration rate between one and three percentage points higher than that on existing capital at the end of 2007 and for a duration of up to 16 years. The increase in the remuneration rate and the duration differ depending on the type of investment.

Resolution ARG/gas 102/09 “Approval of tariff proposals for the regasification service in the thermal year 2009-2010 for GNL Italia S.p.A and Terminale GNL Adriatico S.r.l, enacting the Electricity and Gas Authority’s resolution ARG/gas 92/08 of 7 July 2008”.

The Electricity and Gas Authority approved the tariffs for the thermal year 2009-2010 for the regasification service offered by GNL Italia, as required by resolution ARG/gas 92/08, with this resolution published on 29 July 2009. Tariffs were determined on the basis of core revenue of €24.6 million. Net invested capital (RAB) at 31 December 2008 was €101.2 million.

Resolution ARG/gas 147/09 - “Approval of a proposed amendment to the regasification code prepared by Gnl Italia S.p.A for managing the regasification service following the temporary and partial unavailability of regasification capacity at the Panigaglia terminal”.

With its resolution ARG/gas 147/09, published on 19 October 2009, the Electricity and Gas Authority approved an update to the Regasification Code relating to operational aspects of the terminal concerning the reduction in regasification capacity for the thermal years 2009-2010 and 2010-2011 following the necessary shutdown of one of the vaporisers at the plant for technical checks.