Natural gas storage

Results

Total revenue for the first half of 2014 was €287 million, up by €35 million (13.9%) compared with the same period of 2013, and contained both regulated (€273 million; +9.2%) and non-regulated (€14 million) revenue. Net of components offset in costs, total revenue was €257 million, up by €19 million (8.0%) on the corresponding period of the previous year.

Regulated revenue for the first half of 2014 (€273 million) comprised €247 million in fees for the natural gas storage service (+€9 million; 3.8%) and €26 million in fees charged back to users relating to the natural gas transportation service provided by Snam Rete Gas S.p.A. (+€14 million). The increase in storage revenue (€7 million, net of components offset in costs) was due to the contribution of investments made in 2012.

Non-regulated revenue in the first half of 2014 (€14 million) mainly comprised storage fees relating to the 2013-2014 thermal year (€13 million, compared with €2 million relating to the 2012-2013 thermal year), arising from contractual agreements between Eni and Stogit as part of activities connected to Legislative Decree 130/2010.

EBIT totalled €198 million in the first half of 2014, up by €25 million (14.5%) compared with the same period of 2013. This increase was due essentially to higher revenue (+€19 million) and lower depreciation and amortisation (+€4 million), as well as to lower operating costs (+€2 million, net of components offset in revenue).

Operating review

Technical investments totalled €119 million in the first half of 2014, up by €14 million (+13.3%) compared with the same period of the previous year (€105 million).

Investments were classified in accordance with Resolution ARG/gas 119/10 of the Authority, which identified various categories of projects with different rates of return. A total of 87% of investments are expected to benefit from a greater return than the basic rate.

Investments with a greater return of 4% over 16 years (€63 million) relate essentially to development activities at the Bordolano and Fiume Treste fields, mainly for the drilling of wells, the acquisition of materials and the execution of work on the plants.

Investments with a greater return of 4% over 8 years (€41 million) refer to well drilling, design and repowering activities, mainly at the Settala and Minerbio storage fields.

Natural gas moved through the storage system

During the first half of 2014, 9.51 billion cubic metres of natural gas was moved through the storage system, a reduction of 1.73 billion cubic metres (15.4%) on the corresponding period of 2013 (11.24 billion cubic metres). This reduction was attributable to lower withdrawals from storage (-2.60 billion cubic metres; -35.3%) as a result of milder first-quarter temperatures than during the previous year.

Overall storage capacity as at 30 June 2014 was 15.9 billion cubic metres (unchanged from a year earlier), of which 11.4 billion cubic metres related to available storage capacity and 4.5 billion cubic metres to strategic storage (unchanged compared with the 2012-2013 thermal year)¹³.

Regulation and other provisions

Ministerial Decree of 19/02/2014 – Modulation storage capacity allocation methods, 1 April 2014 – 31 March 2015 (Official Gazette 50 of 01/03/2014).

The Ministry of Economic Development used this decree to set the modulation storage capacity for the thermal year 1 April 2014 – 31 March 2015 at about 6,950 million cubic metres, to be allocated as a priority (50% of said capacity) to entities directly or indirectly supplying civilian customers. The decree provides for this capacity, together with additional available storage capacity of approximately 1,610 million cubic metres, to then be allocated by way of tenders held throughout the injection period.

The ministerial decree also states that 500 million cubic metres of natural gas storage capacity shall be allocated to industrial companies and their consortia, to enable them to offer integrated regasification services aimed at ensuring the direct procurement of LNG from abroad.

Resolution 85/2014/R/gas – “Provisions for the allocation of storage capacity for the 2014-2015 thermal year for storage”.

The Authority used this resolution, published on 28 February 2014, to govern the organisation of tenders for the allocation of storage capacity for the 2014-2015 thermal year based on the provisions of the Decree of the Ministry of Economic Development of 19 February 2014 “Modulation storage capacity allocation methods, 1 April 2014 – 31 March 2015”, to amend the methods for determining the services available to users during the injection phase, and to make provision for certain interventions relating to the storage capacity allocated pursuant to Legislative Decree 130/10.

Specifically, the resolution makes provision for four tenders per month, from March to September 2014, to allocate capacity for the leading, uniform modulation service.

The resolution also provides that users can make available to Stogit, for allocation to third parties, the service capacities to which they are entitled pursuant to Legislative Decree 130/10.

Consultation document 189/2014/R/gas – “Criteria for the determination of revenues recognised for the natural gas storage service for the fourth regulatory period”.

On 24 April 2014, the Authority published the Consultation Document 189/2014/R/gas on the criteria for the determination of revenues recognised for the natural gas storage service for the fourth regulatory period.

Resolution 295/2014/R/gas – “Provisions on settlement relating to storage services for the 2014-2015 thermal year”.

For the 2014-2015 thermal year, this resolution, published by the Authority on 23 June 2014, governs the way in which any differences are eliminated between the revenues recognised by storage companies on the basis of the tariffs approved through Resolution 350/2013/R/gas and those recognised following the tenders pursuant to Article 3 of Resolution 85/2014/R/gas.

This mechanism, for the period 1 April 2014 to 31 March 2015, is the same as the one activated by the Authority for the previous year through Resolution 121/2013/R/gas, with the added recovery of revenues arising from the failure to apply the variable storage fee on volumes injected into the network, which Resolution 85/2014/R/gas set at zero starting from 1 April 2014.

Law 9 of 21 February 2014 – Conversion into law, with amendments, of Decree-Law 145 of 23 December 2013.

Law 9/2014, converting Decree-Law 145/2013 (known as “Destination Italy”), provides that the industrial investors mentioned in Legislative Decree 130/10 inform the Ministry of Economic Development of their desire to remain a part of the development of new storage capacity pursuant to said Legislative Decree 130/10, within 60 days of the same law. In addition, under the same law, was issued a tender for the allocation of new storage capacity, reserved for the electricity-generating companies mentioned in Legislative Decree 130/10. Stogit is obliged only to create new storage capacity in the quantities specified by the industrial investors and allocated to electricity-generating companies during the tender.

There was no request for storage capacity for the thermoelectric sector following the tender conducted by Stogit, while only one industrial investor expressed a desire to remain part of the development of physical storage capacity for the additional amount of 3.7 million standard cubic metres.

As a result, the volume of new capacity was reduced from the expected 4 billion cubic metres to the present 2.6 billion cubic metres.