Natural gas transportation

Results

Total revenue for the first half of 2014 amounted to €1,046 million, up by €5 million, or 0.5%, compared with the first half of 2013, of which €1,036 million related to regulated activities (+0.2%) and €10 million to non-regulated activities. Total revenue, net of components offset in costs, amounted to €949 million, up by €12 million, or 1.3%, compared with the corresponding period of the previous year.

Revenue from regulated activities amounted to €1,036 million, of which €1,001 million related to fees for the natural gas transportation service (+€18 million, or 1.8%) and €35 million related to income from natural gas sales made in order to balance the gas network (-€16 million). Transportation revenue, net of components offset in costs, amounted to €939 million, up by €9 million, or 1.0%, compared with the first half of 2013. The contribution from investments made in 2012 (+€43 million) was partly offset by tariff updating⁷ (-€29 million) and by the reduction in volumes of gas transported (-1.71 billion cubic metres; -€5 million).

EBIT⁸ for the first half of 2014 totalled €591 million, in line with the first half of 2013 (-€2 million; -0.3%). Higher revenue (+€12 million) was offset by higher operating costs (-€8 million) and by the increase in amortisation and depreciation (-€6 million), due mainly to the entry into service of new infrastructure.

Operating review

Technical investments amounted to €251 million in the first half of 2014, up by €12 million (+5.0%) compared with the corresponding period of the previous year (€239 million).

The investments were classified in accordance with Resolution 514/2013/R/gas of the Electricity, Gas and Water Authority (hereinafter “the Authority”), which identified various categories of projects with different rates of return⁹.

The breakdown of investments in 2013 and 2014 by category will be submitted to the Authority when the respective tariff proposals for 2015 and 2016 are approved.

The main development investments subject to a return of 9.3% (€107 million) concern:

• as part of the initiative to support the market in the north-west of the country, and to make it possible to reverse the physical transportation flows at the interconnection points with northern Europa (€83 million): (i) the continuation of the construction works for the Zimella-Cervignano pipeline, in the Veneto and Lombardy regions; (ii) the continuation of the construction works relating to connection points for the Poggio Renatico-Cremona pipeline, in the Emilia-Romagna and Lombardy regions; (iii) the construction of the regulating facilities for the Cervignano-Mortara pipeline in Lombardy; and (iv) material delivery for the Minerbio-Poggio Renatico pipeline in Emilia-Romagna;
• as part of the projects to upgrade the transportation network from the entry points in southern Italy (€21 million): (i) material delivery and the continuation of renovation work at the Enna power station in Sicily; (ii) the continuation of activities relating to the Biccari-Campochiaro pipeline, in the Campania, Puglia and Molise regions; and (iii) materials for connection points for the Massafra-Biccari pipeline, in the Puglia and Basilicata regions.

The main development investments with a return of 8.3% (€28 million) relate to a number of works to upgrade the network and to connect to new regional and national redelivery points, including:

• natural gas projects in Calabria (€7 million);
• materials for the Gavi-Pietralavezzara pipeline in Piedmont (€2 million).

Investments with a return of 7.3% (€116 million) concern works aimed at maintaining security and quality levels at plants (€77 million), projects relating to the development of new information systems and the implementation of existing ones (€17 million), the acquisition of other key operating assets and real estate investments (€12 million), and compensation for third parties (€10 million).

The amount of natural gas injected into the national gas transportation network during the first half of 2014 was 32.78 billion cubic metres, down by 1.71 billion cubic metres, or 5.0%, compared with 34.49 billion cubic metres in the same period of 2013. The reduction was due principally to lower natural gas demand in Italy (-5.44 billion cubic metres, or -14.2%, compared with the first half of 2013), reflecting lower consumption in the residential and tertiary sector (-3.79 billion cubic metres; -19.9%), primarily as a result of weather-related issues, and in the thermoelectric sector (-1.56 billion cubic metres; -15.5%), mainly as a result of lower demand for electricity and more hydroelectric production.Compared with the corresponding period of the previous year, natural gas injections fell below the gas demand during the first half of 2014 because of lower net withdrawals from storage (+3.78 billion cubic metres), owing to lower withdrawals in the first quarter of the year and higher replenishment in the second quarter of 2014.

When adjusted to take account of temperature, natural gas demand decreased by 1.78 billion cubic metres, or 4.7%, compared with the first half of 2013.

Natural gas injected into the national network from domestic production fields or their collection and treatment centres totalled 3.45 billion cubic metres, down by 0.28 billion cubic metres (7.5%) compared with the first half of 2013.

Natural gas injected into the national network at entry points connected with other countries or with LNG regasification plants decreased by 1.43 billion cubic metres (4.6%) to 29.33 billion cubic metres in the first half of 2014, compared with the first half of 2013. This reduction was due mainly to lower volumes injected at the Mazara del Vallo (-3.10 billion cubic metres; -41.4%) entry point and at the Cavarzere regasification plant (-0.61 billion cubic metres; -21.0%), the effects of which were offset partly by higher imports from the Gries Pass (+1.60 billion cubic metres; +74.4%) and Tarvisio (+0.93 billion cubic metres; +6.2%) entry points.