Natural gas transportation

Results

Total revenue for the first half of 2015 was €1,080 million, an increase of €34 million (3.3%) on the first half of 2014. Net of items offset in costs⁸, total revenue was €980 million, up by €31 million (3.3%) compared with the same period of the previous year.

Regulated revenue amounted to €1,047 million for the first half - year, of which €1,012 million related to fees for the natural gas transportation service (+€11 million; 1.1%) and €35 million related to income from natural gas sales made in order to balance the gas network. Revenue from regulated activities, net of components offset in costs, amounted to €947 million, up by €8 million (0.9%) compared with the first half - year of 2014. The contribution from investments made in 2013 (+€38 million) was partially offset by tariff updating (-€29 million).

Non-regulated revenue (€33 million) refers mainly to €22 million of income from the sale of natural gas that is no longer needed for operations.

EBIT in the first half of 2015 came to €591 million, unchanged from the same period in 2014. Higher revenue (+€31 million) was offset by higher operating costs (-€23 million, net of items offset in revenue), attributable mainly to withdrawals of gas from storage as part of the sale of gas no longer needed for operations, and by higher amortisation and depreciation (-€8 million), owing essentially to the entry into service of new infrastructure.

Operating review

Technical investments totalled €278 million in the first half of 2015, up by €27 million (10.8%) compared with the same period of the previous year (€251 million).

The investments were classified in accordance with Resolution 514/2013/R/gas of the Authority, which identified various categories of projects with different rates of return.

The breakdown of investments in 2014 and 2015 by category will be submitted to the Authority when the tariffs are approved for 2016 and 2017, respectively.

The main development investments subject to a greater return of 2.0% (€98 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 Europe (€68 million), in the Po Valley: (i) the continuation of construction work on the Zimella - Cervignano natural gas pipeline; (ii) the construction work on the Minerbio - Poggio Renatico natural gas pipeline; (iii) the delivery of materials and continuation of construction work to upgrade the Poggio Renatico power station; (iv) the construction work relating to the new hub at Sergnano; and (v) the delivery of materials and continuation of construction work relating to the new hub at Minerbio;
• as part of the projects to upgrade the transportation network from the entry points in southern Italy (€28 million): (i) the continuation of construction work on the Biccari-Campochiaro pipeline in the Campania, Apulia and Molise regions; and (ii) the delivery of materials and renovation work at the Enna power station in Sicily.

The main development investments with a greater return of 1.0% (€31 million) relate to a number of works to upgrade the network and to connect to new regional and national redelivery points.

Investments with a basic rate of return⁹ (€149 million) concern works aimed at maintaining security and quality levels at plants (€110 million), the acquisition of other key operating assets (€13 million), including real estate investments (€11 million), projects relating to the development of new information systems and the implementation of existing ones (€15 million), compensation for third parties (€9 million) and metering apparatus (€2 million).

A total of 32.77 billion cubic metres of natural gas was injected into the national gas transportation network during the first half of 2015, in line with the amount injected during the corresponding period of the previous year (32.78 billion cubic metres). Gas demand in Italy (35.54 billion cubic metres) increased by 7.9% compared with the first half of 2014. This increase, owing to higher consumption in the residential and tertiary (+12.4%) and thermoelectric (+9.0%) sectors, was offset entirely by the use of gas from storage, with net withdrawals amounting to €2.52 billion cubic metres compared with marginal net injections of 0.05 billion cubic metres in the first half of 2014.

When adjusted to take account of temperature, natural gas demand was 36.30 billion cubic metres, in line with the first half of 2014.

Natural gas injected into the national network from domestic production fields or collection and treatment centres was equal to 3.24 billion cubic metres (3.44 billion cubic metres in the first half of 2014), down by 0.20 billion cubic metres (-5.8%) compared with the corresponding period of 2014.

Gas injected into the network at entry points (29.53 billion cubic metres) increased by 0.19 billion cubic metres (0.6%) compared with the first half of 2014. The increase was due to higher volumes being injected at the Gela (+0.97 billion cubic metres; +34.2%) and Gries Pass (+0.84 billion cubic metres; +22.4%) entry points and by the LNG regasification plants (+0.74 billion cubic metres; +32.0%), the effects of which were partly offset by lower volumes being injected at the Tarvisio (-1.60 billion cubic metres; -10.0%) and Mazara del Vallo (-0.76 billion cubic metres; -17.3%) entry points.

Other information

Council of State Ruling 2888/2015 – Confirmation of the illegitimacy of transportation tariffs for the period 2010 - 2013

By way of Ruling 2888/2015, filed on 12 June 2015, the Council of State (CoS) rejected the appeal submitted by the Authority to reform the ruling of the Lombardy Regional Administrative Court in Milan, which annulled the provisions of Resolutions ARG/gas/184/09, 192/09, 198/09 and 218/10 on natural gas dispatching and transportation tariffs for the period 2010 - 2013.

The CoS confirmed that the aforementioned provisions, which increase the weighting of the capacity component from 70% to 90% in calculating tariffs (representing the fixed costs and proportional to the distance between gas entry and exit points) and reduce the commodity component (commensurate with the volumes transported) to 10%, are likely to increase the costs incurred by operators for which business is concentrated at gas entry points in southern Italy, ruling that the Authority had not provided “adequate logical and/or regulatory supporting documents” in relation to the “accentuated imbalance between the two tariff components”.

The CoS also ruled that the mechanism used to determine the fee for gas earmarked for Snam’s compression stations, which changed from the price cap system (where costs are included under operating costs and charged back to end users in a uniform fashion across the country) to a criterion based on internal consumption (which involves a direct withdrawal in kind measured according to the uses of the transportation companies, for the purposes of operating the compression stations), was unlawful.