Outlook

The business outlook with regard to the main drivers in the natural gas transportation, regasification and storage businesses is illustrated below.

INVESTMENTS

In the period 2017-2021 Snam has a significant investment plan scheduled, approximately equal to €5 billion, of which €1.0 billion in 2017 for sustaining the development of Italian infrastructures and their connection with European ones, reinforcing the safety, flexibility and liquidity of the entire gas system. The Plan involves the upgrading of the transportation network also enabling the completion of the reverse flow capacity to other European countries and receiving new flows from the Caspian region through the TAP pipeline.

Specifically, investments in the CNG and transportation business, equal to €4.1 billion in the time frame of the plan, will be directed, not only at guaranteeing the safety and reliability of the network, but at satisfying the supply capacity and diversification requirements, to the advantage of shippers and end users. Around 300 service stations for supply of natural gas vehicles are planned to be completed during the time frame of the plan.

In the LNG and storage business, the planned investment in the period 2017-2021 is €0.6 billion, to increase modulation and peak capacity, improving the overall flexibility and liquidity of the system and promoting further opportunities for gas trading.

Snam could also leverage its international investments to promote growing connections of European infrastructures and the development of greater diversification and flexibility of gas flows, at the same time maximising the profitability of its assets. The company will monitor potential new investment opportunities in infrastructure assets, in Europe too, with a risk profile aligned to the one in its current business portfolio with its usual selective and financially-disciplined approach.

GAS DEMAND

Based on the latest forecasts, the demand for natural gas in Europe for the five-year period 2017-2021 is expected to remain essentially stable compared with 2016 levels. However, a gradual reduction in European domestic production will be offset by increasing dependence on imports.

EFFICIENCY

Snam will continue to focus on operating efficiency, through initiatives, launched in the second half of 2016, which will allow a reduction in costs of over €10 million in 2017 and more than €25 million in 2020.