An important past, a brilliant future: Snam’s history and upcoming goals

In 2019 Snam was the first European company to introduce a mix of hydrogen (first 5% and then 10% in volume) and natural gas into its transmission network with a direct supply to two industrial consumers. The Company strongly believes in the potential of this energy source - especially green hydrogen obtained through the electrolysis of water from renewable sources such as solar and wind-power, without CO² emissions - in the global context of the fight to combat climate change. The introduction test, carried out successfully in a section of the network at Contursi Terme (Salerno), confirmed the suitability of Snam’s assets to receive increasing quantities of hydrogen.

A new business unit dedicated to hydrogen was also established in 2019, with the task of evaluating potential pilot projects, contributing to the development of the hydrogen supply chain and carrying out scenario analyses, including an initial study assessing the potential of hydrogen in Italy until 2050, achieved with the analytical support of a leading consulting firm.

The initiatives into hydrogen are set against the framework of Snam’s commitment to energy transition, the linchpin of the 2019-2023 Strategic Plan, presented at the end of November 2019.

Snam intends, specifically, to support the acceleration of the Italian market for biomethane from organic waste, and agricultural and agro-industrial waste, with an investment of €250 million dedicated to the creation of infrastructure and plants, in order to increase the installed capacity to 40MW. Snam can increase its expertise in the management and running of plants, both in the agricultural biomethane supply chain and in the FORSU one (organic fraction of municipal solid waste) through strategic agreements and partnerships. With this in mind, in 2019 Snam increased its acquisitions portfolio thanks to the subsidiary Snam 4 Environment, identifying Renerwaste, one of the leading companies active in Italy in biogas and biomethane infrastructure, which currently operates at three plants and has permission to build two additional ones. In 2019, Snam also signed a binding letter of intent aimed at launching a strategic partnership in infrastructure for biomethane from agriculture through the entry, with a 50% stake, into Iniziative Biometano, a company operating in Italy with five biogas plants, for which there is a plan for conversion to biomethane, and with various plants in the process of authorisation or construction. These projects are perfectly complementary to the expertise in design, development and construction of IES Biogas, the leading subsidiary in the construction of biogas and biomethane plants, nationally and internationally.

Lastly, looking abroad as well, Snam has signed a memorandum of understanding with Infore Environmental Group, an environmental services company listed on the Shanghai Stock Exchange, for potential joint initiatives for the development of biogas and biomethane infrastructure in China.

Investments in the biomethane segment create synergies with those planned for the sustainable mobility segment supporting the increase in the Italian network of compressed natural gas (CNG and bio-CNG) and liquefied natural gas (LNG and bio-LNG) distributors. Specifically, €50 million has been designated for the creation of around 150 natural gas and bio-methane refilling stations for cars and buses, in conjunction with Cubogas, a subsidiary of Snam4Mobility, further strengthening the Italian CNG distribution network which is already the most developed in Europe with around 1,400 facilities. A further €50 million is also planned for constructing two small liquefaction plants (SSLNG), one in the north and one in the south of Italy, and for the adaptation of the Panigaglia terminal, located in the Gulf of La Spezia, aimed at loading tankers and promoting the use of LNG for heavy transport, industry and residential, with a capacity of 250 thousand tonnes per year. In addition, a memorandum of understanding was signed in September 2019 for LNG sustainable mobility in Austria between Snam, the investee TAG and OMV.

With specific reference to energy efficiency, in addition to the subsidiary TEP Energy Solution, specialised in energy efficiency solutions for condominiums, businesses and public administrations, Snam bought the company TEA servizi, an Energy Service Company (ESCo) qualified in the design and construction of industrial plants, with a special focus on SMEs.

The new brand identity

In March 2018 Snam relaunched its brand identity, renewing the logo and values that will accompany the group in its future challenges, from the construction of infrastructure to guarantee stable and secure energy supplies, to the development of gas as a renewable source.

“Energy to inspire the world” is the message around which Snam’s strategic repositioning revolves, in an increasing global market featuring changes and innovations that are transforming energy and environmental scenarios.

Growth in the core business of regulated activities continued in 2018, which also saw the acquisition in December, through a European consortium, of DESFA, the national operator in the natural gas infrastructure sector in Greece. With reference to energy transition, in recent years Snam has completed investments for the on development of new businesses aimed at promoting decarbonisation and the better use of energy, specifically in the biomethane segment (IES Biogas and Enersi Sicilia), sustainable mobility (Cubogas) and energy efficiency (TEP Energy Solution).

Snam has concluded important agreements for the development of sustainable mobility, including through the possible development in partnership of several micro-liquefaction plants, as well as agreements in China for the provision of services and for the evaluation of potential collaborations, in biomethane, in research and development for renewable gas, in sustainable mobility as well as in storage. Specifically, at 31 December 2018, a total of 50 CNG/L-CNG, biomethane and bio-LNG refilling stations were contracted, 34 of them with Eni.

With the goal of developing Snam’s consolidated experience globally, as part of the activities launched by the Snam Global Solution business unit, a joint venture was established with the Albanian infrastructure operator Albgaz, aimed at providing services associated with the management and maintenance (O&M) of the pipelines in Albania.

The non-recourse loan for TAP, the largest project finance operation for a European greenfield infrastructure project was concluded in 2018. Nominated as “Project Finance deal of the year” for the Oil & Gas industry by Project Finance International (PFI), this project refers to a total amount financed of €3.9 billion, in which Snam played a supporting and coordinating role together with other sponsors of the project and which involved financial institutions such as the EIB (which individually provided €700 million to fund the project), the EBRD and various export credit agencies such as SACE, BPI France and Euler Hermes, as well as 17 international commercial banks.

With reference to collaboration opportunities in China, the following were signed: (i) on August 28, 2018 with State Grid International Development (SGID), 100% controlled by State Grid Corporation of China, a Memorandum of Understanding (MOU) to evaluate a series of possible collaboration opportunities in China and internationally, in particular in relation to the use of new technologies to reduce CO2 emissions; (ii) on October 25, 2018, an MOU with Beijing Gas, the largest distributor and supplier of natural gas in China, with a network of 22 thousand km and over 6 million customers in the Beijing area. The agreement envisages evaluating possible collaborations in China, in particular in biomethane and in the storage of natural gas.

In 2017, Snam celebrated 75 years in business, bearing witness to how the ability to place one’s commitment and skills at the service of the community, while keeping a constant dialogue with territories have been and will be its key success drivers. With the acquisition from Edison of 100% of the share capital of Infrastrutture Trasporto Gas and a 7.3% share in Adriatic LNG, Snam has notably strengthened its infrastructures in Italy further and managed to build further synergies in the integrated management of the entire gas system, connecting to the national transport network a strategic entry point for the Italian natural gas market.

Concerning the commitment to sustainable development, in December 2017 Snam entered into the first executive contract for the development of methane supply stations in Italy starting the activities of Snam 4 Mobility S.p.A. (wholly-owned by Snam).

In 2016 Snam completed the separation of its distribution business, acquired a new organisation and continued its path toward development

As of 7 November 2016, a corporate transaction was successfully completed that resulted in the separation of Snam from the national gas distribution business in Italy, with the principal purpose for the Snam Group being to strengthen and enhance its leadership in Europe in its core business: natural gas transportation, storage and regasification. Also in connection with the aforementioned transaction, in October Snam defined a new organisational structure, designed to be an instrument that enables focused management and control of the strategic guidelines of the plan and more efficient and effective operational management, including through the simplification of decision-making processes. Pursuant to the strategy of strengthening and enhancing leadership on the European gas market, on 16 December 2016 Snam, in a joint venture with Allianz, completed the acquisition from OMV of 49% of Gas Connect Austria GmbH (GCA), with an indirect equity investment of 19.6% in the company share capital for Snam.

Snam separates from Eni and expands its scope of activity to cover Europe

On 1 January 2012, the Company changed its name from Snam Rete Gas to Snam and transferred the gas transportation business to a new company, which inherited the respected Snam Rete Gas name. The ownership unbundling from Eni was completed on 15 October 2012 through the sale of approximately 30% of Snam’s capital to CDP Reti S.r.l., and Snam began its path toward growth in Europe. Having acquired 31.5% of Interconnector UK in 2012 as part of a joint venture with Fluxys, Snam (45%; 40.5% starting from February 2015 following the entry of Crédit Agricole Assurances (CAA) in the corporate structure of TIGF Holding), alongside the Singapore sovereign wealth fund GIC (35%) and EDF (20%), successfully completed the acquisition of TIGF (renamed Terēga), from Total in July 2013. Terēga is active in gas transportation and storage in south-west France, with a gas transportation network over 5,000 km and two storage fields. On 19 December 2014, the Company acquired from CDP Gas S.r.l. 84.47% (equivalent to 89.22% of the economic rights) of Trans Austria Gasleitung GmbH (TAG), the company that owns the Austrian section of the gas pipeline linking Russia and Italy. The objective of those transactions was to enhance Snam’s industrial capacity in the integrated management of natural gas transportation and storage infrastructure. Snam’s international development continued with the acquisition of a 20% stake in Trans Adriatic Pipeline AG (TAP), the company responsible for developing the pipeline that will run from the Turkey-Greece border to Italy along the Southern corridor, enabling gas produced in Azerbaijan to reach European markets. Our investment in the project will consolidate the primary position of Snam and Italian infrastructure in improving competition between energy sources and securing gas supplies for Europe.

The integration of all regulated gas activities

In 2009 the Company acquired 100% of Stogit, Italy’s largest natural gas storage field operator, and 100% of Italgas, the country’s biggest gas distributor. This added the other two regulated gas activities in Italy to Snam’s offering: storage and distribution. The June 2009 transaction turned Snam into the biggest integrated regulated gas activities operator in mainland Europe by regulatory asset base (RAB).

Methanisation in Italy and expansion of the gas infrastructure, up to listing on Borsa Italiana

Snam (Società Nazionale Metanodotti) has provided integrated natural gas procurement, transportation and sale services in Italy since 1941. It gradually put together an intricate system of methane pipelines, covering the whole of Italy, and built important pipelines that today allow the country to import from different areas: from Russia, the Netherlands, Algeria, the North Sea, and Libya. In 1971, Snam designed and built Italy’s first liquefied natural gas (LNG) regasification plant at Panigaglia, in the Gulf of La Spezia. Snam Rete Gas was incorporated on 15 November 2000 to house all Snam’s Italian transportation, dispatching and regasification activities. The unbundling of these activities was decided pursuant to the Letta Decree (164/2000), which transposed the European Directive on the liberalisation of the European gas market. On 6 December 2001, after the Electricity and Gas Authority (today the Energy Grid and Environment Regulation Authority - ARERA) issued a resolution establishing the criteria for defining transportation tariffs, Snam Rete Gas was listed on the stock exchange.

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