Snam to Spend €5.7bn To 2022 (Corrects TAP Review)
Correction: When first published, this article reported in the final para that a review of TAP by the present Italian government had yet to be completed. It has been, so that final para has now been corrected.
Italian gas grid operator Snam reported an adjusted net profit for the first nine months of 2018 of €793mn ($905mn), up 5% year on year.
It now expects full year 2018 net profits of around €1bn, up from its earlier guidance of €975mn. Net debt meanwhile was broadly unchanged at €11.7bn.
Snam reported that Italian 9M 2018 gas demand was 51.8bn m3, just 0.9% less year on year. In contrast, gas injected into Snam’s own network increased by 0.4% to 55.7bn m3. Its available storage capacity was 12.4bn m3 (an increment of 0.2bn m3 year on year) of which 99.7% has been booked for the 2018-2019 thermal year.
Snam also presented its 2019-22 Strategic Plan comprising improvement of its core gas grid business, investing in ‘energy transition’, and international activities. Of its €5.7bn budget for investments spanning the five-year period, €4.8bn will go on its gas pipelines grid, €0.7bn on storage/LNG assets, and €0.2bn on energy transition.
That latter €0.2bn will be split three ways: 25% on refuelling gas or LNG fuelled vehicles, 25% on biomethane, and 50% (€1bn) on small-scale LNG; last week the EU cleared Snam and a rival investor’s joint plan to develop a gas network on the island of Sardinia, based on LNG imports.
Snam also said it is targeting more than €160mn of annual profit from its international network or pipeline ventures by 2022, such as the southwest French gas network Terega, Austria’s TAG and national grid GasConnect Austria, Interconnector UK, Greek gas network Desfa, and Trans-Adriatic Pipeline (or TAP). Its deal with partners to acquire 66% of Desfa is still expected to close this year, Snam said.
In June, the environment minister in Italy's new coalition government, Sergio Costa, promised to review Italian involvement in TAP. Two months later prime minister Giuseppe Conte hinted that it would be difficult to cancel the project due to "legal commitments already approved by the previous government" and the following month (September) a top coalition leader Matteo Salvini met a political adviser to TAP, British prime minister Tony Blair. Finally on October 26, PM Conte gave his new government's definitive approval to proceed with TAP's development in Italy, saying: "It is no longer possible to intervene on the implementation of this project that has been planned by previous governments with existing contractual obligations. The agreements closed in the past lead us to a road with no way out. We did not find any elements of illegitimacy. Interrupting the construction work would result in unsustainable costs, amounting to tens of billions of euros."
(The banner photo of Snam board is courtesy of the company)