In the coming years there will be a significant increase in demand in the global gas market, driven by the Americas and by China, where an increase in energy requirements will be accompanied by the growing role of renewable energy, more efficient technology and the gradual transition from other fossil sources to natural gas. Gas will continue to play a central role in the process of decarbonisation in Europe as well, in line with the objectives defined (2020 Climate & Energy Package) or in the process of definition at EU level (Clean Energy Package) specifically making an important contribution to the transport and thermoelectric sector, in view of coal gradually being phased out of production and the increase in intermittent renewable sources. The use of the latter, which is hardly foreseeable, will require greater support from natural gas, a source which, can be programmed. Volumes in Italy remain essentially stable. European trends in natural gas demand, supported in particular by the reduction in the use of coal, together with the decline in domestic production, will require the development of new import routes.
In this context, Snam anticipates an acceleration in the investment plan (€5.7 billion in the five-year period 2018-2022), with a continued focus on replacement and maintenance in order to guarantee the maximum resilience, flexibility and efficiency of existing infrastructure. One quarter of investments in the coming years will also involve development initiatives, including the strengthening of the south network, the north-west connections, the local market service and cross-border flows, the network in Sardinia and the upgrading of the Fiume Treste storage facility. Under the scope of the investment plan, €850 million will be allocated to the Snamtec project (Tomorrow’s Energy Company), with the goal of accelerating Snam's innovative capacity and its assets to take advantage of the opportunities offered by the development of the energy system. The Snamtec project will focus, specifically, on four areas: greater operating efficiency; a reduction in methane emissions (-25% by 2025); energy transition; innovation and reinforcement of core competencies.
The project will also give further impetus to the operating cost efficiency programme launched in 2017, increasing the already ambitious efficiency target to €60 million when fully operational. The implementation of the investment plan, the consequent expansion of the RAB and the cost efficiency programme, will be decisive growth factors. Snam also believes that it will be able to benefit from an increasing contribution to its revenues through the introduction of more performance based-incentives scheduled for the fifth regulatory period. These initiatives, alongside the contribution of Italian and international affiliates and that of the new energy transition businesses, in which Snam intends to play a leading role, are expected to contribute around one quarter of the Group's net profit in 2022.
In the area of the energy transition businesses, the Company plans to invest, directly and in partnership with other operators, in the creation of infrastructure for the production of biomethane from waste or agricultural waste. Investment in the sector complements that planned for sustainable mobility. There are also plans for investments in the creation of methane and biomethane refuelling stations for cars and buses, exploiting the technological excellence and leadership position of Cubogas, controlled by Snam4Mobility, and in the creation of small-scale NLG (SSLNG) for heavy goods traffic, industry and the residential sector. Snam Global Solutions, the division that offers dedicated services to international gas sector operators, will gradually expand its portfolio of contracts, supporting its customers in the integrated management of transport, storage and regasification networks, offering technologically advanced competencies in infrastructure management services. This activity will help promote the development of the internationalisation strategy, which was initiated through the acquisition of foreign affiliates and their increasing contribution to Snam’s economic results.
Regarding financial structure, the optimisation that has taken place over the last three years has led to a significant reduction in the average cost of debt. The actions implemented will also make it possible to reduce the risks associated with a potential change in the global macroeconomic scenario. Snam’s management team remains focused on guaranteeing attractive and sustainable remuneration to shareholders, while also maintaining a balanced financial structure.
Net profit in 2019 is expected to grow by 5% compared with the previous forecast of +4%.
02 August 2019 - 11:42 CEST