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Company profile and strategy

Snam and its business model

Snam is one of the world's leading energy infrastructure operators and ranks among Italy's largest listed companies, by market capitalization. Through a sustainable and technologically advanced network, Snam guarantees the security of supply and is a key enabler in the energy transition. Through its international footprint Snam operates in Albania (AGSCo), Austria (TAG, GCA), France (Teréga), Greece (DESFA), Italy, UAE (ADNOC Gas Pipelines) and UK (Interconnector UK) and has recently started activities in China and India. Snam is also one of the leading shareholders in TAP (Trans Adriatic Pipeline). In 2021 Snam further strengthened its position as leader in energy infrastructures at an international level: Snam and Eni have entered into an agreement for the sale by Eni to Snam of a 49.9% stake in its subsidiaries operating TTPC and TMPC gas pipelines connecting Algeria to Italy; and in december 2021 has finalised the acquisition from Thai energy company PTTER of a 25% stake in the East Mediterranean Gas Company (EMG), owner of the Arish-Ashkelon gas pipeline (part of the so-called "Peace Gas Pipeline") connecting the Israeli terminal of Ashkelon to the Egyptian receiving station of Al-Arish.

The Group has the largest natural gas transportation network (over 41,000 km including international assets) and storage capacity (approx. 20 bcm including international assets) among its European peers and is also a leading player in regasification, through the LNG terminal in Panigaglia (GNL Italia) and its stakes in the Livorno (OLT) and Rovigo (Adriatic LNG) terminals in Italy and in the Revithoussa (DESFA) terminal in Greece.

In recent years, Snam has positioned itself to play a role as enabler of the energy transition, in line with its purpose and European targets, thanks to infrastructures that will be crucial for the achievement of decarbonisation objectives. Snam's 8.1 billion-euro 2021-2025 strategic plan envisages the achievement of carbon neutrality by 2040, investments to make its infrastructure "hydrogen ready" and an acceleration in the development of energy transition businesses such as hydrogen, biomethane, sustainable mobility and energy efficiency. The company also operates in forestation (Arbolia). The Group's business model is based on sustainable growth, transparency, the promotion of talents and diversity and the social development of local areas also through the initiatives of Fondazione Snam.

 

2030 vision and 2021-25 plan

 

Snam will be able to take advantage of new and relevant development opportunities throughout the next decisive decade, in which a strong acceleration of the energy transition is required to achieve net zero targets with rising investments; more specifically, in energy transport and storage infrastructure, as well as in projects along the entire green gases value chain. For this reason, in addition to the plan to 2025, which includes investments already in the money today, Snam has developed a longer-term vision to 2030. Snam has identified, on weighted basis, regulated or contractualised investment opportunities of up to 23 billion euros by 2030 in three areas: energy networks (up to 15 billion euros of investments), storage (up to 5 billion euros) and new green energy projects (up to 3 billion euros).

Snam foresees investments of 8.1 billion euros 700 million euros more than 7.4 billion euros of the 2020-2024 plan. The plan includes the maintenance, upgrade and development of its infrastructure, net zero investments and the acceleration of the energy transition. In particular, investments in the energy networks in Italy amount to 5.6 billion euros; investments in energy storage amount to 1.2 billion euros; while 1.3 billion euros are for investments in energy transition activities. Investments aligned to the European taxonomy account for 47% of the total (an increase compared to 40% in the previous plan).

> More about 2021-2025 strategy

 

Energy transition

In recent years, Snam has created a broad and diversified platform of activities (energy efficiency, biomethane production and infrastructure, sustainable mobility, hydrogen along the entire value chain) to offer aintegrated solution along the entire green gases value chain. For the 2021-2025 period, Snam’s investments in energy transition activities will amount to approximately €1.3 bn, an increased compared with €700 mln in the previous plan, with an annual contribution to EBITDA of 150 million euros in 2025, through projects that, once completed, will generate around 180 million euros in EBITDA.

> More about energy transition

 

Enhanced targets on emissions reduction and ESG scorecard

After committing, as one of the first in its sector, to achieving the objective of zero net Scope 1 and 2 (direct and indirect energy) CO2 equivalent emissions by 2040, Snam has set targets for 2030 on indirect Scope 3 emissions (emissions outside the direct control of the company, for Snam mainly attributable to suppliers and associates). Snam is committed to reducing emissions of its associate companies (and other small categories such as emissions on generation and transmission of fuels and energy, business trips as well as commuting from staff) by 46% and the emissions (by economic intensity) of its suppliers by 55% versus 2019 levels. Snam has also raised its target for reducing methane emissions from 45% to 55% by 2025 (on a 2015 basis), which is more ambitious than the UNEP (UN Environment Programme) targets (- 45%). Finally, Snam has defined a new Scope 1 and Scope2 intermediate target of CO2 emissions reduction to 28% by 2025 (benefiting also from the acceleration of ethane emissions programme).

Net zero

Snam has updated its "scorecard" to 2050 on 14 areas with quantitative objectives to provide stakeholders with a holistic view of the commitment and growing sensitivity towards ESG, enabling them to monitor the results. Sustainable Finance is the new area added to the scorecard for which the company gets committed to increase the weight in total funding to 65% in 2022 and over 80% in 2025. Further efforts are foreseen in all areas by 2025.

> More about the strategy for the future

 

The regulation

Almost all Snam's revenues are regulated. The Regulatory Authority for Energy, Networks and Environment (ARERA) regulates the different tariff system for transportation, storage and regasification services, defining the criteria for setting the tariffs in each regulatory period, which normally lasts for 4 years. The regulation ensures that the services are provided to third parties according to non-discriminatory criteria. Snam is therefore able to maintain a limited risk profile and to provide its shareholders with attractive and sustainable returns.

> More about the regulation

 

International strategy

Snam has further strengthened its position as a leader in energy infrastructure on an international level over the last six years, with a diversified portfolio of assets and a consolidated track record of partnerships in different countries with industrial and financial players.

The company's investment strategy will be consistent with its current criteria (maintenance of rating metrics and risk-adjusted returns at least in line with those of regulated activities in Italy) and with its ESG positioning, enabling contractualised or regulated industrial opportunities (with no exposure to commodity risk).

> More about the international strategy

 

Financial strategy

In the 2021-2025 period, Snam is expected to achieve sustainable growth in key indicators. This growth is expected to further accelerate to 2030 through the contribution of new investments.

Finally, Snam confirms its commitment to guarantee to shareholders an attractive and sustainable remuneration and the payment of an interim dividend. The growth of the dividend per share of 5% until 2022 is confirmed, minimum growth of 2.5% in 2022-2024 extended to 2025.

> More about company targets and achievements

> More about the dividend policy

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updated
22 December 2021 - 19:18 CET