Workshop Slovenian Gas Market in the Region

Ljubljana, 12th september 2018

Agenda

1. Snam at a glance

2. Italian natural gas transportation infrastructure

3. Network capacities

4. Natural gas transportation

5. Natural gas storage

6. Regasification

Snam at a glance

Agenda

1.

Snam at a glanceAn integrated operator with a leadership position in all regulated gas businesses

4

Snam S.p.A.

Industrial & Power

generation

Export

Residential

Stoccaggio Trasporto e dispacciamento

Rigassificazione StorageLNG Regasification

Sales

DomesticProduction

Import

Transmission Network

InfrastructureSupply

Snam at a glanceSnam international development

International assets

Domestic pipelinesLNG Terminals

100 % in IUK owned through a 24-76 JV with Fluxys

• 235 km subsea natural gas pipelines between Bacton (UK) and Zeebrugge (Belgium), 40 inches diameter

• 1 receiving terminal and compression station in Bacton

• 1 receiving terminal and 4 compressors in Zeebrugge

40.5% share in Teréga

• 5,000 km transmission network, 14% of France gas transmission grid

• Total storage capacity of around 5.7 bcm, ca. 20% of French capacity

20.0% share in TAP

• 880 km transmission network

84.47% share in TAG

• 1,140 km transmission network

• 5 compression stations

19.6% share in GCA

• 900 km transmission network

• 5 compression stations

15.5% participation in Prisma

66% share in DESFA

Italian natural gas Infrastructures

Agenda

2.

Italian natural gas transportation infrastructureThe gas transmission & storage infrastructures

7

5 cross border Entry Points

61 Entry Points to NTS National Production

Gas Import

12 FieldsStorage

2 Entry Points to NTS Biomethane Production

3 cross border Exit PointsGas Export

UPSTREAM NETWORK

DOWNSTREAM NETWORK

6 Areas

~ 7.000 Re-delivery PointsRe-delivery points

Off-Take Areas

3 PlantsLng Storage and Regasification

Network capacities

Agenda

3.

Network capacitiesTY 2017/2018 capacities

9

Firm and winter interruptible capacity [MScm/d]

Entry capacity

Exit Capacity

IP NORTH

TARVISIO 113 18

PASSO GRIES 64,4 5

GORIZIA 4,8 4,4

IP SOUTH

MAZARA DEL VALLO 133

-

GELA -

LNG TERMINALS

PANIGAGLIA 13 -

CAVARZERE 26,4 -

LIVORNO 15 -

Network capacitiesReverse flow project

10

Firm and winter interruptible capacity [MScm/d]

Entry capacity

Exit Capacity

IP NORTH

TARVISIO 11340

PASSO GRIES 64,4

GORIZIA 4,8 4,4

IP SOUTHMAZARA DEL VALLO

133-

GELA -

LNG TERMINALS

PANIGAGLIA 13 -

CAVARZERE 26,4 -

LIVORNO 15 -

Transportation capacity:Capacity at the Exit Point of Passo Gries: 40 MSm3/d from 1 October 2018 (22 MSm3/d at Passo Gries and 18 MSm3/d as competing capacity at Passo Gries and Tarvisio)

Network capacitiesTAP Project

11

Firm and winter interruptible capacity [MScm/d]

Entry capacity

Exit Capacity

IP NORTH

TARVISIO 11340

PASSO GRIES 64,4

GORIZIA 4,8 4,4

IP SOUTH

MAZARA DEL VALLO108

-

GELA -

MELENDUGNO (TAP) 25 -

LNG TERMINALS

PANIGAGLIA 13 -

CAVARZERE 26,4 -

LIVORNO 15 -

Natural gas transportation

Agenda

4.

0

10

20

30

40

50

60

70

80

90

2014 2015 2016 2017 2020 2026 2030

Bill

ion

Sm

c

Industrial Civil Power Generation

Natural gas transportationLong term Italian gas demand

13

DomesticPower

generationIndustrial

2015 48% 32% 20%

2016 44% 33% 23%

2017 45% 35% 20%

SOURCE: ten-years network development plan of Snam 2017-2026 (high case scenario)

+9,1% +5,0% +2,2%

• Gas demand increased in the last three years

• Among European countries, Italy is the one with the highest reliance on gas,

which accounts for 35% primary energy consumption: national energy system is

mainly based on gas and renewables, with oil still essential for transport

• Gas assumes a key role in the energy transition, especially in the coal phase out

• Italy is the third European market for gas consumption (≈ 72 bcm in 2017)

Natural gas transportationBooked capacity at importation points

14

2016/2017 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 2022/2023 2023/2024 2024/2025

Tarvisio 95,8 105,2 90,2 10,6 10,0 - - - -

Passo Gries 23,1 25,2 11,2 1,0 1,0 - - - -

Gorizia - 0,1 - - - - - - -

Mazara 83,8 89,4 89,8 - - - - - -

Gela 23,2 18,5 19,8 10,9 10,9 10,9 10,9 10,9 10,9

Multi - Annual Capacity

Mill

ion

smc

• The above values are the average of the capacity booked for the whole year

• The values for Thermal Year 2017/2018 are the average of the capacity booked until the 09/09/2018

• Gorizia point is booked on a daily basis in case of particular market conditions

Natural gas transportationItalian gas market evolution

15

• From few Shippers with long-term contracts to more than one hundred Shippers makingmany gas exchanges and capacity transactions

• Look at the European gas market characterized by liquidity, flexibility and security of supply

0

50

100

150

200

250

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Number of Shippers & Traders

Shipper Shipper+Trader

Natural gas transportationItalian balancing system

16

Shippers are responsible for their own balance position during the gas day through:• 35 renomination cycles starting from 16.00 of gas day D-1 until 3.00 of gas day D at import, storage

and redelivery point;• Gas trade on organized market.

Minimization of the actions made by the TSO for balancing the system (Residual role) through:

• Gas trade on organized marketTrading platforms:

• MGAS Platform (MI – MGP – MGS)• Locational Market• Virtual Trading Point (PSV)

Creation of Organized market, managed by trading platforms, in which the Market Operator (GME) is thecounterparty

Introduction of dual price for Shippers who have not balanced their positions at the end of the Gas Day:• Selling price for Users that inject more gas than the gas withdrawal (long position)• Purchase price for Users that withdraw more gas than the gas injected (short position)

Starting October 2016, the balancing regime foreseen into Network Balancing Code (Regulation UE n. 312/2014)has been implemented in the Italian gas market.

Natural gas transportationItalian balancing system – SRG vs GME

17

SNAM RETE GAS

• Acts as a Balancing Responsible

• Acts as a Balancing Operator for the Network to be balanced

• Determines authorised Users that can have access to GME Platforms on the basis of: EPSU < MEPSU

• Guaranteed gas < gas in storage

• Provides Shippers the information that enables them to estimate their own balance position and how eventually fix any imbalance.

GESTORE MERCATI ENERGETICI – MGAS EXCHANGE

• Trend publication of the marginal puchase and sell price after any trade

• Allows only authorised Users to post trades on the platform

• Operates a forward physical market (MTE), a day-ahead auction market (MGP), an intraday auction market (MI)

Natural gas transportationEuropean hub pricing

18

15

20

25

30

35

40

45

50

55

60

65

€/M

Wh

PSV TTF NBP CEGH NCG

Baumgarten incident

Burian

End of the Injection campaign

Natural gas storage

Agenda

5.

Natural gas storageUnderground storage

20

Working gas - Thermal Year 2018/19Strategic Storage: 4.620 MScm

Modulation Service: 11.707 MScm (*)

MSc

m/d

(*) It is the gas stocked until the 09/09/2018

Natural gas storageStogit services

21

Services Contract duration Allocation methodologyType of User

Peak modulation Seasonal / Monthly

Annual / Infra annualAuction

(marginal price or pay as bid)All

Peak services

Transport network balancing

Annual Equal to the requestNetwork operators

Hydrocarbon Annual Equal to the requestProduction concession holder

Flat modulation Seasonal / Monthly

Multi year / Annual / Infra annual

Auction (pay as bid)All

Fast cycle Annual Auction (pay as bid)All

Flatservices

Short Term Capacity Monthly/Weekly/Daily AuctionAll

Strategic Storage Annual / Infra annualNo allocation / Payment of a

fee applied to the gas imported/produced

Importer/Producer

Natural gas storageOffered/booked services

22

Mln

of

Scm

Thermal Year 2016/2017 Thermal Year 2017/2018 Thermal Year 2018/2019

Offered Offered Offered BookedBookedBooked12.000 12.000 12.200 12.197 12.350 12.315

*

(*) 821 Mln of Smc already booked for TY 2019/2020

Natural gas storageClient Mix – TY 2017-2018

23

Strategic service(55)

Basic Services (70)

Thermal Year 18/19

(39)

Thermal Year 17/18

Strategic service(61)

Basic Services (76)

(48)

86 Shipper89 Shipper vs

Regasification

Agenda

6.

RegasificationLNG Regasification

25

Owner: SnamEntry into operation: 1972Tanks capacities: 90.000 m3liCarrier: up to 70.000 m3liqRegasification capacity annual: ≈ 4 billionm3

Regulated terminal

GNL Italia - On-ShoreAdriatic LNG – Gravity Based OLT – FSRU

Owner: Exxon, Qatar and SnamEntry into operation: 2009Tanks capacities: 250.000 m3liq.Carrier: up to 152.000 m3li.Regasification capacity annual: ≈ 8 billionm3

Partially regulated terminal (20%) e80% in TPA exemption

Owner: Iren and UniperEntry into operation: 2013Tanks capacities: 137.500 m3liqCarrier: up to 180.000 m3liqRegasification capacity annual: ≈ 4billion m3

Regulated terminal

RegasificationThe regasification in Italy

26

NOMINATION=ALLOCATION (Del. 312/2016)

ENTRY

RegasificationThe regasification in Italy

27

0

50.000

100.000

150.000

200.000

250.000

300.000

350.000

MW

h/d

Adriatic LNG OLT GNL Italia

0

50.000

100.000

150.000

200.000

250.000

300.000

350.000

MW

h/d

Adriatic LNG OLT GNL Italia

Contacts

28

Thank you for your attention!

For any further information please contact:

Alessandro MoraEmail: alessandro.mora@snam.itOffice phone number: +39 02 370 37915