outdoor investor days - snam

October 11th-12th, 2006

Outdoor Investor Days

Panigaglia, October 12th 2006

Investor Site Visit

Carlo Malacarne, CEO

Investor Site Visit

44

OPENING REMARKS

OPERATING AND FINANCIAL COMMITMENT

SHAREHOLDERS’ RETURN

MARKET SCENARIO AND CAPEX PLAN

ENVIRONMENTAL MANAGEMENT

55

INVESTMENTS – 2006-2009 € 3.5 bn capex-plan confirmed

TRANSPORTED GAS VOLUMES – Incentives granted from market growth

COST SAVINGS – Better than regulatory targets

LEVERAGE – Higher financial efficiency lowering cost of capital

Maximising returns

66

Regulatory framework

RECENT OUTCOME

NEW RAB SET BY THE AUTHORITY: €11.4 bn at year-end 2005

REVENUES FROM INVESTMENTS CARRIED OUT:• IN THE 1st REGULATORY PERIOD: €60m • IN YEAR 2005: €80m

Thermal year 2006-2007 tariff approval

ON TRACK TO DELIVER REVENUE GROWTH

77

OPENING REMARKS

OPERATING AND FINANCIAL COMMITMENT

SHAREHOLDERS’ RETURN

MARKET SCENARIO AND CAPEX PLAN

ENVIRONMENTAL MANAGEMENT

88

Other

Thermoelectric

Industrial

Residential & commercial

2010 2015

Estimated import increase vs. 2005 ≈ 14

95106

≈ 28

Expected gas demand in Italy

80.6

2005

86.1

6.8 %

2004

Source: Ministry of Industry and SRG estimates

(bcm)

45.4

1H06

46.1

+1.6 %

1H05

6 months

99

Strong growth in the thermoelectric sector

+14.6 bcm (+44%)

Drivers of gas demand growth

Growth in the industrial sector

+4.3 bcm 2005-2015

Slow growth in the residential & commercial sector (weather adjusted)

+2.6 bcm 2005-2015

driven by

• Electricity demand yearly growth = 2.3%• Electricity import yearly decrease = 0.6%

SRG expects

32 GW of CCGT capacityto be in operation by 2009

V

CCGT programme

1010

Capex Plan 2006 - 2009

Incentives

Maintenance& Safety capex

0-1% for 5 years

Regional & National Development 2% for 7-10 years

Expansion & newentry point

3% for 10-15 years

27%

33%

40%

€3.5 billionCapex

€3.5 billion

2005 2006 2008 20092007

In line with2005

€685mInvestment

peak

1111

0

60

120

180

240

300

360

420

2004/05 2005/06

Existingcapacity

Capacity under

construction

Requiredcapacity

Meeting new capacity requirements

4 YEAR CAPEX PLAN2006 - 2009€3.5 billion( million scm / d )

2009 2015

1212

Projects for Network Development

NorthernEurope Russia

PROJECTS UNDER CONSTRUCTION

PROJECTS UNDER STUDY

Algeria

Libya

Brindisi

MonfalconeTrieste

PortoEmpedocle

Gioia Tauro

Taranto

Rovigo

LivornoRosignano

Panigaglia

IGI

Algeria

Russia

THIRD PARTY PROJECTS

Network developmentin Po Valley

Adriatic GridDevelopment South to North

Augusta

Network Developmentfrom South

Network Developmentfrom North

GALSI

1313

OPENING REMARKS

OPERATING AND FINANCIAL COMMITMENT

SHAREHOLDERS’ RETURN

MARKET SCENARIO AND CAPEX PLAN

ENVIRONMENTAL MANAGEMENT

1414

Value creationthrough cost efficiency

In a scenario of market growth…

… we will maximise efficiency through fixed cost control (in real terms)

80,4

85,1

70

75

80

85

90

95

2004 2005 2009

+10%

Gas injected in the network Transport infrastructurebcm Km Mw

Regulatorytarget:

--6%6%in the second

regulatory period

Achievements:

--5%5%2005 vs. 2004

Commitment:

--12%12%In the second

regulatory period

30.71230.545

27.000

28.000

29.000

30.000

31.000

32.000

33.000

2004 2005 2009

683

625

580

630

680

730

780

830

880

930

Network in operation Compression power

+28%

+6%

Achievements:

--6.5%6.5%1H06 vs. 1H05

1515

Regulatory target

41.2%41.2%Leverage implicit

in the 6.7% WACC

Regulatory target

4.67%4.67%

Good hedging

Value creationthrough capital efficiency

Company achievements

57%57%current leverage

~~ 60%60%expected after the share buy back

LeverageLeverage

Current Company’sCost of debt

3.6%3.6%

Efficient controlEfficient control

of cost of debtof cost of debt

Reduction of interestReduction of interest

rate volatilityrate volatility

vs.

Cost of DebtCost of Debt

22ndnd regulatory period Oct. 2005 regulatory period Oct. 2005 –– Sep. 2009Sep. 2009

1616

OPENING REMARKS

OPERATING AND FINANCIAL COMMITMENT

SHAREHOLDERS’ RETURN

MARKET SCENARIO AND CAPEX PLAN

ENVIRONMENTAL MANAGEMENT

1717

Shareholders’ return

Dividend

2005

€€0.17 per share0.17 per share

2006 - 2008

annual growth annual growth at least equal to at least equal to

inflationinflation

Share buy back

Up to a maximum of €800 m

Within 10% of share capital

Nr of shares: 80.6 million

Average price: €3.58 per share

Total amount: €287.9m

Already realised at

Oct. 1, 2006

1818

2006 Cash Returned to Shareholders

Share buyback

2006 YTD overall cash distribution

May 25th

0.17 € / share

YTD

0.33 € billion

0.29 € billion*

CASH OUT

=0.62 €0.62 € billionbillion

2006

* Share buyback spending up to October 1st, 2006.

** Overall cash distribution/market cap as at October 1st, 2006.

Yield** 8.3%

2005 Dividend

1919

SRG’s value proposition

SUSTAINABLE DIVIDEND POLICYWITH ATTRACTIVE YIELD

Defensive stock Consistent strategy Long term visibility Incentive regulation

Drivers for margin growth

New capex Cost efficiencyGas volumes

Commitment t

o

sustainable

development

2020

OPENING REMARKS

OPERATING AND FINANCIAL COMMITMENT

SHAREHOLDERS’ RETURN

MARKET SCENARIO AND CAPEX PLAN

ENVIRONMENTAL MANAGEMENT

2121

Environmental protection

2222

Tunnel boring machine (TBM)

Infrastructure development

2323

In operation

Under construction

Landscape protection and safeguarding biodiversity

2424

Environmental protection

2525

Acoustic, visual impactand emission mitigation

D.L.E. turbine

2626

Panigaglia LNG Plant

2727

Panigaglia LNG Plant

Danilo Ruffinazzi, Director LNG Department

Investor Site Visit

2929

Liquefied Natural Gas (LNG) is a liquid hydrocarbon mixture containing mainly methane and small quantities of other substances - ethane, propane, butane - normally present in Natural Gas

Main characteristics

Odourless and colourless

Boiling point at atmospheric pressure is -160 °C

Gas/Liquid volum ratio is 600/1

LNG

3030

LNG Chain

SubmergedPumps

Storage Tank

Jetty

LNGLNG

LNG

Liquefaction

Heavy Hydrocarboon

Purification andTreatment

Natural Gas

Loading

Gas Field

LIQUEFACTION PLANT

Transport

Regassification

Natural Gas

LNG

Storage Tank

SubmergedPumps

Jetty

LNGLNG

Gas network

Unloading

REGASSIFICATION PLANT

3131

Flow diagram of a liquefaction plant

Dryer Mercury Removal Liquefaction LNG

Storage

Heavy HydrocarbonRemoval

LPGStorage

Acid Gas Removal SulphurStorage

NATURAL GAS

3232

Flow diagram of a regasification plant

Ship LNG StorageGNL

Boil Off GasRecovery

GN GN

GNGNL GNL

Wobbe IndexCorrection

RegassificationQuality and

QuantityMeasurement

Distribution

3333

Energetic flow in LNG Chain

Liquefaction

Plant

Storage tanks

Fuel12

Turbine

88 88

Circa 0.2 %/day

87

Ship’s Tanks

Gas Field

85

100

2 Distribution

Regassification

Storage tanks

3434

19671967--19701970 ConstructionConstruction

19951995--19961996 Retrofitting of LNG TanksRetrofitting of LNG Tanks

November 2001 November 2001 Foundation of GNL Italia companyFoundation of GNL Italia company

October 2004October 2004 Publication of new access conditionsPublication of new access conditions

Panigaglia LNG Plant: Plant History

3535

Old………..

3636

Actual

3737

Panigaglia Regasification Terminal: operational scheme

UNLOADING ARMSVAPOR RETURN ARM

STORAGE LNG TANK STORAGE LNG TANKJETTY

BLOWER

BOIL-OFFCOMPRESSOR

PRIMARYPUMPS

ABSORPTIONTOWER

VAPORISERS

VENT

RISER

Wobbe correction

AIRCOMPRESSORS

MEMBRANES

TO PIPELINENETWORK

FUEL-GASDRUM

BOOSTERPUMPS

SUBMERGEDPUMPS

SUBMERGEDPUMPS

LNG

BOIL-OFF

BOIL-OFF

NATURAL GAS

LNG

LNG

LNG

LNG

3838

Storage Tanks

OUTER TANK SHELL(PRESTRESSED CONCRETE)

INNER TANK(9% Ni STEEL)

PERLITE INSULATION(WOODEN SUPPORTS)

PERLITE INSULATION(WOODEN SUPPORTS)

RISER 4"

VAPOR DRAWOFF 24" FILL LINE 24"

OUTER TANK ROOF(CARBON STEEL)

SUBMERGED PUMP COLUMN(N° 3)

ROOF PLATFORM

COLUMNS(N° 28)

PERLITE INSULATION IN N2 ATMOSPHERE

PILE CAP

NEW FONDATIONPILES

VS

3939

Submerged Vaporizer

PILOT GAS

WEIRTUBE BUNDLE

LNGIN

NGOUT

WATER RECIRCULATIONDISTRIBUTOR DUCT WITH SPARGE TUBES

COMBUSTION AIR

COOLINGWATERJACKET

WATER TANK

FUEL GAS

4040

The Plant control

DCSDistributed control system

• Data collection• Control and regulation of the parameters of the process• Plant supervision

PESProgrammable Electronic System

• Sequences for the start up and stop of the plant• Shut down of the plant in case of emergency• Plant Safety Control

Manned 24 hours/day

4141

Operational data

RegasifiedRegasified quantity quantity Unloaded Unloaded cargoes cargoes

(N° of ships)(N° of ships)

20012001 3.4 Billion Sm3.4 Billion Sm33/year* /year* 102 102 2002 2002 3.3 Billion Sm3.3 Billion Sm33/year /year 1171172003 2003 3.2 Billion Sm3.2 Billion Sm33/year /year 12312320042004 1.9 Billion Sm1.9 Billion Sm33/year/year 686820052005 2.3 Billion Sm2.3 Billion Sm33/year /year 79791H 20061H 2006 1.7 Billion Sm1.7 Billion Sm33/year/year 5656

*Sm*Sm33 at 1,01325 bar,15°Cat 1,01325 bar,15°C

4242

1

2

3

45

67

8VisitVisit routeroute1.1. Manifold and unloading Manifold and unloading armsarms2.2. JettyJetty and transfer lineand transfer line3.3. StorageStorage4.4. LNG PumpsLNG Pumps5.5. Submerged Combustion Submerged Combustion

VaporizersVaporizers6.6. BOG BOG CompressorsCompressors7.7. Wobbe Wobbe IndexIndex CorrectionCorrection SystemSystem8.8. Send out systemSend out system

The terminal visit

October 11th-12th, 2006

Outdoor Investor Days