health safety environment 2003 - snam · health safety environment 2003 report letter from the...

Health Safety Environment 2003 report

Piazza Santa Barbara, 720097 San Donato Milanese - MilanoTel. +39 02 5201www.snamretegas.it

Cover: Lorenzo Mattotti, La vita

Health Safety Environment

2003report

Note on methodsSnam Rete Gas's Health Safety Environment Report for 2003

has been prepared using the guidelines recommended bythe Environmental Reports Forum, promoted by the Eni

Enrico Mattei Foundation.The report illustrates all the activities performed in

connection with the natural gas transmission anddispatching services provided by Snam Rete Gas S.p.A. and

the LNG re-gasification service provided by GNL Italia S.p.A.To enable environmental performance to be compared over

time, the report provides data relating to natural gastransmission and LNG re-gasification activities for the period

1999-2003. Until 30 June 2001 these activities wereperformed by Snam and since 1 July 2001 they have been

performed by Snam Rete Gas.Health and safety performance is comparable from 2001,

the year when Snam Rete Gas started operating.

Health Safety Environment

2003report

contents Snam Rete Gas 7 Transmission and re-gasification system

Health, safety and environmental policy 10

Natural gas and the environment 12

Health, safety and environmental 15 Organisation

management 15 UNI EN ISO 14001 environmental certification

16 Audits

16 Environmental improvement programmes and targets

17 Legislation

18 Training

18 HSE expenditure

Environmental protection 20

21 Reduction of energy consumption

22 Air protection

25 Substitution of ozone-depleting substances

25 Waste management

26 Water consumption and waste water management

26 Noise reduction

27 Landscape protection

28 Pipeline monitoring

Occupational health and safety 30 Activities and initiatives

32 Accident prevention

Commitment to sustainable development 34

35 Our objectives

35 Code of practice

36 Technological innovation and research

36 Quality

36 Initiatives for employees

37 Suppliers and contractors

38 Shippers and the Italian Electricity and Gas Authority

38 Community relations

39 Internal and external communications

GNL Italia 41

Performance indicators 44

Verification of the report 46

SNAM RETE GASHEALTH SAFETY ENVIRONMENT

2003 REPORT

LETTER FROM THE CHAIRMAN

5

A commitment to sustainable development characterises Snam Rete Gas’s Health, Safetyand Environment policy and is an important growth factor for its natural gas transmissionand LNG re-gasification activities. These activities provide a source of energy which has alow environmental impact and which, in 2003, satisfied approximately 33% of Italy’s energyrequirements.

We are aware that our success is gauged on the basis of a combination of economic,environmental and social factors that take into account the needs of the general publicand investors. Accordingly, we are committed to creating value for our shareholders andthe community, with proper regard for the natural and social environments in whichwe work.

With this HSE report, we are continuing our practice to provide annual informationabout the health, safety and environmental aspects of our activities, the aim being toencourage an open and constructive dialogue and strengthen our relationships with allinterested parties, be they employees, customers, shareholders, suppliers, authorities ormembers of the general public. For us, the report is also a management tool because itenables us to verify the progress made and identify areas where there may be room forimprovement.

The dedication and professional skills of all Snam Rete Gas employees, the actions taken,the investments made, the application of new technologies and the continuousimprovement in procedures made it possible for us to achieve excellent results in 2003with a marked improvement in all environmental and safety indicators, thus confirmingthe progress made in previous years.

The report illustrates the actions undertaken and the results achieved, with particularreference to: restoring land after laying new pipes; inspecting gas pipelines; monitoringgeologically unstable areas; reducing energy consumption and atmospheric emissions;eliminating ozone-depleting substances in fire-extinguishing systems; reducing noise;training personnel; taking preventive action and arranging for surveillance in terms ofoccupational health and safety; social initiatives for employees; relations with ourstakeholders.

In recognition of our commitment to the environment, ISO 14001 certification of theenvironmental management systems in place at compressor stations and the LNG re-gasification terminal was maintained and renewed following audits by the certificationbody.

letter from the chairman


2003 REPORT

LETTER FROM THE CHAIRMAN

6

The contribution made by natural gas in satisfying energy requirements is increasingsteadily in Italy and the rest of the world. Snam Rete Gas is aware of the role it has onthe energy and environment scenes and aims to continue to provide a source of energywith a low environmental impact to millions of homes, as well as to industries andpower plants, thus making it possible to enhance energy efficiency, reduce pollutingemissions, play a part in achieving the reduction target set for greenhouse gas emissionsin Kyoto Protocol commitments, and improve the quality of the environment. In 2003,the use of natural gas transmitted by our network in Italy, as an alternative to coal andpetroleum products, prevented the emission into the atmosphere of 60 million tonnesof carbon dioxide.

The satisfactory financial results achieved, together with the results illustrated in thisreport, bear witness to Snam Rete Gas’s commitment to ensuring that economicdevelopment and the protection of health, safety and the environment are fullycompatible and this success acts as an incentive to do even better in the future.

ChairmanSalvatore Russo


2003 REPORT

SNAM RETE GAS

7

Snam Rete Gas belongs to the Eni Group and is responsible for natural gas transmissionand dispatching activities. In addition, it is currently the only provider of LNG (liquefiednatural gas) re-gasification services in Italy.The company started operating on 1 July 2001 following the transfer of the above-mentioned activities from Snam S.p.A. (now Eni S.p.A.).Since 1 November 2001, the LNG re-gasification activities have been performed by GNLItalia S.p.A. which is controlled 100% by Snam Rete Gas.

Key economic and operating data

2003 (million €)

Total revenue 1,767

Operating profit 926

Consolidated net income 545

Snam Rete Gas employees at 31.12.03 (no) 2,484

Transmission and re-gasification system

Natural gas is consigned to Snam Rete Gas at entry points located at interconnectionswith the import lines from Russia, Northern Europe and North Africa, with thePanigaglia LNG re-gasification terminal and with domestic gas production and storagecentres.

Snam Rete Gas


2003 REPORT

SNAM RETE GAS

8

The gas is then transmitted, on the basis of instructions provided by the shippers, to7,000 delivery points connected to urban distribution networks and to major industrialusers and power stations.

The Snam Rete Gas transmission system consists of a pipeline network, extending overmost of Italy, with pipes ranging from 25 to 1,200 millimetres in diameter operating atpressures of between 5 and 75 bar. There are 11 compressor stations and 563 pressurereduction plants. As at 31 December 2003, the network was 30,120 kilometres long, anincrease of 325 kilometres compared with 2002.System management is controlled by the Dispatching Centre at San Donato Milanese incollaboration with operating centres distributed throughout Italy.The Dispatching Centre liaises closely with 8 regional operating centres which superviseand control the activities of 63 local units in charge of the operation, maintenance andmonitoring of the whole system. These units are responsible for ensuring that thenetwork functions in compliance with specific technical standards and with currentlegislation and regulations, guaranteeing the required level of service, safety andenvironmental protection.The gas transmission service on Snam Rete Gas’s network is regulated by the ItalianElectricity and Gas Authority on the basis of a “Network Code” that sets out provisionsgoverning all the rights and obligations of the parties involved in the service.

The volume of natural gas sent into the national network in 2003 totalled 76.37 billioncubic metres, an increase of 1.97 billion, or 2.6%, compared with 2002. Natural gasconsumption increased considerably in 2003. Growth in demand was due primarily toconsumption by the electricity generating sector and to increased consumption in theresidential/commercial sector as a result of colder weather in the winter months of 2003.

1

2

34 5

9

10

11

1213

2

3

768

NATURAL GAS TRANSMISSION SYSTEM

1 Dispatching centre2 Natural gas fields3 Pipeline network4 Import points5 Compressor stations (transmission)

6 Compressor stations (storage)7 Underground storage8 LNG re-gasification (GNL Italia)9 Gas tankers

10 Pressure reduction plants

11 Industrial users and powerstations

12 Urban distribution networks13 Residential and commercial

users

Snam Rete Gas

GNL Italia


2003 REPORT

SNAM RETE GAS

9

20

40

60

80

1999 2000 2001 2002 2003 1999 2000 2001 2002

20,000

24,000

28,000

32,000

2003

Volume of natural gas sent into the network (109 m3) Length of pipeline network (km)

The average distance travelled by the gas in the pipeline network from the entry pointto the final delivery point increased from 430 kilometres in 2002 to 484 kilometres in2003.

At GNL Italia’s re-gasification terminal, located in the Fezzano di Portovenere district(province of La Spezia), liquefied natural gas (LNG) is unloaded from gas tankers andsent to storage tanks at a temperature of -160°C. Subsequently, it is reconverted to thegaseous phase in a simple heating operation and sent into the gas pipeline network.In 2003, the LNG re-gasification terminal sent approximately 3.5 billion cubic metres ofgas into the network.

IMPORTS FROM RUSSIAIMPORTS FROM NORTHERN EUROPE

MASERA

MALBORGHETTO

ISTRANA

RIMINI

LNG TERMINALTERRANUOVA B.

GALLESE

MELIZZANO

MONTESANO

TARSIA

MESSINA

ENNA

IMPORTSFROM ALGERIA

TRANSMISSION NETWORK SNAM RETE GAS REGIONAL CENTRES

KEY

National Network(in operation)

National Network (planned)

Regional Network

LNG re-gasification terminal

Dispatching centre

Compressor stations

Marine terminal

Regional boundary

North-westNorthNorth-eastCentre-westCentre-eastSouth-westSouth-eastSicily


2003 REPORT

HEALTH, SAFETY AND ENVIRONMENTAL POLICY

10

In a policy of sustainable development, the health and safety of employees and thirdparties, and the protection of the environment, are prime and constant objectives forSnam Rete Gas, whose commitment is to bring about a continuous improvement in allits activities.

The principles underlying Snam Rete Gas’s HSE policy are to:

– use natural resources in a sustainable manner and prevent pollution;

– manage activities in compliance with the provisions of law, rules, regulations andcompany procedures containing integrations and improvements;

– aim for technological excellence to ensure levels of safety, environmental protectionand energy efficiency in line with the best international business practices;

– locate, design, construct, manage and decommission plants and conduct activitieswith proper regard for working and natural environments, adopting a preventiveapproach in order to protect the health and safety of employees and third parties;

– identify the health, safety and environmental hazards arising from ongoing and newactivities, assess the associated risks and take steps to prevent and manage them;

– establish procedures, alongside the preventive measures, in order to identify andrespond to emergencies and control the consequences of any accidents;

– train and inform employees, raise their awareness and involve them, so that theytake part actively and responsibly in the implementation of principles and theachievement of objectives;

health, safety and environmental policy


2003 REPORT

HEALTH, SAFETY AND ENVIRONMENTAL POLICY

11

– carry out, at different levels, environmental monitoring and periodic revisions andupdates of procedures, using audit and reporting systems which make it possible toassess performance and review objectives and programmes;

– inform employees, trade unions, the authorities and the general public aboutprevention programmes and the results achieved, maintaining a climate ofco-operation with local, national and international authorities and associations;

– employ the services of qualified suppliers and contractors who can contribute tocontinuous improvement in health, safety and environmental standards;

– promote research and technological innovation to improve environmental performanceand safety standards in the company’s activities;

– make available adequate resources to implement this policy.

The HSE policy was approved by the Chairman of Snam Rete Gas on 18 December 2001.


2003 REPORT

NATURAL GAS AND THE ENVIRONMENT

12

Natural gas can make a major contribution to improving the quality of the environmentbecause it can be transmitted in underground pipelines, because of its inherentchemical-physical properties and because it can be used in high-efficiency low-emissiontechnologies, not only in fixed installations but also as a vehicle fuel. To supply theenergy equivalent of 208 million cubic metres of natural gas per day - the averagequantity transmitted in Snam Rete Gas’s underground pipeline network in 2003 - a largenumber of road tankers (for petroleum products) and railway wagons (for coal) wouldhave to be used, causing problems due to the lack of adequate transport infrastructureand the high environmental impacts involved.

The emissions of sulphur compounds, particulate, aromatic hydrocarbons and harmfulmetal compounds produced by natural gas combustion are negligible. Nitrogen oxideemissions, too, are generally lower than those produced by the combustion of otherfuels.

An increase in the use of natural gas as an alternative to petroleum products and coal,which emit larger quantities of CO2, is one of the most promising and feasible optionsfor reducing CO2 emissions. Natural gas can play an important role in achieving thetarget set for Italy in the Kyoto Protocol, which is to reduce greenhouse gas emissionsby 2008-2012 by 6.5% compared with the 1990 figure.

The combustion of natural gas produces 25-30% less carbon dioxide compared withpetroleum products and 40-50% less compared with coal, for the same energy input.Emissions per unit of energy output can be further reduced by using natural gas in high-efficiency applications and technologies, such as condensing boilers, cogenerationplants and combined cycle plants for electricity generation. A gas-fired combined cyclewith a 56-58% energy efficiency, compared with the approximate 40% effficiency of

natural gas and the environment


2003 REPORT


13

conventional steam cycles, can reduce CO2 emissions by 52% compared with a traditionalplant powered by fuel oil and by 62% compared with a coal-fired plant.

Natural gas also has the edge on other fossil fuels as regards the reduction of greenhousegas emissions, even taking into account the emissions of methane, the main componentof natural gas, from extraction to end use.

Life cycle analysis shows that, in electricity generation, the total greenhouse gasemissions - expressed as CO2 equivalent - in the life cycle of natural gas are 53-65% lowerthan in the coal cycle and 47-60% lower than in the oil cycle. The ranges shown for thepercentage reductions reflect differences in the activities included in the life cycle andin the sources of information.

FUEL TRANSPORT

(energy transported 7.2 * 106 GJ per day)

Fuel

Natural gas208 *106 m3/day

Petroleum products175,000 t/day

Coal274,000 t/day

5,380railway wagons

per day

4,700road tankers per day

1underground network

Means of transport

200

400

600

800

1,000

1,200

Italiangas

Russiangas

Naturalgas*

Oil Coal

End use Other stages

CO2 e

q. (g

/kW

h)

Greenhouse gas emissions in the life cycle of fossil fuels usedto generate electricity

*literature data


2003 REPORT


14

In 2003, the use of natural gas in Italy as an alternative to coal and petroleum productsin power stations, in industrial plants and in the residential/commercial and automotivesectors prevented the emission into the atmosphere of approximately 60 million tonnesof carbon dioxide, 1.04 million tonnes of sulphur oxides, 154,000 tonnes of nitrogenoxides and 69,000 tonnes of particulate.

PARTICULATE -69

EMISSIONS AVOIDEDEstimate of emissions avoided in Italy in 2003 thanks to the use of natural gas (103 t)

NITROGEN OXIDES-154

CARBON DIOXIDE -60,000

SULPHUR OXIDES-1,040


2003 REPORT

HEALTH, SAFETY AND ENVIRONMENTALMANAGEMENT

15

Organisation

Occupational health and safety and environmental protection have always been prioritiesfor Snam Rete Gas when defining corporate policies and making investment decisionsregarding its operations. The company’s Health, Safety and Environmental policy, its HSECommittee and a dedicated unit responsible for defining, scheduling and monitoringimprovement plans relating to occupational health and safety and environmentalprotection are tangible evidence of these priorities.

The HSE management system implemented by Snam Rete Gas is based on in-houseorganisational regulations which establish departmental and individual responsibilities andthe procedures to be followed in the planning, construction, operating and decommissioningstages pertaining to all company activities, the aim being to ensure compliance with the lawand with corporate HSE policy. In the Snam Rete Gas organisational structure, unit managers are required to takeresponsibility for the health, safety and environmental aspects of the activities lyingwithin their province. The environmental management systems in place at gas compressor stations and the LNG re-gasification terminal have achieved UNI EN ISO 14001 certification and the occupational healthand safety management system has been developed in compliance with the BS 8800 standard.

UNI EN ISO 14001 environmental certification

The environmental management systems in place at gas compressor stations and theLNG re-gasification terminal are certified to UNI EN ISO 14001.

health, safety and environmental management


2003 REPORT


16

This certification is valid for 3 years during which time audits are carried out by thecertification body every nine months.In 2003, DNV Italia (Det Norske Veritas) confirmed certified status after carrying out thefollowing audits:– LNG re-gasification plant: audit to maintain certification, January 2003– LNG re-gasification plant: audit to renew certification, October 2003– Tarsia compressor station: audit to maintain certification, April 2003– Montesano compressor station: audit to maintain certification, April 2003– Malborghetto compressor station: audit to maintain certification, April 2003At the end of 2003, Snam Rete Gas’s top management reviewed the corporateenvironmental management system in order to verify its adequacy and effectiveness andapproved the new environmental programme for 2004.Action was taken during the year with a view to introducing an ISO 14001 compliantenvironmental management system for the gas pipeline network.

In January 2004, DNV Italia renewed certification of the environmental managementsystem for gas compressor stations after carrying out the necessary audits at the Enna andMessina stations.

Audits

To verify the correct implementation and effectiveness of the environmental and safetymanagement systems in place and identify areas susceptible of improvement, as well asverifying compliance with the law, routine internal audits are carried out.

The auditing activities are performed by a team of suitably trained/qualified people. Inparticular, the head of the audit team is a qualified auditor or a person with equivalentexperience. When necessary, in addition to routine internal audits to ascertaincompliance with management systems, targeted audits are carried out to assess specifictechnical-operating situations and identify appropriate improvements.

In 2003, a total of 27 audits were performed, involving all the compressor stations, theLNG re-gasification terminal and several maintenance centres. Of these audits, 23 werecarried out by an internal team and 4 by an external team.

Environmental improvement programmes and targets

With a view to continuous improvement and in the framework of the environmentalmanagement system for compressor stations, environmental programmes involve thefollowing objectives and targets:

Objectives and targets achieved in 2003

Objective Target

- Reduce energy consumption Remote-monitoring and diagnostics programsinstalled on 5 units

- Eliminate ozone-depleting substances 4 fine water spray fire- extinguishing systemsinstalled to replace systems using NAF-S-III

- Improve waste management Areas created for the temporary selective storageof waste at 6 compressor stations

- Prevent accidental discharges Areas created for loading and offloading(surface and subsurface) oil products at the Gallese station

- Prevent accidental discharges Underground tanks replaced at the Istrana(surface and subsurface) and Malborghetto stations


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17

Work in progress

Objective Target

- Reduce atmospheric emissions Replacement of heat generators in 4 stations, of combustion products by 31/12/2004

- Reduce energy consumptpion

- Reduce energy consumption Use of remote-monitoring and diagnosticsprograms on 6 other units, by 31/12/2004

- Eliminate ozone-depleting substances Installation in all compressor stations of fire-extinguishing systems that use fine water sprayinstead of NAF-S-III, by 31/12/2004

New objectives and targets in 2004 environmental programme

Objective Target

- Reduce nuisance caused by lighting Modification of lighting systems in 9 stations,by 31/12/2005

- Prevent environmental pollution Installation of new fire-extinguishing systemson vents at 9 stations, by 31/12/2005

- Reduce atmospheric emissions of natural gas Installation of new hydraulic starter systemsfor 14 compressor units (PGT-25) to replacestarter turbines activated with natural gas,by 31/12/2006

- Improve waste management Installation of dedicated underground tanks atthe Malborghetto and Istrana stations for collectionof industrial waste water, by 31/12/2004

- Reduce noise Replacement of sound-absorbing insulationon flue-gas stacks of 13 compressor units,by 31/12/2007

- Improve reliability of low-emission turbines Use of new combustion technologies on 9PGT25-DLE compressor units, by 31/12/2007

- Reduce atmospheric emissions Installation of 7 new low-emission compressorunits, by 31/12/2006

- Reduce atmospheric emissions Conversion of 4 compressor units to low-emission type (DLN) , by 31/12/2004

Legislation

Snam Rete Gas’s activities are subject to European, national and local environmental andsafety legislation, international agreements and control and authorisation procedures.

There are dedicated units in the company’s organisation which:• collect and update the legislative framework, identifying the regulations that apply

to the company’s activities and arranging for their analysis and dissemination to theoperating units and offices concerned;

• file all deeds of authorisation and plan their updating; • prepare specific procedures for the implementation of legislation and regulations;• verify compliance with regulations and authorisations.


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18

Training

In 2003, personnel training activities were aimed at reinforcing and disseminating SnamRete Gas’s business know-how and developing the expertise and attitudes thatemployees need in order to perform their roles in the company.The company constantly organises training and follow-up courses to inform and instructoperating personnel about the risks connected with its activities. In particular, the training courses regarding health, safety and environmental issues areaimed at instructing employees and raising their awareness so that they operateresponsibly and with insight.In 2003, with regard to these specific issues, courses were organised on: safety for operators,safety at construction sites, first aid, fire fighting, legislative updates, internal ecoauditingqualifications, and environmental management systems. The overall attendance figure was1,154 for a total of 6,710 hours, with an expenditure of approximately €227,000.Training courses were also held for a variety of job positions in the company and, althoughthey cannot be classified as training activities devoted to safety and environmentalprotection, they provide employees with skills that are indispensable if they are to carryout their duties correctly and safely.

Courses organised for company employees in 2003 involved a total of more than 124,000hours of training, including approximately 6,600 hours for GNL Italia personnel, withan overall attendance figure of more than 4,800, including 400 for GNL Italia.

HSE expenditure

Capital expenditures and operating expenses are analysed in order to select and classifyitems of expenditure incurred specifically and primarily for occupational health andsafety and the environment.In 2003, HSE expenditure amounted to approximately €55 million (comprising capitalexpenditures totalling more than €35 million and operating expenses totallingapproximately €20 million).The expenditure incurred in 2003 and in prior years has made it possible to maintain highenvironmental protection and safety standards when constructing and operating plants, inaccordance with the company’s policy and its objectives for continuous improvement.

The item “air/climate protection” mainly includes capital expenditures in connectionwith the elimination of HCFC in fire-extinguishing systems and other measures takento limit and monitor atmospheric emissions. The item “landscape protection” comprises expenditure for restoration work after pipelaying and maintenance and expenditure for the landscaping and upkeep of green areasat facilities.

1999 2000 2001 2002 2003

75

60

45

30

15

Capital expenditures Operating expenses Landscape protection 55%

Health and safety 18% Air/climate protection 12%

Other environmental protection activities 15%

HSE expenditure (million €) Percentage breakdown of expenditure


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19

The main costs making up the item “other environmental protection activities”comprise the costs incurred for enviromental management, noise abatement, soilprotection, waste and waste water management and research and development.

Safety expenditure does not include capital expenditures relating to network and plantsafety and operating expenses for network and plant maintenance and control, unlessthey also have a substantial environmental content. For example, expenditures for safetyvalves, remote-controlled valves, increased pipe thickness, greater burial depth for pipeswith respect to current legislation, route changes, etc. are not included. These costs(which are considered an integral part of company activities) account for a highpercentage of the company’s total capital expenditures and operating expenses.

Occupational health and safety expenditure comprises the costs incurred for studies,research, risk assessments pursuant to Legislative Decree 626/94, preparation ofcontingency plans, plant and equipment (automatic safety and fire-extinguishing systems,materials and warning signs), personal safety devices, accident insurance, medicalequipment, analysis and control apparatus, work on plants, industrial hygiene inspectionsand monitoring and medical tests.

The performance indicators on page 45 include a detailed list of HSE expenditure.


2003 REPORT

ENVIRONMENTAL PROTECTION

20

Concern for the environment is shown in every stage of Snam Rete Gas’s activities.

The criteria and procedures used for the location, design, construction, managementand decommissioning of plants and for the conduct of activities comply with highenvironmental protection and safety standards.

The most significant environmental issues associated with Snam Rete Gas’s activitiesconcern the temporary disturbance of land when new transmission infrastructure isbeing constructed and the atmospheric emissions from the gas turbines used incompressor stations.

The transmission of natural gas provides a source of energy with a low environmentalimpact to millions of homes, as well as to industries and power plants, making itpossible to enhance energy efficiency, reduce atmospheric emissions and improve thequality of the environment.

The environmental indicators for 2003 have been calculated on the basis of the volumeof gas transmitted in the Snam Rete Gas network, which totalled 75.8 billion cubicmetres, comprising imports and Italian production sent into the network.

Environmental data and indicators are summarised in the performance indicators onpages 44-45.

environmental protection


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21

Reduction of energy consumption

To curb energy consumption, targeted energy saving programmes have beenimplemented over the years, involving the use of the best available technology and theinstallation of turbines with a high level of efficiency (up to 37%).Natural gas consumption at compressor stations is controlled by the Dispatching Centrewith specific software programs. These programs make it possible to optimise thefunctional efficiency of each station and the operating conditions for the import lines.The energy saving achieved by applying these information systems is estimated to be inthe region of 4-6%. During the year, as part of the ongoing ICT (Information Communication Technology)project for compressor stations, remote-monitoring and diagnostics programs wereinstalled on two units at the Messina station and on three units at the Montesanostation. The remote-monitoring and diagnostics system reveals any abnormal situationand/or deterioration of compressor unit efficiency, in real-time, thus making it possibleto intervene in the most appropriate way in order to return to optimum operatingconditions, with a consequent reduction in energy consumption and atmosphericemissions. Twenty-two compressor units are now controlled with this system, out of atotal of 28 included in the project.

Energy consumption in 2003 totalled 8,816 TJ, a reduction of 5% compared with 2002.Energy consumption for transmission activities accounted for 74% of the total (6,527TJ), a reduction of 7% compared with 2002.

Most of the energy used was natural gas, which accounted for more than 91% of totalenergy requirements.

The energy consumption indicator for gas transmission activities shows a decrease from0.27% in 2002 to 0.25% in 2003, due to the optimisation of transmission conditions.

Gas transmission 74% GNL Italia 22% Other (general services) 4%

1999 2000 2001 2002

0.25

0.50

2003

Percentage breakdown of energy consumption by activity

Energy consumption/energy transmitted (%)(Transmission activities)

1999 2000 2001 2002

0.2

0.4

0.6

0.8

2003

Energy consumption/energy transmitted* average distancetravelled (%/103 km) (Transmission activities)

1999 2000 2001 2002

5,000

10,000

15,000

2003

Natural gas Electricity Other energy

Energy consumption (TJ)


2003 REPORT


22

Air protection

An important aspect of the policy implemented by Snam Rete Gas in the journeytowards environmental sustainability concerns the reduction of atmospheric emissionsof polluting substances. This is borne out by the investments made and the positiveresults achieved.One example is the reduction of nitrogen oxide emissions following the installaton ofnew low-emission turbines in compressor stations.

By using natural gas as its principal fuel, Snam Rete Gas is able to minimise atmosphericemissions of sulphur oxides, particulate, carbon monoxide and volatile organiccompounds.

Total NOx emissions in 2003 amounted to approximately 1,020 tonnes, a reduction of3% compared with 2002 despite increased activities.

Greenhouse gas emissions deriving from Snam Rete Gas’s activities consist of carbondioxide and methane, which is the main component of natural gas.

Carbon dioxide is produced during combustion processes and is directly correlated tofuel consumption. In 2003, the reduction in energy consumption caused a reduction intotal CO2 emissions which fell from approximately 484,000 tonnes in 2002 toapproximately 459,000 tonnes in 2003.

Natural gas emissions originate partly from the normal operation of plants and partly fromdischarges during maintenance operations or as a result of accidents. They can be dividedinto four categories: vented emissions, fugitive emissions, emissions from pneumaticactuators powered by gas, and emissions of unburnt gas in flue-gas from combustion plants.

1999 2000 2001 2002 2003

500

1,000

1,500

2,000

Transmission LNG re-gasification General services

NOx emissions (t)

1999 2000 2001 2002

10

20

30

2003

NOx emissions/gas transmitted (kg/106 m3)(Transmission activities)

1999 2000 2001 2002 2003

200,000

400,000

600,000

800,000

Transmission LNG re-gasification General services

CO2 emissions (t)

1999 2000 2001 2002

3,000

6,000

9,000

2003

CO2 emissions/gas transmitted (kg/106 m3)(Transmission activities)

There was an increase of approximately 2% in total natural gas emissions, from 36.8million cubic metres (corresponding to approximately 23,330 tonnes of methane) in2002 to 37.5 million cubic metres (corresponding to approximately 23,820 tonnes ofmethane) in 2003.This increase is due mainly to more work having been carried out on the transmissionnetwork, both for maintenance and for new connections (approximately 580 operationsin 2003 compared with 400 in 2002). Despite this increase, the natural gas emissions indicator relating to transmissionactivities stayed at the same level as 2002, thanks to:• the installation of systems to recover vented gas at some compressor stations;• the replacement of gas-activated starter turbines with electric or hydraulic starter

systems for the gas turbines;• the use of pneumatic actuators powered by air instead of gas at some compressor

stations;• the introduction of operating procedures to limit discharges during maintenance

work.This result is all the more important if we consider that in 2003 there was an increaseboth in the length of the pipeline network and in the volume of gas transmitted.

It is also to be noted that during three major operations on the transmission networkin 2003 the "in-line" re-compression of natural gas was experimented. This made itpossible for Snam Rete Gas to avoid venting approximately 920,000 cubic metres ofnatural gas to the atmosphere.

The above-mentioned measures, along with targeted energy saving programmes, led toa reduction of 2% in total greenhouse gas emissions compared with 2002, whereas therelevant emissions indicator relating to transmission activities fell by 4%.

Pneumatic actuators 47.3%

Fugitive 27.8%

Vented 24.6%

Unburnt gas 0.3%

Percentage breakdown of natural gas emissions

1999 2000 2001 2002 2003

20

40

60

Transmission LNG re-gasification

Natural gas emissions (106 m3)

1999 2000 2001 2002

0.02

0.04

0.06

2003

Pressure reduction andregulating plants 55%

Transmission network 21% LNG terminal 2%

Compressorstations 22%

Natural gas emissions/gas transmitted (%)(Transmission activities)

Percentage breakdown of natural gas emissionsby type of installation

1999 2000 2001 2002

5

10

15

20

2003

Greenhouse gas emissions/gas transmitted(t CO2 eq./106 m3)(Transmission activities)


2003 REPORT


23


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24

Substantial investments havebeen made in recent years torenew the gas turbines used incompressor stations. Specialattention has been paid toenvironmental issues,concentrating on technologyinvolving low-emission gasturbines that use premixedcombustion chambers.

To assess the possiblerelationship between theoperation of a compressorstation and air quality, a studyhas been carried out incollaboration with the AirPollution Institute run by CNR(National Council for ScientificResearch) to monitor airquality in the vicinity of theGallese compressor station.

AIR QUALITY AND COMPRESSOR STATIONS

The assessment involved threemain themes:• analysis of the possible

connection betweenoperation of the compressorstation and the level ofpollution by nitrogen oxides;

• comparison between thelevels of secondary pollutionrecorded at the station andin neighbouring areas;

• assessment of pollutionassociated withphotochemical smog (ozoneand other photochemicaloxidants).

The results of measurements atthe Gallese station and in aneighbouring area haveconfirmed the findings of asimilar study that took place afew years ago at anothercompressor station, namelythat emissions from the stationhave no appreciable effect onthe surrounding area. Thisapplies both to nitrogen oxidesand the chemical substancesderiving therefrom, as well asto the phenomena known asacid rain and photochemicalsmog.

The data show that the areacan be considered a semi-remote area, subject tomoderate pollution from thenear-by motorway and tooccasional pollution episodesoriginating from the urbandistrict of Rome. This apart, theair quality in the area inquestion is determined byphenomena which, atminimum, take place on aregional scale.

The data that have beenrecorded have made it possibleto carry out extremelyinteresting scientific studieswhich can also be extended tomore general cases, withpositive implications regardingthe use of natural gas as a fuelwith a low environmentalimpact.


2003 REPORT


25

Figures for atmospheric emissions have been determined on the basis of directmeasurements or, in the absence thereof, by using emission factors recommended bythe US Environmental Protection Agency (US-EPA) or by the CORINAIR (COoRdinationINformation AIR) project. In particular, natural gas emissions have been estimated usinga method developed by the Gas Research Institute (GRI), in conjunction with US-EPA,and adapted to Snam Rete Gas’s plant configuration with an ad hoc research project andmeasurement campaigns in the field.

Substitution of ozone-depleting substances

The programme went ahead in 2003 to eliminate the ozone-depleting substances (HCFC)used in fire-extinguishing systems at compressor stations.Under this programme, all fire-extinguishing systems that use NAF-S-III (HCFC) are tobe replaced with new fine water spray systems. This technology combines a high levelof efficiency with operational safety and total environmental compatibility. Four fire-extinguishing systems were replaced in 2003 (2 at the Malborghettocompressor station and 2 at the Istrana station). At the end of 2003, the number of fire-extinguishing systems replaced had reached 23out of a total of 25. The programme, which started in 1999, is expected to be completedbefore the end of 2004 with the replacement of the last two NAF-S-III systems at theGallese compressor station.

Waste management

The quantities of waste produced by Snam Rete Gas’s activities are very limited andoriginate mainly from the maintenance and operation of plants and pipelines and fromthe cleaning of septic tanks that are used at some facilities to treat domestic sewage.

Used oil and spent batteries containing lead are consigned direct to the consortiaresponsible for their recovery, as required by law. Other types of waste are treated anddisposed of by authorised service companies.

The programme to improve waste management at compressor stations, by creating aspecial area for the temporary selective storage of waste at each station, was completedin 2003 with the creation of the last six areas.

300

900

600

1,200

1,500

1999 2000 2001 2002 2003

Transmission LNG-regasification

Waste production (t)


2003 REPORT


26

The total production of special waste in 2003 amounted to approximately 860 tonnes,over 780 tonnes of which belonged to the non-hazardous category (91% of the total).Approximately 60% of total waste production was recovered and 85% of this consistedof scrap iron.

There was a reduction in waste produced in transmission activities, from approximately1,050 tonnes in 2002 to approximately 720 tonnes in 2003.

Selective waste collection continued at head office and this made it possible to recoverand recycle 38 tonnes of paper and cardboard.

Water consumption and waste water management

Water consumption and waste water in gas transmission and LNG re-gasificationactivities have little significance from the environmental point of view, due to thelimited quantities involved and the type of waste water discharged.

In 2003, water offtake consisted of approximately 2.3 million cubic metres of sea-waterand 0.38 million cubic metres of fresh water.The sea-water is used to cool the auxiliary power plants at the LNG re-gasification terminaland the fresh water is used mainly for office activities, fire-extinguishing systems andirrigating green areas.

Of the total quantity of fresh water used, 69% was drawn from wells and the balancecame from water-mains.

In order to improve waste water management at the LNG re-gasification terminal, workto modify the main drainage system was completed in the year.

Noise reduction

The main sources of noise in the gas transmission system are the compressor stations,which are usually in rural areas along the pipeline network, and the pressure reductionplants, which link pipelines operating at different pressures.To minimise noise from its facilities, Snam Rete Gas’s underlying policy is one ofprevention. This involves the correct dimensioning of plants in the project preparationstage, accompanied by an acoustic impact forecast.The measures taken involve installing insulated cabins, sound-absorbing hoods, low-noise valves and silencers on vents and burying pipes.To verify sound levels, specific noise assessments to measure emissions are planned annually.

1999 2000 2001 2002 2003

3,000

4,500

1,500

Transmission LNG re-gasification

Water consumption (103 m3)

Offices 60% Irrigation 34%

Fire-extinguishing systems and other uses 6%

Percentage breakdown of fresh water consumption by use


2003 REPORT


27

Landscape protection

A gas pipeline route is chosen from a number of alternatives in the light of environmentalimpact, transmission safety and technical-economic feasibility. Specifically, the aim is toavoid or disturb as little as possible areas of special natural or cultural interest,archaeological areas, geologically unstable areas and inhabited areas or those where newhousing is planned. In the construction phase, trenches are excavated for the pipe-layingoperations using technologies that interfere as little as possible with the surroundings.Once the pipes have been laid, the land is restored very carefully so that it is returned toits original condition.

In 2003, environmental restoration involved the following gas pipelines:Malborghetto-Bordano pipeline (in Friuli Venetia Julia)Reinstatement of vegetation has been completed along the lower part of the route, fromthe Aupa Valley (in the municipal district of Moggio) to the River Tagliamento (in themunicipal district of Bordano). Revegetation work along the upper part as far asMalborghetto will be completed in 2004 (Alba Valley, Gleris Valley, Canale Valley).A special feature of the reforestation project is the use of indigenous trees which aregrown from seed collected in alpine woods in the Friuli region and which, therefore, areparticularly suited to the soil and climate of the areas where the pipeline has been laid.

Bordano-Flaibano pipeline (in Friuli Venetia Julia) Thin layers of turf and topsoil have been removed and are being conserved for theduration of the construction work. Once work has been completed, not only will theturf be relaid but a special mixture of indigenous grass seed procured locally will besown.

Istrana-Camisano pipeline (in Veneto)The most significant environmental issue associated with this pipeline concerned workto cross the River Brenta in lowland conservation areas. In these areas, the typicalvegetation of water-meadows was reinstated using indigenous species.

Pontremoli-Parma pipeline (in Tuscany and Emilia Romagna)Turf and topsoil were stripped and put to one side when the right-of-way was opened.Revegetation will be completed before the end of 2004, using indigenous trees. In thiscase, these will come from the Bosco di Carrega Park (province of Parma) where speciesthat are typical of the Apennines in Tuscany and Emilia Romagna are grown and whereendangered woodland ecotypes are protected.

Cagnano Varano-Carpino branch line (in Apulia)Most of this pipeline runs through the Gargano National Park (approximately 80% ofthe total length). Narrow rights-of-way were planned (8 metres wide) near wooded areasand, where possible, mature trees were either pollarded or left intact along both sidesof the route.Some sections of the pipeline had to cross very rocky areas and rocks from the trenchingwork were crushed in order to recover original material for backfilling the right-of-way.Targeted revegetation is planned for 2004. This involves reinstating the steppe-typegrassland on the Gargano promontory (above the built-up area of San GiovanniRotondo) and planting indigenous trees and shrubs suited to the wide-rangingtemperatures of the plateau between San Giovanni Rotondo and Cagnano Varano(province of Foggia).

Masera-Mortara pipeline (in Piedmont and Lombardy)In the Site of Community Importance known as Greto del Toce along the uncultivatedarea of the River Toce, activities are under way to monitor plant life, with studiesconducted by botanists from the University of Turin in accordance with EnvironmentMinistry requirements, as well as bird life.


2003 REPORT


28

Pipeline monitoring

When plants and pipelines are in operation, they are subjected to regular checks andmaintenance to ensure high safety standards. The integrity of pipelines is also checkedby running devices known as “intelligent pigs” through them, enabling possible faultsto be detected. Special attention is paid to the transmission route which is inspectedregularly with motor vehicles, helicopters and on foot, so as to detect potentiallydangerous situations caused, for example, by work being carried out by third parties inthe vicinity of the pipeline. Similarly, any movements that could cause landslides atspecific points of the route are kept under control.

In 2003, more than 1,700 kilometres of network were inspected with intelligent pigsand some 11,500 kilometres were monitored by helicopter.

Pipelines laid in unstable areas continued to be monitored with strain gauges in 2003.In addition, 8 new strain gauges were installed and 140 existing gauges were repaired.During the year, geological surveys were carried out on 1,350 kilometres of network,including 563 kilometres of pipeline involved in this type of survey for the first time. Afurther 150 surveys were carried out at sites subject to geological monitoring.

To prevent any interference with and/or damage to the subsea pipelines that cross theStrait of Messina, a campaign took place in 2003 involving the shore ends of the pipes.The purpose of this monitoring, consisting of geophysical surveys of surface areas, was tocheck the situation in terms of water depths and seabed morphology and the externalcondition of the pipelines. In addition, a campaign took place in February, at the Favazzinaarrival point, to clean up the area and check the integrity of the buried shore end of thepipelines.


2003 REPORT


29

Revegetation and reforestationmethods have evolved over theyears, the aim being to re-establish not only a wood butan entire habitat in which thereis a natural balance betweenflora and fauna based on theclimatic conditions of the areaconcerned.

Accordingly, it has been SnamRete Gas’s practice for severalyears to plant trees and shrubsin clumps protected by suitableenclosures to prevent damageby grazing animals, whilst atthe same time leaving openspaces for the passage of wildanimals.

In areas with steep gradients,where the stabilising action ofroot systems helps toconsolidate the slopes, treesare planted over the wholeright-of-way. The trees aresurrounded individually with

REVEGETATION METHODS

1.5-metre-high chestnut palingand wire-netting. This protectsthem from wild animals (whichabound in the mountainscrossed by the main importlines), especially roe-deer andchamois that eat young shootsand wild boar that are capableof uprooting whole saplings.

In 2003, plans were drawn upfor revegetation work along theCampochiaro-Sulmonapipeline, which is soon to belaid, with special attentionbeing paid to sections in theMaiella National Park.Revegetation will take place in2005 but advance planning willensure that all activities runsmoothly (stripping turf andtopsoil when opening the right-of-way, collecting specimens offlowering plants, saving maturetrees, procuring supplies ofindigenous trees and shrubs).

As to the future, the challengeis to plan environmentalrestoration in an increasinglyscientific way. Starting from adetailed environmental

analysis, criteria for re-establishing a habitat areassessed, with more and moreemphasis on safeguardingbiodiversity by using onlyindigenous species ofvegetation and monitoringflora, fauna and soil withbotanical, zoogeographical andpedological studies which willalso help to characterise moreaccurately Italy’s naturalheritage and ecosystems.


2003 REPORT

OCCUPATIONAL HEALTH AND SAFETY

30

Snam Rete Gas is pursuing an active policy of prevention and, with a view to continuousimprovement in terms of occupational health and safety, is engaged in numerousongoing activities and initiatives.

Results are assessed and programmes and objectives are defined and analysed regularlyby the HSE Committee, operating units being kept duly informed at meetings.

Activities and initiatives

Updating health and safety documents Health and safety documents consist of a report on the assessment of occupationalhazards, details of prevention and protection measures and safety equipment and animprovement programme. At meetings held on a regular basis, these documents are updated by members of staffdesignated as “assignors of work”, the manager of the corporate prevention andprotection service, occupational physicians and workers’ safety and environmentofficers.Regarding the assessment of occupational hazards, documents have been preparedconcerning protection against explosions in accordance with Legislative Decree 233/03relating to health and safety requirements for workers exposed to the risk of an explosiveatmosphere.

Updating the occupational health and safety management systemOperating instructions regarding various issues have been introduced and/or updated (e.g.first-aid courses, warning signs and notices, portable and trolley-mounted fire extinguishers,prevention measures for workers exposed to the risk of an explosive atmosphere).

occupational health and safety


2003 REPORT


31

Fire prevention Regarding fire prevention and emergency response in workplaces, 102 contingencyplans are in place, prepared in compliance with current legislation and involving anemergency structure consisting of 411 employees (coordinators and deputies) who havebeen suitably trained to deal with any emergencies and give first aid.Annual fire-drills are organised in all workplaces where contingency plans are in placeand reports are issued on the outcome with any observations considered necessary.

Training activitiesSafety meetings were organised by unit managers and training activities includedcourses on fire prevention, fire fighting and first aid, safety courses for recruits andemployees in the process of changing jobs and courses on the safety aspects of contractwork performed by third parties. To raise internal awareness, the company’s preventionand protection service organises meetings on specific topics (e.g. transport of dangeroussubstances, introduction of new equipment and new personal safety devices,occupational hazards associated with specific jobs) and prepares the necessary teachingaids.

Safety handbooksThese handbooks deal with specific topics concerning occupational health and safetyand are valid teaching aids for informing and training personnel.New safety handbooks have been prepared on VDUs, personal safety devices andemergency response in workplaces.

Company intranet siteTo improve internal communications, a “Health and Safety” site on the in-house ITnetwork can be accessed by all employees. This site contains files on the main healthand safety laws, the company’s prevention and protection structure, the managementand operating procedures included in the occupational health and safety managementsystem and documents with general information, as well as safety data sheets regardingchemical agents.

To safeguard the health of its employees, Snam Rete Gas has introduced measures toprevent work-related ill health and has created work environments to suit individualneeds.For activities that are subject to health surveillance (use of VDUs, night work, use ofchemical agents), involving a total of 938 employees, occupational physicians carriedout medical examinations and specialised tests according to specific protocols. During the year, 480 medical examinations were carried out, along with 1,547 testscomprising 914 laboratory analyses and 633 scans. To optimise the management of medical tests, Snam Rete Gas has developed acomputerised system that has a data bank with different levels of access, depending onthe user’s sphere of activity, where all significant data are stored.

Regarding the monitoring of work environments, periodic controls were carried out inconnection with the levels of noise emitted by plant and equipment, so as to assess thepersonal exposure levels of employees. In collaboration with the prevention andprotection service, an occupational physician carried out inspections of workenvironments in order to verify operating procedures and ergonomics at workstationsand establish any need for improvement (furnishings, lighting, warning signs andnotices, etc.).

To prevent risks connected with passive smoking, Snam Rete Gas is implementing Eni’s“no-smoking” policy and has introduced a smoking ban in its headquarters at SanDonato Milanese and in regional centres.


2003 REPORT


32

Accident prevention

To ensure the safety of employees, occupational hazards are assessed, prevention andprotection measures are identified and improvement programmes are drawn up incollaboration with members of staff designated as “assignors of work”, the corporateprevention and protection service, occupational physicians and workers’ safety andenvironment officers.

The analysis of injury statistics is of fundamental importance in order to determine thecauses of accidents and is an effective tool for identifying the measures that need to betaken in terms of prevention and protection so that occupational hazards can be eliminatedor reduced. For this purpose and to enable a comprehensive assessment to be made, analysisinvolves all reported accidents with injuries attributable to occupational/general hazards,road accidents and commuting accidents.

To optimise data management, the company has an IT system that informs all interestedparties immediately about an accident and records the causes and prevention measuresin place, together with any other information necessary to analyse the incident. Thesystem also provides data concerning accidents in the current and prior years, withstatistics relating to injury frequency and severity rates, the type of activity concerned,the nature and extent of the injury and the part of the body involved.

Since 1955, when PresidentialDecree 547 came into force,the list of Italian lawsconcerning health and safety inthe workplace has becomemuch longer and employers’obligations have becomeincreasingly complex.

In particular, in 1994 LegislativeDecree 626 enacted variousEuropean directives andintroduced a new preventiveculture, creating new jobpositions and assigning specificduties and responsibilities tomembers of staff designated as“assignors of work”, executivesand supervisors, occupationalphysicians, the manager andothers in charge of theprevention and protectionservice, employees and thesafety officers representingthem. The decree also set outspecific obligations concerningthe assessment of all

OCCUPATIONAL HEALTH AND SAFETY MANAGEMENT SYSTEM

occupational hazards, theidentification of preventionand protection measures, theuse of personal safety devices,the briefing and training ofpersonnel, health surveillance,etc. Consequently, the need forcompanies to adoptappropriate organisational andmanagement tools becamevirtually indispensable.

The international standardsused as a point of reference areBS 8800 and OSHAS 18001and, as far as Italy is concerned,UNI-INAIL guidelines issued in2001 are also taken intoaccount.

Given the foregoing legislativerequirements and in line withthese standards, Snam Rete Gasis implementing an

occupational health and safetymanagement system whichalso complies with Eniguidelines. This systemoperates alongside othermanagement systemsintroduced by the company.

The management system, withits various phases of planning,operation, audit and review, isthe tool used to implement thecompany’s health and safetypolicy and it enables corporateobjectives to be achieved in acontext of continuousimprovement.

The occupational health andsafety management system,comprising a manual,management procedures,operating instructions,specifications, reports, safetyhandbooks, etc., is updatedregularly to reflect legislativeand regulatory changes orrevised in-house procedures.


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33

In 2003, the frequency rate was 14.3, a reduction of 8% compared with 2002. The severityrate was 0.36, a reduction of 18% compared with 2002.

Analyses of injury statistics are discussed in detail during periodic safety meetings heldat operating units in order to make employees aware of the causes of the accidents andthe prevention and protection measures that need to be taken.

2001 2002

5

10

15

20

2003 2001 2002

0.2

0.4

0.6

2003

Injuries at workFrequency rate *

Injuries at workSeverity rate **

* number of injuries, resulting in inability to work for at least one day, for every million hours worked** number of working days lost, relative to injuries resulting in inability to work for at least one day, for every thousand hours worked


2003 REPORT

COMMITMENT TO SUSTAINABLE DEVELOPMENT

34

A commitment to sustainable development characterises Snam Rete Gas’s HSE policyand is an important growth factor for its natural gas transmission and LNG re-gasification activities. These activities provide a source of energy which has a lowenvironmental impact and which, in 2003, satisfied approximately 33% of Italy’s energyrequirements.

commitment to sustainable development

Shareholders Employees

Italian Electricityand Gas Authority

Shippers

Non-governmentalorganisations

Lenders

Localcommunities

Government(national and local)

Suppliers

Snam Rete Gas


2003 REPORT


35

Snam Rete Gas recognises that the success of a company is gauged on the basis of acombination of economic, environmental and social factors that take into account theneeds of the general public and investors. Accordingly, the company is committed tocreating value for its shareholders and the community, with proper regard for thenatural and social environments in which it works.

Snam Rete Gas is engaged in building solid and constructive relationships with all itsstakeholders and intends to strengthen these in order to achieve mutual objectives.

Our objectives

In its activities, and with the objective of continuously improving its performance, SnamRete Gas is operating in order to:• reduce atmospheric emissions by using new technologies and low-emission devices,

where technically and economically feasible;• limit disturbance to the land when laying pipelines and, once these have been laid,

return it to its original condition with careful restoration operations;• reduce energy consumption by installing high-efficiency gas turbines and using

advanced software systems to optimise gas transmission programmes in terms ofoperating and energy efficiency;

• monitor the structural integrity of pipelines with diverse systems to ensure highsafety standards;

• replace the ozone-depleting substances used in fire- extinguishing systems;• promote research and development activities aimed at reducing environmental

impact and improving safety conditions;• guarantee the safety of employees by carefully assessing occupational hazards,

introducing improvements and implementing management and operatingprocedures, as well as safety plans;

• safeguard the health of employees by means of specific health surveillance programmes;• create a positive work environment for human resources, the premise being that they

are key corporate assets; • provide suitable professional training for employees to ensure a high level of knowledge,

skills and experience;• create value for shareholders and the community;• guarantee a continuous, reliable and safe gas transmission service for customers;• build constructive relationships with the Italian Electricity and Gas Authority, with

shippers and with all other parties who are directly or indirectly involved in thecompany’s activities.

Code of practice

Snam Rete Gas has adopted and circulated the Eni Group Code of practice which setsout clearly the values that the company recognises, accepts and shares, as well as theresponsibilities it undertakes in its relations both inside and outside the company. Thepurpose of the code is to ensure that all activities are performed in compliance with thelaw, in a climate of fair competition, with honesty, integrity, correctness and in goodfaith and with due regard for the legitimate interests of customers, colleagues,shareholders, commercial and financial partners and the communities in which thecompany operates. All Snam Rete Gas employees, without any distinction or exception,are committed to complying and ensuring compliance with these principles in thefulfilment of their duties and responsibilities. Under no circumstances can theconviction of acting for the benefit of the company justify any form of behaviour incontrast with these principles.An in-house Code of Practice Committee has been set up and a Guarantor for the Codeof practice has been nominated.


2003 REPORT


36

Technological innovation and research

Snam Rete Gas continued its studies and research efforts in 2003 with the aim ofreducing the environmental impact of its activities and identifying new technologiesthat ensure a safe and reliable transmission network.Pursuit of these objectives also involved some important initiatives in collaboration withinternational research organisations, such as GERG (Groupe Européen de RecherchesGazières), Italian universities and transmission companies based in and outside Europe.

More specifically: • activities continued in order to assess the environmental and energy aspects of gas

transmission and use;• activities went ahead in connection with estimating natural gas emissions from the

transmission network; • an assessment was completed regarding the potential benefits of using a satellite to

identify unstable areas along the pipeline route;• tests are under way concerning the use of optical fibres which permit the continuous

monitoring of stresses in areas susceptible to landslides. The aim is to have detailedinformation about the state of stress of a pipeline in order to optimise maintenance work;

• activities to assess the performance of geometric and geometric-inertial pigs werecompleted. These made it possible to carry out more accurate inspections of pipelines;

• tests are under way, along a section of pipeline, to assess a system to monitorinterference caused by machines operating nearby. The system involves the use of alaser signal that is transmitted along an optical fibre in the telecommunications cableinstalled alongside the pipeline;

• a start has been made on a project aimed at assessing the use of new types ofexternal/internal coating for pipelines and new devices to control cathodic protection.

Quality

To ensure that the service provided by the company is transparent and certified, an ISO9000:2000-compliant quality management system is being implemented for thedispatching process. In June 2003, DNV Italia (Det Norske Veritas) certified the qualitymanagement system for natural gas dispatching activities throughout Snam Rete Gas’snetwork in Italy.The quality of the services offered by Snam Rete Gas also emerges in the system used toanalyse the composition of natural gas transmitted by the network. In fact, for thesemeasurements Snam Rete Gas has its own laboratory, known as “LASVIL”, which hasachieved SIT (Italian Calibration System) accreditation - code number 155 - as a Centrefor the Calibration of Natural Gas mixtures (the first in Italy in the gas sector).

Initiatives for employees

In the new gas market situation, Snam Rete Gas has been tackling and governingsuccessfully the ongoing changes, also thanks to the professional skills of its humanresources.During the year, targeted initiatives were organised to introduce new skills and stepswere taken to encourage the professional growth, involvement and career developmentof critical resources.In the field of industrial relations, talks with trade unions were conducted on the basisof proactive participation and negotiation which made it possible to achieve well-balanced solutions in the various stages of the organisational optimisation process.At 31 December 2003, Snam Rete Gas employees numbered 2,484 (including 84 workingfor GNL Italia).


2003 REPORT


37

Recruitments in 2003 totalled 83. Recruitments on the open market mainly involvedpeople with university degrees (45%) and high school/training college diplomas (54%).

Snam Rete Gas promotes social initiatives for its employees and their families, backingthese up with financial resources and dedicated company facilities. In 2003, thefollowing initiatives were organised:• a programmed prevention campaign for employees, known as the “Early Diagnosis Plan”,

in collaboration with Lega Italiana per la Lotta contro i Tumori (an Italian association for thefight against tumours), with screening tests in specialised medical centres. The campaignstarted in October 2002 and will be nationwide; at the present time, it is going ahead inthe regions of Lombardy, Latium, Piedmont, Liguria, Emilia Romagna, Apulia and Calabria;

• an influenza vaccination campaign for employees working in San Donato Milaneseand Rome;

• acts of solidarity in favour of families of deceased employees, healthcare for employeesand their families, and a programme of courses abroad for employees’ children duringschool holidays so that they can improve their knowledge of foreign languages;

• supplementary insurance for employees to cover accidents outside working hours;• long-service awards for employees who have worked for Eni Group companies for a

continuous period of 25 years;• a sports event - Trofeo della Neve (Snow Trophy) - with a weekly programme of ski-ing

competitions between Eni Group companies in which present and retired employeesand their families took part;

• 15-day summer holidays for employees’ children aged between 6 and 14 at seasideand mountain centres.

Suppliers and contractors

Snam Rete Gas makes use of the services of suppliers/contractors on the basis of aselection and qualification process handled by dedicated company units. Whennecessary, these units enlist the support of other departments that are specialised inhealth, safety and environmental matters. The names of approved suppliers/contractorsare included in a Vendors List in accordance with corporate procedures governing theassessment and supervision of suppliers and contractors.Orders placed by Snam Rete Gas in 2003 involved approximately 1,150 external suppliersfor a total value of more than €900 million.

Employees at 31.12.2002 Employees at 31.12.2003Snam Rete Gas GNL Italia Total Snam Rete Gas GNL Italia Total

Executives 60 1 61 68 1 69

Senior staff 258 8 266 246 7 253

Office workers 1,372 32 1,404 1,295 29 1,324

Manual workers 863 52 915 791 47 838

2,553 93 2,646 2,400 84 2,484

2001 2002

250

500

750

1,000

2003

Orders placed (million €)

Italy 90.2% Other countries 0.3%Rest of Europe 9.5%

Percentage breakdown of orders placed


2003 REPORT


38

At the end of a contract, activities carried out by a contractor are assessed in order toestablish compliance with the company’s requirements.

As regards the safety aspects of contract work performed by third parties, contractorswere duly informed about the hazards that exist and the preventive action andcontingency measures in place in company offices and facilities where they are working,the aim being to encourage coordination and cooperation.

Shippers and the Italian Electricity and Gas Authority

In 2003, some thirty shippers used the transmission service provided by Snam Rete Gason its pipeline network. Relations with shippers led to very satisfactory results thathighlighted the role played by Snam Rete Gas in facilitating access to the system. In thefirst place, the company made every effort to make available as much transmissioncapacity as possible so as to guarantee allocations to all shippers requesting capacity.Secondly, it continued to invest in a sophisticated information system that makes itpossible to optimise management of transactions with shippers and respond promptlyto the needs of the transmission capacity market.Volumes of gas sent into the network by shippers other than Eni increased in 2003 andaccounted for 32.2% of the total transmitted, compared with 26.7% in 2002. This increasemore than offset the reduction in volumes transmitted on behalf of Eni, providingtangible evidence of the contribution being made by Snam Rete Gas to vitalise the gasmarket in Italy.

Snam Rete Gas has established an extremely constructive relationship with the Italianregulatory authority (the Electricity and Gas Authority).In July 2003, with ruling 75/03, the Electricity and Gas Authority approved the NetworkCode. This code is a contractual document that sets out rules governing access by shippersto and their use of the transmission service provided by Snam Rete Gas.

Community relations

Snam Rete Gas cooperates with local, national and international authorities and takespart in the work of numerous associations and committees, playing an active role andplacing its expertise at their disposal in order to promote improvements in varioussectors of activity.

In 2003, Snam Rete Gas provided financial support for the Puliamo il Mondo initiativeorganised by the Italian environmental association, Legambiente. Known outside Italyas “Clean Up The World”, this event is the most important international pro-environment initiative involving volunteers and is promoted by the United NationsEnvironment Programme. In Italy, the event involved hundreds of local governmentauthorities, schools and associations, with around 650,000 members of the publicactively engaged in cleaning up some 3,800 areas.


2003 REPORT


39

Internal and external communications

Snam Rete Gas has always recognised the importance of communicating with all partiesinvolved in sustainability processes. In fact, transparency is one of the key factors in thecompany’s policy for good administration.New information technologies have made communication processes faster and simplerboth inside and outside the company.

As regards internal communications, in addition to traditional notice boards, Snam ReteGas has an in-house network known as Sinfonet. Sinfonet has been in operation forseveral years, with progressive improvements in terms of contents and operatingprocesses in order to speed up the exchange of information throughout the company.The aim of the site is to provide all employees with access to a regularly updated flowof information about matters relating to their areas of activity and inform them aboutthe company’s operations and strategies, thus acquainting them with the company’sdecision-making processes. Sinfonet has also become the main source of informationon social initiatives and events. Furthermore, a dedicated Health Safety Environmentarea can be accessed, with an up-to-date flow of information on the following issues:HSE legislation, circulars and documents regarding application of the laws,management system documents, audit programmes, safety data sheets regardingdangerous substances, injury rates.

Electronic mail has also proved to be a fast and extremely popular means of communication.

Professional associations and committeesAIEE - Associazione Italiana Economisti dell’EnergiaANIPLA - Associazione Nazionale Italiana per l’AutomazioneAPCE - Associazione Protezione Corrosioni ElettroliticheATIG - Associazione Tecnica Italiana del GasCEI - Comitato Elettrotecnico ItalianoCIG - Comitato Italiano GasCTI - Comitato Termotecnico ItalianoEASEE-gas - European Association for the Streamlining of Energy Exchange - gasEGIG - European Gas Pipeline Incident Data GroupEPRG - European Pipeline Research GroupEUROGAS - The European Union of the Natural Gas Industry (representing Eni)GERG - Groupe Européen de Recherches GazièresGIIGNL - Groupe International des Importateurs de Gaz Naturel Liquéfié (representing Eni)GTE - Gas Transmission EuropeIATT - Italian Association for Trenchless TechnologyICIM - Istituto Certificazione Industriale per la MeccanicaUNI - Ente Nazionale di UnificazioneUNICHIM - Associazione per l’Unificazione nel settore dell’Industria ChimicaUNSIDER - Ente Italiano Unificazione SiderurgicaInternational standardisation associations and committees (acting as representative for Italian associations/committees)CEN - Comité Européen de Normalisation (representing CIG, UNI and UNSIDER)CENELEC - Comité Européen de Normalisation Electrotechnique (representing CEI)CEOCOR - Comité pour l’Europe occidentale contre la corrosion des conduites souterraines (representing APCE)ECISS - European Committee for Iron and Steel Standardisation (representing UNSIDER)ISO - International Organisation for Standardisation (representing CIG, UNI and UNSIDER)International gas associations (acting as representative for Italian associations)IGU - International Gas Union (representing ATIG)MARCOGAZ - Technical Association of the European Natural Gas Industry (representing ATIG)

SNAM RETE GAS INVOLVEMENT IN NON-PROFIT ASSOCIATIONS


2003 REPORT


40

Regarding external communications with stakeholders, in addition to the publicationof the annual report and this HSE report, information is available on the Internet(www.snamretegas.it) and in a variety of brochures illustrating corporate activities.

It is estimated that the HSE report will have a circulation of more than 2,000, comprisingcustomers, shareholders, suppliers, authorities and members of the general public.

Snam Rete Gas’s web site is organised on the basis of well-defined areas where it ispossible to have information on the company, its background and the regulatoryframework in which it operates. The company’s main publications (quarterly, half-yearlyand annual reports, HSE reports) are available as PDF files in the “Documents” section.Lastly, the site makes it possible for all authorised gas market operators to engage intrade relations with Snam Rete Gas. By accessing the specific “Business Area”, aninformation service and interactive tools are available for all operations connected withthe purchase, sale and transmission of natural gas.

Activities concerning the company’s Internet and Sinfonet sites are the responsibility ofthe Personnel and Organisation Department and are performed by a dedicatedCorporate Image Coordination unit.


2003 REPORT

GNL ITALIA

41

GNL Italia, controlled 100% by Snam Rete Gas, carries out LNG re-gasification activitiesand operates the Panigaglia terminal, located in the Fezzano di Portovenere district(province of La Spezia).

This terminal is the only plant in Italy that receives and re-gasifies liquefied natural gas.Built between 1967 and 1970, it was revamped between 1990 and 1996 in order toprocess light LNG. When revamping, special care was taken to ensure that the terminalblended in with its surroundings on the basis of a project prepared by the University ofGenoa’s School of Landscape Architecture.

The terminal covers an area of some 45,000 square metres and consists of two storagetanks, each with a capacity of 50,000 cubic metres, vaporisation equipment and a berthfor the gas tankers.The criteria for the design, construction and operation of the terminal comply with verystringent international regulations and involve state-of-the-art technology in terms ofsafety and environmental protection.

A total of 123 gas tankers berthed at the terminal in 2003 to unload LNG.The LNG unloaded from the tankers is sent to the two storage tanks at a temperature ofaround -160°C. Subsequently, it is reconverted to the gaseous phase in a simple heatingoperation and sent into the gas pipeline network.

The LNG terminal site operates a UNI EN ISO 14001 certified environmental managementsystem. This system is integrated with a plant safety management system complying withLegislative Decree 334/99. In January 2003, DNV Italia (Det Norske Veritas) carried out theaudit needed to maintain certified status, whereas the audit to renew certification, whichwas subsequently confirmed, took place in October.

GNL Italia


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GNL ITALIA

42

With a view to continuous improvement and in the framework of the environmentaland safety management system for the LNG re-gasification terminal, environmental andsafety programmes involve the following objectives and targets:

Environmental and safety improvement objectives and targets achieved in 2003

Objective Target

- Reduce atmospheric emissions of natural gas Installation of new boil-off compressors- Reduce noise completed

- Prevent accidental discharges Gas oil tanks replaced(surface and subsurface)

- Improve waste water management Modifications carried out to main drainagesystem

- Train and inform personnel Ad hoc training course held on environmentallegislation

- Use best available technology Design stage completed regarding modernisationof automatic PLC (programmed logic controller)system

- Improve internal communications Design stage completed regarding extension(including communications in emergencies) of range of intercom/public-address system

- Modernise the fire prevention system Installation of more reliable fire detectors completedat the berth and distribution of fire extinguishers improved

- Optimse the entry control system New control system installed to record everyoneentering the terminal

Work in progress

Objective Target

- Use best available technology Installation of a new automatic PLC(programmed logic controller) system,by 31/12/2004

- Improve internal communications Extension of the range and integration of the(including communications in emergencies) intercom/public-address system in the plant

and offices, by 31/12/2004

New objectives and targets in 2004 environmental and safety programme

Objective Target

- Prevent accidental discharges Conversion of diesel tank from single-to(surface and subsurface) double-wall type with an alarm system to

detect leakage, by 31/12/2004

- Improve waste water management Complete a study to connect the sewage systemto the main drainage system, by 31/12/2004

- Optimise use of natural resources Complete a study to install a photovoltaic systemfor the production of electricity, by 31/12/2004

- Upgrade the system to detect Installation of devices to detect an explosive an explosive atmosphere atmosphere near the pumps (P-201),

by 31/12/2004

- Improve the reliability of the LNG density Replacement of existing instruments with latestmeasuring system generation instruments, by 31/12/2004


2003 REPORT

GNL ITALIA

43

In 2003, the terminal sent approximately 3.5 billion cubic metres of gas into thenetwork, consuming about 1,960 TJ of energy.

Activities at the terminal in 2003 caused the following atmospheric emissions: approximately75 tonnes of nitrogen oxides, 47 tonnes of carbon monoxide and 91,000 tonnes of carbondioxide.

Natural gas emissions totalled approximately 0.8 million cubic metres, whereas sulphuroxide and particulate emissions are negligible.

Waste production, originating mainly from maintenance activities, amounted toapproximately 137 tonnes. Non-hazardous waste accounted for 95% of the total and 46%was recovered.

Water consumption consists mainly of sea-water (2.3 million cubic metres) which isused to cool auxiliary power plants.

Regarding accidents in 2003, 7 injuries were recorded compared with 4 in 2002. Thesecomprised one attributable to occupational hazards and four to general hazards,whereas the other two were caused by road accidents when commuting.Analysis of injury statistics, compared with 2002, shows a rise in both the frequency rate(from 22.0 to 49.9) and the severity rate (from 0.46 to 1.77), influenced respectively bythe increase in the number of injuries and the days of absence from work (mainly inthe case of injuries attributable to general hazards), combined with a 23% reduction inthe number of hours worked.

The accidents that occurred were analysed with all personnel during periodic meetingsheld for information and awareness-raising purposes, in order to assess their dynamicsand plan appropriate action to keep them from happening again.

1999 2000 2001 2002

0.5

1

1.5

2

2003

Energy consumption/LNG sent into network (%)


2003 REPORT

PERFORMANCE INDICATORS

44

Snam Rete GasPerformance indicators

Activities

1999 2000 2001 2002 2003

Natural gas pipeline network (km) 29,000 29,111 29,607 29,795 30,120

Average distance travelled by natural gas in Italy (km) 527 503 442 430 484

LNG sent into network (109 m3) 3.0 3.5 3.6 3.6 3.5

Natural gas transmitted (109 m3) 66.4 73.1 69.6 73.7 75.8

Pressure reduction plants (no) 561 560 560 560 563

Compressor stations (no) 10 10 10 11 11

Power rating in compressor stations (MW) 597 588 588 621 621

Environmental indicators

1999 2000 2001 2002 2003

Energy consumption (TJ) 11,536 12,058 9,480 9,314 8,816

Natural gas emissions (106 m3) 41 47 38 37 37

CO2 emissions (103 t) 606 634 492 484 459

CO2 eq. emissions (103 t) 1,152 1,241 995 974 959

NOx emissions (t) 1,846 1,628 1,157 1,055 1,019

CO emissions (t) 678 678 526 486 412

Particulate emissions (t) 35 42 37 36 27

SOx emissions (t) 5 6 5 4 4

Total waste production (t) 275 1,146 1,471 1,279 860

Non-hazardous waste production (t) 247 1,062 1,374 1,121 784

Hazardous waste production (t) 28 85 97 158 76

Water consumption (103 m3) 4,057 3,659 2,852 2,627 2,662

Waste water (103 m3) 3,516 2,676 2,614 2,468 2,516

Energy consumption for transmission/energy transmitted (%) 0.41 0.37 0.29 0.27 0.25

Energy consumption for transmission/energy transmitted * av.dist. trav. (%/103 km) 0.78 0.75 0.66 0.64 0.52

Energy consumption for re-gasification/LNG sent into network (%) 1.61 1.73 1.62 1.59 1.64

Natural gas emissions for transmission/natural gas transmitted (%) 0.059 0.050 0.049 0.048 0.048

CO2 emissions for transmission/natural gas transmitted (kg/106 m3) 7,801 7,110 5,478 5,180 4,719

CO2 eq. emissions for transmission/natural gas transmitted (kg/106 m3) 15,714 13,836 12,401 11,621 11,190

NOx emissions for transmission/natural gas transmitted (kg/106 m3) 26 20 15 13 12


2003 REPORT

PERFORMANCE INDICATORS

45

HSE expenditure (thousand €)

1999 2000 2001 2002 2003

Cap. ex. Op. Cap. ex. Op. Cap. ex. Op. Cap. ex. Op. Cap. ex. Op.

Air/climate protection 433 492 1,350 593 2,737 728 5,718 857 5,758 858

Waste water management 43 57 6 105 14 118 10 74 107 74

Waste treatment 0 170 8 504 106 517 53 545 37 441

Soil protection 0 230 73 54 533 124 254 158 722 89

Noise/vibration abatement 435 11 264 25 324 30 0 708 186 16

Landscape/nature protection and

environmental restoration 8,127 7,435 8,189 9,386 32,078 11,212 27,751 9,461 22,349 7,935

Research and development 0 723 0 513 0 280 554 302 214 285

Other environmental protection activities 1,280 8,961 6,456 7,616 4,418 2,991 3,540 3,111 3,003 3,036

Health and safety 1,660 6,088 2,086 7,644 1,729 6,103 1,392 5,534 3,004 6,799

HSE training 0 1,303 0 455 0 418 0 244 0 227

Total 11,979 25,471 18,432 26,895 41,939 22,521 39,272 20,994 35,380 19,760

Total (capital expenditures and operating expenses) 37,450 45,327 64,460 60,266 55,140


2003 REPORT

VERIFICATION OF THE REPORT

46

verification of the report


2003 REPORT

VERIFICATION OF THE REPORT

47

Format control

Snam Rete Gas - Health Safety Environment

Publishing coordination

Snam Rete Gas - Corporate Image Coordination

Graphics

Orecchio Acerbo

Pre-printing

46xy Milan

Printing

Grafiche Mariano S.p.A.

Printed on ecological paper

May 2004

For enquiries:Snam Rete Gas SpA/Health Safety Environment Dept.Piazza Santa Barbara, 7 - 20097 San Donato Milanese (MI)Tel. +39.02.5201 - Fax +39.02.520.38428e-mail: [email protected] - Website: www.snamretegas.it

Health Safety Environment 2003 report

Piazza Santa Barbara, 720097 San Donato Milanese - MilanoTel. +39 02 5201www.snamretegas.it

Cover: Lorenzo Mattotti, La vita