outdoor investor days - snam
TRANSCRIPT
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