Italian Operator Sees Healthy Demand
Italian gas transmission system operator Snam reported adjusted profit of €1.1 ($1.2)bn for 2019, up 8.2%, thanks to better operations, lower financing costs and higher income from shares in subsidiaries, chiefly the Greek TSO Desfa. It had free cash flow of €482mn, it said March 19.
Adjusted pre-tax earnings (Ebitda) for 2019 were €2.17bn, up 3.5% 2018. Revenues were €2.6bn, up 3% thanks to higher tariffs and a 3.5% rise in volumes injected into the system to 75.37bn m³. National demand of 74.6bn m³ was higher, mainly the result of 2.45bn m³ more going into the power sector, a tenth more than in 2018.
Cheaper LNG meant more regasification: last year 2.4bn m³ were injected from the Panigaglia terminal, compared with 0.91bn m³ in 2018.
Storage volumes were down 8.3% compared with 2018, as 19.33bn m³ moved through the system. There were high injections earlier in the year in readiness for a possible problem with Russian gas transit through Ukraine at the start of 2020, but low withdrawals owing to mild weather.
Profit from equity investments totalled €216mn, an increase of €57mn (35.8%), thanks mainly to Senfluga (+€33mn) which acquired a 66% stake in Desfa in the closing weeks of 2018 and a big increase in the amount of gas transported: the Southern Gas Corridor brings more gas from Azerbaijan. It also received payment from the Terega, the grid operator in southwest France (+€16mn), following the release of a provision for tax disputes and non-recurring effects.
CEO Marco Alvera said that the company was gearing up for the hydrogen economy being one of the world’s first companies to inject hydrogen into the grid.
Snam said it was hopeful for future gas demand, seeing similar volumes used in 2040 as today. "In both Europe and Italy, a recovery in demand has been recorded in recent years, coupled with a growing need for imports from diversified routes, in light of the decline in domestic production and the progressive exit of various countries from coal-based thermoelectric production. In Europe, the need for imports has grown by 30% since 2014 and is expected to increase further in the medium-term. In Italy, on the other hand, according to the joint Snam-Terna scenarios published on September 30 2019, gas consumption at 2040 is expected to be substantially in line with current levels, with renewable gases playing a growing role," it said.