Snam bets on Italy’s role in Europe with higher gas investments

MILAN, Jan 19 (Reuters) – Europe’s gas grid operator Snam (SRG.MI) aims to boost Italy’s role in the European energy system with its new investment strategy, its new CEO said on Thursday when presenting the group’s plan to 2026.

Snam, which played a key role in filling Italy’s gas storage facilities to prepare for the winter with dwindling Russian supplies, said it would invest 10 billion euros ($10.8 billion) in the next four years, 23% more than in the previous plan.

Out of the total, 9 billion will go to gas infrastructure for the construction of the so-called Adriatic pipeline, the setting up of two new liquefied natural gas (LNG) terminals, and the expansion of gas storage.

The Adriatic Line will transport more fuel from the south, where pipelines from Africa and Azerbaijan land, to Italy’s industrialized north and will allow reverse flows to northern Europe.

“Last year we exported 4.2 billion cubic meters (bcm) of gas to northern Europe… with investments we will expand reverse flow capacity up to 10 bcm,” Chief Executive Stefano Venier said.

Before the Ukrainian war Italy used to import 38% of the gas it consumed from Russia through pipelines landing in the north.

“We can re-launch the role of Italy with respect to the entire European energy system,” he said, pointing to the fact that Rome can leverage well-established links with African gas suppliers to send gas to European neighbors.

The new strategy for the regulated company is the first since Venier took over from hydrogen advocate Marco Alvera last spring in the middle of the energy crisis.

In the current plan, energy transition projects account for 1 billion euros and investments in hydrogen are planned for the long term.

Snam expects 7% average annual growth in its core earnings and a 3% average annual rise in its net profit. It extended to 2026 a pledge to increase its dividend per share by at least 2.5% a year from 2023.

The 2026 targets look reasonable but not strong, and the group’s net profit expectation is “a bit unexciting as it remains unchanged”, JPM said in a comment.

Shares in Snam were down 3% at 1205 GMT underperforming a 1.4% loss in Milan’s blue-chip index (.FTMIB).

While the plan does not include any M&A or asset disposals the CEO did not rule out the sale of part of the group’s stakes in gas distributor Italgas (IG.MI) and in electrode maker Industrie De Nora (DNR.MI) in the future.

Net debt is expected to increase to around 18 billion euros in 2026.

($1 = 0.9259 euros)

Reporting by Francesca Landini; Editing by Jan Harvey and Elaine Hardcastle

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