assemble - GE Oil and Gas new sources and uses of gas CNG vs. Diesel –CO2: -30% –NOx: -80% –SO2: -100% –PM10: -90% 5. Snam: leader in natural gas infrastructures European infrastructure

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Marco Alverà

Snam CEO

Fuelling the future with natural gas

1. There will be a lot more LNG (+50% 2020 vs 2015)…

2

LNG trade expected to double to cover demand

from Asia and other newly developing countries

LNG liquefaction expected to grow

significantly, especially in Australia and US

… and there could be even more if liquefaction costs are lowered

3

LNG liquefaction costs – 1000% cost inflation

Year

$/t

pa

• Build in lower cost areas and then

assemble

• Floating concepts to reduce

onshore building costs

• Standardise design

• Competition between

manufacturers

• Share facilities for LNG plants in the

same area

Lowering costs

Sources: Oxford School for Energy Studies, LNG Plant Cost Inflation,

research paper Feb2014

2. FSRUs will allow new countries to start benefiting from gas

4

Proposed regasification terminals by country

Source: IHS – Regasification database as of Aug. 23, 2016

40

14

6 5 4 4 3 3 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

1

7

3

2

1 2 2

1 1 2

5

1

12

8%

5%

10%

37%

-1%

24%

7%

0%

8%7%5%

14%10%

21%

-11%

2%1%

7%

3%

12%

1%

12%

6%9%

11%13%

12%

57%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

0

5

10

15

20

25

30

35

40

45 Onshore FSRU LNG CAGR 2016-2030**

LNG Onshore SRU LNG CAGR Bangladesh

Colombia

Philippines

Ghana

S. Africa

Bahrain

Cote D’Ivoire

Panama

Uruguay

Jamaica

El Salvador

Senegal

….

Source: OECD/IEA, “World Energy Outlook 2016”; EU Reference Scenario 2016

* Implementation of the only 20-20-20 energy package with the achievement of the targets ** New Policies Scenario hypothesizes the full implementation of the Energy Policies set out at EU level

*** IHS Rivalry assumes EU on track to reach its 2020 targets. 2030 targets at EU level not reached but different trends among Countries (priority is given to national policies)

Natural gas long-term demand & production (Bcm)

450 Scenario

New Policies EU Ref. Scen. 2016 IHS Rivalry

Current Policies

De

man

d

Pro

du

cti

on

Eurogas 2016

Forecast

Data for EU28 587

484

452

327

465

420

480

546 542

457

422

440

474

565 542

508

375

210 190

163 145

125 112 102 96 90 84

• Gas demand long term forecasts

point on substantial stability in

2015-2025 timeframe

• Internal production decline

• Import requirements set to rise

• Wider gas demand volatility

after 2025 due to different energy

scenarios with potential fall to

~330 BCM in most extreme

scenarios

3. Europe: import requirements set to rise…

5

… with new infrastructure and interconnections providing gas to gas competition

Present flows

Debottlenecking of national interconnections and new supply sources fosters

market integration, greater liquidity and security of supply

RUSSIA

NORTH

SEA

NORTH

AFRICA

LNG RUSSIA

NORTH

SEA

NORTH

AFRICA

LNG

CASPIAN SEA &

MIDDLE EAST &

EAST MED

Expected flows

European

priority

projects for

market

integration

Single market opportunity:

• Greater Interconnections

• Higher Flexibility

• Security of supply

• Lower prices

=

=

6

• Reduces emissions in the automotive

sector with low unitary transport cost

• About 900k CNG cars and 1,000 filling

stations in Italy

• Could grow to 2.5m vehicles and 1800

filling stations by 2025

• Renewable source, already well

developed in some European

countries (e.g. Netherlands,

Sweden,…)

• Strong increase in Italian biogas

production facilities (already >1,500)

which could be upgraded to

biomethane

• Could be injected in the network

using current gas infrastructure

• High potential – 10/15% of Italian

demand (~7-8 bcm)

Biomethane CNG

• Development of Small Scale LNG for

transport is a legal requirement (esp.

for Marine transport)

• Requires mini-LNG terminals or

coastal deposits

• Investments in the sector have already

started also thanks to EU support (i.e.

TEN-T subsidies) initially focused

mostly on Northern EU infrastructure

• Depending on the level of development

of the infrastructure (and new

ships/vehicles penetration) could add

up to 30 bcm of demand by 2025 at

EU level (~7% of 2016 EU demand)

SS- LNG for

transport

4. Technology: new sources and uses of gas

CNG vs. Diesel

–CO2: -30%

–NOx: -80%

–SO2: -100%

–PM10: -90%

5. Snam: leader in natural gas infrastructures

European infrastructure leadership Presence in key EU projects

• A consolidated experience in developing and managing

complex projects

• A solid growth path in Europe to provide for better gas

competitiveness