Snam S.p.A. / Earnings Calls / May 14, 2022

    Operator

    Welcome and thank you for joining the Snam First Quarter 2022 Financial Results Conference Call. As a reminder all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Stefano Venier, CEO of Snam. Please go ahead, sir.

    Stefano Venier

    Thank you. Good afternoon and welcome. I am here with Alessandra and the ER [ph] team. Let me introduce myself first. I am Stefano Venier, I am being appointed as Snam's CEO on April 27 and therefore I am the office since couple of weeks I would say. As some of you know, I've spent my -- the last eight years as CEO of Hera Group, Italian multi-utility, but I am being in this industry since 12 years. I've to say that I began my journey at Snam at a specific time in which we must consolidate our energy security while at the same time, continuing to pursue the energy transition. Snam is ideally placed to contribute to addressing both those challenges and deliver sustainable growth. I'll give you my brief update on quarter's key highlights and then I'll leave the floor to Alessandra for a detailed analysis of our results. On Page Two, in terms of the market context, we are obviously in extraordinary situation with consuming gas demand growth, high prices, and rising inflation. Gas demand was at 1.3%, mainly owning to lower hydro production in the power sector. Export to North Europe reached a record of 0.9bcm, that is five times the previous year's level, confirming the growing role of Italy as a transport hub. Raw material prices, and the cost of energy around driving it's strong rebound in inflation. RAB deflator reached 2.1% on full year 2021 with impact on 2023 revenues, well above recent year's levels and would recall that last three years average was at 0.6%. Inflation expectation have risen $3 billion tightening in monetary policy with an increase of the investment rates and spreads. In this environment, the mark-to-market of weighted average cost of capital in 2025 is flat versus current level. In this environment policy is supportive of SNAM's role, both to ensure supply security and to enable the energy transition as I said. You will have read that Italian government has mandated Snam to acquire two floating vessels for re-gasification of gas, one of which we are in the advanced negotiation one, we count within the next phase to sign a term sheet to start let's say an ex exclusive negotiation for the second vessel. Meanwhile, we are moving to define the framework on full depreciated assets. As you probably know, on May 03, our [indiscernible] has given SNAM a mandate to define and certify a methodology to determine which lines need to be substituted and which can be continued to be operated, which is a very positive step forward to ensure the long-term health and viability of our assets. SNAM continue to provide it's essential service to the country while working to increase supply security. Italy has a relatively strong position thanks to ample transport, spare capacity and large storage facilities. As far as storage is concerned, we are at 42% full offer of today also, thanks to the gas injected by Snam debt on [indiscernible] request has stored the operating volumes needed for the hearing in April, thus supporting the in-filling before the winter. In this context, we have delivered very strong results. EBITDA is up by 5.2% year-on-year and adjusted net profit is up by 3.8% year-on-year with higher web-based revenues and incentives and the strong performance of associates. Offsetting in that sense, is the impact of the reduction on weighted average cost of capital. Net debt reduction, vis-à-vis versus year end was driven by a temporary working capital swing. We have reached this about 65% of sustainable funding, further progressing toward a target to reach more than 80% by 2025. We continue to make progress on our business investing €223 million, mainly maintenance, replacement and development, referring to new connections of biogas and CNG plants. We have executed a first tranch of the agreement reached with Azi [ph] at the end of 2021, by acquiring two plants for a total consideration of about €17 million and we are working with [indiscernible] for the resources made available by the national re-launch plant and it say for H2 technologies. On Page 3 to have let's say a global picture on the market integration and security. The current drive to increase supply security and accelerate the energy transition plays well to Snam's portfolio of assets. Our associates are located in strategic regions, which enables us to diversify risks and capitalizing opportunities. LNG will be key to Europe, supply and diversification. So it will require leveraging large spare regasification capacity in the Iberian Peninsula. This is promoting the re-launch of the mid so-called midcap project, which would increase by 8 bcm the interconnection capacity with France. The investment has also consistent role with the development of the European hydrogen backbone. Our associate Terēga [ph] could be involved with the potential investment of around €400 million. In addition, an MOU has been signed between Snam and to jointly mandate a technical feasibility study for a potential construction of an onshore pipeline by 1530 bcm connecting Spain to Italy, to diversify gas supply for Italy and Europe. The Greek Government has submitted projects to EU in the context of repowering EU which includes the following projects to increase the system flexibility and enhance the ability to supply accounts, which strongly rely on Russian gas. First, increase of storage capacity on RTU LNG terminal through the installation on a floating system that will enable to use the terminal on full capacity that is seven BCM versus the current 2.5 BCM that has been reached in the past years. Announcing the optimization of the cargo unloading scheduling; second, an overall upgrade of the pipes and compressor station to provide more flexibility in the transportation of increased natural gas flows also versus neighboring countries. In addition, [indiscernible] acquired at the end of last year, the 20% stake of the [indiscernible] LNG terminal, which is expected to be operational by '23 with a capacity of 5.5 BCM. [indiscernible] has worked a full capacity in the first quarter of 2022 covering nearly 10% of Italian demand. By the way, April topped the record in those deliveries. There is an ongoing market test to expand the capacity with the phase expected to expire by year end. This could bring up to an additional 10 BCM of gas into the market within the next two years. The interconnection in UK is performing ahead of expectations, given its strong utilization in light of the gas spread, which has supported export flows from UK to Europe. PAG and GECA [ph] are the most exposed to Russian gas given the weight of Russian volumes and tax roll of transit through to Italy. Nevertheless, we consider the assets to remain strategic, given the possibility to work in reverse flows from Italy to Austria, and to provide European market with gas and hydrogen in the future. Finally, our recent acquisition of Stake in the trans pipeline with closing a spec in Q3 strengthened our position in the increasingly important import route from North Africa that is becoming even more important, according to the recent agreements that ENI and Italian government has rich with the Algerian government to increase the export by 9 BCM within the next couple of years. So now I will hand over to Alessandra Pasini for a closer look to our results. Alessandra?

    Alessandra Pasini

    Thank you, Stefano. EBITDA for the period was €588 million up €29 million versus last year. This was reached despite the effect of the WACC review that has been applied starting from January 2022, and which implied €32 million cap between our transportation, regasification and storage revenues. The work revision was more than offset by €28 million increase in regulated revenues, mainly attributable to the tariff growth for more than €10 million. Deposited commodity effect of €8 million that is due to the good volumes commanded before versus the reference volume level that was set two years ago and also thanks to the record export volumes as well as an increase in the outer base incentive of plus €7 million mainly due to the default services provided during the quarter as 19 shifts went under financial stress. Input-based incentives were down by around €2 million in line with the expected phase out. €33 million of one-off contribution from the sale of past year gas on excess inventories, the sale was made in the fourth quarter 2021 on a forward bait to make the gas available to the system in January, 2022. Fixed cost rose by €7 million, little bit partially due to phasing effect, mainly referring to lower capitalization to be recorded in the next quarter and the remaining refers to higher utilities cost. EBITDA of new businesses increases by €6 million versus first quarter of 2021 and the growth was mainly attributable to the strong performance of energy efficiency mainly thanks to the residential business. Moving to our net profit, the net profit for the period was €325 million Euro up €12 million versus was last year. Interest expenses were slightly higher driven by gross cost of debt that moved from 0.8 on a full year basis 2021 to 0.9 in the first quarter. This is due to the insurance of a new €1.5 billion of sustainable linked bond in January '22 at the marginally higher rate than 2021 average cost as well as lower treasury management optimization opportunities as a consequence to lower debt level as an effect to temporary positive working capital. It is worth noting that the bond issuance was executed with a very good timing and cover large part of the funding plan for this year locking in competitive cost of an average or 1% for a 10-year maturity compared to current condition that would be close to a 3% for a similar bond. Associate's contribution was hired by €10 million, mainly due to the strong performance of our interconnector UK associate that is already close to its maximum yearly potential contribution. Thanks to higher export flows, supported by gas prices spread and greater LNG availability in UK, which is an effect we already saw in the last quarter of 2021. The very strong results of the Nora driven by revenue growth, thanks to good performance of water and electrodes couple with an increase in profitability and very strong fixed cost control as well as a very robust backflow, which paves the way for another strong year. These effects were partially offset by the expected decline of Tesla due to lower regulatory tariff and higher energy cost, hose recovery will occur from 2023 based on the Greek regulation. The average tax rate for the period is 23.5%. Turning out our cash flow, the cash flow from operation for the period amounted to €1.7 billion, including €1.2 billion of cash generation from changing working capital. The strong positive effect is temporary and we do expect a reversal in the next quarters. As we have previously explained from January 2020, Snam is responsible to cover gaps between intakes and off-takes of the distribution network buying and selling gas on a daily basis at market price. Moreover NAM operates as a default service provider, meaning that it is required to supply gas for a limited period of time to customers, both shifted, lost the commercial conditions to operate in the market. These activities can generate temporary working capital wins due to the timeline of reimbursement without any impact on our P&L except for interest income due in case of delayed by customers benefiting for this service. Snam can benefit from some out-based margin from the default service as occurred in this quarter. In March 2022, the changing working capital was mainly the result of €1.2 billion of temporary cash generation from balancing and settlement activities that include the collection of receivable for around a €0.5 billion related to gas purchase carried out in the last month of 2021 to cover shippers short position in the market, an increase in payable versus sale for almost €900 million related to Snam gas sale to balance shipper that were long position in the first three months of 2022. Additional cash generation due to the increasing shipper deposit as a result of the increasing gas prices and as more positive balance of the settlement activities for something more than €100 million. This was partially offset by an increase in the receivable related to the default services that I commented before for almost €300 million. Among other minor changes, we also experienced some absorption of cash from energy efficiency due to the growth of the sales of the deep renovation line of business as expected. Other outflows of the period have been the net investments related to our CapEx plan, as well as CapEx label in addition to the cash out for the acquisition of our full year plans as part of the broader [indiscernible] agreement. The interim dividend paid was €344 million. Thank you for your attention, Stefano and I will now be pleased to answer any questions.

    Operator

    [Operator instructions] The first question is from Harry Wyburd, Bank of America. Please go ahead.

    Harry Wyburd

    Hi there. Good afternoon, everyone. Thanks very much for taking my questions and welcome to the new CEO. Three for me please. The first is just on the sale of past year's gas inventories, which benefited the Q1 numbers. I just wondered if you could give us a bit of an explanation of what happened there, because I guess we're quite used to Snam being not sensitive to pricing or volume. So just want to understand why that was able to generate a material increase in earnings. So that's the first question. And the second one is given you've better performance in the UK interconnector, why didn't you increase your net income guidance slightly or is it now just a sort of lower bound for net income guidance for the full year? And then the third one, I guess to the new CEO, I was probably a bit, bit too early to ask, what your kind of strategic views will be given you've only been in seat for a couple of weeks, but I wondered will you, do you plan to have a capital market stay or a strategy update or something like that later in the year? And when can we expect to hear on what your view is your vision is for Snam? Thank you.

    Alessandra Pasini

    When it comes to the gas inventories this was really unique phenomenon. So you shouldn't be concerned about volatility. As a result of past management of gas losses in the system, we had accumulated a small excess of inventories that is not required for our operational activities and as a result of having now a very clear situation on that, we just took the decision of make those gas volumes available to the system on a month that typically is a good month for providing liquidity and that's simply why we decided at the end of last year to do what something was that was done, let's say, due to be done, but we had never had, and we will not be having in the future access inventory. So this is really a unique phenomenon that was a result of a very peculiar situation emerging for the prior two years, I would say and so it's really a true one-off in this sense. When it comes to the guidance Stefano.

    Stefano Venier

    I think that when it comes to the guidance you should recall that we had anticipated some contribution from out base incentives related to the replacement for 2022, which as you could guess from the publications from Ara [ph] that has taken place on the 3 of May, it's unlikely to be happening in 2022. So if you on one side, take that into account as a minus, and you take the contribution of the one-off on gas sales on the other, we are consistent with what we told you before, in terms of a guidance of €1.1 billion.

    Operator

    The next question is from..

    Stefano Venier

    Just a moment, I'm sorry. I have a question I need to reply. That is about, as you said, I'm in the office since a couple of weeks, but of course, as I said, I'm in the industry since 30 years. So the situation is really, let's say evolving. I would say. as I told you, there is a significant effort now we are devoting also to secure those two vessels for the re-gas and to try to put on stream as soon as possible reasonably, we count to have one stream next year. And the second in 2024. This is probably one of the things we are reviewing, I think that full time being the strategy of the company is the one that I mentioned in my introduction that is working for security of gas, focusing on the investments on the core infrastructure that now is required and of course, supporting the long run, the transition. As you probably read in the press release we made, we will make an update of the business plan by January next year. Fall of the year will be therefore dedicated to capture some of the facts that are ongoing. The latter was mentioned by Alessandra that is also this review on according to the last the last document consulting document. So there are many things ongoing. We will keep you updated. Of course we will have other two interim period that will represent the opportunity to keep you updated on what is going on.

    Harry Wyburd

    Okay. Many thanks.

    Operator

    The next question is from Javier Suarez with Mediobanca. Please go ahead.

    Javier Suarez

    Hi, good afternoon and congratulations to the new CEO. Three questions from me as well. The first one is a follow up on the guidance for 2020 and '22. You have explained the offsetting factor of lower upper base incentive compensated by a higher contribution from the gas disposal on this one, but is there based on the guidance also confirm in terms of met debt and CapEx by the year end? I think that in the latest presentation, you mentioned something like €14.8 million of debt, and then capture €1.5 billion. I know that there are several moving pieces here, but any guidance on these two numbers would be useful. Then second question is on the, obviously there are plenty of CapEx opportunities related to the necessity to redesign the European gas sector. So can you be part another of dimension of the CapEx opportunity that the interconnection with the Spain would imply for a company like Snam or other dimension of the additional topic that you foresee as a consequence of a significantly different your political scenario. And also, can you help us to understand when do you differ that the company will start to invest on hydrogen related opportunities? And the very last question is on these mandate by era [ph] on a proposal on how to remunerate the fully data [ph] you can give us first view on how do you think that the difference with you work, many thanks.

    Alessandra Pasini

    So on Javier on the guidance of net debt, you will have seen that the first quarter has a very strong positive cash flow coming from tariff-related item, which as I said, we expect to revert. We are currently confirming our CapEx plan, absent new things on which as Stefano mentioned, we are working like necessary. So without considering that we confirm what we said before we expect the reversal of this items and effective land based on the same CapEx plan on the same net debt guidance that we indicated before.

    Stefano Venier

    Hi, Javier, thank you for your message at the beginning. About the priorities and the opportunities across Europe, I think we will look forward to see the new repower document that will be released within the next I think seven to 15 days, because in that document, we will see the final conclusions in terms of priorities that Europe is settling to on one side to let's say, reduce the dependence, or let's say plan to zero the dependence on Russian gas. And on the other side the initiatives that will be promoted, supported eventually even with let's say some funding to increase and announce the interconnection between countries. As far as Snam is concerned, I mentioned the opportunity to work on the re-launch of the project called mid cap between Spain and France that is sizeable investment that as far as the entire projections is concerned is €3 billion. The part related to gas [ph], as I mentioned was €400 million and therefore it's a sizeable opportunity we see in the reasonable near future. And I think that the attitude of the government that initially in the past, okay, weren't supporting the project now turned especially Spanish government. On the other side, I also mentioned the let’s say, the mainstream from east that is based on the developments and TAP. The TAP market test will turn -- will turn out with the final results by year end and this will guarantee a two-step development. First step to increase and to enhance by 20%, 25% the capacity in the network and then by a 100% of capacity within the next four to five years eventually. And the total investment for the step two is €1 billion and of course we're going to participate for the stake we have. The third, let me say is more within the country because with this swing in the different flows of gas, of course we will, in the next month, review the schedule plan for investments to refocus priorities to support this change in the Italian flows. And as we said, in a more detailed focus, what could be the opportunities to say strengthen the export or the reverse flow chances. Yeah, about the hydrogen investment, of course we are progressing, the strategy is one that has been set in the recent past about the opportunities, or if I got your question extra return for investments in the hydrogen area, this is a discussion that is still ongoing. We do expect on the basis of let's say the decision that has been taken in Germany, that there is ground for supporting this kind of request with the national authorities. But to be frank, we don't have any decision that we expect to get soon on that side.

    Javier Suarez

    And on the asset and the regulation for them.

    Stefano Venier

    As Stefano said, we had this document that is expected on which we should let's say reply by September. So there is a reasonable timeframe to see the final decisions by the authority by the end of the year and we reasonably expect, we have the expectation to see the new system applied from 2023. Of course, this is our expectation. I think that the timing allows to let's say underpin this expectation.

    Javier Suarez

    Okay. Many thanks.

    Operator

    The next question is from Roberto Ranieri with Intesa Sanpaolo. Please go ahead.

    Roberto Ranieri

    Yes. Good afternoon, everyone and congratulations Stefano for the new appointment. I have two questions please. The first one is on the energy transition projects. Could you please give us an update on the biomethane plans, how they are now, your projecting in the biomethane business are proceeding. If there at the moment there will be or there are already new authorization procedures expediting the construction of these projects. And one more question on the energy transition are you also considering in your future also projects in the serial economy, like using producing gas from waste, which probably is very familiar, I suppose it very familiar to you in the previous -- during the previous experience. My last question is on the gas. You mentioned the projects, the offshore projects presentation of offshore projects from Spain to Italy. I'm wondering if this is economically viable or other alternatives such as offshore pipelines through France using gas your participation in gas [ph] Spain to Italy from north, could be an additional option or not necessarily competing with the offshore option. Thank you very much.

    Stefano Venier

    Okay. Just back to your first question about the developments on the team activities, first of all, let me say that we have 18 megawatt of capacity that is already operating. We have 10 megawatt that is under construction. Of course this speed up in those developments depends on the release, the final release on the new let's say decree that has to regulate the incentives for this kind of production. As you probably know, the draft of this new decree has been sent to the European Commission at the end of February and the Italian government is still waiting for a feedback from the European commission. Of course given also the new targets that the power in use is going to set on the biomethane production on European basis. I do expect that this new decree will be on air by maximum a month or something like that. Including in that in that decree, there are also -- there are rumors that there will be a sort of an extension of the existing incentive scheme by 12 months. Okay. That will be extremely positive for those assets that are presently under construction. So I think that further let's say projects will be kicked off after the review of this new decree that of course are fundamental to guarantee an adequate return on those kind of investments. As far as extending the production of biomethane from waste as a matter of fact, we do already do that in the sense that part of the assets produced with biomethane through the bio-fermentation of the organic part of the waste, specifically the two assets that we recently brought from [indiscernible] in the overall transaction that was mentioned before are fully dedicated or are fully fed with organic waste. So therefore we are on the same field already. About your general question on the -- if I got it correctly, the competitiveness of a possible interconnection between Spain and Italy with respect to other possible interconnection that could put in, let's say put -- that could let's say link directly Italy with France. Let me say it's a pre-feasibility study, of course the basis the economic rational and strategic rational behind this pre-feasibility is based on the fact that Spain, as you know, a huge capacity unused capacity of LNG and therefore this could be, let's say a mean for connecting directly that capacity to the Italian market, with the perspective of exporting toward Central Europe, these additional kind of flows. Of course, there can be, let's say alternatives as any time that we will examine, but the benefit of this say possible project is the magnitude on one side and the fact that being offshore -- being offshore it's much to certain extent, it's easier to be deployed vis-à-vis on ground. Last point is that makes this idea to have some reasonable ground is the fact that the mid interconnection has a maximum capacity of 8 bcm., that is a small part of the spare capacity that Spain has, therefore this is the -- these are the thoughts we made with gas [ph] and therefore we decided to make this prefeasibility that I think in not more than three, four months will tell us the key core outcomes that is the cost, the first estimate of cost and the technical complexity in delivery, this kind of infrastructure.

    Operator

    The next question is from Bartlomiej Kubicki with Societe Generale. Please go ahead.

    Bartlomiej Kubicki

    Thank you. Good afternoon. Thank you for the presentation. And let me join the congratulations. Three issues I would like to -- I would like to discuss with your piece. Firstly, on the non-regulated side, you seem to be finally gaining some momentum if there was earnings and in terms of revenues, I would like to ask you whether you see any risks, which could actually derail this momentum this year. Some companies are mentioning supply chain disruptions in energy efficiency activities, for instance, or inflationary pressure. That will be one question. Secondly, on associates, I think Alessandra, you mentioned the €10 million earned by interconnector sort of the maximum has to be earned. I understand it refers to a quarter which would potentially make €40 million for the year. Consequently, what would your -- what would your estimate for associate contribution for this year providing interconnectors good performance continues and TAG is not impacted by the ongoing situation. And lastly, pure curiosity, you have 4.5 BCM of strategic storage. You also have a line on your balance sheet, which refers to strategic gas storage, €360 million. I just wonder, if you look at those storage, strategic storage, is it full or what is that? What is the level of being full and as a result, what could -- what needs to happen for the strategic storage to be withdrawn? And if something like that happens is actually your gas in the strategic storage. So consequently, this is sold on the market at both prices. You can realize some gains versus the book value of the storage, we can see on your balance sheet. How would it work? Thank you.

    Alessandra Pasini

    So, on the non-regulated side, just picking up on what Stefano was saying before, clearly there is some momentum and the speed at which we will continue to progress will be a function of how quickly there will be clarity on the new -- particular on one side. On the other side, it is indeed true that we are seeing a slow down on the supply of certain materials, but we do expect the sign of growth that we are seeing the first quarter to continue for the rest of the year. So we expect more or less to keep the same pace. So you have seen it's a €4 million EBITDA contribution. I think a good assumption is to assume that the other three quarters that are left will be similar in this regard. When it comes to interconnector UK, the mechanics of revenue recognition based on the way the system works and doesn't visit caps. So ultimately we are -- unfortunately for us and for the other shoulders of interconnect UK, we are not going to simply multiplied by four. We expect the overall contribution to continue to increase, but marginally through the year. Given you an overall indication last year, we ended up with 220 on the international side of contribution from our associate. We are targeting slightly less of that as a combination of the usual decline that we expect or expect the client with assets like des [ph] as well as with Tug [ph], which will be compensated by the strong performance of Interconnector, a flat performance of task and a flat performance of our stake [ph] and depending on when actually the closing will occur on our transmit asset, we may have some contribution kicking in. So we're currently targeting the last couple of months of the year, but we clearly do not control the timing of the CPs that will determine the inclusion, our perimeter of corridor. So call it roughly speaking of €10 million, less than last year combination of these effects that we commented. When it comes to the storage, it's storage, so it's actually something that can be part of the system equally. It's around 4.5 BCM of volumes related to that. And it's something that is cost strategic because if needed, it can be part of the volumes that we make available to the system. Clearly, depending on which part of the year we are. The extraction of those volumes can be more or less complicated, i.e. they may require more intervention from our compressor unit to help the extraction, i.e. as storage works with pressure. When pressures goes down in the operating performance, you will need to apply the compressor unit to actually extract it, but it's gas that can be made available?

    Operator

    Excuse me, this is the operator. Mr. Venier, you can please go ahead.

    Stefano Venier

    Okay. I, do apologize. We had -- since we had a technical problem, we were put off line. So now we are back. I don’t know if there is any additional question for myself and Alexandra, please go ahead.

    Operator

    Mr. Kubicki you line is open if you had any question.

    Bartlomiej Kubicki

    Yeah apologies because on the storage side, we only, I think I only heard about the compression units working harder, but then it was interrupted. So maybe if Alessandra, you can actually sort of…

    Alessandra Pasini

    Just to recap, what I said is it's approximately 4.5 BCM. It's part of our regulated asset base. So it's non-asset. Before it's remunerated under the current regulation and it can be made available to the system when needed. I was simply saying that depending on when you actually need, if you have exhausted the rest of your volumes in the storage, it would just be -- it would require mechanical support to be extracted as the pressure would be low. That in a shorter version of what I said before.

    Bartlomiej Kubicki

    Okay. And do you own the gas sitting in those strategic storage or no. Given the, given the balance sheet,

    Alessandra Pasini

    It is part of our rough, so yes, we do own it.

    Bartlomiej Kubicki

    So can you earn actually on that, should it be extracted

    Alessandra Pasini

    It's part of our rub, so it's remunerated, so yes, we do earn it, just to make it available when needed to the system.

    Bartlomiej Kubicki

    Okay. Thank you.

    Operator

    The next question is from Stefano Gamberini with Equita. Please go ahead

    Stefano Gamberini

    Welcome to Stefano also from my side and sincere good luck for this new professional challenge. I have three questions also from my side. The first regarding the €3 billion project for the high project backbone, does it included in the 10-year energy plan and submitted to [ph] and do you have some feedbacks on this or not? You said we expect the plan, but on this, what are the first reaction in Italy on this on this topic? The second regarding also this 10-year plan, you underlined that the gas flow from top could double. So in this case the strengthening of the backbone that is forecast after 2030 and if I'm not trying it count around US24 billion could be being forward due to this additional flows from the south of Italy. The second topic was regarding the two floaters, probably I lost the answer, but when this could arrive, do you know what the total investment and this investment going to be included in the rub. And the final one is regarding the storage. You said that there are a lot of opportunities in the sector that could arrive in your view. $1.2 billion CapEx in the storage in the business plan. Do you see some opportunities also in this sector and could this be exploded in the forthcoming years? Many thanks. Could you hear me? Hello?

    Stefano Venier

    Yeah. We could hear you, sorry. I was just collecting the information about your first question, that is regarding the project of the hydrogen backbone that has been included in 10-year investment plan that has been submitted to the rera [ph] as you know is under the consulting phase. And we don't have any feedback yet. I think it's going to be well received also because should be well received also because the new repower you has reason, again, the total target for hydrogen volumes by 2030 and going forward. Therefore for reaching those kind of volumes, you need to have large backbones and infrastructure to let's say, ship the hydrogen from south to north and from north to Central Europe. About the project [ph] of course, when I was saying that in the next month, according to the finalization of the FS deals and other changes that happen -- that will happen on the flows, we will review the schedule of investments and the artic [ph] pipeline is going to be one of those major investment that will be scrutinized more carefully to understand whether and when could make sense to anticipate that kind of investment. Of course, again the repower you document will be fundamental to understand if any kind of financial support will be dedicated to those kind of strategic investments that by the way, would represent a pillar for -- let's say stepping forward an Italian hub for gas for expert towards Central Europe. About the floating vessels, the FSU [ph] of course one of the points -- one of the question was when we will finalize those transactions? Of course as I told you, we are under let's say exclusive negotiation with one of the vessels that we expect to end by the next weeks and the second will come just afterwards. Again, to understand the mechanism to regulate this vessel, we are looking forward to see the new decree that the government should release in the next days. That will be again fundamental to let's say, understand how will be managed. In terms of storage opportunities, I think are those that were listed in the presentation of the business plan. Nothing has changed significantly on that side. As you know storage, the development of new storage takes time. Therefore need to be planned fairly in advance and I think that reviewing the business plan as I did with the team in the last days, those are the opportunities that are still on table.

    Operator

    The next question is from Jose Ruiz with Barclays. Please go ahead.

    Jose Ruiz

    Yeah, good afternoon. Just one question left for my side, can you update us on your intentions of floating De Nora? Thank you.

    Alessandra Pasini

    Nothing has changed versus what we told you before the intention together with the family are still there. Clearly the market environment it's a bit volatile to say the least, but we are very comforted by the very strong results that the Nora continues to deliver. So the first thing is, as an investor in the Nora, we are looking forward to another very strong year in 2022, and we remain convinced of the opportunity to progress with the listing process, but you will be updated at the right point in time when decisions will be taken.

    Jose Ruiz

    Thank you,

    Operator

    Stefano Venier

    Mr. Venier, there are no more questions registered at this time. I turn the conference back to you for the closing remarks.

    Stefano Venier

    So thanks to everybody that participated to this conference call and I hope to meet you in person very soon, bye-bye.

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