1. GIE Annual Conference – Bratislava, 29 September 2006 DEVELOPING CAPACITIES: THE NEW CHALLENGES A. Stegher Head of Planning and Business Development HANDLING OF TECHNICAL DISRUPTION

2. GIE Annual Conference – Bratislava, 29 September 2006 AGENDA WHO IS STOGIT: –AT A GLANCE THE ITALIAN MARKET PERSPECTIVE –THE FRAMEWORK –INFRASTRUCTURES DEVELOPMENT CAPACITY DEVELOPMENT: –OPTIMISING PERFORMANCES –NEW FIELDS SOME CONCLUSIONS

3. GIE Annual Conference – Bratislava, 29 September 2006 WHO IS STOGIT Stogit (STOCCAGGI GAS ITALIA): is the Eni-owned storage company created in 2001 following the implementation of 98/30/CE Directive (“Letta Decree”) manages 8 storage depleted gas fields in Italy –more than 8 Bcm working gas for modulation (@2006) –257 Mcm/d maximum withdrawal peak –5.1 Bcm working gas for strategic reserve (Stogit gas) serves more than 35 clients through a single “virtual” point on the transportation network

4. GIE Annual Conference – Bratislava, 29 September 2006 WHO IS STOGIT MINERBIO SABBIONCELLO FIUME TRESTE SERGNANO BRUGHERIO SETTALA RIPALTA CORTEMAGGIORE OPERATONAL BORDOLANO FIUME TRESTE DEE0 UNDER DEVELOPMENT Start: mid ’60s

5. GIE Annual Conference – Bratislava, 29 September 2006 THE ITALIAN MARKET PERSPECTIVE THE DEMAND AND SUPPLY FRAMEWORK: Substantial gas demand increase in the power generation sector –2000-2005: from 35,3% to 48,5% of electricity generation (Jan 2006-Jan 2005: + 27,8% growth) –Impact on storage: forecasted increase of demand of about 2-3 Bcm during the withdrawal season in 2006-07 and 2007-08 Continuous reduction of national production Increasing dependency on imports

6. GIE Annual Conference – Bratislava, 29 September 2006 THE ITALIAN MARKET PERSPECTIVE Mcm/d Actual withdrawa l Cold winter (43 years) Normal winter (43 years) 2005-2006 Withdrawal

7. GIE Annual Conference – Bratislava, 29 September 2006 THE ITALIAN MARKET PERSPECTIVE INFRASTRUCTURE DEVELOPMENT (FOCUS ON LNG AND STORAGE): LNG: –many projects STOGIT actions: past and future … too many “no’s” and delays: effective response only possible in the medium-long run STORAGE: −desire to have ready made capacity −no “pro-investments” regulation in the past years

8. GIE Annual Conference – Bratislava, 29 September 2006 DEVELOPING CAPACITIES: OPTIMISING PERFORMANCE Quest for the limit in increasing capacity from operational fields: + 2 Bcm (+31%) volume in 5 years Stogit - Working capacity for modulation

9. GIE Annual Conference – Bratislava, 29 September 2006 VOLUME INCREASE IN EXISTING FIELDS THROUGH: Higher pressure limits in depleted fields –Technical update –Safety monitoring Dynamic flows optimisation for Storage System –Simulations for better volume profiles and capacity adjustment factors Positive features: rapid and cost-efficient capacity increase. It’s so easy ! “External Downside”: Why not more ? Why not now ? DEVELOPING CAPACITIES: OPTIMISING PERFORMANCE

10. GIE Annual Conference – Bratislava, 29 September 2006 SO: WHY NOT MORE AND NOT NOW ? Underground gas storage is not “a car factory”: 1 st : It is not a factory –System performances are affected by its utilisation path –Experience curve and simulation tools 2 nd : It is not a car –It is an underground porous multi-fluid media, with physical and chemical interactions –Learning on the fields’ reaction to stress allow to understand how to work with the reservoir –Risk evaluation is key when exceeding initial conditions DEVELOPING CAPACITIES: OPTIMISING PERFORMANCE

11. GIE Annual Conference – Bratislava, 29 September 2006 NEW FIELDS: THE ENVIRONMENTAL CHALLENGE Environment is a fundamental feature of new fields development: –Safety: a business pre-requisite –Environmental impacts, affecting local populations sensitivity, are becoming crucial: Noise Visual impact … Stakeholders’ involvement Why in “my backyard” ?

12. GIE Annual Conference – Bratislava, 29 September 2006 NEW FIELDS: THE ENVIRONMENTAL CHALLENGE An Italian example: location for a possible new field …

13. GIE Annual Conference – Bratislava, 29 September 2006 NEXT STEPS Timely response to market needs can be given if technical and financial concerns are correctly “supported”: –Proper regulation –Stakeholders’ involvement in finding solutions Stogit 2010 target: doubling of 2001 working gas capacities. (…, see USA approach)

14. GIE Annual Conference – Bratislava, 29 September 2006 SOME CONCLUSIONS (FOR STORAGE) Technical improvements are needed for ensuring both capacity increases and safety of the operations when limits are reached Timely supply developments can be mostly driven by an appropriate investment framework Local sustainability of the projects is to be achieved for responding to global needs … and we have seen how views can be different on this !

15. GIE Annual Conference – Bratislava, 29 September 2006 www.stogit.it andrea.stegher@stogit.it Thank you !