New Gas Plants and Pipelines Put Italy in a Strategic Power Position

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Strategically placed to increase gas supplies to the European power market and because of growing domestic demand at home, Italy's gas processing and transportation plants are rapidly increasing.

Enel SpA (NYSE:EN) (Rome, Italy) and BG Group (LSE:BG) (Reading, United Kingdom) have just signed a letter of intent in which Enel will take a 50% stake in a $340 million project to build a regasification plant at Brindisi. The terminal will have an annual capacity of eight billion cubic meters and is scheduled to begin operations in 2007. Production at the plant will represent about 10% of Italy's imported liquefied natural gas. In terms of legislation, BG and Enel are entitled to 80% of production with the balance going to third parties. A company will be set up between Enel and BG to handle the project.

BG was granted responsibility for building and managing the plant in 2002 and there is a letter of intent concerning the possibility of BG supplying liquefied natural gas and natural gas to Enel.

A 3 billion cubic meter per year liquefied natural gas regasification terminal project is going ahead at Solvay Vada's industrial complex in Rosignano Marittimo. The integrated project for Edison (NYSE:EIX) (Milan, Italy), Solvay (EURONEXT:SOL/SYVSY), and BP (LSE:BP) (London, United Kingdom) includes the construction of an expanded storage facility at the site's existing ethylene plant, the creation of new "green zones", and redevelopment of buildings adjoining the industrial facilities in the Azzuro project. A high tech hub will be developed in the future.

The Vada LNG regasification terminal will be developed by Edison and will be competitive with other leading edge facilities scheduled for construction in Italy. It will provide the Italian energy system with a major new point of entry for natural gas and will help to meet Tuscany's growing energy needs.

Under the project, Solvay's existing Vada dock, which currently is used by ethylene ships to supply the Rosignano plant, will undergo modifications to allow the docking of LNG ships. The incoming LNG will be stored in a 160,000 cubic meter tank and then, after regasification, will be fed into the national distribution grid by means of a 6.5 kilometer pipeline.

In January, a feasibility study was initiated in Milan for the construction of a new Algeria-Sardinia-Italy gas pipeline following the establishment of GALSI SpA. The study will assess the feasibility of building a new gas pipeline to bring Algerian gas to Italy via the island of Sardinia. The proposed pipeline has great strategic value for the development of an Italian natural gas distribution system. It will optimize the flow of gas supplies, support the growth of European energy markets, and make natural gas accessible to users in Sardinia.

GALSI, which is based at Edison's headquarters, is owned 40% Sonatrach (Algeria's state hydrocarbons company), 20% Edison Gas, 15% each Enelpower and Wintershall (XETRA:BASF) (Ludwigshafen, Germany) and 10% by Eos Energia (Lausanne, Switzerland).