Snam SpA

MIL:SRG

Earnings Call Transcript 2022-Q1

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Snam First Quarter 2022 Financial Results Conference Call. [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, executive]

Thank you. Good afternoon, and welcome. I'm here with Alessandra and the IR team. Let me introduce my first -- myself first. I'm Stefano Venier, I've been appointed Snam CEO on April 27 and therefore, I'm in the office since a couple of weeks, I would say. As some of you know, I've spent the last 8 years as CEO of Hera Group, Italian multi-utility. But I've been in this industry since 30 years. I have to say that I began my journey at Snam at this 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 give you my brief update on quarter's key highlights. Then I leave the floor to Alessandra for a detailed analysis of our results.

On Page 2. In terms of the market context, we are obviously in extraordinary situation with continuing gas demand growth, high prices and rising inflation. Gas demand was up 1.3%, mainly owing to lower hydro production in the power sector. Export to North Europe reached a record of 0.9 bcm, that is 5x the previous year's level, confirming the growing role of Italy as a transfer hub.

Raw material prices and the cost of energy are driving a strong rebound inflation. RAB deflator reached 2.1% on full year 2021 with impact on 2023 revenues well above recent year's levels. I would recall that last 3 years average was at 0.6%. Inflation expectations have risen triggering a tightening in monetary policy with an increased 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 to enable the energy transition, as I said.

You will have read that the Italian government has mandated Snam to acquire 2 floating vessels for regasification of gas, one of which we are in the advanced negotiation, while we count within the next phase to sign a term sheet to start, let's say, an exclusive negotiation for the recycling vessels. Meanwhile, we are moving to define the framework on fully depreciated assets.

As you probably know, on May 3, has given us a mandate to define and certify 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 its 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 of today, also thanks to the gas injected by [ Snam gas ] on ARERA request, has stored the operating for the year in April, but supporting the infilling 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 RAB-based revenues and incentives and the strong performance of associates. Offsetting in that sense, the impact of the reduction on weighted average cost of capital.

Net debt reduction vis-a-vis versus year-end was driven by a temporary working capital swing. We have reached this about 65% of sustainable funding further progressing toward the target to reach more than 80% by 2025. We continue to make progress on our business, investing to EUR 223 million, mainly in maintenance, replacement and development, referring to new connections of biogas and CNG plants. We have executed the first tranche of the agreement reached with [indiscernible] at the end of 2021 by acquiring 2 plants for a total consideration of about EUR 70 million. And we are working with De Nora to apply by [indiscernible] for the resources made available by the national relaunch plan PNRR and IPCEI for H2 technologies.

On Page 3, you 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 will enable us to diversify risks and capitalize on opportunities. LNG will be key to Europe supply diversification, which will require leveraging large spare regasification capacity in the Iberian Peninsula. This is promoting the relaunch of the so-called mid-cap project, which would increase by 8 bcm, the interconnection capacity with France. The investment also consistent role with the development of the European hydrogen backbone. Our associate Teréga could be involved with a potential investment of around EUR 400 million.

In addition, an MoU has been signed between Snam and Enagás 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 repower EU, which includes the following projects to increase the system flexibility and enhance the ability to supply Balkans which strongly rely on Russian gas.

First, the increase of storage capacity in Revithoussa LNG terminal through the installation on a floating system that will enable to use the on full capacity that is 7 bcm versus the current 2.5 bcm that has been reached in half years, enhancing the optimization of the cargoes 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, DESFA acquired at the end of last year, the 20% stake of the Alexandroupolis LNG terminal, which is expected to be operational by '23 with a capacity of 5.5 bcm. TAP has worked at full capacity in the first quarter of 2022, covering nearly 10% of the Italian demand. By the way, April topped the record in those deliveries. There is an ongoing market that to expand the capacity with design phase expected to expire by year-end. This could bring to -- up to an additional 10 bcm of gas into the market within the next years.

The interconnection in U.K. is performing ahead of expectations given strong utilization in light of the gas spread, which has supported export flows from U.K. to Europe. TAG and GCA are the most exposed to Russian gas, given the weight of Russian volumes and tax roll of transit to Italy. Nevertheless, we consider the assets to remain strategic, giving the possibility to work in reverse flows from Italy to Austria and to provide European market with gas today's and hydrogen in the future.

Finally, our recent acquisition of stake in transmit pipeline, with closing expected in Q3, strengthen 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 the Italian government has reached 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 for a closer look to our results. Alessandra?

[Alessandra Pasini, executive]

Thank you, Stefano. EBITDA for the period was EUR 588 million, up EUR 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 EUR 32 million cap between our transportation, regasification and storage revenues. The WACC revision was more than offset by EUR 28 million increase in regulated revenues, mainly attributable to the tariff RAB growth for more than EUR 10 million. The positive commodity effect of EUR 8 million that is due to the good volumes commented before versus the reference volume level that was said 3 years ago and also thanks to the record exports volumes as well as an increase in the output based incentives, up plus EUR 7 million, mainly due to the default services provided during the quarter as 19 ships went under financial stress.

Input-based incentives were down by around EUR 2 million, in line with the expected phaseout. EUR 33 million of one-off contribution from the sale of [indiscernible] gas on excess inventories, the sale was made in the fourth quarter of 2021 on a forward base to make the gas available to the system in January 2022. Fixed costs rose by EUR 7 million. This is partially due to phasing effects, mainly referring to lower capitalization to be recovered in the next quarter and the remaining refers to higher utilities costs. EBITDA of new businesses increased by EUR 6 million versus the first quarter of 2021. And the growth is 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 EUR 325 million, up EUR 12 million versus 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 issuance of a new EUR 1.5 billion of sustainable-linked bond in January '22 at a 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 a large part of the funding plan for this year, locking in competitive cost of an average 1% of for a 10-year maturity compared to current conditions that would be close to a 3% for a similar [ panel bond ].

Associate contribution was higher by EUR 10 million, mainly due to the strong performance of our Interconnector U.K. associates that is a [ red flow ] with maximum yearly potential contribution. Thanks to higher export flows supported by gas prices spread and greater LNG availability in U.K., which is an effect we already saw in the last quarter of 2021.

The very strong results of De Nora driven by revenue growth, thanks to good performance of [ water and electrodes ] coupled with an increase in profitability and very strong fixed cost control, as well as a very robust backlog which paves the way for another strong year. These effects were partially offset by the expected decline of DESFA due to lower regulatory tariff and higher energy costs hold recovery will occur from 2023 -- regulation. The average tax rate for the period is circa 23.5%.

Turning now to our cash flow. The cash flow from operations for the period amounted to EUR 1.7 billion, including $1.2 billion of cash generation from change in 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 offtakes of the distribution network, buying and selling gas on a daily basis at market prices. Moreover, operates as a default service provider, meaning that it is required to supply gas for a limited period of guide of time, the customers will shipped lost the commercial conditions to operate in the market. These activities can generate temporary working capital swings due to the time line 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 outdated margin from the full service has occurred in this quarter.

In March 2022, the change in working capital was mainly the result of [ EUR ] 1.2 billion for cash generation from balancing and settlement activities that include the collection of receivables for around $0.5 billion related to gas purchase carried out in the last months of 2021 to cover shippers short position in the market, an increase in payable -- for almost EUR 900 million related to Snam gas sales balance sheet that were long positioned in the first 3 months of 2022.

Additional cash generation due to the increase in shipper deposits as a result of the increase in gas prices and a more positive balance of the settlement activities for something more than EUR 100 million. This was partially offset by an increase in the receivables related to the default services that I commented before, for almost EUR 300 million.

Among other minor changes, we also experienced some absorption of cash from energy efficiency due to the growth of the phase 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 Anzio and Foligno plants as part of the broader as agreed. The interim dividend paid was EUR 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.

[Harry Wyburd, analyst]

And welcome to the new CEO. Three for me, please. So 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 I just want to understand why that was able to generate a material increase in earnings? So that's the first question.

The second one is, given you've had that and better performance in the U.K. Interconnector, why didn't you increase your net income guidance slightly? Or is it now just the sort of lower balance for net income guidance for the full year?

And then the third one, I guess, to the new CEO I was probably a bit too early to ask, what your kind of strategic views will be given that you've only been in seat for a couple of weeks. But I wondered, will -- do you plan to have a Capital Markets Day or a strategy update or something like that later in the year? And when can we expect to hear on what your U.S. provision for Snam?

[Alessandra Pasini, executive]

When it comes to the gas inventories, this was a 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 picture 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 have never had and we will not be having in the future excess inventories. So this is really a unique phenomenon that was the result of their peculiar situation emerging for the prior 2 years, I would say. And so it's really a few one-off in this sense.

When it comes to the guidance, Stefano?

[Stefano Venier, executive]

[indiscernible]

[Alessandra Pasini, executive]

I think that when it comes to the guidance, you should recall that we had anticipated some contribution from out-based incentives related to the replacement for 2022 which, as you could guess from the publication from ARERA that has taken place on the 3rd 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 the guidance of EUR 1.1 billion.

[Operator]

Next question is from Javier Suarez with Mediobanca.

[Stefano Venier, executive]

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, in the industry since 30 years. So the situation is really the same evolving, I would say. As I told you, there is a significant effort now we are devoting also to secure those 2 vessels for the regas and to try to put on stream as soon as possible, reasonably, we count to have 1 in 3 next year in the second -- in 2024, this is only one of the things we are viewing before. I think that for the 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/or 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 the for dedicated to capture some of the effects that are ongoing. The latter was mentioned by Alessandra that is also this review according to the last ARERA document, consulting document. So there are many things ongoing. We will keep you updated. Of course, we will have the interim period that will be the -- we represent the opportunity to keep you updated on what's going on.

[Operator]

The next question is from Javier Suarez with Mediobanca.

[Javier Suarez Hernandez, analyst]

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 output base incentive compensated by a higher contribution from the gas disposal of this one-off. But is the guidance also confirmed in terms of net debt on CapEx by the year-end? I think that in the latest strategical presentation, you mentioned something like EUR [ 14 ] million of debt and then a cash of EUR 1.5 billion. I know that there are several moving features here, but any guidance on these 2 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 give us another dimension of the CapEx opportunity that the other interconnection with Spain would imply for a company like Snam or another dimension of the additional CapEx that you foresee as a consequence of a significantly different year political scenario?

And also, can you help us to understand when do you bias that the company will start to invest on hydrogen-related opportunity?

And the very last question is on the mandates by ARERA on a proposal on how to remunerate the fully depreciated assets. You can give us first views on how do you think that the difference here.

[Alessandra Pasini, executive]

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

[Stefano Venier, executive]

Javier, thank you. 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, 7, 15 days. Within that document, we will see the final conclusions in terms of priorities that Europe is setting to, on one side, to let's say, reduce the dependence or -- 0, the dependence on Russian gas. On the other side, the initiative that will be promoted, supported eventually even with, let's say, some funding to increase and enhance the interconnection between countries.

As far as Snam is concerned, I mentioned the opportunity to work on the relaunch of the project called MIDCAT between Spain and France, that is a sizable investment that as far as -- the entire projection is concerned is EUR 3 billion. The part related to Teréga, as I mentioned, was EUR 400 million. And before, it's a sizable opportunity we see in the reasonable near future. And I think that the attitude of the government that initially in the past, okay, wasn't supporting the project, now turning especially the Spanish government.

On the other side, I also mentioned the -- let's say, the mainstream from East that is based on the DESFA development and the TAP. The TAP market test will turn -- will turn out with the final results by year-end. And this will guarantee a 2-step development, first step to increase and to enhance by 20%, 25% the capacity of the network and then by 100% of the capacity within the next 4 to 5 years, eventually. And the total investment for [ step 2 ] is EUR 1 billion. And of course, we're going to participate for the stake we had.

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's review the schedule -- plan for investments to refocus priorities to support this change in the Italian flows. And as we said -- in more retail focus, what could be the opportunities to, let's say, strengthen the export or the reverse flow chances.

Yes. About the hydrogen investments. Of course, we are progressing. The strategy is the 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 Hernandez, analyst]

And on the full [indiscernible] assets and the regulation of the for them?

[Stefano Venier, executive]

As Alessandra said, I mean we had this document that is expected on which we should, let's say, reply by September. So there is a reasonable time frame to see the final decisions by the authority by the end of the year. And we reasonably expect -- or we have the expectation to see the new system platform 2023. Of course, this is our expectation. I think that the timing allows to, let say, underpin this expectation.

[Operator]

The next question is from Roberto Ranieri with Intesa Sanpaolo.

[Roberto Ranieri, analyst]

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 plants? How they are -- now your projects in the biomethane business proceeding, if at the moment, there would 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 circular economy like using -- producing gas from waste which probably is very familiar, I suppose it's very familiar to you in the previous -- during the previous experience?

My last question is on the gas sourcing. You mentioned the projects -- the auction projects presentation of projects from Spain to Italy, I'm wondering if this is economically viable and -- or other alternatives such as offshore pipelines through trends using Teréga -- your participation in Teréga, so Spain to either from North could be or an additional option or not necessarily competing with the offshore option.

[Stefano Venier, executive]

Okay. Just back to your first question, about the developments on the biomethane activities. First of all, let me say that we have 18 megawatts of capacity that is already operating. We have 10 megawatts that is under construction. Of course, the 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 feedback from the European Commission. Of course, given also the new targets that the repowering you is going to set on the biomethane production on a European basis. I do expect that this new decree will be on air by maximum a month or something like that. Included in that decree also there are rumors that there will be a sort of an extension of the existing incentive scheme by 12 months, okay? That would 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 fundamentals 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 produce the biomethane through the biofermentation of the organic part of the waste. Specifically, the 2 assets that we recently bought from Asia 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 the other possible interconnection that could put in, let's say -- that could, let's say, linked directly Italy with France. Let me say, it's a prefeasibility study. Of course, the basis -- the economic rationale and the strategic rationale behind this prefeasibility is based on the fact that Spain has, 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 towards Central Europe, these additional kind of flows. Of course, there can be, let's say, alternatives as anytime that we will examine. But the benefit of this, let's say, possible project is the magnitude on one side and the fact that the offshore -- being offshore, the -- it's much -- to a certain extent, it's easier to be deployed vis-a-vis on ground.

Last point is that makes this idea to have some reasonable ground is the fact that the mid-cap interconnection has a total 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 Enagás. And therefore, we wanted to make this prefeasibility that I think in no more than 3, 4 months will tell us the key core outcomes, that is the cost, the first estimate of cost and the technical complexity in delivering this kind of infrastructure.

[Operator]

The next question is from Bartek Kubicki with Societe Generale.

[Bartlomiej Kubicki, analyst]

And we join the congratulations. Three issues I would like to discuss with you, as least.

Firstly, on the nonregulated side, you sort of seems to be finally gaining some momentum in terms of some of the 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 would be one question.

Secondly, on associates, I think, Alessandra, you mentioned there's EUR 10 million earned by interconnectors out of the maximum to be earned. I understand, it refers to a quarter, which would potentially make EUR 40 million for the year. Consequently, what would be your estimate for associates 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 EUR 360 million. I just wonder, I mean, if you look at those storage -- strategic storage, is it full? Or what is the level of going forward? And as a result, what could -- what -- what needs to happen for the strategic storage that you withdraw? And if something like that happens, it is actually your gas peaking in the strategic storage? So consequently, you sold on the market at spot prices, you can realize some gains versus the book value of the storage we can see on your balance sheet. How would you work?

[Alessandra Pasini, executive]

So on the nonregulated 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 -- the decree particularly on the biomethane on one side.

On the other side, it is indeed true that we are seeing a slowdown on the supply of certain materials, but we do expect the sign of growth that we are in the first quarter to continue for the rest of the year. So we expect more or less to keep the same price. So you have seen it's a EUR 4 million EBITDA contribution. I think a good assumption is to assume that the other 3 quarters that are left will be similar in this regard.

When it comes to Interconnector U.K., the mechanics of revenue recognition based on the way the system works and does envisage caps. So ultimately, we are unfortunately for us and for the other shareholders of Interconnector U.K., we are not going to see it simply multiplied by 4. 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 EUR 220 million on the international side of contribution from our associates. We are targeting slightly less of that as a combination of the usual decline that we expect -- or expect a decline with assets like DESFA as well as with TAG, which will be compensated by the strong performance of Interconnector, a flat performance of TAP and a flat performance of our ADNOC stake. And depending on when actually the closing will occur on our transmit asset, we may have some contribution kicking in.

So we are 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 -- include in our perimeter of corridor. So call it, roughly speaking, it can in less than last year at -- combination of these effects that we commented.

So 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 called 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 -- as storage works with pressure. When prices goes down in the operating performance, you will need to apply the compressor you need to actually extract it. But its gas that can be made available from [Technical Difficulty].

[Operator]

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

[Stefano Venier, executive]

Okay. I do apologize. Since we had a technical problem, we were put offline. So now we are back. I don't know if there is any additional questions for myself and Alessandra. Please go ahead.

[Operator]

Mr. Kubicki, if you had any additional questions?

[Bartlomiej Kubicki, analyst]

On the storage side, we only -- I think I only heard about the compression units working harder, but then it was interrupted, so maybe Alessandra, you can actually...

[Alessandra Pasini, executive]

Just to recap, what I said is it's approximately 4.5 bcm. It's part of our regulated asset base. So it's a 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 in a shorter version of what I said before.

[Bartlomiej Kubicki, analyst]

Okay. And do you own this gap in those strategic storage or no given the balance sheet...

[Alessandra Pasini, executive]

Yes. It is part of our RAB. So yes, we do own it.

[Bartlomiej Kubicki, analyst]

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

[Alessandra Pasini, executive]

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

[Operator]

The next question is from Stefano Gamberini with Equita SIM.

[Stefano Gamberini, analyst]

Welcome to Stefano also from my side and since good luck for this new professional challenge. I have three questions also from my side. The first regarding the EUR 3 billion project for the high dejection backbone. Does it included in the 10-year energy plan submitted to ARERA? And do you have some feedback on this or not? You said we expect the plan, but on this what are the first reactions in Italy on this topic?

The second regarding also this 10-year plan, you underlined that the gas flow from TAP could double. So in this case, the strengthening of the -- backbone that is forecast after 2030. And if I'm not wrong, it account around USD [ 4 ] billion could be going forward due to this additional flows from the south of Italy?

The second topic was regarding the 2 floaters probably I lost the answer, but when this could arrive? What are the total investment and this investment going to be included in the RAB?

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. You have USD 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? Could you hear me?

[Stefano Venier, executive]

Yes, we could. I was just collecting the information about your first question that is regarding the project of the hydrogen backbone that has been included in the 10-year investment plan that has been submitted to the ARERA. 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 EU program has risen again the total target for hydrogen volumes by 2013 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-North and from North to Central Europe.

About the Adriatic project. Of course, when I was saying that in the next months, according to the finalization of the [indiscernible] deals and other changes that happened -- that will happen on the flows, we will review the schedule of investments and the Adriatic pipeline is going to be one of those major investments 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 export towards Central Europe.

About the floating vessels, the FSRU. 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 facility 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 José Ruiz with Barclays.

[José Ruiz Fernandez, analyst]

Just one question left from my side. Can you update us on your intentions of floating De Nora?

[Alessandra Pasini, executive]

Nothing has changed versus what we told you before, the intention to get a family are still there. Clearly, the market environment is a bit volatile to say the least. But we are very comforted by the very strong results that De Nora continues to deliver.

So -- the first thing is as an investor in De 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.

[Operator]

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

[Stefano Venier, executive]

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

[Operator]

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.