Edison to Boost International Investment in New Growth

ROME Nov 12, 2007 (Dow Jones Newswires)

Edison SpA (EDN.MI), one of Italy's top energy companies, plans to expand its international and upstream investments in its new growth plan as it seeks to become independent of its biggest rival for gas supplies, Chief Executive Umberto Quadrino said Monday.

"We will surely invest more internationally and in exploration and production," Quadrino told Dow Jones Newswires at the World Energy Congress in Rome. "There will be a strong acceleration from the previous plan."

Edison is scheduled to present the new growth plan at the end of the month. Quadrino said exact figures will be released only then.

In September, Edison signed with National Iranian Oil Co. a feasibility study on the possible development of two phases of the giant South Pars field and the possible construction of a liquefied natural gas facility with an annual capacity of 10 billion cubic meters. The two sides expect to conclude the study by the end of the first quarter of 2008.

Edison, which is controlled by Electricite de France SA (1024251.FR) and Italian municipal utility AEM SpA (AEM.MI), is pushing for more expansion abroad as it seeks new sources and to free itself from gas sold by Eni SpA (E), Italy's biggest oil and gas company by volume.

The Milan-based company buys the vast majority of its roughly 13 billion cubic meters of gas annual consumption from Eni. It buys these supplies in Italy and abroad.

Quadrino expects Edison to stop the purchase of significant quantities of gas from Eni in 2012.

This will have a "noticeable" significance on margins, he said, although he declined to give a monetary figure.

The Milan-based company is at the forefront of Italy's drive to diversify its source of gas.

It will take 6.4 billion cubic meters annually of Qatari gas for 25 years, once the Rovigo LNG receiving terminal starts up.

The facility, offshore northeast Italy, is owned by ExxonMobil Corp. (XOM), Qatar Petroleum and Edison and will have a capacity of 8 billion cubic meters a year. It is scheduled to come onstream in the second half of 2008.

Edison owns an 18% stake in Galsi, the company working on building a pipeline that will connect Italy and Algeria via the island of Sardinia. The pipeline, expected to be operational in 2012, will initially transport 8 billion cubic meters of Algerian gas a year. Edison has signed for an annual supply of 2 billion cubic meters.

Furthermore, Edison is investing in a pipeline connecting Italy to the Caspian area via Greece and Turkey, to be in operation by the end of 2012 as part of the European Union's efforts to diversify away from Russian supplies.

The initial annual capacity to Italy of this pipeline is 8 billion cubic meters. Edison will have 80% of the supplies and Greek state-owned gas company DEPA the remaining 20%.

Monday, Quadrino told Dow Jones Newswires Edison is seeking to buy all 8 billion cubic meters from Azerbaijan and hopes to sign a deal next year.

Quadrino also said he is in talks with Russia's OAO Gazprom (GAZP.RS) to buy gas from the pipeline that connects the two countries when it boosts capacity in the next year or two by about 6.5 billion cubic meters annually. He is seeking "long-term" supply contracts of at least 15 years, he said.

Edison may consider including some of its generation assets in any eventual deal between the two. "Gazprom is seeking to gain a foothold in the final market and look at margins along the entire process," Quadrino said.

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