Gas as the stabilizer, OLT and CCS momentum, and a fresh capital allocation posture
SRG.MI · Earnings Call · 2026-07-29
The Gas Anchor in an Electrifying Grid
Snam's H1 2026 results underscore a company not simply clinging to the status quo but actively repositioning itself as the stabilizer of an increasingly volatile energy system. The narrative of "energy integration" dominates the call, with gas positioned not as a transitional fuel but as a permanent balancing force. CEO Agostino Scornajenchi laid out the thesis: “It's about building an increasingly integrated, diversified, and resilient energy system, where electricity, molecules, storage, and infrastructure will work together.” — Agostino Scornajenchi, CEO and General Manager · 2026-07-29 This is not a departure from long-standing strategy but a more explicit embrace of flexible generation as a structural feature. The June heatwave served as a vivid illustration: gas-fired generation nearly doubled to compensate for a drop in wind output. Meanwhile, data centers and electrification are framed as secular drivers of gas demand. In Q&A, Scornajenchi dismissed the notion that batteries could replace this role:
We cannot compare the role of batteries and the role of flexible generation fleet.
The prior quarter's bias is echoed by his March 2025 predecessor, who noted that if data-center projections hold, "I think it could be only a benefit for us." “If the number is correct, I think it could be only a benefit for us.” — Stefano Venier, Chief Executive Officer · 2025-03-19
Regulatory Front: ROSS, CCS, and the WACC Wait
The company is navigating the seventh regulatory period consultation. CFO Luca Passa noted that a proposed simplification of the fast-money/slow-money mechanism would be beneficial, but other elements like the gearing assumption are contentious. On CCS, the regulatory framework is still being defined, but the company expects it to be fully regulated. “We expect this business to be fully regulated, therefore, contributing to our regulated asset base.” — Luca Passa, Chief Financial Officer · 2025-11-05 This echoes the prior quarter's optimism but now with concrete progress on the Ravenna project's permitting. The CCS framework is a key growth pillar, though exact remuneration remains to be seen. At the same time, the company is pressing for a more favorable treatment of LNG storage remuneration, arguing that the current 64% cap undervalues a now-structural asset class. "If you ask me if I am happy with the remuneration that I currently have, the answer is always no," Scornajenchi said, but he conceded the storage scheme is "adequate." This regulatory jockeying is occurring against the backdrop of a possible WACC trigger activation, with regasification "on the edge," per the company.
Capital Discipline and New Levers
The OLT consolidation contributed EUR 32 million to EBITDA, and the company raised its net debt guidance. Passa stated: “We upgrade our net debt guidance from the previous EUR 19 billion to EUR 18.9 billion.” — Luca Passa, Chief Financial, Sustainability, and Investor Relations Officer · 2026-07-29 Behind this lies a tactical shift in funding: the fixed/floating mix moved to 65/35, with Passa explaining: “We see an arbitrage currently between the floating rate curve as well as the interest rate, the fixed rate longer term, therefore, we took the advantage.” — Luca Passa, Chief Financial, Sustainability, and Investor Relations Officer · 2026-07-29 This is a new lever, alongside a potential U.S. dollar bond issuance approved by the board. At the same time, asset rotation continues with the biomethane disposal process nearing completion. The company also launched Polaris, a new monthly energy market report, positioning itself as a transparent data provider in a volatile geopolitical environment.
The overall story is one of a company leveraging its regulated monopoly to extract value from systemic volatility. With net debt down on an adjusted basis and a stable cost of debt at 2.6%, Snam is reinforcing its finance story even as it pushes for regulatory evolution. The OLT consolidation and improved working capital trends provide near-term comfort, while the CCS and TAP expansion optionality offer a longer runway. The call leaves an impression of a management team confident in its role as the backbone of Italy's energy security, but also acutely aware that the regulatory and geopolitical chessboard remains fluid.