The Group

The ERG Group operates in the renewable energy source segment through ERG Renew, a company which, at 30 September 2011, was its wholly owned subsidiary as a result of the takeover bid that ended on 7 June 2011 with the consequent delisting of the subsidiary.

The performance of ERG Renew is based mainly on the wind power generation business.
Wind farms consist of wind-power generators that can transform the kinetic energy of wind into mechanical energy, which is used in turn to generate electricity. Aside from the availability of the plants, the performance expected from each wind farm is obviously influenced by the wind speed profile of the site on which the wind farm is located.
The economic performance is also influenced by electricity selling prices and by the price of green certificates.

 Renewable Energy Sources - Reference Market ⁽¹⁾

(1) Estimated output for September.
(2) Output net  of consumption for auxiliary services.
(3) Sources considered: hydroelectric, geothermal, wind power, and photovoltaic energy.
(4) Sources considered: hydroelectric and wind power.
(5) Single National Price.
(6) 2006 base rate of 82 Euro/MWh pursuant to the 10 July 2006 decree of the French Ministry of Economic Affairs, Finance and Industry. The tariff is indexed to inflation on a yearly basis.

On 3 March 2011 the Council of Ministers finally approved the Legislative Decree transposing Directive 2009/28/EC promoting the use of energy from renewable sources.
The Decree provides that for wind power plants that are already operational, or that will become operational by 31 December 2012, the GSE, as end-purchaser, will continue to withdraw Green Certificates issued for the production from renewable energy sources up to 2015, at a price equal to 78% of the difference between 180 Euro/MWh and the average annual selling price registered for electrical energy in the previous year and communicated by the Authority for Electrical Energy and Gas, by 31 January each year, as per Art. 13, paragraph 3, of Legislative Decree 387 of 29 December 2003.

Refining & Marketing

As a results of the Group's new organization, the results of the Coastal Refining and Integrated Downstream segments are included in the Refining & Marketing segment.

Coastal Refining

In a joint venture with LUKOIL, one of the world’s leading oil companies, in the Priolo area ERG owns 40% of a major oil refining complex, leader in the Mediterranean in terms of size and complexity, integrated with power generation and chemical activities.

This join venture reflect ERG’s strategy to achieve high conversion and efficient refining capable of flexibly processing more profitable crudes in order to obtain high value-added products.

ERG continues to pursue a strategy of continuous improvement in plant efficiency and flexibility, which enables it to respond quickly to developments on the oil markets, both in terms of quality and type of commodities processed and yields of products with higher value added.

Coastal Refining - Reference Market ⁽¹⁾

Source: Platt’s
(1) Average values in period.
(2) Brent Dated: Reference light crude, on FOB mean basis.
(3) Ural: Reference heavy crude, on CIF mean basis.
(4) Value of the EMC notional margin on FOB basis, obtained from a 50-50 mix of Ural and Azeri Light crudes. The EMC notional margin refers to a complex refinery characterised by catalytic conversions dedicated to the production of gasoline (fluid catalytic cracking plant).

Integrated Downstream - Reference Market ⁽¹⁾

 ^{(1) Estimated figures}

ERG aims to maximise the commercial value of its electricity assets:

• ISAB Energy’s IG plant (51% ERG), operational since 2000, through the 20-year CIP 6 agreement
• the new CCGT plant of subsidiary ERG Power S.r.l., which will provide utilities to industrial clientsof the Priolo site and merchant electricity to one of the most profitable market areas in Italy.

ERG is also seeking to enter the gas infrastructure sector through two projects currently in the authorization phase:

• Ionio Gas, a joint venture project company with Shell for Liquid Natural gas (LNG) Regasification within the Priolo industrial complex

• Rivara Storage, a joint venture project company with Independent Resources Plc (IRG) to store natural gas in North Italy.

Power & Gas - Reference Market

^{(1) Source: Terna S.p.A. monthly report on the electrical system. Estimate data, subject to correction.
(2) output net of consumption for auxiliary services
(3) Single National Price. Source: GME S.p.A.}