* Says unbundling would not raise Snam funding costs
* Most likely buyer of Eni's Snam stake is CDP -analysts
* Separation to boost Eni's international profile
(Adds analyst comment, background shares)
By Stephen Jewkes
MILAN, Jan 23 The looming separation of
Italian gas grid operator Snam from oil and gas parent
Eni will not hinder its ability to finance its plans to
become a European gas transport network, it said on Monday.
On Friday the Italian government gave the green light to the
ownership separation of Eni and Snam as part of a liberalisation
decree aimed at cutting energy costs for consumers and business,
but analysts have said Snam might face higher funding costs on
"Any (ownership) separation from Eni would not cause us any
significant additional cost for financing," Snam Chief Executive
Carlo Malacarne told Reuters on Monday.
Snam, continental Europe's biggest regulated gas business,
is gearing up for a big push outside its domestic market, after
a reorganisation of its business and new European regulations.
Last week it signed an agreement with Belgian gas group
Fluxys that envisages acquisitions or new investments
to create a European gas transport network.
The $15 billion company, which also manages gas storage
facilities and distribution, currently accesses all its
financing through state-controlled Eni, which owns 52 percent.
"Decisions on the capital structure of Snam today are
decisions taken by Snam. We currently go to the market through
Eni, but the cost of debt is in line with our shadow rating,"
Snam, which had debt of 10.7 billion euros at the end of
September, told analysts in October its cost of financing was
consistent with an 'A' rating.
In January Standard & Poor's lowered its long-term rating on
Eni to 'A' from 'A+', following a two-notch sovereign downgrade
Under the government's liberalisation package, a decree
allowing Eni to reduce its stake in Snam will be published in
about six months, after which the group will have 24 months to
"We might well see Eni announcing something on its Snam
stake in the early part of this year," an investment banker in
Eni, which has previously flagged its willingness to sell
down its stake in Snam, holds a strategy meeting in March.
Ownership separation of Snam from Eni has been officially
laid out in a series of measures since 2003 but has repeatedly
been halted for national energy strategic concerns.
Snam controls the almost 32,000 kilometres of gas transport
pipelines in Italy, and because of its strategic nature analysts
believe the most likely buyer would be state-controlled Cassa
Depositi e Prestiti (CDP).
CDP, which already holds a stake in power grid operator
Terna, last year bought from Eni the TAG gas pipeline
that transports Russian gas into Italy.
For Eni, cutting its stake in Snam to below 20 percent would
get over 10 billion euros of debt off Eni's balance sheet, which
would allow it to support profitable investments in exploration
"Eni still has a regional flavour rather than international
because of its (Snam) gas activities. If it gets rid of that it
will become an exploration-led growth player," says Jason
Kenney, oil and gas analyst at Santander in the UK.
Eni, the world's No. 7 oil operator, is the biggest oil and
gas operator in Africa and is set to be the biggest foreign
player in the promising Barents Sea area.
Eni's shares closed up 0.64 percent, while Snam fell 1
percent, compared with a 0.86 percent rise in the wider European
oil and gas sector.
(Reporting by Stephen Jewkes; Editing by Will Waterman)