Origins, development, integration
The history of the ERG Group started on 2 June 1938 with the establishment of the sole proprietorship for “trading products derived from petroleum and tar” by Edoardo Garrone. The company, which became a refinery in the early post-war years, chose a die as its symbol (from the Italian word "Dado", a nickname for Edoardo, which also means “die”); its faces bear a three-letter acronym and the initials of Edoardo Garrone Refinery written on the faces of the die read... ERG.
Immediately after the Second World War, in a country that had to be rebuilt from the ground up, the great demand for energy found in petroleum the most suitable energy source to meet national needs thanks to its low price, availability and flexible procurement.
Refining operations, thanks to the favourable economic environment and the excellent geographic position of its plants, thus became strategic for ERG.
In 1956, the company signed the first major international agreement with British Petroleum which, subsequently and for several years, held a significant minority stake in ERG’s share capital. In 1963, the annual processing capacity of the refinery had already reached 6.5 million tonnes.
In 1971, ERG joined other private groups as a shareholder of ISAB, founded to build a large refinery in Sicily and, in 1985, in view of the planned shut-down of the San Quirico refinery in Genoa, it took control of ISAB with a stake that grew over the years and reached 100% in 1997.
After developing its activities mostly in the refining sector, the company started to grow nationwide in the commercial distribution sector as well, where it was already active with its own network of service stations in northwestern Italy.
In 1984, ERG acquired the 780 ELF facilities in Italy and in 1986 the 1,700 Italian distribution stations of Chevron Oil; this was the start of the ERG Network, recognisable, on all roads in Italy, by its trademark three panthers.
In late 1993, an agreement between ERG and Edison Mission Energy, one of the world’s foremost energy producers, led to the inception of ISAB Energy, whose mission was the construction of the first Italian heavy oil gasification plant for the generation of clean electric power. The innovative industrial project received about 1,900 billion lire of project financing, which was unprecedented in Italy.
From listing to 2000
Through a rationalisation of the corporate structure and aggressive re-focusing on the core business of energy, ERG prepared its listing on the Stock Market to create the conditions for more efficient funding of the new development phase that awaited it.
The global offer consisted of a public offer for subscription and sale of 70.25 million shares in Italy and a private placement of 30.75 million shares reserved for domestic and foreign institutional investors. In October 1997, ERG stock was listed on the Electronic System of the Italian Stock Markets.
In 2000, the ISAB Energy plant was commissioned with a capacity of 528 MW and estimated production of 4 billion kWh per year.
As a petroleum company, ERG thus became a company active in the energy industry in the broadest sense.
In October 2002, ERG Raffinerie Mediterranee was incorporated (72% ERG, 28% ENI), to manage one of the largest and most efficient refining sites in Europe, created through the merger and integration of ERG's ISAB Refinery and the former AGIP refinery, both in Priolo.
The two refineries were integrated through the construction of a system of pipelines and other works to upgrade and improve production efficiency and environmental compatibility to allow the new ‘survivor’ to be positioned at a very high competitive level in the international scenario.
In late 2002, Alessandro Garrone was appointed Chief Executive Officer of ERG. In 2003, Riccardo Garrone left ERG’s chairmanship after forty years and was replaced by his first-born son Edoardo.
On 23 December 2004, the Edoardo Garrone Foundation was setup as a natural continuation of the involvement of the Garrone and Mondini families, along with the companies of the ERG Group, in the social and cultural arena.
The goal of the Foundation is to make a significant contribution to ensuring culture, art and science is readily available and understandable, as well as to cooperate actively in ethical, joint projects.
ERG’s multi-energy strategy and its commitment to alternative energies developed further in 2005 with Ionio Gas S.r.l., incorporated with equal stakes by ERG Power & Gas S.p.A. and Shell Energy Italia S.r.l., for the development of a Liquefied Natural Gas regasification plant at the site in Priolo.
In 2005, ERG was included in the MIDEX Index within Borsa Italiana’s Blue Chip segment. The move from STAR to the Blue Chip segment took place following a significant increase in the stock market capitalisation of ERG’s shares.
In 2006, ERG took a decisive step forward in its multi-energy strategy, entering the renewable energies sector and acquiring 51.33% of the share capital of Enertad S.p.A., a listed company active in the generation of electric power from renewable sources; in 2007, this stake rose to 68.38%. In May 2008 a partial split of ERG Power & Gas enabled the integration of the Group’s activities in the renewable energies sector into Enertad; as a result of the transaction, ERG's stake in Enertad reached 77.4% of the share capital.
Following the acquisition of the ERG Power & Gas assets in the renewable energies sector, Enertad changed its name to ERG Renew.
2008 was the year of the agreement with LUKOIL, one of the most important agreements in the Group's history; through the incorporation of the "Newco” ISAB Srl (51% ERG Raffinerie Mediterranee and 49% LUKOIL), it led to a solid partnership in coastal refining operations.
The agreement entailed transferring to Newco the business unit of ERG Raffinerie Mediterranee, which includes all the assets of the ISAB Refinery in Priolo, and the use of the same by shareholders for processing.
In November 2009, ERG Power S.r.l. was established with share capital fully underwritten and paid in by ERG Nuove Centrali S.p.A.: the incorporated company was assigned the new co-generation electric power plant (480 MW) located inside the north area of the Priolo (SR) site; it has been operational since April 2010.
In early 2010 TotalErg was launched as a joint venture resulting from the merger of ERG Petroli and Total Italia.
TotalErg (51% ERG – 49% Total), officially operational since 1 October 2010, is the third largest operator in Italy in the distribution of petroleum products, with a market share of about 12% and over 3,400 service stations. Thanks to the high potential for managerial and operating synergies, TotalErg, in addition to expanding the services and products offered to its customers, will pave the way for significant economic benefits, creating value for its shareholders.
At the beginning of 2011, ERG exercised the put option on 11% of ISAB S.r.l reducing its share in ISAB S.r.l. from 51% to 40%. With the current crisis in the refining sector, the transaction enables ERG to continue to maintain a significant industrial role in the sector in partnership with LUKOIL and in line with its multi-energy strategy, whilst further strengthening its financial structure.
In 2011, the ERG Group successfully completed corporate operations of particular importance for the renewable energy sector: in June it concluded the public offer (launched in December 2010) on the ordinary shares in ERG Renew and the subsequent delisting; this transaction was focused on achieving greater financial, organisational and managerial flexibility to support the achievement of investment and market positioning objectives. ERG Renew, third in the sector in Italy, continued its growth plan in 2011: over the year it completed work on the wind farm in Fossa del Lupo (97.5 MW) and purchased five wind farms in Campania (for a total of about 112 MW). The installed power thus increased from 310 MW to 548 MW (483 in Italy).
In addition, in May, ERG Renew and LUKOIL Ecoenergo signed an agreement for the establishment of the joint venture, LUKERG Renew, with registered office in Vienna: this deal is part of the Memorandum of Understanding signed by the two companies in July 2010 on a collaboration in the renewable energy markets of Eastern European countries.
In November 2011 ERG and IREN, through the subsidiary IREN Mercato, signed a binding Framework Agreement for the supply of 2 TWh per year of power for 6 years to IREN, and the transfer to IREN of the ERG business unit responsible for the marketing and sale of electric power.
Even in the face of challenging scenarios, the Group’s work attests to its entrepreneurial vision able to anticipate changes and exploit new opportunities, always keeping as its primary objective the creation of lasting sustainable value for its stakeholders.