ERG in 2013

ERG's history


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 had become a refinery in the post-war years, chose a die as its symbol (from the Italian word "Dado", which means die and is also a nickname for Edoardo). The faces of the die bear a three-letter acronym that stands for the initials of Edoardo Garrone Refinery - ERG.
Immediately after the Second World War, in a country that had to be completely rebuilt, the huge demand for energy meant that petroleum was the most suitable energy source to meet national needs, thanks to its low price, availability, and flexible procurement. 
As a result of this favourable development and the excellent geographic position, refining operations therefore became strategic for ERG.
In 1956 the company signed its first major international agreement with British Petroleum which, subsequently and for several years, held a 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 in ISAB, a company that had been created 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 until it eventually reached 100% in 1997. 
After developing activities mostly in the refining sector, the company and its subsidiary company ERG Petroli also started to grow nationwide in the fuel distribution sector, where it was already active with a network of service stations in the north west of Italy.  
In 1984 ERG acquired the 780 ELF facilities in Italy and in 1986 the 1,700 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 leading energy producers, led to the creation of ISAB Energy, whose mission was the construction of the first Italian heavy oil gasification plant for producing electric power. This innovative industrial project received about 1,900 billion lire of project financing, which was unprecedented in Italy.
 

From listing to 2000

Through a streamlining of the corporate structure and a firm refocusing on the core business of energy, ERG prepared its listing on the Stock Market in order to create the conditions for more efficient funding of the new development phase that awaited it. 
In October 1997 ERG 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 an estimated production of 4 billion kWh per year.
From being a petroleum company, ERG had now become a "multi-energy" company.
In October 2002 ERG Raffinerie Mediterranee was established (72% ERG, 28% ENI) in order to manage one of the largest and most efficient refining site in Europe, created through the merger and integration of ERG's ISAB refinery and the former AGIP refinery, which were both in Priolo (Province of Syracuse).
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 so that the new "supersite" could enjoy 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 set up as a natural continuation of the involvement of the Garrone and Mondini families and the ERG Group in the social and cultural arena. 
The goal of the Foundation is to make a significant contribution to ensuring that culture, art and science are readily available and understandable, as well as to cooperate actively in ethical and solidarity projects. 
In 2005 ERG was included in the Midex index within Borsa Italiana's Blue-Chips segment. The move from Star to the Blue-Chips 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 Enertad S.p.A., a listed company on the Milan Stock Exchange that later 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 establishment of "Newco" ISAB S.r.l. (51% ERG Raffinerie Mediterranee and 49% LUKOIL) this led to a solid partnership in refining activity and the management of the ISAB Refinery in Priolo.
In November 2009 ERG Power S.r.l. was established and was assigned the new CCGT cogeneration electric power plant (480 MW) located in the north area of the Priolo site. This has been operational since April 2010.
In early 2010 TotalErg was created as a joint venture between ERG Petroli and Total Italia.
Officially operational since 1 October 2010, TotalErg (51% ERG – 49% Total) is the third largest operator in Italy in the distribution of petroleum products and has a market share of around 12% and approximately 3,200 service stations. As a result of the high potential for managerial and operational synergies, TotalErg, in addition to expanding the services and products offered to its customers, also made it possible to achieve significant economic benefits, thereby creating value for its shareholders.
Following the refinery crisis in early 2011, ERG reduced its share in ISAB S.r.l. from 51% to 40%, exercising the put option on 11%.
In 2010 ERG Renew's growth in the wind power sector continued and in July it acquired 102 MW from the IVPC Group in Italy.
In 2011 the ERG Group successfully completed operations of particular importance for the renewable energy sector: in June it concluded the public offer (launched in December 2010) on the ordinary shares of ERG Renew and the subsequent delisting. This operation was focused on achieving greater financial, organisational and managerial flexibility in order to support the achievement of investment and market positioning objectives. 

ERG Renew, third in the sector in Italy, continued its growth plan with the creation of the Fossa del Lupo wind farm (97.5 MW) and with the purchase of five wind farms in Campania (for a total of about 112 MW). The installed power thereby increased from 310 MW to 548 MW (483 MW in Italy).
In addition, in May, in a bid to develop in Eastern European countries, ERG Renew and LUKOIL Ecoenergo signed an agreement for the creation of the joint venture LUKERG Renew, with registered office in Vienna.
In November 2011 ERG and IREN signed the transfer to IREN of the ERG business unit responsible for the marketing and sale of electric power and a binding Framework Agreement for the supply of 2 TWh of electric power to IREN each year for six years; this took effect as of 1 January 2012.

The present

2012 was marked out by significant events that concern the Groups' management and business development.
In line with a strategy that aims to gradually reduce exposure in refining, the put option was exercised for a further 20% at the start of the year. Subsequent to this, ERG shares in the ISAB refinery slump to 20%. In February, ERG Renew enters the Bulgarian wind energy market through LUKERG Renew's acquisition of a 40-MW wind farm.
On 20 April, Luca Bettonte, the Group's General Manager and former Chief Financial Officer, is appointed as ERG's Chief Executive Officer, taking over from Alessandro Garrone who becomes Executive Vice President.
In December, the Group carries out a major operation and, seeking to broaden exposure to renewable energy sources, acquires GDF SUEZ's Italian and German wind farms with a total installed capacity of 636 MW. This enables them to become Italy's leading wind power operator and the ninth most important in Europe, with a total installed power of 1,232 MW in Europe and 1,062 MW in Italy. December was also the month that ERG Renew announced the acquisition of a project to create an 84 MW wind farm in Romania through the joint venture LUKERG Renew. This is being constructed at present. 
2012 ended with the presentation of the Group's 2013-2015 strategic plan, which illustrates the strategy taken in recent years and the Group's new positioning, and also sets out goals and strategic investments for 2015.

ERG S.p.A. - Genova

Paolo Merli

Head of Corporate Finance & Investor Relations

0039 010 2401376

ERG S.p.A. - Genova

Matteo Bagnara

Investor Relations

0039 010 2401423

ir@erg.it


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