Eni of Italy Raises Production Target

Eni of Italy confirmed its strategy of production growth, raising its average annual target to over 4% in the 2013- 2016 period. This growth is based on a scenario of $90/bbl to 2016, but it is resilient to higher oil prices.

Eni’s growth strategy is founded on organic development, thanks to the significant contribution coming from key development hubs including – Russia (Yamal), the Barents Sea, Kazakhstan, Venezuela, the Far Eastand the sub-Saharan region.

Projects due to come onstream over the plan period will add over 700kboe/d of production by 2016. 80% of this new production will come from giant projects, and 40% will come from additional development phases of producing fields.

Beyond the plan period, production growth of over 3% per year to 2022 will be based on our diversified and synergic development pipeline, and on a low decline rate of about 4%, coming from dynamic reservoir management and intense production optimization activities.

Gas & Power

The outlook on the gas market environment, especially in Italy, remains challenging mainly due to a still weak macroeconomic environment. As a result, the Italian market is still oversupplied, lacking physical export capacity which would allow the reverse flow of significant take or pay volumes delivered to Italy.

In this context, Eni is renegotiating the most of the supply contracts in its portfolio. The renegotiations aim at realigning gas purchased with those of the prevailing hubs, aiming also at obtaining more flexibility in the volumes of the take or pay contracts.

On the commercial front, Eni will continue to focus on solid segments like retail and LNG, and support margins in wholesale through the enrichment of its portfolio with flexible and innovative products as today’s market requires.

This is facilitated by the integration of this segment with trading within a new organization.

The EBITDA proforma adj expected in 2016 will be approximately 1.5bln euro.

Financial strategy

Eni’s strategic growth prospects are supported by a transformed balance sheet, with net debt at the end of 2012 almost halved compared with 2011. This stronger financial position is coherent with our new business profile, more exposed to the E&P business. Eni expects to maintain leverage within a target range of 10-30%, using this flexibility to absorb temporary fluctuations in oil prices, in market environments and in our business results.

Eni plans to make approximately €56.8 billion of investments over the 2013-2016 period, an increase, at the exchange rate euro/dollar of approximately €1.6 bln over the last plan period. The increase is largely related to the new growth opportunities in E&P, including Mozambique.

The capex plan will be funded by strong cash generation in the region of €20 bln per year over the period, driven by increasing E&P production, the gradual recovery in our mid and downstream businesses, and over €10bn of disposal opportunities including Galp and Snam, and some rebalancing in our E&P portfolio.

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LNG World News Staff, March 14, 2013; Image: Eni