Eni Raises Production Growth Target. Increases Capex

Eni, Italian oil company which hit the headlines yesterday after selling a 20% stake in its Offshore Area 1 in Mozambique to China’s CNPC for a sum of $4,21 billion, has published its 2013-2016 Strategic Plan.

In the press release issued yesterday, Eni 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 East and 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 the company’s diversified and synergic development pipeline, and on a low decline rate of about 4%, coming from dynamic reservoir management and intense production optimization activities.

Increased capex

As for the capex 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.
Eni explained that the capex plan would 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 Eni’s mid and downstream businesses, and over €10bn of disposal opportunities including Galp and Snam, and some rebalancing in Eni’s E&P portfolio.