Eni Outlines Plans to 2021
Eni outlined its spending and capital expenditure plans for the upstream, gas sector and decarbonisation over the next four years at a strategy presentation in London.
In its 2018-21 presentation held March 16, Eni said it expects to spend €3.5bn ($4.3bn) on exploration over the four-year period to 2021 targeting 2bn barrels oil equivalent (boe) of new resources at a unit cost of about $2/boe and drilling around 115 wells in over 25 countries.
Overall, Eni’s four-year investment plan, which aims at high-value projects with rapid returns, envisages capital expenditure of less than €32bn ($39.5bn), of which more than four fifths is to go upstream.
It expects upstream production to grow by 3.5% a year over the 2018-2021 period thanks to new projects; the incremental production will represent about 700,000 boe/d in 2021. Optimisation activities will add a further 200,000 boe/d in 2021, it added.
This would add up to an extra 900,000 boe/d in 2021, said CEO Claudio Descalzi, noting that already “Over the last four years in a low price scenario, we have discovered 4.4 bn boe.” Exploration success and Eni’s projects' pipeline with a breakeven of less than $30/b, together with financial discipline, will generate a cumulative free cash flow of €22bn in 2018-2021, Eni said.
In Gas and Power, Eni expects to accelerate its LNG portfolio to reach 12mn mt/yr of contracted volumes in 2021, and 14mn mt by 2025. NGW has asked Eni to confirm if these would be Eni’s equity LNG sales (as opposed to its offtakes for its European marketing).
In comments to analysts, Descalzi said he was hopeful for a final investment decision in 2019 on Eni's Mamba LNG venture with ExxonMobil and others in Mozambique, and expected to be exporting gas from Egypt also in 2019 potentially from the Damietta plant that it co-owns.
Eni said it will also aim for 11mn retail gas customers in Europe, up 25% from 2017.
Refining, marketing and chemicals would absorb €3.5bn in 2018-21 capex, it said, noting that Italian bio-refinery capacity and chemicals manufacturing in the Far East and US would be expanded out to 2021.
But it’s on New Energy that Eni’s strategy is perhaps more extensive than a year ago, as it commits to invest €1.2bn in developing 1 gigawatts (GW) of new capacity by 2021 (of which 400 MW by end-2019) and up to 5 GW by 2025. Some will be renewable, but others will involve decarbonising its own production facilities overseas by using more gas, and achieving the same for local consumer markets too where it operates. A further €0.6bn will be invested by 2021 in decarbonisation.
These combined measures would aim to achieve a 43% reduction by 2025 in greenhouse gas emissions upstream, relative to 2014, and include flaring and gas-venting reductions, plus energy efficiency measures.
CEO Claudio Descalzi at Eni's strategy presentation (Photo credit: NGW/Eni. The banner photo shows Eni drilling activities offshore Mozambique, photo credit: Eni)