Italy’s Eni says it will invest EUR3 billion in decarbonisation projects

Italy’s oil and gas company Eni SpA plans to invest approximately EUR3 billion (USD3.38 billion) to further strengthen Eni’s decarbonisation strategy through energy efficiency and flaring down projects, Circular Economy and Renewables initiatives.

 “Decarbonisation is structurally embedded in our overall strategy and ambitions. Addressing the dual challenge of satisfying increasing energy needs, while reducing emissions in line with the Paris Agreement goals, is a strategic priority for our Board. As a first step, our objective is to achieve net zero emissions in our upstream business by 2030. We will accomplish this by increased efficiency to minimize direct upstream CO2 emissions and offsetting residual upstream emissions through large forestry projects,” said Eni CEO Claudio Descalzi.

Descalzi presented the company’s 2019-2022 Strategic Plan to the financial community on 15 March, noting that Eni’s 2019-2022 plan “marks a new era in the company’s evolution to a world-leading global energy provider.”

The company has undergone a successful transformation. This has led to a more integrated setup, which has positioned the company to witness further growth in the upstream sector. Also, the mid-downstream businesses have been reorganized, which are financially more sound and will yield results amid low oil price scenarios.

Eni expects strong growth during the planned period with a cumulative free cash flow of EUR2.6 billion (USD2.93 billion) and an EBIT of more than EUR270 million (USD304.03 million) in 2022.

“We expect mid-downstream operating income to grow to EUR2 billion (USD2.25 billion) by the end of the strategy plan, more than double 2018 levels. After our acquisition of a 20% stake in the Ruwais refining complex in UAE, we have strengthened our refining business accessing to a top class asset. The acquisition has increased our overall refining capacity by 35% and ultimately by 40% in 2023, and will drive our breakeven margin to around USD1.50 per barrel.”

To achieve the targets, Eni intends to restart the Sannazzaro EST plant by mid-2019, and boost the green refining capacity to 1 million tons per and commission the biorefinery in Gela. Also, the second phase of the development of Venice is likely to be concluded by 2022. By the end of 2023, the refining capacity will increase by 40% due to the acquisition of a 20% stake in Ruwais refinery in the UAE. Moreover, consolidation of the company’s leading marketing position in Italy is expected to increase to 25%, capitalizing on the new sustainable mobility initiatives.

New Energy Solutions

Eni’s New Energy Solutions business is expected to grow over the four-year period. The upside will be attributable to a unique model based on incorporation with existing assets and activities. This is likely to create new opportunities and value for the company. This unique model will bring synergies in energy costs for production facilities and increase the availability of more gas for local consumption or export. Return from these projects is expected in the range of 812%.

The company plans to complete 60 brownfield and greenfield projects. Moreover, through investments worth EUR1.4 billion (USD1.58 billion), Eni will develop more than 1.6 GW of new capacity by 2022 and up to 5 GW by 2025, over the medium to long-term.