Eni booked a loss in the third quarter of the year as it said market conditions remain “challenging” due to oil demand destruction caused by the coronavirus pandemic — but the Italian major's renewables segment performed strongly.

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Eni reported a loss for the three months to the end of September of €503 million ($590 million) compared to a profit of €523 million in the comparable period a year earlier.

The company’s loss to date for this year is almost €8 billion compared to a profit of €2 billion year-on-year.

Operating profit in the third quarter dropped to €537 million compared to €2.2 billion reported in the same period of last year.

“Compared to the year-ago quarter, the quarterly performance (down by 75%) was materially hit by the downturn in energy demand driven by the Covid-19 pandemic,” Eni said.

Revenues from the company’s exploration and production arm plunged to €515 million in the three months period compared to the €2.1 billion reported last year.

Eni’s renewables and power segment, however, saw income increase by 280% year-on-year to €57 million from just €15 million in 2019.

Output drop

Quarterly production decreased to 1.7 million barrels of oil equivalent per day compared to 1.9 million boepd in the same quarter of last year.

“The 10% decline was due to Covid-19 impacts and related Opec+ production cuts as well as lower gas demand, mainly in Egypt,” Eni said.

The period also impacted by the drop in oil prices from $61.9 per barrels last year, to just $43 per barrel this year.

This year’s production target is in the range of 1.72 million to 1.74 million boepd.

Challenging market

Eni chief executive Claudio Descalzi said: “In a market environment that remains challenging, we are continuing to successfully mitigate the negative impact of this crisis and making progress with our decarbonisation strategy.

“Faced with a crisis of unprecedented proportions, Eni has demonstrated great resilience and flexibility. In light of these results, we look forward to a recovery in demand, whilst continuing to pursue our energy transition programme."

Looking ahead, Eni has assumed a more conservative oil price scenario, with a Brent at $40 per barrel for 2020, and $60 per barrel in real terms out to 2023 (compared to the previous projection of $70 barrel).

Capital expenditure this year has already been reduced by 35% to €2.6 billion, and for next year, Eni is targeting lower investments of just €2.4 billion, while also planning cost reductions of €1.4 billion.

According to the company, the 2020-2021 capex cuts are almost entirely focused in the E&P segment.

Eni also said higher investments are expected for 2022-2023 for an overall amount of €800 million targeting growth at the green businesses (bio-refineries, renewables and retail customers expansion).