Italian major Eni can access 14 trillion cubic feet of gas resources in the short to medium term to help diversify Europe away from Russian supplies.
Initially, the extra gas would be piped from the company's assets in North Africa.
“The war in Ukraine is forcing us to reconsider the world as we know it. It is a humanitarian tragedy and has created new threats to energy security which we must meet without abandoning our ambitions for a just transition,” chief executive Claudio Descalzi said.
Presenting Eni’s 2022-2025 strategy, Claudio said incumbent strategies and the latest four-year plan have made the company well prepared to address these challenges.
“Our immediate response to the current crisis has been to leverage our established alliances with producing countries to find replacement energy sources for Europe’s energy needs,” said Descalzi.
“We can make available to the market more than 14 Tcf of additional gas resources for the short to medium term [which] complements our work to develop new decarbonised products and services which can [also] help deliver energy security.”
Eni’s gas portfolio amounts to about 50 Tcf of reserves and resources, 14 Tcf of which is available to the market in the short to medium term.
Descalzi told analysts in the strategy webcast that Eni aims to boost production this year through two pipelines, running from Algeria and also Libya across the Mediterranean Sea to Italy.
He said these pipelines have spare ullage available while Eni can fast-track infill drilling at its producing fields to provide additional feedstock this summer and the winter 2022.
He suggested production could be increased to between 317 billion and 385 billion cubic feet per annum.
Further gas for Europe can be sourced from Eni’s liquefied natural gas cargoes for 2022, while in 2023 and 2024, Descalzi pointed to the new LNG project in Congo-Brazzaville and additional LNG throughput in Angola and from the Coral floating LNG plant in Mozambique.
He also said Eni can boost domestic production in Italy by a “couple of billion cubic metres per year”.
Following the start of the Ukraine war, Eni sold a stake in the Blue Stream pipeline that delivers Russian gas to Turkey.
By 2025, the company aims to have contracted 15 million tonnes per annum of LNG — of which 80% is equity-controlled — in Congo-Brazzaville, Angola, Egypt, Indonesia, Nigeria and Mozambique.
Eni plans to accelerate its pathway to net zero with a 35% cut to combined Scope 1, 2 and 3 emissions by 2030 — compared with 25% previously — and 80% by 2040, against its earlier target of 65%.
“To fast track our transition and serve our customers better, we have created a series of dedicated satellite companies that draw on our proprietary technology, lean operational models and strong stakeholder alliances,” Descalzi explained.
These satellite players include green power company Plenitude, which aims to generate more than 15 gigawatts of renewables capacity by 2030.
Descalzi also highlighted the future contributions of Eni's upstream-focused Var Energi unit in Norway, the Azule joint venture with BP in Angola, and the recent listing of Energy One, London’s first special-purpose acquisition company — better known as a Spac — targeting the energy transition.
Among the company’s various targets are for Plenitude to generate 15 GW of renewable electricity by 2030.
Eni also plans to develop bio-refining capacity of up to 6 million tpa in the next decade, while hydrogen will contribute about 4 million tpa by 2050.
In the next decade, the company also aims to have built the first commercial magnetic fusion plant, “potentially opening the route for a limitless source of clean, safe and secure energy”.
To fund this growth, Eni will increase the share of investments directed at new energy solutions to almost 30% by 2025, doubling to 60% by 2030, and up to 80% around 2040.
Within a decade, these businesses are expected to be free cash flow (FCF) positive and generate some 75% of the group’s FCF from 2040.
The company has carbon capture and storage projects under way in Italy, Norway and the UK with other schemes earmarked for Libya, Australia, Algeria and Egypt.
CCS targets include storage of around 10 million tpa by 2030, with gross capacity — including third-party volumes — of 30 million tpa.
Core upstream market
In its core upstream market, production is expected to grow at an average of 3% per year, rising from 1.7 million barrels of oil equivalent this year to a plateau of around 1.9 million barrels of oil equivalent per day in 2025.
By 2030, gas will account for 60% of this output, hitting more than 90% after 2040, while oil volumes will reduce in the medium to long term.
Eni aims to find 2.2 billion bow of new oil and gas over the next four years.
However, Descalzi stressed these would be “easy”, fast-track, phased projects rather than big, complex developments. “Those are finished; finished forever.”
Exploration will focus on infrastructure-led and near-field opportunities in proven basins with high gas potential, with 10% of funding allocated to frontier basins.
During the plan period, the company will bring on stream 11 major projects, including Baleine in Ivory Coast, Marine XII LNG in Congo-Brazzaville, Coral FLNG in Mozambique, Dalma Gas in the United Arab Emirates and other gas projects in Italy, Indonesia and Norway.
In total, these projects will add almost 800,000 boepd to the company’s baseline upstream production in 2025.
As Scope 1 and 2 emissions fall between now and 2030, average upstream cash neutrality is expected to drop to around $25 per boe, down $5 from 2021.
“We will continue focus on fast time to market projects, limiting idle capital and maximising internal rate of return,” the company said.
Upstream capital spending will be €4.9 billion ($5.4 billion) this year although it will average €4.5 billion annually to 2025, out of a total average annual expenditure of just over €7 billion.
On the back of sky-high oil and gas prices, Descalzi pleased investors by announcing an increased dividend.
Cash flow from operations of €14 billion helped the company boost its annual total dividend by two cents to €0.88 per share, while also launching a €1.1 billion share buy-back and putting in place a future buy-back plan when oil prices are higher than $90.
- Eni sets sight on second major development offshore Mexico
- Eni and Mubadala tie up on hydrogen, CCUS and more
- Eni to partner with KazMunaiGas on energy transition projects in Kazakhstan
- Eni boosts Spanish and French renewable portfolio with 'strategic' gigascale buy-ups
- Eni buys onshore wind assets in Italy