THEEni could come out of south stream, but she is not interested in the Tap. The possibility of a change of course, compared to current plans, was made official yesterday by the managing director Claudio Descalzi, in a hearing at the Senate Industry Commission on the group's new strategies. SouthStream, the gas pipeline that will bring gas from Russia to Europe and in which Eni has a 20% stake, “has its value, its value. As far as we are concerned - he said - we have to look at our accounts. Either ENI manages to maintain its budgetary commitment of 600 million or the accounts would be put in jeopardy. Eni will not spend more than what was budgeted, we have the contractual opportunity to exit and we will evaluate it”.
Descalzi then recalled that the pipeline “had to be financed 70% with project financing and 30% equity and our exposure was set at 600 million. Now the partners are struggling to find funding”. Therefore, Descalzi clarifies, if we went to 100% equity “Eni could never, ever, with the current situation, put 2,4 billion on the construction of SoutStream. The accounts would be a bit at risk”. Eni's CEO then added: "SouthStream will be done even without Eni, Saipem's contracts will be maintained and we will have gas".
Eni's eventual exit from South Stream is in any case a Copernican revolution for Eni and gives the measure of how Claudio Descalzi wants to direct the new course of the company. Furthermore, many are wondering if ENI's rethinking of South Stream could herald an approach by the six-legged dog to the tap, Trans Adriatic pipeline which will bring gas from Azerbaijan to Italy, via Turkey and Greece. Thus, bypassing Russia. The rumors are flowing but Eni sources clarify that "no evaluation is underway on a possible entry into the project relating to the Tap pipeline".
If this is certainly the most relevant news of Descalzi's hearing, the manager then confirmed it debt reduction Eni at 15 billion by the end of the year. The measures put in place, with the increase in cash flow generation, lead towards the achievement of the objective. “Big investments and big cash flow expectations are in sight in Exploration and Production,” he continued. “Over the last six years we have been the best in E&P”, underlines Eni's number one. “Between 2008 and 2013, we discovered 9,5 billion barrels. We discovered 2,5 times our production. We have secured our future." Only Exploration & Production maintained profit balance sheets in the period. The other divisions have lost 10 billion of which 2,2 in gas and 2,3 in chemicals. In the same period, refining left 6 billion on the field.
A change of course is therefore necessary, warns the CEO Eni, without underestimating the geopolitical risk and the difficult oil situation, also in terms of price. If Eni expects a value of crude stabilized at 90 dollars, in the global oil sector “about 3,3 million barrels of oil per day have been lost due to geopolitical causes, due to the unrest that exists in the various countries. In the space of four to five years – he summarized – the situation regarding both oil and gas has completely changed”.
The other relevant part of the hearing concerned the crux of the refining. The sector, explained Descalzi, "is of great attention to us" also because "since 2009 to date we have lost 6 billion euros. The problem needs to be addressed." In Venice, he added, "we transformed the refinery into a green refinery" while for Gela "we are in constructive discussions with the Sicilian Region, the union and the government to make a project similar to that of Venice". “We have given ourselves guidelines: we don't want to leave the territory, we don't want to impact employment, we don't want to reduce our staff, and in the case of Sicily we don't want to impact related industries. We want to transform – adds the CEO – one industry into another: we produce bio fuel which has and will have an ever greater market. Let's try to do something, not close down and leave."
In Taranto, Descalzi underlines "we have big losses: we are discussing them internally to understand what project we can do, always maintaining our objective of safeguarding employment". Also for Livorno, he adds, "we are discussing". The goal, concludes Eni's CEO, "is to break even in the refining and marketing sector by the end of 2015. A very ambitious goal".
However, everything has to deal with the slowness of the authorization processes. Eni would be ready to invest 500 million on reclamation but the wait for Eni's authorizations "costs about 100 million a year, which is a lot to maintain sites while waiting to do the cleanup. It would be better to spend it on developing other things”. Finally, Saipem: Descalzi has ruled out the hypothesis of a "stew" in the context of the sale of the company.
