Talks

Eni’s big results in 2018

 By Kevin Baxter

Profits surge after company’s organic growth strategy pays off big…

Eni enjoyed an extremely profitable 2018 with operating profits almost doubling as the energy company achieved record oil production amid higher oil prices.
In a telephone call to investors on Friday February 15, Eni’s Chief Executive Officer, Claudio Descalzi said that full-year operating profits had increased by a massive 94% year-on-year to €11.24bn with profits in the fourth quarter up by 49% compared to the previous three months to €2.99bn.
Eni’s impressive numbers came as the result of the hard work being done by staff company-wide and further cemented Eni’s organic strategy as a market leader.

Upstream

Oil and gas production are the main engines that drive the company and Eni’s financial success in 2018 is reflected in the numbers that emanated from its oil and gas fields across the world.
Hydrocarbons production hit a record 1.85 million barrels of oil equivalent a day (boe/d) for the full year, a 2.5% increase on the 2017 figure.
One of the major highlights of Eni’s 2018 upstream efforts was the 300,000 boe/d that came from the company’s highly profitable mega-projects. The Zohr and Nooros fields in Egypt, Jangkrik in Indonesia, Ghana’s OCTP oil as well as East Hub in Angola and the Nenè phase 2 in Congo all made a significant impact on the figures. Added to this was success of the five start-up fields that Eni ushered into production last year in Africa and the Middle East.
The production figures look even more impressive because they were achieved despite a decline in gas demand witnessed in some countries as well as the running down of a production contract in Libya.
Eni’s exploration team also enjoyed a fruitful 2018 with successful finds in Egypt, Cyprus, Norway, Angola, Nigeria, Mexico and Indonesia. In all exploration resources added 620 million boe of new resources to the company portfolio which bolstered yet again the team’s world class reputation.

Gas and power

Eni’s gas and power business witnessed an operating profit for the full year which was more than double the 2017 figure and was the unit’s best performance in the last eight years. The restructuring of Eni’s long-term gas supply units as well as optimizations across the power generation portfolio each made a contribution to the success.
As one of the key cornerstones of Eni’s business model, the LNG unit seen contracted volumes of the resource rise by an amazing 70% to 8.8 million tonnes. Asia continues to be the key market with more than half the contracted volumes being shipped there.
Added to this was Eni’s Rovuma LNG Project joint venture in Mozambique secured long-term agreements for the purchase of its offtake as well as a positive final investment decision being made for the first phase of the mega-project which will see two LNG trains each produce 7.6 million tonnes a year.

Refining and chemicals

A relatively quiet year for the Eni’s downstream operations, although with the company’s recent $3.3bn investment in Abu Dhabi’s downstream portfolio this will surely change in 2019.
While the full year profits did fall by 27% due to a number of factors including extremely unfavorable trading conditions, the fourth did see a resilient bounce-back from the unit.
Sales of petrochemicals were up by 6% both in the fourth quarter and full year, while the refining and marketing business managed to record operating profits of €0.17 billion. However, with Eni’s refining capacity set to increase by 35% because of the Abu Dhabi acquisition, 2019 marks a huge shift in the scope of the company’s downstream portfolio.
So all-in-all Eni’s 2018 was a resounding success and a fantastic base on which to produce another record year in 2019.

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about the author
Kevin Baxter