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Growth Strategy

2013 results and 2014-2017 strategyEni will continue pursuing growth and creating sustainable long-term shareholders' value through the following pillars:

  • to select and implement the best capital and investment opportunities;
  • to preserve a solid capital structure;
  • to pursue capital and operating efficiency;
  • to manage risks;
  • to leverage research and innovation;
  • to apply the highest ethical principles of business conduct;
  • to promote the sustainability of the business model.


BUSINESS STRATEGIES AND TARGETS

  • TargetsTargets
  • E&PE&P
  • G&PG&P
  • R&MR&M
  • Versalis Versalis
  • Financial Strategy Financial Strategy


E&P: consistent exploration success drives organic growth in the plan period and beyond

HIGHLIGHTS

  • Organic, low cost growth from conventional assets
  • Exploration for reserves replacement and portfolio flexibility

 

Leveraging on the opportunities created by industry-leading exploration successes, Eni will grow production by an average of 3% a year between 2014 and 2017, and 4% a year from 2017 to 2023.

Growth will be driven by 26 projects, which will contribute about 500,000 boed by 2017. Eni assumes that production in Libya and Nigeria will remain depressed in the near-term, and will gradually improve from 2015 onwards.

Operating cash flow growth will outstrip volume growth, with a CAGR of 9% at constant oil prices. Over the next four years, Eni will continue to focus on exploration.

Since 2008, it has discovered 9.5bn boe of resources, or 2.5 times cumulated production in the period. Key areas for Eni’s exploration are Mozambique and Kenya in East Africa, Congo, Angola and Gabon in West Africa, the Pacific basin, the Barents sea and Cyprus.


G&P: positioned to tackle difficult short term scenario and capture medium-term recovery opportunities

HIGHLIGHTS

  • Recover profitability in a difficult market.
  • Consolidate competitiveness of supply
  • Focus on key segments and markets

 

Gas consumption in Europe is still significantly below the pre-crisis levels, and Eni does not expect a material improvement in the plan period. The Division is pursuing a turnaround, based on the following three pillars: 

  • Supply renegotiations: Eni will renegotiate all gas supply contracts in order to reach full alignment by 2016 with the new market conditions in terms of price, flexibility and volumes contracted;
  • Focus on high-value segments: LNG, trading and retail;
  • Logistics and fixed cost reductions, amounting to more than €300m in savings by 2017. 

 

Eni expects positive EBIT in G&P by 2015.


R&M: increasing efficiency and complexity

HIGHLIGHTS

  • Continued efficiency
  • Integration of refinery system, consolidation of marketing

Eni will tackle refining overcapacity in the Mediterranean Basin. The company will further reduce its Italian refining increasing utilization to 80% by 2017.

Meanwhile, it will continue to support margins through logistics streamlining, fixed cost reductions and increasing synergies with trading to take advantage of price differentials among different oil types.

 

IMAGES

Eni's Refining System and Main Supply Flows

Eni's Refining System and Main Supply Flows


Versalis:
a turnaround strategy

HIGHLIGHTS

  • Further efficiencies
  • Internationalization

On top of the 25% already achieved, Versalis will cut capacity by a further 5%. Production will be refocused on high value products such as elastomers and styrenics (up 50% vs 2013).

Finally, Versalis will increase its exposure fast growing markets and in particular in  the Far East, through its Malaysian and Korean joint ventures. Ebit breakeven is expected in 2016 and cashflow breakeven in 2015.

 

Eni’s operating cashflow will grow from €11bn in 2013 to an annual average of €15bn in 2014-15 and to €17bn in 2016-17, notwithstanding the company’s declining oil-price scenario (i). Disposals worth €9bn will further boost cash generation.

Capital discipline will continue to be a key pillar of the company’s financial strategy. Eni will invest €54 billion over the next four years, a reduction of 5% compared to the previous plan. As a result of growing operating cashflows, disposals and a disciplined investment programme, average annual free cash generation in 2014-2017 will be 45% higher than in 2013 in a constant $108/barrel Brent price scenario.




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Last updated on 08/04/14