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The dual exploration model

Explore and find new fields, first and foremost. And then reduce stakeholdings, while maintaining control of operations, to generate cash.

A new approach

In 2013, in Mozambique, there was a revolution, a radical change in our exploratory model. Today it is an established system, which Eni now applies wherever it estimates there is significant exploratory potential. That first “experiment” went like this: Eni, after making a “giant” discovery of natural gas, sold to the Chinese oil company China National Petroleum Corporation (CNPC) its 20% stake in Area 4 in the recently discovered Mozambique offshore field, remaining the owner of 50%. It was the first application of a new approach to the generation of economic liquidity, an advance compared to the era of extraction and sale. 

The strategy called the “Dual Exploration Model” is based on a simple principle: while increasing hydrocarbon reserves through exploration, discovery and acquisition of fields, one benefits from the early monetisation obtained through the sale of minority interests to other players, always maintaining control and guidance of the operations that remain with Eni. The dual exploration model is important not only because of the cash it generates, but also as recognition by the market of the value of Eni’s exploration assets and corporate profile, which is confirmed each time these acquisitions are made by other global players.

From Zohr to Indonesia – a global model

After its “debut” in Mozambique, the Dual Exploration Model was also applied in 2016 in Zohr, which at the time of its discovery was the largest natural gas field in the Mediterranean Sea. In this case, the minority shares in the Shorouk concession were sold to BP and Rosneft: the British bought 10% and the Russian company 30%. Using the same formula, in March 2018, the sale of an additional 10% to Mubadala Petroleum was defined. 

In the meantime, in 2017, the sale to ExxonMobil of an additional indirect 25% interest in Area 4, in the Mozambique offshore field, was completed. Finally, in 2019, Eni and Neptune Energy signed an agreement for the sale by Eni of a 20% stake in the East Sepinggan Offshore area in Indonesia containing the gas discovery of Merakes. These are just a few relevant examples, which show how the model, which was barely tested in 2013, has already become an established and highly successful practice.

The dual exploration model: a beneficial system

The dual exploration model, as we have seen, allows a reduction in investments and financial fixed assets, but without losing control over operations and concessions, thus ensuring the rapid execution of the projects themselves. In addition, it allows substantial receipts from time to time. This winning combination has allowed us, from 2013 to date, to monetise in advance reserves of US$10.3 billion from our exploration activities.