The global macro- economic trends for 2016 is clouded by a number of risks and uncertainties, mainly relating to a continued slowdown of growth in China, caution in the Eurozone and in commodity exporting countries.
After hitting 13-years lows of below $30 per barrel at the beginning of 2016, the price of crude oil has recovered to the 40 dollar-mark thanks to signs of a partial easing in the global glut. However, the fundamentals of the oil market remain weak with the price of crude oil exposed to possible negative pressure due to the uncertainties surrounding the pace of energy demand growth in the short and medium term. In order to cope with the anticipated negative impact of the scenario on the E&P results from operations and cash flow, management is planning to increase efforts to optimize capex and reduce operating costs by exploiting the deflationary pressure induced by the fall in crude oil prices.
In the G&P sector, management anticipates a challenging environment pressured by weak demand growth and oversupplies. The Company confirms its strategy to renegotiate long-term supply contracts in order to align the supply terms with market conditions, as well as boost profitability in its high-value businesses (LNG, gas retail and trading).
In the R&M sector management expects the refining margin to be lower than in 2015. In this context, business strategies will be focused on the optimization of refinery processes and costs as well as on the enhancement of results in marketing.
Forecast Source: Eni Integrated Annual Report 2015 - Outlook
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