Eni is leveraging on its core strengths to build a broad portfolio of high margin opportunities, enabling it to capture upside as oil prices improve and defend value in future downturns.
The 2017-2020 plan will enable Eni to achieve superior cash flow growth by building a high margin portfolio based on material and conventional resources, designed to cost operations and high value assets.
Against a backdrop of continuing oversupply, weak gas demand growth and strong competition, management expects gas sales to be in line with the reduction of the contractual minimum take of supply contracts.
Management plans to retain its market share in the large customers and retail segments, also increasing the value of the existing customer base by developing innovative commercial initiatives, by integrating services to the supply of commodity and by optimizing operations and commercial activities.
In a context of strong competitive pressure, management expects to consolidate volumes and market share in the Italian retail market. This will be achieved by leveraging on competitive differentiation of the offer and the innovation of products and services.
In the rest of Europe, sales are expected to remain stable, excluding the effects of asset disposals in Eastern Europe occurred in 2015 and 2016.
Management expects a highly competitive trading environment pressured from import streams of products from Middle East and the United States, where operators can leverage on economies of scale and availability of cheaper feedstock. Margins in the businesses of polyethylene, intermediates and styrenes are foreseen to decrease.
A positive scenario is expected for specialties, mainly elastomers. Sales volumes are expected to remain substantially unchanged.
In 2017, considering the uncertainty in future trends of the oil fundamentals, management will stick with its strategy of capital discipline by focusing on high-return projects, on near-field initiatives in explorations with accelerated paybacks, on re-phasing and rescheduling large projects.
These initiatives will contribute to reduce capital spending at constant exchange rates coherently with 2017-2020 plan, representing a decrease of 8% compared to the previous plan at constant exchange rates.
Considering selective capital spending and the Company’s target of cash flows funding both capex and the floor dividend, the Group’s leverage at 2017 year-end is projected to decline from 2016 thanks to the planned portfolio management initiatives, among which the sale of a 40% interest in the Zohr project.
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