Our performance levels and achievements are inextricably linked to the company’s evolving business model.
Our excellent results are owed to the process of transformation of our business model started in 2014 in anticipation of the oil downturn, at the end of which Eni has become more financially sustainable and resilient to the volatile scenario as it has never been in the past.
In a strongly volatile scenario, Eni completed the deep transformation process of its businesses, which allowed to continue to grow by strengthening the financial structure. This transformation has been successfully achieved thanks to the speed of action based on skills, Industrial Plan know-how and technologies, by placing at the heart of the strategy the sustainability of Eni’s business model. Now, Eni is an integrated and flexible company with all the businesses able to contribute to long-term value creation.
Drivers of the integrated model for a sustainable growth will be the innovation and the spread of digital technology which will allow to improve safety at the workplace and to catch new opportunities of development and efficiency.
Investing in research and development creates value for the company, increases productivity and improves operational and energy efficiency.
In 2018, overall R&D expenditure of the Exploration & Production segment amounted to €96 million.
As part of the decarbonisation process carried out by the company, an Energy Transition Research and Development Program was created, which aims to develop technologies to promote the rapid spread of natural gas usage, decarbonizing the supply chain; furthermore, from an organizational point of view, the Energy Solutions Department was established which deals with business development for energy production from renewable sources and management of relevant assets by dedicated companies
The Upstream sector is one of the pillars of our new strategy.
In these years, exploration was at the core of our growth and cash generation. For the fourth consecutive year, Eni has been nominated best exploration company in the oil business. This demonstrates the excellence of our discoveries and the effectiveness of the dual exploration model, whereby Eni has elected to acquire high working interest in exploration leases to achieve fast monetization of the discovered resources through the dilution of participation interests, while retaining operatorship.
Since 2013, the dual exploration model allowed us to cash in approximately $10 billion mainly by diluting Eni’s interest in the giant gas projects Zohr in Egypt and Area 4 in Mozambique. Leveraging the dual exploration model, a number of strategic partnerships have been signed as well as the agreements signed in March 2018 to divest a 10% interest in the Zohr field and the concurrent acquisition of interests in the producing concession agreements Lower Zakum (5%) and Umm Shaif and Nasr (10%) located offshore the United Arab Emirates (UAE).
In 2018, hydrocarbon production set a new record at 1.85 million boe/d (up by 2.5% vs. 2017 at constant prices) thanks to the five scheduled start-ups for the year, the highest plateau on record in Iraq and, above all, the extraordinary success in the ramp-up of Zohr field where we reached the first production target to more than 2.1 bcf/d, nine months ahead the schedule and we revised the target to 3.2 bcf/d. Overall, in the year start-ups and ramp-ups of fields started up in 2017 added approximately 300 kboe/d to the full year plateau.
We have continued to invest in safety in the workplace with excellent results: our performance on safety continued on its track record of results within the industry’s low average range, with a Total Recordable Injury Rate (TRIR) of 0.35 in 2018.
Eni’s business model envisages a path to decarbonisation with the ambition to lead the company to become carbon neutral in the long term, aiming at maximize efficiency and reduce direct emissions through the compensation of residual emissions, promoting an energy mix with a low carbon impact.
In 2018, Eni invested about €10 million in energy efficiency projects, which, once in full operation, will yield energy savings of 313 ktoe/year, amounting to a reduction in emissions of around 0.8 million tonnes of CO2eq.
In 2018, GHG direct emissions, calculated on all Eni activities, amounted to 43.35 million tonCO2eq (figure for 100% operated assets) and were stable (+0.5%) compared to 2017, while compared to 2010 they decreased by 26%. Flaring emissions decreased by 8% compared to the previous year, also as a result of emergency flaring containment measures, while venting emissions are in line with 2017. In 2018, electricity produced from photovoltaic grew by 20% YOY (19.3 vs. 16.1 GWh in 2017), while the production of biofuels stood at 219 thousand tonnes, up 6% YOY. For 2018, Eni’s economic investment in scientific research and technological development amounted to €197.2 million, of which €74 million was spent on investments regarding the Path of Decarbonization.
Energy transition, biorefining, green chemistry, renewable sources, emissions’ reduction and energy efficiency were the main areas targeted by these investments.
The downstream businesses reported robust results driven by the finalization of the turnaround implemented in these five years, which made these businesses sustainable also in an unfavorable environment.
The Gas & Power segment reported an adjusted operating profit of €0.54 billion, more than doubling 2017 results and significantly better than the announced guidance. This performance was due to the restructuring the portfolio of longterm gas contracts, leveraging on the associated flexibilities to capture scenario upsides, the optimizations in the power
business, trading and logistics as well as the growth in the LNG business with 8.8 MTPA of contracted volumes (up by 70% compared to 2017). All along the value chain we leveraged on the integration with the upstream segment contributing to the acceleration of FIDs at gas reserves development projects. The retail business performed strongly, driven by value creation at the European customer portfolio which reached 9.2 million clients, efficiency gains from the operations, digitalization programs and automatization of post-selling activities and working capital monitoring.
In the oil downstream, technological innovation was the driver of the turnaround, which allowed Eni to revamp certain unprofitable plants, thus reducing the exposure to the volatility of the oil feedstock. Today we are proud to announce the start of a new growth phase in our refining business. The strategic acquisition of a 20% interest in the Ruwais refinery in Abu Dhabi for a consideration of $3.3 billion gives us the possibility to deal with one of the better opportunity to expand our presence in the market in terms of efficiency and profitability.
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