Eni’s work in this sector involves the buying and selling of liquefied natural gas.
As an international gas and LNG operator, integrated with its upstream operations, Eni is developing a new model with a view to safeguarding its leading position in the LNG market both within Europe and in emerging countries.
For long distances, gas is transported from its production sites to consumers via LNG carriers. To transport gas in this way it must first be liquefied at very low temperatures (-160°C) and kept liquid at slightly above atmospheric pressure. In this form, the volume becomes up to 600 times smaller, allowing the gas to be transported in large quantities as Liquefied Natural Gas. LNG has advantages in terms of the safety and flexibility of its transportation: transporting it via ship means it can be taken to faraway locations that cannot be reached via pipelines due to distance or geographical barriers; companies, meanwhile, can benefit from variations in price between different markets. When it arrives at the terminal, the liquid gas is regassified before being added to the distribution network. These networks take the gas sometimes thousands of miles to wherever it is consumed: large industrial users and local distribution networks.
In June 2017, Eni sent the first shipment of LNG produced as part of its Jangkrik deep-water project in Indonesia. The 22,500 m3 cargo set off for Bali from the liquefaction plant in Bontang, East Kalimantan, as part of the long-term LNG supply agreement signed with PT Pertamina (PERSERO) in June 2015. In October 2016, Eni and its partners from Area 4 signed an agreement with BP to sell all the LNG produced by Coral South in Mozambique for 20-plus years, amounting to around 3.3 million tonnes per year of LNG or approximately 5 billion m3. The Gas & Power division achieved its best result of the last eight years in 2018, with an adjusted operating income of €543m, more than double that of 2017. This result that is also due, in part, to the growth in sales of LNG. LNG operations have experienced real growth thanks to the Asian market, its launch in new markets and the increasing integration with upstream operations with the aim of promoting and selling gas equity.
Selling gas as LNG is crucial in order to optimise its value. Given the significant investment required to build liquefaction and regassification plants, producers must sell the majority of the LNG they produce on long-term contracts (20 years) before the final investment decision (FID) can be taken. Eni has a global LNG portfolio based on long-term purchasing contracts with reliable suppliers, a network of relationships with end clients and traders all over the world.
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