Gas & Power: integration strategy

The objectives of our new strategy, which brings together upstream and midstream, are:

• maximising the gas-equity value
• developing a competitive LNG portfolio
• establishing a leading position both in Europe and emerging markets

To achieve these objectives and create value we will focus on three aspects:

• integrated marketing of gas and LNG all over the world
• long-term relationships with producer countries
• a consolidated midstream platform (marketing, trading and infrastructure)

The market has changed dramatically of late and Upstream has put gas at the centre of its operations. While gas was a risky business 20 years ago, with long-term contracts sought until 2006, things have changed; gas represents an opportunity and contracts now last less than 10 years. The scenario is evolving and gas has a growing role to play: Eni’s Upstream division has discovered significant volumes of gas in its fields all over the world and works in close contact with the Midstream sector. Working together means not only understanding the difficulties and risks, but also creating added value on a daily basis. Projects must be integrated from the off: midstream comes into play at the exploration stage, so a business plan must be drawn up that takes such collaboration into account.

Why we changed the name

This evolution has been made concrete by a change in name for the sector which from Gas & Power has become Gas & LNG Marketing and Power and includes both the marketing activities for the groups gas area as well as responsibility for Power, from generation to marketing. But what does this really mean? Firstly, it increases the importance of trading and optimises our gas equity. The marketing of LNG falls within the parameters of the value chain, given that it is a determining phase for the enhancement of gas produced downstream of exploration and production investments, as well as a necessary condition for investments in liquefaction and regasification projects. The manufacturing companies need to sell the bulk of LNG volumes with long-term contracts before making the final investment decision (FID). During the period prior to the assignment of the construction contract, in the Upstream area, an intense long-term marketing programme for LNG has been foreseen by the shareholders involved in the project.

Refining & Marketing and Chemicals: a restructuring aimed at efficiency

Reorganisation of Eni’s Downstream:

• a relaunch for the sector
• renewed emphasis on the exploitation of expertise and innovation
• extensive promotion of the environment and sustainability

Reorganising the refining and marketing and chemistry sector allowed us to reduce the breakeven price of oil refining from $7.5 per barrel (2013 data) to $3.8 per barrel in 2017, with a further reduction to $3 per barrel forecast by 2018. This process will involve:

• the reduction of oil-refining capacity by more than 30 per cent thanks to the conversion of two bio-refinery plants (Venice and Gela)
• real improvements in efficiency by optimising the way in which we use our plants.
• investing in proprietary technologies. Ecofining^TM– a project for the development of top-quality biofuel – gave us Bio Diesel, which in turn led to the bringing to market of new Eni Diesel +. The latter cuts polluting emissions considerably.