We have restructured the Gas & Power and Refining & Marketing sectors to be increasingly efficient and productive. The successes recorded following the restructuring have gone some way to compensating the fall in the price of oil.
The objectives of our new strategy, which brings together upstream and midstream, are:
To achieve these objectives and create value we will focus on three aspects:
The Upstream sector, dedicated to acquiring drilling rights, exploration, development and production, and the Gas & Power sector, involved in the supply and sale of natural gas, buying and selling LNG and the production and sale of electricity, have always worked together at Eni, but in recent years the relationship between the two has become increasingly integrated and structured. Why?
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.
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.
Reorganisation of Eni’s Downstream:
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:
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