We aim to maximise the use of gas as a primary fuel in a decarbonisation context.
One of the drivers used by Eni to pursue its decarbonization strategy is the Oil & Gas portfolio characterized by conventional projects developed in stages and with low CO2 intensity.
The main upstream projects in progress, which account for about 45% of the total development investments in the sector in the four-year period 2019-22, show an overall break-even at a Brent price of $25/barrel, which is therefore resilient even in the presence of a low-carbon scenario, and an internal rate of return (IRR) of 22%. Furthermore, these projects have a positive cumulative Free Cash Flow as early as 2019, due to the cash in from the application of the Dual Exploration Model, which is the early monetization of exploration successes through the sale of minority stakes. The hydrocarbon equity resources13 at 31/12/2018 show that natural gas, a bridge solution towards a low carbon future, accounts for over 50%. The flexibility and adaptability in the use of Eni’s investments, amounting to about 33 billion € in the period 2019-22, are confirmed by the non-committed share of 50% already in the two-years period 2021-22.
The hydrocarbon equity resources at 31/12/2018 show that natural gas, a bridge solution towards a low carbon future, accounts for over 50%.
Portfolio resilience is ensured by the regular review of the assets portfolio and new investments in order to identify and assess potential emerging risks associated with changes in emissions regulations and in the physical conditions of operations. The return on the main investment projects is tested using a sensitivity to carbon pricing when the Final Investment Decisions (FID) is made and later during the six-monthly monitoring of projects, based on the following assumptions: scenario of hydrocarbon prices and CO2 cost of Eni and IEA SDS low-carbon scenario of hydrocarbon prices and cost of CO2. The results of the most recent monitoring have highlighted marginal impacts on internal return rates. In addition, the portfolio composition and decarbonization strategy minimises the risk of stranded assets in the upstream sector thanks to a progressive reduction of the break-even of Oil & Gas projects by optimising the asset portfolio with a significant share of conventional gas, near field exploration, and improved efficiency in development.
Gas is the ideal partner for the development of renewables, which have economic and technological limits when deployed on a large scale. Use of the gas-renewables mix also enables coal consumption to be reduced. Currently, coal contributes about 40% to global power generation and is responsible for over 70% of CO2 emissions in the electricity sector.