ENI Cuts Back Petrochemicals

25 November 2002 00:00  [Source: ICB Americas]

ENI is stepping up its drive to offload parts of its petrochemicals business with the objective of retaining only assets that are close to its refining operations.

Polimeri Europa, the company's main petrochemicals subsidiary, has just invited offers for its rubbers and latex business, which has annual sales of  650 million ($655 million).

ENI is also in talks with the Russian oil company Yukos about possibly spinning off excess refining capacity in Italy into a joint venture, which could include petrochemical assets.

The Italian oil and gas company decided to dispose of sections of its petrochemicals business after negotiations on a deal with Saudi Basic Industries Corporation (Sabic) fell through earlier this year. Sabic was planning to acquire a majority stake in Polimeri Europa.

"Our objective is to retain only a few petrochemicals businesses," says an ENI official. "These will tend to be activities in which we have a competitive advantage in Europe or worldwide, mainly because they are close to the refinery."

The rubbers activities being put up for sale comprise products consisting of styrene-butadiene, polybutadiene, ethylene-propylene, nitrile and polychloroprene, as well as thermoplastic rubbers.

The products are made in three plants in Italy, two in the UK and one in France. Polimeri Europa has 34 percent of the Italian rubber market and 10 percent of the European market.

"We are now talking to Yukos and other companies about reducing our involvement in other downstream areas because we will have surplus refining capacity in Italy following divestments in the retail gasoline sector," according to an official.

ENI's strategy is to cut back its petrochemicals interests to channel more resources into oil and gas exploration and production. It agreed last week to buy the Norwegian oil assets of Fortum of Finland in a $1.1 billion deal.

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