Italy's Eni targets Versalis EBIT improvement of over €500m by 2016

14 March 2013 15:58  [Source: ICIS news]

LONDON (ICIS)--Eni is aiming to deliver €500m ($649m) of additional earnings before interest and tax (EBIT) from its chemicals business Versalis by 2016, the Italian energy major said on Thursday.

Around the same time last year, Eni announced plans to create more than €400m in improvements in EBIT from its chemicals business by 2015.

The company aimed to expand its activities in emerging markets through strategic partnerships and to improve the efficiency of its plants and processes.

The revised target is part of Eni’s newly announced 2013-2016 strategic plan, which includes “more incisive actions for development and rationalisations in chemicals”, “high hydrocarbon production growth”, “sustainable profitability in [Gas & Power]” and “an ambitious cost reduction program and optimisation of refining activities aimed at recovering profitability in R&M [refining & marketing]”.

Regarding Versalis – previously known as Polimeri Europa – Eni said the business will be focused on greater exposure in high-value segments and growing markets.

“Segments of interest include elastomers, with targeted production growth of over 60% to 2016, and green chemicals. In 2013 there will be the start-up of the first two lines in the Matrica plant – a joint venture with Novamont in Porto Torres, [Italy], one of the biggest biochemical projects in the world,” Eni said.

“Eni is committed to the expansion of its emerging markets activities through strategic partnerships, and will continue to promote initiatives to improve the efficiency of its plants and processes,” it added.

In its exploration & production (E&P) business, Eni CEO Paolo Scaroni said the company has raised its average annual production growth target to over 4% in the 2013-2016 period, based on a scenario of oil costing $90/bbl to 2016.

“Eni’s growth strategy is founded on organic development, thanks to the significant contribution coming from key development hubs including Russia (Yamal), the Barents Sea, Kazakhstan, Venezuela, the Far East and the sub-Saharan region,” Scaroni said.

“Beyond the plan period, production growth of over 3% per year to 2022 will be based on our diversified and synergic development pipeline, and on a low decline rate of about 4%, coming from dynamic reservoir management and intense production optimization activities,” Scaroni added.

In refining, the CEO said Eni will increase the flexibility of its plants, optimise production cycles, reduce costs and exploit its proprietary technologies.

“A key project will be the conversion of the Venice refinery into a bio-refinery to recover profitability. The EST (Eni Slurry Technology) plant in Sannazzaro refinery – exploiting our proprietary technology for the full conversion of the barrel – will be on stream in the second half of 2013, improving the competitiveness of our refining system,” Scaroni said.

Similar to Versalis, Eni is aiming to deliver more than €500m of additional EBIT from its R&M business by 2016.

Eni also said it plans to make approximately €56.8bn of investments over the 2013-2016 period, an increase of approximately €1.6bn over its last plan period (2012-2015).

The increase is largely related to the new growth opportunities in E&P, including Mozambique, it added.

On 15 February, Eni reported that the adjusted net loss from its chemicals division for the fourth quarter of 2012 widened to €128m from a loss of €121m in the same period a year earlier.

The chemicals division reported operating losses of €117m for the fourth quarter, which is an improvement of €34m from the previous year, Eni said.

On a group level, Eni’s net profit for the fourth quarter was €1.46bn, a 13.3% increase year on year, while for the full year it increased by 13.5% to €7.79bn.

($1 = €0.77)

By: Franco Capaldo
+44 (0)20 8652 3214

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