ITALY: Eni exceeds production target for 2003
ITALY:Eni exceeds production target for 2003Vittorio Mincato, CEO, of Eni SpA, cites alliances, technological advances, and diversification as keys to Enis record 2000 and promising 2001. Q. Briefly, what are Enis E&P activities within Italy, including offshore and worldwide?
A. Enis total hydrocarbon production in 2000 averaged 1.187 MMbpdoe, of which 333,000 bpdoe, or 28%, were produced in Italy. Our Italian exploration and development activities are concentrated in the Po Valley, Adriatic Sea, Southern Apennines and Sicily. Our main natural gas fields are in the Adriatic Sea and Ionic Sea. Outside Italy, Eni conducts its principal E&P activities in North Africa (Algeria, Egypt, Libya and Tunisia), with a cumulative output of 306,000 bpdoe in 2000; West Africa (Angola, Congo, Gabon and Nigeria), with 225,000 bpdoe; the North Sea (the UK and Norway), with 168,000 bpdoe. Eni is also active in areas with great potential development, such as the Gulf of Mexico, Latin America (Ecuador, Venezuela, Trinidad & Tobago and Brazil), the Caspian Sea (Kazakhstan and Azerbaijan), China, Qatar and Iran. On the whole, these regions yielded a combined 155,000 bpdoe in 2000. Q. How did Eni cope with the poor economics of 1998 and 1999? A. I would like to point out that Eni is less sensitive to oil price fluctuations than its major competitors. Nevertheless, its true 1998 was a tough year. However, despite a 33% drop in international oil prices, we were among the top three first-world oil companies in terms of net income. This was due to the high level of integration among Enis businesses; an increase in volumes sold; and to the streamlining and sales of assets. In 1999, we had a record income of 2.86 billion euros (US$2.66 billion), up 23% from 1998s level, thanks to continued cost reductions, increased natural gas volumes sold and transported on behalf of third parties, and an improved financial position. Q. Do you agree with analysts who saw 2000 as a "recovery" year for Europes upstream industry? A. Last year was very good for the whole European upstream industry. Eni had record results, due mainly to the increase in operating income resulting from price increases and greater refining margins, more sales of hydrocarbon production, increases in natural gas volumes sold and transported on behalf of third parties, cost-reduction efforts and increased operating income from petrochemicals. Q. What is ENIs outlook for activity levels in 2001? A. I see 2001 as a positive year for us. Today, we are producing 1.4 MMbopd and are aggressively pursuing a profitable, E&P growth strategy. We already have exceeded our production target for 2003 (set in 1999 at 1.5 MMbpdoe), and are currently envisaging production of more than 1.6 MMbpdoe by that year. We want to become a major player in the liberalized European gas market. We plan to float between 30% and 50% of our new gas transportation company, Rete Gas Italia, by the end of the year. Q. How do Italian companies feel about todays relatively high oil price environment? A. OPEC said it will defend an average $25/bbl, and I expect it to be successful. So, I believe that we wont see oil prices above $25/bbl or below $22/bbl. Q. How is the health of the construction sector of the Italian upstream industry? A. In the past few years, Eni has signed alliances with major Italian contractors to maintain and develop flexibile scheduling and financing of oil and gas projects. These agreements, together with the developments carried out onshore and offshore, show that the health of the Italian industry is sound and able to meet the demand. The outlook for local fabrication / conversion of FPSOs and other similar floating systems remains positive because of Italys high-quality naval yards and suppliers. Q. What are some of the offshore industrys greatest challenges? A. The Italian offshore industry is currently focusing on its domestic gas supplies by continually evaluating and implementing offshore compression stations, plants, etc., to optimize the exploitation of gas fields in the Adriatic Sea. The development of marginal and medium-sized gas fields, using the latest effective subsea technology, (horizontal trees and controls by umbilical) remains a technological challenge. Q. What major technological challenges face Eni and other operators? A. The major technological challenges that Eni is currently facing include overseas developments in water depths exceeding 2,500 m (8,200 ft), such as in Nigeria, Angola, Congo and Brazil; and shallow-water developments (2 m to10 m; 6.5 ft to 33 ft), such as in the Kashagan field in the offshore Caspian Sea, where problems arise of deflecting / controlling ice movements. The transport of oil by different pipeline sizes is also a point of concern because of the temperatures, distances and topography of the regions where the company operates. In addition, the re-injection of sour gas in the reservoir remains a technical issue to be solved.
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