BAKU, Azerbaijan, Nov.3
By Leman Zeynalova – Trend:
Italian Eni company plans cost reductions of €1.4 billion and lower investments of €2.4 billion in 2021, Trend reports citing the company.
2020-2021 capex optimizations are almost fully focused in the exploration and production segment. Higher investments are expected for 2022-2023 for an overall amount of €800 million targeting growth at the green businesses (bio-refineries, renewables and retail customers expansion).
In 2020, the company plans investment optimizations of €2.6 billion (for a total reduction of 35 percent compared to the original plans); cost optimizations of €1.4 billion. Expected annual capex level stands at €5.2 billion (on a constant exchange rate).
At management’s assumption of an average Brent price of 40 $/bbl for the FY 2020, expected adjusted cash flow before working capital changes amounts to €6.5 billion, which will enable the company to fund the expected capex for 2020. Compared to the initial guidance of €11.5 billion at a Brent price of 60 $/barrel, the shortfall is attributable to lower hydrocarbon prices (for a total effect of approximately - €4.5 billion) and COVID-19 impact (approximately -€1.7 billion), offset by opex savings and a better performance for €1.2 billion.
Management expects the fourth quarter to be in line with the business trends recorded in the just-ended quarter, which featured high volatility in energy commodity prices due to an uncertain and uneven economic recovery. The fundamentals of the oil market are anticipated to remain weak due to continuing oversupply, high global inventory levels and a sluggish pace in demand growth due to a complex pandemic situation which is weighing on economic activity, trade and travel. The same trends are expected in the other business segments. The Brent price is estimated at approximately 40 $/barrel for the year; PSV gas price at 3 $/mmBTU; SERM margin at 2.4 $/barrel.
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