A Review of the Nigerian Energy Industry

Divestments help boost Eni’s profits

Paolo Scaroni, Eni boss
Paolo Scaroni, Eni boss

30 October 2013, News Wires – Italian giant Eni saw a rise in profits during the third quarter of the year as gains from divestments helped offset a fall in revenue.
Net profit for the three months to 30 September totalled nearly €4 billion, up 61.9% on the €2.5 billion profit booked during the same period last year.

Eni said the rise in net profit was largely driven by the gain on its divestment of its 28.57% stake in Eni East Africa to China National Petroleum Corporation earlier this year.

Overall operating profit was actually down 19.1%, totalling €3.3 billion, compared to nearly €4.1 billion in the third quarter of 2012, driven by a 5.9% appreciation of the euro against the dollar and disruptions to the exploration and production division.

Leading to the drop in operating profits was a fall in net sales during the quarter, from €31.5 billion a year ago to €29.4 billion this year.

The exploration and production division saw its adjusted operating profit fall 9.7%, to €3.9 billion, largely due to lower production following disruptions in Nigeria and Libya during the quarter.

These disruptions caused output to fall 3.8% to about 1.6 million barrels of oil equivalent per day, compared to just over 1.7 million boepd during the third quarter of 2012.

Despite the fall in revenue, Eni chief executive Paolo Scaroni was upbeat over the company’s overall performance in the recent quarter.

“In the third quarter of 2013, we achieved significant exploration successes, made excellent progress in our development activities with new field start-ups and monetised part of our interest in Mozambique,” he said.

“These operating successes strengthen our profitability outlook against the backdrop of a quarter that has not only been affected by difficult market conditions in the European markets of mid and downstream, but also by the extraordinary reductions of production in Nigeria and Libya, and by the appreciation of the euro.”

Eni said it expected full-year output for 2013 to be lower than last year due to “geopolitical factors”, namely those which have disrupted production in Nigeria and Libya.

It added output from project start-ups in Kazakhstan, Algeria and Angola, along with the continued ramp-up of production at fields in places such as Egypt this year would not be enough to offset force majeure events, mature field declines and the effect of asset disposal which took place last year.

– Upstream

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