26 July 2014, News Wires – The new management of Italy’s Eni plans to press on with the sale of a controlling stake in oil services subsidiary Saipem so it can focus on the more lucrative business of finding oil and gas, sources said.
Former ENI CEO Paolo Scaroni had inked in plans to dispose of Saipem but they were put on hold when Italian Prime Minister Matteo Renzi drafted in new management to run the state-controlled oil giant.
Saipem became a liability for Eni last year when half its market value was wiped out by two profit warnings and a damaging investigation into alleged corruption in Algeria, which also engulfed Scaroni. With oil and gas production compromised by conflict in Libya and unrest in Nigeria, along with project delays in Kashagan and Angola, Eni also needs to sell assets to fund increasingly costly upstream investments and maintain its dividend. “Eni’s new management is indeed ready to resume the sale of Saipem, though it first needs to cut its debt either via asset disposals or raising equity,” a source close to the matter said.
Eni has a 43 percent stake in Saipem and fully consolidates it on its balance sheet, including 5.5 billion euros of debt. But it keeps it at arm’s length and has no day-to-day influence over management because Saipem also works on some contracts awarded by Eni. Claudio Descalzi, who took over the top spot at Eni in May, has yet to pronounce on plans for Saipem but is expected to flag his intentions at a strategy meeting next Thursday