Eni Says Mozambique ‘Transforming’ as Africa Leads Growth

Eni SpA (ENI) Chief Executive Officer Paolo Scaroni said the company’s gas discovery in Mozambique is “transforming” as African fields drive growth.

The company expects output to gain more than 3 percent a year until 2015, it said in a presentation to investors on its website. Projects in African nations including Angola, Gabon and Mozambique may allow for growth of 3 percent through 2021.

“In Mozambique we made the biggest discovery in our history,” Scaroni said in an interview in London yesterday. “This is a transforming discovery for us and it’s a transforming discovery for Mozambique as well.”

Output is returning in Libya, where Eni is the largest producer, after the conflict that ousted Muammar Qaddafi shut down most oil and gas fields in the country and caused Eni’s production to drop 13 percent last year. The Rome-based company, which gets 55 percent of production in Africa, found about 30 trillion cubic feet of gas in waters off Mozambique in 2011.

“Eni is transitioning from a European-bias gas conglomerate to a global upstream operator with a portfolio offering a competitive growth,” Theepan Jothilingam, an analyst at Nomura Holdings Inc., wrote today in an e-mailed report. “Mozambique continues to offer notable upside potential” with “significant opportunities in the Barents Sea, Indonesia, Angola and Australia.”

Sell Assets

New projects will add about 700,000 barrels of oil equivalent a day to output from 2012 to 2015, the company said. It also plans to dispose of assets, which produce about 40,000 barrels a day mostly in the North Sea, according to Claudio Descalzi, head of exploration and production.

“The success we have in our exploration activity means we are very prudent in our acquisitions,” Scaroni said. “I am talking about major acquisitions. Of course, we are always ready to do small deals.”

Spending on exploration and production will rise 14 percent to 44.8 billion euros ($58.6 billion) through 2015. Total investment, including in gas and power, refining and marketing, and chemical businesses will be 59.6 billion euros, according to Chief Financial Officer Alessandro Bernini.

Production at Eni will rise to about 2 million barrels of oil equivalent a day in 2015 from 1.6 million barrels last year, according to Mediobanca SpA, which assumed a depletion rate of about 3 percent. The long-term production growth forecast has been increased by one percentage point, partly because of the Mamba field’s projected contribution in Mozambique.

Iraq Boost

Outside Africa, the company is seeking to raise production at Iraq’s Zubair field. Eni plans to increase output at the field to 300,000 barrels of oil equivalent a day in 2013 from 250,000 barrels, Descalzi said.

Scaroni said he may sell Eni’s 3.7 billion euro stake in Galp Energia SGPS SA (GALP), Portugal’s largest oil company, before 2014.

Under Lisbon-based Galp’s shareholder agreement, Eni must win permission for a sale from Amorim Energia, a 33 percent shareholder controlled by billionaire Americo Amorim and partly owned by Angola’s Sonangol EP, and state-owned Portuguese lender Caixa Geral de Depositos SA, which has 1 percent of the company. The agreement is in force until March 2014.

“Certainly, Eni divestment has to have their approval,” Scaroni said. Galp “is doing well, so we are really not in any hurry to sell.”

To contact the reporters on this story: Brian Swint in London at bswint@bloomberg.net; Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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