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MOSCOW (MRC) -- Italy's Eni on Friday
lowered its production guidance for 2020 and announced at least a 30% cut in
planned capex for 2020 and 2021, in response to the collapse in oil prices and
the economic impact of the coronavirus pandemic, reported S&P Global.
The Rome-based major
said it expects oil and production to average between 1.75 million–1.80 million
b/d of oil equivalent in 2020, down from initial forecasts of around 1.9 million
boe/d for the year.
Eni said it will also cut Eur2.3 billion from 2020 capex,
30% lower than the initial targets, and anticipates further reductions of
30%-35% lower than original plans in 2021.
"(The lower production
guidance) is due to capex curtailments, COVID-19 effects, a lower global gas
demand also impacted by the pandemic effects and finally extension of force
majeure in Libya for the entire first half of the year," Eni said in a quarter
earnings statement.
The new production guidance for 2020 does not take
into account the possible impacts of the recently announced OPEC+ cuts totalling
9.7 million b/d that are to be implemented on a "field-by-field basis," it
said.
Eni's capex cuts will be focused in the exploration and production
segment with the "re-phasing" of some projects. However, the projects are
"expected to resume quickly once market fundamentals improve, thus recovering
any lost production volumes," it said.
Eni is planning three oil and gas
field startups in 2020 along with seven FIDs, four of which are in the UAE.
Mozambique's giant Rovuma LNG development is also on the cards.
The
company could also pare back drilling on the 2.5 billion boe of resources it is
targeting with exploration wells over the next three years and slow its
downstream projects.
Halting share buybacks - which Eni has announced -
and cutting dividends are other key levers.
For the first quarter of
2020, Eni reported average production of 1.77 million boe/d, 3.6% lower than the
first quarter of 2019.
The company reported adjusted net earnings of
Eur59 million for the period, down from Eur992 million in the year-ago period on
sharply weaker prices, lower production and the negative impacts associated with
the COVID-19 crisis.
Eni reported a Eur2.93 billion net loss for the
period, from a profit of Eur1.1 billion in the first quarter of 2019, reflecting
major price-related writedowns of its oil and gas inventories.
As MRC informed before,
Italian energy group Eni said in early April that most of its oil refineries in
Italy were working at around 60% of their capacity as the coronavirus emergency
continues. The pandemic has shut down large parts of economies across the globe
and prompted many governments to slap tough restrictions on travel, triggering a
steep fall in the demand for refined oil products. In emailed comments, Eni said
its biggest refinery Sannazzaro, in northern Italy, was running at around 50% of
its capacity since it was also impacted by planned maintenance
work.
Earlier, in mid-March, the company said all its refineries in
Italy were working normally
except for two which had partially cut their volumes for maintenance
work.
At the same time, operations at Italian petrochemical producer
Versalis (part of Eni) have not affected by
emergency quarantine measures in the country at that period. Italian Prime
Minister Giuseppe Conte extended its emergency coronavirus measures in
mid-March and announced the closure of "non-essential" commercial
businesses. This follows the earlier announcement of a nationwide lockdown,
limiting movement for around 60 million people. Under these measures people
werel only allowed to leave their homes for work or health reasons.
Versalis has three steam crackers in Italy, capable of producing 1.675 million
mt of ethylene, 750,000 of propylene and 285,000 mt of butadiene a
year.
Ethylene and propylene are feedstocks for producing polyethylene
(PE) and polypropylene (PP).
According to MRC's ScanPlast report,
Russia's estimated PE consumption totalled 383,760 tonnes in the first two month
of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low
density polyethylene (LLDPE) shipments increased due to the increased capacity
utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian
market were 192,760 tonnes in January-February 2020, down by 6% year on year.
Homopolymer PP accounted for the main decrease in imports. |
