Page 9 - Euroil Week 09 2020

EurOil PERFORMANCE EurOil
Eni swings to loss on Norwegian purchase
ITALY
ITALIAN oil and gas major Eni has reported a fourth-quarter net loss to shareholders of €1.89bn ($2.1bn), versus a €399mn profit in the previous year.
The reversal was largely the result of the $4.5bn purchase by Eni’s Var Energi joint ven- ture of ExxonMobil’ s Norwegian upstream operations. Var Energi paid for the acquisition with its own cash.
Adjusted net income also slumped to €546mn, from €1.45bn, while net sales from operations were down 19% at €16.2bn. Total revenues fell 22.2% to €16.46bn.
Oil and gas production in the three-month period averaged 1.921mn barrels of oil equiva- lent per day (boepd), up 3% year on year.
Eni spoke highly of its Norwegian acquisi- tion, stating that the deal would make Var Energi the second-biggest upstream player in Norway, boasting an output of more than 350,000 boepd by 2023. Exxon’s business in the country cur- rently produces 150,000 boepd of oil and gas.
Like other oil and gas majors, Eni was stung by low prices, especially for gas. Still, CEO
Claudio Descalzi described it as an excellent result for the firm.
“Eni is pleased to have reported excellent results in 2019, despite a tough period charac- terised by geopolitical tensions and much less favourable commodity prices than in 2018,” he said in a statement. “The results today reflect the successful strategy we have pursued in recent years, which has seen Eni become [a] more resilient and growing business. In the upstream in particular, we achieved record production of 1.87mn barrels per day [bpd] with a reserve replacement ratio of 117%.”
Eni’s production grew thanks to higher out- put at the Zohr field and other projects started in 2018, mainly in Libya, Ghana and Angola. It also brought on stream new projects in Mexico, Norway, Egypt and Algeria, contributing a total of 250,000 boepd.
The company expects to raise output by an average of 3.5% each year towards a peak in 2025. Gas will account for around 85% of its pro- duction at that point. It also unveiled a four-year investment plan worth €32bn.™
POLICY
Gazprom cuts gas price for Bulgaria by 40%
BULGARIA
The price cut follows a settlement deal between Gazprom and EU regulators.
RUSSIAN giant Gazprom has reduced by 40% the price of natural gas for Bulgaria, Prime Min- ister Boyko Borissov said on March 3.
The new price follows an agreement between Gazprom and the EU in 2018 changing the way the Russian firm charges clients. According to the new deal, the price will be calculated based on the price charged to European gas hubs and will only partially remain linked to oil prices.
The new price will be valid from August last year and Bulgaria’s state-owned natural gas supplier Bul- gargaz will reimburse its clients, mainly large indus- trial companies and gas retailers, with BGN150mn.
Bulgaria imports more than 80% of its natural gas from Gazprom.
Although Borissov said the price-cut was a huge success, sceptics have said the price remains above that paid by other EU member states.
According to Ilian Vassilev, head of the con- sultancy company Innovative Energy Solutions, the price was cut exclusively thanks to the Euro- pean Commission, but remains very high.
“In short, before we were paying 135% higher prices for the Russian gas, now we shall pay “only” 40% more than [the price at which] we can buy natural gas on the bourse in the Nether- lands,”hewroteonFacebook.
Vassilev also suggested that the price cut could have been linked to other energy projects in Bulgaria, which are attractive for Russia.
Bulgaria was the last EU country to negotiate
the gas price cut after the Czech Republic, Hun- gary, Slovakia, Lativa, Latvia and Estonia.
In September 2018, Gazprom invited Bul- garia to renegotiate the natural gas prices it pays. Talks on lowering the price were launched after the EC completed an antitrust case against Gazprom concerning the high prices for gas deliveries to eight EU member states. Although Gazprom was not fined for abusing its market dominance in Central and Eastern Europe, the company has to comply with EU rules ensuring a more competitive gas market in the region.
The Commission charged Gazprom in 2015 with using its market dominance to overcharge CEE countries and blocking cross-border gas sales in order to segment the CEE market to control what the Commission said was “excessive” pricing.
The charges were the effect of the Commis- sion’s investigation into Gazprom’s business in CEE that began in 2011 after Lithuania filed a formal complaint.
Following the Commission’s ruling, Bulgargaz and Gazprom signed an agreement that the deliv- ery price for Bulgaria will depend on the Euro- pean price and can be renegotiated every two years. Every five years each of the two companies willbeallowedanextraordinarypricechange.
Meanwhile, Nikolay Pavlov, executive direc- tor of Bulgargaz, said that the country will also start negotiations to lower the price of gas from Azerbaijan. ™
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