Eni Raises its Decarbonisation Target
Italian energy major Eni has joined some of its European peers with the launch of its February 19 strategy that commits it to the "full decarbonisation of all our products and processes by 2050." Last year the target for scope 1, 2 and 3 emissions was only 80% decarbonisation.
It said the plan, out to 2024, is "concrete, detailed, economically sustainable and technologically proven" and would include a major shift towards low-cost gas and the merger of some business lines. This includes its renewable and retail businesses becoming one entity, allowing it to develop projects to supply new customers.
Merging G&P retail and renewables will lead to capex for the combined business at €1bn ($1.21bn)/yr, equal to the division's pre-tax earnings by 2024, up from €600mn this year. Renewable capacity will reach 4 GW by 2024 and 15 GW by 2030.
And merging bio-refining with marketing businesses will play an "important role in delivering sustainable mobility," it said, such as the exclusion of environmentally unfriendly palm oil by 2023.
Upstream projects with an internal rate of return of 18% would help fund the lower rate of return of renewable projects and the company is looking to raise €2bn from asset sales. It is eyeing opportunities to replicate its Norwegian entity Var Energi – a producer backed 30% by venture capital company Hitecvision – in other countries.
In the long term, gas will represent more than 90% of Eni’s production and will support the energy transition as a back-up of intermittent sources. Across all hydrocarbons, output is to rise 4%/year, mainly organically, with the addition of 2bn barrels of oil equivalent (boe) in the four-year plan at a finding cost below $2/boe. Capital expenditure is to be €4bn this year and about €18bn over the plan. It is aiming for upstream costs of $28/b by 2024. The growth will be funded by a cumulative €19bn in the plan period and it assumes $50/b dated Brent.
During the four-year plan, major projects brought on stream will be in Angola, Indonesia, Mexico, Mozambique, Norway and the UAE. In terms of future production mix, around 55% of P1 reserves will be gas in 2024, compared with 50% today.
Upstream capex will amount to around €4.5bn/year on average, of which half is to fight depletion and the other half to grow the business. More than 55% of capex in the last two years of the plan is uncommitted, and this flexibility will allow it to absorb price volatility if needed. Upstream capex coverage will drop by almost $10/boe to $28/b by the end of the plan, it said.
It will continue decarbonising upstream and marketing operations and to develop 7mn mt/yr of CO2 storage capacity by 2030, focusing attention on its own refineries and power plants. It did not give an indication of the carbon price needed to support this but earlier this month, French Total said it was looking at a minimum of $40/mt.
LNG contracts are to reach 14mn metric tons/yr by 2024, marking 50% growth relative to last year. LNG contract growth will be driven by new projects in Indonesia, Nigeria, Angola, Mozambique and Egypt, where the start-up of Damietta LNG plant has been completed and the first cargo is being loaded.
Lowering its carbon footprint towards net zero emissions includes forestry: such carbon offset plans are to absorb 6mn mt/yr of CO2 by 2024 and over 20mn m/yr by 2030.