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Eni to see negligible impact from halt of Italian oil field

Eni to see negligible impact from halt of Italian oil field

The shutdown of Europe’s largest onshore oil field over alleged illicit waste disposal at a nearby treatment plant will probably only have a “negligible” effect on Eni SpA’s earnings because Italy often allows operations to resume during probes, said Giuseppe Rebuzzini, an analyst at Fidentiis Equities SV SA.

“I would assume in a matter of days or a few weeks, Eni might restart using the oil treatment plant and consequently might restart production in the Val d’Agri field,” said Rebuzzini, highlighting the economic importance of the operation in Italy’s southern region of Basilicata.

Production at Val d’Agri was halted on March 31 after Italian authorities seized part of a nearby oil-treatment facility amid a waste-disposal investigation. Eni, which has said it’s cooperating with the authorities, has asked prosecutors to restart production after suspending staff as part of the probe. The company declined to comment on the impact of the halt at the field in which Royal Dutch Shell Plc also holds a stake.

Last year, a shipyard owned by Fincantieri SpA at Monfalcone near Trieste was allowed to resume production within a week after authorities started an investigation into waste disposal. That pattern was also repeated at a plant owned by steelmaker Ilva SpA in Taranto.

“My take is this is probably going to happen” at Val d’Agri, Rebuzzini said.

Field Output

The Val d’Agri field produces about 75,000 barrels of oil a day and accounted for about 40 percent of Eni’s total Italian oil and gas production in 2014, according to the latest public data released by the company. Eni, operator of the Val d’Agri field, had a daily global output of 1.6 million barrels in 2014.

Investors are currently more focused on Eni’s strategy in relation to gas discoveries in Egypt and Mozambique, according to Natixis SA.

“In terms of news flow, it would be certainly more meaningful compared to Val d’Agri oil production,” Baptiste Lebacq, analyst at Natixis, said by phone.

La Repubblica reported last week that Eni is in talks with Russia’s Lukoil PJSC to sell a 20 percent stake in its Zohr gas discovery off Egypt while the Wall Street Journal reported on March 24 that Exxon Mobil Corp. was in discussions to acquire a stake in Eni’s Mozambique project. Eni declined to comment.

Last week’s seizure comes as Italy holds a national referendum on April 17 on whether to prevent oil and gas companies extending concessions within 12 miles of the Adriatic coast. The referendum is likely to be void as a majority of Italians are unlikely to vote, according to Rebuzzini, although the plant seizure could raise awareness before the poll.

Last week’s plant seizure forced Industry Minister Federica Guidi to step down on April 1 after her businessman boyfriend Gianluca Gemelli was accused of abusing her ties with the government amid allegations of illegal waste disposal at the same oil treatment plant.

Source: Bloomberg

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