24 September 2009
Global perspectives: Italy's Eni making moves
By Cris Whetton
Eni SpA, Italy's biggest oil and natural gas company by revenue, is going ahead with the planned sale of its Livorno refinery as part of its strategy to reduce its refining capacity.
Chief Executive Paolo Scaroni said Eni hopes to reach a conclusion in the refinery sale “in the next couple of months.” If this deal goes through, it could pave the way for Eni to move into Africa. Eni expressed interest last month in building a refinery in Uganda and a 1,300-kilometer pipeline from there to the Kenyan port of Mombasa.
Eni is looking to partner with U.K.-based Tullow Oil plc in carrying out a feasibility study for the construction of a 100,000 barrel a day refinery in the Albertine region. The refinery would produce fuel for domestic and regional markets. The 1,300 km pipeline is necessary to take fuel from the Albertine region to the Kenyan port of Mombasa for export, once the country reaches full production.
Eni is also in discussions with Iran to finance the construction of a refinery. Iran has begun talks with foreign firms to attract about $1.5 billion in funds to invest in the Bidboland refinery after an agreement with a domestic firm failed to come to fruition. The proposed Bidboland refinery would be in the south-western city of Behbahan, in the oil-rich Khuzestan province.
Meanwhile, Shell decided to sell its Stanlow complex near Ellesmere Port, Cheshire, which produces a sixth of the U.K.’s gasoline and is the company’s only refinery in Britain. However, the company has put it up for sale as it tries to rein in its huge costs, and struggles with the effects of an oil price that is half the level of the historic high of 2008. In July, Shell reported a sharp fall in profits, and Peter Voser, chief executive, has launched an efficiency drive expected to cost thousands of jobs. They are selling Stanlow along with two German refineries, at Heide and Harburg. Shell hopes to raise up to $2.5 billion (£1.5 billion) from the sales. Among the known bidders are Libya’s National Oil Corporation and Essar, the Indian conglomerate owned by the billionaire Ruia brothers, Ravi and Shashi. America’s Valero and an investment vehicle controlled by the Saudi royal family also may make offers.
Cris Whetton is InTech’s European correspondent.