Enis Q2 results were affected by the disruption to the company’s oil and gas operations in Libya. Net profit for the second quarter was US$1.78 billion a decrease of 31 per cent compared with the second quarter of 2010.
“The main feature impacting Eni's results in the first half of 2011 was the disruption in supply of oil and gas from Libya, which affected all of our business activities,” Paolo Scaroni, Chief Executive Officer, commented.
Scaroni discussed in detail the impact of the Libyan crisis on Eni's operations. In terms of Exploration & Production (E&P), in the second quarter of the year Eni’s Libyan production averaged about 50,000 BOE per day with a negative impact on more than 230,000 BOE per day on the average daily production for the quarter.
Mean while, the suspension of Libyan gas import into Italy impacted gas and power results in two ways. In terms of volumes, Eni suffered from reduced sales to shippers, and in terms of margins, the company suffered because Libyan gas was replaced with gas from other sources, which have not yet been re-negotiated. This saw decreasing sales to shippers with the import of gas to Italy falling by 74 percent in the second quarter.
The situation in Libya is also impacting Eni’s balance in refining and petrochemical business as both had to replace Libyan feedstocks with more expensive alternatives.
Scaroni stated: “ Eni is technically able to resume the gas output at a level similar to the pre-crisis flows in 2010 once the situation has returned to normal. We are assuming that the situation in Libya will continue as it is until the end of 2011.”
Overall, oil and gas production was affected by the prolonged crisis in Libya: with production down by 15 per cent for the second quarter to 1.489 mmboe/d. When excluding the impact of the production loss in Libya and price effects, the decline was 2 per cent for the quarter.
The company’s downstream arm performed weakly. The Gas & Power division's profit fell by 60 per cent from a year ago driven by reduced marketing margins on gas sales due to strong competitive pressures and a weak trading environment.
The Refining & Marketing and Petrochemical divisions both reported widening operating losses driven by high costs for oil-based feedstock only partially transferred to end prices.
Scaroni did add: “In the first half of the year we have strengthened our growth prospects through the progress on key development projects, continuing exploration success and new agreements which secure access to resources in core and new high potential areas.”
