Eni CEO defends decision to stay in Libya
The lights are still on in Libya thanks to continued gas production there by Eni, Italy’s state-controlled energy company, according to its chief executive.
In spite of the turmoil in Libya and the evacuation of many of Eni’s expatriate workers, Eni – led by Paolo Scaroni – has continued to work with the National Oil Company to produce oil and gas, although at considerably reduced levels.
Mr Scaroni said that Eni was producing about 100,000 barrels a day of oil equivalent, compared with more than 270,000 b/d before the nationwide insurrection erupted last month. More than half the output is gas from the Wafa field in the desert south of Tripoli, which mostly feeds power stations.“It is for the Libyan people. My view is that if we can produce gas for the domestic electricity market, this is positive for everyone,” he told the Financial Times. “If the international community tells us not to produce in Libya, then we won’t produce.”
Mr Scaroni said that he was aware of at least one shipment of oil by the government-controlled NOC that had been produced by Eni. “We have a contractual obligation to NOC,” he said. Asked whether the fields were under government or rebel control, he said they were deep in the desert and “under nobody’s control”.
Libya is the largest single source of production for Eni worldwide, accounting for 13 per cent of its total production. The company has been active in Libya since 1959. Italy, the former colonial power, normally sources about a quarter of its oil imports and 10 per cent of its gas from Libya.
Eni has halted all gas production reaching Sicily from Libya through the Greenstream pipeline. Eni has been active in Libya since 1959 and Mr Scaroni is confident the company will be well placed to work with whoever rules the country in future.
“In all our experience in the world, whoever gets into power in the end needs to produce oil and gas. At the end of the day, our position remains strong. We know the people, the fields and have the partnerships. The NOC people will remain the same,” he said.
It might take six months or a year to return to normality, he said, adding that “nobody knows”.
Mr Scaroni said this was the tone of the message he intends to deliver to investors and analysts on Thursday when Eni presents its 2011-14 business plan, assuring them that the 10 per cent “hole” in Eni’s worldwide output caused by Libya has been made up by the “medicine” of higher oil prices.
Italy’s centre-right government had capitalised on the close relationship developed by Silvio Berlusconi, prime minister, with Muammer Gaddafi, the Libyan leader. Now Rome is competing with its European allies to develop a relationship with rebels and the opposition based in Benghazi.
Diplomats said Italy is working with its EU partners on a plan to extend sanctions to Libyan institutions by freezing the assets of possibly five entities, including the central bank and Libyan Investment Authority.
An Italian official said Italy had frozen bank accounts belonging to individuals blacklisted by the EU last week. He declined to name them or the amounts involved.