Eni Slashes 2020 Capex by 25%

Italian oil and gas firm Eni has slashed its planned capital expenditure this year by around €2 ($2.2)bn, or a quarter, it said late on March 25.T he company is also targeting a €400mn reduction in operational spending this year, and will scale back its 2021 capex plan by €2.5-3.0bn, or around 30-35%.

The cuts follow the collapse in oil and gas prices and come also in anticipation of operational constraints caused by coronavirus (Covid-19) pandemic.

They are in line with other European companies' plans to attempt to weather the storm: Austrian OMV, French Total, Norwegian Equinor and Anglo-Dutch Shell have all had to take defensive action as oil storage fills up and gas prices plummet.

Eni CEO Claudio Descalzi said: "We are taking these actions in order to defend our robust balance sheet and the dividend while maintaining the highest standards of safety at work." 

The cuts will mainly affect upstream projects, including production optimisation work and new developments that had been slated to start up in the short term. These activities will be resumed once there is a sufficient improvement in market conditions, Eni said.

The Italian firm now expects to produce between 1.80 and 1.84mn barrels of oil equivalent/day this year and the same amount in 2021. Eni produced 1.87mn boe/day in 2019 and announced a goal in February of raising output by 3.5% on average annually until 2025.

The company plunged to a loss in the fourth quarter following the $4.5bn acquisition by its Var Energi joint venture of ExxonMobil's Norwegian upstream business.