Like the oil majors, the Italian hydrocarbon giant Eni suffered an abysmal loss of 8.56 billion euros in 2020, under the effect of the plunge in oil and gas prices caused by the health crisis.
“It was the most difficult year in the history of the energy industry,” said his boss, Claudio Descalzi, on Friday.
The annual result turned out to be worse than expected by analysts, who expected a loss of 7.57 billion euros, according to financial information provider Factset Estimates. In 2019, Eni posted a profit of 148 million euros.
The entire energy sector has been hit hard by the collapse in oil and gas consumption as a result of the coronavirus pandemic which brought the global economy to its knees for much of the year 2020.
Eni’s annual turnover suffered, plummeting 37% to 43.98 billion euros, a much steeper drop than expected by analysts who predicted 55.88 billion euros , according to Factset.
In the fourth quarter, when the world economy had regained some ground after periods of strict containment, the group managed to limit its loss to 725 million euros. It is significantly reduced compared to that recorded during the same period in 2019 (1.89 billion).
Adjusted net loss – an indicator closely scrutinized by the markets because it excludes exceptional items – for its part reached 742 million euros in 2020. In the fourth quarter, the adjusted result was positive, with a small profit of 66 millions of euros.
Hydrocarbon production amounted to 1.73 million barrels per day (mbd) over the year, down 7%, a figure in line with the group’s objectives and analysts’ expectations.
– Cost reduction –
The five oil majors have announced colossal losses for 2020. For the American ExxonMobil, the loss reached 22.4 billion dollars and for his compatriot Chevron 5.5 billion dollars.
Royal Dutch Shell reported a loss of $ 21.7 billion and those of BP and Total amounted to $ 20.3 billion and $ 7.2 billion respectively.
Figures never seen before, far from the billions of dollars in profits to which the majors had accustomed investors lately.
In this heckled context, “Eni has shown great strength and flexibility, responding quickly to the extraordinary context of crisis,” said Claudio Descalzi.
The group had thus announced in July that it would reduce its investments (Capex) by 35% in 2020 (2.6 billion euros less) and by 30% in 2021. This decrease mainly concerns exploration activities and production (upstream).
Eni also planned to launch a cost savings program of 1.4 billion euros in 2020 and an equivalent amount in 2021.
– “Green” investments –
The Italian group, like the entire sector, is facing enormous pressure to urgently review its model due to the climate crisis and the fall in demand for oil and gas due to the pandemic.
Believing that there is no long-term future for companies only active in the oil and gas sector, the group plans to balance its portfolio with the development of renewable energy activities.
“Green” investments will thus represent 17% on average by 2023, according to the Italian group’s plans.
Eni, which plans to present its targets for 2021 in the afternoon, estimated the 2020 drop in the price of Brent oil, the market benchmark, at 35%.
After the first lockdowns in the spring, oil prices had fallen to lows and even briefly went into negative territory in early April.
But they have regained strength since the fall, crossing the $ 60 mark in mid-February.