eni's strategy and sustainable growth


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eni's strategy and sustainable growth

  1. 1. eni’s strategy and sustainable growtheni s strategy and sustainable growth30 January 2012eni.com
  2. 2. our distinctive approach to sustainability comes from historyeni model of relations with producing countries Business and technology development Oil & gas integration“eni model”g g Access to energy and infrastructure To be local“Mattei Formula”1950s – 1960s present dayDistinctive approach to partnership with host communities.Offered producing countries: Long-term approachLong term approach Better economic terms Active participation in projects Knowledge sharing and training2
  3. 3. continued innovation on sustainability initiatives2003Firstbiodiversitypilot project(Val d’Agri,Italy)2007eniFoundation2010EST pilotprojectcompleted atTarantorefinery2011eni modelleads togiant gasdiscovery,Mozambique1999First HSEReport1970sFirst long-term gaspipeline deals withmajor suppliers1994First code of2001Endorse-2007First2011eni for2011eni isFirst code ofconduct(revised in2008 > Codeof Ethics)Endorse-ment of theGlobalCompactFirstSustaina-bility Reporteni fordevelop-ment, firstintegratedreporteni isselected tothe GlobalCompactLEADInitiative3
  4. 4. eni’s sustainability approach: the benefits Access to resources Strategic partnershipsC ti l  Exposure to growing gas market Maximising efficiency Synergic unconventionalTalent att action/ etentionCreating long-term growthopportunities Talent attraction/retentionP li i l Political Financial Operational EnvironmentalManaging andmitigating risks Environmental Geological Reputationalg g4
  5. 5. eni in Africa: our model has driven growth…Tunisia1961Countries and year of entrykboedAfrican production (1970-2010)CAGRAlgeria1981Libya1959Egypt1954Mali200613,854 2.0%Nigeria1962Congo1968Gabon1981/2008Ghana2009RDC2010Togo20107,9241,002 6.5%Angola1980Mozambique2006Presence sinceExploration6,17980386Exploration and ProductionSouth Africa2011 (MOU) %eni1.3% 4.9% 7.2%1970 1990 20105
  6. 6. … while contributing to political risk managementeni production in Africa (1965-2010)Kboe/dTunisia:Nigeria:repeated coupsand social unrestAngola:civil warTunisia:coup d’étatLibya:frictionsItaly-USAEgypt:6 daysAngola:civil warAngola:civil warLibya:embargoEgypt:Yom Kippurwar6 dayswarCongo:civil warAlgeria:civil warcivil war6
  7. 7. eni’s strategy: well-positioned to deliver further growthE&PAnother decade of sustainable growth• Leveraging on increased scale (2000-10 production CAGR 4.3%)• Continuing expansion in legacy areas and in new growth hubsg p g y g• Strengthened resource base through exploration (10 Bboe discoveredin 2000-10)G&PFrom a domestic incumbent to a European leader• Expanded presence in France, Germany, Iberia and Benelux• Medium-term recovery opportunity leveraging on secular gas demandthgrowthEfficiency in a difficult marketR&MPetchemy• 2006-11 effort: €800m of efficiency gains• Profit enhancement through innovation and further efficiency7
  8. 8. sustainability will continue to support growthLeveraging onkey competencesTaylor-made forcountryrequirementsPrepared toinvest with along-term view Access to energyAccess to energy Agriculture and development Innovation to enhance profitabilityCreating newbusinessopportunities8
  9. 9. access to energy First IOC to invest in powergeneration in Africa using GhanaTogo Nigeriaassociated gas Major electricity generation: 4plants in Congo and Nigeria AngolaCongo 60% of Congolese electricalproduction 20% of Nigerian electricalproductionExisting projectsMOUs for new projectsMozambiquep Large involvement inelectrification projects MOUs for 4 new powerFacilitates resource access,i itpprojects in Angola, Ghana,Togo and Mozambiqueimproves communityrelations and reducespolitical risk9
  10. 10. agriculture: local approach to support developmentGreen River Project, Nigeria• Integrated social project impactingPalm oil projects, Congo andAngolaOngoing projects New developmentsg p j p gagriculture, fishing and livestock• 1988-2010 investments: $49m• Benefits more than 500,000 people• Supporting the creation ofmodern, large scale agriculture• Reducing dependence on foodimports• Promoting non oil-linked economicactivitiesRice and Manioca cultivation,Congo• Focused local community projectsFocused local community projects• Improves seed quality andagricultural techniques, building onGreen River experienceImproving communityrelations at local level10
  11. 11. petchem: innovation for business turnaround New bio-based chemical JV to bedeveloped on site hosting former,p g ,structurally loss-making, petchemplant Will produce bio-intermediates forplastics lubricants and additivesplastics, lubricants and additivesfor elastomers Bio-refinery fully integrated withlocal cultivation and production ofbl l f f d kvegetable oil for feedstock Project will boost employment inthe areaCapitalises on new businesst d t i d t  Investments of >€500m, returnon capital in line with eni averagetrend, contains downstreamlosses safeguardingcommunity development11
  12. 12. eni’s strategy and sustainable growtheni s strategy and sustainable growthClaudio Descalzi, E&P COO,eni.com
  13. 13. eni’s sustainability approach Political Operational Financial Access to resources Strategic partnerships Growing global gasmarketManagementofLong termgrowtheni’sbusiness Geological Technological Reputational Minimizing footprint Synergic unconventional Talent attraction/retentionofuncertaintiesgopportunitiesmodelE&P: sustained production growth over past 10 years13
  14. 14. managing political risk: geographical diversification2010 resources31 bn boe  Diversified resource base: key growthareas in Africa, OECD, FSU and Far East, , Containment of financial exposure percountry19%14%20%21% Risk of new projects embedded in hurdlerate16%10% Use of certified international providers forcountry risk Country risk assessed each quarterNorth AfricaAmericaEurope Reduced weighted average risk premiumover the last 5 yearspOtherCentral Asia/RussiaWest Africa14
  15. 15. managing political risk: focus on core hubsKey growth hubsBarents SeaYamalPeninsulaKazakhstanLibyaVenezuelaIndonesiaSub-SaharanAfrica Core areas producing ca 1 mboe/d in 2010 Drivers of synergic long-term growth Consolidated relationship with producing countries15 Double-flag approach
  16. 16. local approach: meeting the country’s development needsBrazzavilleMindouliRITLoudima TsielampoM’BoundiBrazzavilleRC LPG plant Tar sandsRITM’BoundipZingaliLoufikaKouakoualaLitchendjiliRefineryCorafMAGN’GoyoMongo Kamba1/2PointeNoireOil centreGas compression/gas injection WaterCoteMatevepumpsWater injectionPower distributionDjeno oilterminalCED (2x25MW)CEC(2x150MW)gas injectionFeed to RC LPG plant (future)Tar sands (future)Waterinjectionjack-upM’Boundi: the energy hub of Congo16M Boundi: the energy hub of Congo
  17. 17. local approach: the Green River Project in Nigeria First integrated social project inthe industry Project impacting 500 000 peopleNo. of families involved (,000)607080 Project impacting 500,000 peoplein 2010 Introduction of modern farmingtechniques respecting the1020304050cultural heritage of hostcommunities Involving four states: Rivers,Bayelsa, Delta, Imo088 89 90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8 9 10Fisheries in the Delta regionBayelsa, Delta, Imo Total investment 1988-2010 :USD 49 millionCreation of asustainable andmodern agricultureindustry17y
  18. 18. local contentLocal employees*Number Africa main area of increase4 10365% Contribution to country-wideeducation/university programmes2,4964,103Local managers* Training programmes Training on the job at the headquarter Dedicated local training2000 2010Number Master abroad Career development programmes1,081236% International career opportunities2312000 201018* Consolidated subsidiaries only
  19. 19. 2010 resources by typelimiting exposure to operational risk2010 resources by type Balanced portfolio with littleexposure to high risk projects:41%6%13%7%p g p j 74% onshore or shallow water Only 6% deepwater exposure HP/HT wells only 3% of total wellsOnshore Arctic33%HP/HT wells only 3% of total wellsOperated productionOthersOffshore Deepwater12%  Increased operatorship: Competences & know how Enforcement of technical & HSEt d dstandards Cost efficiency Organizational unit dedicated to non-operated assetsOperatedEquity CAGR19pOperatedEquity CAGR
  20. 20. preventive approach: eni’s policy Preventive approval of well designand execution by headquarterOperated assets Processes Mandatory while-drilling technology forreal time well monitoringNon-operated assets eni’s representative in the JV willoppose drilling programme andsubsequent changes if not compliantwith eni’s technical or HSEreal time well monitoring Increase of eni’s supervisors on contractedrigs Specific contractual strategies forsuppliers, bonuses in absence of violationsand accidents with eni s technical or HSEstandardsand accidents Technology Adoption of double barriers in every phase Proprietary lean profile technology People People Maintaining core competences in house Knowledge management and training Low turnovereni’s policy aligned to international best practicesand applied worldwide20
  21. 21. focus on proprietary technologiesBig hole profile – industry standard Extreme lean profile – eni standardLarge flow areain annulusbetween casingsReduced flow areain annulusbetween casingsProduction level inLiner + Tie Backhigher safetystandardsP d tidirectcommunication withthe well head due tosingle productioncasingLINER 7”LINER 9 5/8” and TIE BACKProduction levelsisolated from thestandardsP d tiProductionlevelsLINER 7” isolated from thewell head due toproduction linerProductionlevels21Effective reservoir isolation
  22. 22. operational results: blowoutseni in 2000-2011Drilled wells3073214 wells drilled1 blow-out0.3/1,000 wells3214 wells drilled1 blow-out0.3/1,000 wells2272933071552 591995-99 2000-04 2005-09 2010-11Global average andaccepted insurance coverage2.59 0.880.00 0.00avg drilled wells per yearblow-out frequency (per thousand)4/1,000 wells4/1,000 wells22
  23. 23. operational results: improving safetyLost time injury frequency rate*0 770.41 0.42 0.410.660.770.73Company Contractor Global Prevention and preparedness: 170,000 training hours per year “Leadership in safety” programmeCompany Contractor Global Leadership in safety programme Tracking of near-misses Quarterly reporting of safety performance to top management23* n. of LTI/Mln of worked hours
  24. 24. operational results: low opex and efficient field managementOPEX*1010Low depletion rate8989677.067455.45.7452010 2011 2012 2013 20143307-09 08-10 11-14EBenchmark group**eni start-upproductionoptimizationproducingfields24* RDS n.a.** XOM, CVX, COP, BP, RDS, TOT, eni. Company data and Wood Mackenzie
  25. 25. minimizing environmental impacts: zero gas flaring commitmentNigeria: gas utilization as % of equity productionGasflaredReinjectedFor electricityproductionDistributedfor local useGas to LNG2000 2005 2010 2014Associated gas valorizationCommitment to zero gas flaring25
  26. 26. minimizing environmental impacts: water usage optimizationRe-injected water vs. total water produced42% 41% 41%40 4159 60 5935%33%Re-injected production water% of re-injected oil-linked water2007 2008 2009 2010 2011 Jan-OctWater reinjection target: 62% of the total waterproduced by 201426
  27. 27. case study: Nigeria oil spills300400eni oil spill events/yearNumber0100200 Increasing bunkering activity2005 2006 2007 2008 2009 2010 2011Sabotage Operational Local refining with heavy impact on environment Response: Collaboration with local authorities and communities Increased investment in asset integrity Two new anti-intrusion monitoring systems successfully tested New techniques for tackling with bunkering (tests on site 1H 2012) Continuing remediation activities27 Continuing remediation activities
  28. 28. case study: Goliat blow-out response planWell/installationbarriers  Goliat environment: Close to the coast: short time to shore Vulnerable resources: large seabirdcolonies, rich fisheries Limited visibility in winterA ti iti Activities: Radar coverage Accurate simulation of the dynamics ofa potential oil spilla pote t a o sp Infra-red devices for oil spill detectionand monitoring in the darkness andlow visibility 4 mechanical recovery and dispersion 4 mechanical recovery and dispersionbarriers and stand-by vessel Pre-agreed involvement of a pool offishing vessels and 2 deposits stockedwith oil spills equipment on the shore28with oil spills equipment on the shore
  29. 29. case study: Congo tar sands risk assessment Two exploration permits: Tchikatanga and Tchikatanga-Makola 1790 sqkmAreas under assessmentq 45 km NE of Pointe Noire Pilot project in Q2 2012: Study of the best areas forCongoBrazzaville Study of the best areas forproduction Study of the best cultivationmethod in order to minimizeimpacts Study of the appropriateconservation and restorationtechniques Exploitation of synergies withthe M’Boundi oilfieldthe M Boundi oilfield First exploration phaseconcluded in April 201129
  30. 30. eni’s strategy for the future: continuous improvement Consistent focus on conventional assets and geographical diversification Consolidation of community relations Increased operatorship as a tool to contain risks Continuous development of competences and technologies Proactive attitude in implementing HSE throughout our operations30
  31. 31. closing remarksclosing remarksPaolo Scaroni, CEO,eni.com
  32. 32. eni’s sustainability approach: the benefits Access to resources Strategic partnershipsC ti l  Exposure to growing gas market Maximising efficiency Synergic unconventionalTalent att action/ etentionCreating long-term growthopportunities Talent attraction/retentionP li i l Political Financial Operational EnvironmentalManaging andmitigating risks Environmental Geological Reputationalg g32
  33. 33. Back upBack upeni.com
  34. 34. Safety is our first priority1,62007Lost time injury frequency Steady improvement in all businessareas1.62Frequency per million hours worked0,91,11,4200920082010 Safety indices included inmanagement incentive schemes Emphasis on training and culturalh1.421.110.890,72011LTIF rate eni workforce(employees and contractors)change Periodic update of eni board ofdirectors on safety issues and results0.73eni in Safety programme launched for further improvement: Cascade process ensuring management commitment Addressed to line managers as well as HSE specialists 20 000 people to be trained between 2012-2014 €3.5m investment34
  35. 35. eni model: focus on compliance and controlInternal Control committee & Internal auditBoard of statutory auditors/SOA audit committee Supervises board compliance 4 members (all chartered accountants)C ti C ittInternal Control committee & Internal audit Supervision of internal audit activities Internal audit structure of >100 FTE Chairman drawn from minority slate 2010: 20 meetings, 98% attendance Variable compensation linked to annual and longterm performance Management objectives include sustainabilityindicatorsCompensation Committeeg , Significant role in company strategies, riskt d t lBoard of Directorsmanagement and control 9 members (8 non execs, 7 independentand 3 elected by minorities)Compliance & business ethics Code of Ethics universally applied (incl.BoD, employees, JV partners & suppliers) New management system extended to allof Eni Best in class anti-bribery policies andprocesses Extensive compulsory training35Compliance & business ethics