Due to oil prices, Corona … Eni strikes 3.5 billion euros of its assets

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Economy

Al Ain newsletter
The Italian energy group Eni announced that it will write off about 3.5 billion euros (4 billion dollars) from the value of its assets after lowering its long-term forecasts for oil and gas prices due to the economic repercussions of the Covid-19 crisis.

Eni reduced its long-term forecast for Brent crude prices for the year 2023 to $ 60 a barrel from $ 70 in its previous estimates and reduced gas prices to $ 5.5 per million British thermal units, from $ 7.8, according to a group statement released on Monday.

Across the sector, producers were forced to make cuts, as the impact of travel restrictions aimed at curbing the new Corona virus had severe consequences for oil and gas in particular.

“Changing long-term estimates four months after the Covid-19 pandemic breaks out, reflecting our current outlook for the future of prices,” said Claudio Descalzi, the group’s chief executive.

The move follows a similar write-off of assets from competitors such as BP and Shell, with demand deteriorating due to the Covid-19 crisis and the shift to low-carbon energy, which sparked a recalculation of reserves and asset values.

Eni said it now expects Brent crude at $ 40, $ 48 and $ 55 a barrel for the years 2020, 2021 and 2022, respectively, compared with previous estimates of $ 45, $ 55 and $ 70.

Discalzi confirmed the group’s strategy to become a leader in cutting carbon emissions despite the continuing repercussions of the Covid-19 pandemic on the global economy and the group.

And in the middle of last month, Eni agreed to issue bonds of up to four billion euros, after the company’s revised net profit decreased during the first quarter of this year by 94% to 59 million euros, which is less than the average forecast of analysts presented by the company by about 240 million euros.

Eni said it will save about 600 million euros of expenses this year through its actions.

In a related context, oil futures closed largely stable yesterday, Monday, with the market interacting between positive economic data supporting prices and a jump in cases of coronavirus in the United States that may curb fuel demand and pressure prices.

Brent crude contracts ended the world record for the closest trading session high, up 30 cents to $ 43.10 a barrel, while US West Texas Intermediate benchmarks fell two years to settle at the settlement of $ 40.63 a barrel.

“The competing forces in the oil market now are to reopen economies around the world, which increases oil demand, in the face of fears of closing economies around the world because of a jump in new HIV infections,” said Andy Libo, chief consultant to Libo Oil Associates.





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