Eni SpA (E) could resume exploration and production in Azerbaijan and take a central role in a project to ship compressed natural gas from Turkmenistan to the Azeri pipeline network, Chief Executive Paolo Scaroni said Tuesday in a telephone interview from Baku.
Eni SpA (E) could resume exploration and production in
Azerbaijan
and
take a central role in a project to ship compressed natural gas from
Turkmenistan
to
the Azeri pipeline network, Chief Executive Paolo Scaroni said Tuesday in a
telephone interview from
Baku
.
The Italian company--increasingly focused on the Caspian region--met Tuesday in
Baku
with President Ilham Aliyev and other Azeri
government representatives, discussing a compressed natural gas project that
would allow the transport and transit of Turkmen gas through the country via an
existing pipeline.
"We are looking at between 2 billion cubic meters and 3 billion a year
that will go mainly to
Turkey
,"
Eni's CEO said. "The gas would use an existing pipeline [in
Azerbaijan
] and
[the project] won't be ready before 2012."
The Turkmen gas would be transported some 300 kilometers across the
Caspian
Sea
via ship to
Baku
. Some
of the gas would be Eni's, but most would have otherwise been flared during
Turkmenistan
's
offshore oil production process, Scaroni said.
Gas that is burned off during oil production is a significant source of
greenhouse gas emissions.
The environment would "have a big advantage" from this project, the
Eni CEO said. The gas would be compressed in the ships--a cheaper method than
using liquefied natural gas technology, he said.
The Caspian area is "absolutely strategic" for Eni, Scaroni said.
Eni is a key operator in hydrocarbon-rich
Kazakhstan
with
big stakes in the massive Karachaganak and Kashagan projects. It also has an
oil services venture in
Azerbaijan
via its
subsidiary Saipem SpA (SPM.MI).
Eni also is looking to expand in
Turkmenistan
. The
company has operated in the country since 2008, and in 2009 daily production
was 9,000 barrels of oil.
Turkmenistan
has
vast untapped gas reserves and is looking at ways to boost production and new
export routes.
Turkmenistan
's
2009 proved gas reserves amounted to 8.10 trillion cubic meters, the fourth
biggest in the world, according to the BP Statistical Review of World Energy of
June 2010.
The possible upstream comeback in
Azerbaijan
will
focus mainly on oil, said Eni's CEO, but it also covers associated gas.
Scaroni said the company may replace operators that want to exit, but that
nothing was imminent.
Separately, Scaroni said Eni is willing to sell its 33.34% stake in Portuguese
oil company Galp Energia SGPS SA (GALP.LB) if offered a strong
"premium" to the share price.
The Eni CEO said the company can't sell or negotiate with potential buyers of
the stake under the current shareholders' "standstill" agreement,
which expires at the end of December. At current share prices, a 33.34% Galp
stake is worth around EUR3.16 billion, according to FactSet data. Portuguese
and Italian media have said Brazilian state-run oil firm Petroleo Brasileiro SA
(PBR), or Petrobras, is a possible buyer.
Scaroni said Eni has recovered in dividends the roughly EUR1 billion investment
it made in Galp.
The CEO also said Eni is more than satisfied to stay in Galp as the Portuguese
company has a strong presence in Brazil's exploration and production, which is
"one of the greatest discoveries in the last 10 years."
"We are in no rush [to sell]," Scaroni said. "It has been an
excellent investment."
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