Eni Makes Big Oil Find in Africa Amid New Subordinated-Saharan Success

By Liam Moloney

Eni SpA (E), Italy's biggest energy company by market value, made its biggest oil find in recent years as it continues its string of successes in sub-Saharan Africa and focuses on upstream activities.

Eni made a "very important" oil and natural gas find in the Nene Marine exploration prospect in offshore Republic of Congo, said Claudio Descalzi, who heads the company's exploration and production division, on a conference call to comment on Eni second-quarter results.

Eni estimates 600 million barrels of oil and 700 billion cubic feet of gas are in place.

"The potentiality of this area will increase," added Mr. Descalzi, although he said it was too early to talk of its development as Eni needs to further develop appraisal wells.

Eni is focusing in sub-Saharan Africa, where many of the industry's largest oil and gas discoveries are being made as the area opens up to exploration, as it faces disruptions in its traditional strong base of Northern African amid political instability and disorder, such as in Libya.

In recent years, Eni has made its biggest discovery ever of gas in offshore Mozambique, representing more than four years of total European demand.

Eni has boosted its resources base by 950 million barrels of oil equivalent in the first six months of the year thanks to exploration discoveries in places such as Ghana and Pakistan.

The Republic of Congo discovery size equals to 717 million barrels of oil equivalent, or BOE.

According to Andrea Scauri, an analyst with Mediobanca SpA, the Congo discovery is equal to almost one-fifth of the initial estimate that Eni gave for Mozambique.

"If this discovery grows anywhere close to the one of Mozambique then the potential is very big," said Mr. Scauri.

Analysts were also keen to point out that Eni is already working in the Republic of Congo, where its daily output is 110,000 BOE, with an existing infrastructure, while in Mozambique everything has to be built from scratch.

Eni's last big oil discovery was Skrugard/Havis north of the Arctic circle at the start of last year, which was estimated to hold recoverable 500 million BOE.

Separately, Eni said second-quarter adjusted net profit was cut by more than half, a bigger decline than expected, on weak results from the gas and power division and its oil services subsidiary Saipem SpA (SPM.MI).

Chief Executive Paolo Scaroni said he expects a "significant" improvement in second-half results.

The company also said it forecasts 2013 hydrocarbon output in line with that of last year, while gas sales are predicted to drop on the year, as are refining throughputs.

Write to Liam Moloney at [e-mail]

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