Eni Considers Spinning Off Oil and Gas Projects to Finance Low-Carbon Investments and List Satellites for Further Financing

Italian energy conglomerate Eni is considering spinning off stakes in high-potential oil and gas projects, such as those in Indonesia and Ivory Coast, to help finance their development and focus more capital on low-carbon activities. This strategy, known as splitting operations into separate entities or satellites, would allow investors to choose where to place their funds based on whether they prefer oil and gas or low-carbon investments. The carve-outs would enable investors who prioritize oil and gas over low-carbon initiatives, or vice versa, to be more specific about where they invest. Eni aims to list these satellites to raise further financing for their growth. By spinning out fossil fuel operations, such as last month’s agreement with Ithaca Energy, Eni can receive potential dividends and reduce capital expenses. Eni’s CEO, Claudio Descalzi, has already established the retail and renewable unit, Plenitude, and a biofuels division, Enilive, which has piqued the interest of private equity firms and infrastructure funds. According to Eni’s CFO, Francesco Gattei, this satellite model helps maintain demand for traditional products while simultaneously developing new, green products. Eni plans to sell or list a significant portion of its low-carbon satellites and oil and gas exploration and production segments to generate around €8bn ($9.1bn) between 2024 and 2027. Other recent examples of this strategy include Eni’s creation of Norwegian oil and gas firm Vaar with private equity firm HitecVision and its joint venture with BP in Angola, Azule Energy. Some analysts believe that listing Enilive could establish a reference point for its value, potentially boosting Eni’s stock prices. However, other experts caution that equity markets may take time before recognizing the advantages of these satellites unless dividends are distributed to shareholders. Eni improved its distribution policy and increased its 2024 share buyback program in mid-March but dismissed the notion of paying special dividends tied to disposals. ($1 = 0.9280 euros) ($1.1433 Canadian dollars = $1 US) (Reporting by Ron Bousso; editing by Jan Harvey)