…Hopes to stick to its long-term climate strategy presented in February
Italian oil giant, Eni S.p.A, has taken a decision to cut its long-term price forecasts, in the conclusion that the raging Corona virus may last longer than assumed. Rivals Royal Dutch Shell Plc and BP Plc have also cut price forecasts as the lockdown-induced slump batters their businesses, forcing producers to reassess the value of their assets amid a shift to cleaner energy, a Bloomberg report said yesterday.
It said that Eni now sees benchmark Brent crude at $60 a barrel in 2023 real terms, down from a previous estimate of $70, the company said late Monday, warning of impairment charges.
“Having considered the prospect of the pandemic having an enduring impact on the global economy and the energy scenario, Eni has revised its view of market fundamentals,” the Rome-based oil international said in a statement.
The noted that the spread of the Covid19 virus across the world this year grossly lowered oil demand, hitting oil majors’ earnings in the first quarter and threatening worse to come in the second. It also noted that despite a recent rebound in consumption in some of the worst-hit countries, resurgent waves of the virus show the recovery remains uncertain.
Lowering price forecasts “appears to be the flavor of the month,” Biraj Borkhataria, an analyst at RBC Europe, said in a note. At Eni, “we do not see its current dividend as compatible with its aggressive decarbonization strategy.”
The Bloomberg report recalled that last month, BP signaled it would make the biggest write down on the value of its business since the 2010 Deepwater Horizon disaster, as it cut estimates for oil and gas prices in the coming decades between 20% and 30%.
Two weeks later, Shell also said it had revised its mid- and long-term pricing outlook, and warned of a record writedown.
Chibisi Ohakah, Abuja