ENI ignores Nigeria, plans billion-dollar exploration in 17 countries

Africa’s biggest oil-producing country is losing a decisive battle to smaller oil-producing nations as Italian energy group Eni excluded Nigeria from its exploration plan aimed at discovering 2.2 billion barrels of hydrocarbon resources over the next four years.

In a presentation to investors concerning its 2023-2026 strategy, ENI’s chief executive Claudio Descalzi said the Rome-headquartered player found resources of 750 million barrels of oil equivalent — about 125percent of its production in 2022 — at under $2 per barrel, adding that between 2015 and 2022, the company had discovered about 4 billion barrels.

For Eni’s exploration agenda through to 2026, Descalzi said these calls for €2.1 billion ($2.22 billion) to be spent chasing prospects in Egypt, Libya, Lebanon, Algeria, Cyprus, Italy, Norway, UK, Mozambique, Angola, Ivory Coast, the UAE, Oman, Kazakhstan, Mexico, Vietnam and Indonesia.

Oil and gas production will grow between 3 percent and 4 percent on average every year to 2026 and then remain pretty stable until 2030, the company said. The share of gas production will raise to 60 percent by 2030.

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“Gas is the only hydrocarbon that can accompany energy transition,” Descalzi told Reuters, adding that the negative consequences of the war in Ukraine were exacerbated by the lack of investments in gas in the past years.

“We are in this situation because (in the past) we thought we could avoid having gas”.

Under its new strategic plan, Eni said it would grow its green businesses and indicated that Plenitude was expected to reach a core profit of 1.8 billion euros by 2026, three times its 2022 level.

Apart from ENI, ExxonMobil, Chevron and TotalEnergies are also ignoring Nigeria and making plans to boost their capital spending this year, especially in light of the latest forecast of higher 2023 oil prices by the United States Energy Information Administration.

For a frontier market with the population of Nigeria, oil majors not looking in its direction should be a big worry for the government as it has dire implications for social welfare and economic growth despite the country’s 37 billion oil reserve, 206 trillion cubic feet (tcf) proven gas reserve, and over 600tcf unproven gas reserves.

When the World Bank Group surveyed hundreds of executives at multinational companies to find out what drives decisions around foreign direct investment, the results showed that investors value a business-friendly regulatory environment as well as stable macroeconomic and political conditions.

These crucial factors are missing in Nigeria, according to some foreign investors surveyed by BusinessDay.

They point to policy inconsistency, a business environment that existing local and foreign investors say is anti-business, and the lack of political will to open up the economy to private capital.