Italian oil main Eni accelerates its vitality transition technique | USAEMALL.com

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Italian oil major Eni is accelerating its energy transition strategy as it creates two new businesses this year focused on offering green artificial intelligence computing power and capturing carbon dioxide emissions, it said on Thursday. 

The group has already created two other transition businesses, Plenitude and Enilive, which focus on renewables and biofuels respectively, and sold stakes in them to private equity investors. 

Claudio Descalzi, Eni’s chief executive, said it would create a “new kind of business” around the company’s supercomputer in northern Italy, where Eni also owns a significant tract of land, a power plant and a carbon capture facility. 

He said Eni could sell green computing power to IT companies or anyone looking to develop power-hungry AI applications. 

Separately, he said Eni would also announce in 2025 a new company based on its carbon capture and storage assets. “We have almost three gigatons of storage capacity available,” he said, adding that the company would shortly approve HyNet North West in the UK, a large project to capture industrial emissions and store them in the Irish Sea. 

Eni confirmed its commitment to the energy transition one day after BP, the UK oil major, abandoned all of its renewable energy targets and pivoted back to oil and gas after pressure from shareholders to improve its performance. On Thursday, BP’s chief executive Murray Auchincloss said he expected “tremendous” demand for oil and gas past 2050. 

In a presentation to investors, Eni said its renewable power capacity was on track to grow fourfold to 15 gigawatts by 2030 while its biofuels business should triple its earnings in the same period. After recently selling another 5 per cent of its biofuels arm Enilive to US private equity fund KKR, Eni put another 20 per cent of its renewables company Plenitude up for sale. 

Eni also said it was in talks over a joint venture with Malaysia’s Petronas, which would see the two companies combine their gasfields into a company that produced 500,000 barrels of oil equivalent a day to serve gas-hungry Asian markets such as China and India. “This will be a huge company. It will produce half of the actual gas production of Eni. It is a very, very important step that the market has not immediately understood,” said Descalzi. 

He predicted that the return on capital in Eni’s transition businesses, including carbon capture and storage, would be in double figures in the next five years. In oil and gas, he said, he expected returns of about 15 per cent to 16 per cent.

“So at the end of the day, the returns on capital is comparable, but you have to consider the transition businesses are less risky than upstream investment, where 70 per cent of investment each year is written off and you have to put in all your money upfront,” he said. 

“For us, the transition has really been an opportunity to diversify our business. Beforehand, everything was on the shoulders of upstream (oil and gas). But clearly you have to make money.”

He added there was still investor appetite for the energy transition despite a change of tone since the election of Donald Trump as US president.

“At the end of the day, investors are not looking at transition or not transition, they are looking at whether you are making money or losing money. There is an appetite for a good business. I don’t think the colour of the energy we produce is a problem, it is the money we produce that is the target.”