Eni’s credentials boosted by giant gas find off Egypt

Eni's "supergiant" gas find off the coast of Egypt bolsters its top-flight exploration credentials and gives the Italian energy group access to easy reserves that fit its strategy of seeking growth without sacrificing dividends.

Eni said on Sunday its discovery ranked as the largest known gas field in the Mediterranean, covering an area of about 100sq km and containing a potential 30 trillion cubic feet of gas. Shares in the company rose by as much as 4 per cent yesterday.

Eni, which is already Africa’s biggest oil and gas explorer, was the first oil major to cut its dividend after a plunge in global oil prices.

It is looking to reduce its stake in its Mozambique gas discovery and does not rule out doing the same for its latest find, dubbed Zohr.

"It's an open door to give value and solidity to Eni's balance sheet," chief executive Claudio Descalzi (pictured) said of a potential Zohr stake sale in La Repubblica.

“But it will not be a necessary outcome. There is much less to spend than in Mozambique and the new gas is aimed at the local domestic market, with prices disconnected from those of oil, which today are at six-year lows.”

In July, Egypt raised the price it pays Eni for the natural gas it produces, part of its initiative to encourage investment in the energy-hungry country.

“The news in Egypt is supportive of our view that Eni is the best self-help story among the large-cap integrated oils and continues to keep momentum with a strong growth story,” Bank of America Merrill Lynch analysts said, adding the field was potentially worth up to $5 billion to Eni.

The company is still looking to sell down stakes in top acreage such as Mozambique and Congo to help to fund upstream development and dividends.

Santander analyst Jason Kenney said Eni was likely to look at selling a 30-40 per cent stake in Zohr within three to four years. – (Reuters )