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February 5, 2019updated 27 Oct 2021 11:18am

Buying spree expands Eni’s Middle East footprint

Eni has acquired major development and production assets over the last two years that may make it one of the region’s key international players in the coming years.

By GlobalData Energy

Eni SpA’s recent acreage increase in the Persian Gulf, in Bahrain, Oman, and the United Arab Emirates (UAE) forms part of the Italian oil and gas company’s ambitious Middle East growth strategy.

Eni Middle East interests

Eni has acquired major development and production assets over the last two years that may make it one of the region’s key international players in the coming years.

In March 2018, Eni announced its acquisition of interests in the producing Lower Zakum (5% interest) and Umm Shaif & Nasr (10% interest) concessions in the UAE. Combined with a production increase from Iraq’s Zubair oil field (operatorship and 41.6% share), which was Eni’s only pre-existing production asset in the Middle East, these new interests are expected to deliver strong production growth.

In fact, the company’s 2018 production in the region is estimated to have more than doubled compared with the 2017 figure, and an additional 29% production growth is expected from Eni’s Middle Eastern assets in 2019.

Eni’s Middle East production entitlement forecast

Source: Upstream Analytics, GlobalData Oil and Gas

The proximity to growing markets is also a boost to Eni’s onshore exploration acquisitions. Gas demand in the UAE is increasing as a result of population growth and development of the industrial sector. Similarly, gas demand is increasing in Oman where Eni first licensed Block 52 (operatorship and 55% share), and then, in January 2019, it entered an exploration and production sharing agreement for the onshore Block 47 (8,524 sq.km) while signing a heads of agreement for the acquisition of onshore Block 77 (3,100 sq.km, 50% operatorship, partnered with BP plc).

Eni’s long-term goals

This broad portfolio of new exploration acreage across the Middle East is aimed at securing long-term production growth. Eni’s has been a leader in oil and gas exploration with recent high-quality discoveries in areas such as Angola, Cyprus, Egypt, Indonesia and Mozambique, and it now hopes to follow this trend in the Middle East.

Eni also signed a memorandum of understanding in January 2019 with the National Oil and Gas Authority of Bahrain for offshore Block 1 (2,800 sq km still largely unexplored), and the start of drilling is slated for later this year.

Eni hopes that this activity, along with recent downstream investments, can secure the region a place as a core cash-generating area within its portfolio.

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