What are Eni and Lukoil doing in Congo?
Q&A between Fondazione Finanza Etica, a small ENI activist investor, and the energy group on relations with the Russian company Lukoil in Congo. All the details
In a document containing the answers to questions received before the May 10 meeting, an Eni shareholder asked the company – de facto controlled by the Ministry of the Economy – for clarifications on the hydrocarbon project in Congo waters.
“How do you reconcile”, asks the Ethical Finance Foundation, owner of eighty shares, “the firm intention of contracting gas imports from Russia as much as possible, in order to loosen energy dependence on that country, and, on the other, the joint operations with the most important Russian oil company, Lukoil, for the exploitation of hydrocarbons in the Congo?”.
THE LUKOIL-ENI OFFER FOR TWO BLOCKS IN THE CONGO
Fondazione Finanza Etica, which claims to exercise "forms of ethical pressure through the right to vote" against companies listed on the stock exchange, refers to two news items from last March.
The first is on March 17, given by Reuters . The agency wrote that the joint bid presented by Eni and Lukoil for the rights to two offshore blocks in Congo (Marine XXIV and Marine XXXI, specifically) was "going forward", also because their proposal was "the only on the table". The bidding process dates back to 2018, was suspended in 2020 and has not yet been completed, an Eni spokesman told Reuters . And he specified that the co-bidder's share is less than 33 percent, in line with the sanctions regime imposed on Russia for its invasion of Ukraine.
Unlike other Russian energy companies, such as Gazprom Neft and Rosneft, Lukoil has not been directly sanctioned by Europe.
THE START OF PRODUCTION FROM TANGO FLNG
A few days later, on March 20, 2023, the energy newspaper Staffetta Quotidiana wrote that production at the Tango FLNG natural gas liquefaction plant should start next December.
Eni had acquired the unit – with a capacity of 600,000 tons of liquefied gas per year – in August 2022 for use in the Congo, in the Marine XII block.
Eni is operator in the Marine XII project with 65 percent, while Lukoil holds 25 percent.
ENI'S ANSWER
"The project in Congo", Eni replied to a question from Fondazione Finanza Etica, "is part of Eni's initiatives aimed at freeing our country from dependence on Russian imports, in line with the strategy of diversifying supply sources".
“Lukoil acquired a 25% stake in Marine XII in 2019,” he adds, “from the British company New Age”.
Eni concludes by reiterating that “the Marine XXIV and Marine XXXI blocks have not been assigned to Eni and Lukoil. A joint bid was made in 2018 and the procurement process was suspended in 2020 and has not yet been completed. The share of the co-bidder is lower than the limit set by the applicable sanction regime".
ENI AND LUKOIL IN ISAB
Before the sale – a few days ago – to the Cypriot private equity firm GOI Energy, Lukoil was the de facto owner of ISAB in Priolo Gargallo, one of the largest refineries in Italy and the Mediterranean.
The new ISAB board of directors includes some figures linked to both Eni and Lukoil. Angelo Taraborrelli, president, has worked for a long time at Eni and has led various divisions and subsidiaries. And Massimo Nicolazzi, director, was first manager of Eni (1987-1990) and then of Lukoil (2001-2004).
Read also: Here's how much money Eni pays to Confindustria and universities
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/eni-lukoil-congo/ on Wed, 10 May 2023 06:09:40 +0000.