Eni SWOT and PESTLE Analysis

Strength

This section is available only in the 'Complete Report' on purchase.

Weakness

This section is available only in the 'Complete Report' on purchase.

Opportunity

1. Expansion in the Middle East: Middle East is one of the richest oil and gas producing regions in the world. CEO Claudio Descalzi in Feb 2019 stated" it's not finished, we've started", referring to company's plan to expand its Middle East market and reduce its alliance form African states. ENI has secured 9 deals in UAE in 2018, gained a foothold in Bahrain, expanded in Oman and decided to buy $3.3 billion worth of world's 4th largest refinery in UAE which will help to increase ENI's downstream capacity by 35%. In a groundbreaking deal, ENI has invested 20 percent in Abu Dhabi National Oil Company’s (ADNOC) refining business in January 2019 for around $3.3 billion which also furthers Eni’s diversification away from Africa. Its CEO also stated that ENI is looking forward to Asian market for its gas expeditions and Alaskan gulf for its oil expedition which consists of huge potential for revenue generation market for ENI.

2. ENI's Egyptian Upside: ENI has been operating in Egypt since 1954, ENI leveraged huge opportunity in natural gas production in Egypt as the demand for natural gas consumption in Egypt soared after the Egyptian Civil Crises in 2013. ENI sensed the opportunity in Egyptian natural gas market and discovered the offshore Zohr Field though "Dual Exploration Technique" in 2015 and achieved its first gas in 2017. The Zohr field is expected to house 30 trillion cubic feet of gas in place, equals to 850 cubic meters or 5.5 billion barrels of oil equivalent. ENI holds 50% of working capital interest in the Zohr field. ENI expects to boost up the production from Zohr field to 3.2 Bcf/d by 2019, equals to 33 billion cubic meters per year. Currently the output rests at 2 Bcf/d which is equivalent to 21 billion cubic meters per year.

3. 100% reserve replacement ratio: Reserve replacement ratio is the ratio of amount of proven hydrocarbon reserves added in the company's operating asset against the amount of oil and gas produced during that year. The ratio is used by investors to map the operating performance of an oil and gas company. ENI during the course of its operations in 2017-18 managed to add new proven reserves of resources with a value of around 673 millions of oil equivalent which was sufficient enough for ENI to replace the resources company extracted from the ground. It is important for an oil producing company to gather as much natural reserves because the energy business is an extractive one and the resource supply is finite from the geography, hence companies in business like ENI must continually discover or otherwise obtain new sources of oil and gas before running out of resource supply.

The remaining section of “Strength” is available only in the 'Complete Report' on purchase.

Threat

This section is available only in the 'Complete Report' on purchase.

Political

This section is available only in the 'Complete Report' on purchase.

Economic

This section is available only in the 'Complete Report' on purchase.

Social

This section is available only in the 'Complete Report' on purchase.

Technological

This section is available only in the 'Complete Report' on purchase.

Legal

This section is available only in the 'Complete Report' on purchase.

Environmental

1. Working towards environmental sustainability in operations: ENI implemented operational sustainability through a business model geared towards innovation and achieving long-term goals. ENI each year defines, monitor the progress and provide incentives to managers executing sustainable approach in their environment. Among the relevant issue ENI is completely focused on reduction of climate-changing emissions through a process of de-carbonization that focuses on developing renewables, biofuels, green chemistry and gas advocacy. They work on technological innovation, safety, concern for the environment, research and development, digitalization, Human Rights, training and local developmental projects. The integration of sustainability goals with operational and economic/financial objectives enables the company to build on shared success which is incorporated into different business units. The company has projected an R&D budget of €776 million for their strategic 2018-2021 plan.ENI also investing for development of 7 villages in Niger Delta (Nigeria) through the installation of 2700 KW of capacity.

2. Rising concerns on climate change: Rising public concern about the climate change has led and could possibly lead to the adoption of worldwide laws and regulations which could result in a decrease in demand for hydrocarbons and increased compliance costs for the country. ENI is also exposed to such technological disruption and risk of extreme meteorological events linked to climate change. The rising concern for GHG emissions could seriously affect the operating costs and revenues of ENI, hence ENI in its strategic plan for 2018-2021 highlighted their commitment to reduce gas flaring in their refining process and reduction of GHGs emissions by 43% by the end of 2021 as of 31st December 2019.