Eni Sees Low-Carbon Business Profits Equaling Oil and Gas Profits by 2035

Eni’s profits from alternative energy business operations should reach the same level as oil and gas profits by 2030, continuing to grow further to exceed oil and gas income by 2040. That’s according to chief executive Claudio Descalzi, who seems to be going in a different direction from the rest of the Big Oil leadership.

“By 2035, the [operating profit] created by our new companies will balance what is coming from oil and gas, in 2040 it will be more [than oil and gas],” Descalzi told the Financial Times in an interview today, adding that “I believe growth is important, but you can also have a bubble. To grow, you have to invest, and your free cash flow is always negative,” in what appears to be a suggestion that the low-carbon businesses will remain unprofitable for a while yet.

However, they are not precisely low-carbon businesses, as the FT detailed in its report on Eni’s profit plans. The company has two of what it calls “satellite” companies, one involved in biofuel production combined with hydrocarbon fuel retail, and another involved in wind, solar, and EV charging plus residential gas and electricity distribution.

Both of these are profitable—thanks to the hydrocarbon segment of the businesses, as suggested in the FT report, which said that the biofuels and the EV charging operations were not making any money, but when they were combined with the company’s fuel station business and the gas distribution business, they got much-needed funding.

Now, thanks to this funding, the two companies, Plenitude and Enilive, have become attractive to outside investors and Eni recently closed two minority stake sales in the two, which generated over $4 billion in cash.

“The capital is there and infrastructure funds are looking for good businesses, but they want to understand what is inside. Growth alone is not enough,” Descalzi told the FT.

By Irina Slav for Oilprice.com

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