Eni is forming an energy commodity joint venture with global trader Mercuria as the Italian energy major eyes higher profits to rival the most active traders among the European energy giants.
Eni on Wednesday said it had signed an agreement with Geneva-based Mercuria, one of the world’s largest independent trading groups, to create a joint venture to trade energy commodities across global energy markets.
The joint venture will be equally owned by Eni and Mercuria, and will operate on an independent and unconsolidated basis through a holding structure with international trading hubs, the Italian company said.
The joint venture will cover certain commercialization and trading activities, including, but not limited to, commodities such as oil, biofuels, gas, LNG, and related logistics and infrastructure rights, according to Eni.
“The strategic rationale of this joint venture is to expand our trading footprint, enhance profitability for both partners, and generate long-term value through operational efficiency and robust risk management,” said Stefano Pujatti, Director, Global Trading at Eni.
Eni’s chief executive, Claudio Descalzi, hinted early this year that the Italian group is considering a return to trading, via a joint venture, as the other European majors have been reaping what analysts have estimated to be billions of dollars in trading profits during the extreme market volatility since 2022.
For example, in just one month, the European oil majors with the biggest trading desks – BP, Shell, and TotalEnergies – raised their trading profits by up to $4.75 billion in the first quarter from the end of last year, amid extreme market volatility driven by the Iran war.
“I stopped trading in 2019, but the other big companies are all traders,” Eni’s Descalzi told the Financial Times in an interview in February, prior to the war. “BP, Shell, Total are big traders, and they make billions from that.”
However, Descalzi noted that trading “is not in our DNA…So I thought to become commercial, we have to have a partnership to understand the business.”
The partnership with Mercuria is now a fact, subject to customary regulatory approvals and other conditions precedent, Eni said today.
By Tsvetana Paraskova for Oilprice.com
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