April 27, 2011 / 11:37 AM / 9 years ago

UPDATE 2-Eni full-year output to be hit by Libya turmoil

* Gas sales seen improving

* Q1 adj net 2.22 bln euros vs poll 2.017 bln euros

* Shares rise 2 pct, outpace sector

(Releads, adds detail, analyst comment, updates shares)

By Stephen Jewkes

MILAN, April 27 (Reuters) - Italian oil and gas group Eni (ENI.MI) expects Libyan turmoil to cut its full-year production after a drop of nearly 9 percent in the first quarter, the company said on Wednesday.

Eni, the biggest foreign operator in Libya, raised its oil and gas production growth forecast for the next four years to 3 percent per year in March, but warned that growth depended on stoppages in Libya being short-lived. [ID:nLDE72913P]

Since April, production in Libya has been about 50,000 to 55,000 barrels of oil equivalent per day (boepd), down from the 280,000 boepd expected before the uprising against leader Muammar Gaddafi erupted in February, Eni said.

The drop of 129,000 barrels a day in Libyan first-quarter production “was worse than I thought since I hoped they’d be able to offset the fall with more volumes from elsewhere,” said a Milan analyst who asked to remain anonymous.

He said Libya accounted for about 10 percent of Eni’s overall cash flow.

Eni said it has been implementing plans to target production growth by ramping up fields started in 2010. They include raising the production plateau at Iraq’s Zubair oilfield, starting up new fields in Australia, Algeria and the United States and streamlining production in Nigeria, Egypt, Angola and Britain.


Eni expects the European gas market to remain weak. However, it foresaw growth in its worldwide gas sales from last year’s 97 billion cubic metres as it strengthens its customer base in the domestic market and renegotiates long-term gas contracts.

Many utilities and gas companies have seen their margins eroded as the price of spot gas falls below the prices they pay in their long-term take-or-pay contracts.

“The 6 percent increase in gas sales in the first quarter was a positive development for Eni as were the financial results,” the Milan analyst said.

Adjusted net profit in the first quarter beat forecasts with a 21.6 percent rise thanks largely to higher oil prices. Eni said it was basing its outlook scenario on a Brent oil price of $101 a barrel.

Earlier on Wednesday BP (BP.L) reported a drop in first-quarter profit on Wednesday as lower production and higher charges due to last year’s oil spill outweighed higher oil prices and refining margins. [ID:nLDE73Q058]

At 1327 GMT, Eni shares were up 2 percent at 17.82 euros while the STOXX Europe 600 Oil and Gas index .SXEP was up 1.29 percent. (Editing by Jon Loades-Carter)

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