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Italy's oil and gas company Eni SpA (E - Analyst Report) signed a memorandum of understanding (MoU) with Vietnam's national oil company PetroVietnam. This will facilitate the Italian giant in strengthening its foothold in and outside Vietnam.

The agreement allows PetroVietnam to expand its international business and Eni to have the opportunity to procure more blocks in Vietnam. Eni added that it will offer PetroVietnam participation in international projects in which it holds exploration and development rights.

Since mid last year, Eni has been present in Vietnam with 50% participation and operatorship of three exploration blocks located in the Hong Son basin in the Gulf of Tonkin. The region is estimated to hold 10% of the country’s hydrocarbon resources.

This move is in sync with the company’s strategy to strengthen its traction in Asia where it has already marked its presence by its recent exploration successes in Indonesia and Pakistan, and acquisitions in Australia.

We believe that Eni’s constant efforts to expand its upstream operations in Egypt, Vietnam, Indonesia, Pakistan, Kenya will go a long way in generating profitable growth in the future. Moreover, project start-ups, inputs from big projects in Iraq, Australia, Russia and Egypt as well as its strategic position in non-conventional gas, are expected to augment volumes going forward. In recent years, U.S. energy behemoths like ExxonMobil Corporation (XOM - Analyst Report) have also been busy tapping hydrocarbon deposits in shale rock formations.

In fact, Eni expects its full-year 2012 oil and natural gas production to be higher than the reported 2011 level of 1.58 million barrels of oil equivalent per day (MMBoe/d), given the ramp up in activities in Libya in an effort to attain the pre-crisis level. With the expected strengthening of the global economy and production ramp-up in the new licenses, we believe that Eni’s profitability over the coming quarters is quite visible and assured.

Recently, Eni signed an agreement with the U.S. based Anadarko Petroleum Corporation (APC - Analyst Report) for the development of natural gas reservoirs offshore Mozambique. Both the companies will carry out separate but coordinated offshore activities in Area 4 and Area 1.

Eni, which recently received regulatory approval for the Goliat oilfield in the Barents Sea, in partnership with Statoil ASA (STO - Analyst Report), holds a Zacks Rank #3 that is equivalent to a Hold rating for a period of one to three months.

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