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Eni SPA (E) to End Its Pipeline JV With Gazprom in Russia
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Eni SPA (E - Free Report) will dissolve its 50/50 pipeline joint venture (JV) with Gazprom as part of its move to seclude Russia in retaliation to the country’s attack on Ukraine.
Eni has collaborated with Russia-based energy company Gazprom on projects for more than 50 years. In response to Russia’s invasion of Ukraine, Eni will divest its 50% stake in the Blue Stream subsea gas pipeline, which transports gas from Russia to Turkey through the Black Sea. Notably, Blue Stream has a carrying capacity of 16 billion cubic meters per year.
Eni currently has a marginal presence in Russia, one of the world's most resource-rich countries. The company has already discontinued its JVs with Russia-based Rosneft regarding the exploration licenses in the Arctic area. This was due to the international sanctions, which have been imposed on Moscow since 2014.
Russia is the third-largest oil producer and the biggest exporter of gas in the world. Over the last decade, the country was regarded as the most promising exploration and development destination globally. However, Russia’s invasion of Ukraine has had widespread repercussions in the energy sector. International oil majors like Shell plc (SHEL - Free Report) , BP plc (BP - Free Report) and Exxon Mobil Corporation (XOM - Free Report) announced their exits from the Russia operations.
Shell is dumping Russian energy investment. The company intends to exit the Sakhalin-2 LNG project and its JVs with Gazprom. Beside this, it plans to end its involvement in the Nord Stream 2 pipeline project.
At the end of 2021, Shell had $3 billion in non-current assets in the Russia joint ventures. The company expects the decision to start the discontinuation of JVs with Gazprom and related entities to impact the book value of its Russia assets and lead to impairments.
BP is withdrawing its stake in the Russia-based oil and gas company, Rosneft, after operating for more than 30 years in the country. It was one of the biggest foreign investors in Russia before exiting its position. The decision can hit BP financially by $25 billion and slash almost half of its hydrocarbon reserves.
BP is also planning an exit strategy from its other businesses in Russia, which involves three JVs, with a carrying value on its books of $1.4 billion. The company’s board believes that these decisions are in the best long-term interests of all shareholders.
Another global energy company, ExxonMobil, recently announced that it commenced the process of discontinuation of operations at Sakhalin-1. It plans to make no new investments in Russia. With the exit from the key oil and gas project, located off the eastern coast of Russia, ExxonMobil is concluding its operations in Russia that spanned over decades.
Thus, ExxonMobil is aligning its interests with the business communities across the world that are isolating Russia over its violent and unprovoked invasion of Ukraine. If this trend continues, Russia will lose foreign investment in its crucial energy sector.
Company Profile & Price Performance
Headquartered in Rome, Italy, Eni is one of the leading integrated energy players in the world.
Shares of Eni have underperformed the industry in the past six months. The stock has gained 18.6% compared with the industry’s 44.7% growth.
Image: Bigstock
Eni SPA (E) to End Its Pipeline JV With Gazprom in Russia
Eni SPA (E - Free Report) will dissolve its 50/50 pipeline joint venture (JV) with Gazprom as part of its move to seclude Russia in retaliation to the country’s attack on Ukraine.
Eni has collaborated with Russia-based energy company Gazprom on projects for more than 50 years. In response to Russia’s invasion of Ukraine, Eni will divest its 50% stake in the Blue Stream subsea gas pipeline, which transports gas from Russia to Turkey through the Black Sea. Notably, Blue Stream has a carrying capacity of 16 billion cubic meters per year.
Eni currently has a marginal presence in Russia, one of the world's most resource-rich countries. The company has already discontinued its JVs with Russia-based Rosneft regarding the exploration licenses in the Arctic area. This was due to the international sanctions, which have been imposed on Moscow since 2014.
Russia is the third-largest oil producer and the biggest exporter of gas in the world. Over the last decade, the country was regarded as the most promising exploration and development destination globally. However, Russia’s invasion of Ukraine has had widespread repercussions in the energy sector. International oil majors like Shell plc (SHEL - Free Report) , BP plc (BP - Free Report) and Exxon Mobil Corporation (XOM - Free Report) announced their exits from the Russia operations.
Shell is dumping Russian energy investment. The company intends to exit the Sakhalin-2 LNG project and its JVs with Gazprom. Beside this, it plans to end its involvement in the Nord Stream 2 pipeline project.
At the end of 2021, Shell had $3 billion in non-current assets in the Russia joint ventures. The company expects the decision to start the discontinuation of JVs with Gazprom and related entities to impact the book value of its Russia assets and lead to impairments.
BP is withdrawing its stake in the Russia-based oil and gas company, Rosneft, after operating for more than 30 years in the country. It was one of the biggest foreign investors in Russia before exiting its position. The decision can hit BP financially by $25 billion and slash almost half of its hydrocarbon reserves.
BP is also planning an exit strategy from its other businesses in Russia, which involves three JVs, with a carrying value on its books of $1.4 billion. The company’s board believes that these decisions are in the best long-term interests of all shareholders.
Another global energy company, ExxonMobil, recently announced that it commenced the process of discontinuation of operations at Sakhalin-1. It plans to make no new investments in Russia. With the exit from the key oil and gas project, located off the eastern coast of Russia, ExxonMobil is concluding its operations in Russia that spanned over decades.
Thus, ExxonMobil is aligning its interests with the business communities across the world that are isolating Russia over its violent and unprovoked invasion of Ukraine. If this trend continues, Russia will lose foreign investment in its crucial energy sector.
Company Profile & Price Performance
Headquartered in Rome, Italy, Eni is one of the leading integrated energy players in the world.
Shares of Eni have underperformed the industry in the past six months. The stock has gained 18.6% compared with the industry’s 44.7% growth.
Image Source: Zacks Investment Research
Zacks Rank
Eni currently carries a Zack Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.