Eni says strong gas business to support 2023 results

Eni's Board of Directors, chaired by Lucia Calvosa, approved on 27 Apr 2023 the unaudited consolidated results for the 1Q 2023, said the company.

1Q 2023 adjusted profit before tax of EUR 5.0 bn was only 5% lower than 1Q 2022 despite a 20% fall in crude oil price and a 42% drop in gas price. This performance reflects a highly resilient E&P result and an outstanding contribution from the GGP business plus steady earnings from Sustainable Mobility & Refining.

Of note is the 30% rise in adjusted EBIT and 14% rise in adjusted profit before tax on 4Q 2022 despite the weakening Upstream scenario. E&P earned EUR 2.8 bn of adjusted EBIT. Including the contribution of Azule, the 1Q 2023 pro-forma EBIT increased to EUR 2.93 bn, a reduction of 33% year on year. GGP earned EUR 1.37 bn of adjusted EBIT, 47% higher than the 1Q 2022, driven by optimization and trading activities. Eni Sustainable Mobility, operational as of 1 Jan 2023, delivered EUR 0.14 bn of adjusted EBIT, up by EUR 0.07 bn compared to the proforma adjusted EBIT of the 1Q 2022 following the restatement of the comparative period.

The Refining business earned EUR 0.13 bn of adjusted EBIT compared to a loss of EUR 0.04 bn during 1Q 2022. The improvement was driven by higher benchmark refining margins, with Eni's SERM up to $11/bbl (vs a negative value in 2022) but negatively impacted by planned turnaround activity at important upgrading refinery units and lower leverage to natural gas price energy costs than in the benchmark due to efficiency initiatives already undertaken. Versalis was negatively affected by lower demand and market uncertainties, which held back purchase decisions by resellers and continued competitive pressures of products from Middle and East Asia.

Plenitude & Power delivered solid results with EUR 0.19 bn of adjusted EBIT (flat year on year) helped by the ramp up in the renewable installed capacity and production volumes and optimizations in the business of power generation from gas-fired plants. Plenitude generated EUR 0.23 bn of adjusted EBITDA despite challenging conditions. 1Q 2023 adjusted net profit attributable to Eni shareholders was EUR 2.9 bn and, compared with 1Q 2022, was 11% lower. In 1Q 2023, the Group adjusted operating cash flow before working capital at replacement cost was EUR 5.3 bn, largely exceeding the cash outflows related to organic capex of EUR 2.2 bn and dividend payments (EUR 0.8 bn).

Seasonal factors that typically shape working capital requirements in the first quarter accounted for the bulk of the excess cashflow with other investing activities also a EUR 0.2 bn outflow and the net effect of acquisition and disposal amounting to EUR 0.3 bn. In Mar 2023, Eni paid the third instalment of the 2022 dividend of EUR 0.22/share. The fourth tranche of EUR 0.22 per share will be paid in May 2023. Net borrowings ex-IFRS 16 as of 31 Mar 2023, were EUR 7.8 bn, and Group leverage stood at 0.14, versus 0.13 as of 31 Dec 2022.

We remind, Eni has started offloading the initial LNG cargo into Snam's new c in Piombino on 8 May 2023. The terminal has a cumulative processing capacity of 5 bn cu m/y, or nearly 7% of Italy's gas demand. The LNG was generated at Egypt's Damietta liquefaction facility, one of the units where Eni has invested with the strategic target of expanding its integrated liquefied gas portfolio. Eni bought regasification capacity at Piombino terminal as part of its strategy to diversify Italy's LNG supplies through its internationally generated equity gas. Leveraging its strong relations with the nations where it runs and its trademark fast-track project development approach, Eni has boosted the volumes of available gas from Libya, Algeria, and Italy and raised the number of LNG cargoes from Congo, Egypt, Qatar, Nigeria, Angola, Mozambique, and Indonesia.

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Pemex’s production of aromatics, ethane, propylene, and sulphur fell in the first quarter, year on year, but methane output rose strongly, the Mexican energy and petrochemicals major said.

The rise in production of methane and its derivatives helped overall petrochemicals production to remain mostly flat, with 319,000 tonnes produced during the first quarter, down by 0.62% year on year.

Financially, however, the company’s sales, operating income, and net income fell sharply.

Pemex said its production of methane and derivatives had risen sharply on the back of healthy output at its VI ammonia plant, located at the Cosoleacaque petrochemical complex.

Pemex said attributed the sharp fall in production of aromatics and derivatives to a five-week maintenance at its CCR Plant, located at the petrochemicals complex La Cangrejera CCR, in the state of Veracruz in the east of Mexico.

We remind, Mexican state oil company Pemex's newest refinery, which is still under construction in Mexico's southeast, will begin to process crude oil in July 2023.

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Covestro got off to a better start than expected in the 2023 fiscal year. Despite a still weak level of demand in a business environment that remains challenging, the company was able to limit the related negative impacts, said the company.

Group sales were down 20.1% in 1Q 2023, to EUR 3.7 bn (1Q 2022: EUR 4.7 bn), among other things due to a drop in volumes sold and a lower selling price level. The Group's EBITDA amounted to EUR 286 M and was thus 64.5% lower year over year (1Q 2022: EUR 806 M) due to a drop in volumes sold and lower margins. However, this result significantly exceeded the company's own expectations of EUR 100 M to EUR 150 M as well as recent analysts' estimates of EUR 158 M for 1Q 2023.

That was due in particular to the Group's focus on efficiency as part of its Sustainable Future strategy. Net income in 1Q 2023 fell to EUR -26 M (1Q 2022: EUR 416 M), while the free operating cash flow (FOCF) was EUR -139 M (1Q 2022: EUR 17 M). As the results for 1Q 2023 demonstrate, Covestro is well positioned with its strategic and structural setup to successfully overcome challenges on its own.

While the Performance Materials segment focuses on the reliable supply of standard products at competitive market prices, the Solutions & Specialities segment serves the need for complex products with a high pace of innovation in combination with application technology services. Covestro can thus leverage the individual strengths of both segments in their respective competitive landscapes ideally and gear them to customers' needs. Group sales in the Performance Materials segment fell by 25.0% to EUR 1.8 bn (1Q 2022: EUR 2.4 bn).

That was attributable in particular to the decline in volumes sold and lower average selling prices, mainly as a result of continued weak demand. The segment's EBITDA declined by 72.1% year over year to EUR 173 M (1Q 2022: EUR 620 M) due to lower margins and a reduction in volumes sold driven by demand and availability factors. The free operating cash flow declined to EUR -57 M (1Q 2022: EUR 112 M), primarily as a result of the drop in EBITDA. Sales in the Solutions & Specialties segment fell by 15.3% to EUR 1.9 bn (1Q 2022: EUR 2.2 bn), mainly on the back of a decline in volumes sold and lower average selling prices, both due to weaker demand.

The segment's EBITDA fell in 1Q 2023 by 26.3% year over year to EUR 165 M (1Q 2022: EUR 224 M). Here, too, the main drivers behind this decline were the demand-related decrease in volumes sold. However, the rise in margins had a positive effect as lower raw material prices outweighed the lower selling prices. The free operating cash flow increased by 67.1% to EUR -48 M (1Q 2022: EUR -146 M), mainly because of the fact that less cash was tied up in working capital compared to in 1Q 2022.

We remind, Covestro successfully started up a new world-scale facility for the production of chlorine in Tarragona, Spain. It is the first world-scale production plant for chlorine based upon the highly innovative and energy efficient ODC (oxygen depolarized cathode) technology invented by Covestro and its partners.

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MRC) -- Russia has started diesel exports to Chile, expanding its oil products supplies to Latin America after a European Union embargo forced traders to find new outlets, as per Reuters.

According to Refinitiv data, two cargoes loaded in April in Russia’s Baltic port of Primorsk with about 73,000 tons of diesel heading to Guayacan port in Chile.

Since the EU embargo on importing oil products of Russian origin went into effect in February, Russia has diverted its sea-borne diesel supplies to Asia, Africa, the Middle East and increasingly to Latin America.

In January-April, Russia exported to Latin and South American countries about 1.5 million tons of diesel, mainly to Brazil, after 211,000 tons in the whole 2022, Refinitiv data showed.

Russian diesel is gaining market share from the United States, which traditionally accounts for most of Brazil’s diesel imports. Brazil buys about 30% of its diesel abroad.

The Group of Seven rich nations, the European Union and Australia have set price caps at USD100 per barrel on Russian oil products that trade at a premium to crude, principally diesel, and USD45 per barrel for products that trade at a discount, such as fuel oil and naphtha.

We remind, Russia's second-largest oil producer Lukoil said on Thursday its subsidiary LITASCO had completed the sale of the ISAB oil refinery in Sicily to Cypriot private equity firm G.O.I. Energy following approval by Italian authorities.

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GAIL (India) Ltd, the country's top gas supplier, plans to build a USD4.89-B ethane cracker near its liquefied natural gas (LNG) import plant in Western India, two sources with direct knowledge of the matter said, as it seeks to meet an expected surge in demand, said Hydrocarbonprocessing.

Indian companies are boosting their petrochemical production capacity as the expanding economy boosts the need for goods ranging from plastics to paints and adhesives. A cracker produces ethylene, required for products such as plastics.

Demand for petrochemicals could nearly triple by 2040, according to estimates by top refiner Indian Oil, forcing companies to make big investments to set up new facilities across the country.

GAIL is looking for land in the coastal region of Dabhol in Maharashtra state for the 1.5 million tons a year (mtpa) cracker project, one of the sources told Reuters. GAIL operates a 5 mtpa LNG plant at Dabhol. The company plans to import ethane from the United States for the project, the source said.

GAIL's communications office did not immediately respond to a request for comment. "We are trying to sort out challenges around acquiring land, most likely, in or around Dabhol ... we are hoping to receive financial support from the state government," the source said.

GAIL is also exploring the possibility to acquire land in Madhya Pradesh, which neighbors Maharashtra, if a deal in Dabhol doesn't materialize, the person said. The proposed dual-feed cracker will also have capability to crack up to 40% liquefied petroleum gas (LPG), enabling the option to switch to less expensive feedstock to maximize margins.

India's per capita petrochemical consumption is about one-third of the global average. Asia's third-largest economy annually consumes 25 million to 30 million tons of petrochemicals.

We remind, GAIL Gas Limited is also steering its pricing mechanism in line with the Government of India's guideline to pass on new domestic gas pricing benefits to its customers and has announced a substantial reduction in prices with effect from 9th April 2023. GAIL Gas Limited has announced a reduction in its Domestic PNG prices by Rs. 7 per SCM in Bengaluru and Dakshin Kannada and Rs. 6 per SCM in all its other Geographical areas. The new effective Domestic PNG Prices is Rs 52.50 per SCM in Dewas, Meerut, Sonipat, Taj Trapezium Zone, Raisen, Mirzapur, Dhanbad, Adityapur and Rourkela and Rs 51.50 per SCM for Bengaluru & Dakshin Kannada.

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