MILAN (Reuters) – Italian energy company Eni said it will write off around 3.5 billion euros ($ 4 billion) of the value of its assets after assessing its long-term outlook for oil and gas prices due to the economic impact of COVID 19 corrected crisis.
In a statement on Monday, Eni said it would increase its long-term price assumption for Brent for 2023 from previously $ 70 to $ 60 per barrel and gas at the Italian hub from $ 7.8 to $ 5.5 per barrel Million British thermal units.
“Our revised long-term assumptions, which were achieved four months after the outbreak of the COVID-19 pandemic, reflect our current expectations for future prices and will feed into our capital allocation processes,” said Claudio Descalzi, CEO of Eni.
The move follows similar write-offs from rivals like BP and Shell as crumbling demand due to the COVID-19 crisis and transition to lower-carbon energies trigger a recalculation of reserves and assets.
Eni said it expects “after-tax impairment losses on long-term assets, including a depreciation of tax credits recognized in connection with tax loss carryforwards, of EUR 3.5 billion plus or minus 20%”.
It said it would post the write-downs, most of it on upstream assets, in its second quarter results.
It said it now forecast Brent at $ 40, $ 48 and $ 55 a barrel, respectively, from $ 45, $ 55 and $ 70 a barrel, respectively.
Earlier this year, Eni pledged to cut its greenhouse gas emissions by 80% as part of one of the most ambitious cleanups in an industry under pressure from investors to go green.
Descalzi confirmed the group’s strategy of becoming a leader in the decarbonization process despite the ongoing impact of the COVID-19 pandemic on the global economy and the group.
“We are looking at how we can accelerate our plans,” he said.
Reporting by Stephen Jewkes; Adaptation by Giles Elgood