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This quarter we saw Eni’s ‘Satellite model’ in action, signing an exclusivity agreement with KKR for the sale of a 20-25% stake in its Enilive business.

Our view

Eni claims funding growth through its satellite model will provide access to additional capital markets, but we haven’t seen any evidence of this. With the company lagging peers in low-carbon capex ambition, the question will be whether Eni will use divestment proceeds to increase low-carbon capex guidance or to fund higher distributions. 

Either way, it needs more money than it has guidance to build the low-carbon business. We estimate that to meet its renewable generation targets it will need an additional ~€2bn in capex by 2030.

Investors engaging with Eni should ask for :

1) Whether Eni’s satellite model will lead to higher low carbon investment than already guided, to bring ambition in line with peers.

2) A quantified breakdown of decarbonisation levers. Eni has the most ambitious absolute targets compared to peers, aiming for a -35% reduction in net scope 1, 2, & 3 emissions between FY18-30. However, its target may be at risk, with plans to increase oil and gas production by up to 15% by FY30, the highest of its European peers.

3) Increased ambition for low-carbon investment. Eni’s short-term capex guidance is ~28% of group, placing its ambition only ahead of  Shell. In addition, the company does not provide low-carbon capex guidance to FY30. 

4) Match Net Carbon Intensity (NCI) ambition with peers. Eni’s FY30 NCI target is the least ambitious compared to peers at -15% between FY19-30 (vs -19%-20%).

Key findings