Italian energy giant Eni is considering giving investors a chance to invest in separate stakes in its fossil fuel projects, in a move that is known as a satellite strategy. The projects are likely to be some of the company's very lucrative developments based in the Ivory Coast and Indonesia.
This will allow investors who may not be particularly interested in renewable energy projects to make sure their money is funding only the fossil fuel projects they support.
Similarly, it will also allow investors who prioritise green projects to ensure that their money is not being used to support fossil fuel developments.
At the same time, the company plans to use its own capital to further develop low-carbon and renewable energy projects, ensuring those are not neglected either. The move is expected to garner the support of several high-profile and key investors such as a variety of infrastructure funds and private equity firms.
Eni's chief financial officer (CFO) told Reuters: "The satellite model is an approach we have built to have additional funding sources to keep together the need to meet demand for traditional products, while also developing new, greener products."
The strategy separates the fossil fuels and renewables by making sure they have their own balance sheets and management teams looking after them. The satellite model of energy investment has been adopted by several oil and gas companies in recent months.
It goes a long way towards reassuring traditional investors that profitable oil and gas projects will not be abandoned for renewables until the latter are at least as profitable. On the other hand, through such a separation of projects, renewables also get a chance to shine, with companies being better able to highlight their potential to investors.
Eni continues exploration and development projects
Eni recently reported first quarter results, with the company focusing on plans to expand and develop current projects. It has partnered with Ithaca Energy in order to merge its British North Sea oil and gas projects. In return, Eni will have a 38.5% stake in Ithaca Energy.
Eni CEO Claudio Descalzi said in a statement: "In the first quarter 2024, we have accelerated in executing the transformation of our portfolio through different high value platforms of growth in both the legacy and transition businesses.
"With the closing of the acquisition of Neptune Energy and the announced UK focused combination with Ithaca Energy in the upstream, we will reinforce our exposure to gas and to OECD countries, while the Energy Infrastructure Partners (EIP) investment into Plenitude at an enterprise value in excess of €10 billion confirms the material potential of our renewable and retail segment.
"Operationally, we continue to leverage our exploration and development skills: a new giant discovery in Cote d'Ivoire will expand our optionality in the long term both in term of resources and potential dilution; fast tracking development has ensured the start-up of the first liquefied natural gas (LNG) in Congo, just one year after the Final Investment Decision."
