Eni Essay ⋆ Business Essay Examples ⋆ EssayEmpire

Eni is one of the leading integrated energy companies in the world, and its success is mainly based on continuous innovation and growth strategies. The primary businesses managed by the company through different operating divisions and subsidiaries are Exploration & Production, Gas & Power, Refining & Marketing, Engineering & Construction, Petrochemicals, Oilfield Services and Engineering. From exploration and production (upstream segment) to the supply, transport, distribution, and sale of natural hydrocarbons (midstream segment), to the processing and marketing of refined products (downstream segment), Eni has a presence in all phases of the energy value chain. BASF, BP, Chevron, ConocoPhillips, E.ON, Enel, ExxonMobil, Marathon Oil, Pemex, Petrobras, Repsol YPF, Royal Dutch Shell, Sunoco, and Total are among its main global competitors.

The company, headquartered in Rome, Italy, has reached a strong international position operating in around 70 countries with a staff of about 76,000 employees. During fiscal year 2007 the group recorded revenues of €87,256 millions, and a net profit of €10,011 millions.

Eni (Ente Nazionale Idrocarburi) was established by the Italian government in 1953 with the mission to promote and develop national energy-related operations. It became a joint stock company in 1992. Today the main shareholders are the government (20.31 percent), the Cassa Depositi e Prestiti (CDP SpA, whose capital is held 70 percent by the Italian Ministry of the Economy and Finance and 30 percent by some Italian banking foundations) with a share of 9.99 percent, the Intesa San Paolo Group (2.27 percent) and the Monte dei Paschi di Siena Group (2.11 percent).

Since the beginning, under the leadership of its chairman Enrico Mattei, the company was focused on developing international key business alliances with many producer countries. Furthermore, relevant investments into research and technologically advanced structures of excellence had been always considered a key success factor for satisfying customers’ needs and protecting the environment. Technological, business-model, and new-to-the world product innovations are continuously developed in Eni, resulting in the creation of maximum value and generating a strong and durable competitive advantage.

In Eni the continuous growth of its upstream and downstream activities has been always considered a strategic priority. The growth strategy, supported by a strong pipeline of projects and strongly coordinated with an increasing operational efficiency and relevant technological investments, is differently implemented depending on the business lines.

Exploration & Production Division growth has been based since its historical origins on a continuous increase of production, thanks to some foreign direct investments carried out through development projects, acquisitions of assets, and new exploration licenses. Partnerships and strategic agreements have enabled the company to accelerate the achievement of its growth strategies. Today organic production growth is relevant in some strategic regions such as the Caspian Sea area, Gulf of Mexico, North and West Africa, where Eni is part of some important projects. Nowadays, one of the company’s targets is to replace in the medium term more than 100 percent of produced reserves.

Also in the Gas & Power business Eni occupies a strong and integrated position in Europe. The company’s value drivers can be summarized in the following: a strong capacity to dialogue with oil and gas producing countries such as Russia and Algeria; a competitive advantage in capturing full value from the gas value chain; business development with an integrated approach between Gas & Power and Exploration & Production.

Eni’s profitability in the Refining and Marketing Division is also a priority. In Refining, profitability is reached through focused investments that enable the company to obtain a continuous increasing of the refining conversion index. This results in higher value and quality products, lower operating costs, and increasing refinery flexibility in processing low-quality crude oils. In Marketing, with its retail business focused in Italy where the company is the leader with the brand Agip, Eni is involved in focused marketing initiatives and effective segmented pricing strategies. Nevertheless the company is strengthening its position in other international growing markets through the acquisition of local service stations.

Finally, among the numerous differentiating strategies that determine the competitive advantage in the other company’s business lines and subsidiaries, is the continuous geographical expansion and innovation, the constant business integration, and the creation of plants which enable the company to generate significant economies of scale.

Bibliography:

Datamonitor, www.datamonitor.com (cited March 2009);
“Eni: Looking to Bounce Back,” Petroleum Economist (v.75/5, 2008);
Eni SpA, www.ENI.it (cited March 2009);
Fisher. “Devil’s Advocate: Italian Oil Giant Eni Has a History of Cutting Deals with Anyone. But Now Its Future Hangs on Russia,” Forbes (v.180/2, July 23, 2007);
“Going for a Gusher in Libya Italy’s Eni Is Beating Out Giants Like BP and ExxonMobil, Partly Because It Never Left the Country During the U.S. Embargo,” BusinessWeek (March 26, 2007);
Hoovers, www.hoovers.com (cited March 2009);
“Norway: Eni Aiming for 2012 Production Start for Barents Oil in the Arctic,” Offshore (v.68/4, 2008);
“UOP and Eni Plan to Make Diesel Fuel from Vegetable Oil,” Focus on Catalysts (n.10, October 2007).

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