) has inked a Production Sharing Agreement (PSA) with the
Ukrainian government relating to the exploration and development
of acreage in the Ukrainian sector of the Black Sea. The acreage
comprises the Subbotina oil discovery.
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Located in the eastern part of the Crimean peninsula, the
1,400-square kilometer patch provides extensive exploration
opportunities. According to Eni, licenses for Abiha, Mayachna and
Kavkazka - together known as the Pry Kerch block - are also part
of the deal. The Pry Kerch block is considered to contain
numerous oil and gas prospects.
The Milan-headquartered oil major holds a 50% interest in the
block. The other partners include state oil venture Nadra
Ukrainy's subsidiary Vody Ukrainy, state gas player Naftogaz's
Black Sea arm Chornomornaftogaz and France's EDF holding 35%, 10%
and 5%, respectively.
Eni did not disclose the investment involved in the PSA. However,
the Ukrainian Energy Minister revealed through a news agency that
the project could entail an investment of about $4 billion.
Eni's expertise in exploration, development and production in
similar reservoirs as well as its immense understanding of the
technologies necessary for the development of offshore activities
will assure the success of the project.
Last year, Eni was one of the majors to be defeated in bidding on
a pair of Ukraine shale blocks, where
Royal Dutch Shell plc
) emerged winners.
Eni's constant efforts to expand its upstream operations in
Cyprus, Egypt, Vietnam, Indonesia, Pakistan and Kenya will go a
long way in generating profitable growth in the future. Moreover,
project start-ups, inputs from big projects in Algeria, Iraq,
Australia, Russia as well as Egypt, as well as its strategic
position in non-conventional gas, are expected to augment volumes
Eni carries a Zacks Rank #3 (Hold). A better-ranked stock in the
same sector is
SM Energy Company
), which holds a Zacks Rank #1 (Strong Buy).