Italian energy giant
) signed an agreement with Japanese and South Korean energy
companies for shipments of liquefied natural gas (LNG).
Per the agreement, Eni intends to transport 1.7 million tons of
LNG, or 28 cargoes, to the South Korean energy company Korea Gas
Corp. (KOGAS) and Japan's Chubu Electric Power Co. This first
ever joint purchase transaction that involves several Asian
countries covers a period between May 2013 and December 2017.
Asian LNG prices are generally steeper than prices in the U.S.
and Europe as Asian purchasers hardly ever get into group
As for the current deal, Eni said that it would ship the LNG as
per the requirement of each party. Chubu Electric secures
approximately 14 million tons of LNG annually while KOGAS
procures over 30 million tons positioning them as the world's No.
4 and No. 1 purchasers of the fuel, respectively.
In 2012, Eni inked a deal to sell 3.3 million tons of LNG, or 49
cargoes, to the Japanese market. Following the Fukushima Daiichi
nuclear disaster in 2011, Japan needs more natural gas supplies
in order to cope with the mounting energy deficit. While these
sale agreements would aid the Asian countries to meet energy
requirements, it will also benefit Eni to strengthen its LNG
footprint in the region.
The strengthening of the global economic scenario also offers Eni
ample long-term visibility. The company aims to enhance the
flexibility of its plants, along with optimizing the production
cycles, while reducing costs and utilizing its proprietary
Last month, Eni entered into a Heads of Agreement (HOA) with
Anadarko Petroleum Corporation
) for the development of natural gas reservoirs in offshore
Jointly, Eni and Anadarko also planned to build a common onshore
LNG liquefaction facility in the Cabo Delgado Province of
northern Mozambique. The facility is expected to be in operation
by 2018 and expand to a 10-train 50 million tons per annum (mtpa)
Eni holds a Zacks Rank #4 that is equivalent to a Sell rating for
a period of one to three months. Longer term, we maintain our
Neutral recommendation on the stock.
ANADARKO PETROL (APC): Free Stock Analysis
ENI SPA-ADR (E): Free Stock Analysis Report
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