Italian energy giant
) confirmed that its joint venture with the state-run oil holding
Petróleos de Venezuela SA (PDVSA) has commenced producing first
oil from Junín 5, an oilfield located at the Orinoco Oil Belt,
ENI SPA-ADR (E): Free Stock Analysis Report
STATOIL ASA-ADR (STO): Free Stock Analysis
TOTAL FINA SA (TOT): Free Stock Analysis
YPF SA D CV ADR (YPF): Free Stock Analysis
To read this article on Zacks.com click here.
PetroJunín, a joint venture between PDVSA and Eni, started
production nine months ahead of Phase 1 schedule. The companies
intend to generate approximately 15,000 barrels per day (BPD) by
year end at the Junín 5. The block is situated around 550
kilometers south east of Caracas with 35 billion barrels of oil
equivalent (BBOE) of certified oil in place.
The explorers intend to boost the production to about 75,000 BPD
by early 2015 with the drilling of around 180 wells. After the
completion of the Phase 2 development, the block is expected to
produce 240,000 BPD by the end of 2018. The companies also
planned to drill nearly 1500 wells throughout the expected 40
years of field lifespan. PDVSA holds a 60% share in the
PetroJunin joint venture and acts as the operator, with Eni on
Eni also holds a stake in another Venezuela block. The company is
the co-operator in Cardón IV − the operating company controlling
the huge Perla gas field. The company expects Perla to contain
around 17 Trillion cubic feet (Tcf), or 3.1 BBOE. The project is
expected to comprise of Eni with 32.5% interest and Repsol 32.5%.
PDVSA will also hold a 35% stake after its entry in the project.
Again, the Italian company holds an interest in Petrosucre − the
operating company of the Corocoro offshore field. PDVSA owns a
74% share and Eni 26% in the filed, which currently has a net
daily production of around 10,000 barrels.
The latest upstream venture is in sync with Eni's constant
efforts to expand its exploration operations. Moreover, project
start-ups, inputs from big projects in Iraq, Australia, Russia as
well as Egypt, as well as its strategic position in
non-conventional gas, are expected to augment volumes going
The company also made a record number of discoveries during 2012
and added resources of 3.64 BBOE. At the end of 2012, Eni's
proved reserves were at an eight-year high of 7.17 BBOE and the
organic reserve replacement ratio was 147%.
However, Eni believes that a certain degree of ambiguity still
looms with respect to the economic slowdown, particularly in the
Euro Zone. The European gas, refining and marketing, and
chemicals sectors also remain highly volatile. Overall demand
will likely remain weak due to the ongoing economic dormancy.
Eni currently carries a Zacks Rank #4, which translates into a
Sell rating. There are other stocks in the oil and gas industry
that appear more attractive. These include
) that hold a Zacks Rank #2 (Buy) and are expected to perform