Eni Is Nearing a €2 Billion Plan to Reshape Its Italian Chemicals Business – BNN Bloomberg

(Bloomberg) -- Eni SpA is set to spend about €2 billion ($2.2 billion) to overhaul its aging Italy chemicals business, with a shift away from fossil fuel-based source products toward increasing use of decarbonized options.

The Italian energy major will gradually phase out production of basic chemicals at its loss-making Versalis business and focus on renewable, circular and specialty chemicals made from non-fossil fuel materials, according to people familiar with the plan.

The move comes as Europe’s chemicals industry faces a pivotal moment amid high energy costs and competition from Asia. Saudi Arabia’s SABIC decommissioned a naphtha cracking facility in the Netherlands this year while Exxon Mobil Corp. is closing chemicals operations in France. LyondellBasell in May announced a review of some European assets.

Eni’s transformation project will likely last five years, said the people, asking not to be named discussing confidential information.

Versalis plants in the southern regions of Sicily and Puglia will see a gradual reduction and stoppage in the use of steam crackers, which process hydrocarbon into ethylene. The company remains open on future uses for those facilities, according to the people.

The group’s chemicals plants in southern Italy now supply Versalis facilities in northern Italy. After the eventual shutdown of the crackers, the northern Italy plants will rely mostly on imported fossil fuel-based chemicals, the people said.

An Eni representative declined to comment on the chemicals unit transformation and relaunch plan, adding that details will be announced shortly.

Versalis, which last posted a profit in 2017, recorded a €220 million loss for the second quarter of this year. Eni has said restructuring and repositioning of the business will bring it back to break-even next year with a profit in 2026.

Eni Chief Executive Officer Claudio Descalzi has said the company needs to consider more radical initiatives in chemicals and focus more on bio-plastics.

The recent reorganization of the group’s structure was partly driven by that shift, Descalzi said last month. The executive also recently criticized the European shift toward services and away from core industries like chemicals.

--With assistance from Alex Longley and Antonio Vanuzzo.

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