Eni Confirms Fears about Kashagan Oil Field Problems

Italian oil and gas giant Eni SpA confirmed investors’ fears about delays and cost overruns at its mammoth Kashagan oil project in Kazakhstan, but insisted its strong position in the growing European gas market and its alliance with Russia’s OAO Gazprom will power the company forward.

The announcement came as Eni, the world’s sixth-largest oil company by market cap, reported that fourth-quarter net profit slipped to EUR1.52 billion, 28% lower than the same quarter a year earlier, due to lower refining margins, the depreciation of the U.S. dollar against the euro and production disruptions.

Eni said fourth-quarter adjusted net profit, the profit figure most closely watched by analysts and which excludes changes in the value of inventories and special items, dropped 1.7% to EUR2.36 billion from EUR2.4 billion. The company’s board proposed a 2006 dividend of EUR1.25 a share, compared with EUR1.10 the previous year.

Eni confirmed that its most important exploration project, the Kashagan field in the Caspian Sea with proven reserves of more than 13 billion barrels, won’t begin pumping until the second half of 2010, a full two years later than had previously been disclosed.

Rigzone