The reopening of the economies and the consequent recovery of aggregate demand caused significant pressure on the prices of all raw materials. Copper, timber, food commodities have all nearly doubled prices since the lows of the pandemic. The WTI after the low of April 20, 2020, when it touched negative values, has skyrocketed to $ 70 in recent days, while the change in share prices of companies operating in the oil sector has underperformed the trend of the reference raw material.
The spread between black gold and oil security
Analyzing the trend since the beginning of the year, WTI oil jumped by 52%, while ENI by only 23%. At one year the difference is even more macroscopic: + 87% for the WTI and only + 23% for ENI (in the same period the Ftse Mib marks + 31%).
The same goes for the whole sector. L’EURO STOXX Oil & Gas marks + 23% in the last 12 months and + 10% YTD, underperforming the markets.
A real spread between black gold and big oil. This happened because if, on the one hand, the raw materials market is a “physical” market, very sensitive to changes in supply and demand, which, with the cessation of restrictions and the reopening of economies, has seen demand increase exponentially of oil; on the other we talk more and more often about energy transition: an ever-increasing share of investments in the energy sector will go to renewable energies, CO2 capture and hydrogen.
The International Energy Agency (IEA), through the voice of its director Fatih Birol, has even proposed to stop the search for new fields as early as this year. Many managers are in fact still underweight on the energy sector, which however is seeing, in recent months, a restart of profits that may have already reached the lowest point before restarting. In fact, the activities of oil companies are high in capital so the leverage operational is even greater e in a context of restarting inflation they should be more profitable.
ENI launches the first sustainability bond
ENI is one of the companies in the oil sector that is investing in the energy transition. The group led by Claudio Desclazi has successfully launched the first sustainability-linked bond issue in its sector for a total nominal value of one billion euros which will be used for ordinary needs. The issue follows Eni’s adoption of the “Sustainability-Linked Financing Framework” and pays an annual coupon of 0.375% which will remain unchanged until maturity if the sustainability goals relating to Net Carbon Footprint Upstream (Scope 1 and 2) and installed capacity for the production of electricity from renewable sources, as indicated in the terms and conditions of the issue. In detail, the first objective concerns the halving, by the end of 2024, of emissions deriving from the extraction and production of hydrocarbons. The second estimates to reach 5 Gwh of installed capacity to produce electricity from renewable sources by 2025, and today equal to about 1 Gwh.
Possible spin-off of the biorefineries
CEO Claudio Descalzi reported yesterday that the group could consider spin-off the biorefinery business to combine them with retail operations, as it plans to do with renewables assets. “It is premature, but it is an operation that could be interesting in the future”, said Descalzi speaking at the virtual event dedicated to the theme ‘Global Energy Transition 2021’.
Furthermore Descalzi reiterated that the Six-legged Dog group has the‘goal of achieving carbon neutrality by 2030 in the upstream sector, and overall activities by 2040 with respect to Scope 1 and 2 parameters. This year Eni presented a new strategy with the goal of zero net emissions based also on Scope 3 by 2050, while providing interim targets .