*is its limited presence in downstream justified-why? *is its vertical integration into gas justifie


Case 15 Eni SpA: The Corporate Strategy of an International Energy Major By May 2012, Paolo Scaroni had been CEO of the Italian energy giant Eni for seven years. His strategy had deviated little from that of his predecessor, Vittorio Mincato (CEO from 1998 to 2005). It comprised two major thrusts a commitment to organic growth strategy with a particular emphasis on oill and gas exploration and production CE&P) vertically integrated approach to Enis natural gas business through linking a Enis gas fields in north and west Africa and gas supplied from its alliance partner, Gazprom, to its downstream gas business in Europe by pipelines (and, more recently, liquefied natural gas). The strategy had achieved some notable successes. Since 2000, Eni had grown its petro leum output and reserves by more than most of the other majons, revenues had increased almost fourfold, retum on capital employed had averaged 148% over the ponod, and in tems of market capitalization Eni was Europes tenth-most-valuable company In his strategy presentation on March 15, 2012, Scaroni committed Eni to a con- inuation of this strategy During 2012-2015, capital investment would rise to 15 billion annually, of which 75% would go to E&P. The target was for petroleum production to grow by more than 3% each year during 2012-2015. Eni would continue to grow its natural gas business. The majority of Enis increased petroleum output would be natural gas; downstream, Eni would grow its sales of gas to European business and retail customers by 1896 and 28% respectively; Eni would continue to invest in pipelines, including the proposed South Stream pipeline (a joint venture with Gazprom, EDF, and WintershalD from Russ?a to Austria and Italy However, in pursuing this strategy, Scaroni recognized that Eni would face some strong headwinds. Expanding upstream production was becoming increasingly chal- lenging: exploration was moving to technically challenging frontier regions such as the This case was prepared by Robert M.Grant. 02012 Robert M. Grant
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media%2F6d2%2F6d29dc4a-3f8b-417e-be91-7d *is its limited presence in downstream justified-why? *is its vertical integration into gas justified-why? *is Eni's Italian nationality an advantage-why? Case 15 Eni SpA: The Corporate Strategy of an International Energy Major By May 2012, Paolo Scaroni had been CEO of the Italian energy giant Eni for seven years. His strategy had deviated little from that of his predecessor, Vittorio Mincato (CEO from 1998 to 2005). It comprised two major thrusts a commitment to organic growth strategy with a particular emphasis on oill and gas exploration and production CE&P) vertically integrated approach to Eni's natural gas business through linking a Eni's gas fields in north and west Africa and gas supplied from its alliance partner, Gazprom, to its downstream gas business in Europe by pipelines (and, more recently, liquefied natural gas). The strategy had achieved some notable successes. Since 2000, Eni had grown its petro leum output and reserves by more than most of the other majons, revenues had increased almost fourfold, retum on capital employed had averaged 148% over the ponod, and in tems of market capitalization Eni was Europe's tenth-most-valuable company In his strategy presentation on March 15, 2012, Scaroni committed Eni to a con- inuation of this strategy During 2012-2015, capital investment would rise to 15 billion annually, of which 75% would go to E&P. The target was for petroleum production to grow by more than 3% each year during 2012-2015. Eni would continue to grow its natural gas business. The majority of Eni's increased petroleum output would be natural gas; downstream, Eni would grow its sales of gas to European business and retail customers by 1896 and 28% respectively; Eni would continue to invest in pipelines, including the proposed South Stream pipeline (a joint venture with Gazprom, EDF, and WintershalD from Russ?a to Austria and Italy However, in pursuing this strategy, Scaroni recognized that Eni would face some strong headwinds. Expanding upstream production was becoming increasingly chal- lenging: exploration was moving to technically challenging frontier regions such as the This case was prepared by Robert M.Grant. 02012 Robert M. Grant

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