Italy’s Eni is considering reopening its oil-trading business as it misses out on the profits that its fellow European supermajors are generating from selling the commodities they produce, the company’s chief executive told the Financial Times.
“I stopped trading in 2019, but the other big companies are all traders,” Claudio Descalzi told the publication in an interview. “BP, Shell, Total are big traders, and they make billions from that.”
Indeed, trading has been especially profitable for the other supermajors, so Eni is pivoting via partnerships. Descalzi told the FT that Eni was in preliminary talks with a number of commodity trading houses, including Mercuria.
“It is not in our DNA. We are not very commercial,” Descalzi explained. “So I thought to become commercial, we have to have a partnership to understand the business.” “If we can offer physical hedging, that is a big advantage for them. We can complement each other,” the chief executive of the supermajor added, noting the amount of oil and gas that Eni produces should make it an attractive partner.
Despite oil trading being a major profit source for Big Oil, Shell, for one, flagged a weaker performance of its trading division ahead of its fourth-quarter results announcement. BP also said its trading business has weakened over the final three months of last year.
TotalEnergies, meanwhile, recently sealed a trading joint venture deal with Bahrain’s BapcoEnergies backed by production flows from Bapco Energies’ refinery. The new entity is positioned as a competitive regional trading player, designed to maximize downstream value and broaden access to international markets for Bahraini oil products.
Big Oil, and especially European Big Oil, has recently pivoted away from its low-carbon energy ventures and back to its core business of producing and refining oil and gas amid slowing energy transition momentum. Shareholders are now pushing for growth as predictions for peak oil move into the more distant future.
By Charles Kennedy for Oilprice.com
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