Eni (E) Asked To Stop Goliat Production Due To Safety Issue
Zacks Investment Research | Oct 08, 2017 11:00PM ET
Italian oil giant Eni S.p.A. (NYSE:E) has been ordered by the offshore safety watchdog of Norway, Petroleum Safety Authority ("PSA") to halt production on the company's Goliat Floating Production Storage and Offloading ("FPSO") vessel owing to some insufficiencies and faults.
Eni operates in the Goliat field, which is located in PL 229 in the Barents Sea and contains around 180 million barrels of oil reserve. It is 80 kilometers north-west of Hammerfest in Northern Norway. Production in the Goliat field, about 100,000 barrels of oil per day, began in March 2016. Eni has 65% operating interest in the field, while Statoil (OL:STL) ASA (NYSE:STO) has the rest 35% interest. Toward the end of September, PSA carried an audit of electrical safety on the FPSO, following which a meeting was held between Eni and the watchdog in early October. The fault rates found in the equipment were high, which led to an emergency shutdown. Per the company, the fault rate on the equipment was reduced to 38% through repairs after the audit report came out. The condition of the Ex motors relevant to the FPSO is yet to be determined.
What's Next?
Per the notice served to Eni, the company has to commence a complete systematic survey of potential ignition sources in the Ex motors. Operational, technical and organizational measures have to be taken by the company to decrease the threats from the FPSO, after which the PSA has to be informed. Production will start after that.
About Eni
Based in Rome, Eni with its consolidated subsidiaries is engaged in oil and gas, electricity generation, petrochemicals, oilfield services and engineering industries. The company’s major business segments are Exploration and Production (E&P), Gas and Power, and Refining and Marketing. The company conducts its major exploration and production activities for hydrocarbons.
We believe that Eni’s constant efforts to expand its upstream operations in Cyprus, Egypt, Vietnam, Indonesia, Pakistan and Kenya will go a long way in generating profitable growth in the future. However, the company expects weak trading environment for its Gas and Power business, which will adversely impact its profitability.
Price Performance
Eni has gained 1.1% year to date compared with 0.2% growth of its Zacks Investment Research
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