Eni bets big on Zohr explorer finding new Egyptian treasure

MILAN: Italian oil major Eni is betting billions on Luca Bertelli being able to achieve something he has been doing since he was 9 years old — spotting things others overlook.
The geologist, who heads Eni’s exploration team, began collecting rocks as a boy growing up in Tuscany, developing a curious eye that eventually led him to discover two of the world’s biggest gas fields this century.
His latest success, the Zohr field off Egypt, sits in an area that Royal Dutch Shell pored over for years before Bertelli persuaded his boss to embark on a drilling program that turned up the Mediterranean’s largest gas discovery.
Now the 59-year-old and his team are under pressure to show they can keep finding treasures others have missed — this time in waters off Mexico where former state oil monopoly Pemex has been exploring for decades.
“We feel there’s room for surprise, even in areas previously explored,” Bertelli said up in his 12th-floor office in Milan, fingering a specimen of crumbly oil-rich rock from the Amoca field it won, with two other fields, in 2015.
Bertelli is a lynchpin in Eni’s corporate strategy which in recent years has seen it break ranks with major rivals and ignore the rush to shale, focusing instead on eking out the world’s conventional energy resources.
In recent years weakness in its “downstream” businesses like refining and chemicals have dragged on profits and placed more of a premium on securing success in “upstream” exploration.
The story of how Eni discovered the giant Zohr field in 2015 offers a window into how Bertelli and his team operate.
He said geologic intuition and experience told him there could be something there that other companies hadn’t spotted.
Previous discoveries in the East Mediterranean had all been in sandstone. But it soon became clear this was not the case in Zohr, prompting a host of rivals to dismiss the site.
What Bertelli and his team saw instead were the outlines of a different kind of structure beneath a thick layer of salt and he had a hunch it could be a form of limestone — carbonate — that he had seen yielding oil and gas in fields as far flung as Kazakhstan and Venezuela.
“Intuition comes from experience,” he said. “In the case of Zohr we’d already seen similar geological features elsewhere.”
Then Eni’s supercomputer came in. It is the third most powerful in the industry after those operated by France’s Total and Norway’s Petroleum Geo-Services, processing 8 million billion operations a second.
It recrunched imaging data hailing from the 1990s to look for signs of carbonate formation, performing the task in a matter of days rather than the months that was once needed.
“The result gave us the confidence to back up our intuition,” said Bertelli. “We decided to go for drilling.”
But if Eni, the seventh-biggest major by output, might have an edge in exploration, its downstream business has struggled. The consequent shift of focus away from those areas has raised concerns it might be overly exposed to oil price volatility.
Its heavy presence in Africa, with the risk associated with working in places like Libya and Nigeria, is for some another reason why the company’s shares have underperformed peers like BP and Total.
A decade ago, Eni was all but washed-up as an explorer.
It was struggling to discover as much new oil and gas as it extracted each year. And its ability to run complex projects was in doubt after losing its role as sole operator of the huge Kashagan oilfield in 2008 due to delays and cost overruns.
Since then it has discovered two world-class gas fields, in Mozambique and Egypt, adding 115 trillion cubic feet of resources.
Bertelli attributes the turnaround to a strategy he helped CEO Claudio Descalzi implement — a focus on simple projects majority-owned by Eni to better control costs and time.
The decision not to chase the shale bonanza that reshaped the industry was also key. “We found a window of opportunity in a field no longer dominated by the super-majors but by smaller independent players.”
Bertelli points to a map on his wall of the company’s giant Mamba field off Mozambique, calling it one of a kind. Then he pauses for thought. “But it’s probably not unique,” he adds. “There’s another one out there waiting to be found.”
— Reuters