Eni in Africa

Challenges to Sustainable Development

The advent of the crisis and the subsequent countermeasures taken by western Governments to limit its effects, highlighted the weaknesses of the African economic system.

In the business sector, the fall in demand and raw material prices is leading to growing unemployment , which is worsened by the lack of integrated supra-regional markets and, at the same time, by the protectionist barriers set up by various western governments.

Gas and oil exporting Countries (particularly North African ones) appear to be more resistant to the recession, although this makes the local economic systems dependent on fluctuations in oil prices. These problems are additional to the serious problems that already exist (malnutrition, illiteracy, political instability, spread of endemic diseases) which, despite the considerable efforts made and the slight progress made recently, seem to further delay any real socio-economic development, particularly in the Sub-Saharan area.

If it is managed appropriately, however, the global economic crisis can turn out to be a major turning point. The availability of abundant natural resources and cultivable land, the widespread presence of a young workforce and an emerging middle class are the ingredients needed for gradual development in the more dynamic economic environments.

In this respect, during the World Economic Forum held in Cape Town in June 2009, African political and economic leaders made a number of important points on how to re-launch economic competitiveness. Firstly, they highlighted the need to protect local financial markets by means of appropriate reforms, which some African Countries had already introduced before the crisis. Furthermore, they pointed to the need to revitalize trade, both internationally, by strengthening and regulating growing ties with emerging Countries (China and India), and regionally, by reducing customs duties and creating the premises for greater political and economic integration between African States. Inter-regional trade can only be improved, however, if international investments and aid continue to flow. Used efficiently, they are an important tool that can be used to build the infrastructure which is still lacking throughout the African continent.

The energy scenario: risks and opportunities

In recent decades, rapid population growth and the increasing openness of local economies to international markets have highlighted a number of serious shortcomings in the African energy sector, particularly as regards power generation, which is fundamentally important for creating infrastructure and, consequently, for economic development.
According to the World Energy Outlook 2009 data, only the Mediterranean Countries of Africa enjoy a high rate of electrification, with over 98% of the population covered. In Sub-Saharan Africa, however, almost 600 million people have no electricity (71.5% of the total), particularly in rural areas of the Countries most affected by poverty, such as Ethiopia, the Democratic Republic of the Congo, and Malawi.

In terms of resources, however, Africa has enormous potential, as a result of the huge availability of both traditional and renewable energy sources.

As regards the former, several African Countries are currently among the biggest oil producers in the world, not only in the north (Egypt, Libya, Tunisia), but also in the Sub-Saharan area, particularly Nigeria and Angola (which are among the top 20 producers in the world and are increasing production all the time).
The low rate of urbanization across the continent and low population density in many rural areas have however created an opportunity to make efficient use of local renewable resources as well. At the moment, the use of these resources covers almost half (49%) of the energy requirements of the local population, although much of the supply comes from the use of biomass (particularly high in Mozambique, Nigeria, and the Democratic Republic of Congo).

Other renewable sources (solar, wind, geothermal) present great potential for the future, thanks to the geographical and environmental characteristics of the African continent. The use of these resources is still small but major industrial projects have been launched in some Countries which have had a significant effect on the amount of energy produced locally, as it has happened in Mozambique and Nigeria (with over 10% of total energy coming from renewable sources not obtained from biomass).

Cooperation and Development Model

Eni’s strategy in Africa is to consolidate and expand its position by engaging in sustainable projects aimed at creating value for its stakeholders and for the Countries involved. Eni is currently present in 15 African Countries and is the main oil major in terms of production, with approximately one million barrels of oil a day. Thanks to its vast investment program planned for the next four years, production is destined to grow significantly in the near future. In North Africa, Eni is the leading foreign producer in all the Countries where it currently operates (Egypt, Libya, Algeria and Tunisia), while in Sub-Saharan Africa, a region where it has been active since the early 1960s, the Company is established in the main producing Countries, such as Angola, Nigeria, and the Republic of the Congo, as well as having exploratory interests in Gabon, Ghana, Mali, and Mozambique. Approximately 20,000 Eni people work throughout the continent.

Eni’s commitment to Africa stems from a long history of relations and cooperation agreements built up over more than fifty years of presence in the continent, which have made the Company a solid and credible partner of the local stakeholders. With the anti-colonialist approach of its President, Eni was immediately perceived as a different presence that could contribute actively to real and effective growth. Since the agreement signed in Egypt in 1955 – which assigned the country 75% of oil profits compared to the 50% offered by the other majors – Eni has established relations and coalitions with various Countries across the continent, faithful to its cooperative approach.

With the agreement signed in Libya in 2006, Eni renewed its Cooperation and Development Model, inaugurating a series of major agreements in Angola, Gabon (2008), Egypt and the Democratic Republic of the Congo (2009), based on a desire to promote lasting and sustainable growth.

With its resources, skills and know-how, Eni contributes primarily by transferring technology for energy efficiency and environmental protection, actively contributing to the implementation of energy procurement policies, as witnessed by its involvement in the construction of major energy infrastructure in Nigeria and Congo and its participation in projects in which the use of advanced technologies is fundamental.

Eni is increasing its involvement in projects aimed at strengthening local socio-economic systems as well as supporting the development of facilities required by communities, in order to improve the quality of life of local populations. In accordance with its local development plans, the Food plus Biodiesel projects in Congo and Angola are primarily aimed at promoting the agricultural sector, which presents a major opportunity for diversifying local economies that are heavily dependent on oil. In Africa, the Company’s involvement in pursuing the UN’s Millennium Development Goals (MDG) is a priority. To this end, Eni is actively involved not only in the context of operational agreements but also in promoting dialogue and international cooperation, even with non-governmental organizations, to support and optimize this work (AVSI Report). In this respect, Eni Foundation is playing an increasingly major role thanks to its commitment, as demonstrated by the results achieved, to various projects in Congo and Angola, aimed at contributing to and dealing with emergencies associated with the health of the more vulnerable members of the community.

Oil spill prevention in Egypt and Nigeria

In Egypt, the IEOC associated company, operating through Petrobel and Agiba, has been carrying out for some years numerous initiatives for the prevention of oil spills and for an adequate response when they occur. The environmental conditions of operations (strong thermal excursions and closeness to the sea) can seriously affect pipeline functions and require the definition of specific interventions in order to guarantee the highest reliability of the plants.The Western Desert Zero Leak project was launched in 2007 in Agiba and addressed the prevention of oil spills. The project aimed at a reduction in the number and severity of the spills through the replacement of the existing flowlines and the injection of anti-corrosive substances into the manifolds. A total of 241 km of flowline will be replaced.

From 2007 to 2009, 225 km of pipeline were replaced; in 2009 the flowline manifold was replaced with new lines covering 31 km and with the Internal Coated type of lines covering 15 km. In 2010, the existing flowlines will be replaced with the new Internal Coated type of lines covering additional 30 km. The project has resulted in a 64% reduction in the volume of spilled oil in Agiba. In Petrobel, 110 km of underwater pipe will be inspected with the support of the HSE division unit. Finally, an Oil Spill Assessment was carried out for two associated companies, which has involved the formulation of environmental sensitivity maps, the collection of information on spill events and the preparation of emergency plans.

 In Nigeria a pilot project has been developed  to monitor the access to pipelines and a prompt location of sabotage actions. The Remote Sensing system operates at the Ob/Ob site and it monitors 12 Km of the pipeline until the Ogoda site revealing the presence of walking persons on foot and by means of transport, excavations and vandalisms. In 2009 has been issued a specific procedure for the oil spill management and the involvement of local authorities and communities representatives in the causes’ analysis, concerned areas definition, clean up activities, land reclamation activities and land recovery certification.

The reclamation certification is issued by the National Oil Spill Detection and Response Agency (NOSDRA). Considering favourable environmental and climate conditions the Remediation Enhanced Natural Attenuation was defined to improve soil micro-organisms conditions: through fertilizers administration of and soil revolving, the concentration of hydrocarbons will be reduced by 40 times.

The prevention of road accidents in Africa

In 2009, within the Exploration & Production sector, the percentage of road accidents that occurred with Company vehicles, including those to and from work, was equal to 15% of the total. To reduce the impact of these accidents, in the last few years the prevention policy referred to the use of vehicles was intensified in all the subsidiaries abroad.

Safe driving programs were implemented and a project to adopt speed control devices was launched with reference to the higher risk vehicles. In Africa, with special attention to Egypt, Algeria, Nigeria and the Congo, the implementation of the "Safety technical guidelines on vehicle driving in non EU Countries" issued in 2006, started being monitored along with the project concerning the company vehicles not yet equipped with the speed control system. In Africa, to this date, the company has a fleet of 1,406 vehicles; the control system has already been implemented on 18% of the company’s vehicles, those at higher risk. The system will be adopted on 700 vehicles by May 2010 and on the remaining within 2011.

Application of solar technologies

As regards Concentrating Solar Power (CSP) technology, i.e. solar technologies that use the “direct‘ radiation of the sun by concentrating it through mirrors for the production of energy, Eni is implementing a project which includes, among its objectives, the evaluation of possible industrial initiatives.

For this purpose, a case study concerning the installation of a hybrid fossil-solar power plant of 140 MWe, was conducted at one of the sites in Tunisia. It consists of a combined natural gas cycle associated with a field of concentrating collectors capable of converting solar energy into thermal energy at high temperatures which is then converted into energy within the same cycle.

Part of the electricity produced can be fed into the national electrical grid. The assessments conducted to date have led to an appreciation of the advantages of this particular installation which provides a good exploitation of solar energy (thanks to the large capacity of the power cycle), a reduction in the consumption of fuel gas and of CO2 emissions (thanks to the use of a renewable source) as well as a production of energy 24 hours a day (thanks to the use of fossil sources).

At the same time, Eni has carried out assessments on the production of energy (1 MWe) from a solar source using CSP and photovoltaic (PV) systems to power multi-phase pumps in a remote location in Algeria. In both cases, independent setups were evaluated, with energy accumulation and hybrid solutions powered from a solar source or from fossil fuels. Regardless of the comparison with traditional technologies based on fossil fuels, less expensive to date, this second analysis has confirmed once again the convenience of developing hybrid solutions. A set of studies, aimed at assessing the potential advantages in the use of solar energy within the upstream business, in order to reduce the consumption of fossil fuels and therefore CO2 emissions by using hybrid PV/diesel generator systems, are to be noted: in Egypt, for the production of 1 MWp (peak) to be fed into the domestic electrical grid, in Libya for the production of a total of 2 MWe in order to power submerged electric pumps. Also in Egypt, a stand-alone, hybrid 58 kW PV/diesel pilot installation for powering the pumps in desert areas, is underway.