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E&P veteran offered Eni’s top job

EDUARD GISMATULLIN

ROME (Bloomberg) -- Claudio Descalzi’s nomination as CEO of Eni SpA puts a life-long oil man in charge of Italy’s largest crude producer, demonstrating Prime Minister Matteo Renzi’s preference for technocrats over political appointees to run the country’s biggest companies.

This “strikes us as a business rather than a political appointment,” said Lucas Herrmann, a London-based analyst at Deutsche Bank AG, wrote in an emailed report. It “avoids the uncertainties which could have been created by an outside nominee. Descalzi is well known by the investment community.”

Descalzi, a 59-year-old engineer, has headed exploration and production since 2008 and oversaw Eni’s biggest natural gas discovery off Mozambique. He’s tried to improve project management after delays and cost overruns blighted Eni’s leadership of the $48-billion Kashagan project in Kazakhstan.

His appointment will be confirmed at Eni’s annual shareholder meeting on May 8. Italy’s prime minister can nominate the CEO because the state holds 30% of the company through a direct stake and an investment by a government bank. He will replace Paolo Scaroni, who was appointed almost nine years ago by Silvio Berlusconi.

Renzi nominated several senior managers at Italy’s largest companies yesterday. Francesco Starace, the head of Enel SpA’s renewable power unit, was appointed to lead the country’s biggest utility.

Emma Marcegaglia, former head of the Italian employers’ lobby Confindustria, was nominated as Eni’s chairwoman.

Descalzi started his career at Eni in 1981 and worked on projects in the North Sea, Libya, Nigeria and Congo, according to the company’s website.

Descalzi is “the first CEO candidate emerging from the core” exploration and production business, Oswald Clint, a Sanford C. Bernstein & Co. analyst in London, said in a report. He will continue the strategy of “controlling capital expenditure, driving cashflow up and maintaining a strong focus on exploration.”

In Mozambique, Eni together with Anadarko Petroleum Corp. found more than 100 Tcf of gas, enough to build the world’s second-biggest plant to liquefy the fuel.

Scaroni, who saw Eni’s stock slip about 14% under his management, in February said that he was “available” for a fourth term as a CEO. His candidacy ran into complications when he was convicted last month of environmental charges stemming from his tenure as CEO of Enel from 2002 to 2005.

Scaroni said in a March 31 statement that he would appeal the conviction and that the Porto Tolle power plant, which was at the center of the case, always respected the law.

The court ruling made it more difficult for Scaroni to seek re-election at Eni’s shareholder meeting, Bertrand Hodee, an analyst at Raymond James Financials Inc. in Paris, said on April 1.

04/15/2014

 

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