Michele Marsiglia, President FederPetroli Italia, explains why the price of oil has gone below zero and why today Eni is stronger with the confirmation of Descalzi and the entry into the Saudi shareholding, "a strengthening of the Oil & Gas business "…….
Since Monday, the Covid-19 coronavirus has given way to oil in financial market nightmares. The reason is easy to say: for the first time in history, the price of oil has gone below zero. And fibrillations continue on all markets today.
Still with regard to the oil world, today the Ministry of Economy has confirmed Claudio Descalzi as Eni Administrator, our oil flagship which oversees the hottest areas - and not only in oil terms - of the planet, let's also say the Farnesina 2. Eni which in recent days has seen an important entry into its shareholding, namely the sovereign wealth fund of Saudi Arabia.
Oil will continue to lead world politics and the economy for a long time to come, it often repeats, also on our columns, Michele Marseilles, President of FederPetroli Italy, who just yesterday in a press note had underlined the favor with which the industries of the Italian oil sector looked at the Saudi entry into Eni. So we asked three questions about these 3 facts right in Marseille, a man of oil and certainly of establishment, who can afford to speak clearly and tell the facts for what they are.
President, there is an economic and financial world in turmoil due to the collapse of the oil market, we have reached -37 dollars. Would you like to explain what's going on?
We consider that the -37 dollars refers to a Futures contract that expires today, if we evaluate the same financial instrument on the West Texas Intermediate (WTI - American reference crude) expiring next June, the price is about 26 dollars. What went 'Less Than Zero', below zero is the reference crude oil for the American market, but the reference BRENT crude oil for Europe and a large part of the Middle East (our part of the world) remained at the quotations from 22 to 25 dollars a barrel, in a normal intraday swing. This is the most important element, the United States and their economies and Wall Street are collapsing on one side and on the other the NYMEX (New York Mercantile Exchange - market where crude futures are traded) have failed to hold the weight of the collapse or better, they didn't want to bear it.
This market fluctuation is a loss on the one hand, but a big gain on the other. From here it is understandable that yesterday's crash, although important and almost unique in history, was only a strong market speculation, with the complicity of our Saudi friends. To analyze the situation well, however, it is necessary to dwell on some variables of about a week ago and move the clock hands to the last online meeting of OpecPlus between Russia, the USA and Saudi Arabia to reduce the production of crude oil in the Covid-19 period and give breath to the oil economy. At the meeting, in addition to the gradual cutting of crude oil - and we pay attention to the word 'gradual' -, another important agreement wanted by Saudi Arabia was that which the United States of America would however undertake to buy crude oil slowly in order to increase their reservations, once everything is broken down.
Even if the United States has full deposits, crude oil can be contractually purchased the same and the financial instruments for commodity commodity are different, but this was not even veiledly done by the Trump Administration and the Middle East has served on the account, without ifs and buts. A few weeks ago I said in my speech in your newspaper that a "blow of the Middle East wind" will be enough to bring into play and upset all the balances in place, in a few hours ". For small and medium-sized American Shale Oil producers, today it is cheaper to empty the deposits in free economy than to close the wells and then put them back into operation, not only that, the cost of the deposits to store product today is too expensive with this situation . Recall that many of these producers have already resorted to Chapter 11 bankruptcy procedures in recent weeks. It is not the big American oil companies that are complaining, but the small producers, and the difference is not to be underestimated.
Descalzi has been confirmed at the helm of Eni. I am sure that FederPetroli Italia will be satisfied with this decision, you personally spent a lot of money.
By now everyone knows that for me talking about Claudio Descalzi, despite my age, is like a boy fan of Rolling Stonse who talks about his references. To someone last night, who knows me and more confidentially, I said that for dinner I would have uncorked a bottle of Champagne Ruinart and, I did, my wife witnessed it, also because the bottle is finished. The next I will open it together with Descalzi ! Personally, but mainly with FederPetroli Italia, we have fought and hoped to the end on this reconfirmation of Claudio Descalzi at ENI.
Always aware that it would have been a difficult maneuver, for a series of things that focus mainly on the judicial issue of ENI international corruption between Algeria and Nigeria. But everyone has to do their job, we are not judging bodies of jurisprudence, we are entrepreneurs and a team called Oil & Gas, the winning coach who is Claudio Descalzi, was awarded. In recent years ENI has consolidated important results in terms of Research and Exploration of hydrocarbons, I am not speaking only of Zohr in Egypt, but also in Mozambique, Congo, Emirates, Mexico, these are researches and results that have been made with investments by ENI, therefore a business in the business that as Italy we must be proud of.
There is no lack of investments in the Green Era, where with the conversion of waste treatment and energy from sea waves, ENI has been a pioneer. We believe that with this continuation of the Descalzi era the Energy, first and foremost Italian and then international, will go on the right line, and this will bring great added value to our companies, both in Italy and abroad.
Added value that I believe also brings the entry of Saudi Arabia into Eni's shareholder, we understood it from its note yesterday, but would you like to explain why Saudi Arabia should do so well to the six-legged dog?
Yesterday I declared in a press note with FederPetroli Italia that, we won a lottery. Italy has always seen the entry of foreign capital into state-owned companies with skepticism and prejudice. Of course what France wanted to do some time ago, it was good that the Italian government that was in charge did everything to block it. But today, we are talking about an oil producing country such as Saudi Arabia, ergo, the country with the most oil in the world that enters the share capital of our state energy company ENI.
First of all, a sign of great confidence, and here inevitably Descalzi is its main actor, and then the Saudi investment is around 1,24% of the share capital, we have not said 50%. Looking ahead, and considering that ENI has consolidated important cooperation and development agreements in the Middle East in recent months, it will lead our oil company to increasingly strengthen its international leadership.
We have to look at it as a strengthening of the Oil & Gas business, considering that the listing on the stock exchange a few months ago of the Saudi energy company Saudi Aramco was one of the most important for capitalization in history. If Italy had moved earlier with agreements, as well as industrial but political agreements with strategic countries, we would have seen a lower cost of energy in our country for some time now, but we hope that it will happen. ENI / Middle East is a winning combination!