Eni (E, Financial) has announced plans to invest €2 billion (approximately $2.2 billion) over the next five years to rejuvenate its aging chemical operations in Italy. This plan aims to significantly reduce its subsidiary Versalis's exposure to the basic chemicals sector, which is facing a "structural and irreversible decline" in Europe.
The company disclosed that Versalis will gradually phase out its operations at the cracking plants in Puglia and Sicily and the polyethylene plant in Sicily. This decision comes at a critical time for the European chemical industry, which is grappling with high energy costs and increasing competition from Asia. Previously, Saudi Basic Industries Corporation (SABIC) closed a naphtha cracker in the Netherlands, and ExxonMobil (XOM) withdrew its chemical operations in France. Additionally, LyondellBasell announced an evaluation of some European assets earlier this year.
Versalis has not recorded a profit since 2017, suffering a loss of €220 million in the second quarter of this year. Eni anticipates that the restructuring and repositioning of its business will enable it to break even next year and return to profitability by 2026.
Eni stated that the transformation plan will eventually have a positive impact on employment. The company has reported economic losses amounting to nearly €7 billion over the past 15 years due to its chemical operations, with €3 billion lost in just the last five years.
The goal is to refocus Versalis on a high-value downstream portfolio consisting of specialties like composites, specialty polymers, biochemicals, and circular economy products. These initiatives are projected to reduce carbon dioxide emissions by about 1 million tons, representing roughly 40% of Versalis's total emissions in Italy.
Eni plans to provide additional details during its third-quarter earnings release.
