(Bloomberg) -- Eni SpA will invest about €2 billion ($2.2 billion) over five years to relaunch its aging chemicals business in Italy.
With the plan, the oil and gas major aims to significantly reduce the exposure of its unit Versalis to the basic chemicals sector, which is facing “structural and irreversible decline in Europe”, according to a company statement on Thursday.
Activity at Versalis’s cracking plants in Puglia and Sicily, and the polyethylene plant in Sicily, will be phased out, Eni said. The announcement confirms an earlier report by Bloomberg.
The move comes as Europe’s chemicals industry faces a pivotal moment amid high energy costs and competition from Asia. Saudi Arabia’s SABIC decommissioned a naphtha cracking facility in the Netherlands this year while Exxon Mobil Corp. is closing chemicals operations in France. LyondellBasell in May announced a review of some European assets.
Versalis, which last posted a profit in 2017, recorded a €220 million loss for the second quarter of this year. Eni has said restructuring and repositioning the business will bring it back to break-even next year with a profit in 2026.
The transformation plan will “support a positive impact on employment” at the end of the process, Eni said.
Exposure to chemicals has led to economic losses that have been close to €7 billion in cash terms over the last 15 years, €3 billion of which was in the last five years, Eni said.
Eni aims re-focus Versalis on a high-value downstream portfolio made up of compounding and specialized polymers, biochemistry, and products from the circular economy. These moves will reduce emissions by approximately 1 million tons of CO2, currently about 40% of Versalis’s total in Italy, the company said.
Eni will provide further details at the presentation of its third quarter results presentation on Friday.
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