Eni chief urges co-operation between Opec and other producers

The head of one of Europe's largest energy groups, Italy's Eni, has called for co-operation between the world's big oil and gas producers - Opec, the US and Russia - to avoid a repeat of "destabilising" price moves such as the recent collapse in crude.

Claudio Descalzi, Eni's chief executive, told the Financial Times he expected oil prices to recover over the coming year, to about $70 a barrel, after a near 50 per cent plunge since last summer. A fall in US shale production, improving demand and the effects of reduced spending on projects would lead to the recovery.

But he said that it had become clear that the Opec cartel, led by Saudi Arabia, was no longer willing - or able - to act as the world's swing producer. After its decision in November not to cut output in the face of the US supply glut and weaker-than-expected Chinese demand, the market - vulnerable to sharper swings because of the growth in futures and other financial derivatives - lacked a stabilising force.

Mr Descalzi stopped short of suggesting formalised co-operation on output between Opec and other producing countries, but said "guidance" for the market was essential to encourage investment by the industry and to avoid sharp leaps in prices in the future.

"For the industry we need stability, and stability means guidance," he said, pointing to the huge volumes produced by the US and Russia as well as Opec. "We need co-operation among all the producers to stabilise the market."

His comments, on the eve of the energy industry's biggest annual conference, CERAWeek in Houston, reflect growing concern among oil executives over the impact of the price slide on revenues and profits. Barclays analysts are forecasting a 58 per cent average fall in European integrated oil groups' first-quarter earnings from a year ago.

Last month, Eni itself became the first of the energy majors to cut its dividend for 2015 in response to dwindling cash flows, a decision Mr Descalzi described as "not easy" but which met with a positive reaction from investors.

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Nevertheless, he said the Italian group was interested in returning to Iran if western sanctions are lifted - and were Tehran to offer production-sharing contracts. "That should be the fast way to restarting in Iran," said Mr Descalzi, who last met Iranian oil minister Bijan Zanganeh at an Opec meeting in 2014.

Eni's biggest geopolitical concern is Libya, just across the Mediterranean from Italy's southern coasts, where it has continued to produce as much as 300,000 barrels per day of oil equivalent, despite the deadly civil war still ravaging the North African nation.

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Mr Descalzi would like to see the international community mount a "faster" effort to reach a peace agreement in Libya, which has eluded UN mediators in recent months. But he was adamant that Eni - which has operated in Libya for more than 50 years - would not see the security situation deteriorate to the point that it has to shut down production.

The Italian company produced gas to supply the domestic electricity market, keeping the lights on in Tripoli, which should make it less susceptible to attack. "Libyans are going to protect their assets, it's the most important thing they have."

Italian officials have argued that the security risks coming from Europe's southern flank are at least as threatening as those posed by the Ukrainian crisis. Moreover, Eni - considered by many to be a driver of Italian foreign policy - has, historically, had close ties to Gazprom, the Russian gas giant. This has made it a big advocate of dialogue between Russia and the West.

Indeed, Mr Descalzi is rooting for sanctions against Russia to be wound down as early as this year. "I hope that the situation on the ground allows Europe and the US to ease sanctions - it would mean we don't have war, we don't have fighting," he said.

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