Uchenna Izundu
International Editor
ROME, Nov. 13 -- Italy was mistaken to move away from nuclear power, a move that has resulted in tremendous cost to electricity users, Paolo Scaroni, chief executive of Eni SPA, said at a press conference at the World Energy Congress.
Italy voted against expanding nuclear power in a referendum in 1987 and has imposed a moratorium on building new capacity. High oil and gas prices and Italy's reliance on imported energy have sparked political debate on resurrecting nuclear power in Italy's energy mix.
"Nuclear power is the only system where we're in full control and we don't produce any emissions," Scaroni said.
He told delegates that Europe needs to increase nuclear capacity to reduce its reliance on gas and avoid a gas shortage by 2020. Russia and Algeria, which together account for 70% of Europe's imports, should be "closely monitored" in the strategic alliance for their state-owned companies, Gazprom and Sonatrach, Scaroni added.
"We have got to mitigate this [peaking Russian gas]. Gazprom cannot produce more from existing fields, but it does have large, untapped reserves in eastern Siberia, and this needs investment and infrastructure to get it to market."
Gas waste is rife in Russia because prices are a quarter of those on international markets. "Gas is so cheap there is no measure of energy savings," he said.
Scaroni denied recent press reports that Eni plans to take a stake in Gazprom. "Our relations (with Gazprom) are excellent."
The consortium that Eni is leading to develop Kashagan oil field in Kazakhstan remains unified, Scaroni said, stressing that the operator's role had transformed Eni because the project it was the most difficult in the world. "We think we can carry on with operatorship and do other projects in the world," he said.
The consortium is in discussions with the Kazakh government, which has complained about delays and rising costs to develop the field (OGJ, Oct. 22, 2007, Newsletter). The government is reportedly seeking a bigger state for its state owned company KazMunaiGaz and a $10 billion fine for cost overruns. Eni's stake in Kashagan is 18.5%. Other members are ExxonMobil, Royal Dutch Shell, Total, ConocoPhillips, Inpex, and KazMunaiGaz.
Eni would welcome cooperation with the Venezuelan government over Dacion oil field, which has been renationalized. "If there's no room for cooperation we'll go ahead with the arbitrage," he said.
At the beginning of this year, Eni launched a damages claim against Venezuela as compensation for its loss of profits from the field. Resource nationalism is unsurprising considering high oil and gas prices, according to Scaroni, who noted this trend is not prevalent when prices are low. "Contracts were renegotiated in 1991 or 1992 when prices were low."
Contact Uchenna Izundu at [email protected].
