Italy's largest energy company, Eni SpA, on Wednesday reported a 15 percent increase in first quarter profit as higher oil prices offset a loss in production caused by the conflict in Libya.
Eni said that net profit in the first quarter of this year was euro2.55 billion ($3.73 billion), up from euro2.2 billion a year ago.
Oil and gas production, however, were down 8.6 percent, at 1.684 million barrels a day, due to the shutdown of activities in Libya.
CEO Paolo Scaroni said in a statement that the solid results were due to a "favorable oil price environment" but that "uncertainties" remain regarding the resumption of activities in Libya.
The company nevertheless expects the global economic recovery to strengthen over the year, helping oil prices average around $101 a barrel for the year.
"In spite of ongoing uncertainties regarding resumption of our activities in Libya, the profitability and growth outlook for our company has remained positive," Scaroni said.
Shares in the company rose 1.89 percent to euro17.80 in Milan trading.
Eni closed down the GreenStream pipeline bringing natural gas from Libya to Italy on Feb. 22 as the violence escalated in the North African country. It continues to produce natural gas in Libya only for the production of electricity to supply the Libyan population, Eni said.
Eni's Wafa gas field is producing about 50,000 to 55,000 barrels of oil equivalent a day, down from 90,000 at the beginning of March.
The unrest also forced Eni to shut down its oil production in Libya, resulting in a production loss of 129 million barrels in the first quarter compared with the same period a year earlier, Eni said. The losses were partially offset by ramping up production in Egypt, Iraq and Italy.
"We are constantly monitoring the progress of this highly volatile situation" in Libya, Scaroni said in an analyst conference call. "Our assets have suffered no damage and we are able to quickly resume" operations.
Natural gas sales for the quarter were up 6 percent, thanks to new clients in Italy and increased demand in Turkey, France, Germany, Austria, Spain and Portugal. But sales to shippers importing gas to Italy dropped by 42 percent due to the drop off in Libyan production.
During the quarter, Eni bought two exploration and development leases in Ukraine, continued the exploration of the Perla 4 well in Venezuela, and made offshore discoveries in Ghana, the Barents Sea and the North Sea.
Venezuela is imposing a windfall profits tax on royalties from oil projects when crude prices are above $40 a barrel, seeking to squeeze as much as $16 billion mostly out of foreign oil companies, the government said Tuesday.
Energy Minister Rafael Ramirez said the tax, which was decreed by President Hugo Chavez last week, will allow the government to collect between $9 billion and $16.3 billion this year.
A 20 percent tax will be in effect when the price of a barrel of Venezuelan oil is between $40 and $70 a barrel, Ramirez said. When the price is between $70 and $90, the tax rises to 80 percent. Between $90 and $100, the tax reaches 90 percent, and if the price tops $100 a barrel, a 95 percent tax will be imposed.
Scaroni said that Eni projects in Venezuela would not be immediately impacted by a new windfall profits tax in Venezuela, noting that the projects are not subjected until Eni's investments are recouped.
"So at the moment, there is no impact on our projects, both gas and oil," Scaroni said.
Venezuela is imposing a tax on royalties from oil projects when crude prices are above $40 a barrel, seeking to squeeze cash out of foreign oil companies. The tax ranges from 20 percent to 95 percent, with the rate rising with the price of crude.