Italy’s Eni has rejected charges by the Institute for Energy Economics and Financial Analysis that its development of a “carbon bomb” gas field in Australia conflicts with its record-breaking retail sustainability-linked bond issue.
“The connection made by the authors of the report between a savings instrument – in which thousands of Italians have believed and invested – and an alleged non-existent 'carbon bomb' is incomprehensible and improper to us,” said a spokeswoman for the oil and gas company.
More than 300,000 private investors bought into the SLB in January, a record for a single-tranche retail-targeted Italian corporate bond, according to Eni. Despite being doubled to €2bn on its first day, the offering was immediately covered and subscription closed two weeks earlier than planned.
IEEFA charged that Eni’s development of the Verus field (previously known as Evans Shoal) is “at odds with the objectives it pledged to the Italian investing public” and was not disclosed to bondholders. As a result, Eni’s “sustainability credentials and net-zero commitments should come under greater scrutiny”, the NGO said.
It said the high carbon content of gas from the field makes it subject to Australia’s “Safeguard Mechanism”, which will make its carbon costs higher than those of other fields.
The spokeswoman disputed that the SLB finances specific gas projects, including Verus, saying: “The bond proceeds have the sole objective of keeping Eni's financial structure balanced while further diversifying the company’s financial sources.”
She said the project is consistent with Eni's objective of achieving Scope 1 and 2 carbon neutrality in all its businesses by 2035 – “a goal we confirm once again”.
In addition, she said Verus is part of Eni’s upstream operations for which it is targeting net-zero Scope 1 and 2 emissions by 2030. This is one of the SLB’s sustainability performance targets.
Much of the dispute appears to hinge on the company’s plans to use CO2 capture and storage as part of developing the field. The spokeswoman said the technology would enable it “to supply decarbonised energy in line with Eni's objectives”.
The NGO countered that CCS technology is unproven. It also said the field’s development “will coincide with a glut of new supply in global [liquid natural gas] markets over 2025 to 2027 and challenging economics for new LNG ventures looking to come online shortly after this period”.