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Eni (E) to List Vaar Energi Shares as Part of Clean Energy Plan

Zacks Equity Research
·3-min read

Eni SPA E is planning to launch an initial public offering (“IPO”) for its Norway-based joint venture, Vaar Energi, and listing of shares on the Oslo Stock Exchange.

The move is part of Eni’s plan to enhance the value of its assets and free up resources to accelerate the clean energy transition. The IPO will grant access to Norway and international capital markets, enabling Eni to create a strong shareholder base. The IPO offers a strong foundation for long-term value creation and shareholder returns.

Vaar Energi is a leading independent exploration and production company formed by the merger of Eni Norge and Point Resources, a HitecVision subsidiary. Notably, Vaar Energi represents Eni’s long-standing experience on the Norwegian Continental Shelf.

Subsequent to the IPO, Eni and private equity firm HitecVision intend to remain committed owners of Vaar Energi. The companies are committed to improving Vaar Energi’s position as a leading player on the Norwegian Continental Shelf. Eni, which currently has a 69.85% interest in Vaar Energi, is expected to retain a majority share in the company, while preserving equity accounting.

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Eni pledged to become carbon-neutral by 2050 due to the growing urgency from investors and environmentalists to curb climate change. The Vaar Energi listing is one of Eni’s operational strategies for its transition to cleaner energy. Energy companies like Exxon Mobil Corporation XOM, Royal Dutch Shell plc (RDS.A) and TotalEnergies TTE are among the prominent names to commit to a net-zero emissions goal.

ExxonMobil has set detailed targets for reducing emissions from major facilities and assets to achieve net-zero emissions from its operations by 2050. ExxonMobil's net-zero plan involves emissions associated with its oil, gas and chemical production. XOM also commits to carbon neutrality for its Scope 1 and Scope 2 greenhouse gas emissions.

ExxonMobil intends to spend $15 billion on low-carbon projects through 2027. This comprises technological developments that are currently non-commercial such as carbon capture and storage, hydrogen power, and biofuel from algae.

Shell, like its European Big Oil competitors, pledged to reduce its traditional oil and gas operations in favor of cleaner energy sources with electricity as a key component of its transition plan. Unlike its peers, RDS.A primarily concentrated on long-term power purchase agreements or smaller investments in technological firms.

Shell intends to invest $565 million in renewable energy projects in the nation through 2025, most of which will be solar energy. The Brazilian division contributes to Shell's ambition of achieving net-zero emissions by 2050 as well as providing greener energy alternatives that assist other companies and governments in attaining the Paris Agreement objectives. Shell invests billions of dollars each year in clean, low-carbon energy generation worldwide.

TotalEnergies targets to achieve zero emissions by 2050 and is taking necessary measures to attain the same. TTE is making systematic investments in operations to achieve clean energy transition goals. TotalEnergies maintained a planned investment of $1.5-$2 billion in low-carbon electricity generation.

At the end of September 2021, TotalEnergies' gross renewable electricity generation capacity was 10 GW. TTE will continue to expand the business to reach 35 GW of gross production capacity from renewable sources by 2025 and 100 GW by 2030. TotalEnergies is gradually building a portfolio of low-carbon businesses that could account for 15-20% of sales by 2040.

Since there is an immense scope of growth in the renewable energy space, energy companies are actively investing in renewables.


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