Eni cuts long-term oil price assumption to $60/b on coronavirus

London — Italy's Eni has become the third European oil major to cut its future oil prices assumptions due to the expected long-term impact of the coronavirus pandemic on the global economy.

The Rome-based company said late July 6 it has cut its long-term assumption for Brent crude to $60/b in real terms from 2023 from $70/b.

For the years 2020-22, Brent prices are now expected to average $40, $48 and $55/b, respectively, compared with the previous assumptions of $45, $55 and $70/b, Eni said.

Eni also lowered its assumed natural gas price for the Italian spot market to $5.50/MMBtu in real terms from 2023, down from a previous assumption of $7.80/MMBtu.

"Having considered the prospect of the pandemic having an enduring impact on the global economy and the energy scenario, Eni has revised its view of market fundamentals to factor in certain emerging trends," Eni said.

Long-term refining margins in the Mediterranean region are now seen as slightly lower than $5/b, Eni said.

As a result of the change, Eni said it expects to record post-tax impairment charges of around Eur3.5 billion ($3.95 billion) in its second-quarter results.

BP said last month it would write off up to $17.5 billion worth of assets after cutting its long-term price assumptions for oil and gas to reflect expectations that the coronavirus pandemic will accelerate the shift away from fossil fuels.

Last week, Shell also slashed its near-term oil and gas price assumptions June 30 to reflect a more bearish, post-pandemic market outlook.

The moves have sparked concern over a wider industry recognition for the potential of more stranded assets as the energy transition hits long-term demand forecasts for oil and gas.