Oil barrels. Image: iStock
Oil barrels. Image: iStock

Total Chairman and Chief Executive Officer Patrick Pouyanne did not rule out a merger with Italian-listed oil giant ENI and said he is against state ownership of the European oil and gas group.

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When asked by Capitol Intelligence if Total is eyeing a merger with ENI considering its overlapping industrial footprint, Pouyanne responded: “Merging today? I do not think I will answer. I already answered a few months ago that I do not want [the] state to be among the shareholders.”

In exclusive comments to Capitol Intellgence at the World Gas Congress in Washington, DC, ENI CEO Claudio Descalzi said he had no comment on a possible merger with Total.

In an earlier statement to Capitol Intelligence asking if ENI could acquire Texas-based Andarko Petroleum or merge with San Ramon, California-based Chevron Corporation,, Descalzi said ENI is happy “with its current size.”

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The new populist government between the 5 Star Movement (M5S) and the Northern League (Lega) now makes a merger between Total and ENI more likely than with a traditional center-right or center-left government, a former Italian energy minister said.

“It seems neither Lugi d Maio [M5S deputy premier] or [Lega Deputy Prime Minister Matteo] Salvini care if ENI is merged with Total or not. Di Maio and Salvini may decide the funds from a Total/ENI merger can pay for the Lega’s flat tax and M5S minimum income,” the minsiter said.

France’s Total has been seeking a merger with ENI for decades but has always been rebuffed through the Italian government use of its golden share and its status as a national champion in the oil and gas business

France’s Total has been seeking a merger with ENI for decades but has always been rebuffed through the Italian government use of its golden share and its status as a national champion in the oil and gas business.

ENI’s head of investor relations, Andrew Lees, said the Italian government has increasingly seen its stake in ENI as financially insignificant, even to the extent that it participated in ENI share buy-back programs.

However, the lack of an Italian government and weakened executive board at ENI following a series of FCPA-related corruption scandals involving its former CEO, Paolo Scaroni, has made ENI vulnerable to a “merger of equals” with Total.

The combination of ENI and Total would bring considerable cost savings to both companies and at the same time consolidate their considerable upstream operations in strategic markets such as Kazakhstan, Mozambique, Iran-Iraq, Libya-Tunisia and, of course, Algeria.

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In Mozambique, ENI is in a three-way production-sharing agreement with US oil giant ExxonMobil and China’s China National Petroleum Company (CNPC).

In fact, Decalzi, Exxon CEO Darren Woods and CNPC Chairman Wang Yilin held what could only be described as a high-level public “closed-door meeting” to discuss Mozambique on June 26, 2018, during the World Gas Conference in Washington, DC.

Former ENI CEO Paolo Scaroni had been charged by Milan prosecuting magistrates after allegations emerged that ENI’s listed oil services unit SAIPEM paid Algerian public officials, including Algeria’s then energy minister and Sonatrach chairman Chabib Khelil a €197 million ($227 million) bribe to secure an $11 billion contract for the company.

While a Milanese court on September 19 found Scaroni not guilty of the Algerian bribery charges, Scaroni remains a target of a US Foreign Corruption Practices Act (FCPA) investigation by the US Department of Justice and the US Securities &  Exchange Commission in connection with an Algerian bribery scandal, judicial sources close to the matter said.

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“The Milan court ordered €197 million to be seized for SAIPEM and convicted former SAIPEM CEO Pietro Tali to a prison sentence of 4 years and nine months,” a Washington, DC, lawyer specializing in FCPA said, adding. “Under US FCPA, it is the CEO who is ultimately responsible for any corruption of foreign officials.”

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Peter K Semler is the chief executive editor and founder of Capitol Intelligence. Previously, he was the Washington, DC, bureau chief for Mergermarket (Dealreporter/Debtwire) of the Financial Times and headed political and economic coverage of the US House of Representatives and Senate.