By Justin Scheck and Liam Moloney
By proposing to remove the chief executive of Italian oil giant
Eni SpA, Italian Prime Minister Matteo Renzi is pushing aside one
of Italy's most resilient and politically connected
businessmen.
Mr. Renzi plans to replace Paolo Scaroni, an executive with a
background in management consulting who was appointed by ex-Prime
Minister Silvio Berlusconi, with lifelong oil man Claudio
Descalzi.
The proposal to replace the CEO at the partly state-owned firm
goes to a shareholder vote next month, though the government owns
30% of the shares and will likely get the item passed.
A petroleum engineer who spent the last three decades
prospecting for Eni in places such as sub-Saharan Africa and the
Middle East, Mr. Descalzi has been in charge of executing Mr.
Scaroni's plan to focus Eni's investment on discovering new oil and
gas fields.
The transition comes nine years after Mr. Berlusconi appointed
Mr. Scaroni following stints leading an Italian engineering firm, a
British glassmaker, and Enel, a partially state-owned utility in
Italy. Along the way he has weathered political changes and a 1990s
Italian bribery case that ensnared a number of Italian
businessmen.
In his nine years as Eni CEO, Mr. Scaroni presided over a series
of large oil and gas discoveries while avoiding the type of big
North American shale acquisitions that have weighed on Eni's
competitors.
Instead, he pushed Eni deeper into exploring politically
difficult countries--such as Libya and various African
nations--that competitors shied away from, but which offered
favorable terms to the company.
"A difficult country is more willing to sign an easy contract"
with an oil company, Mr. Scaroni, 67 years old, said in a recent
interview.
Eni in recent years made big discoveries in countries including
Mozambique and Republic of Congo. The company says it has
discovered about 9.6 billion barrels of oil and equivalent barrels
of natural gas since 2008, more than twice its production over that
period.
But Eni's successes under Mr. Scaroni were tempered by legal
issues that weighed on the company's share price. Eni and its
subsidiaries in recent years faced investigations by U.S. and
European regulators probing issues including whether Eni or its
subsidiaries or employees paid bribes. The company has denied
wrongdoing in the corruption investigations.
The company has particularly struggled with its holding in
Saipem SpA, an oil-services company of which Eni owns about 43%.
Last year Saipem reduced profit projections amid cost problems in
North America and friction in Algeria, where it said Italian
prosecutors are investigating possible corruption.
Eni said last year that Italian prosecutors were investigating
whether Mr. Scaroni had a role in any Algerian corruption issues.
Eni and Mr. Scaroni denied wrongdoing, and Saipem said in January
that a review of contracts there didn't turn up irregularities.
Mr. Scaroni said in an interview last year that Eni's ownership
in Saipem presented "a very uncomfortable situation" because Eni
doesn't exercise any control over the company. Activist investor
Knight Vinke last year pushed Eni to sell its Saipem stake.
Eni has had its own operational issues too. In Kazakhstan, the
world's biggest new oil development--a field beneath the Caspian
sea called Kashagan, which Eni is taking the lead in developing--
ran into cost overruns and mechanical problems. Toxic gas leaks
forced Eni and its partners to shut down the project, and the
Kazakh government and Eni officials say they expect a government
fine for emissions resulting from so-far unsuccessful attempts to
fix the leaks.
Last month, a court in the northeastern Italian city of Rovigo
found Mr. Scaroni guilty of environmental violations when he was
CEO of utility Enel about a decade ago, and sentenced him to three
years in prison. Mr. Scaroni said he is appealing the verdict.
On the heels of the court case, Mr. Renzi's government announced
that it would replace Mr. Scaroni with Mr. Descalzi, a 33-year Eni
veteran. An Eni spokesman didn't make Mr. Descalzi available to
comment.
Mr. Scaroni said he is happy that Mr. Descalzi is succeeding him
as CEO, and that he is taking the company over at a time when
turmoil with Russia, Libya and Algeria--all important natural-gas
suppliers--are making "the life of Eni more complex than
before."
Write to Justin Scheck at justin.scheck@wsj.com and Liam Moloney
at liam.moloney@wsj.com
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