Then we had the operating cost. Our operating cost remain in the lower side of the industry, about $6 per barrel, and the development cost is ranging between $9 and $10. Why? Because it’s organic, it’s also following our strategy. We develop near field, close to existing facilities. So that means we are below, and that is also for the acquisition we made. There are well below, thermo stacking cost well below $18, $17 per barrel. So that helps the margin. That’s also the reason why the cash neutrality, or the breakeven of our stream is very good. Clearly, when we make an acquisition, normally we are organics, but we work also through acquisition, we have big synergies, we try to replicate and check and due diligence that the asset we acquire are in line with our cost and we are not diluted our cost.
The second round, buy back, Francesco, sorry, Guido, you want to add something or is it okay?
Guido Brusco : No, I would add just the time to market.
Claudio Descalzi: Yes, retention market.
Guido Brusco : Yes, return on our project.
Claudio Descalzi: Sure, you’re right.
Guido Brusco : The quality, as Claudio said of our portfolio, but also our distinct phase and fast track approach improves a lot the return on the project because of the very short time to market.
Francesco Gattei : On the buyback, generally speaking about the distribution, you have seen that we announced last year the distribution policy between 25% to 30%. Actually, we designed a distribution it was at 30% on the basis of the assumption of the cash flow we planned at the beginning of the year. Actually we are working now in the range of 32% – 33% of overall distribution yield. The buyback plan is substantially almost completed. We have accelerated in the last part of last year, so we proved to the market that we are flexible and positively flexible towards this metric. Clearly. any other distribution guidance will be disclosed in the next Capital Market Day in the middle of March, with all the planner related both on the dividend and buyback.
Operator: The next question is from Bertrand Hodee of Kepler Cheuvreux.
Bertrand Hodee: Yes, hello for taking my question. I have two, if I may. I understand you will give us a full update on 14 of March with a new strategic plan on your medium term target. I’m sorry to be a bit impatient, but is there any element of 2024 guidance you would like to share with us at this stage? The second question is on UAE LNG opportunity. The UAE is likely to launch close to 10 million tons of LNG this year, sanctioning the Ruwais LNG project. Would you be keen on participating? Meaning, I remember that when Qatar launched their extension, you were quite vocal, you would like to participate. Do you have the same appetite to potentially take a stake or be an off-taker on Abu Dhabi LNG project? Thank you.
Claudio Descalzi: So, on the first question, what we can say just for the sake of clarity is about CapEx, what we want really to do is to be very focused on CapEx on our expenditure. One means is M&A, but the other is to be efficient in CapEx, so reduce CapEx, but keeping in any case the same level of profitability and returns on our operations. So that is an exercise on which we are working a lot. And so CapEx is, so the gross capital will remain below EUR 9 billion, I can say, also if my people are not very happy, but that will be, and then that CapEx much lower. That’s what I can say. For Abu Dhabi, we are working, Abu Dhabi work very well with ADNOC and we are interested, we are also developing Gaza and producing associated strategic gas, but we are going to develop Gaza, so it’s something that we can have a look, but I cannot tell you anything now. If I have to say something, I will say to Abu Dhabi and ADNOC and then to you. Thank you.
Operator: The next question is from Matt Losking of JP Morgan.
Unidentified Analyst : Hi, thanks for taking the questions and congratulations on strong execution through 2023. Two quick ones, if I could please. First, exploration has clearly been a significant value lever for the company through recent history. I think you talked about Egypt earlier. Could you just talk about sort of 2024 more broadly or the next sort of six to 12 months, any sort of key exploration opportunities that you have lined up within the portfolio and perhaps the next steps around Indonesia as well. And then secondly, just on GDP, the arbitration proceeds were a key component of the fourth quarter. Obviously, that’s a lumpy component within the business. And could you just talk about how we should view that on a three-site basis and any further arbitration upside that you see over the medium term. Thank you.
Claudio Descalzi: The first question about arbitration and future development is Guido or Aldo that is not in charge of the exploration cycle. One is Cristian.
Guido Brusco : On exploration, I think you said it’s one of the levers of the value creation in our company. The results this year were outstanding as also in the past year and particularly in Indonesia. We have some high impact well ongoing at the moment and of course the result of those will happen soon. In 2024, we will continue our near field ILX exploration in proven basin that proved to be very effective and successful. Indonesia is one of the key areas. Geng North and the acquisition of the acreage around the discovery proved that that play as well as other play that we drilled in the past year can deliver significant resources. When we made the discovery in Geng, we outlined also the potential of the area which is in the region of the tens of the TCF.
And as you may have appreciated, we have already anticipated that we will build a second hub in the north area. And that together with the hub, we have junk creek we have in the south with almost 750 million scuff per day. This hub will bring a production which is approximately close to the 2 billion of the standard cubic feet per day in the forthcoming year which will be — which will have extended plateau because of the number of prospects that are around that. Other important areas, of course, are legacy areas like Egypt and others where we had our discovery. Norway also is an area where we have a significant acreage in exploration. But, of course, the near filled nature of our discovery will also enable us to bring them quickly on onstream.
Claudio Descalzi: So, quickly onstream and gave us a possibility to go through, as Francesco said, through dual exploration. So, it’s a part of the plan because we discover a lot and we own between 80 and the percent of all these discoveries, also with what we acquire. So that is another important upside that we can have in our next four year plan. So now we have Cristian and then one more and then we have finished. Thank you very much.
Cristian Signoretto: So in terms of renegotiation, as you can imagine, I mean these are normal features of the midstream business. So we have ongoing renegotiation in our portfolio with our contracts. We tend to clearly settle those amicably, but from time to time it happens that we had to resort to arbitrational tribunal in order to seek a conclusion of that discussion. So what I can tell you is that in 2024, we don’t expect any outcome from any arbitration.
Operator: The next question is from Massimo Bonisoli of Equita.
Massimo Bonisoli: Thank you. Two quick set of questions. So the first one the chemical business. I’d like to know how much of the negative performance of Versalis in Q4 is coming from the consolidation of Novamont and given the still weak trading condition in Q1 2024 for chemical margin, is it reasonable to expect again a triple digit loss for Q1 2024? And then a question on the refining business in Italy following the change in ownership of ISAB and now on Saras together with the stop of traditional activity in Livorno. Could you share your thoughts on the supply of fuel on domestic market and if this may represent an opportunity for ENI? Thank you.
Cristian Signoretto: Okay, thank for the question on the chemical side. Novamont has been consolidated just for a quarter, so the impact of the four quarter is very minor and is not really representative because every time that you’re in acquisition that you have some transaction point of view. So it’s really not representative of the performance in one quarter. About outlook for Q1, we don’t give yet to the outlook for Q1 but of course it’s not the three digits. About the refining in Italy.
Claudio Descalzi: Refinery in Italy, I ask Pino if he’s still there.
Stefano Ballista : Yes, of course.
Claudio Descalzi: Okay, if you good, Pino, you address this, okay, you can.
Stefano Ballista : Yes. Okay. No, the refining in Italy — in the refining in Italy, we have seen a lot of change in the last period and two bigger finalists are moving to the trade ownership. What does this mean? That there is still an interest in the refining system in Italy, but at the same time we have to consider that, in any case, the profitability of the refining, the traditional refining system in Italy, as well as for Europe, is affected by the very high cost of energy, very high cost of CO2, very low size of the plant. So it’s very, very difficult to maintain in the long term the profitability. The effect of the transformation of Livorno refinery, bio refinery, helps to balance also the demand and offer in a market that is naturally declining in the mid to long term.
So what we expect to see in Italy is that in our system, more balance between production and refining and the consumption in the marketing in the retail system and wholesale system, we could gain the advantage to reduce the volatility because the volatility is when you have to offer the product on the cargo market. And the transformation of the traditional refinery and biorefinery help two times. First, because you enter in a new business, it’s very, very profitable as we have seen before. Second, you rebalance the demand and offer in the traditional refining system.
Operator: Ladies and gentlemen, this is the last question. Thank you.
Claudio Descalzi: Thank you very much. Goodbye.
