:00:00. > :00:00.desperately needed. `` and medical supplies. Now it's
:00:00. > :00:18.time for HARDtalk. Welcome to HARDtalk. His energy
:00:19. > :00:21.Europe's economic Achilles heel? While the US benefits from a massive
:00:22. > :00:28.investment in shale gas production, Europeans focus on decarbonising the
:00:29. > :00:33.economy, while bickering about the relative merits of franking, nuclear
:00:34. > :00:39.and renewable energy. My guest today is Paolo Scaroni, boss of one of
:00:40. > :00:49.Europe's energy giants, Italian oil company Eni. How can you best
:00:50. > :01:11.safeguard its energy future? `` can Europe.
:01:12. > :01:18.Paolo Scaroni, welcome to HARDtalk. Thank you. You wrote the other day
:01:19. > :01:21.in the Financial Times that Europe's energy strategy was in a
:01:22. > :01:30.mess. Isn't the more particular point that your own company Eni, is
:01:31. > :01:34.in a mess? Not really. Ali European strategy of course has some
:01:35. > :01:42.problems. In particular gas and electricity. But the total Europe is
:01:43. > :01:48.in a mess. We ended up being gas three times more than Americans and
:01:49. > :01:51.electricity twice. How can we imagine a future for Europe as an
:01:52. > :01:56.industrial power with such a differential price? This is the
:01:57. > :02:01.question we have been asking to all our regulators and the public
:02:02. > :02:05.opinion and of course our institutions. When you look at the
:02:06. > :02:09.European economy which, for several years, has struggled to be globally
:02:10. > :02:16.competitive, your view is that one of the elements of that lack of
:02:17. > :02:28.competitiveness is energy? This is relatively new. This is the result
:02:29. > :02:31.of the fracking in the US. The fact that the US in the last five years
:02:32. > :02:36.has been capable of producing so much gas and lowering prices of gas
:02:37. > :02:41.in the US is completely changing the scenario. Everybody who has to make
:02:42. > :02:47.an energy intensive investment, rather than choosing Europe, will
:02:48. > :02:54.necessarily choose the US. Just to give you an impressive number, last
:02:55. > :03:01.year, every American household, as a result of the shale gas revolution,
:03:02. > :03:07.saved $1200. That's a phenomenal number for a family. So, our
:03:08. > :03:13.families are getting more poor and Ali industry is becoming less
:03:14. > :03:17.competitive. `` Ali industry. This is the problem. I want to pick up on
:03:18. > :03:20.that fundamental point about fracking, use of shale gas and
:03:21. > :03:25.whether it offers opportunities for Europe in a moment. Before we get
:03:26. > :03:30.there, let me come back to this point about Eni and your strategy.
:03:31. > :03:33.One of the key problems you face today is that you took a strategic
:03:34. > :03:37.decision over many years, in fact decades, to put a huge amount of
:03:38. > :03:44.your focus and resources into Africa, and particularly North
:03:45. > :03:50.Africa and Libya. And right now, that strategic decision is seriously
:03:51. > :03:53.backfiring. Well, you are really talking about something which is
:03:54. > :03:58.happening today. I am. In the last week or so. As boss of the company,
:03:59. > :04:03.you have to accept that you face a crisis. Right now, the key gas
:04:04. > :04:07.pipeline between Libya and Italy isn't operating. Your company is at
:04:08. > :04:11.the heart of this crisis and right now it's hard to see how you will
:04:12. > :04:17.get out of it. Let me give you my view about that. We are the biggest
:04:18. > :04:22.producer in Africa and in particular in northern Africa. We have not lost
:04:23. > :04:28.one barrel of production in Egypt so far, and we have not lost one barrel
:04:29. > :04:35.in Algeria. The problem is around Libya. Libya is getting out from 42
:04:36. > :04:42.years of dictatorship. It `` a dictatorship which, on purpose,
:04:43. > :04:45.destroyed all Libyan institutions. Well, a dictatorship which you
:04:46. > :04:55.consistently did deal with `` deals with. Happy knack you made a new 25
:04:56. > :04:59.year strategic commitment to Libya in 2008. And now, with the benefit
:05:00. > :05:04.of hindsight, that looks like an estate? Not really. Over that
:05:05. > :05:10.agreement, we haven't spent any money, with the revolution came so
:05:11. > :05:15.quickly. In fact, we didn't make any investment since 2008. This
:05:16. > :05:21.agreement in 2008 was crucial to renew our concessions in Libya. And
:05:22. > :05:27.I point out that Alp position in Libya has been even before Gaddafi.
:05:28. > :05:32.`` our position. We have been there since the time of the monastery
:05:33. > :05:35.there. Yes, we are worried about Libya today. Do you agree with your
:05:36. > :05:44.own Foreign Minister who said the other day, Libya is absolutely out
:05:45. > :05:49.of control? I would probably take a word, absolutely. Out of control.
:05:50. > :05:54.It's a country which doesn't have an army. In which the police is very
:05:55. > :06:01.weak, in which everybody has a weapon. And I am quite surprised
:06:02. > :06:07.that there are not many casualties in Libya, because with this
:06:08. > :06:10.situation it's quite surprising. The reality is that Libyans are
:06:11. > :06:15.relatively passive people. But what are you going to do? There are
:06:16. > :06:18.various militant groups who have taken over key institutions and have
:06:19. > :06:25.effectively forced you to shut down the pipeline to Italy. Italy is
:06:26. > :06:29.almost 25% reliant on Libyan oil. It also uses a huge amount of Libyan
:06:30. > :06:32.gas. This is a crisis for your national economy and a crisis for
:06:33. > :06:38.your company. I'm not really hearing that you've got any short`term
:06:39. > :06:42.solution. But nothing of that... It's not a crisis for the Italian
:06:43. > :06:47.economy. We will replace the oil from Libya easily. The gas, yes, it
:06:48. > :06:52.is more complex. 12% of the Italian gas comes from Libya. But there is
:06:53. > :06:56.so much gas around that I don't see any foreseeable future... At least
:06:57. > :07:00.until we are talking about Libyan gas alone. We already have been
:07:01. > :07:07.living through a window completely without Ruby and gas. Without major
:07:08. > :07:12.problems. `` Libyan gas. There is a problem for Eni, of course, because
:07:13. > :07:17.we are missing production there. Therefore, some income. But it's a
:07:18. > :07:21.relatively small part of our production and we will find ways to
:07:22. > :07:29.replace this production somewhere else. I'm surprised you sound so
:07:30. > :07:31.blase about it. It's actually quite a significant part of your
:07:32. > :07:36.production. Are you only now beginning to think you will have two
:07:37. > :07:43.factor out Libya from your future business plans? That Libya may not
:07:44. > :07:50.be part of your future? We are not reaching a conclusion at all. We
:07:51. > :07:54.have been producing in Libya in 2013 roughly 62% of what we should have
:07:55. > :07:59.been producing. Starting from the 1st of January up until now. Yes,
:08:00. > :08:02.Libya represents roughly 12% of our production and we missed a portion
:08:03. > :08:10.of that. Today, the situation is getting worse. I recognise that. But
:08:11. > :08:15.I have reasons to be mystic. Libya remains a very huge country. `` to
:08:16. > :08:23.be optimistic. I cannot believe that Libyans will not find a way to live
:08:24. > :08:27.peacefully in a very rich country, which can be wait or another guitar.
:08:28. > :08:31.So, it's a question of how long you can wait before there is stability
:08:32. > :08:39.to allow you to resume your operations. `` Kuwait or Qatar. It
:08:40. > :08:44.raises other strategic questions. You are the biggest fossil fuel
:08:45. > :08:48.player in the whole of Africa. You have end a huge amount of your
:08:49. > :08:52.company's future on Africa and yet you work in countries, Nigeria,
:08:53. > :08:57.Mozambique, the Republic of Congo, which all, in different ways, off a
:08:58. > :09:03.huge challenges to your company. Are you confident that you can meet
:09:04. > :09:08.those challenges? We have met those challenges in the last 60 years. So,
:09:09. > :09:14.I believe we should be able to meet those challenges in the future. We
:09:15. > :09:23.have been in Nigeria, for example, since 1962, just to give you... In
:09:24. > :09:27.Congo since 1968. So, we have become kind of part of the country. Which
:09:28. > :09:33.is one of our strengths. You have also become the subject of great ``
:09:34. > :09:38.consistent criticism, which is why I am asking. For example, in Nigeria,
:09:39. > :09:46.the recent amnesty and `` Amnesty International report looked at two
:09:47. > :09:49.of the biggest players in Nigeria, misrepresenting oil spills,
:09:50. > :09:58.pollution, that your company is responsible for. They report that,
:09:59. > :10:06.in 2012 there were a staggering 474 spills from your own company's
:10:07. > :10:10.operations, 207 from Shell. Your company committed a great number of
:10:11. > :10:14.spills to sabotage but provided absolutely no information to support
:10:15. > :10:19.the allegation and Amnesty International concludes that number
:10:20. > :10:25.of spills is indefensible from a responsible operator. Well, we
:10:26. > :10:30.defend it very well. In no country in the world we have the amount of
:10:31. > :10:32.spills that we have in Nigeria. A don't come from corrosion, otherwise
:10:33. > :10:37.we would be the first ones to prepare the pipes, it was of course
:10:38. > :10:44.we have an interest in repairing the pipes. The reality is that most of
:10:45. > :10:49.these spills, the large majority, come from sabotage and theft, which
:10:50. > :10:54.is not defined by us, it's by a commission made by the government,
:10:55. > :11:00.one of our people in the community, which defines what is theft. So, in
:11:01. > :11:06.total, we lose in Nigeria 30,000 barrels a day, which is dramatic.
:11:07. > :11:13.And all of these 30,000 barrels a day are what we call barrels which
:11:14. > :11:20.are... But you have been promising for years to take countermeasures
:11:21. > :11:26.against this so`called bunkering. Technically it's a major issue. What
:11:27. > :11:30.we can do is, through the pipelines, no sooner rather than later that
:11:31. > :11:35.somebody is picking up our oil. And we are working on that to find a
:11:36. > :11:41.technical solution, to know what's happening in real time. You better
:11:42. > :11:44.hurry up because, as you know, the Nigerian parliament right now is
:11:45. > :11:50.considering tougher laws that will punish companies such as yours for
:11:51. > :11:55.these spills in a new way. There will be punitive fines and they
:11:56. > :11:58.could be a `` they could shut down some of your operations. If you
:11:59. > :12:05.don't improve your act in Nigeria, you are in big trouble. I hope the
:12:06. > :12:09.Nigerian parliament will care more about bunkering in Nigeria. Keep
:12:10. > :12:14.order in the Swans and avoid these criminal acts. You say the problem
:12:15. > :12:20.is Nigeria's, even though you are making big rockets? You are not
:12:21. > :12:22.prepared to take responsibility? Certainly the problem of bunkering,
:12:23. > :12:26.the key problem in Nigeria, the reason why all major oil companies
:12:27. > :12:32.are thinking about quitting Nigeria, is a Nigerian problem. We
:12:33. > :12:39.can do nothing about bunkering. What we can do is when we have a theft,
:12:40. > :12:41.which is taking place, knowing that this theft is taking place earlier
:12:42. > :12:47.rather than later, but the problem of how to stop that is very much a
:12:48. > :12:53.Nigerian problem. The thing is, for you to be a success in Africa, you
:12:54. > :12:55.need to build confidence. You need African nations and the public to
:12:56. > :13:01.trust you. Let's talk one other African issue. That is, your massive
:13:02. > :13:04.project in the Republic of Congo. You have been talking about it for
:13:05. > :13:12.years. To develop up to 1800 square miles off will fans inside Congo.
:13:13. > :13:17.You say there could be anything from up to 200 million barrels of oil. ``
:13:18. > :13:24.oil sands. How will you extract that? This heavy oil, what you are
:13:25. > :13:29.talking about... In western Canada, which has raised so many
:13:30. > :13:32.concerns... This has been postponed for the reason that we have been so
:13:33. > :13:36.good in making new discoveries in the Congo, in particular the
:13:37. > :13:43.Republic of Congo, that the government decided to postpone
:13:44. > :13:47.this. That's off? You were talking with such confidence. The real
:13:48. > :13:51.problem with Congo was the production was declining so rapidly,
:13:52. > :13:56.the Republic was looking for new resources. We made two major
:13:57. > :14:02.discoveries in the last 12 months. That made this project not any more
:14:03. > :14:07.a priority. So it's not a priority. It is a priority is white, going
:14:08. > :14:13.into the oil... Thousands of feet under the sea? This locally is very
:14:14. > :14:19.much shallow water. With all of the concerned that we see in the Arctic
:14:20. > :14:26.for the offshore drilling in various offshore finds. There is concerned
:14:27. > :14:32.that your in Africa will not prioritise the environment in a way
:14:33. > :14:35.that should be prioritised. The people around the world believe that
:14:36. > :14:44.the coil companies have to prioritise.
:14:45. > :14:48.As far as we are concerned, first of all, 95% of our activity in Africa
:14:49. > :14:56.is not deep offshore, and is never high temperature. It has three
:14:57. > :15:02.conditions. We are not in the same scenario. We have a track record of
:15:03. > :15:11.probably being the safest company in the industry. We drilled 3000 Wales.
:15:12. > :15:19.Without one blowout. It is a record for the profession. So in total, we
:15:20. > :15:23.are very careful about this problem. Africa is not the place where this
:15:24. > :15:29.problem should arise. In strategic terms, you are pouring more and more
:15:30. > :15:36.resources into exploration in very rum at parts of Africa. `` remote.
:15:37. > :15:43.You are also a very loud advocate of fracking. You sit as a European big
:15:44. > :15:50.oil CEO, who has forgotten that Europe's E long`term commitment to
:15:51. > :15:56.the energy sector is to decarbonise. As far as exploration is concerned,
:15:57. > :15:59.we are very active in exploration and very successful. No other large
:16:00. > :16:05.international company has been so successful as us. I understand that.
:16:06. > :16:10.But justified that in terms of the context of Europe's commitment to
:16:11. > :16:15.decarbonise. It is nothing to do with backing. It is conventional
:16:16. > :16:23.oil, conventional gas, in particular Mozambique. It is very conventional
:16:24. > :16:32.gas. Moving into Europe, the question I raise is not necessarily
:16:33. > :16:36.a question... It is for Europe. How do they want to cope in such a
:16:37. > :16:41.differential in energy price in Europe, and in particular the US?
:16:42. > :16:46.Europe wants to continue its policy on energy, I have to tell you, the
:16:47. > :16:56.European policy on energy has been wrong. Wrong, because in terms of
:16:57. > :17:01.the subsidies to renewables, particularly German, Spanish, and
:17:02. > :17:07.Italian consumers, they are paying a bill which is skyrocketing in terms
:17:08. > :17:11.of cost. Security of Supply, it has been going down with renewables,
:17:12. > :17:19.because people are stopping the gas`fired power station. There is no
:17:20. > :17:21.economic reason to keep them. Renewables happened to produce
:17:22. > :17:26.electricity when they want, not when we need it. I need to ask you the
:17:27. > :17:31.fundamental point raised by the International energy agents, they
:17:32. > :17:36.say that two thirds of current fossil fuel reserves need to stay in
:17:37. > :17:40.the ground if there is to be any chance of avoiding catastrophic
:17:41. > :17:45.global warming. As a representative of bit `` big oil, do you accent
:17:46. > :17:52.that conclusion? I accept that we have to produce as less CO2 as
:17:53. > :17:55.possible. Fossil fuel is also is, including some that you are actively
:17:56. > :18:02.looking at, need to be left in the ground. In practical terms, what do
:18:03. > :18:11.we have to do? We have to use in a conservative way, energy. We have to
:18:12. > :18:16.use gas instead of coal when it is possible, simply because you produce
:18:17. > :18:20.less CO2. We need to work on renewables because at the end of the
:18:21. > :18:25.day, it will replace carbon when they are capable of doing that. But
:18:26. > :18:31.those renewables have to be something that makes sense. But the
:18:32. > :18:35.point is, this is the nub of the debate, you are sitting before me,
:18:36. > :18:39.telling about your ambitious plans for all your exploration and gas
:18:40. > :18:44.exploration in Africa, it seems to me that at some point, business
:18:45. > :18:48.leaders have to say, no, we are not going to strive for more and more
:18:49. > :18:54.exploitation of these fossil fuels. We are going to put our energy
:18:55. > :19:00.elsewhere. That is what the world economy and the European economy do
:19:01. > :19:06.Mans. First of all, before renewables, will take the place of
:19:07. > :19:11.hydrocarbons, it will be in 50 years, a long time. Today renewables
:19:12. > :19:20.represent in the world 1% of the consumption of energy. The road is
:19:21. > :19:28.very long. This is about leadership. In the meanwhile, we have to give
:19:29. > :19:33.the energy that people want a at competitive cost to make our economy
:19:34. > :19:38.is competitive. In the meanwhile, renewables will solve the two major
:19:39. > :19:43.problems they had. The first, they are very expensive and the second is
:19:44. > :19:47.that they are intermittent. Until we do not find a way to store energy
:19:48. > :19:56.effectively, renewables RA very slow solution. The political climate is
:19:57. > :19:58.to strive for these ambitious long`term carbon reduction targets.
:19:59. > :20:04.That is the context in which you work. The other context is energy
:20:05. > :20:05.security. You recently argued that Europe should be striving for a
:20:06. > :20:08.closer energy relationship