I noticed yesterday that I had missed two interesting articles in the Financial Times last week (July 8, 2008) – Oil price prompts nuclear move and Total and Eni eye nuclear option. Apparently, Total (a large French oil company) and Eni (a large Italian oil company) have determined that their future includes nuclear power plant investments and that part of the motivation for this strategic change in direction is the trend in oil and gas prices.
Christophe de Margerie Total’s chief executive, and Paolo Scaroni, Eni’s chief executive have determined that some of the countries where they have an historical presence have an interesting combination of available cash, a need for new electrical power supplies, and the potential for increasing available exportable energy supplies if nuclear power plant output can displace the need to burn indigenous oil and gas in power plants. UAE is the first announced future customer; there are other deals in the works.
Like many of the major oil companies, Total and Eni have been having trouble finding attractive investment opportunities within their traditional sectors of the energy market. It is interesting to see that de Margerie and Scaroni have recognized that direct investments in nuclear power plants can capitalize on some of their core strengths – like working with Middle Eastern countries and arranging financing for large, capital intensive projects. Nuclear investments – properly managed – can also provide returns similar to those offered by investing in oil and gas wells.
Will Rex Tillerson be next?