Good afternoon and welcome to Eni's Capital Markets Update. It is a real pleasure to see you here at our technological hub in Bolgiano. This is one of our seven research centers where we develop our technology, we transform our businesses, and continue to improve our operations. Today we will set out our update for your plan and discuss how, in a complex, in-changing market, Eni maximizes its opportunities. In the presentation we will go through the following main topics: a distinctive strategy addressing the challenges and opportunities of the energy market, business performances and prospects arising from organic investment, and a disciplined investment approach and focus divestment that will materially lower our net CapEx with respect to the previous plan, and an improved distribution policy with higher payout, enhanced upside, and raised dividend.
In the plan we are focused on fully realizing the value of our traditional businesses and skills, and at the same time fast-tracking development of new high-growth and valuable activities related to the energy transition. Energy transition is irreversible. The complexity of this transformation raises many questions about the future mix of technologies, the role of geopolitics in the pace of change, how and when it will be executed in the different geographies, and most importantly, how all of this can be affordable from an economic standpoint. For sure there will not be a single answer valid for all to manage the energy dilemma. Therefore we need an adaptive strategy that aims at different objectives of security, affordability, and decarbonization, and which develops, levers, and business models that are tailored to the different countries and industries, and most crucially is economically sustainable.
Our approach is pragmatic and technologically neutral, pursuing a mix of solutions prioritized on the basis of limiting timing and deployment cost. It is an approach progressively shared by policymakers' consensus that spans from the increased supply of gas and renewables replacing more emitting energy sources in developing countries and improving their energy availability to the deployment of low and zero-carbon technologies in OECD countries, echoing our rapid build-out of Plenitude and our industry-leading positions in biofuels and CCUS. Such a model preserves the competitiveness of the existing economic and industrial systems and supports current and future energy demand, while developing innovative technologies and optionality, like fusion, capable of shaping the energy system of the future. Our approach to the energy transition results in a more profitable, diversified, and more resilient Eni.
In fact, we are differentiating our sources of cash and lowering our risks while expanding into new areas of growth. Our exploration capacity and technological expertise generate a broad range of opportunities. This then demands a high level of discipline in spending, coupled with a growing portfolio management focus. The combination of selective investment and timely and appropriate divestment helps us to speed up the execution of our strategy, manage risk, and optimize capital and returns, and thereby secure value. In our key upstream business we are maximizing flexibility and agility in our development projects, as already proven by our good results and short time to market. The gas component will grow its role in upstream, where we expect a return on capital that will be consistently double-digit plus.
It will also expand our trading opportunities through GGP, a business with virtually no requirement for invested capital that will grow in size and flexibility, enhancing returns further. In addition, new forms of energy will see an even more sizable growth, both in activity and earnings, from transition-related businesses. These display high growth and attractive returns on investment. The return on capital employed is already 15% for Enilive, and by the end of the decade we expect it to rise to around 10% for Plenitude, as its revenues scale up and CapEx for growth will stabilize. There are also two future segments under rapid maturation where we have a leadership position and we add value: CCS, which allows us to exploit existing assets to reduce emissions from hard-to-abate activities, and biochemicals, where Novamont is at the forefront of research on innovative natural products.
CCS will grow in accordance with business models that combine, in some cases, regulated returns and a related merchant component, with expected returns on invested capital of around 10%. Novamont, on the other hand, is a market potential that leads us to project significant growth and return of around 15% by the end of the planned period. In many cases these transition-related businesses have a presence in OECD countries and the ability to repurpose existing facilities through a circular economy concept. We are seizing industrial potential provided by the energy transition with a distinctive organizational and financial model. Growth in new businesses determines the need to apply managerial and financial focus to activities that have different characteristics in terms of frequency and size of investment decision, geographies involved, or require a bigger role of marketing.
But above all it is from an economic and financial perspective that a potential trade-off emerges between continuing with more traditional businesses that generate high free cash flows but offer reduced growth profile or investing into energy transition high-growth sectors where we can generate significant value and command high multiples by which we demand capital. Our satellite model reduces the capital absorption by new businesses, preserving the free cash flow from traditional assets for the benefit of shareholders' distribution. Indeed we can develop emerging activities autonomously, usually with third-party funding, accessing new pools of aligned capital, and thereby highlighting value creation. The recent sale of Plenitude stake, for example, is the first step to support further investment, and it highlighted the value already generated in this business but not reflected in Eni's multiple. We intend to replicate this model for Enilive, for our Novamont biochemicals activity, and for CCS.
At the same time a satellite structure can also be applied in some upstream geographies to access operational and financial synergies, maximize growth potential, and of course free up more capital for the rest of the portfolio. Vår and Azule are very successful examples of business combinations that have allowed us to fuel upstream growth under a dedicated and focused management structure in Norway and Angola. Similar opportunities are under evaluation in other geographies. Our satellite businesses in 2023 accounted for around EUR 4 billion of adjusted EBIT and provided us with EUR 2.3 billion of dividend. Natural resources will continue to be a dynamic and material value and cash generator for Eni, while delivering progressive decarbonization. We will follow an organic strategy to develop our activities, leveraging our highly distinctive exploration and market-leading fast-track development to grow over the plan.
We are expanding our existing trading activities so as to participate in the full gas value chain, and we are using existing infrastructure and depleted fields to capture and store CO2, both for ourselves and as a service for others. The considerable optionality and flexibility of new projects also allow us to unlock value earlier and to de-risk investment via an increased relevance of portfolio management, in line with a track record already established by our Dual Exploration Model. Exploration is a core high-return activity for our upstream business. To secure full realization of the value potential means being strategic about how and where we expect, and doing so at the significant equity levels. This then allows us to accelerate valorization, reduce the time-to-market to start up, and retain the option of part divestment. Eni has developed a unique model that maximizes the time-to-value of our exploration.
Over the past 15 years we have made discoveries of over 16 billion barrels of resources at a unique cost of $1.2. Over the past 10 years we have put into production 70% of our discoveries, and in the same time we have cashed in around EUR 10 billion via the Dual Exploration Model. We have progressively shifted our focus to near-field exploration to further reduce the time-to-production. Côte d'Ivoire discoveries in Congo, in Egypt, in Cyprus, and Indonesia are clear examples of this approach. In this plan we will invest more than EUR 1.5 billion in exploration, and it will continue to be strategic, distinctive, a material engine of value creation for Eni. Time-to-market is the second key feature of our upstream strategy. Our last two major startups are evidence of our fast-track model in action.
Our floating LNG project in Congo started only 12 months after FID, benefiting from the use of already existing facilities and the more advanced technologies. In Côte d'Ivoire we have used a similar approach with the refurbishment of an existing ship, modernized and upgraded, to start the first phase with 18 months optimizing both cost and time. Our model is based on parallelizing the execution of the different development phases, the use of reconversion of existing assets, and a phased development that reduces upfront investment and allows us to learn more about the reservoir behavior. This can only be achievable with the distinctive in-house resources and technology expertise which we develop in R&D hubs like the one we are in today. In terms of production we see underlying growth over the plan at 3%-4% before disposals, in line with the 2023 plan.
The main startups foreseen in the plan are those related to the phase two of Baleine in Côte d'Ivoire, the ramp-up of activities in Congo where the arrival of the second floating unit is expected, and the development of the structures A and E in Libya, and different projects in Indonesia consolidating southern hubs as well as the development of a new northern hub around the discovery of Geng North. The new project under development will have an average internal rate of return higher than 20%, helped by the fast time-to-market, and will contribute to a cash flow per barrel growth of more than 30% in the planned period. Fast-track development and dilution of stakes through M&A will work synergistically to bring forward positive cash flows and manage your overall cash exposure.
Thanks also to our dual exploration model and mature asset disposal we will keep the net CapEx related to our upstream business to around EUR 5 billion a year, with the reported production growth after divestment of around 2%. 2022 and 2023 were impressive years for GGP. We successfully managed price volatility and financial risks emerging from the cutting of Russian supply. We were instrumental in securing replacement sources of gas to meet customer needs. We demonstrated the capability to add material value and extract margin from the supply of equity gas, and we transformed GGP's role by playing across the entire value chain, focusing on commercialization and valorization of equity gas. In the context of a lower macro scenario with a reduced level of volatility for gas we are conservative in our Plenitude outlook.
We expect to deliver EUR 800 million per year of pro forma EBIT at the same that we set out last year. However, current markets remain highly sensitive to geopolitical tensions, supply issues, weather and demand effects. In this context we have clearly demonstrated that we have the supply portfolio, the infrastructure access, and expertise to generate significant upside to over EUR 1 billion. Moving to CCS, carbon capture and storage is a crucial technology in the decarbonization of industrial clusters, in particular in hard- to- abate sectors, and hence for the success of the transition itself. Indeed its role has been recognized by the most relevant international organizations such as the IEA, IPCC, IRENA, and more recently by the UN's decarbonization policies. For Eni, CCS represents an opportunity to reduce our net emissions but also to generate value creating a new transition-linked business.
We have developed a distinctive approach thanks to our large inventory of depleted reservoirs and through our technical and commercial know-how we can play the role of transport and storage operator, and for large industrial hubs the cluster orchestrator. We have established a leadership position particularly in the U.K. and in Italy, and we are further expanding in North Africa, the Netherlands, and in the North Sea. Our unrisked portfolio of opportunities is of the order of 3 gigatons of gross storage capacity. Our goal is to reach a CO2 injection capacity of more than 15 million tons per year by 2030, and to progressively rise to around 40 million after 2030, exceeding 60 million in the long term. In the U.K. our HyNet project is the most advanced.
In October we signed Heads of Terms with the government defining the key terms related to the economic model and the remuneration of investment for the transportation and storage on a regulated asset-based mechanism. We plan to sanction the project in 2024 simultaneously with that of the emmiters. Ravenna CCS phase one will start up this year, with the phase two expansion schedule for starting up in 2027 and capacity rising to 4 million tons per year. Further expansion could take this facility up to 16 million tons in the 2030s. CCS is ideally also suited at the appropriate time to a satellite-type structure, with both strategic investors and as a vehicle for equity investors enhancing returns to Eni. Energy evolution integrates a number of businesses that drive the transition and reposition Eni towards higher growth and better evaluation.
Enilive, Plenitude, and Versalis, specifically Novamont, provide a portfolio of business solutions to help customers to cut emissions and, as we have already said, they are ideal candidates for our satellite model. Enilive is rapidly developing a multi-energy, multi-services strategy to generate value in the sustainable mobility space. Our biorefining activities are evolving into high-performing, high-returning, and globally relevant business thanks to our early-mover status, scientific know-how, and a vertically integrated approach. We recently sanctioned our third bioconversion at Livorno, and a fourth is currently under study. We are constantly expanding our global footprint, building on our JV with PBF at Chalmette. We are developing projects with Petronas and Euglena in Malaysia, and with LG Chem in South Korea. Both are scheduled for FID this year and in operation by 2026.
Our target is to raise biorefineries' capacity to over 3 million tons per year by 2026, and to over 5 million tons by 2030, about a 20% growth rate. Demand for sustainable aviation fuel will be supported both by regulation and by voluntary demand. Against this backdrop we are accelerating production of SAF from our assets, and we expect to have more than 1 million tons SAF optionality by 2026, twice our previous goal, with the potential to double by 2030. In parallel we are progressing our unique vertically integrated feedstock strategy with 700,000-ton production of novel vegetable oil from agribusiness that will grow to account for over 35% of our Italian throughput by 2027. This ensures us as an economic and reliable vegetable oil supply source. We are also investing in pre-treatment technology to capture further margin.
Enilive is integrated along the value chain with the sales of mobility products and services to retail, wholesale and worldwide cargo markets. In retail we see major transformational opportunities, building on our network of around 5,300 service stations in Europe, and we are evolving the traditional retail outlet into mobility hubs to provide a wider experience. We are expanding our network with 300 premium stations in strategic areas, implementing a full redesign. As retail represents a significant captive market for our sustainable fuels we plan to sell HVO in over 1,000 stations by the end of 2024, nearly doubling sales in just one year. We are also progressively rolling out other alternative energy carriers such as biomethane and electricity throughout the plan, helping our customers in their decarbonization journey.
We are expanding our non-oil offering for which we target a contribution to EBIT of about 40% by the end of the plan. Thanks to the combination of biorefining throughput tripling by the end of the plan versus 2023. Our focus on premium products and a steady contribution from marketing, we target a 20% growth rate in pro forma EBITDA to over EUR 1.6 billion by 2027. Our conservative approach at this early stage of development leaves further upside to EBITDA in the plan, as the agri-hub cost structure normalizes, leading to a 20-30 cost advantage against comparable feedstock. Enilive is organically self-financed through the plan, with disciplined CapEx of EUR 0.5 billion per annum, of which 65% is targeted to growth. The growth and return opportunity in Enilive warrants a premium multiple versus the traditional businesses.
It is therefore ideally suited to follow the same pathway as Plenitude in attracting, aligning capital to support growth, and give visibility to the value created. Now Versalis. In 2023 Versalis has been materially impacted by the global chemical market scenario and the particular challenges of Europe. Our commitment is to accelerate the restructuring of this business, to align the integration with the growing new bio-based chemical chemical platforms, and 2023 was also a catalyst year, as in October we completed the acquisition of the remaining shares of Novamont, taking full control of these world leaders in the production of bioplastic bioplastic and biochemicals. So we are transforming and repositioning Versalis, leveraging the new platforms focused on specialized products, bio-based chemistry, and circularity solutions, where we can compete with a leading position. Within the context of the plan the price is significant.
The target EBITDA being in 2025 and positive EBIT in 2026 represent an improvement of over EUR 600 million to the group. I would emphasize that work underway in the transformation of our traditional refining to our biorefining represents a good precedent in how we can reposition an uncompetitive business leveraging our innovation and technological capabilities. At the breakout you will have the opportunity to meet with management and go through their plans in more detail. Now Plenitude. Plenitude continues delivering its outstanding operational growth. By the end of 2023 installed renewables reached 3 GW, almost 10 times the figure of end 2022. We plan to grow capacity further, increasing to 4 GW in 2024 and more than doubling to over 8 GW by 2027.
This growth is supported by a solid pipeline in excess of 20 GW, well diversified in different technologies and geographies, of which 2 GW is under execution, 4 GW is of high-medium maturity, and 15 GW low maturities. In 2023 we also grew charging points by 46% and expected to double them by 2027. Plenitude integrated business model is a critical and differentiating quality. The combination of renewables and around and about 10 million clients provide valuable internal hedging, as seen in 2022 and 2023 in two highly challenging years. Plenitude in mobility growth we also leverage Enilive stations while also continue developing partnerships with car manufacturers and large-scale retail across Europe. Value creation in our operating performance is also evident in our financial results. In 2023 full-year pro forma EBITDA totaled above EUR 900 million.
This is EUR 200 million ahead of our initial projection. We expect EUR 1 billion of pro forma EBITDA in 2024, and then a doubling to EUR 2 billion by 2027. Our growth is supported by organic investment over the plan period, averaging around EUR 1.4 billion a year, of which 70% goes to renewables. In December we reached an important milestone with the investment of EUR 0.6 billion by Energy Infrastructure Partners, which closed last week. The deal confirms enterprise value built at above EUR 10 billion, providing a helpful benchmark as we move towards our plan of an IPO. The growing materiality of Plenitude in any group requires understanding its different risk profile, return on capital employed during the growing phase, EBITDA multiples, and debt capacity, all elements that differ from other businesses of Eni.
These elements, together with the other financial targets of our plan and the announced distribution policy, will be described by Francesco, to whom I leave the floor. Please, Francesco. Thank you, Claudio, and good afternoon. Our financial framework supports the execution of a strategy that builds businesses with complementary risk and return profile, increases resilience and flexibility across the cycle, and delivers value to the shareholders. Looking to the next four-year plan the context is a more cautiously framed scenario. We assume $80/barrel for oil, EUR 30-35/MWh for gas in Europe, and an average $5.4/barrel of our Southern Europe refining margin. In 2024 we expect to generate around EUR 13.5 billion in cash from operations.
Over the course of the plan we also expect to grow cash flow from operation in a constant scenario by around 30%, or over EUR 4 billion. This extends the growth rate we set out in the previous plan. The growth in operating cash flow is delivered from all segments. It is worth highlighting that our two main transition businesses of Plenitude and Enilive will account for 20% of the cash flow from operation. Growth during the plan period, emphasizing the emerging high-quality diversification we see at Eni. As we will continue to right-size the corporate structure in the context of our strategic evolution and satellite model we also expect to deliver EUR 1.8 billion of saving and simplification benefits over the plan. As we have highlighted we find ourselves in a situation of real depth of investment opportunity.
For this reason we have to be, and we will be, highly selective in project sanctioning. On portfolio we don't require acquisition and we can instead gather partners to support our projects. In the upstream we will leverage our well-consolidated model of dual exploration by reducing our equity and anticipating cash flow. We made significant discovery, for instance, in Ivory Coast, Cyprus, Indonesia, and Congo, which all hold the potential for this type of equity dilution we have successfully performed in the past. This divestment activity is in addition to the continuing management of tail assets, such as our 2023 sales of assets in Congo, already completed, and Nigeria. At the same time we are also looking at growth from the new transition businesses that are essentially self-funded, with the dilution of minority stake or IPO valorization, if market condition will be favorable.
Following the successful dilution of Plenitude that we completed at the beginning of March, we expect to speed up in the valorization at each of the four main businesses related to the transition, capturing the real multiples appropriate to their activities. Our disciplined investment approach and the quality of our portfolio means that now we see our gross investment at EUR 35 billion, less than EUR 9 billion per year, and EUR 2 billion lower than the previous plan. But our overall CapEx absorption will be materially lower in this plan. In fact, with the more active divestment and value realization we have described before, we expect an overall net CapEx of EUR 27 billion, an average of EUR 7 billion per year, more than 20% lower than last year's plan.
In addition, we have uncommitted CapEx in 2024 of 15% of the budget, and this rises by around 20% of the budget in each of the subsequent years. Our distribution policy confers the progressive growth in shareholder value related to our strategy. In the past two years we have distributed almost EUR 11 billion, an historical record for Eni, approximating to 20% of the current market cap. We expect to continue at high level in the coming years. Our model is to continue to rank distribution as a top priority to a percentage of operating cash flow, a transparent link to our business performance. Today we are announcing that we are enhancing our payout, which will now target a distribution around 30%-35% of cash flow from operation, compared with the previous 25%-30%.
We will allocate an amount to the dividend and the rest as a buyback, the variable component. For the 2024 dividend we propose an increase by over 6% to EUR 1 per share from the previous EUR 0.94 per share, paid all in quarterly installments. On the buyback, following approval at the assembly in May we expect, based on the 2024 scenario, to repurchase EUR 1.1 billion. This is a flexible tool with higher exposure to the upside. In fact, similar to 2023 we can confirm that in lower-than-plan scenario we will seek business outperformance and use financial flexibility to deliver the target buyback. While, in the case of better-than-planned cash flow from operation outcomes, we will now allocate up to 60% of incremental cash to our buyback.
This is a material improvement versus last year, when we indicated 35% of incremental cash allocated as an upside. As an example, at $90 barrel, benefiting from the top end of the enhanced payout the buyback would amount to EUR 2 billion. Overall, during the plan period and at our scenario we are planning to buyback above EUR 6.5 billion of our share, reducing the share count by 13%. A continuous and material improvement of the return for our shareholders. In conclusion we are keeping our distribution policy highly competitive, implying at the current share price a distribution yield of 9%. Our investment and distribution plans are made in the context of maintaining balance sheet strength and flexibility.
During the plan period our cash flow from operation will average over EUR 15 billion per year, and net CapEx will average around EUR 7 billion, implying a free cash flow that materially covers our distribution and enhanced balance sheet strength. Our goal is to preserve Eni as a strong investment grade credit. This means leverage will range between 15%-25%, as we seek to balance a fundamentally conservative capital structure with flexibility and advanced cost of capital. To emphasize this point the average cost of our net debt, thanks to good return on our liquidity, was 0.8% in 2023. We expect it to be around 1.5% through 2024. For this reason we took the opportunity to advance our strategy, completing important strategic acquisitions in a particularly favorable period in terms of net borrowing cost.
We see leverage falling back towards the low end of the indicated range by the end of the plan. Furthermore it is also worth noting the role of Plenitude in our debt composition. Plenitude financial model and risk profile lends itself to higher gearing than would be typical at an oil and gas company. At the end of 2023 its net debt stood at EUR 2.2 billion, and we expect it to target debt levels at around 2-3 times EBITDA, in line with the norms for such businesses. In context Eni ex-Plenitude leverage was around three percentage points lower at the end of 2023, while by 2027 that figure will be around five percentage points lower. These are the key highlights of our financial plan. Now I will return the floor to Claudio for his final remark. Thank you, Francesco.
In conclusion, I would like to highlight the key feature of our four-year plans, and particularly the improvements in comparison with the previous plan. We are embracing the challenges created by the energy transition, with a strategy that addresses each element of the trilemma. We have a distinctive and a creative strategy, supported by strong organic investment, performance, and focused M&A. We are executing on our deep portfolio of opportunities in a disciplined manner. Its quality enables us to reduce the gross CapEx in the plan by EUR 2 billion versus last year. We have considerable scope to anticipate value in high equity projects, introduce aligned capital in satellites, and address our tail. We see net M&A contribution contributing EUR 8 billion over the plan, cutting average annual net CapEx to EUR 7 billion. Growth in our traditional upstream and from our new transition businesses is exceptionally strong.
Over the four-year plan we will grow CFFO by 30% with the material contribution of the new businesses. During the plan the 20% of CFFO growth will come from the emerging high value, high multiple businesses, well defined in our satellite structure. All economic and financial KPIs demonstrate progress and robustness with a compelling trend of value growth, upside leverage, and resilient downside. This enables us to make substantial improvements to our distribution policy. We are raising our payout commitment, the associated dividend, and materially increase the upside participation. Our investment will also mean that Eni at the end of the plan is bigger and more profitable, through high-performing upstream and the new material transition-related businesses. Our growth is coupled with material reduction in emissions.
Since 2018 we have cut our upstream net Scope 1 and 2 emissions by around 40%, and the methane emissions by more than 60%. In the past 12 months we have made significant strategic steps that give us increased confidence in the path we are taking. We have made the organic and M&A investments, continued building technological know-how, created the organizational structures, and delivered a new portfolio of new transition-linked businesses. Ultimately it is evident that energy transition can only become real if it creates material and sustainable returns and enables new forms of profitable business. That is what we are doing. Thank you for your attention and now we are ready with the team to answer your questions. Good afternoon, everybody. I'm looking to see. I did promise to ask someone who didn't get. Martin. We'll start with Martin.
Yeah, hi, hello. Two questions, which are somewhat connected. Can you talk a little bit more about the $8 billion of disposals and also how that relates to the difference in the upstream growth guidance, the 3%-4% versus the 2% reported? Is it as simple as saying $8 billion of disposals lowers the reported growth rate? And given that this is such a large amount, can you talk a little bit about sort of where the $8 billion sort of plan came from? And then finally, it's only two years ago that we talked about the balance sheet being 10% geared. Now we're talking sort of 15%-20%, despite $8 billion of disposals. I'm sure there must be a spreadsheet that makes it all work, but can you say a few things about that?
Yeah, I can say something about the first question, about the EUR 8 billion. So the EUR 8 billion clearly is not coming just from the upstream. It's coming from the upstream. And when we talk about upstream we talk about tails, so we talk about marginal fields or some cleanup in our asset base. Then we have the other, the other satellite of company that we created where we are looking for strategic partners, like what happened with Plenitude, for example, that gave some additional contribution to the EUR 8 billion.
At the end, at the end when we talk about the EUR 8 billion and reported production 3%-4% after the plan of disposal we go to 2 is because we are cutting about, about 1,000 barrels per day, something like that, of marginal field and tails in our asset base, in order to reduce costs and to be more efficient. Also because we have a big operationality. We found a lot of exploration, so we find a lot of exploration with a high percentage. So we have tails and we have also dual exploration, so assets that where we have to start new development, new CapEx, so we have also an advantage in terms of reducing the CapEx because we are going to reduce the stake this year in assets where we have now 90, 85, 90, sometimes 100% of the assets itself. Yes.
About the comparison on the leverage trend. You are clearly comparing two different macro environments. So the 10%-20% that we described a pair of years ago, or even last year, was an environment where the price of gas was materially higher. There was also a higher assumption related to oil, if you remember last year. So I think that if you remove this component related to the scenario, the implicit raise of the leverage would have been 13%. While once you add back the benefit of the disposal and comparing the period 2023-2026 this benefit is substantially adding or recovering between 27 to 8 percentage points. Therefore the impact of the 5% that you now see in terms of the range is substantially the contribution on the impact of the overall macro partially offset by the disposal and the new plan of M&A.
Christian. Christian.
Good afternoon and congratulations on an excellent presentation. Two questions are interlinked. First around your crude oil growth. I know you've given a BOE growth target. Can you unpack that in terms of your oil volume, or give an indication, and also sort of the key milestones in terms of delivery of that volume growth? And that segues into the second question, which is regarding your cash return targets around the macro assumptions you make. Have I missed something, or has the second order gone down in terms of cash flow relative to oil price sensitivity? Because the assumptions you make, or you've provided, seems to me as an implicit downgrade relative to what you can generate through the volume growth. So I guess the question is how has your sensitivity changed on your cash flow relative to your macro assumptions?
And if you can walk us through that, so we can be confident that there is upside, as you highlight in your presentation? Thank you.
Okay, on this second question, eventually for the oil production will be Guido. Clearly the sensitivity is related to the situation of the overall situation and the portfolio that you have at the time of the four-year plan. This portfolio is moving continuously. It's moving continuously because you have new startups, you have different contributions from oil and gas, you see a growing contribution from gas, eventually condensate, and you have different ages or periods of the phases of a PSA. So once you look at this kind of sensitivity, and this is the reason we update this range of sensitivity, you have to consider all these factors.
As you can see, we are now in a situation where it is a quite material upside in terms of $ per barrel effects, in terms of cash flow from operation, but this is partially a bit lower than in the past because the gas component is growing and therefore this is reflected in a different sensitivity metrics, and clearly also there are some PSA mechanisms. Or also, we have to remind this, the contribution of the satellites. Because if I move out Vår and Azule, and these metrics are not reflected because Vår and Azule are paying back dividend, so this is an element that is additionally contributing to the dilution or the lower impact that you are mentioning. It's clear? I see doubt on your face. It's clear what it's not exactly what responded to your question.
I understand the portfolio is a relatively high cost in the context of the macro assumptions you said. It's just trying to understand the oily piece of your portfolio, the quality of that oil relative to the BOE, and how does that work relative to movements in oil price. Because again, like I said, the cash flow that you provided is certainly less than our numbers at JP Morgan. Clear. Yeah. So let me give you some more color on the growth. The growth is mainly driven by a number of projects, which are the Côte d'Ivoire, which is an oil project, very accretive, very lucrative, I would say. Then Congo LNG, which is not just an LNG project, but it has also a component of oil.
And then we have the Libya project, which is gas, and Indonesia, which is a very rich gas project, so a lot of liquids. The growth in the underlying and in the non-organic view is seeing an increase of the gas component, which when I say gas I'm including also the liquids associated with the gas, yeah, the condensate. And then if you and it's targeting the 60% towards the 2030. And then when you look at it from a reported view it's almost, I would say, equal the ratio that we will maintain from the beginning of the plan to the end of the plan. I'd also say, Christian, if you look the EBIT sensitivity is obviously pre the satellites, so it doesn't include satellites, which are obviously oily.
And if you use the starting point, the 13.5, and apply the sensitivities from the 2023 performance you'll get almost exactly to 13.5. So we needed a starting point. It is consistent with the assumptions we put in, whether those are the right assumptions or not. That's for you to decide. Alex. Hello, thank you for taking my questions. Alejandro Vigil from Santander. Just a question about the situation in natural gas prices overall, in Europe and in the U.S. we see this weakness in commodities. Which are the implications for this business plan in terms of investment in LNG, natural gas in the upstream, and also in Plenitude, all the investments in renewable plants that, of course, they are exposed to power prices? Thank you. Yeah. So I'll say something that I ask maybe Christian. Where is Christian? He's not there.
So clearly we have a scenario, gas scenario, so all the possible impact all along the plan is already inside embedded in this presentation, in this four-year plan. Clearly we have a different kind of situation. If we look at upstream production, we don't have a lot of production in Europe, or we have production more linked to domestic situation, so we sell production to the countries. Most of our production is sold to the country, and we have a contract. And we have a fixed price that is not depending on the market price. Most of the time it's domestic, so it's quite flat. Okay, it has a floor, so it's defending our situation, but it's not really impacted all this macro scenario. If it's going down, down, down we rest in a safe situation. Then we have GGP.
GGP, as you saw last year, we started with a very high price, then the price went down, but in any case GGP made a very good result. Why? Because GGP is part of the business of GGP, a good part of the business of GGP rely on volatility, so on the differences. And we have this kind of diversified asset because we have LNG that is growing. And you saw at the end of the plan 80 million tonnes of contracted LNG. And we have pipes where we can't really play on the volatility. So I think that our gas price is an average gas price, also considering all the different analysts. I don't think that we can be really impacted downside. Clearly we can be impacted upside if there is a big, high price for volatility and also for the upstream. You want to say something else?
Difficult to add something, Claudio. I would just say that we see 2024 and 2025 still being very tight in terms of LNG and gas scenario. Because it's true that now we are coming from a mild winter, which actually left the storages in the U.S. and also in Europe fairly high. But if you look at the addition of LNG, new LNG coming in the next couple of years you have hardly 5 million tonnes coming, and part of it is actually also contention due to sanctions. And on the other hand though we see an uptick of the Asian and a bit also European demand coming back on stream. So we think the next one or two years will be still tight and volatile. Irene? Thank you. Irene Himona, Société Générale. My first question is on your gross CapEx number.
If you can talk around what sort of inflation or disinflation you assume in there. And then, Francesco, you referred to EUR 1.8 billion of savings from simplification. I wasn't quite clear if that is OpEx alone, or OpEx and CapEx. And then secondly, very quickly, going back to Russian gas. Last year you spoke about replacing, I think, initially 50% of that and then rising to 80% eventually. Where are we in that? And how should we think about the structure of these new contracts? Anything you can say on pricing for these new contracts versus the old Gazprom ones, please. Thank you. Apart from Russia that is easier, then we go through the inflation. So for Russia now where we are in a good position because especially I talk about Europe clearly, the demand is lower. We have big storage, the storage are 65%.
If we go back and we make all the calculation now we are exceeding 80% of replacement. Clearly in a different way because that was one contract. Now we have different contracts. But the model changed completely because I think that all the replacement has been made, apart one small quantity of 1.5 billion cubic meters per year with Qatar, the whole replacement has been made using our gas, equity gas. Though we are in a different kind of situation. Before we are just buyers, now we are producers so we can control much better the quantity. And the contract is a contract with ourselves most of the case, or so market condition clearly. So we are quite in a safe situation.
If the demand comes back to what we had in 2018, 2019, so 420 billion cubic meters per year in Europe, clearly we are not 100%. We can reach 100% in one year, I think, for next winter. At this level of, so maximum level of demand. But with a lower demand we can reach it faster. With the cost inflation, the current scenario with the geopolitical instability, clearly the persistence of a high level of activity globally, and the merging of the major suppliers is bringing some inflation. Clearly neither at the level of 2022 versus 2021, which was 10%, or 2023 versus 2022, which was 6%, we see an increase between 3% and 4% which is embedded in our plan.
While coming to the question related to the cost and the savings of corporate, these are mainly OpEx. There are some, let's say, CapEx related to ICT, but the great part of that is OpEx. We wanted to bring back the amount that we had in the past for this kind of, I'll say, running corporate in the range of EUR 1.5 billion-EUR 1.6 billion. We kept this relatively flat for a number of years. After COVID there was a double impact. There was a rebound following the reduction of activity of 2020, 2021, and there was also the inflation component that added, let's say, a double-digit push for the so we wanted to return to the normalized level. Michele? Thank you. Michele Della Vigna from Goldman Sachs.
First of all, congratulations on what is a very powerful industrial growth story, both in traditional and low carbon. I wanted to come back to your financial framework. It looks like you've been quite conservative in that you match the outflow and inflow of capital even before the disposals, more or less, on your plan. I was wondering, especially given the very low valuation that you, like the rest of the oil and gas companies in Europe, are trading at, why not perhaps link some of the disposals with increased buybacks, taking advantage of such a low multiple in a very accretive way? And then the second question is a little bit more technical. On the carbon capture business, clearly you're developing a very strong business of storage and transportation of CO2.
I was wondering, is the capture side as well something you're interested in to perhaps help some of the industries in Europe that don't really know how to do it themselves or how to finance it to add that extra piece of decarbonization and increase your business there? Thank you. So it starts from CCS and then we talk about buyback and asset disposal. In this very center we develop R&D, also another center, on the capture. So the capture is not normally in the UK business model. We are just in charge of storage, transportation, storage. But as I said, for big hubs we play a different role as an orchestrator.
Because it's our specific know-how, the capture in refineries or in ENP to strip the CO2 or the sour gas, clearly we have the means to use the best technology, but also to use for us the best technology is the technology that consumes less energy. Because the most expensive part in the CCS is the capturing. So if we consider transportation and storage we can consider about between 50, 18, 19 dollars per CO2 capture tonne or CO2 capture, then 40, or 50, or 60, depends, or less, depends on how rich in CO2 the gas is, due to the capture. So we are working, we are R&D, and we have the means.
For the first question, no, that could be an idea, but clearly when we say that we have a level of EBIT and if we are so good or we have different prices or we perform better in our plan, or there is some other event, for example, we sell or we sell and we reach a better, a bottom line, a better result. I talk about the CFFO and not everything we are going to share 60% what the result, the upside, is 60% for our shareholders and 40% for us. So there is inside our we can say new policy because we upgrade but also we change because we remember that we talk about 35%. So that is another way to give an additional remuneration in different kind of situation.
I don't consider that we cannot link the disposal with other mechanisms at the—it's not in the model that has been approved by the board. It's a possible idea. I would like to integrate that we prefer to have a progression of dividend distribution related to the, let's say, underlying performance. The disposals are cycles. Could expand your return in a year. The following year you will have the setback of that because the people will immediately, let's say, be accustomed to a higher return that is not originated through the business but is related to a specific sale. So it is much better to create a real growth that is absorbed or recovered or balanced also through the disposal but ensure a consistent cash flow growth. That is the origin of the distribution policy. Anisha? Down the front. Sorry, Anisha. Come yeah.
Hi. Thank you for the presentation.
I'm Anisha Patani from Barclays. So I have two questions. One, again, on buyback. You mentioned the potential upside to buyback, so I wanted to sort of understand where exactly that comes from. Is it just linked to the fact that you could have changes in the macro environment? And then the second question was on chemicals. I wanted to know how far along you are on the restructuring and transformation to reach the break-even in 2025. And you mentioned on the slides participation in strong specialization in high-end markets, so could you specify what that is exactly? Thank you. Thank you. For the upside, I say if you were then the expert for sure you want to say something.
But the upside, as I said, is we have on the basis of our scenario we have EBIT or we have cash flow from operation, not EBIT, cash flow from operation, EUR 13.5 billion. That is the cash flow from operation. So if we are performing better in terms of manage the business we get better results. Or we have higher prices, as the example that Francesco did during the presentation, the $90, how much can give to our shareholders. That are the conditions. It's not M&A or divestment. That are the conditions because it's linked to the first line, the cash flow from operation. For Versalis, it's to give some cover then we have the breakout. But you can maybe, Adriano, the CEO Versalis can give some cover about that. Sure. So thanks for the question.
On the trajectory of restructuring, we are going in line with our plan. In fact, we start already a few years ago with, for example, transformation fuel site like Porto Marghera. We announced in November the shutdown also another site in Scotland, about Elastomer. Of course it's ongoing in terms of efficiency, in terms of restructuring and resizing a fuel site, of course bringing fixed and variable cost reduction. It's something that you cannot do overnight. Of course we are not waking up today. It's something that we start over the last few years. It takes time also to build the platform that enables the transformation. So over the last few years we built a few platforms. We acquired also some platforms like Novamont, for example.
But going back to the specific question on specialization, so that is one of the platforms of the three platforms that we mentioned before that we want to grow. We want to diversify specifically in markets linked to energy transition. So for example, wire and cable, like polyethylene for photovoltaic, like in some cases potential application for battery, specific composite for battery. So this is all the type of application we're looking on. And we can do because we acquired a few years ago Finproject, that is a compounding company, very integrated with our technology platform. So we have the raw material and also the solution offering to these markets. Yeah. But in summary, the commitment of Adriano, that is the CEO of Versalis, is that during the plan he's going to reach break-even by the end of the plan. He has Adriano, look at me because you're hiding yourself.
Because we are very squeezed. You are taking commitment in front of everybody. So I repeat because it was looking at something else. But in summary, your commitment is for Versalis. In the next two years you reach break-even. By the end of the plan, or in three years, I remember, you have a positive EBIT. You can say to everybody that is the commitment. No, it's better to say public. Free cash flow 27. So we are not joking. Clearly. No, not at all. Okay. Good. You can sit down now. I feel a bit intimidated. Let's finish off on the front row with Al and we'll move back. Can I just ask a couple of questions on Plenitude? Can you talk about the involvement of Energy Infrastructure Partners? Was that a competitive process?
Were they chosen because they paid the most or did they bring something to the joint venture? That is immediately they paid the most. Otherwise. Yeah. But are they a partner that can add value to the business is kind of my question. And yeah, but we'll probably leave it there. That's my question. Okay. So when we talk about the process, Francesco is going to say more. Why them? Because they believe in the project. They believe in the company. They were able to cash out money to be part of this project. It's not a new project, but it's for us not a new project. But from our side we talk about Plenitude satellite model. We put together clients, EV charging points, renewables, solar, wind. We create a company. Now it's working. The results are there. But we start discussing with them because we present.
They believed in the company. They already put money. They want to invest more to grow the company. When you find for a partner and you look for a strategic partner strategic means that it's not just there to follow, not just there. You have to drag it and you have it's sleepy and sometimes one dividend finish. No, they believe in this business and they put money because they want to grow with us. So because we were not ready to accept everybody because we want to invest, we want to grow, we selected them because we felt that there is a strong belief. It's not just a question of money. Because for us Plenitude is a strategic project. It's not just a project. Want to say something about the project?
I think that we can say that there were other, let's say, potential buyers that were upset by the conclusion of this negotiation. So I think that this was a good win for us. I think it was also a discussion related to governance that was the lengthy component of this negotiation. I think that we will have, let's say, a balance of industrial competence and financial competence that will help Plenitude to perform even better in the future. Just one bit of quick follow-up. The debt that you mentioned, the debt reconciliation, is the debt in Plenitude recourse or non-recourse? This is a non-recourse debt. It's a recourse in case consolidated with Eni. So it will be at the end of a Plenitude debt once it will be eventually consolidated in the future. Come around and Biraj on his own there. Hi. It's Biraj Borkhataria at RBC.
Thanks for taking my question. So the first one's on the GDP guidance. So last year you had a really exceptional result for a few reasons. And I guess we can all take a view on volatility this year and environment's quite different and so on. But the bit that's harder is the arbitrations. So implicitly in your guidance for 2024, are you not expecting much? Are you risking it very heavily? How should I think about that? Because they tend to come out of the blue and it's hard to see from my seat. And then the second question is just on the upstream sales. So one of the changes is the step up in divestments in the upstream. And you've had some exploration success, but you've very consistently had some exploration success. So that's not really changed year on year.
So could you give some comments on the sort of broader environment for M&A in that space?
Because you see a lot of activity in the US. Your larger peers are buying assets and you're talking about accelerating the sales. I'd be interested in your perspective there. Okay. So starting from the exploration, so dual exploration model, it's true that we made a lot of exploration discoveries. And you said that didn't change a lot because we made EUR 11 billion from selling. So that means that for exploration with a big added value because we de-risked. That is specifically for us. We de-risked the asset, just the investment for exploration. Then there is a big added value. So that is something that we did in the past. And EUR 11 billion is not nothing is a huge amount of money for a de-risked without FID, without development.
Then we developed, clearly. But that we do add a bit that is part of our strategy. And it's not just an aspiration. It's a different kind of aspiration because this aspiration link is a near-field. So linked to existing facilities. It's aspiration that is not just de-risked from a geological point of view, but it's aspiration that is close to existing facilities. That means that is also the development, as we demonstrated with several examples, it's fast. It's less expensive with a higher internal rate of returns. So we can find IOC, we can find a lot of NOC or state that want to join us as happened in the past and now is happening now. So that is quite, for the past record, it's quite credible project stuff. So that are something that we are finalizing also. And also we expect to finalize something also in 2024.
They are very good assets. As Guido explained before, assets are not just dry gas. It's rich gas or condensate, volatile oil, so very light oil with a quite premium. So there are really good from that point of view, we are in very good shape. There are no particular issues. Sorry, then your focus on this? Volatility gas. For gas. You want to say something? Oh, gosh. Thank you. Yeah. So in 2024 we don't expect any arbitration outcome. So the guidance is actually not affected by that. Instead, clearly we have ongoing, as usual, renegotiation, renegotiation with our counterparts, which actually might also affect the guidance exactly to quantify a bit the upside that Claudio was referring to. So the upside is also linked to volatility, prices, but also outcome of those discussions.
I like to add about this point that it's true there is no arbitration. But what I said at the very beginning, that we are buying our gas. So we are on the value chain. So it's something that you can't maybe see in the GGP; you can see in the upstream. Or then in Plenitude at the end of the day. So the good stuff of this satellite model and the equity model where you are not just a buyer, you buy from a third party, you sell to a third party, you adjust in the middle with a small margin, that you are on all the value chain. And you are in different places to optimize the result, the economic result at the corporate level. We'll work our way back. So I should go to Massimo at the back there.
And then we'll come to Josh after that. So back on the back. Good afternoon, Massimo Bonisoli from Equita. One question on the bridge, on your outlook for 2024 on cash flow from operations. It seems to me you have quite a good level of contingencies. I'm struggling a little bit on the bridge here. So I would like to know, to understand better the contribution from Neptune in 2024, the exit of cash flow from the divested asset in upstream. And maybe one word about contingencies in the sense that last year you improved cash flow from operation targets over the year at same scenario level. So maybe you have included some contingencies as well. Francesco. Yes. We do not provide all these details that you look for, sorry. But this is your job. At the end of the year. Exactly.
No, anyway, just to give you a figure that is important in terms of contribution cash flow from operation 2023 versus 2024, of that $3 billion difference, $2.7 billion is related to GGP. So substantially what you are seeing is the impact of GGP plus that have last year also some one-off factors that helped is the scenario of gas. CERM is a bit lower. So you see that there were and also oil was about $2-$3 lower. So the overall net comparison is related to scenario plus the GGP changes. Massimo, I guarantee if you run the oil price, the gas price scenario through it and adjust for the GGP guidance, you'll get pretty much to what number we've got as the base. Josh.
Thank you. It's Josh Stone here from UBS. Two questions, please. First, just clarification on your CapEx guidance.
You've given the net CapEx number. But when it comes to running your business, I'm presuming you base everything on a gross CapEx basis. So just a point of clarification on that. And then second point, you made a comment about the satellite model driving a simplification inside Eni. And it's just from where I sit, if you're sort of cutting out different parts of the business, different layers of management, that would strike me as something that's driving more complexity inside Eni. So where am I wrong on that? Thank you. So we play between. Just for simplification and complexity of the satellite model. Clearly, you have to make a balance and strike, understand what is the cost and what is the advantages. Clearly, when we add the satellite, we are able to extract the value.
If you look at the more than EUR 10 billion now Plenitude based on the strategic investor investment, clearly we are not able to extract this kind of value. That's all these different companies of gas, retail, all the we're in the big basket of Eni that was mainly valued through the EV multiple with 3x, 3x-5x or more for a European company. If you are able to extract there, you have big advantages. Then for Enilive, it's more or less the same. But what are the other advantages? That at the corporate level, we have R&D technology. So we can give update like in the iPhone, the software. So we really can enrich this company. Clearly, we must have through service contract or service agreement, sorry, links with them.
They are a company while we continue to feed because we are shareholder and we need to increase the value. So there is no additional cost that can pay these big advantages. On the gross CapEx, as we said, in the past were EUR 37 billion. Now we are, let's say, in the range of EUR 35 billion. So it is a saving in the range of EUR 2 billion over the four-year plan. And this is the gross CapEx element. Then what we said, there is the benefit of the M&A that reduces this overall amount by an additional EUR 8 billion. So almost EUR 2 billion per year. Yes. So you're right. The top line is driven by the gross. Kim, from the back there. Thank you. It's Kim Fustier, HSBC. I was wondering, how do you philosophically reconcile the dual exploration model with a fast-track approach?
When you farm down an asset, in some cases you lose control. And you might run into partner alignment issues. And I think Mozambique was a good example of that. So I guess going forward, would you look to sell down only minority stakes in immature projects? Or would you look to farm down closer to FID so that you don't run into those partner alignment issues? And then perhaps linked to that, could you provide an update on the Mozambique floating, the second floating energy project? Thank you. So what we have done in the past, what is the base, so the logic of our model is that we, because we believe in our skills in exploration, we acquire 100% of the block most of the time. And then we sell, except Mozambique, because we sell much more because we were in a development phase.
But Zohr is a different case, for example, where we can hold 45%, 30%, 50%. So we hold the operatorship. And that works in Angola, Block 15/06. In Litchendjili or Block 12 in Congo. In Indonesia. In many cases, Mozambique is quite different because we made a decision to reduce our share from 80% to 25%, 20%. Now we have different kind of situation offshore where we run with a higher share to go faster. And then we have to consider that this joint venture was not so when we discovered Mozambique was early 2010, before. But then the joint venture has been constituted before the dual exploration model. So it's been constituted with the government, with us. So they put together different kind of actors. Our model is quite different.
Then we start in 2012 with the dual exploration model. We acquire 100% and then we farm out shares. So the issue is we run the business. And what happened in different countries, from Egypt to Algeria to Angola to Congo to Indonesia or Mexico, we keep a share that allows us to have an operatorship. And in any case, until the first production, we remain a positive free cash flow. We are never in a red phase. For Mozambique, we are evaluating, we are already a POD. We are evaluating the situation and also the partnership and the situation to understand when we can take the FID. We are not far from a full analysis of the plan of development. But I'm not now in the situation.
For that reason, we didn't put also in our list of projects this year when we can be ready to start the second floating energy. I'm conscious we've run out of time. So, Frank, I'm going to have to close up the Q&A now. We obviously got time to. There's one question. You want to do one more? Okay. Because it is one hour that is. The lucky man. Thank you, Alessandro Pozzi, Mediobanca. Two questions, if I can, John. The first one is on production. We were talking this morning about the need to cut emissions and how it could impact production in the long term. And I think we started to see that already in Eni with the reported production going by 2% post-disposals. How should we think about production going into 2030s? Is 2030 peak year for production or?
Every year is peak year. Every year. For a long time, John. And yeah, so how should we think about production evolving? And also on CCS. I think that is a candidate for a satellite model. And you already have an acquisition vehicle listed in London. What would be the perimeter of a potential independent company for CCS, just with UK assets, with all assets, including Italy as well? If you can give us your thoughts on that. Thank you. So the first question is for Guido. The question and answer for Guido and then Francesco, CCS vehicle. Yeah. On production, I mean, this morning you have seen about our model. And we have also a strong pipeline of projects looking forward, which would enable us to have an underlying growth in the plan of 3%-4%, which then reduced to the 2% reported because of the M&A.
So beyond the plan, we plan to reach our peak around 2030 and then plateauing with the gas component increasing over time. Of course, as we said this morning, we have a lot of flexibilities. And we have also to take into consideration what the society would ask in terms of what the trend should be. So within these boundaries, we will manage our strong inventory and multiple inventory of basically opportunities. And in terms of CO2 intensity, how is that going to change post-disposals? It is going to improve. As you've seen, the quality of our projects are mostly gas. So the intensity is lower. And so overall, the total intensity is going down while the production is going up in terms of volume.
For the CCS, as also was presented, the idea is not to work just specifically in a country, but substantially to present a business model that is a global model. Clearly, Europe is also for our exposure, is a region where we have more opportunity, not only U.K., but the Netherlands through the acquisition recently on Neptune and clearly Italy. But we have also North Africa and potentially also storage activity in Far East. So the idea is to have this overall global company that is able to present towards the harder-to-abate industry, the solution to capture and provide the assets and the competence to put this CO2 captured within the storage. When do you think you have critical mass to achieve to have an independent company in CCS? I think that clearly the size we have already the potential of that.
The complexity is related that you should have a framework and emitters around that are all aligned towards taking the FID and making this potential. In any case, Francesco, what we said and what we know that in 2024 for Hyne, for the first one, so on the southwest, we are going the MITRE, Alpine Dimitri there, we are going if they are going to sign the FID, so the formal signature on the project, we are there. So we are ready. We are ready there. We are ready. We start now in a couple of months in Ravenna. Then we can grow in Ravenna. So that are the two ready. So the critical mass is there. The critical mass is there. All right. Thank you. I jumped the gun. I'm going to have to cut it, I'm afraid.
So, we're running out of time on the call. Yeah, because now we have also the other. We'll come back. Thank you, everybody, for your attendance. We've got the three breakout sessions later on. But before that, you get a drink and a bit of a rest. I know it's been quite intense. And then we will collect you up and take you to your breakout rooms. So that's how it will work. So thank you very much. Thank you very much.