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UPDATE 2-Eni points to "significant" problems in Nigeria
* Sees 2013 production in line with 2012
* Q2 results affected by Saipem, outages in Libya, Nigeria
* Eni sees significant improvement in H2
* Shares higher, outperform sector
By Stephen Jewkes
MILAN, Aug 1 (Reuters) - Italian oil major Eni cut its annual production target on Thursday and joined rival Shell in highlighting outages in Nigeria as a drag on second quarter profit.
The world's No. 7 oil company by volume which was previously targeting output growth this year, said it now expected oil and gas production to be in line with 2012.
The company has also had supply disruptions in Libya and its 43 percent-owned oil services arm Saipem has issued two profit warnings.
Eni is the biggest foreign operator in Libya where disruption has led to a slump in Libyan oil exports of 70 percent. But Eni said outages were a problem in Nigeria, where theft is a festering problem.
"Performance (in Q2) was affected by force majeure events in Nigeria, particularly significant, and in Libya," Eni said.
A surge in oil thefts in Nigeria hit second-quarter profits at Royal Dutch Shell on Thursday as it took a £700 million hit.
Sources told Reuters on Wednesday that Shell would sell more oil blocks in Nigeria in its latest divestment from Africa's biggest oil exporter.
The blocks are in joint ventures which include Eni. Eni declined to comment when asked if it could sell its share in the case Shell sold. In previous deals, Eni has sold its shares.
"The disruptions in Libya and Nigeria were flagged as too was Saipem. These results are probably a nadir for Eni and 2014-2015 delivery prospects look good," Santander analyst Jason Kenney said.
At 0835 GMT Eni shares were up 1.8 percent, outperforming the European oil and gas index.
Net profit in the second quarter fell 55 percent to 580 million euros ($770.15 million), below a Reuters analyst poll forecast of 683 million euros.
"We expect a significant improvement in our second-half results," Eni CEO Paolo Scaroni said, noting he was pleased with the company's six production start-ups so far this year.
THINKING BIG
Eni, which has shifted focus to upstream development by selling non-core assets, has made a series of major discoveries in recent years including a blockbuster gas discovery in Mozambique which is expected to come on line in 2019.
But some analysts have questioned Eni's ability to deliver such large-scale projects on budget and time, especially after experience in Kazakhstan where Kashagan, the world's largest oil development, has been hit by huge cost overruns and delays.
Eni said on Thursday it expected production start-up at Kashagan "in the coming weeks".
The state-controlled oil major, which produced 1.648 million barrels of oil equivalent per day in the second quarter, has plans to bring 450,000 boe/d of new production on stream in 2013-2014 from 15 projects.
Earlier on Thursday Eni, the biggest foreign oil and gas player in Africa, announced a major new discovery in Congo.
But flagging gas sales continue to weigh on profitability.
Eni, Russia's biggest gas client, lowered its gas sales forecast for the year on Thursday, saying they would be lower than in 2012. In first-quarter results it said it saw sales in line with last year's.
Eni is now renegotiating most of its long-term take-or-pay gas contracts which have fixed prices that are above spot market prices.
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