* Eni's Fitch rating at risk without refinery overhaul
* Meeting between unions, Eni CEO ends inconclusively
* Three-quarters of refineries face problems-union bosses
* Eni strategy to focus on upstream E&P - sources
(Recasts after meeting with unions)
By Stephen Jewkes and Oleg Vukmanovic
MILAN, July 8 Italy's Eni could be at
risk of a credit downgrade if it fails to turn around its
troubled refining business soon, Fitch Ratings said on Tuesday,
as a meeting between the oil major and trade unions over the
threat of plant closures ended inconclusively.
Fitch said that while weak refining margins would not prompt
downgrades for major oil and gas companies, Eni was different
because of the relative size of its Italy-focused refining and
It said failure to introduce consistent improvement in the
refining business over the next 12 to 18 months could be one
factor that triggered a downgrade of the Italian group's A+
The warning came as Eni's new chief executive officer gears
up for a strategy presentation this month, which sources have
said could announce the paring back of some of its refining
business to focus on more profitable upstream oil and gas
Europe's refining sector is facing growing pressure from
increasing international competition, excess production capacity
and weak domestic consumption.
State-controlled Eni, which has five wholly owned refineries
in Italy and one half-owned plant, posted an adjusted net loss
of 232 million euros last year in its refining and marketing
division. Italian consumption of refined products fell from 72
million tons a year in 2006 to 53 million tons a year in 2013.
"The company wants to dispose of their downstream and
mid-stream operations in Italy, especially refineries and
chemicals though they'll have a hard time getting it past the
government," one industry source said.
A banking source with knowledge of the matter said Eni could
consider joint ventures with partners to help it downsize.
Three quarters of Eni's Italian facilities face being shut
down, downsized or converted to other purposes as weak refining
margins take their toll, raising concerns about the potential
loss of thousands of jobs, union bosses said.
Eni's Gela refinery, which produces 100,000 barrels per day,
is one of those at risk of shutting down for good since weak
demand caused prolonged inactivity, a separate source said.
On Tuesday evening trade union leaders met Eni Chief
Executive Officer Claudio Descalzi to discuss the group's plans
for the sector.
"We're very concerned. Descalzi said he wants to dismantle
the refineries, not sell them but convert them," Sergio Gigli,
the secretary general of the Femca Cisl union who was at the
meeting, told Reuters.
Emilio Miceli, secretary of union Filctem Cgil, said Eni had
confirmed stoppage of the Gela refinery and the petrochemical
facility at Porto Marghera.
"There's a clear willingness on the part of Eni to stop
flows and activity," he told Reuters.
Eni could not be reached for a comment.
Any refinery shutdowns in Italy would be good news for
independent competitors such as Saras and API and for
the European sector as whole.
(Additional reporting by Ron Bousso and Giancarlo Navach;
editing by Sophie Walker and Cynthia Osterman)