By Ron Bousso and Stephen Jewkes
LONDON/MILAN, May 15 (Reuters) - Italian energy group Eni is working with investment bank Citi to sell natural gas assets in Australia that could fetch up to $1 billion, sources said.
The sale, which is expected to be launched next week in a two-round process, could see Eni all but exit from Australia.
Eni declined to comment, while Citi was not immediately available for comment.
The Italian group has chosen to sell the assets to raise cash after the global downturn resulting from the coronavirus pandemic led to a sharp drop in oil prices, one of the sources said.
Eni's operations in Australia are mostly based on selling natural gas into the domestic market and therefore are less exposed to global demand and price fluctuations, the source said, making them a potentially attractive target for buyers.
Eni, led by oil veteran Claudio Descalzi who was reappointed CEO this week for a third term, operates a series of offshore gas fields in the north of Australia and has stakes in four exploration licences, including the Joint Petroleum Development Area in the Timor Sea.
It owns the Blacktip Gas Project in the shallow waters off the Northern Territory, and has stakes in the Bayu-Undan gas and condensate field and the associated Darwin LNG plant.
In March Australia's Santos Ltd agreed to sell 25% of the Darwin LNG facility and the Bayu-Undan gas field off Northern Australia to South Korea's SK E&S for $390 million.
Another source said the assets could be worth $700-900 million, with the bulk linked to the Blacktip gas field, which has a long-term gas supply agreement tied to it.
A third source said it had not yet been decided whether the Katherine solar project Eni acquired last year in northern Australia, which has not yet started production, will be included in the sale.
Eni, which has pledged to reduce its oil production from 2025, is investing heavily in renewable energy as part of a drive to slash its greenhouse gas emissions by 80% in one of the energy sector's most ambitious clean-up drives.
Like other rivals it has cut production forecasts and investments as it looks to raise cash to fight the coronavirus crisis, which has destroyed oil and gas demand. (Reporting by Ron Bousso in London and Stephen Jewkes in Milan; Editing by Jan Harvey)