Regime change is becoming a recurring theme at Eni. Last year’s revolution in Libya was one instance of it: the Italian oil and gas group sources about 13 per cent of its daily output from the country, so production in 2011 was down by that amount. Eni says output is 80 per cent restored now and should all be back in another few months. That should help the company. So might events closer to home – regime change in Italy.

The new government in Rome has signalled an ownership overhaul of Italy’s strategic infrastructure. One plan is to spin off Snam, the gas distribution network in which Eni has a 52 per cent stake. Eni chief executive Paolo Scaroni had planned a progressive divestment of the stake in any case. Now that Rome has intervened, the question is how and when it might be done. Selling it would not only raise about €7bn at today’s prices; it would allow Eni to deconsolidate €11bn of Snam’s net debt, substantially reducing its own leverage ratio (the ratio of net borrowings to total equity) of 0.46.

This would also allow Eni to invest more in its upstream activities, where its real expertise lies. Profits at the exploration and production division were 16 per cent higher in 2011, annual results on Wednesday showed. A second huge gas find in the Mamba field off the coast of Mozambique represents a big slice of future production: its natural market is gas-hungry Asia. Eni has 70 per cent of Mamba, but it could cost $50bn to bring it to production. That means bringing in partners, but Eni has other assets besides Snam that it could monetise, including a 33 per cent stake in Galp Energia – a sort of mini-Eni worth about €11bn.

Eni’s problem is that its structure obscures its strengths. Its shares are up 40 per cent since September on the back of exploration successes. Spinning off Snam and going back to what it does best would justify Eni’s longer term re-rating.

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