ROME (Bloomberg) -- Eni SpA, Italy’s biggest oil company, cut its forecast for production growth this year as weaker demand and a slump in crude prices spurred a 43 percent decline in first-quarter profit.

Net income fell to 1.9 billion euros ($2.5 billion) from 3.32 billion euros a year earlier, the Rome-based company said on Friday in a statement. Excluding inventory changes, earnings beat analysts’ expectations.
Eni, the first of Europe’s oil majors to report results, said output growth would be less than its initial estimate of 3 percent because of lower-than-expected demand for natural gas and militant attacks in Nigeria. It joins Royal Dutch Shell Plc and BP Plc in cutting spending and postponing projects after New York oil prices plunged 66 percent from a record.
“Oil prices are off and weaker demand is going to hit all producers of gas, oil and refined products,” said Jason Kenney, an Edinburgh-based analyst at ING Wholesale Banking, who rates Eni a “buy.”
Eni’s production this year will increase between 2 percent and 2.2 percent, Claudio Descalzi, head of its exploration and distribution unit, said on a conference call with analysts.
Profit excluding changes in inventory values fell to 1.76 billion euros from 3.04 billion euros a year earlier. That beat the 1.55 billion-euro median estimate of 10 analysts surveyed by Bloomberg News.
--------------Output drop
Eni rose 4 percent to 15.59 euros as of 10:50 a.m. in Milan, trimming its decline so far this year to 6.9 percent.
Chief Executive Officer Paolo Scaroni is counting on fields in the Gulf of Mexico, Congo and Turkmenistan to bolster production. Eni pumped 1.779 million barrels a day in the first quarter, a decline of almost 1 percent from a year earlier, according to the statement. Sales declined 16 percent to 23.7 billion euros.
The oil producer said it’s rescheduling some projects in order to “capture the expected downturn in costs.” Investments will be delayed at fields already in operation, according an Eni official.
Eni reiterated that it expects capital spending to fall this year from 14.56 billion euros in 2008.
U.S. oil futures averaged $43.31 a barrel in the first quarter, 56 percent lower than a year earlier, after falling from a record $147.27 reached in July. Crude futures traded at $49.85 a barrel in New York on Friday.
--------------Falling demand
“The main reason for the fall in prices is the economy and continuously falling demand,” said Achim Wittmann, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart, Germany. “Oil companies have enough cash to survive for the next two years without any big problems,” Wittmann said.
Global daily oil consumption will drop by 1.37 million barrels this year to 84.18 million barrels, according to the Organization of Petroleum Exporting Countries. The International Energy Agency has forecast demand of 83.4 million barrels a day.
Eni’s output may grow by an average 3.5 percent a year through 2012, down from 4.5 percent in 2008, even as the producer invests 48.8 billion euros in the period to boost production, the company said in a February presentation.
OAO Gazprom, with an option about to expire, on April 7 agreed to buy Eni’s 20 percent stake in the Russian gas exporter’s oil unit for about $4.1 billion. The agreement ended speculation Gazprom would delay the purchase and force Scaroni to trim investments or its 1.30-euro-per-share dividend.
Scaroni is also selling the company’s gas retailer Italgas SpA and storage businesses Stoccaggi Gas Italia to Snam Rete Gas SpA, the Eni-controlled operator of the Italian gas grid, for 4.72 billion euros.
Snam on Thursday said it’s selling 3.47 billion euros of new shares to fund the Italgas and Stogit purchases. Eni’s board on Friday approved the sale of up to 2 billion euros in bonds to retail investors by April 23, 2010.