LONDON/MILAN, March 18 (Reuters) - Italy's Eni is cutting investments and selling down stakes in oil and gas fields to help it prop up dividends and become a leaner exploration-driven player focusing on gas.
The state-controlled company said in its 2016-2019 business plan on Friday it would cut overall group capital spending by 21 percent and exploration budgets by 18 percent, while raising 7 billion euros ($7.9 billion) from asset sales.
It also plans 6 billion euros in cost cuts, more than half of which is expected to come from renegotiating contracts.
"The disposals will be mainly through the dilution of our stakes in recent and material discoveries," Eni CEO Claudio Descalzi said, picking out its giant gas fields in Mozambique and Egypt as prime candidates.
"We are not far from disposal in Mozambique," he said, adding Eni was holding talks with "a lot of interested parties".
The CEO, a trained reservoir engineer, said in recent years a 25 percent drop in exploration costs had not kept pace with a 75 percent fall in oil prices, pressuring explorers' balance sheets.
"Eni is in good shape to align costs with price (given its) ability to work on a time-to-market of 12-24 months," he said on a conference call with analysts.
Since taking the helm in 2014, Descalzi has refocused Eni on finding more oil and gas, with a preference for projects that are lower cost and faster to market.
Since 2008, Eni has discovered 2.4 times what it actually produces, compared with a peer rate of just 0.3 times.
"We think gas will be the future," Descalzi said.
Over the next four years Eni expects oil and gas production to grow by more than 3 percent per year, compared with the 3.5 percent growth under its previous plan, with a focus on North and west Africa and the Far East.
Europe's fourth-largest oil major by market capitalisation aims to tap 1.6 billion barrels of oil equivalent by 2019 and bring down breakeven prices on new projects to $27 a barrel from $45 a barrel now.
Zenit fund manager Stefano Fabiani said it was a reassuring plan. "The cut in spending has come without impacting output and the disposals have given more visibility to the dividend which is safe medium term," he said.
Eni, which became the first Western major last year to cut its dividend, confirmed a 0.8 euro per share payout for 2016.
Oil majors around the world are slashing investments to maintain dividends in the face of weak oil prices driven by a global supply glut.
At 1617 GMT Eni shares were up 1.5 percent, while the European oil and gas index was down 0.1 percent.
($1 = 0.8865 euros)
(Additional reporting by Oleg Vukmanovic and Ron Boussu; Writing by Oleg Vukmanovic; Editing by David Evans and Mark Potter)
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