MILAN  - Italian energy giant Eni raised net profit by half in the second-quarter it reported on Thursday, driven by a significant increase in cash flow from the renegotiation of long-term gas supply contracts.

The company posted a net profit up 51.0 percent from the same time last year at 868 million euros ($1.16 billion), while net sales dropped by 2.7 percent to 27.353 billion euros. The results benefited largely from “certain long-term contracts renegotiations” in its gas sector, while oil sales were “impacted by geopolitical issues in Libya”, where a fierce fire at a depot in Tripoli has aggravated the situation.

Chief Executive Officer Claudio Descalzi said that Eni’s refining and marketing business — which lost 324 million euros in the first half — was suffering from a sluggish economy in Italy and increasing competition from the Middle East, Russia and the United States. “In 2014 the overall market environment has deteriorated compared to last year, in particular in the European refining sector where margins have collapsed owning to excess capacity, causing us to accelerate the restructuring of our plants,” Descalzi said in a company statement. “Despite this negative backdrop, Eni reported a significant increase in cash flow thanks to the renegotiation of long-term gas supply contracts, which will bring Gas & Power breakeven forwards to 2014,” he said.