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* Expects 2013 output to be lower than 2012
* Q3 hit by "extraordinary reductions" in Libya, Nigeria
* To start up to 6 bln euros share buyback in coming weeks
* Q3 adjusted net 1.17 billion euros vs f'cast 972 million
By Stephen Jewkes
MILAN, Oct 30 (Reuters) - Eni is facing growingproblems in Africa as social unrest in the resource-richcontinent escalates to threaten production targets on acontinent where the Italian oil company is the biggest foreignproducer.
On Wednesday, Eni cut its production outlook for the year toreflect shrinking volumes from Libya and Nigeria, saying it nowexpected output to be lower than in 2012.
The group saw its oil and gas production fall 3.8 percent inthe third quarter to 1.653 million barrels of oil equivalent perday. Around 57 percent of that came from Africa - the highestproportion of any of the western world oil majors, where itranks in the top 10 for both production and market value.
"The historically high exposure to Africa is one of themajor problems facing the group and is why it trades at adiscount to its European peers," said Andrea Scauri, oil analystat Mediobanca.
Eni trades on an EV/EBIT earnings multiple for 2014 of 4.6times compared to a European average of 5.8 times, he said.
Eni has been present in Africa since 1954 with 8,000 peopleworking for it across the continent and remains committed to itspresence there.
"We believe in Africa and it doesn't scare us to pumpbillion of dollars into new countries on whose stability,solidity and growth we willingly bet," Chief Executive PaoloScaroni said in September.
Scaroni, who is fond of saying oil cannot be found inSwitzerland, is being investigated as part of a corruption probein Algeria involving Eni's oil services affiliate Saipem. His mandate comes up for review next year.
In the third quarter Eni's adjusted net profits fell almost30 percent, mainly due to outages in Libya and Nigeria.
Libya's oil exports have dropped to less than 10 percent ofcapacity as protests halt operations while Nigeria, Africa'sbiggest oil exporter, has seen production fall due to widespreadoil theft and pipeline leakages.
Royal Dutch Shell has already sold blocks in theNiger Delta while Eni has said it is reviewing its positionthere and is looking to focus investments in offshoredevelopment.
But besides its strong presence in North Africa Eni also hasfrontier exploration prospects in Sub-Saharan Africa, withpositions in Ghana, Gabon, Angola and, especially, Mozambique.
Eni's giant gas discovery in Mozambique's Rovuma basin wasthe group's biggest ever resource discovery with an estimated 80trillion cubic feet of gas in place.
But an escalation of tension in Mozambique where the formerrebel group Renamo said it was ending a 1992 peace accord hascast a shadow over prospects.
While east Africa is a hot new province for oil and gasexploration, excitement has been tempered by wrangles withgovernments, gaps in regulations and rickety infrastructure.
Tullow Oil's recent suspension of drilling in Kenyaafter protests showed that popular impatience for a share of thespoils is compounding problems energy firms face building an oiland gas industry from scratch in East Africa.
As aging fields dry up, oil majors are increasingly spendingmore to look for hydrocarbons in countries that until recentlywere off the sector's radar screens. At the same time though,they face shareholder pressure to keep a lid on costs as the oilprice cycle threatens to turn down.
BUYBACK SWEETENER
Hence the actions Eni and others are taking to keep theirinvestors happy.
Shares in Eni rose on Wednesday after it posted an adjustednet profit in the third quarter of 1.17 billion euros to beat anaverage forecast of 972 million in a Reuters poll of analysts.
"It's good news because despite the problems in Africa thegroup has shown it can replace some of the missing volumes fromelsewhere," a Milan analyst said.
The company also reassured investors by saying it would bestarting a buy-back programme of up to 6 billion euros in thecoming weeks. This follows BP Plc's announcement of adividend hike on Tuesday.
The Italian state has flagged its intention to sell a directstake of 4.3 percent in Eni as part of its debt reduction plans.
Such a sale would leave state-controlled lender CassaDepositi e Prestiti with a stake of around 26 percent that someanalysts suggested could leave the company vulnerable tounwanted attention.
"If Eni cancels the shares the effect will be that CDP'sstake will rise back to the safety zone," the Milan analystsaid.
Eni's 2014 production growth should be boosted by thisyear's start-ups - three in Algeria, Angola LNG which began inJune, and Kashagan in Kazakhstan which wobbled into firstproduction a few weeks ago. The UK-Jasmine field is set to startup in the fourth quarter and Goliat in the Barents sea during2014.
