(Adds CEO comments, details)
By Stephen Jewkes and Oleg Vukmanovic
MILAN, July 30 (Reuters) - Italian oil and gas group Eni raised its production targets for the year on Thursday,boosting its shares after second-quarter net profit slumped dueto lower oil prices and a heavy loss at subsidiary Saipem.
Oil and gas production is targeted to rise more than 7percent this year, up from a previous 5 percent target, helpedby output in Venezuela, Norway, the United States, Angola andRepublic of Congo, and expectations of higher volumes in Libya.
The Italian major posted a 10.7 percent rise in output inthe second quarter grew 10.7 percent.
"Upstream growth is there and it's steadily going all right.Saipem aside, the group is well positioned," said Jason Kenney,oil and gas analyst at Santander.
Oil company profits are taking a battering from fallingcrude prices and weak demand. Anglo-Dutch major Shell on Thursday said it would axe 6,500 jobs and step up spendingcuts, responding to extended low prices which contributed to a37 percent drop in second-quarter profit.
Eni said adjusted net profit in the second quarter fell 84percent to 139 million euros ($153 million).
Stripping out the Saipem effect, adjusted net profit was 448million euros, below a 480 million euro Reuters consensus. OnTuesday, Saipem reported a quarterly adjusted operating loss of738 million euros after heavy writedowns as part of a turnaroundplan.
Eni continues to pursue selling down its 43 percent stake inSaipem as part of plans to shift more than $5 billion of the oilcontractor's debt off its books.
"Our target is to deconsolidate the debt and we're workingon that," Descalzi said.
The CEO singled out steady cashflow generation as thecompany's key achievement despite crude oil prices halving overthe past year. It generated $5.68 billion in the first half, inline with a year ago.
Eni, which earlier this year became the first large oilcompany to cut its dividend after the slump in oil prices, saidit would pay an interim dividend of 0.4 euros per share.
IRAN-GAZING
Eni, the biggest foreign producer in Africa, is focusingincreasingly on the bread and butter business of finding oil andgas under Descalzi's stewardship despite plans to cut groupinvestments by 14 percent for the year.
With Iran looking set to return to global oil marketsfollowing a nuclear deal struck this month, the CEO played downthe chance of making any imminent investments givenbelt-tightening across the oil industry.
"At the moment the industry is cutting 30 percent ofinvestments, but in 2-3 years this cut will impact the imbalancebetween demand and supply ... in the future we will need Iranianproduction," Descalzi said.
Iran needs investments over $100 billion if it is to resumestrong production rates quickly, he said. Eni has a deal withIran to recoup its previous investments in the country inbarrels of oil.
At 1302 GMT Eni shares were up 2 percent, while the Europeanoil and gas sector was up 2.53 percent.
($1 = 0.9127 euros) (Editing by David Clarke and David Evans)
