UPDATE 2-Eni says balance sheet remains strong after third-quarter loss

* Eni Q3 net loss in line with analyst consensus

* Production falls 10% to 1.7 million barrels/day

* Opportunities for asset sales in 2021 (Recasts with manager comments)

MILAN, Oct 28 (Reuters) - Eni’s balance sheet remains strong with plenty of headroom to defend shareholder returns should the coronavirus crisis persist, the Italian energy group said on Wednesday after swinging to a third-quarter net loss.

The company booked an adjusted net loss of 0.15 billion euros ($177 million), down from a 0.78 billion euro profit a year ago as the pandemic saps demand.

In July Eni cut its dividend and announced further spending cuts after slumping into the red in what it described as the oil and gas industry’s worst-ever quarter.

“Even if the crisis is longer than expected, we have lots of tools we can use to defend our floor dividend,” Chief Financial Officer Francesco Gattei said on a conference call.

He said the group had flexibility on investments and costs and could do more on disposals following gross asset sales currently under discussion worth $1 billion, including its natural gas operations in Australia.

“We have many opportunities for disposals in 2021,” Gattei said without giving details.

Investors, already anticipating poor earnings in the oil sector, are focusing on how executives plan to save cash and whether they will cut dividends after the fall in oil demand and slump in prices.

Eni, which is sitting on about 17.4 billion euros of liquidity, said its operating cash in the first nine months fell 44% on the year to 5.1 billion euros.

Production in the period fell 10% to 1.7 million barrels of oil equivalent per day, but it confirmed its full-year target of 1.72-1.74 mboe/d. It also confirmed planned investment and cost cuts for this year and next.

Eni said the operating environment remained challenging but added the group was making progress with its decarbonisation strategy.

Earlier this year Eni pledged to slash its greenhouse gas emissions by 80% in one of the most ambitious clean-up drives in an industry under pressure from investors to go green.

“Their outlook remains cautious for 4Q but the business is set up strongly for cyclical recovery in 2021 we believe,” analysts at Bernstein said in a note.

Eni shares closed down 3.5%, while the European oil sector as a whole ended down 2%.

$1 = 0.8461 euros Reporting by Stephen Jewkes Editing by Kirsten Donovan and David Holmes