Eni
Annual
Report
2020
1 MANAGEMENT REPORT
Activities
Business model
Responsible and sustainable approach
Letter to shareholders
Eni at a glance
Stakeholders engagement activities
Strategy
Integrated Risk Management
Governance
Operating review
Natural Resources
Exploration & Production
Global Gas & LNG Portfolio
Environmental activities
Energy Evolution
Refining & Marketing and Chemicals
Eni gas e luce, Power & Renewables
Financial review and other information
Financial review
Risk factors and uncertainties
Outlook
Consolidated disclosure of non-financial information (NFI)
Other information
Glossary
2 CONSOLIDATED FINANCIAL STATEMENTS
3 ANNEX
1
2
4
6
8
14
18
20
26
32
40
42
66
70
72
74
82
88
114
135
136
182
183
186
332
Disclaimer
This Annual Report contains certain forward-looking statements in particular under the section “Outlook” regarding capital expenditures,
dividends, buy-back programs, allocation of future cash flow from operations, financial structure evolution, future operating performance,
targets of production and sale growth and the progress and timing of projects.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances
that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors,
including the impact of the pandemic disease; the timing of bringing new oil and gas fields on stream; management’s ability in carrying
out industrial plans and in succeeding in commercial transactions; future levels of industry product supply; demand and oil and natural
gas pricing; operational problems; general macroeconomic conditions; political stability and economic growth in relevant areas of the
world; changes in laws and governmental regulations; development and use of new technology; changes in public expectations and other
changes in business conditions; the actions of competitors. “Eni” means the parent company Eni SpA and its consolidated subsidiaries.
2
Activities
Eni activities: the value chain
Eni is a global energy company, engaged in the entire value chain: from the exploration, devel-
opment and extraction of oil and natural gas, to the generation of electricity from cogeneration
and renewable sources, traditional and biorefining and chemicals, and the development of
circular economy processes. Eni extends its reach to end markets, selling gas, electricity and
products to retail and business customers and local markets. Both CO2 capture and storage
initiatives and forest conservation projects (REDD+ initiatives) will be implemented to absorb
residual emissions.
Consolidated expertise, technologies and geographical distribution of assets are Eni levers to
strengthen its presence along the value chain.
Along this path, Eni is committed to become a leading company in the production and sale of
decarbonized energy products, increasingly customer-oriented.
Decarbonization will be achieved through the implementation and strengthening of existing
technologies and activities such as biorefineries with an increasing input of raw material
from waste;
Circular economy with increased use of biomethane, waste products and recycling of end
products;
Efficiency and digitalization in operations and customer services;
Renewables through increased capacity and integration with the retail business;
Blue and green hydrogen to power Eni biorefineries and other highly energy-intensive indus-
trial activities;
Natural or artificial carbon capture to absorb residual emissions through REDD+ forest con-
servation initiatives and CCS projects.
Gas will be an important support to intermittent sources in the energy transition.
operating in 68
Countries
beyond 31,000
our employees
1
5
1
AMERICAS
6
4
18
7
8
EUROPE
26
10
4
6
3
AFRICA
14
14
7
15
3
ASIA AND
OCEANIA
22
10
EXPLORATION & PRODUCTION
GLOBAL GAS & LNG PORTFOLIO
REFINING & MARKETING AND CHEMICALS
ENI GAS E LUCE, POWER & RENEWABLES
Management report | Consolidated financial statements | Annex 3
EXPLORATION AND DEVELOPMENT
PRODUCTION FROM
RENEWABLE SOURCES
OIL & GAS PRODUCTION
PURCHASE
OF GAS FROM
THIRD PARTIES
PURCHASE OF BIO
AND RENEWABLE
RAW MATERIALS
TRANSMISSION
NETWORK
TRADING & SHIPPING
CAPTURE, STORAGE
AND USE OF CO2
AND REDD+ PROJECTS
I
N
O
T
A
M
R
O
F
S
N
A
R
T
M
R
O
F
T
A
L
P
S
T
C
U
D
O
R
P
ELECTRICITY
GENERATION
TRADITIONAL AND
BIOREFINING
AND PETROCHEMICALS
REMEDIATION,
WATER & WASTE
INTO DEVELOPMENT
ELECTRICITY
OIL & GAS
TRADITIONAL
AND BIOCHEMICALS
LUBRICANTS
FUEL
BIOFUEL
LOCAL MARKETS
BUSINESS
MARKETS
RETAIL
MARKETS
Eni Annual Report 2020
4
Business Model
Eni business model is aimed
at the creation of value for
all stakeholders through a
strong presence along the
entire value chain of energy.
Eni aims to contribute,
directly or indirectly, to
the achievement of the
Sustainable Development
Goals (SDGs) of the
United Nations 2030
Agenda, supporting a just
energy transition, which
responds with concrete and
economically sustainable
solutions to the challenges
of combating climate
change and giving access to
energy in an efficient and
sustainable way, for all.
Eni organically combines its business plan with the principles of environmental and social
sustainability, extending its range of action along three pillars:
1. operational excellence;
2. carbon neutrality by 2050;
3. alliances for development.
1. First of all, Eni business is constantly focused on operational excellence. This translates
into an ongoing commitment to valuing people, safeguarding both the health and safety
of people and asset integrity, protecting the environment, integrity and respect for human
rights, resilience and diversification of activities and ensuring sound financial discipline.
These elements allow the company to seize the opportunities related to the possible evolu-
tions of the energy market and to continue on the path of transformation.
2. Second, Eni’s business model envisages a decarbonization path towards carbon neu-
trality based on an approach oriented to emissions generated throughout the life cycle of
energy products and on a set of actions that will lead to the total decarbonization of pro-
cesses and products by 2050. This path, achieved through existing technologies, will allow
Eni to totally reduce its carbon footprint, both in terms of net emissions and in terms of net
carbon intensity.
3. The third guideline refers to alliances for the promotion of development through the
enhancement of the resources of the Countries where it operates, promoting access to
electricity and promoting Local Development Programmes (LDPs) with a broad portfolio of
initiatives in favour of communities. This distinctive approach, referred to as Dual Flag, is
based on collaborations with other internationally recognized players in order to identify the
needs of communities in line with the National Development Plans and the United Nations
2030 Agenda. Eni is also committed to creating job opportunities and transferring its know-
how and expertise to its local partners.
Eni’s business model is developed along these three pillars by leveraging internal expertise,
the development and application of innovative technologies and the digitalization process.
A fundamental element of the business model is the Corporate Governance system, inspired
by the principles of transparency and integrity, outlined further in the Governance section.
Management report | Consolidated financial statements | Annex 5
VALUE CREATION FOR STAKEHOLDERS
Through an integrated presence all along the energy value chain
OPERATIONAL
EXCELLENCE
CARBON NEUTRALITY
BY 2050
ALLIANCES
FOR DEVELOPMENT
Health, Safety and Environment
Human Rights & Integrity
Resilience and Diversification
Capital discipline
TRANSFORMATION
AND PORTFOLIO
FLEXIBILITY
Life cycle GHG emissions
approach
(Scope 1, 2 and 3)
Set of concrete actions for the entire
decarbonization of processes
and products
Dual Flag approach
Public-private partnerships
Job creation
and know-how transfer
INTERMEDIATE OBJECTIVES
OF NET REDUCTION
IN ABSOLUTE TERMS AND
OF EMISSION INTENSITY
LOCAL DEVELOPMENT PROGRAMS
IN ACCORDANCE WITH
2030 AGENDA
COMPETENCES
TECHNOLOGICAL INNOVATION AND DIGITALIZATION
Eni Annual Report 2020
6
Responsible and sustainable approach
COMMITMENTS
MAIN RESULTS 2020
SUSTAINABLE DEVELOPMENT GOALS
Eni adopts a responsible
and sustainable approach
in order to ensure value
creation in the medium
and long term for the
company and for all
stakeholders. This approach,
the importance of which is
even more evident after the
outbreak of the pandemic,
is confirmed in the
company’s Mission, which
clearly expresses the
commitment of Eni to
play a decisive role in the
just transition process for
a low carbon future that
guarantees efficient and
sustainable access to energy
for all in order to contribute
to the achievement of the
Sustainable Development
Goals (SDGs).
CARBON
NEUTRALITY
BY 2050
COMBATING
CLIMATE CHANGE
OPERATIONAL
EXCELLENCE
PEOPLE
HEALTH
SAFETY
RESPECT
FOR THE
ENVIRONMENT
Eni has defined a medium-long term plan
to take full advantage of the opportunities
offered by the energy transition and
progressively reduce the carbon footprint
of its activities, committing to achieve total
decarbonization of all its products and
processes by 2050
Eni is committed to supporting the just
transition process by consolidating
and developing skills, enhancing every
psychophysical dimension of its people and
recognising diversity as a resource
Eni considers the protection of the health
of its people, families and communities
in the Countries where it operates to be a
fundamental requirement and promotes their
physical, psychological and social well-being
Eni considers workplace safety an essential
value to be shared among local employees,
contractors and stakeholders and it is
committed to reduce incidents down to zero
and to preserve assets integrity
Eni promotes the efficient management
of natural resources and the safeguard of
protected areas relevant to biodiversity,
through actions aimed at improving energy
efficiency and the transition to a circular
economy and identifying potential impacts
and mitigation actions and is committed not
to carry out hydrocarbon exploration and
development activities in UNESCO World
Heritage Sites
HUMAN RIGHTS
Eni is committed to respecting Human Rights
in its activities and to promoting their respect
with partners and stakeholders
TRANSPARENCY
AND INTEGRITY
IN BUSINESS
MANAGEMENT
Eni carries out its business activities with
fairness, correctness, transparency, honesty,
integrity and in compliance with the laws
ALLIANCES
FOR
DEVELOPMENT
COOPERATION
MODEL
The cooperation model integrated into the
business model is a distinctive feature of Eni,
which aims to support Countries in achieving
their development goals
-26% GHG emission intensity index upstream vs. 2014
-39% volume of hydrocarbons sent for routine flaring vs. 2014
-90% upstream methane fugitive emissions vs. 2014 (TARGET
REACHED)
31,495 employees in service at 31 December (reported -1.7% vs. 2019)
+2.3 percentage point increase in women hired (34.6% in 2020
vs. 32.3% in 2019)
Approx. 1.04 million hours of training (-23.6% vs. 2019)
13,300 professional profiles mapped to date
354,192 of health services provided
222,708 registrations to health promotion initiatives
TRIR(a) 0.36
accident risks
Promotion of in-depth initiatives on the Human Factor to counter
Relaunched and enhanced the “Safety starts @ home” campaign in
view of the new ways of working
Adherence to the 4 principles for solutions based on “Together with
Nature”
Extension of biodiversity risk mapping to the R&M pipeline network
91% reuse of fresh water
-11% fresh water withdrawn vs. 2019
-19% waste generated by production activities vs. 2019
-7% barrels spilled from operational oil spills vs. 2019
Ranked by the CHRB(b) as first among 199 companies evaluated
Adherence to the Voluntary Principles on Security and Human Rights
Issuance of the new Code of Ethics
Issuance of the new Eni Supplier Code of Conduct
Issuance of a new Policy on Indigenous Peoples in Alaska
97% security contracts with Human Rights clauses
100% new suppliers assessed according to social criteria
Membership in EITI(c) since 2005
9 Countries where Eni supports the EITI Multi Stakeholder Groups
at local level
31 internal audits conducted with anti-corruption checks
Publication Country-by-Country Report(d)
Publication of Eni position on contractual transparency
€96.1 million invested in local development
Cooperation agreements signed with World Bank, USAID
and civil society organizations
TECHNOLOGICAL
INNOVATION
For Eni, research, development and rapid
implementation of new technologies are an
important strategic lever to drive business
transformation
€157 million invested in research and development
25 new applications for first patent filings, of which 7 concern
renewable sources
(a) Total Recordable Injury Rate.
(b) Corporate Human Rights Benchmark.
(c) Extractive Industries Transparency Initiative.
conducts business.
(d) Report for the assessment of tax risk by the Financial Authorities that collects data on turnover, profits and taxes aggregated with reference to the jurisdictions in which Eni
Management report | Consolidated financial statements | Annex
COMMITMENTS
MAIN RESULTS 2020
SUSTAINABLE DEVELOPMENT GOALS
CARBON
COMBATING
Eni has defined a medium-long term plan
NEUTRALITY
CLIMATE CHANGE
to take full advantage of the opportunities
BY 2050
-26% GHG emission intensity index upstream vs. 2014
-39% volume of hydrocarbons sent for routine flaring vs. 2014
-90% upstream methane fugitive emissions vs. 2014 (TARGET
REACHED)
7
31,495 employees in service at 31 December (reported -1.7% vs. 2019)
+2.3 percentage point increase in women hired (34.6% in 2020
vs. 32.3% in 2019)
Approx. 1.04 million hours of training (-23.6% vs. 2019)
13,300 professional profiles mapped to date
354,192 of health services provided
222,708 registrations to health promotion initiatives
TRIR(a) 0.36
Promotion of in-depth initiatives on the Human Factor to counter
accident risks
Relaunched and enhanced the “Safety starts @ home” campaign in
view of the new ways of working
Adherence to the 4 principles for solutions based on “Together with
Nature”
Extension of biodiversity risk mapping to the R&M pipeline network
91% reuse of fresh water
-11% fresh water withdrawn vs. 2019
-19% waste generated by production activities vs. 2019
-7% barrels spilled from operational oil spills vs. 2019
Ranked by the CHRB(b) as first among 199 companies evaluated
Adherence to the Voluntary Principles on Security and Human Rights
Issuance of the new Code of Ethics
Issuance of the new Eni Supplier Code of Conduct
Issuance of a new Policy on Indigenous Peoples in Alaska
97% security contracts with Human Rights clauses
100% new suppliers assessed according to social criteria
Membership in EITI(c) since 2005
9 Countries where Eni supports the EITI Multi Stakeholder Groups
at local level
31 internal audits conducted with anti-corruption checks
Publication Country-by-Country Report(d)
Publication of Eni position on contractual transparency
€96.1 million invested in local development
Cooperation agreements signed with World Bank, USAID
and civil society organizations
TECHNOLOGICAL
For Eni, research, development and rapid
INNOVATION
implementation of new technologies are an
important strategic lever to drive business
transformation
€157 million invested in research and development
25 new applications for first patent filings, of which 7 concern
renewable sources
(a) Total Recordable Injury Rate.
(b) Corporate Human Rights Benchmark.
(c) Extractive Industries Transparency Initiative.
(d) Report for the assessment of tax risk by the Financial Authorities that collects data on turnover, profits and taxes aggregated with reference to the jurisdictions in which Eni
conducts business.
OPERATIONAL
EXCELLENCE
PEOPLE
HEALTH
SAFETY
offered by the energy transition and
progressively reduce the carbon footprint
of its activities, committing to achieve total
decarbonization of all its products and
processes by 2050
Eni is committed to supporting the just
transition process by consolidating
and developing skills, enhancing every
psychophysical dimension of its people and
recognising diversity as a resource
Eni considers the protection of the health
of its people, families and communities
in the Countries where it operates to be a
fundamental requirement and promotes their
physical, psychological and social well-being
Eni considers workplace safety an essential
value to be shared among local employees,
contractors and stakeholders and it is
committed to reduce incidents down to zero
and to preserve assets integrity
RESPECT
FOR THE
Eni promotes the efficient management
of natural resources and the safeguard of
ENVIRONMENT
protected areas relevant to biodiversity,
through actions aimed at improving energy
efficiency and the transition to a circular
economy and identifying potential impacts
and mitigation actions and is committed not
to carry out hydrocarbon exploration and
development activities in UNESCO World
Heritage Sites
HUMAN RIGHTS
Eni is committed to respecting Human Rights
in its activities and to promoting their respect
with partners and stakeholders
TRANSPARENCY
AND INTEGRITY
IN BUSINESS
MANAGEMENT
Eni carries out its business activities with
fairness, correctness, transparency, honesty,
integrity and in compliance with the laws
ALLIANCES
COOPERATION
The cooperation model integrated into the
FOR
DEVELOPMENT
MODEL
business model is a distinctive feature of Eni,
which aims to support Countries in achieving
their development goals
Eni Annual Report 2020
8
Letter to shareholders
Dear shareholders,
2020 was a year like no other, which will forever be remembered for the dramatic events we have
experienced and for the unprecedented challenges that our Company has faced. The COVID-19
pandemic affected everybody’s lives, every activity and the energy industry with a magnitude that
exceeded all previous crises. The trading environment in 2020 saw the largest oil demand drop
in history, down by an estimated 9%.
In tackling COVID-19, we reacted fast, finding inside our Company the energy, resources and
flexibility to overcome this crisis. First, we implemented effective measures to preserve the
health of the 60,000 people who work within Eni and with Eni at all our offices and production
hubs, as well as to ensure the continuity of our operations also through the involvement of our
suppliers. Furthermore, in collaboration with local authorities, Eni has taken immediate action
to reorient local development projects to better respond to the urgent needs of the most vul-
nerable populations.
During the most acute phase of the downturn, we have taken decisive measures to strengthen
the financial and capital resilience of the company, defining clear priorities in the cash alloca-
tion. Through the review of our short-medium term plans we have reduced the disbursements
for costs and capital expenditure by €8 billion in the period 2020-2021, thus reshaping the
production growth profile. We have defined an innovative dividend policy, based on a fixed
component, which will be reassessed going forward based on the achievement of Eni’s indus-
trial objectives, and a variable component linked to the scenario, in order to adapt the dividend
to market volatility, while the buy-back has been suspended.
Thanks to these actions, we were able to generate an adjusted cash flow of €6.7 billion, able to
fund 100% of our organic capital expenditure, which were revised to €5 billion, leaving a surplus
of €1.7 billion despite the large impact of the crisis on our cash receipts which contracted by
around €6 billion compared to the forecasts at the beginning of the year.
The Company, also leveraging the issuance of two hybrid bonds for a total amount of €3 billion,
has successfully overcome the worst phase of the downturn, retaining the leverage within the
management comfort zone at 0.3 as of December 31, 2020 and achieving to keeping our net
debt flat versus last year. These actions, sustained from our credit standing, were clearly appre-
ciated by the financial markets.
Despite the crisis, we have improved and accelerated our decarbonization strategy and today we
announce the even more ambitious goal of zeroing all our emissions (Scope 1, 2 and 3) linked to
the entire life cycle of all the products traded by our organization by 2050.
In this context, in June 2020 we reshaped Eni’s organization by setting up two new Business
Groups: Natural Resources, which will maximize the value of Eni’s Oil & Gas upstream portfolio
from a sustainable perspective, with the objective of reducing its carbon footprint by scaling up
energy efficiency and the development of projects for the capture and storage of carbon diox-
ide, and the Energy Evolution, which will focus on growing the businesses of power generation,
transformation and marketing of products from fossil to bio, blue and green. The two Business
Groups will work in synergy with the help of R&D and digitalization to implement Eni’s plans and
to achieve Eni’s decarbonization goals by 2050.
The businesses of Natural Resources, together with traditional refining, were those most af-
fected by the industry crisis caused by the COVID-19 pandemic. Despite a 35% drop in the
Brent price, E&P generated a robust cash contribution thanks to the resilience of the asset
portfolio characterized by low break-even and the flexibility of our development projects that
allowed us to re-phase some activities and contain capex. Exploration, one of our main growth
and value generation drivers, achieved excellent results in 2020. Despite the reduction in cap-
ital expenditure of about 50%, we discovered 400 mmboe of new resources, at a competitive
Lucia Calvosa
Chairman
Claudio Descalzi
Chief Executive Officer and
General Manager
Management report | Consolidated financial statements | Annex 9
cost of 1.6 $/barrel. The activities focused on near-field exploration in order to ensure fast contribution to cash
flows. In this context, we made several near-field discoveries in Egypt, Tunisia, Norway, Algeria and Angola, in
this latter the Agogo appraisal well has estimated 1 bboe in place, that will allow us to extend the useful life of
the FPSO of operated Block 15/06.
Important results were also obtained in frontier exploration basins with the Mahani gas and condensates discov-
ery in the onshore of the Emirate of Sharjah (UAE), where we made the FID at the beginning of 2021, just one year
after the signing of the contract; the appraisal of the Ken Bau field offshore Vietnam, which allowed us to outline
a giant field, and the discovery of Saasken offshore Mexico, which consolidates our position in the Country.
The importance of these successes opens up opportunities to early monetization of the discovered resources
through the deployment of our dual exploration model.
One of our competitive advantages is the ability to reduce the time-to-market of reserves, which together with
efficient exploration helps to ensure a resilient asset portfolio to the scenario. Our success leverages on an
original development model based on the parallelization of phases (appraisal, pre-development, engineering), a
modular approach that provides for accelerated start-up in early production and subsequent ramp-up, minimiza-
tion of financial exposure and insourcing of critical project phases (detailed engineering, production supervision,
commissioning/hook-up) in order to apply our skills and know-how. Examples of this approach were the rapid
production ramp-up of the Area 1 hub in Mexico in 2020 (from 4 kboe/day in 2019 to 14 kboe/day, up by 200%),
the start-up of Agogo in Angola, just nine months from the discovery and the Berkine project in Algeria, carried
out with a fast-track approach, allowing the monetization of proximity reserves.
Other activities during the year concerned the optimization of the production plateau of assets in operation in
order to counteract natural declines.
Overall, discounting the reduction in capital expenditure of around €2 billion, E&P development helped to ensure
a solid production level of 1.73 mmboe/day with the crisis cutting about 200 kboe, net of which we would have
exceeded our initial expectations.
The emission intensity of the operated productions (100%) decreased in 2020 by about 25% compared to
2014, in line with the reduction target of 43% by 2025. The global emissions calculated on equity production
were equal to approximately 14.4 million tonnes of CO2, which was reduced to 12.9 million thanks to the car-
bon sink obtained from our participation to the REDD+ Luangwa Community Forest Project in the Republic
of Zambia, where Eni achieved its first generation of carbon credits that have been used to offset emissions
equivalent to 1.5 million tonnes of CO2.
The ramp-up of the projects designed to valorize or manage routine gas otherwise sent to flaring allowed us
to reduce the flaring volumes of the 2014 baseline by 37% at the end of 2020 and we confirm their zeroing by
2025, contributing to Eni’s decarbonization objectives. Other drivers of our decarbonization process are the
projects in the start-up phase for the CO2 geological capture and sequestration using depleted fields. The first
milestone of this kind of projects was achieved with the award by the British Oil & Gas authority of the license
for the CO2 storage project in the Liverpool Bay, which will contribute to the decarbonization of industrial areas
of the north-west England and North Wales, as well as progress in the start-up of a pilot project, for which we
expect to make shortly a final investment decision, to build a hub for the capture and sequestration of CO2 at
our depleted gas fields offshore Ravenna (Italy).
Finally, we are developing an innovative approach in the capex evaluation process, systematizing information
on the United Nations 17 Sustainable Development Goals (UN SDGs), in order to integrate these aspects into
planning and strategies. After a first testing phase on a sample of investments in the upstream sector, the scope
of analysis will be extended to other types of projects.
The Global Gas & LNG Portfolio (GGP) sector reported an adjusted EBIT of €0.33 billion, above our expectations
despite the significant decline in European gas demand and the collapse in Asian LNG consumption during the
peak of the crisis. The sustainability of the GGP result is due to the overall restructuring of long-term gas supply
and transportation contracts, as well as to portfolio optimization activities by exploiting the flexibility and option-
ality of our gas assets.
Eni Annual Report 2020 10
The businesses managed by the Energy Evolution Department have shown great resilience and adaptability,
managing to absorb the impact of the recession on the consumption of fuels and plastics.
R&M closed the year with an adjusted EBIT of €0.24 billion, despite the worst scenario ever for the margins of
traditional oil-based processing. The result was supported by the increase in volumes processed (up by 130%)
and margins of biodiesel thanks to the ramp-up of the Gela green refinery and the performance of the Venice one,
as well as by the steady contribution from the retail marketing thanks to the efficiency of the network and cus-
tomer care. The evolution process of the service station continues towards the expansion of mobility services in
support of the results that will leverage the consolidation of agreements with Amazon, Poste and Telepass, the
launch of the new Eni Cafè Emporium format and the launch of the “Eni Parking” project.
The Chemical business leaded by Versalis has overall withstood the impact of the significant contraction in con-
sumption of plastics due to the economic crisis thanks to the restructuring carried out in recent years in the tra-
ditional business lines, while we progressed the expansion in the green and circular economy businesses, which
going forward will lessen the exposure of Versalis to the oil cycle. An upgrade is ongoing at the Crescentino site,
a strategic hub for the production of electricity and chemical feedstock entirely coming from residual biomass
that does not compete with the food supply chain on the basis of one of the most advanced proprietary tech-
nologies in the industry, of which one of the first practical application was the production of a bioethanol-based
disinfectant based on the WHO formulation for health emergency.
Investments continued to bring plastic waste recycling technologies to an industrial scale. Versalis is already ac-
tive in the mechanical recycling of used plastic with the “Revive” line of polyethylene/styrenics which in 2020 was
expanded thanks to the alliance with Forever Plast to promote the development and marketing of a new range
of compact polystyrene products made out of recycled packaging. For the non-recoverable part of plastic waste
(Plasmix), processes of chemical recycling based on pyrolysis are in a developing stage, which will be applied in
a pilot plant in Mantua for the production of chemical raw materials or, in synergy with refining, in synthesis gas
transformation technologies for the production of hydrogen or other industrial feedstocks. Furthermore, thanks
to the alliance with the British research company AlphaBio Control, we are developing products for agriculture
from renewable sources, such as herbicides and biocides, in synergy with the production of active ingredients by
our renewable chemistry platform in Porto Torres, Sardinia.
Eni gas e luce (EGL), Power & Renewables segment performed strongly. EGL reported a 17% growth in EBIT
thanks to the retention of the customer base, which grew to 9.6 million delivery points (up by 150 thousand), the
incremental contribution of non-commodity services/products, the efficiency of marketing and power optimiza-
tion. The retail gas business is increasingly opening up to decarbonization and innovation with the acquisitions
of Evolvere Group, in order to expand the offer of green products and partnerships with Tate in Italy and OVO in
France for the enhancement of digital services.
The Renewables business reached a first milestone with 1 GW of generation capacity installed or under develop-
ment. The growth took place both internally and by leveraging selective M&A transactions such as those in the
USA market in partnership with Falck Renewables for the acquisition of 112.5 MW of renewable capacity (wind/
solar) and 57 MW of photovoltaic capacity taken over by Falck itself. The internal growth leverages on the original
Eni development model which exploits the technical-operational synergies with existing assets, both active such
as the E&P oil centers and dismissed sites reclaimed and cleaned by Eni Rewind which are revamped through
the installation of green generation capacity. In this context, the photovoltaic units of Porto Torres and Volpiano
were started up in 2020.
The growth of renewables will be supported in the medium-term by the realization of the opportunities associ-
ated with our strategic partnerships in the USA and with HitecVision (Vår Energi’s Norwegian partner) and the
newly established Vargron joint venture, which will target the offshore wind sector of Norway and the Nordic
markets by leveraging Vår Energi’s experience in the upstream sector and supporting its decarbonization pro-
cess. Eni acquired a 20% of the Dogger Bank project (A and B) offshore UK, which will build and operate a 2.4 GW
wind facility, which will be the largest of its kind, with first phase start-up expected in 2023; in Italy three projects
have been authorized from Asja Environment for the construction of onshore wind farms with a total capacity
of 35 MW.
Another medium-term development driver is the exploitation of renewable energy deriving from the wave motion
of the sea which, starting from the industrial collaboration with Italian companies such CDP, Fincantieri and
Terna, is further strengthened with the entry as lead partner in Ocean Energy Europe, the largest European organ-
ization for energy development from the ocean.
Management report | Consolidated financial statements | Annex 11
Our R&D, the exploration engine in the renewable sector and a driving force for growth across Eni’s businesses,
is committed to areas that we consider strategic in shaping the medium/long-term energy scenario, such as:
the production of biofuels from second/third generation of raw materials; the process of obtaining hydrogen and
methanol from waste; the energy of the oceans; solar concentration and CO2 capture complementary methods
to the geological one based on the innovative idea of reusing CO2 through biofixation on microalgae by exploiting
the principle of chlorophyll photosynthesis with the additional advantage of obtaining valuable feedstock (food
bases or bio oil) or chemically fixing it in residues of the mining industry, obtaining building materials. Another
field of great interest is research on green hydrogen: we are studying, in partnership with Enel, the construction
of electrolyzers powered by renewable energy in synergy with our refineries. Pilot projects with electrolyzers of
around 10 MW are expected to start generating green hydrogen in 2022-2023.
In conclusion, our company was able to withstand this global economic crisis of 2020, retaining a healthy bal-
ance between cash inflows and outflows and at the same time making strong progress on the path towards
achieving carbon neutrality in the long term.
Our performance in transitioning to a low carbon business model has been appreciated by well-established ESG
ratings agencies on the marketplace which recognized us leading four international ratings: MSCI, Sustainalytics,
Bloomberg ES and V.E Vigeo Eiris. We received high-scorings from CDP Climate Change, CDP Water Security
and in the Transition Pathways Initiative rating. We have also been confirmed within the FTSE4Good Developed
index and, starting from 2020, also in the ESG iTraxx index. Added to these is the recognition by specialized
research institutes such as Carbon Tracker, which ranked Eni first among its peers for the competitiveness of
the unsanctioned portfolio of projects, target of emissions reduction and the adoption of a medium-long term
price scenario that is one of the most conservative among the peers. Finally, Eni confirms its leadership in the
approach to human rights, ranking first among the 199 companies evaluated by the Corporate Human Rights
Benchmark (CHRB) in 2020, ex aequo with only one other company.
Strategy and action plan 2021-2024
Our strategy outlines a non-reversible path of business transformation, which will lead us to the “zero net emis-
sions” goal in our production processes and in the use of our products by end consumers (Scope 1, 2 and 3)
by 2050, placing the most challenging ambitions of the Paris Agreement at the center of our action, in order to
contribute to the achievement of the UN’s 17 Sustainable Development Goals and to create sustainable value
for all our stakeholders. The evolution of our industrial structure will leverage on the decarbonization of our
products and industrial processes, on diversifying and expanding our presence in the retail and renewables
businesses, which will be combined into a single entity to maximize synergies, in bioproducts and in circular
economy. These actions coupled with financial and capital discipline will underpin the Company’s resilience
to the volatility of the scenario.
Considering the uncertainties and risks of the post-pandemic recovery, we defined a set of actions for the next
four years aimed at further reducing our cash neutrality and growing in green, blue and bioproducts.
The operational program of Natural Resources is aimed at maximizing cash generation and reducing the carbon
footprint of the business.
The exploration phase, with an annual expenditure ceiling of approximately €400 million over the next four years,
will develop along the guidelines for the reduction of the discovery cycle with near-field/incremental initiatives
with rapid return in mature super-basins and proven areas, selective renewal of the portfolio and alignment of re-
sources replacement to the targeted long-term production mix. Frontier exploration will be carried out in selected
areas according to the principles of operatorship and high working interest, in order to apply the dual exploration
model in the event of substantial successes. The goal is to discover around 2 billion boe of reserves at competi-
tive costs over the four-year period with activities concentrated in North Africa, West Africa, Norwegian offshore
and border areas in the Middle East, East Africa, Southeast Asia and the Gulf of Mexico.
The development of hydrocarbon reserves with an average annual expenditure of about €4 billion, equally divided
between support for plateaus and growth initiatives, will favor assets with high cash generation and low break-
even, achieving an average annual growth rate in the four-year period of around 4% to a plateau of 2 mmboe/day
by 2024, of which around one third from new developments (ramp-ups, start-ups and near-field discoveries). The
main drivers of growth will be the increase in gas volumes of the Zohr project in Egypt for which the relative capacity
is already online, the start-up of Merakes in Indonesia and Coral LNG in Mozambique gas fields, the developments
in the Norwegian offshore by our JV Vår Energi, the full-field development of Area 1 in Mexico and the Dalma Hub
Eni Annual Report 2020 12
and Sharjah gas initiatives in the United Arab Emirates. The planned development actions, together with a constant
focus on efficiency, will allow us to reach a Brent capex coverage of 28 $/bbl at the end of the plan, 10 $/bbl less
than the current level, while maintaining an adequate level of flexibility in the event of further shocks considering
that more than 55% of our investments in the last two years of the plan are uncommitted.
The GGP business is expected to ensure stable cash flow over the four-year period by leveraging the integration
with upstream and the monetization of our long-term gas supplies marketed in Europe. The main driver will be
the development of LNG sales in the Middle/Far-East Asian premium markets with the aim of leverage a portfolio
of contracted volumes of 14 MTPA in 2024. A growing part of LNG supplies that will cover 70% of the portfolio
by 2024 will be equity gas from our production hubs in Indonesia, Mozambique, Nigeria, as well as Egypt where,
thanks to the restructuring agreement of Union Fenosa Gas, we acquired an interest in the strategic LNG terminal
of Damietta.
The operational program of Energy Evolution is based on the strategic guidelines of the development of renew-
able energy and the customer portfolio as well as the optimization of the industrial footprint, with cumulative
investments of €7.9 billion over the four-year period.
R&M will gradually reduce exposure to the traditional oil scenario in Europe characterized by structural weak-
nesses due to excess capacity and decline in consumption and volatile margins. The main actions will be in-
creasing the efficiency and flexibility of oil-based assets, maximizing the potential of the investment in ADNOC
Refining thanks also to the new trading platform and the development of the green business.
The biorefining capacity is expected to double to 2 mmtonnes/year by 2024. The production of biofuels will be
increasingly sustainable due to the progressive elimination of the palm oil feedstock to the benefit of second
generation oils not in competition with the food chain and others innovative feedstock (waste/residues) that will
cover approximately 80% of the input by 2024. Service stations will be upgraded to enhance mobility services
and expand the low carbon offer (methane, hydrogen and charging stations for electric vehicles).
Versalis will focus on a more sustainable chemistry, circular economy projects such as recycled plastics and
niche products to reduce the portfolio’s exposure to the volatility of the cost of oil-based feedstock and to com-
modities characterized by competitive pressure and unstable margins.
The combined-cycle gas-fired power generation plants will be managed to maximize their value by leveraging
greater efficiency and flexibility and the decarbonization of production with targeted investments and in synergy
with the Group’s initiatives.
EGL will promote the growth and enhancement of the customer portfolio, leveraging integration with renewables,
with the aim of exceeding 11 million supply points in 2024 and 15 million in 2030 thanks to an increasingly green
offer and improving the consumer experience through innovation and digitalization. The other result drivers will
be the expansion of extra commodity services, distributed photovoltaic generation and a constant focus on
maintaining the efficiency of the operations.
The development of power generation capacity from renewable sources will take place both internally in synergy
with our assets, and by harvesting the investment opportunities associated with our strategic partnerships: the
JV with Falck Renewables for expansion into the US market, the alliance with “CDP per l’Italia”, entry into Norwe-
gian offshore wind and participation in the Dogger Bank wind project in the British North Sea. The goal is to reach
4 GW of installed capacity by 2024 and 15 GW by 2030.
In addition to the development of power generation capacity from renewable sources, our decarbonization strat-
egy will leverage the drivers of energy efficiency, forestry projects and the deployment of our negative emission
technologies. Investments in the enhancement of gas and the digitalization of operations allow us to confirm our
medium-term objectives of decarbonization of the upstream with the elimination of routine gas sent to process
flaring and a reduction of 43% of the emission intensity relative to fully-operated productions from 2025 on-
wards. We are convinced that forest conservation can make an important contribution to the climate objectives
of the Paris Agreement as well as the UN SDGs.
In this context, a series of projects are currently being sanctioned in Africa, Central-South America and South-East
Asia which, when fully operational over the next ten years, will guarantee a portfolio of emission credits that will
offset more than 6 mmtonnes of CO2 by 2024 and more than 20 mmtonnes by 2030, the latter target based on the
need of zeroing the Scope 1 and 2 emissions of our upstream sector by 2030 (calculated referring to production
based on Eni’s working interest) and to contribute to offsetting the emissions from other sectors.
The projects at a pre-development stage related to geological carbon capture storage/reuse (CCS/CCU) are
the fruit of our core expertise in geology and our research laboratory for innovative solutions for the benefit of
Management report | Consolidated financial statements | Annex 13
the climate. We estimate a potential for avoided emissions through geological capture or re-utilization corre-
sponding to approximately 15 MTPA by 2030 (7 MTPA net to Eni) when our ongoing initiatives will be brought
at scale, including the large operated projects such as CCS Adriatic Blue at Ravenna and Liverpool Bay in the
UK where we will leverage our existing infrastructures and depleted fields, as well as the CO2 biofixation and
mineralization CCU projects, to obtain valuable products expected to be launched on a pilot scale respectively
in 2022-2023 at our hubs in Gela and Ravenna.
Another driver of growth and improvement of our carbon footprint will be the circular economy projects in which
we will invest a significant amount of resources. The main initiatives will concern the ramp-up of chemical pro-
duction from mechanical recycling of used plastics, the construction of a pilot plant for the chemical recycling
of Plasmix and the construction with start-up in 2024 in the Porto Marghera hub of an industrial plant for the
treatment of solid urban waste with the obtainment of bio-oil for manufacturing green diesel, based on our
proprietary Waste-to-Fuel technology. In addition, in Ravenna, in a depleted and cleaned-up site owned by the
Company, we will build a supply chain in collaboration with Herambiente for the circular treatment of waste from
environmental and industrial activities with ramp-up up to 60 ktonnes/year, with a clear improvement in sustain-
ability and emissions.
Overall, in the next four years we expect a capex program of approximately €27 billion, of which approximately
20% relating to the business of the future (renewables and decarbonization/circular economy projects). Given
the conservative scenario of a subdued recovery in the price of Brent oil up to 60 $/barrel in 2023-2024, we ex-
pect to generate approximately €44 billion of operating cash flow before working capital to cover planned capex,
working capital needs and the floor dividend, leaving a progressively wider margin of discretionary cash flow to
support the variable component of the dividend and to retain a strong balance sheet.
Based on the Company’s outlook and profitability prospects, we are able to improve the remuneration policy
which provides for a floor dividend of €0.36 per share conditioned upon a Brent average of at least 43 $/barrel in
the reference year, compared to the previously set threshold of 45 $/barrel, while a variable dividend is expected
to be paid as an increasing percentage from 30 to 45% of the free cash flow generated in a scenario between 43
and 65 $/barrel. In addition, a €300 million/year buy-back program will be reactivated with a Brent price between
56 and 60 $/barrel, a lower level than the previous activation threshold. The buy-back will rise to €400 million/
year from 61 $/barrel and to €800 million/year from 66 $/barrel, as already planned.
In conclusion, after having successfully managed the global crisis of the sector in 2020 thanks to the quality of
our assets and the ability of the organization to adapt and react, Eni is now ready to face the challenges of the
next decade, of the post-pandemic recovery and the energy transition, being able to count on a clear vision of the
future evolution of the Company, robust emission targets consistent with the Paris agreements and a well-de-
fined path of growth in decarbonized products, as well as a progressive reduction of the weight of fossil fuels in
the production portfolio. Proprietary technologies, business integration, digitalization and our competences will
be the driving force behind this evolution.
Finally, we would like to express particular thanks to the women and men of Eni who, despite the challenges of
a dramatic year, have demonstrated, working remotely or at our production hubs, great teamwork, sense of duty
and ability to adapt, guaranteeing the stability of the operations and reliability in supplies to communities, our
customers and civil society ensuring continuity in a time of great upheaval.
March 18, 2021
Lucia Calvosa
Chairman
Claudio Descalzi
Chief Executive Officer and General Manager
Eni Annual Report 2020 14
Eni at a glance
“In a year like no other in the history of the energy industry, Eni has proven the robustness and flexibility of its business
model by reacting swiftly and effectively to the extraordinary crisis context, while progressing the Company’s
irreversible path for the energy transition. In the space of a few months after the outbreak of the pandemic we reduced
capital spending and limited the impact of the sharp drop in crude oil prices on the cash flow, strengthening our
liquidity and preserving the robustness of our balance sheet. The upstream business is strengthening its recovery, while
our businesses in the production and sale of decarbonized products achieved excellent results in the year, driven by
a 17% Ebit increase from Eni gas e luce, a 130% increase in biorefining processing and 1 GW of new solar and wind
generation capacity already installed or sanctioned. We laid foundations for strong growth in renewables by entering
two strategic markets, the US and the Dogger Bank wind project in the UK’s North Sea offshore wind market, which will
be the largest in the world in the sector. Through leveraging the actions we put in place, our 2020 adjusted cash flow
of €6.7 billion was able to finance our capex, with a surplus of €1.7 billion. Net borrowings (before IFRS 16) are at the
same level as at the end of 2019, and leverage is at around 30%”.
Eni CEO Claudio Descalzi
€1.9 bln
Adjusted operating
profit
€11.6 bln
Net borrowings
€6.7 bln
Adjusted net cash before
changes in working capital
at replacement cost
>35%
Net capex reduction
vs. 2020 guidance
0.3
Leverage
37.8
mmtonnes CO2eq.
GHG emissions Scope 1
-8% vs. 2019
Capital expenditure
(€ million)
-€1.9 bln
Opex reduction
vs. pre-COVID-19 level
1.5
mmtonnes CO2eq.
offset Forestry
REDD+
E&P
GGP R&MandC EGL, P&R
2018
2019
2020
9,119
7,901
26
877
238
8,376
6,996
15
933
357
4,644
3,472
11
771
293
Average Brent dated
price ($/BBL)
I quarter 2020
II quarter 2020
III quarter 2020
IV quarter 2020
PSV
(€/kcm)
I quarter 2020
II quarter 2020
III quarter 2020
IV quarter 2020
SERM
($/BBL)
I quarter 2020
II quarter 2020
III quarter 2020
IV quarter 2020
50.26
29.20
43.00
44.23
3.6
2.3
0.7
0.2
Average exchange rate EUR/USD
121
75
95
156
I quarter 2020
II quarter 2020
III quarter 2020
IV quarter 2020
1.103
1.101
1.169
1.193
Management report | Consolidated financial statements | Annex 15
The trading environment in 2020 saw the largest drop in oil demand in history (down by 9% y-o-y) driven by the lock-
down measures implemented globally to contain the spread of the COVID-19 pandemic, Eni has promptly defined
actions, leveraging on the energy, resources and flexibility of the operations.
Management took decisive actions according to three priorities:
Health and safety of our people and asset integrity: implemented initiatives to safeguard each of the 60
thousand people that work in Eni and with Eni, in all the work places and operational sites. Very quickly, smart
working was adopted by 99% of Eni employees in the main offices and by 70% of people engaged in our opera-
tional sites. These measures allowed to ensure continuity, without operational interruptions and asset integrity.
Robustness of balance sheet: during the pandemic peak, management took decisive actions to increase the fi-
nancial resiliency and strengthen the balance sheet, defining clear priorities in cash allocation. The Company is
set to resume growing once the macro backdrop normalizes. Revised the Company’s strategy and plans for the
short-to-medium term leveraging on a reduction of €8 billion in the outlays for expenses and capital expenditures in
the two-year period 2020-2021, more exposed to the downturn, with the subsequent reshaping of the growth profile
of production and the definition of a dividend policy based on a fixed component, subject to a continuous re-evalua-
tion process, following the achievement of certain Eni’s industrial targets and a variable component indexed to the
scenario, in order to adapt the dividend to market volatility; the share buy-back program is temporarily suspended.
Organizational structure: in June 2020, Eni created a new organizational setup by establishing two business
groups: the Natural Resources business which has the task of valorizing the Oil & Gas portfolio in a sustainable
way and of managing the energy efficiency activities, the projects of CO2 capture; and the Energy Evolution
business which has the task of managing the evolution of businesses of power generation, manufacturing and
marketing of products from fossil to bio, blue and green. The two business groups will work in synergy with
R&D and digitalization department to realize Eni’s plans and achieve the decarbonization targets to 2050.
Thanks to these actions, notwithstanding the significant impact of pandemic crisis on Group’s cash flow, in
2020 the adjusted cash flow of €6.7 billion was able to finance 100% of net organic capex lowered to €5 billion
(down by 35% vs. the original budget at constant exchange rates) due to the implemented optimizations, with
a surplus of €1.7 billion. Opex were reduced by €1.9 billion compared to the pre-COVID-19 level, of which about
30% is structural. As of December 31, 2020, leverage was confirmed at 0.3 and net borrowings were in line with
the comparative period, also due to the issuance of two hybrid bonds for €3 billion.
2020: FAST REACTION TO COVID-19 CRISIS
PEOPLE HEALTH AND BUSINESS CONTINUITY
COSTS
PORTFOLIO
FINANCIALS
>35% capex reduction
vs. original 2020 guidance
-€1,9 bln cost savings
vs. pre‐COVID-19 level
FID rescheduling on
large upstream projects
Increased capex on
green project
Leverage* in the comfort zone at about 0.3
First issuance of hybrid
bonds of €3 bln
(*) Before IFRS 16.
NEW COMPANY ORGANIZATION
LONG-TERM DECARBONIZATION PLAN
.
Eni Annual Report 2020
16
FINANCIAL HIGHLIGHTS
Sales from operations
Operating profit (loss)
Adjusted operating profit (loss)(a)
Exploration & Production
Global Gas & LNG Portfolio
Refining & Marketing and Chemicals
Eni gas e luce, Power & Renewables
Adjusted net profit (loss)(a)(b)
Net profit (loss)(b)
Net cash flow from operating activities
Capital expenditure
of which: exploration
development of hydrocarbon reserves
Dividend to Eni's shareholders pertaining to the year(c)
Cash dividend to Eni's shareholders
Total assets at year end
Shareholders' equity including non-controlling interests at year end
Net borrowings at year end before IFRS 16
Net borrowings at year end after IFRS 16
Net capital employed at year end
of which: Exploration & Production
Global Gas & LNG Portfolio
Refining & Marketing and Chemicals
Eni gas e luce, Power & Renewables
Share price at year end
Weighted average number of shares outstanding
Market capitalization(d)
(a) Non-GAAP measures.
(b) Attributable to Eni’s shareholders.
(c) The amount of dividend for the year 2020 is based on the Board’s proposal.
(d) Number of outstanding shares by reference price at year end.
SUMMARY FINANCIAL DATA
Net profit (loss)
- per share(a)
- per ADR(a)(b)
Adjusted net profit (loss)
- per share(a)
- per ADR(a)(b)
Cash flow
- per share(a)
- per ADR(a)(b)
Adjusted Return on average capital employed (ROACE)
Leverage before IFRS 16
Leverage after IFRS 16
Gearing
Coverage
Current ratio
Debt coverage
Net Debt/EBITDA adjusted
Dividend pertaining to the year
Total Share Return (TSR)
Dividend yield(c)
(€ million)
(€)
(million)
(€ billion)
(€)
($)
(€)
($)
(€)
($)
(%)
(€ per share)
(%)
2020
43,987
(3,275)
1,898
1,547
326
6
465
(758)
(8,635)
4,822
4,644
283
3,077
1,290
1,965
109,648
37,493
11,568
16,586
54,079
45,252
796
8,786
2,284
8.6
3,572.5
31
2019
69,881
6,432
8,597
8,640
193
21
370
2,876
148
12,392
8,376
586
5,931
3,078
3,018
123,440
47,900
11,477
17,125
65,025
53,358
1,327
10,215
1,787
13.9
3,592.2
50
2018
75,822
9,983
11,240
10,850
278
360
262
4,583
4,126
13,647
9,119
463
6,506
2,989
2,954
118,373
51,073
8,289
n.a.
59,362
50,358
1,742
6,960
1,869
13.8
3,601.1
50
2020
2019
2018
(2.42)
(5.53)
(0.21)
(0.48)
1.35
3.08
(0.6)
31
44
31
(3.1)
1.4
29.1
174.1
0.36
(34.1)
4.2
0.04
0.09
0.80
1.79
3.45
7.72
5.3
24
36
26
7.3
1.2
72.4
100.7
0.86
6.7
6.3
1.15
2.72
1.27
3.00
3.79
8.95
8.5
16
n.a.
14
10.3
1.4
164.6
45.2
0.83
4.8
5.9
(a) Fully diluted. Ratio of net profit/cash flow and average number of shares outstanding in the period. Dollar amounts are converted on the basis of the average EUR/USD exchange rate quoted by
Reuters (WMR) for the period presented.
(b) One American Depositary Receipt (ADR) is equal to two Eni ordinary shares.
(c) Ratio of dividend for the period and the average price of Eni shares as recorded in December.
EMPLOYEES
Exploration & Production
Global Gas & LNG Portfolio
Refining & Marketing and Chemicals
Eni gas e luce, Power & Renewables
Corporate and other activities
Group
(number)
2020
9,815
700
11,471
2,092
7,417
31,495
2019
10,272
711
11,626
2,056
7,388
32,053
2018
10,448
734
11,457
2,056
7,006
31,701
Management report | Consolidated financial statements | Annex
INNOVATION
R&D expenditure
First patent filing application
HEALTH, SAFETY AND ENVIRONMENT(a)
17
(€ million)
(number)
2020
157
25
2019
194
34
2018
197
43
TRIR (Total Recordable Injury Rate)
(total recordable injuries/worked hours) x 1,000,000
employees
contractors
Direct GHG emissions (Scope 1)
Indirect GHG emissions (Scope 2)
Indirect GHG emissions (Scope 3) other than those due
to purchases from other companies(b)
Net GHG Lifecycle Emissions(b)
Net Carbon Intensity(b)
Net Carbon Footprint upstream (GHG emissions Scope 1 + Scope 2)(b)
Direct GHG emissions (Scope 1)/operated hydrocarbon
gross production (upstream)
Carbon efficiency index Group
Methane fugitive emissions (upstream)
Volumes of hydrocarbon sent to routine flaring
Total volume of oil spills (>1 barrel)
of which: due to sabotage
operational
Freshwater withdrawals
Re-injected production water
(a) KPIs refer to 100% of the operated assets, unless otherwise specified.
(b) KPIs are calculated on an equity basis.
OPERATING DATA
EXPLORATION & PRODUCTION
Hydrocarbon production
Net proved reserves of hydrocarbons
Reserve life index
Organic reserve replacement ratio
Profit per boe(a)(c)
Opex per boe(b)
Finding & Development cost per boe(c)
GLOBAL GAS & LNG PORTFOLIO
Natural gas sales
of which: Italy
outside Italy
LNG sales
REFINING & MARKETING AND CHEMICALS
Capacity of biorefineries
Production of biofuels
Average biorefineries utilization rate
Retail market share in Italy
Retail sales of petroleum products in Europe
Service stations in Europe at year end
Average throughput of service stations in Europe
Average oil refineries utilization rate
Production of petrochemical products
Average petrochemical plant utilization rate
ENI GAS E LUCE, POWER & RENEWABLES
Retail gas sales
Retail power sales to end customers
Thermoelectric production
Power sales in the open market
Renewables installed capacity at period end
Energy production from renewable sources
(a) Related to consolidated subsidiaries.
(b) Includes Eni’s share in joint ventures and equity-accounted entities.
(c) Three-year average.
(mmtonnes CO2eq.)
(gCO2eq./MJ)
(mmtonnes CO2eq.)
(tonnes CO2eq./kboe)
(ktonnes CH4)
(billion Sm³)
(barrels)
(mmcm)
(%)
2020
2019
2018
0.36
0.37
0.35
37.8
0.73
185
439
68
11.4
20.0
31.6
11.2
1.0
6,789
5,831
958
113
53
0.34
0.21
0.39
41.2
0.69
204
501
68
14.8
19.6
31.4
21.9
1.2
7,265
6,232
1,033
128
58
0.35
0.37
0.34
43.4
0.67
203
505
68
14.8
21.4
33.9
38.8
1.4
6,687
4,022
2,665
117
60
2020
2019
2018
(kboe/d)
(mmboe)
(years)
(%)
($/boe)
(bcm)
(mmtonnes/year)
(ktonnes)
(%)
(mmtonnes)
(number)
(kliters)
(%)
(ktonnes)
(%)
(bcm)
(TWh)
(MW)
(GWh)
1,733
6,905
10.9
43
3.8
6.5
17.6
64.99
37.30
27.69
9.5
1.1
622
63
23.3
6.61
5,369
1,390
69
8,073
65
7.68
12.49
20.95
25.33
307
339.6
1,871
7,268
10.6
92
7.7
6.4
15.5
72.85
37.98
34.87
10.1
1.1
256
44
23.6
8.25
5,411
1,766
88
8,068
67
8.62
10.92
21.66
28.28
174
60.6
1,851
7,153
10.6
100
6.7
6.8
10.4
76.60
39.17
37.43
10.3
0.4
219
63
24.0
8.39
5,448
1,776
91
9,483
76
9.13
8.39
21.62
28.54
40
11.6
Eni Annual Report 2020
18
Stakeholder engagement activities
Operating in 68 Countries
with different social,
economic and cultural
contexts, Eni considers the
dialogue and the direct
involvement of stakeholders
fundamental elements
for the creation of long-term
value, in every phase
of its activities.
For Eni, openness to listening
and mutual exchange,
inclusion, understanding
of stakeholders’ points
of view and expectations
and the sharing of choices
are fundamental elements
for building relationships based
on mutual trust, transparency
and integrity. To improve the
knowledge and understanding
of the views and expectations
of the multiple stakeholders,
in the different operating
sites, since 2018 Eni has
been supported by an IT
platform called Stakeholder
Management System
(SMS). Since 2020, the
system has been in use in
all Eni’s-operated industrial
activities sites, monitoring the
relationship with about 4,000
stakeholders. The SMS allows
to understand the specificities
of the local contexts, the
possible needs, critical issues
and improvement areas, the
main topics of interest, also
identifying the potential
impacts on Human Rights
and the possible presence of
vulnerable groups and areas
listed as cultural and/or natural
interest sites by UNESCO
(WHS - World Heritage Sites).
STAKEHOLDERS CATEGORIES
MAIN STAKEHOLDER ENGAGEMENT ACTIVITIES
ENI’S PEOPLE
AND NATIONAL
AND INTERNATIONAL
UNIONS
Professional and training paths on emerging skills related to business
strategies and expansion of skills mapping
Training initiatives to support inclusion and recognition of the value
of all kinds of diversity and international initiatives supporting team
building and innovation
FINANCIAL
COMMUNITY
LOCAL COMMUNITIES
& COMMUNITY BASED
ORGANIZATIONS
CONTRACTORS,
SUPPLIERS
AND COMMERCIAL
PARTNERS
CUSTOMERS
AND CONSUMERS
DOMESTIC, EUROPEAN
AND INTERNATIONAL
INSTITUTIONS
UNIVERSITIES
AND RESEARCH
CENTRES
Presentation of the Long-Term Strategic Plan to 2050 and the 2020-23
Plan, followed by virtual Road-Show of the CEO and the top management
at the main financial centres
Participation in ESG thematic conferences
Involvement of more than 600 communities, including hosts (villages/
communities that host Eni’s activities in their territory), transits
(communities near pipelines), neighbouring (communities close to
Eni activities in the territory, not directly impacted) and indigenous
communities - close to Eni’s operations
Publication and distribution of the Eni Suppliers Code of Conduct
Collaboration with suppliers for health emergency management
Launch of JUST (Join Us in a Sustainable Transition) initiative to involve
suppliers in the energy transition process, placing sustainability in every
phase of the procurement process
Meetings and workshops with Presidents, General Secretaries and Energy
Managers of national and local Consumer Associations (AdC) on topics such
as sustainability, circular economy, remediation, environmental restoration,
energy saving, customer service and new business initiatives
Active participation in workshops and working tables, including technical
and institutional ones, with local, national, European and international
political and institutional representatives on energy, climate, sustainable
development, research and innovation topics
Meetings with local, national, European and international political and
institutional representatives on strategic issues
Meetings with Universities, Research Centres and third-party companies with which
Eni collaborates or interfaces in the development of innovative technologies
Agreements and collaborations with the Polytechnic of Milan and Turin, the
Universities of Bologna, Naples and Pavia, MIT, CNR, INSTM, ENEA and INGV(a)
Establishment with the CNR of 4 research centres in Southern Italy for sustainable
environmental and economic development in Italy and worldwide
VOLUNTARY ADVOCACY
AND CATEGORY
ORGANIZATIONS
AND INDUSTRY
ASSOCIATIONS
Membership and participation in OGCI, IPIECA, WBCSD, UN GLOBAL
COMPACT, CIDU, EITI and VPI(b)
Conferences, debates, seminars, events and training initiatives on
sustainability issues (energy, circular economy, remediation, corporate
social responsibility); implementation of guidelines and sharing of best
practices
ORGANIZATIONS
FOR COOPERATION
AND DEVELOPMENT
Definition of new types of local development collaboration agreements
Consolidation of collaborations with civil society organizations, cooperation
bodies and agencies and religiously inspired organizations (AMREF, AVSI,
CUAMM, VIS, GHACCO, E4Impact Foundation, Don Bosco High School in
Maputo, Diocese of Sekondi-Takoradi and Halo Trust Foundation)
a) Massachusetts Institute of Technology; National Research Council (Consiglio Nazionale delle Ricerche); National Interuni-
versity Consortium for Materials Science and Technology (Consorzio Interuniversitario Nazionale per la Scienza e Tecnologia
dei Materiali); National Agency for new technologies, energy and sustainable economic development (Agenzia nazionale per
le nuove tecnologie, l’energia e lo sviluppo economico sostenibile); National Institute of Geophysics and Volcanology (Istituto
nazionale di geofisica e vulcanologia).
b) Oil and Gas Climate Initiative; World Business Council for Sustainable Development; Inter-ministerial Committee for Hu-
man Rights (Comitato Interministeriale dei Diritti Umani); Extractive Industries Transparency Initiative; Voluntary Principles
Initiative.
c) Institute for Human Rights and Business.
Management report | Consolidated financial statements | Annex 19
MAIN TOPICS ADDRESSED1
Initiatives to support parenting (smart working and nursery school services), family
members with disabilities and psychological support for employees in the COVID-19
emergency
Signing by Eni and the unions of the new industrial relations protocol to support the energy
transition process; periodic meetings with the unions to manage the health emergency
Dialogue with the market, in particular on the 2020 remuneration policy, before
the 2020 Shareholders’ Meeting
Discussion of quarterly results and strategy update in Q2 2020
Participation of the top management in thematic conferences organized by banks
Mapping of the community relations, requests and grievances and definition of local
engagement contents
Consultations with the local authorities and communities for new exploration activities
and/or the development of new projects as well as for the planning and management of
local development projects
Engagement of suppliers through the eniSpace platform for communication and
collaboration between Eni and suppliers
Completion of the Due Diligence on human rights with the formalization of a risk-based
model on the respect of human rights along the procurement process
Sponsorship of Consumer Association initiatives on sustainability and circular economy
Territorial meetings with the regional Consumer Associations of the National Council of
Consumers and Users
Survey to national and regional Consumer Association representatives on the circular
economy, sustainability and energy transition
Meetings with foreign, European, national and local institutional delegations during
State visits and at industrial sites
Activities of engagement and institutional dialogue with national, international and
European think tanks and fora on green transition and related geopolitical issues
Collaboration with the Polytechnics of Milan and Turin in the organization of Post-Graduate
Master Courses in Energy Innovation and in Energy Engineering and Operations. 2019-2020
editions concluded
Collaborations for the development of Impact Assessment Models (Polytechnic of Milan
and University of Milan - Faculty of Agrarian Sciences)
Participation in meetings of the association bodies and working tables on strategic issues,
monitoring any legislative developments
Specific meetings with local business associations, such as the supplier qualification
process and the most current energy issues
Collaboration with IHRB(c) and other international human rights institutions
Consolidation of partnerships with International Organizations, Italian and European
institutions, development banks and private sector (United Nations Development
Programme - UNDP; United Nations Educational, Scientific and Cultural Organization -
UNESCO; Food and Agriculture Organization - FAO, United Nations Industrial Development
Organization - UNIDO, World Bank, USAID)
Climate change and energy transition
Health, safety, asset integrity and emergencies
Diversity, labour standards and welfare
Management of environmental impacts
Integrity and transparency
Sustainable supply chain management
Protection of human rights
Community relations/local development
Innovation and technological research
Creation of economic-financial value
Ability to respond to customer needs
Fairness and transparency of commercial policies
(1) Highlighted the topics on which there was the most interaction during 2020.
Eni Annual Report 2020 20
Strategy
"Eni is strongly committed to
continue to play a key role in
sustainability and innovation,
supporting social and
economic development in
all our activities.
Today we are taking another
step forward in boosting our
transformation. We commit
to the full decarbonization
of all our products and
processes by 2050.
Our plan is concrete, detailed,
economically sustainable
and technologically proven.
Today we are also announcing
the merge of our renewable
and retail businesses. With this
new entity, our large customer
base will continue to grow
in synergy with our renewable
business.
Additionally, the combination
of our biorefining and
marketing businesses
will play an important role
in delivering sustainable
mobility. These initiatives
will greatly contribute to
the decarbonization of our
products, impacting positively
on our customers.
Finally, thanks to a strong
financial discipline and a
resilient cash generation,
we can upgrade our
distribution policy reflecting
the strategic progress of
our plan".
Leading energy
transition
Decarbonization of operations and products to deliver a mix of entirely
decarbonized products
Net Zero Emissions at 2050, introducing new targets for net
absolute emissions (Scope 1, 2 and 3): -25% at 2030 vs. 2018
and -65% at 2040
Net Zero Carbon Intensity by 2050: -15% at 2030, -40% in 2040
Stakeholder
Value Creation
Enhanced remuneration policy
Eni CEO Claudio Descalzi
Dividend floor set at €0.36 per share at 43 $/bbl vs. the previous level
of 45 $/bbl
€300 mln/year buy-back to re-start at 56 $/bbl. Confirmed buy-back
at €400 mln/year from 61 $/bbl and €800 mln/year from 66 $/bbl
Management report | Consolidated financial statements | Annex
Leveraging integration, diversification
and expansion of retail and renewables businesses,
bio-products and circular economy.
Merge of retail and renewable businesses
Accelerated growth of customer base to 15 million customers in 2030
Growth of renewable installed capacity to 15 GW by 2030
EBITDA will double in the plan to almost ~ €1bln in 2024
Financial
robustness
to absorb price volatility. Selective growth, increased efficiency and
right-sizing to ensure value and high returns in all activities.
Reduction of group cash neutrality covering capex and dividend floor
(€0.36 per share) below 40 $/bbl over the four-year plan
21
Eni Group
€13 bln
Cash flow from operations
by 2024
Exploration
& Production
Hydrocarbon production
4 % CAGR 2020-2024
Global Gas & LNG
Portfolio
14 mln ton/y
Contractual LNG volumes
by 2024
Refining & Marketing
Biorefining capacity
2 mln ton/y
in 2024; +70% vs. 2020
Renewables
4 GW
installed capacity by 2024
with a four-year capex plan
of €3.2 bln
Retail business
>11 mln customers
at 2024; +15% vs. 2020
Eni Annual Report 2020
22
Following the deep transformation of the Group which allowed to develop and diversify its portfolio aiming
at strengthening the financial structure, Eni entered a new evolutionary phase of its business model.
Eni's organization has been reshaped by setting up two new Business Groups: Natural Resources, which will
maximize the value of Eni’s Oil & Gas upstream portfolio from a sustainable perspective and develop projects
for forestry conservation (REDD+) and CO2 capture, and the Energy Evolution which will focus on growing the
businesses of power generation, transformation and marketing of products from fossil to bio, blue and green.
This new organizational setup represents a fundamental step for the implementation of Eni's 2050 strategy
which combines value creation, business sustainability and economic and financial robustness.
The defined strategy aims at facing a complex contest requiring a triple connected challenge:
i) energy transition in progress;
ii) efficient and sustainable management of traditional businesses ensuring high cash flow and returns and
restructuring loss-making sectors;
iii) increasing shareholders value.
To face this scenario, the strategy defined in Eni’s industrial plan lays the foundation on three pillars:
decarbonization of activities and products in line with the targets announced to the market;
diversification and development of retail and renewable activities, bioproducts and circular economy;
enhancement of resilience and flexibility of our asset portfolio to absorb price volatility through assets
optimization, selective growth and overhead costs cut.
This strategy will be implemented by leveraging on know-how, proprietary technologies and innovation and will
allow to seize new opportunities for development and efficiency, as well as to further improve safety at work
and actively contribute to the achievement of the 17 SDGs, on which Eni's mission is founded.
The evolution of Eni’s business portfolio will significantly impact on the reduction of the carbon footprint,
whose targets have been relaunched targeting the achievement of carbon neutrality by 2050.
In particular, Eni will pursue a strategy aiming to:
net zero emissions (Scope 1, 2 and 3) and net zero carbon Intensity by 2050, relating to the life cycle of sold
energy products;
strengthen its role as a global player in the energy market by leveraging the mix of portfolio activities in-
creasingly balanced and integrated;
maximize the flexibility of its business portfolio, able to react to external market factors and at the same
time ready to maximize its opportunities;
strengthen its proactive role in the energy supply chain by enhancing in the medium to long-term its low
carbon technologies for the production of decarbonized energy carriers;
create shareholders value through a progressive remuneration policy.
Confirmed and further improved intermediate targets to reach the complete carbon neutrality:
net zero emissions (Scope 1, 2 and 3): -25% at 2030 vs. 2018 and -65% at 2040;
net zero carbon intensity per unit of energy product sold: -15% at 2030 vs. 2018 and -40% in 2040;
net zero carbon footprint (Scope 1 and 2) of upstream activities accounted on equity basis by 2030, set a
new target to halve at 2024 vs. 2018;
net zero carbon footprint by 2040 for Eni’s Scope 1 and 2 emissions at 2040.
Breakdown by business segment
Long-term plan to 2050 and 2021-2024 action plan
EXPLORATION & PRODUCTION
Eni's upstream strategy aims at maximizing returns and cash generation by leveraging on the enhancement
of the current asset portfolio, exclusively conventional, with lower break even, phased projects, accelerated
time-to-market and limited exposure beyond the medium term.
Management report | Consolidated financial statements | Annex 23
The evolution of the production mix provides for the gas component to be 60% in 2030 and over 90% in 2050.
Scope 1 and 2 emissions of upstream assets, calculated on the basis of equity production, are expected to
be zero in 2030 by leveraging not only energy efficiency but also primary and secondary forest conservation
projects ensuring the compensation of CO2 emissions for about 20 million tons by 2030 and about 40 million
tons per year by 2050.
The Group decarbonization targets will be reached through certain projects for the capture and geological
sequestration of CO2 with a target of about 50 million tons per year by 2050.
The 2021-24 action plan targets:
growing cash generation and progressive reducing cash neutrality reaching Brent prices lower than 30 $/
barrel by leveraging:
2020-2024 production growth: 4% average growth rate benefitting from projects already started up or ex-
pected to be started up in the four-year period;
capital discipline: capex at approximately €4.5 billion on average in the next four-year period with high flex-
ibility (being more than 55% uncommitted capex in the 2023-2024 period);
further development of integrated initiatives with the Global Gas & LNG Portfolio segment to enhance gas
equity volumes;
maximizing efficiency and business continuity;
enhancement and development of exploration, with the aim of discovering 2 billion boe of resources at a
unit cost of 1.6 $/barrel; exploration will be focused on areas not far from "near-field" production fields and
existing or upcoming infrastructures.
Free cash flow generation will be enhanced by the transformation of the assets portfolio through the disposal
of non-strategic assets or with a higher breakeven and the focalization on high cash-generating assets, the
set-up of new business combinations like the Vår Energi one, to reduce financial indebtedness and allow a
faster assets growth.
These actions will allow to reach a 2021-2024 cumulative organic free cash flow of more than €18 billion.
GLOBAL GAS & LNG PORTFOLIO
The Global Gas & LNG Portfolio (GGP) will be focused on marketing of all non-oil equity products of Eni Group:
gas, biomethan, blue energy and hydrogen, progressively reducing the non-equity share.
In the plan period, GGP will progress on the renegotiation of long-term gas supply portfolio in order to align
certain conditions to the even more market volatility, to optimize logistic by reducing costs and leveraging on
assets flexibility to maximize sale margins.
The other driver supporting growth and value creation is the expansion in the LNG business through develop-
ment in new premium and growing markets in the Middle East/Far East also exploiting the possible synergies
with the legacy market in Europe and the increasing integration with the upstream business for the enhance-
ment of gas equity.
The expected contracted LNG volume portfolio will be equal to 14 million tons/y in 2024 (up 45% vs. 2020)
with a gas equity share higher than 70%.
The value creation will also leverage on the maximization of cash generation from international gas transport
assets.
The aforementioned actions will allow to achieve a 2021-2024 cumulative free cash flow of €0.8 billion.
REFINING & MARKETING
The Refining & Marketing strategy is focused on the development of biorefinery capacity, expected to almost
double to 2 million tonnes by 2024 and further grow to 5-6 million tonnes/y in 2050.
Biorefineries will benefit of second and third generation palm oil free in 2023. In the marketing business Eni
intends to evolve the product mix marketed to our retail customers, with the aim to reach 100% of decarbonized
products by 2050.
Eni Annual Report 2020 24
The 2021-2024 action plan targets:
the optimization of traditional refining activities (leveraging system flexibility) as well as the full potential
capacity of the Ruwais refining hub;
the diversification through the enhancement of biorefining capacity up to 2 million tonnes in 2024, by zero-
ing the use of palm oil and growing to 80% the share of feedstock coming from waste & residues;
the growth in European marketing activities by focusing on high margin segments, enhancing the offer
of alternative fuels, the further development of non-oil services in the retail segment and, more generally,
enlarging the sustainable mobility.
CHEMICALS
Eni’s long-term strategy aims at significantly reduce the exposure of the chemical business to the cycle’s and
the feedstock volatility through the specialization of product portfolio and the development and integration of
chemistry from renewables and from chemical/mechanical recycling.
The 2021-24 action plan targets:
the progressive specialization of polymers vs. higher value-added products and extension of the down-
stream supply chain towards "compounding" to reduce margins volatility;
the development of renewable chemicals with new processes and products;
the increase of circular economy mainly mechanical and chemical recycling also through partnerships;
the progressive reduction of GHG emissions, increasing energy efficiency.
ENI GAS E LUCE, POWER & RENEWABLES
The main strategic guidelines in the medium-long term provide for the synergic development of installed ca-
pacity for the production of renewable energy targeting 15 GW by 2030 and 60 GW by 2050 and the enhance-
ment of retail customer base up to exceeding 20 million of customers by 2050 through the selection of areas
of expansion in the renewables leveraging on the presence of our customers as well as the development of
activities in Eni’s countries of operation.
In 2050 Eni expects to supply to retail customers decarbonized products from its portfolio (energy from re-
newable sources and biomethane) and new generation services.
The 2021-24 action plan targets:
the implementation of 4 GW of installed capacity by 2024, planning capex for €3.2 million in the plan period;
the enhancement of Eni’s customer base, which will grow to 11 million clients by 2024, also leveraging on
the international diversification by entering the Iberian market;
the focus on extra-commodity services and maximizing value from energy transition;
the enhancement of power results thanks to power plants flexibility and efficiency and focused capex;
identification and development of new low carbon technology solutions.
Main economic and financial data – 2021-2024 plan
The four-year capex plan focused on high-value fast-return projects, is expected to be €27 billion. This
capital plan retains some degree of flexibility because about 55% of capex expected in 2023-2024 remain
uncommitted.
The 65% of the group capex plan is expected to be focused on the upstream segment and is well diversified
geographically thanks to developments in the Middle East, Africa and Mexico.
Eni’s capex plan is a high value programme and is resilient even in a challenging scenario. The current
portfolio of upstream projects in progress has a break even price of 28 $/barrel by 2024 and an overall
IRR of about 18%.
Management report | Consolidated financial statements | Annex 25
These projects remain competitive also at lower Brent prices scenario. In particular, assuming future scenario
lower than 20%, the internal rate of return will reduce by 2 percentage points.
In line with the medium and long-term targets and to fuel the company's decarbonization process, Eni
plans to investment over €4 billion in renewable sources, energy efficiency, circular economy and flaring
down.
Regarding renewables projects the unlevered internal rate of return is between 6 and 9% and, through financ-
ing operations, it will be able to reach a double-digit level; while IRR for biorefineries is envisaged at 15%.
Assuming a Brent scenario progressively growing at 60 $/barrel, cumulative cash flow ante working capital
over the plan horizon is expected to be €44 billion, or €39 billion in a scenario of 50 $/barrel flat.
Eni expects the coverage of capex and dividend floor of €0.36 per share at a Brent price below 40 $/barrel in
2024, through the generation of organic cash flow.
The plan, in line with the updated remuneration policy, provides for a €0.36 per share when the annual Brent
scenario is at least 43 $/barrel and then it will increase as a growing percentage of the incremental free cash
flow generated by price scenario.
Moreover, a €300 million share buy-back per year will restart in the case of a Brent price of 56 $/barrel.
Buy-back will rise to €400 million from 61 $ to 65 $/barrel and to €800 million/year from 65 $/barrel.
Eni Annual Report 2020 26
Integrated Risk Management
The Integrated Risk Management (IRM) process is aimed at ensuring that
management takes risk-informed decisions, with adequate consideration of actual
and prospective risks, including short, medium and long-term ones, within the
framework of an organic and comprehensive vision.
The IRM Model is based on a system of methodologies and skills that leverages
on principle of the third parties assessments (data quality, objectivity of the
detection and quantification of the mitigation actions) in order to improve
the effectiveness of the analyses, ensure an adequate support for the main
decision making processes (definition of the Strategic Plan and medium
and long-term objectives) and guarantee the disclosure to the administration
and control structures.
Integrated Risk Management Model
The IRM Model is characterized by a structured approach, based on international best practices and considering
the guidelines of the Internal Control and Risk Management System (see page 38), that is structured on three
control levels. Risk Governance attributes a central role to the Board of Directors (BoD) which defines the nature
and level of risk in line with strategic targets, including in evaluation process all those risks that could be consist-
ent for the sustainability of the business in the medium-long term. The BoD, with the support of the Control and
Risk Committee, outlines the guidelines for risk management, so as to ensure that the main corporate risks are
properly identified and adequately assessed, managed and monitored, determining the degree of compatibility
with company management consistent with the strategic targets.
231
SUPERVISORY
BODY
BOARD OF
STATUTORY
AUDITORS
CONTROL AND RISK COMMITTEE
BOARD OF
DIRECTORS
CHAIRMAN
CEO(a)
COMPLIANCE COMMITTEE
RISK COMMITTEE
FIRST LEVEL
OF CONTROL
SECOND LEVEL
OF CONTROL
RISK
OWNER
Process Owner
Compliance/
Governance
Functions
identified in the
Compliance/
Governance
models
Financial
Reporting Officer
Process Owner
core business
and business
support
processes
Dedicated
/non-exclusively
-dedicated
functions (if any)
Risk specialist
Planning
and control
THIRD LEVEL
OF CONTROL
INTERNAL
AUDIT(c)
Integrated Compliance
Integrated Risk Management
Compliance Objectives(b)
Strategic, Operating and Reporting Objectives
(a) Director in charge of the internal control and risk management system.
(b) Including objectives on the reliability of financial reporting.
(c) Director Internal Audit reports hierarchically to the Board of Directors, and on its behalf, to the Chairman, without prejudice to the provisions relating to its
appointment, termination, remuneration and resources and his functional reporting to the Control and Risk Committee and to the CEO, as Director in charge of
the internal control and risk management system.
Management report | Consolidated financial statements | Annex 27
For this purpose, Eni’s CEO, through the IRM process, presents every three months a review of the Eni’s
main risks to the Board of Directors. The analysis is based on the scope of the work and risks specific of
each business area and processes aiming at defining an integrated risk management policy; the CEO also
ensures the evolution of the IRM process consistently with business dynamics and the regulatory environ-
ment. Furthermore, the Risk Committee, chaired by the CEO, holds the role of consulting body for the latter
with regards to major risks. For this purpose, the Risk Committee evaluates and expresses opinions, at the
instance of CEO, related to the main results of the IRM process.
Integrated Risk Management Process
The IRM process ensures the detection, consolidation and analysis of all Eni’s risks and supports the BoD to
verify the compatibility of the risk profile with the strategic targets, also in a medium-long term approach. The
IRM supports management in the decision-making process by strengthening awareness of the risk profile and
the associated mitigations. The process, regulated by the “Management System Guideline (MSG) Integrat-
ed Risk Management” is continuous, dynamic and includes the following sub-processes: (i) risk governance,
methodologies and tools (ii) risk strategy, (iii) integrated risk management, (iv) risk knowledge, training and
communication.
The IRM process starts from the contribution to the definition of medium and long-term plans and Eni’s Stra-
tegic Plan (risk strategy) through the analysis of the risk profile and business opportunities underlying the
plan and the long-term development, as well as the identification of proposals for de-risking objectives and
strategic treatment actions.
The “Integrated Risk Management” sub-process includes: periodic risk assessment and monitoring cycles
(Integrated Risk Assessment) in order to understand the risks taken on the basis of the strategic and me-
dium-long term targets and the initiatives defined to achieve them; contract risk management and analysis
aimed at the best allocation of the contractual responsibilities with the supplier and their adequate manage-
ment in the operational phase; integrated analysis of existing risks in the Countries of presence or potential in-
terest (ICR) which represents a reference for risk strategy, risk assessment and project risk analysis activities;
support to the decision-making process for the authorization of investment projects and main transactions
(Integrated Project Risk Management and M&A).
The risks are assessed with quantitative and qualitative tools considering both the likelihood of occurrence
and the impacts that would occur in a defined time horizon when the risk occurs.
The assessment is expressed following an inherent and a residual level (taking into account the effectiveness
of the mitigation actions) and allows to measure the impact with respect to the achievement of the objectives
of the Strategic Plan and for the whole life as regards the business. The risks are represented on the basis
of the likelihood of occurrence and the impact on matrices that allow their comparison and classification by
relevance.
In 2020, two assessment sessions were performed: the Annual Risk Profile Assessment performed in the first
half of the year, involving 121 subsidiaries in 43 Countries and the Interim Top Risk Assessment performed
in the second half of the year, relating to the update of the evaluation and treatment of Eni’s top risks and
the main business risks. A specific focus regarded the analysis of the biological risk - COVID-19 pandemic
considered both as a risk to people’s health and as a systemic risk able to influence the Eni’s risks portfolio, in
particular, market, country and operational risks.
Eni Annual Report 2020 28
The two assessment results were submitted to Eni’s management and control bodies in July and December
2020. In addition, three monitoring processes were performed on Eni’s top risks.
The monitoring of such risks and the relevant treatment plans allow to analyze the risks evolution (through
update of appropriate indicators) and the progress in the implementation of specific treatment measures
decided by management. The top risks monitoring results were submitted to the management and control
bodies in March, July and October 2020.
The risk knowledge, training and communication sub-process is aimed at increasing the diffusion of the cul-
ture of risk, at strengthening a common language among the resources that operate in the risk management
area across the different Eni businesses as well as sharing information and experiences, also through the
development of a community of practice.
Eni’s top risks portfolio consists of 20 risks classified in: (i) external risks, (ii) strategic risks and, finally, (iii)
operational risks (see Targets, risks and treatment measures on the following pages).
IRM - Integrated Risk Management
Risk-based approach
1 Risk Governance, methodologies and tools
2 Risk Strategy
3 Integrated Risk Management
> INTEGRATED RISK ASSESSMENT
> INTEGRATED COUNTRY RISK
> CONTRACT RISK MANAGEMENT
> INTEGRATED PROJECT RISK MANAGEMENT & M&A
4 Risk Knowledge, training and communication
Targets, risks and treatment measures
Strategic risk
SCENARIO
MAIN RISK
EVENTS
Price Scenario, risk of unfavourable fluctuations in Brent and other commodities prices compared to planning
assumptions.
TREATMENT
MEASURES
Actions aimed at improving the resilience (reduction of cash neutrality), flexibility (in terms of investment decisions)
and efficiency (capital discipline and action on structural costs) of the company;
alignment of the gas supply portfolio to market prices and related sales contracts with indexation to the main
European hubs instead of oil-linked;
renegotiation of gas supply portfolio to grant flexibility in gas offtakes;
flexibilization of refining capacity and traditional electricity generation;
maximization of biorefinery capacity;
optimization of petrochemical plants.
Eni’s target:
Company profitability
Corporate Reputation
Relationship with Stakeholders, Local development
Management report | Consolidated financial statements | Annex 29
Strategic risk
DECREASING DEMAND/ COMPETITIVE ENVIRONMENT
MAIN RISK
EVENTS
Contraction in demand/Competitive environment relating to the market demand and supply imbalance or an increase
in competitiveness leading to: i) reduction of sale volumes, ii) increase difficulties in defending customer base/develop
growth initiatives, iii) generate adverse dynamics in the prices of finished products.
TREATMENT
MEASURES
Integration of midstream and upstream activities and portfolio management of gas equity volumes to facilitate the
maximization of the relative value; identification of projects with low break even and fast time-to-market;
consolidation of the market share in the retail sales in Italy and selective growth outside; evolution towards the
Mobility Services station;
differentiation of the portfolio towards petrochemical products with higher added value, extension of the
downstream supply chain and development of chemicals from renewable;
maximization of value and loyalty of the Gas & Power retail customer base;
growth in renewable technologies through partnerships, also with operators with distinctive skills in the sector
(for more innovative technological areas).
CLIMATE CHANGE
MAIN RISK
EVENTS
Climate change, referred to the possibility of change in scenario/climatic conditions which may generate phisical risks
and connected to energy transition (legislative, market, technological and reputational risks) on Eni’s businesses in the
short, medium and long term.
TREATMENT
MEASURES
Structured governance with the central role of the Board in managing main issues connected with climate change,
presence of specific committees;
medium and long-term plan to 2050, which combines business development guidelines for progressive industrial
transformation with ambitious targets for reducing GHG emissions associated with energy products sold by Eni as
well as offsetting emissions;
four-year plan with provision for each business of operational actions to support and implement the industrial
transformation indicated in the medium and long-term plan;
Inclusion of energy transition targets in management incentive scheme;
leadership on climate-related financial disclosures and participation to international initiatives.
EXPOSURE TO LONG-TERM CONTRACTS (LONG-TERM SUPPLY GAS CONTRACTS)
MAIN RISK
EVENTS
Referred to the possible mismatch of the cost of supply and the minimum take constraints envisaged by supply
contracts with respect to current market conditions.
TREATMENT
MEASURES
Diversified supply portfolio and prices-volumes renegotiation;
portfolio balancing with sales to hubs (in Italy and in Northern Europe) of volumes not for mainstream distribution
channels;
legal defense, continuous control of arbitration management and negotiations by dedicated organisational
structures.
STAKEHOLDER
MAIN RISK
EVENTS
Relationships with international, national and local stakeholders on Oil & Gas industry activities, with impacts also in
the media.
TREATMENT
MEASURES
Integration of targets and sustainability projects (i.e. Community Investment) within the Strategic Plan and incentive
program;
focused communication plan and development of dialogue and discussion with local areas and communication
initiatives aimed at spreading Eni’s strategy and activities, also through social media with a mainly institutional
target, as well as through an international cross-media distribution plan of media content targeted to brand
reputation and recognition initiatives;
initiatives to meet and dialogue with stakeholders and strengthening of presence in critical areas in order to
intensify the relationship management with local authorities and territories.
Eni’s target:
Company profitability
Corporate Reputation
Relationship with Stakeholders, Local development
Eni Annual Report 2020 30
External risk
BIOLOGICAL
MAIN RISK
EVENTS
risk related to the spread of pandemics and epidemics and the deterioration of health infrastructure and health
response capacity.
TREATMENT
MEASURES
Eni Crisis Unit’s constant management and monitoring to align, coordinate and identify reactions;
preparation and implementation of a plan to react to health emergencies (Medical Emergency Response Plan
- MERP) to be adopted by all Eni subsidiaries and employers. The plan is also aimed at defining a business
continuity plan;
restrictive and preventive measures (also through alternative working methods) in offices and operating sites;
coordination and centralization of protection and medical devices procurement;
centralized management of international health emergency services.
GEOPOLITICAL
MAIN RISK
EVENTS
Impact of geopolitical issues on strategic actions and business operations.
TREATMENT
MEASURES
Institutional activities with national and international players in order to overcome crisis situations;
continuous monitoring of the environment, mainly focused on the critical political/institutional developments and
regulatory aspects which can potentially affect the business;
enhancement of Eni’s presence leveraging on economic and social issues of Countries where Eni operates.
COUNTRY
MAIN RISK
EVENTS
Political and social instability related to both political and social instability (in the Countries where the Group operates)
and criminal/bunkering events against Eni and its subsidiaries, with potential repercussions in terms of lower
production, project delays, potential damage to people and assets.
Global security risk relates to actions or fraudulent events which may negatively affect people and material and
immaterial assets.
Credit and Financing risk related to the credit proceeds delay and the financial stress of the partners.
TREATMENT
MEASURES
Institutional relations with ministries/local authorities, commitment to respect for human rights;
presence of a security risk management system supported by specific sites and Countries analysis of the
preventive measures; implementation of emergency plans aimed at maximum safety of people and the
management of activities and assets;
signing of specific repayment plans for some Countries, using already tested contractual or financial
instruments;
demand for sovereign guarantees and letters of credit to protect credit positions.
ENERGY SECTOR REGULATION
MAIN RISK
EVENTS
Impacts on the operations and competitiveness of the businesses associated with the evolution of the energy sector
regulation.
TREATMENT
MEASURES
Control of legislative and regulatory evolution; dialogue with institutions to represent Eni’s position;
definition of strategic and operational actions in line with regulatory changes: the increase in refining capacity; the
development of mechanical and chemical recycling, the use of feedstocks instead of palm oil, the development of
biomethane, etc.
Eni’s target:
Company profitability
Corporate Reputation
Relationship with Stakeholders, Local development
Management report | Consolidated financial statements | Annex 31
Operational risk
ACCIDENTS
MAIN RISK
EVENTS
Blow-out risks and other accidents affecting the upstream assets, refineries and petrochemical plants, as well as the
transportation of hydrocarbons and derivatives by sea and land (i.e. fires, explosions, etc.) with damages on people
and assets and impact on company profitability and reputation.
TREATMENT
MEASURES
Insurance coverage;
real time monitoring for wells;
proactive monitoring of accidental events with the identification of weak signals in the Safety Process;
technological and operational improvements and Asset Integrity Management;
rating of operators and vetting activities;
continuous monitoring of technical and transport data;
contract Risk Management (Pre/Post award);
continuing education.
CYBER SECURITY
MAIN RISK
EVENTS
Cyber Security & Industrial espionage refers to cyber attacks aimed at compromising information (ICT) and
industrial (ICS) systems, as well as the subtraction of Eni’s sensitive data.
TREATMENT
MEASURES
Centralized governance model of Cyber Security, with units dedicated to cyber intelligence and prevention,
monitoring and management of cyber attacks;
strengthening of Cyber Security Operations infrastructures and services; the enhancement of workstation
protection systems for surfing the Internet and e-mail, and strengthening of monitoring following the intensive use
of smart working due to the COVID-19 emergency;
constant updating and alignment of the rules dedicated to the information security management and data protection;
Operating plans aimed at increasing security of industrial sites (in Italy and abroad), training and awareness
initiatives dedicated to Eni’s employees;
strengthening of the corporate culture in the Cyber Security with particular focus to the behaviors to be adopted
(e.g. safe smart working).
INVESTIGATIONS AND PROCEEDINGS
MAIN RISK
EVENTS
Environmental, health and safety proceedings may trigger impacts on company profitability (costs for remediation
activities and/or plant implementation), operating activities and corporate reputation.
Involvement in anti-corruption investigations and proceedings.
TREATMENT
MEASURES
Specialist assistance for Eni SpA and the Italian and foreign unlisted subsidiaries;
continuous monitoring of regulatory developments and constant evaluation of the adequacy of existing presidium
and control models;
enhancement of the process of assigning and managing assignments to external professionals through new
methods aimed at ensuring transparency and traceability;
internal training activities at all levels on the topics of interest;
monitoring of relations with the Public Administration and definition of routes for the management of relevant
problems and for the development of the territory;
constant discussion with the Ministry of the Environment on the authorization procedures as a part of remediation
activities;
continuous monitoring of the efficacy and efficiency of reclamation activities;
focused communications;
audit activities on compliance with anti-corruption regulations and 231 Legislative Decree.
Eni’s target:
Company profitability
Corporate Reputation
Relationship with Stakeholders, Local development
Eni Annual Report 2020 32
Governance
Integrity and transparency are the principles that have inspired Eni in designing its corporate governance sys-
tem1, a key pillar of the Company’s business model. The governance system, flanking our business strategy,
is intended to support the relationship of trust between Eni and its stakeholders and to help achieve business
goals, creating sustainable value for the long-term. Eni is committed to building a corporate governance sys-
tem founded on excellence in our open dialogue with the market and all stakeholders.
Furthermore, in line with the principles defined by the Board of Directors, Eni is committed to creating a Corpo-
rate Governance system inspired by criteria of excellence, also participating in initiatives to improve it. Among
other initiatives, during 2020, Eni participated in initiatives supported by national and international bodies and
associations, including the Enacting Purpose Initiative, promoted by the Saïd Business School of the University
of Oxford, to explore the theme of the purpose of business in terms of sustainability (the “purpose”).
On December 23, 2020, Eni’s Board of Directors decided to adopt the new Corporate Governance Code 2020,
with recommendations applying from January 1, 2021.
The new Code identifies “sustainable success” as the objective that must guide the action of the management
body and which takes the form of creating long-term value for shareholders, taking into account the interests of
other relevant stakeholders. Eni, however, has been considering the interest of stakeholders other than share-
holders as one of the necessary elements Directors must evaluate in making informed decisions since 2006.
With this in mind, we consider ongoing, transparent communication with stakeholders an essential tool for
better understanding their needs. It is part of our efforts to ensure the effective exercise of shareholders’
rights.
In 2020 Eni continued to pursue a dialogue with the market on matters of governance and to seize the oppor-
tunities deriving from studies and experience at the international level, in spite of the complications associat-
ed with the health emergency which prevented more immediate contacts, in particular with reference to the
shareholders’ meeting. In any case, shareholders were granted all legal rights and additional information tools
in order to allow the greatest possible involvement.
The Eni Corporate Governance
Eni Corporate Governance model
Eni’s Corporate Governance structure is based on the traditional Italian model, which – without prejudice to
the role of the Shareholders’ Meeting – assigns the management of the Company to the Board of Directors,
supervisory functions to the Board of Statutory Auditors and statutory auditing to the Audit Firm.
Appointment and composition of corporate bodies
Eni’s Board of Directors and Board of Statutory Auditors, and their respective Chairmen, are elected by the
Shareholders’ Meeting. To ensure the presence of Directors and Statutory Auditors selected by non-controlling
shareholders a slate voting mechanism is used.
Eni’s Board of Directors and Board of Statutory Auditors, whose term runs from May 2020 until the Sharehold-
ers’ Meeting called to approve the 2022 financial statements, are made up of 9 and 5 members, respectively.
Three directors and two standing statutory auditors, including the Chairman of the Board of Statutory Auditors,
are elected by non-controlling shareholders, thereby giving minority shareholders a larger number of represent-
atives than that provided for under law. In deciding the composition of the Board of Directors, the Shareholders’
Meeting was able to take account of the guidance provided to investors by the previous Board with regard to
diversity, professionalism, experience and competence, also with reference to corporate strategies, the Compa-
(1) For more detailed information on the Eni Corporate Governance system, please see the Corporate Governance and Shareholding Structure Report drafted in ac-
cordance with Article 123-bis of Legislative Decree no. 58/1998 and published on the Company’s website in the Governance section.
Management report | Consolidated financial statements | Annex 33
ny’s transformation and energy transition. The outcome was a balanced and diversified Board of Directors. The
Board of Statutory Auditors also prepared new shareholders’ advice providing indications on the composition
of the body in relation to the tasks it is called upon to perform. The composition of the Board of Directors and
of the Board of Statutory Auditors is also more diversified in gender terms, in accordance with the provisions
of applicable law and the By-laws. The latter was promptly amended to be compliant with the law in February
2020 in view of the renewal of the corporate bodies. In particular, for 6 consecutive terms the management and
control bodies shall be composed of at least 2/5 of the less represented gender. Furthermore, based on the
assessments carried out on May 14, 2020 on the appointment of the new bodies, the number of independent di-
rectors on the Board of Directors (72 of the 9 serving directors, of whom 8 are non-executive directors) remains
greater than the number provided for in the Bylaws and by corporate governance best practices.
COMPOSITION OF THE BOARD OF DIRECTORS
Slate
Independence(a)
Gender diversity
3
6
5
4
2
7
majority
minority
independent
non-independent
male
female
(a) Independence as defined by applicable law.
(b) Figures at December 31, 2020.
Age(b)
4
40-50 years
51-60 years
61-70 years
2
3
The structure of the Board of Directors
The Board of Directors appointed a Chief Executive Officer on May 14, 2020 and established four internal com-
mittees with advisory and recommendation functions: the Control and Risk Committee3, the Remuneration
Committee4, the Nomination Committee and the Sustainability and Scenarios Committee. The Committees
report, through their Chairmen, on the main issues they address at each meeting of the Board of Directors.
The Board of Directors also retained the Chairman’s major role in internal controls, with specific regard to the
Internal Audit unit. In agreement with the Chief Executive Officer, the Chairman proposes the appointment, rev-
ocation and remuneration of its Head and the resources available to it, without prejudice to the support to the
Board of the Control and Risks Committee and the Nomination Committee, to the extent of their competences,
(2) Independence as defined by applicable law, to which the Eni By-laws refer. Under the Corporate Governance Code in force at the time, 5 of the 9 serving directors
were independent.
(3) As regards the composition of the Control and Risk Committee, Eni requires that at least two members shall have appropriate experience with accounting, financial
or risk management issues, exceeding the provision of the Corporate Governance Code 2018, confirmed by the new Corporate Governance Code, which recommends
only one such member. In this regard, on May 14, 2020 the Eni Board of Directors determined that 2 of the 4 members of the Committee, including the Chairman, have
the appropriate experience.
(4) In line with the Recommendation of the Corporate Governance Code 2018, confirmed by the new Corporate Governance Code, the Rules of the Remuneration Com-
mittee require that at least one member shall have adequate expertise and experience in finance or compensation policies. These qualifications are assessed by the
Board of Directors at the time of appointment. In this regard, on May 14, 2020 the Eni Board of Directors determined that all three members of the Committee have the
appropriate expertise and experience. The level of expertise and experience of the Committee members therefore exceeds that provided for in the Committee Rules and
Corporate Governance Code.
Eni Annual Report 2020 34
and having heard the Board of Statutory Auditors, and also directly manages relations with the unit on behalf
of the Board of Directors (without prejudice to the unit’s functional reporting to the Control and Risk Com-
mittee and the Chief Executive Officer, as the director in charge of the internal control and risk management
system). The Chairman is also involved in the appointment of the primary Eni officers responsible for internal
controls and risk management, including the officer in charge of preparing financial reports, the members of
the Watch Structure, the Head of Integrated Risk Management and the Head of Integrated Compliance.
Finally, the Board of Directors, acting on a recommendation of the Chairman, appoints the Secretary, charged
with providing assistance and advice to the Chairman, the Board of Directors and the individual directors5. In
view of this role, the Secretary, who reports to the Board of Directors and, on its behalf, to the Chairman, must
also meet professional requirements, as provided for in the Corporate Governance Code, while the Chairman
oversees his independence.
The following chart summarises the Company’s corporate governance structure as at December 31, 2020:
BOARD OF DIRECTORS
CHIEF EXECUTIVE OFFICER (CEO)
CHAIRMAN
Claudio Descalzi(a)
Lucia Calvosa(b)
Eni SpA
Shareholders’
Meeting
DIRECTORS (NON-EXECUTIVE)
Ada Lucia De Cesaris(d)
Filippo Giansante(e)
Pietro A. Guindani(c)
Karina A. Litvack(c)
Emanuele Piccinno(f)
Nathalie Tocci(d)
Raphael Louis L. Vermeir(c)
C
C
DIRECTOR
INTERNAL AUDIT
Marco Petracchini
C
C
BOARD SECRETARY
AND CORPORATE GOVERNANCE
COUNSEL (COMPANY SECRETARY)
Roberto Ulissi**
C O N T R O L A N D
M IT T EE
RIS K C O M
N O M IN A TIO N C O M
S U S T AIN A BILIT Y A N D
M IT T EE
R E M U N E R A TIO N
M IT T EE
M IT T EE
S C E N A RIO S C O M
C O M
BOARD OF STATUTORY AUDITORS
(Audit Committee SOA)
CHAIRMAN
Rosalba Casiraghi(c)
STATUTORY AUDITORS*
Enrico Maria Bignami(c)
Giovanna Ceribelli(d)
Marco Seracini(d)
Roberto Maglio(l)
AUDIT FIRM
PwC SpA
C
CHAIRMAN
CHIEF OPERATING OFFICERS
Alessandro Puliti
(Natural Resources)
Massimo Mondazzi***
(Energy Evolution)
OFFICER IN CHARGE
OF PREPARING FINANCIAL REPORTS
Francesco Esposito
231 SUPERVISORY BODY
Attilio Befera (Chairman)(g)
Antonella Alfonsi(g)
Ugo Lecis(g)
Rosalba Casiraghi(h)
Marco Petracchini(i)
MAGISTRATE OF
THE COURT
OF AUDITORS
Manuela Arrigucci
(a) Member appointed from the majority list.
(b) Member appointed from the majority list non-executive
and independent pursuant to law.
(h) Chairman of the Board of Statutory Auditors.
(i)
(l) Roberto Maglio - Alternate Auditor appointed from the majority list,
Internal Audit Director.
(c) Member appointed from the minority list and independent pursuant
replaced Standing Statutory Auditor Mario Notari from September 1st, 2020.
to law and 2018 Corporate Governance Code.
(d) Member appointed from the majority list and independent pursuant
to law and 2018 Corporate Governance Code.
(e) Member appointed from the majority list, non-executive.
(f) Member appointed from the majority list, non-executive
and independent pursuant to law.
(g) External member.
Alternate Auditor: Claudia Mezzabotta - Member appointed from the minority list.
*
** Also Corporate Affairs and Governance Director.
From January 1st, 2021 the Secretary and Board Counsel
is Luca Franceschini, also Integrated Compliance Director.
*** From January 1st, 2021 the Chief Operating Officer Energy Evolution
is Giuseppe Ricci.
(5) The Charter of the Board Secretary and Board Counsel is available on the Eni website, in the Governance section.
Management report | Consolidated financial statements | Annex
35
The following is a chart setting out the current macro-organizational structure of Eni SpA as at December 31, 2020:
BOARD OF DIRECTORS
Lucia Calvosa
Chairman of the Board
CHAIRMAN’S OFFICE
Roberto Ulissi
Board Secretary
and Corporate
Governance Counsel
(Company Secretary)(a)
Marco Petracchini
Internal Audit(b)
Director
Claudio Descalzi
Chief Executive Officer
Office of the CEO
Roberto Ulissi
Corporate Affairs
and Governance
Director
Luca Franceschini
Integrated Compliance
Director
Jadran Trevisan
Integrated
Risk Management(c)
Director
Stefano Speroni
Legal Affairs and
Commercial Negotiations
Director
Claudio Granata
Human Capital &
Procurement Coordination
Director
Francesca Zarri
Technology,
R&D & Digital
Director
Lapo Pistelli
Public Affairs
Director
Erika Mandraffino
External Communication
Director
Alessandro Puliti
Natural Resources
Chief Operating Officer
Deputy Luca Bertelli
Deputy Cristian Signoretto
Francesco Gattei
Chief Financial
Officer
Massimo Mondazzi
Energy Evolution(d)
Chief Operating Officer
Deputy Giuseppe Ricci(e)
(a) He reports hierarchically and functionally to the Board of Directors and, on its behalf, to the Chairman. From 1st January 2021 the Board Secretary and Counsel is Luca
Franceschini, Director Integrated Compliance.
(b) The Internal Audit Director reports hierarchically and functionally to the Board and, on its behalf, to the Chairman, without prejudice to its functional dependence on the
Control and Risk Committee and on the CEO (in his capacity as director in charge of the internal control and risk management system).
(c) From 1st January, 2021 the Integrated Risk Management Director is Grazia Fimiani.
(d) From January 1st, 2021 the Chief Operating Officer Energy Evolution is Giuseppe Ricci.
(e) Since 31 December, 2020.
Decision making
The Board of Directors entrusts the management of the Company to the Chief Executive Officer, while retain-
ing key strategic, operational and organizational powers for itself, especially as regards governance, sustaina-
bility6, internal control and risk management.
Organizational arrangements
In recent years, the Board of Directors has devoted special attention to the Company’s organizational arrange-
ments, including a number of important measures being taken with regard to the internal control and risk
management system and compliance.
More specifically, the Board decided that the Integrated Risk Management function reports directly to the
Chief Executive Officer and created an Integrated Compliance function, also reporting to the Chief Executive
Officer, separate from the Legal unit. Furthermore, in June 2020, the Board redefined the organizational struc-
ture of the Company with the establishment of two General Departments (Energy Evolution and Natural Re-
sources), launching a new structure consistent with the corporate mission and functional to the achievement
(6) For more information concerning non-financial disclosures, please see the section of the Report on the Consolidated Disclosure of Non-Financial Information
(NFI), pursuant to Legislative Decree No. 254/2016.
Eni Annual Report 2020
36
of strategic objectives. Among the Board of Directors’ most important duties is the appointment of people to
key management and control positions in the Company, such as the officer in charge of preparing financial
reports, the Head of Internal Audit, the members of the Watch Structure. In performing these duties, the Board
of Directors is supported by the Nomination Committee.
Reporting flows
In order for the Board of Directors to perform its duties as effectively as possible, the directors must be in a po-
sition to assess the decisions they are called upon to make, possessing appropriate expertise and information.
The current members of the Board of Directors, who have a diversified range of skills and experience, including
on the international stage, are well qualified to conduct comprehensive assessments of the variety of issues they
face from multiple perspectives. The directors also receive timely complete briefings on the issues on the agen-
da of the meetings of the Board of Directors. To ensure this operates smoothly, Board meetings are governed
by specific procedures that establish deadlines for providing members with documentation and the Chairman
ensures that each director can contribute effectively to Board discussions. The same documentation is provided
to the Statutory Auditors. In addition to meeting to perform the duties assigned to the Board of Statutory Auditors
by Italian law, including in its capacity as the “Internal Control and Audit Committee”, and by US law in its capacity
as the “Audit Committee”, the Statutory Auditors also participate in the meetings of the Board of Directors and,
also through individual members, at meetings of the Control and Risk Committee thus ensuring the timely ex-
change of key information for the performance of their respective duties.
The adequacy and timeliness of reporting flows towards the Board of Directors is subject to periodic review by
the same Board as part of the annual self-assessment process (see next section).
Ongoing training and self-assessment
On an annual basis, the Board of Directors conducts a self-assessment (the Board Review)7, for which bench-
marking against national and international best practices and an examination of Board dynamics are essen-
tial elements, also with a view to provide shareholders with guidance on the most appropriate professional
profiles for members of the Board. Following the Board Review, the Board of Directors develops an action
plan, if necessary, to improve the operation of the Board and its Committees. In addition, in determining the
procedures for the performance of the Board Review, the Eni Board also assesses whether to perform a Peer
Review of the Directors, in which each director expresses his or her view of the contribution made by the other
Directors to the work of the Board. The Peer Review, which has been completed five times in the last nine years
and started, most recently, in conjunction with the Board Review 2020, is a best practice among Italian listed
companies. Eni was among the first Italian companies to perform one, starting in 2012. The Board of Statutory
Auditors also conducted its own self-assessment in 2020. For a number of years now, Eni has supported the
Board of Directors and the Board of Statutory Auditors with an induction programme, which involves the pres-
entation of the activities and organization of Eni by top management. During 2020, following the appointment
of the Board of Directors and the Board of Statutory Auditors, numerous induction sessions were held open
to Directors and Statutory Auditors, in the context of meetings of both the Board and the Board of Statutory
Auditors and the Board Committees, on issues under the remit of the Committees themselves. In particular,
the issues addressed include those relating to the corporate structure and its business model, Eni’s mission
and decarbonization path, sustainability, governance, compliance, the internal control and risk management
system, accounting and tax issues, remuneration policy and human capital.
The governance of sustainability
Eni’s governance structure reflects the Company’s willingness to integrate sustainability, including in the form
of “sustainable success” as outlined in the new Corporate Governance Code, into its business model. The
Board of Directors has a central role in defining sustainability policies and strategies, acting upon proposal
of the CEO, in the identification of annual, four-year and long-term objectives shared between functions and
subsidiaries and in verifying the related results, which are also presented to the Shareholders’ Meeting.
(7) For more information on the Board Review process, see the section devoted to that process in the 2020 Corporate Governance and Shareholding Structure Report.
Management report | Consolidated financial statements | Annex 37
In detail, a central theme in which the Board of Directors plays a key role is challenge related to the process
of energy transition to a low carbon future8.
In this regard, it should be noted that the self-assessment process relating to the last year of the term, car-
ried out with the support of an independent external consultant and completed in February 2020, also with
a view to the definition of the guidelines on the composition of the future board9, provided the Directors with
the opportunity to reflect specifically on climate change and the role of the Board in relation to this future
challenge. The Board appeared to be fully aware of the impact of climate change on Eni’s activities and
confirmed in general that it was adequately informed on the main aspects, including regulatory ones. The
Directors shared the Board’s role in defining a governance oriented towards the goal of combating climate
change, also with respect to monitoring the road map of the Group’s commitments in this respect, and the
constant assessment of associated risks and opportunities.
Another central theme that the Board of Directors oversees is the respect for Human Rights. Indeed, in
December 2018, the Board of Directors of Eni SpA approved the Eni Statement on respect for human rights.
This document renews the Company’s commitment, aligning it with the main international standards on Hu-
man Rights and Business, starting from the United Nations Guiding Principles, highlighting also the priority
areas on which this commitment is concentrated.
Furthermore, continuing on the path of transformation, in September 2019 Eni’s Board of Directors approved
a new corporate mission, which takes inspiration from the 17 United Nations Sustainable Development
Goals (SDGs) and highlights Eni’s values related to climate, the environment, access to energy, cooperation
and partnerships for development, respect for people and human rights. The mission highlights the prin-
ciples that underpin the Company’s business model aimed at integrating sustainability into all Company’s
activities, having regard not only for climate and environment but also for the development, enhancement
and training of human resources, considering diversity as an opportunity.
THE MAIN SUSTAINABILITY ISSUES ADDRESSED BY THE BOARD IN 2020
2020 Financial sustainability strategy and sustainability reporting
2019 Sustainability Report: “Eni For”
Update of the UK Modern Slavery Act statement
2019 financial statements, including the consolidated Non-Financial Statement
The Remuneration Report, including sustainability targets in the definition of performance plans
2019 HSE Report
Four-year and long-term Plan (including non-financial targets)
Further issues were addressed in the context of the induction activities mentioned above: in particular, in addition
to the issues already mentioned, among other things, issues relating to the anti-corruption compliance program,
the Code of Ethics, succession plans, of technical professionalism and the evolution of skills in Eni.
(8) For further information on the role of the Board of Directors in the process of energy transition and the pursuit of sustainable success, see the section of this Report relating
to the Consolidated Non-Financial Statement, pursuant to Legislative Decree no. 254/2016.
(9) On the basis of the results of the self-assessment process, the outgoing Board prepared an advice to the Shareholders on the composition of the future Board which
highlighted the advisability of including members with, among other things, skills and experience to fully understand the decarbonization process as well as, with specific
reference to the issue of the energy transition and its centrality in Eni’s strategic plan, the importance of professionalism with experience in contexts of strategic change of
similar complexity on a global scale, and “Soft skills” such as the ability to integrate sustainability issues into the business vision.
Eni Annual Report 2020 38
Thanks to the growing commitment to transparency and to the business model built by Eni in recent years to
create long-term sustainable value, Eni’s stock has achieved the top positions in the most popular ESG ratings
and confirmed its presence in the main ESG indices10.
The Sustainability and Scenarios Committee
In performing its duties in the field of sustainability, the Board is supported by the Sustainability and Scenarios
Committee, established for the first time in 2014 by the Board itself, which provides advice and recommen-
dations on scenario and sustainability issues. The Committee plays a key role in addressing the sustainability
issues integrated into the Company’s business model11.
Remuneration Policy
Eni’s Remuneration Policy for its Directors and top management contributes to the Company’s strategy, the
pursuit of the Company’s long-term interests and is functional for sustainable success of the Company. It is
established in accordance with the Governance model adopted and the recommendations of the Corporate
Governance Code. The Policy seeks to attract, motivate and retain high-level professionals and skilled man-
agers and to align the interests of management with the priority objective of creating value for shareholders
over the medium/long-term.
For this purpose, the remuneration of Eni’s top management is established on the basis of the position and
the responsibilities assigned, with due consideration given to market benchmarks for similar positions in com-
panies similar to Eni in dimension and complexity. Under Eni Remuneration Policy, considerable importance
is given to the variable component, also on a per-share basis, which is linked to the achievement of certain
results, through incentive plans connected to the fulfilment of preset, measurable and complementary targets
which represent the main Company’s priorities in line with the Company’s Strategic Plan and the expectations
of shareholders and stakeholders, in order to promote a strong focus on results and combine the operating,
economic and financial soundness with social and environmental sustainability, coherently with the long-term
nature of the business and the related risk profiles.
The Policy defined for the next term 2020-2023 provides the confirmation, in the Short-Term Plan of Incentive
of Short Term with deferral, of a target related to environmental sustainability and human capital (weight
25%), focused on safety and reduction of GHG emission intensity (direct and indirect), as well as a new target
related to the increase of renewables installed capacity (weight 12.5%), in place of the target connected to the
explorative resources.
The 2020-2022 Long-Term Equity Incentive Plan includes a target related to environmental sustainability and
energy transition (overall weight 35%), articulated on a series of goals linked to the processes of decarboniza-
tion and energy transition and to the circular economy.
The Remuneration Policy is described in the first section of the Remuneration Report, available on the Compa-
ny’s website (www.eni.com) and is presented for a binding vote at the Shareholders’ Meeting, with the cadence
required by its duration and in any case at least every three years or in the event of changes to it12.
The internal control and risk management system13
Eni has adopted an integrated and comprehensive internal control and risk management system at different
levels of the organizational and corporate structure, based on a set of rules, procedures and organizational
structures aimed at allowing an effective identification, measurement, management and monitoring of the
main risks, in order to contribute to the sustainable success of the Company.
(10) For timely updates on ESG indices and ratings of relevance to the financial markets, please refer to the Shareholder Relations page of the 2020 Corporate Governance
Report and to the Investor Relations page of the site.
(11) For more information on the Committee activities in 2020, please see the relevant section in the 2020 Corporate Governance Report.
(12) In accordance with Art. 123 ter, paragraph 3 bis of the Italian Decree Law No. 58/98.
(13) For more information, please see the 2020 Corporate Governance Report.
Management report | Consolidated financial statements | Annex 39
The internal control and risk management system is also based on Eni’s Code of Ethics, which sets out the
rules of conduct for the appropriate management of the Company’s business and which must be complied
with by all the members of the Board, as well as of the other corporate bodies and all other third parties
working with or in name or for the interest of Eni.
Eni has adopted rules for the integrated governance of the internal control and risk management system,
the guidelines of which were approved by the Board.
Furthermore, on adopting the new Corporate Governance Code, Eni’s Board of Directors established various
actions and application and improvement methods to comply with the recommendations on the internal
control and risk management system, already generally accepted as in line with the best practices of cor-
porate governance14.
In 2018 Eni completed the definition of the reference model for Integrated Compliance, which together with
Model 231 and the Code of Ethics, is aimed at ensuring that all Eni personnel who are contributing to the
achievement of business objectives operate in full compliance with the rules of integrity and applicable
laws and regulations in an increasingly complex national and international regulatory framework, defin-
ing a comprehensive process, developed using a risk-based approach, for managing activities to prevent
non-compliance. With this in mind, risk assessment methodologies were developed aimed at modulating
controls, calibrating monitoring activities and planning training and communication activities based on the
compliance risk underlying the various cases, to maximize their effectiveness and efficiency.
The Integrated Compliance process was designed to stimulate integration between those who work in the
business activities and the corporate functions that oversee the various compliance risks, both internal or
external to the Integrated Compliance unit.
Furthermore, acting on the proposal of the Chief Executive Officer, having obtained a favourable opinion
from the Control and Risk Committee, the Board of Directors of Eni approved the internal rules concerning
the Market Information Abuse (Issuers). These, by updating the previous Eni rules for the aspects relating
to “issuers”, incorporate the amendments introduced by Regulation No. 596/2014/EU of April 16, 2014
and the associated implementing rules, as well as the national regulations, taking account of Italian and
foreign institutional guidelines on the matter. The updated internal rules lay down principles of conduct for
the protection of confidentiality of corporate information in general, to promote maximum compliance, as
also required by Eni’s Code of Ethics and corporate security measures. Eni recognizes that information is a
strategic asset to be managed in such a way as to ensure the protection of the interests of the Company,
shareholders and the market.
An integral part of the Eni internal control system is the internal control system for financial reporting, the
objective of which is to provide reasonable certainty of the reliability of financial reporting and the ability of
the financial report preparation process to generate such reporting in compliance with generally accepted
international accounting standards. Eni’s CEO, Chief Financial Officer (CFO) and Head of Accounting and
Financial Statements and budget manager, in his capacity as officer in charge of preparing financial reports,
are responsible for planning, establishing and maintaining the internal control system for financial report-
ing. A central role in the Company’s internal control and risk management system is played by the Board of
Statutory Auditors, which in addition to the supervisory and control functions provided for in the Consoli-
dated Law on Financial Intermediation, also monitors the financial reporting process and the effectiveness
of the internal control and risk management systems, consistent with the provisions of the Corporate Gov-
ernance Code, including in its capacity as the “Internal Control and Audit Committee” pursuant to Italian law
and as the “Audit Committee” under US law.
(14) For more information, please see the 2020 Corporate Governance Report.
Eni Annual Report 2020 40
Natural
Resources
The Natural Resources Business Group is committed to build up in a sustainable way,
the value of Eni’s Oil & Gas upstream portfolio, with the objective of reducing
its carbon footprint by scaling up energy efficiency and expanding production
in the natural gas business, and its position in the wholesale market. Furthermore,
it is focused on the development of projects of capture and compensation of CO2 emissions
and forests conservation (REDD+). The Business Group, in addition to
the Exploration & Production business, includes also the result of natural gas wholesale
marketing and LNG, and the activities of environmental reclamation and requalification
implemented by the subsidiary company Eni Rewind.
Management report | Consolidated financial statements | Annex 41
€1.55 bln
Exploration & Production
Adjusted operating profit
€326 mln
GGP Adjusted operating
profit +69% vs. 2019
higher than expected
1.73 mln
boe/day
Hydrocarbon production
in line with the guidance
revised in response to COVID-19
400 mln boe
New equity exploration
resources at a competitive
unit cost of 1.6 $/boe
1.5 mln
tons CO2eq.
Offset emissions
by the Forestry REDD+
11.4 mln
tons CO2eq.
Net Carbon footprint upstream
-23% vs. 2019
Eni Annual Report 2020 42
Exploration & Production
1.73 mmboe/d
Hydrocarbons production
in line with the guidance
updated following to the
COVID-19 pandemic
6.9 bboe
Net proved reserves in 2020
96% three-year average
all sources replacement ratio
400 mmboe
New equity resources
discovered at a competitive
cost of 1.6 $/barrel
1.5 mmtonnes CO2eq.
Offset emissions by
the Forestry REDD+
Scenario vs. Performance
Reserves 2020
Towards net zero emissions
($/bbl)
60
40
20
0
38.8
Liquids
3.5 bbbl
Natural gas
18,001 bcf
24.1
21.9 22.8
21.1
2018
10.9
2019
8.6
2020
1.5
Adjusted operating profit (€ bln)
Brent
Eni - average hydrocarbon realization
Italy
Rest of Europe
North Africa
Egypt
Sub-Saharan Africa
Kazakhstan
Rest of Asia
Americas
Australia and Oceania
14.8
14.8
11.2
11.4
2018
2019
2020
Methane fugitive emissions
(ktonnes CH4)
Direct GHG emissions (Scope 1)
(mmtonnes CO2eq.)
Net Carbon Footprint upstream
(mmtonnes CO2eq.)
Management report | Consolidated financial statements | Annex KEY PERFORMANCE INDICATORS
TRIR (Total Recordable Injury Rate)
(total recordable injuries/worked hours) X 1,000,000
of which: employees
contractors
Profit per boe(a)(b)
Opex per boe(c)
Cash flow per boe
Finding & Development cost per boe(b)(c)
Average hydrocarbon realization
Hydrocarbons production(c)
Net proved hydrocarbons reserves
Reserves life index
Organic reserves replacement ratio
Employees at year end
of which outside Italy
Direct GHG emissions (Scope 1)(d)
GHG emissions (Scope 1)/operated hydrocarbons gross production(d)(e)
Methane fugitive emissions(d)
Volumes of hydrocarbon sent to routine flaring(d)
Net Carbon Footprint upstream (GHG emissions Scope 1 + Scope 2)(f)
Oil spills due to operations (>1 barrel)(d)
Re-injected production water(d)
43
2020
2019
2018
0.28
0.18
0.31
3.8
6.5
9.8
17.6
0.33
0.18
0.37
7.7
6.4
18.6
15.5
0.30
0.29
0.30
6.7
6.8
22.5
10.4
($/boe)
28.92
43.54
47.48
(kboe/d)
(mmboe)
(years)
(%)
1,733
6,905
10.9
43
1,871
7,268
10.6
92
1,851
7,153
10.6
100
(number)
9,815
10,272
10,448
6,123
6,781
6,971
(mmtonnes CO2eq.)
(tonnes CO2eq./kboe)
(ktonnes CH4)
(billion Sm³)
(mmtonnes CO2eq.)
(barrels)
(%)
21.1
20.0
11.2
1.0
11.4
882
53
22.8
19.6
21.9
1.2
14.8
988
58
24.1
21.4
38.8
1.4
14.8
1,595
60
(a) Related to consolidated subsidiaries.
(b) Three-year average.
(c) Includes Eni’s share of equity-accounted entities.
(d) Calculated on 100% operated assets.
(e) Hydrocarbon gross production from fields fully operated by Eni (Eni’s interest 100%) amounting to 1,009 mmboe, 1,114 mmboe and 1,067 mmboe in 2020, 2019 and
2018, respectively.
(f) Calculated on equity basis and included carbon sink.
Performance of the year
Total recordable injury rate (TRIR) was 0.28, down by 15%, confirming Eni’s commitment to reduce injuries
in each of its operations.
Direct GHG emissions (Scope 1) of the operated assets reported a decrease of 7% for an activity declines
due to sanitary emergency.
Direct GHG emissions (Scope 1)/operated hydrocarbon gross production: increased by 2% vs. 2019 due to
lower productions connected to the pandemic crisis and lower gas demand in Egypt, which productions are
associated to a low emission intensity.
Methane fugitive emissions of the operated assets were down by 49% from 2019 mainly due to the finali-
zation of the monitoring and maintenance programs as well as production declines. The overall reduction
with respect to 2014 is 90%, achieving in advance the 80% reduction target set by 2025.
Net Carbon Footprint upstream (GHG emissions Scope 1 + Scope 2 accounted for on an equity basis)
decreased by 23% compared to 2019 due to lower productions connected to the pandemic crisis, and first
allowance of carbon credits to offset GHG emissions.
Volumes of hydrocarbon sent to routine flaring of the operated assets decreased by 14% from 2019, thanks
to the zero process flaring achieved in July in Angola, at the West Hub site, and the production shutdown
due to force majeure at the Bu-Attifel and El-Feel fields in Libya.
Oil spills due to operations: down by 10% compared to 2019 leveraging on to the technical measures adopted in
the operating activities.
Eni Annual Report 2020
44
Re-injected production water decreased from the full year of 2019 (down by 8.9%), due to the standstills occurred
in Libya, as well as technical issues in Congo at the Loango and Zatchi fields and in Nigeria at the Ebocha field.
In 2020, the E&P segment reported an adjusted operating profit of €1,547 million with a decrease of 82%,
affected by a depressed scenario due to the COVID-19 pandemic which impacted both hydrocarbons realized
prices and production. Particularly, lower sales volumes were driven by capex optimizations intended to pre-
serve the Company’s cash flows, from the production cuts implemented by the OPEC+ agreement and falling
gas demand.
Oil and natural gas production was 1.73 million of boe/d, down by 7% from 2019. Net of price effects, the
decline was due to COVID-19 impacts and related OPEC+ production cuts, as well as lower gas demand,
mainly in Egypt. Production start-ups/ramp-ups of 109 kboe/d and portfolio contributions in Norway were
partly offset by lower volumes in Libya, driven mainly by an expected contractual trigger, as well as mature
field declines.
Net proved reserves at December 31, 2020 amounted to 6.9 bboe based on a reference Brent price of 41
$/barrel. The all-sources replacement ratio was 43%; 96% three-year average all sources replacement ratio.
The reserves life index was 10.9 years (10.6 years in 2019).
Path to decarbonization
Within the Eni’s long-term target to reach carbon neutrality, the projects in the start-up phase for the CO2
geological capture and sequestration using depleted fields as well as reusing in other production cycle are
the main decarbonization drivers in the upstream and other business. In particular Eni was awarded by the
UK Oil and Gas Authority a license for building a carbon storage project in the Liverpool Bay supporting
the decarbonization process in the North-West England and North Wales industrial areas. In Italy, Eni has
launched a plan to build a hub for the capture and storage of CO2 in depleted fields off the coast of Raven-
na which will be designed to store 500 mmtonnes. These projects are the fruit of Eni’s core expertise and
research for innovative solutions in order to tackle climate change. Leveraging on the development of CCS
projects, the target is to reach a storage capacity of 7 mmtonnes/year in 2030.
Launched initiatives focusing on the forest’s protection, conservation and sustainable management, mainly in
developing Countries, by means of the REDD+ projects, as a part of Eni’s decarbonization process. In particular,
in November 2020, was achieved the first allowance of carbon credits by the REDD+ Luangwa Community
Forest Project (LCFP) to offset GHG emissions equivalent to 1.5 million tonnes of CO2. Eni continues to evaluate
further initiatives in different Countries by means of partnerships with governments and international players in
Africa, Latin America and Asia. The long-term target is a progressive growth of these initiatives to support an
annual carbon credit portfolio offsetting over 40 million tonnes of CO2 by 2050.
Exploration activity
Exploration activity achieved excellent results in 2020 despite the capex reduction of approximately 50% from
2019. Added 400 mmboe of new resources at a competitive cost of 1.6 $/barrel. Exploration is still a distinctive
approach of Eni’s upstream model, maintaining a solid track record of production replacement with resources
discovered equal to over 6 bboe in the last seven years, well above than the cumulative production in the period,
at a unit cost lower than 1.5 $/barrel.
Achieved near-field exploration successes ensuring a fast contribution to cash flows. In this context,
main near-field discoveries were in Egypt and then in Tunisia, Norway, Algeria and Angola, where the Ago-
go appraisal well estimated 1 billion boe in place. Significant results reached also in frontier exploration
area with the Mahani gas and condensate discovery in the onshore of the Emirate of Sharjah (UAE), just
one year since the signing of the contracts, the appraisal of the Ken Bau field offshore Vietnam, which
allowed to outline a giant field, and the Saasken discovery, offshore Mexico, which strenght Eni’s activity
in the Country. These exploration successes create opportunities to early monetization fuelling the dual
exploration model.
Management report | Consolidated financial statements | Annex 45
Reloading exploration portfolio in 2020. Acquired new acreage in Albania, Oman, the United Arab Emirates,
Angola, Indonesia, Norway with JV Vår Energi, and Egypt covering approximately 23,600 square kilometers.
In addition, renewed exploration licenses in Kenya, as part of long-term partnership with the Country for
access to energy and decarbonization.
In 2020 exploration expenses were €510 million (€489 million in 2019) and included the write-off of unsuc-
cessful wells amounting to €314 million (€214 million in 2019), which also related to the write-off of unproved
exploration rights, if any, associated to projects with negative outcome. The write-off of expenses related to
unsuccessful drilling activities mainly concerned projects in Libya, the United States, Angola, Egypt, Oman,
Mexico and Lebanon. In addition, 86 exploratory drilled wells are in progress at year-end (46.0 net to Eni).
Development activity
Achieved production start-up of the following projects:
•
•
•
•
in Algeria, with the gas project in the Berkine North area (Eni’s interest 49%) levaraging on a fast-track
development;
in Congo, with the Nené Marine phase 2B project in the Marine XII block (Eni operator with a 65% inter-
est);
in Angola, with the Agogo oil field in the operated offshore Block 15/06, in just 9 months from discovery,
leveraging on the synergies with the existing FPSOs in the area;
in January 2021, in the onshore Sharjah Emirate, with start-up of the Mahani gas and condensate dis-
covery in the Area B concession (Eni’s interest 50%), just two years after signing the concession agree-
ment and one year since discovery.
Development expenditure amounted to €3.1 billion, directed mainly outside Italy, in particular in Egypt, Indo-
nesia, the United Arab Emirates, the United States, Angola, Mexico, Iraq and Kazakhstan.
In the year marked by the COVID-19 pandemic crisis, Eni implemented effective measures in several ar-
eas to protect the health of its employees and contractors and to manage the pandemic impact on local
communities in Italy and abroad. Eni operated in synergy with governments, institutions, United Nations
agencies and local and international NGOs to prevent and tackle the expansion of the COVID-19 pandemic.
In particular, Eni provided protective and hygiene sanitary supplies, medical equipment for intensive care,
activated awareness campaigns, sustained the logistics activities of the international Task Forces, as well
as implemented initiatives in support of the most vulnerable populations. Furthermore, in the foreign Coun-
tries, Eni implemented different specific initiatives such as in the Luanda, Huila and Namibe area in Angola,
in the Koilou department in Congo, at the Multi-Disciplinary Medical Center of Nur-Sultan in Kazakshtan, in
the Maputo area in Mozambique and in the Tabasco area in Mexico.
The Africa Program targets to contribute the local socio-economic development with initiatives to support
economic diversification by means of training programs in the agricultural-food and agro-business areas
and to facilitate access to the labor market in a path of economic growth, inclusive and sustainable at the
same time, in line with the United Nations 2030 Agenda. In 2020, activities of the Pilot Project started up
at the Okuafo Pa center, opened in 2019, in Ghana, in order to set-up the model to be replicated in other
Countries. The project provides for defining to access micro-credit facilities and the use of funds, in coop-
eration with Cassa Depositi e Prestiti, and for the development of agricultural activities with the support of
Bonifiche Ferraresi. During the year, 800 people benefited from the training program.
In 2020, overall R&D expenditure amounted to €59 million (€71 million in 2019); a total of 8 new patents
were filed. During the year the main technologies application concerned tools, software and hardware to
improve and optimize energy and operational efficiency in production activities. In particular, technolo-
gies were applied to optimize the development and exploration drilling activities, such as in Mozambique,
Mexico, Oman, Vietnam and Indonesia; application tools to enhance the efficiency of hydrocarbons pro-
duction and transportation activities, such as in operated activities in Angola, Algeria and Egypt; tech-
nologies to guarantee efficient monitoring and asset integrity of plants, such as in Italy, Angola, Libya,
Algeria, Egypt, Indonesia, Mexico and Ghana; as well as applications to reduce the exploration risk by
means of tools to allow a better analysis of the subsoil, such as in Egypt, Vietnam, Mexico and Norway.
Eni Annual Report 2020 46
RESERVES
OVERVIEW
The Company has adopted comprehensive classification criteria for the estimate of proved, proved developed
and proved undeveloped oil and gas reserves in accordance with applicable US Securities and Exchange Com-
mission (SEC) regulations, as provided for in Regulation S-X, Rule 4-10. Proved oil and gas reserves are those
quantities of liquids (including condensates and natural gas liquids) and natural gas which, by analysis of
geoscience and engineering data, can be estimated with reasonable certainty to be economically producible
from a given date forward, from known reservoirs, under existing economic conditions, operating methods,
and government regulations prior to the time at which contracts providing the right to operate expire, unless
evidence indicates that renewal is reasonably certain.
Oil and natural gas prices used in the estimate of proved reserves are obtained from the official survey pub-
lished by Platt’s Marketwire, except when their calculation derives from existing contractual conditions. Prices
are calculated as the unweighted arithmetic average of the first-day-of-the-month price for each month within
the 12-month period prior to the end of the reporting period. Prices include consideration of changes in exist-
ing prices provided only by contractual arrangements.
Engineering estimates of the Company’s oil and gas reserves are inherently uncertain. Although authoritative
guidelines exist regarding engineering criteria that have to be met before estimated oil and gas reserves can be
designated as “proved”, the accuracy of any reserves estimate is a function of the quality of available data and
engineering and geological interpretation and evaluation. Consequently, the estimated proved reserves of oil and
natural gas may be subject to future revision and upward and downward revisions may be made to the initial
booking of reserves due to analysis of new information. Proved reserves to which Eni is entitled under conces-
sion contracts are determined by applying Eni’s equity interest to total proved reserves of the contractual area,
until expiration of the relevant mineral right. Eni’s proved reserves entitlements under PSAs are calculated so that
the sale of production entitlements cover expenses incurred by the Group for field development (Cost Oil) and
recognize a share of profit set contractually (Profit Oil). A similar scheme applies to service contracts.
RESERVES GOVERNANCE
Eni retains rigorous control over the process of booking proved reserves, through a centralized model of re-
serves governance. The Reserves Department of the Exploration & Production segment is in charge of: (i)
ensuring the periodic certification process of proved reserves; (ii) updating the Company’s guidelines on re-
serves evaluation and classification and the internal procedures; and (iii) providing training of staff involved in
the process of reserves estimation. Company guidelines have been reviewed by DeGolyer and MacNaughton
(D&M), an independent petroleum engineering company, which has stated that those guidelines comply with
the SEC rules1. D&M has also stated that the Company guidelines provide reasonable interpretation of facts
and circumstances in line with generally accepted practices in the industry whenever SEC rules may be less
precise. When participating in exploration and production activities operated by other entities, Eni estimates
its share of proved reserves on the basis of the above guidelines.
The process for estimating reserves, as described in the internal procedure, involves the following roles and
responsibilities: (i) the business unit managers (geographic units) and Local Reserves Evaluators (LRE) are
in charge with estimating and classifying gross reserves including assessing production profiles, capital ex-
penditure, operating expenses and costs related to asset retirement obligations; (ii) the petroleum engineering
department and the operations unit at the head office verify the production profiles of such properties where
significant changes have occurred and operating expenses, respectively; (iii) geographic area managers verify
the commercial conditions and the progress of the projects; (iv) the Planning and Control Department provides
the economic evaluation of reserves; and (v) the Reserves Department, through the Headquarter Reserves
Evaluators (HRE), provides independent reviews of fairness and correctness of classifications carried out by the
above mentioned units and aggregates worldwide reserves data.
(1) The reports of independent engineers are available on Eni website eni.com section Publications/Integrated Annual Report 2016.
Management report | Consolidated financial statements | Annex 47
The head of the Reserves Department attended the “Politecnico di Torino” and received a Master of Science
degree in Mining Engineering in 2000. He has more than 20 years of experience in the oil and gas industry.
Staff involved in the reserves evaluation process fulfil the professional qualifications requested by the role and comply
with the required level of independence, objectivity and confidentiality in accordance with professional ethics. Re-
serves Evaluators qualifications comply with international standards defined by the Society of Petroleum Engineers.
RESERVES INDEPENDENT EVALUATION
Eni has its proved reserves audited on a rotational basis by independent oil engineering companies2. The de-
scription of qualifications of the persons primarily responsible for the reserves audit is included in the third-party
audit report3. In the preparation of their reports, independent evaluators rely, upon information furnished by Eni
without independent verification, with respect to property interests, production, current costs of operations and
development, sales agreements, prices and other factual information and data that were accepted as represent-
ed by the independent evaluators. These data, equally used by Eni in its internal process, include logs, directional
surveys, core and PVT (Pressure Volume Temperature) analysis, maps, oil/gas/water production/injection data
of wells, reservoir studies, technical analysis relevant to field performance, development plans, future capital and
operating costs.
In order to calculate the net present value of Eni’s equity reserves, actual prices applicable to hydrocarbon sales,
price adjustments required by applicable contractual arrangements and other pertinent information are provided
by Eni to third party evaluators. In 2020 Ryder Scott Company and DeGolyer and MacNaughton provided an
independent evaluation of approximately 36%4 of Eni’s total proved reserves at December 31, 20205, confirming,
as in previous years, the reasonableness of Eni internal evaluation6.
In the 2018-2020 three-year period, 92% of Eni total proved reserves were subject to an independent evaluation.
As at December 31, 2020, Balder in Norway and Merakes in Indonesia were the main Eni property, which did not
undergo an independent evaluation in the last three years.
MOVEMENTS IN NET PROVED RESERVES
Eni’s net proved reserves were determined taking into account Eni’s share of proved reserves of equity-ac-
counted entities. Movements in Eni’s 2020 proved reserves were as follows:
(mmboe)
Consolidated
subsidiaries
Equity-accounted
entities
Estimated net proved reserves at December 31, 2019
Extensions, discoveries, revisions of previous estimates and
improved recovery, excluding price effect
Price effect
Reserve additions, total
Production of the year
Estimated net proved reserves at December 31, 2020
Reserves replacement ratio, all sources
(%)
220
18
6,287
238
(541)
5,984
57
(24)
981
33
(93)
921
277
(6)
Total
7,268
271
(634)
6,905
43
Net proved reserves as of December 31, 2020 were 6,905 mmboe, of which 5,984 mmboe of consolidated
subsidiaries. Net additions to proved reserves were 271 mmboe (included the effect an updating of the
natural gas conversion factor; up by 67 mmboe) and derived from:
(i) extensions and discoveries were up by 47 mmboe, mainly due to the final investment decision made for
the Bredaiblikk project in Norway and the Mahani field in the United Arab Emirates. This field started-up in
January 2021;
(2) From 1991 to 2002, DeGolyer and MacNaughton; from 2003, also Ryder Scott. In 2018, the Societé Generale de Surveillance (SGS) Company also provided an inde-
pendent certification.
(3) The reports of independent engineers are available on Eni website eni.com section Publications/Annual Report 2020.
(4) The share of reserve subjected to independent evaluation increases to 37% also including the third-party evaluation provided by the Gaffney Cline company on the
reserves of the Angola LNG project (Eni’s interest 13.6%) required by the shareholders of the consortium operating company.
(5) Includes Eni’s share of proved reserves of equity accounted entities.
(6) The reports of independent engineers are available on Eni website eni.com section Publications/Annual Report 2020.
Eni Annual Report 2020 48
(ii) revisions of previous estimates were up by 219 mmboe, and mainly derived from the progress in
development activities of several fields, including Zubair in Iraq, Kashagan and Karachaganak in Ka-
zakhstan and Merakes in Indonesia;
(iii) improved recovery of 5 mmboe mainly related to the Burun project in Turkmenistan.
Net additions were marginally impacted by negative price effects of 6 mmboe in 2020. The decrease of Brent refe-
rence price used in the reserve estimation process (down to 41 $/barrel in 2020 compared to 63 $/barrel in 2019)
leading to reduce proved reserves by 124 mmboe, due to the removal of volumes of reserves which have become
uneconomical in this environment. There was also an offsetting positive addition due to net higher reserves entitle-
ments under PSA contracts of 118 mmboe because of the cost recovery mechanism.
The organic and all sources reserves replacement ratio7 was 43%.
The reserves life index was 10.9 years (10.6 years in 2019).
For further information, please see the additional information on Oil & Gas producing activities required by the SEC
in the notes to the consolidated financial statements.
PROVED UNDEVELOPED RESERVES
Proved undeveloped reserves as of December 31, 2020 totaled 2,005 mmboe, of which 1,064 mmbbl of liquids
mainly concentrated in Africa and Asia and 4,992 bcf of natural gas mainly located in Africa. Proved undeve-
loped reserves of consolidated subsidiaries amounted to 837 mmbbl of liquids and 4,703 bcf of natural gas.
Movements in Eni’s 2020 proved undeveloped reserves were as follows:
(mmboe)
Proved undeveloped reserves as of December 31, 2019
Additions
Extensions and discoveries
Revisions of previous estimates
Improved recovery
Proved undeveloped reserves as of December 31, 2020
2,114
(206)
40
53
4
2,005
In 2020, Eni matured 206 mmboe of proved undeveloped reserves to proved developed reserves due to progress in
development activities, production start-ups and project revisions. The main reclassifications to proved developed
reserves are related to the following fields/projects: Zohr in Egypt, Zubair in Iraq, Area 1 in Mexico, Umm Shaif/Nasr
concession in the United Arab Emirates and Karachaganak in Kazakhstan.
For further information, please see the additional information on Oil & Gas producing activities required by the SEC
in the notes to the consolidated financial statements.
In 2020, capital expenditures amounted to approximately €4.2 billion.
Reserves that remain proved undeveloped for five or more years are a result of several factors that affect the timing
of the projects development and execution, such as the complex nature of the development project in adverse and
remote locations, physical limitations of infrastructures or plant capacity and contractual limitations that establish
production levels. The Company estimates that 0.5 bboe of proved undeveloped reserves have remained undevelo-
ped for five years or more at the balance sheet date and unchanged from 2019. The proved undeveloped reserves
that have remained undeveloped for five years or more at the balance sheet date mainly related to:
(i)
the Zubair field in Iraq (0.15 bboe), where development of PUDs has been conditioned by the drilling of
additional production and injection wells to be linked to the production facilities, which were already com-
pleted to achieve the full field production plateau of 700 kboe/d;
(ii) certain Libyan gas fields (0.25 bboe) where development completion and production start-ups are plan-
ned according to the delivery obligations set forth in a long-term gas supply agreement currently in force;
(iii) other fields in Italy and Egypt (0.1 bboe), where development activities are in progress.
(7) Organic ratio of changes in proved reserves for the year resulting from revisions of previously reported reserves, improved recovery, extensions and discoveries, to
production for the year. All sources ratio includes sales or purchases of minerals in place. A ratio higher than 100% indicates that more proved reserves were added than
produced in a year. The Reserves Replacement Ratio is not an indicator of future production because the ultimate development and production of reserves is subject to
a number of risks and uncertainties. These include the risks associated with the successful completion of large-scale projects, including addressing ongoing regulatory
issues and completion of infrastructure, as well as changes in oil and gas prices, political risks and geological and environmental risks..
Management report | Consolidated financial statements | Annex ESTIMATED NET PROVED HYDROCARBONS RESERVES(a)
i
s
d
u
q
L
i
)
l
b
b
m
m
(
s
a
g
l
a
r
u
t
a
N
)
f
c
b
(
2020
178
146
32
34
31
3
383
243
140
227
172
55
624
469
155
805
716
89
579
297
282
224
143
81
1
1
348
280
68
208
194
14
2,201
1,014
1,187
4,692
4,511
181
3,864
1,751
2,113
2,003
2,003
1,589
674
915
175
109
66
474
315
159
s
n
o
b
r
a
c
o
r
d
y
H
)
e
o
b
m
m
(
243
199
44
73
68
5
798
434
364
1,110
1,022
88
1,352
799
553
1,182
1,093
89
879
424
455
256
162
94
91
60
31
i
s
d
u
q
L
i
)
l
b
b
m
m
(
s
a
g
l
a
r
u
t
a
N
)
f
c
b
(
2019
194
137
57
41
37
4
468
301
167
264
149
115
694
519
175
746
682
64
491
245
246
225
148
77
1
1
752
657
95
262
242
20
2,738
1,374
1,364
5,191
4,777
414
4,103
1,858
2,245
1,969
1,969
1,349
685
664
240
186
54
507
322
185
s
n
o
b
r
a
c
o
r
d
y
H
)
e
o
b
m
m
(
333
258
75
89
82
7
974
553
421
1,225
1,033
192
1,453
863
590
1,108
1,046
62
742
372
370
268
182
86
95
61
34
3,055
2,218
837
15,554
10,851
4,703
5,984
4,261
1,723
3,124
2,219
905
17,111
12,070
5,041
6,287
4,450
1,837
3,183
2,208
975
17,324
11,203
6,121
6,356
4,261
2,095
400
176
224
12
12
18
15
3
30
30
460
233
227
510
415
95
14
14
364
170
194
1,559
1,559
2,447
2,158
289
496
254
242
14
14
87
47
40
324
324
921
639
282
424
219
205
12
12
10
7
3
31
31
477
269
208
772
597
175
14
14
287
88
199
1,648
1,648
2,721
2,347
374
567
330
237
16
16
63
23
40
335
335
981
704
277
297
154
143
11
11
12
8
4
37
32
5
357
205
152
49
s
n
o
b
r
a
c
o
r
d
y
H
)
e
o
b
m
m
(
428
336
92
106
99
7
1,022
582
440
1,246
764
482
1,361
895
466
1,066
925
141
700
403
297
302
170
132
125
87
38
s
a
g
l
a
r
u
t
a
N
)
f
c
b
(
2018
1,199
980
219
320
300
20
2,890
1,447
1,443
5,275
3,331
1,944
3,506
1,871
1,635
1,989
1,846
143
1,217
822
395
277
154
123
651
452
199
)
l
b
b
m
m
(
i
s
d
u
q
L
i
208
156
52
48
44
4
493
317
176
279
153
126
718
551
167
704
587
117
476
252
224
252
143
109
5
5
360
276
84
14
14
310
57
253
1,716
1,716
2,400
2,063
337
19,724
13,266
6,458
363
205
158
14
14
68
17
51
352
347
5
797
583
214
7,153
4,844
2,309
Consolidated subsidiaries
Italy
Developed
Undeveloped
Rest of Europe
Developed
Undeveloped
North Africa
Developed
Undeveloped
Egypt
Developed
Undeveloped
Sub-Saharan Africa
Developed
Undeveloped
Kazakhstan
Developed
Undeveloped
Rest of Asia
Developed
Undeveloped
Americas
Developed
Undeveloped
Australia and Oceania
Developed
Undeveloped
Total consolidated subsidiaries
Developed
Undeveloped
Equity-accounted entities
Rest of Europe
Developed
Undeveloped
North Africa
Developed
Undeveloped
Sub-Saharan Africa
Developed
Undeveloped
Americas
Developed
Undeveloped
Total equity-accounted entities
Developed
Undeveloped
Total including equity-accounted entities
Developed
Undeveloped
3,515
2,451
1,064
18,001
13,009
4,992
6,905
4,900
2,005
3,601
2,488
1,113
19,832
14,417
5,415
7,268
5,154
2,114
3,540
2,413
1,127
(a) Effective January 1, 2020, the conversion rate of natural gas from cubic feet to boe has been updated to 1 barrel of oil = 5,310 cubic feet of gas (it was 1 barrel of oil = 5,408 cubic feet
of gas).
Eni Annual Report 2020
50
DELIVERY COMMITMENTS
Eni, through consolidated subsidiaries and equity-accounted entities, sells crude oil and natural gas from its
producing operations under a variety of contractual obligations. Some of these contracts, mostly relating to
natural gas, specify the delivery of fixed and determinable quantities.
Eni is contractually committed under existing contracts or agreements to deliver in the next three years mainly
natural gas to third parties for a total of approximately 623 mmboe from producing assets located mainly in
Algeria, Australia, Egypt, Ghana, Indonesia, Kazakhstan, Libya, Nigeria, Norway and Venezuela.
The sales contracts contain a mix of fixed and variable pricing formulas that are generally indexed to the
market price for crude oil, natural gas or other petroleum products. Management believes it can satisfy these
contracts from quantities available from production of the Company’s proved developed reserves and sup-
plies from third parties based on existing contracts. Production is expected to account for approximately 93%
of delivery commitments. Eni has met all contractual delivery commitments as of December 31, 2020.
OIL AND GAS PRODUCTION
In 2020, oil and natural gas production averaged 1,733 kboe/d, down by 7% from 2019. Net of price effects,
the decline was due to COVID-19 impacts and related OPEC+ production cuts, as well as lower gas demand,
mainly in Egypt. This performance was driven by production start-up/ramp-up in Algeria and Mexico, better
contribution of Kazakhstan, as well as portfolio contributions in Norway. These positives were partly offset by
the lower volumes reported in Libya since during the year a contractual parameter already envisaged in the
contract has been triggered and will be applied going forward, lower entitlements/spending and force majeure,
as well as mature field declines.
Liquids production amounted to 843 kbbl/d, down by 6% from 2019. The reduction in Libya, the COVID-19 im-
pacts and related OPEC+ cuts, as well as the mature fields decline are partly offset by portfolio contributions
and production growth in Mexico, due to the ramp-up of Area 1, Angola for the start-up of Agogo, Congo due
to the Nenè phase 2B start-up, Algeria and Kazakhstan.
Natural gas production amounted to 4,729 mmcf/d, down by 11% from 2019. Lower production in Libya and
lower natural gas demand impact in certain areas (mainly in Egypt), as well as LNG demand were partly offset
by the growth in Algeria, due to the start-up of the Berkine gas project, and Kazakhstan.
Oil and gas production sold amounted to 575.2 mmboe. The 59.1 mmboe difference over production (634.3
mmboe in 2020) mainly reflected volumes of natural gas consumed in operations (45.4 mmboe), changes
in inventory levels and other variations. Approximately 67% of liquids production sold (300.1 mmbbl) was
destined to Eni’s Refining & Marketing business. About 19% of natural gas production sold (1,461 bcf) was
destined to Eni’s Global Gas & LNG Portfolio segment.
Management report | Consolidated financial statements | Annex ANNUAL OIL AND NATURAL GAS PRODUCTION(a)(b)(c)
51
s
n
o
b
r
a
c
o
r
d
y
H
)
e
o
b
m
m
(
50
71
1
49
21
144
31
111
2
110
123
46
34
7
36
52
65
1
26
13
7
4
14
27
4
2
21
8
8
)
l
b
b
m
m
(
i
s
d
u
q
L
i
17
8
8
41
19
21
1
24
80
33
18
9
20
40
32
11
1
3
17
21
4
17
s
a
g
l
a
r
u
t
a
N
)
f
c
b
(
2020
116
58
58
278
56
218
4
440
249
22
48
32
147
103
170
91
28
28
17
2
4
36
4
32
33
33
s
n
o
b
r
a
c
o
r
d
y
H
)
e
o
b
m
m
(
39
19
19
93
30
61
2
106
127
37
27
15
48
60
64
17
17
5
4
3
18
28
5
23
6
6
s
a
g
l
a
r
u
t
a
N
)
f
c
b
(
2019
137
64
64
419
41
374
4
551
227
25
54
36
112
100
184
113
29
37
2
3
24
1
23
51
51
s
n
o
b
r
a
c
o
r
d
y
H
)
e
o
b
m
m
(
45
20
20
138
30
106
2
129
133
42
32
15
44
55
66
1
21
15
7
3
19
24
2
1
21
10
10
)
l
b
b
m
m
(
i
s
d
u
q
L
i
19
8
8
61
23
37
1
27
91
37
22
9
23
36
32
1
10
3
18
20
2
1
17
1
1
i
s
d
u
q
L
i
)
l
b
b
m
m
(
s
a
g
l
a
r
u
t
a
N
)
f
c
b
(
2018
22
41
33
8
56
24
31
1
28
89
41
24
5
19
35
28
1
1
10
2
14
19
4
15
1
1
155
162
4
88
70
474
38
431
5
445
185
31
55
7
92
97
202
137
14
39
10
2
43
13
30
42
42
263
1,483
542
295
1,757
620
319
1,805
650
1
42
1
1
45
36
134
1
77
248
8
68
1
15
92
2
27
1
1
31
35
66
2
70
173
8
40
1
14
63
1
1
3
5
32
2
81
115
7
1
18
26
Consolidated subsidiaries
Italy
Rest of Europe
Croatia
Norway
United Kingdom
North Africa
Algeria
Libya
Tunisia
Egypt
Sub-Saharan Africa
Angola
Congo
Ghana
Nigeria
Kazakhstan
Rest of Asia
China
Indonesia
Iraq
Pakistan
Timor Leste
Turkmenistan
United Arab Emirates
Americas
Ecuador
Mexico
Trinidad & Tobago
United States
Australia and Oceania
Australia
Equity-accounted entities
Angola
Norway
Tunisia
Venezuela
Total
308
1,731
634
326
1,930
683
324
1,920
676
(a) Includes Eni’s share of equity-accounted equities.
(b) Includes volumes of hydrocarbons consumed in operations (45.4, 45.4 and 43.5 mmboe in 2020, 2019 and 2018, respectively).
(c) Effective January 1, 2020, the conversion rate of natural gas from cubic feet to boe has been updated to 1 barrel of oil = 5,310 cubic feet of gas (it was 1 barrel of oil = 5,408 cubic feet of
gas). The effect of this update on production expressed in boe was approximately 6 mmboe for the full year of 2020. Other per-boe indicators were only marginally affected by the update
(e.g. realized prices, costs per boe) and also negligible was the impact on depletion charges. Other oil companies may use different conversion rates.
Eni Annual Report 2020
52
DAILY OIL AND NATURAL GAS PRODUCTION(a)(b)(c)
Consolidated subsidiaries
Italy
Rest of Europe
Croatia
Norway
United Kingdom
North Africa
Algeria
Libya
Tunisia
Egypt
Sub-Saharan Africa
Angola
Congo
Ghana
Nigeria
Kazakhstan
Rest of Asia
China
Indonesia
Iraq
Pakistan
Timor Leste
Turkmenistan
United Arab Emirates
Americas
Ecuador
Mexico
Trinidad & Tobago
United States
Australia and Oceania
Australia
Equity-accounted entities
Angola
Indonesia
Norway
Tunisia
Venezuela
i
s
d
u
q
L
i
)
d
/
l
b
b
k
(
47
23
23
112
53
56
3
64
218
89
49
24
56
110
88
1
1
31
2
7
46
57
12
45
s
a
g
l
a
r
u
t
a
N
)
d
/
f
c
m
m
(
2020
316.6
159.1
159.1
758.4
152.5
594.4
11.5
1,203.0
679.0
58.2
131.1
87.6
402.1
282.2
465.0
248.5
76.3
76.8
46.8
6.2
10.4
97.1
10.9
86.2
91.0
91.0
s
n
o
b
r
a
c
o
r
d
y
H
)
d
/
e
o
b
k
(
107
52
52
255
81
168
6
291
345
100
73
41
131
163
176
1
48
45
15
10
9
48
75
14
61
17
17
s
a
g
l
a
r
u
t
a
N
)
d
/
f
c
m
m
(
2019
376.4
174.6
174.6
1,149.2
111.8
1,025.8
11.6
1,509.0
621.2
67.3
147.7
97.9
308.3
272.4
502.7
308.1
78.7
101.2
6.0
8.7
66.8
2.8
64.0
139.6
139.6
s
n
o
b
r
a
c
o
r
d
y
H
)
d
/
e
o
b
k
(
123
55
55
379
83
291
5
354
363
113
87
42
121
150
179
1
59
41
19
8
51
68
6
4
58
28
28
s
a
g
l
a
r
u
t
a
N
)
d
/
f
c
m
m
(
2018
426.2
444.9
11.4
241.8
191.7
i
s
d
u
q
L
i
)
d
/
l
b
b
k
(
60
113
89
24
154
1,299.1
65
86
3
77
244
111
65
15
53
94
77
1
3
28
6
39
52
12
40
2
2
105.5
1,180.3
13.3
1,218.5
505.4
84.2
150.3
19.3
251.6
265.2
550.7
376.5
36.7
106.1
27.2
4.2
118.9
35.7
83.2
114.3
114.3
s
n
o
b
r
a
c
o
r
d
y
H
)
d
/
e
o
b
k
(
138
194
2
134
58
392
85
302
5
300
337
127
92
18
100
143
177
1
71
34
20
11
40
75
12
7
56
23
23
i
s
d
u
q
L
i
)
d
/
l
b
b
k
(
53
23
23
166
62
101
3
75
249
102
59
24
64
100
86
1
2
27
7
49
55
6
4
45
2
2
719
4,051.4
1,481
809
4,811.9
1,699
873
4,943.2
1,779
4
98.8
23
116
2
2
124
365.0
2.9
211.0
677.7
185
2
42
252
4
74
3
3
84
97.3
23
182.4
3.4
192.0
475.1
108
3
38
172
3
3
8
14
89.2
2.2
4.4
221.7
317.5
19
1
4
48
72
Total
843
4,729.1
1,733
893
5,287.0
1,871
887
5,260.7
1,851
(a) Includes Eni’s share of equity-accounted equities.
(b) Includes volumes of hdrocarbons consumed in operations (124, 124 and 119 kboe/d in 2020, 2019 and 2018, respectively).
(c) Effective January 1, 2020, the conversion rate of natural gas from cubic feet to boe has been updated to 1 barrel of oil = 5,310 cubic feet of gas (it was 1 barrel of oil = 5,408 cu-
bic feet of gas). The effect on production has been 16 kboe/d in the full year 2020.
Management report | Consolidated financial statements | Annex
53
PRODUCTIVE WELLS
In 2020, oil and gas productive wells were 8,255 (2,806.9 of which represented Eni’s share). In particular, oil
productive wells were 6,744 (2,135.7 of which represented Eni’s share); natural gas productive wells amounted
to 1,511 (671.2 of which represented Eni’s share). The following table shows the number of productive wells in
the year indicated by the Group and its equity-accounted entities in accordance with the requirements of FASB
Extractive Activities Oil & Gas (Topic 932).
PRODUCTIVE OIL AND GAS WELLS(a)
Italy
Rest of Europe
North Africa
Egypt
Sub-Saharan Africa
Kazakhstan
Rest of Asia
Americas
Australia and Oceania
(units)
2020
Oil wells
Natural gas wells
Gross
205.0
633.0
612.0
1,233.0
2,589.0
207.0
1,012.0
253.0
Net
159.2
109.5
258.1
527.3
524.8
56.7
369.5
130.6
Gross
396.0
183.0
127.0
144.0
194.0
1.0
180.0
284.0
2.0
Net
341.6
48.6
67.9
44.3
24.1
0.3
60.8
81.6
2.0
(a) Includes 1,369 gross (349.0 net) multiple completion wells (more than one producing into the same well bore). Productive wells are producing wells and wells
capable of production. One or more completions in the same bore hole are counted as one well.
6,744.0
2,135.7
1,511.0
671.2
DRILLING ACTIVITIES
EXPLORATION
In 2020, a total of 28 new exploratory wells were drilled (13.8 of which represented Eni’s share), as compared to 31
exploratory wells drilled in 2019 (16.3 of which represent Eni’s share) and 24 exploratory wells drilled in 2018 (15.6
of which represented Eni’s share).
The following tables show the number of net productive, dry and in progress exploratory wells in the years indicated
by the Group and its equity-accounted entities in accordance with the requirements of FASB Extractive Activities -
Oil & Gas (Topic 932). The overall commercial success rate was 28% (30% net to Eni) as compared to 36% (47% net
to Eni) in 2019 and 62% (66% net to Eni) in 2018.
EXPLORATORY WELL ACTIVITY
Net wells completed(a)
Wells in progress at Dec. 31(b)
2020
2019
2018
2020
(units)
productive
dry(c)
productive
dry(c)
productive
dry(c)
gross
Italy
Rest of Europe
North Africa
Egypt
Sub-Saharan Africa
Kazakhstan
Rest of Asia
Americas
Australia and Oceania
0.8
0.5
0.7
0.1
0.8
0.4
1.5
1.5
0.9
1.1
0.9
0.6
0.3
0.5
4.5
0.5
0.5
1.4
1.5
0.9
1.7
0.5
1.8
1.7
0.4
2.2
4.0
0.5
0.5
1.5
2.6
16.0
9.0
15.0
33.0
11.0
1.0
1.0
net
3.3
7.5
11.8
17.8
4.5
0.8
0.3
2.9
6.9
5.8
6.5
10.1
5.1
86.0
46.0
(a) Includes number of wells in Eni’s share.
(b) Includes temporary suspended wells pending further evaluation.
(c) A dry well is an exploratory, development, or extension well that proves to be incapable of producing either oil or gas sufficient quantities to justify completion
as an oil or gas well.
Eni Annual Report 2020
54
DEVELOPMENT
In 2020, a total of 182 development wells were drilled (57.4 of which represented Eni’s share) as compared
to 241 development wells drilled in 2019 (85.4 of which represented Eni’s share) and 209 development wells
drilled in 2018 (80.2 of which represented Eni’s share).
The drilling of 58 development wells (14.2 of which represented Eni’s share) is currently underway.
The following tables show the number of net productive, dry and in progress development wells in the years
indicated by the Group and its equity-accounted entities in accordance with the requirements of FASB Extracti-
ve Activities - Oil and Gas (Topic 932).
DEVELOPMENT WELL ACTIVITY
Net wells completed(a)
Wells in progress at Dec. 31
2020
2019
2018
2020
(units)
productive
dry(b)
productive
dry(b)
productive
dry(b)
gross
Italy
Rest of Europe
North Africa
Egypt
Sub-Saharan Africa
Kazakhstan
Rest of Asia
Americas
Australia and Oceania
2.8
4.3
23.2
1.2
0.3
23.2
2.0
0.4
3.0
3.3
5.0
33.5
7.0
0.9
27.3
2.1
1.1
2.2
3.0
2.8
9.6
30.7
7.3
0.9
21.9
2.3
0.8
0.3
0.5
0.1
24.0
3.0
3.0
5.0
17.0
6.0
net
5.0
1.5
1.4
0.9
3.4
2.0
(a) Includes number of wells in Eni’s share.
(b) A dry well is an exploratory, development, or extension well that proves to be incapable of producing either oil or gas sufficient quantities to justify completion
as an oil or gas well.
57.0
0.4
82.1
3.3
79.3
0.9
58.0
14.2
ACREAGE
In 2020, Eni performed its operations in 42 Countries located in five continents. As of December 31, 2020, Eni’s
mineral right portfolio consisted of 798 exclusive or shared rights of exploration and development activities for
a total acreage of 336,449 square kilometers net to Eni (357,854 square kilometers net to Eni as of December
31, 2019). Developed acreage was 26,359 square kilometers and undeveloped acreage was 310,090 square
kilometers net to Eni.
In 2020, main changes derived from: (i) the entry in Albania and new leases mainly in Oman, the United Arab
Emirates, Angola, Indonesia, Norway and Egypt for a total acreage of approximately 23,600 square kilometers;
(ii) the total relinquishment of licenses mainly to Somalia, Myanmar, Indonesia, Pakistan and Gabon covering
an acreage of approximately 47,500 square kilometers; (iii) interest increase mainly in Myanmar and Australia
for a total acreage of approximately 4,800 square kilometers; and (iv) partial relinquishment in Algeria, Cyprus
and Egypt for approximately 2,300 square kilometers.
Eni’s investment in developed and undeveloped acreage is comprised of numerous concessions, leases and
blocks. The terms and conditions under which the Company maintains exploration and/or production rights
to the acreage are property-specific, contractually defined and vary significantly from property to property.
Work programs are designed to ensure that the exploration potential of any property is fully evaluated before
expiration. In some instances, Eni may elect to relinquish acreage in advance of the contractual expiration date
if the evaluation process is complete and there is not a business basis for extension. In cases where additional
time may be required to fully evaluate acreage, Eni has generally been successful in obtaining extensions.
The scheduled expiration of leases and concessions for undeveloped acreage over the next three years is not
expected to have a material adverse impact on the Company.
The gross undeveloped acreages that will expire in the next three years are related to exploration leases,
blocks, concessions in: (i) Rest of Asia, in particular in Oman, Russia, Vietnam and Myanmar; (ii) North Africa,
in particular in Morocco and Libya; and (iii) Sub-Saharan Africa, in particular in Kenya, Mozambique and South
Africa. In most cases extension or renewal options are contractually defined and may or may not be exercised
in according on the results of the studies and the planned activities. Management believes that a significant
amount of acreage will be maintained following extension or renewal.
Management report | Consolidated financial statements | Annex
OIL AND NATURAL GAS INTERESTS
December 31, 2019
December 31, 2020
55
DEVELOPMENT WELL ACTIVITY
Net wells completed(a)
Wells in progress at Dec. 31
2020
2019
2018
2020
(units)
productive
dry(b)
productive
dry(b)
productive
dry(b)
gross
Italy
Rest of Europe
North Africa
Egypt
Sub-Saharan Africa
Kazakhstan
Rest of Asia
Americas
Australia and Oceania
2.8
4.3
23.2
1.2
0.3
23.2
2.0
0.4
3.0
3.3
5.0
33.5
7.0
0.9
27.3
2.1
1.1
2.2
3.0
2.8
9.6
30.7
7.3
0.9
21.9
2.3
0.8
0.3
0.5
0.1
24.0
3.0
3.0
5.0
17.0
6.0
net
5.0
1.5
1.4
0.9
3.4
2.0
(a) Includes number of wells in Eni’s share.
as an oil or gas well.
(b) A dry well is an exploratory, development, or extension well that proves to be incapable of producing either oil or gas sufficient quantities to justify completion
57.0
0.4
82.1
3.3
79.3
0.9
58.0
14.2
EUROPE
Italy
Rest of Europe
Albania
Cyprus
Greenland
Montenegro
Norway
United Kingdom
Other Countries
AFRICA
North Africa
Algeria
Libya
Morocco
Tunisia
Egypt
Sub-Saharan Africa
Angola
Congo
Gabon
Ghana
Ivory Coast
Kenya
Mozambique
Nigeria
South Africa
Other Countries
ASIA
Kazakhstan
Rest of Asia
Bahrain
China
Indonesia
Iraq
Lebanon
Myanmar
Oman
Pakistan
Russia
Timor Leste
Turkmenistan
United Arab Emirates
Vietnam
Other Countries
AMERICAS
Mexico
United States
Venezuela
Other Countries
AUSTRALIA AND OCEANIA
Australia
Total
)
a
(
e
g
a
e
r
c
a
t
e
n
l
a
t
o
T
38,028
13,732
24,296
14,557
1,909
614
4,213
1,120
1,883
163,625
31,873
5,572
13,294
10,755
2,252
7,613
124,139
3,744
1,471
4,107
579
3,724
43,948
4,349
6,642
22,271
33,304
142,696
2,160
140,536
2,858
13
15,955
446
1,461
14,147
49,918
3,779
17,975
1,620
180
10,387
18,553
3,244
10,703
3,106
1,935
1,066
4,596
2,802
2,802
t
s
e
r
e
t
n
I
f
o
r
e
b
m
u
N
312
129
183
1
7
2
1
136
34
2
255
71
49
11
1
10
57
127
47
21
3
3
4
6
10
32
1
69
7
62
1
4
13
1
2
3
3
13
2
4
1
10
4
1
157
10
134
6
7
5
5
)
b
(
)
a
(
e
g
a
e
r
c
a
d
e
p
o
e
v
e
d
l
s
s
o
r
G
15,284
9,578
5,706
4,799
907
48,458
12,213
6,742
1,963
3,508
5,638
)
b
(
)
a
(
e
g
a
e
r
c
a
d
e
p
o
e
v
e
d
l
t
e
N
9,335
7,951
1,384
l
d
e
p
o
e
v
e
d
n
u
)
a
(
e
g
a
e
r
c
a
s
s
o
r
G
63,741
7,220
56,521
587
25,474
4,890
1,228
)
a
(
e
g
a
e
r
c
a
s
s
o
r
g
l
a
t
o
T
79,025
16,798
62,227
587
25,474
4,890
1,228
20,868
25,667
773
2,701
1,680
2,701
772
612
l
d
e
p
o
e
v
e
d
n
u
)
a
(
e
g
a
e
r
c
a
t
e
N
30,506
5,681
24,825
587
)
a
(
e
g
a
e
r
c
a
t
e
n
l
a
t
o
T
39,841
13,632
26,209
587
13,988
13,988
1,909
614
5,481
363
1,883
1,909
614
6,253
975
1,883
232,341
280,799
12,333
116,834
129,167
55,419
3,982
24,673
23,900
2,864
14,984
67,632
10,724
26,636
23,900
6,372
20,622
30,607
161,938
192,545
8,158
1,164
226
21,059
13,146
21,304
1,320
2,931
930
3,747
50,677
25,304
8,206
55,677
2,484
2,931
1,156
3,747
50,677
25,304
29,265
55,677
5,312
2,818
958
1,536
2,109
4,912
1,035
678
100
3,099
25,721
1,914
12,336
10,755
716
5,275
31,033
4,732
13,294
10,755
2,252
7,384
85,838
90,750
4,604
628
2,931
395
3,372
5,639
1,306
2,931
495
3,372
43,948
43,948
4,349
3,340
4,349
6,439
22,271
22,271
12,994
271,271
284,265
3,343
151,502
154,845
2,391
3,853
6,244
442
1,505
1,947
10,603
267,418
278,021
2,901
149,997
152,898
68
2,605
1,074
3,442
200
3,214
2,267
14
992
1,261
328
328
2,858
2,858
68
18,672
21,277
3,653
13,750
1,074
3,653
13,750
102,016
102,016
2,443
53,930
2,612
28,976
23,908
14,600
15,274
5,455
952
1,543
7,324
3,180
3,180
5,885
53,930
2,612
200
32,190
23,908
14,600
17,541
5,469
1,944
2,804
7,324
3,508
3,508
11
1,029
446
886
180
349
1,020
14
509
497
328
328
2,858
2,858
11
13,155
14,184
1,461
10,015
58,955
1,427
17,975
1,620
18,331
20,956
3,244
8,699
3,092
689
569
4,349
2,549
2,549
446
1,461
10,015
58,955
2,313
17,975
1,620
180
18,680
20,956
3,244
9,719
3,106
1,198
1,066
4,349
2,877
2,877
(a) Square kilometers.
(b) Developed acreage refers to those leases in which at least a portion of the area is in production or encompasses proved developed reserves.
357,854
798
79,331
585,807
665,138
26,359
310,090
336,449
Eni Annual Report 2020
56
MAIN PRODUCING ASSETS (GROUP SHARE IN %) AND THE YEAR IN WHICH ENI STARTED OPERATIONS
ITA LY
(1926) Operated
Adriatic
and Ionian Sea
Barbara (100%), Annamaria (100%), Clara NW (51%), Hera Lacinia (100%)
and Bonaccia (100%)
Basilicata Region
Val d'Agri (61%)
Sicily
Gela (100%), Tresauro (45%), Giaurone (100%), Fiumetto (100%),
Prezioso (100%) and Bronte (100%)
REST OF EUROPE Norway(a)
(1965) Operated
Goliat (45.40%), Marulk (13.97%), Balder & Ringhorne (62.87%) and Ringhorne East (48.88%)
Non-operated
Åsgard (15.41% ), Mikkel (33.79%), Great Ekofisk Area (8.65%), Snorre (12.96%), Ormen Lange
(4.43%), Statfjord Unit (14.92%), Statfjord Satellites East (10.16%), Statfjord Satellites North (17.46%),
Statfjord Satellites Sygna (14.67%) and Grane (19.78%)
United
Kingdom
(1964) Operated
Liverpool Bay (100%) and Hewett Area (89.3%)
Non-operated
Elgin/Franklin (21.87%), Glenelg (8%), J Block (33%), Jasmine (33%) and Jade (7%)
NORTH AFRICA
Algeria(b)
(1981) Operated
Sif Fatima II (49%), Zemlet El Arbi (49%), Ourhoud II (49%), Blocks 403a/d (from 65% to 100%),
Block ROM North (35%), Blocks 401a/402a (55%), Block 403 (50%) and Block 405b (75%)
Non-operated
Block 404 (12.25%) and Block 208 (12.25%)
Libya(b)
(1959) Non-operated Onshore contract
areas
Offshore contract
areas
Area A (former concession 82-50%), Area B (former concession 100/Bu-Attifel
and Block NC 125-50%), Area E (El-Feel - 33.3%) and Area D (Block NC 169-50%)
Area C (Bouri - 50%) and Area D (Block NC 4 -50%)
Tunisia
(1961) Operated
Maamoura (49%), Baraka (49%), Adam (25%), Oued Zar (50%), Djebel Grouz (50%), MLD (50%)
and El Borma (50%)
EGYPT(b)(c)
(1954) Operated
Shorouk (Zohr - 50%), Nile Delta (Abu Madi West/Nidoco - 75%), Sinai (Belayim Land, Belayim Ma-
rine and Abu Rudeis - 100%), Meleiha (76%), North Port Said (Port Fouad - 100%), Temsah (Tuna,
Temsah and Denise - 50%), Southwest Meleiha (100%), Baltim (50%), Ras Qattara (El Faras and
Zarif - 75%), West Abu Gharadig (Raml - 45%) and West Razzak (100%)
SUB-SAHARAN
AFRICA
Non-operated Ras el Barr (Ha'py and Seth - 50%) and South Ghara (25%)
Angola
(1980) Operated
Block 15/06 (36.84%)
Non-operated
Block 0 (9.8%), Development Areas in the Block 3 and 3/05-A (12%), Development Areas in the
Block 14 (20%), Lianzi Development Area in the Block 14 K/A IMI (10%) and Development Areas in
the Block 15 (18%)
Congo
(1968) Operated
Nené Marine (65%), Litchendjili (65%), Zatchi (55.25%), Loango (42.5%), Ikalou (85%), Djambala
(50%), Foukanda (58%), Mwafi (58%), Kitina (52%), Awa Paloukou (90%), M’Boundi (83%) and
Kouakouala (75%)
Non-operated
Pointe-Noire Grand Fond (29.75%) and Likouala (35%)
Ghana
Nigeria
(2009) Operated
Offshore Cape Three Points (44.44%)
(1962) Operated
OMLs 60, 61, 62 and 63 (20%) and OML 125 (100%)
K AZAKHSTAN(b)
(1992) Operated(e)
Karachaganak (29.25%)
Non-operated
Kashagan (16.81%)
Non-operated(d) OML 118 (12.5%)
REST OF ASIA
United Arab
Emirates
(2018) Non-operated
Lower Zakum (5%), Umm Shaif and Nasr (10%) and Area B - Sharjah (50%)
Indonesia
(2001) Operated
Jangkrik (55%)
Iraq
(2009) Non-operated(f) Zubair (41.56%)
Pakistan
(2000) Operated
Bhit/Bhadra (40%) and Kadanwari (18.42%)
Non-operated
Latif (33.3%), Zamzama (17.75%) and Sawan (23.7%)
Turkmenistan (2008) Operated
Burun (90%)
AMERICAS
Mexico
(2019) Operated
Area 1 (100%)
United States
(1968) Operated
Gulf of Mexico
Allegheny (100%), Appaloosa (100%), Pegasus (85%), Longhorn (75%),
Devils Towers (75%) and Triton (75%)
Alaska
Nikaitchuq (100%) and Oooguruk (100%)
Non-operated
Gulf of Mexico
Europa (32%), Medusa (25%), Lucius (8.5%), K2 (13.4%), Frontrunner (37.5%)
and Heidelberg (12.5%)
Venezuela
(1998) Non-operated
Perla (50%), Corocoro (26%) and Junín 5 (40%)
Texas
Alliance area (27.5%)
(a) Assets held by the Vår energi equity-accounted entities (Eni’s interest 69.85%).
(b) In certain extractive initiatives, Eni and the host Country agree to assign the operatorship of a given initiative to an incorporated joint venture, a so‐called operating company. The
operating company in its capacity as the operator is responsible of managing extractive operations. Those operating companies are not controlled by Eni.
(c) Eni’s working interests (and not participating interests) are reported. This include Eni’s share of costs incurred on behalf of the first party accordingly to the terms of PSAs inforce in the
Country.
(d) As partners of SPDC JV, Eni holds a 5% interest in 17 onshore blocks and in 1 conventional offshore block and with a 12.86% in 2 conventional offshore blocks.
(e) Eni and Shell are co-operators.
(f) Eni is leading a consortium of partners including international companies and the national oil company Missan Oil within a Technical Service Contract as contractor.
Management report | Consolidated financial statements | Annex 57
MAIN EXPLORATION AND DEVELOPMENT PROJECTS
Eni’s exploration and production activities are conducted in many Countries and are therefore subject to a
broad range of legislation and regulations. These cover virtually all aspects of exploration and production
activities, including matters such as license acquisition, production rates, royalties, pricing, environmental
protection, export, taxes and foreign exchange. The terms and condition of the leases, licenses and con-
tracts under which these Oil & Gas interests are held vary from Country to Country. These leases, licenses
and contracts are generally granted by or entered into with a government entity or state company and are
sometimes entered into with private property owners. These contractual arrangements usually take the form
of concession agreements or production sharing agreements:
Concessions contracts. Eni operates under concession contracts mainly in Western Countries. Concessions
contracts regulate relationships between States and oil companies with regards to hydrocarbon explora-
tion and production activity. Contractual clauses governing mineral concessions, licenses and exploration
permits regulate the access of Eni to hydrocarbon reserves. The company holding the mining concession
has an exclusive right on exploration, development and production activities, sustaining all the operational
risks and costs related to the exploration and development activities, and it is entitled to the productions
realized. As a compensation for mineral concessions, pays royalties on production (which may be in cash or
in-kind) and taxes on oil revenues to the state in accordance with local tax legislation. Both exploration and
production licenses are granted generally for a specified period of time (except for production licenses in the
United States which remain in effect until production ceases): the term of Eni’s licenses and the extent to
which these licenses may be renewed vary by area. Proved reserves to which Eni is entitled are determined by
applying Eni’s share of production to total proved reserves of the contractual area, in respect of the duration
of the relevant mineral right.
Production Sharing Agreement (PSA). Eni operates under PSA in several of the foreign jurisdictions mainly
in African, Middle Eastern, Far Eastern Countries. The mineral right is awarded to the national oil company
jointly with the foreign oil company that has an exclusive right to perform exploration, development and
production activities and can enter into agreements with other local or international entities. In this type of
contract, the national oil company assigns to the international contractor the task of performing exploration
and production with the contractor’s equipment (technologies) and financial resources. Exploration risks are
borne by the contractor and production is divided into two portions: “Cost Oil” is used to recover costs borne
by the contractor and “Profit Oil” is divided between the contractor and the national company according to
variable schemes and represents the profit deriving from exploration and production. Further terms and
conditions of these contracts may vary from Country to Country. Pursuant to these contracts, Eni is entitled
to a portion of a field’s reserves, the sale of which is intended to cover expenditures incurred by the Company
to develop and operate the field. The Company’s share of production volumes and reserves representing the
Profit Oil includes the share of hydrocarbons which corresponds to the taxes to be paid, according to the con-
tractual agreement, by the national government on behalf of the Company. As a consequence, the Company
has to recognize at the same time an increase in the taxable profit, through the increase of the revenues, and
a tax expense. Proved reserves to which Eni is entitled under PSAs are calculated so that the sale of produc-
tion entitlements should cover expenses incurred by the Group to develop a field (Cost Oil) and recognize the
Profit Oil set contractually (Profit Oil). A similar scheme applies to some service contracts.
ITALY
In December 2020, Eni signed with Saipem a Memorandum of Understanding to identify and develop jointly
decarbonization initiatives and projects in the Country. In particular, the agreement provides for: (i) a collabo-
ration in decarbonization projects in Italy focused on capture, transport, reuse and storage of CO2 produced
by the industrial activity; and (ii) initiatives related to Green Deal Strategy to tackle climate change and to
achieve of CO2 reduction targets at national, European and world level.
Within Eni’s long-term strategy to minimize carbon footprint, a program was launched to build a hub for the capture
and storage of CO2 (Carbon Capture and Storage - CCS) in depleted fields off the coast of Ravenna which will be de-
Eni Annual Report 2020 58
signed to store 500 million tonnes of CO2. The development program includes: (i) a pilot project with expected start-
up in 2022, following all necessary authorizations; (ii) a full development phase expected to commence in 2026. The
planned activities will benefit on the expected synergies on development cost due to the infrastructure in place and
in addition to be significant impacted on the technology and competence areas.
In the Adriatic Sea, development activities in 2020 mainly concerned maintenance and production optimization at
offshore gas fields to recover the residual mineral potential. The decommissioning plan to plug & abandon non-pro-
ductive wells and remove non-productive platforms progressed in the year in compliance with applicable Italian
laws; a total of five offshore platforms are currently in the authorization process to be removed. In the circular econ-
omy initiatives, a program in collaboration with national research institutions was launched to redevelop asset in the
decomissioning phase. In particular activities started up to convert an offshore platform into a marine science park.
Within the VIII Agreement with the Municipality of Ravenna, activities progressed with: (i) environmental pro-
tection projects at the coastline areas; (ii) energy efficiency measures; (iii) programs to support employment,
including mentoring and training initiatives; and (iv) completion of environmental monitoring studies.
During the year, maintenance and production optimization activities project were completed at the Viggiano
Oil Center in the Val d’Agri concession (Eni operator with a 61%). The concession expired in October 2019 and
activities have continued since then in accordance with the prorogation regime. Applications have been timely
filed with Italian administrative Authority to obtain a ten-year extension of the concession based on the same
work program as in the original concession award.
In 2020 the Energy Valley project activities progressed and includes a number of initiatives relating to environ-
mental sustainability, innovation and enhancement of the area: (i) Mini Blue Water project on circular economy,
for treatment, recover and reuse of water production at the Viggiano Oil Center as well as installation of photo-
voltaic plants supporting oil production facilities; (ii) environmental and biodiversity monitoring plan. In particular,
the opening of the Center of Environmental Monitoring to manage and spread data collected; and (iii) the CASF
project to support the technological development and competence in the agro-food sector in the area. In 2020,
upgrading of certain areas was completed and other initiatives was launched to support the agricultural, bio-
monitoring and teaching with a positive impact on local employment.
In addition, within the memorandum agreement with the Basilicata Region including environmental, social and sus-
tainable development programs, initiatives progressed with defined activities of the Gas Agreement. Activities in-
clude a grant to support the gas consumption in 11 Municipalities of Val d’Agri and for energy efficiency programs.
In Sicily, following the Memorandum of Understanding for the Gela area, signed with the Ministry of Economic
Development in November 2014, progressed with: (i) development activities of the Cassiopea offshore gas fields
(Eni’s interest 60%). The project, through a significant reduction of the environmental impact, expects to achieve
the carbon neutrality target. The activities provide the transportation of natural gas produced by offshore wells
through a subsea pipeline to a new onshore treatment and compression plant, that will be realized in certain
reclaimed area of the Gela Refinery; (ii) the sustainable development initiatives supported by local institutions. In
particular, the Macchitella Lab project was launched to support youth employment and small and medium-sized
local enterprises with the start-up of the redevelopment programs.
In addition, progressed the initiatives of the Memorandum of Understanding signed at the end of 2019 with the
Ministry of Environment. Activities, which will be implemented in the next years, include the redevelopment pro-
grams of certain productive areas, environmental remediation projects as well as innovative projects developed
by Eni’s proprietary technologies to capture and reuse of CO2.
REST OF EUROPE
Norway Exploration activity yielded positive results with: (i) the Tordis NE and Lomre oil discoveries in the
PL089 block (Eni’s interest 11.24%); (ii) the Enniberg oil and and gas discovery in the 971 license (Eni’s interest
13.97%) in the North Sea, located near the Balder production field (Eni’s interest 62.87%); and (iii) in March
2021, new oil discovery in the PL532 license (Eni’s interest 21%) in the Barents Sea and in the PL 090/090I
license (Eni’s interest 17%), located in the northern North Sea, respectively.
The mineral interest portfolio increases were as follows: (i) in 2020 seven exploration licenses were acquired
as operator and ten licenses in partnership. The licenses are distributed over the three main sections of the
Management report | Consolidated financial statements | Annex 59
Norwegian continental shelf; and (ii) in 2021 ten exploration licenses were awarded, of which two as operator
in the North Sea and three as operator in the Barents Sea. The licenses are located near-fields already in pro-
duction or development.
Development activities concerned: (i) the Johan Castberg sanctioned project (Eni’s interest 20.96%) with
start-up expected in 2023; and (ii) the Balder X sanctioned project (Eni operator with a 62.87% interest) in
the PL 001 license, located in the North Sea. The Balder project scheme provides for drilling additional pro-
ductive wells, to be linked to an upgraded FPSO unit that will be relocated in the area. Production start-up
is expected in 2022.
In 2020, the Breidablikk project was sanctioned with start-up expected in 2024. The development activities
include the drilling of 23 productive wells that will be linked to existing facilities. Leveraging on high energy and
operational efficiency technologies, the project development will minimize direct emissions.
United Kingdom In January 2021, Eni was awarded a 100% interest in the exploration license P2511 in the
North Sea.
In October 2020 Eni was awarded by the UK Oil & Gas Authority a license, lasting six years, for building a car-
bon storage project in the Liverpool Bay area. The project includes the reutilization and refurbishment of Eni’s
depleted fields with a target of storing 3 million tonnes per year of CO2. Activity start-up is expected in 2025.
Eni is expected to coordinate the storage and transportation phase from existing industries and future hydro-
gen production sites in the area, within the HyNet North West integrated project. The project will contribute to
the UK’s carbon neutrality targets by 2050. In the year concept selection activities started up and signed CO2
capture agreement with existing industries in the area. In addition, Eni signed a cooperation agreement with
other upstream partners for the Net Zero Teeside (Eni’s interest 20%) and North Endurance Partnership (Eni’s
interest 16.7%) projects. These integrated projects will allow to achieve the decarbonization target of the Tee-
side industrial area, in the north east UK, by means of the capture, transportation and storage of CO2. Start-up
is expected in 2026 with a carbon capture and storage of 4 million tonnes per year.
In March 2021, the UK Research and Innovation (UKRI), Country’s authority for research and innovation, will
fund the CCS projects developed by Eni and other partners: (i) the HyNet North West integrated project with
approximately £33 million (£21 million net to Eni); and (ii) the Net Zero Teeside and North Endurance Part-
nership projects with approximately overall £52 million (£9 million net to Eni). The grants will finance 50% of
the ongoing design studies and accelerate the final investment decision for all projects, expected in 2023.
NORTH AFRICA
Algeria Exploration activities yielded positive results with the BKNES-1 near-field oil discovery well (Eni’s inter-
est 49%) in the Berkine North area.
During the year, gas production was started at the Berkine North complex (Eni’s interest 49%) leveraging a
fast-track development intended to valorize the existing gas reserves. The development program included
the drilling of four producing wells that were linked to the existing facilities, as well as the laying of a pipeline
connecting the producing field to the MLE treatment plant in Block 405b (Eni’s interest 75%). The upgrading
of the MLE treatment plant was completed in the year and is expected to reach a gross peak production of 60
kboe/d leveraging also the production of the Block 403 (Eni’s interest 50%) and of the Berkine North area by
the end of 2021.
Other development activities mainly concerned production optimization in the operated Blocks 403a/d and
ROM Nord (Eni’s interest 35%), Blocks 401a/402a (Eni’s interest 55%), Block 403, Block 405b and Block 404
(Eni’s interest 12.25%).
EGYPT
In 2020 the award of the exploration block West Sherbean (Eni’s interest 50%) in the onshore Nile Delta
was ratified.
Eni Annual Report 2020 60
Exploration activities yielded positive results with near-field discoveries in the operated areas: (i) the
Nidoco NW-1 in the Abu Madi West concession (Eni’s interest 75%) and Bashrush gas discoveries (Eni’s
interest 37.5%) in the Great Nooros Area; (ii) the SWM-A-6X oil discovery well in the South West Melei-
ha concession (Eni’s interest 100%). The production start-up was achieved during the year; and (iii) the
southern extension of the Arcadia field through the Arcadia 9 oil discovery well in the Meleiha concession
(Eni’s interest 76%) and already in production.
The new discoveries confirm the positive track-record of Eni’s exploration in the Country leveraging on the
continuous technology progress in exploration activities that allows to re-evaluate the residual mineral
potential in mature production areas. The development activities related to the discoveries started up
in production or whit start-up expected in 2021 will leverage on the synergies with the existing facilities
confirming the effectiveness of the incremental exploration strategy focused on high-value opportunities
with fast time-to-market to support production level and cash flow in the short-term.
In 2020 development activities concerned: (i) the drilling of infilling wells in the production fields located
in the Sinai area (Eni operator with a 100% interest) and Meleiha Complex (Eni operator with a 76% inter-
est); (ii) the development of near-field discoveries made in the year which were readily put into production
in the Arcadia South, Meleiha, South West Meleiha and Baltim SW (Eni’s interest 50%) operated fields. In
particular, the Baltim SW project includes a full field development phase with the drilling of two additional
productive wells; and (iii) maintenance activities and extensive asset integrity programs at the onshore
and offshore facilities of the Sinai, Western Desert and Mediterranean assets.
Development activities progressed at the Zohr project, targeting to ramp-up the field production capacity and
concerned: (i) the drilling of two additional productive wells and linked to onshore production facility, reaching a
gross production capacity of 3,200 mmscf/d; (ii) optimization and upgrading activities of the subsea facilities
and of the onshore treatment plant.
As of December 31, 2020, the aggregate development costs incurred by Eni for developing the Zohr project
and capitalized in the financial statements amounted to $5.5 billion (€4.5 billion at the EUR/USD exchange rate
of December 31, 2020). Development expenditure incurred in the year were €73 million. As of December 31,
2020, Eni’s proved reserves booked at the Zohr field amounted to 771 mmboe.
Within the social responsibility initiatives, the programs defined by the Memorandum of Understanding signed
in 2017 are currently to be implemented. The agreement, which supports the development activities of the Zohr
project, defines two intervention projects to be implemented in four years. The first, already completed, included
the renovation of the El Garabaa hospital, located nearby the onshore Zohr production facilities, and the supply
of necessary medical equipment. The second project, for an overall expense of $20 million, includes three so-
cio-economic and health programs to support local communities in the Zohr and Port Said areas. In particular,
two initiatives concerned the implementation of: (i) Health Care Center provides health services to approximately
60,000 people; and (iii) Youth Center provides programs to support youth, also with professional training services.
The related activities have been completed and the two structures were handed to the local Authorities. The
third project, which is part of education and technical training, is being defined. Expected activities start-up
in 2021.
SUB-SAHARAN AFRICA
Angola In 2020 Eni was awarded the operatorship with a 60% interest in the offshore Block 28, in the
Namibe basin, and a 42.5% interest in the onshore Cabinda Central block.
Exploration activities yielded positive results in the operated Block 15/06 (Eni’s interest 36.84%), follow-
ing a successful appraisal well of the Agogo discovery, with estimated volumes of 1 billion boe in place.
The Block 15/06 exploration license was renewed for additional three years. The agreement will allow to
assess the possible additional mineral potential of the area.
During the year, production ramp-up was achieved at the Agogo discovery well, connecting it to the Ngo-
ma FPSO (West Hub project). Production started up just nine months after the discovery, confirming Eni’s
commitment in the fast-track development of the discoveries, that maximizes the projects value leverag-
ing on the synergies with the existing infrastructures.
Management report | Consolidated financial statements | Annex 61
Other development activities in the operated Block 15/06 concerned: (i) the completion of the subsea
production and injection facilities at the Cabaça North & UM 4/5 project; (ii) studies for the full field devel-
opment of the Agogo field; and (iii) activities related to the Ndungu discovery development.
In October 2020, the unitization agreement of the three Development Areas of Block 14 (Eni’s interest
20%) was ratified with the related implementing decree. The agreements provide a new expiration date
in 2028 and new development plan of the area as well as increasing entitlement volumes for the cost
recovery.
In 2020 the local development initiatives and projects concerned: (i) restructuring of the Beira Nova
school in Cabinda; (ii) the installation of two power generation systems from renewables sources at two
medical centers in Luanda area; (iii) support to the agricultural development of the area in collaboration
with the relevant local Authorities; and (iv) the integrated development project in Huila and Namibe area
through water and energy access initiatives, education programs, economic diversification and health
protection projects.
Congo In 2020 production start-up was achieved at the Nené phase 2b project in the Marine XII block (Eni
operator with a 65% interest) by means of the linkage to the existing production platform in the area. The
full field development phase is expected in the second half of 2022.
Development activities concerned the expansion of the CEC power plant (Eni’s interest 20%), increasing
the electricity generation capacity to 484 MW, with the installation of a third turbine in 2020. Natural gas
supply to the plant will be ensured by the Marine XII block production.
The activities of the second phase of the Project Integrated Hinda (PIH) progressed with initiatives to
support the economic and agricultural development, access to water, education programs and sanitary
service program development. In particular, in the access to water initiatives, 5 additional wells were
completed in 2020 achieving a total of 30 water wells for approximately 20,000 people. The activity pro-
gressed at the training center in Oyo area, in the north of the Country, with construction activity and
equipment supply. Completion is expected in 2021.
Mozambique The development activities of Area 4 offshore (Eni’s interest 25%) concerned the Coral
South gas project, operated by Eni, and the gas discoveries of Mamba Complex where Eni is expected to
coordinate the upstream development and production phase and ExxonMobil the construction and oper-
ation phase of natural gas liquefaction facilities onshore.
The sanctioned Coral South project includes the construction, installation and commissioning and of an
FPSO vessel linked to six subsea gas producing wells, where the gas will undergo treatment, liquefaction,
storage and export, with a capacity of approximately 3.4 mmtonnes/y of LNG. The LNG produced will be
sold by the Area 4 Concessionaires to BP under a long-term contract for a period of twenty years, with
an option for an additional ten-year term. The project has reached a progress of more than 80% and the
production start-up is expected in 2022.
Within the Mamba Complex discoveries, the Rovuma LNG project provides for the development of the
straddled reserves of Area 1 according to its independent industrial plan, coordinated with the operator of
Area 1 (Total). The development project will include also a part of non-straddled reserves. The project pro-
vides the construction of two onshore LNG trains with capacity of approximately 7.6 mmtonnes/y each,
fed by 24 subsea wells and facilities for storing and exporting LNG. In 2019, the plan of development
(POD) was approved by the relevant Authorities. The Area 4 operators progressed development activities
towards a final investment decision (FID).
In 2020, Eni’s programs to support the local communities of the Country progressed with: (i) the scholar-
ship programs mainly in Pemba, also through the construction of a school and maintenance activities, as
well as training initiatives; (ii) initiatives to promote more sustainable domestic behaviors through clean
cooking projects; (iii) biodiversity protection programs and technical-professional training initiatives, also
through agreements with institutions and Authorities of the Country; (iv) projects of forests protection
and conservation (REDD+ program) with the Government of Mozambique; and (v) health care initiatives,
coordinated with the Country’s health Authorities, in the Maputo area, by means of specific initiatives on
prevention.
Eni Annual Report 2020 62
Nigeria In January 2021, Eni and the partners divested the onshore production and development block
OML 17 (Eni’s interest 5%).
Development activities of the operated OMLs 60, 61, 62 and 63 blocks (Eni’s interest 20%) concerned: (i)
production optimization programs with workover and drilling activities; and (ii) increasing generation ca-
pacity of the combined cycle power plant at Okpai. Natural gas production of the area will support the plant
capacity. The first phase of the expansion project was completed, reaching an installed capacity of 780 MW.
Other development activities concerned: (i) the drilling of 8 oil wells in the EA offshore field in the Block 79
(Eni’s interest 5%); (ii) production optimization programs with workover activity in the Gbaran field in the
OML 28 block (Eni’s interest 5%) and Forkados Yokri field in the OML 43 block (Eni’s interest 5%); (iii) the
drilling of 4 oil wells in the western area of the Block 46 (Eni’s interest 5%); and (iv) the completion of an
additional development well of the offshore Bonga field (Eni’s interest 12.5%).
Eni continues the collaboration with the Food and Agriculture Organization (FAO) to foster access to safe
and clean water in Nigeria, mainly in the north-east areas, by drilling boreholes powered with photovoltaic
systems, both for domestic use and irrigation purposes. In 2020 Eni realized 6 wells to achieve a total of
22 wells, including the other wells completed in 2018-2019. Eni’s programs to support local communities
progressed with: (i) access to energy initiatives; (ii) economic programs for diversification purposes, in
particular with the Green River Project; (iii) professional training and scholarship programs; and (iv) reno-
vation and construction of health centers and supply of medical equipment.
Eni holds a 10.4% interest in the Nigeria LNG Ltd joint venture, which runs the Bonny liquefaction plant
located in the Eastern Niger Delta. The plant has treatment capacity of approximately 1,236 bcf/y of feed
gas and a production capacity of 22 mmtonnes/y of LNG. Natural gas supplies to the plant are currently
provided under a gas supply agreement from the SPDC JV (Eni’s interest 5%), TEPNG JV and the NAOC
JV (Eni’s interest 20%). In 2020, the Bonny liquefaction plant processed approximately 1,135 bcf. LNG pro-
duction is sold under long-term contracts and exported mainly to American, Asian and European markets
by the Bonny Gas Transport fleet, wholly owned by Nigeria LNG.
KAZAKHSTAN
Kashagan The development activities of the Kashagan field (Eni’s interest 16.81%) concerned the phased
expansion program of production capacity. The first development phase envisages increasing the pro-
duction capacity up to 450 kbbl/d by upgrading the existing associated gas compression handling. The
ongoing activities, sanctioned in 2020, mainly concerned: (i) increasing gas reinjection capacity by means
of upgrading the existing facilities; and (ii) delivering a part of gas volumes to a new onshore treatment
unit operated by a third party, currently under construction.
As of December 31, 2020, the aggregate costs incurred by Eni for the Kashagan project capitalized in the
financial statements amounted to $10 billion (€8.1 billion at the EUR/USD exchange rate of December 31,
2020). This capitalized amount included: (i) $7.4 billion relating to expenditure incurred by Eni for the devel-
opment of the oil field; and (ii) $2.6 billion relating primarily to accrued finance charges and expenditures for
the acquisition of interests in the Consortium from exiting partners upon exercise of pre-emption rights in
previous years. Costs incurred in the year were €27 million. As of December 31, 2020, Eni’s proved reserves
booked for the Kashagan field amounted to 675 mmboe, reporting an increase from 2019 due to a change
in a marker Brent price used in the reserves estimation process.
Karachaganak Within the gas treatment expansion projects of the Karachaganak field (Eni’s interest 29.25%), ac-
tivities concerned: (i) the ongoing activities of the Karachaganak Debottlenecking project and the construction of
a fourth gas reinjection unit; and (ii) completion of the Front End Engineering Design of the Karachaganak Expan-
sion Project (KEP). This latter project is scheduled to be achieved in several phases. The development program
of the first phase, sanctioned at the end of 2020, provides the construction of a sixth injection line, the drilling of
three additional injection wells and of a new gas compression unit. Start-up is expected in 2024. Furthermore,
the project includes the installation of one additional treatment and compression units.
Management report | Consolidated financial statements | Annex 63
Eni continues its commitment to support local communities in the nearby area of the Karachaganak
field. In particular, activities focused on: (i) professional training; and (ii) realization of kindergartens and
schools, maintenance of bridges and roads, construction of sport centers.
As of December 31, 2020, the aggregate costs incurred by Eni for the Karachaganak project capitalized in
the financial statements amounted to $4.3 billion (€3.5 billion at the EUR/USD exchange rate of Decem-
ber 31, 2020). Costs incurred in the year were €147 million.
As of December 31, 2020, Eni’s proved reserves booked for the Karachaganak field amounted to 507
mmboe, a slightly increase from 2019 mainly due to a change in a marker Brent price used in the reserves
estimation process.
REST OF ASIA
Indonesia In 2020, Eni was awarded the operatorship with 40% interest in the West Ganal exploration
block.
Development activities are related to the offshore Merakes gas project in the operated East Sepinggan
block (Eni’s interest 65%). The project foresees the drilling and the completion of five subsea wells,
which will be tie-back to the Floating Production Unit (FPU) of the Jangkrik producing field (Eni oper-
ator with a 55% interest). Natural gas production will be processed by the FPU and then delivered via
pipeline to the onshore plant, which is connected to the East Kalimantan transport system to feed the
Bontang liquefaction plant or will be sold on a spot basis in the domestic market. Start-up is expected
in 2021.
The activities and initiatives in the fields of access to water and renewable energy progressed to support
the local development areas of Samoja, Kutai Kartanegara and East Kalimantan.
Iraq Development activities concerned the execution of an additional development phase of the ERP (En-
hanced Redevelopment Plan) at the Zubair field (Eni’s interest 41.56%), to achieve a production plateau of 700
kbbl/d. This phase also contemplates utilization of the associated gas for power generation. The production
capacity and relevant facilities to treat the targeted production plateau have been already installed; the field
reserves will be progressively put into production by drilling additional productive wells over the next few years.
Eni’s commitment continues with projects in the fields of education, health, environment and access to
water. In particular: (i) started up activities for the construction of a new school in Zubair City; (ii) pro-
gressed the revamping of two water plants to achieve the distribution of approximately 30 million liters
of drinkable water per day; and (iii) progressed activities for the expansion of Basra Children Cancer and
the supply of medical equipment.
Pakistan In March 2021, Eni signed an agreement to divest the entire upstream activity in the Country includ-
ing interests in eight development and production licenses to Prime International Oil & Gas local company.
In particular, the agreement provides the disposal of the Bhit/Badhra (Eni’s interest 40%) and Kadanwari
(Eni’s interest 18.42%) operated fields, as well as the partecipating interest in the Latif (Eni’s interest
33.3%), Zamzama (Eni’s interest 17.75%) and Sawan (Eni’s interest 23.7%) fields.
United Arab Emirates In 2020, Eni awarded the operatorship with a 70% interest in the Block 3, located
offshore Abu Dhabi. The exploration commitment for the first phase includes exploration studies, the
drilling of exploration and appraisal wells.
In January 2021, production start-up was achieved at the Mahani field located in onshore concession of
Area B (Eni’s interest 50%) in the Emirate of Sharjah, just one year since discovery in January 2020 and
two years after signing the concession agreement. Development activities, sanctioned with the final in-
vestment decision, provide the progressive ramp-up with the tie-back of two additional productive wells.
Drilling activities were already planned.
Eni Annual Report 2020 64
AMERICAS
Mexico In February 2020, exploration activities yielded positive results with the Saasken offshore oil discov-
ery in the operated Block 10 (Eni’s interest 65%).
The development activities concern the full field development program of the operated license Area 1
(Eni’s interest 100%), already in production. Development drilling activities are ongoing and during 2020
were completed producing wells which were linked to the Miztón production platform. A subsequent de-
velopment phase of the project includes the production start-up of the Amoca discovery by means of the
installation of a new leased production platform, currently under construction, as well as the conversion
and upgrading of an FPSO unit that will be completed in 2021 including all linking and treatment facilities.
Production start-up is expected in 2022. During the year, the FEED phase for these two production plat-
forms started up.
Within the cooperation agreement with the local Authorities to identify initiatives relating to health, edu-
cation and environment, as well as economic diversification initiatives to support employment, during the
year the activities concerned: (i) food supply programs; (ii) restructuring of school buildings and construc-
tion of roads; (iii) child medical screening campaigns; (iv) initiatives to support youth employment; and (v)
environmental monitoring program. The signed agreements target to define further projects improving
the sustainable development in the areas close to Eni’s activity in the Country.
FORESTRY PROJECTS
In the decarbonization path, one of the pillars and strategic guidelines of Eni include the forest protec-
tion, conservation and sustainable management projects, in particular in developing Countries. The for-
est projects are considered the most significant at internationally level within climate change mitigation
strategies.
The projects including the REDD+ (Reducing Emissions from Deforestation and forest Degradation)
scheme are a key lever in this context. The REDD+ scheme was designed by the United Nations (in par-
ticular within the UNFCCC - United Nations Framework Convention on Climate Change) and involves con-
servation forest activities to reduce emissions and improve the natural storage capacity of CO2, as well as
supporting, with a different development model, the local communities through socio-economic projects,
in line with sustainable management, forest protection and biodiversity conservation.
In this scheme, Eni’s protection forest activities support national governments, local communities and
UN agencies in the REDD+ strategies, in line with the NDCs (Nationally Determined Contributions) and
National Development Plans and, mainly, the Sustainable Development Goals (SDGs) of UN.
Eni built solid partnerships over time with recognized international developers of REDD+ projects, like
BioCarbon Partners, Terra Global, Peace Parks Foundation, First Climate and Carbonsink, which allows
to oversee every phase of the projects, from the design to the implementation up to verify the reduction
emissions, with an active role in the governance of the project. The Eni’s role is essential also to allow
the alignment with the highest standards for certification of the carbon emissions reduction and social
and environmental effects (such as Verified Carbon Standard - VCS and Climate Community & Biodiver-
sity Standards - CCB), internationally recognized and in line with the qualitative standards, target to be
achieved by Eni.
Eni launched the forestry projects by means of the agreement with BioCarbon Partners to became active
member in the governance of the Luangwa Community Forests Project (LCFP) in Zambia.
Management report | Consolidated financial statements | Annex 65
The LCFP covers an area of approximately 1 million hectares, involves over 170,000 beneficiaries, also
with economic diversification initiatives, and is currently one of the largest REDD + projects in Africa. The
LCFP achieved the CCB (Climate, Community and Biodiversity Standards) “triple gold” issued by interna-
tional no-profit organization Verra, leader in the carbon credits certifying, for its oustanding social and
environmental impact.
Eni committed to purchase carbon credits generated by the LCFP project until 2038. In particular, in No-
vember 2020 Eni achieved the first allowance of carbon credits by the project to offset GHG emissions
equivalent to 1.5 million tonnes of CO2.
Eni is currently considering further different initiatives in several countries, by means of partnerships with
governments and international developers in Africa (Angola, Democratic Republic of Congo, Ghana, Ma-
lawi, Mozambique and Zambia), Latin America (Colombia and Mexico) and Asia (Vietnam and Malaysia).
The medium-long term target is a progressive growth of these initiatives and planned to reach a carbon
credit portfolio on yearly basis to offset over 6 million tonnes of CO2 by 2024, over 20 million tonnes of
CO2 in 2030, as well as over 40 million tonnes of CO2 by 2050.
Eni Annual Report 2020 66
Global Gas & Lng Portfolio
€326 mln
Adjusted operating profit
vs. 2019: +68.9%
112 €/kcm
Average yearly gas price
in Italy
vs. 2019: -35%
37.30 bcm
Average yearly gas sales in Italy
vs. 2019: -1.8% despite the
strong reduction of demand (-5%)
Restarted Damietta
liquefaction plant in
Egypt, with a 7.56 bcm
annual capacity
Hubs prices
LNG sales | bcm
40
30
20
10
0
10.3
10.1
9.5
8.1
8.3
Gas sales by area
7%
6%
30%
57%
64.99 bcm
2018
17
2019
29
2020
12
Spread PSV - TTF (€/kcm)
2016
2017
2018
2019
2020
5.2
2.9
5.2
3.1
4.7
5.6
5.5
4.6
4.8
4.7
Europe
Extra Europe
Italy
European markets
Importers in Italy
Extra Europe
Management report | Consolidated financial statements | Annex 67
KEY PERFORMANCE INDICATORS
TRIR (Total Recordable Injury Rate)
(total recordable injuries/worked hours) x 1,000,000
of which: employees
contractors
Natural gas sales(a)
Italy
Rest of Europe
of which: Importers in Italy
European markets
Rest of world
LNG sales(b)
Employees at year end
of which outside Italy
Direct GHG emissions (Scope 1)
(a) Data include intercomapny sales.
(b) Refers to LNG sales of the GGP segment (included in worldwide gas sales).
(bcm)
(number)
(mmtonnes CO2eq.)
2020
2019
2018
1.15
0.99
1.37
64.99
37.30
23.00
3.67
0.56
0.96
0,00
72.85
37.98
26.72
4.37
0.51
0.40
0.69
76.60
39.17
29.17
3.42
19.33
22.35
25.75
4.69
9.5
700
410
0.36
8.15
10.1
711
418
0.25
8.26
10.3
734
416
0.62
Performance of the year
In 2020, the total recordable injury rate (TRIR) of the workforce amounted to 1.15, due to two minor events.
Direct GHG emissions (Scope 1) increased by 48% compared to 2019, due to a higher number of production
restarts following the discontinued trend in gas demand and venting emissions for maintenance actions
developed at Sergaz plants.
Eni worldwide gas sales amounted to 64.99 bcm, down by 10.8% compared to 2019 (down by 7.86 bcm).
Eni’s sales in Italy (37.30 bcm) decreased by 1.8% compared to 2019 (37.98 bcm).
LNG sales amounted to 9.5 bcm representing a decrease of 5.9% compared to 2019.
Restart of Damietta liquefaction plant
In February 2021, restarted LNG production at the Damietta liquefaction plant (Eni’s interest 50%), coherently
with a series of agreements finalized in March 2021 with the Arab Republic of Egypt (ARE) and the Spanish
partner Naturgy for the resolution of all pending issues and restart the terminal, which was shut down in 2012.
Thanks to these agreements, Eni will take over the contracts for the purchase of natural gas for the plant,
receiving the corresponding liquefaction rights and will allow Eni to directly enter the Spanish gas market,
strengthening its presence in the European gas.
The restart of the plant, with a capacity of 7.56 billion cubic meters per year, enables Eni to strengthen its
strategic objectives in terms of growth of its LNG portfolio and presence in the Eastern Mediterranean region.
NATURAL GAS
SUPPLY OF NATURAL GAS
In 2020, Eni’s consolidated subsidiaries supplied 62.16 bcm of natural gas, down by 8.26 bcm or by 11.7%
from the full year 2019.
Eni Annual Report 2020 68
Gas volumes supplied outside Italy from consolidated subsidiaries (54.69 bcm), imported in Italy or sold
outside Italy, represented approximately 88% of total supplies, decreased by 10.16 bcm or by 15.7% from
the full year 2019. This mainly reflected lower volumes purchased in the Netherlands (down by 3.01 bcm), in
Russia (down by 1.87 bcm), Algeria (down by 1.44 bcm), in Libya (down by 1.42 bcm), partly offset by higher
purchases in Norway (up by 0.76 bcm). Supplies in Italy (7.47 bcm) increased by 34.1% from the full year 2019.
SUPPLY OF NATURAL GAS
Italy
Russia
Algeria (including LNG)
Libya
Netherlands
Norway
United Kingdom
Indonesia (LNG)
Qatar (LNG)
Other supplies of natural gas
Other supplies of LNG
OUTSIDE ITALY
TOTAL SUPPLIES OF ENI'S CONSOLIDATED SUBSIDIARIES
Offtake from (input to) storage
Network losses, measurement differences and other changes
AVAILABLE FOR SALE BY ENI'S CONSOLIDATED SUBSIDIARIES
Available for sale by Eni's affiliates
TOTAL AVAILABLE FOR SALE
(bcm)
2020
2019
2018 Change
% Ch.
7.47
22.49
5.57
24.36
5.22
4.44
1.11
7.19
1.62
1.15
2.47
5.24
3.76
54.69
62.16
0.52
(0.03)
62.65
2.34
6.66
5.86
4.12
6.43
1.75
1.58
2.79
7.90
3.40
64.85
70.42
0.08
(0.22)
70.28
2.57
5.46
26.10
12.02
4.55
3.95
6.75
2.21
3.06
2.56
5.50
1.97
1.90
(1.87)
(1.44)
(1.42)
(3.01)
0.76
(0.13)
(0.43)
(0.32)
(2.66)
0.36
68.67
(10.16)
74.13
(8.26)
0.08
(0.18)
74.03
2.57
0.44
0.19
(7.63)
(0.23)
(7.86)
34.1
(7.7)
(21.6)
(24.2)
(73.1)
11.8
(7.4)
(27.2)
(11.5)
(33.7)
10.6
(15.7)
(11.7)
..
86.4
(10.9)
(8.9)
(10.8)
64.99
72.85
76.60
In 2020, main gas volumes from equity production derived from: (i) certain Eni fields located in the British and
Norwegian sections of the North Sea (3 bcm); (ii) Italian gas fields (2.8 bcm); (iii) Libyan fields (1 bcm); (iv)
Indonesia (0.6 bcm); and (v) the United States (0.3 bcm).
Supplied gas volumes from equity production were 7.7 bcm representing around 12% of total volumes
available for sale.
The available for sale by Eni’s affiliates amounted to 2.34 bcm (down by 8.9% compared to 2019) and mainly
referred to supplied volumes from Oman, United States and Spain.
SALES
In a 2020 scenario characterized by a raising competitive pressure and lower gas demand (about down by
5% and 3% in Italy and in the European Union, respectively, compared to 2019), natural gas sales amounted to
64.99 bcm (including Eni’s own consumption, Eni’s share of sales made by equity-accounted entities), down by
7.86 bcm or 10.8% from the previous year due to the economic downturn caused by the COVID-19 pandemic,
with lower volumes marketed to thermoelectric and industrial segments.
GAS SALES BY ENTITY
Total sales of subsidiaries
Italy (including own consumption)
Rest of Europe
Outside Europe
Total sales of Eni's affiliates (net to Eni)
Rest of Europe
Outside Europe
WORLDWIDE GAS SALES
(bcm)
2020
2019
2018 Change
% Ch.
62.58
70.17
73.68
(7.59)
(10.8)
37.30
21.54
3.74
2.41
1.46
0.95
37.98
25.21
6.98
2.68
1.51
1.17
39.17
(0.68)
(1.8)
27.42
(3.67)
(14.6)
7.09
2.92
1.75
1.17
(3.24)
(46.4)
(0.27)
(10.1)
(0.05)
(3.3)
(0.22)
(18.8)
64.99
72.85
76.60
(7.86)
(10.8)
Management report | Consolidated financial statements | Annex Sales in Italy (37.30 bcm) decreased by 1.8% from 2019 mainly driven by lower sales to thermoelectrical and
industrial segments, partly offset by higher sales to hub. Sales to importers in Italy (3.67 bcm) decreased by
16% from 2019 due to the lower availability of Libyan gas.
Sales in the European markets amounted to 19.33 bcm, a decrease of 13.5% or 3.02 bcm from 2019. Sales in
the Extra European markets of 4.69 bcm decreased by 3.46 bcm or 42.5% from the previous year, due to lower
volumes in the United States and lower LNG sales in the Far East markets.
69
GAS SALES BY MARKET
ITALY
Wholesalers
Italian gas exchange and spot markets
Industries
Power generation
Own consumption
INTERNATIONAL SALES
Rest of Europe
Importers in Italy
European markets:
Iberian Peninsula
Germany/Austria
Benelux
United Kingdom
Turkey
France
Other
Extra European markets
WORLDWIDE GAS SALES
LNG
LNG SALES
Europe
Outside Europe
TOTAL LNG SALES
(bcm)
2020
2019
2018 Change
% Ch.
37.30
12.89
12.73
4.21
1.34
6.13
27.69
23.00
3.67
19.33
3.94
0.35
3.58
1.62
4.59
5.01
0.24
37.98
13.08
12.13
4.62
1.90
6.25
34.87
26.72
4.37
22.35
4.22
2.19
3.78
1.75
5.56
4.47
0.38
39.17
14.67
12.49
4.40
1.50
6.11
37.43
29.17
3.42
25.75
4.65
1.93
5.29
2.22
6.53
4.95
0.18
4.69
64.99
8.15
72.85
8.26
76.60
(0.68)
(0.19)
0.60
(0.41)
(0.56)
(0.12)
(7.18)
(3.72)
(0.70)
(3.02)
(0.28)
(1.84)
(0.20)
(0.13)
(0.97)
0.54
(0.14)
(3.46)
(7.86)
(1.8)
(1.5)
4.9
(8.9)
(29.5)
(1.9)
(20.6)
(13.9)
(16.0)
(13.5)
(6.6)
(84.0)
(5.3)
(7.4)
(17.4)
12.1
(36.8)
(42.5)
(10.8)
(bcm)
2020
2019
2018 Change
% Ch.
4.8
4.7
9.5
5.5
4.6
4.7
5.6
10.1
10.3
(0.7)
0.1
(0.6)
(12.7)
2.2
(5.9)
In 2020, LNG sales (9.5 bcm, included in the worldwide gas sales) decreased by 5.9% from 2019 and mainly
concerned LNG from Qatar, Nigeria, Indonesia and Oman and marketed in Europe, China, Pakistan and Taiwan.
INTERNATIONAL TRANSPORT ACTIVITY
Eni, as shipper, has transport rights on a large European and North African networks for transporting natural gas in
Italy and Europe, which link key consumption basins with the main producing areas (Russia, Algeria, the North Sea,
including the Netherlands, Norway, and Libya).
The Company participates to both entities which operate the pipelines and entities which manage transport rights.
The main international pipelines currently participated or operated by Eni are: i) the TTPC pipeline, 740-kilometer long
which transports natural gas from Algeria; ii) the TMPC pipeline for the import of Algerian gas is 775-kilometer long;
iii) the GreenStream pipeline for the import of Libyan gas (520-kilometer long); and iv) Eni holds an interest in the Blue
Stream underwater pipeline linking the Russian coast to the Turkish coast of the Black Sea. These assets generate a
steady operating profit thanks to the sale of transport rights mainly on a long-term basis.
Eni Annual Report 2020 70
Environmental activities
78 %
6 mln cm
Recovered waste vs. recoverable waste
vs. 2019: +19 p.p.
Groundwater treated in 2020
vs. 2019: +20%
Awarded by ArcelorMittal
of the contract for design
reclamation works at
former Ilva site in Taranto
Started initiatives
outside Italy to
support upstream
activities
Reclamation activities
Reclamation activities are by Eni Rewind, the environmental Eni’s company through an integrated end to end model which ensures
the supervision of reclamation process by planning projects from the early stages in accordance with local institutions and stake-
holders, and the enhancement and reuse of resources in order to make them available for sustainable initiatives, in Italy and abroad.
Eni Rewind applies the most advanced technologies, paying particular attention to on-site and in-site solutions to maximize
efficacy and efficency of the actions.
In 2020, Eni Rewind expands the scope of its activities beyond the group, with the awarding by ArcelorMittal of the contract for
design the reclamation works at former Ilva site in Taranto. The agreement also covers specialist assistance with the process
for the authorities’ approval for securing the plant. Furthermore, through “Progetto Rinnovabili per l’Italia”, have been identified
the reclaimed lands in the industrial areas where to install photovoltaic, biomass plants and concentrated solar power stations.
Management report | Consolidated financial statements | Annex 71
In 2020, a 31MW photovoltaic park was started in Porto Torres area. The produced energy is addressed
in part to the local industrial activities, allowing to avoid emissions of approximately 26 ktonnes per year
of CO2. During the year, another area was identified for the construction of a 34 MW photovoltaic park, in
the design phase.
In addition, the activities related to the project “Ravenna Ponticelle” were carried on and provide, through
an environmental intervention of permanent safety and subsequent redevelopment, the construction of:
(i) a photovoltaic plant; (ii) a bio-remediation and land recovery plant with a biological laboratory; and (iii)
a multipurpose platform created with another local player for the management of up to 60 ktonnes per
year of special waste deriving from environmental and production activities in line with the European
directives of the sector.
Water & Waste Management
The activity is developed by Eni Rewind and is focused on treatment of water at the Eni’s sites, through an
integrated system of interception and conveying of groundwater to treatment plants for their purification.
Currently, 42 water treatment plants are in operation and managed in Italy, with approximately 36 million
cubic meters of treated water in 2020. During the year, the automation and digitization of groundwater
treatment plants were finalized, through the completion of remote control for the main plants. Initiatives
of recovery and reuse of treated water were carried on aimed at the production of demineralized water
for industrial use and relating to the operational plans of reclamation of contaminated sites. In 2020, after
treatment, approximately 6 million cubic meter of water were reused.
Activities for the application of Blue Water technology continue at the Val d’Agri Oil Center in Viggiano. The
project is finalized to the treatment and recovery of production water extracted from the oil field for an in-
dustrial reuse. The project is under authorization. In addition, almost the overall waste are managed, from
both environmental rehabilitation activities and the Group’s production activities in Italy, through the appli-
cation of the best technologies to minimize environmental impacts. In 2020, about 1.7 million tons of waste
were managed, with a share of recovered waste compared to the effective recoverable waste, amounting
to approximately 78%. In the year, initiatives were also implemented outside Italy, including training and
knowledge sharing programs, particularly in Iraq, Nigeria, Egypt, Tunisia, Kazakhstan, Turkmenistan and
Angola to support the ongoing upstream activities in these countries. Furthermore, in January 2021 was
signed a Memorandum of Understanding with the National Authority for oil and the gas of the Kingdom of
Bahrain with the target of identifying and promoting joint initiatives for management, recovery and reuse of
the country’s water, soil and waste resources.
Waste to Fuel
The target of recovery and reuse of resources is realized also through the development of the proprietary
technology Waste to Fuel, which permits to transform FORSU (Organic fraction of municipal solid waste) in
water and bio oil. Bio oil can be addressed to maritime transport, considering its low-sulphur content, or to
help the production of advanced biofuels, while the recovered water can be used for industrial uses. The first
application of this technology is ongoing at Gela plant, through a pilot plant started in 2018.
The construction of a plant with industrial scale is planned at Porto Marghera, in a reclaimed property’s
area. The plan includes the realization of a system with a treatment capacity up to 150 ktons/year of FOR-
SU. During the year, were started the procedures to obtain the authorizations of the project which includes
collaboration with local industrial and productive players in a perspective of synergy with the local context..
Eni Annual Report 2020 72
Energy
Evolution
The Business Group Energy Evolution is engaged on the evolution of the businesses
of power generation, transformation and marketing of products from fossil to bio,
blue and green. In particular, it is focused on growing power generation from renewable
energy and biomethane, it coordinates the bio and circular evolution of the Company’s
refining system and chemical business, and it further develops Eni’s retail portfolio,
providing increasingly more decarbonized products for mobility, household consumption
and small enterprises. The Business Group includes results of the Refining & Marketing
business, chemical business managed by Versalis SpA and its subsidiaries,
retail gas and power managed by Eni gas e luce and the activities of power generation
from thermoelectric plants and renewables.
Management report | Consolidated financial statements | Annex 73
€325 mln
EGL adjusted
operating profit
+17% vs. 2019
€550 mln
biorefining+marketing
adjusted operating profit
+27% vs. 2019
9.6 mln
points of delivery
EGL customer base
+1,6% vs. 2019
340 GW
Energy production
from renewables
more than fourfold
vs. 2019
1 GW
Renewable installed
capacity at advanced stage
of development at period end
in line with the Group’s
targets
1.1mmtonnes/y
biorefining capacity
at 2020 year-end
2 mmtonnes/y by 2024
Eni Annual Report 2020 74
Refining & Marketing and Chemicals
1.1 mmtonnes/y
Biorefinery
capacity
6.65 mmtonnes CO2eq.
Direct GHG emissions (Scope 1)
vs. 2019: -16%
€ 550 mln
Adjusted operating profit
biorefining+marketing
vs. 2019: +27%
4.34 mmtonnes
Sales of petrochemical products
vs. 2019: +1% despite the
decrease of demand
Retail activity in Italy
Biorefineries throughputs
Petrochemical production
and average plant utilization rate
2018
4,223
24.0
1.20
2019
4,184
23.6
1.23
2020
4,134
23.3
1.22
Service stations (number)
Market share (%)
Retail efficiency index (%)
2018
253
63
2019
311
44
2020
710
63
2018
2019
2020
9,483
76
8,068
67
8,073
65
Bio throughputs (kton)
Petrochemical production (kton)
Average biorefineries utilization rate (%)
Average plant utilization rate (%)
Management report | Consolidated financial statements | Annex 75
KEY PERFORMANCE INDICATORS
2020
2019
2018
TRIR (Total Recordable Injury Rate)
(total recordable injuries/worked hours) x 1,000,000
0.80
0.27
0.56
of which: employees
contractors
Bio throughputs
Capacity of biorefineries
Average biorefineries utilization rate
Conversion index of oil refineries
Average oil refineries utilization rate
(ktonnes)
(mmtonnes/year)
(%)
1.17
0.48
710
1.1
63
54
69
0.24
0.29
311
1.1
44
54
88
0.49
0.62
253
0.4
63
54
91
Retail sales of petroleum products in Europe
(mmtonnes)
6.61
8.25
8.39
Service stations in Europe at year end
(number)
5,369
5,411
5,448
Average throughput per service station in Europe
(kliters)
1,390
1,766
1,776
Retail efficiency index
Production of petrochemical products
Sale of petrochemical products
Average petrochemical plant utilization rate
Employees at year end
of which: outside Italy
Direct GHG emissions (Scope 1)
Direc GHG emissions (Scope 1)/refinery throughputs
(raw and semi-finished materials)
(%)
1.22
1.23
1.20
(ktonnes)
8,073
8,068
9,483
4,339
4,295
4,946
(%)
65
67
76
(number)
11,471
11,626
11,457
2,556
2,591
2,594
(mmtonnes CO2eq.)
6.65
7.97
8.19
(tonnes CO2eq./ktonnes)
248
248
253
Performance of the year
Total recordable injury rate (TRIR) of the workforce amounted to 0.80 due to an increase in events recorded
in the R&M business in Ecuador.
Direct GHG emissions (Scope 1) reported a decrease of 16% compared to the previous year, mainly due to
the decline in refining activities.
Direct GHG emissions (Scope 1)/refining throughputs (raw and semi-finished materials) were substantially
stable in 2020. The trend in GHG emissions was proportional to the reduction of processed materials.
In 2020 Eni’s refining throughputs on own account amounted to 17 mmtonnes (excluding the ADNOC Refin-
ing), down by 25% from 2019, due to lower volumes processed in response to a sharply depressed refining
scenario and storage saturation, as a consequence of demand backdrop affected by COVID-19 pandemic.
Production of biofuels from vegetable oil of 0.71 mmtonnes were more than doubled from 2019, driven by
the ramp-up of the Gela biorefinery.
Retail sales in Italy were 4.56 mmtonnes, decreased by 22% from 2019. The market share in 2020 was
23.3% (23,6% in 2019).
Retail sales in the Rest of Europe (2.05 mmtonnes) were down by 16% compared to 2019, due to the
COVID-19 impact on consumptions.
Sales of petrochemical products amounted to 4.34 mmtonnes, up by 1%, despite the drop in demand.
Eni Annual Report 2020
76
Gela biorefinery
In 2020, reached full operation at Gela biorefinery, with a five-fold increase in biofuel productions com-
pared to 2019. The ramp-up of the plant is a step forward along the path to decarbonization of Eni’s ac-
tivities thanks to the EcofiningTM proprietary technology. In March 2021, started the Biomass Treatment
Unit to expand the range of charges to be processed by the plant, allowing the replacement of palm oil
with other sustainable sources.
Circular economy and green chemicals
Implemented on an industrial scale the technologies of plastic waste recycling thanks to the alliance with
Forever Plast in order to develop and market a new range of solid polystyrene products made from reused
packaging.
Signed an agreement with AGR, an Italian company owner of a proprietary technology to treat used elas-
tomers, to develop and market new products and applications in recycled rubber, in collaboration with the
EcoTyre Consortium, which manages a national network for the collection and processing of ELTs (End-of-
Life Tyres).
Signed an agreement with COREPLA (National Consortium for the Collection, Recycling and Recovery of
Plastic Packaging) to develop effective solutions to reutilize plastics, applying Eni’s expertise in the fields of
gasification and chemical recycling by means of pyrolysis.
In 2020, Versalis joined the Circular Plastics Alliance (CPA) to contribute to the European target of using 10
million tonnes of recycled plastic in new products by 2025. The mission of this alliance, promoted by the
European Commission, is to promote the recycling of plastic in Europe and at the same time to develop the
market of second raw materials.
Versalis entered the market of agricultural protection, thanks to the alliance with AlphaBio Control, a re-
search and development company engaged in the production of natural formulations for the protection
of crops, aimed at the production of herbicides and biocides for the disinfection of plant-based and biode-
gradable surfaces, using the active ingredients produced from the chemistry from the renewable sources
platform of Porto Torres.
Business developments
Crescentino plant is being upgraded. This strategic hub for the production of electricity and chemical feed-
stocks from residual biomass, is not in competition with the food supply chain and is based on an ad-
vanced proprietary technology. First application of this technology was the production of a bioethanol dis-
infectant from corn glucose syrup, based on the formulation provided by the WHO for medical applications;
restarted the biomass power plant for renewable electricity generation. Studies are ongoing to develop the
production process of second-generation sugar bioplastics.
In July 2020, Versalis finalized the acquisition of a 40% interest in Finproject, a company engaged in the
production of high-performance polymers, increasing exposure to products more resilient to the volatility
of the chemical. This initiative allows Eni to exploit value from the integration of Finproject’s positioning in
the market of high value added applications with the industrial and technological leadership of Versalis.
Proprietary technologies
In 2021, Versalis has licensed to Enter Engineering Pte Ltd a low density polyethylene/ethyl vinyl acetate
(LDPE/EVA) swing unit to be built as part of a new gas to chemical complex based on MTO-methanol to
Management report | Consolidated financial statements | Annex 77
olefins technology to be located in the Karakul area in the Bukhara region of the Republic of Uzbekistan.
Versalis’ background and expertise as licensor of its proprietary technologies relies on its enduring R&D and
lab & pilot plant testing capabilities, and full-scale operational experience at its own production facilities.
REFINING & MARKETING
SUPPLY AND TRADING
In 2020, were purchased 17.37 mmtonnes of crude (compared with 23.43 mmtonnes in 2019), of which 3.55
mmtonnes by equity crude oil, 10.23 mmtonnes on the spot market and 3.59 mmtonnes by producer’s Coun-
tries with term contracts. The breakdown by geographic area was as follows: 26% of purchased crude came
from the Middle East, 17% from Central Asia, 16% from Russia, 16% from Italy, 8% from West Africa, 7% from
North Africa, 4% from North Sea and 6% from other areas.
REFINING
PURCHASES
Equity crude oil
Other crude oil
Total crude oil purchases
Purchases of intermediate products
Purchases of products
TOTAL PURCHASES
(mmtonnes)
2020
2019
2018 Change
% Ch.
3.55
4.24
4.14
(0.69)
(16.3)
13.82
19.19
18.48
(5.37)
(28.0)
17.37
23.43
22.62
(6.06)
(25.9)
0.11
0.26
0.65
(0.15)
(57.7)
10.31
11.45
11.55
(1.14)
(10.0)
27.79
35.14
34.82
(7.35)
(20.9)
Consumption for power generation
(0.35)
(0.35)
(0.35)
Other changes(a)
TOTAL AVAILABILITY
(0.69)
(2.08)
(1.27)
1.39
66.8
26.75
32.71
33.20
(5.96)
(18.2)
(a) Include change in inventories, decrease due to transportation, consumption and losses.
In 2020, Eni’s refining throughputs on own account were 17 mmtonnes decreased by 25.2% from 2019, due to
the lower throughputs in Italy, as a result of the depressed refining scenario and storage saturation as conse-
quence of COVID-19 impact on demand. These negatives were partially offset by the restart of the Bayernoil
plants and PCK in Germany.
In Italy, the refinery throughputs (14.82 mmtonnes) decreased by 28.4% from 2019 following the depressed
refining scenario.
Outside Italy, Eni’s refining throughputs on own account were 2.18 mmtonnes, up by approximately 140
ktonnes or 6.9% due to the restart of Vohburg plant and PCK in Germany. Total throughputs in wholly-owned
refineries were 12.72 mmtonnes, down by 4.54 mmtonnes or 26.3% compared with 2019.
The refinery utilization rate, ratio between throughputs and refinery capacity, is 69%.
Approximately 21.2% of processed crude was supplied by Eni’s Exploration & Production segment, increased
from 2019 (18.9%).
BIOREFINERY
The volumes of biofuels processed from vegetable oil were more than doubled from the corresponding period
of 2019 with an increase of 0.40 mmtonnes, driven by the production ramp-up at Gela biorefinery.
Eni Annual Report 2020 78
AVAILABILITY OF REFINED PRODUCTS
ITALY
At wholly-owned refineries
Less input on account of third parties
At affiliated refineries
Refinery throughputs on own account
Consumption and losses
Products available for sale
(mmtonnes)
2020
2019
2018 Change
% Ch.
12.72
17.26
16.78
(4.54)
(26.3)
(1.75)
(1.25)
(1.03)
(0.50)
(40.0)
3.85
4.69
4.93
(0.84)
(17.9)
14.82
20.70
20.68
(5.88)
(28.4)
(0.97)
(1.38)
(1.38)
0.41
29.7
13.85
19.32
19.30
(5.47)
(28.3)
Purchases of refined products and change in inventories
7.18
7.27
7.50
(0.09)
(1.2)
Products transferred to operations outside Italy
Consumption for power generation
Sales of products
Bio throughputs
OUTSIDE ITALY
Refinery throughputs on own account
Consumption and losses
Products available for sale
Purchases of refined products and change in inventories
Products transferred from Italian operations
Sales of products
(0.66)
(0.68)
(0.54)
(0.35)
(0.35)
(0.35)
0.02
0.00
2.9
0.0
20.02
25.56
25.91
(5.54)
(21.7)
0.71
0.31
0.25
0.40
128.3
2.18
2.04
2.55
(0.17)
(0.18)
(0.20)
2.01
3.39
0.66
6.06
1.86
4.17
0.68
6.71
2.35
4.12
0.54
0.14
0.01
0.15
6.9
5.6
8.1
(0.78)
(18.7)
(0.02)
7.01
(0.65)
(2.9)
(9.7)
Refinery throughputs on own account
17.00
22.74
23.23
(5.74)
(25.2)
of which: refinery throughputs of equity crude on own account
3.55
4.24
4.14
(0.69)
(16.3)
Total sales of refined products
Crude oil sales
TOTAL SALES
26.08
32.27
32.92
(6.19)
(19.2)
0.67
0.44
0.28
0.23
52.3
26.75
32.71
33.20
(5.96)
(18.2)
MARKETING OF REFINED PRODUCTS
In 2020, retail sales of refined products (26.08 mmtonnes) were down by 6.19 mmtonnes or by 19.2% from
2019, due to the COVID-19 crisis which negatively affected sales in Italy and in the rest of Europe.
PRODUCT SALES IN ITALY AND OUTSIDE ITALY
Retail
Wholesale
Petrochemicals
Other sales
Sales in Italy
Retail rest of Europe
Wholesale rest of Europe
Wholesale outside Europe
Other sales
Sales outside Italy
(mmtonnes)
2020
2019
2018 Change
% Ch.
4.56
5.75
0.61
9.10
5.81
7.68
0.83
5.91
7.54
0.96
(1.25)
(21.5)
(1.93)
(25.1)
(0.22)
(26.5)
11.24
11.50
(2.14)
(19.0)
20.02
25.56
25.91
(5.54)
(21.7)
2.05
2.40
0.48
1.13
2.44
2.63
0.48
1.16
2.48
2.82
0.47
1.24
(0.39)
(16.0)
(0.23)
(8.7)
(0.03)
(2.6)
(9.7)
6.06
6.71
7.01
(0.65)
TOTAL SALES OF REFINED PRODUCTS
26.08
32.27
32.92
(6.19)
(19.2)
Management report | Consolidated financial statements | Annex
79
Retail sales in Italy
In 2020, retail sales in Italy were 4.56 mmtonnes, with a decrease compared to 2019 (1.25 mmtonnes or
down by 21.5%) as consequence of the restrictive measures implemented mainy in the second quarter dur-
ing the pandemic peak. Average throughput per service station (1,206 kliters) decreased by 380 kliters from
2019 (1,586 kliters). Eni’s retail market share of 2020 was 23.3%, slightly down from 2019 (23.6%).
As of December 31, 2020, Eni’s retail network in Italy consisted of 4,134 service stations, lower by 50 units
from December 31, 2019 (4,184 service stations), resulting from the negative balance of acquisitions/re-
leases of lease concessions (46 units), closure of low throughput stations (3 units) and a decrease of 1
motorway concession.
RETAIL AND WHOLESALES SALES OF REFINED PRODUCTS
Italy
Retail sales
Gasoline
Gasoil
LPG
Others
Wholesale sales
Gasoil
Fuel Oil
LPG
Gasoline
Lubricants
Bunker
Jet fuel
Other
Outside Italy (retail+wholesale)
Gasoline
Gasoil
Jet fuel
Fuel Oil
Lubricants
LPG
Other
(mmtonnes)
2020
2019
2018 Change
% Ch.
10.31
13.49
13.45
(3.18)
(23.6)
4.56
1.16
3.10
0.27
0.03
5.75
3.11
0.02
0.18
0.30
0.08
0.63
0.70
0.73
4.93
1.13
2.73
0.09
0.13
0.09
0.50
0.26
5.81
1.44
3.95
0.38
0.04
7.68
3.41
0.06
0.18
0.47
0.08
0.77
1.92
0.79
5.55
1.31
3.02
0.29
0.09
0.09
0.50
0.25
5.91
(1.25)
(21.5)
1.46
4.03
0.38
0.04
(0.28)
(19.4)
(0.85)
(21.5)
(0.11)
(28.9)
(0.01)
(25.0)
7.54
(1.93)
(25.1)
3.25
0.07
0.20
0.44
0.08
0.80
1.98
0.72
(0.30)
(8.8)
(0.04)
(66.7)
0.00
0.0
(0.17)
(36.2)
0.00
0.0
(0.14)
(18.2)
(1.22)
(63.5)
(0.06)
(7.6)
5.77
(0.62)
(11.2)
1.30
3.16
0.33
0.14
0.09
0.50
0.25
(0.18)
(13.7)
(0.29)
(9.6)
(0.20)
(69.0)
0.04
0.00
0.00
0.01
44.4
0.0
0.0
4.0
TOTAL RETAIL AND WHOLESALES SALES
15.24
19.04
19.22
(3.80)
(20.0)
Retail sales in the Rest of Europe
Retail sales in the Rest of Europe were 2.05 mmtonnes, recorded a reduction from 2019 (down by 16%) mainly
due to the restrictive measures adopted against COVID-19 in the second quarter during the pandemic peak.
At December 31, 2020, Eni’s retail network in the Rest of Europe consisted of 1,235 units, increasing by 8 units
from December 31, 2019, mainly in Germany and France. Average throughput (1,980 kliters) decreased by 376
kliters compared to 2019 (2,356 kliters).
Eni Annual Report 2020 80
Wholesale and other sales
Wholesale sales in Italy amounted to 5.75 mmtonnes, decreasing by 25.1% from the full year of 2019, due to
the contraction of industrial activity and in particular, for lower sales of jet fuel following a deep crisis of the
airlines sector.
Wholesale sales in the Rest of Europe were 2.40 mmtonnes, down by 8.7% from 2019 due to lower sold
volumes mainly in Spain, partly offset by higher volumes marketed in Germany for higher product availa-
bility due to the restart of Vohburg plant.
Supplies of feedstock to the petrochemical industry (0.61 mmtonnes) decreased by 26.5%. Other sales in
Italy and outside Italy (10.23 mmtonnes) decreased by 2.17 mmtonnes or down by 17.5% mainly due to lower
volumes sold to oil companies.
CHEMICALS
PRODUCT AVAILABILITY
Intermediates
Polymers
Production
Consumption and losses
Purchases and change in inventories
TOTAL AVAILABILITY
Intermediates
Polymers
TOTAL SALES
ktonnes
2020
2019
2018 Change
% Ch.
5,861
5,818
7,130
2,212
2,250
2,353
8,073
8,068
9,483
43
(38)
5
(4,366)
(4,307)
(5,085)
(59)
632
534
548
4,339
4,295
4,946
2,549
2,529
3,095
1,790
1,766
1,851
4,339
4,295
4,946
98
44
20
24
44
0.7
(1.7)
0.1
(1.4)
18.4
1.0
0.8
1.4
1.0
Petrochemical sales of 4,339 ktonnes slightly increased from 2019 (up by 44 ktonnes, or 1%) thanks to the
positive performance reported in the intermediate, styrenics and polyethylene segments due to the accelerated
economic recovery in the fourth quarter, mainly in Asia and lower competitive pressure, partly mitigated by the
generalized reduction in volumes during the pandemic peak in the second quarter and by the global economic
downturn which affected all the main end-markets, particularly the automotive sector, and the subsequent con-
servative position of operators which induced to decrease storage.
Average unit sales prices of the intermediates business decreased by 23,3% from 2019, with aromatics and olefins
down by 36.4% and 25.4%, respectively. The polymers reported a decrease of 15% from 2019.
Management report | Consolidated financial statements | Annex PRODUCT AVAILABILITY
Intermediates
Polymers
Production
Intermediates
Polymers
TOTAL SALES
Consumption and losses
Purchases and change in inventories
TOTAL AVAILABILITY
ktonnes
2020
2019
2018 Change
% Ch.
(4,366)
(4,307)
(5,085)
(59)
5,861
5,818
7,130
2,212
2,250
2,353
8,073
8,068
9,483
632
534
548
4,339
4,295
4,946
2,549
2,529
3,095
1,790
1,766
1,851
4,339
4,295
4,946
43
(38)
5
98
44
20
24
44
0.7
(1.7)
0.1
(1.4)
18.4
1.0
0.8
1.4
1.0
81
Petrochemical production of 8,073 ktonnes were substantially unchanged from 2019 (up by 5 ktonnes) due
to higher production of intermediates business (up by 43 ktonnes), in particular olefins; these higher volumes
were partially offset by lower productions of elastomers and polyethylene down by 18 ktonnes and 23 ktonnes
from 2019, respectively.
The main decreases in production were registered at the Priolo site (down by 207 ktonnes), due to the
prolonged planned shutdown and at Brindisi (down by 33 ktonnes), these reductions were offset by higher
volumes at Porto Marghera plant (up by 246 ktonnes).
Nominal capacity of plants slightly decreased from the 2019. The average plant utilization rate calculated on
nominal capacity was 65%, decreased from 2019 (67%) following the aforementioned shutdowns.
BUSINESS TRENDS
Intermediates
Intermediates revenues (€1,385 million) decreased by €406 million from 2019 (down by 22.7%) reflecting both
the lower commodity prices scenario and the lower product availability due to the standstills occurred in 2020.
Sales increased, in particular for aromatics (up by 2.4%), olefins (up by 0.8%) following the higher product
availability. Average unit prices decreased by 23.3%, in particular aromatics (down by 36.4%), olefins (down
by 25.4%) and derivatives (down by 5.9%). Intermediates production (5,861 ktonnes) registered an increase of
0.7% from 2019. Increases were recorded in olefins (up by 1.7%) and decreases in derivatives (down by 3.9%)
and in aromatics (down by 0.8%).
Polymers
Polymers revenues (€1,888 million) decreased by €313 million or 14.2% from 2019 due to the decrease of the
average unit prices (down by 15%). The styrenics business benefitted of the increase of volumes sold (up by
4.0%) for higher product availability; decrease of sale prices (down by 16.0%). Polyethylene volumes increased
(up by 2.0%) for higher demand. Average prices decreased by 13.4%. In the elastomers business, a decrease of
sold volumes (down by 4.6%) was attributable to lattices (down by 8.4%), EPR (down by 6.5%), TPR (down by
4.8%), SBR rubbers (down by 4.6%) and BR (down by 3.0%). Higher styrenics volumes sold (up by 4.0%) were
mainly attributable to ABS (up by 7.8 %), expandable polystyrene (up by 5.1%) and compact polystyrene (4.5%),
these higher volumes were partly offset by lower sales of styrene (down by 12.7%). Overall, the sold volumes
of polyethylene business reported a reported an increase (up by 2.0%) with higher sales of LDPE and EVA (up
by 4.6% and 7.3%, respectively), while volumes of LLDPE decreased (down by 2.3%). In addition, average sales
prices decreased (down by 13.4%). Polymers productions (2,212 ktonnes) decreased from the 2019 due to the
lower productions of elastomers (down by 6.7%), polyethylene (down by 1.9%).
Eni Annual Report 2020 82
Eni gas e luce, Power & Renewables
€465 mln
Adjusted operating profit
of the segment
vs. 2019: +26%
7.68 bcm
Retail gas sales
12.49 TWh
Retail power sales to end
customers
vs. 2019: +14.4% thanks to the
growth of customer portfolio
outside Italy
339.6 GWh
Production from renewables
increased more than fivefold
vs. 2019
Retail customers
(mln of POD)
Total Recordable Injury Rate (TRIR)
0 injuries among employees
Renewables installed capacity by area
2018
9.2
2019
9.4
2020
9.6
Gas and power customers
2018
0.31
2019
0.30
2020
0.0
TRIR employees (total recordable
injuries/worked hours)
28%
27%
307 MW
2%
3%
3%
16%
Italy
Australia
Kazakhstan
USA
21%
Pakistan
Tunisia
Algeria
Management report | Consolidated financial statements | Annex 83
KEY PERFORMANCE INDICATORS
2020
2019
2018
Total recordable incident rate (TRIR)
(total recordable injuries/worked hours) x 1,000,000
of which: employees
contractors
Eni Gas e Luce
Retail gas sales
Retail power sales to end customers
Retail customers
Power & Renewables
Power sales in the open market
Thermoelectric production
Energy production from renewable sources
Renewable installed capacity at period end
Employees at year end
of which: outside Italy
Direct GHG emissions (Scope 1)
Direct GHG emissions (Scope 1)/equivalent produced electricity (Eni Power)
0.32
0.00
0.73
0.62
0.30
0.95
(bcm)
(TWh)
7.68
8.62
12.49
10.92
(milion of POD)
9.57
9.42
(TWh)
(GWh)
(MW)
25.33
20.95
339.6
307
28.28
21.66
60.6
174
0.60
0.31
1,16
9.13
8.39
9.19
28.54
21.62
11.6
40
2,092
2,056
2,056
413
9.63
391
358
337
10.22
10.47
394
402
(mmtonnes CO2eq.)
(gCO2eq./kWh eq.)
Performance of the year
The total recordable injury rate (TRIR) of the workforce amounted to 0.32, 48% better than the previous year.
Achieved the target of zero injuries for employees and a remarkable improvement in the contractors’ index.
Direct GHG emissions (Scope 1) reported an improved performance (up by 6% compared to 2019), as a re-
sult of lower productions connected to the pandemic crisis and maintenance standstill at the Ferrara plant.
Direct GHG emissions (Scope 1)/equivalent produced electricity slightly decreased from 2019 (down by
0.7%) following the reduced use of syngas at the Ferrera Erbognone plant, with an improved effect on the
emission index.
Retail gas sales amounted to 7.68 bcm, down by 10.9% compared to 2019. The decrease was mainly due
to lower sales marketed to the small and medium enterprises and resellers segments.
Retail power sales to end customers amounted to 12.49 TWh, recording an increase of 14.4% compared to
2019, leveraging on growth of the customer base outside Italy.
Power sales in the open market amounted to 25.33 TWh, down by 10.4% following the economic slowdown
due to the restrictive measures implemented during the pandemic.
Energy production from renewable sources amounted to 339.6 GWh, more than a five-fold increase from
the comparative period (60.6 GWh in the 2019) due to the entry in exercise of new capacity and the contri-
bution of the acquired assets in the USA.
As of December 31, 2020, the renewable installed capacity was 307 MW: 80% attributable to photovoltaic
plants (including installed storage capacity) and 20% attributable to wind farms.
Retail gas and power business developments
In line with the strategy of digital and technological business development, Eni through its subsidiary Eni gas
e luce, acquired a 20% interest in Tate Srl in June 2020, a start-up operating in the activation and management
of electricity and gas contracts through digital solutions. Furthermore, in July 2020, was launched a strategic
partnership with OVO targeting the residential market in France to raise customer awareness for a responsible
use of energy and access to zero-emission technologies leveraging digitalization.
Eni Annual Report 2020
84
In line with the target to increase the customer portfolio in Europe, in January 2021 was signed an agreement
between Eni gas e luce and Grupo Pitma for the 100% acquisition of Aldro Energía with a 250,000 customers
portfolio mainly in Spain and Portugal and focused on small and medium-sized enterprises. The transaction
is subject to the approval of the relevant authorities.
Transition to sustainable mobility
In line with the strategy of decarbonization and energy transition focused on sale of low carbon products,
in February 2021, Eni gas e luce signed an agreement with Be Charge, a company of the Be Power Group
SpA, aimed at the development of infrastructure for electric mobility, which provides for the nationwide
installation of co-branded public charging stations for electric vehicles that will be powered by renewable
energy supplied by Eni gas e luce.
Expansion of renewables business
In 2020, continued the expansion in the international market thanks to the strategic partnership with the Italian
Group Falck; in particular, in the USA were developed the following initiatives:
acquired in March a 49% share of Falck’s photovoltaic plants in operation in the Country (57 MW net to Eni);
finalized in November, the acquisition from Building Energy SpA of 62 MW of operating capacity (30.2 MW
net to Eni) in wind and solar plants and a pipeline of wind projects up to 160 MW. Production in operation will
avoid more than 93 ktonnes of CO2 emissions per year;
acquired in November a 30 MW solar project “ready to build” in Virginia from Savion LLC (14.5 MW net to
Eni). The plant will allow to avoid over 33 ktonnes of CO2 emissions per year.
Started in July a photovoltaic plant at Volpiano (total capacity of 18 MW), with an expected production of 27
GWh/y, avoiding 370 ktonnes of CO2 emissions over the service life of the plant.
In February 2021, signed an agreement with X-Elio, a Spanish leader company, for the acquisition of three
photovoltaic projects located in the Southern region of Spain with a total capacity of 140 MW.
Relating to the wind segment, finalized the acquisition from Asja Ambiente of three wind projects for a total
capacity of 35.2 MW expected to produce approximately 90 GWh/y, avoiding around 38 ktonnes of CO2
emissions per year.
Signed a Sale and Purchase Agreement for the acquisition from Equinor and SSE Renewables of a 20%
share of the offshore wind project Dogger Bank (A and B) in the United Kingdom, which will be the largest
wind power facility in the world, for a total capacity of 2.4 GW at a full capacity. The construction phase is
expected to be completed in 2023-2024. This transaction, finalized at the end of February 2021, will contrib-
ute 480 MW to the renewable generation capacity and to Eni’s growth targets.
ENI GAS E LUCE
GAS DEMAND
Eni operates in a liberalized market where energy customers are allowed to choose the gas supplier and, ac-
cording to their specific needs, to evaluate the quality of services and offers. Overall Eni supplies 9.6 million
retail clients (gas and electricity) in Italy and Europe. In particular, clients located all over Italy are 7.7 million.
Management report | Consolidated financial statements | Annex
GAS SALES BY MARKET
(bcm)
ITALY
Resellers
Industries
Small and medium-sized enterprises and services
Residential
INTERNATIONAL SALES
European markets:
France
Greece
Other
RETAIL GAS SALES
2020
5.17
0.23
0.28
0.70
3.96
2.51
2.08
0.34
0.09
7.68
2019
5.49
0.33
0.30
0.87
3.99
3.13
2.69
0.35
0.09
8.62
85
3.96
Gas sales in Italy
(bcm)
2018
Change
5.83
(0.32)
% Ch.
(5.8)
(0.10)
(30.3)
(0.02)
(6.7)
0.45
0.39
0.79
4.20
(0.17)
(19.5)
0.70
(0.03)
(0.8)
5.17 bcm
3.30
(0.62)
(19.8)
2.94
0.24
0.12
(0.61)
(22.7)
(0.01)
0.00
(2.9)
0.0
9.13
(0.94)
(10.9)
0.28
0.23
Residential
Industriali
Wholesalers
Small and
medium-sized
enterprises
and services
RETAIL GAS SALES
In 2020, natural gas sales in Italy and in the rest of Europe amounted to 7.68 bcm, down by 0.94 bcm or 10.9%
from the previous year. Sales in Italy amounted to 5.17 bcm down by 5.8% compared to 2019, the reduction
was mainly due to lower volumes marketed at small and medium enterprises and resellers segments; the
reduction reported in the residential segment was mitigated by the positive weather effect mainly in the last
quarter of the year.
Sales in the European markets (2.51 bcm) reported a reduction of 19.8% or 0.62 bcm compared to 2019. In
France, sales decreased by 22.7% due to lower volumes marketed to industrial customers. In Greece and Slove-
nia sales were substantially in line with the comparative period.
RETAIL POWER SALES TO END CUSTOMERS
In 2020, retail power sales to end customers, managed by Eni gas e luce and the subsidiaries in France
and Greece, amounted to 12.49 TWh, an increase by 14.4% from 2019, due to growth of retail customers
portfolio (up by 270,000 customers vs. 2019) and higher volumes sold to the retail and industrial segments
in Europe.
POWER
AVAILABILITY OF ELECTRICITY
Eni’s power generation sites are located in Brindisi, Ferrera Erbognone, Ravenna, Mantova, Ferrara and
Bolgiano. As of December 31, 2020, installed operational capacity of Enipower’s power plants was 4.6
GW. In 2020, thermoelectric power generation was 20.95 TWh, substantially in line compared to 2019.
Electricity trading (17.09 TWh) reported a decrease of 4.2% from 2019, thanks to the optimization of
inflows and outflows of power.
POWER SALES IN THE OPEN MARKET
In 2020, power sales in the open market were 25.33 TWh, representing a reduction of 10.4% compared to
2019, due to economic downturn.
Eni Annual Report 2020
86
Purchases of natural gas
Purchases of other fuels
Power generation
Steam
AVAILABILITY OF ELECTRICITY
Power generation
Trading of electricity(a)
Availability
Power sales in the open market
(mmcm)
(ktoe)
(TWh)
(ktonnes)
(TWh)
2020
4,346
160
20.95
7,591
2020
20.95
17.09
38.04
25.33
2019
4,410
276
21.66
7,646
2019
21.66
17.83
39.49
28.28
2018
Change
% Ch.
4,300
356
21.62
7,919
(64)
(116)
(0.71)
(55)
(1.5)
(42.0)
(3.3)
(0.7)
2018
Change
% Ch.
21.62
15.45
37.07
28.54
(0.71)
(0.74)
(1.45)
(3.3)
(4.2)
(3.7)
(2.95)
(10.4)
(a) Includes positive and negative imbalances (difference between the electricity effectively fed-in and as scheduled).
RENEWABLES
Eni is engaged in the renewable energy business (solar and wind) through the business unit Energy Solutions
aiming at developing, constructing and managing renewable energy producing plant.
Eni’s targets in this field will be reached by leveraging on an organic development of a diversified and balanced
portfolio of assets, integrated with selective asset and projects acquisitions as well as international strategic
partnership.
ENERGY FROM RENEWABLE SOURCES AND INSTALLED CAPACITY AT PERIOD END
Energy production from renewable sources
(GWh)
of which: photovoltaic
wind
of which: Italy
outside Italy
of which: own consumption(a)
Renewable installed capacity at period end
(MW)
of which: photovoltaic
wind
installed storage capacity
(a) Electricity for Eni’s production sites consumptions.
2020
339.6
223.2
116.4
112.2
227.4
23%
307
77%
20%
3%
2019
2018
Change
% Ch.
279
162.6
116.4
58.9
220.1
..
..
..
..
133
76.4
11.6
11.6
11.6
75%
40
100%
60.6
60.6
53.3
7.3
60%
174
76%
20%
4%
Energy production from renewable sources amounted to 339.6 GWh (of which 223.2 GWh photovoltaic and
116.4 GWh wind) up by 279 GWh compared to 2019.
The increase in production compared to the previous year benefitted from the entry in operations of new
capacity, as well as the contribution of assets already operating in the United States, acquired in 2020.
Management report | Consolidated financial statements | Annex
87
Follows breakdown of the installed capacity by Country and technology:
RENEWABLE INSTALLED CAPACITY AT PERIOD END (ENI’S SHARE)
(MW)
(technology)
2020
2019
2018
ITALY
OUTSIDE ITALY
Algeria
Australia
Pakistan
Tunisia
United States
Total photovoltaic installed capacity
United States
Kazakhstan
Total wind installed capacity
TOTAL INSTALLED CAPACITY AT PERIOD END
(INCLUDING INSTALLED STORAGE POWER)
of which installed storage power
PLANTS IN OPERATION AT PERIOD END
fotovoltaic
fotovoltaic
fotovoltaic
fotovoltaic
fotovoltaic
fotovoltaic
wind
wind
35
5
5
82
58
5
39
10
4
84
160
5
64
10
9
72
244
140
40
15
48
63
307
8
30
34
34
174
7
15
-
40
-
12
At the end of 2020, the total installed and sanctioned capacity amounted to 1GW: the total installed capacity
for the generation of energy from renewable sources amounted to 307 MW (in Eni share and including the sto-
rage power), of which about 84 MW in Italy and 223 MW abroad, with 30 plants in operation; the capacity under
construction/advanced stage of development amounted to about 0.7 GW and mainly relating to the Dogger
Bank A and B offshore wind projects in the UK (480 MW in Eni share) and the new capacity in Kazakhstan (98
MW, of which 48 MW onshore wind and 50 MW solar photovoltaic).
Eni Annual Report 2020
88
Financial review
Eni’s new organizational structure
and segment reporting
Effective July 1, 2020, Eni’s management has redesigned the
macro-organizational structure of the Group, in line with its new
long-term strategy, disclosed on February 2020 to the market
and aimed at transforming the Company into a leader in the
production and marketing of decarbonized energy products.
The new organization is based on two new Business Groups:
Natural Resources, to build up the value of Eni’s Oil & Gas
upstream portfolio, with the objective of reducing its carbon
footprint by scaling up energy efficiency and expanding pro-
duction in the natural gas business, and its position in the
wholesale market. Furthermore, it will focus its actions on the
development of carbon capture and compensation projects.
The Business Group will incorporate the Company’s Oil & Gas
exploration, development and production activities, natural gas
wholesale via pipeline and LNG. In addition, it will include for-
ests conservation (REDD+) and carbon storage projects. The
company Eni Rewind (environmental activities), will also be
consolidated in this Business Group.
Energy Evolution, will focus on the evolution of the businesses
of power generation, transformation and marketing of products
from fossil to bio, blue and green. In particular, it will focus on
growing power generation from renewable energy and biom-
ethane, it will coordinate the bio and circular evolution of the
Company’s refining system and chemical business, and it will
further develop Eni’s retail portfolio, providing increasingly more
decarbonized products for mobility, household consumption
and small enterprises. The Business Group will incorporate the
activities of power generation from natural gas and renewa-
bles, the Refining and Chemicals businesses, Retail Gas & Pow-
er and mobility Marketing. The companies Versalis (chemical
products) and Eni gas e luce will also be consolidated in this
Business Group.
The new organization represents a fundamental step to imple-
ment Eni’s strategy to become leader in the supply of decar-
bonized products by 2050 combining value creation, sustaina-
bility and financial resilience.
In re-designing the Group’s segment information for financial
reporting purposes, the management evaluated that the com-
ponents of the Company whose operating results are regularly
reviewed by the Chief Operating Decision Maker (CEO) to make
decisions about the allocation of resources and to assess
performances would continue being the single business units
which are comprised in the two newly-established Business
Groups, rather than the two groups themselves. Therefore, in
order to comply with the provisions of the international report-
ing standard that regulates the segment reporting (IFRS 8), the
new reportable segments of Eni, substantially confirming the
pre-existing setup, are identified as follows:
Exploration & Production: research, development and pro-
duction of oil, condensates and natural gas, forestry conser-
vation (REDD+) and CO2 capture and storage projects.
Global Gas & LNG Portfolio: supply and sale of wholesale
natural gas by pipeline, international transport and purchase
and marketing of LNG. It includes gas trading activities final-
ized to hedging and stabilizing the trade margins, as well as
optimising the gas asset portfolio.
Refining & Marketing and Chemicals: supply, processing, dis-
tribution and marketing of fuels and chemicals. The results of
the Chemicals segment were aggregated with the Refining &
Marketing performance in a single reportable segment, because
these two operating segments have similar economic returns. It
comprises the activities of trading oil and products with the aim
to execute the transactions on the market in order to balance the
supply and stabilize and cover the commercial margins.
Eni gas e luce, Power & Renewables: retail sales of gas, elec-
tricity and related services, production and wholesale sales
of electricity from thermoelectric and renewable plants. It in-
cludes trading activities of CO2 emission certificates and for-
ward sale of electricity with a view to hedging/optimising the
margins of the electricity.
Corporate and Other activities: includes the main business
support functions, in particular holding, central treasury, IT, hu-
man resources, real estate services, captive insurance activi-
ties, research and development, new technologies, business
digitalization and the environmental activity developed by the
subsidiary Eni Rewind.
According to the requirements of IFRS 8, 2019 and 2018 com-
parative periods have been restated to adjust them to the
change of the segment information, as follows:
(€ million)
Adjusted net profit (loss)
Exploration & Production
Gas & Power
Global Gas & LNG Portfolio
Refining & Marketing and Chemicals
EGL, Power & Renewables
Corporate and other activities
Impact of unrealized intragroup profit elimination and other consolidation adjustments
2019
2018
As published
As restated As published
As restated
8,597
8,640
585
21
(624)
(25)
8,597
8,640
193
21
370
(602)
(25)
11,240
10,850
543
380
(606)
73
11,240
10,850
278
360
262
(583)
73
Management report | Consolidated financial statements | Annex PROFIT AND LOSS ACCOUNT
Sales from operations
Other income and revenues
Operating expenses
Other operating income (expense)
Depreciation, depletion, amortization
Net impairment reversals (losses) of tangible
and intangible and right-of-use assets
Write-off of tangible and intangible assets
Operating profit (loss)
Finance income (expense)
Income (expense) from investments
Profit (loss) before income taxes
Income taxes
Tax rate (%)
Net profit (loss)
attributable to:
- Eni's shareholders
- Non-controlling interest
89
% Ch.
(37.1)
(17.2)
32.5
..
9.9
(45.5)
(9.7)
..
(18.9)
..
..
(€ million)
2020
2019
2018
Change
43,987
69,881
75,822
(25,894)
960
1,160
1,116
(36,640)
(54,302)
(59,130)
(766)
287
129
(7,304)
(8,106)
(6,988)
(3,183)
(2,188)
(300)
6,432
(879)
193
(866)
(100)
9,983
(971)
1,095
(200)
17,662
(1,053)
802
(995)
(29)
(9,707)
(166)
(1,851)
(329)
(3,275)
(1,045)
(1,658)
(5,978)
(2,650)
..
(8,628)
(8,635)
7
5,746
10,107
(11,724)
(5,591)
(5,970)
2,941
52.6
97.3
155
148
7
59.1
4,137
(8,783)
4,126
(8,783)
11
..
..
Impact of COVID-19 pandemic
The trading environment in 2020 saw the largest oil demand
drop in history (down by an estimated 9% y-o-y) driven by the
lockdown measures implemented at global scale to contain the
spread of the COVID-19 pandemic causing a material hit to eco-
nomic activity, international commerce and travel, mainly during
the peak of the crisis in the first and second quarter of 2020.
The shock in hydrocarbon demand occurred against the back-
drop of a structurally oversupplied oil market, as highlighted by
the disagreements among OPEC+ members in the response to
be adopted to manage the crisis in early March 2020. The pro-
ducing Countries of the cartel decided against maintaining the
existing quotas and as a result the market was inundated with
production while demand was crumbling. Those developments
led to a collapse in commodity prices.
At the peak of the downturn, between March and April, the Brent
marker price fell to about 15 $/barrel, the lowest level in over
twenty years. The oversupply drove oil markets into contango, a
situation when prices for prompt delivery quote below prices for
future deliveries, while both land and floating storages reached
the highest technical filling levels.
Since May, oil prices have been staging a turnaround thanks to
a comprehensive agreement reached within OPEC+ on imple-
menting record production cuts as well as an ongoing recovery
in the world economy and oil consumption following an ease in
restrictive measures and driven in large part by a strong rebound
of activity in China. Brent prices recovered to almost 45 $/barrel
in summer months.
However, during the autumn months the macroeconomic re-
bound hit a standstill in the USA and in Europe due to a resur-
gence in virus cases, which forced the governments and local
authorities in those Countries to reinstate partial or full lock-
downs and other restrictive measures that weighted heavily on
oil and products demands as millions of people continued living
in partial isolation.
In this period, crude oil prices were supported by strict produc-
tion discipline on part of OPEC+ members and the market was
able to accommodate the return of Libya’s production by the
end of September, which quickly ramped to the plateau of 1.2
million boe/d as a result of an internal peace agreements which
resolved the force majeure which had blocked export terminals.
A barometer of the weakness of the fundamentals in the energy
sector in the third and fourth quarter was the trend in the refining
margins which dropped to historic lows due to weak demand for
fuels and the crisis in the airline sector, which prevented refiners
from passing the cost of the crude oil feedstock to the final pric-
es of products. To make things worse, OPEC+ production cuts
impacted the availability of medium-heavy crudes, narrowing
the price differentials with light-medium qualities like the Brent
crude and squeezing the refiners’ conversion advantage.
However, since mid-November a few market and macroeconomic
developments triggered a rally in oil prices, which reached 50 $/
bbl at the end of the year rebounding from the still depressed
level of October and then rose to an average of 60 $/barrel in the
first quarter of 2021. First, several effective vaccines against the
virus were approved. Second, the OPEC+ members resolved at
a meeting in early December to slowdown the pace of easing
the production curtailments scheduled to begin at the onset of
2021. Then in a subsequent meeting in early January 2021, Sau-
di Arabia surprised markets by announcing a unilateral cut to its
production quota of 1 million barrels/d in February and March in
relation to the uncertainties to the recovery in demand caused
by the ongoing rise in new virus case.
Eni Annual Report 2020
90
Meanwhile, the pace of the economic recovery accelerated in
Asia, where China and India drove a surge oil consumption. The
inventory overhang began to ease due to market being better
balanced. Finally, exceptional cold weather conditions hit the Far
East which caused a mini energy crisis due to the sudden spike
in the demand for heating products which led to a substantial
increase in the JKM benchmark spot prices of LNG spot which
climbed to all-time highs, up to 30-40 $/mmBTU (an increase
more than 1000% compared to the values recorded in April 2020
during the peak of the crisis).
The Brent price closes the year at 50 $/barrel and the recovery
accelerates at the beginning of 2021 with the psychological
threshold of 60 $/barrel and an average of almost 58 $/barrel in
the first two months of the year.
Despite these positive developments, we believe the outlook for
2021 to remain subdued due to an ongoing slowdown in econom-
ic activity and in oil consumption in Europe and in the USA, with
possible downside risks related to the evolution of the pandemic
crisis and the discovery of new virus strains. Therefore, the trading
environment for 2021 remains uncertainty and volatile.
In 2020 due to macroeconomic and market developments
described above, the average price of the Brent benchmark
crude oil decreased by 35% compared to the previous year,
with an annual average of 42 $/barrel, the price of natural
gas at the Italian spot market “PSV” declined on average by
35%, and the Standard Eni Refining Margin - SERM record-
ed the worst performance (down by 60%). Considering the
market trends, management revised the Company’s outlook
for hydrocarbons prices assuming a more conservative oil
scenario with a LT Brent price at 60 $/barrel in 2023 real
terms (compared to the previous projection of 70 $/barrel)
to reflect the possible structural effects of the pandemic on
oil demand and the risk that the energy transition will ac-
celerate due to the fiscal policies adopted by governments
to rebuild the economy on more sustainable basis. These
developments had negative, material effects on Eni’s results
of operations and cash flow.
In 2020, Eni’s Group reported a net loss of €8.6 billion due to the
reduction in revenues driven by lower realized prices and margins
for hydrocarbons with an estimated impact of €6.8 billion and
lower production volumes and other business impacts caused by
the COVID-19 pandemic for €1 billion, as well as the recognition
of impairment losses of €3.2 billion taken at Oil & Gas assets and
refineries due to a management’s revised outlook on long-term oil
and gas prices and lowered assumptions for the refining margins.
A loss of approximately €1.3 billion was incurred in relation to the
evaluation of inventories of oil and products, which were aligned
to their net realizable values at period end.
All these trends caused the Group to incur an operating loss of
€3.3 billion. Cost efficiencies and other management initiatives
to counter the effects of the pandemic drove an improvement
of €1.1 billion.
Furthermore, the Group net loss for the year was also due to a €1.7
billion loss taken at equity-accounted investments, €1.3 billion for
the write-down of deferred tax assets due to the projections of
lowered future taxable profits and the negative effects on the un-
derlying tax rate of the recognition of non-deductible losses and
charges, such as the lower intercompany marketing margins of
non-equity gas entitlements, the inability to recognize deferred tax
assets on losses for the year in jurisdictions with the projection
of lower future taxable income and other non-deductible items.
Adjusted cash flow declined to €6.7 billion with a reduction of
43% compared to 2019, due to lower prices of hydrocarbons
and other scenario effects for €6 billion and the negative impact
on operations associated with the COVID-19 for €1.3 billion due
to lower production as a result of the curtailments of expendi-
tures, lower demand for fuel and chemicals, longer maintenance
standstills in response to the COVID-19 emergency, lower LNG
offtakes and lower gas demand and higher provisions for im-
pairment losses at trade receivables.
These negatives were partially offset by cost savings and other
initiatives in response to the pandemic crisis for an amount of
€2.3 billion.
In order to respond to a shortfall of such magnitude, manage-
ment has taken several decisive actions to preserve the Com-
pany’s liquidity, the ability to cover maturing financial obligations
and to mitigate the impact of the crisis on the Group’s net finan-
cial position, as follows:
Rescheduled and optimized the capital expenditures for 2020-
2021 years; in 2020 Eni reduced capex by approximately €2.6
billion, around 35% lower than the initial capital budget at
constant exchange rates; incurring expenditures of €5 billion.
Those capex reductions mainly related to upstream activities,
targeting production optimization activities and the rephasing
of certain development projects. The delayed or re-phased ac-
tivities can be recovered once the scenario normalizes, deter-
mining a recovery of related production.
Implemented widespread cost reduction initiatives across
all businesses with achieved savings of about €1.9 billion in
2020, of which about 30% are of structural nature; reductions
of similar amount are expected in 2021.
In May 2020, a €2 billion bond was issued. Then, in October
2020 two hybrid bonds were issued for a total amount of
€3 billion; those latter bonds are classified among equity for
balance sheet purposes.
A share repurchase program approved before the start of the
crisis was put on hold.
Established a new dividend policy with the introduction of a
variable component of the dividend in line with the volatility
of the scenario. The new policy establishes a floor dividend
currently set at 0.36 €/share under the assumption of a Brent
scenario of at least 43 $/barrel and a growing variable com-
ponent based on a recovery in the crude oil scenario up to
65 $/barrel. The floor amount will be revalued over time de-
pending on the Company delivering on its industrial targets.
For 2020, the dividend proposal is equal to the floor dividend.
Management report | Consolidated financial statements | Annex 91
The Company, leveraging on these measures, successfully
overcame the worst phase of the downturn, limiting the in-
crease in the net borrowings before IFRS 16 which closed the
year at €11.6 billion (unchanged over 2019), while retaining the
leverage within the management comfort zone at 0.31. The
Company can count to fulfill the financial obligations coming
due in the short-term on a liquidity reserve of €20.4 billion as of
December 31, 2020, consisting of:
cash and cash equivalents of €9.4 billion;
€5.3 billion of undrawn committed borrowing facilities;
€5.5 billion of readily disposable securities (mainly govern-
ment bonds and corporate investment grade bonds) and
€0.2 billion of short-term financing receivables.
This reserve is considered adequate to cover the main financial
obligations maturing in the next twelve months relating to:
short-term debt of €2.9 billion;
maturing bonds of €1.1 billion and other maturing long-term
the Brent crude oil benchmark and proportional changes in gas
prices, applicable for variation of 5-10 $/barrel, compared to
the considered scenario for 2021 at 50 $/barrel, before further
corrective actions by management and has excluded the ef-
fects on the dividends from investments. The short-term re-
covery of the crude oil and gas prices will greatly depend on
how the current COVID-19 crisis unfolds and on how long it
lasts.
Under adverse assumptions, the spread of the disease could
dampen or further delay an economic recovery, which could
materially hit demand for energy products and prices of ener-
gy commodities. This scenario could be further complicated in
case of a faltering OPEC+ policy at supporting prices by contin-
uing to roll over the ongoing production quotas. These trends
could have a material and adverse effect on our results of op-
erations, cash flow, liquidity, and business prospects, including
trends in Eni shares and shareholders’ returns.
debt of €1.1 billion;
committed investments of €4.3 billion;
instalments of leasing contracts coming due of €1.1 billion;
the payment of a floor dividend for approximately €1.5 billion
(including the final 2020 dividend and the interim floor divi-
dend for 2021 due to paid in September).
The evolution of Group’s financial situation in 2021 will depend,
in addition to management initiatives, on trends in oil prices,
which will be closely correlated to the evolution of the pandem-
ic crisis. Considering the current Oil & Gas assets portfolio,
management has estimated a change of cash flow of approx-
imately €150 million for each one-dollar change in the price of
In addition to the current liquidity reserve, the Company can lev-
erage on a solid business model and actions finalized or started
in this year that have increased the resilience to the scenario.
The main point of these actions was the gradual reduction of
the average breakeven of the projects in execution at 23 $/barrel
thanks to the successful exploration at competitive discovery
costs, the deployment of an efficient model to develop hydrocar-
bon reserves based on a phased approach, reduction of time-to-
market and design-to-cost.
The following tables report the breakdown of the operating profit
(loss) by business and the key scenario indicators for 2020:
Exploration & Production
Global Gas & LNG Portfolio
Refining & Marketing and Chemicals
EGL, Power & Renewables
Corporate and other activities
Impact of unrealized intragroup profit elimination
Operating profit (loss)
Average price of Brent dated crude oil in U.S. dollars(a)
Average EUR/USD exchange rate(b)
Average price of Brent dated crude oil in euro
Standard Eni Refining Margin (SERM)(c)
PSV(d)
TTF(d)
(€ million)
2020
(610)
(332)
(2,463)
660
(563)
33
(3,275)
2020
41.67
1.142
36.49
1.7
112
100
2019
2018
Change
7,417
10,214
(8,027)
431
(682)
74
(688)
(120)
6,432
2019
64.30
1.119
57.44
4.3
171
142
387
(763)
(501)
(1,781)
340
(668)
211
586
125
153
9,983
(9,707)
2018
71.04
1.181
60.15
3.7
260
243
% Ch.
(35.2)
2.0
(36.5)
(60.5)
(34.5)
(29.6)
(a) Price per barrel. Source: Platt’s Oilgram.
(b) Source: ECB.
(c) In $/BBL FOB Mediterranean Brent dated crude oil. Source: Eni calculations. Approximates the margin of Eni’s refining system in consideration of material balances and refineries’ product yields.
(d) €/kcm.
Eni Annual Report 2020 92
ADJUSTED RESULTS AND BREAKDOWN OF SPECIAL ITEMS
(€ million)
2020
Operating profit (loss)
Exclusion of inventory holding (gains) losses
Exclusion of special items
Adjusted operating profit (loss)
Breakdown by segment:
Exploration & Production
Global Gas & LNG Portfolio
Refining & Marketing and Chemicals
EGL, Power & Renewables
Corporate and other activities
Impact of unrealized intragroup profit elimination and other consolidation adjustments
Net profit (loss) attributable to Eni's shareholders
Exclusion of inventory holding (gains) losses
Exclusion of special items
Adjusted net profit (loss) attributable to Eni's shareholders
(3,275)
1,318
3,855
1,898
1,547
326
6
465
(507)
61
(8,635)
937
6,940
(758)
2019
6,432
(223)
2,388
8,597
8,640
193
21
370
(602)
(25)
148
(157)
2,885
2,876
2018
Change
% Ch.
9,983
96
1,161
11,240
10,850
278
360
262
(583)
73
4,126
69
388
4,583
(9,707)
..
(6,699)
(77.9)
(7,093)
133
(15)
95
95
86
(8,783)
(3,634)
(82.1)
68.9
(71.4)
25.7
15.8
..
..
Management determines adjusted results excluding the special
charges previously disclosed and mainly related to non-current
write-downs, tax credits and loss on stocks, in order to improve
understanding of the key businesses.
In 2020, the adjusted operating profit of €1,898 million was around
€6.7 billion lower than the previous year (down by 78%). Scenario
effects were a loss of -€6.8 billion and the operational and volumes
losses relating to the impacts associated with COVID-19 pandemic
amounted to €1 billion, while the underlying performance was posi-
tive for €1.1 billion, thanks to the positive result reported in the GGP
segment, leveraging on the optimizations of gas and LNG asset
portfolio, which allow to exploit value from a volatile scenario , bi-
orefineries and fuels marketing contribution and the solid and grow-
ing performance of the retail business, notwithstanding COVID-19
pandemic impacts on demand and counterparty risk.
For further information on the adjusted operating profit by busi-
ness, see the paragraph “Results by business segments”.
In 2020, the Group reported an adjusted net loss of €758 million
due to the weaker operating performance, lower results reported
by JV and other investments due to the deteriorated macroeco-
nomic environment and tax rate.
Breakdown of special items
Adjusted net loss includes special items consist of net charges
of €6,940 million, relating to the following:
(i) net impairment losses recorded at Oil & Gas properties in
production or under development (€1,888 million, almost
related to the first half), driven by a downward revision to
management’s expectations for crude oil prices in the long-
term, which were reduced to 60 $/barrel and the associated
curtailments of expenditures in the years 2020-2021 with
the re-phasing of a number of projects, in order to preserve
cash generation, as well as negative revisions of reserves.
The main impairment losses were recorded at CGUs in Italy,
Algeria, Congo, the USA and Turkmenistan;
(ii) impairment losses at refineries driven by a lowered outlook
for refining margins and expectations for a continuing nar-
rowing in spreads between medium-sour crudes vs. light-
sweet crude qualities, as well as the write-down of capital
expenditure relating to certain Cash Generating Units in the
R&M business. These units were impaired in previous re-
porting periods and continued to lack any profitability pros-
pects (for an overall impact of €1,225 million, almost related
to the first half);
(iii) the impairment of Chemical assets due to a deteriorated
margin scenario (€46 million);
(iv) the accounting effect of certain fair-valued commodity de-
rivatives lacking the formal criteria to be classified as hedg-
es, as well as the fair value of forward contracts to sell vol-
umes of gas which were not accounted based on the own
use exemption (charges of €440 million);
(v) risk provisions mainly in the E&P business (€137 million);
(vi) provisions for redundancy incentives (€123 million);
(vii) the reclassification to adjusted operating profit of the neg-
ative balance of €160 million related to derivative financial
instruments used to manage margin exposure to foreign
currency exchange rate movements and exchange transla-
tion differences of commercial payables and receivables;
(viii) an allowance for doubtful accounts relating to receivables
(€77 million) in the E&P business;
(ix) charges relating to the JV Vår Energi, mainly driven by im-
pairment losses recorded at Oil & Gas assets due to a re-
vised oil price outlook and downward reserve revisions,
netted by the accrued currency translation differences at fi-
nance debt denominated in a currency other than the report-
ing currency for which the reimbursement cash outflows
are expected to be matched by highly probable cash inflows
from the sale of production volumes, in the same currency
as the finance debt as part of a natural hedge relationship
(for overall charges of €1,111 million);
(x) a loss of €124 million relating to the alignment of raw mate-
rial and products inventories to their net realizable values at
period end at ADNOC Refining;
(xi) Eni’s share of non current charges/impairments relating to
Saipem (charges of €271 million) relating to Saipem;
(xii) tax effects relating to the aforementioned special items, as
well as the write-down of deferred taxes due to a deteriorat-
ed profitability outlook (an overall effect of €1,278 million).
Management report | Consolidated financial statements | Annex
BREAKDOWN OF SPECIAL ITEMS
Special items of operating profit (loss)
- environmental charges
- impairment losses (impairments reversal), net
- net gains on disposal of assets
- risk provisions
- provision for redundancy incentives
- commodity derivatives
- exchange rate differences and derivatives
- reinstatement of Eni Norge amortization charges
- other
Net finance (income) expense
of which:
- exchange rate differences and derivatives reclassified to operating profit (loss)
Net (income) expense from investments
of which:
- gains on disposal of assets
- impairments / revaluation of equity investments
Income taxes
Total special items of net profit (loss)
(€ million)
2020
3,855
(25)
3,183
(9)
149
123
440
(160)
154
152
160
1,655
1,207
1,278
6,940
2019
2,388
338
2,188
(151)
3
45
(439)
108
296
(42)
(108)
188
(46)
148
351
2,885
The breakdown by segment of the adjusted net profit (loss) is provided in the table below:
Exploration & Production
Global Gas & LNG Portfolio
Refining & Marketing and Chemicals
Eni gas e luce, Power & Renewables
Corporate and other activities
Impact of unrealized intragroup profit elimination and other consolidation adjustments(a)
Adjusted net profit (loss)
attributable to:
- Eni's shareholders
- Non-controlling interest
(€ million)
2020
124
211
(246)
329
(1,205)
36
(751)
2019
3,436
100
(42)
275
(866)
(20)
2,883
2018
Change
4,955
(3,312)
118
224
189
(948)
56
111
(204)
54
(339)
56
4,594
(3,634)
(758)
2,876
4,583
(3,634)
7
7
11
(a) This item concerned mainly intragroup sales of commodities, services and capital goods recorded in the assets of the purchasing business segment as of end of the period.
PROFIT AND LOSS ANALYSIS
SALES FROM OPERATIONS
Exploration & Production
Global Gas & LNG Portfolio
Refining & Marketing and Chemicals
- Refining & Marketing
- Chemicals
- Consolidation adjustments
EGL, Power & Renewables
- EGL
- Power
- Renewables
- Consolidation adjustments
Corporate and other activities
Consolidation adjustments
Sales from operations
Other income and revenues
Total revenues
2020
2019
2018
Change
13,590
7,051
25,340
22,965
3,387
23,572
11,779
42,360
39,836
4,123
25,744
14,807
(9,982)
(4,728)
46,483
(17,020)
43,476
(16,871)
5,123
(736)
(1,012)
(1,599)
(2,116)
7,536
6,006
1,894
14
(378)
1,559
8,448
6,420
2,476
4
(452)
1,676
8,218
5,910
2,648
1
(341)
1,588
(11,089)
(17,954)
(21,018)
(912)
(414)
(582)
10
(117)
6,865
43,987
69,881
75,822
(25,894)
960
1,160
1,116
(200)
44,947
71,041
76,938
(26,094)
93
2018
1,161
325
866
(452)
380
155
(133)
107
(375)
288
(85)
(107)
(798)
(909)
67
110
388
% Ch.
(96.4)
..
..
19.6
(39.1)
..
..
% Ch.
(42.3)
(40.1)
(40.2)
(42.4)
(17.9)
(10.8)
(6.4)
(23.5)
..
(7.0)
(37.1)
(17.2)
(36.7)
Eni Annual Report 2020
94
Total revenues amounted to €44,947 million, reporting a de-
crease of 36.7% from 2019 reflecting the COVID-19 effect,
in particular: the decline in price of oil (the Brent crude oil
benchmark down by 35%) and of gas in all geographies (in
particular, the Italian spot market “PSV” down by 35%), lower
sales of energy, fuels and chemical products, as well as low-
er production availability due to full enactment of lockdown
measure in response to the pandemic emergency.
Sales from operations in the full year of 2020 (€43,987 mil-
lion) decreased by €25,894 million or down by 37.1% from
2019, with the following breakdown:
revenues generated by the Exploration & Production seg-
ment (€13,590 million) decreased by 42.3% due to the dete-
riorated price scenario, reflected on realization hydrocarbon
prices (down by 34%);
revenues generated by the Global Gas & LNG Portfolio
segment (€7,051 million) decreased by €4,728 million
or down by 40.1% due to lower natural gas prices and
reduced volumes. The decrease reflected the economic
downturn due to COVID-19 pandemic which affected the
European gas demand, in particular in the second quarter,
during the pandemic peak;
revenues generated by the Refining & Marketing and
Chemicals segment (€25,340 million) decreased by
€17,020 million (down by 40.2%) due to the sharply de-
pressed scenario following the crisis of fuel demand and
the automotive sector;
revenues generated by the EGL, Power & Renewables
(€7,536 million) decreased by €912 million or down by
10.8%, due to the collapse of commodities prices impact-
ed by lower consumptions for the economic slowdown.
OPERATING EXPENSES
Purchases, services and other
Impairment losses (impairment reversals) of trade and other receivables, net
Payroll and related costs
of which: provision for redundancy incentives and other
(€ million)
2020
2019
2018
Change
33,551
50,874
55,622
(17,323)
226
2,863
123
432
2,996
45
415
3,093
155
(206)
(133)
% Ch.
(34.1)
(47.7)
(4.4)
36,640
54,302
59,130
(17,662)
(32.5)
Operating expenses for 2020 (€36,640 million) decreased by
€17,662 million from 2019, down by 32.5%. Purchases, servic-
es and other (€33,551 million) were down by 34.1% vs. 2019,
reflecting lower costs for hydrocarbon supplies (gas under
long-term supply contracts and refinery and chemical feed-
stocks). This reduction is a consequence of the decisive ac-
tions implemented by management to preserve profitability
and strengthen resilience to the pandemic scenario, achiev-
ing an opex decrease of €1.9 billion vs. pre-COVID-19 level, of
which 30% structural. Payroll and related costs (€2,863 million)
decreased by €133 million from 2019 (down by 4.4%), mainly
due to the decreased average employment rate outside Italy
and the appreciation of the euro against the USD, partly offset
by higher provision for redundancy incentives.
DEPRECIATION, DEPLETION, AMORTIZATION AND IMPAIRMENTS
Exploration & Production
Global Gas & LNG Portfolio
Refining & Marketing and Chemicals
- Refining & Marketing
- Chemicals
EGL, Power & Renewables
- EGL
- Power
- Renewables
Corporate and other activities
Impact of unrealized intragroup profit elimination
Total depreciation, depletion and amortization
Impairment losses (impairment reversals) of tangible and intangible and right of use assets, net
Depreciation, depletion, amortization, impairments and reversals, net
Write-off of tangible and intangible assets
(€ million)
2020
6,273
2019
7,060
2018
Change
6,152
(787)
125
575
488
87
217
166
45
6
146
(32)
124
620
530
90
190
133
55
2
144
(32)
7,304
3,183
8,106
2,188
10,487
10,294
329
300
10,816
10,594
226
399
311
88
182
126
56
59
(30)
6,988
866
7,854
100
7,954
1
(45)
(42)
(3)
27
33
(10)
4
2
(802)
995
193
29
222
Management report | Consolidated financial statements | Annex
95
Depreciation, depletion and amortization (€7,304 million) de-
creased by 9.9% from 2019, in particular in the Exploration & Pro-
duction segment mainly due to the reduction of capex and pro-
ductions, as well as the lower book value of Oil & Gas assets as
consequence of impairments recorded in 2020 (€1,888 million).
Net impairment losses (impairment reversals) of tangible
and intangible and right of use assets amounted to €3,183
million and the disclosure is provided under the paragraph
“special items”. The breakdown by segment is provided be-
low:
Exploration & Production
Global Gas & LNG Portfolio
Refining & Marketing and Chemicals
EGL, Power & Renewables
Corporate and other activities
Impairment losses (impairment reversals) of tangible
and intangible and right of use assets, net
(€ million)
2020
1,888
2
1,271
1
21
2019
1,217
(5)
922
42
12
3,183
2,188
2018
Change
726
(73)
193
2
18
866
671
7
349
(41)
9
995
Write-off charges amounted to €329 million and mainly relat-
ed to previously capitalized costs of exploratory wells which
were expensed through profit because it was determined that
they did not encounter commercial quantities of hydrocar-
bons mainly in Libya, the United States, Angola, Egypt, Oman,
Mexico and Libano.
FINANCE INCOME (EXPENSE)
Finance income (expense) related to net borrowings
- Interest expense on corporate bonds
- Net income from financial activities held for trading
- Interest expense for banks and other financing istitutions
- Interest expense for lease liabilities
- Interest from banks
- Interest and other income from receivables and securities
for non-financing operating activities
Income (expense) on derivative financial instruments
- Derivatives on exchange rate
- Derivatives on interest rate
Exchange differences, net
Other finance income (expense)
- Interest and other income from receivables and securities for financing operating activities
- Finance expense due to the passage of time (accretion discount)
- Other finance income (expense)
Finance expense capitalized
(€ million)
2020
(913)
(517)
31
(102)
(347)
10
12
351
391
(40)
(460)
(96)
97
(190)
(3)
(1,118)
73
(1,045)
2019
(962)
(618)
127
(122)
(378)
21
8
(14)
9
(23)
250
(246)
112
(255)
(103)
(972)
93
(879)
2018
Change
(627)
(565)
32
(120)
18
8
(307)
(329)
22
341
(430)
132
(249)
(313)
(1,023)
52
(971)
49
101
(96)
20
31
(11)
4
365
382
(17)
(710)
150
(15)
65
100
(146)
(20)
(166)
Net finance expenses were €1,045 million, an increase of
€166 million from 2019. The main drivers of were: (i) recog-
nition of expenses on exchange rate (€460 million) offset by
the positive change of fair-valued currency derivatives (up by
€382 million) lacking the formal criteria to be designated as
hedges under IFRS 9; (ii) decrease of other finance expense
reflecting the lower cost of debt, as well as the circumstance
that in 2019 was reported the interest expense accrued on
risk provisions, in particular in the E&P segment and (iii) the
reduction of finance expense (up by €65 million) relating to
the accretion discount of liabilities recognized at present val-
ue following lower discount rates.
Eni Annual Report 2020
96
NET INCOME FROM INVESTMENTS
2020
Share of gains (losses) from equity-accounted investments
Dividends
Other income (expense), net
(€ million)
Exploration
& Production
Global
Gas & LNG
Portfolio
Refining
& Marketing
and Chemicals
EGL, Power
& Renewables
Corporate and
other activities
Group
(980)
118
(862)
(15)
(48)
(63)
(363)
32
(18)
(349)
6
(9)
(3)
(381)
(1,733)
150
(75)
(381)
(1,658)
Net income from investments amounted to €1,658 million re-
lated to:
a loss of €1,733 million due to the share of losses at equity-ac-
counted entities, mainly the upstream joint venture Vår Energi,
ADNOC Refining and Saipem, which were negatively affected
by the deteriorated scenario as well as impairment losses of
tangible assets and inventories valuation allowance, offset by
accrued currency translation differences at finance debt de-
nominated in a currency other than the reporting currency for
which the reimbursement cash outflows are expected to be
matched by highly probable cash inflows from the sale of pro-
duction volumes, in the same currency as the finance debt as
part of a natural hedge relationship;
dividends of €150 million paid by minor investments in certain
entities which were designated at fair value through OCI under
IFRS 9 except for dividends which are recorded through profit.
These entities mainly comprised Nigeria LNG (€113 million)
and Saudi European Petrochemical Co. (€28 million).
The table below sets forth a breakdown of net income/loss
from investments:
Share of gains (losses) from equity-accounted investments
Dividends
Net gains (losses) on disposals
Other income (expense), net
Income (expense) from investments
(€ million)
2020
2019
2018
Change
(1,733)
150
(75)
(1,658)
(88)
247
19
15
193
(68)
231
22
910
(1,645)
(97)
(19)
(90)
1,095
(1,851)
INCOME TAXES
In 2020, income taxes amounted to €2,650 million (€5,591
million in 2019) with a loss before income taxes of €5,978
million.
In 2020, the Group’s tax rate recorded a disproportionate
value, with accrued income taxes being more than 100% of
pre-tax profit due to a depressed pricing scenario which, on
the one hand, determined higher relative weight of certain
transactions and therefore higher distortive effects of certain
tax items than in the past, and on the other hand limited the
Company’s ability to recognize deferred tax assets for current
losses. The Group tax rate was significantly and negatively
affected by the following trends:
the incurrence of non-deductible expenses and losses, be-
cause their tax recognition depends on the achievement of
certain project milestones (such as a project FID) as in the
case of explorations expenses or due to being related to in-
tercompany losses as in the case of the one incurred in con-
nection with the resale of the non-equity Libyan gas entitle-
ments; those impacts under normal scenarios are strongly
mitigated;
the inability to recognize tax-losses carryforwards in certain
jurisdictions due to lack of sufficient future taxable profits
against which deferred tax assets are offset as required by
IAS 12;
the recognition of current income taxes on intercompany div-
idend distribution which created a mismatch due to absence
of pre-tax profit at Group level (intercompany dividends are
eliminated in the consolidation process).
Net of these transactions, the Group’s normalized tax rate
would come at 70% reflecting the high impact in the Eni’s
portfolio of PSA oil contracts that have tax rates less sensi-
tive to oil prices.
Pre-tax profit
Accrued income taxes
Tax rate
(€ million)
reported
(ex-special items)
non-deductible
costs, losses and
exploration items
unrecognized
deferred tax assets on
losses for the period
tax accrued on
intercompany
dividends
normalized
tax rate
741
1,002
1,753
n.s.
(330)
(195)
1,743
1,228
70%
Management report | Consolidated financial statements | Annex
Results by business segments1
EXPLORATION & PRODUCTION
Operating profit (loss)
Exclusion of special items:
- environmental charges
- impairment losses (impairment reversals), net
- net gains on disposal of assets
- provision for redundancy incentives
- risk provisions
- exchange rate differences and derivatives
- other
Adjusted operating profit (loss)
Net finance (expense) income(a)
Net income (expense) from investments(a)
of which: Vår Energi
Income taxes(a)
Adjusted net profit (loss)
Results also include:
Exploration expenses:
‐ prospecting, geological and geophysical expenses
‐ write‐off of unsuccessful wells(b)
Average realizations
Liquids(c)
Natural gas
Hydrocarbons
97
(€ million)
2020
(610)
2,157
19
1,888
1
34
114
13
88
1,547
(316)
262
193
2019
7,417
1,223
32
1,217
(145)
23
(18)
14
100
8,640
(362)
312
122
2018
Change
% Ch.
10,214
(8,027)
..
636
110
726
(442)
26
360
(6)
(138)
10,850
(7,093)
(82.1)
(366)
285
46
(50)
(1,369)
(5,154)
(5,814)
3,785
124
3,436
4,955
(3,312)
(96.4)
510
196
314
37.06
3.76
28.92
489
275
214
59.26
4.94
43.54
380
287
93
65.47
5.20
47.48
21
(79)
100
(22.20)
(1.18)
(14.62)
4.3
(28.7)
46.7
(37.5)
(23.9)
(33.6)
($/bbl)
($/kcf)
($/boe)
(a) Excluding special items.
(b) Also includes write‐off of unproved exploration rights, if any, related to projects with negative outcome.
(c) Includes condensates.
In 2020, Exploration & Production reported an adjusted
operating profit of €1,547 million, down by €7.1 billion y-o-y,
or 82%. The decrease was driven by a sharply deteriorated oil
and natural gas pricing scenario in all the geographies, par-
ticularly in the second quarter which was the hardest hit by
the downturn, as well as COVID-19 pandemic impacts (low-
er production volumes due to lower capital expenditures and
operational impacts), OPEC+ production cuts and lower gas
demand. Furthermore, the result of the period was affected
by a loss incurred in reselling Libyan non-equity gas volumes,
which were marketed in Europe. This resale price is excluded
from the calculation of Eni’s average realized gas prices be-
cause Eni’s realized prices are calculated only with reference
to equity production. Higher write-off expenses relating to un-
successful exploration wells also negatively affected the full
year performance and were partly offset by the optimization
of operating expenses.
Adjusted operating profit excluded special charges of €2,157
million.
Adjusted net profit of €124 million decreased by 96.4% from
2019 due to lower operating profit and lower results accrued by
most of the equity-accounted entities driven by a significantly
deteriorated trading environment, except for Vår Energi which
reported improving results in the fourth quarter.
(1) Other alternative performance indicators disclosed are accompanied by explanatory notes and tables in line with guidance provided by ESMA guidelines on alternative
performance measures (ESMA/2015/1415), published on October 5, 2015. For further information, see the section “Alternative performance measures” of this Annual
Report at subsequent pages.
Eni Annual Report 2020
98
GLOBAL GAS & LNG PORTFOLIO
Operating profit (loss)
Exclusion of special items:
- impairment losses (impairment reversals), net
- provision for redundancy incentives
- commodity derivatives
- exchange rate differences and derivatives
- other
Adjusted operating profit (loss)
Net finance (expense) income(a)
Net income (expense) from investments(a)
Income taxes(a)
Adjusted net profit (loss)
(a) Excluding special items.
(€ million)
2020
(332)
658
2
2
858
(183)
(21)
326
(15)
(100)
211
2019
431
(238)
(5)
1
(576)
109
233
193
3
(21)
(75)
100
2018
Change
% Ch.
387
(109)
(73)
4
(63)
111
(88)
278
(3)
(1)
(156)
118
(763)
..
133
(3)
6
(25)
111
68.9
..
In 2020, the Global Gas & LNG Portfolio segment reported an ad-
justed operating profit of €326 million, up by 68.9% compared to
2019. This improvement was due to the optimization of the gas
and LNG assets portfolio, leveraging high price volatility and con-
tracts’ flexibility, as well as to a favourable outcome of an LNG
contract renegotiation closed in the third quarter. These positive
trends more than offset the lower performance at the gas busi-
ness negatively affected by a contraction in gas demand at the
main European markets due to the COVID-19 pandemic, mainly in
the second quarter of 2020, being the height of the crisis.
Adjusted operating profit excluded special charges of €658
million.
Adjusted net profit was €211 million, more than doubled
from 2019 mainly due to increased operating profit.
REFINING & MARKETING AND CHEMICALS
Operating profit (loss)
Exclusion of inventory holding (gains) losses
Exclusion of special items:
- environmental charges
- impairment losses (impairment reversals), net
- net gains on disposal of assets
- risk provisions
- provision for redundancy incentives
- commodity derivatives
- exchange rate differences and derivatives
- other
Adjusted operating profit (loss)
- Refining & Marketing
- Chemicals
Net finance (expense) income(a)
Net income (expense) from investments(a)
of which: ADNOC Refining
Income taxes(a)
Adjusted net profit (loss)
(a) Excluding special items.
(€ million)
2020
(2,463)
1,290
1,179
85
1,271
(8)
5
27
2019
(682)
(318)
1,021
244
922
(5)
(2)
8
(185)
(118)
10
(26)
6
235
(229)
(7)
(161)
(167)
(84)
(246)
(5)
(23)
21
289
(268)
(36)
37
23
(64)
(42)
2018
Change
% Ch.
(501)
(1,781)
..
234
627
193
193
(9)
21
8
120
5
96
360
370
(10)
11
(2)
(145)
224
(15)
(54)
39
29
(198)
(20)
(204)
(71.4)
(18.7)
14.6
..
The Refining & Marketing business reported an adjusted
operating loss of €235 million, down by 18.7% compared to
2019. The oil-based refining business reported a lower per-
formance due to a sharply depressed scenario, negatively af-
fected by the pandemic-induced crisis in fuels demand and
by a worsening conversion premium resulting in reduced re-
finery runs, against the backdrop of overcapacity, competitive
pressure and high levels of inventories. These impacts were
partially offset by optimization actions of the industrial setup
and by a positive performance of the biorefineries thanks to
higher processed volumes and margins. The marketing busi-
ness reported steady results, despite a strong reduction of
sales due to the pandemic effects, thanks to the optimization
and efficiency initiatives.
Management report | Consolidated financial statements | Annex
99
The chemicals segment reported better results from the previ-
ous year, notwithstanding the economic recession caused by
the COVID-19 pandemic reduced the consumption of plastics
in core industries like the automotive sector. Strengthening
economic recovery in Asia in the final part of the year, softening
competitive pressures and a margin recovery especially at the
polyethylene business supported the segment’s recovery in the
fourth quarter, which also benefitted of higher product avail-
ability. In 2020, the Chemical business reported an adjusted
operating loss of €229 million, an improvement of €39 million
compared with a loss of €268 million in 2019, notwithstanding
the strong reduction of sale volumes recorded in the second
and the third quarter, due to an economic downturn in Europe
triggered by the restrictive measures implemented during the
COVID-19 pandemic’s peak, as well as ongoing uncertainties
about the strength of the recovery which led operators to
postpone purchase decisions. Furthermore, lower sales vol-
umes were negatively affected by reduced product availability
due to longer maintenance standstills at the production hubs
in response to the COVID-19 emergency (particularly at the
steam-cracking of Priolo and the Brindisi hub). Finally, these
trends were more than offset in the fourth quarter by a margin
recovery especially in the polyethylene business, supported the
business recovery in the last part of the year.
Adjusted operating profit of the R&M and Chemicals seg-
ment of €6 million, excluded special charges of €1,179 mil-
lion and inventory holding losses of €1,290 million. On a net
basis, the negative result of €246 million reflects a net ex-
pense from investment in ADNOC Refining of €167 million.
EGL, POWER & RENEWABLES
Operating profit (loss)
Exclusion of special items:
- environmental charges
- impairment losses (impairment reversals), net
- risk provisions
- provision for redundancy incentives
- commodity derivatives
- exchange rate differences and derivatives
- other
Adjusted operating profit (loss)
- Eni gas e luce
- Power & Renewables
Net finance (expense) income(a)
Net income (expense) from investments(a)
Income taxes(a)
Adjusted net profit (loss)
(a) Excluding special items.
(€ million)
2020
660
(195)
1
1
10
20
(233)
6
465
325
140
(1)
6
(141)
329
2019
2018
Change
% Ch.
74
296
42
3
255
(10)
6
370
278
92
(1)
10
(104)
275
340
(78)
(1)
2
118
(190)
(3)
(4)
262
201
61
(1)
10
(82)
189
586
..
95
47
48
(4)
(37)
54
25.7
16.9
52.2
19.6
In 2020 the retail gas and power business, managed by Eni gas e
luce, reported a solid and growing performance with an adjusted
operating profit of €325 million, up by €47 million or 16.9% from
2019, notwithstanding reduced sales due to lower consumption
following the economic downturn and higher provisions for im-
pairment losses at trade receivables in line with an expected de-
terioration in the counterparty risk. Performance was supported
by commercial and efficiency initiatives, the contribution of ex-
tra-commodity business in Italy and by the development of the
business in France and Greece. The Power & Renewables busi-
ness reported an adjusted operating profit of €140 million (up by
€48 million vs. 2019), benefitting from higher margins.
Adjusted operating profit of €465 million excluded special charg-
es of €195 million.
The segment reported an adjusted net profit of €329 mil-
lion an increase of 19.6% due to an improved operating
performance.
Eni Annual Report 2020
100
CORPORATE AND OTHER ACTIVITIES
Operating profit (loss)
Exclusion of special items:
- environmental charges
- impairment losses (impairment reversals), net
- net gains on disposal of assets
- risk provisions
- provision for redundancy incentives
- other
Adjusted operating profit (loss)
Net finance (expense) income(a)
Net income (expense) from investments(a)
Income taxes(a)
Adjusted net profit (loss)
(a) Excluding special items.
2019
(688)
2018
Change
(668)
125
% Ch.
18.2
(€ million)
2020
(563)
56
(130)
21
(2)
20
40
107
(507)
(569)
(95)
(34)
86
62
12
(1)
23
10
(20)
(602)
(525)
43
218
85
23
18
(1)
(1)
(1)
47
(583)
(697)
5
327
(1,205)
(866)
(948)
95
(44)
(138)
(252)
(339)
15.8
(39.1)
The results of Corporate and other activities mainly include
costs of Eni’s headquarters net of services charged to oper-
ational companies for the provision of general purposes ser-
vices, administration, finance, information technology, human
resources management, legal affairs, international affairs, as
well as operational costs of decommissioning activities per-
taining to certain businesses which Eni exited, divested or shut
down in past years, net of the margins of captive subsidiar-
ies providing specialized services to the business (insurance,
financial, recruitment).
Management report | Consolidated financial statements | Annex
101
SUMMARIZED GROUP BALANCE SHEET
The summarized Group balance sheet aggregates the amount
of assets and liabilities derived from the statutory balance sheet
in accordance with functional criteria which considers the enter-
prise conventionally divided into the three fundamental areas fo-
cusing on resource investments, operations and financing. Man-
agement believes that this summarized group balance sheet is
useful information in assisting investors to assess Eni’s capital
structure and to analyse its sources of funds and investments
in fixed assets and working capital. Management uses the sum-
marized group balance sheet to calculate key ratios such as the
return on invested capital (adjusted ROACE) and the financial
soundness/equilibrium (gearing and leverage).
SUMMARIZED GROUP BALANCE SHEET(a)
Fixed assets
Property, plant and equipment
Right of use
Intangible assets
Inventories - Compulsory stock
Equity-accounted investments and other investments
Receivables and securities held for operating purposes
Net payables related to capital expenditure
Net working capital
Inventories
Trade receivables
Trade payables
Net tax assets (liabilities)
Provisions
Other current assets and liabilities
Provisions for employee benefits
Assets held for sale including related liabilities
CAPITAL EMPLOYED, NET
Eni shareholders' equity
Non-controlling interest
Shareholders’ equity
Net borrowings before lease liabilities ex IFRS 16
Lease liabilities
- of which Eni working interest
- of which Joint operators' working interest
Net borrowings post lease liabilities ex IFRS 16
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
Leverage
Gearing
(€ million) December 31, 2020 December 31, 2019
Change
53,943
4,643
2,936
995
7,706
1,037
(1,361)
69,899
3,893
7,087
(8,679)
(2,198)
(13,438)
(1,328)
(14,663)
(1,201)
44
54,079
37,415
78
37,493
11,568
5,018
3,366
1,652
16,586
54,079
0.44
0.31
62,192
5,349
3,059
1,371
9,964
1,234
(2,235)
80,934
4,734
8,519
(10,480)
(1,594)
(14,106)
(1,864)
(14,791)
(1,136)
18
65,025
47,839
61
47,900
11,477
5,648
3,672
1,976
17,125
65,025
0.36
0.26
(8,249)
(706)
(123)
(376)
(2,258)
(197)
874
(11,035)
(841)
(1,432)
1,801
(604)
668
536
128
(65)
26
(10,946)
(10,424)
17
(10,407)
91
(630)
(306)
(324)
(539)
(10,946)
(a) For a reconciliation to the statutory statement of cash flow see the paragraph “Reconciliation of Summarized Group Balance Sheet and Statement of Cash Flows to Statutory Schemes”.
As of December 31, 2020, fixed assets decreased by €11,035
million mainly due to: (i) impairment losses and amortization
and depletion charges taken at PP&E (€10,816 million), as
well as negative currency translation differences partly offset
by capex incurred in the period (€4,644 million); (ii) a reduc-
tion in the book value of equity accounted investments and
other investments (-€2,258 million) driven by losses incurred
at the main equity-accounted entities (Vår Energi and ADNOC
Refining); (iii) the write-down of compulsory stock following a
decline in crude oil and product prices.
Net working capital (-€14,663 million) was broadly unchanged
y-o-y. A lower balance between trade payables and trade re-
ceivables (+€369 million) and reduced provisions mainly due
to utilizations with respect to the incurrence of expenses
(+€668 million) were offset by a lower value of oil and prod-
ucts inventories due to the alignment of the book value to
market prices at the period-end (-€841 million) and the write-
off of deferred tax assets due to a deteriorated profitability
outlook.
Eni Annual Report 2020
(€ million)
102
COMPREHENSIVE INCOME
Net profit (loss)
Items that are not reclassified to profit or loss in later periods
Remeasurements of defined benefit plans
Change in the fair value of minor investments with effects
to other comprehensive income
Share of other comprehensive income on equity accounted investments
Taxation
Items that may be reclassified to profit or loss in later periods
Currency translation differences
Change in the fair value of cash flow hedging derivatives
Share of other comprehensive income on equity accounted investments
Taxation
Total other items of comprehensive income (loss)
Total comprehensive income (loss)
attributable to:
- Eni's shareholders
- Non-controlling interest
CHANGES IN SHAREHOLDERS’ EQUITY
(€ million)
Shareholders' equity at January 1, 2019
Total comprehensive income (loss)
Dividends distributed to Eni's shareholders
Dividends distributed by consolidated subsidiaries
Buy-back program
Reimbursement to third party shareholders
Other changes
Total changes
Shareholders' equity at December 31, 2019
attributable to:
- Eni's shareholders
- Non-controlling interest
Shareholders' equity at January 1, 2020
Total comprehensive income (loss)
Dividends distributed to Eni's shareholders
Dividends distributed by consolidated subsidiaries
Net payments on perpetual subordinated bonds
Other changes
Total changes
Shareholders' equity at December 31, 2020
attributable to:
- Eni's shareholders
- Non-controlling interest
2020
(8,628)
33
(16)
24
25
(2,813)
(3,314)
661
32
(192)
(2,780)
(11,408)
(11,415)
7
224
(3,018)
(4)
(400)
(1)
30
(11,408)
(1,965)
(3)
2,975
(6)
2019
155
(47)
(42)
(3)
(7)
5
116
604
(679)
(6)
197
69
224
217
7
51,069
(3,169)
47,900
47,839
61
47,900
(10,407)
37,493
37,415
78
Shareholders’ equity (€37,493 million) decreased by €10,407
million compared to December 31, 2019 due to the net loss for
the period (-€8,628 million), the payment of dividends to Eni’s
shareholders (€1,965 million related to the 2019 final dividend
of €0.43 per share and the 2020 interim dividend of €0.36 per
share or one-third of floor dividend) as well as negative foreign
currency translation differences (-€3,314 million) reflecting the
depreciation of the dollar vs. the euro as of December 31, 2020
vs. December 31, 2019, partly offset by an increase due to the
issuance of two hybrid bonds for approximately €3 billion in
October and a positive change in the cash flow hedge reserve
(+€661 million).
Management report | Consolidated financial statements | Annex
103
LEVERAGE AND NET BORROWINGS
Leverage is a measure used by management to assess the
Company’s level of indebtedness. It is calculated as a ratio
of net borrowings which is calculated by excluding cash and
cash equivalents and certain very liquid assets from financial
debt to shareholders’ equity, including non-controlling inter-
est. Gearing measures how much of capital employed net is
financed recurring to third-party funding and is calculated as
the ratio between net borrowings and capital employed net.
Management periodically reviews leverage in order to assess
the soundness and efficiency of the Group balance sheet in
terms of optimal mix between net borrowings and net equity,
and to carry out benchmark analysis with industry standards.
Total finance debt
- Short-term debt
- Long-term debt
Cash and cash equivalents
Securities held for trading
Financing receivables held for non-operating purposes
Net borrowings before lease liabilities ex IFRS 16
Lease Liabilities
- of which Eni working interest
- of which Joint operators' working interest
Net borrowings post lease liabilities ex IFRS 16
Shareholders' equity including non-controlling interest
Leverage before lease liability ex IFRS 16
Leverage after lease liability ex IFRS 16
(€ million) December 31, 2020 December 31, 2019
26,686
4,791
21,895
(9,413)
(5,502)
(203)
11,568
5,018
3,366
1,652
16,586
37,493
0.31
0.44
24,518
5,608
18,910
(5,994)
(6,760)
(287)
11,477
5,648
3,672
1,976
17,125
47,900
0.24
0.36
Change
2,168
(817)
2,985
(3,419)
1,258
84
91
(630)
(306)
(324)
(539)
(10,407)
(0.07)
Net borrowings as of December 31, 2020 were €16,586 mil-
lion decreasing by €539 million from 2019. Total finance debt
of €26,686 million consisted of €4,791 million of short-term
debt (including the portion of long-term debt due within twelve
months of €1,909 million) and €21,895 million of long-term
debt. When excluding the lease liabilities, net borrowings were
re-determined at €11,568 million in line with the 2019 year-end.
Leverage2 – the ratio of the borrowings to total equity – was
0.44 at December 31, 2020. The impact of the lease liability
pertaining to joint operators in Eni-led upstream unincorpo-
rated joint ventures weighted on leverage for 4 points. Ex-
cluding the impact of IFRS 16 altogether, leverage would be
0.31.
SUMMARIZED GROUP CASH FLOW STATEMENT
Eni’s Summarized Group Cash Flow Statement derives from
the statutory statement of cash flows. It enables investors to
understand the connection existing between changes in cash
and cash equivalents (deriving from the statutory cash flows
statement) and in net borrowings (deriving from the sum-
marized cash flow statement) that occurred in the reporting
period. The measure which links the two statements is repre-
sented by the “free cash flow” which is calculated as difference
between the cash flow generated from operations and the net
cash used in investing activities. Starting from free cash flow
it is possible to determine either: (i) changes in cash and cash
equivalents for the period by adding/deducting cash flows re-
lating to financing debts/receivables (issuance/repayment of
debt and receivables related to financing activities), sharehold-
ers’ equity (dividends paid, net repurchase of own shares, capi-
tal issuance) and the effect of changes in consolidation and of
exchange rate differences; and (ii) change in net borrowings for
the period by adding/deducting cash flows relating to share-
holders’ equity and the effect of changes in consolidation and
of exchange rate differences.
(2) Other alternative performance indicators disclosed are accompanied by explanatory notes and tables in line with guidance provided by ESMA guidelines on alternative
performance measures (ESMA/2015/1415), published on October 5, 2015. For further information, see the section “Alternative performance measures” of this Annual
Report at subsequent pages.
Eni Annual Report 2020 104
SUMMARIZED GROUP CASH FLOW STATEMENT(a)
Net profit (loss)
Adjustments to reconcile net profit (loss) to net cash provided by operating activities:
- depreciation, depletion and amortization and other non monetary items
- net gains on disposal of assets
- dividends, interests, taxes and other changes
Changes in working capital related to operations
Dividends received by investments
Taxes paid
Interests (paid) received
Net cash provided by operating activities
Capital expenditure
Investments and purchase of consolidated subsidiaries and businesses
Disposals of consolidated subsidiaries, businesses, tangible and intagible assets and investments
Other cash flow related to investing activities and disinvestments
Free cash flow
Net cash inflow (outflow) related to financial activities
Changes in short and long-term financial debt
Repayment of lease liabilities
Net issue (repayment) of perpetual hybrid bond
Effect of changes in consolidation and exchange differences of cash and cash equivalent
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT
Adjusted net cash before changes in working capital at replacement cost
Change in net borrowings
Free cash flow
Repayment of lease liabilities
Net borrowings of acquired companies
Net borrowings of divested companies
Exchange differences on net borrowings and other changes
Dividends paid and changes in non-controlling interest and reserves
Net issue (repayment) of perpetual hybrid bond
CHANGE IN NET BORROWINGS BEFORE LEASE LIABILITIES
IFRS 16 first application effect
Repayment of lease liabilities
Inception of new leases and other changes
Change in lease liabilities
CHANGE IN NET BORROWINGS AFTER LEASE LIABILITIES
(€ million)
2020
(8,628)
2019
155
2018
Change
4,137
(8,783)
12,641
10,480
(9)
3,251
(18)
509
(170)
6,224
366
1,346
7,657
(474)
6,168
1,632
275
(2,049)
(5,068)
(5,226)
(875)
4,822
(4,644)
(392)
28
(735)
(921)
1,156
3,115
(869)
(941)
12,392
(8,376)
(3,008)
504
(254)
1,258
(279)
(1,540)
(877)
(522)
13,647
(9,119)
(244)
1,242
942
6,468
(357)
320
2,975
(69)
3,419
6,726
2020
(921)
(869)
(67)
759
1
(4,861)
11,700
2019
1,258
(877)
13
(158)
(€ million)
18
3,492
12,529
(4,974)
2018
Change
6,468
(2,179)
(18)
(499)
(367)
(1,968)
(3,424)
(2,957)
2,975
(91)
869
(239)
630
539
(3,188)
(5,759)
877
(766)
(5,648)
(8,836)
2,627
2,627
2,161
161
(2,973)
(384)
(837)
3,019
66
(7,570)
3,732
2,616
(476)
(481)
(2,179)
1,435
4,655
8
1,456
2,975
(70)
8,280
8
(67)
(13)
917
1,456
2,975
3,097
5,759
(8)
527
6,278
9,375
Dividends paid and changes in non-controlling interests and reserves
(1,968)
(3,424)
(2,957)
(a) For a reconciliation to the statutory statement of cash flow see the paragraph “Reconciliation of Summarized Group Balance Sheet and Statement of Cash Flows to Statutory Schemes”.
Net cash provided by operating activities for the full year 2020
was €4,822 million, 61% lower than 2019 due to a deteriorated
scenario and the circumstance that the 2019 amount included
higher dividends paid by the JV Vår Energi (€1,057 million in
2019 vs. €274 million in the current period).
Changes in working capital in the full year of 2020 were mainly
driven by a reduction in the book value of inventories due to
the alignment to their net realizable values at period-end and
despite a lower amount of trade receivables due in subsequent
reporting periods divested to financing institutions compared
to the fourth quarter 2019 (-€1 billion), as well as the settle-
ment of a contractual dispute with a first party in the E&P busi-
ness (approximately -€0.4 billion).
Adjusted cash flow was €6,726 million with a reduction of
43% compared to the previous year. This non-GAAP measu-
re includes net cash provided by operating activities befo-
re changes in working capital excluding inventory holding
gains or losses and provisions for extraordinary credit los-
ses and other charges, as well as the fair value of commo-
dity derivatives lacking the formal criteria to be designated
as hedges and the fair value of forward gas sale contracts
with physical delivery which were not accounted in accor-
dance with the own use exemption. The reduction from the
full year of 2019 is due to scenario effects of approximately
-€6.0 billion, including the impact of dividends from equity
accounted entities, operational impacts associated with the
Management report | Consolidated financial statements | Annex
105
COVID-19 for -€1.3 billion, while the underlying performance
was a positive €2.3 billion. The Group cash tax rate was 32%
(31% in the full year of 2019).
A reconciliation of adjusted net cash before changes in wor-
king capital at replacement cost to net cash provided by opera-
ting activities for full year of 2019 and 2020 is provided below:
Net cash provided by operating activities
Changes in working capital related to operations
Exclusion of commodity derivatives
Exclusion of inventory holding (gains) losses
Provisions for extraordinary credit losses and other charges
(€ million)
2020
4,822
18
440
1,318
128
2019
2018
Change
12,392
(366)
(439)
(223)
336
13,647
(1,632)
(133)
96
551
(7.570)
384
879
1.541
(208)
Adjusted net cash before changes in working capital at replacement cost
6,726
11,700
12,529
(4.974)
CAPITAL EXPENDITURE
Exploration & Production
- acquisition of proved and unproved properties
- exploration
- development
- other expenditure
Global Gas & LNG Portfolio
Refining & Marketing and Chemicals
- Refining & Marketing
- Chemicals
EGL, Power & Renewables
- EGL
- Power
- Renewables
Corporate and other activities
Impact of unrealized intragroup profit elimination
Capital expenditure
Investments and purchase of consolidated subsidiaries and businesses
Total capex and investments and purchase of consolidated subsidiaries
and businesses
(€ million)
2020
3,472
57
283
2019
6,996
400
586
2018
Change
7,901
(3,524)
869
463
(343)
(303)
3,077
5,931
6,506
(2,854)
% Ch.
(50.4)
(85.8)
(51.7)
(48.1)
(30.4)
(26.7)
(17.4)
(27.9)
55.1
(17.9)
1.2
23.8
(53.5)
20.2
55
11
771
588
183
293
175
52
66
107
(10)
79
15
933
815
118
357
173
42
142
89
(14)
4,644
392
8,376
3,008
63
26
877
726
151
238
143
46
49
94
(17)
9,119
244
(24)
(4)
(162)
(227)
65
(64)
2
10
(76)
18
(3,732)
(2,616)
(44.6)
(87.0)
5,036
11,384
9,363
(6,348)
(55.8)
Cash outflows for capital expenditure and investments
were €5,036 million, including the acquisition of the control
of the Evolvere company and of minority interests in Fin-
project and in Novis Renewables Holdings, as well as capi-
tal contributions made to certain equity-accounted entities
engaged in the execution of projects of Eni’s interest. Net
of the above-mentioned non-organic items and of utilization
of trade advances cashed by Egyptian partners in previous
reporting periods in relation to the financing of the Zohr
project (€0.25 billion), net capital expenditures amounted
to €4.97 billion, 36% lower than the same period of 2019
leveraging the curtailments implemented by the manage-
ment following a review of the industrial plan 2020-2021 in
response to the pandemic COVID-19 crisis. In the full year of
2020 net capex were fully funded by the adjusted cash flow.
Capital expenditure amounted to €4,644 million (€8,376
million in 2019), decreasing by 45% from 2019 and mainly
related to:
development activities (€3,077 million) mainly in Egypt, In-
donesia, the United Arab Emirates, Italy, the United States,
Angola, Mexico, Iraq and Kazakhstan;
refining activity in Italy and outside Italy (€462 million)
mainly relating to the activities to maintain plants’ integri-
ty and stay-in-business, as well as HSE initiatives; market-
ing activity (€126 million) for regulation compliance and
stay-in-business initiatives in the retail network in Italy and
in the rest of Europe;
initiatives relating to gas and power marketing in the retail
business (€175 million).
Eni Annual Report 2020
106
Alternative performance measures (Non-GAAP measures)
Management evaluates underlying business performance on
the basis of Non-GAAP financial measures under IFRS (“Alter-
native performance measures”), such as adjusted operating
profit and adjusted net profit, which are arrived at by excluding
inventory holding gains or losses, special items and, in deter-
mining the business segments’ adjusted results, finance charg-
es on finance debt and interest income. From 2017, the recog-
nition of the inventory holding (gains) losses has been revised
in the Gas & Power segment considering a recently-enacted,
less restrictive regulatory framework relating the legal obliga-
tion on part of gas wholesalers to retain gas volumes in stor-
age to ensure an adequate level of modulation to the retail seg-
ment. On this basis, management has progressively reduced
gas quantities held in storage and has commenced to leverage
those quantities to improve margins by seeking to capture the
seasonality in gas prices existing between the phase of gas
injection (which typically occurs in summer months) vs. the
phase of gas off-take (which typically occurs during the winter
months). Therefore, from the closure of the statutory period of
gas injection, i.e. from the fourth quarter of 2017, the determi-
nation of the stock profit or loss in the Gas & Power segment
has changed and currently gas off-takes from storage are val-
ued at the average cost incurred during the injection period net
of the effects of hedging derivatives, ensuring when the pur-
chased volumes are matched by the corresponding sales (net
of the effects of hedging derivatives) the proper measurement
and accountability of the economic performances. The adjust-
ed operating profit of each business segment reports gains
and losses on derivative financial instruments entered into to
manage exposure to movements in foreign currency exchange
rates, which affect industrial margins and translation of com-
mercial payables and receivables. Accordingly, also currency
translation effects recorded through profit and loss are report-
ed within business segments’ adjusted operating profit. The
taxation effect of the items excluded from adjusted operating
or net profit is determined based on the specific rate of taxes
applicable to each of them. Management includes them in or-
der to facilitate a comparison of base business performance
across periods, and to allow financial analysts to evaluate Eni’s
trading performance on the basis of their forecasting models.
Non-GAAP financial measures should be read together with
information determined by applying IFRS and do not stand in
for them. Other companies may adopt different methodologies
to determine Non-GAAP measures. Follows the description of
the main alternative performance measures adopted by Eni.
The measures reported below refer to the performance of the
reporting periods disclosed in this press release.
Adjusted operating and net profit Adjusted operating and net
profit are determined by excluding inventory holding gains or
losses, special items and, in determining the business seg-
ments’ adjusted results, finance charges on finance debt and
interest income. The adjusted operating profit of each busi-
ness segment reports gains and losses on derivative financial
instruments entered into to manage exposure to movements in
foreign currency exchange rates which impact industrial mar-
gins and translation of commercial payables and receivables.
Accordingly, also currency translation effects recorded through
profit and loss are reported within business segments’ adjust-
ed operating profit. The taxation effect of the items excluded
from adjusted operating or net profit is determined based on
the specific rate of taxes applicable to each of them. Finance
charges or income related to net borrowings excluded from the
adjusted net profit of business segments are comprised of in-
terest charges on finance debt and interest income earned on
cash and cash equivalents not related to operations. Therefore,
the adjusted net profit of business segments includes finance
charges or income deriving from certain segment operated as-
sets, i.e., interest income on certain receivable financing and
securities related to operations and finance charge pertaining
to the accretion of certain provisions recorded on a discounted
basis (as in the case of the asset retirement obligations in the
Exploration & Production segment).
Inventory holding gain or loss This is the difference between
the cost of sales of the volumes sold in the period based on
the cost of supplies of the same period and the cost of sales of
the volumes sold calculated using the weighted average cost
method of inventory accounting as required by IFRS.
Special items These include certain significant income or
charges pertaining to either: (i) infrequent or unusual events
and transactions, being identified as non-recurring items under
such circumstances; (ii) certain events or transactions which
are not considered to be representative of the ordinary course
of business, as in the case of environmental provisions, re-
structuring charges, asset impairments or write ups and gains
or losses on divestments even though they occurred in past pe-
riods or are likely to occur in future ones. Exchange rate differ-
ences and derivatives relating to industrial activities and com-
mercial payables and receivables, particularly exchange rate
derivatives to manage commodity pricing formulas which are
quoted in a currency other than the functional currency are re-
classified in operating profit with a corresponding adjustment
to net finance charges, notwithstanding the handling of foreign
currency exchange risks is made centrally by netting off nat-
urally-occurring opposite positions and then dealing with any
residual risk exposure in the derivative market. Finally, special
items include the accounting effects of fair-valued commodi-
ty derivatives relating to commercial exposures, in addition to
Management report | Consolidated financial statements | Annex
107
those which lack the criteria to be designed as hedges, also
those which are not eligible for the own use exemption, includ-
ing the ineffective portion of cash flow hedges, as well as the
accounting effects of commodity and exchange rates deriva-
tives whenever it is deemed that the underlying transaction is
expected to occur in future reporting periods. As provided for
in Decision No. 15519 of July 27, 2006 of the Italian market
regulator (CONSOB), non-recurring material income or charges
are to be clearly reported in the management’s discussion and
financial tables.
Leverage Leverage is a Non-GAAP measure of the Company’s
financial condition, calculated as the ratio between net bor-
rowings and shareholders’ equity, including non-controlling
interest. Leverage is the reference ratio to assess the solidity
and efficiency of the Group balance sheet in terms of inci-
dence of funding sources including third-party funding and
equity as well as to carry out benchmark analysis with indus-
try standards.
Gearing Gearing is calculated as the ratio between net bor-
rowings and capital employed net and measures how much
of capital employed net is financed recurring to third-party
funding.
Net cash provided by operating activities before changes in
working capital at replacement cost Net cash provided from
operating activities before changes in working capital and ex-
cluding inventory holding gain or loss.
Free cash flow Free cash flow represents the link existing be-
tween changes in cash and cash equivalents (deriving from
the statutory cash flows statement) and in net borrowings
(deriving from the summarized cash flow statement) that oc-
curred from the beginning of the period to the end of period.
Free cash flow is the cash in excess of capital expenditure
needs. Starting from free cash flow it is possible to determine
either: (i) changes in cash and cash equivalents for the period
by adding/deducting cash flows relating to financing debts/
receivables (issuance/repayment of debt and receivables re-
lated to financing activities), shareholders’ equity (dividends
paid, net repurchase of own shares, capital issuance) and
the effect of changes in consolidation and of exchange rate
differences; (ii) changes in net borrowings for the period by
adding/deducting cash flows relating to shareholders’ equity
and the effect of changes in consolidation and of exchange
rate differences.
operations” when these are not strictly related to the business
operations.
ROACE (Return On Average Capital Employed) adjusted Is the
return on average capital invested, calculated as the ratio be-
tween net income before minority interests, plus net financial
charges on net financial debt, less the related tax effect and net
average capital employed.
Coverage Financial discipline ratio, calculated as the ratio be-
tween operating profit and net finance charges.
Current ratio Measures the capability of the company to repay
short-term debt, calculated as the ratio between current assets
and current liabilities.
Debt coverage Rating companies use the debt coverage ratio
to evaluate debt sustainability. It is calculated as the ratio be-
tween net cash provided by operating activities and net bor-
rowings, less cash and cash-equivalents, securities held for
non-operating purposes and financing receivables for non-op-
erating purposes.
Net Debt/EBITDA adjusted Net Debt/adjusted EBITDA is the
ratio between the profit available to cover the debt before in-
terest, taxes, amortizations and impairment. This index is a
measure of the company’s ability pay off its debt and gives an
indication as to how long a company would need to operate at
its current level to pay off all its debt.
Profit per boe Measures the return per oil and natural gas bar-
rel produced. It is calculated as the ratio between Results of
operations from E&P activities (as defined by FASB Extractive
Activities - Oil & Gas Topic 932) and production sold.
Opex per boe Measures efficiency in the Oil & Gas development
activities, calculated as the ratio between operating costs (as
defined by FASB Extractive Activities - Oil and Gas Topic 932)
and production sold.
Finding & Development cost per boe Represents Finding & De-
velopment cost per boe of new proved or possible reserves.
It is calculated as the overall amount of exploration and de-
velopment expenditure, the consideration for the acquisition of
possible and probable reserves as well as additions of proved
reserves deriving from improved recovery, extensions, discov-
eries and revisions of previous estimates (as defined by FASB
Extractive Activities - Oil and Gas Topic 932).
Net borrowings Net borrowings is calculated as total finance
debt less cash, cash equivalents and certain very liquid in-
vestments not related to operations, including among others
non-operating financing receivables and securities not related
to operations. Financial activities are qualified as “not related to
The following tables report the group operating profit and
Group adjusted net profit and their breakdown by segment, as
well as is represented the reconciliation with net profit attribut-
able to Eni’s shareholders of continuing operations.
Eni Annual Report 2020 108
RECONCILIATION TABLES OF NON-GAAP RESULTS TO THE MOST COMPARABLE MEASURES OF FINANCIAL PERFORMANCE
DETERMINED IN ACCORDANCE TO GAAPS
2020
Reported operating profit (loss)
Exclusion of inventory holding (gains) losses
Exclusion of special items:
- environmental charges
- impairment losses (impairments reversal), net
- net gains on disposal of assets
- risk provisions
- provision for redundancy incentives
- commodity derivatives
- exchange rate differences and derivatives
- other
Special items of operating profit (loss)
Adjusted operating profit (loss)
Net finance (expense) income(a)
Net income (expense) from investments(a)
Income taxes(a)
Tax rate (%)
Adjusted net profit (loss)
of which attributable to:
- non-controlling interest
- Eni's shareholders
Reported net profit (loss) attributable to Eni's shareholders
Exclusion of inventory holding (gains) losses
Exclusion of special items
Adjusted net profit (loss) attributable to Eni's shareholders
(a) Excluding special items.
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937
6,940
(758)
Management report | Consolidated financial statements | Annex
(€ million)
n
o
i
t
c
u
d
o
r
P
&
n
o
i
t
a
r
o
l
p
x
E
7,417
32
1,217
(145)
(18)
23
14
100
1,223
8,640
(362)
312
(5,154)
o
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l
o
f
t
r
o
P
G
N
L
&
s
a
G
l
a
b
o
G
l
431
(5)
1
(576)
109
233
(238)
193
3
(21)
(75)
s
l
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a
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m
e
h
C
d
n
a
g
n
i
t
e
k
r
a
M
&
g
n
i
n
fi
e
R
(682)
(318)
244
922
(5)
(2)
8
(118)
(5)
(23)
1,021
21
(36)
37
(64)
s
e
l
b
a
w
e
n
e
R
&
r
e
w
o
P
,
L
G
E
74
42
3
255
(10)
6
296
370
(1)
10
(104)
d
n
a
e
t
a
r
o
p
r
o
C
s
e
i
t
i
v
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t
c
a
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t
o
(688)
62
12
(1)
23
10
(20)
86
(602)
(525)
43
218
109
p
u
o
r
G
6,432
(223)
338
2,188
(151)
3
45
(439)
108
296
2,388
8,597
(921)
381
d
e
z
i
l
a
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r
n
u
p
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t
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p
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t
a
n
m
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l
e
(120)
95
(25)
5
(5,174)
3,436
100
(42)
275
(866)
(20)
64.2
2,883
7
2,876
148
(157)
2,885
2,876
2019
Reported operating profit (loss)
Exclusion of inventory holding (gains) losses
Exclusion of special items:
- environmental charges
- impairment losses (impairments reversal), net
- net gains on disposal of assets
- risk provisions
- provision for redundancy incentives
- commodity derivatives
- exchange rate differences and derivatives
- other
Special items of operating profit (loss)
Adjusted operating profit (loss)
Net finance (expense) income(a)
Net income (expense) from investments(a)
Income taxes(a)
Tax rate (%)
Adjusted net profit (loss)
of which attributable to:
- non-controlling interest
- Eni's shareholders
Reported net profit (loss) attributable to Eni's shareholders
Exclusion of inventory holding (gains) losses
Exclusion of special items
Adjusted net profit (loss) attributable to Eni's shareholders
(a) Excluding special items.
Eni Annual Report 2020
110
2018
Reported operating profit (loss)
Exclusion of inventory holding (gains) losses
Exclusion of special items:
- environmental charges
- impairment losses (impairments reversal), net
- net gains on disposal of assets
- risk provisions
- provision for redundancy incentives
- commodity derivatives
- exchange rate differences and derivatives
- other
Special items of operating profit (loss)
Adjusted operating profit (loss)
Net finance (expense) income(a)
Net income (expense) from investments(a)
Income taxes(a)
Tax rate (%)
Adjusted net profit (loss)
of which attributable to:
- non-controlling interest
- Eni's shareholders
Reported net profit (loss) attributable to Eni's shareholders
Exclusion of inventory holding (gains) losses
Exclusion of special items
Adjusted net profit (loss) attributable to Eni's shareholders
(a) Excluding special items.
(€ million)
n
o
i
t
c
u
d
o
r
P
&
n
o
i
t
a
r
o
l
p
x
E
10,214
110
726
(442)
360
26
(6)
(138)
636
10,850
(366)
285
o
i
l
o
f
t
r
o
P
G
N
L
&
s
a
G
l
a
b
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G
l
387
s
l
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C
d
n
a
g
n
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t
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k
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a
M
&
g
n
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n
fi
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R
(501)
234
(73)
4
(63)
111
(88)
(109)
278
(3)
(1)
193
193
(9)
21
8
120
5
96
627
360
11
(2)
(5,814)
(156)
(145)
s
e
l
b
a
w
e
n
e
R
&
r
e
w
o
P
,
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G
E
340
(1)
2
118
(190)
(3)
(4)
(78)
262
(1)
10
(82)
d
n
a
e
t
a
r
o
p
r
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C
s
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i
t
i
v
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t
c
a
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e
h
t
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(668)
23
18
(1)
(1)
(1)
47
85
(583)
(697)
5
327
d
e
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i
l
a
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r
n
u
p
u
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r
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211
(138)
73
p
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G
9,983
96
325
866
(452)
380
155
(133)
107
(87)
1,161
11,240
(1,056)
297
(17)
(5,887)
4,955
118
224
189
(948)
56
56.2
4,594
11
4,583
4,126
69
388
4,583
Management report | Consolidated financial statements | Annex
RECONCILIATION OF SUMMARIZED GROUP BALANCE SHEET AND STATEMENT OF CASH FLOW TO STATUTORY SCHEMES
111
December 31, 2020
December 31, 2019
Notes to the
Consolidated
Financial
Statement
Amounts
from
statutory
scheme
Amounts
of the
summarized
Group scheme
Amounts
from
statutory
scheme
Amounts
of the
summarized
Group scheme
(€ million)
SUMMARIZED GROUP BALANCE SHEET
Items of Summarized Group Balance Sheet
(where not expressly indicated, the item derives
directly from the statutory scheme)
Fixed assets
Property, plant and equipment
Right of use
Intangible assets
Inventories - Compulsory stock
Equity‐accounted investments and other investments
Receivables and securities held for operating activities
Net payables related to capital expenditure, made up of:
- receivables related to disposals
- receivables related to disposals non‐current
- payables for purchase of non-current assets
Total fixed assets
Net working capital
Inventories
Trade receivables
Trade payables
Net tax assets (liabilities), made up of:
- current income tax payables
- non-current income tax payables
- other current tax liabilities
- deferred tax liabilities
- other non‐current tax liabilities
- current income tax receivables
- non-current income tax receivables
- other current tax assets
- deferred tax assets
- other non‐current tax assets
- receivables for Italian consolidated accounts
- payables for Italian consolidated accounts
Provisions
Other current assets and liabilities, made up of:
- short-term financial receivables for operating purposes
- receivables vs. partners for exploration and production activities and other
- other current assets
- other receivables and other assets non-current
- advances, other payables, payables vs. partners
for exploration and production activities and other
- other current liabilities
- other payables and other liabilities non-current
Total net working capital
Provisions for employee benefits
Assets held for sale including related liabilities
made up of:
- assets held for sale
- liabilities directly associated with held for sale
CAPITAL EMPLOYED, NET
Shareholders' equity including non‐controlling interest
Net borrowings
Total debt, made up of:
‐ long‐term debt
‐ current portion of long‐term debt
‐ short‐term debt
less:
Cash and cash equivalents
Securities held for trading
Financing receivables held for non‐operating purposes
Net borrowings before lease liabilities ex IFRS 16
Lease liabilities, made up of:
- long‐term lease liabilities
- current portion of long‐term lease liabilities
TOTAL NET BORROWINGS POST LEASE LIABILITIES EX IFRS 16(a)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
(a) For details on net borrowings see also note 19 to the consolidated financial statements.
(see note 16)
(see note 7)
(see note 10)
(see note 17)
21
11
(1,393)
(see note 7)
(see note 17)
(see note 10)
(see note 10)
(see note 10)
(see note 10)
(see note 7)
(see note 17)
(see note 16)
(see note 7)
(see note 10)
(see note 10)
(see note 17)
(see note 10)
(see note 10)
(243)
(360)
(1,124)
(5,524)
(26)
184
153
450
4,109
181
3
(1)
22
3,815
2,236
1,061
(2,863)
(3,748)
(1,851)
53,943
4,643
2,936
995
7,706
1,037
(1,361)
69,899
3,893
7,087
(8,679)
(2,198)
(13,438)
(1,328)
(14,663)
(1,201)
44
30
11
(2,276)
(456)
(454)
(1,411)
(4,920)
(63)
192
173
766
4,360
223
(4)
37
4,324
3,206
637
(2,785)
(5,735)
(1,548)
44
18
21,895
1,909
2,882
4,169
849
(see note 16)
54,079
37,493
26,686
(9,413)
(5,502)
(203)
11,568
5,018
16,586
54,079
18,910
3,156
2,452
4,759
889
62,192
5,349
3,059
1,371
9,964
1,234
(2,235)
80,934
4,734
8,519
(10,480)
(1,594)
(14,106)
(1,864)
(14,791)
(1,136)
18
65,025
47,900
24,518
(5,994)
(6,760)
(287)
11,477
5,648
17,125
65,025
Eni Annual Report 2020
112
SUMMARIZED GROUP CASH FLOW STATEMENT
Items of Summarized Cash Flow Statement and
confluence/reclassification of items in the statutory scheme
Net profit (loss)
Adjustments to reconcile net profit (loss) to net cash
provided by operating activities:
Depreciation, depletion and amortization and other non monetary items
- depreciation, depletion and amortization
- impairment losses (impairment reversals) of tangible,
intangible and right of use, net
- write-off of tangible and intangible assets
- share of profit (loss) of equity-accounted investments
- other changes
- net change in the provisions for employee benefits
Gains on disposal of assets, net
Dividends, interests, income taxes and other changes
- dividend income
- interest income
- interest expense
- income taxes
Cash flow from changes in working capital
- inventories
- trade receivables
- trade payables
- provisions for contingencies
- other assets and liabilities
Dividends received
Income taxes paid, net of tax receivables received
Interests (paid) received
- interest received
- interest paid
Net cash provided by operating activities
Investing activities
- tangible assets
- prepaid right of use
- intangible assets
Investments and purchase of consolidated subsidiaries and businesses
‐ investments
‐ Consolidated subsidiaries and businesses net of cash
and cash equivalent acquired
Disposals
- tangible assets
- intangible assets
- Consolidated subsidiaries and businesses net of cash
and cash equivalent disposed of
- tax disposals
- investments
Other cash flow related to capital expenditure, investments and disposals
‐ investment of securities and financing receivables held
for operating purposes
‐ change in payables in relation to investing activities
‐ disposal of securities and financing receivables held for operating purposes
‐ change in receivables in relation to disposals
Free cash flow
2020
2019
(€ million)
Amounts
from statutory
scheme
Amounts of the
summarized
Group scheme
Amounts
from statutory
scheme
Amounts of the
summarized
Group scheme
(8,628)
12,641
(9)
3,251
(18)
509
(2,049)
(875)
4,822
(4,644)
(392)
28
155
10,480
(170)
6,224
366
1,346
(5,068)
(941)
12,392
(8,376)
(3,008)
504
8,106
2,188
300
88
(179)
(23)
(247)
(147)
1,027
5,591
(200)
1,023
(940)
272
211
88
(1,029)
(8,049)
(16)
(311)
(3,003)
(5)
264
17
187
(3)
39
(735)
(254)
(237)
(307)
195
95
(921)
1,258
7,304
3,183
329
1,733
92
(150)
(126)
877
2,650
1,054
1,316
(1,614)
(1,056)
282
53
(928)
(4,407)
(237)
(283)
(109)
12
16
(166)
(757)
136
52
Management report | Consolidated financial statements | Annex
continued SUMMARIZED GROUP CASH FLOW STATEMENT
Items of Summarized Cash Flow Statement and
confluence/reclassification of items in the statutory scheme
Free cash flow
Borrowings (repayment) of debt related to financing activities
- net change of securities and financing receivables held
for non-operating purposes
Changes in short and long‐term finance debt
- increase in long-term debt
- repayments of long-term debt
- increase (decrease) in short-term debt
Repayment of lease liabilities
Dividends paid and changes in non‐controlling interest and reserves
‐ reimbursement to non-controlling interest
- net purchase of treasury shares
- acquisition of additional interests in consolidated subsidiaries
‐ dividends paid to Eni's shareholders
‐ dividends paid to non‐controlling interest
Issue of perpetual subordinated bonds
113
2020
2019
(€ million)
Amounts
from statutory
scheme
Amounts of the
summarized
Group scheme
Amounts
from statutory
scheme
Amounts of the
summarized
Group scheme
1,156
5,278
(3,100)
937
(1,965)
(3)
(921)
1,156
3,115
(869)
(1,968)
2,975
(69)
3,419
(279)
1,811
(3,512)
161
(1)
(400)
(1)
(3,018)
(4)
1
1,258
(279)
(1,540)
(877)
(3,424)
1
(4,861)
Effect of changes in consolidation, exchange differences and cash
and cash equivalent
- effect of exchange rate changes on cash and cash equivalents and other changes
(69)
Net increase (decrease) in cash and cash equivalent
Eni Annual Report 2020
114
Risk factors and uncertainties
RISK FACTORS AND UNCERTAINTIES
The risks described below may have a material effect on our
operational and financial performance. We invite our investors
to consider these risks carefully.
Strategic risks and risks related to the business activities and
industries of Eni and its consolidated subsidiaries
The Company’s performance is affected by volatile prices of cru-
de oil and produced natural gas and by fluctuating margins on
the marketing of natural gas and on the integrated production
and marketing of refined products and chemical products
The price of crude oil is the single, largest variable that affects
the Company’s operating performance and cash flow. The price
of crude oil has a history of volatility because, like other com-
modities, it is cyclical and is influenced by several macro-fac-
tors that are beyond management’s control. Crude oil prices are
mainly driven by the balance between global oil supplies and
demand and hence the global levels of inventories and spare
capacity. In the short-term, worldwide demand for crude oil is
highly correlated to the macroeconomic cycle. A downturn in
economic activity normally triggers lower global demand for
crude oil and possibly a supply build-up. Whenever global sup-
plies of crude oil outstrip demand, crude oil prices weaken. Fac-
tors that can influence the global economic activity in the short-
term and demand for crude oil include several, unpredictable
events, like trends in the economic growth in China, India, the
United States and other large oil-consuming Countries, financial
crisis, geo-political crisis, local conflicts and wars, social insta-
bility, pandemic diseases, the flows of international commerce,
trade disputes and governments’ fiscal policies, among others.
All these events could influence demands for crude oil. In the
long-term, factors which can influence demands for crude oil in-
clude on the positive side demographic growth, improving living
standards and GDP expansion. Negative factors that may af-
fect demand in the long-term comprise availability of alternative
sources of energy (e.g., nuclear and renewables), technological
advances affecting energy efficiency, measures which have
been adopted or planned by governments all around the world
to tackle climate change and to curb carbon-dioxide emissions
(CO2 emissions), including stricter regulations and control on
production and consumption of crude oil, or a shift in consumer
preferences. The civil society and several governments all over
the world, with the EU leading the way, have announced plans to
transition towards a low carbon model through various means
and strategies, particularly by supporting development of re-
newable energies and the replacement of internal combustion
vehicles with electric vehicles, including the possible adoption
of tougher regulations on the use of hydrocarbons such as the
taxation of CO2 emissions as a mitigation action of the clima-
te change risk. The push to reduce worldwide greenhouse gas
emissions and an ongoing energy transition towards a low
carbon economy, which are widely considered to be irreversi-
ble trends, will represent in our view major trends in shaping
global demand for crude oil over the long-term and may lead to
structural lower crude oil demands and consumption. We also
believe that the dramatic events of 2020 in relation to the spre-
ad of the COVID-19 pandemic could have possibly accelerated
those trends. See the section dedicated to the discussion of cli-
mate-related risks below.
Global production of crude oil is controlled to a large degree by
the OPEC cartel, which has recently extended to include other
important oil producers like Russia and Kazakhstan (so-called
OPEC+). Saudi Arabia plays a crucial role within the cartel, be-
cause it is estimated to hold huge amounts of reserves and
a vast majority of worldwide spare production capacity. This
explains why geopolitical developments in the Middle East and
particularly in the Gulf area, like regional conflicts, acts of war,
strikes, attacks, sabotages and social and political tensions can
have a big influence on crude oil prices. Also, sanctions impo-
sed by the United States and the EU against certain producing
Countries may influence trends in crude oil prices. However, we
believe that the continued rise of crude oil production in the Uni-
ted States due to the technology-driven shale oil revolution has
somewhat reduced the ability of the OPEC+ to control the glo-
bal supply of oil. To a lesser extent, factors like adverse weather
conditions such as, hurricanes in sensitive areas like the Gulf of
Mexico, and operational issues at key petroleum infrastructure
can influence crude oil prices.
The year 2020 was one of the worst on record for the Oil & Gas
industry due to the far-reaching consequences of the COVID-19
pandemic, the long-term impacts of which have yet to be under-
stood and estimated. Almost all of the companies in the sector
suffered material economic losses and cash flow shortfalls and
saw their business fundamentals along with share prices signi-
ficantly deteriorate due to a massive hit to global demand for
crude oil and other energy products and to collapsing commo-
dity prices as direct consequences of the lockdown measures
imposed in the first months of the year by governments throu-
ghout the world to contain the spread of the pandemic, leading
to the suppression of industrial activity, international commer-
ce and travel as well as souring the moods of consumers. To
make things worse, while demand was falling precipitously, in
Management report | Consolidated financial statements | Annex 115
March 2020 the OPEC+ failed to reach a deal for production
cuts claimed by some members to counteract the effects of
the COVID-19 pandemic and Saudi Arabia decided to increase
its output and reduce prices to gain market share. The concur-
rence of a material reduction in global crude oil demand and
rising production on the part of the OPEC+ members triggered
a collapse in crude oil prices. At the peak of the COVID-19 crisis
and the price war, the value of the Brent crude benchmark had
fallen to below 15 $/BBL, marking the lowest point over several
decades on an inflation-adjusted basis. The situation of extre-
me oversupply in the month of April 2020 was signalled by bal-
looning global inventories, depletion of storage capacity and a
strong contango structure in the prices of contracts for future
deliveries. Subsequently, with the gradual easing of lockdown
measures and the implementation from May 2020 of major
output cuts by the members of the OPEC+ as well as major ca-
pex curtailments implemented by international Oil & Gas com-
panies, Brent prices staged a significant comeback, recovering
to a level of almost 45 $/BBL in July. However, this recovery
weakened at the end of the summer and in the autumn months
due to a continuing rise in COVID-19 cases in western Coun-
tries, particularly in the United States, continental Europe and
the UK forcing national or local governments to re-impose new
restrictive measures or full lockdowns to curb the spread of the
virus, which negatively affected the pace of economic recovery
and the consumption of fuels like gasoline and gasoil. On the
other hand, an acceleration in the economic recovery in main-
land China and other Asian Countries where the virus was more
effectively contained helped sustain the price of crude oil and
a reduction in global inventories. Finally, the recovery of crude
oil prices gained strength in the final months of 2020 and in the
first months of 2021 due to a favourable combination of market
and macro developments, most notably: a break-through in the
development and approval of effective vaccines against CO-
VID-19, further acceleration in the pace of economic activity in
Asia, the outcome of the presidential election in the United Sta-
tes which fuelled expectations of large stimulus measures in fa-
vour of the U.S. economy, the continuing commitments on the
part of OPEC+ to support the rebalancing of the oil market by
slowing down the planned curtailments of the extra production
quotas enacted in May 2020 and finally the surprising announ-
cement by Saudi Arabia that it would implement a voluntary cut
of its production quota of 1 million barrels/day in the months of
February and March 2021 to compensate for any possible im-
pact on demand due to recrudescence of the pandemic in we-
stern Countries. Unexpectedly, while oil companies’ executives,
traders and fund managers were weighing all these macro and
market developments, a massive, unprecedented cold snap hit
the Northern-Eastern hemisphere, particularly Japan, South Ko-
rea and China, causing a spike in demand for oil-based heating
fuels and LNG, which significantly boosted the market prices
of all hydrocarbons. Due to such recent developments, Brent
crude oil prices strengthened to 50 $/bbl at the end of 2020 and
then rallied further in the first quarter of 2021 averaging about
60 $/bbl. Despite this improvement, we expect the trading en-
vironment for crude oil price to remain volatile and uncertain in
2021 due to the virus overhang, a weak macroeconomic back-
drop in the United States and Europe and high inventory levels
in OECD Countries, which remain above historical averages.
The COVID-19 pandemic negatively and materially affected
a weak global natural gas market. As a result of the gas de-
mand collapse recorded in the first half of 2020 due to the
economic crisis resulting from COVID-19, gas prices fell to
unprecedented lows in all the main geographies. Likewise,
crude oil and natural gas prices recovered in the second half
of the year supported by an improving economy and falling
production levels due to capex constraints on global Oil & Gas
companies. Overall, natural gas prices fell remarkably in 2020
(the prices at the Italian spot market were 35% lower than
in 2019). However, at the end of 2020 and in January 2021
natural gas prices staged a material comeback supported by
record seasonal demand in the Northern-Eastern hemisphere
driven by record low temperatures.
Lower hydrocarbon prices from one year to another negati-
vely affect the Group’s consolidated results of operations and
cash flow. This is because lower prices translate into lower
revenues recognised in the Company’s Exploration & Pro-
duction segment at the time of the price change, whereas
expenses in this segment are either fixed or less sensitive to
changes in crude oil prices than revenues. In 2020, the Brent
price averaged about 42 $/bbl, a decrease of 35% compared
to 2019, which significantly and adversely affected Eni’s resul-
ts of operations and cash flow for the year. We estimated that
lower equity crude oil realizations and other scenario effects
(lower equity gas prices, lower refining margins and other
declines as described below) reduced the Company’s under-
lying operating profit and the net cash provided by operating
activities by about €7 billion.
Considering the risks and uncertainties to the outlook for 2021,
we are retaining a prudent financial framework and capital di-
scipline in our investment decisions, while we are assuming a
Brent price forecast of 50 $/bbl for the full year. Based on the
current Oil & Gas assets portfolio of Eni, management estima-
tes that the Company’s cash flow from operations will vary by
Eni Annual Report 2020 116
approximately €150 million for each one-dollar change in the
price of the Brent crude oil benchmark compared to the 50 $/
bbl scenario adopted by management for the current year and
for proportional changes in gas prices.
In addition to the short-term impacts on the Group’s profitability,
a market crisis like the one experienced in 2020 may also alter
the fundamentals of the oil and natural gas markets. Lower oil
and gas prices over prolonged periods of time may have mate-
rial adverse effects on Eni’s performance and business outlook,
because such a scenario may limit the Group’s ability to finance
expansion projects, further reducing the Company’s ability to
grow future production and revenues, and to meet contractual
obligations. The Company may also need to review investment
decisions and the viability of development projects and capex
plans and, as a result of this review, the Company could re-
schedule, postpone or curtail development projects. A structu-
ral decline in hydrocarbon prices could trigger a review of the
carrying amounts of oil and gas properties and this could result
in recording material asset impairments and in the de-booking
of proved reserves, if they become uneconomic in this type of
environment.
In the course of 2020 Eni’s management revised its view of
the oil market fundamentals to factor in certain emerging
trends. Management considered that the lockdown measu-
res in response to COVID-19 could result in a prolonged pe-
riod of weak oil demand. Furthermore, the massive actions
in support of the economic recovery planned by governmen-
ts in several Countries may have a strong environmental fo-
otprint and be supportive of the green economy, leading to
a potential acceleration in the pace of energy transition and
in the replacement of hydrocarbons in the energy mix in the
long-term. Based on these considerations, in 2020 the Com-
pany revised its long-term forecast for hydrocarbon prices,
which are the main driver of capital allocations decisions
and of the recoverability assessment of the book values of
our non-current assets. The revised scenario adopted by Eni
foresees a long-term price of the marker Brent of 60 $/bbl
in 2023 real terms compared to the previous assumption of
70 $/bbl. The price of natural gas at the Italian spot market
“PSV” is estimated at 5.5 $/mmBTU in real terms in 2023
as compared to the previous assumption of 7.8 $/mmBTU.
This changed outlook for hydrocarbons prices drove the re-
cognition of significant impairment losses relating to Oil &
Gas assets (€1.9 billion, pre-tax). For further details, see the
notes to the consolidated financial statements. Furthermo-
re, given the decline in crude oil prices used in the estimation
of proved reserves according to the SEC rules compared to
2019 (average of the first-of-the-day price of each month at
41 $/bbl in 2020 vs. 63 $/bbl in 2019), we were forced to
debook 124 mmBOE of reserves that have become uneco-
nomic in this environment.
Finally, during a downturn like the one experienced in 2020, the
Group’s access to capital may be reduced and lead to a down-
grade or other negative rating action with respect to the Group’s
credit rating by rating agencies. These downgrades may nega-
tively affect the Group’s cost of capital, increase the Group’s fi-
nancial expenses, and may limit the Group’s ability to access
capital markets and execute aspects of the Group’s business
plans.
Eni estimates that approximately 50% of its current production
is exposed to fluctuations in hydrocarbons prices. Exposure to
this strategic risk is not subject to economic hedging, except
for some specific market conditions or transactions. The re-
maining portion of Eni’s current production is largely unaffected
by crude oil price movements considering that the Company’s
property portfolio is characterized by a sizeable presence of
production sharing contracts, whereby the Company is entitled
to a portion of a field’s reserves, the sale of which is intended
to cover expenditures incurred by the Company to develop and
operate the field. The higher the reference prices for Brent crude
oil used to estimate Eni’s proved reserves, the lower the number
of barrels necessary to recover the same amount of expenditu-
re and hence production, and vice versa.
All these risks may adversely and materially impact the Group’s
results of operations, cash flow, liquidity, business prospects, fi-
nancial condition, and shareholder returns, including dividends,
the amount of funds available for stock repurchases and the
price of Eni’s share.
Margins on the manufacturing and sale of fuels and other refi-
ned products, chemical commodities, and other energy com-
modities are driven by economic growth, global and regional dy-
namics in supplies and demand and other competitive factors.
Generally speaking, the prices of products mirror that of oil-ba-
sed feedstock, but they can also move independently. Margins
for refined and chemical products depend upon the speed at
which products’ prices adjust to reflect movements in oil prices.
Margins at our business of wholesale marketing of natural gas
are driven by the spreads between spot prices at continental
hubs to which our procurement costs are indexed and the spot
prices at the Italian hub where a large part of our gas sales oc-
cur. These spreads can be very volatile.
In 2020, demand and margins for fuels and petrochemical pro-
ducts were materially hit by the economic downturn triggered
by the COVID-19 pandemic, resulting in lower demand for fuels
and petrochemical commodities. The trading environment was
particularly unfavourable in the refining business due to an un-
precedented combination of negative market trends. During the
peak of the pandemic crisis in the second quarter of 2020, the
lockdown measures imposed by governments throughout the
world to curb the spread of the pandemic resulted in the sup-
pression of air travel and people’s commuting by car leading to
Management report | Consolidated financial statements | Annex 117
a massive decline in worldwide consumption of gasoline, kero-
sene and other fuels. Furthermore, while those restrictive mea-
sures were eased in Asia and other parts of the world, they have
continued or have been re-imposed in Italy and other European
Countries, which are the main reference markets of our refining
and marketing business. Although since the implementation of
the production cuts by OPEC+ producers, crude oil prices have
been moderately recovering throughout 2020, the increases in
the cost of the feedstock did not translate into higher prices
of fuels due to a depressed demand environment. Finally, the
profitability of our business was also negatively affected by the
appreciation of sour crude oils towards medium/light qualities
such as the Brent, due to market dislocations and the effects
of the production cuts implemented by the OPEC+, which re-
duced availability of sour crudes in the marketplace. This latter
trend negatively affected the profitability of conversion plants,
which are normally supported by the fact that heavy and sour
crudes trade at a discount vs. the light qualities as the Brent.
Due to all those market trends, the Company’s own internal
performance measure to gauge the profitability of its refineries,
the SERM (see glossary), fell to historic lows over the second
half of 2020, plunging into negative territory at the end of 2020
and the beginning of 2021 in concomitance with the rally in
crude oil prices, which has yet to be supported by a recovery
of fuel demand in Europe. This trend will negatively affect the
profitability of our refining business in 2021. The sales volumes
at our network of service stations were significantly impacted
by lower consumption due to the lockdown and anti-pandemic
measures. The deteriorated outlook for refining margins and
fuels consumption triggered a revision of the book value of the
Company’s oil-based refining assets leading to the recognition
of €1.2 billion of impairment losses.
The chemical business of Eni was negatively affected by a si-
gnificant reduction in demand in the segments most exposed
to the COVID-19 crisis such as elastomers following the con-
traction in the automotive sector, while the polyethylene mar-
gins were supported both by the reduction in the cost of oil
feedstock and by strong demand for single-use plastics and
packaging as consequence of higher demand for goods related
to “stay-at-home economy”.
There is strong competition worldwide, both within the oil indu-
stry and with other industries, to supply energy and petroleum
products to the industrial, commercial and residential energy
markets
Eni faces strong competition in each of its business segments.
The current competitive environment in which Eni operates is
characterised by volatile prices and margins of energy commo-
dities, limited product differentiation and complex relationships
with state-owned companies and national agencies of the
Countries where hydrocarbons reserves are located to obtain
mineral rights. As commodity prices are beyond the Company’s
control, Eni’s ability to remain competitive and profitable in this
environment requires continuous focus on technological inno-
vation, the achievement of efficiencies in operating costs, ef-
fective management of capital resources and the ability to pro-
vide valuable services to energy buyers. It also depends on Eni’s
ability to gain access to new investment opportunities. The
economic crisis caused by the suppression of industrial activi-
ty and travel in response to the COVID-19 pandemic materially
and negatively impacted demand for the Company’s products,
driving a strong increase in the level of competition across all
sectors where we are operating. We believe that the pandemic
will have enduring effects on the competition within the Oil &
Gas sectors, including the refining and marketing of fuels and
other energy commodities and the supply of energy products to
the retail segment.
In the Exploration & Production segment, Eni is facing com-
petition from both international and state-owned oil compa-
nies for obtaining exploration and development rights and
developing and applying new technologies to maximise hy-
drocarbon recovery. Because of its smaller size relative to
other international oil companies, Eni may face a competitive
disadvantage when bidding for large scale or capital intensive
projects and it may be exposed to the risk of obtaining lower
cost savings in a deflationary environment compared to its
larger competitors given its potentially smaller market power
with respect to suppliers. Due to those competitive pressu-
res, Eni may fail to obtain new exploration and development
acreage, to apply and develop new technologies and to con-
trol costs. The COVID-19 pandemic has caused exploration
& production companies to significantly reduce their capital
investment in response to lower cash flows from operations
and to focus on the more profitable and scenario-resilient
projects. We believe that this development will be long-lasting
and likely drive increased competition among players to gain
access to relatively cheaper reserves (onshore vs. offshore;
proven areas vs. unexplored areas).
In the Global Gas & LNG Portfolio business, Eni is facing
strong competition in the European wholesale markets to sell
gas to industrial customers, the thermoelectric sector and
retail companies from other gas wholesalers, upstream com-
panies, traders and other players. The results of our wholesa-
le gas business are subject to global and regional dynamics
of gas demand and supplies. The results of the LNG business
are mainly influenced by the global balance between demand
and supplies, considering the higher level of flexibility of LNG
with respect to gas delivered via pipeline. In 2020, the econo-
mic crisis triggered by the COVID-19 pandemic exacerbated
the already weak fundamentals of the gas market. In fact, the
lockdown of European economies resulted in sharply lower
gas consumption leading to intensified competitive pressu-
res. These developments caused lower sales volumes of gas
Eni Annual Report 2020 118
marketed via pipeline and by our LNG business and signifi-
cantly lower prices. In 2020 Eni’s gas and LNG sales declined
by 11% due to the impact of the economic crisis triggered by
the pandemic. Sales margins at our LNG business were put
under pressure by collapsing demand due to the lockdown
of Asian economies, which are the main outlet of global LNG
production, as many buyers requested activation of the force
majeure clauses for not lifting LNG contracted volumes. The-
se developments led to increased competition in the global
LNG market, dragging down sales margins. We expect conti-
nued competitive pressure in our wholesale gas and LNG bu-
sinesses. However, in the first months of 2021 a colder-than
normal winter in the Northern Hemisphere has supported the
price of gas and LNG.
In the Refining & Marketing segment, Eni is facing competi-
tion both in the refining business and in the retail marketing
activity. Our Refining business has been negatively affected
for years by structural headwinds due to muted trends in the
European demand for fuels, refining overcapacity and conti-
nued competitive pressure from players in the Middle East,
the United States and Far East Asia. Those competitors can
leverage on larger plant scale and cost economies, availabi-
lity of cheaper feedstock and lower energy expenses. This
unfavourable competitive environment has been exacerba-
ted by the effects of the 2020 economic crisis due to the
COVID-19 pandemic, the consequent lockdown of entire eco-
nomies and travel restrictions, which drove a collapse in the
consumption of motor gasoline, jet fuels and other refined
products. In the initial stages of the global energy downturn,
refining margins were supported by a collapse in crude oil
prices. Subsequently, as crude oil prices found support in the
production curtailments implemented by the OPEC+, refining
margins were severely hit by the weakness in global demand
for fuels due to low propensity of people for travelling, which
squeezed relative prices of fuels vs. the oil feedstock cost.
This trend became particularly unfavourable starting from
the summer months when refining margins were much less
profitable, until the last months of the year when they even re-
corded negative value. On average, in 2020, the refining mar-
gin (SERM) dropped materially, down by 60% as compared
to the prior year. Furthermore, Eni’s refining profitability was
exposed to the volatility in the spreads between crudes with
high sulphur content or sour crudes and the Brent crude ben-
chmark, which is a low-content sulphur crude. Eni’s complex
refineries are able to process sour crudes, which typically tra-
de at a discount over Brent crude. Historically, this discount
has supported the profitability of complex refineries, like our
plant at Sannazzaro in Italy. However, in the course of 2020,
a shortfall in supplies of sour crudes due to the production
cuts implemented by OPEC+ in response to the COVID-19
pandemic, drove an appreciation of the relative prices of sour
crudes as compared to Brent, which negatively affected the
results of Eni’s refining business by reducing the advantage
of processing sour crudes. Eni believes that the competitive
environment of the refining sector will remain challenging
in the foreseeable future, considering ongoing uncertainties
and risks relating to the strength of the economic recovery
in Europe and worldwide, and risks of another round of lock-
down measures in case of failure by governments to effecti-
vely contain the spread of the pandemic, which would weigh
heavily on demand for fuels. Other risks factors include refi-
ning overcapacity in the European area and expectations of
a new investment cycle driven by capacity expansion plans
announced in Asia and the Middle East, potentially leading
to global oversupplies of refinery products. Due to a reduced
profitability outlook in the refining business, management re-
cognized impairment charges of €1.2 billion to align the book
value of refineries to their realizable values.
The business of marketing refined products to drivers at our
network of service stations and to large account customers
(airlines, public administrations, transport and industrial cu-
stomers, bulk buyers and resellers) is facing competition
from other oil companies and newcomers such as low-scale
and local operators, and un-branded networks with light cost
structure. All of these operators compete with each other pri-
marily in terms of pricing and, to a lesser extent, service qua-
lity. Against this backdrop, in 2020 the lockdown measures
adopted to contain the spread of the pandemic resulted in the
suppression of travel and road transportation which weighed
heavily on throughput volumes at our network of service sta-
tions in Italy and other European markets which were down
by 19.9% as compared to the prior year.
Eni’s Chemical business is in a highly-cyclical, very competiti-
ve sector. We have been facing for years strong competition
from well-established international players and state-owned
petrochemical companies, particularly in the most commodi-
tised market segments such as the production of basic petro-
chemical products (like ethylene and polyethylene), where de-
mand is a function of macroeconomic growth. Many of these
competitors based in the Far East and the Middle East have
been able to benefit from cost economies due to larger plant
scale, wide geographic moat, availability of cheap feedstock
and proximity to end-markets. Excess worldwide capacity of
petrochemical commodities has also fuelled competition in
this business. Furthermore, petrochemical producers based
in the United States have regained market share, as their cost
structure has become competitive due to the availability of
cheap feedstock deriving from the production of domestic
shale gas from which ethane is derived, which is a cheaper
raw material for the production of ethylene than the oil-based
feedstock utilised by Eni’s petrochemical subsidiaries. Finally,
rising public concern about climate change and the preser-
vation of the environment has begun to negatively affect the
consumption of single-use plastics. In 2020, these competi-
tive dynamics were greatly amplified by the economic crisis
triggered by the lockdown measures in response to the CO-
Management report | Consolidated financial statements | Annex 119
VID-19 pandemic, which negatively affected plant utilization
rates and sales volumes, particularly in those segments more
exposed to the recession of their customer segments, like in
the case of sales volumes of elastomers to the automotive
industry. However, other chemicals segments performed re-
latively well, because the “stay-at-home economy” boosted
demands for certain products like polyethylene, that is utili-
zed in the packaging of food and other consumer goods as
well as in materials for the sanitary emergency. These trends
supported polyethylene margins. Looking forward, manage-
ment believes that the competitive environment in the Chemi-
cals businesses will remain challenging due to uncertainties
and risks relating to the strength of the economic recovery or
another round of lockdown measures in case of by govern-
ments to effectively contain the spread of the pandemic.
Eni’s Retail gas and power business engages in the supply of
gas and electricity to customers in the retail markets mainly
in Italy, France and other Countries in Europe. Customers
include households, large residential accounts (hospitals,
schools, public administration buildings, offices) and small
and medium-sized businesses. The retail market is characte-
rised by strong competition among selling companies which
mainly compete in terms of pricing and the ability to bundle
valuable services with the supply of the energy commodity. In
this segment, competition has intensified in recent years due
to the progressive liberalisation of the market and the ability
of residential customers to switch smoothly from one sup-
plier to another. In 2020, the performance of this business
was negatively affected by the economic crisis caused by
the lockdown measures imposed to contain the spread of
COVID-19, which reduced energy demand particularly in the
segments of medium and small businesses, increased credit
risk and triggered increased credit losses. In 2020, sales vo-
lumes of natural gas to the retail market fell by 11%; however,
this trend was partly offset by greater power requirements
due to the “stay-at-home economy” with sales volumes up by
13% for the year. We anticipate that competition will remain
strong in this business due to the likelihood of a slow eco-
nomic recovery and weak trends in energy consumption, as
well as the potential risk of yet another downturn in case of
new lockdown measures to contain the pandemic and rising
sensitivity among households and businesses to reduce the
cost of the energy bill.
consumption by Italian businesses. Management believes that
these factors will continue to negatively affect clean spark spre-
ad margins on electricity in the Italian wholesale markets.
In case the Company is unable to effectively manage the above
described competitive risks, which may increase in case of a we-
aker-than-anticipated recovery in the post-pandemic economy
or in a worst case scenario of the imposition by governments
of new lockdown measures and other restrictions in response
to the pandemic, the Group’s future results of operations, cash
flow, liquidity, business prospects, financial condition, sharehol-
der returns, including dividends, the amount of funds available
for stock repurchases and the price of Eni’s shares may be ad-
versely and significantly affected.
Safety, security, environmental and other operational risks
The Group engages in the exploration and production of oil and
natural gas, processing, transportation and refining of crude oil,
transport of natural gas, storage and distribution of petroleum
products and the production of base chemicals, plastics and
elastomers. By their nature, the Group’s operations expose Eni
to a wide range of significant health, safety, security and en-
vironmental risks. Technical faults, malfunctioning of plants,
equipment and facilities, control systems failure, human errors,
acts of sabotage, attacks, loss of containment and adverse
weather events can trigger damaging consequences such as
explosions, blow-outs, fires, oil and gas spills from wells, pi-
peline and tankers, release of contaminants and pollutants in
the air, the ground and in the water, toxic emissions and other
negative events. The magnitude of these risks is influenced by
the geographic range, operational diversity and technical com-
plexity of Eni’s activities. Eni’s future results of operations and
liquidity depend on its ability to identify and address the risks
and hazards inherent to operating in those industries.
In the Exploration & Production segment, Eni faces natural ha-
zards and other operational risks including those relating to the
physical and geological characteristics of oil and natural gas
fields. These include the risks of eruptions of crude oil or of
natural gas, discovery of hydrocarbon pockets with abnormal
pressure, crumbling of well openings, leaks that can harm the
environment and the security of Eni’s personnel and risks of
blowout, fire or explosion.
Eni also engages in the business of producing gas-fired electrici-
ty that is largely sold at wholesale energy market and balancing
market (so called MSD) in Italy. Margins on the sale of electricity
have declined in recent years due to oversupplies, weak eco-
nomic growth and inter-fuel competition. The pandemic-driven
economic crisis has exacerbated those trends, causing a ma-
terial reduction in power consumption due to the lockdowns of
entire industrial sectors and producing activities. In 2020, power
sales in the wholesale market in Italy fell by 10% due to lower
Eni’s activities in the Refining & Marketing and Chemical seg-
ment entail health, safety and environmental risks related to the
handling, transformation and distribution of oil, oil products and
certain petrochemical products. These risks can arise from the
intrinsic characteristics and the overall lifecycle of the products
manufactured and the raw materials used in the manufacturing
process, such as oil-based feedstock, catalysts, additives and
monomer feedstock. These risks comprise flammability, toxi-
city, long-term environmental impact such as greenhouse gas
Eni Annual Report 2020 120
emissions and risks of various forms of pollution and contami-
nation of the soil and the groundwater, emissions and dischar-
ges resulting from their use and from recycling or disposing of
materials and wastes at the end of their useful life.
All of Eni’s segments of operations involve, to varying degrees,
the transportation of hydrocarbons. Risks in transportation
activities depend on several factors and variables, including the
hazardous nature of the products transported due to their flam-
mability and toxicity, the transportation methods utilized (pipeli-
nes, shipping, river freight, rail, road and gas distribution networ-
ks), the volumes involved and the sensitivity of the regions
through which the transport passes (quality of infrastructure,
population density, environmental considerations). All modes
of transportation of hydrocarbons are particularly susceptible
to risks of blowout, fire and loss of containment and, given that
normally high volumes are involved, could present significant
risks to people, the environment and the property.
Eni has material offshore operations relating to the exploration
and production of hydrocarbons. In 2020, approximately 65%
of Eni’s total oil and gas production for the year derived from
offshore fields, mainly in Egypt, Libya, Angola, Norway, Congo,
Indonesia, the United Arab Emirates, Italy, Ghana, Venezuela,
the United Kingdom, Nigeria and the United States. Offshore
operations in the oil and gas industry are inherently riskier than
onshore activities. Offshore accidents and spills could cause
damage of catastrophic proportions to the ecosystem and to
communities’ health and security due to the apparent difficul-
ties in handling hydrocarbons containment, pollution, poisoning
of water and organisms, length and complexity of cleaning
operations and other factors. Furthermore, offshore operations
are subject to marine risks, including storms and other adverse
weather conditions and perils of vessel collisions, which may
cause material adverse effects on the Group’s operations and
the ecosystem.
The Company has invested and will continue to invest signifi-
cant financial resources to continuously upgrade the methods
and systems for safeguarding the reliability of its plants, pro-
duction facilities, transport and storage infrastructures, the
safety and the health of its employees, contractors, local com-
munities and the environment, to prevent risks, to comply with
applicable laws and policies and to respond to and learn from
unforeseen incidents. Eni seeks to manage these operational
risks by carefully designing and building facilities, including
wells, industrial complexes, plants and equipment, pipelines,
storage sites and other facilities, and managing its operations
in a safe and reliable manner and in compliance with all appli-
cable rules and regulations, as well as by applying the best avai-
lable techniques in the marketplace. However, these measures
may ultimately not be completely successful in preventing
and/or altogether eliminating risks of adverse events. Failure
to properly manage these risks as well as accidental events
like human errors, unexpected system failure, sabotages or
other unexpected drivers could cause oil spills, blowouts, fire,
release of toxic gas and pollutants into the atmosphere or the
environment or in underground water and other incidents, all
of which could lead to loss of life, damage to properties, envi-
ronmental pollution, legal liabilities and/or damage claims and
consequently a disruption in operations and potential econo-
mic losses that could have a material and adverse effect on the
Group’s results of operations, cash flow, liquidity, business pro-
spects, financial condition, and shareholder returns, including
dividends, the amount of funds available for stock repurchases
and the price of Eni’s shares.
Eni’s operations are often conducted in difficult and/or envi-
ronmentally sensitive locations such as the Gulf of Mexico, the
Caspian Sea and the Arctic. In such locations, the consequen-
ces of any incident could be greater than in other locations.
Eni also faces risks once production is discontinued because
Eni’s activities require the decommissioning of productive infra-
structures and environmental sites remediation and clean-up.
Furthermore, in certain situations where Eni is not the operator,
the Company may have limited influence and control over third
parties, which may limit its ability to manage and control such
risks. Eni retains worldwide third-party liability insurance cove-
rage, which is designed to hedge part of the liabilities associa-
ted with damage to third parties, loss of value to the Group’s
assets related to unfavourable events and in connection with
environmental clean-up and remediation. As of the date of this
filing, maximum compensation allowed under such insurance
coverage is equal to $1.2 billion in case of offshore incident and
$1.4 billion in case of incident at onshore facilities (refineries).
Additionally, the Company may also activate further insurance
coverage in case of specific capital projects and other industrial
initiatives. Management believes that its insurance coverage is
in line with industry practice and is enough to cover normal risks
in its operations. However, the Company is not insured against
all potential risks. In the event of a major environmental disaster,
such as the incident which occurred at the Macondo well in the
Gulf of Mexico several years ago, for example, Eni’s third-party
liability insurance would not provide any material coverage and
thus the Company’s liability would far exceed the maximum co-
verage provided by its insurance. The loss Eni could suffer in
case of a disaster of material proportions would depend on all
the facts and circumstances of the event and would be subject
to a whole range of uncertainties, including legal uncertainty as
to the scope of liability for consequential damages, which may
include economic damage not directly connected to the disa-
ster. The Company cannot guarantee that it will not suffer any
uninsured loss and there can be no guarantee, particularly in the
case of a major environmental disaster or industrial accident,
that such a loss would not have a material adverse effect on
the Company.
Management report | Consolidated financial statements | Annex 121
The occurrence of any of the above mentioned risks could have
a material and adverse impact on the Group’s results of opera-
tions, cash flow, liquidity, business prospects, financial condi-
tion, and shareholder returns, including dividends, the amount
of funds available for stock repurchases and the price of Eni’s
shares and could also damage the Group’s reputation.
Risks deriving from Eni’s exposure to weather conditions
Significant changes in weather conditions in Italy and in the rest
of Europe from year to year may affect demand for natural gas
and some refined products. In colder years, demand for such
products is higher. Accordingly, the results of operations of our
businesses engaged in the marketing of natural gas and, to a
lesser extent, the Refining & Marketing business, as well as the
comparability of results over different periods may be affected
by such changes in weather conditions. Over recent years, this
pattern could have been possibly affected by the rising fre-
quency of weather trends like milder winter or extreme weather
events like heatwaves or unusually cold snaps, which are pos-
sible consequences of climate change. In 2020, our sales volu-
mes of gas both at wholesale markets and at the retail sector
particularly in Italy were negatively affected by lower seasonal
sales in the first quarter.
Risks associated with the exploration and production of oil
and natural gas
The exploration and production of oil and natural gas require
high levels of capital expenditures and are subject to natural
hazards and other uncertainties, including those relating to the
physical characteristics of oil and gas fields. The exploration
and production activities are subject to mining risk and the risks
of cost overruns and delayed start-up at the projects to develop
and produce hydrocarbons reserves. Those risks could have an
adverse, significant impact on Eni’s future growth prospects,
results of operations, cash flows, liquidity and shareholders’
returns.
The production of oil and natural gas is highly regulated and
is subject to conditions imposed by governments throughout
the world in matters such as the award of exploration and pro-
duction leases, the imposition of specific drilling and other work
obligations, higher-than-average rates of income taxes, additio-
nal royalties and taxes on production, environmental protection
measures, control over the development and decommissioning
of fields and installations, and restrictions on production. A de-
scription of the main risks facing the Company’s business in
the exploration and production of oil and gas is provided below.
Exploratory drilling efforts may be unsuccessful
Exploration activities are mainly subject to mining risk, i.e.
the risk of dry holes or failure to find commercial quantities
of hydrocarbons. The costs of drilling and completing wells
have margins of uncertainty, and drilling operations may be
unsuccessful because of a large variety of factors, including
geological failure, unexpected drilling conditions, pressure or
heterogeneities in formations, equipment failures, well control
(blowouts) and other forms of accidents. A large part of the
Company exploratory drilling operations is located offshore, in-
cluding in deep and ultra-deep waters, in remote areas and in
environmentally-sensitive locations (such as the Barents Sea,
the Gulf of Mexico, deep water prospect off West Africa, Indo-
nesia, the Mediterranean Sea and the Caspian Sea). In these lo-
cations, the Company generally experiences higher operational
risks and more challenging conditions and incurs higher explo-
ration costs than onshore. Furthermore, deep and ultra-deep
water operations require significant time before commercial
production of discovered reserves can commence, increasing
both the operational and the financial risks associated with the-
se activities. Because Eni plans to make significant investmen-
ts in executing exploration projects, it is likely that the Company
will incur significant amounts of dry hole expenses in future ye-
ars. Unsuccessful exploration activities and failure to discover
additional commercial reserves could reduce future production
of oil and natural gas, which is highly dependent on the rate
of success of exploration projects and could have an adverse
impact on Eni’s future performance and returns.
Development projects bear significant operational risks which
may adversely affect actual returns
Eni is executing or is planning to execute several development
projects to produce and market hydrocarbon reserves. Certain
projects target the development of reserves in high-risk areas,
particularly deep offshore and in remote and hostile environ-
ments or in environmentally sensitive locations. Eni’s future re-
sults of operations and business prospects depend heavily on
its ability to implement, develop and operate major projects as
planned. Key factors that may affect the economics of these
projects include:
the outcome of negotiations with joint venture partners,
governments and state-owned companies, suppliers and
potential customers to define project terms and conditions,
including, for example, Eni’s ability to negotiate favourable
long-term contracts to market gas reserves;
commercial arrangements and granting of all necessary ad-
ministrative authorizations to build pipelines and related equi-
pment to transport and market hydrocarbons;
timely issuance of permits and licenses by government
agencies;
the ability to carry out the front-end engineering design in or-
der to prevent the occurrence of technical inconvenience du-
ring the execution phase; timely manufacturing and delivery of
critical equipment by contractors, shortages in the availability
of such equipment or lack of shipping yards where complex
offshore units such as FPSO and platforms are built; delays in
Eni Annual Report 2020 122
achievement of critical phases and project milestones;
risks associated with the use of new technologies and the
inability to develop advanced technologies to maximise the
recoverability rate of hydrocarbons or gain access to previou-
sly inaccessible reservoirs;
performance in project execution on the part of contractors
who are awarded project construction activities generally ba-
sed on the EPC (Engineering, Procurement and Construction)
contractual scheme;
changes in operating conditions and cost overruns;
the actual performance of the reservoir and natural field decli-
ne; and
the ability and time necessary to build suitable transport in-
frastructures to export production to final markets.
The occurrence of any of such risks may negatively affect the
time-to-market of the reserves and cause cost overruns and a
delayed pay-back period, therefore adversely affecting the eco-
nomic returns of Eni’s development projects and the achieve-
ment of production growth targets.
Development projects normally have long lead times due to the
complexity of the activities and tasks that need to be performed
before a project final investment decision is made and commer-
cial production can be achieved. Those activities include the ap-
praisal of a discovery to evaluate the technical and economic
feasibility of the development project, obtaining the necessary
authorizations from governments, state agencies or national oil
companies, signing agreements with the first party regulating
a project’s contractual terms such as the production sharing,
obtaining partners’ approval, environmental permits and other
conditions, signing long-term gas contracts, carrying out the
concept design and the front-end engineering and building and
commissioning the related plants and facilities. All these activi-
ties normally can take years to perform. As a consequence, ra-
tes of return for such projects are exposed to the volatility of oil
and gas prices and costs which may be substantially different
from those estimated when the investment decision was made,
thereby leading to lower return rates. Moreover, projects execu-
ted with partners and joint venture partners reduce the ability
of the Company to manage risks and costs, and Eni could have
limited influence over and control of the operations and perfor-
mance of its partners. Furthermore, Eni may not have full ope-
rational control of the joint ventures in which it participates and
may have exposure to counterparty credit risk and disruption
of operations and strategic objectives due to the nature of its
relationships.
Finally, if the Company is unable to develop and operate major
projects as planned, particularly if the Company fails to accom-
plish budgeted costs and time schedules, it could incur signi-
ficant impairment losses of capitalised costs associated with
reduced future cash flows of those projects.
Inability to replace oil and natural gas reserves could adversely
impact results of operations and financial condition
In case the Company’s exploration efforts are unsuccessful at
replacing produced oil and natural gas, its reserves will decline.
In addition to being a function of production, revisions and new
discoveries, the Company’s reserve replacement is also affected
by the entitlement mechanism in its production sharing agree-
ments (“PSAs”), whereby the Company is entitled to a portion of a
field’s reserves, the sale of which is intended to cover expenditu-
res incurred by the Company to develop and operate the field. The
higher the reference prices for Brent crude oil used to estimate
Eni’s proved reserves, the lower the number of barrels necessary
to recover the same amount of expenditure, and vice versa. Based
on the current portfolio of oil and gas assets, Eni’s management
estimates that production entitlements vary on average by ap-
proximately 330 barrels/d for each $1 change in oil prices based
on current Eni’s assumptions for oil prices. In 2020, production
and year-end proved reserves benefitted from lower oil prices whi-
ch translated into higher entitlements (approximately 12 kBOE/d
of incremental production and 118 MBOE of reserves volumes).
In case oil prices differ significantly from Eni’s own forecasts, the
result of the above-mentioned sensitivity of production to oil price
changes may be significantly different.
Future oil and gas production is a function of the Company’s
ability to access new reserves through new discoveries, appli-
cation of improved techniques, success in development activi-
ty, negotiations with national oil companies and other owners
of known reserves and acquisitions.
An inability to replace produced reserves by discovering, acqui-
ring and developing additional reserves could adversely impact
future production levels and growth prospects. If Eni is unsuc-
cessful in meeting its long-term targets of production growth
and reserve replacement, Eni’s future total proved reserves and
production will decline.
Uncertainties in estimates of oil and natural gas reserves
The accuracy of proved reserve estimates and of projections
of future rates of production and timing of development expen-
ditures depends on a number of factors, assumptions and va-
riables, including:
the quality of available geological, technical and economic
data and their interpretation and judgement;
management’s assumptions regarding future rates of pro-
duction and costs and timing of operating and development
expenditures. The projections of higher operating and de-
velopment costs may impair the ability of the Company to
economically produce reserves leading to downward reserve
revisions;
changes in the prevailing tax rules, other government regula-
tions and contractual conditions;
Management report | Consolidated financial statements | Annex 123
results of drilling, testing and the actual production perfor-
mance of Eni’s reservoirs after the date of the estimates
which may drive substantial upward or downward revi-
sions; and
changes in oil and natural gas prices which could affect the
quantities of Eni’s proved reserves since the estimates of re-
serves are based on prices and costs existing as of the date
when these estimates are made. Lower oil prices may impair
the ability of the Company to economically produce reserves
leading to downward reserve revisions.
Many of the factors, assumptions and variables underlying
the estimation of proved reserves involve management’s jud-
gement or are outside management’s control (prices, gover-
nmental regulations) and may change over time, therefore
affecting the estimates of oil and natural gas reserves from
year-to-year.
The prices used in calculating Eni’s estimated proved reserves
are, in accordance with the SEC requirements, calculated by de-
termining the unweighted arithmetic average of the first day-of-
the-month commodity prices for the preceding twelve months.
For the 12-months ending at December 31, 2020, average pri-
ces were based on 41 $/BBL for the Brent crude oil, which was
materially lower than the reference price of 63 $/BBL utilized in
2019 due to the effects of the pandemic-induced economic cri-
sis on demand and prices of hydrocarbons. Also, the reference
price of natural gas was markedly lower than in 2019. Those
reductions resulted in Eni having to remove 124 MBOE of pro-
ved reserves because they have become uneconomical in this
price environment.
Accordingly, the estimated reserves reported as of the end of
2020 could be significantly different from the quantities of oil
and natural gas that will be ultimately recovered. Any downward
revision in Eni’s estimated quantities of proved reserves would
indicate lower future production volumes, which could adver-
sely impact Eni’s business prospects, results of operations,
cash flows and liquidity.
At the end of 2020 due to a combination of a slowdown in de-
velopment expenditures because of the need to preserve the
Group liquidity during the downturn and the removal of a signi-
ficant amount of reserves that have become uneconomical in
this environment, the Group reserves additions for the year of
271 MBOE fell significantly short of the volume produced of 634
MBOE, negatively affecting the replacement ratio of produced
volumes and the total quantity of proved reserves at year-end
compared to 2019 (down by 5%) which could negatively affect
the Group’s growth prospects going forward.
The development of the Group’s proved undeveloped reserves
may take longer and may require higher levels of capital expen-
ditures than it currently anticipates or the Group’s proved unde-
veloped reserves may not ultimately be developed or produced
At December 31, 2020, approximately 30% of the Group’s to-
tal estimated proved reserves (by volume) were undeveloped
and may not be ultimately developed or produced. Recovery
of undeveloped reserves requires significant capital expendi-
tures and successful drilling operations. The Group’s reserve
estimates assume it can and will make these expenditures
and conduct these operations successfully. These assump-
tions may not prove to be accurate and are subject to the
risk of a structural decline in the prices of hydrocarbons due
to possible long-lasting effects associated with the COVID-19
pandemic, including acceleration towards a low carbon eco-
nomy and a shift in consumers’ behaviour and preferences.
In case of a continued decline in the prices of hydrocarbon
the Group may not have enough financial resources to make
the necessary expenditures to recover undeveloped reserves.
The Group’s reserve report at December 31, 2020 includes
estimates of total future development and decommissioning
costs associated with the Group’s proved total reserves of ap-
proximately €27.7 billion (undiscounted, including consolida-
ted subsidiaries and equity-accounted entities). It cannot be
certain that estimated costs of the development of these re-
serves will prove correct, development will occur as schedu-
led, or the results of such development will be as estimated.
In case of change in the Company’s plans to develop those
reserves, or if it is not otherwise able to successfully develop
these reserves as a result of the Group’s inability to fund ne-
cessary capital expenditures or otherwise, it will be required
to remove the associated volumes from the Group’s reported
proved reserves.
Oil and gas activity may be subject to increasingly high levels of
income taxes and royalties
Oil and gas operations are subject to the payment of royalties
and income taxes, which tend to be higher than those payable
in many other commercial activities. Furthermore, in recent
years, Eni has experienced adverse changes in the tax regi-
mes applicable to oil and gas operations in a number of Coun-
tries where the Company conducts its upstream operations.
As a result of these trends, management estimates that the
tax rate applicable to the Company’s oil and gas operations is
materially higher than the Italian statutory tax rate for corpo-
rate profit, which currently stands at 24%. Management belie-
ves that the marginal tax rate in the oil and gas industry tends
to increase in correlation with higher oil prices, which could
make it more difficult for Eni to translate higher oil prices into
increased net profit. However, the Company does not expect
that the marginal tax rate will decrease in response to falling
oil prices. Adverse changes in the tax rate applicable to the
Group’s profit before income taxes in its oil and gas opera-
tions would have a negative impact on Eni’s future results of
operations and cash flows.
Eni Annual Report 2020 124
In the current uncertain financial and economic environment,
governments are facing greater pressure on public finances,
which may induce them to intervene in the fiscal framework for
the oil and gas industry, including the risk of increased taxation,
windfall taxes, and even nationalisations and expropriations.
The present value of future net revenues from Eni’s proved reser-
ves will not necessarily be the same as the current market value
of Eni’s estimated crude oil and natural gas reserves
the world in matters such as the award of exploration and pro-
duction leases, the imposition of specific drilling and other work
obligations, environmental protection measures, control over
the development and abandonment of fields and installations,
and restrictions on production. These risks can limit the Group’s
access to hydrocarbons reserves or may cause the Group to re-
design, curtail or cease its Oil & Gas operations with significant
effects on the Group’s business prospects, results of operations
and cash flow.
The present value of future net revenues from Eni’s proved reser-
ves may differ from the current market value of Eni’s estimated
crude oil and natural gas reserves. In accordance with the SEC
rules, Eni bases the estimated discounted future net revenues
from proved reserves on the 12-month un-weighted arithmetic
average of the first-day-of-the-month commodity prices for the
preceding twelve months. Actual future prices may be materially
higher or lower than the SEC pricing used in the calculations.
Actual future net revenues from crude oil and natural gas pro-
perties will be affected by factors such as:
the actual prices Eni receives for sales of crude oil and na-
tural gas;
the actual cost and timing of development and production
expenditures;
the timing and amount of actual production; and
changes in governmental regulations or taxation.
The timing of both Eni’s production and its incurrence of expen-
ses in connection with the development and production of crude
oil and natural gas properties will affect the timing and amount
of actual future net revenues from proved reserves, and thus
their actual present value. Additionally, the 10% discount factor
Eni uses when calculating discounted future net revenues may
not be the most appropriate discount factor based on interest
rates in effect from time to time and risks associated with Eni’s
reserves or the crude oil and natural gas industry in general. At
December 31, 2020 the net present value of Eni’s proved reser-
ves totalled approximately €27.7 billion and was materially lower
than at the end of 2019 because the average prices used to esti-
mate Eni’s proved reserves and the net present value at Decem-
ber 31, 2020, as calculated in accordance with the SEC rules,
were 41 $/barrel for the Brent crude oil compared to 63 $/barrel
utilized in 2019 due to the big fall recorded in hydrocarbons pri-
ces during the course of 2020 as a result of the demand con-
traction caused by the COVID-19 pandemic. Actual future prices
may materially differ from those used in our year-end estimates.
Oil and gas activity may be subject to increasingly high levels
of regulations throughout the world, which may impact our ex-
traction activities and the recoverability of reserves
The production of oil and natural gas is highly regulated and
is subject to conditions imposed by governments throughout
In Italy, the activities of hydrocarbon development and pro-
duction are performed by oil companies in accordance to con-
cessions granted by the Ministry of Economic Development
in agreement with the relevant Region territorially involved in
the case of onshore concessions. Concessions are granted for
an initial twenty-year term; the concessionaire is entitled to a
ten-year extension and then to one or more five-year extensions
to fully recover a field’s reserves and investments on the condi-
tion that the concessionaire has fulfilled all obligations related
to the work program agreed in the initial concession award. In
case of delay in the award of an extension, the original conces-
sion remains fully effective until the administrative procedure
to grant an extension is finalized. These general rules are to
be coordinated with a new law that was enacted in February
2019. This law requires certain Italian administrative bodies
to adopt by the end of 2021 a plan intended to identify areas
that are suitable for carrying out exploration, development and
production of hydrocarbons in the national territory, including
the territorial seawaters. Until approval of such a plan, a mo-
ratorium on exploration activities, including the award of new
exploration leases, is in effect. Following the plan approval,
exploration permits will resume in areas that have been identi-
fied as suitable and new exploration permits can be awarded.
However, in unsuitable areas, exploration permits will be repea-
led, applications for obtaining new exploration permits ongoing
at the time of the law enactment will be rejected and no new
permit applications can be filed. As far as development and
production concessions are concerned, pending the national
plan approval, ongoing concessions remain in effect and ad-
ministrative procedures underway to grant extensions to expi-
red concessions remain unaffected; however, no applications
to obtain new concessions can be filed. Once the above men-
tioned national plan is adopted, development and production
concessions that fall in suitable areas can be granted further
extensions and applications for new concessions can be filed;
however, development and production concessions in place as
at the approval of the national plan that fall in unsuitable areas
will be repealed at their expiration, no further extensions will
be granted, and no new concession applications can be filed
or awarded. According to the statute, areas that are suitable to
the activities of exploring and developing hydrocarbons must
conform to a number of criteria including morphological cha-
racteristics and social, urbanistic and industrial constraints,
Management report | Consolidated financial statements | Annex 125
with particular bias for the hydrogeological balance, current
territorial planning and with regard to marine areas for externa-
lities on the ecosystem, reviews of marine routes, fishing and
any possible impacts on the coastline.
The Group’s largest operated development concession in Italy
is Val d’Agri, which term expired on October 26, 2019. Deve-
lopment activities at the concession have continued since
then in accordance with the “prorogation regime” described
above, within the limits of the work plan approved when the
concession was first granted. The Company filed an applica-
tion to obtain a ten-year extension of the concession in accor-
dance to the terms set by the law and before the enactment
of the new law on the national plan for hydrocarbons activity.
In this application the Company confirmed the same work
program as in the original concession award. Similarly, Com-
pany operations are underway in accordance to the ongoing
prorogation regime at another 41 expired Italian concessions
for hydrocarbons development and production. The Com-
pany has also filed requests for extensions within the terms
of the law for those concessions.
As far as proven reserves estimates are concerned, manage-
ment believes the criteria laid out in the new law to be high-le-
vel principles, which make it difficult to identify in a reliable and
objective manner areas that might be suitable or unsuitable to
hydrocarbons activities before the plan is adopted by Italian
authorities. However, based on the review of all facts and cir-
cumstances and on the current knowledge of the matter, ma-
nagement does not expect any material impact on the Group’s
future performance.
Eni’s future performance depends on its ability to identify and
mitigate the above-mentioned risks and hazards which are
inherent to its Oil & Gas business. Failure to properly manage
those risks, the Company’s underperformance at exploration,
development and reserve replacement activities or the occur-
rence of unforeseen regulatory risks may adversely and mate-
rially impact the Group’s results of operations, cash flow, liqui-
dity, business prospects, financial condition, and shareholder
returns, including dividends, the amount of funds available for
stock repurchases and the price of Eni’s shares.
RISKS RELATED TO POLITICAL
CONSIDERATIONS
As of December 31, 2020, approximately 83% of Eni’s proved
hydrocarbon reserves were located in non-OECD Countries,
mainly in Africa and central-south East Asia, where the so-
cio-political framework, the financial system and the macroe-
conomic outlook are less stable than in the OECD Countries. In
those non-OECD Countries, Eni is exposed to a wide range of
political risks and uncertainties, which may impair Eni’s ability
to continue operating economically on a temporary or perma-
nent basis, and Eni’s ability to access oil and gas reserves. Parti-
cularly, Eni faces risks in connection with the following potential
issues and risks:
socio-political instability leading to internal conflicts, revolu-
tions, establishment of non-democratic regimes, protests,
attacks, strikes and other forms of civil disorder and unrest,
such as strikes, riots, sabotage, acts of violence and simi-
lar events. These risks could result in disruptions to econo-
mic activity, loss of output, plant closures and shutdowns,
project delays, loss of assets and threats to the security of
personnel. They may disrupt financial and commercial mar-
kets, including the supply of and pricing for oil and natural
gas, and generate greater political and economic instability
in some of the geographical areas in which Eni operates. Ad-
ditionally, any possible reprisals because of military or other
action, such as acts of terrorism in Europe, the United States
or elsewhere, could have a material adverse effect on the
world economy and hence on the global demand for hydro-
carbons;
lack of well-established and reliable legal systems and uncer-
tainties surrounding the enforcement of contractual rights;
unfavourable enforcement of laws, regulations and con-
tractual arrangements leading, for example, to expropriation,
nationalisation or forced divestiture of assets and unilateral
cancellation or modification of contractual terms;
sovereign default or financial instability due to the fact that
those Countries rely heavily on petroleum revenues to su-
stain public finance and petroleum revenues have dramati-
cally contracted in 2020 due plunging hydrocarbons prices
as a consequence of the global economic crisis caused by
the COVID-19 pandemic. Financial difficulties at Country
level often translate into failure by state-owned companies
and agencies to fulfil their financial obligations towards Eni
relating to funding capital commitments in projects operated
by Eni or to timely paying for supplies of equity oil and gas
volumes;
restrictions on exploration, production, imports and exports;
tax or royalty increases (including retroactive claims);
difficulties in finding qualified international or local suppliers
in critical operating environments; and
complex processes of granting authorisations or licences af-
fecting time-to-market of certain development projects.
The financial outlook of several, non-OECD Countries where
Eni is operating was significantly affected by the material con-
traction recorded in hydrocarbons revenues following the CO-
VID-19 pandemic, which also increased the counterparty risk
of a few state-owned or privately-held local companies that are
Eni’s partners in certain projects to develop Oil & Gas reserves.
Areas where Eni operates and where the Company is particular-
ly exposed to political risk include, but are not limited to Libya,
Venezuela and Nigeria.
Eni Annual Report 2020 126
Eni’s operations in Libya are currently exposed to significant
geopolitical risks. The current situation of social and political
instability dates back to the revolution of 2011 that brought a
change of regime and a civil war, triggering an uninterrupted
period of lack of well-established institutions and recurrent epi-
sodes of internal conflict, clashes, disorders and other forms
of civil turmoil. In the year of the revolution, Eni’s operations
in Libya were materially affected by a full-scale war, which for-
ced the Company to shut down its development and extracti-
ve activities for almost all of 2011, with a significant negative
impact on the Group’s results of operation and cash flow. In
subsequent years Eni has experienced frequent disruptions to
its operations, albeit on a smaller scale than in 2011, due to
security threats to its installations and personnel. In April 2019,
a resurgence of the socio-political instability and a failure by
the opposed factions to establish a national government trig-
gered the resumption of the civil war with armed clashes in
the area of Tripoli and elsewhere in the Country. The situation
continued to escalate also because international negotiations
aimed at restoring a state of peace and stability proved elusi-
ve. At the beginning of 2020 oil export terminals in the eastern
and southern parts of Libya were blocked, halting most of the
Country’s oil export terminals, and force majeure was decla-
red at several Libyan production facilities. Production shut-
downs also involved certain of the Company’s profit centres
(the El Feel oilfield and the Bu Attifel offshore platform). The
Company repatriated its personnel and strengthened security
measures at its plants and facilities still in operation. However,
despite this difficult framework, the Company’s largest assets
in Libya – the Bahr Essalam offshore platform and the onsho-
re Mellitah oil and gas production centre – have continued to
produce regularly. Due to those developments, we estimated a
loss of output in the range of 9 kBBL/d on average for the year
2020. In late September, the situation began to improve than-
ks to a temporary agreement between the conflicting factions,
the blockade was lifted at the main ports for exporting crude
oil and production resumed at the main fields, revoking force
majeure. Despite this, management believes that Libya’s ge-
opolitical situation will continue to represent a source of risk
and uncertainty to Eni’s operations in the Country and to the
Group’s results of operations and cash flow.
As of December 31, 2020, Libya represented approximately 10%
of the Group’s total production; this percentage is forecasted
to decrease in the medium term in line with the expected im-
plementation of the Group’s strategy intended to diversify the
Group’s geographical presence to better balance the geopolitical
risk of the portfolio. In the event of major adverse events, such
as the escalation of the internal conflict into a full-blown civil war,
attacks, sabotage, social unrest, clashes and other forms of civil
disorder, Eni could be forced to reduce or to shut down com-
pletely its production activities at its Libyan fields, which would
significantly hit results of operations and cash flow.
Venezuela is currently experiencing a situation of financial
stress, which has been exacerbated by the economic recession
caused by the effects of the COVID-19 pandemic. Lack of fi-
nancial resources to support the development of the Country’s
hydrocarbons reserves has negatively affected the Country’s
production levels and hence fiscal revenues. The situation has
been made worse by certain international sanctions targeting
the Country’s financial system and its ability to export crude
oil to U.S. markets, which is the main outlet of Venezuelan pro-
duction (see also “Sanctions targets” below).
Presently, the Company retains only one valuable asset in Ve-
nezuela: the 50%-participated Cardón IV joint venture, which is
operating a natural gas offshore project and is supplying its pro-
duction to the national oil company, PDVSA, under a long-term
supply agreement. We also hold an equity interest in other two
oil projects: the PetroJunin oilfield and the Corocoro field, with
respect to which in past years we have registered significant
impairment losses and reserves de-bookings, with currently litt-
le value left to recover. The main risk to Eni’s ability to recover its
investment is the continued difficulty on the part of PDVSA to
pay the receivables for the gas supplies of Cardón IV, resulting
in a significant amount of overdue receivables. The joint-ventu-
re is systematically booking a loss provision on the revenues
accrued. The expected credit loss was based on management’s
appreciation of the counterparty risk driven by the findings of a
review of the past experience of sovereign defaults on which
basis a deferral in the collection of the gas revenues was esti-
mated. As of December 31, 2020, Eni’s invested capital in Vene-
zuela was approximately $1 billion. Despite the negative finan-
cial outlook of the Country and of PDVSA, during the course of
2020 the Company was able to collect a certain percentage of
accrued revenues, in line with management’s estimates of the
expected credit losses. Eni expects the financial and political
outlook of the Country to remain a risk factor to Eni’s operations
there for the foreseeable future.
We have significant credit exposure in Nigeria to state-owned
and privately-held local companies, where the overall financial
and economic outlook of the Country has been made worse
by the contraction of petroleum revenues due to the crisis of
the oil sector in 2020 caused by the COVID-19 pandemic. Our
credit exposure is due to the fact that we are funding the share
of capital expenditures pertaining to Nigerian joint operators at
Eni-operated oil projects. We have incurred in the past and it
is possible to continue incurring in the future significant credit
losses because of the ongoing difficulties of our Nigerian coun-
terparts to reimburse amounts past due.
Eni is closely monitoring political, social and economic risks of
the Countries in which it has invested or intends to invest, in
order to evaluate the economic and financial return of capital
projects and to selectively evaluate projects. While the occur-
Management report | Consolidated financial statements | Annex 127
rence of these events is unpredictable, the occurrence of any
such risks may adversely and materially impact the Group’s re-
sults of operations, cash flow, liquidity, business prospects, fi-
nancial condition, and shareholder returns, including dividends,
the amount of funds available for stock repurchases and the
price of Eni’s shares.
Finally, the United Kingdom left the European Union at the end
of January 2020. Due to this decision, it is possible that in the
future we may experience delays in moving our products and
employees between the UK and EU. Also, additional tariffs and
taxes could impact the demand for some of our products and
this, combined with the weak macroeconomic conditions in
both the EU and UK due to the COVID-19 pandemic, could have
a material adverse effect on energy demand.
Sanction targets
The most relevant sanction programs for Eni are those issued
by the European Union and the United States of America and in
particular, as of today, the restrictive measures adopted by such
authorities in respect of Russia and Venezuela.
In response to the Russia-Ukraine crisis, the European Union
and the United States have enacted sanctions targeting, in-
ter alia, the financial and energy sectors in Russia by restri-
cting the supply of certain oil and gas items and services to
Russia and certain forms of financing. Eni has adapted its
activities to the applicable sanctions and will further adapt its
business to any subsequent restrictive measures that shall
be adopted by the relevant authorities. In response to these
restrictions, the Company has put on hold its projects in the
upstream sectors in Russia and currently is not engaged in
any Oil & Gas project in the Country. It is not possible to rule
out the possibility that wider sanctions targeting the Russian
energy, banking and/or finance industries may be implemen-
ted. Further sanctions imposed on Russia, Russian citizens
or Russian companies by the international community, such
as restrictions on purchases of Russian gas by European
companies or measures restricting dealings with Russian
counterparties, could adversely impact Eni’s business, results
of operations and cash flow. Furthermore, an escalation of
the international crisis, resulting in a tightening of sanctions,
could entail a significant disruption of energy supply and tra-
de flows globally, which could have a material adverse effect
on the Group’s business, financial conditions, results of ope-
rations and prospects.
Starting from 2017, the United States enacted a regime of eco-
nomic and financial sanctions against Venezuela. The scope of
the restrictions, initially targeting certain financial instruments
issued or sold by the Government of Venezuela, was gradually
expanded over 2017 and 2018 and then significantly broade-
ned during the course of 2019 when Petroleos de Venezuela
SA (“PDVSA”), the main national state-owned enterprise, has
been added to the “Specially Designated Nationals and Blocked
Persons List” and the Venezuelan governments and its control-
led entities became subject to assets freeze in the United Sta-
tes. Even if such U.S. sanctions are substantially “primary” and
therefore dedicated in principle to U.S. persons only, retaliatory
measures and other adverse consequences may also interest
foreign entities which operate with Venezuelan listed entities
and/or in the oil sector of the Country.
The U.S. sanction regime against Venezuela has been fur-
ther tightened in the final part of 2020 by restricting any
Venezuelan oil exports, including swap schemes utilized by
foreign entities to recover trade and financing receivables
from PDVSA and other Venezuelan counterparties. This lat-
ter tightening of the sanction regime could jeopardize our
ability to collect the trade receivable owed to us for our acti-
vity in the Country.
Eni is carefully evaluating on a case by case basis the adop-
tion of measures adequate to minimize its exposure to any
sanctions risk which may affect its business operation. In any
case, the U.S. sanctions add stress to the already complex fi-
nancial, political and operating outlook of the country, which
could further limit the ability of Eni to recover its investments
in Venezuela.
RISKS SPECIFIC TO THE COMPANY’S
GAS BUSINESS IN ITALY
Current, negative trends in gas demands and supplies in Europe
may impair the Company’s ability to fulfil its minimum off-take
obligations in connection with its take-or-pay, long-term gas sup-
ply contracts
Eni is currently party to a few long-term gas supply contracts
with state-owned companies of key producing Countries,
from where most of the gas supplies directed to Europe are
sourced via pipeline (Russia, Algeria, Libya and Norway). The-
se contracts which were intended to support Eni’s sales plan
in Italy and in other European markets, provide take-or-pay
clauses whereby the Company has an obligation to lift mini-
mum, pre-set volumes of gas in each year of the contractual
term or, in case of failure, to pay the whole price, or a fraction
of that price, up to a minimum contractual quantity. Similar
considerations apply to ship-or-pay contractual obligations
which arise from contracts with pipeline owners, which the
Company has entered into to secure long-term transport ca-
pacity. Long-term gas supply contracts with take-or-pay clau-
ses expose the Company to a volume risk, as the Company
is obligated to purchase an annual minimum volume of gas,
or in case of failure, to pay the underlying price. The structure
Eni Annual Report 2020 128
of the Company’s portfolio of gas supply contracts is a risk
to the profitability outlook of Eni’s wholesale gas business
due to the current competitive dynamics in the European gas
markets. In past downturns of the gas sector, the Company
incurred significant cash outflows in response to its take-or-
pay obligations. Furthermore, the Company’s wholesale busi-
ness is exposed to volatile spreads between the procurement
costs of gas, which are linked to spot prices at European
hubs or to the price of crude oil, and the selling prices of gas
which are mainly indexed to spot prices at the Italian hub. A
reduction of the spreads between Italian and European spot
prices for gas could negatively affect the profitability of our
business by reducing the total addressable market and by re-
ducing the margin to cover the business’s logistics costs and
other fixed expenses.
Eni’s management is planning to continue its strategy of re-
negotiating the Company’s long-term gas supply contracts in
order to constantly align pricing terms to current market con-
ditions as they evolve and to obtain greater operational flexibi-
lity to better manage the take-or-pay obligations (volumes and
delivery points among others), considering the risk factors de-
scribed above. The revision clauses included in these contracts
state the right of each counterparty to renegotiate the econo-
mic terms and other contractual conditions periodically, in re-
lation to ongoing changes in the gas scenario. Management
believes that the outcome of those renegotiations is uncertain
in respect of both the amount of the economic benefits that will
be ultimately obtained and the timing of recognition of profit.
Furthermore, in case Eni and the gas suppliers fail to agree on
revised contractual terms, both parties can start an arbitration
procedure to obtain revised contractual conditions. All these
possible developments within the renegotiation process could
increase the level of risks and uncertainties relating the outco-
me of those renegotiations.
Risks associated with the regulatory powers entrusted to the
Italian Regulatory Authority for Energy, Networks and Envi-
ronment in the matter of pricing to residential customers
Eni’s wholesale gas and retail Gas & Power businesses are
subject to regulatory risks mainly in our domestic market in
Italy. The Italian Regulatory Authority for Energy, Networks
and Environment (the “Authority”) is entrusted with certain
powers in the matter of natural gas and power pricing. Spe-
cifically, the Authority retains a surveillance power on pricing
in the natural gas market in Italy and the power to establish
selling tariffs for the supply of natural gas to residential and
commercial users until the market is fully opened. Develop-
ments in the regulatory framework intended to increase the
level of market liquidity or of de-regulation or intended to re-
duce operators’ ability to transfer to customers cost increa-
ses in raw materials may negatively affect future sales mar-
gins of gas and electricity, operating results and cash flow.
RISKS RELATED TO ENVIRONMENTAL, HEALTH
AND SAFETY REGULATIONS AND LEGAL RISKS
Eni has incurred in the past, and will continue incurring, mate-
rial operating expenses and expenditures, and is exposed to
business risk in relation to compliance with applicable environ-
mental, health and safety regulations in future years, including
compliance with any national or international regulation on GHG
emissions
Eni is subject to numerous European Union, international, na-
tional, regional and local laws and regulations regarding the
impact of its operations on the environment and on health and
safety of employees, contractors, communities and on the va-
lue of properties. We believe that laws and regulations inten-
ded to preserve the environment and to safeguard health and
safety of workers and communities are particularly severe in
our businesses due to their inherent nature because of flamma-
bility and toxicity of hydrocarbons and of industrial processes
to develop, extract, refine and transport oil, gas and products.
Generally, these laws and regulations require acquisition of a
permit before drilling for hydrocarbons may commence, restrict
the types, quantities and concentration of various substances
that can be released into the environment in connection with
exploration, drilling and production activities, including refinery
and petrochemical plant operations, limit or prohibit drilling acti-
vities in certain protected areas, require to remove and dismant-
le drilling platforms and other equipment and well plug-in once
oil and gas operations have terminated, provide for measures
to be taken to protect the safety of the workplace and of plants
and infrastructures, the health of employees, contractors and
other Company collaborators and of communities involved by
the Company’s activities, and impose criminal or civil liabilities
for polluting the environment or harming employees’ or com-
munities’ health and safety as result from the Group’s opera-
tions. These laws and regulations control the emission of scrap
substances and pollutants, discipline the handling of hazardous
materials and set limits to or prohibit the discharge of soil, wa-
ter or groundwater contaminants, emissions of toxic gases and
other air pollutants or can impose taxes on polluting air emis-
sions, as in the case of the European Trading Scheme that re-
quires the payment of a tax for each tonne of carbon dioxide
emitted in the environment above a pre-set allowance, resulting
from the operation of oil and natural gas extraction and proces-
sing plants, petrochemical plants, refineries, service stations,
vessels, oil carriers, pipeline systems and other facilities owned
or operated by Eni. In addition, Eni’s operations are subject to
laws and regulations relating to the production, handling, tran-
sportation, storage, disposal and treatment of waste. Breaches
of environmental, health and safety laws and regulations as in
the case of negligent or wilful release of pollutants and con-
taminants into the atmosphere, the soil, water or groundwater
or exceeding the concentration thresholds of contaminants set
Management report | Consolidated financial statements | Annex 129
by the law expose the Company to the incurrence of liabilities
associated with compensation for environmental, health or sa-
fety damage and expenses for environmental remediation and
clean-up. Furthermore, in the case of violation of certain rules
regarding the safeguard of the environment and the health of
employees, contractors and other collaborators of the Com-
pany, and of communities, the Company may incur liabilities in
connection with the negligent or wilful violation of laws by its
employees as per Italian Law Decree No. 231/2001.
Environmental, health and safety laws and regulations have a
substantial impact on Eni’s operations. Management expects
that the Group will continue to incur significant amounts of ope-
rating expenses and expenditures in the foreseeable future to
comply with laws and regulations and to safeguard the environ-
ment and the health and safety of employees, contractors and
communities involved by the Company operations, including:
costs to prevent, control, eliminate or reduce certain types
of air and water emissions and handle waste and other ha-
zardous materials, including the costs incurred in connection
with government action to address climate change (see the
specific section below on climate-related risks);
remedial and clean-up measures related to environmental
contamination or accidents at various sites, including those
owned by third parties (see discussion below);
damage compensation claimed by individuals and entities,
including local, regional or state administrations, should Eni
cause any kind of accident, oil spill, well blowouts, pollution,
contamination, emission of GHG and other air pollutants abo-
ve permitted levels or of any other hazardous gases, water,
ground or air contaminants or pollutants, as a result of its
operations or if the Company is found guilty of violating envi-
ronmental laws and regulations; and
costs in connection with the decommissioning and removal
of drilling platforms and other facilities, and well plugging at
the end of Oil & Gas field production.
As a further consequence of any new laws and regulations
or other factors, like the actual or alleged occurrence of envi-
ronmental damage at Eni’s plants and facilities, the Company
may be forced to curtail, modify or cease certain operations or
implement temporary shutdowns of facilities. For example, in
Italy Eni has experienced in recent years a number of temporary
plant shutdowns at our Val d’Agri oil treatment centre due to en-
vironmental issues and oil spillovers, causing loss of output and
of revenues. The Italian judicial authorities have started legal
proceedings to verify alleged environmental crimes or crimes
against the public safety and other criminal allegations as de-
scribed in the notes to the Consolidated Financial Statements.
returns, including dividends, the amount of funds available for
stock repurchases and the price of Eni’s shares.
CLIMATE-RELATED RISKS
The civil society and the national governments adhering to the
2015 COP 21 Paris Agreement are stepping up efforts to reduce
the risks of climate change and to support an ongoing transition
to a low carbon economy, which will likely lead to the adoption of
national and international laws and regulations intended to curb
carbon emissions, as well as to the implementation of fiscal me-
asures which could possibly drive technological breakthrough in
the use of hydrogen, exponential growth in the development of
renewables energies and fast-growing adoption of electric vehi-
cles, thus reducing the world’s economy reliance on fossil fuels.
These trends could materially affect demand for hydrocarbons
in the long-term, while we expect increased compliance costs
for the Company in the short-term. Eni is also exposed to risks
of unpredictable extreme meteorological events linked to climate
change. All these developments may adversely and materially af-
fect the Group’s profitability, businesses outlook and reputation
The civil society and the national governments adhering to the
2015 COP 21 Paris Agreement, with the EU playing a leading
role, are advancing plans and initiatives intended to transition
the economy towards a low carbon model in the long run, as
the scientific community has been sounding alarms over the
potential, catastrophic consequences for human life on the pla-
net in connection with risks of climate change, based on the
scientific relationship between global warming and increasing
GHG concentration in the atmosphere, mainly as a result of
burning fossil fuels. This push, as well as increasingly stricter
regulations in this area, could adversely and materially affect
the Group’s business.
Those risks may emerge in the short and medium-term, as well
as over the long term.
Eni expects that the achievement of the Paris Agreement goal
of limiting the rise in temperature to well below 2° C above
pre-industrial levels, or the more stringent goal advocated by
the Intergovernmental Panel on Climate Change (IPCC) of li-
miting global warming to 1.5° C, will strengthen the global re-
sponse to the issue of climate change and spur governments
to introduce measures and policies targeting the reduction of
GHG emissions, which are expected to bring about a gradual
reduction in the use of fossil fuels over the medium to long-
term, notably through the diversification of the energy mix, likely
reducing local demand for fossil fuels and negatively affecting
global demand for oil and natural gas.
If any of the risks set out above materialise, they could adver-
sely impact the Group’s results of operations, cash flow, liqui-
dity, business prospects, financial condition, and shareholder
Recently, governmental institutions have responded to the issue
of climate change on two fronts: on the one side, governmen-
Eni Annual Report 2020 130
ts can both impose taxes on GHG emissions and incentivise a
progressive shift in the energy mix away from fossil fuels, for
example, by subsidising the power generation from renewable
sources; on the other side they can promote worldwide agree-
ments to reduce the consumption of hydrocarbons. This trend
has been progressively gaining traction with an increasing num-
ber of governments adopting national agendas and strategies
intended to reach the goals of the Paris Agreement and formal-
ly pledging to obtain net-zero emissions by 2050, like the EU’s
Green Deal, which may lead to the enactment of various measu-
re to constrain, limit or prohibit altogether the use of fossil fuels.
This trend could increase both in breadth and severity if more
governments follow suit.
The dramatic fallout of the COVID-19 pandemic on economic
activity and people’s lifestyle could possibly result in a brea-
kthrough in the evolution towards a low carbon model of deve-
lopment. The unprecedented contraction in economic activity
caused by the lockdown measures adopted throughout the
world to contain the spread of the virus, which resulted in the
suppression of demand for hydrocarbons, could have an en-
during impact on the future role of hydrocarbons in satisfying
global energy needs. This is because many governments and
the EU have deployed massive amounts of resources to help
rebuild entire economies and industrial sectors hit by the pan-
demic-induced crisis and a large part of this economic stimulus
has been or is planned to be directed to help transitioning the
economy and the energy mix towards a low carbon model, as
in the case of the EU’s recovery fund, which provides for huge
investments in the sector of renewable energies and the green
economy, including large-scale adoption of hydrogen as a new
energy source. At the same time, the auto industry is ramping
up production of electric vehicles (EVs) and boosting the EVs
line-up, while large amounts of risk capital and financing is pro-
pelling the growth of an entire new industry of pure-EV players.
The growing role of EVs in transportation is leveraging on state
subsidies to incentivize the purchase of EVs and growing inte-
rest among consumers towards EVs. Other potentially disrup-
tive technologies designated to produce energy without fossil
fuels and to replace the combustion engine in the transport sec-
tor are emerging, driven by the development of hydrogen-based
innovations. These trends could disrupt demand for hydrocar-
bons in the not so distant future, with many forecasters, both
within the industry, or state agencies and independent obser-
vers predicting peak oil demand sometimes in the next ten ye-
ars or earlier; some operators still consider 2019 as the peak
year for oil demand. A large portion of Eni’s business depends
on the global demand for oil and natural gas. If existing or future
laws, regulations, treaties, or international agreements related
to GHG and climate change, including state incentives to con-
serve energy or use alternative energy sources, technological
breakthrough in the field of renewable energies or mass-adop-
tion of electric vehicles trigger a structural decline in worldwide
demand for oil and natural gas, our results of operations and
business prospects may be materially and adversely affected.
We expect our operating and compliance expenses to increase
in the short-term due to the likely growing adoption of carbon
tax mechanisms. Some governments have already introduced
carbon pricing schemes, which can be an effective measure
to reduce GHG emissions at the lowest overall cost to society.
Today, about half of the direct GHG emissions coming from
Eni’s operated assets are included in national or supranational
Carbon Pricing Mechanisms, such as the European Emission
Trading Scheme (ETS), as a result of which the Company in-
curs operating expenses. For example, under the European
ETS, Eni is obligated to purchase, on the open markets, emis-
sion allowances in case its GHG emissions exceed a pre-set
amount of free emission allowances. In 2020 to comply with
this carbon emissions scheme, Eni purchased on the open
market allowances corresponding to 10.5 million tonnes of
CO2 emissions. Due to the likelihood of new regulations in this
area and expectations of a reduction in free allowances under
the European ETS and of the adoption of similar schemes by
a rising number of governments, Eni is aware of the risk that a
growing share of the Group’s GHG emissions could be subject
to carbon-pricing and other forms of climate regulation in the
not so distant future, leading to additional compliance obliga-
tions with respect to the release, capture, and use of carbon
dioxide that could result in increased investments and higher
project costs for Eni. Eni also expects that governments will
require companies to apply technical measures to reduce their
GHG emissions.
Our portfolio of oil and gas properties features a large weight of
natural gas, the least GHG-emitting fossil energy source, which
represented approximately 48% of Eni’s production in 2020 on
an available-for-sale basis; as of December 31, 2020, gas reser-
ves represented approximately 49% of Eni’s total proved reser-
ves of its subsidiary undertakings and joint ventures. The other
pillar of our resilient portfolio of Oil & Gas properties is the high
incidence of conventional projects, developed through phases
and with low CO2 intensity. We estimate that Oil & Gas projects
under execution, which will drive the expected production incre-
ase in the next four-year period and attract a large part of the
projected development expenditures in the same period, have a
price breakeven of around 23 $/bbl. We believe that those cha-
racteristics of our portfolio coupled with a relatively low pay-
back period will mitigate the risk of stranded reserves going
forward, should risks of structurally declining hydrocarbons
demands materialize because of stricter global environmental
constraints and regulations and changing consumers’ preferen-
ces resulting in trends like the mass adoption of electric vehi-
cles or a lower weight of hydrocarbons in the energy mix.
Management report | Consolidated financial statements | Annex 131
Eni’s portfolio exposure to those risks is reviewed annually
against changing GHG regulatory regimes, evolving consu-
mers’ habits, technological developments and physical con-
ditions to identify emerging risks. To test the resilience of new
capital projects, Eni assesses potential costs associated with
GHG emissions and their impact on projects’ returns. New
projects’ internal rates of return are stress-tested against
two sets of assumptions: i) Eni’s management estimation of
a cost per ton of carbon dioxide (CO2), which is applied to
the total GHG emissions of each capital project along its life
cycle, while retaining the management scenario for hydrocar-
bons prices; and ii) the hydrocarbon prices and cost of CO2
emissions adopted in the International Energy Agency (IEA)
Sustainable Development Scenario “IEA SDS” WEO 2020.
This stress test is performed on a regular basis to monitor
progress and risks associated with each project. The review
performed at the end of 2020 indicated that the internal rates
of return of Eni’s ongoing projects in aggregate should not be
substantially affected by a carbon pricing mechanism, also
under the assumption that the costs for emission allowances
are not recoverable in the cost oil or are not deductible from
profit before taxes. This observation holds true also under the
more severe CO2 pricing assumptions of the IEA SDS scena-
rio. The development process and internal authorization pro-
cedures of each E&P capital project feature several checks
that may require additional and well detailed GHG and energy
management plans to address potential risks of underperfor-
mance in relation to possible scenarios of global or regional
adoption of regulations introducing mechanisms of carbon
cap and trade or carbon pricing. These processes and inter-
nal authorization hurdles can lead to projects being stopped,
designs being changed, and potential GHG mitigation invest-
ments being identified, in preparation for when the economic
conditions imposed by new regulations would make these
investments commercially compelling.
Furthermore, management performed a sensitivity analysis
of the recoverability of the book values of the Company’s Oil
& Gas assets under the assumptions set forth in the IEA SDS
WEO 2020 to evaluate the reasonableness of the outcome of
impairment review of those assets under the base case mana-
gement scenario as well as possible risks of stranded assets.
This stress test covered all the Oil & Gas cash generating unit
(CGUs) that are regularly tested for impairment in accordance
to IAS 36. The IEA SDS sets out an energy pathway consistent
with the goal of achieving universal energy access by 2030 and
of reducing energy-related CO2 emissions and air pollution in
line with the goals of the Paris Agreement which endorse ef-
fective action to combat climate change by holding the rise in
global average temperature to well below 2°C with respect to
the baseline before the Industrial Revolution and to pursuing
efforts to limit it to 1.5°C.
The hydrocarbons pricing assumptions of the IEA SDS scenario
are substantially aligned to the ones adopted by Eni in its base
case impairment review made in accordance with IAS 36. CO2
emissions costs under the IEA SDS show a strong uptrend con-
sistent with the goal of encouraging the adoption of low carbon
technologies. The IEA SDS projects CO2 emissions costs in ad-
vanced economies to reach 140 $ per ton in real terms 2019 by
2040, which is higher than Eni’s CO2 pricing trends and assump-
tions for the medium-long term. The sensitivity test performed
at Eni’s Oil & Gas CGUs under the IEA SDS assumptions and
applying the CO2 cost estimated by the IEA for advanced eco-
nomies to all of our oil and gas assets validated the resiliency
of Eni’s asset portfolio, determining a reduction of 11% in the
total value-in-use of all of Eni’s Oil & Gas CGUs compared to the
result of the impairment review performed by the Company in
the preparation of its 2020 financial statements using the ma-
nagement’s base case scenario. That reduction falls to a 5%
decline assuming the recoverability of CO2 costs in the cost oil
or the deductibility from the taxable income.
Finally, management considered the following trends in the sec-
tor: the increased volatility of crude oil prices which have been
increasingly exposed to macro and global risks; the continued
oversupply in the oil markets which has determined a reset in
hydrocarbons realized prices and cash flows of oil companies;
growing uncertainty about long-term evolution of global oil de-
mand in light of the rising commitment on the part of the inter-
national community at addressing climate change and spee-
ding up the pace of the energy transition, the increase in energy
alternatives to fossil fuels and changing consumer preferences,
management has evaluated the recoverability of the book va-
lues of Eni’s Oil & Gas properties under different stress-test sce-
narios, including the risk of stranded assets. Particularly, under
the more conservative set of the assumptions which envisages
a flat long-term Brent price of 50 $/bbl and at a flat Italian gas
price of 5 $/mmBTU, management is estimating that approxi-
mately 81% of the volumes of the Company’s proven and un-
proven reserves (latter being properly risked) will be produced
within 2035 and 93% of their net present value will be realized.
The net present value of those production volumes, valued at
the most conservative of the scenarios evaluated, is substan-
tially aligned with the book values of the net fixed assets of Eni’s
Oil & Gas properties, including Eni’s share of the fixed assets of
our joint ventures like Vår Energi AS, and including in the calcu-
lation the expected cash outflows committed to the Company’s
forestry projects.
In October 2018 the Intergovernmental Panel on Climate
Change (IPCC) stated that to reduce risks of irreversible chan-
ges to the ecosystem the world economy needs to limit the
increase in global temperatures to 1.5°C. To meet this chal-
lenge, the world economy would need to undertake in the next
Eni Annual Report 2020 132
decades a deeper and more complex transformation, both in
term of size and speed, than the one foreseen in the Paris
Agreement. Recognizing the IPCC position, the IEA has ela-
borated in its WEO 2020 a new detailed modelling called the
Net Zero Emissions 2050 case (NZE2050) to examine what
more would be needed compared to the SDS in next decade
to put global CO2 emissions on a pathway to net zero by 2050.
The set of actions contemplated by the IEA NZE2050 case
comprise a dramatic increase in investments in low-emission
electricity, infrastructure and innovation as well as deman-
ding behavioral changes on part of the consumers. Currently,
this scenario like the one outlined by the IPCC have yet to
be complemented by a full set of pricing and other operating
assumptions, which once available will be analyzed by the
Company for the purpose of updating stress-testing models
and methodologies.
The scientific community has concluded that increasing glo-
bal average temperature produces significant physical effects,
such as the increased frequency and severity of hurricanes,
storms, droughts, floods or other extreme climatic events that
could interfere with Eni’s operations and damage Eni’s facilities.
Extreme and unpredictable weather phenomena can result in
material disruption to Eni’s operations, and consequent loss
of or damage to properties and facilities, as well as a loss of
output, loss of revenues, increasing maintenance and repair
expenses and cash flow shortfall.
Finally, there is a reputational risk linked to the fact that oil
companies are increasingly perceived by institutions and
the general public as entities primarily responsible for global
warming due to GHG emissions across the hydrocarbons va-
lue-chain, particularly related with the use of energy products.
This could possibly make Eni’s shares less attractive to in-
vestment funds and individual investors who have been more
and more assessing the risk profile of companies against
their carbon footprint when making investment decisions.
Furthermore, a growing number of financing institutions, in-
cluding insurance companies, appear to be considering limi-
ting their exposure to fossil fuel projects, as witnessed by a
pledge from the World Bank to stop financing upstream oil
and gas projects and a proposal from the EU finance mini-
ster to reduce the financing granted to Oil & Gas projects via
the European Investment Bank (EIB). This trend could have a
material adverse effect on the price of our securities and our
ability to access equity or other capital markets. Accordingly,
our ability to obtain financing for future projects or to obtain
it at competitive rates may be adversely impacted. Further,
in some Countries, governments and regulators have filed
lawsuits seeking to hold fossil fuel companies, including Eni,
liable for costs associated with climate change. Losing any
of these lawsuits could have a material adverse effect on our
business prospects.
As a result of these trends, climate-related risks could have a
material and adverse effect the Group’s results of operations,
cash flow, liquidity, business prospects, financial condition, and
shareholder returns, including dividends, the amount of funds
available for stock repurchases and the price of Eni’s shares.
Eni is exposed to the risk of material environmental liabilities
in addition to the provisions already accrued in the consolida-
ted financial statement
Eni has incurred in the past and may incur in the future material
environmental liabilities in connection with the environmental
impact of its past and present industrial activities. Eni is also
exposed to claims under environmental requirements and, from
time to time, such claims have been made against us. Further-
more, environmental regulations in Italy and elsewhere typically
impose strict liability. Strict liability means that in some situa-
tions Eni could be exposed to liability for clean-up and reme-
diation costs, environmental damage, and other damages as a
result of Eni’s conduct of operations that was lawful at the time
it occurred or of the conduct of prior operators or other third
parties. In addition, plaintiffs may seek to obtain compensation
for damage resulting from events of contamination and pollu-
tion or in case the Company is found liable of violations of any
environmental laws or regulations. In Italy, Eni is exposed to the
risk of expenses and environmental liabilities in connection with
the impact of its past activities at certain industrial hubs whe-
re the Group’s products were produced, processed, stored, di-
stributed or sold, such as chemical plants, mineral-metallurgic
plants, refineries and other facilities, which were subsequently
disposed of, liquidated, closed or shut down. At these industrial
hubs, Eni has undertaken several initiatives to remediate and
to clean-up proprietary or concession areas that were allegedly
contaminated and polluted by the Group’s industrial activities.
State or local public administrations have sued Eni for environ-
mental and other damages and for clean-up and remediation
measures in addition to those which were performed by the
Company, or which the Company has committed to perform.
In some cases, Eni has been sued for alleged breach of crimi-
nal laws (for example for alleged environmental crimes such as
failure to perform soil or groundwater reclamation, environmen-
tal disaster and contamination, discharge of toxic materials,
amongst others). Although Eni believes that it may not be held
liable for having exceeded in the past pollution thresholds that
are unlawful according to current regulations but were allowed
by laws then effective, or because the Group took over opera-
tions from third parties, it cannot be excluded that Eni could
potentially incur such environmental liabilities. Eni’s financial
statements account for provisions relating to the costs to be
incurred with respect to clean-ups and remediation of contami-
nated areas and groundwater for which a legal or constructive
obligations exist and the associated costs can be reasonably
estimated in a reliable manner, regardless of any previous liabili-
ty attributable to other parties. The accrued amounts represent
Management report | Consolidated financial statements | Annex 133
management’s best estimates of the Company’s existing liabi-
lities. Management believes that it is possible that in the future
Eni may incur significant or material environmental expenses
and liabilities in addition to the amounts already accrued due
to: (i) the likelihood of as yet unknown contamination; (ii) the
results of ongoing surveys or surveys to be carried out on the
environmental status of certain Eni’s industrial sites as required
by the applicable regulations on contaminated sites; (iii) unfa-
vourable developments in ongoing litigation on the environmen-
tal status of certain of the Company’s sites where a number of
public administrations, the Italian Ministry of the Environment
or third parties are claiming compensation for environmental
or other damages such as damages to people’s health and loss
of property value; (iv) the possibility that new litigation might
arise; (v) the probability that new and stricter environmental
laws might be implemented; and (vi) the circumstance that the
extent and cost of environmental restoration and remediation
programs are often inherently difficult to estimate leading to
underestimation of the future costs of remediation and resto-
ration, as well as unforeseen adverse developments both in
the final remediation costs and with respect to the final liability
allocation among the various parties involved at the sites. As
a result of these risks, environmental liabilities could be sub-
stantial and could have a material adverse effect the Group’s
results of operations, cash flow, liquidity, business prospects, fi-
nancial condition, and shareholder returns, including dividends,
the amount of funds available for stock repurchases and the
price of Eni’s shares.
RISKS RELATED TO LEGAL PROCEEDINGS
AND COMPLIANCE WITH ANTI-CORRUPTION
LEGISLATION
Eni is the defendant in a number of civil and criminal actions
and administrative proceedings. In future years Eni may incur
significant losses due to: (i) uncertainty regarding the final
outcome of each proceeding; (ii) the occurrence of new deve-
lopments that management could not take into consideration
when evaluating the likely outcome of each proceeding in order
to accrue the risk provisions as of the date of the latest finan-
cial statements or to judge a negative outcome only as possible
or to conclude that a contingency loss could not be estimated
reliably; (iii) the emergence of new evidence and information;
and (iv) underestimation of probable future losses due to circu-
mstances that are often inherently difficult to estimate. Certain
legal proceedings and investigations in which Eni or its subsi-
diaries or its officers and employees are defendants involve the
alleged breach of anti-bribery and anti-corruption laws and re-
gulations and other ethical misconduct. Such proceedings are
described in the notes to the condensed consolidated interim
financial statements, under the heading “Legal Proceedings”.
Ethical misconduct and noncompliance with applicable laws
and regulations, including noncompliance with anti-bribery
and anti-corruption laws, by Eni, its officers and employees, its
partners, agents or others that act on the Group’s behalf, could
expose Eni and its employees to criminal and civil penalties and
could be damaging to Eni’s reputation and shareholder value.
INTERNAL CONTROL RISKS
Risks from acquisitions
Eni is constantly monitoring the oil and gas market in search of
opportunities to acquire individual assets or companies with a
view of achieving its growth targets or complementing its asset
portfolio. Acquisitions entail an execution risk – the risk that the
acquirer will not be able to effectively integrate the purchased
assets so as to achieve expected synergies. In addition, acquisi-
tions entail a financial risk – the risk of not being able to recover
the purchase costs of acquired assets, in case a prolonged de-
cline in the market prices of oil and natural gas occurs. Eni may
also incur unanticipated costs or assume unexpected liabilities
and losses in connection with companies or assets it acqui-
res. If the integration and financial risks related to acquisitions
materialise, expected synergies from acquisition may fall short
of management’s targets and Eni’s financial performance and
shareholders’ returns may be adversely affected.
Eni’s crisis management systems may be ineffective
Eni has developed contingency plans to continue or recover
operations following a disruption or incident. An inability to re-
store or replace critical capacity to an agreed level within an
agreed period could prolong the impact of any disruption and
could severely affect business, operations and financial resul-
ts. Eni has crisis management plans and the capability to deal
with emergencies at every level of its operations. If Eni does not
respond or is not seen to respond in an appropriate manner to
either an external or internal crisis, this could adversely impact
the Group’s results of operations, cash flow, liquidity, business
prospects, financial condition, and shareholder returns, inclu-
ding dividends, the amount of funds available for stock repur-
chases and the price of Eni’s shares.
Disruption to or breaches of Eni’s critical IT services or digital
infrastructure and security systems could adversely affect the
Group’s business, increase costs and damage our reputation
The Group’s activities depend heavily on the reliability and se-
curity of its information technology (IT) systems and digital
security. The Group’s IT systems, some of which are mana-
ged by third parties, are susceptible to being compromised,
damaged, disrupted or shutdown due to failures during the
process of upgrading or replacing software, databases or
components, power or network outages, hardware failures,
cyber-attacks (viruses, computer intrusions), user errors or
natural disasters. The cyber threat is constantly evolving.
The oil and gas industry is subject to fast-evolving risks from
cyber threat actors, including nation states, criminals, terro-
Eni Annual Report 2020 134
rists, hacktivists and insiders. Attacks are becoming more
sophisticated with regularly renewed techniques while the
digital transformation amplifies exposure to these cyber thre-
ats. The adoption of new technologies, such as the Internet
of Things (IoT) or the migration to the cloud, as well as the
evolution of architectures for increasingly interconnected sy-
stems, are all areas where cyber security is a very important
issue. The Group and its service providers may not be able
to prevent third parties from breaking into the Group’s IT sy-
stems, disrupting business operations or communications
infrastructure through denial-of-service attacks, or gaining
access to confidential or sensitive information held in the sy-
stem. The Group, like many companies, has been and expects
to continue to be the target of attempted cybersecurity at-
tacks. While the Group has not experienced any such attack
that has had a material impact on its business, the Group
cannot guarantee that its security measures will be sufficient
to prevent a material disruption, breach or compromise in the
future. As a result, the Group’s activities and assets could su-
stain serious damage, services to clients could be interrup-
ted, material intellectual property could be divulged and, in
some cases, personal injury, property damage, environmental
harm and regulatory violations could occur.
If any of the risks set out above materialise, they could adver-
sely impact the Group’s results of operations, cash flow, liqui-
dity, business prospects, financial condition, and shareholder
returns, including dividends, the amount of funds available for
stock repurchases and the price of Eni’s share.
Violations of data protection laws carry fines and expose us
and/or our employees to criminal sanctions and civil suits
Data protection laws and regulations apply to Eni and its joint
ventures and associates in the vast majority of Countries in whi-
ch we do business. The EU General Data Protection Regulation
(GDPR) came into effect in May 2018 and increased penalties
up to a maximum of 4% of global annual turnover for breach of
the regulation. The GDPR requires mandatory breach notifica-
tion, a standard also followed outside of the EU (particularly in
Asia). Non-compliance with data protection laws could expose
us to regulatory investigations, which could result in fines and
penalties as well as harm our reputation. In addition to impo-
sing fines, regulators may also issue orders to stop processing
personal data, which could disrupt operations. We could also be
subject to litigation from persons or corporations allegedly af-
fected by data protection violations. Violation of data protection
laws is a criminal offence in some Countries, and individuals
can be imprisoned or fined.
If any of the risks set out above materialise, they could adver-
sely impact the Group’s results of operations, cash flow, liqui-
dity, business prospects, financial condition, and shareholder
returns, including dividends, the amount of funds available for
stock repurchases and the price of Eni’s shares.
Management report | Consolidated financial statements | Annex Outlook
135
The latest business trends are the following.
The Eni’s industrial plan 2021 forecasts a crude oil price for
the Brent benchmark at 50 $/barrel, a standard Eni’ refining
margins “SERM” of 3.8 $/barrel and a EUR/USD exchange
rate of 1.19. Under these assumptions, management plans to
generate in 2021 enough cash flow from operations to fund
the organic capital expenditures (excluding acquisitions), as
well as to cover a portion of the floor dividend.
In the first quarter of 2021, the Brent crude oil price sharply
increased thanks to the accelerated economic recovery in
Asia, signs of recovery in the United States and the production
discipline of OPEC+, recording an average price of around
61 $/barrel, while the refining margin reported a significant
negative trend due to the increase in the cost of feedstock
without resumption of fuel demand in the reference markets
(mainly in Italy and western Europe).
Considering the outlook for 2021, management estimates
that the Company’s cash flow from operations will vary by
approximately €150 million for each one-dollar change in the
price of the Brent crude oil benchmark and for proportional
changes in gas prices; similarly, management estimates a
change of cash flow of approximately €160 million per each
one-dollar change in the SERM.
Eni Annual Report 2020 136
Consolidated disclosure of Non-Financial
Information pursuant to Legislative Decree 254/2016
Introduction
The Eni 2020 consolidated disclosure of Non-Financial Infor-
mation (NFI) has been drafted in accordance with Legislative
Decree 254/2016 and the Sustainability Reporting Standards
published by the Global Reporting Initiative (GRI)1. In continuity
with previous editions, the document is structured according
to the three levers of the integrated business model, Carbon
Neutrality by 2050, Operational Excellence and Alliances for
development, whose objective is the creation of long-term val-
ue for all stakeholders. The contents of the “Carbon Neutrality
by 2050” chapter have been organized according to the volun-
tary recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD) of the Financial Stability Board,
of which Eni has been a member since its foundation, in order
to provide even clearer and more in-depth disclosure on these
issues. In addition, the main United Nations Sustainable Devel-
opment Goals (SDGs), that constitute an important reference
for Eni in the conduct of its activities, have been mentioned in
the various chapters.
The NFI is included in the Management Report in the Annual
Report, to meet the information needs of Eni stakeholders in
a clear and concise manner, further favouring the integrated
disclosure of financial and non-financial information. In order
to avoid duplication of information and ensure that disclo-
sures are as concise as possible, the NFI provides integrated
disclosures, which may include references to other sections
of the Management Report, the Corporate Governance and
Shareholding Structure Report and the Report on remunera-
tion policy and remuneration paid, when the issues required
by Legislative Decree 254/2016 are already contained therein
or for further details. Specifically, the Management Report de-
scribes the Eni business model and governance, the integrat-
ed risk management system and the risk and uncertainty fac-
tors in which the main risks, possible impacts and treatment
actions are detailed, in line with the disclosure requirements
of Italian regulations. Integration and conciseness are also
some of the distinctive elements that allowed Eni to win the
2020 edition of the special award "Oscar" for the Non Finan-
cial Information promoted by FERPI – Federazione Relazioni
Pubbliche Italiana (Italian Public Relations Federation) – in
collaboration with Borsa Italiana and Bocconi University. The
NFI contains detailed information on corporate policies,
management and organizational models, an in-depth anal-
ysis of ESG (Environmental, Social and Governance) risks,
the strategy on the topics covered, the most important in-
itiatives of the year, the main performances with related
comments and the 2020 materiality analysis. In the 2020
NFI, the “core” metrics defined by the World Economic Fo-
rum2 (WEF) in its September 2020 White Paper “Measuring
Stakeholder Capitalism – Towards Common Metrics and
Consistent Reporting of Sustainable Value Creation” were
included for the first time. Eni announced its support for
the initiative, which aims to define common metrics for
long-term value creation and to further promote the con-
vergence of ESG standards and principles.
As in previous years, on the occasion of the Shareholders’
Meeting, Eni will also publish Eni for, the voluntary sustaina-
bility report that aims to further enhance non-financial infor-
mation. The 2020 edition of Eni for will also include the annex
“Carbon Neutrality by 2050”, and a report dedicated to human
rights (Eni for - Human Rights)3. On the occasion of the Share-
holders’ Meeting, Eni will publish a reconciliation table with
the Exploration & Production standards of the Sustainability
Accounting Standards Board (SASB).
Below is a reconciliation table showing the information con-
tent required by the Decree, the areas and relative positioning
in the NFI, the Management Report, the Corporate Govern-
ance and Shareholding Structure Report and the Report on
remuneration policy and remuneration paid.
(1) For further details, reference is made to the paragraph: “Reporting principles and criteria”.
(2) The reconciliation with the WEF core metrics is directly shown in the Content Index in a dedicated column, see pp. 175-178.
(3) The Eni for Human Rights report will be published subsequent to Eni for by June 2021.
Management report | Consolidated financial statements | Annex 137
SCOPES
OF LEGISLATIVE
DECREE 254/2016
CROSS-
REFERENCES
TO ALL SCOPES
OF THE DECREE
0 CLIMATE
5
CHANGE
0
2
Art. 3.2,
Y
paragraphs a)
B
and b)
Y
T
I
L
A
R
T
U
E
N
N
O
B
R
A
C
COMPANY MANAGEMENT MODEL
AND GOVERNANCE
POLICIES APPLIED
RISK MANAGEMENT
MODEL
PERFORMANCE
INDICATORS
NFI - Management and organizational
models, p. 141; Sustainability material
topics, p. 170
CGR - Eni Regulatory
System; Principles and
values. The Code of ethics
AR - Business model, pp. 4-5;
Responsible and sustainable approach,
pp. 6-7; Stakeholder engagement
activities, pp. 18-19; Strategy, pp. 20-25;
Governance, pp. 32-39
CGR - Responsible and sustainable
approach; Corporate governance model;
Board of Directors; Board Committees;
Board of Statutory Auditors; Model 231
AR - Integrated Risk
Management, pp.
26-31; Risk factors and
uncertainties, pp. 114-134
AR - Responsible and
sustainable approach,
pp. 6-7; Eni at a glance,
pp. 14-17
NFI - Carbon Neutrality by 2050, pp.
144-150
AR - Strategy, pp. 20-25
CGR - Responsible and sustainable
approach
NFI - Main regulatory
tools, guidelines and
management models
related to the scopes
of Legislative Decree
254/2016, pp. 139-140
NFI - Main ESG risks and
related mitigation actions
pp. 142-143
AR - Responsible and
sustainable approach,
pp. 6-7
NFI - Carbon Neutrality
by 2050, pp. 148-150
PEOPLE
Art. 3.2,
paragraphs a)
and b)
AR - Governance, pp. 32-39
NFI - People (employment, diversity
and inclusion, training, industrial
relations, welfare, health), pp. 151-155;
Safety, pp. 156-157
RESPECT
FOR THE
ENVIRONMENT
Art. 3.2,
paragraphs a), b)
and c)
HUMAN RIGHTS
Art. 3.2,
paragraph e)
NFI - Respect for the environment
(circular economy, waste, water,
spills, biodiversity), pp. 157-162
NFI - Human Rights (security, training,
whistleblowing ), pp. 162-164
CGR - Responsible and sustainable
approach
SUPPLIERS
Art. 3.1,
paragraph c)
NFI - Human Rights, pp. 162-164;
Suppliers, p. 165
E
C
N
E
L
L
E
C
X
E
L
A
N
O
T
A
R
E
P
O
I
NFI - Transparency, anti-corruption
and tax strategy, pp. 166-167
TRANSPARENCY
AND ANTI-
CORRUPTION
Art. 3.2,
paragraph f)
NFI - Alliances for promotion
of local development, pp. 168-169
COMMUNITIES
Art. 3.2,
paragraph d)
T LOCAL
N
E
M
P
O
L
E
V
E
D
R
O
F
S
E
C
N
A
I
L
L
A
NFI -Main regulatory
tools, guidelines and
management models
related to the scopes
of Legislative Decree
254/2016, pp. 139-140
NFI - Main regulatory
tools, guidelines and
management models
related to the scopes
of Legislative Decree
254/2016, pp. 139-140
NFI - Main regulatory
tools, guidelines and
management models
related to the scopes
of Legislative Decree
254/2016, pp. 139-140
NFI - Main regulatory
tools, guidelines and
management models
related to the scopes
of Legislative Decree
254/2016, pp.139-140
NFI - Main regulatory
tools, guidelines and
management models
related to the scopes
of Legislative Decree
254/2016, pp. 139-140
CGR - Principles and
values. The Code of
Ethics; Anti-Corruption
Compliance Program
NFI - Main regulatory
tools, guidelines and
management models
related to the scopes
of Legislative Decree
254/2016, pp. 139-140
NFI - Main ESG risks and
related mitigation actions
pp. 142-143
AR - Responsible
and sustainable
approach, pp. 6-7
NFI - People, pp. 153-
155; Safety, pp. 156-157
RR - Executive Summary,
pp. 12-13
NFI - Main ESG risks and
related mitigation actions
pp. 142-143
AR - Responsible and
sustainable approach,
pp. 6-7
NFI - Main ESG risks and
related mitigation actions
pp. 142-143
NFI - Main ESG risks and
related mitigation actions
pp. 142-143
NFI - Main ESG risks and
related mitigation actions
pp.142-143
NFI - Respect for
the environment,
pp. 159-162
AR - Responsible
and sustainable
approach, pp. 6-7
NFI - Human Rights,
p. 164
AR - Responsible
and sustainable
approach, pp. 6-7
NFI - Human Rights,
p. 164; Suppliers,
p. 165
AR - Responsible
and sustainable
approach, pp. 6-7
NFI - Transparency,
anti-corruption and
tax strategy, p. 167
NFI - Main ESG risks and
related mitigation actions
pp. 142-143
AR - Responsible
and sustainable
approach, pp. 6-7
NFI - Alliances for
promotion of local
development, p. 169
AR Annual Report 2020
CGR Corporate Governance and Shareholding Structure Report 2020
RR Report on remuneration policy and remuneration paid 2021
Sections/paragraphs providing the disclosures required by the Decree
Sections/paragraphs to which reference should be made for further details
Eni Annual Report 2020
138
The effects of the COVID-19 pandemic
In a year in which the world was turned upside down by the health
emergency linked to the outbreak of the COVID-19 pandemic, Eni
intervened on several fronts to manage the consequences by ex-
ploiting its expertise gained in a complex sector such as energy,
in order to protect the health of its employees and contractors.
Eni has also worked in synergy with governments, institutions
and local and international NGOs with the aim of preventing and
countering the spread of the pandemic and minimizing its im-
pact on local communities, both in Italy and abroad.
Emergency management of the pandemic - Despite the scope
and speed with which the COVID-19 pandemic spread through-
out the world, Eni intervened promptly, also by virtue of the ex-
perience gained managing past epidemics such as Sars-Cov-1
and Ebola, and thanks to the regulatory, organizational and op-
erational tools it had already adopted in 2011 to be prepared
for the management of epidemic and pandemic events, imple-
menting its own risk management model for Health, Safety,
Environment, Security and Public Health and Safety. Since Jan-
uary 2020, there has been a constant flow of communication
with the subsidiaries, both in Italy and abroad, with the aim of
monitoring the evolution of the emergency and implementing
the necessary preventive measures defined by the Company’s
regulatory instruments and in accordance with the provisions
of national and international health authorities. Eni has there-
fore updated the epidemic and pandemic response plan within
its medical emergency procedure.
In particular, Eni, through its Board of Directors, has defined the
strategic and coordination guidelines also through the estab-
lishment of the Crisis Unit formed by all the competent central
functions of Eni with the role of monitoring the regulations in
force and, in application of this, taking into account the pro-
gress of the pandemic, to indicate the strategic guidelines for
the transversal management of the health emergency, defin-
ing technical and organizational measures to be implement-
Company mission
ed for the containment of the spread of the infection in the
workplace. On the basis of the indications of the Crisis Unit,
each employer has put in place the appropriate measures and
operational actions with respect to its own production unit, tak-
ing into account the specificities of the work environments, for
the counter and containment of the spread of the virus, main-
ly with regard to: (i) communication, information and training;
(ii) hygiene and prevention; (iii) management and use of PPE
(Personal Protective Equipment); (iv) sanitization of work en-
vironments; (v) reorganization of work arrangements and agile
work; (vi) access to workplaces and aggregation areas; (vii)
management of suspected and confirmed cases; (viii) health
surveillance and protection of fragile workers; (ix) maintenance
of essential services and business continuity plan.
In March 2020, all employees with duties that do not require
physical presence in the workplace began to perform their
professional activities remotely. Over a few days, Eni ensured
that 99% of office personnel and, overall, about 87% of total
non-shift personnel (almost 14,400 employees) were able to
continue their activities through smart working, guaranteeing
the maintenance of the IT infrastructure (for further details see
Internal control risks, p. 134) and providing about 3,000 PCs,
Hot Spots and monitors. At the same time, the return from for-
eign offices of approximately 500 expatriate colleagues was
organized, ensuring the necessary logistical measures, includ-
ing dedicated flights. Additional and complementary actions
have been activated in support of health institutions and impor-
tant initiatives have been put in place in favour of Eni's people (for
more information see the sections on People and Health, pp. 151-
155) and in support of Community Health in line with the needs
gathered and the evolution of national and territorial health plans
(see the section on Alliances for promotion of local development,
pp. 168-169). Finally, for more information on the impact of the
pandemic on Eni operating performance, see pp. 89-91.
The Eni mission – approved by the Board of Directors in Sep-
tember 2019 – shows the path that the Company has taken to
face the main challenge of the energy sector: ensuring access
to efficient and sustainable energy for all, while reducing green-
house gas emissions, in order to counter climate change in line
with the objectives of the Paris Agreement.
Despite the complex context due to the health emergency,
Eni has decided to accelerate its transformation path by com-
mitting to achieve total decarbonization of all products and
processes by 2050 (for more details see the chapter Strate-
gy pp. 20-25 and the chapter Carbon Neutrality by 2050 pp.
144-150). The mission, which is inspired by the 17 SDGs to the
achievement of which Eni intends to contribute by seizing new
business opportunities, confirms the commitment of Eni to a
just energy transition. This is possible thanks to Eni's people,
the passion and drive towards continuous innovation, respect
and promotion of human rights, considering diversity as a re-
source, integrity in business management and environmental
protection. In addition, it must be considered that achieving the
SDGs requires unprecedented collaboration between the pub-
lic and private sectors, as announced at the 2015 Addis Ababa
international conference on financing for development. Hence,
the commitment of Eni in defining and building cooperations
with locally rooted, internationally recognized partners.
Management report | Consolidated financial statements | Annex 139
Main regulatory tools, guidelines and management models
related to scopes of Legislative Decree 254/2016
In order to implement the mission in actual practice and to en-
sure integrity, transparency, correctness and effectiveness in
its processes, Eni adopts rules for the performance of corpo-
rate activities and the exercise of powers, ensuring compliance
with the general principles of traceability and segregation.
All of Eni's operational activities can be grouped into a map
of processes functional to the Company’s activities and inte-
grated with control requirements and principles set out in the
compliance and governance models and based on the By-
laws, Code of Ethics, Self Regulatory Code 2018 and Corporate
Governance Code 20204, Model 231, SOA principles5 and CoSO
Report6.
BY-LAWS
CODE
OF ETHICS
CORPORATE
GOVERNANCE CODE
MODEL 231
PRINCIPLES OF THE ENI CONTROL
SYSTEM ON REPORTING
CoSo REPORT FRAMEWORK
GENERAL OVERVIEW OF THE REGULATORY SYSTEM
L
O
R
T
N
O
C
D
N
A
N
O
T
A
N
D
R
O
O
C
I
I
,
E
C
N
A
D
U
G
I
I
S
N
O
T
A
R
E
P
O
Policy
Management
System
Guideline
Procedure
10 policy approved by the BoD
- Operation excellence; Our tangible and intangible assets; Our partners of the value chain;
Our institutional partners; The global compliance; Sustainability; Our people;
Information management; The integrity in our operations; Corporate Governance.
48 Management System Guideline ("MSG"):
- 1 MSG of Regulatory System defines the process for Regulatory System management;
- 34 MSG of Process define the guidelines for properly managing the relevant process and the related risks,
with an aim towards integrated compliance;
- 13 MSG of compliance and governance (approved by the BoD normally) define the general rules for ensuring
compliance with the law, regulations and corporate governance code: Code of commercial practices and advertising;
Compliance model regarding corporate responsibilities for Italian Subsidiaries of Eni - WS Composition; Compliance
model regarding corporate responsibilities for Foreign Subsidiaries of Eni; Corporate governance for Eni Companies;
Internal Control and Risk Management System; Market Information Abuse (Issuers); Anti-Corruption; Antitrust; Eni's
internal control system over financial reporting; Privacy and personal Data Protection; Transactions involving the
interests of the Directors and Statutory Auditors and Transactions with Related Parties; Market conducts and
financial regulation.
- Define the operational methods to be implemented in executing the Company’s activities.
Operating Instruction
- Define in detail the operating procedures for a specific function, organisational unit or professional area/family.
With regard to the types of instruments that make up the Reg-
ulatory System:
the Policies, approved by the Board, are mandatory docu-
ments that set out the principles and general rules of conduct
on which all the activities carried out by Eni must be based
in order to ensure the achievement of corporate objectives,
taking into account risks and opportunities. The Policies cut
across all processes and are focused on a key element of
business management; they apply to Eni SpA and, following
the implementation process, to all subsidiaries;
The Management System Guidelines (“MSGs”) are the guide-
lines common to all Eni's companies and may be process or
compliance/governance guidelines (the latter normally ap-
proved by the Board of Directors) and include sustainability as-
pects. The individual MSGs issued by Eni SpA apply to subsid-
iaries, which ensure their implementation, unless a derogation
is needed;
The Procedures set out the operating procedures by which the
companies’ activities are to be carried out. They describe the
tasks and responsibilities of the organizational contacts involved,
management and control methods and communication flows.
They also regulate operations in order to pursue the
objectives of compliance with local regulations. The content
is defined in compliance with the Policies and MSGs as
implemented by the companies;
The Operating Instruction define the details of the operating
procedures referring to a specific function/organizational
unit/professional area or professional family, or to Eni's peo-
ple and functions involved in the fulfilments regulated therein.
The regulatory instruments are published on the Company’s In-
tranet site and, in some cases, on the Company’s website. In addi-
tion, in 2020, Eni updated its Code of Ethics in which it renewed the
corporate values that characterize the commitment of Eni people
and all third parties working with the Company: integrity, respect
and protection of human rights, transparency, promotion of devel-
opment, operational excellence, innovation, teamwork and collab-
oration. In the first of the two following tables (p. 140), in addition
to the Policies and the Code of Ethics, other Eni regulatory instru-
ments approved by the CEO and/or the BoD are also considered.
On the other hand, the second table (p. 141) shows management
and organizational models, including management systems, mul-
ti-year plans, processes and cross-functional working groups.
(4) Please note that on December 23rd 2020, the Eni Board of Directors resolved to adhere to the new Code, the recommendations of which are applicable as of Janu-
ary 1st 2021. Therefore, as from that date, roles, responsibilities and regulatory instruments must take into account the new recommendations on the subject provided
for by the new Code, as well as the decisions taken by the Board of Directors on how to apply these recommendations.
(5) US Sarbanes-Oxley Act of 2002.
(6) Framework issued by the "Committee of Sponsoring Organizations of the Treadway Commission (CoSO)" in May 2013.
Eni Annual Report 2020
140
CARBON NEUTRALITY
BY 2050
OPERATIONAL EXCELLENCE
OPERATIONAL EXCELLENCE
CLIMATE CHANGE
PEOPLE, HEALTH E SAFETY
RESPECT FOR THE ENVIRONMENT
GOAL
Combat climate change
PUBLIC DOCUMENTS
Policy "Sustainability", Eni’s Position on
biomass, Eni’s responsible engagement
on climate change within business
associations, Strategic Plan 2021-2024:
towards zero emissions (February 2021)
PRINCIPLES
Full decarbonization of all products and
processes by 2050;
reduce the carbon footprint towards zero
emissions with the contribution of Forestry
and CCS initiatives
develop and implement new technologies
for the reduction of climate-altering
emissions and more efficient energy
production
ensure sustainable biomass management
along the entire supply chain
ensure consistency and transparency in the
activities of associations with Eni's strategy
on climate change and energy transition, in
line with stakeholders' expectations
GOAL
Value Eni's people and protect their health
and safety
GOAL
Use resources efficiently and protect
biodiversity and ecosystem services (BES)
PUBLIC DOCUMENTS
Our People” and “The integrity in Our Oper-
ations” policies, Eni’s statement on Respect
for Human Rights
PRINCIPLES
respect the dignity of each individual,
valuing cultural, ethnic, gender, age, sexual
orientation and different abilities
provide managers with tools and support
for the management and development of
people working for them
identify knowledge instrumental to the
Company's growth and promote its
enhancement, development and sharing
adopt fair remuneration systems that allow
to motivate and retain people with skills
that best suit the needs of the business
carry out activities in accordance
with agreements and regulations on
workers' health and safety protection
and in accordance with the principles of
precaution, prevention, protection and
continuous improvement
create a safe working environment
implementing appropriate prevention
initiatives
PUBLIC DOCUMENTS
Sustainability” and “The integrity in Our
Operations” policies, “Eni biodiversity
and ecosystem services” policy; “Eni’s
commitment not to conduct exploration and
development activities within the boundaries
of Natural Sites included in the UNESCO
World Heritage List”
PRINCIPLES
consider, in project assessments and
operations, the presence of UNESCO World
Heritage Sites and other protected areas
relevant to biodiversity, identifying potential
impacts and mitigation actions (risk-based
approach)
establish links between environmental and
social aspects including the sustainable
development of local communities
promote sustainable water resource
management
optimise the control and reduction of
emissions into the air, water and soil
act in a sustainable way, minimizing
environmental impacts and optimizing the
use of energy and natural resources
OPERATIONAL EXCELLENCE
OPERATIONAL EXCELLENCE
ALLIANCES FOR DEVELOPMENT
HUMAN RIGHTS
GOAL
Protect human rights
PUBLIC DOCUMENTS
Policy “Sustainability”, “Our people", “Our
Partners of the Value Chain”, “Whistleblowing
reports received, including anonymously, by
Eni SpA and by its subsidiaries in Italy and
abroad”, “Alaska Indigenous Peoples”, Eni’s
Statement on Respect for Human Rights,
Supplier code of conduct
PRINCIPLES
respect human rights and promote their
respect among employees, partners and
stakeholders, also through training and
awareness-raising activities
ensure a safe and healthy working
environment and working conditions in line
with international standards
take into account Human Rights issues,
from the very first feasibility evaluation
phases of projects and respect the
distinctive rights of indigenous populations
and vulnerable groups
minimize the necessity for intervention
by state and/or private security forces to
protect employees and assets
select commercial partners that comply
with the Eni Supplier Code of Conduct
and that are committed to preventing or
mitigating impacts on human rights
TRANSPARENCY AND ANTI-CORRUPTION
LOCAL COMMUNITIES
GOAL
Fight any form of corruption, with no
exception
PUBLIC DOCUMENTS
Anti-Corruption” Management System
Guideline, “Our partners of the value chain”
policy, Tax Strategy Guideline, Eni's position
on Contracts Transparency
PRINCIPLES
carry out business activities with fairness,
correctness, transparency, honesty and
integrity in compliance with the law
prohibit bribery without exception
prohibit offering, promising, giving, paying,
directly or indirectly, benefits of any nature
to a Public Official or a private person
(active corruption)
prohibit accepting, directly or indirectly,
benefits of any nature from a Public Official
or a private person (passive corruption)
ensure that all Eni employees and partners
comply with the anti-corruption regulations
GOAL
Promote relations with local communities
and contribute to their development also
through public-private partnerships
PUBLIC DOCUMENTS
“Sustainability” policy, Eni’s Statement on
Respect for Human Rights
PRINCIPLES
create growth opportunities and enhance
the skills of people and local companies in
the territories where Eni operates
involve local communities in order to
consider their concerns on new projects,
impact assessments and development
initiatives, also with reference to human
rights
identify and assess the environmental,
social, economic and cultural impacts
generated by Eni activities, including those
on indigenous populations
promote free, prior and informed
consultation with local communities
cooperate in initiatives to guarantee
independent, long-lasting and sustainable
local development
Management report | Consolidated financial statements | Annex 141
MANAGEMENT AND ORGANIZATIONAL MODELS
CLIMATE CHANGE New organization to be a leader in energy transition with two Business Groups:
• Natural Resources, for the sustainable valorization of the upstream Oil & Gas portfolio, for energy efficiency and carbon capture
• Energy Evolution, for the evolution of the production, transformation and marketing activities from fossil fuel based to bio, blue and green
products
Central organizational function dedicated which oversees the Company’s strategy and positioning on climate change
Technologies for Energy Transition and Biomasses Programme: to promote research and technological innovation relating to the exploitation
of gas resources with a view to full integration with renewable sources, the use of biomasses and the valorisation of scrap materials
with reference to their possible application in the process of redefining the energy mix
Energy management systems coordinated with the ISO 50001 standard, included in the HSE regulatory system, for the improvement of energy
performance and already implemented in all the main mid-downstream sites and extension in progress to all Eni's sites
PEOPLE
Employment management and planning process to align skills to the technical and professional needs
Management and development tools, aimed at professional involvement, growth and updating, inter-generational and inter-cultural exchange of
experiences, building of cross-cutting and professional managerial development pathways in core technical areas valuing and including diversity
Working group to determine the impacts of Digital Transformation on Roles/Skills. Development of Innovative HR Management Tools
Quality management system for training, up-to-date and complying with the ISO 9001:2015 standard
Knowledge management system for integrating and sharing know-how and professional experiences
National and international industrial relations management system: participative model and platform of operating tools to engage employees
in compliance with ILO (International Labour Organization) conventions and the guidelines of the Institute for Human Rights and Business
Welfare system for the achievement of work-life balance and the enhancement of services for employees and their families
HEALTH
Integrated environmental, health and safety management system based on an operating platform of qualified healthcare providers
and partnerships with national and international university and governmental research centers and institutions
Occupational medicine for the protection of the health and safety of workers, in relation to the workplace, to occupational risk factors
and to the way in which work is carried out and the system of assistance and health promotion for the provision of health services consistent
with the results of the analysis of needs and epidemiological, operational and legislative contexts
Health emergency preparedness and response, including epidemic and pandemic response plans
Health for communities: initiatives aimed at maintaining, protecting and/or improving the health status of communities
SAFETY
Integrated environment, health and safety management system for workers certified in accordance with the OHSAS 18001/ISO 45001 standard
with the aim of eliminating or mitigating the risks to which workers are exposed during their work activities
Process safety management system aimed at preventing major accidents by applying high technical and management standards
(application of best practices for asset design, operating management, maintenance and decommissioning)
Emergency preparation and response with plans that put the protection of people and the environment first
Product safety management system for the assessment of risks related to the production, import, sale, purchase and use of substances/
mixtures to ensure human health and environmental protection throughout their life cycle
Working group for the definition of methodologies and tools for the management of the Human Factor in accident prevention
RESPECT
FOR THE
ENVIRONMENT
Integrated environment, health and safety management system: adopted in all plants and production units and certified in accordance with the
ISO 14001:2015 environmental management standard
Application of the Environmental, Social & Health Impact Assessment (ESHIA) process to all projects
Technical meetings for the analysis and sharing of experiences on specific environmental and energy issues
Green Sourcing: model to identify analysis methods and technical requirements for the selection of products and suppliers with the best
environmental performances
Site-specific circularity analysis: mapping of elements already present, measurement and identification of possible interventions for improvement
International Environmental Legislative Analysis: in-depth analysis of current national and international legislation by environmental matrix and
definition of a Ranking of regulatory development for each Country analyzed
HUMAN RIGHTS
Human rights management process regulated by an internal regulatory instrument
Inter-functional activities on Business and Human Rights to further align processes with key international standards and best practices
Human Rights Impact Assessment, with a risk-based prioritization model for industrial projects
Security management system aimed at ensuring respect of human rights in all Countries, particularly in high-risk Countries
Three-year e-learning training plan on the main areas of interest on human rights
TRANSPARENCY
AND
ANTI-CORRUPTION
Model 231: sets out responsibilities, sensitive activities and control protocols for crimes of corruption under Italian Legislative Decree 231/01
(including environmental crimes and crimes related to workers' health and safety)
Anti-Corruption Compliance Program: system of rules and controls to prevent corruption crimes
Recognition for the Eni SpA Anti-Corruption Compliance Program: certified pursuant to the ISO 37001:2016 standard
Anti-corruption unit placed in the “Integrated Compliance” function reporting directly to the CEO
Eni participation in local EITI multi stakeholder group activities to promote responsible use of resources, fostering transparency
SUPPLIERS
Procurement Process designed to check compliance with Eni requirements for reliability, ethical conduct and integrity, health, safety,
environmental and human rights protection, through the qualification, selection and assignment of contracts, management and monitoring
of suppliers, as well as through assessments using parameters set out by the Social Accountability Standard (SA8000)
JUST: initiative aimed at involving suppliers in the energy transition process
LOCAL
COMMUNITIES
Sustainability liaison at local level, who interfaces with the Company headquarters to define local community development programmes
(Local Development Programme) in line with national development plans integrating business processes
Application of the ESHIA (Environmental Social & Health Impact Assessment) process to all business projects
Stakeholder Management System Platform for the management and monitoring of relations with local stakeholders and of grievances
Sustainability management process in the business cycle and design specifications according to international methods (e.g. Logical Framework)
INNOVATION AND
DIGITALIZATION
Centralized Research & Development function for optimal sharing and best use of know-how
Management of Technological Innovation projects in line with best practices (step-by-step planning and control according to the development
of the technology)
Continuous updating of procedures relating to the protection of intellectual property and the identification of service/professional
service providers
Eni Annual Report 2020 142
Main ESG risks and related mitigation actions
For the analysis and assessment of risks, Eni has adopt-
ed an Integrated Risk Management Model with the aim of
enabling management to make informed decisions with
an overall and prospective vision7. Risks are assessed
with quantitative and qualitative tools, taking into account
environmental, health and safety, social and reputational
impacts. The results of the risk assessment, including the
main ESG (Environmental, Social and Governance) risks, are
submitted to the Board of Directors and the Control and Risk
Committee on a half yearly basis. It should be noted that
in 2020, the impact of the Climate Change risk, already a
top risk, increased due to the effects of the energy transi-
tion on the Eni business model and management’s subse-
quent commitment in the definition of the Long-Term Stra-
tegic Plan. In addition, it should be noted that due to the
COVID-19 pandemic in 2020, biological risk has become a
top risk, assessed both as a risk to people’s health and as
a systemic risk capable of affecting Eni's risk portfolio as
a whole and, in particular, market, Country and operational
risks. The table below provides a summary view of Eni ESG
risks classified according to the areas of Legislative Decree
254/2016. For each risk event, the type of risk – top risk
and non-top risk – and the page references, where the main
treatment actions are set out, are indicated.
RISK MANAGEMENT MODEL
SCOPES OF LEGISLATIVE
DECREE 254/2016
RISK EVENT
CROSS
RISKS
Risks associated with research
and development activities
Cyber Security
Relations with stakeholders
Political and social instability
and Global security risk
Climate Change risk
and energy transition risks
CLIMATE
CHANGE
Art. 3.2,
paragraphs a)
and b)
Y
T
I
L
A
R
T
U
E
N
N
O
B
R
A
C
0
5
0
2
Y
B
Top risk
(7) For further information, see the chapter Integrated Risk Management, on pp. 26-31.
TOP
RISK
MAIN TREATMENT
ACTIONS
NFI - Carbon neutrality by 2050,
pp. 144-150; Safety, pp. 156-157;
Respect for the environment,
pp. 157-162
AR - Integrated Risk Management,
pp. 26-31; Internal control risks,
pp. 133-134
AR - Integrated Risk Management,
pp. 26-31; Risks related to political
considerations, pp. 125-127; Risks
associated with the exploration
and production of oil and natural
gas, pp. 121-125
NFI - Alliances for promotion of
local development, pp. 168-169
AR - Integrated Risk Management,
pp. 26-31; Risks related to political
considerations, pp. 125-127
AR - Integrated Risk Management,
pp. 26-31; Safety, security,
environmental and other
operational risks, pp. 119-121;
Climate-related risks, pp. 129-132
NFI - Carbon Neutrality by 2050
(risk management), pp. 146-147
Management report | Consolidated financial statements | Annex
RISK MANAGEMENT MODEL
SCOPES OF LEGISLATIVE
DECREE 254/2016
RISK EVENT
PEOPLE
Art. 3.2,
paragraphs c)
and d)
Biological risk, i.e. the spread of pandemics and
epidemics with potential impacts on people, health
systems and business
RESPECT FOR THE
ENVIRONMENT
Art. 3.2,
paragraphs a), b)
and c)
Risks regarding human health and safety:
• Accidents involving workers and contractors
• Process safety and asset integrity incidents
Risks connected with the competency portfolio
Blow out
Process safety and asset integrity incidents
Regulatory risk energy sector
Permitting
Environmental risks (e.g. water scarcity, oil spill,
waste, biodiversity)
E
C
N
E
L
L
E
C
X
E
L
A
N
O
T
A
R
I
143
TOP
RISK
MAIN TREATMENT
ACTIONS
AR - Eni at a glance, pp. 14-15;
Integrated Risk Management,
pp. 26-31; Impact of COVID-19
pandemic, pp. 89-91; Safety,
security, environmental and
other operational risks, pp.
119-121; Risks associated with
the exploration and production of
oil and natural gas, pp. 121-125
NFI - People, pp. 151-155, Safety,
pp. 156-157
AR - Integrated Risk Management,
pp. 26-31; Risks associated with
the exploration and production of
oil and natural gas, pp. 121-125;
Safety, security, environmental
and other operational risks,
pp. 119-121; Risks related to
Environmental, Health and Safety
regulations and legal risks
pp.128-129;
NFI - Respect for the environment,
pp. 157-162
HUMAN RIGHTS
Art. 3.2,
paragraph e)
Risks associated with the violation of human rights
(human rights in the supply chain, human rights
in security, human rights in the workplace, human
rights in local communities)
NFI - Human Rights (risk
management), pp. 162-164
SUPPLIERS
Art. 3.1,
paragraph c)
Risks associated with procurement activities
NFI - Suppliers (risk management),
p. 165
TRANSPARENCY
AND
ANTI-CORRUPTION
Art. 3.2,
paragraph f)
Investigations and litigation regarding:
• Environment, health and safety
• Corruption
Risks connected with Corporate Governance
Risks connected with local content
S
E
C
N
A
I
L
L
A
T COMMUNITIES
N
Art. 3.2,
E
M
paragraph d)
P
O
L
E
V
E
D
R
O
F
Top risk
AR - Integrated Risk Management,
pp. 26-31; Risks related to legal
proceedings and compliance with
anti-corruption legislation, p. 133
AR - The internal control and risk
management system, pp. 38-39
NFI - Transparency, anti-corruption
and tax strategy, pp. 166-167
AR - Integrated Risk Management,
pp. 26-31; Risks related to political
considerations, pp. 125-127; Risks
associated with the exploration
and production of oil and natural
gas, pp. 121-125
NFI - Alliances for promotion of
local development, pp. 168-169
Eni Annual Report 2020
144
CARBON NEUTRALITY BY 2050
Eni, aware of the ongoing climate emergency, wants to be an
active part of a virtuous path of the energy sector to contribute
to carbon neutrality by 2050, in order to keep average global
warming within the threshold of 1.5°C at the end of the centu-
ry. Eni has long been committed to promoting comprehensive
and effective climate change disclosure and in this respect
confirms its commitment to implementing the recommenda-
tions of the Task Force on Climate Related Financial Disclo-
sure (TCFD) of the Financial Stability Board.
Leadership in disclosure - Eni has been the only Oil & Gas Com-
pany involved in the TCFD since the beginning of its work and
has contributed to the development of the voluntary recommen-
dations for corporate climate change reporting. Transparency
in climate change reporting and the strategy implemented by
the Company have enabled Eni to be confirmed, once again in
2020, as a leading Company in the Climate Change disclosure
program of the CDP8. The A-rating achieved by Eni was equalled
only by few in the Oil & Gas industry and far exceeds the glob-
al average rating of C, in a scale ranging from D (minimum) to
A (maximum). In 2020, the TPI9 assessment awarded Eni, for
the first time, the highest rating for management quality, due to
the completeness of Eni’s decarbonization strategy, and a high
ranking for the emission performance of sold products (carbon
performance). In the same period, Carbon Tracker10 published
an analysis of the potential risk of investment for the upstream
sector of the main Oil & Gas companies in transition scenarios,
in which Eni ranked first, distinguishing itself for the ambition of
its GHG emission reduction targets, the competitiveness of fu-
ture projects and for a medium-long term price scenario among
the most conservative in the sector.
Commitment to partnerships - Among the many internation-
al climate initiatives that Eni participates in, Eni’s CEO sits on
the Steering Committee of the Oil and Gas Climate Initiative
(OGCI). Established in 2014 by 5 Oil & Gas companies, including
Eni, OGCI now counts twelve companies, representing about
one-third of global hydrocarbon production. To reinforce its
commitment to reduce operational emissions, OGCI has com-
municated in 2020 a new collective target for the reduction of
the GHG emission intensity (Scope 1+2) of upstream operated
assets11, consistent with the scenarios in line with the Paris
Agreement. The target is in addition to the methane emission
intensity reduction target announced in 201812. Furthermore,
the commitment to the joint investment in a fund of 1 billion
dollars has continued, for the development of technologies to
reduce GHG emissions throughout the energy value chain at a
global scale and to promote, following the initiative started in
2019, (CCUS KickStarter) wide-scale marketing at global level
of CCUS (CO2 Capture, Utilisation and Storage) technology.
Eni promotes the need for alignment among the methodolo-
gies for GHG reporting in order to make the Oil & Gas sector
performances and decarbonization targets comparable. In this
sense, Eni collaborates in the Science Based Target Initiative
(SBTi), which is working on the definition of guidelines and
standards applicable to the sector to define decarbonization
targets in line with the objectives of the Paris Agreement. In De-
cember 2020, Eni, together with 7 other companies, joined the
Energy Transition Principles initiative, committing to increase
transparency and consistency in reporting on GHG emissions
and Net Carbon Intensity targets. Disclosure on long-term
carbon neutrality is organized according to the four thematic
areas covered by TCFD recommendations: governance, risk
management, strategy and metrics and targets. The key ele-
ments of each area are presented below; please see Eni for
2020 - Carbon Neutrality by 205013 Report for a complete anal-
ysis; further details will be available through Eni’s disclosure to
CDP Climate Change questionnaire 2021.
(8) CDP (formerly Carbon Disclosure Project) is an organization recognized internationally as one of the reference institutions in performance assessment and for the
climate strategy of listed companies.
(9) Transition Pathway Initiative, an investor-led global initiative that assesses companies' progress in the low-carbon transition. The report published in September 2020
is an update of the first TPI assessment published in 2019.
(10) Financial indipendent think tank that for years has been conducting analyses to assess the impact of energy transition on financial markets.
(11) Equal to 20 kgCO2eq./boe by 2025 compared to the baseline of 23 kgCO2eq./boe in 2017 (13% reduction).
(12) Collective target to reduce methane emission intensity of upstream activities to 0.25% by 2025 from the 2017 value of 0.32%.
(13) This report will be published in the occasion of Eni’s Shareholders Meeting.
Management report | Consolidated financial statements | Annex TCFD RECOMMENDATIONS
AR 2020
2020 SUSTAINABILITY REPORT
Consolidated
Non-Financial Information
Addendum Eni For -
Carbon neutrality by 2050
145
GOVERNANCE
Disclose the organization’s governance
around climate-related risks and
opportunities.
a) Oversight by the BoD
b) Role of the management
STRATEGY
Disclose the current and potential impacts
of climate-related risks and opportunities
on the organization’s businesses, strategy,
and financial planning where such
information is material.
RISK MANAGEMENT
Disclose how the organization identifies,
assesses, and manages risks related
to climate change.
a) Climate-related risks
and opportunities
b) Incidence of risks and
opportunities linked to
climate
c) Resilience of the strategy
a) Identification
and assessment processes
b) Management processes
c) Integration into overall
risk management
METRICS & TARGETS
Disclose the metrics and targets used
to assess and manage risks
and opportunities related to climate change
where such information is material.
a) Metrics used
b) GHG emissions
c) Targets
√
Key elements
√
Key elements
√
Key elements
√
Key elements
√
√
√
√
√
√
√
√
√
√
√
GOVERNANCE
Role of the BoD. Eni’s decarbonization strategy is part of a
structured system of Corporate Governance, in which the
BoD and the CEO play a central role in managing the main
aspects linked to climate change. Based on the CEO’s pro-
posal, the BoD examines and approves the Strategic Plan,
which sets out strategies and targets, including those re-
lated to climate change and energy transition. Since 2014,
the BoD has been supported in performing its duties by the
Sustainability and Scenarios Committee (SSC), with whom
it examines, on a periodic basis, integration between strat-
egy, future scenarios and the medium/long-term sustaina-
bility of the business. During 2020, the SSC discussed cli-
mate change issues at all meetings, including the outcomes
of the 2019 United Nations Climate Change Conference
(COP25), energy scenarios, the state of the art in research
and development for energy transition, Eni’s decarboniza-
tion strategy, forestry activities, climate partnerships, Eni’s
responsible engagement on climate change within business
associations, climate resolutions and assembly’s disclosure
of reference peers14. As from 2019, the BoD examines and
approves Eni’s Medium-Long Term Plan, aiming to guar-
antee the sustainability of its business portfolio in a time
frame up to 2050, in line with what is provided for in the
Four-Year Strategic Plan. Several members of the new Board
of Directors, in place since May 13, 2020, have experience
with ESG issues15. Immediately after the appointment of the
Board of Directors and the Board of Statutory Auditors, a
board induction programme was implemented for directors
and statutory auditors, which covered, among other topics,
issues related to the decarbonization process and the envi-
ronmental and social sustainability of Eni’s activities. Eni’s
economic and financial exposure to the risk deriving from
the introduction of new carbon pricing mechanisms is ex-
amined by the BoD both during preliminary approval of the
investment and in the following half-year monitoring of the
entire project portfolio.
The BoD is also informed annually on the results of the impair-
ment test carried out on the main Cash Generating Units in the
E&P sector and elaborated with the introduction of a carbon
(14) For more information, please see the “Sustainability and Scenarios Committee” paragraph of the 2020 Corporate Governance Report.
(15) In particular, in addition to the Chief Executive Officer, Director Litvack and Director Guindani, current and former Chair of the Sustainability and Scenarios Committee
respectively, as well as Directors Piccinno and Vermeir. For further details, reference should be made to the biographies of the Directors published in the Governance
section of the eni.com website, https://www.eni.com/en-IT/about-us/governance/board-of-directors.html
Eni Annual Report 2020 146
tax value aligned with IEA16 Sustainable Development Scenario
- SDS (see pp. 129-132, “Climate Change Risk” para.). Finally,
the BoD is informed on a quarterly basis on the results of the
risk assessment and monitoring activities related to Eni’s top
risks, including climate change.
Role of management. All corporate structures are involved
in the definition and implementation of the carbon neutrality
strategy and in 2020, to foster its energy transition path, Eni
launched a new organizational structure with two business
groups: Natural Resources, active in the sustainable devel-
opment of the upstream Oil & Gas portfolio, in marketing of
wholesale natural gas, and in promoting forestry conservation
(REDD+) and carbon storage projects, and Energy Evolution,
to support the evolution of the production, transformation and
marketing activities from fossil fuel based to bio, blue and
green products, also through the merge of the retail and renew-
able businesses. As of 2019, climate strategy issues are part
of long-term planning and managed by the CFO area through
dedicated structures with the aim of overseeing the process of
defining Eni’s climate strategy and the related portfolio of initia-
tives, in line with international climate agreements. The strate-
gic commitment in carbon footprint reduction is part of the es-
sential goals of the Company and is therefore also reflected in
the Variable Incentive Plans for the CEO and Company’s man-
agement. In particular, the 2020-2022 Long-Term Stock-based
Incentive Plan provides for a specific objective on issues of en-
vironmental sustainability and energy transition (total weight
35%), based on the targets related to decarbonization, energy
transition and circular economy processes consistent with the
objectives communicated to the market and with a view to
aligning with the interests of all stakeholders. The Short-Term
deferral Incentive Plan 2021 is closely linked to the Company’s
strategy, as it is aimed at measuring the achievement of an-
nual objectives in line with Eni’s new decarbonization targets.
In particular, the upstream emission intensity on an equity ba-
sis is considered, which includes indirect emissions (so-called
Scope 2) and non-operated activities. Starting this year, the
IBT Plan will also include the incremental renewable installed
capacity KPI, replacing the one related with the exploration of
resources, to support the energy transition strategy. Each of
these targets is assigned to the CEO with a weighting of 12.5%
and to all the Company’s managers according to percentages
in line with the attributed responsibilities.
RISK MANAGEMENT
The process for identifying and assessing climate-related
risks and opportunities is part of Eni’s Integrated Risk Man-
agement Model developed to ensure that management makes
decisions that take into account current and potential risks,
including medium- and long-term risks, and with an integrat-
ed, comprehensive and prospective view. In light of the link
between risk and opportunity management and Eni’s strate-
gic objectives, the RMI process starts with a contribution in
defining Eni’s medium- and long-term plan and four-year plan
(objectives and actions with de-risking value), and continues
with supporting their implementation through periodic risk as-
sessments and monitoring cycles. The IRM process ensures
the detection, consolidation and analysis of all Eni’s risks and
supports the BoD in checking the compatibility of the risk pro-
file with the strategic targets, including those that are medium
to long-term. Risks are:
˛ assessed with quantitative and qualitative tools considering
both the probability of occurrence and the impacts that will
be determined in a given time frame should the risk occur;
˛ represented, based on the probability of occurrence and on
the impact, by matrices that allow comparison and classifi-
cation according to importance.
Main risks and opportunities. Risks related to climate change
are analysed, assessed and managed by considering energy
transition aspects (market scenario, regulatory and technolog-
ical evolution, reputation issues) and physical phenomena. The
analysis is carried out using an integrated and cross-cutting
approach that involves specialist departments and business
lines and considers the related risks and opportunities. The
main findings are shown below.
Market scenario. The International Energy Agency (IEA) identi-
fies two main paths of possible evolution of the energy system:
the Stated Policies Scenario (STEPS), which includes the poli-
cies implemented and planned by governments, and the Sus-
tainable Development Scenario (SDS), which pursues the main
energy objectives of sustainable development, including limit-
ing the temperature increase in line with the Paris Agreement.
In the SDS scenario, considered by Eni as the main reference
for assessing the risks and opportunities associated with en-
ergy transition, fossil sources maintain a central role in the en-
ergy mix (Oil & Gas equal to 46% of the mix in 2040). Although
in this scenario, the global energy demand by 2040 is expected
to decrease compared to today (-9.6% vs. 2019, CAGR17 2019-
2040 -0.5%). In particular, natural gas maintains its portion in
the energy mix (23%), and appears as the fossil fuel with the
best future prospectives both for integration with renewable
sources and for replacement of other sources with higher
environmental impacts, especially in emerging Countries. Oil
demand, on the other hand, is expected to peak immediately
within the next two years and then gradually decline in almost
all Countries (with the exception of India and Sub-Saharan Af-
rica). Nevertheless, significant upstream investments are still
needed to offset the decline in production from existing fields,
although uncertainty remains on the influence that regulatory
changes and technological breakthroughs could have on the
scenario. Instead, renewable sources will gain growing impor-
tance in the progress towards decarbonization, succeeding
(16) International Energy Agency.
(17) CAGR: Compound Annual Growth Rate.
Management report | Consolidated financial statements | Annex 147
in satisfying in 2040 36% of primary consumption (vs. 14% in
2019), mostly through wind and solar energy.
In its World Energy Outlook 2020 (WEO), IEA introduced an
even more challenging scenario called NZE2050 (Net Zero
Emissions).
Built on the SDS scenario, it calls for a much stronger set of
measures than the SDS in order to achieve net zero emis-
sions by 2050 and limit the temperature increase to 1.5°C
by 2100 compared to pre-industrial levels. Energy demand
in the NZE2050 decreases by 17% as early as 2030 (vs. -7%
compared to SDS), reaching a level similar to 2006, but with
an economy twice the size. This is made possible through an
even more pronounced recourse (vs. SDS) to electrification, ef-
ficiency and changing consumer behaviours.
Regulatory developments. Adoption of policies suitable to
sustain the energy transition towards low carbon sources
could have significant impacts on the evolution of Eni’s busi-
ness portfolio. In particular, all Parties of the Paris Agreement
are called upon to review and strengthen their Nationally Deter-
mined Contributions (NDCs) by COP26, to be held in Novem-
ber 2021 in Glasgow. At the same time, an increasing number
of governments are announcing carbon neutrality targets by
2050 and some of them, including the EU, have already trans-
posed this into law. In fact, the EU published in December 2019
the European Green Deal, a set of initiatives aimed at achiev-
ing carbon neutrality by 2050, a goal transposed into law with
the Climate Law. In this context, the EU also intends to revise
upwards its 2030 emission reduction target and update most
of the related legislation accordingly (e.g. Renewable Directive,
EU Emissions Trading Directive). Also with respect to this de-
velopment, Eni has defined a medium to long-term plan de-
signed to take full advantage of the opportunities offered by
the energy transition and progressively reduce the carbon foot-
print of its activities, as explained in more detail in the Strategy
and Targets section.
Technological developments. The need to build a final ener-
gy consumption model with a low carbon footprint will favour
technologies for GHG emissions capture and reduction, pro-
duction of hydrogen from gas as well as technologies that
support methane emissions control along the Oil & Gas pro-
duction chain. These elements will contribute to sustaining the
role of hydrocarbons in the global energy mix. Furthermore,
technological evolution in the field of energy production and
storage from renewable sources and in the field of bio-based
activities will be a key lever for the industrial transformation of
Eni's business. Scientific and technological research is there-
fore one of the levers on which Eni’s decarbonization strategy
is based and the areas of action are described in the Strategy
and Targets section.
Reputation. Awareness-raising campaigns by NGOs and other
environmentalist organizations, media campaigns, campaigns
to ban plastic, shareholder resolutions during meetings, disin-
vestments by some investors and class action by groups of
stakeholders are increasingly more oriented towards greater
transparency on the tangible commitments of Oil & Gas com-
panies towards energy transition. Additionally, some public
and private parties have begun proceedings, legal or otherwise,
against the major Oil & Gas companies, including companies
belonging to Eni’s Group, deeming them responsible for the
impacts related to climate change and human rights. Eni has
long been committed to promoting a constant, open and trans-
parent exchange of views on climate change and human rights
issues which are an integral part of its strategy and therefore
the subject of communications to all stakeholders. This com-
mitment is part of a wider relationship that Eni has established
with its stakeholders on important sustainability issues with
initiatives on the subjects of governance, dialogue with in-
vestors and targeted communication campaigns, as well as
participation in international initiatives and partnerships. In the
early months of 2020, upholding requests from a number of
investors, Eni published a Responsible Engagement policy on
climate change within business associations, in which it com-
mitts to periodically check (update expected in the first half of
2021) consistency of its climate and energy advocacy posi-
tions and those of the trade associations to which it belongs.
Physical risks. Intensification of extreme/chronic weather
phenomena in the medium-long term could cause damage to
plants and infrastructures, resulting in an interruption to indus-
trial activities and increased recovery and maintenance costs.
With regard to extreme phenomena, such as hurricanes or ty-
phoons, Eni’s current portfolio of assets, designed in accord-
ance with applicable regulations to withstand extreme environ-
mental conditions, has a geographical distribution that does
not result in concentrations of high risk. With regard to more
gradual phenomena, such as sea level rise or coastal erosion,
vulnerability of Eni's assets affected by the phenomenon is
assessed through specific analysis, as in the case of Eni’s as-
sets in the Nile Delta area, where the impact is however limit-
ed and it is therefore possible to hypothesize and implement
preventive mitigation interventions to counter the phenome-
non. In parallel with its commitment to ensuring the integrity
of its operations, Eni is active on Climate Change adaptation,
also with regard to the socio-economic and environmental
impacts in the Countries where Eni operates. To this end, Eni
has launched a project that will end in 2021, in collaboration
with FEEM (Fondazione Eni Enrico Mattei) and Pisa Institute
of Management (IDM), for the assessment of the main risks/
opportunities related to Climate Change and the development
of appropriate guidelines and measures that will provide meth-
odological support for the identification and implementation
of adaptation actions in Countries of interest to Eni.
STRATEGY AND OBJECTIVES
Following a phase of great transformation that has allowed the
group to grow and diversify its portfolio, and at the same time
strengthen its financial organization, Eni initiated a new phase
Eni Annual Report 2020 148
in the development of its business model, strongly oriented
towards the creation of long-term value, combining econom-
ic/financial and environmental sustainability. Based on these
principles, in 2021, the new strategy was defined to relaunch
the short, medium and long-term operational objectives that
outline the evolutionary and integrated path of the individ-
ual businesses and that will lead Eni to carbon neutrality by
2050, in line with the provisions of the scenarios compatible
with maintaining global warming within the threshold of 1.5°C.
The speed of the evolution and the related contribution of the
businesses will depend on the market trend, the technological
scenario and the reference regulations. Eni will pursue a strat-
egy that aims to achieve by 2050 the net-zero target on GHG
Lifecycle Scope 1, 2 and 3 emissions, and the associated emis-
sion intensity (Net Carbon Intensity), referred to the entire life
cycle of the energy products sold. In addition, the intermediate
decarbonization targets were confirmed and further extended:
˛ -25% of Net GHG Lifecycle Emissions @2030 vs. 2018 and
-65% @2040;
˛ -15% of Net Carbon Intensity of energy products sold @2030
vs. 2018 and -40% @2040;
˛ Net-zero Carbon Footprint for Scope 1 and 2 emissions from
upstream activities by 2030, with a new target of halving by
2024 vs. 2018;
˛ Net-zero Carbon Footprint for Scope 1 and 2 emissions from
all group operations by 2040.
Actions mostly already in place that will contributer to achieve
these results are:
˛ reduction of hydrocarbon production in the medium term, with
gradual growth of the gas share, which will reach 90% by 2050;
˛ gradual conversion of traditional refining using new technol-
ogies for the production of decarbonized products and recy-
cling of waste materials;
˛ increase of “bio” refining capacity to 5/6 million tonnes, palm
oil free starting from 2023;
˛ growth in renewable energy capacity production to 60 GW by
2050;
˛ progressive increase in the production of blue energy carri-
ers (electricity and hydrogen) from gas, combined with CO2
capture and storage projects;
˛ increase in Eni gas e luce retail customers, with over 20 mil-
lion by 2050;
˛ forest conservation projects totalling around 40 million
tonnes/year by 2050.
Accurate accounting of emissions is ensured by the applica-
tion of a reporting model based on a rigorous methodology for
evaluating Scope 1+2+3 emissions associated with the value
chain of energy products sold, including both those deriving
from own production and those purchased from third parties.
This distinctive approach exceeds the current standards for
estimating emissions and provides an integral and concise
view of the carbon footprint associated with Eni activities.
The methodology was developed with the collaboration of in-
dependent experts and the resulting indicators are published
annually and certified by the financial auditor. Overall spending
in the four-year period 2021-24 for decarbonization, circular
economy and renewables is approximately €5.7 billion, includ-
ing scientific and technological research activities designed to
support these themes.
PERFORMANCE METRICS AND COMMENTS
Starting from 2016, Eni was among the first in the industry, to
committ to targets aimed at improving the performance relat-
ed to operational GHG emissions of the operated assets, with
specific indicators showing the progress achieved so far in
terms of reduction of GHG emissions into the atmosphere, use
and consumption of energy resources from primary sources
and production of energy from renewable sources. In addition
to these, in 2020 new medium and long-term targets, account-
ed for on an equity basis, were defined and in 2021 they have
been relaunched during the presentation of the strategy, in
which Eni announced the target of net zero emissions (Scope
1, 2 and 3) by 2050. Below are Eni’s main long-term objectives
and the performance of the associated indicators:
Net-zero Carbon Footprint upstream by 2030: the indicator
considers Scope 1+2 emissions from all upstream assets, op-
erated by Eni and by third parties, net of carbon sinks, which in
2020, was down by 23% compared to 2019 due to both the pro-
duction declines occured in relation to the health emergency
and the offsetting through forestry credits equal to 1.5 million
tonnes of CO2eq.
Net-zero GHG Lifecycle Emissions by 2050: the indicator
refers to all Scope 1, 2 and Scope 3 emissions associated
with Eni activities and products, along their value chain, net
of carbon sinks and in 2020 it was down by 13% mainly due
to the decrease in production and sales in all sectors related
to the health emergency.
Zero Net Carbon Intensity by 2050: the indicator is calculat-
ed as the ratio between absolute net GHG emissions (Scope
1, 2 and 3) along the value chain of energy products and the
amount of energy they contain. In 2020 it was essentially sta-
ble as the decrease in emissions across all sectors was ac-
companied by a proportional decrease in production related to
the decline in activities due to the health emergency.
With specific reference to short-term decarbonization targets,
defined on operated assets and accounted for on a 100% ba-
sis, the following is a summary of the results obtained in 2020
and the progress towards defined targets.
Management report | Consolidated financial statements | Annex 149
Reduction of the upstream GHG emission intensity index
by 43% by 2025 vs. 2014: the upstream GHG intensity in-
dex, expressed as the ratio of direct emissions in tonnes of
CO2eq. and the gross production in thousands of barrels of
oil equivalent, in 2020 interrupted the progressive reduction
trend, due to the drop in production ascribable to the health
emergency and other causes, including the reduced produc-
tion in onshore fields in Libya due to force majeure caused
by the geo-political instability situation and the drop in gas
demand in Egypt, whose productions are associated with a
low emission impact. In 2020, the index recorded a value of
20.0 tonCO2eq./kboe, up by 2% compared to 2019. The over-
all reduction compared to 2014 is 26%.
Zero routine gas flaring by 2025: in 2020, the volumes of hy-
drocarbons sent to routine flaring, equal to 1.03 billion Sm3, fell
by 14% compared to 2019 and by 39% compared to 2014, in
relation to both the completion of projects to reduce flaring, in
particular in Angola, and due to the decrease in activities relat-
ed to the health emergency that also affected some fields with
associated gas flaring.
Reduction of upstream methane fugitive emissions by 80%
by 2025 vs. 2014: upstream methane fugitive emissions were
11.2 ktCH4 in 2020, down by approximately 50% from 2019,
as a consequence of the decreased production related to the
health emergency and thanks to monitoring and maintenance
activities carried out as part of the Leak Detection And Repair
(LDAR) campaigns that are conducted on a periodic basis and
to date cover approximately 60 assets. The overall reduction
compared to 2014 is 90%, confirming the achievement in ad-
vance of the 80% reduction target set for 2025.
An average improvement of 2% per year in 2021 compared to
the 2014 carbon efficiency index: the target has extended the
commitment of reducing GHG emissions (Scope 1 and Scope
2) to all business areas. This objective refers to the overall Eni’s
index, maintaining the appropriate flexibility in the trends of the
individual businesses. In 2020, the index was 31.64 tonCO2eq./
kboe, substantially stable with respect to 2019 (31.41 tonCO2eq./
kboe) mainly due to the drop in production related to the health
emergency, and in line with the trend in the upstream sector that
weighs more on the overall index. The effect was partially offset
by the energy efficiency projects launched or completed during
the year. In 2020, in fact, Eni went ahead with its investment plan
both in projects aiming directly at increasing energy efficiency in
its assets (€10M) and in development and revamping projects
with significant effects on the energy performance of operations.
When fully operational, the interventions carried out during the
year will allow fuel savings of 287 ktoe/year (mostly upstream),
with a benefit in terms of emissions reduction of approximately
0.7 million tonnes of CO2eq.
Overall, direct GHG emissions from assets operated by Eni in
2020 amounted to 37.8 mln tonCO2eq., down by 8% compared
to 2019, mainly due to the decrease in activities related to the
health emergency, in the upstream, power and refining sectors.
The Energy Solutions business in 2020 grew significantly, report-
ing a 76% increase in renewables installed capacity compared
to 2019 (307 MWp in 2020 vs. 174 in 2019) and bringing produc-
tion to 339.6 GWh. For biofuels, the quantities produced in 2020
rose to 622 thousand tonnes, with a 143% increase with respect
to the previous year. For 2020, the financial commitment of Eni
in scientific research and technological development amounted
to €157 million, of which approximately €74 million was spent
on investments for decarbonization and circular economy pro-
jects. These investments are related to energy transition, bio-re-
finement, green chemistry, production from renewable sources,
reduction of emissions and energy efficiency.
KPIS RELATED TO MEDIUM-LONG TERM TARGETS18
2020
2019
2018
Target
Net Carbon Footprint upstream (Scope 1 + Scope 2 GHG emissions)
(million tonnes CO2eq.)
11.4
14.8
14.8
UPS Net zero 2030
Net GHG Lifecycle Emissions (Scope 1, 2 and 3)(a)
439
501
505
Net zero 2050
Net Carbon Intensity (Scope 1, 2 and 3)(a)
Renewable installed capacity
Capacity of biorefineries(b)
(gCO2eq./MJ)
68
68
MW
307
174
68
40
Net zero 2050
60 GW 2050
(milion tonnes/year)
1.11
1.11
0.36
5/6 million tonnes/
year 2050
(a) The methodology for calculating Scope 1+2+3 emissions associated to the value chain of energy products sold, has been enhanced in order to better represent Scope 3 end-use emissions; 2019
and 2018 data are updated accordingly.
(b) Installed capacity of Gela biorefinery has been updated to 750 ktonnes/y due to a review of KPI calculation method (2019 data updated accordingly).
(18) KPIs accounted for on an equity basis.
Eni Annual Report 2020
150
KEY PERFORMANCE INDICATORS
Direct GHG emissions (Scope 1)
(million tonnes CO2eq.)
of which: CO2 equivalent from combustion and process
of which: CO2 equivalent from flaring(a)
of which: CO2 equivalent from venting
of which: CO2 equivalent from methane fugitive emissions
Carbon efficiency index (Scope 1 and 2)
(tonnes CO2eq./kboe)
Direct GHG emissions (Scope 1)/100% operated
hydrocarbon gross production
Direct GHG emissions (Scope 1)/Equivalent
electricity produced (EniPower)
Direct GHG emissions (Scope 1)/Refinery throughputs
(raw and semi-finished materials)
Methane fugitive emissions (upstream)
Volumes of hydrocarbon sent to flaring
of which: routine flaring
Indirect GHG emissions (Scope 2)
Indirect GHG emissions (Scope 3) from use of sold products(b)
Electricity produced from renewable sources(c)
Energy consumption from production activities/ 100% operated
hydrocarbon gross production (upstream)
Net consumption of primary resources/ Equivalent electricity
produced (EniPower)
Energy Intensity Index (refineries)
R&D expenditure
of which: related to decarbonization
2020
2019
2018
of which fully
consolidated entities
24.32
Total
41.20
Total
43.35
21.30
32.27
33.89
2.53
0.31
0.19
6.49
1.88
0.56
6.26
2.12
1.08
41.78
31.41
33.90
19.84
19.58
21.44
391.0
248
7.01
0.9
0.3
0.58
na
243.4
3.88
0.17
394
248
402
253
21.9
38.8
1.9
1.2
0.69
204
60.6
1.39
0.17
1.9
1.4
0.67
203
11.6
1.42
0.17
157
74
25
7
194
102
34
15
197.2
74
43
13
Total
37.76
29.70
6.13
1.64
0.29
31.64
19.98
391.4
248
11.2
1.8
1.0
0.73
185
74
25
7
(%)
124.8
124.8
112.7
112.2
(gCO2eq./kWh eq.)
(tonnes CO2eq./ktonnes)
(ktonnes CH4)
(billion Sm3)
(million tonnes CO2eq.)
(GWh)
339.6
(GJ/toe)
(toe/MWheq.)
1.52
0.17
(€ million)
157
First patent filing applications
(number)
of which: filed on renewable sources
Production of biofuels
(ktonnes)
622
622
256
219
Unless differently specified, KPIs related to GHG emissions and consumptions refer to operated assets 100% data.
(a) Starting with 2020, the indicator includes all Eni’s emissions related to flaring, aggregating also the contributions of Refining & Marketing and Chemicals, which, until 2019, are accounted in the
“combustion and process” category.
(b) Category 11 of GHG Protocol Corporate Value Chain (Scope 3) Standard. Based on upstream production, Eni's share, consistently with IPIECA methodologies.
(c) Consistently with Company targets, the indicator is accounted for on an equity basis. In order to ensure comparability, 2019 and 2018 data are represented accordingly.
Management report | Consolidated financial statements | Annex 151
OPERATING EXCELLENCE MODEL
The Operating Excellence Model is based on a constant com-
mitment to consolidating and developing skills in line with new
business needs, enhancing its people in all areas (professional
and non-professional), and ensuring health and safety, environ-
mental protection, respect and promotion of human rights and
attention to transparency and anti-corruption.
People
The Eni business model is based on internal competencies,
an asset in which Eni continues to invest to ensure their align-
ment with business needs, in line with its long-term strategy.
Planned evolution of business activities, strategic directions
and the challenges posed by changes in technology and the
labour market in general imply an important commitment to
increase the value of human capital over time through upskill-
ing and reskilling initiatives, aimed at enriching or redirecting
the set of skills required.
A CULTURE OF PLURALITY
AND THE DEVELOPMENT OF PEOPLE
The approach of Eni to Diversity & Inclusion has been devel-
oped in the wake of its cultural sensitivity and tradition, rooted
in the international culture of plurality; it is based on the fun-
damental principles of non-discrimination, equal opportunity
and inclusion of all forms of diversity, as well as integration
and balancing work with people’s personal and family needs.
Eni is committed to creating a work environment in which
different personal and cultural characteristics or orientations
are considered a source of mutual enrichment and an indis-
pensable element of business sustainability. At Eni, there are
no differences in gender, religion, nationality, political opinion,
sexual orientation, social status, physical abilities, medical
conditions, family circumstances and age and any other ir-
relevant aspect; furthermore, Eni aims to establish working
relationships free from any form of discrimination, requiring
that similar values be adopted by all third parties working
with Eni. Diversity is in fact a resource to be safeguarded and
enhanced both within the Company and in all relations with
external stakeholders, including suppliers, commercial and
industrial partners, as underlined by its mission and Code of
Ethics. Eni promotes cross professional exchange through a
series of processes, including geographical mobility, as an
important experience in the path of personal growth. The
consolidation over the years of the processes of induction of
new recruits, coaching, training and sharing of skills and best
practices with local personnel has ensured continuity in op-
erating activities in 2020, a year characterized by a massive
return of expatriate personnel to headquarters. With regard to
gender diversity, Eni pays particular attention to the promo-
tion of initiatives to attract female talents at a national and
international level, and to the development of managerial and
professional growth paths for the women in the Company. In
this context, Eni organizes initiatives for high school students
in STEM (Science, Technology, Engineering and Mathemat-
ics) subjects, with a focus on gender equality (Think About
Tomorrow) and participates in national and international ini-
tiatives19 with the aim of constantly enhancing its processes
and operating practices with a view to gender equality. These
activities have continued throughout the year through the
“dematerialization” of events and meetings that has allowed
reaching places, people and realities inaccessible to date,
breaking down language and geographical barriers.
Remuneration policies for Eni employees are defined accord-
ing to an integrated model at global level and promote salary
progression linked exclusively to meritocratic criteria refer-
ring to the skills expressed in the role held, the performance
achieved and the references of the local remuneration mar-
ket. In order to verify the implementation of these policies,
since 2011, Eni has annually monitored the remuneration
gap between women and men, noting the substantial align-
ment of remuneration. In addition, in relation to ILO (Interna-
tional Labour Organization) standards, Eni performs annual
analyses on the remuneration of local personnel in the main
Countries in which it operates, which show minimum salary
levels of Eni personnel significantly higher than both the min-
imum legal salaries and the minimum market remuneration
levels, identified for each Country by international providers
(for further information, see Report on remuneration policy
and remuneration paid 2021, on p. 13).
Relating to the professional management of its resources,
Eni has implemented managerial development and excel-
lence pathways aimed at the core professional areas, which
it supports through training activities, mobility initiatives, job
rotation and development tools. Eni uses various assessment
(19) Inspiring Girls Project - International project against stereotypes about women; "Manifesto for women's employment" by Valore D - Programme document to enhance
female talent in businesses promoted by Valore D and sponsored by the Italian Presidency of G7 and the Department for Equal Opportunities of the Italian Prime Minister's
Office; Elis - Sistema Scuola Impresa Consortium; Fondazione Mondo Digitale; WEF - World Economic Forum; ERT - European Round Table.
Eni Annual Report 2020 152
tools to support these pathways, including the annual review,
the performance and feedback process with a focus on senior
managers, middle managers and young graduates and soft
skills assessment processes. The year 2020 saw an inevitable
downturn in mobility initiatives. However, internal growth and
development continued, held remotely.
In 2020, the performance assessment and feedback pro-
cess covered 97%, while potential assessment activities20
95% of the total planned with an overall improving trend
(+10 p.p. vs. 2019); finally, 123 senior managers and middle
managers were assessed using the Management Appraisal
methodology.
TRAINING
The 2020 training programme was marked by an intense
redesign of many distance learning courses, giving priority
to health and safety issues, alongside courses to support
people, up to and including master’s degrees, to which we
wanted to give continuity. HSE training continued where
possible in presence, or in distance mode, and covered both
mandatory and non-mandatory training content. In addition,
a course was created for all Eni employees (Enicampus Live)
to encourage greater awareness of individual behaviour in
the emergency context and to acquire renewed responsibil-
ity for individual and team results. The Diversity & Inclusion
training offer was also expanded with new content, including
a course dedicated to “gender harassment in the workplace”,
while the commitment for the contamination remained preva-
lent for many training initiatives on the emerging issues of Ener-
gy Transition, Circular Economy, Carbon Capture, Utilization, and
Storage (CCUS), Forestry, Renewable Energy, digitalization both
of a technical nature and of Corporate Identity (for new hires,
new managers, or managerial figures). Attention continued to
be focused both on information security, through the provision
of cyber security courses, and on training using innovative tech-
niques such as Virtual Reality Training (for example in the HSE
and Drilling field) or Augmented Reality (in the HSE field).
INDUSTRIAL RELATIONS
The energy transition path has determined the need to de-
fine a new model of industrial relations and for this rea-
son, on December 3, 2020, Eni and the unions signed a new
protocol called “INSIEME, a model of industrial relations to
support the energy transition path”. The protocol aims at
sharing information on this path, updating and renewing
professional skills in view of the new business challenges
and proposing a clear and favourable regulatory framework
for the development of a sustainable business model. At in-
ternational level, the model of trade union relations is based
on three pillars: two in Europe (the European Works Coun-
cil and the European Observatory for the Health and Safe-
ty of Workers at Eni) and a global one, namely the Global
Framework Agreement on International Industrial Relations
and Corporate Social Responsibility (GFA), renewed in 2019
with the main Italian trade unions and IndustriALL Global
Union21. During 2020, a constant exchange of information
was ensured between the Company and the unions, with-
in the framework of competence provided for each agree-
ment, on the main topics of attention (including emergency
management, Company reorganizations and Brexit).
WELFARE INITIATIVES22
The health emergency situation has impacted all person-
al services, making it necessary both to revise the ways in
which initiatives are organized with a view to utmost safety
(increased attention to health services, support for sum-
mer family organization and employee catering services)
and to identify innovative services capable of responding
to emerging needs arising from family and social complex-
ity and new ways of working. These new initiatives include
an online training course dedicated to parents to help them
cope in the new everyday life, addressing issues such as
the impact of digital technologies, educational needs and
building relationships.
HEALTH
Eni considers health protection an essential requirement
and promotes the physical, psychological and social
well-being of its people, their families and the communities
of the Countries in which it operates. The extreme variabili-
ty of working contexts requires a constant effort to update
health risk matrices and makes it particularly challenging
to guarantee health at every stage of the business cycle.
To rise to this challenge, Eni has developed an operational
platform that ensures services to its people, covering occu-
pational health, industrial hygiene, traveller health, health-
care and medical emergency, as well as health promotion
initiatives for Eni people and the communities in which it
operates. The Eni strategy for health management is orient-
ed, in addition to maintaining and continuously improving
health services, to: (i) enhancing access to assistance for
all Eni people, interventions in favour of communities and
emergency provisions to support situations of fragility cre-
ated or aggravated by the pandemic; (ii) spreading the cul-
ture of health through initiatives in favour of workers, their
families and communities identified downstream of risk
assessment and impacts in the health field; (iii) implement-
ing occupational medicine activities also in consideration of
(20) Potential assessments are conducted through the methodology of Development Center, Online Assessment, and Individual Assessment.
(21) Organization that represents more than 50 million workers distributed in 140 Countries, in the energy, manufacturing and mining sectors.
(22) Benefits are offered to all employees consistent with the regulations set forth in the Health Care, Supplemental Security and Other Funds.
Management report | Consolidated financial statements | Annex 153
the risks inherent to new projects, industrial processes and
the results of industrial hygiene activities; (iv) promoting the
digitalization of health processes and services. In 2020, all
of the Group companies continued the implementation of
health management systems with the objective of promot-
ing and maintaining the health and well-being of Eni people
and ensuring adequate risk management in the workplace.
In the critical global health context, Eni has implemented a
series of prevention and assistance interventions in order to
support those in the front line managing health emergencies
and local health structures, also thanks to the numerous ex-
periences in health projects gained in response to epidemic
events around the world23. In fact, the Eni centre of compe-
tence for the management of health emergencies has sup-
ported the business units through: (i) epidemiological up-
dates and new guidelines issued by international bodies, (ii)
hygiene measures for the prevention and containment of out-
breaks and epidemics/pandemics, (iii) clinical and care flow
management best practices, vaccinations and recommenda-
tions for travel medicine and (iv) support in defining technical
specifications for services related to emergency response.
PERFORMANCE METRICS AND COMMENTS
EMPLOYMENT AND DIVERSITY
Overview - Overall employment amounts to 30,775 people,
of whom 21,170 in Italy (68.7% of Eni employees) and 9,605
abroad (31.2% of Eni employees). In 2020, employment at
global level decreased by 546 people compared to 2019,
equal to -1.7%, with an increase in Italy (+92 employees) and
a reduction abroad (-638 employees). The reduction in em-
ployment, due mainly to a business scenario affected by the
health emergency, concerned both local and international
employees. Despite the discontinuity of the energy market,
Eni continued to pursue its diversity objectives: in 2020, per-
manent hires of female personnel stood at 34.6% of total
hires compared to 32.3% in the previous year.
Hires - Overall, in 2020, 780 people were hired, 607 of whom with
permanent contracts. About 76% involved employees under the
age of 40. Of the total number of hires, approximately 23% in up-
stream business (total 183, of which 109 with permanent con-
tracts and 74 with fixed-term contracts), 20% in Support Func-
tion, 10% the R&M area and 47% the other businesses.
Terminations - Overall, 1,600 contracts were terminated (934
in Italy and 666 abroad), 1,323 of which were permanent
contracts24, and 21.0% regarded female employees. In 2020,
22.1% of employees with permanent contracts who ended
their employment were under 40 years of age. Due to the
negative business scenario generated mainly by the health
emergency, the turnover rate decreased compared to previ-
ous years mainly due to a reduction in the number of hires.
Female employment - Of the permanent hires in 2020,
34.6% involved female personnel (up 2.3 percentage points
vs. 2019). In 2020, the percentage of female employees
stood at: 16.3% of executives, 27.7% of middle managers,
29.9% of white collar workers, 2.1% of blue collar workers.
Compared to the past, the overall percentage of women on
the boards of directors of subsidiaries decreased to 26% in
2020 (29% in 2019), while the overall percentage of women
on the supervisory boards of subsidiaries remained sub-
stantially stable at 37%. In 2020, the percentage of women
in positions of responsibility rose to 26.64%, compared to
26.05% in 2019; in all, women accounted for 24.56% of the
Eni total workforce. At Eni, 33% of the figures reporting di-
rectly to the CEO are women.
Employment in Italy - There were 379 hires in Italy, of which
346 were permanent contracts (37.6% women, an increase
of about 5 percentage points compared to 2019). Despite
an increase in employment in Italy of +0.4% compared to
2019, there was a slight decrease in the number of people
employed in the youngest age group (18-29), -0.6% vs. 2019,
while the 40-49 (+0.8%) and over 60 (+1.15%) age groups
increased, partly due to the return of expatriate personnel.
Again in Italy, in 2020, there were 934 terminations, 893 of
whom were permanently employed (and 19.0% women).
Employment abroad - Average presence of local employees
abroad is costant and around 84% in the last three years
on average, that confirms Eni commitment to local content
through the engagement of local communities in its busi-
ness activities in the Countries. Use of expatriate personnel
is limited to specific expertise and compentences hardly
available in the Country. Abroad, in 2020, there were 401
new hires, of which 261 were with permanent contracts
(30.7% women) and 78.1% were employees under 40 years
of age. The balance between hires and terminations abroad
at the end of the year was -265 (+401 hires and -666 ter-
minations) and this trend is also attributable to contractual
terminations of international resources employed in the E&P
business. There were 666 terminations, 430 of whom per-
manently employed. Of these, 35.3% regarded employees
under the age of 40, and 25.1% were women. Abroad, there
(23) For health-related initiatives carried out in favour of the local community in Italy and abroad, see the chapter Alliances for promotion of local development on pp. 168-169.
(24) Of which about 58% for retirement and 28% for resignation.
Eni Annual Report 2020 154
was a reduction of 645 overseas resources compared to the
previous year (-33.5%), in particular -392 Italian expatriates
(-28.8%) and -253 international expatriates (-44.9%). Local
personnel remains essentially stable compared to 2019
(+0.08%). A total of 1,278 expatriates work abroad (of which
968 Italians and 310 international expatriates). In last years,
approximately 20% of employees in positions of responsi-
bility are non-italians, with an increase of 1.3 p.p. vs. 2019.
Such an increase is part of professional development paths
that include work periods in offices located in Italy or in
Countries other than the one of origin. Specifically, percent-
age of local senior managers & middle managers abroad
increased of 2.48 p.p. vs. 2019.
Employment by line of business - About 55% of perma-
nent hires were in the upstream business areas (mainly in
Mozambique, the United Kingdom, Mexico and the United
States), Retail G&P (France and Greece) and Support Func-
tions, with the main objective of managing turnover to sup-
port the consolidation and evolution of skills. Terminations
were related to the upstream business (31.8%), Support
Functions (25.3%) and R&M (14.2%).
Average age - The average age of Eni's people in the world
is 45.8 years (46.7 in Italy and 43.7 abroad): 49.8 years (50.7
in Italy and 47.1 abroad) for senior and middle managers,
44.4 years (45.5 in Italy and 41.9 abroad) for employees, and
41.9 years (40.6 in Italy and 43.7 abroad) for workers.
TRAINING
In a year marked by the COVID-19 emergency, there was a
23.6% reduction in total hours of training provided in 2020
compared to 2019. However, it is important to highlight the
significant increase in distance learning, which reached 67%
of total hours in 2020 (vs. 28% in 2019).
The average expenditure compared to 2019 has a per capita
decrease as it is affected by the reduction in overall training
costs, which led to a decrease of 33%; however, it was pos-
sible to achieve this result also thanks to efficiency actions
with reductions in external costs and greater use of internal
teaching.
HEALTH
In 2020, the number of health services sustained by Eni was
354,192, of which 242,160 for employees, 39,840 for family
members, 65,662 for contractors and 6,530 for others (e.g.
visitors and external patients).
The number of participants in health promotion initiatives
in 2020 was 222,708, of whom 99,758 were employees,
86,357 contractors and 36,593 family members. As con-
cerns occupational illnesses, claims fell during 2020 from
73 to 28, with an overall reduction of 61%, due to the re-
duction of illnesses reported, both by former employees
(from 64 to 21 claims) and current employees (from 9 to 7
claims). Of the 28 occupational disease claims submitted
in 2020, 10 were submitted by heirs (all relating to former
employees).
Management report | Consolidated financial statements | Annex KEY PERFORMANCE INDICATORS
Employees as of 31st December(a)
Women
Italy
Abroad
Africa
Americas
Asia
Australia and Oceania
Rest of Europe
Employees aged 18-24
Employees aged 25-39
Employees aged 40-54
Employees aged over 55
Local employees abroad
155
2020
2019
2018
(number)
30,775
31,321
30,950
7,559
21,170
9,605
3,143
925
2,432
87
3,018
470
8,689
7,590
21,078
10,243
3,371
1,005
2,662
88
3,117
564
9,289
7,307
20,576
10,374
3,374
1,257
2,505
90
3,148
437
9,224
13,739
13,824
14,058
7,877
7,644
7,231
(%)
87
81
83
Employees by professional category:
(number)
Senior managers
Middle managers
White collars
Blue collars
Employees by educational qualification:
Degree
Secondary school diploma
Less than secondary school diploma
Employees with permanent contracts(b)
Employees with fixed term contracts(b)
Employees with full-time contracts
Employees with part-time contracts(c)
New hires with permanent contracts
Terminations of permanent contracts
Turnover rate(d)
Local senior managers & middle managers abroad
Non-Italian employees in positions of responsibility
Seniority
Senior managers
Middle managers
White collars
Blue collars
Presence of women on the Boards of Directors
Presence of women on the Boards of Statutory Auditors(e)
Training hours
Average training hours per employee by employee category
Senior managers
Middle managers
White collars
Blue collars
Average training and development expenditure per full time employee
Employees covered by collective bargaining
Italy
Abroad
Occupational illnesses allegations received
Employees
Previously employed
965
9,172
1,021
9,387
1,008
9,147
15,941
16,050
15,839
4,697
4,863
4,956
15,345
12,826
2,604
15,375
13,184
2,762
14,603
13,348
2,999
30,165
30,571
30,183
610
750
767
30,290
30,785
30,390
485
607
1,323
6.1
19.13
18.6
23.21
20.40
17.03
14.15
26
37
536
1,855
1,198
9.8
16.65
17.3
22.78
20.00
16.73
13.55
29
37
560
1,264
1,270
7.6
16.70
17.9
22.12
20.02
17.03
13.05
33
39
(%)
(years)
(%)
(number) 1,040,119 1,362,182 1,169,385
36.2
30.7
34.9
39.0
30.3
778.4
83.40
100
41.78
28
7
21
43.6
51.0
42.0
43.9
44.3
36.9
41.7
37.2
36.2
37.7
1070.8
1059.5
83.03
100
40.91
73
9
64
80.89
100
35.33
81
10
71
(€)
(%)
(number)
(a) The data differ from those published in the Annual Report (see p. 16) because they include only fully consolidated companies.
(b) The breakdown of fixed-term/permanent contracts does not vary significantly either by gender or by geographical area except for China and Mozambique where it is common practice to insert
local resources for fixed term and then stabilize them over a period of 1-3 years.
(c) There is a higher percentage of women (6% of total women) on part-time contracts, compared to men who are round 0.2% of total men.
(d) Ratio between the number of new hires + terminations of permanent contracts and the permanent employment of the previous year.
(e) Outside of Italy, only the companies with a control body similar to the Italian Board of Statutory Auditors are considered.
Eni Annual Report 2020
156
Safety
Eni is constantly engaged in research and development
for all the necessary actions to be taken to ensure safety
at work, in particular in the development of organizational
models for risk assessment and management and in the
promotion of a culture of safety, in order to pursue its com-
mitment to stopping accidents from happening. Several
projects and initiatives on the theme of the “Human Factor”
were promoted in 2020, mainly concerning: (i) the creation
of a behavioural analysis model in search of so-called “weak
signals” that provides recommendations for reducing hu-
man error, strengthening human “barriers” to counter acci-
dent risks and assessing the influence of cultural elements
in a given operational reality; (ii) the creation of an accident
investigation methodology to highlight recurring causes; (iii)
the preparation of a new behavioural training area with the
aim of fostering greater awareness of HSE aspects in the
field of behavioural safety and Non-Technical Skills.
In addition to these innovative activities, Eni continued to pay
particular attention to reinforcing safety during activities at op-
erating sites, further standardizing in special regulatory instru-
ments, valid for all Eni entities, the minimum basic principles
to be applied in the most critical activities already adopted at
site level. In addition, with the continuation of smart working,
the “Safety starts @ home” campaign was relaunched and
enhanced to promote safety at home starting with the “Safe-
ty Golden Rules”25 – the 10 golden rules for safety at work. In
the foreign upstream subsidiaries, an initiative was also im-
plemented with the aim of strengthening the leadership and
commitment of management at all levels, both of Eni and its
contractors.
Regarding the management of contractors, the 130 people
in the Safety Competence Center (SCC)26 continued to pro-
actively monitor and support the process of improvement of
companies towards management models characterized by
a safety culture that is more preventive than reactive, mon-
itoring over 2,500 suppliers, equal to 70% of those with po-
tential HSE criticalities in Italy, and managing the anomalies
detected with immediate corrective actions and sharing in-
novative good practices. In addition, agreements (so-called
“Safety Pacts”) were developed with various contractors op-
erating in Ghana and Angola.
In 2020, the massive dissemination of the 10 shared oper-
ating rules on process safety (Process Safety Fundamen-
tals - PSF) was launched, which transversally involved the
various Eni businesses, covering about 80% of employees
at operating sites.
Moreover, Eni applies Asset Integrity process to its assets
and ensures they are well-designed, well-built and with the
most appropriate materials, well run, and decommissioned
properly, by managing residual risk with the aim of guaran-
teeing maximum reliability and, above all, safety of people
and the environment. The Asset Integrity Management Sys-
tem develops from the initial design stage (Design Integrity),
to procurement, construction, installation and testing (Tech-
nical Integrity) through to operational and decommissioning
(Operating Integrity). In 2020 Eni continued the initiatives
launched in 2019 to further promote the Asset Integrity cul-
ture with a cross and widespread approach.
With regard to industrial hygiene, great attention was paid,
in the context of the emergency, to the identification and
management of suitable individual prevention devices (PPE)
and initiatives were promoted to raise awareness of the ef-
fective management of risk factors.
In 2020, Eni continued to develop and implement digital initia-
tives to support safety, including: the creation of an app to in-
crease HSE culture, initiatives to support issued work permits
currently present at more than 60 sites and a project to identify
recurring hazardous situations with artificial intelligence tech-
nologies.
Lastly, other initiatives were launched in the areas of emer-
gency preparedness and response, use of chemical prod-
ucts, radiation protection with regard to the dangers of ex-
posure to ionizing radiation and product safety. The main
corporate objectives for safety and industrial hygiene in
2021 are: (i) the improvement of the Severity Incident Rate
(SIR), Eni's weighted internal index that measures the level
of incident severity and is used in the short-term incentive
plan of the CEO and senior managers with strategic respon-
sibilities, in order to focus the commitment of Eni on reduc-
ing the most serious accidents; (ii) the consolidation of the
Safety Culture Program, an indicator that monitors the level
of proactivity through aspects of preventive safety manage-
ment; (iii) the continuation of the dissemination of the 10
Process Safety Fundamentals; (iv) the extension to all Eni
sites of projects that apply new technologies and new digi-
tal devices to support safety; (v) strengthening of oversight
in specific areas of industrial hygiene.
PERFORMANCE METRICS AND COMMENTS
In 2020, the total recordable injury frequency ratio (TRIR) of the
workforce increased compared to 2019 (+5%), particularly the
employee ratio due to an increase in the number of injuries (30
(25) For more information, see: https://www.eni.com/en-IT/just-transition/culture-of-safety.html.
(26) Eni Center of Excellence on Safety, which supports Eni industrial sites in Italy and abroad in the coordination and supervision of contract work.
Management report | Consolidated financial statements | Annex 157
compared to 19 in 2019). In contrast, the ratio for contractors
improved by 10%. A fatal injury occurred involving an upstream
contractor in Egypt due to crushing. The ratio for injuries at
work with serious consequences is nil, since there were no
events falling into this category (i.e. no injuries with more than
180 days of absence or with consequences such as total or
partial permanent disability).
In Italy, the number of total recordable injuries decreased (27
events compared to 37 in 2019, of which 8 employees and 19
contractors) and the total recordable injury frequency ratio
(TRIR) improved by 18%; also abroad the number of injuries
decreased (64 events compared to 77 in 2019, of which 22
employees and 42 contractors), but the total recordable inju-
ry frequency ratio worsened (+14%).
KEY PERFORMANCE INDICATORS
2020
2019
2018
TRIR (Total Recordable Injury Rate)
(total recordable injuries/hours worked)
x 1,000,000
Employees
Contractors
Number of fatalities as a result of work-related injury
(number)
Employees
Contractors
High-consequence work-related injuries rate
(excluding fatalities)
(high-consequence work-related injuries/hours
worked) x 1,000,000
Employees
Contractors
Near miss
Worked hours
Employees
Contractors
(number)
(million of
hours)
of which fully
consolidated entities
0.42
0.50
0.38
0
0
0
0.00
0.00
0.00
Total
0.34
0.21
0.39
3
1
2
0.01
0.00
0.01
Total
0.35
0.37
0.34
4
0
4
0.01
0.00
0.01
642
1,159
1,431
158.8
334.2
330.6
54.1
92.1
91.6
104.7
242.1
239.0
Total
0.36
0.37
0.35
1
0
1
0.00
0.00
0.00
841
255.1
81.8
173.3
Respect for the environment
Eni operates in very different geographical contexts, which re-
quire specific assessments of the environmental aspects, and
is committed to strengthening control and monitoring of its
activities by adopting international technical and management
good practices and Best Available Technology. Particular at-
tention is paid to the efficient use of natural resources, like wa-
ter, to reducing oil spills, to managing waste, to managing the
interaction with biodiversity and ecosystem services.
For Eni, environmental culture is an important lever for the cor-
rect management of environmental issues and for this reason
in 2020, it involved its own people through various initiatives in-
cluding the conduct of specific environmental cultural engage-
ment sessions on the field, the provision of awareness “briefs”
on the correct management of environmental aspects and the
creation of an environmental communication campaign dedi-
cated to all employees, with interventions by internal and oper-
ational experts. At the same time, in renewing its environmental
culture, Eni has directly involved its suppliers, whose activities
must reflect Eni’s values, commitment and standards. In 2020,
the Safety Pact was extended to the environment as well, involv-
ing several suppliers who have committed to implement tangible
improvement actions that can be measured through the Safety
and Environment Performance Index, whose data are collected
with specific tools called “safetymeter” and “environmentmeter”.
The commitment of Eni in 2020 also concerned environmen-
tal digitalization with particular reference to process optimi-
zation through the creation of IT tools for the management of
environmental compliance, including international compliance,
and site-specific technical-management assessment models.
The transition path towards a circular economy represents for
Eni one of the main responses to the current environmental
challenges, which is based on the revision of the Company’s
production processes and the management of its assets, re-
ducing the withdrawal of natural resources in favour of mate-
Eni Annual Report 2020
158
rials from renewable sources, reducing and enhancing scrap
(from production, waste, emissions, discharges) through recy-
cling or recovery actions and extending the useful life of prod-
ucts and assets through reuse or reconversion actions. In this
regard, starting in 2017, Eni began carrying out site-specific cir-
cularity analyses, moving from an initial qualitative approach,
based on the 3R (Reduce, Reuse, Recycle) criterion, to quan-
titative assessments with a measurement model developed
on the basis of internationally recognized principles and as-
sessed by a third party. This model, through the monitoring of
specific indicators, including HSE indicators, makes it possible
to measure both the current state of circularity and the effect
of the improvement opportunities identified, while at the same
time anticipating the setting of future national and internation-
al regulations on the subject.
Eni's waste management pays particular attention to the trace-
ability of the entire process and to the verification of the par-
ties involved in the disposal/recovery chain, in order to ensure
compliance with regulations and the environment. Nearly all
of Eni waste in Italy is managed by Eni Rewind, which in 2020,
launched a digitalization project for the efficiency and monitor-
ing of its waste management process and implemented solu-
tions to ensure its traceability up to its correct final disposal/
recovery, facing regulatory developments that have strength-
ened the responsibilities of companies in this area.
With reference to water resources, Eni operates efficient man-
agement by evaluating the use of water and the impacts of its
activities on water resources for the benefit of the ecosystem,
other users and the Company itself. Eni, especially in stressed
areas, carries out the mapping and monitoring of water risks
and drought scenarios to define long-term actions also aimed
at preventing and mitigating the effects of climate change,
involving suppliers as well during the qualification process.
Following its decision to endorse the CEO Water Mandate in
2019, Eni has launched a number of initiatives including, in line
with the first of the core elements of the Mandate, a number of
studies to evaluate options to increase the water resilience and
efficiency of its assets. In terms of transparency, also in 2020,
Eni gave a public response to the CDP Water Security question-
naire, confirming the score obtained last year (A-).
With regard to the management of risks related to oil spills, Eni
is constantly engaged in every area of intervention: prevention,
preparedness, followed by mitigation, response and recovery.
In the area of prevention, in Italy, on the pipeline network of
the Val D’Agri Oil Centre, completed on two backbones was
the installation of the e-VPMS® technology (Eni Vibroacous-
tic Pipeline Monitoring System27 – Proprietary Patent), which,
among other things, obtained the recognition of Conformity to
the Industry 4.0 Plan28 by a third party, while in Nigeria, where
the system is already operational on the Kwale-Akri and Og-
boinbiri-Tebidaba pipelines, installation has been temporarily
suspended on the Clough Creek-Tebidaba pipeline (52 km) due
to the pandemic and is expected to be rescheduled in 2021.
Lastly, regarding R&D, work continued on testing various tech-
nologies, including those that monitor the integrity of pipelines
and tanks and early warning systems for water and pollution
risks, both on upstream and downstream assets. In addition,
on the retail network in Italy, the replacement of single-wall un-
derground tanks with new double-wall tanks or resining contin-
ued, with completion expected in 2021.
As part of the preparation, in order to minimize intervention
times, an analysis of the risk of natural events, such as land-
slides and river overflows, was carried out on the oil pipeline
network in Italy, in order to identify the critical sections and the
consequent priorities for defence interventions.
As part of the sustainable recovery of places that have been
sabotaged, remediation work is also being carried out using a
technology that makes use of plant species (phyto-remedia-
tion). Lastly, collaborations continued with IPIECA and IOGP29 in
order to strengthen the capacity to respond to marine pollution,
in terms of updating and disseminating good practices and re-
gional initiatives such as GI-WACAF - Global Initiative for West,
Central and Southern Africa30 and OSPRI - Oil Spill Preparedness
Regional Initiative31, together with local authorities.
Eni commitment to Biodiversity and Ecosystem Services (BES)
is an integral part of the Integrated HSE Management System,
confirming its awareness of the risks for the natural environ-
ment resulting from its sites and activities. Operating on a global
scale in environmental contexts with different ecological sensi-
tivities and regulatory systems, Eni has adopted a specific BES
management model that has evolved over time thanks also to
long-term collaborations with recognized international organi-
zations that are leaders in biodiversity conservation. The BES
management model32 is aligned with the strategic objectives
of the Convention on Biological Diversity (CBD)33 and ensures
that the interactions between environmental aspects (such as
(27) e-VPMS® is a technology for detecting vibro-acoustic variations in the structure of pipelines and in the fluid transported by the same, aimed at identifying poten-
tial spills in progress.
(28) The Industry 4.0 Plan, included in the Italian Budget Law 2017, is a tool that aims to support and encourage private investment functional to the technological
and digital transformation of production processes.
(29) IPIECA - Association of sustainability on environmental and social issues in the Oil & Gas sector; IOGP - Association of upstream Oil & Gas producers for sharing
best practices on sustainability issues.
(30) Collaboration between the International Maritime Organization (IMO) and IPIECA to improve the capacity of partner Countries to prepare for and respond to
marine oil spills.
(31) Founded by a group of oil and gas companies, including Eni, it aims to encourage and support industry and governments in adopting proven, credible, integrated
and sustainable oil spill response capabilities at national, regional and international levels.
(32) Eni BES management model is described in detail in the BES Policy published on the Eni website:
https://www.eni.com/assets/documents/eng/just-transition/Eni-Biodiversity-and-Ecosystem-Services-Policy.pdf.
(33) Rio de Janeiro, 1992.
Management report | Consolidated financial statements | Annex 159
BES, climate change, water management) and social aspects
(such as the sustainable development of local communities)
are identified and managed correctly from the early planning
stages. Through the application of the Mitigation Hierarchy, Eni
gives priority to preventive measures over corrective ones with
the primary objective of no net loss of biodiversity.
The active involvement of stakeholders is fundamental for the
implementation and continuous improvement in the manage-
ment of the BES issue and ensures the effective application of
the Mitigation Hierarchy. Consultation and collaboration with
local communities, indigenous peoples and other local stake-
holders helps to understand their expectations and concerns,
determine how ecosystem services and biodiversity are be-
ing used, and identify management options that include their
needs. The involvement of key stakeholders is an inclusive and
transparent process that takes place from the early stages of
a project and continues throughout its life cycle. Eni biodiver-
sity risk exposure is periodically assessed by mapping the ge-
ographical proximity to protected areas and areas important
for biodiversity conservation. This mapping allows identifying
priority sites where to take action with higher resolution inquir-
ies to characterize the operational and environmental context
and assess potential impacts to be mitigated through Action
Plans, thus ensuring effective management of risk exposure.
Moreover, since October 2019, Eni has committed not to con-
duct oil and gas exploration and development activities within
the boundaries of Natural Sites included in the UNESCO World
Heritage List34. This commitment confirms the Biodiversity
and Ecosystem Services Policy that Eni has been following for
a long time in its operations, in line with the corporate mis-
sion, and reaffirms both its approach to nature conservation
in every area with a high biodiversity value and the spread of
good management practices in joint ventures where Eni is not
an operator. In 2020, Eni adhered to the “Together with Nature”
principles, committing, in addition to recognizing the close link
between climate change and biodiversity loss, to minimizing
risks and maximizing efforts to protect and conserve existing
ecosystems through the application of Nature-based Solu-
tions, based on rigorous ecological principles.
PERFORMANCE METRICS AND COMMENTS
In 2020, sea water withdrawals increased by 10% overall,
mainly due to the increase recorded at the Priolo petrochem-
ical plant (where activity resumed after the 2019 mainte-
nance shutdown and where, starting in the second half of
2020, functionality tests were carried out on the seawater
network with an increase in the related withdrawals). The
increase in seawater withdrawals was also influenced by
upstream start-up activities in Angola. The increase in sea
water withdrawals was partly offset by the lower quantity
of raw materials processed at the Taranto refinery (-8 Mm3).
Freshwater withdrawals, accounting for about 7% of total
water withdrawals and over 70% attributable to the R&MeC
sector, declined by 11%. The trend is attributable to a reduc-
tion in surface water withdrawals of more than 19 Mm3 at
the Mantua (Italy) petrochemical plant due to both the ces-
sation of maintenance activities carried out in 2019 and the
individual user awareness and control activities put in place
by the site during 2020. Freshwater reuse rate increased
to 91% from 89% in 2019. The E&P sector’s produced wa-
ter re-injection rate stood at 53%, down from 2019 (when it
stood at 58%) due to shutdowns in Libya, malfunctions of
the re-injection systems at the Loango and Zatchi fields in
Congo and the Ebocha field in Nigeria (with difficulties in
performing maintenance activities due to reduced staffing
for the COVID-19 emergency) as well as deconsolidation of
Eni Ecuador whose performances in terms of re-injection
rates were particularly solid. Analysis of the stress level of
hydrographic basins35 and further studies carried out locally
shows that freshwater withdrawals from areas under stress
account for 1.5% of Eni total water withdrawals. In 2020,
in particular, Eni withdrew 113 million cubic meters (Mm3)
of freshwater, of which 26.5 Mm3 from water-stressed are-
as (11.8 Mm3 from superficial water bodies, 5.4 Mm3 from
groundwater, 4.6 Mm3 from third parties, 3.2 Mm3 from ur-
ban net and 1.5 Mm3 from TAF). Onshore produced water in
water-stressed areas was 20.7 Mm3. In 2020, Eni discharged
93.6 Mm3 of freshwater, of which 18.3 Mm3 in water-stressed
areas (equal to 20%). Spilled barrels following operational oil
spills decreased by 7% compared to 2019. The most signifi-
cant events included a spill in Nigeria of almost 300 barrels
at the Brass Terminal (almost all recovered) and a spill of 63
barrels at the Brindisi petrochemical plant (fully recovered).
Overall, 64% of operational spill volumes were recovered. Of
the barrels spilled, 73% are attributable to activities in Nige-
ria. With regard to sabotage events, in 2020, there was a de-
crease in both the number of spills and the quantities spilled.
Of volumes spilled, 76% were from upstream operations in
Nigeria, where spilled quantities were down 29% compared
to 2019. Two events were recorded in Egypt, one of which
caused the spill of 1,000 barrels from a crude oil line in the
desert (70% already recovered). In Italy, there was a break-in
(34) Natural Sites included in the UNESCO World Heritage List as of May 31, 2019. For further information, please refer to the Eni website:
https://www.eni.com/en-IT/media/press-release/2019/10/eni-makes-no-go-commitment-for-unesco-natural-world-heritage-sites.html.
(35) Water-stressed areas: areas with a Baseline Water Stress value over 40%. The indicator, defined by the World Resources Institute (WRI www.wri.org), measures the
exploitation of freshwater sources and indicates a stressful situation if withdrawals from a given river basin are greater than 40% of its renewable supply.
Eni Annual Report 2020 160
at the Genoa-Ferrera Erbognone oil pipeline near Novi Ligure,
which caused the spillage of about 400 barrels of crude oil.
Overall, 46% of oil spill volumes from sabotage were recov-
ered. Volumes spilled as a result of chemical spills are main-
ly attributable to upstream activities in the UK and USA.
Waste generated by Eni from production operations in 2020
decreased by 19% compared to 2019, due to the decline in
both non-hazardous waste (76% of the total), and hazardous
waste. The decrease in non-hazardous waste is mainly relat-
ed to the E&P sector, where more than 350,000 tonnes less
were generated compared to 2019 due to the slowdown of
activities following the COVID-19 emergency and as a result
of the cessation of Construction activities in Zohr (Egypt).
The reduction in hazardous waste is attributable to both the
E&P sector (due to reduced drilling activities in Nigeria and
Kazakhstan) and the R&MeC sector, where the Taranto and
Sannazzaro refineries recorded a significant drop in waste
production due to the slowdown in operations following the
health emergency. Eni's share of recovered and recycled
waste in 2020 was 13% of the total waste disposed36, up from
2019 thanks to the increase in non-hazardous waste recov-
ered regarding both the E&P sector (Central Southern District)
and the R&MeC sector (Gela and Taranto refineries). In 2020,
a total of 4.2 million tonnes of waste was generated by reme-
diation activities (of which 3.9 million tonnes by Eni Rewind),
of which about 73% was groundwater treated at TAF plants,
partly reused and partly returned to the environment. Expend-
iture on remediation activities amounted to €411 million.
Emissions of pollutants into the atmosphere decreased,
with the exception of sulphur oxide (SOx) emissions, which
increased slightly compared to 2019 (+0.1%), particularly
for upstream activities where the composition of the gas
sent to the emergency flares at the Val d’Agri Oil Center was
updated, a gas that has a higher percentage of hydrogen
sulphide (H2S).
In 2020, Eni updated the assessment of exposure to biodiver-
sity risk to the R&M, Versalis and EniPower operational sites,
and to the concessions under development or exploitation in
the upstream sector, in order to identify where Eni activities
fall, even only partially, within protected areas37 or key biodi-
versity areas (KBA)38. An analysis of the mapping of the R&M,
Versalis and EniPower operational sites showed that there
is overlap, even partial, with protected areas or KBAs at 11
sites, all located in Italy; another 18 sites in 7 Countries (Italy,
Austria, Hungary, France, Germany, Switzerland and the Unit-
ed Kingdom) border with protected areas or KBAs, i.e. locat-
ed at a distance of less than 1 km. As regards the upstream
sector, 74 concessions overlap partially with protected areas
or KBAs, 30 of which located in 6 Countries (Italy, Nigeria,
Pakistan, USA/Alaska, Egypt and the United Kingdom) have
operations in the overlapping area. The number of sites and
concessions overlapping protected areas/KBAs is in line with
2019 results. In addition, a similar mapping was carried out in
2020 for R&M pipelines in Italy, which showed that about 10%
of the total length of the pipelines crosses (under surface)
protected areas and KBAs, for stretches with a total length of
118 km and 146 km respectively. In general, for all the Busi-
ness Lines, the greatest exposure in Italy and Europe is to the
protected areas of the Natura 2000 Network39, which is wide-
spread across Europe. In no case, in Italy or abroad, there is
any overlapping of operational activities with natural sites
belonging to the UNESCO WHS40; only one upstream site41 is
located near a WHS natural site (Mount Etna) but there are no
operational activities within the protected area.
(36) Specifically, in 2020, 10% of hazardous waste disposed of by Eni was recovered/recycled, 4% was subjected to chemical/physical/biological treatment, 29% was in-
cinerated, 2% was disposed of in landfill and the remaining 55% was sent for other types of disposal (including transfer to temporary storage plants prior to final disposal).
With regard to non-hazardous waste, 14% was recovered/recycled, 50% was subjected to chemical/physical/biological treatment, 3% was disposed of in landfills and the
remaining 33% was sent for other types of disposal (including transfer to temporary storage plants prior to final disposal and incineration of small quantity).
(37) Source: World Database of Protected Areas.
(38) Source: World Database of Key Biodiversity Areas. KBAs (Key Biodiversity Areas) are sites that contribute significantly to the global persistence of biodiversity, on
land, in freshwater or in the seas. These are identified through national processes by local stakeholders using a set of globally agreed scientific criteria. The KBAs analyzed
consist of two subsets: 1) Important Bird and Biodiversity Areas; 2) Alliance for Zero Extinction Sites.
(39) Natura 2000 is the main tool of European Union policy for biodiversity conservation. It is a network of environmental habitats throughout the territory of the European
Union, set up pursuant to Directive 79/409/EEC of April 2 1979 on conservation of wild birds and Directive 92/43/EEC "Habitat".
(40) WHS, World Heritage Site.
(41) Moreover, although it is not included among the consolidated entities, the Zubair field (Iraq) is located near the Ahwar site classified as a mixed WHS site (natural and
cultural). In this case too, no operational infrastructure or activity falls within this protected area.
Management report | Consolidated financial statements | Annex KEY PERFORMANCE INDICATORS
Total water withdrawals(a)
of which: sea water
of which: freshwater
of which: from superficial water bodies
of which: from subsoil
of which: from urban net or tanker
of which: polluted groundwater treated at TAF(b) plants
and used in the production cycle
of which: third-party water(c)
of which: withdrawal from other streams(d)
of which: brackish water from subsoil or superficial water bodies
Freshwater reused
Re-injected production water
Total water discharge(e)
of which: into the sea
of which: in superficial water bodies
of which: in sewerage
of which: given to third-party(f)
Operational oil spills(g)
Total number of oil spills (> 1 barrel)
Volumes of oil spills (> 1 barrel)
Oil spills due to sabotage (including thefts)(g)
Total number of oil spills (> 1 barrel)
Volumes of oil spills (> 1 barrel)
Chemical spills
Total number of chemical spills
Volumes of chemical spills
Total waste from production activities
of which: hazardous waste
of which: non-hazardous waste
NOx (nitrogen oxides) emissions
SOx (sulphur oxides) emissions
NMVOC (Non Methan Volatile Organic Compounds) emissions
TSP (Total Suspended Particulate) emissions
161
2020
2019
2018
of which fully
consolidated entities
Total
Total
1,683
1,597
1,776
1,580
1,451
1,640
101
128
117
62
18
6
4
10
0
2
92
33
90
20
8
3
6
1
18
89
58
81
19
6
4
6
1
19
87
60
1,580
1,501
1,432
1,668
1,334
1,576
67
10
2
29
780
79
14
5
72
15
5
67
72
1,033
2,665
(million m3)
(%)
(million m3)
(number)
(barrels)
Total
1,723
1,599
113
71
21
7
4
10
0
11
91
53
1,583
1,501
67
11
4
46
958
(number)
109
107
140
101
(barrels)
5,831
4,826
6,232
4,022
(number)
(barrels)
(million of tonnes)
(ktonnes NO2eq.)
(ktonnes SO2eq.)
(ktonnes)
24
3
1.8
0.4
1.4
51.7
15.3
21.4
1.3
24
3
1.5
0.3
1.2
31.2
4.8
10.8
0.6
21
4
2.2
0.5
1.7
52.0
15.2
24.1
1.4
34
61
2.6
0.3
2.3
53.1
16.5
23.1
1.5
(a) It is reported that the production water in 2020 was 57.4 Mm3.
(b) TAF: groundwater treatment facilities.
(c) Water withdrawal from third-party are exclusively related to fresh water.
(d) With the aim to further increase the accordance with "GRI 303: Water and effluents 2018" standard used by Eni from 2020 reporting cycle, data related to third party water is reported separately,
while in previous editions it was included in "of which freshwater withdrawal from other streams".
(e) It is reported that in 2020 re-injected production water and re-injected water for disposal was equal to 30.5 Mm3. 6% of the total water discharges is fresh water.
(f) It is water given for industrial use.
(g) The 2019 figure was updated following the closure of some investigations after the publication of the 2019 NFI. This circumstance could also occur for the 2020 data.
Eni Annual Report 2020
162
NUMBER OF PROTECTED AREAS AND KBAS OVERLAPPING WITH R&M, VERSALIS, ENIPOWER OPERATIONAL SITES
AND UPSTREAM CONCESSIONS(a)
R&M, Versalis, Enipower Operational sites
Upstream Concessions
Overlapping
with operational sites
Adjacent to operational sites
(<1km)(b)
With operating activities
in the overlapping area
2020
2019
2018
2020
2019
2018
2020
2019
2018
ENI Operational sites/Concessions(c)
(number)
11
11
UNESCO World Heritage Natural Sites
(number)
Natura 2000
IUCN(d)
Ramsar(e)
Other Protected Areas
KBAs
0
5
4
0
2
5
0
5
4
0
2
6
n.a
n.a
n.a
n.a
n.a
n.a
n.a
18
0
19
13
3
8
8
15
0
21
11
3
3
11
n.a
n.a
n.a
n.a
n.a
n.a
n.a
30
0
16
2
3
11
12
31
0
15
3
2
12
13
27
0
15
3
2
7
12
(a) The reporting boundary, in addition to fully consolidated entities, includes also 5 upstream concessions belonging to operated companies in Egypt and 1 coastal deposit of R&M, belonging
to an operated Company as well. For this analysis, upstream concessions as of June 30 of reporting year are considered.
(b) The important areas for biodiversity and the operational sites do not overlap but are at distance of less than 1 km.
(c) Eni's operational site/concession may result in overlapping/adjacent to more protected areas or KBAs.
(d) Protected areas with an assigned IUCN (International Union for Conservation of Nature) management category.
(e) List of wetlands of international importance identified by the Countries that signed the Ramsar Convention in Iran in 1971 and which aims to ensure the sustainable development and
conservation of biodiversity in these areas.
Human rights
Eni is committed to conducting its activities with respect for
human rights and expects its Business Partners to do the
same in carrying out the assigned activities or those done
in collaboration with and/or on behalf of Eni. This commit-
ment, based on the dignity of each human being and on the
responsibility of the Company to contribute to the well-be-
ing of individuals and communities in the Countries in which
it operates, is set out in the Eni’s Statement on Respect for
Human Rights approved in December 2018 by Eni's Board
of Directors (BoD). The document highlights the priority ar-
eas on which this commitment is focused and on which Eni
exercises in-depth due diligence, according to an approach
developed in line with the United Nations Guiding Principles
on Business and Human Rights (UNGPs)42 and pursuing
continuous improvement. These aspects are described with-
in a dedicated report, Eni for Human Rights, published for
the first time in December 2019, and updated during 202043,
which provides a full representation of the management
model adopted by Eni on the issue and the activities carried
out in recent years, using the UNGP Reporting Framework to
report commitments and results.
Human rights are one of the areas in which Eni's Sustainabili-
ty and Scenarios Committee (SSC) performs consultative and
advisory functions for the BoD. In 2020, the SSC reviewed the
activities carried out during the year and analyzed the result
achieved in the fourth edition of the Corporate Human Rights
Benchmark (CHRB), in which Eni confirmed its leadership po-
sition, ranking first ex aequo with only one other Company
among the 199 assessed.
In 2020, Eni further strengthened the process of awarding man-
agement incentives linked to human rights performance, assign-
ing specific objectives to all managers reporting directly to the
CEO and other management levels. In addition, Eni adopted a
new internal procedure outlining the human rights due diligence
process as required by the UNGPs and updated its Code of Ethics.
With regard to training, following on with the internal human
rights awareness process launched in 2016, specific e-learning
courses dedicated to the functions most in managing human
rights issues were provided in 2020 in order to create a com-
mon and shared language and culture throughout the Compa-
ny and to improve the understanding of the possible impacts
of the business on human rights.
Moreover, since 2006 an internal procedure has been in place,
also included in the Anti-Corruption Regulatory Instruments,
which regulates the process for receiving, analyzing and pro-
cessing any whistleblowing reports, also related to human
rights, sent by or transmitted from stakeholders, Eni's people
and other third parties, even confidentially or anonymously.
The commitment of Eni, the management model and activi-
ties on human rights focus on issues considered most signif-
(42) UN Guiding Principles on Business and Human Rights (UNGPs).
(43) See: https://www.eni.com/assets/documents/eni-report-human-rights.pdf.
Management report | Consolidated financial statements | Annex
163
icant for the Company – as also requested by the UNGPs – in
light of the business activities carried out and the contexts in
which the Company operates. The “salient human rights is-
sues” identified by Eni's are 13, grouped into 4 categories: hu-
man rights (i) in the workplace (see chapter People); (ii) in the
communities hosting Eni activities; (iii) in business relations
(with suppliers, contractors and other business partners); (iv)
in security services.
Eni is committed to preventing possible negative impacts on
the human rights of individuals and host communities re-
sulting from the implementation of industrial projects. To
this end, in 2018, Eni adopted a risk-based model that uses
elements related to the operating context, such as risk indices
of the data provider Verisk Maplecroft, and project character-
istics, in order to classify upstream business projects accord-
ing to potential human rights risks and to identify appropriate
management measures. Higher-risk projects are specifically
investigated through a Human Rights Impact Assessment
(HRIA) to identify measures to prevent potential impacts on
human rights and manage the existing ones. Consistent with
the evolution towards a just transition and its commitment to
decarbonization, in 2020, Eni also conducted an in-depth as-
sessment of the Energy Evolution business activities, aimed
at identifying the most relevant human rights issues of the
projects for the production of energy from renewable sources,
following which a specific action plan was prepared. In some
Countries, such as Norway, Australia and Alaska, Eni operates
in areas where indigenous peoples are present, towards which
it has adopted specific policies to protect their rights, culture
and traditions and to promote their free, prior and informed
consultation. During 2020, Eni approved and published a Poli-
cy dedicated to Indigenous Peoples in Alaska44, referring to the
business activities carried out by Eni US Operating in that area.
Respect for human rights in the supply chain is ensured
through the adoption of transparent, impartial, consistent and
non-discriminatory conduct in the selection of suppliers, the
evaluation of offers and the verification of contractual activi-
ties (see chapter Suppliers).
In 2020, the Supplier Code of Conduct was published, which
sets out the principles contained in the Code of Ethics for sup-
pliers that are required to sign it during the qualification or as-
signment of contracts, committing to respect Eni's values and
to recognize and protect the value of people and prevent any
type of discrimination.
To support human rights due diligence, Eni has also introduced
a new risk-based model to segment qualified suppliers accord-
ing to a potential risk of human rights violations in considera-
tion of Country and product risk level. The assessment of these
risks is based on the application of an objective and transpar-
ent methodology, which provides for the classification not only
of the geographical context but also the evaluation of the pe-
culiarities of the activity carried out, using information verified
during the qualification process, which ascertained both the
complexity (e.g. skills required, workforce employed, equip-
ment and materials used) and the relevance in HSE terms of
the reference product sector. Suppliers assessed in the human
rights area carry out activities directly related to Eni's needs,
both industrial (including electrical and instrumental assem-
bly) and civil (including cleaning services). The model makes it
possible to apply control measures differentiated on the basis
of the level of risk, using criteria inspired by international stand-
ards, such as the SA 8000 standard.
Further actions to counteract forms of modern slavery and
human trafficking and to prevent the exploitation of minerals
associated with human rights violations in the supply chain are
discussed respectively in the “Slavery and Human Trafficking
Statement”45 and in the “Position on conflict minerals”46.
With reference to Business Partners in upstream contracts,
Eni adopts ad hoc clauses for the respect of human rights.
Eni manages its security operations in accordance with
international principles, including the Voluntary Principles
on Security & Human Rights, adhered to by Eni in 2020.
In May 2020, Eni was admitted as an “Engaged Corporate
Participant” to the Voluntary Principles Initiative (VPI), the
multi stakeholder initiative dedicated to the respect of hu-
man rights in the management of Security operations that
involves governments, companies and NGOs. In line with its
commitment, Eni has designed a coherent set of rules and
tools to ensure that: (i) contractual terms comprise provi-
sions on the respect for human rights; (ii) the providers of
security forces are selected also according to human rights
criteria; (iii) security operators and supervisors receive ad-
equate training on the respect for human rights; (iv) the
events considered most at risk are managed in accordance
with international standards. Moreover, in 2020, Eni launched
the human rights due diligence model, aimed at identifying
the risk of negative impacts on human rights in relation to
security activities and evaluating the use of preventive and/
or mitigation measures. In this regard, the “Security & Hu-
man Rights” action plan was drawn up, which envisaged: (i)
sample review of the security contracts in place in the first
10 Countries resulting from the risk-based model, in order
to verify the presence or absence of human rights clauses;
(ii) verification of the allocation/use of security assets and
services made available to the public and private security
forces operating at Eni Pakistan sites; (iii) implementation of
a training and information workshop on “Security & Human
Rights” in Angola.
(44) See: https://www.eni.com/assets/documents/indigenous-peoples-policy-1dec2020-final.pdf.
(45) In accordance with the English Modern Slavery Act 2015 and, from this year, the Australian Commonwealth Modern Slavery Act 2018.
(46) Compliance with US SEC regulations.
Eni Annual Report 2020 164
PERFORMANCE METRICS AND COMMENTS
Mandatory training for senior managers and middle manag-
ers (Italy and abroad) of the 4 specific modules continued in
2020: “Security and Human Rights”, “Human Rights and rela-
tions with Communities”, “Human Rights in the Workplace”
and “Human Rights in the Supply Chain”, with a 99% comple-
tion rate compared to registrations. In addition, the provision
of sustainability and human rights pathways continued for
the entire Eni's population on a voluntary basis: “Stakeholder
sustainability, reporting and human rights”, “Sustainability and
integration with business”, “SDGs” and the new “SDG’s Follow
Up: Agenda 2030”; taking into account the two types of use, the
overall percentage is 92%.
The e-learning course “Security & Human Rights”, dedicated
tothe target population of the Security professional area (mid-
dle managers and senior managers), was also reconfirmed in
2020. The e-learning course has been produced in three lan-
guages (Italian, English and French), to extend its accessibility.
Thanks also to the course mentioned above, the staff belonging
to the professional area trained in human rights reached 91%.
In addition, since 2009 Eni has been conducting a training
program for public and private security forces at its subsidiar-
ies, which was recognized as a best practice in the 2013 joint
publication by the Global Compact and the Principles for Re-
sponsible Investment (PRI) of the United Nations. In 2020, the
training session was carried out in Angola and was attended in
presence of 32 representatives of the security forces47.
Although no new Human Rights Impact Assessments (HRIAs)
were carried out in 2020 due to the emergency, the implemen-
tation of actions under the Action Plans related to the HRIAs
carried out during 2019 and 2018 on Area 1 development in
Mexico and Area 4 development in Mozambique continued. In
addition, in 2020, Eni published a Report48 on the completion of
the Action Plan referred to the North Cabinda project in Angola
and a Report49 on the progress of the Action Plan referred to
the aforementioned Area 1 development project in Mexico.
With regard to whistleblowing reports, in 2020 investigations
were completed on 73 files50, of which 2551 included human
rights aspects, mainly concerning potential impacts on work-
ers’ rights. Among these, 28 assertions were verified with the
following results: for 11 of them, the reported facts were con-
firmed, at least in part, and corrective actions were taken to
mitigate and/or minimise their impact, including: (i) actions
on the Internal Control and Risk Management System, relating
to the implementation and strengthening of controls in place;
(ii) actions against business partners/suppliers; (iii) actions
against employees, including disciplinary measures, in accord-
ance with the collective labour agreement and other national
laws applicable. At the end of the year, 16 files were still open,
6 of which referred to human rights aspects, in particular po-
tential impacts on workers’ rights.
KEY PERFORMANCE INDICATORS
Human rights training hours
In class
Distance
Employees trained on human rights(a)
Security personnel trained on human rights(b)
Security personnel (professional area) trained on human rights(c)
Security contracts containing clauses on human rights
2020
2019
2018
(number)
33,112
25,845
10,653
260
108
164
32,852
25,737
10,489
92
32
91
97
97
696
92
97
91
73
96
90
(%)
(number)
(%)
Whistleblowing files (assertions) on human rights violations closed during the year
(number)
25 (28)
20 (26)
31 (34)
Founded assertions
Unfounded assertions, with the adoption of corrective/improvement measures
Unfounded/Not applicable assertions(d)
11
9
8
7
8
11
9
9
16
(a) This percentage is calculated as the ratio between the number of registered employees who have completed a course and the total number of registered employees.
(b) The variations of the KPI Security personnel trained on human rights, in some cases even significant from one year and the next, are related to the different characteristics of the training projects
and to the operating contingencies.
(c) This data is a cumulative percentage value. The 2020 data is calculated considering only Eni's employees, unlike the 2019 figure which also includes contractors.
(d) They are classified as such whistleblowing/assertions in which the reported facts: (i) coincide with the subject of the pre-litigation, litigation and investigation; (ii) cannot be classified as
Verifiable Detailed Reports, therefore it is not possible to start the investigation phase; (iii) Verifiable Detailed Reports for which, in light of the outcomes of the preliminary checks conducted, it is not
being considered necessary to start the subsequent investigation referred phase.
(47) Other 100 people attended the event (either in presence or remotely), among which Eni’s management and employees, other oil companies’ members and NGOs.
(48) https://www.eni.com/assets/documents/eng/just-transition/human-rights/HRA-Action-Plan-Cabinda-Centrum-summary-report-December-2020.pdf.
(49) https://www.eni.com/assets/documents/eng/just-transition/human-rights/Eni-Mexico-Summary-report-on-the-implementation-of-Human-Rights-Action-Plan-
Area-1-update-2019-2020.pdf.
(50) Whistleblowing report: is a summary document of the investigations carried out on the report(s) (which may contain one or more detailed and verifiable assertions)
providing a summary of the investigation carried out on the reported facts, the outcome of the investigations and any action plans identified.
(51) All relating to fully consolidated entities.
Management report | Consolidated financial statements | Annex
165
Suppliers
Eni adopts qualification and selection criteria for suppliers to
assess their capacity to meet Company standards in terms of
ethical reliability, technical-operational, health, safety, environ-
mental protection, human rights and cyber security. Eni meets
this commitment by promoting its own values with its suppli-
ers and involving them in the risk prevention process. For this
purpose, as part of the procurement process, Eni: (i) subjects
all suppliers to qualification and due diligence processes to
verify their professionalism, technical-operational skills, ethi-
cal, economic and financial reliability and to minimize the risks
inherent in operating with third parties; (ii) requires all suppliers
to sign the Supplier Code of Conduct with which they under-
take to recognize and protect the value of people and prevent
any type of discrimination; (iii) monitors compliance with these
commitments, to ensure that suppliers maintain the qualifica-
tion requirements over time; (iv) if critical issues arise, requires
the implementation of improvement actions or, if they do not
meet the minimum standards of acceptability, limits or inhibits
the invitation to tender. During 2020, Eni launched the JUST
(Join Us in a Sustainable Transition) initiative, aimed at involv-
ing suppliers in the fair and sustainable energy transition path,
enhancing the aspects of environmental protection, economic
development and social growth. In particular, Eni has: (i) ex-
tended to all qualification processes an assessment related
to the respect of human rights; (ii) launched the “Sustainable
Transition and Supply Chain” observatory to collect suppliers’
sustainability experiences; (iii) introduced sustainability criteria
and rewarding mechanisms in tenders to encourage suppliers’
best practices; (iv) launched an experimental workshop with
qualified companies in the chemical, physical and biological
treatment of liquid waste sector to encourage the adoption
of circular economy models and/or sustainability initiatives;
(v) supported the JUST initiative through external and inter-
nal communication activities, conveying the main objectives
through eniSpace, the platform for collaboration and commu-
nication between Eni and the supply market, with the aim of
reaffirming Eni's commitment to the sustainability of its supply
chain. In addition, Eni has started the development, in collabo-
ration with Boston Consulting Group (BCG) and Google Cloud,
of Open-es, an open digital platform dedicated to all suppliers
in the energy sector with the aim of sharing and enhancing
information, best practices and sustainability models along
the supply chain and encouraging the entire supply chain to-
wards the sector’s energy transition. Finally, in the context of
the COVID-19 health emergency, Eni has set up a task force to
ensure the safe continuity of contractors’ activities and at the
same time, ensure the resilience of the supply chain during the
crisis, so as to be able to guarantee a safe and timely restart
after the emergency situation. Measures activated include: (i)
the renegotiation of contracts, seeking mutual benefits such
as the extension of their duration in exchange for greater flex-
ibility and efficiency and identifying contractual forms capable
of sustaining, where possible, employment levels; (ii) meas-
ures to protect suppliers at greater financial risk, for example
by rebalancing payment terms; (iii) tendering strategies to
encourage the opening of the market also to small and me-
dium-sized enterprises or, where not feasible, favouring joint
ventures between small/medium-sized enterprises.
PERFORMANCE METRICS AND COMMENTS
During 2020, 5,655 suppliers (including all the new ones) were
subject to checks and assessments with reference to envi-
ronmental and social sustainability aspects (including health,
safety, environment, human rights, anti-corruption and compli-
ance). Potential critical issues and/or areas for improvement
were identified for 15% of the suppliers audited (828). Of these,
only a portion, equal to 124, received a negative evaluation dur-
ing the qualification phase or was subject to new preventive
measures (attention status with clearance, suspension or rev-
ocation of qualification) or confirmation of the pre-existing pre-
ventive measures. The identified criticalities (resulting in the
request for the implementation of improvement plans) during
the qualification process or Human Rights assessment are
related to HSE issues or violations of human rights, such as
health and safety regulations, violation of the Code of Ethics,
corruption, environmental crimes.
KEY PERFORMANCE INDICATORS
Suppliers subjected to assessment on social responsibility aspects
(number)
of which: suppliers with criticalities/areas for improvement
of which: suppliers with whom Eni has terminated the relations
New suppliers assessed using social criteria
(%)
2020
5,655
828
124
100
2019
5,906
898
96
100
2018
5,184
1,008
95
100
Eni Annual Report 2020 166
Transparency, anti-corruption and tax strategy
Demonstrating its commitment to the 10 United Nations Princi-
ples for Responsible Business, in 2020, Eni was confirmed in the
Global Compact LEAD. These principles, including the repudiation
of corruption, are reflected in Eni's Code of Ethics, which is distrib-
uted to all employees at the time of hiring, and in Model 231 of
Eni SpA. Moreover, since 2009, Eni has designed and developed
the Anti-Corruption Compliance Program, in compliance with the
applicable provisions in force and international conventions and
taking into account guidance and best practices, as well as the
policies adopted by leading international organizations. It is an
organic system of rules and controls to prevent corrupt practices.
All Eni's subsidiaries, in Italy and abroad, must adopt, by resolu-
tion of their BoD52, all the anti-corruption regulatory instruments
issued by Eni SpA. In addition, companies and entities in which it
holds a non-controlling interest are encouraged to comply with
the standards set forth in internal anti-corruption regulations by
adopting and maintaining an adequate internal control system
consistent with the requirements of the relevant laws.
Eni's Anti-Corruption Compliance Program has evolved over
the years with the aim of continuous improvement; in January
2017, Eni SpA was the first Italian Company to achieve the ISO
37001:2016 “Anti-bribery Management Systems” certification. In
order to maintain this certification, Eni cyclically undergoes sur-
veillance and recertification audits, which have always ended with
a positive outcome. In addition, in order to guarantee the effective-
ness of the Anti-Corruption Compliance Program, Eni, through its
anti-corruption unit, supports its subsidiaries in Italy and abroad,
providing specialized assistance in the activity of assessing the
reliability of potential counterparties at risk (due diligence), the
management of any critical issues/red flags that emerge and the
development of the related contractual safeguards. In particular,
specific anti-corruption clauses are included in contracts with
counterparties, which also provide for a commitment to view and
abide by the principles contained in Eni's Anti-Corruption regula-
tions. The main anti-corruption activities and information on the
related regulatory instruments issued during the reporting period
are the subject of periodic reports addressed to Eni's internal con-
trol bodies and the Chief Financial Officer.
Eni also implements an anti-corruption training program, both
through e-learning and with classroom events, general work-
shops and job specific training. The workshops offer an over-
view of the anti-corruption laws applicable to Eni, the risks that
could result from their infringement for natural and legal per-
sons and the Anti-Corruption Compliance Program adopted to
address these risks. Generally, the workshops are accompa-
nied by job specific training, or training for professional areas
particularly at risk in terms of corruption.
In order to optimize the identification of the recipients of the var-
ious training initiatives, a methodology has been defined for the
systematic segmentation of Eni's people based on specific cor-
ruption risk drivers such as Country, qualification, and profession-
al area. In addition, periodic information and updating activities
continued through the preparation of short information briefs on
compliance, including any anti-corruption issues.
In 2020, on the occasion of their inauguration, the members of the
Board of Directors of Eni SpA were shown the key elements of the
Anti-Corruption Compliance Programme for training purposes,
also in terms of its consistency with international best practices.
In addition, the anti-corruption training program continued for
some categories of Eni's third parties with the aim of making
them aware of the issue of corruption and in particular, on how
to recognize corrupt conduct and how to prevent the violation of
anti-corruption laws, in the context of their professional activity.
Eni's experience in the field of anti-corruption also matures
through continuous participation in international conferences,
events and working groups, which represent a tool for Eni to
grow and promote and disseminate its values. In this regard, in
2020, Eni actively participated in the World Economic Forum’s
Partnering Against Corruption Initiative (PACI) and the Oil &
Gas ABC Compliance Attorney Group (a discussion group on
anti-corruption issues in the Oil & Gas sector).
In order to assess the adequacy and effective operation of the
Anti-Corruption Compliance Program, as part of the integrat-
ed audit plan approved annually by the BoD, Eni carries out
specific checks on relevant activities, with audits dedicated to
analyses of processes and companies, identified based on the
riskiness of the Country in which they operate and materiality,
as well as third parties considered to be high risk, where re-
quired contractually.
Moreover, since 2006 Eni has issued an internal procedure,
aligned with national and international best practices as well
as with the Italian law (L.179/2017), in order to manage the
process of receiving, analyzing and processing whistleblowing
reports received, even in confidential or anonymous form, by
Eni SpA and its subsidiaries in Italy and abroad. This internal
procedure allows anyone, employees and third parties, to re-
port facts relating to the Internal Control and Risk Manage-
ment System and concerning behaviors in violation of the
Code of Ethics, any laws, regulations, provisions of authorities,
internal regulations, Model 231 or Compliance Models for for-
eign subsidiaries, that may cause damage or prejudice to Eni,
even if only to its public image. Dedicated and easily accessi-
ble channels have been set up and are available on eni.com.
Eni's tax strategy, which has been approved by the Board of Di-
(52) Or alternatively the equivalent body depending on the governance of the subsidiary.
Management report | Consolidated financial statements | Annex rectors and is available on the Company’s website53, is based on
the principles of transparency, honesty, fairness and good faith set
forth in its Code of Ethics and in the “OECD Guidelines for Multina-
tional Enterprises”54 and has as its primary objective the payment
of taxes in the various Countries in which it operates, in the knowl-
edge that it can contribute significantly to tax revenues in those
Countries, supporting local economic and social development.
Eni has designed and implemented a Tax Control Framework
for which Eni's CFO is responsible, structured in a three-step
business process: (i) assessment of tax risk (Risk Assess-
ment); (ii) identification and establishment of controls to mon-
itor risks; (iii) verification of the effectiveness of controls and
related information flows (Reporting).
As part of its tax and litigation activities risk management, Eni
adopts prior communication with the tax authorities and main-
tains relations based on transparency, dialogue and coopera-
tion, participating, where appropriate, in projects of enhanced
cooperation (Co-operative Compliance). True to the commit-
ment to better governance and greater transparency in the
extraction sector, which is crucial to foster responsible use of
resources and prevent corruption, Eni takes part in the Extrac-
tive Industries Transparency Initiative (EITI) since 2005. In this
context, Eni actively participates both at local level, through the
Multi-Stakeholder Groups in the member Countries, and in the
Board’s initiatives at international level.
In accordance with Italian law no. 208/2015, Eni prepares the
“Country-by-Country Report” required by Action 13 of the “Base
erosion and profit shifting - BEPS” project, promoted by the OECD
with the sponsorship of the G-20, whose objective is to have the
profits of multinational companies declared in the jurisdictions
where the economic activities that generate them are carried
out, in proportion to the value generated. With a view to fostering
fiscal transparency for the benefit of all interested stakeholders,
this report is published voluntarily by Eni, although there are no
regulatory obligations in this regard55. The publication of this re-
port has been recognized as best practice by the EITI56.
KEY PERFORMANCE INDICATORS
167
Also in line with its support for the EITI, Eni has published a pub-
lic position on contract transparency in which governments are
encouraged to comply with the new requirement on contracts
publication and it is expressed the support to the mechanisms
and initiatives that will be launched by Countries to promote
transparency in this area. Finally, anticipating by two years the
reporting requirements on transparency of payments to States
in the exercise of extraction activities introduced by the EU Di-
rective 2013/34 EU (Accounting Directive), Eni had begun in
2015 to provide disclosure on a voluntary basis of a series of
summary data on cash flows paid to States in which it con-
ducts hydrocarbon exploration and production activities.
PERFORMANCE METRICS AND COMMENTS
During 2020, 31 audits were carried out in 21 Countries, with
anti-corruption checks that confirmed the overall adequacy and
effective operation of the Anti-Corruption Compliance Program.
In 2020, the ascertained cases of corruption57 relating to Eni
SpA amounted to 0; for ongoing proceedings see the section
Legal Proceedings on pp. 264 and following.
Beginning in March 2020, due to the emergency related to
COVID-19, planned classroom training events were conducted in
distance mode. In addition, in 2020, the online training continued
on anti-corruption issues according to the risk-based methodol-
ogy started in 2019, aimed at the entire corporate's population.
Regarding the commitment with EITI, Eni follows the activities
conducted at international level and contributes annually to
preparation of the Reports in member Countries; additionally,
as a member, Eni takes part in the activities of the Multi Stake-
holder Groups in Congo, Ghana, Timor Leste, and the United
Kingdom. In Kazakhstan, Indonesia, Mozambique, Nigeria and
Mexico, Eni's subsidiaries interface with the local EITI Multi
Stakeholder Groups through the industry associations present
in the Countries.
Audit actions with anti-corruption verifications(a)
(number)
E-learning for resources in medium/high corruption risk context
(number of partecipants)
E-learning for resources in low corruption risk context
General Workshops
Job specific training
Countries where Eni supports EITI’s local Multi Stakeholder Groups
(number)
(a) 2018 data refer to fully consolidated entities only.
2020
2019
2018
of which fully
consolidated entities
31
3,276
3,694
832
539
9
Total
31
3,388
3,769
904
568
9
Total
27
13,886
9,461
1,237
1,108
9
Total
32
951
1,950
1,765
1,461
8
(53) Please see https://www.eni.com/assets/documents/Tax-strategy_ENG.pdf.
(54) Please see: http://www.oecd.org/daf/inv/mne/48004323.pdf.
(55) For more details please see the most recent edition of Country-by-Country Report published in November 2020 related to 2019:
https://www.eni.com/assets/documents/eng/just-transition/2019/Country-by-Country-2019-ENG.pdf
(56) EITI pointed out Eni and Shell as companies pionerring Country-by-Country reporting among Oil and Gas majors, see:
https://eiti.org/news/extractives-companies-champion-tax-transparency
(57) Data include investigations carried out on any whisteblowing reports.
Eni Annual Report 2020 168
ALLIANCES FOR PROMOTION OF LOCAL DEVELOPMENT
One lever of Eni’s business model is represented by the pro-
motion of local development, through the enhancement of
the resources of the Countries where Eni is present, allocating
gas production to the local market and promoting access to
electricity, together with a wide range of socio-economic de-
velopment initiatives in line with the development objectives of
the Countries themselves. The unpredictable and rapid spread
of the pandemic has destabilized health, social and economic
systems all over the world. However, at the same time, it has
shown how, when faced with great challenges, forces need to
be joined and actions implemented together, making the most
of common factors with the various partners involved in the
areas of interest: from International Organizations to Develop-
ment Banks, from National Institutions to the private sector,
from Universities to Research Centres, from Cooperation Bod-
ies to Civil Society Organizations present in the territories in
which Eni operates, with the common goal of fostering local
sustainable development in the innate respect for the dignity of
every person. Starting from the analysis of the local socio-eco-
nomic context, which accompanies the various business
project phases in order to ensure greater efficiency and sys-
tematicity in the decision-making approach, from the time of
license acquisition to decommissioning, Eni adopts tools and
methodologies consistent with the main international stand-
ards to meet the needs of local populations. These activities,
defined in specific Local Development Programmes (LDPs) in
line with the United Nations 2030 Agenda, the National Devel-
opment Plans, the United Nations Guiding Principles on Busi-
ness and Human Rights (UNGPs) and the commitments under
the Paris Agreement (Nationally Determined Contributions -
NDCs), include five lines of action:
Local development projects: contribution to the socio-eco-
nomic development of local communities, in accordance
with national legislation and development plans, also based
on the knowledge acquired. These initiatives are aimed at
improving access to off-grid energy and clean cooking, eco-
nomic diversification (e.g. agricultural projects, micro-credit,
infrastructure interventions) and forest protection and con-
servation, education and vocational training, access to water
and sanitation and support of health services/systems, as
well as improving the health status of vulnerable groups;
Local Content: generation of added value through the trans-
fer of skills and know-how, activation of labour along the
local supply chain and the implementation of development
projects;
Land management: optimal land management starting
from the assessment of the impacts deriving from the ac-
quisition of land on which Eni’s activities are carried out in
order to find possible alternatives and mitigation measures;
Eni undertakes to evaluate possible project alternatives with
the aim of pursuing the well-being of local communities;
Stakeholder engagement: enhancement of the relationship
with stakeholders based on the sharing of values, mutual un-
derstanding and attention;
Human Rights: assessment of potential or actual human
rights impacts attributable - directly or indirectly - to Eni’s ac-
tivities through Human Rights Impact Assessments, defini-
tion of related prevention or mitigation measures, in line with
the United Nations Guiding Principles (UNGPs) and promo-
tion of human rights through the local development projects
mentioned above.
The definition of Local Development Programme implies the
commitment of Eni in the front line on site and alongside other
development players to contribute to the sustainable devel-
opment of Countries. Many of the partnerships developed by
Eni with International Organizations and – more generally – of
development cooperations move in this direction, such as the
agreements signed in 2020: in Ghana with the local office of
the World Bank and the Ghana Alliance for Clean Cookstoves
and Fuels (GHACCO) to improve cooking systems and reduce
forest exploitation, in Angola with USAID58 as part of economic
diversification with a focus on women’s empowerment, and in
Kenya with the E4Impact Foundation for the development of
local entrepreneurship. In addition, cooperation agreements
were signed in 2020 with some Civil Society Organizations
such as AMREF, AVSI, CUAMM and VIS59.
In the various business design phases, in line with internation-
ally recognized standard principles/methodologies, Eni has
developed:
analysis tools to better understand the reference context
and appropriately address local development projects, such
as Social Context analysis
(58) United States Agency for International Development.
(59) Organizations from Civil Society recognized as international development cooperation leaders in matters such as access to energy, economic diversification, education,
access to water and sanitation, land management, community health.
Management report | Consolidated financial statements | Annex 169
also based on the global Multidimensional Poverty Index
(MPI) developed by UNDP (United Nations Development
Programme) and Oxford University – and the Human Rights
Impact Assessment – (HRIA);
management tools to map the relationship with stakehold-
ers and monitor the progress of projects and the results
achieved (including Stakeholder Management System -
SMS, Logical Framework Approach - LFA and Monitoring,
Evaluation and Learning - MEL);
impact assessment tools, useful for evaluating the direct, in-
direct and induced benefits generated by Eni in the context
of business operations and through the cooperation model,
such as Eni's Local Content Evaluation - ELCE and Eni's Im-
pact Tool60;
analyses to measure the percentage spent on local suppli-
ers at some relevant foreign upstream subsidiaries, which in
2020 amounted to about 38% of the total amount spent.
PERFORMANCE METRICS AND COMMENTS
In 2020, investments for local development amounted to
around €96.1 million61 (Eni's share), about 96% of which in
the area of upstream activities. In Africa, a total of €44.2 mil-
lion was spent, of which €36.6 million in the Sub-Saharan
area, mainly in the area of development and maintenance of
infrastructures, particularly school buildings. In Asia, approx-
imately €28.2 million was spent, mainly on economic diversi-
fication, in particular for the development and maintenance
of infrastructures. In Italy, €16.9 million was spent. Overall,
approximately €41.8 million was invested in infrastructure de-
velopment activities, of which €20.8 million in Asia, €16.3 mil-
lion in Africa, €4.4 million in Central and South America. Key
projects implemented in 2020 include initiatives to encour-
age: (i) access to water through desalination plants in Iraq
and wells fed by photovoltaic systems in North-East Nigeria;
(ii) access to electricity in Libya and Nigeria; (iii) economic
diversification both in the agricultural sector in Congo and
Nigeria and to support local and youth entrepreneurship in
Nigeria and Ghana; (iv) access to education with activities for
both students and trainers in Angola, Mozambique, Ghana,
Iraq and Mexico. As part of the interventions implemented
in response to the health needs of the populations of the
Countries in which it is present, in 2020, Eni supported 22 in-
itiatives against the COVID-19 pandemic, in 14 foreign Coun-
tries, aimed in particular at local vulnerable groups, hospitals,
health institutions and ministries of health, providing: ventila-
tors and respirators; intensive care equipment and other med-
ical equipment; personal protective equipment. In addition,
the emergency response plan included: (i) implementation of
community awareness campaigns and “community engage-
ment” actions aimed at preventing the spread of the virus;
(ii) creation of access points and distribution of safe water
equipped with soap for hand washing; (iii) social protection
and food assistance measures such as the distribution of
meals for families, vulnerable groups and school canteens;
(iv) measures to support the education system through the
creation of widespread learning spaces and the distribution
of educational materials. In addition to its support to fight the
pandemic, Eni has carried out 29 initiatives in 13 Countries to
improve the health status of the populations of partner Coun-
tries as an essential prerequisite for socio-economic devel-
opment, through the strengthening of the skills of health per-
sonnel, the construction and rehabilitation of health facilities
and their equipment, access to drinking water, information,
education and awareness-raising on health issues among the
populations involved.
Lastly, in 2020, with the aim of assessing the potential impact
of projects on the health of the communities involved, Eni com-
pleted 4 HIAs (Health Impact Assessment), of which 3 were
integrated ESHIA studies (Environmental and Social Health
Impact Assessment).
During 2020, 107 grievances62 were received, of which 53%
were resolved and closed. The complaints mainly concerned:
management of environmental aspects, employment develop-
ment, land management.
KEY PERFORMANCE INDICATORS
Local development investment
of which: infrastructure
2020
2019
2018
Total
96.1
41.8
of which fully
consolidated entities
80.4
38.8
Total
95.3
43.4
Total
94.8
32.4
(€ million)
(60) The ELCE (Eni Local Content Evaluation) Model was developed by Eni and validated by the Polytechnic of Milan to assess the direct, indirect and induced effects
generated by Eni’s activities at a local level in the areas in which it operates. Eni's Impact Tool is a methodology developed by Eni and validated by Polytechnic of Milan
that allows assessing the social, economic and environmental impacts of its activities at local level, quantifying the generated benefits and directing investment choices
for future initiatives.
(61) The figure includes expenses for resettlement activities which in 2020 amounted to €12.2 million, of which: €11.8 million in Mozambique, €0.4 million in Ghana and
€0.004 million in Kazakhstan.
(62) Complaints made by an individual or a group of individuals relating to actual or perceived impacts caused by the Company’s operational activities.
Eni Annual Report 2020
170
SUSTAINABILITY MATERIAL TOPICS
Each year, to identify the relevant issues for the Strategic Plan
and sustainability report, the materiality analysis is updated.
The material aspects include the priority issues relevant to
all of Eni's major stakeholders, whether external or internal,
through the multi-stakeholder approach and identify the key
challenges and opportunities of the entire chain of activities
for creating value in the long term.
Identification of relevant aspects
The analysis has been updated from last year’s material as-
pects to which the priorities reported by ESMA63 on non-finan-
cial reporting have been added.
Analysis of internal and external priorities
The materiality of the topics identified is determined based on
the priority analyses:
the relevance of stakeholders and their requests, mapped
and weighed both through a dedicated platform (Stakehold-
er Management System - SMS), which supports the man-
agement of relations with local stakeholders, and through
interviews with the departments responsible for managing
relations with specific stakeholders at central level on an on-
going basis throughout the year, through meetings, consul-
tations, initiatives, workshops, etc.;
the ESG risks resulting from the Integrated Risk Manage-
ment (IRM) process, which also takes into account the ev-
idences provided by external providers, including RepRisk64.
These risks are assessed considering also potential environ-
mental, social, health and safety and reputational impacts;
the scenario elements – determined based on the topics
that were addressed during the Sustainability and Scenario
Committee (SSC) meetings in 2020.
The combination of these analyses allows for the inclusion of
priority issues for both relevant stakeholders and the Company
itself.
Sharing and validation with the governing body
The management involved in the non-financial reporting pro-
cess validated the material aspects, which, in turn, were pre-
sented to the SSC and the Board of Directors, together with
the relevant analysis.
Below are the 2020 material topics associated with the SDGs
on which Eni's activities have a direct or indirect impact.
2020 MATERIAL TOPICS
CARBON NEUTRALITY BY 2050
COMBATING
CLIMATE CHANGE
OPERATIONAL EXCELLENCE
PEOPLE
HEALTH
SAFETY
ENVIRONMENT
HUMAN RIGHTS
GHG emissions, Promotion of natural gas,
Renewables, Biofuels and Green Chemistry,
CO2 storage solutions
SDGs
7 - 9 - 12 - 13 - 15 - 17
Employment, Diversity
& Inclusion and Training
Health emergency management
Occupational health and local communities’ health
People safety and asset integrity
4 - 5 - 8 - 10
3 - 6 - 8
3 - 8
Water resources, biodiversity, oil spill, air quality, remediation and waste
3 - 6 - 9 - 11 -12 - 14 - 15
Rights of workers and local communities
Supply chain and Security
1 - 4 - 8 - 10 - 16 - 17
INTEGRITY IN BUSINESS MANAGEMENT
Transparency and Anti-Corruption
ALLIANCES FOR DEVELOPMENT
ACCESS TO ENERGY
LOCAL DEVELOPMENT THROUGH
PUBLIC-PRIVATE PARTNERSHIPS
Access to energy
Economic diversification; Education and Training;
Access to water and sanitation; Health; Protection
and conservation of forests and land protection;
Public Private Partnership:
Health emergency support
16 - 17
7 - 17
1- 2 - 3 - 4 - 5 - 6 - 7
8 - 9 - 10 - 13 - 15 - 17
LOCAL CONTENT
Business and added value created in countries of presence
4 - 8 - 9
DIGITALIZATION, INNOVATION
AND CYBER SECURITY
7 - 9 - 12 - 13 - 17
(63) ESMA, the European Securities and Markets Authority, is the EU body with the role of safeguarding the stability of the EU's financial system and issued a public state-
ment last 28th of October including also priorities related to non-financial reporting.
(64) RepRisk is a provider for the materiality analysis of ESG risks related to companies, industries, Countries and topics, whose calculation model is based on the collec-
tion and classification of information (i.e., “risk incidents”) from media, other stakeholders and public sources external to companies.
Management report | Consolidated financial statements | Annex 171
REPORTING PRINCIPLES AND CRITERIA
Standards, guidelines and recommendations. The Consoli-
dated Non-Financial Information was prepared in accordance
with the Legislative Decree 254/2016 transposing the Euro-
pean Directive on Non-Financial Information, and the “Sus-
tainability Reporting Standards”, published by the Global Re-
porting Initiative (GRI Standards), with a level of adherence “in
accordance Core” and has been subject to a limited review by
the independent Company, which is also the auditor of Eni’s
Annual Report as of December 31, 2020. All GRI's indicators
in the Content Index refer to the version of the GRI Standards
published in 2016, with the exception of those of: (i) “Stand-
ard 403: Occupational Health and Safety”, (ii) “Standard 303:
Water and Effluents” – which refer to the 2018 edition – and
(iii) “Standard 207: Tax” of 2019. In addition, the recommen-
dations reported by ESMA on non-financial statements as
well as the set of core metrics defined by WEF in the Sep-
tember 2020 White Paper “Measuring Stakeholder Capitalism
- Towards Common Metrics and Consistent Reporting of Sus-
tainable Value Creation” were taken into account in drafting
the document.
Key Performance Indicators. KPIs are selected based on the
the topics identified as most significant, are collected on an
annual basis according to the consolidation scope of the refer-
ence year and refer to the period 2018-2020. In general, trends
in data and performance indicators are also calculated using
decimal places not shown in the document. The data for the
year 2020 are the best possible estimate with the data availa-
ble at the time of preparation of this report. In addition, some
data published in previous years may be subject to restate-
ment in this edition for one of the following reasons: refine-
ment/change in estimation or calculation methods, significant
changes in the consolidation scope, or if significant updated
information becomes available. If a restatement is made, the
reasons for it are appropriately disclosed in the text. Most of
the KPIs presented are collected and aggregated automatically
through the use of specific Company software.
Boundary. The boundary of the key performance indicators is
aligned with the objectives set by the Company and represents
the potential impact of the activities Eni manages. In particular,
for KPIs relating to safety, the environment and climate, the
boundary is made up of companies with HSE impacts65 and
includes: (i) companies in joint operations, jointly controlled
or associated companies in which Eni has control over oper-
ations and (ii) Eni's subsidiaries with HSE risk66. With regard to
health, the data consider the companies with health impacts
and companies under joint operation or joint control or as-
sociates in which Eni has the control of the operations (with
the sole exception of data relating to occupational illness re-
ports, which refer to fully consolidated companies only). The
boundary of data relating to anti-corruption training, local de-
velopment investments and the number of Countries in which
Eni supports EITI relates to the reporting companies in which
these activities are conducted. The boundary of data referred
to whistleblowing reports relate to Eni SpA and its subsidiar-
ies. The boundary of data referred to audit actions on risk of
corruption activities relate to: Eni SpA, subsidiaries controlled
directly and indirectly (excluding listed subsidiaries that have
their own internal audit department), associated companies,
and based on specific agreements third parties deemed to
have a higher risk, as provided for under the contracts entered
with Eni. Comments on performance relate to these bound-
aries. In addition to these Key Performance Indicators, there
is an additional view only for 2020 where the data of the fully
consolidated companies are presented. Finally, the indicators
relating to people, human rights and suppliers refer to the data
of fully consolidated companies.
(65) In addition to fully consolidated companies, the boundary includes the following non fully consolidated companies: Agiba Petroleum Co; Cardón IV SA; Costiero
Gas Livorno SpA; Esacontrol SA; Eni Abu Dhabi Refining & Trading Services BV; Eni Gas Transport Services Srl; Eni Iran BV; Eni Ukraine LLC; EniProgetti Egypt Ltd;
Groupment Sonatrach-Agip; Industria Siciliana Acido Fosforico - ISAF - SpA - in liquidation; Karachaganak Petroleum Operating BV; Mellitah Oil & Gas BV; Mozambique
Rovuma Venture SpA; Oleodotto del Reno SA; OOO ''Eni-Nefto''; Olèoduc du Rhone SA; Petrobel Belayim Petroleum Co; Servizi Fondo Bombole Metano SpA; Società
EniPower Ferrara Srl; Société Energies Renouvelables Eni-ETAP SA; Tecnoesa SA; Versalis Pacific (India) Private Limited; Vår Energi AS.
(66) Based on the type of activity performed and the number of employees, Eni SpA subsidiaries with HSE impacts (significant and limited) are included in the scope
of consolidation, while those with no HSE impacts are excluded.
Eni Annual Report 2020 172
KPI
CLIMATE CHANGE
GHG
EMISSIONS
METHODOLOGY
Scope 1: direct GHG emissions are those deriving from sourcaes associated to the Company's assets (e.g. combustion, flaring,
fugitive and venting), and include CO2, CH4 e N2O; the Global Warming Potential used for conversion into CO2 equivalent is 25 for
CH4 and 298 for N2O. Contributions of biogenic CO2 emissions are not included.
Scope 2: are the indirect GHG emissions related to the generation of electricity, steam and heat purchased from third parties.
Scope 3: indirect GHG emissions associated with the value chain of Eni’s products, which involve an analysis by category of
activity. In the Oil and Gas sector, the most significant category is that related to the use of energy products (end-use), which Eni
calculates according to internationally consolidated methodologies (GHG Protocol and IPIECA), based on upstream production.
EMISSION
INTENSITY
Indicators consider the direct GHG emissions (Scope 1) related to assets operated by Eni, which include CO2, CH4 e N2O,
accounted for on a 100% basis.
Upstream: indicator focused on emissions associated to development and production of hydrocarbons. Denominator
refers to gross operated production.
R&M: indicator focused on emissions related to traditional and biorefineries. Denominator refers to refinery throughputs
(raw and semi-finished materials).
EniPower: indicator focused on emissions related to electricity and steam production of thermoelectric plants.
Denominator refers to equivalent electricity produced (excluding Bolgiano cogeneration plant).
The indicator represents GHG emissions (Scope 1 and Scope 2 in tonCO2eq.) of the main industrial activities operated by Eni
divided by the productions (converted by homogeneity into barrels of oil equivalent using Eni’s average conversion factors)
of the single businesses of reference, thus measuring their degree of operating efficiency in a decarbonization scenario. In
particular, the following specifications apply:
Upstream: includes the hydrocarbon production and electricity plants;
R&M: inckudes only refiniries;
Chemicals: includes all plants;
EniPower: includes thermoelectric plants except for Bolgiano cogeneration plant.
Differently from the other emission intensity indicators, which refer to single businesses and consider only GHG Scope 1
emissions, the operating efficiency index effectively measures Eni’s commitment for reducing its GHG emission intensity by
including also Scope 2 emissions.
The refining energy intensity index represents the total amount of energy actually used in the reference year among the
various refinery processing plants, divided by the corresponding value of preset standard consumption values for each
processing plant. To allow comparison over the years, 2009 data is taken as a reference (100%). For other sectors, the index
represents the ratio between significant energy consumption associated to operated plants and the related production.
The indicator considers GHG Scope 1+2 emissions associated to hydrocarbons development and production activities,
operated by Eni and by third parties, accounted for on an equity basis (Revenue Interest), net of annulments from forestry
credits occurred in the reference reporting year.
The indicator refers to GHG Scope 1+2+3 emissions associated with the value chain of the energy products sold by Eni,
including both those deriving from own productions and those purchased from third parties, accounted for on an equity
basis, net of offset. Differently from Scope 3 end-use emissions, which Eni reports based on upstream production, the Net
GHG Lifecycle Emissions indicator considers a much wider perimeter, including Scope 1, 2 and Scope 3 emissions referred to
the whole value chain of energy products sold by Eni, thus including Scope 3 end-use emissions associated to gas purchased
by third parties and petroleum products sold by Eni.
The indicator, accounted for on an equity basis, is defined as the ratio between Net GHG Lifecycle Emissions (see Net GHG
Lifecycle Emissions definition) and the energy content of the products sold by Eni.
The indicator is measured as the maximun generating capacity of Eni’s share power plants that use renewable energy
sources (wind, solar and wave, and any other non-fossil fuel source of generation deriving from natural resources,
excluding, from the avoidance of doubt, nuclear energy) to produce electricity. The capacity is considered “installed”
once the power plants are in operation or the mechanical completion phase has been reached. The mechanical
completion represents the final construction stage excluding the grid connection.
CARBON
EFFICIENCY
ENERGY
INTENSITY
NET CARBON
FOOTPRINT
USPTREAM
NET GHG
LIFECYCLE
EMISSIONS
NET CARBON
INTENSITY
RENEWABLE
INSTALLED
CAPACITY
PEOPLE, HEALTH AND SAFETY
INDUSTRIAL
RELATIONS
Regarding industrial relations, the minimum notice period for operational changes is in line with the provisions of the laws in
force and the trade union agreements signed in the Countries in which Eni operates.
Employees covered by collective bargaining: are those employees whose employment relationship is governed by collective
agreements or contracts, whether national, industry, Company or site. This is the only KPI dedicated to people that considers
role-based employees (Company with which the employee enters into the employment contract). All others, including
indicators on training, are calculated according to the utilisation method (Company where the work is actually done). It should
be noted that, using this second method, the two aspects (role companies and service) could coincide.
SENIORITY
Average number of years worked by employees at Eni and its subsidiaries.
TRAINING
HOURS
Hours provided to Eni's employees through training courses managed and carried out by Eni Corporate University (classroom
and remote) and through activities carried out by the organizational units of Eni's Business areas/Companies independently,
also through on-the-job training. Average training hours are calculated as total training hours divided by the average number
of employees in the year.
LOCAL SENIOR AND
MIDDLE MANAGERS
ABROAD
Number of local senior managers + middle managers (employees born in the Country in which their main working activity is
based) divided by total employment abroad.
Management report | Consolidated financial statements | Annex 173
KPI
METHODOLOGY
TURNOVER RATE
Ratio between the number of new hires + resolutions of permanent contracts and permanent employment for the previous year.
SAFETY
Eni uses a large number of contractors to carry out the activities within its own sites.
TRIR: total recordable injury rate (injuries leading to days of absence, medical treatments and cases of work
limitations). Numerator: number of total recordable injuries; denominator: hours worked in the same period. Result of
the ratio multiplied by 1,000,000.
High-consequence work-related injuries rate: injuries at work with days of absence exceeding 180 days or resulting
in total or permanent disability. Numerator: number of injuries at work with serious consequences; denominator: hours
worked in the same period. Result of the ratio multiplied by 1,000,000.
Near miss: an incidental event, the origin, execution and potential effect of which is accidental in nature, but which
is however different from an accident only in that the result has not proved damaging, due to luck or favourable
circumstances, or to the mitigating intervention of technical and/or organizational protection systems. Accidental
events that do not turn into accidents or injuries are therefore considered to be near misses.
The main hazards detected in 2020 in Eni concern:
HGV maneuvers;
Load lifting;
Energized systems, in particular equipment containing high/low temperature fluids, exposed electrical parts or moving
mechanical parts, the latter related to parts of drilling or cutting equipment.
HEALTH
Number of occupational disease claims filed by heirs: indicator used as a proxy for the number of deaths due to
occupational diseases.
Recordable cases of occupational diseases: number of occupational disease reports.
Main types of diseases: reports of suspected occupational disease made known to the employer concern pathologies
that may have a causal connection with the risk at work, as they may have been contracted in the course of work and
due to prolonged exposure to risk agents present in the workplace. The risk may be caused by the processing carried out,
or by the environment in which the processing takes place. The main risk agents whose prolonged exposure may lead
to an occupational disease are: (i) chemical agents (example of disease: neoplasms, respiratory system diseases, blood
diseases); (ii) biological agents (example of disease: malaria); (iii) physical agents (example of disease: hearing loss).
ENVIRONMENT
WATER
RESOURCES
Water withdrawals: sum of sea water, freshwater, and brackish water from subsoil or surface withdrawn. TAF
(groundwater treatment plant) water represents the amount of polluted groundwater treated and reused in the
production cycle. The limit for freshwater, which is more conservative than that indicated by the GRI reference standard
(equal to 1,000 ppm), is 2,000 ppm TDS, as provided in the IPIECA/API/IOGP 2020 guidance.
Water discharges: The internal procedures relating to the operational management of water discharges regulate the
control of the minimum quality standards and the authorization limits prescribed for each operational site, ensuring that
they are respected and promptly resolved if they are exceeded.
BIODIVERSITY
Number of sites overlapping with protected areas and Key Biodiversity Areas (KBAs): R&M, Versalis and EniPower
operational sites and pipelines in Italy and abroad, which are located within (or partially within) the boundaries of one or
more protected areas or KBAs (December of each reference year).
Number of sites adjacent to protected areas or Key Biodiversity Areas (KBAs): R&M, Versalis and EniPower
operational sites in Italy and abroad which, although outside the boundaries of protected areas or KBA, are less than 1
km away (December of each reference year).
Number of upstream concessions overlapping protected areas and Key Biodiversity Areas (KBAs), with activities
in the overlapping area: active national and international concessions, operated, under development or in production,
present in the Company's databases in June of each reference year that overlap one or more protected areas or
KBAs, where development/production operations (wells, sealines, pipelines and onshore and offshore installations as
documented in the Company's GIS geodatabase) are located within the intersection area.
Number of upstream concessions overlapping protected areas or Key Biodiversity Areas (KBAs), without activities
in the overlapping area: active national and international concessions, operated, under development or in production,
present in the Company's databases in June of each reference year that overlap one or more protected areas or
KBAs, where development/production operations (wells, sealines, pipelines and onshore and offshore installations as
documented in the Company's GIS geodatabase) are located outside the intersection area.
The sources used for the census of protected areas and KBAs are the "World Database on Protected Areas" and the
"World Database of Key Biodiversity Areas" respectively; the data was made available to Eni in the framework of its
membership in the UNEP-WCMC Proteus Partnership. There are some limitations to consider when interpreting the
results of this analysis:
˛ it is globally recognized that there is an overlap between the different databases of protected areas and KBAs, which may
have led to a certain degree of duplication in the analysis (some protected areas/KBAs could be counted several times);
˛ the databases of protected or key biodiversity areas used for the analysis, while representing the most up-to-date
information available at global level, may not be complete for each Country.
SPILL
Spills from primary or secondary containment into the environment of oil or petroleum derivative from refining or oil
waste occurring during operation or as a result of sabotage, theft or vandalism. Specifically, in 2020, volumes spilled by
operational spill impacted 95% soil and 5% water body, those due to sabotage impacted 93% soil and 7% water body.
WASTE
Waste from production: waste from production activities, including waste from drilling activities and construction sites.
Waste from remediation activities: this includes waste from soil securing and remediation activities, demolition and
groundwater classified as waste. The waste disposal method is communicated to Eni by the third party authorised for
disposal.
Eni Annual Report 2020 174
KPI
METHODOLOGY
AIR PROTECTION
NOx: total direct emissions of nitrogen oxide due to combustion processes with air. It includes emissions of NOx from
flaring activities, sulphur recovery processes, FCC regeneration, etc. It includes emissions of NOx and NO2, excludes N2O.
SOx: total direct emissions of sulphur oxides, including emissions of SO2 and SO3.
NMVOC: total direct emissions of hydrocarbons, hydrocarbon substitutes and oxygenated hydrocarbons that evaporate
at normal temperature. They include LPG and exclude methane.
PST: direct emissions of Total Suspended Particulates, finely divided solid or liquid material suspended in gaseous
flows. Standard emission factors.
HUMAN RIGHTS
SECURITY
CONTRACTS
WITH HUMAN
RIGHTS CLAUSES
WHISTLEBLOWING
REPORTS
SUPPLIERS
SUPPLIERS
SUBJECTED
TO ASSESSMENT
NEW SUPPLIERS
ASSESSED
ACCORDING TO
SOCIAL CRITERIA
The indicator "percentage of security contracts with human rights clauses" is obtained by calculating the ratio between
the "Number of security and security porter contracts with human rights clauses" and the "Total number of security and
security porter contracts".
The indicator refers to the reporting files relating to Eni SpA and its subsidiaries, closed during the year and relating
to Human Rights; of the files thus identified, the number of separate claims is reported as a result of the investigation
conducted on the facts reported founded, not founded with adoption of improvement actions and not founded/not
applicable.
The indicator refers to the processes managed by the companies in the boundary; it represents all the suppliers subject
to Due Diligence or subject to a qualification process or subject to a performance assessment feedback on HSE or
Compliance or commercial conduct or subject to a feedback process or subject to an assessment on human rights issues
(based on the SA 8000 standard or similar certification). The indicator therefore refers to all suppliers for which Vendor
Management activities are centralized in Eni SpA (i.e. all Italian, mega and international suppliers) and to local suppliers of
Eni Ghana, Eni Pakistan, Eni US and Eni Angola, Eni México S. de RL de CV and IEOC.
This indicator is included in the "Suppliers subject to assessment" indicator and represents all new suppliers subjected
to a new qualification process.
TRANSPARENCY, ANTI-CORRUPTION AND TAX STRATEGY
Country-
BY-Country REPORT
The disclosure relating to the Country-by-Country report is covered by means of a reference to the last published
document (generally the financial year preceding the NFI reporting year) in line with the provisions of the relevant GRI
standard (207-4).
ANTI-CORRUPTION
TRAINING
E-learning for resources in a context at medium/high risk of corruption.
E-learning for resources in a context at low risk of corruption.
Generale workshop: classroom training events for staff in a context at high risk of corruption.
Job specific training: classroom training events for professional areas in a context at risk of corruption.
LOCAL DEVELOPMENT
LOCAL
DEVELOPMENT
INVESTMENTS
The indicator refers to the Eni share of spending in local development initiatives carried out by Eni in favour of local
communities to promote the improvement of the quality of life and sustainable socio-economic development of
communities in operational contexts.
SPENDING
TO LOCAL
SUPPLIERS
The indicator refers to the 2020 share of expenditure to local suppliers. "Spending to local suppliers" has been defined
according to the following alternative methods on the basis of the specific characteristics of the Countries analyzed: 1)
"Equity method" (Ghana): the share of expenditure towards local suppliers is determined on the basis of the percentage
of ownership of the corporate structure (e.g. for a Joint Venture with 60% local components, 60% of total expenditure
towards the Joint Venture is considered as expenditure towards local suppliers); 2) "Local currency method" (Angola
and UK): the share paid in local currency is identified as expenditure towards local suppliers; 3) "Country registration
method" (Iraq and Nigeria): the expenditure towards suppliers registered in the Country and not belonging to
international groups/mega suppliers (e.g. suppliers of drilling services/auxiliary drilling services) is identified as local; 4)
"Method of registration in the Country + local currency" (Congo and Mexico): expenditure towards suppliers registered in
the Country and not belonging to international groups/mega suppliers (e.g. suppliers of drilling services) is identified as
local. For the latter, spending in local currency is considered to be local.
The selected Countries are Ghana, Angola, UK, Iraq, Nigeria, Congo and Mexico. The Countries selected are those most
representative for Eni business from a strategic point of view and in which a significant component of expenditure was
recorded compared to the total spent by the Eni Group.
Management report | Consolidated financial statements | Annex CONTENT INDEX
Material
Aspect/
GRI
Disclosure Description/GRI Disclosure
ORGANIZATIONAL PROFILE
Section and/or
page number
Omission
WEF - Core themes
and metrics
175
102-1
102-2
102-3
102-4
102-5
102-6
102-7
102-8
Name of the organization
Annual Report 2020, p. 1
Activities, brands, products,
and services
Annual Report 2020, pp. 2-3
Location of headquarters
Annual Report 2020, back cover
Location of operations
Annual Report 2020, p. 2
Ownership and legal form
Annual Report 2020, back cover
https://www.eni.com/en-IT/about-us/governance/shareholders.html
Markets served
Annual Report 2020, pp. 2-3
Scale of the organization
Annual Report 2020, pp. 14-17
Information on employees
and other workers
NFI, pp. 153-155; 172-173
102-9
Supply chain
NFI, p. 165
102-10
Significant changes to the
organization and its supply chain
Annual Report 2020, pp. 198-200; 369
102-11
Precautionary Principle or approach
Annual Report 2020, pp. 26-31
102-12
External initiatives
Annual Report 2020, pp. 18-19
102-13
Membership of associations
Annual Report 2020, pp. 18-19
STRATEGY
102-14
Statement from senior decision-
maker
Annual Report 2020, pp. 8-13
102-15
Key impacts, risks, and opportunities
Annual Report 2020, pp. 26-31; 114-134
Risk and opportunity oversight -
Integrating risk and opportunity
into business process
ETHICS AND INTEGRITY
102-16
Values, principles, standards,
and norms of behavior
Annual Report 2020, pp. 4-7; 38-39
Governing purpose - Setting purpose
NFI, page pp. 138; 140
Ethical behaviour - Protected ethics
advice and reporting mechanisms
(see also p. 166)
GOVERNANCE
102-18
Governance structure
Annual Report 2020, pp. 32-39
STAKEHOLDER ENGAGEMENT
102-40
List of stakeholders groups
Annual Report 2020, pp. 18-19
102-41
Collective bargaining agreements
NFI, pp. 155; 172
102-42
Identifying and selecting stakeholders Annual Report 2020, pp. 18-19
102-43
Approach to stakeholder engagement Annual Report 2020, pp. 18-19
102-44
Key topics and concerns raised
Annual Report 2020, pp. 18-19
REPORTING PRACTICE
102-45
Entities included in the consolidated
financial statements
Annual Report 2020, pp. 334-369
102-46
Defining report content and topic
Boundaries
NFI, p. 171
NFI, pp. 171; 176-178
102-47
List of material topics
NFI, pp. 170; 176-178
102-48
Restatements of information
NFI, 149-150; 161
102-49
Changes in reporting
NFI, pp. 170-171; 176-178
102-50
Reporting period
NFI, p. 171
102-51
Date of most recent report
https://www.eni.com/en-IT/publications/2019.html
102-52
Reporting cycle
NFI, p. 171
Stakeholder engagement - Material
issues impacting stakeholders
Stakeholder engagement - Material
issues impacting stakeholders
Eni Annual Report 2020 176
Material
Aspect/
GRI
Disclosure Description/GRI Disclosure
Section and/or
page number
102-53
Contact point for questions regarding
the report
https://www.eni.com/en-IT/just-transition.html
102-
54/102-55
Claims of reporting in accordance
with the GRI Standards and content
index
NFI, pp. 171; 175-178
102-56
External assurance
NFI, pp. 179-181
Omission
WEF - Core themes
and metrics
COUNTER CLIMATE CHANGE
GHG Emissions, Promotion of natural gas, Renewables, Biofuels and Green Chemistry, Solutions for the storage of CO2
Economic performance - Management approach
(103-1; 103-2; 103-3)
201-2
Financial implications
and other risks and opportunities
due to climate change
Emissions - Management approach
(103-1; 103-2; 103-3)
Boundary: external and internal
(Suppliers - RNES1, customers RNEC2)
NFI, pp. 140-141; 144; 170; 176
Annual Report 2020 , pp. 29; 129-132
NFI, pp. 144-150
Boundary: external and internal
(Suppliers - RNES1, customers RNEC2)
NFI, pp. 140-141; 144-150; 170; 172; 176
305-1
305-2
305-3
305-4
305-7
Direct GHG emissions (Scope 1)
NFI, pp. 148-150; 172
Greenhouse gas emissions from
energy consumption (Scope 2)
NFI, pp. 148-150; 172
Other indirect GHG emissions (Scope
3)
NFI, pp. 148-150; 172
GHG emission intensity
NFI, pp. 148-150; 172
Nitrogen oxides (NOX), sulfur oxides
(SOX), and other significant air
emissions
NFI, pp. 159-161; 174
Energy - Management approach
(103-1; 103-2; 103-3)
Boundary: internal
NFI, pp. 140-141; 144-150; 170; 172; 176
302-3
Energy intensity
NFI, pp. 148-150; 172
PEOPLE
Employment, diversity and inclusion, Training, Occupational health and local communities health
Market presence - Management approach
(103-1; 103-2; 103-3)
Boundary: internal
NFI, pp. 140-141; 151-155; 170; 172; 176
202-2
Proportion of senior management
hired from the local community
NFI, pp. 153-155; 172
Employment - Management approach
(103-1; 103-2; 103-3)
Boundary: internal
NFI, pp. 140-141; 151-155; 170; 172-173; 176
401-1
New employee hires
and employee turnover
NFI, pp. 153-155; 173
Occupational health and safety - Management
approach (103-1; 103-2; 103-3; 403-1; 403-2; 403-4;
403-5; 403-7)
Boundary: internal
NFI, pp. 140-141; 151-155; 170; 173; 176
403-10
Work-related ill health
NFI, pp. 153-155; 173
Training and education - Management approach
(103-1; 103-2; 103-3)
Boundary: internal
NFI, pp. 140-141; 151-155; 170; 172; 176
404-1
Average hours of training
per year per employee
NFI, pp. 153-155; 172
Diversity and equal opportunity - Management
approach (103-1; 103-2; 103-3)
Boundary: internal
NFI, pp. 140-141; 151-155; 170; 176
405-1
Diversity of governance bodies
and employees
NFI, pp. 153-155
Climate change - TCFD
implementation
Climate change - Greenhouse gas
(GHG) emissions
Employment and wealth generation -
Absolute number and rate
of employment
Skills for the future - Training
provided
Dignity and equality - Pay equality
Report on remuneration policy
and remuneration paid 2021, p. 12
Dignity and equality - Wage level
Report on remuneration policy
and remuneration paid 2021, p. 13
Quality of governing body -
Governance body composition
Corporate Governance and Shareholding Structure Report
2020, Board of Directors
Dignity and equality - Diversity
and inclusion
Management report | Consolidated financial statements | Annex
Material
Aspect/
GRI
Disclosure Description/GRI Disclosure
SAFETY
People safety and asset integrity
Section and/or
page number
Omission
WEF - Core themes
and metrics
177
Occupational health and safety - Management
approach (103-1; 103-2; 103-3; 403-1; 403-2; 403-3;
403-4; 403-5; 403-6; 403-7)
Boundary: internal and external (suppliers)
NFI, pp. 140-141; 156-157; 170; 173; 177
403-9
Work-related injuries
NFI, pp. 156-157; 173
REDUCTION OF ENVIRONMENTAL IMPACTS
Water resources, Biodiversity, Oil spill, Air quality, Remediation and waste
Water - Management approach
(103-1; 103-2; 103-3; 303-1; 303-2)
Boundary: internal
NFI, pp. 140-141; 157-161; 170; 173; 177
303-3
Water withdrawal
NFI, pp. 159-161; 173
303-4
Water discharge
NFI, pp. 159-161; 173
Biodiversity - Management approach
(103-1; 103-2; 103-3)
Boundary: internal
NFI, pp. 140-141; 157-162; 170; 173; 177
304-1
Operational sites owned, leased,
managed in, or adjacent to, protected
areas and areas of high biodiversity
value outside protected areas
NFI, pp. 159-162; 173
Effluents and waste - Management approach
(103-1; 103-2; 103-3)
Boundary: internal
NFI, pp. 140-141; 157-161; 170; 173; 177
306-2
306-3
Waste by type and disposal method
NFI, pp. 159-161; 173
Significant spills
NFI, pp. 159-161; 173
Environmental compliance - Management approach
(103-1; 103-2; 103-3)
Boundary: internal
NFI, pp. 140-141; 157-162; 170; 177
307-1
Environmental compliance
Annual Report 2020, pp. 264-279
HUMAN RIGHTS
Rights of workers and local communities, Supply chain and Security
Health and well-being - Health
and safety
Health and well-being - Health
and safety
Freshwater availability - Water
consumption and withdrawal in
water-stressed areas
Nature loss - Land use and
ecological sensitivity
Non-discrimination - Management approach
(103-1; 103-2; 103-3)
Boundary: internal and external
(Local security forces and Suppliers - RNES1)
NFI, pp. 140-141; 162-164; 170; 174; 177
Dignity and equality - Risk for
incidents of child, forced or
compulsory labour
406-1
Incidents of discrimination and
corrective actions taken
NFI, pp. 164; 174
Security practices - Management approach
(103-1; 103-2; 103-3)
Boundary: internal and external
(Local security forces and Suppliers - RNES1)
NFI, pp. 140-141; 162-164; 170; 174; 177
410-1
Security personnel trained in human
rights policies or procedures
NFI, pp. 164; 174
Human rights assessment - Management approach
(103-1; 103-2; 103-3)
Boundary: internal and external
(Local security forces and Suppliers - RNES1)
NFI, pp. 140-141; 162-164; 170; 177
412-2
Training on human rights
NFI, p. 164
Suppliers and social assessment - Management
approach (103-1; 103-2; 103-3)
Boundary: internal and external
(Local security forces and Suppliers - RNES1)
NFI, pp. 140-141; 165; 170; 174; 177
414-1
New suppliers that were screened
using social criteria
NFI, pp. 165; 174
Eni Annual Report 2020
178
Material
Aspect/
GRI
Disclosure Description/GRI Disclosure
INTEGRITY IN BUSINESS MANAGEMENT
Transparency, anti-corruption and tax strategy
Section and/or
page number
Omission
WEF - Core themes
and metrics
Anti-corruption - Management approach
(103-1; 103-2; 103-3)
Boundary: internal
NFI, pp. 140-141; 166-167; 170; 174; 178
205-2
205-3
Communication and training
on anti-corruption policies
and procedures
NFI, pp. 166-167; 174; 178
Confirmed incidents of corruption
and actions taken
NFI, p. 167
Tax - Management approach
(103-1; 103-2; 103-3; 207-1; 207-2; 207-3)
Boundary: internal
NFI, pp. 140-141; 166-167; 170; 174; 178
207-4
Tax: Country-by-Country reporting
NFI, pp. 166-167; 174. See Note 32 on the Consolidated
Financial Statements for further information.
ACCESS TO ENERGY, LOCAL DEVELOPMENT THROUGH PUBLIC-PRIVATE PARTNERSHIPS
Economic diversification, Education and training, Access to water and sanitation, Health
Indirect economic impacts - Management approach
(103-1; 103-2; 103-3)
Boundary: internal
NFI, pp. 140-141; 168-170; 174; 178
203-1
Infrastructure investments
and services supported
NFI, pp. 169; 174
Boundary: internal
Economic performance - Management approach
(103-1; 103-2; 103-3)
NFI, pp. 140-141; 170; 178
201-1
Direct economic value generated
and distributed
NFI, p. 178
Local communities - Management approach
(103-1; 103-2; 103-3)
Boundary: internal
NFI, pp. 140-141; 168-170; 178
413-1
Operations with local community
engagement, impact assessments,
and development programs
NFI, pp. 168-169
LOCAL CONTENT
Procurement practices - Management approach
(103-1; 103-2; 103-3)
204-1
Proportion of spending
on local suppliers
Boundary: internal and external
(suppliers - RNES1)
NFI, pp. 140-141; 168-170; 174; 178
NFI, pp. 168-169; 174
DIGITALIZATION, INNOVATION AND CYBER SECURITY
Technological development - Management
approach
(103-1; 103-2; 103-3)
Boundary: internal
NFI, pp. 140-141; 144-157; 178
(1) RNES: Reporting not extended to suppliers.
(2) RNEC: Reporting not extended to customers.
Ethical behaviour - Anti-corruption
Employment and wealth generation -
Financial investment contribution
In 2020, investments net of write-
downs amounted to €1,444 million
and share buy-backs plus dividend
payments amounted to €1,968
million
Community and social vitality - Total
tax paid
Eni paid €2,049 million in taxes in
2020.
Employment and wealth generation -
Economic contribution
1) In 2020, Eni generated an
economic value of €46 billion of
which €41 billion was distributed,
in particular: 81% are operating
costs, 7% wages and salaries for
employees, 7% payments to capital
suppliers, 5% payments to the Public
Administration.
2) Eni received approximately €84
million in financial assistance from
the Public Administration in 2020,
mainly abroad.
Innovation of better products
and services - Total R&D expenses
NFI, pp. 148-150
Management report | Consolidated financial statements | Annex Independent auditor's report
179
Independent auditor’s report on the consolidated non-
financial statement
pursuant to article 3, paragraph 10, of Legislative Decree No. 254/2016 and article 5
of CONSOB Regulation No. 20267 of January 2018
To the Board of Directors of Eni SpA
Pursuant to article 3, paragraph 10, of Legislative Decree No. 254 of 30 December 2016 (the “Decree”)
and article 5 of CONSOB Regulation No. 20267/2018, we have undertaken a limited assurance
engagement on the consolidated non-financial statement of Eni SpA and its subsidiaries (the “Group”)
for the year ended 31 December 2020 prepared in accordance with article 4 of the Decree, presented in
the specific section of the report on operations and approved by the board of directors on 18 March
2021 (the “NFS”).
Responsibilities of the Directors and the Board of Statutory Auditors for the NFS
The Directors are responsible for the preparation of the NFS in accordance with articles 3 and 4 of the
Decree and with the “Global Reporting Initiative Sustainability Reporting Standards” defined in 2016,
and updated to 2019, by the GRI - Global Reporting Initiative (the “GRI Standards”), disclosed in the
chapter “Reporting principles and criteria” of the NFS, identified by them as the reporting standard.
The Directors are also responsible, in the terms prescribed by law, for such internal control as they
determine is necessary to enable the preparation of a NFS that is free from material misstatement,
whether due to fraud or error.
Moreover, the Directors are responsible for identifying the content of the NFS, within the matters
mentioned in article 3, paragraph 1, of the Decree, considering the activities and characteristics of the
Group and to the extent necessary to ensure an understanding of the Group’s activities, its
performance, its results and related impacts.
Finally, the Directors are responsible for defining the business and organisational model of the Group
and, with reference to the matters identified and reported in the NFS, for the policies adopted by the
Group and for the identification and management of risks generated or faced by the Group.
The Board of Statutory Auditors is responsible for overseeing, in the terms prescribed by law,
compliance with the Decree.
180
Auditor’s Independence and Quality Control
We are independent in accordance with the principles of ethics and independence set out in the Code
of Ethics for Professional Accountants published by the International Ethics Standards Board for
Accountants, which are based on the fundamental principles of integrity, objectivity, competence and
professional diligence, confidentiality and professional behaviour. Our audit firm adopts International
Standard on Quality Control 1 (ISQC Italia 1) and, accordingly, maintains an overall quality control
system which includes processes and procedures for compliance with ethical and professional
principles and with applicable laws and regulations.
Auditor’s responsibilities
We are responsible for expressing a conclusion, on the basis of the work performed, regarding the
compliance of the NFS with the Decree and the GRI Standards. We conducted our work in accordance
with International Standard on Assurance Engagements 3000 (Revised) – Assurance Engagements
Other than Audits or Reviews of Historical Financial Information (“ISAE 3000 Revised”), issued by
the International Auditing and Assurance Standards Board (IAASB) for limited assurance
engagements. The standard requires that we plan and apply procedures in order to obtain limited
assurance that the NFS is free of material misstatement. The procedures performed in a limited
assurance engagement are less in scope than those performed in a reasonable assurance engagement
in accordance with ISAE 3000 Revised, and, therefore, do not provide us with a sufficient level of
assurance that we have become aware of all significant facts and circumstances that might be
identified in a reasonable assurance engagement.
The procedures performed on the NFS were based on our professional judgement and consisted in
interviews, primarily of company personnel responsible for the preparation of the information
presented in the NFS, analyses of documents, recalculations and other procedures designed to obtain
evidence considered useful.
In detail, we performed the following procedures:
1.
2.
3.
4.
analysis of the relevant matters reported in the NFS relating to the activities and characteristics
of the Group, in order to assess the reasonableness of the selection process used, in accordance
with article 3 of the Decree and with the reporting standard adopted;
analysis and assessment of the criteria used to identify the consolidation area, in order to assess
their compliance with the Decree;
comparison of the financial information reported in the NFS with the information reported in
the Group’s consolidated financial statements;
understanding of the following matters:
-
-
-
business and organisational model of the Group with reference to the management of the
matters specified by article 3 of the Decree;
policies adopted by the Group with reference to the matters specified in article 3 of the
Decree, actual results and related key performance indicators;
key risks generated or faced by the Group with reference to the matters specified in article
3 of the Decree.
With reference to those matters, we compared the information obtained with the information
presented in the NFS and carried out the procedures described under point 5 a) below;
2 of 3
181
5.
understanding of the processes underlying the preparation, collection and management of the
significant qualitative and quantitative information included in the NFS.
In detail, we held meetings and interviews with the management of Eni SpA and with the
personnel of Eni Mediterranea Idrocarburi SpA, Eni UK Limited and Versalis SpA and we
performed limited analyses of documentary evidence, to gather information about the processes
and procedures for the collection, consolidation, processing and submission of the non-financial
information to the function responsible for the preparation of the NFS.
Moreover, for material information, considering the activities and characteristics of the Group:
-
at holding level,
a) with reference to the qualitative information included in the NFS, and in particular
to the business model, the policies adopted and the main risks, we carried out
interviews and acquired supporting documentation to verify its consistency with
available evidence;
b) with reference to quantitative information, we performed analytical procedures as
well as limited tests, in order to assess, on a sample basis, the accuracy of
consolidation of the information;
-
for the sites of Eni SpA (Venice Refinery and Distretto Centro-Settentrionale – Centro
Olio Trecate), Eni Mediterranea Idrocarburi SpA (Nuovo Centro Olio Gela), Eni UK
Limited (Liverpool Bay Offshore Assets) and Versalis SpA (Porto Marghera Plant), which
were selected on the basis of their activities, their contribution to the performance
indicators at a consolidated level and their location, we carried out meetings and
interviews during which we met local management and gathered supporting
documentation regarding the correct application of the procedures and calculation
methods used for the key performance indicators.
Conclusion
Based on the work performed, nothing has come to our attention that causes us to believe that the NFS
of Eni Group for the year ended 31 December 2020 is not prepared, in all material respects, in
accordance with articles 3 and 4 of the Decree and with the GRI Standards.
Rome, 2 April 2021
PricewaterhouseCoopers SpA
Signed by
Signed by
Giovanni Andrea Toselli Paolo Bersani
(Partner) (Authorised signatory)
This report has been translated from the Italian original solely for the convenience of international
readers. We have not performed any controls on the NFS 2020 translation.
3 of 3
182
Other information
Acceptance of Italian responsible payments code
Coherently with Eni’s policy on transparency and accuracy in
managing its suppliers, Eni SpA adhered to the Italian respon-
sible payments code established by Assolombarda in 2014. In
2020, payments to Eni’s suppliers were made within 52 days, in
line with contractual provisions.
Article No. 15 (former Article No. 36) of Italian regulatory ex-
changes (Consob Resolution No. 20249 published on December
28, 2017). Continuing listing standards about issuers that control
subsidiaries incorporated or regulated in accordance with laws
of extra-EU Countries. Certain provisions have been enacted to
regulate continuing Italian listing standards of issuers controlling
subsidiaries that are incorporated or regulated in accordance with
laws of extra-EU Countries, also having a material impact on the
consolidated financial statements of the parent company. Regard-
ing the aforementioned provisions, the Company discloses that:
as of December 31, 2020, eight of Eni’s subsidiaries: NAOC
– Nigerian Agip Oil Co Ltd, Eni Petroleum Co Inc, Eni Congo
SA, Nigerian Agip Exploration Ltd, Eni Canada Holding Ltd, Eni
Ghana Exploration and Production Ltd, Eni Trading & Shipping
Inc, Eni Finance USA Inc;
the Company has already adopted adequate procedures to
ensure full compliance with the new regulations.
Rules for transparency and substantial and procedural fairness
of transactions with related parties
The rules for transparency and substantial and procedural fair-
ness of transactions with related parties adopted by the Com-
pany, in line with the Consob listing standards are available on
the Company’s website and in the Corporate Governance and
Shareholding Structure Report.
Branches
In accordance with Article No. 2428 of the Italian Civil Code, it
is hereby stated that Eni has the following branches:
San Donato Milanese (MI) - Via Emilia, 1;
San Donato Milanese (MI) - Piazza Vanoni, 1.
Subsequent events
Subsequent business developments are described in the operat-
ing review of each of Eni’s business segments.
Management report | Consolidated financial statements | Annex 183
Glossary
The glossary of oil and gas terms is available on Eni’s web page
at the address eni.com. Below is a selection of the most fre-
quently used terms.
Enhanced recovery Techniques used to increase or stretch
over time the production of wells.
2nd and 3rd generation feedstock Are feedstocks not in com-
petition with the food supply chain as the first generation feed-
stock (vegetable oils). Second generation are mostly agricultur-
al non-food and agro/urban waste (such as animal fats, used
cooking oils and agricultural waste) and the third generation
feedstocks are non-agricultural high innovation feedstocks
(deriving from algae or waste).
Average reserve life index Ratio between the amount of re-
serves at the end of the year and total production for the year.
Barrel/bbl Volume unit corresponding to 159 liters. A barrel of
oil corresponds to about 0.137 metric tonnes.
Boe (Barrel of Oil Equivalent) Is used as a standard unit meas-
ure for oil and natural gas. Effective January 1, 2019, Eni has
updated the conversion rate of gas produced to 5,310 cubic
feet of gas equals 1 barrel of oil.
Conversion Refinery process allowing the transformation of
heavy fractions into lighter fractions. Conversion processes
are cracking, visbreaking, coking, the gasification of refinery
residues, etc. The ration of overall treatment capacity of these
plants and that of primary crude fractioning plants is the con-
version rate of a refinery. Flexible refineries have higher rates
and higher profitability.
Elastomers (or Rubber) Polymers, either natural or synthetic,
which, unlike plastic, when stress is applied, return, to a certain
degree, to their original shape, once the stress ceases to be ap-
plied. The main synthetic elastomers are polybutadiene (BR),
styrene-butadiene rubber (SBR), ethylenepropylene rubber
(EPR), thermoplastic rubber (TPR) and nitrylic rubber (NBR).
Emissions of NOx (Nitrogen Oxides) Total direct emissions
of nitrogen oxides deriving from combustion processes in air.
They include NOx emissions from flaring activities, sulphur re-
covery processes, FCC regeneration, etc. They include NO and
NO2 emissions and exclude N2O emissions.
Emissions of SOx (Sulphur Oxides) Total direct emissions of
sulfur oxides including SO2 and SO3 emissions. Main sources
are combustion plants, diesel engines (including maritime en-
gines), gas flaring (if the gas contains H2S), sulphur recovery
processes, FCC regeneration, etc.
Eni carbon efficiency index Ratio between GHG emissions
(Scope 1 and Scope 2 in tonnes CO2eq.) of the main industrial
activities operated by Eni divided by the productions (converted
by homogeneity into barrels of oil equivalent using Eni’s average
conversion factors) of the single businesses of reference.
Green House Gases (GHG) Gases in the atmosphere, trans-
parent to solar radiation, that trap infrared radiation emitted
by the earth’s surface. The greenhouse gases relevant within
Eni’s activities are carbon dioxide (CO2), methane (CH4) and ni-
trous oxide (N2O). GHG emissions are commonly reported in
CO2 equivalent (CO2eq.) according to Global Warming Potential
values in line with IPCC AR4, 4th Assessment Report.
Infilling wells Infilling wells are wells drilled in a producing area
in order to improve the recovery of hydrocarbons from the field
and to maintain and/or increase production levels.
LNG Liquefied Natural Gas obtained through the cooling of nat-
ural gas to minus 160°C at normal pressure. The gas is lique-
fied to allow transportation from the place of extraction to the
sites at which it is transformed and consumed. One ton of LNG
corresponds to 1,400 cubic meters of gas.
LPG Liquefied Petroleum Gas, a mix of light petroleum frac-
tions, gaseous at normal pressure and easily liquefied at room
temperature through limited compression.
Mineral Potential (potentially recoverable hydrocarbon
volumes) Estimated recoverable volumes which cannot be
defined as reserves due to a number of reasons, such as
the temporary lack of viable markets, a possible commer-
cial recovery dependent on the development of new tech-
nologies, or for their location in accumulations yet to be
developed or where evaluation of known accumulations is
still at an early stage.
Natural gas liquids Liquid or liquefied hydrocarbons recovered
from natural gas through separation equipment or natural gas
treatment plants. Propane, normal-butane and isobutane, iso-
pentane and pentane plus, that used to be defined natural gas-
oline, are natural gas liquids.
Net Carbon Footprint Overall Scope 1 and Scope 2 GHG emis-
sions associated with Eni’s operations, accounted for on an
equity basis, net of carbon sinks.
Eni Annual Report 2020 184
Net Carbon Intensity Ratio between the Net GHG lifecycle
emissions and the energy products sold, accounted for on an
equity basis.
the operator must be reasonably certain that it will commence
the project within a reasonable time.
Net GHG Lifecycle Emissions GHG Scope 1+2+3 emissions as-
sociated with the value chain of the energy products sold by Eni,
including both those deriving from own productions and those
purchased from third parties, accounted for on an equity basis,
net of offset.
Oil spills Discharge of oil or oil products from refining or oil
waste occurring in the normal course of operations (when ac-
cidental) or deriving from actions intended to hinder operations
of business units or from sabotage by organized groups (when
due to sabotage or terrorism).
Olefins (or Alkenes) Hydrocarbons that are particularly active
chemically, used for this reason as raw materials in the synthe-
sis of intermediate products and of polymers.
Over/underlifting Agreements stipulated between partners
regulate the right of each to its share in the production of a set
period of time. Amounts different from the agreed ones deter-
mine temporary over/underlifting situations.
Plasmix The collective name for the different plastics that cur-
rently have no use in the market of recycling and can be used
as a feedstock in the new circular economy businesses of Eni.
Production Sharing Agreement (PSA) Contract in use in African,
Middle Eastern, Far Eastern and Latin American Countries, among
others, regulating relationships between states and oil companies
with regard to the exploration and production of hydrocarbons. The
mineral right is awarded to the national oil company jointly with the
foreign oil company that has an exclusive right to perform explo-
ration, development and production activities and can enter into
agreements with other local or international entities. In this type
of contract, the national oil company assigns to the international
contractor the task of performing exploration and production with
the contractor’s equipment and financial resources. Exploration
risks are borne by the contractor and production is divided into two
portions: “cost oil” is used to recover costs borne by the contractor
and “profit oil” is divided between the contractor and the national
company according to variable schemes and represents the profit
deriving from exploration and production. Further terms and condi-
tions of these contracts may vary from Country to Country.
Proved reserves Proved oil and gas reserves are those quan-
tities of oil and gas, which, by analysis of geoscience and en-
gineering data, can be estimated with reasonable certainty to
be economically producible from a given date forward, from
known reservoirs, and under existing economic conditions. The
project to extract the hydrocarbons must have commenced or
Renewable Installed Capacity Is measured as the maximun
generating capacity of Eni’s share of power plants that use
renewable energy sources (wind, solar and wave, and any
other non-fossil fuel source of generation deriving from nat-
ural resources, excluding, from the avoidance of doubt, nu-
clear energy) to produce electricity. The capacity is consid-
ered “installed” once the power plants are in operation or the
mechanical completion phase has been reached. The me-
chanical completion represents the final construction stage
excluding the grid connection.
Reserves Quantities of oil and gas and related substances an-
ticipated to be economically producible, as of a given date, by
application of development projects to known accumulations.
In addition, there must exist, or there must be a reasonable ex-
pectation that will exist, the legal right to produce or a revenue
interest in the production, installed means of delivering oil and
gas or related substances to market, and all permits and financ-
ing required to implement the project. Reserves can be: (i) devel-
oped reserves quantities of oil and gas anticipated to be through
installed extraction equipment and infrastructure operational at
the time of the reserves estimate; (ii) undeveloped reserves: oil
and gas expected to be recovered from new wells, facilities and
operating methods.
Scope 1 GHG Emissions Direct greenhouse gas emissions
from company’s operations, produced from sources that are
owned or controlled by the company.
Scope 2 GHG Emissions Indirect greenhouse gas emissions
resulting from the generation of electricity, steam and heat pur-
chased from third parties.
Scope 3 GHG Emissions Indirect GHG emissions associated
with the value chain of Eni’s products.
Ship-or-pay Clause included in natural gas transportation con-
tracts according to which the customer for which the transpor-
tation is carried out is bound to pay for the transportation of
the gas also in case the gas is not transported.
Take-or-pay Clause included in natural gas purchase contracts
according to which the purchaser is bound to pay the contrac-
tual price or a fraction of such price for a minimum quantity of
the gas set in the contract also in case it is not collected by the
customer. The customer has the option of collecting the gas
paid and not delivered at a price equal to the residual fraction
of the price set in the contract in subsequent contract years.
UN SDGs The Sustainable Development Goals (SDGs) are the
Management report | Consolidated financial statements | Annex 185
blueprint to achieve a better and more sustainable future for
all by 2030. Adopted by all United Nations Member States in
2015, they address the global challenges the world is facing,
including those related to poverty, inequality, climate change,
environmental degradation, peace and justice.
For further detail see the website https://unsdg.un.org
/downstream The term upstream refers to all hydrocarbon ex-
ploration and production activities.
The term mid-downstream includes all activities inherent to
oil industry subsequent to exploration and production. Pro-
cess crude oil and oil-based feedstock for the production of
fuels, lubricants and chemicals, as well as the supply, trading
and transportation of energy commodities. It also includes the
marketing business of refined and chemical products.
Upstream GHG Emission Intensity Ratio between 100% Scope
1 GHG emissions from upstream operated assets and 100%
gross operated production (expressed in barrel of oil equivalent).
Wholesale sales Domestic sales of refined products to whole-
salers/distributors (mainly gasoil), public administrations and
end consumers, such as industrial plants, power stations (fuel
oil), airlines (jet fuel), transport companies, big buildings and
households. They do not include distribution through the service
station network, marine bunkering, sales to oil and petrochemi-
cal companies, importers and international organizations.
Work-over Intervention on a well for performing significant
maintenance and substitution of basic equipment for the collec-
tion and transport to the surface of liquids contained in a field.
Abbreviations
/d
/y
bbbl
bbl
bboe
bcf
bcm
per day
per year
billion barrels
barrels
billion barrels of oil equivalent
billion cubic feet
billion cubic meters
bln liters
billion liters
bln tonnes billion tonnes
boe
cm
GWh
LNG
LPG
kbbl
kboe
barrels of oil equivalent
cubic meter
Gigawatt hour
Liquefield Natural Gas
Liquefield Petroleum Gas
thousand barrels
thousand barrels of oil equivalent
km
ktoe
ktonnes
mmbbl
mmboe
mmcf
mmcm
kilometers
thousand tonnes of oil equivalent
thousand tonnes
million barrels
million barrels of oil equivalent
milion cubic feet
million cubic meters
mmtonnes
million tonnes
MTPA
Million Tonnes Per Annum
No.
NGL
PCA
ppm
PSA
Tep
TWh
number
Natural Gas Liquids
Production Concession Agreement
parts per million
Production Sharing Agreement
Ton of equivalent petroleum
Terawatt hour
Eni Annual Report 2020 Consolidated financial
statements
2020
1 MANAGEMENT REPORT
2 CONSOLIDATED FINANCIAL STATEMENTS
Financial statements
Notes on consolidated financial statements
Supplemental oil and gas information
Management’s certification
Independent Auditor’s report
4 ANNEX
2
186
188
196
304
323
324
332
188
Consolidated balance sheet
(€ million)
ASSETS
Current assets
Cash and cash equivalents
Financial assets held for trading
Other current financial assets
Trade and other receivables
Inventories
Income tax receivables
Other current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Inventory - Compulsory stock
Equity-accounted investments
Other investments
Other non-current financial assets
Deferred tax assets
Income tax receivables
Other non-current assets
Assets held for sale
TOTAL ASSETS
LIABILITIES AND EQUITY
Current liabilities
Short-term debt
Current portion of long-term debt
Current portion of long-term lease liabilities
Trade and other payables
Income tax payables
Other current liabilities
Non-current liabilities
Long-term debt
Long-term lease liabilities
Provisions
Provisions for employee benefits
Deferred tax liabilities
Income tax payables
Other non-current liabilities
Liabilities directly associated with assets held for sale
TOTAL LIABILITIES
Share capital
Retained earnings
Cumulative currency translation differences
Other reserves and equity instruments
Treasury shares
Profit (loss)
Equity attributable to equity holders of Eni
Non-controlling interest
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
December 31, 2020
December 31, 2019
Note
Total amount
of which with
related parties
Total amount
of which with
related parties
60
704
219
911
181
46
5
2,663
155
8
23
(5)
(6)
(16)
(7)
(8)
(9)
(10) (23)
(11)
(12)
(13)
(8)
(15)
(15)
(16)
(22)
(9)
(10) (23)
(24)
(18)
(18)
(12)
(17)
(9)
(10) (23)
(18)
(12)
(20)
(21)
(22)
(9)
(10) (23)
(24)
9,413
5,502
254
10,926
3,893
184
2,686
32,858
53,943
4,643
2,936
995
6,749
957
1,008
4,109
153
1,253
76,746
44
109,648
2,882
1,909
849
12,936
243
4,872
23,691
21,895
4,169
13,438
1,201
5,524
360
1,877
48,464
72,155
4,005
34,043
3,895
4,688
(581)
(8,635)
37,415
78
(25)
37,493
109,648
41
802
145
766
74
52
54
2,100
452
112
23
5,994
6,760
384
12,873
4,734
192
3,972
34,909
62,192
5,349
3,059
1,371
9,035
929
1,174
4,360
173
871
88,513
18
123,440
2,452
3,156
889
15,545
456
7,146
29,644
18,910
4,759
14,106
1,136
4,920
454
1,611
45,896
75,540
4,005
35,894
7,209
1,564
(981)
148
47,839
61
47,900
123,440
Management report | Consolidated financial statements | Annex
189
Consolidated profit and loss account
2020
2019
2018
(€ million)
Sales from operations
Other income and revenues
REVENUES AND OTHER INCOME
Purchases, services and other
Net (impairment losses) reversals of trade and other
receivables
Payroll and related costs
Other operating income (expense)
Depreciation and amortization
Note
(28)
(29)
(7)
(29)
(23)
(11) (12) (13)
Total
amount
43,987
960
44,947
(33,551)
(226)
(2,863)
(766)
(7,304)
Net (impairment losses) reversals of tangible and intangible
assets and right-of-use assets
(14)
(3,183)
Write-off of tangible and intangible assets
(11) (13)
OPERATING PROFIT (LOSS)
Finance income
Finance expense
Net finance income (expense) from financial assets held
for trading
Derivative financial instruments
FINANCE INCOME (EXPENSE)
(30)
(30)
(30)
(23) (30)
Share of profit (loss) from equity-accounted investments
Other gain (loss) from investments
INCOME (EXPENSE) FROM INVESTMENTS
(15) (31)
PROFIT (LOSS) BEFORE INCOME TAXES
Income taxes
PROFIT (LOSS)
Attributable to Eni
Attributable to non-controlling interest
Earnings (loss) per share (€ per share)
Basic
Diluted
(32)
(33)
(329)
(3,275)
3,531
(4,958)
31
351
(1,045)
(1,733)
75
(1,658)
(5,978)
(2,650)
(8,628)
(8,635)
7
(2.42)
(2.42)
of which
with related
parties
1,164
35
of which
with related
parties
1,248
4
Total
amount
69,881
1,160
71,041
of which
with related
parties
1,383
8
Total
amount
75,822
1,116
76,938
(6,595)
(50,874)
(9,173)
(55,622)
(8,009)
26
(22)
319
115
(283)
(6)
(36)
13
114
(26)
(432)
(2,996)
287
(8,106)
(2,188)
(300)
6,432
3,087
(4,079)
127
(14)
(879)
(88)
281
193
5,746
(5,591)
155
148
7
0.04
0.04
28
(28)
19
96
(36)
(415)
(3,093)
129
(6,988)
(866)
(100)
9,983
3,967
(4,663)
32
(307)
(971)
(68)
1,163
1,095
10,107
(5,970)
4,137
4,126
11
1.15
1.15
Eni Annual Report 2020
190
Consolidated statement of comprehensive income
(€ million)
Profit (loss)
Other items of comprehensive income (loss)
Items that are not reclassified to profit or loss in later periods
Remeasurements of defined benefit plans
Share of other comprehensive income (loss) on equity-accounted investments
Change of minor investments measured at fair value with effects
to other comprehensive income
Tax effect
Items that may be reclassified to profit or loss in later periods
Currency translation differences
Change in the fair value of cash flow hedging derivatives
Share of other comprehensive income (loss) on equity-accounted investments
Tax effect
Total other items of comprehensive income (loss)
Total comprehensive income (loss)
Attributable to Eni
Attributable to non-controlling interest
Note
2020
(8,628)
(25)
(25)
(25)
(25)
(25)
(25)
(25)
(25)
(16)
24
25
33
(3,314)
661
32
(192)
(2,813)
(2,780)
(11,408)
(11,415)
7
2019
155
(42)
(7)
(3)
5
(47)
604
(679)
(6)
197
116
69
224
217
7
2018
4,137
(15)
15
(2)
(2)
1,787
(243)
(24)
58
1,578
1,576
5,713
5,702
11
Management report | Consolidated financial statements | Annex
Consolidated statements of changes in equity
191
Equity attributable to equity holders of Eni
n
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c
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r
u
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r
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e
h
t
r
o
f
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fi
o
r
p
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l
a
t
i
p
a
c
e
r
a
h
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e
t
o
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g
n
i
l
l
o
r
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(25)
4,005
35,894
7,209
1,564
(981)
148
47,839
(8,635)
(8,635)
61
7
47,900
(8,628)
9
24
33
9
24
33
(3,314)
(3,314)
469
32
469
32
(2,813)
(2,813)
(8,635)
(11,415)
7 (11,408)
9
24
33
(1)
469
32
500
533
(3,313)
(3,313)
(3,313)
1,542
(429)
(2,930)
(1,817)
(25)
(9)
(34)
(3,078)
(1,536)
(429)
2,930
(400)
400
3,000
2,600
(9)
(9)
(1)
(1)
400
(148)
3,000
1,035
(25)
(19)
(44)
(1,536)
(429)
(3)
(3)
15
15
3,000
1,047
(25)
(21)
(46)
37,493
12
(2)
(2)
78
(€ million)
Balance at December 31, 2019
Profit (loss) for the year
Other items of comprehensive income (loss)
Remeasurements of defined benefit plans net
of tax effect
Change of minor investments measured at fair value
with effects to OCI
Items that are not reclassified to profit or loss
in later periods
Currency translation differences
Change in the fair value of cash flow hedge
derivatives net of tax effect
Share of “Other comprehensive income (loss)”
on equity-accounted investments
Items that may be reclassified to profit or loss
in later periods
Total comprehensive income (loss) of the year
Dividend distribution of Eni SpA
Interim dividend distribution of Eni SpA
Dividend distribution of other companies
Allocation of 2019 net income
Cancellation of treasury shares
Increase in non‐controlling interest relating
to acquisition of consolidated entities
Issue of perpetual subordinated bonds
Transactions with holders of equity instruments
Costs for the issue of perpetual subordinated bonds
Other changes
Other changes in equity
(25)
(25)
(25)
(25)
(25)
(25)
(25)
(25)
(26)
(25)
Balance at December 31, 2020
(25)
4,005
34,043
3,895
4,688
(581)
(8,635)
37,415
Eni Annual Report 2020
192
continued Consolidated statements of changes in equity
Equity attributable to equity holders of Eni
n
o
i
t
a
l
s
n
a
r
t
y
c
n
e
r
r
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f
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r
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v
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a
t
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o
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g
n
i
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l
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t
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l
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t
o
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y
t
i
u
q
e
l
a
t
o
T
4,005
35,189
6,605
1,672
(581)
4.126
51.016
57
51.073
(4)
(4)
(4)
4,005
35,185
6,605
1,672
(581)
4.126
51.012
57
51.069
148
148
7
155
(25)
(25)
(25)
(25)
(25)
(25)
(25)
(25)
(25)
604
604
604
(37)
(7)
(3)
(47)
(482)
(6)
(488)
(535)
400
400
27
(37)
(7)
(3)
(47)
604
(482)
(6)
116
217
148
(2.989)
(1.476)
(1.542)
(37)
(7)
(3)
(47)
604
(482)
(6)
116
224
(1.476)
(1.542)
(4)
(1)
7
(4)
(1)
(1.137)
(400)
(400)
(400)
(400)
(4.126)
(3.418)
(5)
(3.423)
28
2
30
1,513
(1,542)
1,137
(400)
708
1
(€ million)
Balance at December 31, 2018
Changes in accounting policies (IAS 28)
Balance at January 1, 2019
Profit (loss) for the year
Other items of comprehensive income (loss)
Remeasurements of defined benefit plans net
of tax effect
Share of “Other comprehensive income (loss)”
on equity-accounted investments
Change of minor investments measured at fair value
with effects to OCI
Items that are not reclassified to profit or loss
in later periods
Currency translation differences
Change in the fair value of cash flow hedge
derivatives net of tax effect
Share of “Other comprehensive income (loss)”
on equity-accounted investments
Items that may be reclassified to profit or loss
in later periods
Total comprehensive income (loss) of the year
Dividend distribution of Eni SpA
Interim dividend distribution of Eni SpA
Dividend distribution of other companies
Reimbursements to minority shareholders
Allocation of 2018 net income
Acquisition of treasury shares
Transactions with shareholders
Other changes in shareholders’ equity
Balance at December 31, 2019
(25)
4,005
35,894
7,209
1,564
(981)
148
47.839
61
47.900
Management report | Consolidated financial statements | Annex
193
continued Consolidated statements of changes in equity
Equity attributable to equity holders of Eni
n
o
i
t
a
l
s
n
a
r
t
y
c
n
e
r
r
u
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m
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t
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i
y
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i
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d
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r
a
h
s
y
r
u
s
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r
T
l
a
t
i
p
a
c
e
r
a
h
S
r
a
e
y
e
h
t
r
o
f
t
fi
o
r
p
t
e
N
g
n
i
l
l
o
r
t
n
o
c
-
n
o
N
t
s
e
r
e
t
n
i
l
a
t
o
T
y
t
i
u
q
e
l
a
t
o
T
4,005
34,525
4,818
1,889
(581)
3,374
48,030
49
48,079
(€ million)
Balance at December 31, 2017
Changes in accounting policies (IFRS 9 and 15)
245
Balance at January 1, 2018
Profit (loss) for the year
Other items of comprehensive income (loss)
Remeasurements of defined benefit plans net
of tax effect
Change of minor investments measured at fair value
with effects to OCI
Items that are not reclassified to profit or loss
in later periods
Currency translation differences
Change in the fair value of cash flow hedge
derivatives net of tax effect
Share of “Other comprehensive income (loss)”
on equity-accounted investments
Items that may be reclassified to profit or loss
in later periods
Total comprehensive income (loss) of the year
Dividend distribution of Eni SpA
Interim dividend distribution of Eni SpA
Dividend distribution of other companies
Allocation of 2017 net income
Transactions with shareholders
Other changes in shareholders’ equity
Balance at December 31, 2018
4,005
34,770
4,818
1,889
(581)
(17)
15
(2)
(185)
(24)
1,787
1,787
(209)
245
48,275
4,126
3,374
4,126
245
48,324
4,137
49
11
(17)
15
(2)
1,787
(185)
(24)
1,578
(17)
15
(2)
1,787
(185)
(24)
1,578
1,441
(1,513)
493
421
(2)
1,787
(211)
4,126
5,702
11
5,713
(2,881)
(1,440)
(1,513)
(493)
(1,440)
(1,513)
(3)
(3)
(3,374)
(2,953)
(3)
(2,956)
(6)
(8)
(8)
4,005
35,189
6,605
1,672
(581)
4,126
51,016
57
51,073
Eni Annual Report 2020
194
Consolidated statement of cash flows
(€ million)
Profit (loss)
Adjustments to reconcile profit (loss) to net cash provided by operating activities
Depreciation and amortization
Net Impairments (reversals) of tangible and intangible assets
and right-of-use assets
Write-off of tangible and intangible assets
Share of (profit) loss of equity-accounted investments
Net gain on disposal of assets
Dividend income
Interest income
Interest expense
Income taxes
Other changes
Cash flow from changes in working capital
- inventories
- trade receivables
- trade payables
- provisions
- other assets and liabilities
Net change in the provisions for employee benefits
Dividends received
Interest received
Interest paid
Income taxes paid, net of tax receivables received
Net cash provided by operating activities
- of which with related parties
Cash flow from investing activities
- tangible assets
- prepaid right-of-use assets
- intangible assets
- consolidated subsidiaries and businesses net of cash
and cash equivalent acquired
- investments
- securities and financing receivables held for operating purposes
- change in payables in relation to investing activities
Cash flow from disposals
- tangible assets
- intangible assets
- consolidated subsidiaries and businesses net of cash
and cash equivalent disposed of
- tax on disposals
- investments
- securities and financing receivables held for operating purposes
- change in receivables in relation to disposals
Net change in securities and financing receivables held
for non-operating purposes
Net cash used in investing activities
- of which with related parties
Note
(11) (12) (13)
(14)
(11) (13)
(15) (31)
(31)
(32)
1,054
1,316
(1,614)
(1,056)
282
(36)
(11)
(12)
(13)
(26)
(15)
(26)
(36)
2020
(8,628)
7,304
3,183
329
1,733
(9)
(150)
(126)
877
2,650
92
(18)
509
53
(928)
(2,049)
4,822
(4,640)
(5,959)
(4,407)
(237)
(109)
(283)
(166)
(757)
216
12
16
136
52
1,156
(4,587)
(1,372)
2019
155
8,106
2,188
300
88
(170)
(247)
(147)
1,027
5,591
(179)
366
(200)
1,023
(940)
272
211
15
334
642
(238)
879
(23)
1,346
88
(1,029)
(5,068)
12,392
(6,356)
(11,928)
(8,049)
(16)
(311)
(5)
(3,003)
(237)
(307)
794
264
17
187
(3)
39
195
95
(279)
(11,413)
(2,912)
2018
4,137
6,988
866
100
68
(474)
(231)
(185)
614
5,970
(474)
1,632
109
275
87
(609)
(5,226)
13,647
(2,707)
(9,321)
(8,778)
(341)
(119)
(125)
(366)
408
2,142
1,089
5
(47)
195
294
606
(357)
(7,536)
(3,314)
Management report | Consolidated financial statements | Annex
continued Consolidated statement of cash flows
(€ million)
Increase in long-term financial debt
Repayments of long-term financial debt
Payments of lease liabilities
Increase (decrease) in short-term financial debt
Dividends paid to Eni's shareholders
Dividends paid to non-controlling interest
Reimbursements to non-controlling interest
Acquisition of additional interests in consolidated subsidiaries
Acquisition of treasury shares
Issue of perpetual subordinated bonds
Net cash used in financing activities
- of which with related parties
Effect of exchange rate changes and other changes on cash
and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents - beginning of the year
Cash and cash equivalents - end of the year
Note
(18)
(18)
(12)
(18)
(25)
(36)
(5)
(5)
2020
5,278
(3,100)
(869)
937
(1,965)
(3)
2,975
3,253
164
(69)
3,419
5,994
9,413
2019
1,811
(3,512)
(877)
161
(3,018)
(4)
(1)
(1)
(400)
(5,841)
(817)
1
(4,861)
10,855
5,994
195
2018
3,790
(2,757)
(713)
(2,954)
(3)
(2,637)
16
18
3,492
7,363
10,855
Eni Annual Report 2020
196
Notes on Consolidated Financial Statements
IMPACT OF COVID-19 PANDEMIC
The trading environment in 2020 saw a material reduction
in the global demand for crude oil driven by the lockdown
measures implemented worldwide to contain the spread
of the COVID-19 pandemic causing a sharp contraction
in economic activity, international commerce and travel,
mainly during the peak of the crisis in the first and second
quarter of 2020.
The shock in the hydrocarbon demand occurred against
the backdrop of a structurally oversupplied oil market, as
highlighted by the disagreements among OPEC+ members
on the response to be adopted to manage the crisis in early
March 2020. The producing countries of the cartel decided
against maintaining the existing quotas and as a result
the market was inundated with production while demand
was crumbling. Those developments led to a collapse in
commodity prices.
At the peak of the downturn, between March and April, the
Brent marker price fell to about 15 $/barrel, the lowest level
in over twenty years. The oversupply drove oil markets
into contango, a situation when prices per prompt delivery
quote below prices for future deliveries, while both land and
floating storages reached the highest technical filling levels.
Since May, oil prices have been staging a turnaround
thanks to an agreement reached within OPEC+ which
implemented production cuts and an ongoing recovery in
the world economy and oil consumption following an ease
to restrictive measures, which were driven in large part by a
strong rebound of activity in China. Brent prices recovered
to almost 45 $/barrel in the summer months.
However, during the autumn months the macroeconomic
rebound hit a standstill in the USA and in Europe due to a
continuous recrudescence in virus cases, which forced
the governments and local authorities in those countries
to reinstate partial or full lockdowns and other restrictive
measures that weighted heavily on oil and products
demands as millions of people continued living stranded.
In this period, crude oil prices were supported by strict
production discipline on part of OPEC+ members and the
market was able to accommodate the return of Libya’s
production by the end of September.
Barometer of the weakness of the fundamentals in the
energy sector in the third quarter was the trend in the
refining margins which dropped into negative territory due
to weak demand for fuels and the crisis in the airline sector,
which prevented refiners from passing the cost of the crude
oil feedstock to the final prices of products. To make things
worse, OPEC+ production cuts impacted the availability of
medium-heavy crudes, narrowing the price differentials with
light-medium qualities like the Brent crude and squeezing
the refiners’ conversion advantage.
However, since mid-November a
few market and
macroeconomic developments triggered a rally in oil prices,
which reached 50 $/bbl at the end of the year rebounding
from the still depressed level of October and then rose to an
average of over 60 $/barrel in the first quarter of 2021.
In 2020 due to the macroeconomic and market developments
caused by the COVID-19 pandemic, the price of the Brent
benchmark crude oil prices decreased by 35% compared to
the previous year, with an annual average of 42 $/barrel, the
price of natural gas at the Italian spot market “PSV” declined
on average by 35%, and the Standard Eni Refining Margin –
SERM decreased by 60%.
Considering the market trends, management revised the
Company’s outlook for hydrocarbons prices assuming a
more conservative oil scenario with a Long Term Brent price
at 60 $/barrel in 2023 real terms (compared to the previous
projection of 70 $/barrel) to reflect the possible structural
effects of the pandemic on oil demand and the risk that the
energy transition will accelerate due to the fiscal policies
adopted by governments to rebuild the economy on more
sustainable basis. These developments had negative,
material effects on Eni’s results of operations and cash flow.
In 2020, Eni reported a net loss of €8.6 billion due to the
reduction in revenues driven by lower realized prices and
margins for hydrocarbons with an estimated impact of €6.8
billion and lower production volumes and other business
impacts caused by the COVID-19 pandemic for €1 billion, as
well as the recognition of impairment losses of €3.2 billion
taken at Oil & Gas assets and refineries due to a revised
management’s outlook on long-term oil and gas prices
and lowered assumptions for the refining margins. A loss
of approximately €1.3 billion was incurred in relation to the
evaluation of inventories of oil and products, which were
aligned to their net realizable values at period end, and a
€1.7 billion loss taken at equity-accounted investments.
Management report | Consolidated financial statements | Annex 197
All these trends caused the Group to incur an operating loss
of €3.3 billion. These effects were partially offset by cost
efficiencies and other management initiatives to counter the
effects of the pandemic. Furthermore, the Group net loss for
the year was also affected for €1.3 billion by the write-down
of deferred tax assets.
Net cash provided by operating activities declined to €4.8
billion with a reduction of 61% compared to 2019, due to
lower prices of hydrocarbons and other scenario effects for
€6 billion and the negative impact on operations associated
with the COVID-19 for €1.3 billion, attributable to reduced
expenditures, lower demand for fuel and chemicals, longer
in response to the COVID-19
maintenance standstills
emergency, lower LNG offtakes and lower gas demand and
higher provisions for impairment losses at trade receivables.
These negative impacts were partially offset by cost savings
and other initiatives in response to the pandemic crisis.
A share repurchase program approved before the start of
the crisis was put on hold.
Established a new dividend policy with the introduction of a
variable component of the dividend in line with the volatility
of the scenario. The new policy establishes a floor dividend
currently set at 0.36 €/share under the assumption of a
Brent scenario of at least 43 $/barrel and a growing variable
component based on a recovery in the crude oil scenario.
The floor amount will be revalued over time depending on
the Company delivering on its industrial targets. For 2020,
the dividend proposal is equal to the floor dividend.
The Company limited the increase in net borrowings before
IFRS 16 which closed the year at €11.6 billion (unchanged
over 2019), while retaining leverage at 0.31. The Company
can count to fulfill the financial obligations coming due in
the next future on a liquidity reserve of €20.4 billion as of
December 31, 2020, consisting of:
In order to respond to this large-scale shortfall, management
has taken several decisive actions to preserve the Company’s
liquidity, the ability to cover maturing financial obligations
and to mitigate the impact of the crisis on the Group’s net
financial position, as follows:
cash and cash equivalents of €9.4 billion;
€5.3 billion of undrawn committed borrowing facilities;
€5.5 billion of readily disposable securities (mainly
government bonds and corporate investment grade bond)
and €0.2 billion of short-term financing receivables.
In 2020 Eni reduced capital expenditures by a significant
amount. Those capex reductions mainly related to
upstream activities, targeting production optimization
activities and the rephasing of certain development
projects. The delayed or re-phased activities can be
restarted quickly in normal conditions, determining a
recovery of related production.
Implemented widespread cost reduction initiatives across
all businesses resulting in significant cost savings.
In May 2020, a €2 billion bond was issued. Then, in October
two hybrid bonds were issued for a total amount of €3
billion; those latter bonds are classified among equity for
balance sheet purposes.
This reserve is considered adequate to cover the main
financial obligations maturing in the next twelve months
relating to:
short-term debt of €2.9 billion;
maturing bonds of €1.1 billion and other maturing long-
term debt of €1.1 billion
committed investments of €4.3 billion;
instalments of leasing contracts coming due of €1.1
billion
the payment of a floor dividend for approximately €1.5
billion (including the final 2020 dividend and the interim
floor dividend for 2021 due to paid in September).
Eni Annual Report 2020 198
1 SIGNIFICANT ACCOUNTING POLICIES,
ESTIMATES AND JUDGEMENTS
BASIS OF PREPARATION
The Consolidated Financial Statements of Eni SpA and its
subsidiaries (collectively referred to as Eni or the Group)
have been prepared on a going concern1 basis in accordance
with International Financial Reporting Standards (IFRS)2 as
issued by the International Accounting Standards Board
(IASB) and adopted by the European Union (EU) pursuant
to article 6 of the EC Regulation No. 1606/2002 of the
European Parliament and of the Council of July 19, 2002,
and in accordance with article 9 of the Italian Legislative
Decree No. 38/053.
The Consolidated Financial Statements have been prepared
under the historical cost convention, taking into account,
where appropriate, value adjustments, except for certain
items that under IFRSs must be measured at fair value
as described in the accounting policies that follow. The
principles of consolidation and the significant accounting
policies that follow have been consistently applied to all
years presented, except where otherwise indicated.
The 2020 Consolidated Financial Statements, approved
by the Eni’s Board of Directors on March 18, 2021, were
audited by the external auditor PricewaterhouseCoopers
SpA. The external auditor of Eni SpA, as the main external
auditor, is wholly in charge of the auditing activities of the
Consolidated Financial Statements; when there are other
external auditors, PricewaterhouseCoopers SpA takes the
responsibility of their work.
The Consolidated Financial Statements are presented in
euros and all values are rounded to the nearest million euros
(€ million), except where otherwise indicated.
SIGNIFICANT ACCOUNTING ESTIMATES AND
JUDGEMENTS
The preparation of the Consolidated Financial Statements
requires the use of estimates and assumptions that affect
the assets, liabilities, revenues and expenses recognised
in the financial statements, as well as amounts included
in the notes thereto, including disclosure of contingent
assets and contingent liabilities. Estimates made are based
on complex judgements and past experience of other
assumptions deemed reasonable in consideration of the
information available at the time. The accounting policies
and areas that require the most significant judgements and
estimates to be used in the preparation of the Consolidated
Financial Statements are in relation to the accounting for oil
and natural gas activities, specifically in the determination
of reserves, impairment of financial and non-financial
assets, leases, decommissioning and restoration liabilities,
environmental liabilities, business combinations, employee
benefits, revenue from contracts with customers, fair value
measurements and income taxes. Although the Company
uses its best estimates and judgements, actual results
could differ from the estimates and assumptions used.
The accounting estimates and judgements relevant for the
preparation of the Consolidated Financial Statement are
described below.
PRINCIPLES OF CONSOLIDATION
SUBSIDIARIES
The Consolidated Financial Statements comprise the
financial statements of the parent Company Eni SpA and
those of its subsidiaries, being those entities over which the
Company has control, either directly or indirectly, through
exposure or rights to their variable returns and the ability to
affect those returns through its power over the investees. To
have power over an investee, the investor must have existing
rights that give it the current ability to direct the relevant
activities of the investee, i.e. the activities that significantly
affect the investee’s returns.
Subsidiaries are consolidated, on the basis of consistent
accounting policies, from the date on which control is
obtained until the date that control ceases.
Assets, liabilities, income and expenses of consolidated
subsidiaries are fully recognised with those of the parent in
the Consolidated Financial Statements, taking into account
the appropriate eliminations of intragroup transactions
(see the accounting policy for “Intragroup transactions”);
the parent’s investment in each subsidiary is eliminated
against the corresponding parent’s portion of equity of
each subsidiary. Non-controlling interests are presented
separately on the balance sheet within equity; the profit
or loss and comprehensive income attributable to non-
controlling interests are presented in specific line items,
respectively, in the profit and loss account and in the
statement of comprehensive income.
The Consolidated Financial Statements do not consolidate:
(i) some subsidiaries being immaterial, either individually or
in the aggregate; (ii) companies whose consolidation does
not produce material impacts, that are subsidiaries acting
as sole-operator in the management of oil and gas contracts
on behalf of companies participating in a joint project. In the
latter case, the activities are financed proportionally based
(1) With reference to the impacts of COVID-19, see information provided in the previous paragraph.
(2) IFRSs include also International Accounting Standards (IAS), currently effective, as well as the interpretations developed by the IFRS Interpretations Committee,
previously named International Financial Reporting Interpretations Committee (IFRIC) and initially Standing Interpretations Committee (SIC).
(3) As applied to Eni, there are no differences between IFRSs as issued by the IASB and those adopted by the EU, effective for the year 2020.
Management report | Consolidated financial statements | Annex 199
on a budget approved by the participating companies upon
presentation of periodical reports of proceeds and expenses.
Costs and revenue and other operating data (production,
reserves, etc.) of the project, as well as the related
obligations arising from the project, are recognised directly
in the financial statements of the companies involved based
on their own share. The abovementioned exclusions do not
produce material4 impacts on the Consolidated Financial
Statements5 .
When the proportion of the equity held by non-controlling
interests changes, any difference between the consideration
paid/received and the amount by which the related non-
controlling interests are adjusted is attributed to Eni owners’
equity. Conversely, the sale of equity interests with loss of
control determines the recognition in the profit and loss
account of: (i) any gain or loss calculated as the difference
between the consideration received and the corresponding
transferred net assets; (ii) any gain or loss recognised as a
result of the remeasurement of any investment retained in
the former subsidiary at its fair value; and (iii) any amount
related to the former subsidiary previously recognised in
other comprehensive income which may be reclassified
subsequently to the profit and loss account6. Any investment
retained in the former subsidiary is recognised at its fair
value at the date when control is lost and shall be accounted
for in accordance with the applicable measurement criteria.
INTERESTS IN JOINT ARRANGEMENTS
Joint control is the contractually agreed sharing of control
of an arrangement, which exists only when decisions about
the relevant activities require the unanimous consent of the
parties sharing control.
A joint venture is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to the
net assets of the arrangement. Investments in joint ventures
are accounted for using the equity method as described in
the accounting policy for “The equity method of accounting”.
A joint operation is a joint arrangement whereby the parties
that have joint control of the arrangement have enforceable
rights to the assets, and enforceable obligations for the
liabilities, relating to the arrangement; in the Consolidated
Financial Statements, Eni recognises its share of the
assets/liabilities and revenue/expenses of joint operations
on the basis of its rights and obligations relating to the
arrangements.
the
joint operations are measured
After the initial recognition, the assets/liabilities and revenue
in
/expenses of
accordance with the applicable measurement criteria.
Immaterial joint operations structured through a separate
vehicle are accounted for using the equity method or, if this
does not result in a misrepresentation of the Company’s
financial position and performance, at cost net of any
impairment losses.
INVESTMENTS IN ASSOCIATES
An associate is an entity over which Eni has significant
influence, that is the power to participate in the financial and
operating policy decisions of the investee, but is not control
or joint control of those policies. Investments in associates
are accounted for using the equity method as described in
the accounting policy for “The equity method of accounting”.
Investments
joint arrangements and
associates as of December 31, 2020 are presented separately
in the annex “List of companies owned by Eni SpA as of
December 31, 2020”. This annex includes also the changes in
the scope of consolidation.
Consolidated companies’ financial statements are audited by
external auditors who also audit the information required for
the preparation of the Consolidated Financial Statements.
in subsidiaries,
THE EQUITY METHOD OF ACCOUNTING
Investments in joint ventures, associates and immaterial
unconsolidated subsidiaries, are accounted for using the
equity method7.
Under the equity method, investments are initially recognised
at cost, allocating it, similarly to business combinations
procedures, to the investee’s identifiable assets/liabilities;
any excess of the cost of the investment over the share
of the net fair value of the investee’s identifiable assets
and liabilities is accounted for as goodwill, not separately
recognised but included in the carrying amount of the
investment. If this allocation is provisionally recognised at
initial recognition, it can be retrospectively adjusted within
one year from the date of initial recognition, to reflect new
information obtained about facts and circumstances that
existed at the date of initial recognition. Subsequently, the
carrying amount is adjusted to reflect: (i) the investor’s
share of the profit or loss of the investee after the date
of acquisition, adjusted to account for depreciation,
amortization and any impairment losses of the equity-
(4) According to IFRSs, information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general
purpose financial statements make on the basis of those financial statements.
(5) Unconsolidated subsidiaries are accounted for as described in the accounting policy for “The equity method of accounting”; for further information, see the annex “List
of companies owned by Eni SpA as of December 31, 2020”.
(6) Conversely, any amount related to the former subsidiary previously recognised in other comprehensive income, which may not be reclassified
subsequently to the profit and loss account, are reclassified in another item of equity.
(7) Joint ventures, associates and immaterial unconsolidated subsidiaries are accounted for at cost less any accumulated impairment losses, if this does not result in a
misrepresentation of the Company’s financial position and performance.
Eni Annual Report 2020 200
is objective evidence of
accounted entity’s assets based on their fair values at the date
of acquisition; and (ii) the investor’s share of the investee’s
other comprehensive income. Distributions received from
an equity-accounted investee reduce the carrying amount of
the investment. In applying the equity method, consolidation
adjustments are considered (see also the accounting policy
for “Subsidiaries”). Losses arising from the application of
the equity method in excess of the carrying amount of the
investment, recognised in the profit and loss account within
“Income (Expense) from investments”, reduce the carrying
amount, net of the related expected credit losses (see
below), of any financing receivables towards the investee
for which settlement is neither planned nor likely to occur
in the foreseeable future (the so-called long-term interests),
which are, in substance, an extension of the investment in
the investee. The investor’s share of any losses of an equity-
accounted investee that exceeds the carrying amount of the
investment and any long-term interests (the so-called net
investment), is recognised in a specific provision only to the
extent that the investor has incurred legal or constructive
obligations or made payments on behalf of the investee.
impairment
Whenever there
(e.g. relevant breaches of contracts, significant financial
difficulty, probable default of the counterparty, etc.), the
carrying amount of the net investment, resulting from the
application of the abovementioned measurement criteria,
is tested for impairment by comparing it with the related
recoverable amount, determined by adopting the criteria
indicated in the accounting policy for “Impairment of non-
financial assets”. When an impairment loss no longer exists
or has decreased, any reversal of the impairment loss is
recognised in the profit and loss account within “Income
(Expense) from investments”. The impairment reversal of the
net investment shall not exceed the previously recognised
impairment losses.
The sale of equity interests with loss of joint control or
significant influence over the investee determines the
recognition in the profit and loss account of: (i) any gain or
loss calculated as the difference between the consideration
received and the corresponding transferred share; (ii) any
gain or loss recognised as a result of the remeasurement
of any investment retained in the former joint venture/
associate at its fair value8; and (iii) any amount related to
the former joint venture/associate previously recognised
in other comprehensive income which may be reclassified
subsequently to the profit and loss account9. Any investment
retained in the former joint venture/associate is recognised
at its fair value at the date when joint control or significant
influence is lost and shall be accounted for in accordance
with the applicable measurement criteria.
interests are measured as
BUSINESS COMBINATIONS
Business combinations are accounted for by applying the
acquisition method. The consideration transferred in a business
combination is the sum of the acquisition-date fair value of the
assets transferred, the liabilities incurred and the equity interests
issued by the acquirer. The consideration transferred includes
also the fair value of any assets or liabilities resulting from
contingent considerations, contractually agreed and dependent
upon the occurrence of specified future events. Acquisition-
related costs are accounted for as expenses when incurred.
The acquirer shall measure the identifiable assets acquired
and liabilities assumed at their acquisition-date fair values10,
unless another measurement basis is required by IFRSs.
The excess of the consideration transferred over the Group’s
share of the acquisition-date fair values of the identifiable
assets acquired and liabilities assumed is recognised, on the
balance sheet, as goodwill; conversely, a gain on a bargain
purchase is recognised in the profit and loss account.
Any non-controlling
the
proportionate share in the recognised amounts of the
acquiree’s identifiable net assets at the acquisition date
excluding the portion of goodwill attributable to them (partial
goodwill method)11. In a business combination achieved in
stages, the purchase price is determined by summing the
acquisition-date fair value of previously held equity interests
in the acquiree and the consideration transferred for obtaining
control; the previously held equity interests are remeasured
at their acquisition-date fair value and the resulting gain
or loss, if any, is recognised in the profit and loss account.
Furthermore, on obtaining control, any amount recognised in
other comprehensive income related to the previously held
equity interests is reclassified to the profit and loss account,
or in another item of equity when such amount may not be
reclassified to the profit and loss account.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the provisional amounts recognised at
the acquisition date shall be retrospectively adjusted within
one year from the acquisition date, to reflect new information
obtained about facts and circumstances that existed as of
the acquisition date.
(8) If the retained investment continues to be classified either as a joint venture or an associate and so accounted for using the equity method, no remeasurement at fair
value is recognised in the profit and loss account.
(9) Conversely, any amount related to the former joint venture/associate previously recognised in other comprehensive income, which may not be reclassified subsequently
to the profit and loss account, are reclassified in another item of equity.
(10) Fair value measurement principles are described in the accounting policy for “Fair value measurements”.
(11) As an alternative, IFRSs allow to use the full goodwill method, which leads to the portion of goodwill/badwill attributable to non-controlling interests being recognised;
the choice of measurement basis for goodwill/badwill (partial goodwill method vs. full goodwill method) is made on a transaction-by-transaction basis.
Management report | Consolidated financial statements | Annex 201
The acquisition of interests in a joint operation whose
activity constitutes a business is accounted for applying
the principles on business combinations accounting. In
this regard, if the entity obtains control over a business that
was a joint operation, the previously held interest in the joint
operation is remeasured at the acquisition-date fair value and
the resulting gain or loss is recognized in the profit and loss
account12.
Significant accounting estimates and judgements:
investments and business combinations
The assessment of the existence of control, joint control,
significant influence over an investee, as well as for joint
operations, the assessment of the existence of enforceable
rights to the investee’s assets and enforceable obligations for
the investee’s liabilities imply that the management makes
complex judgements on the basis of the characteristics of
the investee’s structure, arrangements between parties and
other relevant facts and circumstances. Significant accounting
estimates by management are required also for measuring the
identifiable assets acquired and the liabilities assumed in a
business combination at their acquisition-date fair values. For
such measurement, to be performed also for the application
of the equity method, Eni adopts the valuation techniques
generally used by market participants taking into account
the available information; for the most significant business
combinations, Eni engages external independent evaluators.
INTRAGROUP TRANSACTIONS
All balances and transactions between consolidated companies,
and not yet realised with third parties, including unrealised profits
arising from such transactions have been eliminated.
Unrealised profits arising from transactions between the Group
and its equity-accounted entities are eliminated to the extent of
the Group’s interest in the equity-accounted entity. In both cases,
unrealised losses are not eliminated unless the transaction
provides evidence of an impairment loss of the asset transferred.
FOREIGN CURRENCY TRANSLATION
The financial statements of foreign operations having a
functional currency other than the euro, that represents
the parent’s functional currency, are translated into euros
using the spot exchange rates on the balance sheet date for
assets and liabilities, historical exchange rates for equity and
average exchange rates for the profit and loss account and
the statement of cash flows.
The cumulative
resulting exchange differences are
presented in the separate component of Eni owners’ equity
“Cumulative currency translation differences”13. Cumulative
amount of exchange differences relating to a foreign
operation are reclassified to the profit and loss account
when the entity disposes the entire interest in that foreign
operation or when the partial disposal involves the loss of
control, joint control or significant influence over the foreign
operation. On a partial disposal that does not involve loss of
control of a subsidiary that includes a foreign operation, the
proportionate share of the cumulative exchange differences
is reattributed to the non-controlling
in that
foreign operation. On a partial disposal of interests in joint
arrangements or in associates that does not involve loss of
joint control or significant influence, the proportionate share
of the cumulative exchange differences is reclassified to
the profit and loss account. The repayment of share capital
made by a subsidiary having a functional currency other
than the euro, without a change in the ownership interest,
implies that the proportionate share of the cumulative
amount of exchange differences relating to the subsidiary is
reclassified to the profit and loss account.
The financial statements of foreign operations which are
translated into euros are denominated in the foreign operations’
functional currencies which generally is the U.S. dollar.
interests
The main foreign exchange rates used to translate the
financial statements into the parent’s functional currency are
indicated below:
(currency amount for 1 €)
U.S. Dollar
Pound Sterling
Australian Dollar
Annual average
exchange rate
2020
Exchange rate
at December 31,
2020
Annual average
exchange rate
2019
Exchange rate
at December 31,
2019
Annual average
exchange rate
2018
Exchange rate
at December 31,
2018
1.14
0.89
1.66
1.23
0.90
1.59
1.12
0.88
1.61
1.12
0.85
1.60
1.18
0.88
1.58
1.15
0.89
1.62
(12) If the entity acquires additional interests in a joint operation that is a business, while retaining joint control, the previously held interest in the joint operation is not
remeasured.
(13) When the foreign subsidiary is partially owned, the cumulative exchange difference, that is attributable to the non-controlling interests, is allocated to and recognised
as part of “Non-controlling interest”.
Eni Annual Report 2020 202
SIGNIFICANT ACCOUNTING POLICIES
The most significant accounting policies used
in the
preparation of the Consolidated Financial Statements are
described below.
OIL AND NATURAL GAS EXPLORATION,
APPRAISAL, DEVELOPMENT AND
PRODUCTION ACTIVITIES
Oil and natural gas exploration, appraisal and development
activities are accounted for using the principles of the
successful efforts method of accounting as described below.
ACQUISITION OF EXPLORATION RIGHTS
Costs incurred for the acquisition of exploration rights
(or their extension) are initially capitalised within the line
item “Intangible assets” as “exploration rights — unproved”
pending determination of whether the exploration and
appraisal activities in the reference areas are successful
or not. Unproved exploration rights are not amortised, but
reviewed to confirm that there is no indication that the
carrying amount exceeds the recoverable amount. This
review is based on the confirmation of the commitment
of the Company to continue the exploration activities and
on the analysis of facts and circumstances that indicate
the absence of uncertainties related to the recoverability
of the carrying amount. If no future activity is planned,
the carrying amount of the related exploration rights is
recognised in the profit and loss account as write-off. Lower
value exploration rights are pooled and amortised on a
straight-line basis over the estimated period of exploration.
In the event of a discovery of proved reserves (i.e. upon
recognition of proved reserves and internal approval for
development), the carrying amount of the related unproved
exploration rights is reclassified to “proved exploration
rights”, within the line item “Intangible assets”. Upon
reclassification, as well as whether there is any indication
of impairment, the carrying amount of exploration rights to
reclassify as proved is tested for impairment considering
the higher of their value in use and their fair value less
costs of disposal. From the commencement of production,
proved exploration rights are amortised according to the
unit of production method (the so-called UOP method,
described in the accounting policy for “UOP depreciation,
depletion and amortisation”).
of exploration potential and reserves, the cost is allocated
to the different assets acquired based on their expected
discounted cash flows.
Acquired exploration potential is measured in accordance with
the criteria illustrated in the accounting policy for “Acquisition of
exploration rights”. Costs associated with proved reserves are
amortised according to the UOP method (see the accounting
policy for “UOP depreciation, depletion and amortisation”).
Expenditure associated with possible and probable reserves
(unproved mineral interests) is not amortised until classified as
proved reserves; in case of a negative result of the subsequent
appraisal activities, it is written off.
EXPLORATION AND APPRAISAL EXPENDITURE
Geological and geophysical exploration costs are recognised
as an expense as incurred.
Costs directly associated with an exploration well are
initially recognised within tangible assets in progress, as
“exploration and appraisal costs — unproved” (exploration
wells in progress) until the drilling of the well is completed
and can continue to be capitalised
in the following
12-month period pending the evaluation of drilling results
(suspended exploration wells). If, at the end of this period,
it is ascertained that the result is negative (no hydrocarbon
found) or that the discovery is not sufficiently significant
to justify the development, the wells are declared dry/
unsuccessful and the related costs are written-off.
Conversely, these costs continue to be capitalised if and
until: (i) the well has found a sufficient quantity of reserves
to justify its completion as a producing well, and (ii) the
entity is making sufficient progress assessing the reserves
and the economic and operating viability of the project; on
the contrary, the capitalised costs are recognised in the
profit and loss account as write-off. Analogous recognition
criteria are adopted for the costs related to the appraisal
activity. When proved reserves of oil and/or natural gas
are determined, the relevant expenditure recognised
as unproved is reclassified to proved exploration and
appraisal costs within
in progress.
Upon reclassification, or when there is any indication of
impairment, the carrying amount of the costs to reclassify
as proved is tested for impairment considering the higher
of their value in use and their fair value less costs of
disposal. From the commencement of production, proved
exploration and appraisal costs are depreciated according
to the UOP method (see the accounting policy for “UOP
depreciation, depletion and amortisation”).
tangible assets
ACQUISITION OF MINERAL INTERESTS
Costs incurred for the acquisition of mineral interests are
capitalised in connection with the assets acquired (such as
exploration potential, possible and probable reserves and
proved reserves). When the acquisition is related to a set
DEVELOPMENT EXPENDITURE
Development expenditure,
the costs related
to unsuccessful and damaged development wells, are
in progress — proved”.
capitalised as “Tangible asset
Development costs are incurred to obtain access to proved
including
Management report | Consolidated financial statements | Annex 203
reserves and to provide facilities for extracting, treating,
gathering and storing the oil and gas. They are amortised,
from the commencement of production, generally on a
UOP basis. When development projects are unfeasible/not
carried on, the related costs are written off when it is decided
to abandon the project. Development costs are tested for
impairment in accordance with the criteria described in the
accounting policy for “Property, plant and equipment”.
UOP DEPRECIATION, DEPLETION AND AMORTISATION
Proved oil and gas assets are depreciated generally under
the UOP method, as their useful life is closely related to
the availability of proved oil and gas reserves, by applying,
to the depreciable amounts at the end of each quarter a
rate representing the ratio between the volumes extracted
during the quarter and the reserves existing at the end of
the quarter, increased by the volumes extracted during
the quarter. This method is applied with reference to
the smallest aggregate representing a direct correlation
between expenditures to be depreciated and oil and gas
reserves. Proved exploration rights and acquired proved
mineral interests are amortised over proved reserves;
proved exploration and appraisal costs and development
expenditure are depreciated over proved developed
reserves, while common facilities are depreciated over
total proved reserves. Proved reserves are determined
according to US SEC rules that require the use of the yearly
average oil and gas prices for assessing the economic
producibility; material changes in reference prices could
result in depreciation charges not reflecting the pattern in
which the assets’ future economic benefits are expected
to be consumed to the extent that, for example, certain
non-current assets would be fully depreciated within a
short term. In these cases the reserves considered in
determining the UOP rate are estimated on the basis of
economic viability parameters, reasonable and consistent
with management’s expectations of production, in order
to recognise depreciation charges that more appropriately
reflect the expected utilization of the assets concerned.
PRODUCTION COSTS
Production costs are those costs incurred to operate and
maintain wells and field equipment and are recognised as an
expense as incurred.
PRODUCTION SHARING AGREEMENTS AND SERVICE
CONTRACTS
Oil and gas reserves related to Production Sharing
Agreements are determined on the basis of contractual
terms related to the recovery of the contractor’s costs
to undertake and finance exploration, development and
production activities at its own risk (Cost Oil) and the
Company’s stipulated share of the production remaining
after such cost recovery (Profit Oil). Revenues from the sale
of the lifted production, against both Cost Oil and Profit Oil,
are accounted for on an accrual basis, whilst exploration,
development and production costs are accounted for
according to the above-mentioned accounting policies.
The Company’s share of production volumes and reserves
includes the share of hydrocarbons that corresponds to the
taxes to be paid, according to the contractual agreement,
by the national government on behalf of the Company. As
a consequence, the Company has to recognise at the same
time an increase in the taxable profit, through the increase
of the revenue, and a tax expense.
A similar scheme applies to service contracts.
PLUGGING AND ABANDONMENT OF WELLS
Costs expected to be incurred with respect to the plugging
and abandonment of a well, dismantlement and removal of
production facilities, as well as site restoration, are capitalised,
consistent with the accounting policy described under “Property,
plant and equipment”, and then depreciated on a UOP basis.
Significant accounting estimates and judgements: oil and
natural gas activities
Engineering estimates of the Company’s oil and gas
reserves are inherently uncertain. Proved reserves are
the estimated volumes of crude oil, natural gas and gas
condensates, liquids and associated substances which
geological and engineering data demonstrate that can be
economically producible with reasonable certainty from
known reservoirs under existing economic conditions
and operating methods. Although there are authoritative
guidelines regarding
the engineering and geological
criteria that must be met before estimated oil and gas
reserves can be categorised as “proved”, the accuracy
of reserve estimates depends on a number of factors,
assumptions and variables, including: (i) the quality of
available geological, technical and economic data and their
interpretation and judgement; (ii) projections regarding
future rates of production and operating costs as well
as timing and amount of development expenditures; (iii)
changes in the prevailing tax rules, other government
regulations and contractual conditions; (iv) results of
drilling, testing and the actual production performance of
Eni’s reservoirs after the date of the estimates which may
drive substantial upward or downward revisions; and (v)
changes in oil and natural gas prices which could affect
expected future cash flows and the quantities of Eni’s
proved reserves since the estimates of reserves are based
on prices and costs existing as of the date when these
estimates are made. Lower oil prices or the projections of
higher operating and development costs may impair the
ability of the Company to economically produce reserves
leading to downward reserve revisions.
Eni Annual Report 2020 204
Many of the factors, assumptions and variables involved in
estimating proved reserves are subject to change over time
and therefore affect the estimates of oil and natural gas
reserves. Similar uncertainties concern unproved reserves.
The determination of whether potentially economic
oil and natural gas reserves have been discovered by
an exploration well is made within a year after well
completion. The evaluation process of a discovery, which
requires performing additional appraisal activities on the
potential oil and natural gas field and establishing the
optimum development plans, can take longer, in most
cases, depending on the complexity of the project and
on the size of capital expenditures required. During this
period, the costs related to these exploration wells remain
suspended on the balance sheet. In any case, all such
capitalised costs are reviewed, at least, on an annual basis
to confirm the continued intent to develop, or otherwise to
extract value from the discovery.
Field reserves will be categorised as proved only when
all the criteria for attribution of proved status have been
met. Proved reserves can be classified as developed or
undeveloped. Volumes are classified into proved developed
reserves as a consequence of development activity.
Generally, reserves are booked as proved developed at the
start of production. Major development projects typically
take one to four years from the time of initial booking to the
start of production.
Estimated proved reserves are used
in determining
depreciation, amortisation and depletion charges and
impairment charges. Assuming all other variables are
held constant, an increase in estimated proved developed
reserves for each field decreases depreciation, amortisation
and depletion charge under the UOP method. Conversely,
a decrease
in estimated proved developed reserves
increases depreciation, amortisation and depletion charge.
PROPERTY, PLANT AND EQUIPMENT
including
Property, plant and equipment,
investment
properties, are recognised using the cost model and stated
at their purchase price or construction cost including any
costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable of
operating in the manner intended by management. For
assets that necessarily take a substantial period of time
to get ready for their intended use, the purchase price or
construction cost comprises the borrowing costs incurred
in the period to get the asset ready for use that would have
been avoided if the expenditure had not been made.
In the case of a present obligation for dismantling
and removal of assets and restoration of sites, the
initial carrying amount of an item of property, plant and
equipment includes the estimated (discounted) costs to be
incurred when the removal event occurs; a corresponding
amount is recognised as part of a specific provision
(see the accounting policy for “Decommissioning and
restoration liabilities”). Analogous approach is adopted for
present obligations to realise social projects in oil and gas
development areas.
Property, plant and equipment are not revalued for financial
reporting purposes.
Expenditures on upgrading, revamping and reconversion
are recognised as items of property, plant and equipment
when it is probable that they will increase the expected
future economic benefits of the asset. Assets acquired
for safety or environmental reasons, although not directly
increasing the future economic benefits of any particular
existing item of property, plant and equipment, qualify for
recognition as assets when they are necessary for running
the business.
Depreciation of tangible assets begins when they are
available for use, i.e. when they are in the location and
condition necessary for it to be capable of operating as
planned. Property, plant and equipment are depreciated on
a systematic basis over their useful life. The useful life is the
period over which an asset is expected to be available for
use by the Company. When tangible assets are composed
of more than one significant part with different useful
lives, each part is depreciated separately. The depreciable
amount is the asset’s carrying amount less its residual
value at the end of its useful life, if it is significant and can
be reasonably determined. Land is not depreciated, even
when acquired together with a building. Tangible assets
held for sale are not depreciated (see the accounting policy
for “Assets held for sale and discontinued operations”).
Changes in the asset’s useful life, in its residual value or in
the pattern of consumption of the future economic benefits
embodied in the asset, are accounted for prospectively.
Assets to be handed over for no consideration are
depreciated over the shorter term between the duration of
the concession or the asset’s useful life.
Replacement costs of identifiable parts in complex assets
are capitalised and depreciated over their useful life;
the residual carrying amount of the part that has been
substituted is charged to the profit and loss account. Non-
removable leasehold improvements are depreciated over
the earlier of the useful life of the improvements and the
lease term. Expenditures for ordinary maintenance and
repairs are recognised as an expense as incurred.
The carrying amount of property, plant and equipment is
derecognised on disposal or when no future economic
benefits are expected from its use or disposal; the arising
gain or loss is recognised in the profit and loss account.
Management report | Consolidated financial statements | Annex 205
LEASES14, 15
A contract is, or contains, a lease, if the contract conveys
the right to control the use of an identified asset for a period
of time in exchange for consideration16; such right exists
whether, throughout the period of use, the customer has
both the right to obtain substantially all of the economic
benefits from use of the identified asset and the right to
direct the use of the identified asset.
At the commencement date of the lease (i.e. the date on which
the underlying asset is available for use), a lessee recognises
on the balance sheet an asset representing its right to use the
underlying leased asset (hereinafter also referred as right-of-
use asset) and a liability representing its obligation to make
lease payments during the lease term (hereinafter also referred
as lease liability17). The lease term is the non-cancellable
period of a contract, together with, if reasonably certain,
periods covered by extension options or by the non-exercise of
termination options.
In particular, the lease liability is initially recognised at the
present value of the following lease payments18 that are
not paid at the commencement date: (i) fixed payments
(including in-substance fixed payments), less any lease
incentives receivable; (ii) variable lease payments that
depend on an index or a rate19; (iii) amounts expected to
be payable by the lessee under residual value guarantees;
(iv) the exercise price of a purchase option if the lessee
is reasonably certain to exercise that option; and (v)
payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising an option to terminate
the lease. The lease payments are discounted using the
interest rate implicit in the lease or, if that rate cannot be
readily determined, the lessee’s incremental borrowing
rate. The latter is determined considering the term of the
lease, the frequency and currency of the contractual lease
payments, as well as the features of the lessee’s economic
in the country risk premium
environment (reflected
assigned to each country where Eni operates).
After the initial recognition, the lease liability is measured
on an amortised cost basis and is remeasured, normally, as
an adjustment to the carrying amount of the related right-
of-use asset, to reflect changes to the lease payments due,
essentially, to: (i) modifications in the lease contract not
accounted as a separate lease; (ii) changes in indexes or
rates (used to determine the variable lease payments); or
(iii) changes in the assessment of contractual options (e.g.
options to purchase the underlying asset, extension or
termination options).
The right-of-use asset is initially measured at cost, which
comprises: (i) the amount of the initial measurement of
the lease liability; (ii) any initial direct costs incurred by the
lessee20; (iii) any lease payments made at or before the
commencement date, less any lease incentives received;
and (iv) an estimate of costs to be incurred by the lessee
in dismantling and removing the underlying asset, restoring
the site on which it is located or restoring the underlying
asset to the condition required by the terms and conditions
of the lease. After the initial recognition, the right-of-use
is adjusted for any accumulated depreciation21,
asset
any accumulated impairment losses (see the accounting
policy for “Impairment of non-financial assets”) and any
remeasurement of the lease liability.
The depreciation charges of the right-of-use asset and the
interest expenses on the lease liability directly attributable
to the construction of an asset are capitalised as part of
the cost of such asset and subsequently recognised in the
profit and loss account through depreciation/impairments
or write-off, mainly in the case of exploration assets.
In the oil and gas activities, the operator of an unincorporated
joint operation which enters into a lease contract as the
(14) The accounting policies related to leases have been defined on the basis of IFRS 16 “Leases” effective from January 1, 2019. As allowed by the accounting standard,
the new requirements have been applied without restating the comparative years. The previous accounting policies about leases required essentially that: (i) assets held
under finance lease, or under arrangements that did not take the legal form of a finance lease but substantially transferred all the risks and rewards incidental to ownership
of the leased asset, were recognised, at the commencement of the lease, at their fair value, net of grants attributable to the lessee or, if lower, at the present value of the
minimum lease payments, within property, plant and equipment as a contra account to a financing payable to the lessor; and (ii) lease payments under an operating lease
were recognised as an expense over the lease term.
(15) As expressly provided for in IFRS 16, this accounting policy does not apply to leases to explore for and extract resources such as those for oil and gas rights, leases
of land and any rights of way related to oil and gas activities.
(16) The assessment of whether the contract is, or contains, a lease is performed at the inception date, that is the earlier of the date of a lease agreement and the date of
commitment by the parties to the principal terms and conditions of the lease.
(17) Eni applies the recognition exemptions allowed for short-term leases (for certain classes of underlying assets) and low-value leases, by recognising the lease
payments associated with those leases as an expense on a straight-line basis over the lease term.
(18) Eni, in accordance with the practical expedient allowed by the accounting standard, does not separate non-lease components from lease components except for
main contracts related to upstream activities (drilling rigs), which provide for single payments relating to both lease and non-lease components.
(19) Conversely, the other kinds of variable lease payments (e.g. payments that depend on the use of an underlying leased asset) are not included in the carrying amount
of the lease liability, but are recognised in the profit and loss account as operating expenses over the lease term.
(20) Initial direct costs are incremental costs of obtaining a lease that would not have been incurred if the lease had not been obtained.
(21) Depreciation charges are recognised on a systematic basis from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the
end of the lease term. Nevertheless, if the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, or if the cost of the right-of-use
asset reflects that the lessee will exercise a purchase option, the right-of-use asset is depreciated from the commencement date to the end of the useful life of the
underlying asset.
Eni Annual Report 2020 206
sole signatory recognises on the balance sheet: (i) the
entire lease liability if, based on the contractual provisions
and any other relevant facts and circumstances, it has
primary responsibility for the liability towards the third-
party supplier; and (ii) the entire right-of-use asset, unless,
on the basis of the terms and conditions of the contract,
there is a sublease with the followers.
The followers’ share of the right-of-use asset, recognised
by the operator, will be recovered according to the joint
operation’s contractual arrangements by billing the project
costs attributable to the followers and collecting the
related cash calls. Costs recovered from the followers are
recognised as “Other income and revenues” in the profit
and loss account and as net cash provided by operating
activities in the statement of cash flows.
Differently, if a lease contract is signed by all the partners,
Eni recognises its share of the right-of-use asset and lease
liability on the balance sheet based on its working interest.
If Eni does not have primary responsibility for the lease
liability, it does not recognise any right-of-use asset and
lease liability related to the lease contract.
When lease contracts are entered into by companies other
than subsidiaries that act as operators on behalf of the
other participating companies (the so-called operating
companies), consistent with the provision to recover from
the followers the costs related to the oil and gas activities,
the participating companies recognise their share of the
right-of-use assets and the lease liabilities based on their
working interest, defined according to the expected use, to
the extent that it is reliably determinable, of the underlying
assets.
Significant accounting estimates and judgements: lease
transactions
With reference to lease contracts, management makes
significant estimates and
judgements related to: (i)
determining the lease term, making assumptions about
the exercise of extension and/or termination options;
(ii) determining the lessee’s incremental borrowing rate;
(iii) identifying and, where appropriate, separating non-
lease components from lease components, where an
observable stand-alone price is not readily available, taking
into account also the analysis performed with external
experts; (iv) recognising lease contracts, for which the
underlying assets are used in oil and gas activities (mainly
drilling rigs and FPSOs), entered into as operator within
an unincorporated
if the
operator has primary responsibility for the liability towards
the third-party supplier and the relationships with the
followers; (v) identifying the variable lease payments and
the related characteristics in order to include them in the
measurement of the lease liability.
joint operation, considering
INTANGIBLE ASSETS
Intangible assets are
identifiable non-monetary assets
without physical substance, controlled by the Company and
able to produce future economic benefits, and goodwill. An
asset is classified as intangible when management is able to
distinguish it clearly from goodwill.
Intangible assets are
initially recognised at cost as
determined by the criteria used for tangible assets and they
are not revalued for financial reporting purposes.
Intangible assets with finite useful lives are amortised on
a systematic basis over their useful life; the amount to be
amortised and the recoverability of the carrying amount are
determined in accordance with the criteria described in the
accounting policy for “Property, plant and equipment”.
Goodwill and intangible assets with indefinite useful lives
are not amortised. For the recoverability of the carrying
amounts of the goodwill and other intangible assets see the
accounting policy “Impairment of non-financial assets”.
Costs of obtaining a contract with a customer are recognised
on the balance sheet if the Company expects to recover
those costs. The intangible asset arising from those costs is
amortised on a systematic basis, that is consistent with the
transfer to the customer of the goods or services to which
the asset relates, and is tested for impairment.
Costs of technological development activities are capitalised
when: (i) the cost attributable to the development activity
can be measured reliably; (ii) there is the intention and the
availability of financial and technical resources to make the
asset available for use or sale; and (iii) it can be demonstrated
that the asset is able to generate probable future economic
benefits.
The carrying amount of intangible assets is derecognised
on disposal or when no future economic benefits are
expected from its use or disposal; any resulting gain or loss
is recognised in the profit and loss account.
IMPAIRMENT OF NON-FINANCIAL ASSETS
Non-financial assets (tangible assets, intangible assets and
right-of-use assets) are tested for impairment whenever
events or changes in circumstances indicate that the
carrying amounts for those assets may not be recoverable.
The recoverability assessment is performed for each cash-
generating unit (hereinafter also CGU) represented by the
smallest identifiable group of assets that generate cash
inflows that are largely independent of the cash inflows
from other assets or group of assets.
Cash-generating units may include corporate assets which
do not generate cash inflows independently of other assets
or group of assets, allocable on a reasonable and consistent
Management report | Consolidated financial statements | Annex 207
basis. Corporate assets not attributable to a single cash-
generating unit are allocated to a group of cash-generating
units. Goodwill is tested for impairment at least annually,
and whenever there is any indication of impairment, at the
lowest level within the entity at which it is monitored for
internal management purposes. Right-of-use assets, which
generally do not generate cash inflows independently of
other assets or groups of assets, are allocated to the CGU to
which they belong; the right-of-use assets which cannot be
fully attributed to a CGU are considered as corporate assets.
The recoverability of the carrying amount of common
facilities within the E&P segment is assessed by considering
the set of recoverable amounts of the CGUs benefiting from
the common facility.
The recoverability of a CGU is assessed by comparing its
carrying amount with the recoverable amount, which is the
higher of the CGU’s fair value less costs of disposal and its
value in use. Value in use is the present value of the future
cash flows expected to be derived from continuing use of
the CGU and, if significant and reliably measurable, the
cash flows expected to be obtained from its disposal at the
end of its useful life, after deducting the costs of disposal.
The expected cash flows are determined on the basis of
reasonable and supportable assumptions that represent
management’s best estimate of the range of economic
conditions that will exist over the remaining useful life of
the cash-generating unit, giving greater weight to external
evidence.
The value in use of CGUs which include material right-of-use
assets is calculated, normally, by ignoring lease payments
included in the measurement of the lease liabilities.
With reference to commodity prices, management uses
the price scenario adopted for economic and financial
projections and for the evaluation of investments over their
entire life. In particular, for the cash flows associated with
oil, natural gas and petroleum products prices (and prices
derived from them), the price scenario is approved by the
Board of Directors and is based on management’s planning
assumptions, in the short and medium term, takes into
account the projections of market analysts and, if there is a
sufficient liquidity and reliability level, on the forward prices
prevailing in the marketplace.
For impairment test purposes, cash outflows expected
to be incurred to guarantee compliance with laws and
regulations regarding CO2 emissions (e.g. Emission Trading
Scheme) or on a voluntary basis (e.g. cash outflows related
to forestry certificates acquired or produced consistent with
the Company’s decarbonization strategy – hereinafter also
forestry) are taken into account.
In particular, in estimating value in use, the cash outflows
for forestry projects22 are included, consistent with the
targets of the decarbonization strategy, within the expected
operating cash outflows; in this regard, considering that
the forestry projects can be developed in countries where
Eni does not carry out operating activities and given the
difficulty to allocate such cash outflows, on a reasonable
and consistent basis, to CGUs of the relevant segment, the
related discounted cash outflows are treated as a reduction
of the headroom of that specific segment.
For the determination of value in use, the estimated future
cash flows are discounted using a rate that reflects a
current market assessment of the time value of money and
of the risks specific to the asset that are not reflected in
the estimated future cash flows. In particular, the discount
rate used is the Weighted Average Cost of Capital (WACC)
adjusted for the specific country risk of the CGU. These
information
adjustments are measured considering
from external parties. WACC differs considering the risk
associated with each operating segment/business where
the asset operates. In particular, for the assets belonging to
the Global Gas & LNG Portfolio (GGP) segment, the Chemical
business and each business within the Eni gas e luce, Power
& Renewables segment, taking into account their different
risk compared to Eni as a whole, specific WACC rates
have been defined on the basis of a sample of comparable
companies, adjusted to take into account the specific
country-risk premium. For the other segments/businesses,
a single WACC is used considering that the risk is the same
to that of Eni as a whole. Value in use is calculated net of the
tax effect as this method results in values similar to those
resulting from discounting pre-tax cash flows at a pre-tax
discount rate derived, through an iteration process, from a
post-tax valuation.
When the carrying amount of the CGU, including goodwill
allocated thereto, determined taking
into account any
impairment loss of the non-current assets belonging to
the CGU, exceeds its recoverable amount, the excess is
recognised as an impairment loss. The impairment loss is
allocated first to reduce the carrying amount of goodwill;
any remaining excess is allocated to the other assets of the
unit pro-rata on the basis of the carrying amount of each
asset in the CGU, up to the recoverable amount of assets
with finite useful lives.
When an impairment loss no longer exists or has decreased,
a reversal of the impairment loss is recognised in the profit
and loss account. The impairment reversal shall not exceed
the carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised for
(22) For the recognition criteria of forestry certificates see the accounting policy for “Costs”.
Eni Annual Report 2020 208
the asset in prior years. An impairment loss recognised for
goodwill is not reversed in a subsequent period23.
GRANTS RELATED TO ASSETS
Government grants related to assets are recognised by
deducting them in calculating the carrying amount of the
related assets when there is reasonable assurance that the
Company will comply with the conditions attaching to them
and the grants will be received.
INVENTORIES
Inventories, including compulsory stock, are measured at the
lower of purchase or production cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion
and the estimated costs necessary to make the sale, or, with
reference to inventories of crude oil and petroleum products
already included in binding sale contracts, the contractual
selling price. Inventories which are principally acquired with
the purpose of selling in the near future and generating a
profit from fluctuations in price are measured at fair value
less costs to sell and any subsequent changes in fair value are
recognised in the profit and loss account. Materials and other
supplies held for use in production are not written down below
cost if the finished products in which they will be incorporated
are expected to be sold at or above cost.
The cost of
inventories of hydrocarbons (crude oil,
condensates and natural gas) and petroleum products is
determined by applying the weighted average cost method
on a three-month basis, or on a different time period (e.g.
monthly), when it is justified by the use and the turnover of
inventories of crude oil and petroleum products; the cost
of inventories of the Chemical business is determined by
applying the weighted average cost on an annual basis.
When take-or-pay clauses are included in long-term gas
purchase contracts, pre-paid gas volumes that are not
withdrawn to fulfill minimum annual take obligations are
measured using the pricing formulas contractually defined.
They are recognised under “Other assets” as “Deferred
costs”, as a contra to “Trade and other payables” or, after
settlement, to “Cash and cash equivalents”. The allocated
deferred costs are charged to the profit and loss account:
(i) when natural gas is actually withdrawn — the related
cost is included in the determination of the weighted
average cost of inventories; and (ii) for the portion which
is not recoverable, when it is not possible to withdraw the
previously pre-paid gas, within the contractually defined
deadlines. Furthermore, the allocated deferred costs are
tested for economic recoverability by comparing the related
carrying amount and their net realisable value, determined
adopting the same criteria described for inventories.
judgements:
Significant accounting estimates and
impairment of non-financial assets
The recoverability of non-financial assets is assessed
whenever events or changes in circumstances indicate
that carrying amounts of the assets are not recoverable.
Such impairment indicators include changes in the Group’s
business plans, changes in commodity prices leading to
unprofitable performance, a reduced capacity utilisation
of plants and, for oil and gas properties, significant
downward revisions of estimated proved reserve quantities
or significant increase of the estimated development and
production costs. Determination as to whether and how
much an asset is impaired involves management estimates
on highly uncertain and complex matters such as future
commodity prices, future discount rates, future development
expenditure and production costs, the effects of inflation
and technology
improvements on operating expenses,
production profiles and the outlook for global or regional
market supply-and-demand conditions also with reference
to the decarbonization process and the effects of changes
in regulatory requirements. The definition of CGUs and the
identification of their appropriate grouping for the purpose
of testing for impairment the carrying amount of goodwill,
corporate assets as well as common facilities within the E&P
segment, require judgement by management. In particular,
CGUs are identified considering, inter alia, how management
monitors the entity’s operations (such as by business lines)
or how management makes decisions about continuing or
disposing of the entity’s assets and operations.
Similar remarks are valid for assessing the physical
recoverability of assets recognised on the balance sheet
(deferred costs — see also the accounting policy for
“Inventories”) related to natural gas volumes not withdrawn
under long-term supply contracts with take-or-pay clauses.
The expected future cash flows used for impairment
analyses are based on judgemental assessments of future
production volumes, prices and costs, considering available
information at the date of review and are discounted by
using a rate which considers the risks specific to the asset.
For oil and natural gas properties, the expected future
cash flows are estimated principally based on developed
and undeveloped proved reserves including, among other
(23) Impairment losses recognised for goodwill in an interim period are not reversed also when, considering conditions existing in a subsequent interim period, they would
have been recognised in a smaller amount or would not have been recognised.
Management report | Consolidated financial statements | Annex elements, production taxes and the costs to be incurred
for the reserves yet to be developed. When appropriate
according to facts and circumstances management’s
estimate could also include risk-adjusted unproved reserves.
The estimate of the future amount of production is based
on assumptions related to future commodity prices, lifting
and development costs, field decline rates, market demand
and other factors. The cash flows associated to oil and gas
commodities are estimated on the basis of forward market
information, if there is a sufficient liquidity and reliability
level, on the consensus of independent specialised analysts
and on management’s forecasts about the evolution of the
supply and demand fundamentals.
More details on the main assumptions underlying the
determination of the recoverable amount of tangible, intangible
and right-of-use assets are set out in note 14 – Impairment
review of tangible and intangible assets and right-of-use
assets.
FINANCIAL INSTRUMENTS
FINANCIAL ASSETS
Financial assets are classified, on the basis of both
contractual cash flow characteristics and the entity’s
in the following
business model for managing them,
categories: (i) financial assets measured at amortised cost;
(ii) financial assets measured at fair value through other
comprehensive income (hereinafter also OCI); (iii) financial
assets measured at fair value through profit or loss.
At initial recognition, a financial asset is measured at its fair
value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs that are directly
attributable; at initial recognition, trade receivables that do
not have a significant financing component are measured at
their transaction price.
After initial recognition, financial assets whose contractual
terms give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding are
measured at amortised cost if they are held within a business
model whose objective is to hold financial assets in order to
collect contractual cash flows (the so-called hold to collect
business model). For financial assets measured at amortised
cost, interest income determined using the effective interest
rate, foreign exchange differences and any impairment losses24
(see the accounting policy for “Impairment of financial assets”)
are recognised in the profit and loss account.
Conversely, financial assets that are debt instruments
are measured at fair value through OCI (hereinafter also
209
FVTOCI) if they are held within a business model whose
objective is achieved by both collecting contractual cash
flows and selling financial assets (the so-called hold to
collect and sell business model). In these cases: (i) interest
income determined using the effective interest rate, foreign
exchange differences and any impairment losses (see the
accounting policy for “Impairment of financial assets”) are
recognised in the profit and loss account; (ii) changes in
fair value of the instruments are recognised in equity, within
other comprehensive income. The accumulated changes in
fair value, recognised in the equity reserve related to other
comprehensive income, is reclassified to the profit and loss
account when the financial asset is derecognised. Currently
the Group does not have any financial assets measured at
fair value through OCI.
A financial asset represented by a debt instrument that
is neither measured at amortised cost nor at FVTOCI, is
measured at fair value through profit or loss (hereinafter
FVTPL); financial assets held for trading fall into this category.
Interest income on assets held for trading contributes to the
fair value measurement of the instrument and is recognised
in “Finance income (expense)”, within “Net finance income
(expense) from financial assets held for trading”.
When the purchase or sale of a financial asset is under a
contract whose terms require delivery of the asset within the
time frame established generally by regulation or convention
in the marketplace concerned, the transaction is accounted
for on the settlement date.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, demand
deposits, as well as financial assets originally due, generally,
up to three months, readily convertible to known amount of
cash and subject to an insignificant risk of changes in value.
IMPAIRMENT OF FINANCIAL ASSETS
The expected credit loss model is adopted for the impairment
of financial assets that are debt instruments, but are not
measured at FVTPL25.
In particular, the expected credit losses are generally
the
measured by multiplying:
counterparty’s credit risk net of any collateral held and
other credit enhancements (Exposure At Default, EAD); (ii)
the probability that the default of the counterparty occurs
(Probability of Default, PD); and (iii) the percentage estimate
of the exposure that will not be recovered in case of default
(Loss Given Default, LGD), considering the past experiences
and the range of recovery tools that can be activated (e.g.
extrajudicial and/or legal proceedings, etc.).
the exposure
(i)
to
(24) Receivables and other financial assets measured at amortised cost are presented on the balance sheet net of their loss allowance.
(25) The expected credit loss model is also adopted for issued financial guarantee contracts not measured at FVTPL. Expected credit losses recognised on issued finan-
cial guarantees are not material.
Eni Annual Report 2020 210
With reference to trade and other receivables, Probabilities
of Default of counterparties are determined by adopting the
internal credit ratings already used for credit worthiness
and are periodically reviewed using,
inter alia, back-
testing analyses; for government entities (e.g. National
Oil Companies), the Probability of Default, represented
essentially by the probability of a delayed payment, is
determined by using, as input data, the country risk
premium adopted to determine WACC for the impairment
review of non-financial assets.
For customers without internal credit ratings, the expected
credit losses are measured by using a provision matrix, defined
by grouping, where appropriate, receivables into adequate
clusters to which apply expected loss rates defined on the
basis of their historical credit loss experiences, adjusted, where
appropriate, to take into account forward-looking information
on credit risk of the counterparty or clusters of counterparties26.
Considering the characteristics of the reference markets,
financial assets with more than 180 days past due or,
in any case, with counterparties undergoing
litigation,
restructuring or renegotiation, are considered to be in default.
Counterparties are considered undergoing litigation when
judicial/legal proceedings aimed to recover a receivable
have been activated or are going to be activated. Impairment
losses of trade and other receivables are recognised in the
profit and loss account, net of any impairment reversal, within
the line item of the profit and loss account “Net (impairment
losses) reversals of trade and other receivables”.
The financing receivables held for operating purposes,
granted to associates and joint ventures, for which settlement
is neither planned nor likely to occur in the foreseeable
future and which in substance form part of the entity’s net
investment in these investees, are tested for impairment,
first, on the basis of the expected credit loss model and,
then, together with the carrying amount of the investment in
the associate/joint venture, in accordance with the criteria
indicated in the accounting policy for “The equity method of
accounting”. In applying the expected credit loss model, any
adjustments to the carrying amount of long-term interest
that arise from applying the accounting policy for “The equity
method of accounting” are not taken into account.
judgements:
Significant accounting estimates and
impairment of financial assets
Measuring impairment losses of financial assets requires
management evaluation of complex and highly uncertain
elements such as, for example, Probabilities of Default of
counterparties, the assessment of any collateral or other
credit enhancements, the expected exposure that will not
be recovered in case of default, as well as the definition of
customers’ clusters to be adopted.
Further details on the main assumptions underlying the
measurement of expected credit losses of financial assets
are provided in note 7 – Trade and other receivables.
in equity
income, without subsequent
INVESTMENTS IN EQUITY INSTRUMENTS
Investments
instruments that are not held
for trading are measured at fair value through other
transfer
comprehensive
of fair value changes to profit or loss on derecognition
of these investments; conversely, dividends from these
investments are recognised in the profit and loss account,
within the line item “Income (Expense) from investments”,
unless they clearly represent a recovery of part of the cost
of the investment. In limited circumstances, an investment
in equity instruments can be measured at cost if it is an
appropriate estimate of fair value.
FINANCIAL LIABILITIES
At initial recognition, financial liabilities, other than derivative
financial instruments, are measured at their fair value, minus
transaction costs that are directly attributable, and are
subsequently measured at amortised cost.
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE
ACCOUNTING
Derivative financial
including embedded
instruments,
derivatives (see below) that are separated from the host
contract, are assets and liabilities measured at their fair value.
With reference to the defined risk management objectives
and strategy, the qualifying criteria for hedge accounting
requires: (i) the existence of an economic relationship
between the hedged item and the hedging instrument in
order to offset the related value changes and the effects
of counterparty credit risk do not dominate the economic
relationship between the hedged item and the hedging
instrument; and (ii) the definition of the relationship
between the quantity of the hedged item and the quantity
of the hedging instrument (the so-called hedge ratio)
consistent with the entity’s risk management objectives,
under a defined risk management strategy; the hedge ratio
is adjusted, where appropriate, after taking into account
any adequate rebalancing. A hedging relationship
is
discontinued prospectively, in its entirety or a part of it, when
it no longer meets the risk management objectives on the
basis of which it qualified for hedge accounting, it ceases
to meet the other qualifying criteria or after rebalancing it.
When derivatives hedge the risk of changes in the fair value
(26) For credit exposures arising from intragroup transactions, the recovery rate is normally assumed equal to 100% taking into account, inter alia, the Group central
treasury function which supports both financial and capital needs of subsidiaries.
Management report | Consolidated financial statements | Annex 211
of the hedged items (fair value hedge, e.g. hedging of the
variability in the fair value of fixed interest rate assets/
liabilities), the derivatives are measured at fair value through
profit and loss account. Consistently, the carrying amount
of the hedged item is adjusted to reflect, in the profit and
loss account, the changes in fair value of the hedged item
attributable to the hedged risk; this applies even if the
hedged item should be otherwise measured.
When derivatives hedge the exposure to variability in cash
flows of the hedged items (cash flow hedge, e.g. hedging the
variability in the cash flows of assets/liabilities as a result
of the fluctuations of exchange rate), the effective changes
in the fair value of the derivatives are initially recognised in
the equity reserve related to other comprehensive income
and then reclassified to the profit and loss account in the
same period during which the hedged transaction affects
the profit and loss account.
If a hedged forecast transaction subsequently results in
the recognition of a non-financial asset or a non-financial
liability, the accumulated changes in fair value of hedging
derivatives, recognised in equity, are included directly in the
carrying amount of the hedged non-financial asset/liability
(commonly referred to as a “basis adjustment”).
The changes in the fair value of derivatives that are not
designated as hedging instruments, including any ineffective
portion of changes in fair value of hedging derivatives, are
recognised in the profit and loss account. In particular, the
changes in the fair value of non-hedging derivatives on interest
rates and exchange rates are recognised in the profit and loss
account line item “Finance income (expense)”; conversely,
the changes in the fair value of non-hedging derivatives on
commodities are recognised in the profit and loss account
line item “Other operating (expense) income”. Derivatives
embedded in financial assets are not accounted for separately;
in such circumstances, the entire hybrid instrument is classified
depending on the contractual cash flow characteristics of the
financial instrument and the business model for managing it
(see the accounting policy for “Financial assets”). Derivatives
embedded in financial liabilities and/or non-financial assets are
separated if: (i) the economic characteristics and risks of the
embedded derivative are not closely related to the economic
characteristics and risks of the host contract; (ii) a separate
instrument with the same terms as the embedded derivative
would meet the definition of a derivative; and (iii) the entire
hybrid contract is not measured at FVTPL.
Eni assesses the existence of embedded derivatives to
be separated when it becomes party to the contract and,
afterwards, when a change in the terms of the contract that
modifies its cash flows occurs.
Contracts to buy or sell commodities entered into and
continued to be held for the purpose of their receipt or
delivery in accordance with the Group’s expected purchase,
sale or usage requirements are recognised on an accrual
basis (the so-called normal sale and normal purchase
exemption or own use exemption).
OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES
Financial assets and liabilities are set off on the balance
sheet if the Group currently has a legally enforceable right to
set off and intends to settle on a net basis (or to realise the
asset and settle the liability simultaneously).
FINANCIAL ASSETS AND
DERECOGNITION OF
LIABILITIES
Transferred financial assets are derecognised when the
contractual rights to receive the cash flows from the financial
assets expire or are transferred to another party. Financial
liabilities are derecognised when they are extinguished, or
when the obligation specified in the contract is discharged,
cancelled or expired.
PROVISIONS, CONTINGENT LIABILITIES AND
CONTINGENT ASSETS
A provision is a liability of uncertain timing or amount on
the balance sheet date. Provisions are recognised when:
(i) there is a present obligation, legal or constructive, as a
result of a past event; (ii) it is probable that an outflow of
resources embodying economic benefits will be required to
settle the obligation; and (iii) the amount of the obligation
can be reliably estimated. The amount recognised as a
provision is the best estimate of the expenditure required to
settle the present obligation or to transfer it to third parties
at the balance sheet date. The amount recognised for
onerous contracts is the lower of the cost necessary to fulfill
the obligations, net of expected economic benefits deriving
from the contracts, and any compensation or penalties
arising from failure to fulfill these obligations. Where the
effect of the time value is material, and the payment date
of the obligations can be reasonably estimated, provisions
to be accrued are the present value of the expenditures
expected to be required to settle the obligation at a discount
rate that reflects the Company’s average borrowing rate
taking into account the risks associated with the obligation.
The change in provisions due to the passage of time is
recognised within “Finance income (expense)”.
A provision for restructuring costs is recognised only when
the Company has a detailed formal plan for the restructuring
and has raised a valid expectation in the affected parties
that it will carry out the restructuring.
Provisions are periodically reviewed and adjusted to reflect
changes in the estimates of costs, timing and discount
rates. Changes in provisions are recognised in the same
profit and loss account line item where the original provision
was charged.
Eni Annual Report 2020 212
Contingent liabilities are: (i) possible obligations arising from
past events, whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the Company;
or (ii) present obligations arising from past events, whose
amount cannot be reliably measured or whose settlement
will probably not result in an outflow of resources embodying
economic benefits. Contingent liabilities are not recognised in
the financial statements, but are disclosed.
Contingent assets, that are possible assets arising from past
events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future
events not wholly within the control of the Company, are not
recognised in financial statements unless the realisation of
economic benefits is virtually certain. Contingent assets are
disclosed when an inflow of economic benefits is probable.
Contingent assets are assessed periodically to ensure that
developments are appropriately reflected in the financial
statements.
DECOMMISSIONING AND RESTORATION LIABILITIES
Liabilities for decommissioning and restoration costs are
recognized, together with a corresponding amount as part of
the related property, plant and equipment, when the Group has
a legal or constructive obligation and when a reliable estimate
can be made.
Considering the long time span between the recognition of
the obligation and its settlement, the amount recognised
is the present value of the future expenditures expected to
be required to settle the obligation. Any change due to the
unwinding of discount on provisions is recognised within
“Finance income (expense)”.
Such liabilities are reviewed regularly to take into account
the changes in the expected costs to be incurred, contractual
obligations, regulatory requirements and practices in force in
the countries where the tangible assets are located.
The effects of any changes in the estimate of the liability are
recognised generally as an adjustment to the carrying amount
of the related property, plant and equipment; however, if the
resulting decrease in the liability exceeds the carrying amount
of the related asset, the excess is recognised in the profit and
loss account.
Analogous approach is adopted for present obligations to
realise social projects related to operating activities carried
out by the Company.
and
estimates
accounting
Significant
judgements:
decommissioning and restoration liabilities, environmental
liabilities and other provisions
The Group holds provisions for dismantling and removing
items of property, plant and equipment, and restoring land
or seabed at the end of the oil and gas production activity.
Estimating obligations to dismantle, remove and restore
items of property, plant and equipment is complex. It
requires management to make estimates and judgements
with respect to removal obligations that will come to term
many years into the future and contracts and regulations are
often unclear as to what constitutes removal. In addition,
the ultimate financial impact of environmental laws and
regulations is not always clearly known as asset removal
technologies and costs constantly evolve in the countries
where Eni operates, as do political, environmental, safety
and public expectations.
The discount rate used to determine the provision and the
timing of future cash outflows, as well as any related update,
are based on complex managerial judgements.
Decommissioning and restoration provisions, recognised in
the financial statements, include, essentially, the present value
of the expected costs for decommissioning oil and natural
gas facilities at the end of the economic lives of fields, well-
plugging, abandonment and site restoration of the Exploration
& Production segment. Any decommissioning and restoration
provisions associated with the other segments’ assets are
generally not recognised, as the obligations, given their
indeterminate settlement dates, also considering the strategy
to reconvert plants in order to produce low carbon products,
cannot be reliably measured. In this regard, Eni performs
periodic reviews for any changes in facts and circumstances
that might require recognition of a decommissioning and
restoration provision.
As other oil and gas companies, Eni is subject to numerous
EU, national, regional and
laws and
regulations concerning its oil and gas operations, production
and other activities. They include legislations that implement
international conventions or protocols. Environmental liabilities
are recognised when it becomes probable that an outflow
of resources will be required to settle the obligation and such
obligation can be reliably estimated27.
Management, considering the actions already taken, insurance
policies obtained to cover environmental risks and provisions
already recognised, does not expect any material adverse effect
local environmental
(27) With reference to the environmental liabilities assumed, the expected operating costs to be incurred for managing groundwater treatment plants are not included
in the estimates of environmental liabilities because it is not possible to reliably define a time horizon within which the operations of the plant will be terminated. In this
regard, Eni performs periodic reviews for any changes in facts and circumstances, including changes in regulatory framework and technology, that might require the
recognition of the environmental liability.
Management report | Consolidated financial statements | Annex 213
on Eni’s consolidated results of operations and financial position
as a result of such laws and regulations. However, there can be
no assurance that there will not be a material adverse impact on
Eni’s consolidated results of operations and financial position due
to: (i) the possibility of an unknown contamination; (ii) the results
of the ongoing surveys and other possible effects of statements
required by applicable laws; (iii) the possible effects of future
environmental legislations and rules; (iv) the effects of possible
technological changes relating to future remediation; and (v)
the possibility of litigation and the difficulty of determining Eni’s
liability, if any, against other potentially responsible parties with
respect to such litigations and the possible reimbursements.
In addition to environmental and decommissioning and restoration
liabilities, Eni recognises provisions primarily related to legal and
trade proceedings. These provisions are estimated on the basis
of complex managerial judgements related to the amounts to be
recognised and the timing of future cash outflows. After the initial
recognition, provisions are periodically reviewed and adjusted to
reflect the current best estimate.
EMPLOYEE BENEFITS
including
Employee benefits are considerations given by the Group
in exchange for service rendered by employees or for the
termination of employment.
Post-employment benefit plans,
informal
arrangements, are classified as either defined contribution
plans or defined benefit plans depending on the economic
substance of the plan as derived from its principal terms
and conditions. Under defined contribution plans, the
Company’s obligation, which consists in making payments
to the State or to a trust or a fund, is determined on the basis
of contributions due.
The liabilities related to defined benefit plans, net of any
plan assets, are determined on the basis of actuarial
assumptions and charged on an accrual basis during the
employment period required to obtain the benefits.
Net interest includes the return on plan assets and the
interest cost to be recognised in the profit and loss account.
Net interest is measured by applying to the liability, net of
any plan assets, the discount rate used to calculate the
present value of the liability; net interest of defined benefit
plans is recognised in “Finance income (expense)”.
liability,
Remeasurements of the net defined benefit
comprising actuarial gains and
losses, resulting from
changes in the actuarial assumptions used or from changes
arising from experience adjustments, and the return on
plan assets excluding amounts included in net interest,
are recognised within the statement of comprehensive
income. Remeasurements of the net defined benefit liability,
recognised within other comprehensive income, are not
reclassified subsequently to the profit and loss account.
Obligations for long-term benefits are determined by adopting
actuarial assumptions. The effects of remeasurements are
taken to profit and loss account in their entirety.
SHARE-BASED PAYMENTS
The line item “Payroll and related costs” includes the cost
of the share-based incentive plan, consistent with its actual
remunerative nature. The cost of the share-based incentive
plan is measured by reference to the fair value of the equity
instruments granted and the estimate of the number of
shares that eventually vest; the cost is recognised on an
accrual basis pro rata temporis over the vesting period, that
is the period between the grant date and the settlement
date. The fair value of the shares underlying the incentive
plan is measured at the grant date, taking into account the
estimate of achievement of market conditions (e.g. Total
Shareholder Return), and is not adjusted in subsequent
periods; when the achievement is linked also to non-
market conditions, the number of shares expected to vest
is adjusted during the vesting period to reflect the updated
estimate of these conditions. If, at the end of the vesting
period, the incentive plan does not vest because of failure
to satisfy the performance conditions, the portion of cost
related to market conditions is not reversed to the profit
and loss account
judgements:
Significant accounting estimates and
employee benefits and share-based payments
Defined benefit plans are evaluated with reference to
uncertain events and based upon actuarial assumptions
including, among others, discount rates, expected rates
of salary increases, mortality rates, estimated retirement
dates and medical cost trends. The significant assumptions
used to account for defined benefit plans are determined
as follows: (i) discount and inflation rates are based on the
market yields on high quality corporate bonds (or, in the
absence of a deep market of these bonds, on the market
yields on government bonds) and on the expected inflation
rates in the reference currency area; (ii) the future salary
levels of the individual employees are determined including
an estimate of future changes attributed to general
price levels (consistent with inflation rate assumptions),
productivity, seniority and promotion; (iii) healthcare cost
trend assumptions reflect an estimate of the actual future
changes in the cost of the healthcare related benefits
provided to the plan participants and are based on past
and current healthcare cost trends, including healthcare
Eni Annual Report 2020 214
inflation, changes in healthcare utilisation, changes in
health status of the participants and the contributions paid
to health funds; and (iv) demographic assumptions such as
mortality, disability and turnover reflect the best estimate of
these future events for individual employees involved.
Differences in the amount of the net defined benefit liability
(asset), deriving from the remeasurements, comprising,
among others, changes in the current actuarial assumptions,
differences in the previous actuarial assumptions and what
has actually occurred and differences in the return on plan
assets, excluding amounts included in net interest, usually
occur. Similar to the approach followed for the fair value
measurement of financial instruments, the fair value of the
shares underlying the incentive plans is measured by using
complex valuation techniques and identifying, through
structured judgements, the assumptions to be adopted.
EQUITY INSTRUMENTS
TREASURY SHARES
Treasury shares, including shares held to meet the future
requirements of the share-based incentive plans, are recognised
as deductions from equity at cost. Any gain or loss resulting
from subsequent sales is recognised in equity.
HYBRID BONDS
The perpetual subordinated hybrid bonds are classified in the
financial statements as equity instruments considering that
the issuer has the unconditional right to defer, until the date
of its own liquidation, the repayment of the principal amount
and the payment of accrued interest28. Therefore, the issuer
recognises the cash received from the bondholders, net of
costs incurred in issuing the hybrid bonds, as an increase in
Eni owners’ equity; differently, the repayments of the principal
amount and the payments of accrued interest (upon the
arising of the related contractual payment obligation) are
accounted for as a decrease in Eni owners’ equity.
REVENUE FROM CONTRACTS WITH
CUSTOMERS
Revenue from contracts with customers is recognised
on the basis of the following five steps: (i) identifying the
contract with the customer; (ii) identifying the performance
obligations, that are promises in a contract to transfer
goods and/or services to a customer; (iii) determining the
transaction price; (iv) allocating the transaction price to
each performance obligation on the basis of the relative
stand-alone selling prices of each good or service; and (v)
recognising revenue when (or as) a performance obligation
is satisfied, that is when a promised good or service is
transferred to a customer. A promised good or service is
transferred when (or as) the customer obtains control of it.
Control can be transferred over time or at a point in time.
With reference to the most important products sold by Eni,
revenue is generally recognised for:
crude oil, upon shipment;
natural gas and electricity, upon delivery to the customer;
petroleum products sold to retail distribution networks,
upon delivery to the service stations, whereas all other sales
of petroleum products are recognised upon shipment;
chemical products and other products, upon shipment.
Revenue from crude oil and natural gas production from
properties in which Eni has an interest together with other
producers is recognised on the basis of the quantities
actually lifted and sold (sales method); costs are recognised
on the basis of the quantities actually sold.
Revenue is measured at the fair value of the consideration
to which the Company expects to be entitled in exchange
for transferring promised goods and/or services to a
customer, excluding amounts collected on behalf of third
parties. In determining the transaction price, the promised
amount of consideration is adjusted for the effects of the
time value of money if the timing of payments agreed to
by the parties to the contract provides the customer or the
entity with a significant benefit of financing the transfer of
goods or services to the customer. The promised amount of
consideration is not adjusted for the effect of the significant
financing component if, at contract inception, it is expected
that the period between the transfer of a promised good or
service to a customer and when the customer pays for that
good or service will be one year or less. If the consideration
promised in a contract includes a variable amount, the
Company estimates the amount of consideration to which
it will be entitled in exchange for transferring the promised
goods and/or services to a customer; in particular, the
amount of consideration can vary because of discounts,
refunds,
incentives, price concessions, performance
bonuses, penalties or if the price is contingent on the
occurrence or non-occurrence of future events.
If, in a contract, the Company grants a customer the option to
acquire additional goods or services for free or at a discount
(e.g. sales incentives, customer award points, etc.), this option
gives rise to a separate performance obligation in the contract
only if the option provides a material right to the customer that
it would not receive without entering into that contract. When
goods or services are exchanged for goods or services which
are of a similar nature and value, the exchange is not regarded
as a transaction which generates revenue.
(28) The payment of accrued interest is required upon the occurrence of events under the issuer’s control such as, for example, a distribution of dividends to shareholders.
Management report | Consolidated financial statements | Annex 215
Significant accounting estimates and judgements: revenue
from contracts with customers
Revenue from sales of electricity and gas to retail customers
includes the amount accrued for electricity and gas supplied
between the date of the last invoiced meter reading (actual
or estimated) of volumes consumed and the end of the year.
These estimates consider mainly information provided by
the grid managers about the volumes allocated among the
customers of the secondary distribution network, about the
actual and estimated volumes consumed by customers.
Therefore, revenue is accrued as a result of a complex
estimate based on the volumes distributed and allocated,
communicated by third parties,
likely to be adjusted,
according to applicable regulations, within the fifth year
following the one in which they are accrued. Considering
the contractual obligations on the supply delivery points,
revenue from sales of electricity and gas to retail customers
includes costs for transportation and dispatching and in
these cases the gross amount of consideration to which the
Company is entitled is recognised.
COSTS
Costs are recognised when the related goods and services
are sold or consumed during the year, when they are
allocated on a systematic basis or when their future
economic benefits cannot be identified. Costs associated
with emission quotas, incurred to meet the compliance
requirements (e.g. Emission Trading Scheme) determined
on the basis of market prices, are recognised in relation to
the amounts of the carbon dioxide emissions that exceed
free allowances. Costs related to the purchase of the
emission rights that exceed the amount necessary to meet
regulatory obligations are recognised as intangible assets.
Revenue related to emission quotas is recognised when
they are sold. The costs incurred on a voluntary basis for
the acquisition or production of forestry certificates, also
taking into account the absence of an active market, are
recognised in the profit and loss account when incurred.
The costs for the acquisition of new knowledge or
discoveries, the study of products or alternative processes,
new techniques or models, the planning and construction
of prototypes or, in any case, costs incurred for other
scientific research activities or technological development,
which cannot be capitalised (see also the accounting policy
for “Intangible assets”), are included in the profit and loss
account when they are incurred.
EXCHANGE DIFFERENCES
Revenues and costs associated with transactions in foreign
currencies are translated into the functional currency by applying
the exchange rate at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are translated
into the functional currency at the spot exchange rate on the
balance sheet date and any resulting exchange differences are
included in the profit and loss account within “Finance income
(expense)” or, if designated as hedging instruments for the
foreign currency risk, in the same line item in which the economic
effects of the hedged item are recognised. Non-monetary assets
and liabilities denominated in foreign currencies, measured at
cost, are not retranslated subsequent to initial recognition. Non-
monetary items measured at fair value, recoverable amount or
net realisable value are retranslated using the exchange rate at
the date when the value is determined.
DIVIDENDS
Dividends are recognised when the right to receive payment
of the dividend is established.
Dividends and interim dividends to owners are shown as
changes in equity when the dividends are declared by,
respectively, the shareholders’ meeting and the Board of
Directors.
INCOME TAXES
Current income taxes are determined on the basis of
estimated taxable profit. Current income tax assets and
liabilities are measured at the amount expected to be paid
to (recovered from) the taxation authorities, using tax rates
and the tax laws that have been enacted or substantively
enacted by the end of the reporting period.
Deferred tax assets and liabilities are recognised for temporary
differences arising between the carrying amounts of the
assets and liabilities and their tax bases, based on tax rates
and tax laws that are expected to apply to the period when the
asset is realised or the liability is settled, based on tax rates
and tax laws that have been enacted or substantively enacted
by the end of the reporting period. Deferred tax assets are
recognised when their recoverability is considered probable,
i.e. when it is probable that sufficient taxable profit will be
available in the same year as the reversal of the deductible
temporary difference. Similarly, deferred tax assets for the
carry-forward of unused tax credits and unused tax losses are
recognised to the extent that their recoverability is probable.
The carrying amount of the deferred tax assets is reviewed, at
least, on an annual basis.
If there is uncertainty over income tax treatments, if the
company concludes it is probable that the taxation authority
will accept an uncertain tax treatment, it determines the (current
and/or deferred) income taxes to be recognised in the financial
statements consistent with the tax treatment used or planned
to be used in its income tax filings. Conversely, if the company
concludes it is not probable that the taxation authority will accept
an uncertain tax treatment, the company reflects the effect of
Eni Annual Report 2020 216
uncertainty in determining the (current and/or deferred) income
taxes to be recognised in the financial statements.
Relating to the taxable temporary differences associated with
investments in subsidiaries and associates, and interests in joint
arrangements, the related deferred tax liabilities are not recognised
if the investor is able to control the timing of the reversal of the
temporary differences and it is probable that the temporary
differences will not reverse in the foreseeable future. Deferred
tax assets and liabilities are presented within non-current assets
and liabilities and are offset at a single entity level if related to off-
settable taxes. The balance of the offset, if positive, is recognised
in the line item “Deferred tax assets” and, if negative, in the line
item “Deferred tax liabilities”. When the results of transactions are
recognised in other comprehensive income or directly in equity,
the related current and deferred taxes are also recognised in other
comprehensive income or directly in equity.
taxes
involves
Significant accounting estimates and judgements: income
taxes
The computation of
the
income
interpretation of applicable tax laws and regulations in
many jurisdictions throughout the world. Although Eni aims
to maintain a relationship with the taxation authorities
characterised by transparency, dialogue and cooperation
(e.g. by not using aggressive tax planning and by using, if
available, procedures intended to eliminate or reduce tax
litigations), there can be no assurance that there will not
be a tax litigation with the taxation authorities where the
legislation could be open to more than one interpretation.
The resolution of tax disputes, through negotiations with
relevant taxation authorities or through litigation, could
take several years to complete. The estimate of liabilities
related to uncertain tax treatments requires complex
judgements by management. After the initial recognition,
these liabilities are periodically reviewed for any changes
in facts and circumstances.
Management makes complex judgements regarding mainly
the assessment of the recoverability of deferred tax assets,
related both to deductible temporary differences and unused
tax losses, which requires estimates and evaluations about
the amount and the timing of future taxable profits.
ASSETS HELD FOR SALE AND DISCONTINUED
OPERATIONS
Non-current assets and current and non-current assets
included within disposal groups, are classified as held
for sale
if their carrying amounts will be recovered
principally through a sale transaction rather than through
their continuing use. This condition is regarded as met
only when the sale is highly probable and the asset or
the disposal group is available for immediate sale in its
present condition. When there is a sale plan involving loss
of control of a subsidiary, all the assets and liabilities of
that subsidiary are classified as held for sale, regardless of
whether a non-controlling interest in its former subsidiary
will be retained after the sale.
Non-current assets held for sale, current and non-current
assets included within disposal groups that have been
classified as held for sale and the liabilities directly
associated with them are recognised on the balance sheet
separately from other assets and liabilities.
Immediately before the initial classification of a non-
current asset and/or a disposal group as held for sale, the
non-current asset and/or the assets and liabilities in the
disposal group are measured in accordance with applicable
IFRSs. Subsequently, non-current assets held for sale are
not depreciated or amortised and they are measured at the
lower of the fair value less costs to sell and their carrying
amount. If an equity-accounted investment, or a portion of
that investment meets the criteria to be classified as held for
sale, it is no longer accounted for using the equity method
and it is measured at the lower of its carrying amount at the
date the equity method is discontinued, and its fair value less
costs to sell. Any retained portion of the equity-accounted
investment that has not been classified as held for sale is
accounted for using the equity method until disposal of the
portion that is classified as held for sale takes place.
Any difference between the carrying amount of the non-
current assets and the fair value less costs to sell is taken
to the profit and loss account as an impairment loss; any
subsequent reversal is recognised up to the cumulative
impairment losses, including those recognised prior to
qualification of the asset as held for sale. Non-current
assets classified as held for sale and disposal groups are
considered a discontinued operation if they, alternatively: (i)
represent a separate major line of business or geographical
area of operations; (ii) are part of a disposal program of
a separate major line of business or geographical area of
operations; or (iii) are a subsidiary acquired exclusively with
a view to resale. The results of discontinued operations,
as well as any gain or loss recognised on the disposal,
are indicated in a separate line item of the profit and
loss account, net of the related tax effects; the economic
figures of discontinued operations are indicated also for
prior periods presented in the financial statements.
If events or circumstances occur that no longer allow to
classify a non-current asset or a disposal group as held
for sale, the non-current asset or the disposal group is
reclassified into the original line items of the balance sheet and
measured at the lower of: (i) its carrying amount at the date of
classification as held for sale adjusted for any depreciation,
Management report | Consolidated financial statements | Annex 217
amortisation, impairment losses and reversals that would
have been recognised had the asset or disposal group not
been classified as held for sale, and (ii) its recoverable amount
at the date of the subsequent decision not to sell.
FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants (not in a forced liquidation or a
distress sale) at the measurement date (exit price). Fair value
measurement is based on the market conditions existing at
the measurement date and on the assumptions of market
participants (market-based measurement). A fair value
measurement assumes that the transaction to sell the asset
or transfer the liability takes place in the principal market for
the asset or liability, or in the absence of a principal market,
in the most advantageous market to which the entity has
access, independently from the entity’s intention to sell the
asset or transfer the liability to be measured.
A fair value measurement of a non-financial asset takes
into account a market participant’s ability to generate
economic benefits by using the asset in its highest and
best use or by selling it to another market participant that
would use the asset in its highest and best use. Highest
and best use is determined from the perspective of market
participants, even if the entity intends a different use; an
entity’s current use of a non-financial asset is presumed to
be its highest and best use, unless market or other factors
suggest that a different use by market participants would
maximise the value of the asset.
The fair value of a liability, both financial and non-financial,
or of the Company’s own equity instrument, in the absence
of a quoted price, is measured from the perspective of
a market participant that holds the identical item as an
asset at the measurement date. The fair value of financial
instruments takes into account the counterparty’s credit
risk for a financial asset (Credit Valuation Adjustment,
CVA) and the Company’s own credit risk for a financial
liability (Debit Valuation Adjustment, DVA). In the absence
of available market quotation, fair value is measured by
using valuation techniques that are appropriate in the
circumstances, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
Significant accounting estimates and judgements: fair value
Fair value measurement, although based on the best
available information and on the use of appropriate valuation
techniques, is inherently uncertain, requires the use of
professional judgement and could result in expected values
other than the actual ones.
2 PRIMARY FINANCIAL STATEMENTS
Assets and liabilities on the balance sheet are classified as
current and non-current. Items in the profit and loss account
are presented by nature. Assets and liabilities are classified
as current when: (i) they are expected to be realised/settled
in the entity’s normal operating cycle or within twelve months
after the balance sheet date; (ii) they are cash or cash
equivalents unless they are restricted from being exchanged
or used to settle a liability for at least twelve months after
the balance sheet date; or (iii) they are held primarily for the
purpose of trading. Derivative financial instruments held for
trading are classified as current, apart from their maturity
date. Non hedging derivative financial instruments, which
are entered into to manage risk exposures but do not satisfy
the formal requirements to be considered as hedging, and
hedging derivative financial instruments are classified as
current when they are expected to be realised/settled within
twelve months after the balance sheet date; on the contrary
they are classified as non-current.
The statement of comprehensive income (loss) shows net profit
integrated with income and expenses that are not recognised
directly in the profit and loss account according to IFRSs.
The statement of changes
includes the total
comprehensive income (loss) for the year, transactions with
owners in their capacity as owners and other changes in equity.
The statement of cash flows is presented using the indirect
method, whereby net profit (loss) is adjusted for the effects
of non-cash transactions.
in equity
3 CHANGES IN ACCOUNTING POLICIES
The amendments to IFRSs effective from January 1,
2020 and adopted by Eni, did not have a material impact
on the Consolidated Financial Statements. In this regard,
the amendments to IFRS 16 “COVID-19-Related Rent
Concessions”, effective for 2020, were applied to immaterial
cases.
4 IFRSs NOT YET EFFECTIVE
IFRSS ISSUED BY THE IASB AND ADOPTED BY THE EU
By the Commission Regulation No. 2021/25 issued by the
European Commission on January 13, 2021, the amendments
to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate
Benchmark Reform — Phase 2” (hereinafter the amendments)
were adopted. The amendments provide practical expedients
and temporary exceptions from the application of some IFRS
requirements related to financial instruments measured at
amortised cost and/or hedging relationships modified as
a consequence of the interest rate benchmark reform. The
Eni Annual Report 2020 218
amendments shall be applied for annual reporting periods
beginning on or after January 1, 2021.
IFRSs ISSUED BY THE IASB AND NOT YET ADOPTED BY
THE EU
On May 18, 2017, the IASB issued IFRS 17 “Insurance
Contracts” (hereinafter
IFRS 17), which sets out the
accounting for the insurance contracts issued and the
reinsurance contracts held. On June 25, 2020, the IASB
issued the amendments to IFRS 17 “Amendments to IFRS
17” and the amendments to IFRS 4 “Extension of the
Temporary Exemption from Applying IFRS 9”, related to
insurance activities, providing, among others, the deferral of
the effective date of IFRS 17 by two years. Therefore, IFRS
17, which replaces IFRS 4 “Insurance Contracts”, shall be
applied for annual reporting periods beginning on or after
January 1, 2023.
On January 23, 2020, the IASB issued the amendments
to IAS 1 “Classification of Liabilities as Current or Non-
current” (hereinafter the amendments), which clarify how to
classify debt and other liabilities as current or non-current.
Because of further amendments issued on July 15, 2020
(“Classification of Liabilities as Current or Non-current
— Deferral of Effective Date”), the amendments shall be
applied for annual reporting periods beginning on or after
January 1, 2023.
On May 14, 2020, the IASB issued:
the amendments to IAS 37 “Onerous Contracts - Cost of
Fulfilling a Contract” (hereinafter the amendments), aimed
to provide clarifications for the purpose of assessing
whether a contract is onerous. The amendments shall be
applied for annual reporting periods beginning on or after
January 1, 2022;
the amendments
“Property, Plant and
IAS 16
Equipment: Proceeds before Intended Use” (hereinafter
the amendments), aimed to state that the proceeds from
selling items produced while the company is preparing the
asset for its intended use shall be recognised in the profit
to
and loss account, together with the related production
costs. The amendments shall be applied for annual
reporting periods beginning on or after January 1, 2022;
the amendments to IFRS 3 “Reference to the Conceptual
Framework” (hereinafter the amendments), aimed to: (i)
replace all remaining references to the previous versions
of the IFRS Framework with references to the new
Conceptual Framework for Financial Reporting included
in IFRS 3; (ii) provide clarifications on the requirements for
recognising, at the acquisition date, provisions, contingent
liabilities and levies assumed in a business combination;
(iii) state explicitly that a contingent asset acquired
in a business combination cannot be recognised. The
amendments shall be applied for annual reporting periods
beginning on or after January 1, 2022;
the document “Annual Improvements to IFRS Standards
2018-2020”, which
includes, basically, technical and
editorial changes to existing standards. The amendments
to the standards shall be applied for annual reporting
periods beginning on or after January 1, 2022.
On February 12, 2021, the IASB issued:
the amendments to IAS 1 and IFRS Practice Statement
2 “Disclosure of Accounting Policies” (hereinafter the
amendments), aimed to provide clarifications on identifying
the material accounting policies to be disclosed in the
financial statements. The amendments shall be applied for
annual reporting periods beginning on or after January 1,
2023;
the amendments to IAS 8 “Definition of Accounting
Estimates” (hereinafter the amendments), which introduce
the definition of accounting estimates essentially to
clarify how to distinguish changes in accounting policies
from changes in accounting estimates. The amendments
shall be applied for annual reporting periods beginning on
or after January 1, 2023.
Eni is currently reviewing the IFRSs not yet adopted in order
to determine the likely impact on the Consolidated Financial
Statements.
Management report | Consolidated financial statements | Annex 219
5 CASH AND CASH EQUIVALENTS
Cash and cash equivalents of €9,413 million (€5,994 million
at December 31, 2019) included financial assets with maturity
generally of up to three months at the date of inception
amounting to €6,913 million (€3,984 million at December 31,
2019) and mainly included short-term deposits in euro and U.S.
dollars with financial institutions, having notice of more than
48 hours, to meet the Group’s short-term financing needs.
Expected credit losses on deposits with banks and financial
institutions measured at amortized cost are immaterial.
Restricted cash amounted to €198 million (same amount as
of December 31, 2019) in relation to foreclosure measures by
third parties.
The average maturity of bank deposits in euro of €5,948 million
was 50 days and the effective interest rate was a negative 0.4%;
the average maturity of bank deposits in U.S. dollars of €944
million was 8 days with an effective interest rate of 0.25%.
6 FINANCIAL ASSETS HELD FOR TRADING
(€ million)
Bonds issued by sovereign States
Other
December 31, 2020
December 31, 2019
1,223
4,279
5,502
1,462
5,298
6,760
The Company has established a liquidity reserve as part of its
internal targets and financial strategy with a view of ensuring
an adequate level of flexibility to the Group development
plans and of coping with unexpected fund requirements or
difficulties in accessing financial markets. The management
of this liquidity reserve is performed through trading activities
in view of the optimizing returns, within a predefined and
authorized level of risk threshold, targeting the preservation
of the invested capital and the ability to promptly convert it
into cash.
Financial assets held for trading include securities subject
to lending agreements of €1,361 million (€1,347 million at
December 31, 2019).
The breakdown by currency is provided below:
(€ million)
Euro
U.S. dollars
Other currencies
December 31, 2020
December 31, 2019
3,731
1,688
83
5,502
4,272
2,279
209
6,760
Eni Annual Report 2020
220
The breakdown by issuing entity and credit rating is presented below:
Quoted bonds issued by sovereign states
Fixed rate bonds
Italy
Chile
Other(*)
Floating rate bonds
Italy
Germany
Other
Total quoted bonds issued by sovereign states
Other Bonds
Fixed rate bonds
Quoted bonds issued by industrial companies
Quoted bonds issued by financial and insurance companies
Other bonds
Floating rate bonds
Quoted bonds issued by industrial companies
Quoted bonds issued by financial and insurance companies
Other bonds
Total other bonds
Total other financial assets held for trading
(*) Amounts included herein are lower than €50 million.
e
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499
187
168
854
253
56
43
352
1,206
974
893
54
1,921
791
1.298
234
2,323
4,244
5,450
’
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from Aaa to Baa1
from AAA to A-
Baa3
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BBB
AAA
from Aaa to Baa3
from AA+ to BBB
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506
192
172
870
255
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43
353
1,223
992
from Aa2 to Baa3
from AA to BBB-
910
from Aa1 to Baa3
from AA+ to BBB-
55
from Aaa to Baa3
from AAA to BBB-
1,957
787
from Aa1 to Baa3
from AA+ to BBB-
1.301
from Aa1 to Baa3
from AA+ to BBB-
234
from Aaa to Baa3
from AAA to BBB-
2,322
4.279
5.502
The fair value hierarchy is level 1 for €5,248 million and level 2
for €254 million.
During 2020, there were no significant transfers between the
different hierarchy levels of fair value.
7 TRADE AND OTHER RECEIVABLES
(€ million)
Trade receivables
Receivables from divestments
Receivables from joint ventures in exploration and production activities
Other receivables
December 31, 2020
December 31, 2019
7,087
21
2,293
1,525
10,926
8,519
30
2,637
1,687
12,873
Generally, trade receivables do not bear interest and provide
payment terms within 180 days.
Trade receivables decreased by €1,432 million due to the
drop in prices of hydrocarbons.
At December 31, 2020, Eni sold without recourse receivables
due in 2021 for €1,377 million (€1,782 million at December
31, 2019 due in 2020). Derecognized receivables in 2020
related to the Refining & Marketing and Chemical segment
for €730 million, to the Eni gas e luce, Power & Renewables
segment for €324 million and to the Global Gas & LNG
Portfolio segment for €323 million.
Receivables from joint ventures in exploration and production
Management report | Consolidated financial statements | Annex
221
activities included amounts due by partners in unincorporated
joint operation in Nigeria of €1,015 million (€1,052 million at
December 31, 2019) in respect of the contractual recovery
of expenditures incurred at certain projects operated by
Eni. The Nigerian national oil company NNPC owed an
amount to Eni of €605 million (€764 million at December
31, 2019), in relation to past investments. About half of this
amount is subject to a “Repayment Agreement”, whereby
Eni is to be reimbursed through the sale of the entitlement
attributable to NNPC in certain rig-less petroleum initiatives
with low mineral risk, with an expected completion of the
reimbursement plan within the next two/three years based
on Eni’s Brent price scenario. The receivable is stated net of
a discount factor equal to 8%, calculated based on the risk
of the underlying mineral initiative. The amounts past due
related to current investment activities were assessed based
on more conservative assumptions than the ones adopted
in previous reporting periods to factor in an increased
counterparty risk due to COVID-19 developments. A privately
held Nigerian oil company owed us €134 million (€113 million
at December 31, 2019) which were past due at the reporting
date. These amounts were stated net of a provision based on
the loss given default (LGD) defined by Eni for international
oil companies in a default state.
Receivables
(i)
recoverable amounts for €376 million (€373 million at
December 31, 2019) of certain overdue trade receivables
from other counterparties comprised:
towards the state-owned oil company of Venezuela, PDVSA,
in relation to gas equity volumes supplied by the joint venture
Cardón IV, equally participated by Eni and Repsol. Those
trade receivables were divested by the joint venture to the
two shareholders. The receivables were stated net of an
allowance for doubtful accounts estimated on the basis of
average recovery percentages obtained by creditors in the
context of sovereign defaults, adjusted to reflect the strategic
value of the Oil & Gas sector, and also applied for assessing
the recoverability of the carrying amount of the investment and
the long-term interest in the initiative, as described in note 16
– Other financial assets. Risks associated with the complex
financial outlook of the Country and the deteriorated operating
environment were taken into account in the estimation of the
expected loss by assuming a deferral in the timing of collection
of future revenues and overdue credit amounts, which resulted
in an expected credit loss rate of about 53%. During the year
the percentages of collection of gas sales by the joint venture
were in line with the estimated assumptions; (ii) amounts to be
received from customers following the triggering of the take-
or-pay clause of long-term supply contracts for €325 million
(€104 million at December 31, 2019).
Trade and other receivables stated in euro and U.S. dollars
amounted to €5,553 million and €4,304 million, respectively.
Credit risk exposure and expected losses relating to trade
and other receivables has been prepared on the basis of
internal ratings as follows:
December 31, 2020
Business customers
National Oil Companies and public administrations
Other counterparties
Gross amount
Allowance for doubtful accounts
Net amount
Expected loss (% net of counterpart risk mitigation factors)
December 31, 2019
Business customers
National Oil Companies and public administrations
Other counterparties
Gross amount
Allowance for doubtful accounts
Net amount
Expected loss (% net of counterpart risk mitigation factors)
Performing receivables
(€ million)
Low
Risk
Medium
Risk
High
Risk
Defaulted
receivables
Eni gas e luce
customers
1,398
841
1,243
3,482
(32)
3,450
0.9
1,922
1,201
1,646
4,769
(13)
4,756
0.3
2,746
620
450
3,816
(21)
3,795
0.6
2,882
472
103
3,457
(4)
3,453
0.1
432
7
28
467
(29)
438
6.2
840
244
381
1,465
(16)
1,449
1.1
1,351
2,653
141
4,145
(2,429)
1,716
58.6
1,396
2,710
217
4,323
(2,547)
1,776
58.9
2,173
2,173
(646)
1,527
29.7
2,105
2,105
(666)
1,439
31.6
Total
5,927
4,121
4,035
14,083
(3,157)
10,926
22.4
7,040
4,627
4,452
16,119
(3,246)
12,873
20.1
Eni Annual Report 2020
222
reviewed
The classification of
the Company’s customers and
counterparties and the definition of the classes of counterparty
risk are disclosed in note 1 – Significant accounting policies.
Management has
its assumptions underlying
the recoverability of outstanding receivables in light of the
widespread economic and financial impacts of the COVID-19
pandemic crisis on the counterparty risk. The review of
recoverability assumptions led to both an extension in the
timing of credit collection (generally of one year) and a step-up
in the probabilities of default applicable across the Company’s
customer classes. These updated assumptions were based
on accumulated experience, independent assessments of the
expected increase in the probability of default of commercial
counterparts over a twelve-month time horizon to factor in
the financial impact of the ongoing crisis, as well as updated
evaluations of the probability of unfavorable developments
in the operating environment of the main countries where Eni
is conducting Oil & Gas operations leading to an increased
risk applicable to our counterparts national oil companies.
With regard to customers of the Eni gas e luce business line,
the recoverability assessments incorporate the most updated
information relating to the performance in credit collection and
the ageing of overdue amounts.
The exposure to credit risk and expected losses relating to
customers of the Eni gas e luce business line was assessed
based on a provision matrix as follows:
December 31, 2020
Customers - Eni gas e luce:
- Retail
- Middle
- Other
Gross amount
Allowance for doubtful accounts
Net amount
Expected loss (%)
December 31, 2019
Customers - Eni gas e luce:
- Retail
- Middle
- Other
Gross amount
Allowance for doubtful accounts
Net amount
Expected loss (%)
(€ million)
Not-past due
from 0
to 3 months
from 3
to 6 months
from 6
to 12 months
over
12 months
Total
Ageing
1,155
75
61
1,291
(46)
1,245
3.6
991
93
76
1,160
(16)
1,144
1.4
105
16
121
(23)
98
19.0
105
29
3
137
(27)
110
19.7
50
3
53
(22)
31
41.5
60
4
1
65
(26)
39
40.0
102
8
110
(57)
53
51.8
86
14
2
102
(49)
53
48.0
366
232
598
(498)
100
83.3
376
263
2
641
(548)
93
85.5
1,778
334
61
2,173
(646)
1,527
29.7
1,618
403
84
2,105
(666)
1,439
31.6
Trade and other receivables are stated net of the allowance for
doubtful accounts which has been determined considering the
counterpart risk mitigation factors amounting to €1,016 million
(€2,914 million at December 31, 2019):
(€ million)
Allowance for doubtful accounts - beginning of the year
Additions on trade and other performing receivables
Additions on trade and other defaulted receivables
Deductions on trade and other performing receivables
Deductions on trade and other defaulted receivables
Other changes
Allowance for doubtful accounts - end of the year
2020
3,246
112
231
(82)
(275)
(75)
3,157
2019
3,150
95
525
(119)
(484)
79
3,246
Management report | Consolidated financial statements | Annex
223
Additions to allowance for doubtful accounts on trade and
other performing receivables related for €84 million (€65
million in 2019) to Eni gas e luce business line, particularly in
the retail business; the increase compared to 2019 is due to
the effects of the economic crisis on the solvency of small
and medium-sized companies.
Additions to allowance for doubtful accounts on trade and
other defaulted receivables related to: (i) the Exploration &
Production segment for €118 million (€339 million in 2019)
and were in relation with receivables for the supply of equity
hydrocarbons to State-owned companies and receivables
towards joint operators, State oil Companies and local private
companies for cash calls in oil projects operated by Eni; (ii) to
the Eni gas e luce business line for €97 million (€87 million
in 2019).
Utilizations of allowance for doubtful accounts on trade and
other performing and defaulted receivables amounted to
€357 million (€603 million in 2019) and mainly related to the
Eni gas e luce business line for €200 million (€343 million in
2019), in particular utilizations against charges of €178 million
(€319 million in 2019) mainly in the retail business. Utilizations
in Exploration & Production segment of €101 million (€177
million in 2019) related for €73 million to the derecognition of
receivables from PDVSA following in-kind refunds.
Net (impairment losses) reversals of trade and other
receivables are disclosed as follows:
(€ million)
Net (impairment losses) reversals of trade and other receivables
New or increased provisions
Net credit losses
Reversals
2020
2019
2018
(343)
(36)
153
(226)
(620)
(45)
233
(432)
(498)
(37)
120
(415)
Receivables with related parties are disclosed in note 36 – Transactions with related parties.
8 CURRENT AND NON-CURRENT INVENTORIES
Current inventories are disclosed as follows:
(€ million)
Raw and auxiliary materials and consumables
Consumables for infrastructure and facility maintenance of perforation activities
Finished products and goods
Other
December 31, 2020
December 31, 2019
706
1,580
1,603
4
3,893
950
1,477
2,284
23
4,734
Raw and auxiliary materials and consumables include oil-
based feedstock, catalysts and other consumables pertaining
to refining and chemical activities.
Materials and supplies include materials to be consumed
in drilling activities and spare parts to the Exploration &
Production segment for €1,463 million (€1,359 million at
December 31, 2019).
Finished products and goods included natural gas and oil
products for €874 million (€1,467 million at December 31,
2019) and chemical products for €443 million (€547 million
at December 31, 2019).
Inventories are stated net of write-down provisions of €348
million (€377 million at December 31, 2019).
Inventories held for compliance purposes of €995 million
(€1,371 million at December 31, 2019) related to Italian
subsidiaries for €977 million (€1,353 million at December
31, 2019) in accordance with minimum stock requirements
for oil and petroleum products set forth by applicable laws.
The decrease in current and non-current inventories was due
to the alignment of the book values to their net realizable
values at year-end, which were affected by the drop in oil and
hydrocarbons prices.
Eni Annual Report 2020
224
9 INCOME TAX RECEIVABLES AND PAYABLES
(€ million)
Income taxes
December 31, 2020
December 31, 2019
Receivables
Payables
Receivables
Payables
Current Non Current
Current Non Current
Current Non Current
Current Non Current
184
153
243
360
192
173
456
454
Income taxes are described in note 32 — Income tax expense.
Non-current income tax payables include the likely outcome
of pending litigation with tax authorities in relation to
uncertain tax matters relating to foreign subsidiaries of the
Exploration & Production segment for €254 million (€362
million at December 31, 2019).
10 OTHER ASSETS AND LIABILITIES
(€ million)
Fair value of derivative financial
instruments
Contract liabilities
Other Taxes
Other
December 31, 2020
December 31, 2019
Assets
Liabilities
Assets
Liabilities
Current Non-current
Current Non-current
Current Non-current
Current Non-current
1,548
152
450
688
2,686
181
920
1,253
1,609
1,298
1,124
841
4,872
162
394
26
1,295
1,877
2,573
766
633
3,972
54
223
594
871
2,704
1,669
1,411
1,362
7,146
50
456
63
1,042
1,611
The fair value related to derivative financial instruments is
disclosed in note 23 – Derivative financial instruments and
hedge accounting.
Assets related to other current taxes included VAT for €475
million, of which €315 million are current, and advances made
in December (€742 million at December 31, 2019, of which €557
million current).
Other assets include: (i) gas volumes prepayments due to the
take-or-pay obligations in relation to the Company’s long-term
supply contracts, whose underlying current portion Eni plans to
recover within the next 12 months for €53 million, and beyond
12 months for €651 million (€174 million at December 31, 2019);
in 2020 the Company opted to increase the take-or-pay advance
with a view of optimizing its gas portfolio and motivated by
the reduction in gas demand due to the COVID-19 pandemic,
expecting to recover the underlying volumes beyond the next
year; (ii) underlifting positions of the Exploration & Production
segment of €338 million (€323 million at December 31, 2019);
(iii) non-current receivables for investing activities for €11 million
(same amount as of December 31, 2019).
Contract liabilities included: (i) advances denominated in local
currency of €546 million (€1,228 million at December 31, 2019)
to offset future supplies of equity hydrocarbons to our Egyptian
State-owned partners in relation to the operations of Eni’s
Concession Agreements in the Country, in particular, among
these, the Zohr project. In 2020, the decrease is due to the
offsetting with the gas invoices for the sale of equity production,
considering the substantial completion of the investment
activities; (ii) the current portion of advances received by
Engie SA (former Suez) relating to a long-term agreement for
supplying natural gas and electricity for €62 million (€64 million
at December 31, 2019); the non-current portion amounted to
€393 million (€455 million at December 31, 2019).
Revenues recognized during the year related to contract
liabilities stated at December 31, 2019 are indicated in note 28 –
Revenues and other income.
Liabilities related to other current taxes include excise duties
and consumer taxes for €516 million (€628 million at December
31, 2019) and VAT liabilities for €212 million (€311 million at
December 31, 2019).
Other current liabilities included overlifting imbalances of the
Exploration & Production segment for €559 million (€917 million
at December 31, 2019).
Other non-current liabilities included: (i) liabilities for prepaid
revenues and income for €323 million (€420 million at December
31, 2019); (ii) the value of gas not withdrawn by customers due
to the triggering of the take-or-pay clause provided for by the
relevant long-term contracts, the underlying volumes of which
are expected to be withdrawn within the next 12 months for €65
million and beyond 12 months for €372 million (€148 million at
December 31, 2019); (iii) cautionary deposits for €261 million
(€265 at December 31, 2019), of which €228 million from retail
customers for the supply of gas and electricity (€231 million at
December 31, 2019).
Transactions with related parties are described in note 36 —
Transactions with related parties.
Management report | Consolidated financial statements | Annex
11 PROPERTY, PLANT AND EQUIPMENT
s
g
n
i
d
l
i
u
b
d
n
a
d
n
a
L
1,218
12
(55)
13
(82)
d
n
a
t
n
a
l
p
,
s
l
l
e
w
P
&
E
y
r
e
n
i
h
c
a
m
46,492
6
(5,642)
183
(1,551)
(€ million)
2020
Net carrying amount - beginning of the year
Additions
Depreciation capitalized
Depreciation(*)
Reversals
Impairment
Write-off
Currency translation differences
(2)
(3,325)
Initial recognition and changes in estimates
Transfers
Other changes
Net carrying amount - end of the year
Gross carrying amount - end of the year
Provisions for depreciation and impairments
2019
Net carrying amount - beginning of the year
Additions
Depreciation capitalized
Depreciation(*)
Reversals
Impairment
Write-off
Disposals
Currency translation differences
Initial recognition and changes in estimates
Transfers
Other changes
Net carrying amount - end of the year
Gross carrying amount - end of the year
Provisions for depreciation and impairments
(*) Before capitalization of depreciation of tangible assets.
39
(15)
1,128
4,082
2,954
1,274
12
(60)
44
(47)
(1)
2
42
(48)
1,218
4,067
2,849
870
2,677
(62)
39,648
136,468
96,820
42,856
144
(6,435)
65
(659)
(3)
815
2,028
7,568
113
46,492
144,789
98,297
-
a
m
d
n
a
t
n
a
l
p
r
e
h
t
O
y
r
e
n
i
h
c
3,632
229
(508)
342
(972)
(1)
(75)
755
(103)
3,299
28,839
25,540
3,901
223
(537)
69
(500)
(5)
(1)
21
597
(136)
3,632
28,191
24,559
s
t
e
s
s
a
n
o
i
t
a
r
o
l
p
x
e
P
&
E
l
a
s
i
a
r
p
p
a
d
n
a
1,563
265
4
(296)
(119)
(9)
(47)
(20)
1,341
1,341
1,267
508
14
(216)
(22)
24
25
(42)
5
1,563
1,563
n
i
s
t
e
s
s
a
e
l
b
i
g
n
a
t
P
&
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s
s
e
r
g
o
r
p
7,412
3,127
100
98
(567)
(7)
(605)
94
(2,630)
96
7,118
11,169
4,051
9,195
6,170
202
65
(669)
(49)
(80)
181
21
(7,526)
(98)
7,412
11,406
3,994
225
l
a
t
o
T
62,192
4,407
104
(6,205)
648
(3,754)
(305)
(4,140)
955
41
53,943
184,641
130,698
60,302
8,049
216
(7,032)
382
(2,412)
(270)
(113)
1,044
2,074
(48)
62,192
192,815
130,623
n
i
s
t
e
s
s
a
e
b
g
n
a
t
l
i
r
e
h
t
O
s
e
c
n
a
v
d
a
d
n
a
s
s
e
r
g
o
r
p
1,875
768
12
(582)
(1)
(14)
(794)
145
1,409
2,742
1,333
1,809
992
139
(537)
(6)
1
(639)
116
1,875
2,799
924
Capital expenditures included capitalized finance expenses of
€73 million (€93 million in 2019) related to the Exploration &
Production segment for €51 million (€71 million in 2019). The
interest rate used for capitalizing finance expense ranged from
1.3% to 2.2% (2.6% to 2.8% at December 31, 2019).
Capital expenditures primarily related to the Exploration &
Production segment for €3,444 million (€6,889 million in 2019)
and included bonuses for €57 million of which €55 million for
the acquisition of unproved mineral interest in Algeria.
Capital expenditures by industry segment and geographical
area of destination are reported in note 35 – Segment
information and information by geographical area.
Eni Annual Report 2020
226
(%)
Buildings
Mineral exploration wells and plants
Refining and chemical plants
Gas pipelines and compression stations
Power plants
Other plant and machinery
Industrial and commercial equipment
Other assets
2 - 10
UOP
3 - 17
4 - 12
4 - 5
6 - 12
5 - 25
10 - 20
The criteria adopted by Eni for determining impairment losses
and reversal is reported in note 14 – Impairment review of
tangible and intangible assets and right-of-use assets.
Currency translation differences related to subsidiaries which
utilize the U.S. dollar as functional currency (€4,068 million).
Initial recognition and change in estimates include the
increase in the asset retirement cost of Exploration &
Production segment mainly due to the reduction in discount
rates and in estimated costs for social projects to be
incurred in respect to the commitments being formalized
between Eni SpA and the Basilicata region following to the
development plan of oilfields in Val d’Agri relating to royalties
for mineral concessions (€439 million).
Transfers from E&P tangible assets in progress to E&P UOP
wells, plant and machinery related for €1,690 million to the
commissioning of wells, plants and machinery primarily in
Egypt, Italy, Algeria, Iraq, United States, Kazakhstan and Mexico.
Exploration and appraisal activities of 2020 comprised
write-offs of unsuccessful exploration wells costs for €296
million mainly in Libya, United States, Angola, Egypt, Oman,
Mexico and Lebanon.
Exploration and appraisal activities related for €1,268 million
to the costs of suspended exploration wells pending final
determination and for €66 million to costs of exploration
wells in progress at the end of the year. Changes relating to
suspended wells are reported below:
(€ million)
Costs for exploratory wells suspended - beginning of the year
Increases for which is ongoing the determination of proved reserves
Amounts previously capitalized and expensed in the year
Reclassification to successful exploratory wells following the estimation of proved reserves
Disposals
Changes in the scope of consolidation
Reclassification to assets held for sale
Currency translation differences
Costs for exploratory wells suspended - end of the year
2020
1,246
408
(226)
(48)
(112)
1,268
2019
1,101
368
(183)
(46)
(15)
21
1,246
2018
1,263
235
(61)
(297)
(6)
(58)
(24)
49
1,101
The following information relates to the stratification of the suspended wells pending final determination (ageing):
Costs capitalized and suspended for exploratory well
activity
- within 1 year
- between 1 and 3 years
- beyond 3 years
Costs capitalized for suspended wells
- fields including wells drilled over the last 12 months
- fields for which the delineation campaign is in progress
- fields including commercial discoveries that proceeds
to sanctioning
2020
2019
2018
(number of
wells in Eni’s
interest)
(€ million)
(number of
wells in Eni’s
interest)
(€ million)
(number of
wells in Eni’s
interest)
(€ million)
157
250
861
1,268
157
631
480
1,268
6.7
11.0
19.3
37.0
6.7
14.9
15.4
37.0
185
171
890
1,246
185
556
505
1,246
7.7
6.4
26.4
40.5
7.7
11.3
21.5
40.5
111
87
903
1,101
111
217
773
1,101
7.0
2.9
24.2
34.1
7.0
4.7
22.4
34.1
Management report | Consolidated financial statements | Annex
227
Suspended wells costs awaiting a final investment decision
amounted to €480 million and primarily related to the
exploration costs
in
Mozambique’s offshore Area 4 (€151 million), for which the
venture partners are completing the activities for sanctioning
the project. The other suspended costs refer to several
initiatives ongoing in the main countries of presence (Nigeria,
incurred for the Mamba discovery
Congo, Egypt and Indonesia), none of which represented an
individually significant amount.
Unproved mineral interests, comprised in assets in progress
of the Exploration & Production segment, include the purchase
price allocated to unproved reserves following business
combinations or acquisition of individual properties. Unproved
mineral interests were as follows:
(€ million)
2020
o
g
n
o
C
a
i
r
e
g
N
i
n
a
t
s
i
n
e
m
k
r
u
T
A
S
U
Book amount at the beginning of the year
253
939
139
162
Additions
Net (impairments) reversals
Reclassification to proved mineral interest
Currency translation differences
Book amount at the end of the year
(25)
(25)
203
(79)
860
2019
Book amount at the beginning of the year
769
921
Additions
Net (impairments) reversals
Reclassification to proved mineral interest
Currency translation differences
Book amount at the end of the year
(533)
17
253
18
939
(134)
(37)
(2)
(3)
77
65
(4)
1
139
(11)
114
103
97
(27)
(14)
3
162
a
i
r
e
g
A
l
115
55
(61)
(9)
100
77
135
(99)
2
115
t
p
y
g
E
19
2
(2)
(1)
18
29
1
(12)
1
19
b
a
r
A
d
e
t
i
n
U
s
e
t
a
r
i
m
E
535
(25)
(42)
468
502
23
10
535
l
a
t
o
T
2,162
57
(196)
(90)
(170)
1,763
2,478
256
(495)
(129)
52
2,162
Unproved mineral interests comprised the Oil Prospecting
License 245 property (“OPL 245”), offshore Nigeria, for
€800 million corresponding to the price paid in 2011
to the Nigerian Government to acquire a 50% interest
in the property, with another international oil company
acquiring the remaining 50%. As of December 31, 2020,
the net book value of the property amounted to €1,085
million, including capitalized exploration costs and pre-
development costs. The acquisition of OPL 245 is subject
to judicial proceedings in Italy and in Nigeria for alleged
in respect of the
corruption and money
Resolution Agreement signed on April 29, 2011, relating to
the purchase of the license. This proceeding is disclosed
in note 27 – Guarantees, Commitments and Risks – legal
proceedings. The impairment test of the asset confirmed
the book value. The impairment review was based on the
assumption that the exploration licence due to expire
in May 2021 will be renewed or converted into a mining
licence. Eni filed an application for renewal/conversion
of the licence in compliance with the contractual terms.
Considering the inaction of the Nigerian authorities in
charge of the matter towards the legitimate request of
laundering
ICSID, the
the Company and the closeness of the expiry date of
the licence, in September 2020 Eni started an arbitration
international centre for settlement of
at
investment disputes, to protect the value of its asset.
Accumulated provisions for impairments amounted to
€20,343 million (€18,226 million at December 31, 2019).
Property, plant and equipment include assets subject to
operating leases for €358 million, essentially relating to
service stations of the Refining & Marketing business line.
At December 31, 2020, Eni pledged property, plant and
equipment for €24 million to guarantee payments of
excise duties (same amount as of December 31, 2019).
Government grants recorded as a decrease of property,
plant and equipment amounted to €103 million (€112
million at December 31, 2019).
Contractual commitments related to the purchase of
property, plant and equipment are disclosed in note 27 –
Guarantees, commitments and risks — Liquidity risk.
Property, plant and equipment under concession
arrangements are described in note 27 – Guarantees,
commitments and risks — Assets under concession
arrangements.
Eni Annual Report 2020
228
12 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
n
o
i
t
c
u
d
o
r
p
g
n
i
t
a
o
l
F
s
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a
e
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r
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t
s
)
O
S
P
F
(
3,153
79
(232)
(251)
(77)
2,672
3,107
435
s
a
g
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n
a
l
i
o
r
o
f
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e
s
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a
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n
o
i
t
a
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p
s
n
a
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t
g
i
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g
n
i
l
l
i
r
D
d
n
a
s
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i
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n
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t
a
t
s
e
c
i
v
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e
s
y
a
w
r
o
t
o
M
313
193
(189)
(13)
(60)
244
528
284
497
281
(252)
(13)
(67)
446
927
481
3,294
346
569
3,294
32
(240)
67
3,153
3,393
240
346
192
(224)
6
(7)
313
528
215
569
219
(272)
4
(23)
497
757
260
s
a
g
d
n
a
l
i
O
n
o
i
t
u
b
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t
s
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i
t
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l
i
c
a
f
6
22
(2)
(15)
11
29
18
7
7
1
(1)
(1)
6
7
1
s
g
n
i
d
l
i
u
b
e
c
ffi
O
707
65
(118)
(8)
6
652
859
207
l
s
e
c
h
e
V
i
32
24
(22)
(2)
32
65
33
720
43
720
108
(115)
3
(9)
707
806
99
43
22
(23)
(10)
32
54
22
r
e
h
t
O
181
95
(56)
(11)
(7)
(40)
162
293
131
215
16
(13)
218
56
(63)
(28)
3
(5)
181
274
93
l
a
t
o
T
5,349
808
(928)
(47)
(292)
(247)
4,643
6,381
1,738
5,656
46
(13)
5,689
684
(999)
(41)
85
(69)
5,349
6,351
1,002
460
49
(57)
(21)
(7)
424
573
149
462
30
492
54
(61)
(13)
2
(14)
460
532
72
(€ million)
2020
Net carrying amount - beginning of the year
Additions
Depreciation(a)
Impairment losses
Currency translation differences
Other changes
Net carrying amount at the end of the year
Gross carrying amount at the end of the year
Provisions for depreciation and impairment
2019
First adoption IFRS 16
Reclassifications
Reclassifications to assets held for sale
Net carrying amount at January 1, 2019
Additions
Depreciation(a)
Impairment losses
Currency translation differences
Other changes
Net carrying amount at December 31, 2019
Gross carrying amount
Provisions for depreciation and impairment
(a) Before capitalization of depreciation of tangible assets.
Right-of-use assets (RoU) related: (i) for €3,274 million
(€3,895 million at December 31, 2019) to the Exploration &
Production segment and mainly comprised leases of certain
FPSO vessels hired in connection with operations at offshore
development projects in Ghana (OCTP) and Angola (Block
15/06 West and East hub) with expiry date between 9 and
16 years including a renewal option and in addition the lease
component of long-term leases of offshore rigs; (ii) for €788
million (€831 million at December 31, 2019) to the Refining
& Marketing and Chemical segment relating to motorway
concessions, land leases, leases of service stations for the
sale of oil products, leasing of vessels for shipping activities
and the car fleet dedicated to the car sharing business; (iii)
for €526 million (€574 million at December 31, 2019) to the
Corporate and other activities segment mainly regarding
property rental contracts.
The main leasing contracts signed for which the asset is not
yet available concerns: (i) a contract with a nominal value of
€1.7 billion relating to an FPSO vessel that will be deployed for
the development of Area 1 in Mexico. The asset is expected
to enter under the Group’s control and be accounted as RoU
in 2021, expiring in 2040; (ii) a contract with a nominal value
of €438 million relating to leasing of office buildings with
an expiry date of 20 years including an extension option
of 6 years; (iii) a contract for the use of a FLNG naval unit,
signed by the joint operation Mozambique Rovuma Venture
SpA (Eni’s interest 35.71%), for the development of the Coral
discovery in the offshore of Mozambique, the amount of
which will be determined based on the final cost payments
incurred for the realization of the asset by the associated
company Coral FLNG SA and the financial charges relating to
the debt of this company towards Coral South FLNG DMCC.
The commencement date of the lease is expected in 2022,
corresponding to the start of production of the Coral field.
The main future cash outflows potentially due not reflected
in the measurements of lease liabilities related to: (i) options
for the extension or termination of lease for office buildings of
€302 million; (ii) extension options related to service stations
Management report | Consolidated financial statements | Annex
for the sale of oil products of €148 million; (iii) other extension
options related to concessions of land for €60 million and
ancillary assets in the upstream business for €48 million.
Liabilities for leased assets were as follows:
229
(€ million)
2020
Book amount at the beginning of the year
Additions
Decreases
Currency translation differences
Other changes
Book amount at the end of the year
2019
First adoption IFRS 16
Reclassifications
Reclassifications to liabilities directly associated with assets held for sale
Carrying amount at January 1, 2019
Additions
Decreases
Currency translation differences
Other changes
Carrying amount at December 31, 2019
f
o
n
o
i
t
r
o
p
t
n
e
r
r
u
C
e
s
a
e
l
m
r
e
t
-
g
n
o
l
s
e
i
t
i
l
i
b
a
i
l
889
(866)
(40)
866
849
665
132
(3)
794
(875)
10
960
889
e
s
a
e
l
m
r
e
t
-
g
n
o
L
s
e
i
t
i
l
i
b
a
i
l
4,759
808
(3)
(269)
(1,126)
4,169
4,991
36
(10)
5,017
668
(2)
77
(1,001)
4,759
l
a
t
o
T
5,648
808
(869)
(309)
(260)
5,018
5,656
168
(13)
5,811
668
(877)
87
(41)
5,648
Lease liabilities related for €1,652 million (€1,976 million at
December 31, 2019) to the portion of the liabilities attributable
to joint operators in Eni-led projects which will be recovered
through the mechanism of the cash calls.
Total cash outflows for leases consisted of the following: (i) cash
payments for the principal portion of the lease liability for €869
million; (ii) cash payments for the interest portion of €329 million.
Lease liabilities stated in U.S. dollars and euro amounted to
€3,447 million and €1,411 million, respectively.
Other changes in right-of-use assets and lease liabilities essentially
related to early termination or renegotiation of lease contracts.
The amounts recognised in the profit and loss account consist
of the following:
(€ million)
Other income and revenues
Income from remeasurement of lease liabilities
Purchases, services and other
Short-term leases
Low-value leases
Variable lease payments not included in the measurement of lease liabilities
Capitalised direct cost associated with self-constructed assets - tangible assets
Depreciation and impairments
Depreciation of RoU leased assets
Capitalised direct cost associated with self-constructed assets - tangible assets
Impairment losses of RoU leased assets
Finance income (expense) from leases
Interests on lease liabilities
Capitalised finance expense of ROU leased assets - tangible assets
Net currency translation differences on lease liabilities
2020
2019
12
12
67
37
7
(2)
109
928
(96)
47
879
(347)
7
24
(316)
6
6
115
39
16
(2)
168
999
(210)
41
830
(378)
17
(6)
(367)
Eni Annual Report 2020
230
13 INTANGIBLE ASSETS
(€ milioni)
2020
Net carrying amount - beginning of the year
Additions
Amortization
Impairments
Reversals
Write-off
Changes in the scope of consolidation
Currency translation differences
Other changes
Net carrying amount at the end of the year
Gross carrying amount at the end of the year
Provisions for amortization and impairment
2019
Net carrying amount - beginning of the year
Additions
Amortization
Impairments
Write-off
Currency translation differences
Other changes
Net carrying amount at the end of the year
Gross carrying amount at the end of the year
Provisions for amortization and impairment
s
t
h
g
i
r
n
o
i
t
a
r
o
l
p
x
E
1,031
18
(53)
(23)
(19)
(66)
888
1,613
725
1,081
78
(81)
(19)
(28)
18
(18)
1,031
1,748
717
s
t
n
e
t
a
p
l
a
i
r
t
s
u
d
n
I
l
a
u
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c
e
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e
t
n
i
d
n
a
s
t
h
g
i
r
y
t
r
e
p
o
r
p
195
23
(92)
(5)
41
162
1,623
1,461
221
23
(93)
(1)
45
195
1,597
1,402
e
l
b
i
g
n
a
t
n
i
r
e
h
t
O
s
t
e
s
s
a
568
196
(130)
(7)
24
7
(3)
(66)
589
4,399
3,810
584
210
(117)
(72)
(1)
1
(37)
568
4,373
3,805
s
e
v
i
l
l
u
f
e
s
u
e
t
i
n
fi
h
t
i
w
s
t
e
s
s
a
e
b
g
n
a
t
n
I
i
l
1,794
237
(275)
(30)
24
(24)
7
(69)
(25)
1,639
7,635
5,996
1,886
311
(291)
(91)
(30)
19
(10)
1,794
7,718
5,924
l
l
i
w
d
o
o
G
1,265
(24)
70
(14)
l
a
t
o
T
3,059
237
(275)
(54)
24
(24)
77
(83)
(25)
1,297
2,936
1,284
(26)
3
4
3,170
311
(291)
(117)
(30)
22
(6)
1,265
3,059
Exploration rights comprised the residual book value of license
and leasehold property acquisition costs relating to areas with
proved reserves, which are amortized based on UOP criteria and
are regularly reviewed for impairment. Furthermore, they include
the cost of unproved areas which are suspended pending a final
determination of the success of the exploration activity or until
management confirms its commitment to the initiative. Additions
for the year related to signature bonuses paid for the acquisition of
new exploration acreage in Angola, Albania, United Arab Emirates,
Egypt, Oman and the extension of a licence in Gabon.
The breakdown of exploration rights by type of asset was as
follows:
(€ million)
Proved licence and leasehold property acquisition costs
Unproved licence and leasehold property acquisition costs
Other mineral interests
December 31, 2020
December 31, 2019
225
653
10
888
291
709
31
1,031
Industrial patents and intellectual property rights mainly
regarded the acquisition and internal development of
software and rights for the use of production processes
and software.
Other
intangible assets comprised:
(i) customer
acquisition costs relating to Eni gas e luce business line
for €262 million (€226 million at December 31, 2019); (ii)
concessions, licenses, trademarks and similar items for
€88 million (€102 million at December 31, 2019) comprised
transmission rights for natural gas imported from Algeria
Management report | Consolidated financial statements | Annex
for €25 million (€30 million at December 31, 2019); (iii)
capital expenditures in progress on natural gas pipelines
for which Eni has acquired transport rights for €78 million
(same amount as of December 31, 2019).
The main amortization rates used were substantially
unchanged from the previous year and ranged as follows:
231
(%)
Exploration rights
Transport rights of natural gas
Other concessions, licenses, trademarks and similar items
Service concession arrangements
Capitalized costs for customer acquisition
Other intangible assets
Cumulative impairments charges at the end of the year amounted to €2,457 million.
The breakdown of goodwill by segment is provided below:
(€ million)
Eni gas e luce
Exploration & Production
Refining & Marketing
Corporate and Other activities
Renewables
UOP
3
3 - 33
20 - 33
17 - 33
4 - 20
December 31, 2020 December 31, 2019
1,046
146
93
11
1
1,297
981
190
93
1
1,265
An impairment loss of goodwill was recorded in relation to a
business combination of the Exploration & Production seg-
ment.
Change in the scope of consolidation of goodwill related for
€66 million to the acquisition of the 70% stake in Evolvere, a
group operating in the business of distributed generation from
renewable sources.
Goodwill acquired through business combinations has been
allocated to the CGUs that are expected to benefit from the
synergies of the acquisition.
With regard to the Eni gas e luce business line, which has sig-
nificant allocated goodwill, the allocation of CGU was carried
out as follows:
(€ million)
Domestic market
Foreign market
December 31, 2020 December 31, 2019
904
142
1,046
839
142
981
Goodwill allocated to the CGU Domestic market was
recognized upon the buy-out of the former Italgas SpA
minorities in 2003 through a public offering (€706 million).
The acquired entity engaged in the retail sale of gas to the
residential sector and middle and small-sized businesses
in Italy. In addition, further goodwill amounts have been
allocated over the years following business combinations
with small, local companies selling gas to residential
customers in focused territorial reach and municipalities
synergic to Eni’s activities, the latest of which was the
acquisition of 70% of Evolvere group, operating in the
business of distributed generation from renewable sources,
in line with the strategy of growing the market share in the
retail sector through the diversification of the product mix by
including
offering green electricity. The impairment review performed
at the balance sheet date confirmed the recoverability of
the carrying amount of this CGU, including the allocated
goodwill.
The recoverability of the carrying amount of the CGU
the allocated portion of
Domestic market,
goodwill, was verified comparing the value in use of the
CGU, which was estimated based on the cash flows of the
four-year plan approved by management and on a terminal
value calculated as perpetuity of the last year of the plan
by assuming a nominal long-term growth rate equal to zero,
unchanged. These cash flows were discounted by using the
post-tax WACC of the retail business adjusted considering
the specific country risk for Italy of 4.3%.
Eni Annual Report 2020
232
There are no reasonable assumptions of changes in the
discount rate, growth rate, profitability or volumes that
would lead to zeroing the headroom amounting to €2,856
million of the value in use of the CGU Domestic market with
respect to its book value, including the allocated goodwill.
Goodwill allocated to the CGU Foreign market related for
€95 million to Eni Gas & Power France SA (former Altergaz
SA) operating in France and for €45 million to the acquisition
in 2018 of the residual 51% interest in Gas Supply Company
Thessaloniki-Thessalia SA operating in Greece, previously
participated with a 49% of the share capital. The impairment
review performed at the balance sheet date by using a
method similar to the CGU Domestic market confirmed the
recoverability of the carrying amount of these market CGUs,
including the goodwill, by using a post-tax WACC adjusted
considering a post-tax country risk for France of 4.6% and
4.8% for Greece.
Post-tax cash flows and discount rates resulted
assessment
assessment.
in an
that substantially approximated a pre-tax
14 IMPAIRMENT REVIEW OF TANGIBLE AND
INTANGIBLE ASSETS AND RIGHT-OF-USE
ASSETS
Management has adopted a conservative stance in elaborating
its view of the long-term oil price outlook, considering the risks
and uncertainties associated with the post-pandemic recovery
and the pace of the energy transition. With the long-term fallout
of the pandemic still being evaluated, management sees the
prospect of an enduring impact on the global economy, with the
potential for weaker demand for energy for a sustained period,
because differently from other recessions, the one caused by
the pandemic has involved at the same time all cyclical sectors
of the economy and the service sector as well with consequent
extreme fluctuations in the economic activity.
Eni’s management also has a growing expectation that the
aftermath of the pandemic will accelerate the pace of transition
to a lower carbon economy and energy system, as countries
seek to ‘build back better’ so that their economies will be more
resilient in the future.
Based on these considerations, management reviewed on
the downside the long-term outlook for oil prices, which is
the main driver of investment appraisal and the evaluation
of recoverability of the Group’s tangible assets. The revised
scenario adopted by Eni forecasts a long-term Brent price of
60 $/bbl in 2023 real terms, compared to a previous level of
70 $, used in the impairment test in 2019. In 2021 and 2022,
Brent prices are set at 50 and 55 $/bbl, respectively.
The gas price of the Italian spot market has been projected at
5.5 $/mmBTU in 2023, down from the previous assumption
of 7.8 $/mmBTU.
Management also revised downwards its expectations
of future refining margins considering the collapse in the
consumption of fuels driven by the pandemic.
The discount rates of future cash flows associated with
the use of the assets were estimated on the basis of Eni’s
weighted average cost of capital, adjusted to discount
the specific risks of the operating context of the Group’s
countries of activity (WACC adjusted). Eni’s WACC for 2020
of 6.7% decreased compared to 2019 (7.4%), mainly due
to the decline in the yields of risk-free assets of benchmark
countries, which turned negative. This trend was mitigated
by the greater weight attributed to the short-term volatility
of Eni stock (beta determined from independent sources)
which compared to the prior year is affected by a greater
perceived risk of the Oil & Gas sector due to climate-related
risks and structural weaknesses of the industry, also
amplified by the pandemic crisis.
The cash flows of the assets have been estimated based
on the approved business plans and the residual useful life
of the reserves or industrial plants as described in Note 1 –
Significant accounting policies, estimates and judgements
– Impairment of non-financial assets.
In consideration of the generalized presence of impairment
indicators in all Eni’s business sectors, including the evidence
that as of December 31, 2020, Eni’s market capitalization was
lower than the book value of the consolidated net assets,
and the company policy to regularly test the recoverability of
carrying amounts, an impairment test covering 100% of the
CGUs was performed.
In the Exploration & Production sector, impairment losses of
assets in production or development were recognized for €1,888
million, mainly due to the revision of long-term hydrocarbons
prices and the reduced capital expenditures to develop reserves
of investments, as well as downward revisions of reserves. The
most significant amounts were recorded at properties in Italy
(€566 million), Algeria (€409 million), Congo (€306 million), USA
(€232 million) and Turkmenistan (€202 million). The post-tax
WACC used ranges from a minimum of about 6% for Italy/USA to
a range of 7-8% for the other countries, which are redetermined
in a range of 6-14% pre-tax.
In the Refining & Marketing business, impairment losses
of refining plants were recorded for €1,225 million, mainly
related to the Sannazzaro Refinery, driven by are the
weak fundamentals of the European industry, explained
by: the crisis in fuel consumptions due to the pandemic;
overcapacity, competitive pressure from Asian and Middle
Eastern producers with more efficient scale and cost
structures; market dislocations, that have reduced the supply
of medium/heavy crude oils, penalizing the profitability of
conversion cycles. The pre-tax and post-tax discount rate
relating to the Italian refineries is 6.3%.
In addition, the recoverability of the carrying amounts of
Oil & Gas activities was assessed also taking into account
Management report | Consolidated financial statements | Annex 233
the expected expenditure for participating to forestry
conservation projects, consistent with Eni’s decarbonization
targets, the achievement of which includes participating in
initiatives for the conservation and repopulation of primary
and secondary forests to obtain carbon credits, certified
according to international standards. Management expects
a gradual ramp-up of these initiatives in the medium-long
term with the aim of having a portfolio of forestry projects
by 2030 from which to obtain an annual amount of carbon
credits capable of covering the deficit of residual direct and
indirect emissions (“Scope 1 and 2”) of the Exploration &
Production sector for the purposes of carbon neutrality of
equity production from 2030 onwards. The expenditures
for the purchase of carbon credits are considered part of
the operating costs of the Exploration & Production sector
with reference to the whole sector considered as a single
CGU. Net of these projected costs until the end of the
residual life of the reserves, the overall headroom of the
Exploration & Production sector determined on the basis of
the assumptions of the impairment test is reduced by 4.6%.
The reasonableness of the outcome of the impairment
review made by Eni’s at its Oil & Gas activities was assessed
on the basis of a stress test analysis performed using the
decarbonization scenario developed by the International
in
Energy Agency (IEA)
its Sustainable Development
Scenario in the in the World Energy Outlook (WEO) 2020
which draws a pathway and a set of actions consistent
with the goal of the 2015 COP21 Paris Agreement on
climate. The IEA SDS scenario is a well-established set of
assumptions available on the market place relating to the
decarbonization of the world economy. The VIUs of Eni’s
reserves were reassessed with the projections estimated
by the IEA of hydrocarbon prices and the purchase cost
of emission allowances of the “advanced” economies
equal to $140 in 2040, in 2019 currency per ton. IEA price
assumptions for hydrocarbons are substantially in line with
those adopted by Eni, while the cost of CO2 is significantly
higher. This stress test indicates a loss in the value-in-use
of the Exploration & Production sector equal to 11% with
respect to the base case, assuming non-deductibility or
non-recoverability for cost oil purposes of the CO2 charge
(-5% otherwise). These sensitivity analyses do not, however,
represent management’s best estimate of any impairment
losses that might be recognized as they do not fully
incorporate the consequential changes that management
could implement such as changes to business plans, cost
reduction, development reshaping, review of reserves and
production volumes.
15 INVESTMENTS
EQUITY-ACCOUNTED INVESTMENTS
n
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i
n
E
l
a
t
o
T
(€ million)
Carrying amount - beginning of the year
86
4,592
4,357
9,035
Changes in accounting policies (IAS 28)
Carrying amount restated - beginning
of the year
Additions and subscriptions
Divestments and reimbursements
Share of profit of equity-accounted
investments
Share of loss of equity-accounted
investments
Deduction for dividends
Change in the scope of consolidation
Currency translation differences
Other changes
Carrying amount - end of the year
86
2
3
(2)
(5)
3
(4)
(3)
80
4,592
4,357
9,035
75
(3)
21
198
(1)
14
275
(4)
38
(1,399)
(332)
(1,733)
(296)
30
(254)
66
2,832
(13)
1
(345)
(42)
3,837
(314)
34
(603)
21
6,749
95
95
6
(5)
6
(10)
(4)
1
2
(5)
86
2019
s
e
r
u
t
n
e
v
t
n
i
o
J
5,497
22
5,519
76
80
(157)
(1,073)
67
80
s
e
t
a
i
c
o
s
s
A
1,452
1,452
2,910
(17)
75
(17)
(61)
17
(2)
l
a
t
o
T
7,044
22
7,066
2,992
(22)
161
(184)
(1,138)
1
86
73
4,592
4,357
9,035
Eni Annual Report 2020
234
Acquisitions and share capital increases mainly related: (i) for
€89 million to the acquisition of a 49% stake in Novis Renewables
Holdings Llc and a 50% stake in Novis Renewables Llc and the
subsequent capital increase of both companies as part of the
partnership with Falck Renewables for the joint development of
renewable energy projects in the United States; (ii) for €72 million
to the acquisition of a 40% stake of Finproject SpA, a company
operating in the compounding sector and in the production of
ultralight fabrics, businesses more resilient to the volatility of the
chemicals market; (iii) for €38 million to a capital contribution
made to Lotte Versalis Elastomers Co Ltd, a joint venture operating
in the manufacturing of elastomers in South Korea.
The accounting under the equity method included losses related
to: (i) Vår Energi AS for €918 million due to impairment losses
recorded at the CGUs of the investee due to revised long-term
outlook for hydrocarbons prices and changes in production
profiles; (ii) Abu Dhabi Oil Refining Co (Takreer) for €275 million due
to a weaker refining scenario and the recognition of a significant
loss in the alignment of the book values of inventories at their
net realizable values; (iii) Saipem SpA for €354 million due to a
weaker scenario, which impacted on the investment decisions
of oil companies together with the curtailments of expenditures
made during the downturn driving, lower demand for oil and gas
services as well as to the recognition of impairment losses in
particular in the Offshore Drilling CGU.
Share of losses of equity-accounted investments included a
loss of €46 million accounted at the joint venture Cardón IV
SA (Eni’s interest 50%) which is operating the Perla gas field
in Venezuela, affected by the slowdown in the gas supplies to
the buyer PDVSA due to a deteriorated operating environment.
Deduction for dividends related for €274 million to Vår Energi AS.
Net carrying amount related to the following companies:
(€ million)
Investments in unconsolidated entities controlled by Eni
December 31, 2020
December 31, 2019
Net carrying
amount
% of the
investment
Net carrying
amount
% of the
investment
Eni BTC Ltd
Other
Joint ventures
Vår Energi AS
Saipem SpA
Unión Fenosa Gas SA
Cardón IV SA
Gas Distribution Company of Thessaloniki - Thessaly SA
Lotte Versalis Elastomers Co Ltd
PetroJunín SA
Società Oleodotti Meridionali - SOM SpA
AET - Raffineriebeteiligungsgesellschaft mbH
Other
Associates
Abu Dhabi Oil Refining Co (Takreer)
Angola LNG Ltd
Coral FLNG SA
Finproject SpA
Novis Renewables Holdings Llc
United Gas Derivatives Co
Novamont SpA
Other
24
56
80
1,144
908
242
199
140
51
50
32
17
49
2,832
2,335
1,039
138
73
65
58
129
3,837
6,749
100.00
69.85
31.08
50.00
50.00
49.00
50.00
40.00
70.00
33.33
20.00
13.60
25.00
40.00
49.00
33.33
30
56
86
2,518
1,250
326
148
139
74
53
35
49
4,592
2,829
1,159
102
69
71
127
4,357
9,035
100.00
69.60
30.99
50.00
50.00
49.00
50.00
40.00
33.33
20.00
13.60
25.00
33.33
25.00
Results of equity-accounted investments by segment are
disclosed in note 35 – Segment information and information
by geographical area.
The carrying amounts of equity-accounted investments
included differences between the purchase price of acquired
interests and their underlying book value of net assets
amounting to €44 million relating to Finproject SpA. This
surplus was driven by the long-term profitability outlook of
the acquired company at the time of the acquisition.
As of December 31, 2020, the market value of the investments
listed in regulated stock markets was as follows:
Management report | Consolidated financial statements | Annex
Number of shares held
% of the investment
Share price (€)
Market value (€ million)
Book value (€ million)
235
Saipem SpA
308,767,968
31.08
2.205
681
908
As of December 31, 2020, the fair value of Saipem was 25%
lower than the book value in Eni’s financial statements.
Due to this impairment indicator, given the volatility of
the stock and the significant spending cuts implemented
by the oil companies in the short and medium term
in hydrocarbons prices,
in response to the collapse
management performed an impairment test of the book
value of the investment based on an internal estimation
of the value in use of the investment, which confirmed the
carrying amount.
Additional information is included in note 37 – Other
information about investments.
OTHER INVESTMENTS
(€ million)
Carrying amount - beginning of the year
Additions and subscriptions
Change in the fair value
Divestments and reimbursements
Currency translation differences
Other changes
Carrying amount - end of the year
2020
929
8
24
(12)
(61)
69
957
2019
919
11
(3)
(12)
15
(1)
929
The fair value of the main non-controlling interests in non-
listed investees on regulated markets, classified within
level 3 of the fair value hierarchy, was estimated based on
a methodology that combines future expected earnings
and the sum-of-the-parts methodology (so-called residual
income approach) and takes into account, inter alia, the
following inputs: (i) expected results, as a gauge of the future
profitability of the investees, derived from the business plans,
but adjusted, where appropriate, to include the assumptions
that market participants would incorporate; (ii) the cost of
capital, adjusted to include the risk premium of the specific
country in which each investee operates. A stress test
based on a 1% change in the cost of capital considered in
the valuation did not produce significant changes at the fair
value evaluation.
Dividend income from these investments is disclosed in note
31 – Income (expense) from investments.
The investment book value as of December 31, 2020 primarily
related to Nigeria LNG Ltd for €579 million (€657 million at
December 31, 2019), Saudi European Petrochemical Co “IBN
ZAHR” for €115 million (€146 million at December 31, 2019)
and Novamont SpA for €77 million.
joint arrangements and
Investments
associates as of December 31, 2020 are presented separately
in the annex “List of companies owned by Eni SpA as of
December 31, 2020”.
in subsidiaries,
16 OTHER FINANCIAL ASSETS
(€ million)
Long-term financing receivables held for operating purposes
Short-term financing receivables held for operating purposes
Financing receivables held for non-operating purposes
Securities held for operating purposes
December 31, 2020
December 31, 2019
Current
Non-current
Current
Non-current
29
22
51
203
254
254
953
953
953
55
1,008
60
37
97
287
384
384
1,119
1,119
1,119
55
1,174
Eni Annual Report 2020
236
Changes in allowance for doubtful accounts were as follows:
(€ million)
Carrying amount at the beginning of the year
Additions
Deductions
Currency translation differences
Other changes
Carrying amount at the end of the year
Financing receivables held for operating purposes related
principally to funds provided to joint ventures and associates in
the Exploration & Production segment (€883 million) to execute
capital projects of interest to Eni. These receivables are long-
term interests in the initiatives funded. The greatest exposure
is towards the joint venture Cardón IV SA (Eni’s interest 50%) in
Venezuela, which is currently operating the Perla offshore gas
field, for €383 million (€563 million at December 31, 2019).
Financing receivables held for operating purposes due beyond
five years amounted to €771 million (€1,018 million at December
31, 2019).
The fair value of non-current financing receivables held for
operating purposes of €953 million has been estimated based
on the present value of expected future cash flows discounted
at rates ranging from -0.5% to 1.4% (-0.3% and 2.0% at December
31, 2019).
In addition to the expected credit loss model, the recoverability of
the financial loan granted to the joint venture Cardón IV SA was
assessed on the basis of the recoverability of the investment made
by the JV for the development of the Perla field corresponding
to the future cash flows of the project adjusted to price possible
difficulties in converting future gas sales into cash, essentially
2020
379
7
(7)
(26)
(1)
352
2019
430
11
(88)
7
19
379
assuming a deferral in the timing of revenues collection.
The recoverability of other long-term financial assets was
assessed by considering the expected probability default in the
next twelve months only, as the creditworthiness suffered no
significant deterioration in the reporting period.
Financing receivables held for non-operating purposes related
to bank deposits with the purpose to invest cash surpluses
and restricted deposits in escrow to guarantee transactions on
derivative contracts.
Financing receivables held for operating purposes were
denominated in euro and U.S. dollar for €178 million and €1,024
million, respectively.
Securities held for operating purposes related to listed bonds
issued by sovereign states.
Securities for €20 million (same amount as of December 31,
2019) were pledged as guarantee of the deposit for gas cylinders
as provided for by the Italian law.
The following table analyses securities per issuing entity:
t
s
o
c
d
e
z
i
t
r
o
m
A
)
n
o
i
l
l
i
m
€
(
24
17
11
3
55
e
u
l
a
v
l
i
a
n
m
o
N
)
n
o
i
l
l
i
m
€
(
24
17
11
3
55
e
u
l
a
V
r
i
a
F
)
n
o
i
l
l
i
m
€
(
e
t
a
r
l
i
a
n
m
o
N
n
r
u
t
e
r
f
o
%
e
t
a
d
y
t
i
r
u
t
a
M
’
s
y
d
o
o
M
-
g
n
i
t
a
R
P
&
S
-
g
n
i
t
a
R
25
from 0.35 to 4.75 from 2021 to 2030
Baa3
BBB
17
from 0.05 to 0.20 from 2021 to 2025 from Aa3 to Baa1
from AA to A
11
3
56
from 2022 to 2025
2022
Baa3
Baa3
BBB
BBB
Sovereign States
Fixed rate bonds
Italy
Others (*)
Floating rate bonds
Italy
Others
Total sovereign states
(*) Amounts included herein are lower than €10 million.
All securities have maturity within five years.
The fair value of securities was derived from quoted market
prices.
Receivables with related parties are described in note 36 –
Transactions with related parties.
Management report | Consolidated financial statements | Annex
17 TRADE AND OTHER PAYABLES
(€ million)
Trade payables
Down payments and advances from joint ventures in exploration & production activities
Payables for purchase of non-current assets
Payables due to partners in exploration & production activities
Other payables
237
December 31, 2020
December 31, 2019
8,679
417
1,393
1,120
1,327
12,936
10,480
401
2,276
1,236
1,152
15,545
The decrease in trade payables of €1,801 million was mainly
due to lower prices of hydrocarbons.
Other payables included: (i) the amounts to be paid due to the
triggering of the take-or-pay clause of the long-term supply
contracts for €376 million (€148 million at 31 December 2019);
(ii) payroll payables for €255 million (€215 million at December
31, 2019); (iii) payables for social security contributions for €92
million (same amount as of December 31, 2019).
Trade and other payables were denominated in euro for €5,384
million and in U.S. dollar for €6,243 million.
Because of the short-term maturity and conditions of
remuneration of trade payables, the fair values approximated
the carrying amounts.
Trade and other payables due to related parties are described
in note 36 – Transactions with related parties.
18 FINANCE DEBTS
(€ million)
Banks
Ordinary bonds
Convertible bonds
Commercial papers
Other financial institutions
December 31, 2020
December 31, 2019
t
b
e
d
m
r
e
t
-
t
r
o
h
S
337
t
b
e
d
m
r
e
t
-
g
n
o
l
f
o
n
o
i
t
r
o
p
t
n
e
r
r
u
C
759
t
b
e
d
m
r
e
t
-
g
n
o
L
l
a
t
o
T
t
b
e
d
m
r
e
t
-
t
r
o
h
S
3,193
4,289
187
t
b
e
d
m
r
e
t
-
g
n
o
l
f
o
n
o
i
t
r
o
p
t
n
e
r
r
u
C
504
t
b
e
d
m
r
e
t
-
g
n
o
L
l
a
t
o
T
2,341
3,032
1,140
18,280
19,420
2,642
16,137
18,779
2,233
312
2,882
396
10
26
396
2,233
348
1,909
21,895
26,686
1,778
487
2,452
393
10
39
393
1,778
536
3,156
18,910
24,518
Finance debts increased by €2,168 million due to new
issuance net of repayments of €3,115 million, partially
offset by currency translation differences relating to foreign
subsidiaries and debts denominated in foreign currency
recorded by euro-reporting subsidiaries for €876 million.
Commercial papers were issued by the Group’s financial
subsidiaries.
Eni entered into long-term borrowing facilities with the
European Investment Bank. These borrowing facilities are
subject to the retention of a minimum level of credit rating.
According to the agreements, should the Company lose the
minimum credit rating, new guarantees could be required
to be agreed upon with the European Investment Bank. At
December 31, 2020, debts subjected to restrictive covenants
amounted to €1,051 million (€1,243 million at December 31,
2019). Eni was in compliance with those covenants.
Ordinary bonds consisted of bonds issued within the Euro
Medium Term Notes Program for a total of €16,356 million
and other bonds for a total of €3,064 million.
Eni Annual Report 2020
238
The following table provides a breakdown of ordinary bonds by issuing entity, maturity date, interest rate and currency as of
December 31, 2020:
(€ million)
Issuing entity
Euro Medium Term Notes
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni Finance International SA
Eni Finance International SA
Eni Finance International SA
Eni Finance International SA
Other bonds
Eni SpA
Eni SpA
Eni SpA
Eni SpA
Eni USA Inc
d
n
o
b
n
o
t
n
u
o
c
s
D
i
d
e
u
r
c
c
a
d
n
a
e
u
s
s
i
e
s
n
e
p
x
e
t
n
u
o
m
A
y
c
n
e
r
r
u
C
l
a
t
o
T
y
t
i
r
u
t
a
M
to
e
t
a
R
)
%
(
to
from
from
1,200
1,000
1,000
1,000
1,000
1,000
1,000
900
800
800
750
750
750
700
650
600
1,427
795
111
24
16
28
12
10
9
2
(2)
2
1
10
6
(4)
2
3
(4)
(3)
6
5
1,216
1,028
1,012
1,010
1,009
1,002
1,000
898
802
801
760
756
746
702
653
596
1,424
801
116
24
16,257
99
16,356
815
815
815
285
326
3,056
19,313
5
3
(1)
1
8
820
818
814
286
326
3,064
107
19,420
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
USD
EUR
GBP
YEN
USD
USD
USD
USD
USD
2025
2029
2023
2031
2026
2030
2026
2024
2021
2028
2024
2027
2034
2022
2025
2028
2027
2043
2021
2021
2023
2028
2029
2040
2027
3.750
3.625
3.250
2.000
1.500
0.625
1.250
0.625
2.625
1.625
1.750
1.500
1.000
0.750
1.000
1.125
variable
5.441
4.750
1.955
4.000
4.750
4.250
5.700
7.300
1.275
2026
2025
As of December 31, 2020, ordinary bonds maturing within 18
months amounted to €1,644 million. During 2020, new bonds
issued amounted to €3,514 million.
The following table provides a breakdown of convertible bonds
issued by Eni SpA as of December 31, 2020:
(€ million)
Eni SpA
d
n
o
b
n
o
t
n
u
o
c
s
D
i
d
e
u
r
c
c
a
d
n
a
e
u
s
s
i
e
s
n
e
p
x
e
t
n
u
o
m
A
y
c
n
e
r
r
u
C
y
t
i
r
u
t
a
M
e
t
a
R
)
%
(
l
a
t
o
T
400
(4)
396
EUR
2022
0.000
Management report | Consolidated financial statements | Annex
239
This is a non-dilutive equity-linked bond, which provides for
a redemption value linked to the market price of Eni’s shares.
The bondholders can exercise their conversion rights
at certain expiry dates and/or in the presence of certain
events, while the bonds will be cash-settled. Accordingly, to
hedge its exposure, Eni purchased cash-settled call options
relating to Eni shares that will be settled on a net cash basis.
The bond conversion price is equal €17.62 and includes a
35% premium with respect to the Eni’s share reference price
at the date of issuance. The convertible bond is measured
at amortized cost. The conversion option, embedded in
the financial instrument issued, and the call option on
Eni’s shares acquired are valued at fair value with effects
recognized through profit and loss.
Eni has in place a program for the issuance of Euro Medium
Term Notes up to €20 billion, of which €16.3 billion were
drawn as of December 31, 2020.
The following table provides a breakdown by currency of
finance debt and the related weighted average interest
rates:
December 31, 2020
December 31, 2019
t
b
e
d
m
r
e
t
t
r
o
h
S
)
n
o
i
l
l
i
m
€
(
1,004
1,870
8
2,882
e
t
a
r
e
g
a
r
e
v
A
)
%
(
1.1
(0.5)
n
o
i
t
r
o
p
t
n
e
r
r
u
c
d
n
a
t
b
e
d
m
r
e
t
g
n
o
l
f
o
t
b
e
d
m
r
e
t
g
n
o
L
)
n
o
i
l
l
i
m
€
(
19,142
4,522
140
23,804
e
t
a
r
e
g
a
r
e
v
A
)
%
(
1.7
4.6
4.3
t
b
e
d
m
r
e
t
t
r
o
h
S
)
n
o
i
l
l
i
m
€
(
464
1,981
e
t
a
r
e
g
a
r
e
v
A
)
%
(
0.2
2.3
7
(0.7)
2,452
f
o
n
o
i
t
r
o
p
t
n
e
r
r
u
c
d
n
a
t
b
e
d
m
r
e
t
g
n
o
L
t
b
e
d
m
r
e
t
g
n
o
l
)
n
o
i
l
l
i
m
€
(
16,526
5,392
148
22,066
e
t
a
r
e
g
a
r
e
v
A
)
%
(
2.1
4.6
4.3
Euro
U.S. dollar
Other currencies
As of December 31, 2020, Eni
retained undrawn
uncommitted short-term borrowing facilities amounting to
€7,183 million (€13,299 million at December 31, 2019) and
undrawn committed borrowing facilities of €5,295 million,
of which €4,750 million due beyond 12 months (€4,667
million at December 31, 2019, of which €4,217 million due
beyond 12 months).
Those facilities bore interest rates reflecting prevailing
conditions in the marketplace.
As of December 31, 2020, Eni was in compliance with
covenants and other contractual provisions in relation to
borrowing facilities.
Fair value of long-term debt, including the current portion
of long-term debt is described below:
(€ million)
Ordinary bonds
Convertible bonds
Banks
Other financial institutions
December 31, 2020
December 31, 2019
22,429
497
4,008
36
26,970
19,173
402
2,904
49
22,528
Fair value of finance debts was calculated by discounting the
expected future cash flows at discount rates ranging from
-0.5% to 1.4% (-0.3% and 2.0% at December 31, 2019).
Because of the short-term maturity and conditions of
remuneration of short-term debts, the fair value approximated
the carrying amount.
Eni Annual Report 2020
240
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
(€ million)
Carrying amount at December 31, 2019
Cash flows
Currency translation differences
Other non-monetary changes
Carrying amount at December 31, 2020
t
b
e
d
m
r
e
t
-
g
n
o
L
t
b
e
d
m
r
e
t
-
g
n
o
l
t
n
e
r
r
u
c
d
n
a
f
o
n
o
i
t
r
o
p
22,066
2,178
(348)
(92)
23,804
t
b
e
d
m
r
e
t
-
t
r
o
h
S
2,452
937
(528)
21
2,882
e
s
a
e
l
m
r
e
t
-
g
n
o
l
f
o
s
e
i
t
i
l
i
b
a
i
l
t
n
e
r
r
u
c
d
n
a
m
r
e
t
-
g
n
o
L
n
o
i
t
r
o
p
5,648
(869)
(333)
572
5,018
l
a
t
o
T
30,166
2,246
(1,209)
501
31,704
Other non-monetary changes include €808 million of lease
liabilities assumptions.
Lease liabilities are described in note 12 – Right-of-use assets
and lease liabilities.
Transactions with related parties are described in note 36 –
Transactions with related parties
19 INFORMATION ON NET BORROWINGS
The analysis of net borrowings, as defined in the “Financial Review”, was as follows:
(€ million)
A. Cash and cash equivalents
B. Financial assets held for trading
C Liquidity (A+B)
D. Financing receivables
E. Short-term debt towards banks
F. Long-term debt towards banks
G. Bonds
H. Short-term financial debt towards related parties
I. Other short-term financial liabilities
J. Other long-term financial liabilities
K. Total borrowings before lease liabilities (E+F+G+H+I+J)
L. Net borrowings before lease liabilities (K-C-D)
M. Lease liabilities
N. Lease liabilities towards related parties
O. Total borrowings including lease liabilities (K+M+N)
P. Net borrowings including lease liabilities (O-C-D)
December 31, 2020
Current Non-current
9,413
5,502
14,915
203
337
759
1,140
52
2,493
10
4,791
(10,327)
795
54
5,640
(9,478)
3,193
18,676
26
21,895
21,895
4,057
112
26,064
26,064
Total
9,413
5,502
14,915
203
337
3,952
19,816
52
2,493
36
26,686
11,568
4,852
166
31,704
16,586
December 31, 2019
Current Non-current
5,994
6,760
12,754
287
187
504
2,642
46
2,219
10
5,608
(7,433)
884
5
6,497
(6,544)
2,341
16,530
39
18,910
18,910
4,751
8
23,669
23,669
Total
5,994
6,760
12,754
287
187
2,845
19,172
46
2,219
49
24,518
11,477
5,635
13
30,166
17,125
Cash and cash equivalent are disclosed in note 5 – Cash
and cash equivalent.
Financial assets held for trading are disclosed in note 6 –
Financial assets held for trading.
Financing receivables are disclosed in note 16 – Other
financial assets.
Finance debts are disclosed in note 18 – Finance debts.
Lease liabilities related for €1,652 million (€1,976 million
at December 31, 2019) to the share of joint operators in
upstream projects operated by Eni which will be recovered
through a partner cash-call billing process. More information
is reported in note 12 – Right-of-use assets and lease
liabilities.
Management report | Consolidated financial statements | Annex
20 PROVISIONS
l
a
i
c
o
s
d
n
a
t
n
e
m
n
o
d
n
a
b
a
e
t
i
s
r
o
f
s
n
o
s
i
i
v
o
r
P
,
n
o
i
t
a
r
o
t
s
e
r
s
t
c
e
o
r
p
j
l
a
t
n
e
m
n
o
r
i
v
n
E
s
n
o
s
i
i
v
o
r
p
(€ million)
Carrying amount at December 31, 2019
8,936
2,602
New or increased provisions
Initial recognition and changes in estimates
Accretion discount
Reversal of utilized provisions
Reversal of unutilized provisions
Currency translation differences
Other changes
168
(2)
(296)
(183)
955
190
(252)
(3)
(469)
5
(26)
Carrying amount at December 31, 2020
9,362
2,263
241
l
i
a
s
o
p
s
d
r
o
f
s
n
o
s
i
i
v
o
r
P
g
n
i
r
u
t
c
u
r
t
s
e
r
d
n
a
46
2
(14)
(4)
(1)
29
r
e
h
t
O
l
a
t
o
T
769
14,106
193
1
801
955
190
(266)
(1,628)
(38)
(9)
(25)
(403)
(522)
(61)
625
13,438
s
e
s
s
o
l
r
o
f
s
n
o
s
i
i
v
o
r
P
s
t
n
e
m
t
s
e
v
n
i
n
o
188
44
(6)
(4)
(24)
198
L
I
O
r
o
f
s
n
o
s
i
i
v
o
r
P
r
e
v
o
c
e
c
n
a
r
u
s
n
i
113
(9)
(1)
(8)
95
s
e
v
i
t
n
e
c
n
i
y
c
n
a
d
n
u
d
e
r
r
o
f
s
n
o
s
i
i
v
o
r
P
70
1
(7)
(11)
53
s
n
o
i
t
a
g
i
t
i
l
r
o
f
s
n
o
s
i
i
v
o
r
P
850
172
1
(526)
(96)
(31)
15
385
s
e
x
a
t
e
m
o
c
n
i
n
a
h
t
r
e
h
t
o
s
e
x
a
t
r
o
f
s
n
o
s
i
i
v
o
r
P
199
61
(30)
(53)
(8)
1
170
s
n
o
s
i
i
v
o
r
p
l
a
i
r
a
u
t
c
a
d
n
a
s
t
n
e
m
t
s
u
d
a
s
s
o
L
j
e
c
n
a
r
u
s
n
i
s
e
i
s
’
i
n
E
r
o
f
n
a
p
m
o
c
333
160
(237)
2
258
Provisions for site restoration, abandonment and social projects
include the present value of the estimated costs that the Company
expects to incur for dismantling oil and natural gas production
facilities at the end of the producing lives of fields, well-plugging,
site clean-up and restoration for €8,454 million. Initial recognitions
and changes in estimates of €955 million were driven by a
decrease in the discount rates and the estimate of the costs
for social projects to be incurred following the commitments
between Eni SpA and the Basilicata region in relation to the oil
development program in the Val d’Agri concession area (€439
million). The unwinding of discount recognized through profit and
loss for €190 million was determined based on discount rates
ranging from -0.2% to 3.7% (from -0.1% to 6.1% at December
31, 2019). Main expenditures associated with decommissioning
operations are expected to be incurred over a fifty-year period.
Provisions for environmental risks included the estimated costs for
environmental clean-up and remediation of soil and groundwater
in areas owned or under concession where the Group performed
in the past industrial operations that were progressively divested,
shut down, dismantled or restructured. The provision was
accrued because at the balance sheet date there is a legal or
constructive obligation for Eni to carry out environmental clean-
up and remediation and the expected costs can be estimated
reliably. The provision included the expected charges associated
with strict liability related to obligations of cleaning up and
remediating polluted areas that met the parameters set by the
law at the time when the pollution occurred but presently are
no more in compliance with current environmental laws and
regulations, or because Eni assumed the liability borne by other
operators when the Company acquired or otherwise took over
site operations. Those environmental provisions are recognized
when an environmental project is approved by or filed with the
relevant administrative authorities or a constructive obligation
has arisen whereby the Company commits itself to performing
certain cleaning-up and restoration projects and a reliable cost
estimation is available. At December 31, 2020, environmental
provision primarily related to Eni Rewind SpA for €1,647 million
and to the Refining & Marketing business line for €359 million.
Litigation provisions comprised expected liabilities associated
with legal proceedings and other matters arising from contractual
claims, including arbitrations, fines and penalties due to antitrust
proceedings and administrative matters. These provisions
represent the Company’s best estimate of the expected and
probable liabilities associated with ongoing litigation and related
to the Exploration & Production segment for €250 million.
Reversals of utilized provisions related for €515 million to the
Exploration & Production segment in relation to the settlement
of contractual disputes.
Provisions for uncertain taxes matters related to the estimated
losses that the Company expects to incur to settle tax litigations
and tax claims pending with tax authorities in relation to
uncertainties in applying rules in force were in respect of the
Exploration & Production segment for €139 million.
Loss adjustments and actuarial provisions of Eni’s insurance
company Eni Insurance DAC represented the estimated liabilities
accrued on the basis for third party claims. Against such liability
was recorded receivables of €116 million recognized towards
insurance companies for reinsurance contracts.
Provisions for losses on investments included provisions
relating to investments whose loss exceeds the equity and
primarily related to Industria Siciliana Acido Fosforico - ISAF -
SpA (in liquidation) for €146 million.
Provisions for the OIL mutual insurance scheme included the
estimated future increase of insurance premiums which will
be charged to Eni in the next five years and that were accrued
at the reporting date because of the effective accident rate
occurred in past reporting periods.
Provisions for redundancy incentives were recognized mainly
due to a restructuring program involving the Italian personnel
related to past reporting periods.
Eni Annual Report 2020
242
21 PROVISIONS FOR EMPLOYEE BENEFITS
(€ million)
Italian defined benefit plans
Foreign defined benefit plans
FISDE, foreign medical plans and other
Defined benefit plans
Other benefit plans
Provision for employee benefits
December 31, 2020
December 31, 2019
258
493
182
933
268
1.201
269
412
177
858
278
1.136
The liability relating to Eni’s commitment to cover the healthcare
costs of personnel is determined based on the contributions
paid by the Company.
Other employee benefit plans related to deferred monetary
incentive plans for €128 million, the isopensione plans (a post
retirement benefit plan applicable to a specific category of
employees) of Eni gas e luce SpA for €97 million, jubilee awards
for €28 million and other long-term plans for €15 million.
Present value of employee benefits, estimated by applying
actuarial techniques, consisted of the following:
2020
2019
d
e
n
fi
e
d
n
a
i
l
a
t
I
l
s
n
a
p
t
fi
e
n
e
b
d
e
n
fi
e
d
n
g
e
r
o
F
i
l
s
n
a
p
t
fi
e
n
e
b
i
n
g
e
r
o
f
,
E
D
S
I
F
s
n
a
p
l
l
i
a
c
d
e
m
r
e
h
t
o
d
n
a
t
fi
e
n
e
b
d
e
n
fi
e
D
s
n
a
p
l
t
fi
e
n
e
b
r
e
h
t
O
s
n
a
p
l
d
e
n
fi
e
d
n
a
i
l
a
t
I
l
s
n
a
p
t
fi
e
n
e
b
l
a
t
o
T
d
e
n
fi
e
d
n
g
e
r
o
F
i
l
s
n
a
p
t
fi
e
n
e
b
i
n
g
e
r
o
f
,
E
D
S
F
I
s
n
a
p
l
l
i
a
c
d
e
m
r
e
h
t
o
d
n
a
t
fi
e
n
e
b
d
e
n
fi
e
D
s
n
a
p
l
t
fi
e
n
e
b
r
e
h
t
O
s
n
a
p
l
l
a
t
o
T
269
1,044
177
1,490
278
1,768
275
925
148
1,348
309
1,657
23
27
48
2
5
(3)
(10)
9
71
3
2
13
2
13
26
31
66
(11)
93
(1)
(13)
(2)
(16)
(2)
1
1
(2)
1
1
50
1
4
2
5
(3)
20
76
32
70
(9)
98
4
5
7
(19)
(2)
18
1
1
19
37
41
50
(9)
1
1
1
2
3
24
3
21
8
21
44
70
60
10
9
1
1
55
1
1
1
(2)
76
45
71
61
10
7
1
1
(20)
(33)
2
32
(9)
(4)
(62)
(63)
(125)
(15)
(28)
(9)
(52)
(88)
(140)
30
(22)
8
48
1
49
2
51
258
1,140
182
1,580
268
1,848
269
1,044
177
1,490
278
1,768
632
15
51
(3)
15
1
14
(21)
(41)
648
1
1
632
15
51
(3)
15
1
14
(21)
(41)
648
1
1
632
15
51
(3)
15
1
14
(21)
(41)
648
1
1
545
20
23
14
1
13
(19)
49
632
5
(5)
545
20
23
14
1
13
(19)
49
632
5
(5)
545
20
23
14
1
13
(19)
49
632
5
(5)
(€ million)
Present value of benefit liabilities
at beginning of year
Current cost
Interest cost
Remeasurements:
- actuarial (gains) losses due to changes
in demographic assumptions
- actuarial (gains) losses due to changes
in financial assumptions
- experience (gains) losses
Past service cost and (gains)
losses on settlements
Plan contributions:
- employee contributions
Benefits paid
Currency translation differences
and other changes
Present value of benefit liabilities
at end of year (a)
Plan assets at beginning of year
Interest income
Return on plan assets
Past service cost and (gains) losses
settlements
Plan contributions:
- employee contributions
- employer contributions
Benefits paid
Currency translation differences
and other changes
Plan assets at end of year (b)
Asset ceiling at beginning of year
Change in asset ceiling
Asset ceiling at end of year (c)
Net liability recognized at end of year (a-b+c)
258
493
182
933
268
1,201
269
412
177
858
278
1,136
Employee benefit plans included the liability attributable to
partners operating in exploration and production activities of
€268 million (€175 million at December 31, 2019). Eni recorded
a receivable for an amount equivalent to such liability.
Management report | Consolidated financial statements | Annex
Costs charged to the profit and loss account, valued using actuarial assumptions, consisted of the following:
(€ million)
2020
Current cost
Past service cost and (gains) losses on settlements
Interest cost (income), net:
- interest cost on liabilities
- interest income on plan assets
Total interest cost (income), net
- of which recognized in "Payroll and related cost"
- of which recognized in "Financial income (expense)"
Remeasurements for long-term plans
Total
- of which recognized in "Payroll and related cost"
- of which recognized in "Financial income (expense)"
2019
Current cost
Past service cost and (gains) losses on settlements
Interest cost (income), net:
- interest cost on liabilities
- interest income on plan assets
Total interest cost (income), net
- of which recognized in "Payroll and related cost"
- of which recognized in "Financial income (expense)"
Remeasurements for long-term plans
Total
- of which recognized in "Payroll and related cost"
- of which recognized in "Financial income (expense)"
d
e
n
fi
e
d
n
a
i
l
a
t
I
l
s
n
a
p
t
fi
e
n
e
b
2
2
2
2
2
4
4
4
4
4
i
n
g
e
r
o
f
,
E
D
S
I
F
d
e
n
fi
e
d
n
g
e
r
o
F
i
l
s
n
a
p
t
fi
e
n
e
b
23
1
27
(15)
12
12
36
24
12
19
1
37
(20)
17
17
37
20
17
s
n
a
p
l
l
i
a
c
d
e
m
r
e
h
t
o
d
n
a
3
2
2
2
5
3
2
2
8
3
3
3
13
10
3
t
fi
e
n
e
b
d
e
n
fi
e
D
s
n
a
p
l
26
1
31
(15)
16
16
43
27
16
21
9
44
(20)
24
24
54
30
24
l
s
n
a
p
t
fi
e
n
e
b
r
e
h
t
O
50
20
1
1
1
4
75
75
55
(2)
1
1
1
1
55
55
Costs of defined benefit plans recognized in other comprehensive income consisted of the following:
(€ milioni)
Remeasurements
Actuarial (gains)/losses due to changes in demographic assumptions
Actuarial (gains)/losses due to changes in financial assumptions
Experience (gains) losses
Return on plan assets
Change in asset ceiling
2020
d
e
n
fi
e
d
n
g
e
r
o
F
i
l
s
n
a
p
t
fi
e
n
e
b
(10)
71
(13)
(51)
1
(2)
i
n
g
e
r
o
f
,
E
D
S
I
F
s
n
a
p
l
l
i
a
c
d
e
m
r
e
h
t
o
d
n
a
2
13
(2)
13
d
e
n
fi
e
d
n
a
i
l
a
t
I
l
s
n
a
p
t
fi
e
n
e
b
7
(2)
5
l
a
t
o
T
(11)
93
(16)
(51)
1
16
2019
d
e
n
fi
e
d
n
g
e
r
o
F
i
l
s
n
a
p
t
fi
e
n
e
b
i
n
g
e
r
o
f
,
E
D
S
F
I
s
n
a
p
l
l
i
a
c
d
e
m
r
e
h
t
o
d
n
a
50
(9)
(23)
(5)
13
3
21
24
d
e
n
fi
e
d
n
a
i
l
a
t
I
l
s
n
a
p
t
fi
e
n
e
b
(3)
9
(1)
5
243
l
a
t
o
T
76
21
32
(15)
17
1
16
4
118
102
16
76
7
45
(20)
25
1
24
1
109
85
24
l
a
t
o
T
60
10
(23)
(5)
42
Eni Annual Report 2020
244
Plan assets consisted of the following:
(€ million)
December 31, 2020
Plan assets with a quoted market price
Plan assets without a quoted market price
December 31, 2019
Plan assets with a quoted market price
Plan assets without a quoted market price
h
s
a
c
d
n
a
h
s
a
C
l
s
t
n
e
a
v
i
u
q
e
117
117
32
32
s
e
i
t
i
r
u
c
e
s
y
t
i
u
q
E
38
38
39
39
s
e
i
t
i
r
u
c
e
s
t
b
e
D
297
297
388
388
e
t
a
t
s
e
l
a
e
R
8
8
7
7
s
e
v
i
t
a
v
i
r
e
D
2
2
2
2
t
n
e
m
t
s
e
v
n
I
s
d
n
u
f
e
c
n
a
r
u
s
n
i
y
b
l
d
e
h
s
t
e
s
s
A
y
n
a
p
m
o
c
76
76
79
79
20
3
23
17
3
20
r
e
h
t
O
87
87
65
65
l
a
t
o
T
645
3
648
629
3
632
The main actuarial assumptions used in the measurement of the liabilities at year-end and in the estimate of costs expected for
2021 consisted of the following:
2020
Discount rate
Rate of compensation increase
Rate of price inflation
Life expectations on retirement at age 65
2019
Discount rate
Rate of compensation increase
Rate of price inflation
Life expectations on retirement at age 65
d
e
n
fi
e
d
n
a
i
l
a
t
I
l
s
n
a
p
t
fi
e
n
e
b
0.3
1.8
0.8
0.7
1.7
0.7
d
e
n
fi
e
d
n
g
e
r
o
F
i
l
s
n
a
p
t
fi
e
n
e
b
i
n
g
e
r
o
f
,
E
D
S
I
F
s
n
a
p
l
l
i
a
c
d
e
m
r
e
h
t
o
d
n
a
0.1-14.7
1.3-12.5
0.8-12.2
13-26
0.0-13.7
1.3-12.5
0.8-11.3
13-25
0.3
0.8
24
0.7
0.7
24
t
fi
e
n
e
b
r
e
h
t
O
s
n
a
p
l
0.0-0.3
0.8
0.0-0.7
0.7
(%)
(%)
(%)
(years)
(%)
(%)
(%)
(years)
The following is an analysis by geographical area related to the main actuarial assumptions used in the valuation of the principal
foreign defined benefit plans:
2020
Discount rate
Rate of compensation increase
Rate of price inflation
Life expectations on retirement at age 65
2019
Discount rate
Rate of compensation increase
Rate of price inflation
Life expectations on retirement at age 65
a
e
r
a
o
r
u
E
e
p
o
r
u
E
f
o
t
s
e
R
(%)
(%)
(%)
(years)
(%)
(%)
(%)
(years)
0.4-0.8
1.3-3.0
1.3-1.9
21-22
0.8-1.0
1.3-3.0
1.3-2.0
21-22
0.1-1.4
2.5-3.6
0.8-3.1
23-26
0.0-2.0
2.5-3.6
0.8-3.1
24-25
s
a
e
r
a
r
e
h
t
O
6.4-9.8
5.0-9.8
3.0-5.0
i
n
g
e
r
o
F
d
e
n
fi
e
d
t
fi
e
n
e
b
s
n
a
p
l
0.1-14.7
1.3-12.5
0.8-12.2
13-26
a
c
i
r
f
A
2.6-14.7
2.0-12.5
2.6-12.2
13-17
2.6-13.7
7.3-11.3
2.0-12.5
10.0-11.3
2.6-11.3
3.3-5.0
13-17
0.0-13.7
1.3-12.5
0.8-11.3
13-25
Management report | Consolidated financial statements | Annex
245
The effects of a possible change in the main actuarial assumptions at the end of the year are listed below:
(€ million)
December 31, 2020
Italian defined benefit plans
Foreign defined benefit plans
FISDE, foreign medical plans and other
Other benefit plans
December 31, 2019
Italian defined benefit plans
Foreign defined benefit plans
FISDE, foreign medical plans and other
Other benefit plans
Discount rate
0.5%
Increase
0.5%
Decrease
Rate of price
inflation
0.5%
Increase
Rate of
increases in
pensionable
salaries
0.5%
Increase
Healthcare cost
trend rate
0.5%
Increase
Rate of
increases to
pensions in
payment
0.5%
Increase
(10)
(84)
(10)
(3)
(12)
(67)
(9)
(4)
6
92
7
1
13
77
10
1
7
47
1
8
31
1
25
18
11
10
67
34
The sensitivity analysis was performed based on the results
for each plan through assessments calculated considering
modified parameters.
The amount of contributions expected to be paid for employee
benefit plans in the next year amounted to €132 million, of
which €61 million related to defined benefit plans.
The following is an analysis by maturity date of the liabilities
for employee benefit plans and their relative weighted
average duration:
(€ million)
December 31, 2020
2021
2022
2023
2024
2025
2026 and thereafter
Weighted average duration
(years)
December 31, 2019
2020
2021
2022
2023
2024
2025 and thereafter
Weighted average duration
(years)
d
e
n
fi
e
d
n
a
i
l
a
t
I
l
s
n
a
p
t
fi
e
n
e
b
12
13
17
20
21
175
8.2
17
16
12
10
15
199
9.4
d
e
n
fi
e
d
n
g
e
r
o
F
i
l
s
n
a
p
t
fi
e
n
e
b
44
42
50
63
67
227
19.1
33
35
32
39
49
224
18.1
i
n
g
e
r
o
f
,
E
D
S
I
F
s
n
a
p
l
l
i
a
c
d
e
m
r
e
h
t
o
d
n
a
8
7
7
7
7
146
13.7
9
8
7
7
7
139
13.3
t
fi
e
n
e
b
r
e
h
t
O
s
n
a
p
l
71
66
63
16
12
40
2.8
73
68
61
17
14
45
3.0
Eni Annual Report 2020
246
22 DEFERRED TAX ASSETS AND LIABILITIES
(€ million)
Deferred tax liabilities before offsetting
Deferred tax assets available for offset
Deferred tax liabilities
Deferred tax assets before offsetting (net of accumulated write-down provisions)
Deferred tax liabilities available for offset
Deferred tax assets
December 31, 2020
December 31, 2019
8,581
(3,057)
5,524
7,166
(3,057)
4,109
9,583
(4,663)
4,920
9,023
(4,663)
4,360
The most significant temporary differences giving rise to net deferred tax assets and liabilities are disclosed below:
(€ million)
Deferred tax liabilities
Accelerated tax depreciation
Leasing
Difference between the fair value and the carrying amount of assets acquired
Site restoration and abandonment (tangible assets)
Application of the weighted average cost method in evaluation of inventories
Other
Deferred tax assets, gross
Carry-forward tax losses
Site restoration and abandonment (provisions for contingencies)
Timing differences on depreciation and amortization
Accruals for impairment losses and provisions for contingencies
Impairment losses
Leasing
Employee benefits
Over/Under lifting
Unrealized intercompany profits
Other
Accumulated write-downs of deferred tax assets
Deferred tax assets, net
Carrying amount at
December 31, 2020
Carrying amount at
December 31, 2019
6,171
1,089
415
199
56
651
8,581
(6,983)
(2,211)
(2,206)
(1,371)
(1,213)
(1,113)
(213)
(211)
(117)
(593)
(16,231)
9,065
(7,166)
6,796
1,375
617
126
97
572
9,583
(6,065)
(2,242)
(2,022)
(1,513)
(946)
(1,385)
(209)
(525)
(120)
(740)
(15,767)
6,744
(9,023)
The following table summarizes the changes in deferred tax liabilities and assets:
(€ million)
Carrying amount at December 31, 2019
Additions
Deductions
Currency translation differences
Other changes
Carrying amount at December 31, 2020
Carrying amount at December 31, 2018
Changes in accounting policies (IFRS 16)
Carrying amount at January 1, 2019
Additions
Deductions
Currency translation differences
Other changes
Carrying amount at December 31, 2019
Deferred tax liabilities,
gross
Deferred tax assets,
gross
Accumulated
write-downs of deferred
tax assets
Deferred tax assets,
net of impairments
9,583
960
(1,326)
(725)
89
8,581
7,956
1,470
9,426
1,265
(1,205)
194
(97)
9,583
(15,767)
(2,649)
1,357
742
86
(16,231)
(13,356)
(1,470)
(14,826)
(2,091)
1,407
(182)
(75)
(15,767)
6,744
2,638
(130)
(192)
5
9,065
5,741
5,741
1,161
(174)
34
(18)
6,744
(9,023)
(11)
1,227
550
91
(7,166)
(7,615)
(1,470)
(9,085)
(930)
1,233
(148)
(93)
(9,023)
Management report | Consolidated financial statements | Annex
247
Carry-forward tax losses amounted to €23,325 million, of which
€17,323 million can be carried forward indefinitely. Carry-forward
tax losses were €13,153 million and €10,172 million at Italian
subsidiaries and foreign subsidiaries, respectively. Deferred tax
assets recognized on these losses amounted to €3,734 million
and €3,249 million, respectively. Italian taxation law allows the
carry-forward of tax losses indefinitely. Foreign taxation laws
generally allow the carry-forward of tax losses over a period
longer than five years, and in many cases, indefinitely. A tax
rate of 24% was applied to tax losses of Italian subsidiaries
to determine the portion of the carry-forwards tax losses. The
corresponding average rate for foreign subsidiaries was 31.9%.
Accumulated write-downs of deferred tax assets related to
Italian companies for €7,090 million and non-Italian companies
for €1,975 million.
Taxes are also described in note 32 – Income taxes.
23 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING
(€ million)
Non-hedging derivatives
Derivatives on exchange rate
- Currency swap
- Interest currency swap
- Outright
Derivatives on interest rate
- Interest rate swap
Derivatives on commodities
- Future
- Over the counter
- Other
Trading derivatives
Derivatives on commodities
- Over the counter
- Future
- Options
Cash flow hedge derivatives
Derivatives on commodities
- Over the counter
- Future
- Options
Option embedded in convertible bonds
Gross amount
Offsetting
Net amount
Of which:
- current
- non-current
December 31, 2020
December 31, 2019
Fair value
asset
Fair value
liability
Level
of Fair value
Fair value
asset
Fair value
liability
Level
of Fair value
125
128
4
257
23
23
418
89
5
512
792
1,167
440
4
1,611
209
119
328
2
2,733
(1,033)
1,700
1,548
152
127
2
7
136
74
74
447
77
524
734
1,451
525
3
1,979
30
8
51
89
2
2,804
(1,033)
1,771
1,609
162
2
2
2
2
1
2
2
2
1
2
2
1
2
2
97
26
8
131
13
13
192
89
12
293
437
2,387
348
21
2,756
1
34
35
11
3,239
(612)
2,627
2,573
54
43
5
48
34
34
181
58
239
321
1,953
313
22
2,288
596
148
2
746
11
3,366
(612)
2,754
2,704
50
2
2
2
2
1
2
2
2
1
2
2
1
2
2
Eni is exposed to the market risk, which is the risk that
changes in prices of energy commodities, exchange rates
and interest rates could reduce the expected cash flows
or the fair value of the assets. Eni enters into financial and
commodities derivatives traded on organized markets (like
MTF and OTF) and into commodities derivatives traded over
Eni Annual Report 2020
248
the counter (swaps, forward, contracts for differences and
options on commodities) to reduce this risk in relation to the
underlying commodities, currencies or interest rates and, to
a limited extent, in compliance with internal authorization
thresholds, with speculative purposes to profit from
expected market trends.
Derivatives fair values were estimated based on market
quotations provided by primary info-provider or, alternatively,
appropriate valuation techniques generally adopted in the
marketplace.
Fair values of non-hedging derivatives related to derivatives
that did not meet the formal criteria to be designated as
hedges under IFRS.
Fair values of trading derivatives comprised forward sale
contracts of natural gas for physical delivery which were not
entitled to the own use exemption, as well as derivatives for
proprietary trading activities.
Fair value of cash flow hedge derivatives related to
commodity hedges were entered by the Global Gas & LNG
Portfolio segment. These derivatives were entered into to
hedge variability in future cash flows associated with highly
probable future trade transactions of gas or electricity or
on already contracted trades due to different indexation
mechanisms of supply costs versus selling prices. A similar
scheme applies to exchange rate hedging derivatives. The
existence of a relationship between the hedged item and the
hedging derivative is checked at inception to verify eligibility
for hedge accounting by observing the offset in changes of
the fair values at both the underlying commodity and the
derivative. The hedging relationship is also stress-tested
against the level of credit risk of the counterparty in the
derivative transaction. The hedge ratio is defined consistently
with the Company’s risk management objectives, under a
defined risk management strategy. The hedging relationship
is discontinued when it ceases to meet the qualifying criteria
and the risk management objectives on the basis of which
hedge accounting has initially been applied.
The effects of the measurement at fair value of cash flow
hedge derivatives are given in note 25 – Equity. Information
on hedged risks and hedging policies is disclosed in note 27
– Guarantees, commitments and risks – Risk factors.
In 2020, the exposure to the exchange rate risk deriving
from securities denominated in US dollars included in the
strategic liquidity portfolio amounting to €1,335 million was
hedged by using, in a fair value hedge relationship, negative
exchange differences for €120 million resulting on a portion
of bonds denominated in US dollars amounting to €1,546
million.
Options embedded in convertible bonds relate to equity-
linked cash settled. More information is disclosed in note
18 – Finance debts.
The offsetting of financial derivatives related to Eni Trading
& Shipping.
During 2020, there were no transfers between the different
hierarchy levels of fair value.
Hedging derivative instruments are disclosed below:
(€ million)
Cash flow hedge derivatives
Derivatives on commodity
- Over the counter
- Future
December 31, 2020
December 31, 2019
Nominal
amount of
the hedging
instrument
Change
in fair value
(effective
hedge)
Change
in fair value
(ineffective
hedge)
Nominal
amount of
the hedging
instrument
Change
in fair value
(effective
hedge)
Change
in fair value
(ineffective
hedge)
821
541
1,362
(438)
158
(280)
(1)
(1)
2,179
1,245
3,424
(1,357)
(61)
(1,418)
(2)
(2)
The breakdown of the underlying asset or liability by type of risk hedged under cash flow hedge is provided below:
(€ million)
Cash flow hedge derivatives
Commodity price risk
- Planned sales
December 31, 2020
December 31, 2019
Change of the underlying
asset used for the
calculation of hedging
ineffectiveness
CFH reserve
Reclassification
adjustments
Change of the underlying
asset used for the
calculation of hedging
ineffectiveness
CFH reserve
Reclassification
adjustments
284
284
(7)
(7)
(941)
(941)
1,444
1,444
(656)
(656)
(739)
(739)
More information is reported in note 27 — Guarantees, Commitments and Risks — Financial risks.
Management report | Consolidated financial statements | Annex
249
EFFECTS RECOGNIZED IN OTHER OPERATING PROFIT (LOSS)
Other operating profit (loss) related to derivative financial instruments on commodity was as follows:
(€ million)
Net income (loss) on cash flow hedging derivatives
Net income (loss) on other derivatives
2020
(1)
(765)
(766)
2019
(2)
289
287
2018
129
129
Net income (loss) on cash flow hedging derivatives related to
the ineffective portion of the hedging relationship on commodity
derivatives was recognized through profit and loss.
Net income (loss) on other derivatives included the fair value
measurement and settlement of commodity derivatives which
could not be elected for hedge accounting under IFRS because
they related to net exposure to commodity risk and derivatives
for trading purposes and proprietary trading.
EFFECTS RECOGNIZED IN FINANCE INCOME (LOSS)
(€ million)
Derivatives on exchange rate
Derivatives on interest rate
2020
391
(40)
351
2019
9
(23)
(14)
2018
(329)
22
(307)
Net financial income from derivative financial instruments
was recognized in connection with the fair value valuation
of certain derivatives which lacked the formal criteria to be
treated in accordance with hedge accounting under IFRS, as
they were entered into for amounts equal to the net exposure
to exchange rate risk and interest rate risk, and as such, they
cannot be referred to specific trade or financing transactions.
Exchange rate derivatives were entered into in order to
manage exposures to foreign currency exchange rates arising
from the pricing formulas of commodities.
More information is disclosed in note 36 – Transactions with
related parties.
24 ASSETS HELD FOR SALE AND LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR
SALE
As of December 31, 2020, assets held for sale related to sales of tangible assets for €44 million (€18 million at December 31, 2019).
25 EQUITY
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF ENI
(€ million)
Share capital
Retained earnings
Cumulative currency translation differences
Other reserves and equity instruments:
- Perpetual subordinated bonds
- Legal reserve
- Reserve for treasury shares
- Reserve for OCI on cash flow hedging derivatives net of the tax effect
- Reserve for OCI on defined benefit plans net of tax effect
- Reserve for OCI on equity-accounted investments
- Reserve for OCI on other investments valued at fair value
- Other reserves
Treasury shares
Net profit (loss) for the year
December 31, 2020
December 31, 2019
4,005
34,043
3,895
3,000
959
581
(5)
(165)
92
36
190
(581)
(8,635)
37,415
4,005
35,894
7,209
959
981
(465)
(173)
60
12
190
(981)
148
47,839
Eni Annual Report 2020
250
SHARE CAPITAL
As of December 31, 2020, the parent company’s issued share
capital consisted of €4,005,358,876 (same amount as of
December 31, 2019) represented by 3,605,594,848 ordinary
shares without nominal value (3,634,185,330 at December 31,
2019).
On May 13, 2020, Eni’s Shareholders’ Meeting declared: (i) to
distribute a dividend of €0.43 per share, with the exclusion of
treasury shares held at the ex-dividend date, in full settlement
of the 2019 dividend of €0.86 per share, of which €0.43 per
share paid as interim dividend. The balance was paid on May
20, 2020, to shareholders on the register on May 18, 2020,
record date on May 19, 2020; (ii) to cancel 28,590,482 treasury
shares without nominal value maintaining unchanged the
share capital and reducing the related reserve for an amount
of €399,999,994.58, equal to the carrying value of the shares
cancelled.
RETAINED EARNINGS
Retained earnings include the interim dividend distribution
effect for 2020 amounting to €429 million corresponding
to €0.12 per share, as resolved by the Board of Directors on
September 15, 2020, in accordance with Article 2433-bis,
paragraph 5 of the Italian Civil Code; the dividend was paid on
September 23, 2020.
CUMULATIVE FOREIGN CURRENCY TRANSLATION DIFFERENCES
The cumulative foreign currency translation differences arose from the translation of financial statements denominated in currencies
other than euro.
PERPETUAL SUBORDINATED HYBRID BONDS
Eni issued two euro-denominated perpetual subordinated
hybrid bonds for an aggregate nominal amount of €3 billion;
issuing costs amounted to €25 million.
The hybrid bonds are governed by English law and are traded
on the regulated market of the Luxembourg Stock Exchange.
The key characteristics of the two bonds are: (i) an issue of
€1.5 billion perpetual 5.25-year subordinated non-call hybrid
notes with a re-offer price of 99.403% and an annual fixed
coupon of 2.625% until the first reset date of January 13,
2026. As from such date, unless it has been redeemed in
whole on or before the first reset date, which is the last day
for the first optional redemption, the bond will bear interest
per annum determined according to the relevant 5-year
Euro Mid Swap rate plus an initial spread of 316.7 basis
points, increased by an additional 25 basis points as from
January 13, 2031 and a subsequent increase of additional 75
basis points as from January 13, 2046; (ii) an issue of €1.5
billion perpetual 9-year subordinated non-call hybrid notes
with a re-offer price of 100% and an annual fixed coupon
of 3.375% until the first reset date of October 13, 2029. As
from such date, unless it has been redeemed in whole on or
before the first reset date, which is the last day for the first
optional redemption, the bond will bear interest per annum
determined according to the relevant 5-year Euro Mid Swap
rate plus an initial spread of 364.1 basis points, increased by
additional 25 basis points as from October 13, 2034 and a
subsequent increase of additional 75 basis points as from
October 13, 2049.
LEGAL RESERVE
This reserve represents earnings restricted from the payment
of dividends pursuant to Article 2430 of the Italian Civil Code.
The legal reserve has reached the maximum amount required
by the Italian Law.
RESERVE FOR TREASURY SHARES
The reserve for treasury shares represents the reserve that was established in previous reporting periods to repurchase the
Company shares in accordance with resolutions at Eni’s Shareholders’ Meetings.
Management report | Consolidated financial statements | Annex RESERVES FOR OTHER COMPREHENSIVE INCOME
(€ million)
Reserve as of December 31, 2019
Changes of the year
Foreign currency translation differences
Reversal to inventories adjustments
Reclassification adjustments
Reserve as of December 31, 2020
Reserve as of December 31, 2018
Foreign currency translation differences
Change in scope of consolidation
Reversal to inventories adjustments
Reclassification adjustments
Reserve for OCI on cash flow
hedge derivatives
Reserve for OCI
on defined benefit plans(*)
Gross
reserve
(656)
(280)
Deferred
tax
liabilities
Net
reserve
Gross
reserve
Deferred
tax
liabilities
191
81
(465)
(199)
(190)
(16)
(6)
17
25
5
Net
reserve
(173)
9
(1)
(12)
941
(7)
(13)
3
(273)
2
4
(9)
668
(5)
(212)
47
(165)
(9)
(143)
(49)
(3)
13
5
(130)
(44)
(3)
4
5
(1)
36
739
(10)
(214)
26
525
Changes of the year
(1,418)
411
(1,007)
251
Reserve for OCI
on equity-accounted
investments
Reserve for OCI
on investments
valued at fair
value
60
32
92
66
(6)
12
24
36
15
(3)
Reserve as of December 31, 2019
(656)
191
(465)
(190)
17
(173)
60
12
(*) OCI for defined benefit plans at December 31, 2020 includes €7 million relating to equity-accounted investments (€7 million at December, 31 2019).
OTHER RESERVES
Other reserves related to a reserve of €127 million representing
the increase in equity attributable to Eni associated with a
business combination under common control, whereby the
parent company Eni SpA divested its subsidiaries.
TREASURY SHARES
A total of 33,045,197 of Eni’s ordinary shares (61,635,679 at
December 31, 2019) were held in treasury for a total cost of
€581 million (€981 million at December 31, 2019).
On May 13, 2020, the Shareholders Meeting approved the Long-
Term Monetary Incentive Plan 2020-2022 and empowered
the Board of Directors to execute the Plan by authorizing it to
dispose up to a maximum of 20 million of treasury shares in
service of the Plan.
DISTRIBUTABLE RESERVES
As of December 31, 2020, equity attributable to Eni included distributable reserves of approximately €30 billion.
Eni Annual Report 2020
252
RECONCILIATION OF NET PROFIT AND EQUITY ATTRIBUTABLE TO ENI OF THE PARENT COMPANY ENI SPA
TO CONSOLIDATED NET PROFIT AND EQUITY ATTRIBUTABLE TO ENI
Net profit
Shareholders’ equity
(€ million)
As recorded in Eni SpA's Financial Statements
2020
1,607
2,978
2019
December 31, 2020
December 31, 2019
Excess of net equity stated in the separate accounts of consolidated subsidiaries
over the corresponding carrying amounts of the parent company
(10,660)
(2,800)
Consolidation adjustments:
- difference between purchase cost and underlying carrying amounts of net equity
- adjustments to comply with Group accounting policies
- elimination of unrealized intercompany profits
- deferred taxation
Non-controlling interest
As recorded in Consolidated Financial Statements
(6)
264
88
79
(8,628)
(7)
(8,635)
(6)
(348)
(74)
405
155
(7)
148
26 OTHER INFORMATION
SUPPLEMENTAL CASH FLOW INFORMATION
44,707
(8,839)
193
2,086
(478)
(176)
37,493
(78)
37,415
41,636
5,211
202
1,424
(593)
20
47,900
(61)
47,839
(€ million)
Investment in consolidated subsidiaries and businesses
2020
2019
2018
Current assets
Non-current assets
Net borrowings
Current and non-current liabilities
Net effect of investments
Fair value of investments held before the acquisition of control
Non-controlling interests
Gain on a bargain purchase
Purchase price
less:
Cash and cash equivalents
Consolidated subsidiaries and businesses net of cash and cash equivalent acquired
Disposal of consolidated subsidiaries and businesses
Current assets
Non-current assets
Net borrowings
Current and non-current liabilities
Net effect of disposals
Reclassification of foreign currency translation differences among other items of comprehensive income
Fair value of share capital held after the sale of control
Fair value valuation for business combination
Gain (loss) on disposal
Selling price
less:
Cash and cash equivalents
Consolidated subsidiaries and businesses net of cash and cash equivalent disposed of
15
193
(64)
(17)
127
(15)
112
(3)
109
1
12
(6)
7
(2)
5
5
77
188
11
(57)
219
(24)
16
211
(24)
187
44
198
11
(47)
206
(50)
(8)
148
(29)
119
328
5,079
785
(3,470)
2,722
113
(3,498)
889
13
239
(286)
(47)
Management report | Consolidated financial statements | Annex
253
Investments in 2020 related to the acquisition by Eni gas
e luce SpA of a 70% controlling stake in Evolvere, a group
operating in the business of distributed generation from
renewable sources for €97 million, net of acquired cash of
€3 million, and to the acquisition by Eni New Energy SpA of
the whole capital of three companies holding authorization
rights for the construction of three wind projects in Puglia
for €12 million. The allocation of the purchase price of both
business combinations is final.
Investments in 2019 concerned: (i) the acquisition of a 60%
stake of SEA SpA, which supplies services and solutions for
energy efficiency in the residential and industrial segments
in Italy; (ii) the acquisition of the residual 32% interest in
the joint operation Petroven Srl, which operates storage
facilities of petroleum products.
Disposals in 2019 concerned the sale of 100% of the stake
of Agip Oil Ecuador BV, which retains a service contract for
the development of the Villano oil field.
Investments in 2018 concerned: (i) the acquisition of the
business by Versalis SpA of the “bio” activities of the Mossi
& Ghisolfi Group, related to development, industrialization,
licensing of biochemical technologies and processes based
on use of renewable sources for €75 million; (ii) the acquisition
of the remaining 51% stake in the Gas Supply Company of
Thessaloniki - Thessalia SA which distributes and sells gas in
Greece for €24 million, net of cash acquired of €28 million; (iii)
the acquisition of the company Mestni Plinovodi distribucija
plina doo, which distributes and sells gas in Slovenia for €15
million, net of cash acquired for €1 million. The gain from
bargain purchase, recognized in Other income and revenues,
was due to the obtainable synergies from the greater ability to
recover the investments made by the acquired company due
to the combination of customer portfolios.
Disposals in 2018 concerned: (i) the loss of control of Eni
Norge AS resulting from the business combination with
Point Resources AS, with the establishment of the equity-
accounted joint venture Vår Energi AS (Eni’s interest 69.60%),
that will develop the project portfolio of the combined
entities. The operation entailed the change in scope of
consolidation of €2,486 million of net assets, of which cash
and cash equivalents for €258 million, the recognition of
the investment in Vår Energi AS for €3,498 million and a fair
value gain of €889 million, net of negative exchange rate
differences of €123 million; (ii) the sale of 98.99% (entire
stake owned) of Tigáz Zrt and Tigáz Dso (100% Tigáz Zrt)
operating in the gas distribution business in Hungary to the
MET Holding AG group for €145 million net of cash divested
of €13 million; (iii) the sale by Lasmo Sanga Sanga of the
business relating to a 26.25% stake (entire stake owned) in
the PSA of the Sanga Sanga gas and condensates field for
€33 million; (iv) the sale of 100% of Eni Croatia BV, which
owns shares of gas projects in Croatia to INA-Industrija
Nafte dd for €20 million, net of cash divested of €15 million;
(v) the sale of 100% of Eni Trinidad and Tobago Ltd, which
holds a share of a gas project in Trinidad and Tobago for
€10 million.
Eni Annual Report 2020 254
27 GUARANTEES, COMMITMENTS AND RISKS
GUARANTEES
(€ million)
Consolidated subsidiaries
Unconsolidated subsidiaries
Joint ventures and associates
Others
December 31, 2020
December 31, 2019
4,758
176
3,800
150
8,884
4,323
197
4,075
267
8,862
Guarantees issued on behalf of consolidated subsidiaries of
€4,758 million (€4,323 million at December 31, 2019) primarily
consisted of guarantees given to third parties relating to bid
bonds and performance bonds for €3,209 million (€2,886 million
at December 31, 2019). At December 31, 2019, the underlying
commitment issued on behalf of consolidated subsidiaries
covered by such guarantees was €4,520 million (€4,013 million
at December 31, 2019).
Guarantees issued on behalf of joint ventures and associates of
€3,800 million (€4,075 million at December 31, 2019) primarily
consisted of: (i) unsecured guarantees and other guarantees
for €1,533 million issued towards banks and other lending
institutions in relation to loans and lines of credit received (€1,676
million at December 31, 2019), of which €1,304 million (€1,425
million at December 31, 2019) related to guarantees issued as
part of the Coral development project offshore Mozambique
with respect to the financing agreements of the project with
Export Credit Agencies and banks; (ii) guarantees given to
third parties relating to bid bonds and performance bonds for
€1,544 million (€1,661 million at December 31, 2019), of which
€1,079 million (€1,168 million at December 31, 2019) related to
guarantees issued towards the contractors who are building a
floating vessel for gas liquefaction and exportation (FLNG) as
part of the Coral development project offshore Mozambique;
(iii) an unsecured guarantee of €499 million (same amount
as of December 31, 2019) given by Eni SpA on behalf of the
participated Saipem joint-venture to Treno Alta Velocità — TAV
SpA (now RFI — Rete Ferroviaria Italiana SpA) for the proper
and timely completion of a project for the construction of the
Milan-Bologna fast track railway by the CEPAV (Consorzio Eni
per l’Alta Velocità) Uno; (iv) a guarantee issued in favor of Gulf
LNG Energy and Gulf LNG Pipeline and on behalf of Angola LNG
Supply Service Llc (Eni’s interest 13.60%) to cover contractual
commitments of paying re-gasification fees for €165 million
(€181 million at December 31, 2019). At December 31, 2020,
the underlying commitment issued on behalf of joint ventures
and associates covered by such guarantees was €1,898 million
(€2,109 million at December 31, 2019).
Guarantees issued on behalf of third parties of €150 million
(€267 million at December 31, 2019) related for €145 million
(€158 million at December 31, 2019) to the share of the
guarantee attributable to the State oil Company of Mozambique
ENH, which was assumed by Eni in favor of the consortium
financing the construction of the Coral project FLNG vessel.
At December 31, 2020, the underlying commitment issued on
behalf of third parties covered by such guarantees was €87
million (€80 million at December 31, 2019).
As provided by the contract that regulates the petroleum activities
in Area 4 offshore Mozambique, Eni SpA in its capacity as parent
company of the operator Mozambique Rovuma Venture SpA has
provided concurrently with the approval of the development plan
of the reserves which are located exclusively within the concession
area, an irrevocable and unconditional parent company guarantee
in respect of any possible claims or any contractual breaches
in connection with the petroleum activities to be carried out in
the contractual area, including those activities in charge of the
special purpose entities like Coral FLNG SA, to the benefit of the
Government of Mozambique and third parties. The obligations
of the guarantor towards the Government of Mozambique are
unlimited (non-quantifiable commitments), whereas they provide
a maximum liability of €1,223 million in respect of third-parties
claims. This guarantee will be effective until the completion of any
decommissioning activity related to both the development plan
of Coral as well as any development plan to be executed within
Area 4 (particularly the Mamba project). This parent company
guarantee issued by Eni covering 100% of the aforementioned
obligations was taken over by the other concessionaires (Kogas,
Galp and ENH) and by ExxonMobil and CNPC shareholders of the
joint operation Mozambico Rovuma Venture SpA, in proportion to
their respective participating interest in Area 4.
COMMITMENTS AND RISKS
(€ million)
Commitments
Risks
December 31, 2020
December 31, 2019
69,998
600
70,598
74,338
676
75,014
Management report | Consolidated financial statements | Annex
following
the payment of
Commitments related to: (i) parent company guarantees
that were issued in connection with certain contractual
commitments for hydrocarbon exploration and production
activities and quantified, based on the capital expenditures
to be incurred, to be €64,294 million (€65,374 million at
December 31, 2019). The decrease of €1,080 million was
primarily determined by negative exchange rate differences;
(ii) a parent company guarantee of €3,260 million (€6,527
million at December 31, 2019) given on behalf of Eni Abu
Dhabi Refining & Trading BV following the Share Purchase
Agreement to acquire from Abu Dhabi National Oil Company
(ADNOC) a 20% equity interest in ADNOC Refining and the
set-up of ADNOC Global Trading Ltd dedicated to marketing
petroleum products. The decrease of €3,267 million related
to the extinction of the parent company guarantee, issued
to guarantee the obligations under the Share Purchase
Agreement,
the deferred
consideration amounting to €73 million. The parent company
guarantee still outstanding has been issued to guarantee
the obligations set out in the Shareholders Agreements and
will remain in force as long as the investment is maintained;
(iii) commitments assumed by Eni USA Gas Marketing Llc
towards Angola LNG Supply Service Llc for the purchase of
volumes of re-gasified gas at the Pascagoula plant (United
States) over a twenty-year period (until 2031). The expected
commitments were estimated at €1,672 million (€1,978
million at December 31, 2019) and have been included in
off-balance sheet contractual commitments in the table
“Future payments under contractual obligations” in the
paragraph Liquidity risk. However, since the project has been
abandoned by the partners, Eni does not expect to make any
payment under those contractual obligations. In 2018, the
contractual commitment signed in December 2007 between
Eni USA Gas Marketing Llc and Gulf LNG Energy Llc (GLE)
and Gulf LNG Pipeline Llc (GLP) for the purchase of long-term
regasification and transport services (until 2031) amounting
at December 31, 2017 to €948 million (undiscounted)
ceased due to an arbitration ruling. The jurors established
that the commitment was resolved by March 1, 2016 and
recognized to the counterparty an equitable compensation
of €324 million. Despite the ruling of the arbitration court
invalidating the contract, GLE and GLP filed a claim with the
Supreme Court of New York against Eni SpA demanding
the enforcement of the parent company guarantee issued
by Eni for the payment of the regasification fees until the
original due date of the contract (2031) for a maximum
amount of €757 million. Eni believes that the claims by
GLE and GLP have no merit and is defending the action; (iv)
the commitment to purchase of a 20% stake of the project
relating to the Dogger Bank (A and B) wind facility in the
North Sea for €451 million; (v) the commitment to purchase
the remaining 60% stake of Finproject SpA, a company
255
engaged in the compounding sector for €150 million; (vi) a
memorandum of intent signed with the Basilicata Region,
whereby Eni has agreed to invest €108 million (€114 million
at December 31, 2019) in the future, also on account of Shell
Italia E&P SpA, in connection with Eni’s development plan of
oilfields in Val d’Agri. The commitment has been included
in the off-balance sheet contractual commitments in the
following paragraph “Liquidity risk”.
Risks relate to potential risks associated with: (i) contractual
assurances given to acquirers of certain investments and
businesses of Eni for €230 million (€248 million at December
31, 2019); (ii) assets of third parties under the custody of Eni
for €370 million (€428 million at December 31, 2019).
OTHER COMMITMENTS AND RISKS
A parent company guarantee was issued on behalf of Cardón
IV SA (Eni’s interest 50%), a joint venture operating the Perla
gas field located in Venezuela, for the supply to PDVSA GAS
of the volumes of gas produced by the field until the end
of the concession agreement (2036). This guarantee cannot
be quantified because the penalty clause for unilateral
anticipated resolution originally set for Eni and the relevant
quantification became ineffective due to a revision of the
contractual terms. In case of failure on part of the operator
to deliver the contractual gas volumes out of production, the
claim under the guarantee will be determined by applying
the local legislation. Eni’s share (50%) of the contractual
volumes of gas to be delivered to PDVSA GAS amounted to
a total of around €12 billion. Notwithstanding this amount
does not properly represent the guarantee exposure,
nonetheless such amount
the maximum
financial exposure at risk for Eni. A similar guarantee was
issued by PDVSA on behalf of Eni for the fulfillment of the
purchase commitments of the gas volumes by PDVSA GAS.
Other commitments include the agreements entered into for
forestry initiatives, implemented within the low carbon strategy
defined by the Company, concerning the commitments for the
purchase, until 2038, of carbon credits produced and certified
according to international standards by subjects specialized in
forest conservation programs.
Eni is liable for certain non-quantifiable risks related to
contractual guarantees given to acquirers of certain Eni
assets,
investments, against
certain contingent liabilities deriving from tax, social security
issues and other matters
contributions, environmental
applicable to periods during which such assets were operated
by Eni. Eni believes such matters will not have a material
adverse effect on Eni’s results of operations and cash flow.
including businesses and
represents
RISK FACTORS
The following is the description of financial risks and their
management and control. With reference to the issues related
Eni Annual Report 2020 256
to credit risk, the parameters adopted for the determination
of expected losses and, in particular, the estimates of the
probability of default and the loss given default have been
updated to take into account the impacts of COVID-19 and
its related effects on the economic context and the degree of
solvency of Eni’s counterparts.
The crisis in energy consumption connected to lockdown
measures adopted by the governments around the world
to contain the spread of the pandemic and the consequent
collapse in hydrocarbon prices have led to a significant
contraction in Eni’s operating cash flows. Management has
adopted all the necessary actions to protect the liquidity
and the capital ratios of the Company by reducing costs and
investments, by updating the shareholders’ remuneration
policy and by recurring to capital market as described in the
section Impact of COVID-19 pandemic of the Management
Report, to which reference is made. As of December 31, 2020,
the Company retains liquidity reserves that management
deems enough to meet the financial obligations due in the
next eighteen months.
No significant effects were reported on hedging transactions
connected to the impacts of COVID-19 on the economic
context.
FINANCIAL RISKS
Financial risks are managed in respect of guidelines issued
by the Board of Directors of Eni SpA in its role of directing
and setting the risk limits, targeting to align and centrally
coordinate Group companies’ policies on financial risks
(“Guidelines on financial risks management and control”).
The “Guidelines” define for each financial risk the key
components of the management and control process,
such as the aim of the risk management, the valuation
methodology, the structure of limits, the relationship model
and the hedging and mitigation instruments.
MARKET RISK
Market risk is the possibility that changes in currency
exchange rates, interest rates or commodity prices will
adversely affect the value of the Group’s financial assets,
liabilities or expected future cash flows. The Company
actively manages market risk in accordance with a set of
policies and guidelines that provide a centralized model
of handling finance, treasury and risk management
transactions based on the Company’s departments of
operational finance: the parent company’s (Eni SpA) finance
department, Eni Finance International SA, Eni Finance USA
Inc and Banque Eni SA, which is subject to certain bank
regulatory restrictions preventing the Group’s exposure to
concentrations of credit risk, and Eni Trading & Shipping
that is in charge to execute certain activities relating to
commodity derivatives. In particular, Eni Corporate finance
department, Eni Finance International SA and Eni Finance
USA Inc manage subsidiaries’ financing requirements
in and outside Italy and in the United States of America,
respectively, covering funding requirements and using
available surpluses. All transactions concerning currencies
and derivative contracts on interest rates and currencies
different from commodities are managed by the parent
company, while Eni Trading & Shipping SpA executes the
negotiation of commodity derivatives over the market.
Eni SpA and Eni Trading & Shipping SpA (also through its
subsidiary Eni Trading & Shipping Inc) perform trading
activities in financial derivatives on external trading venues,
such as European and non-European regulated markets,
Multilateral Trading Facility (MTF), Organized Trading
Facility (OTF), or similar and brokerage platforms (i.e.
SEF), and over the counter on a bilateral basis with external
counterparties. Other legal entities belonging to Eni that
require financial derivatives enter into these transactions
through Eni Trading & Shipping and Eni SpA based on the
relevant asset class expertise. Eni uses derivative financial
instruments (derivatives) in order to minimize exposure
to market risks related to fluctuations in exchange rates
relating to those transactions denominated in a currency
other than the functional currency (the euro) and interest
rates, as well as to optimize exposure to commodity prices
fluctuations taking into account the currency in which
commodities are quoted. Eni monitors every activity in
derivatives classified as risk-reducing (in particular, back-
to-back activities, flow hedging activities, asset-backed
hedging activities and portfolio-management activities)
directly or indirectly related to covered industrial assets,
so as to effectively optimize the risk profile to which Eni is
exposed or could be exposed. If the result of the monitoring
shows those derivatives should not be considered as risk
reducing, these derivatives are reclassified in proprietary
trading. As proprietary trading is considered separately
from the other activities in specific portfolios of Eni
Trading & Shipping, its exposure is subject to specific
controls, both in terms of Value at Risk (VaR) and stop loss
and in terms of nominal gross value. For Eni, the gross
nominal value of proprietary trading activities is compared
with the limits set by the relevant international standards.
The framework defined by Eni’s policies and guidelines
provides that the valuation and control of market risk is
performed on the basis of maximum tolerable levels of
risk exposure defined in terms of: (i) limits of stop loss,
which expresses the maximum tolerable amount of
losses associated with a certain portfolio of assets over
a pre-defined time horizon; (ii) limits of revision strategy,
which consist in the triggering of a revision process of the
strategy in the event of exceeding the level of profit and
loss given; and (iii) VaR which measures the maximum
Management report | Consolidated financial statements | Annex 257
potential loss of the portfolio, given a certain confidence
level and holding period, assuming adverse changes in
market variables and taking into account the correlation
among the different positions held in the portfolio. Eni’s
finance department defines the maximum tolerable levels
of risk exposure to changes in interest rates and foreign
currency exchange rates in terms of VaR, pooling Group
companies’ risk positions maximizing, when possible,
the benefits of the netting activity. Eni’s calculation and
valuation techniques for interest rate and foreign currency
exchange rate risks are
in accordance with banking
standards, as established by the Basel Committee for bank
activities surveillance. Tolerable levels of risk are based
on a conservative approach, considering the industrial
nature of the Company. Eni’s guidelines prescribe that Eni
Group companies minimize such kinds of market risks by
transferring risk exposure to the parent company finance
department. Eni’s guidelines define rules to manage
the commodity risk aiming at optimizing core activities
and pursuing preset targets of stabilizing industrial and
commercial margins. The maximum tolerable level of
risk exposure is defined in terms of VaR, limits of revision
strategy, stop
in connection with
exposure deriving from commercial activities, as well as
exposure deriving from proprietary trading, exclusively
managed by Eni Trading & Shipping. Internal mandates
to manage the commodity risk provide for a mechanism
of allocation of the Group maximum tolerable risk level
to each business unit. In this framework, Eni Trading &
Shipping, in addition to managing risk exposure associated
with its own commercial activity and proprietary trading,
pools the requests for negotiating commodity derivatives
and executes them in the marketplace. According to the
targets of financial structure included in the financial plan
approved by the Board of Directors, Eni decided to retain a
cash reserve to face any extraordinary requirement. Eni’s
finance department, with the aim of optimizing the efficiency
and ensuring maximum protection of capital, manages
such reserve and its immediate liquidity within the limits
assigned. The management of strategic cash is part of the
asset management pursued through transactions on own
risk in view of optimizing financial returns, while respecting
authorized risk levels, safeguarding the Company’s assets
and retaining quick access to liquidity.
The four different market risks, whose management and
control have been summarized above, are described below.
loss and volumes
MARKET RISK - EXCHANGE RATE
Exchange rate risk derives from the fact that Eni’s
operations are conducted in currencies other than euro
(mainly U.S. dollar). Revenues and expenses denominated
in foreign currencies may be significantly affected by
exchange rate fluctuations due to conversion differences
on single transactions arising from the time lag existing
between execution and definition of relevant contractual
terms (economic risk) and conversion of foreign currency-
denominated trade and financing payables and receivables
(transactional risk). Exchange rate fluctuations affect
the Group’s reported results and net equity as financial
statements of subsidiaries denominated in currencies other
than euro are translated from their functional currency into
euro. Generally, an appreciation of U.S. dollar versus euro
has a positive impact on Eni’s results of operations, and
vice versa. Eni’s foreign exchange risk management policy
is to minimize transactional exposures arising from foreign
currency movements and to optimize exposures arising from
commodity risk. Eni does not undertake any hedging activity
for risks deriving from the translation of foreign currency
denominated profits or assets and liabilities of subsidiaries,
which prepare financial statements in a currency other than
euro, except for single transactions to be evaluated on a
case-by-case basis. Effective management of exchange
rate risk is performed within Eni’s finance departments,
which pool Group companies’ positions, hedging the Group
net exposure by using certain derivatives, such as currency
swaps, forwards and options. Such derivatives are evaluated
at fair value based on market prices provided by specialized
info-providers. Changes in fair value of those derivatives are
normally recognized through profit and loss, as they do not
meet the formal criteria to be recognized as hedges. The VaR
techniques are based on variance/covariance simulation
models and are used to monitor the risk exposure arising
from possible future changes in market values over a 24-
hour period within a 99% confidence level and a 20-day
holding period.
MARKET RISK - INTEREST RATE
Changes in interest rates affect the market value of financial
assets and liabilities of the Company and the level of finance
charges. Eni’s interest rate risk management policy is to
minimize risk with the aim to achieve financial structure
objectives defined and approved in management’s finance
plans. The Group’s central departments pool borrowing
requirements of the Group companies in order to manage
net positions and fund portfolio developments consistent
with management plans, thereby maintaining a level of risk
exposure within prescribed limits. Eni enters into interest rate
derivative transactions, in particular interest rate swaps, to
manage effectively the balance between fixed and floating
rate debt. Such derivatives are evaluated at fair value based
on market prices provided from specialized sources. VaR
deriving from interest rate exposure is measured daily based
on a variance/covariance model, with a 99% confidence level
and a 20-day holding period.
Eni Annual Report 2020 258
MARKET RISK - COMMODITY
Eni’s results of operations are affected by changes in the
prices of commodities. The commodity price risk arises in
connection with the following exposures: (i) strategic exposure:
exposures directly identified by the Board of Directors as a
result of strategic investment decisions or outside the planning
horizon of risk management. These exposures include those
associated with the program for the production of proved and
unproved Oil & Gas reserves, long-term gas supply contracts
for the portion not balanced by ongoing or highly probable
sale contracts, refining margins identified by the Board of
Directors of strategic nature (the remaining volumes can be
allocated to the active management of the margin or to asset-
backed hedging activities) and minimum compulsory stocks;
(ii) commercial exposure: includes the exposures related to
the components underlying the contractual arrangements
of industrial and commercial activities and, if related to
take-or-pay commitments to purchase natural gas, to the
components related to the time horizon of the four-year plan
and budget and the relevant activities of risk management.
Commercial exposures are characterized by a systematic
risk management activity conducted based on risk/return
assumptions by implementing one or more strategies and
subjected to specific risk limits (VaR, revision strategy limits
and stop loss). In particular, the commercial exposures
to asset-backed hedging
include exposures subjected
activities, arising from the flexibility/optionality of assets;
and (iii) proprietary trading exposure: includes operations
independently conducted for profit purposes in the short
term, and normally not for the purpose of delivery, both
within the commodity and financial markets, with the aim to
obtain a profit upon the occurrence of a favorable result in
the market, in accordance with specific limits of authorized
risk (VaR, stop loss). Origination activities are included in the
proprietary trading exposures, if not connected to contractual
or physical assets.
Strategic risk is not subject to systematic activity of
management/coverage that is eventually carried out only
in case of specific market or business conditions. Because
of the extraordinary nature, hedging activities related to
strategic risks are delegated to the top management.
Strategic risk is subject to measuring and monitoring but is
not subject to specific risk limits. If previously authorized by
the Board of Directors, exposures related to strategic risk can
be used in combination with other commercial exposures
in order to exploit opportunities for natural compensation
between the risks (natural hedge) and consequently reduce
the use of derivatives (by activating logics of internal
market). Eni manages exposure to commodity price risk
arising in normal trading and commercial activities in view
of achieving stable economic results. Eni manages the
commodity risk through the trading unit of Eni Trading &
Shipping and the exposure to commodity prices through the
Group’s finance departments by using derivatives traded on
the organized markets MTF, OTF and derivatives traded over
the counter (swaps, forward, contracts for differences and
options on commodities) with the underlying commodities
being crude oil, gas, refined products, power or emission
certificates. Such derivatives are valued at fair value based
on market prices provided from specialized sources or,
absent market prices, on the basis of estimates provided
by brokers or suitable valuation techniques. VaR deriving
from commodity exposure is measured daily based on a
historical simulation technique, with a 95% confidence level
and a one-day holding period.
MARKET RISK - STRATEGIC LIQUIDITY
Market risk deriving from liquidity management is identified
as the possibility that changes
in prices of financial
instruments (bonds, money market instruments and mutual
funds) would affect the value of these instruments when
valued at fair value. The setting up and maintenance of
the liquidity reserve is mainly aimed to guarantee a proper
financial flexibility. Liquidity should allow Eni to fund any
extraordinary need (such as difficulty in access to credit,
exogenous shock, macroeconomic environment, as well as
merger and acquisitions) and must be dimensioned to provide
a coverage of short-term debts and a coverage of medium
and long-term finance debts due within a time horizon of 24
months. In order to manage the investment activity of the
strategic liquidity, Eni defined a specific investment policy
with aims and constraints in terms of financial activities and
operational boundaries, as well as governance guidelines
regulating management and control systems. In particular,
strategic liquidity management is regulated in terms of VaR
(measured based on a parametrical methodology with a one-
day holding period and a 99% confidence level), stop loss
and other operating limits in terms of concentration, issuing
entity, business segment, country of emission, duration,
ratings and type of investing instruments in portfolio, aimed
to minimize market and liquidity risks. Financial leverage or
short selling is not allowed. Activities in terms of strategic
liquidity management started in the second half of the year
2013 (Euro portfolio) and throughout the course of the year
2017 (U.S. dollar portfolio). In 2020, the Euro investment
portfolio has maintained an average credit rating of A-/BBB+,
whereas the USD investment portfolio has maintained an
average credit rating of A+/A, both in line with the year 2019.
The following tables show amounts in terms of VaR, recorded
in 2020 (compared with 2019) relating to interest rate and
exchange rate risks in the first section and commodity
risk. Regarding the management of strategic liquidity, the
sensitivity to changes of interest rate is expressed by values
of “Dollar value per Basis Point” (DVBP).
Management report | Consolidated financial statements | Annex 259
Value at risk - parametric method variance/covariance; holding period: 20 days; confidence level: 99%)
(€ million)
Interest rate (a)
Exchange rate (a)
2020
Low
1.18
0.10
High
7.39
0.48
Average
At year end
2.93
0.28
1.34
0.18
High
5.19
0.41
2019
Low
2.44
0.07
Average
At year end
3.80
0.17
3.00
0.15
(a) Value at risk deriving from interest and exchange rates exposures include the following finance departments: Eni Corporate Finance Department, Eni Finance International SA, Banque Eni
SA and Eni Finance USA Inc.
(Value at risk - Historic simulation method; holding period: 1 day; confidence level: 95%)
(€ million)
Commercial exposures - Management
Portfolio (a)
Trading (b)
High
16.10
1.57
2020
Low
3.02
0.10
Average
At year end
8.50
0.52
3.02
0.25
High
23.03
1.60
2019
Low
7.74
0.25
Average
At year end
11.22
0.51
9.11
0.31
(a) Refers to the Gas & LNG Marketing Power business line (risk exposure from Refining & Marketing business line and Global Gas & LNG Portfolio), Eni Trading & Shipping commercial portfolio,
operating branches outside Italy pertaining to the Divisions and from October 2016 the Gas e Luce business line. For the Global Gas & LNG Portfolio business lines, following the approval of the
Eni’s Board of Directors on December 12, 2013, VaR is calculated on the so-called Statutory view, with a time horizon that coincides with the year considering all the volumes delivered in the year
and the relevant financial hedging derivatives. Consequently, during the year the VaR pertaining to GGP and EGL presents a decreasing trend following the progressive reaching of the maturity
of the positions within the annual horizon.
(b) Cross-commodity proprietary trading, both for commodity contracts and financial derivatives, refers to Eni Trading & Shipping SpA (London-Bruxelles-Singapore) and Eni Trading & Shipping
Inc (Houston).
(Sensitivity - Dollar value of 1 basis point - DVBP)
2020
2019
(€ million)
Strategic liquidity (a)
High
0.37
Low
0.29
Average
At year end
0.32
0.30
High
0.37
Low
0.31
Average
At year end
0.35
0.33
(a) Management of strategic liquidity portfolio starting from July 2013.
(Sensitivity - Dollar value of 1 basis point - DVBP)
2020
2019
(€ million)
Strategic liquidity (a)
High
0.07
Low
0.03
Average
At year end
0.05
0.05
High
0.05
Low
0.02
Average
At year end
0.04
0.05
(a) Management of strategic liquidity portfolio in $ currency starting from August 2017.
financial
CREDIT RISK
Credit risk is the potential exposure of the Group to losses
in case counterparties fail to perform or pay amounts due.
Eni defined credit risk management policies consistent
with the nature and characteristics of the counterparties
regarding
of commercial and
the centralized finance model. The Company adopted
a model to quantify and control the credit risk based on
the evaluation of the expected loss which represents the
probability of default and the capacity to recover credits in
default that is estimated through the so-called Loss Given
Default. In the credit risk management and control model,
credit exposures are distinguished by commercial nature,
in relation to sales contracts on commodities related to
transactions
Eni’s businesses, and by financial nature, in relation to
the financial instruments used by Eni, such as deposits,
derivatives and securities.
and
finance
CREDIT RISK FOR COMMERCIAL EXPOSURES
is
Credit risk arising from commercial counterparties
managed by the business units and by the specialized
corporate
administration
departments and is operated based on formal procedures
for the assessment of commercial counterparties, the
monitoring of credit exposures, credit recovery activities
and disputes. The credit worthiness of businesses and large
clients is assessed through an internal rating model that
combines different default factors deriving from economic
dedicated
Eni Annual Report 2020
260
from specialized primary
variables, financial indicators, payment experiences and
info providers.
information
The probability of default related to State Entities or their
closely related counterparties (e.g. National Oil Company),
essentially represented by the probability of late payments,
is determined by using the country risk premiums adopted
for the purposes of the determination of the WACCs for
the impairment of non-financial assets. Furthermore, for
retail positions without specific ratings, risk is determined
by distinguishing customers in homogeneous risk clusters
based on historical series of data relating to payments,
periodically updated.
CREDIT RISK FOR FINANCIAL EXPOSURES
With regard to credit risk arising from financial counterparties
deriving from current and strategic use of liquidity, derivative
contracts and transactions with underlying financial assets
valued at fair value, Eni has established internal policies
providing exposure control and concentration
through
maximum credit risk limits corresponding to different classes
of financial counterparties defined by the Company’s Board of
Directors and based on ratings provided for by primary credit
rating agencies. Credit risk arising from financial counterparties
is managed by the Eni’s operating finance departments and
Eni’s subsidiary Eni Trading & Shipping which specifically
engages in commodity derivatives transactions and by Group
companies and business units, only in the case of physical
transactions with financial counterparties consistently
with the Group centralized finance model. Eligible financial
counterparties are closely monitored by each counterpart
and by group of belonging to check exposures against the
limits assigned daily and the expected loss analysis and the
concentration periodically.
LIQUIDITY RISK
Liquidity risk is the risk that suitable sources of funding
for the Group may not be available, or the Group is unable
to sell its assets in the marketplace in order to meet short-
term finance requirements and to settle obligations. Such
a situation would negatively affect Group results, as it
would result in the Company incurring higher borrowing
expenses to meet its obligations or under the worst of
conditions the inability of the Company to continue as
a going concern. Eni’s risk management targets include
the maintaining of an adequate level of liquidity readily
to meet
available to deal with external shocks (drastic changes
in the scenario, restrictions on access to capital markets,
etc.) or to ensure an adequate level of operational
flexibility for the development programs of the Company.
The strategic liquidity reserve is employed in short-term
marketable financial assets, favoring investments with
very low risk profile.
At present, the Group believes to have access to sufficient
funding
the current foreseeable borrowing
requirements due to available cash on hand financial
assets and lines of credit and the access to a wide range
of funding opportunities which we believe we can activate
at competitive costs through the credit system and the
capital markets.
Eni has in place a program for the issuance of Euro Medium
Term Notes up to €20 billion, of which about €16.3 billion were
drawn as of December 31, 2020 (€13.9 billion by Eni SpA).
The Group has credit ratings of A- outlook negative and
A-2, respectively, for long and short-term debt, assigned
by Standard & Poor’s; Baa1 outlook stable and P-2,
respectively, for long and short-term debt, assigned by
Moody’s; A- outlook stable and F1, respectively for long
and short-term debt, assigned by Fitch. Eni’s credit rating is
linked in addition to the Company’s industrial fundamentals
and trends in the trading environment to the sovereign
credit rating of Italy. Based on the methodologies used
by the credit rating agencies, a downgrade of Italy’s credit
rating may trigger a potential knock-on effect on the credit
rating of Italian issuers such as Eni.
During 2020, the rating of Eni remained unchanged.
As part of the Euro Medium Term Notes program, in 2020 the
Company issued bonds for €3.5 billion (€3.0 billion by Eni SpA).
In October 2020, Eni placed two euro-denominated perpetual
subordinated hybrid bond issues for an aggregate nominal
amount of €3 billion. These are perpetual instruments
with an early repayment option in favor of the issuer and
classified as equity items. The rating agencies assigned to
the bonds the following ratings Baa3 / BBB / BBB (Moody’s
/ S&P / Fitch) and an “equity credit” of 50%.
As of December 31, 2020, Eni maintained short-term
uncommitted unused borrowing facilities of €7,183 million.
Committed unused borrowing facilities amounted to €5,295
million, of which €4,750 million due beyond 12 months.
These facilities bore interest rates and fees for unused
facilities that reflected prevailing market conditions.
Management report | Consolidated financial statements | Annex EXPECTED PAYMENTS FOR LIABILITIES, TRADE AND OTHER PAYABLES
The tables below summarize the Group main contractual
obligations for finance debt and lease liability repayments,
including expected payments for interest charges and
derivatives.
261
(€ million)
December 31, 2020
Non-current financial liabilities (including the current portion)
Current financial liabilities
Lease liabilities
Fair value of derivative instruments
Interest on finance debt
Interest on lease liabilities
Financial guarantees
(€ million)
December 31, 2019
2021
2022
2023
2024
2025
2026 and
thereafter
Total
Maturity year
1,697
2,882
815
1,609
7,003
502
295
797
1,072
1,518
3,469
2,049
2,730
12,232
23,695
593
26
503
13
442
50
413
2,218
73
2,882
4,984
1,771
2,137
3,985
2,541
3,143
14,523
33,332
473
252
725
461
219
680
387
192
579
360
165
525
1,164
748
1,912
2020
2021
2022
2023
2024
2025 and
thereafter
Maturity year
3,347
1,871
5,218
1,072
Total
Non-current financial liabilities (including the current portion)
Current financial liabilities
Lease liabilities
Fair value of derivative instruments
Interest on finance debt
Interest on lease liabilities
Financial guarantees
2,908
2,452
884
2,704
8,948
594
341
935
926
1,704
1,259
2,743
1,785
11,521
21,920
632
2
487
14
434
424
2,761
34
2,452
5,622
2,754
2,338
1,760
3,177
2,209
14,316
32,748
452
302
754
353
263
616
342
233
575
269
206
475
1,667
1,015
2,682
3,677
2,360
6,037
926
Liabilities for leased assets including related interest for
€2,429 million (€2,953 million at December 31, 2019)
pertained to the share of joint operators participating in
unincorporated ventures operated by Eni which will be
recovered through a partner-billing process.
The table below presents the timing of the expenditures for
trade and other payables.
(€ million)
December 31, 2020
Trade payables
Other payables and advances
(€ million)
December 31, 2019
Trade payables
Other payables and advances
Maturity year
2021
2022-2025
8,679
4,257
12,936
111
111
Maturity year
2020
2021-2024
2026 and
thereafter
94
94
2025 and
thereafter
10,480
5,065
15,545
54
54
100
100
Total
8,679
4,462
13,141
Total
10,480
5,219
15,699
Eni Annual Report 2020
262
EXPECTED PAYMENTS UNDER CONTRACTUAL OBLIGATIONS29
In addition to lease, financial, trade and other liabilities
represented in the balance sheet, the company is subject
to non-cancellable contractual obligations or obligations,
the cancellation of which requires the payment of a penalty.
These obligations will require cash settlements in future
reporting periods. These liabilities are valued based on the
net cost for the company to fulfill the contract, which consists
of the lowest amount between the costs for the fulfillment of
the contractual obligation and the contractual compensation/
penalty in the event of non-performance.
The Company’s main contractual obligations at the balance
sheet date comprise take-or-pay clauses contained in the
Company’s gas supply contracts or shipping arrangements,
whereby the Company obligations consist of off-taking
minimum quantities of product or service or, in case of
failure, paying the corresponding cash amount that entitles
the Company the right to collect the product or the service
in future years. Future obligations in connection with these
contracts were calculated by applying the forecasted prices
of energy or services included in the four-year business plan
approved by the Company’s Board of Directors.
The table below summarizes the Group principal contractual
obligations as of the balance sheet date, shown on an
undiscounted basis.
Amounts expected to be paid in 2021 for decomissioning Oil
& Gas assets and for environmental clean-up and remediation
are based on management’s estimates and do not represent
financial obligations at the closing date.
(€ million)
Decommissioning liabilities (a)
Environmental liabilities
Purchase obligations (b)
- Gas
. take-or-pay contracts
. ship-or-pay contracts
- Other purchase obligations
Other obligations
- Memorandum of intent - Val d’Agri
Total
Maturity year
2023
202
267
7,342
6,809
480
53
2024
425
255
8,150
7,691
439
20
2022
237
323
7,644
6,852
519
273
2021
400
383
8,041
6,196
893
952
2
2
2025
276
196
8,613
2026 and
thereafter
10,433
839
Total
11,973
2,263
63,864
103,654
8,392
63,477
99,417
212
9
359
28
106
106
2,902
1,335
108
108
8,826
8,204
7,811
8,830
9,085
75,242
117,998
(a) Represents the estimated future costs for the decommissioning of oil and natural gas production facilities at the end of the producing lives of fields, well-plugging, abandonment and site
restoration.
(b) Represents any agreement to purchase goods or services that is enforceable and legally binding and that specifies all significant terms.
CAPITAL INVESTMENT AND CAPITAL EXPENDITURE COMMITMENTS
In the next four years, Eni expects capital investments and capital
expenditures of €26.9 billion. The table below summarizes
Eni’s capital expenditure commitments for property, plant
and equipment and capital projects. Capital expenditure is
considered to be committed when the project has received
the appropriate level of internal management approval. At this
stage, procurement contracts to execute those projects have
already been awarded or are being awarded to third parties.
The amounts shown in the table below include committed
expenditures to execute certain environmental projects.
(€ million)
Committed projects
Maturity year
2021
4,264
2022
3,983
2023
2,890
2025 and
thereafter
1,334
2024
2,204
Total
14,675
(29) Contractual obligations related to employee benefits are indicated in note 21 – Provisions for employee benefits.
Management report | Consolidated financial statements | Annex
263
OTHER INFORMATION ABOUT FINANCIAL INSTRUMENTS
(€ million)
Financial instruments at fair value with effects recognized in profit
and loss account
Financial assets held for trading (a)
Non-hedging and trading derivatives (b)
Other investments valued at fair value (c)
Receivables and payables and other assets/liabilities valued
at amortized cost
Trade receivables and other (d)
Financing receivables (e)
Securities (a)
Trade payables and other (a)
Financing payables (f)
Net assets (liabilities) for hedging derivatives (g)
2020
2019
Finance income (expense) recognized in
Finance income (expense) recognized in
Carrying
amount
Profit and
loss account
OCI
Carrying
amount
Profit and
loss account
5,502
(19)
957
10,955
1,207
55
13,141
26,686
(52)
31
(415)
150
(213)
99
(31)
(632)
(941)
6,760
(125)
929
12,926
1,503
55
15,699
24,518
(2)
24
661
127
273
247
(409)
110
33
(802)
(739)
OCI
(3)
(679)
(a) Income or expense were recognized in the profit and loss account within “Finance income (expense)”.
(b) In the profit and loss account, economic effects were recognized as expense within “Other operating income (loss)” for €766 million (income for €287 million in 2019) and as income within
“Finance income (expense)” for €351 million (loss for €14 million in 2019).
(c) Income or expense were recognized in the profit and loss account within “Income (expense) from investments - Dividends”.
(d) Income or expense were recognized in the profit and loss account as net impairment losses within “Net (impairment losses) reversal of trade and other receivables” for €226 million (net
impairment losses for €432 million in 2019) and as income within “Finance income (expense)” for €13 million (income for €23 million in 2019), including interest income calculated on the basis
of the effective interest rate of €22 million (interest income for €26 million in 2019).
(e) In the profit and loss account, income or expense were recognized as income within “Finance income (expense)”, including interest income calculated on the basis of the effective interest rate
of €92 million (income for €99 million in 2019) and net impairment losses for €1 million (net revaluations for €4 million in 2019).
(f) In the profit and loss account, income or expense were recognized as expense within “Finance income (expense)”, including interest expense calculated on the basis of the effective interest
rate of €531 million (interest expense for €647 million in 2019).
(g) In the profit and loss account, income or expense were recognized within “Sales from operations” and “Purchase, services and other”.
DISCLOSURES ABOUT THE OFFSETTING OF FINANCIAL INSTRUMENTS
(€ million)
December 31, 2020
Financial assets
Trade and other receivables
Other current assets
Financial liabilities
Trade and other liabilities
Other current liabilities
December 31, 2019
Financial assets
Trade and other receivables
Other current assets
Financial liabilities
Trade and other liabilities
Other current liabilities
Gross amount
of financial assets
and liabilities
Gross amount
of financial assets
and liabilities subject
to offsetting
Net amount
of financial assets
and liabilities
11,681
3,719
13,691
5,905
13,773
4,584
16,445
7,758
755
1,033
755
1,033
900
612
900
612
10,926
2,686
12,936
4,872
12,873
3,972
15,545
7,146
The offsetting of financial assets and liabilities related to the
offsetting of: (i) receivables and payables pertaining to the
Exploration & Production segment towards state entities for
€753 million (€713 million at December 31, 2019) and trade
receivables and trade payables pertaining to Eni Trading &
Shipping Inc for €2 million (€187 million at December 31, 2019);
and (ii) other assets and liabilities for current financial derivatives
of €1,033 million (€612 million at December 31, 2019).
Eni Annual Report 2020
264
Legal Proceedings
Eni is a party in a number of civil actions and administrative
arbitral and other judicial proceedings arising in the ordinary
course of business. Based on information available to date,
and taking into account the existing risk provisions disclosed
in note 20 – Provisions and that in some instances it is not
possible to make a reliable estimate of contingency losses, Eni
believes that the foregoing will likely not have a material adverse
effect on the Group Consolidated Financial Statements.
In addition to proceedings arising in the ordinary course of
business referred to above, Eni is party to other proceedings,
and a description of the most significant proceedings currently
pending is provided in the following paragraphs. Generally and
unless otherwise indicated, these legal proceedings have not
been provisioned because Eni believes a negative outcome to
be unlikely or because the amount of the provision cannot be
estimated reliably.
(ii)
(iii)
1. Environment, health and safety
1.1
Criminal proceedings in the matters of environment,
health and safety
(i)
Eni Rewind SpA (company incorporating EniChem
Agricoltura SpA – Agricoltura SpA in liquidation
– EniChem Augusta Industriale Srl — Fosfotec Srl)
— Proceeding about the industrial site of Crotone.
In 2010 a criminal proceeding started before the
Public Prosecutor of Crotone relating to allegations
of environmental disaster, poisoning of substances
used in the food chain and omitted clean-up due to
the activity at a landfill site which was taken over by
Eni in 1991. Subsequently to Eni’s takeover, any activity
for waste conferral was stopped. The defendants are
certain managers of Eni Group companies, that have
managed the landfill since 1991. The Municipality of
Crotone is acting as plaintiff. In March 2019, the public
prosecutor requested the acquittal of all defendants.
The proceeding is ongoing. In April 2017, the Public
Prosecutor of Crotone started another criminal
proceeding concerning the clean-up of the area called
“Farina Trappeto”. Despite the prosecuting PM asked
the acquittal of all the defendants, on January 17,
2020, the GUP asked the PM to modify the charges in
order to better specify modalities and timing of each
disputed conduct. At the preliminary hearing on July 1,
2020, the GUP acquitted all the defendants, some for
not having committed the alleged crime and others for
prescription. The Company therefore decided to appeal
against the sentence, in order to obtain an acquittal
on the merits also in relation to the positions of the
former managers of the Eni Group acquitted due to
prescription.
(iv)
Eni Rewind SpA – Crotone omitted clean-up. In
April 2017, a further criminal case was opened by
the Crotone prosecutor’s office on the reclamation
activities of the Crotone site as a whole. Meanwhile,
in the first half of 2018, the new clean-up project
presented by the Company was deemed feasible
by the Ministry of the Environment. Pending the
decisions of the Public Prosecutor, a defense brief
was filed to summarize the activity carried out by the
subsidiary Eni Rewind (former Syndial SpA) in terms
of reclamation, pointing to willingness of executing
a decisive plan of action, and to obtain the dismissal
of the criminal proceedings. On March 3, 2020, the
Ministerial Decree approving the POB Phase 2 was
issued.
Eni Rewind SpA and Versalis SpA – Porto Torres –
Prosecuting body: Public Prosecutor of Sassari.
In 2011, the Public Prosecutor of Sassari (Sardinia)
determined that a manager responsible for plant
operations at the site of Porto Torres should stand trial
for alleged environmental disaster and poisoning of
water and substances destined for food. The Province
of Sassari, the Municipality of Porto Torres and other
entities have been involved in the proceedings as civil
parties seeking damages. In 2013, the Prosecutor
of Sassari requested a new indictment for negligent
behavior, replacing the previous allegation of willful
conduct. The Third Instance Court has denied a motion
to terminate the proceedings. The Public Prosecutor
has re-submitted a request that the defendants would
stand trial. Eni’s subsidiary Eni Rewind SpA has been
summoned for third-party liability. The preliminary
hearing is still ongoing.
Eni Rewind SpA and Versalis SpA – Porto Torres
dock. In 2012, following a request of the Public
Prosecutor of Sassari, an
Italian court ordered
presentation of evidence relating to the functioning of
the hydraulic barrier of Porto Torres site (ran by Eni
Rewind SpA) and its capacity to avoid the dispersion
of contamination released by the site into the nearby
sea. Eni Rewind SpA and Versalis SpA were notified
that its chief executive officers and certain other
investigated. The Public
managers were being
Prosecutor of the Municipality of Sassari requested
that these individuals stand trial. The plaintiffs, the
Ministry for Environment and the Sardinia Region
claimed environmental damage in an amount of €1.5
billion. Other parties referred to the judge’s equitable
assessment. At a hearing in July 2016, the court
acquitted all defendants of Eni Rewind and Versalis
with respect to the crimes of environmental disaster.
Management report | Consolidated financial statements | Annex (v)
(vi)
Three Eni Rewind managers were found guilty of
environmental disaster relating to the period limited to
August 2010 – January 2011 and sentenced to one-
year prison, with a suspended sentence. Eni Rewind
filed an appeal against this decision. The proceeding
is ongoing.
Eni Rewind SpA – The illegal landfill in Minciaredda
area, Porto Torres site. The Court of Sassari,
on request of the Public Prosecutor, seized the
Minciaredda landfill area, near the western border
of the Porto Torres site (Minciaredda area). All the
indicted have been served a notice of investigation for
alleged crimes of carrying out illegal waste disposal
and environmental disaster. The seizure order involved
also Eni Rewind pursuant to Legislative Decree No.
231/01, whereby companies are liable for the crimes
committed by their employees when performing their
duties. The court determined that Eni Rewind can be
sued for civil liability and resolved that all defendants
and the Eni subsidiary be put on trial before the Court
of Sassari. The assessment for the admissibility of a
civil claim is ongoing.
Eni Rewind SpA – The Phosphate deposit at Porto
Torres site. In 2015, the Court of Sassari, accepting a
request of the Public Prosecutor of Sassari, seized - as
a preventive measure – the area of “Palte Fosfatiche”
located on the territory of
(phosphates deposit)
Porto Torres site, in relation to alleged crimes of
environmental disaster, carrying out of unauthorized
disposal of hazardous wastes and other environmental
crimes. Eni Rewind SpA is being investigated pursuant
to Legislative Decree No. 231/01. In November 2019,
a request for referral to trial was served on the Eni
subsidiary. The preliminary hearing will be held on
September 9, 2020. At the outcome of the preliminary
hearing, the Judge pronounced against all the
defendants a sentence of no place to proceed due
to the statute of limitation in relation to the crimes of
unauthorized management of landfills and disposal of
hazardous wastes as well as against Eni Rewind SpA
in relation to the liability pursuant to Legislative Decree
231/01. The Judge also ordered the indictment of the
defendants before the Court of Sassari, at the hearing
on May 28, 2021, limited to the alleged crime of
environmental disaster.
(vii)
Eni Rewind SpA – Proceeding relating to the asbestos
at the Ravenna site. A criminal proceeding is pending
before the Tribunal of Ravenna relating to the crimes
of culpable manslaughter, injuries and environmental
disaster, which have been allegedly committed by
265
former Eni Rewind employees at the site of Ravenna.
The site was acquired by Eni Rewind following a number
of corporate mergers and acquisitions. The alleged
crimes date back to 1991. In the proceeding there
are 75 alleged victims. The plaintiffs include relatives
of the alleged victims, various local administrations,
and other institutional bodies, including local trade
unions. Eni Rewind asserted the statute of limitation
as a defense to the instance of environmental disaster
for certain instances of diseases and deaths. The
court at Ravenna decided that all defendants would
stand trial and held that the statute of limitation
only applied with reference to certain instances of
crime of culpable injury. Eni Rewind reached some
settlements. In November 2016, the Judge acquitted
the defendants in all the contested cases except for
one, an asbestos case, for which a conviction was
handed down. The defendants, the Prosecutor and
the plaintiffs appealed the decision; a second instance
judge ordered a complex appraisal, believing that they
could not decide on the state of the proceedings,
appointing three well-known experts. Eni’s defenders
rejected one of them, believing that he had an interest
in the matter; the Court rejected the request for
recusal but the Third Instance Court, accepting the
appeal of the defendants of the accused, canceled the
order by postponement. On the referral, at the request
of Eni’s lawyers, the Court of Appeal of Bologna, given
the different composition of the judging panel, ordered
the renewal of the appeal judgment and, consequently,
the subsequent revocation of the order with which it
had initially prepared the appraisal. On May 25, 2020,
at the outcome of the discussion of the parties, the
Court acquitted the defendants, and the person sued
for damages in relation to 74 cases of mesothelioma,
lung cancer, pleural plaques and asbestosis, took note
of the res judicata of the acquittal for the disaster
complaint and confirmed the conviction for a case
of asbestosis. He also declared inadmissible the
appeals of several claimants. The Company appealed
to a Third Instance Court against the conviction for
asbestosis; some claimants challenged the acquittal
for other pathologies.
is pending
(viii) Raffineria di Gela SpA and Eni Mediterranea
Idrocarburi SpA – Alleged environmental disaster.
A criminal proceeding
in relation to
crimes allegedly committed by the managers of the
Raffineria di Gela SpA and EniMed SpA relating to
environmental disaster, unauthorized waste disposal
and unauthorized spill of industrial wastewater. The
Gela Refinery has been prosecuted for administrative
offence pursuant to Legislative Decree No. 231/01.
Eni Annual Report 2020 266
(ix)
initially
This criminal proceeding
regarded soil
pollution allegedly caused by spills from 14 tanks of
the refinery storage, which had not been provided
with double bottoms, and pollution of the sea water
near the coastal area adjacent to the site due to the
failure of the barrier system implemented as part of
the clean-up activities conducted at the site. At the
closing of the preliminary investigation, the Public
Prosecutor of Gela merged into this proceeding the
other investigations related to the pollution that
occurred at the other sites of the Gela refinery as
well as hydrocarbon spills at facilities of EniMed. The
proceeding is ongoing.
investigation
Val d’Agri. In March 2016, the Public Prosecutors
of Potenza started a criminal
into
alleged illegal handling of waste material produced
at the Viggiano oil center (COVA), part of the Eni-
operated Val d’Agri oil complex. After a two-year
investigation, the Prosecutors ordered the house
arrest of 5 Eni employees and the seizure of certain
plants functional to the production activity of the
Val d’Agri complex which, consequently, was shut
down (loss of 60 KBOE/d net to Eni). From the
commencement of the investigation, Eni has carried
out several technical and environmental surveys, with
the support of independent experts of international
standing, who found a full compliance of the plant
and the industrial process with the requirements of
the applicable laws, as well as with best available
technologies and international best practices. The
Company implemented certain corrective measures
to upgrade plants which were intended to address
the claims made by the Public Prosecutor about
an alleged operation of blending which would have
occurred during normal plant functioning. Those
corrective measures were favorably reviewed by the
Public Prosecutor. The Company restarted the plant in
August 2016. In relation to the criminal proceeding, the
Public Prosecutor’s Office requested the indictment
of all the defendants for alleged illegal trafficking of
waste, violation of the prohibition of mixing waste,
unauthorized management of waste and other
violations, and the Company, pursuant to Legislative
Decree No. 231/01, which presumes that companies
are liable for crimes committed by their employees
when performing
in
November 2017. At the outcome of the preliminary
hearings, the Court of Potenza, on March 10, 2021,
acquitted all the defendants in relation to the allegation
of false statements in an administrative deed, while in
relation to the request of administrative fines, the Court
declared that there was no need to proceed due to the
job tasks. The trial started
(x)
(xi)
statute of limitations. Finally, in relation to the alleged
crime of illegal trafficking of waste, the Court acquitted
two former employees of the Southern District for
not having committed the crime, while convicted six
former officials of the same District with suspension
of the sentence and at the same time sentenced Eni
pursuant to Legislative Decree no. 231/01 to pay a fine
of €700,000, with the contextual confiscation of a sum
of €44,248,071 deemed to constitute the unfair profit
obtained from the crime, from which Eni will deduct
the amount incurred for the plant upgrade carried out
in 2016. The Court reserved the term of ninety days for
the filing of the reasons of the sentence and an appeal
will be promptly filed against all the condemnations.
Eni SpA – Health investigation related to the COVA
center. Beside the criminal proceeding for illegal
trafficking of waste, the Public Prosecutor started
another investigation in relation to alleged health
violations. The Public Prosecutor requested the formal
opening of an investigation with respect to nine people
in relation to alleged violations of the rules providing
for the preparation of a Risk Assessment Document
of the working conditions at the Val d’Agri Oil Center
(COVA). In March 2017, following the request of the
consultant of the Prosecutor, the Labor Inspectorate
of Potenza issued a fine against the employers of
the COVA for omitted and incomplete assessment
of the chemical risks for the COVA center. In October
2017, the Prosecutor’s Office changed the criminal
allegations to disaster, murder and negligent personal
injury, also alleging breaches of health and safety
regulations. The proceeding is ongoing.
Proceeding Val d’Agri – Tank spill. In February
2017, the Italian police department of Potenza found
a stream of water contaminated by hydrocarbon
traces of unknown origin, flowing inside a small shaft
located outside the COVA. Eni carried out activities
at the COVA aimed at determining the origin of the
contamination and identified the cause in a failure
of a tank (the “D” tank) outside of the COVA, that
presented a risk of extension of the contamination in
the downstream area of the plant. In executing these
activities, Eni performed all the communications
provided for by Legislative Decree 152/06 and started
certain emergency safe-keeping operations at the
areas subject to potential contamination outside the
COVA. Furthermore, the characterization plan of the
areas inside and outside the COVA was approved by
the relevant authorities, to which the Risk Analysis
document was subsequently submitted. Following
this event, a criminal investigation was initiated in
Management report | Consolidated financial statements | Annex 267
order to ascertain whether there had been illegal
environmental disaster by the former COVA officers,
the Operation Managers in charge since 2011 and the
HSE Manager in charge at the time of the accident,
and also against Eni in relation to the same offense
pursuant to Legislative Decree No. 231/01 and of some
public officials belonging to local administrations
for official misconduct, false and fraudulent public
statements committed in 2014 and of the crime for
environmental disaster and of culpable conduct
committed in February 2017. The Company has paid
damages of an immaterial amount almost to all the
landlords of areas close to the COVA, which were
affected by a spillover. Discussions are ongoing with
other claimants. The likely disbursements relating to
these transactions have been provisioned. In February
2018, Eni contested the reports presented in October
and in December 2017 by the Italian Fire Department
stating that it does not consider itself obliged to carry
out the integration required, considering that the data
acquired in the area affected by the event indicate,
according to Eni’s assessments, that the loss was
promptly and efficiently controlled and there were no
situations of serious danger to human health and the
environment. In April 2019, precautionary measures
were ordered against three Eni employees at the COVA
which, following an appeal, were canceled by the
Third Instance Court. In September 2019, the Public
Prosecutor requested one of those employees to be
put on trial with expedited proceeding, accepted by the
Judge for preliminary investigations. The judgment
was suspended in order to allow the continuation of
the environmental clean-up and reclamation of the
site. As part of the concomitant procedure against
the remaining employees and Eni as the legal entity
being held liable pursuant to Legislative Decree No.
231/01, the Public Prosecutor, after issuing a notice
of conclusion of the preliminary investigations, made
a request for indictment. The hearings are ongoing.
Raffineria di Gela SpA and Eni Mediterranea
Idrocarburi SpA – Waste management of the landfill
Camastra. In June 2018, the Public Prosecutor of
Palermo (Sicily) notified Eni’s subsidiaries Raffineria
di Gela SpA and Eni Mediterranea Idrocarburi SpA
of a criminal proceeding relating to allegations of
unlawful disposal of industrial waste resulting from
the reclaiming activities of soil, which were discharged
at a landfill owned by a third party. The Prosecutor
charged the then chief executive officers of the two
subsidiaries, and the legal entities have been charged
with the liability pursuant to Legislative Decree No.
231/01. The alleged wrongdoing related to the willful
falsification of the waste certification for purpose of
discharging at the landfill. The charges against the
CEO of the Refinery of Gela SpA and the company
itself were dismissed, while a request to put on
trial the CEO of EniMed SpA and the company was
approved. The proceeding is in progress before the
Court of Agrigento, to which the proceeding has been
transferred due to territorial jurisdiction.
(xiii) Versalis SpA – Preventive seizure at the Priolo
Gargallo plant. In February 2019, the Court of
Syracuse at the request of the Public Prosecutor
ordered the seizure of the Priolo/Gargallo plant as part
of an ongoing investigation concerning the offenses
of dangerous disposal of materials and environmental
pollution, by the former plant manager of Versalis,
pursuant to Legislative Decree No. 231/01. The Public
Prosecutor’s thesis, according to the consultants,
is that the plants covered by the provision have
points of emissions that do not comply with the
Best Available Techniques (BAT), therefore resulting
in violation of the applicable legislation. Versalis has
already implemented certain plant upgrades designed
to comply with measures requested by the Public
Prosecutor and his consultants. Based on this, an
appeal was filed against the measure of precautionary
seizure of the plant before a review court, which
revoked the seizure of the plants on March 26, 2019. In
March 2021, a notice of conclusion of the preliminary
investigations was notified, with the formulation by the
Public Prosecutor of the allegations already previously
stated.
(xiv) Eni SpA – Fatal accident Ancona offshore platform.
On March 5, 2019, a fatal accident occurred at the
Barbara F platform in the offshore of Ancona. During
the unloading phase of a tank from the platform to a
supply vessel, there was a sudden failure of a part of
the structure on which a crane was installed, causing
the death of an Eni employee who was inside the
control cabin of the crane and injuries to two other
workers. The Public Prosecutor of Ancona initially
opened an investigation against unknown persons
and ordered further technical appraisals relating to
the crane. As part of the technical assessment of
the incident, the Public Prosecutor resolved to put
under investigation the Eni employees who were in
charge of safety standards at the involved facility.
Also the Company has been put under investigation
pursuant to Legislative Decree No. 231/01, which
holds companies liable for the crimes committed
by employees in a number of matters, including the
violations of laws about safety of the workplace. The
(xii)
Eni Annual Report 2020 268
(xv)
proceeding is pending in the preliminary investigation
phase.
Raffineria di Gela SpA and Eni Rewind SpA –
Groundwater pollution survey and
reclamation
process of the Gela site. Following complaints
made by former contractors, the Public Prosecutor’s
Office of Gela issued an inspection and seizure of
the area called Isola 32 within the refinery of Gela,
where old and new monitored landfills are located.
The proceeding concerns criminal allegations of
environmental pollution, omitted clean-up, negligent
personal injury and illegal waste management, as part
of the execution of clean-up of soil and groundwater
as well as decommissioning activities in the area
currently managed by Eni Rewind SpA, also on behalf
of the companies Raffineria di Gela SpA, ISAF SpA (in
liquidation) and Versalis SpA (efficiency and efficacy
of the barrier system). The Public Prosecutor acquired
documents and evidence at the Syndial office in Gela
and at the refinery of Gela, which, during the period
January 1, 2017 – March 20, 2019, managed the
facilities involved in cleaning up the groundwater area
(TAF Syndial, site TAF-TAS and pumping wells and
hydraulic barrier). Subsequently a decree was issued
for the seizure of eleven (11) piezometers of the
hydraulic barrier system with contextual guarantee
notice, issued by the Public Prosecutor of Gela against
nine employees of Gela Refinery and four employees
of Syndial SpA. The proceedings are ongoing.
investigation.
(xvi) Eni Rewind SpA and Versalis – Mantua. Environmental
In August and September
crime
2020, the Public Prosecutor of Mantua notified the
conclusion of the preliminary investigations relating
to several criminal proceedings. Several employees of
the Eni’s subsidiaries Versalis SpA and Eni Rewind SpA
as well as of a third-party company Edison SpA were
notified of being under investigations. Furthermore
the above-mentioned entities were being held liable
for the alleged crimes committed on their own interest
by their own employees pursuant to Legislative
Decree No. 231/01. The Public Prosecutor is alleging,
depending on some specific areas related to the
Mantua industrial hub, the crimes of unauthorized
waste management,
damage/
pollution, omitted communication of environmental
contamination and omitted clean-up. Following the
filing of defense briefs, the case has been dismissed
against some individuals. The Public Prosecutor’s
Office requested the indictment of the remaining
defendants, not yet notified, confirming the allegations
referred to in the closing of the investigation.
environmental
(xvii) Versalis SpA – Brindisi plant factory flares and
odor emissions - Criminal procedure n. 6580/18
R.G. Mod. 44 against unknown persons. On May
18, 2018 the manager of the Versalis plant in Brindisi
and two other employees were summoned in order
to provide brief information regarding two episodes
that occurred in April 2018, which led to the activation
of the plant torches. The company collaborated with
the judicial authorities to provide useful information
to exclude that such events may have had a negative
and significant impact on air quality. Moreover, the
Company is reviewing available data as well as
carrying out some important upgrading to minimize
any detrimental effect, even if only visual, of the flaring
phenomenon with the construction of a new ground
torch facility.
At the end of May 2020, in conjunction with a scheduled
shutdown of the plant, anomalous concentrations of
benzene and toluene were detected; on those bases,
the mayor of Brindisi ordered the plant shutdown. The
order was issued without any technical check on the
real correlation between the peaks detected in the air
and the activities in progress at the plant. After a close
discussion with the authorities in charge, the order
was revoked. However, the Public Prosecutor acquired
information and documents, also produced by the
Company itself, on the aforementioned order to verify,
also from a criminal point of view, any connection or
responsibilities.
The proceeding has been filed for the time being against
unknown persons and it is not possible to exclude that
this event may be the subject of a proceeding from the
Public Prosecutor’s Office. The company is providing
all the involved local authorities with all the useful
information for the correct reconstruction of the facts.
(xviii) Eni SpA R&M Depot of Civitavecchia – Criminal
proceedings for groundwater pollution. In the period
in which Eni was in charge of the Civitavecchia
storage hub (2008-2018), pending the approval of
a characterization plan of the environmental status
of the site, the Company, in coordination with public
authorities, adopted measures to preserve the safety
of the groundwaters and to pursue the clean-up
process of the site until its disposal.
The Public Prosecutor of Civitavecchia issued a
notice of conclusion of the preliminary investigations,
contesting, among others, the former manager of
the Eni fuel storage hub of Civitavecchia, the alleged
crime of environmental pollution in relation to the
mismanagement of the hydraulic barrier placed over
the site aimed at putting under emergency safety the
contaminated groundwater, as part of the clean-up
Management report | Consolidated financial statements | Annex
process in progress. This circumstance would have
been reported by officials of a local authority (ARPA),
to whom technical feedback has been provided
several times over the years. Eni is under investigation
pursuant
to Legislative Decree 231/2001. The
prosecutor made a request for indictment.
1.2
Civil and administrative proceedings in the matters
of environment, health and safety
(i)
(ii)
Eni Rewind SpA – Summon for alleged environmental
damage caused by DDT pollution in Lake Maggiore.
In May 2003, the Ministry for the Environment
claimed compensation from Eni Rewind for alleged
environmental damage caused by the activity at the
Pieve Vergonte plant in the years 1990 through 1996.
In July 2008, the District Court of Turin ordered Eni
Rewind to pay environmental damages amounting to
€1,833.5 million, plus interests accrued from the filing
of the decision. Eni and its subsidiary deemed the
amount of the environmental damage to be absolutely
lacked sufficient
the sentence
groundless as
elements to support such a material amount of the
liability from the volume of pollutants ascertained
by the Italian Environmental Minister. In July 2009,
Eni Rewind filed an appeal and consequently the
proceeding continued before a second Instance
Court of Turin that requested a technical appraisal
on the matter. The consultants that undertook this
appraisal concluded that: (i) no further measure for
environmental restoration is required; (ii) there was no
significant and measurable impact on the environment
of the ecosystem, therefore no restoration or damage
compensation should be claimed; the only impact
seen concerned fishing activity, with an estimated
damage of €7 million which could be already restored
through the measures proposed by Eni Rewind,
and; (iii) the necessity and convenience of dredging
should be excluded, both from the legal and scientific
point of view, while confirming
technical and
scientific correctness of the Eni Rewind’s approach
based on the monitoring of the process of natural
recovery, which is estimated to require 20 years. In
March 2017, the second Instance Court: (i) excluded
the application of compensation for monetary
equivalent; (ii) annulled the monetary compensation
of €1.8 billion requesting Eni Rewind to perform the
already approved clean-up project of the polluted
areas, which comprise groundwater, as well as
compensatory remediation works. The value of these
compensatory works required by the Court, in case of
Eni Rewind failure or misperformance, is estimated at
€9.5 million. The clean-up project filed by Eni Rewind
269
was ratified by the authorities and is currently being
executed. Expenditures expected to be incurred have
been provisioned in the environmental provision.
Any other claims filed by the Italian Minister for the
Environment were rejected by the court (including
compensation for non-material damage). In April
2018, the Ministry for the Environment filed an appeal
to the Third Instance Court. Following this appeal,
the Company appeared in Court. After the hearings
in July 2020 and in January 2021, the sentence is still
ongoing.
Eni Rewind SpA – Versalis SpA – Eni SpA (R&M)
– Augusta harbor. The Italian Ministry for the
Environment with various administrative acts
required companies that were operating plants in
the petrochemical site of Priolo to perform safety
and environmental remediation works in the Augusta
harbor. Companies involved include Eni subsidiaries
Versalis, Eni Rewind and Eni Refining & Marketing
Division. Pollution has been detected in this area
primarily due to a high mercury concentration that
is allegedly attributed to the industrial activity of
the Priolo petrochemical site. The above-mentioned
companies contested these administrative actions,
objecting in particular to the nature of the remediation
works decided and the methods whereby information
on the pollutants concentration has been gathered.
A number of administrative proceedings started on
this matter were subsequently merged before the
Regional Administrative Court. In October 2012, the
Court ruled in favor of Eni’s subsidiaries against
the Ministry’s requirements for the removal of the
pollutants and the construction of a physical barrier.
In September 2017, the Ministry notified all the
companies involved of a formal notice for the start
of remediation and environmental restoration of the
Augusta harbor within 90 days, basing its request on
an alleged ascertainment of liability on the basis of
the 2012 provision of Regional Administrative Court.
The act, contested by the co-owner companies in
December 2017, constitutes a formal notice for
environmental damage. In June 2019, the Italian
Ministry for the Environment set up a permanent
technical committee to review the matter of the clean-
up and reclamation of the Augusta harbor. The report,
recalling the warning of 2017, confirmed the thesis
of the parties on the responsibility of the companies
co-located for the contamination of the Rada and
affirmed a breach of the aforementioned warning
by the companies, also communicated to the Public
Prosecutor’s Office. In agreement with all the other
companies involved, this report and other parallel
Eni Annual Report 2020 270
(iii)
for
responsible
internal technical investigations were challenged for
defensive purposes. Eni’s subsidiary proposed to the
Italian Environmental Ministry to start a collaboration
with other interested parties to find remediation
measures based on new available environmental data
collected by independent agencies, without prejudice
to the need for the parties to correctly identify the
legal entity
the contamination
detected. In the meantime, the company requested, in
full compliance with applicable environmental laws,
to establish a roadmap for identifying the companies
accountable for the environmental pollution and
their respective shares of responsibility in order to
implement a clean-up and remediation project.
In September 2020, the Company took part in the
Investigation Services Conference convened by
the Ministry of the Environment on the results of
the technical investigations and exhibited, together
with its consultants, the in-depth analyzes on the
environmental state of the Rada and its observations
to the report which would lead to the exclusion of
any involvement of the Group companies in the
contamination detected.
Eni SpA — Eni Rewind SpA (former Syndial SpA)
— Raffineria di Gela SpA — Claim for preventive
technical inquiry. In February 2012, Eni’s subsidiaries
Raffineria di Gela SpA and Eni Rewind SpA and the
parent company Eni SpA (involved in this matter
through the operations of the Refining & Marketing
Division) were notified of a claim issued by the parents
of children with birth defects in the Municipality
of Gela between 1992 and 2007. The claim called
for an inquiry aimed at determining any causality
between the birth defects suffered by these children
and any environmental pollution caused by the Gela
site, quantifying the alleged damages suffered and
eventually identifying the terms and conditions to
settle the claim. The same issue was the subject of
previous criminal proceedings, of which one closed
without determining any illegal behavior on the part
of Eni or its subsidiaries, while a further criminal
proceeding is still pending. In December 2015, the
three companies involved were sued in relation to a
total of 30 cases of compensation for damages in
civil proceedings. In May 2018, the Court issued a first
instance judgment concerning one case. The Judge
rejected the claim for damages, acknowledging the
arguments of the defendant companies in relation
to the absence of evidence concerning the existence
of a causal link between the birth defects and the
alleged industrial pollution. The judgement has been
appealed.
(iv)
(v)
Environmental claim relating to the Municipality of
Cengio. Since 2008 a proceeding is pending by the Court
of Genoa, brought by The Ministry for the Environment
and the Delegated Commissioner for Environmental
Emergency in the territory of the Municipality of Cengio.
Those parties summoned Eni Rewind before a Civil
Court and demanded Eni’s subsidiary compensate for
the environmental damage relating to the site of Cengio.
The request for environmental damage amounted to
€250 million to which was to be added health damage
to be quantified during the proceeding. The plaintiffs
accused Eni Rewind of negligence in performing the
clean-up and remediation of the site. In March 2019, the
Ministry for the Environment presented a proposal to
Eni Rewind to settle the case. The Company responded
with a counterproposal in July 2019. In September
2020, the debate reopened and the drafting of an
agreement shared between the parties and considered
to be final also by the representatives of the Ministry
was reached. The Ministry, through the Attorney’s
Office, at the hearing in February 2021, declared the
“advanced state” of the negotiations, thus allowing the
hearing to be postponed to June 2021.
In March 2021, the Inspection Commission also issued
a test certificate for the works carried out on the soils,
thereby further strengthening the restorative suitability
of the measures carried out by the Company.
Val D’Agri – Eni/Vibac. In September 2019 a claim
was brought in the Court of Potenza against Eni.
The plaintiffs are eighty people, living in different
municipalities of the Val d’Agri area, who are
complaining of economic, non-economic, biological
and moral damages, all deriving from the presence
of Eni’s oil facilities in the territory. In particular, the
claim refers to certain events which allegedly caused
damage to the local community and the territory
(such as a 2017 spill, flaring events since 2014, smelly
and noisy emissions). The Judge has been asked to
ascertain Eni’s responsibility for causing emissions
of polluting substances into the atmosphere. The
plaintiffs have also requested Eni be ordered to
interrupt any polluting activity and to be allowed to
resume industrial activities on condition that all the
necessary remediation measures be implemented
to eliminate all of the alleged dangerous situations.
Finally, they are asking that Eni compensate all direct
and indirect property damages, current and future, to
an extent that will be quantified in the course of the
case. At the end of the trial phase, the Judge sent the
parties the proposal for an extra-judicial settlement,
putting a deadline to present further proposals on the
matter.
Management report | Consolidated financial statements | Annex
(vi)
(vii)
Eni SpA – Climate change. In 2017 and 2018, local
government authorities and a fishing association
brought in the courts of the State of California seven
proceedings against a controlled entity (Eni Oil & Gas
Inc) and other oil companies. These proceedings
claim compensation for the damages attributable to
the increase in sea level and temperature, as well as to
the hydrogeological instability. The cases have been
transferred, by request of the defendants, from the
State Courts to the Federal Courts. A specific request
has been filed, highlighting the lack of jurisdiction
of the State Courts. Following a suspension period
waiting for the decision on jurisdiction, on May 26,
2020 the proceedings returned to the State Courts.
On July 9,2020, Eni Oil & Gas Inc, together with other
defendants, signed a petition for rehearing “en blanc”
to request a review of the postponement decision
to the competent “9th Circuit Court”. The disputes
will remain suspended until a decision made on
the petition for rehearing. The Court rejected the
petition for rehearing en banc but, at the request
of the defendants, granted a suspension of the
proceedings of 120 days (until January 2021) to
allow the defendants themselves to present a so-
called petition for certiorari to the Supreme Court
of the United States in order to obtain the revision
of rejection. The petition was presented in January
2021 by the defendant; the Supreme Court of the
United States will rule on the matter by June 2021.
Eni Rewind / Province of Vicenza – Clean-up process
for Trissino site. On May 7, 2019 the Province of
Vicenza imposed (with a warning) on some persons
and companies as MITENI SpA
in bankruptcy,
Mitsubishi and ICI, to clean-up the Trissino site
where MITENI carried out its industrial activity. In
this site, in 2018, based on the analysis carried out
by administrative parties, significant concentrations
of substances considered highly toxic-harmful and
carcinogenic were allegedly discovered in groundwater
and in surface water. The analysis carried out by the
Province of Vicenza with the direct involvement of
the Istituto Superiore di Sanità reported the presence
of these substances in the blood of about 53,000
people in the area. The action of health analysis and
monitoring by the institutions is destined to increase.
The Province warned some individuals, including
a former employee who served between 1988 and
1996 as CEO of a company that was taken over by Eni
Rewind.
In an initial phase of the administrative procedure, there
were no references to the former company Enichem
Synthesis, which Eni Rewind took over, therefore
2.
(i)
271
the legal assistance and the defense strategy were
concentrated supporting only the persons involved.
Instead, several appeals to the Regional Administrative
Court have arisen in which Eni Rewind was called into
question as the “successor” of Enichem for the period
of management of the site as the majority shareholder
of MITENI. On the basis of this, in February 2020, the
Province extended the proceeding also to Eni Rewind
which set a procedural brief for the prompt filing of the
proceeding against it.
However, on October 5, 2020 the Province notified a
warning with which it would have identified Eni Rewind
as further responsible for the potential contamination
of the Trissino site. On December 4, 2020 Eni Rewind
appealed to the Administrative Court, pending the
setting of the hearing.
Eni Rewind was also invited to take part in several
meetings that will be held by the Public Entities in
relation to the site remediation interventions, and has
already participated in the first one held on December
23, 2020, without thereby granting any acquiescence
to the provisions issued by the Province. Access to
the documents is ongoing with the Public Authorities
aimed at acquiring a complete knowledge of the facts
and being able to integrate the defenses in these
proceedings. In order to carry out a transversal study
on the issue of PFAS, the company has established
a Working Group (WG) that will analyze the technical-
environmental, toxicological and regulatory aspects
also addressing the
international
approach. In addition to Eni Group personnel, three
external competent consultants for the respective
subjects are part of the WG.
issue with an
Proceedings concerning criminal/administrative
corporate responsibility
Block OPL 245 – Nigeria. A criminal case is ongoing
before the Court of Milan alleging
international
corruption in connection with the acquisition in 2011
of the OPL 245 exploration block in Nigeria. In July
2014, the Public Prosecutor of Milan served Eni with
a notice of investigation pursuant to Italian Legislative
Decree No. 231/01. The proceeding was commenced
following a claim filed by NGO ReCommon relating to
alleged corruptive practices which, according to the
Public Prosecutor, allegedly involved the Resolution
Agreement made on April 29, 2011 relating to the
so-called Oil Prospecting License of the offshore
oilfield that was discovered in OPL 245. Eni fully
cooperated with the Public Prosecutor and promptly
filed the requested documentation. Furthermore, Eni
voluntarily reported the matter to the US Department
Eni Annual Report 2020
272
of Justice and the US SEC. In July 2014, Eni’s Board of
Statutory Auditors jointly with the Eni Watch Structure
resolved to engage an independent, US-based law
firm, expert in anticorruption, to conduct a forensic,
independent review of the matter, upon informing the
Judicial Authorities. After reviewing the matter, the US
lawyers concluded that they detected no evidence of
wrongdoing by Eni in relation to the 2011 transaction
with the Nigerian government for the acquisition of
the OPL 245 license. In September 2014, the Public
Prosecutor notified Eni of a restraining order issued
by a British judge who ordered the seizure of a bank
account not pertaining to Eni domiciled at a British
bank following a request from the Public Prosecutor.
Since the act had also been notified to some persons,
including the CEO of Eni and the former Chief
Development, Operation & Technology Officer of Eni
and the former CEO of Eni, it was assumed that the
same had been registered in the register of suspects at
the Milan Prosecutor’s office. During a hearing before a
court in London in September 2014, Eni and its current
executive officers stated their non- involvement in the
matter regarding the seized bank account. Following
the hearing, the Court reaffirmed the seizure. In
December 2016, the Public Prosecutor of Milan notified
Eni of the conclusion of the preliminary investigation
and requested Eni’s CEO, the Chief Development,
Operations and Technological Officer and the Executive
Vice President for international negotiations to stand
trial, as well as Eni’s former CEO and Eni SpA, pursuant
to Italian Legislative Decree No. 231/01. Upon the
notification to Eni of the conclusion of the preliminary
investigation by the Public Prosecutor, the independent
US-based law firm was requested to assess whether
the new documentation made available from Italian
prosecutors could modify the conclusions of the
prior review. The US law firm was also provided with
the documentation filed in the Nigerian proceeding
mentioned below. The
law firm
concluded that the reappraisal of the matter in light
of the new documentation available did not alter the
outcome of the prior review. In September 2019, the DoJ
notified Eni that based on the information it currently
possessed, the DoJ was closing its investigation of Eni
in connection with OPL 245 without the filing of any
charges. In December 2017, the Judge for preliminary
investigation ordered the indictment of all the parties
mentioned above, and other parties under investigation
by the Public Prosecutor, before the Court of Milan. The
request of the Federal Government of Nigeria (FGN)
for admission as a civil claimant in the proceedings
was granted in July 2018. The first instance trial of
the Milan Prosecutor’s OPL 245 charges began before
independent US
the Court of Milan on June 20, 2018. Following the
discussion of the parties, in response to the request
for conviction for all the individuals and companies
involved, at the hearing of March 17, 2021 the judge
fully acquitted all the defendants, since there was no
case.
In January 2017, Eni’s subsidiary Nigerian Agip
Exploration Ltd (“NAE”) became aware of an Interim
Order of Attachment (“Order”) issued by the Nigerian
Federal High Court upon request from the Nigerian
Economic and Financial Crimes Commission (EFCC),
attaching OPL 245 temporarily pending a proceeding
in Nigeria relating to alleged corruption and money
laundering. After making this application, Eni became
aware of a formal filing of charges by the EFCC
against NAE and other parties. In March 2017, the
Nigerian Court revoked the Order. To NAE’s knowledge
EFCC charges have not been dropped but none of the
defendants were served nor arraigned. In November
2018, Eni SpA and its subsidiaries NAE, NAOC and
AENR (as well as some companies of the Shell Group)
were notified of the intention of the FGN to bring a civil
claim before an English court to obtain compensation
for damages allegedly deriving from the transaction
that resulted in assignment of the OPL 245 to NAE
and Shell subsidiary SNEPCO (Shell subsidiary).
On April 15, 2019 the Nigerian subsidiaries NAE,
NAOC and AENR received formal notification of the
commencement of the proceeding, while similar
notification was received by Eni SpA on May 16, 2019.
In the introductory deeds of the proceeding, the claim
is set at $1,092 million or at any other amount that
will be established during the proceedings. The FGN
has based its assessment on an estimated fair value
of the asset of $3.5 billion. Eni’s interest in the asset
is 50%. As the FGN is also acting as claimant in the
Italian proceeding before the Court of Milan, this
claim appears to duplicate the claims made before
the Milan’s Court against Eni employees. On May 22,
2020, the Judge accepted the exception presented by
Eni and declined its jurisdiction over the case, having
found the judicial pending with the Milan procedure
according to the criteria set out in Regulation (EU) No
1215/2012. The Appeal Court obtained permission
to appeal against the decision. Similarly, the Appeal
Court rejected the Nigerian Government’s request to
appeal the decision, thus making it definitive.
On January 20, 2020, NAE subsidiary was notified
of the beginning of a new criminal case before the
Federal High Court in Abuja. The proceeding, mainly
focused on the accusations against Nigerian persons
(including the Minister of Justice in office in 2011,
at the time of the disputed facts), involves NAE
Management report | Consolidated financial statements | Annex
(ii)
and SNEPCO as co-holders of the OPL 245 license.
These persons were attributed in 2011 illicit acts of
corruptive nature, which NAE and SNEPCO would
have unlawfully facilitated. The beginning of the
trial, scheduled for the end of March 2020, has been
postponed for the closure of the judicial offices in
Nigeria due to COVID-19 emergency. A new hearing
has not been scheduled to date.
Congo. In March 2017, the Italian Finance Police served
Eni with an information request in accordance with the
Italian Code of Criminal Procedure in connection with
an investigative file opened by the Public Prosecutor
of Milan against unknown persons. The request
related in particular to the agreements signed by Eni
Congo SA with the Ministry of Hydrocarbons of the
Republic of Congo in 2013, 2014 and 2015 in relation
to exploration, development and production activities
concerning certain permits held by Eni Congo SA
for Congolese projects and Eni’s relationships with
Congolese companies that hold stakes in those
projects. In July 2017, the Italian Financial Police,
on behalf of the Public Prosecutor of Milan, served
Eni with another information request and a notice
of investigation pursuant to Legislative Decree No.
international corruption. The
231/01 for alleged
request expressly stated that it was based in part on
the March 2017 information request and concerned
the relationship of Eni and its subsidiaries with certain
third-party companies from 2012 to the present. Eni
produced all of the documentation requested in March
and July 2017 and voluntarily disclosed this matter to
the relevant US authorities (SEC and DoJ). In January
2018, the Public Prosecutor’s Office requested a six-
months extension of the deadline for conducting
its preliminary investigation into this matter, from
January 31, 2018 until July 30, 2018. Subsequently
in July 2018, the Public Prosecutor requested a
second extension until February 28, 2019. In April
2018, the Public Prosecutor of Milan served Eni SpA
with a further request for documentation and notified
a former Eni employee, who was the then Chief
Development, Operation & Technology Officer, of a
search order stating that he and another Eni employee
had been placed under investigation.
In October 2018, the Public Prosecutor ordered the
seizure of an e-mail account of another Eni manager,
who was formerly the general director of Eni in Congo
during the period 2010-2013. In December 2018 and
subsequently in May, September and December 2019,
Eni was notified by the Public Prosecutor of Milan
of a request for documents in accordance with the
Italian Code of Criminal Procedure, concerning some
273
economic transactions between Eni Group companies
and certain third-party companies. All the required
documentation has been produced to the Judge.
In September 2019, the Company was informed that
the Company’s CEO was served with a search decree
and an investigation decree in connection with an
alleged violation of article 2629 bis of the Italian Civil
Code which penalizes directors of listed companies,
who fail to communicate conflicts of interest. The
alleged omission relates to the supply of logistics and
transportation services to certain Eni’s subsidiaries
operating in Africa, among which Eni Congo SA, by
third-party companies owned by Petroserve Holding
BV, in the period 2007-2018. The claims are based
on the allegations that the wife of the Company’s
CEO retained a shareholding of the above-mentioned
holding company during part of the period of time
under investigation. The Board of Directors of Eni SpA
has never been involved in any resolution concerning
the suppliers under
investigation. Subsequently,
on June 15, 2020, the company was informed that
an extension of the investigations relating to these
allegations was requested until December 21, 2020.
In April 2018, the Board of Statutory Auditors, the
Watch Structure and the Control and Risk Committee
of Eni jointly appointed an independent law firm and
a professional consulting company, knowledgeable in
the matter of anti-corruption, to carry out a forensic
review of facts relating to Eni’s work in Congo. Such
review did not find any factual evidence as to the
involvement of Eni, nor of any Eni employees and key
managers, in the alleged crimes.
In November 2019, following the notification of
further
the Board of
Statutory Auditors, the Watch Structure of Eni and the
Control and Risk Committee asked the professional
consultants, which had been engaged in 2018, also
to review the conclusions reached, in the light of the
documentation made available following the decree
notified to the CEO in September 2019. The second
report of the consultants, which was delivered in July
2020, integrates the findings achieved in the first report,
particularly indicating that: (i) it is probable that the
CEO’s wife retained a shareholding in the Petroserve
Group for a few years, at least, starting from 2009 until
2012; (ii) there is an absence of evidence to contradict
the statements made by the CEO as to his lack of
knowledge of his wife’s interests in the ownership of
Petroserve Group; (iii) absence of evidence that the
activity of the abovementioned involved employees
was carried out in the interest of Eni.
On September 9, 2020, Eni was notified of a decree,
setting a hearing due to the filing by the Public
investigative documents,
Eni Annual Report 2020
274
Prosecutor of Milan requesting a restrictive measure
pursuant to Legislative Decree No. 231/01, relating
to some oilfields in Congo. In particular, the Judge
requested Eni to be banned from exploiting Djambala
II, Foukanda II, Mwafi II, Kitina II, Marine VI Bis, Loango,
Zatchi oilfields for 2 years and subordinately the
appointment of a judicial commissioner to manage
those oilfields.
The Judge for Preliminary Investigations in the decree
setting the hearing for September 21, 2020, recognized
the above-mentioned restrictive measure would have
been statute barred on July 14, 2020, since the date of
commission of the alleged crimes was mentioned by
the public prosecutors till July 14, 2015. However, this
five-year limitation term would have been suspended
due to the recent anti-COVID-19 legislation until
September 16, 2020. The Judge also stated that a claim
was pending before the Constitutional Court about the
constitutional legitimacy of the aforementioned anti-
COVID-19 legislation, with particular reference to the
principle of non-retroactivity of an unfavorable rule.
Therefore, the hearing initially set for September 21,
2020, was postponed initially to December 10, 2020
pending the resolution of the Constitutional Court and
then, once the Court resolved to declare the legitimacy
of the anti-COVID-19 rule to February 17, 2021 also to
await the filing of the reasons for the sentence.
The hearing of February 17, 2021 was postponed
to March 25, 2021, due to the fact that the Public
Prosecutor changed the charge from international
corruption to undue inducement to give or promise
benefits, a possible course of action was explored
whereby the public prosecutor and the defendant may
request the judge to apply a penalty. On March 15,
2021, the Board of Directors of Eni SpA approved the
granting of a special power of attorney in favor of the
defense lawyer of Eni SpA, the entity legally liable, to
propose a motion to apply a penalty on request of the
parties.
The sanction agreed with the Public Prosecutor
amounts to €11.8 million. At the hearing on March 25,
2021 the Judge for Preliminary Investigations accepted
the agreed sanction and the Prosecutor also revoked
the request for a restrictive measure for Eni SpA.
3. Other proceedings concerning criminal matters
(i)
Eni SpA (R&M) – Criminal proceedings on fuel
is currently
excise tax. A criminal proceeding
pending, relating to alleged evasion of excise taxes
in the context of retail sales in the fuel market.
In particular, the claim states that the quantity of
oil products marketed by Eni was larger than the
quantity subjected to the excise tax. This proceeding
(No. 7320/2014 RGNR) concerns the combination
of three distinct investigations: (i) A first proceeding,
opened by the Public Prosecutor’s Office of Frosinone
involved a company (Turrizziani Petroli) purchaser
of Eni’s fuel. This investigation was subsequently
extended to Eni. The Company fully cooperated
and provided all data and information concerning
the excise tax obligations for the quantities of fuel
coming from the storage sites of Gaeta, Naples and
Livorno. Such proceeding referred to quantities of
oil products sold by Eni, allegedly larger than the
quantity subjected to the excise tax. (ii) A second
proceeding, concerning an investigation by the Public
Prosecutor’s Office of Prato, commenced in regard
to the deposit of Calenzano and relates to abduction
of fuel through manipulation of the fuel dispensers,
subsequently extended also to the Refinery of
Stagno (Livorno); (iii) A third proceeding, opened by
the Public Prosecutor’s Office of Rome, concerns
alleged missing payment of excise tax on the surplus
of the unloading products, as the quantity of such
products was larger than the quantity reported in
the supporting fiscal documents. This proceeding
represents a development of the first proceeding
mentioned above and substantially concerns similar
facts presenting, however, some differences with
regard to the nature of the alleged crimes and the
responsibility.
The Public Prosecutor’s Office of Rome has alleged
the existence of a criminal conspiracy aimed at
habitual abduction of oil products at all of the 22
storage sites which are operated by Eni in Italy. Eni
is cooperating with the Prosecutor in order to defend
the correctness of its operation. In September 2014,
a search was conducted at the office of the former
chief of the R&M Division in Rome. The motivations
of the search are the same as the above-mentioned
proceeding as the ongoing investigations also relate
to a period of time when the officer was in charge
at Eni’s R&M Division. In March 2015, the Prosecutor
of Rome ordered a search at all the storage sites of
Eni’s network in Italy as part of the same proceeding.
The search was intended to verify the existence
of fraudulent practices aimed at tampering with
measuring systems functional to the tax compliance
of excise duties in relation to fuel handling at
the storage sites. In September 2015, the Public
Prosecutor of Rome requested a one-off technical
appraisal aimed to verify the compliance of the
software installed at certain metric heads previously
seized with those lodged by the manufacturer at the
Ministry of Economic Development. The technical
Management report | Consolidated financial statements | Annex
appraisal verified the compliance of the software
tested. The proceeding was then extended to a
large number of employees and former employees
of the Company. Eni has continued to provide full
cooperation to the authorities.
During 2018, as part of the general proceeding no.
7320/2014, the Public Prosecutor of Rome notified the
conclusion of the preliminary investigations in relation
to the criminal proceeding concerning the Calenzano,
Pomezia, Naples, Gaeta and Ortona storage sites
and the Livorno and Sannazzaro refineries. Based
on the outcome of the investigations, as far as Eni is
concerned, the proceeding involves former managers
and directors of the logistic sites and refineries
indicated above concerning alleged aggravated and
continuous non-payment of excise duties, alteration
and removal of seals, use and possession of false
measures and weights instruments. In addition, for the
Calenzano site, three employees and their manager of
the storage site were accused of alleged procedural
fraud.
In September 2018, Eni received, as injured party, the
notification of the schedule of hearing issued by the
Court of Rome, in relation to criminal association and
other minor claims, against numerous persons under
investigation — including over forty Eni employees —
subject of a separated proceeding (No. 22066/17
RGNR), for which, in May 2017, the Public Prosecutor’s
Office had requested the dismissal. At the end of
the hearing in December 2018, the Judge accepted
the request for dismissal for several persons under
investigation, including thirteen Eni employees. The
Judge also initially rejected the request of indictment
for criminal association relating to twenty-eight Eni
employees (including the former managers of the
R&M Division).
As part of the separate proceeding no. 22066/2017
RGNR, following the re-filing by the Public Prosecutor
of the indictment for criminal association, following a
preliminary hearing, the judge resolved to dismiss the
case against all of the defendants because allegations
were found to be groundless.
(ii)
Eni SpA – Public Prosecutor of Milan – Criminal
proceeding no. 12333/2017. In February 2018,
Eni was notified of a search and seizure decree in
relation to allegations of associative crime aimed
at slander and at reporting false information to a
Public Prosecutor. In the decree, the Prosecutor of
Milan included, among the other persons under
investigation, a former external lawyer and a former
Eni manager, at the time of the facts holding strategic
positions in the Company. According to the decree,
275
the association is allegedly aimed at interfering with
the judicial activity in certain criminal proceedings
that are involving, among others, Eni and some of
its directors and managers. Afterwards, the Control
and Risks Committee, having consulted the Board
of Statutory Auditors, and together with the Watch
Structure, agreed to engage an auditing firm to
perform an internal audit of all relevant facts and
circumstances and all records and documentation
relating to the matter with respect to the events
of the aforementioned proceeding, including a
forensic review. The final report, submitted to the
Control and Risk Committee, the Watch Structure
and the Board of Statutory Auditors on September
12, 2018, concluded that following the review carried
out with respect to the allegations made by the
Public Prosecutor of Milan, there was not sufficient
factual evidence to prove the involvement of the
aforementioned former manager of Eni in the alleged
crimes. On April 19, 2018, the Board of Directors
appointed two external consultants, a criminal
lawyer and a civil lawyer to provide independent legal
advice in relation to the facts under investigation.
Their report, dated November 22, 2018, did not find
facts which could suggest any involvement of any
Eni employees in the crimes alleged by the Public
Prosecutor. On June 4, 2018, Consob, the Italian
market regulator, requested to be informed about
request
the above-mentioned proceeding. The
was addressed to the Company and to its Board of
Statutory Auditors.
Specifically, Consob asked for the outcome of the
forensic review and to be updated about any other audit
action taken in relation to the matter by the Company
and by its Board of Statutory Auditors. The Board of
Statutory Auditors was also requested to report about
the findings of the additional audit program agreed
with an external auditor regarding the matter and to
keep Consob updated about any further initiatives
adopted. The Company answered the request on
June 11, 2018. Subsequently, the Company finalized
its response by sending further documentation
including the final report of the independent third
party and the reports of the consultants of the Board
of Directors. The Board of Statutory Auditors has
periodically updated Consob of the initiatives taken
as part of the Board’s monitoring responsibilities
with several communications, the last of which on
July 25, 2020. On June 13, 2018, Eni was notified
of a request from the Prosecutor Office to transmit
certain documentation in accordance with the Italian
Code of Criminal Procedure. The request targeted
evidence and documents relating to the internal audit
Eni Annual Report 2020
276
performed by the Company and any possible external
review concerning certain tasks that had been
assigned to the former external lawyer with respect to
Eni. This lawyer appears to be investigated as part of
this proceeding. The reports of the independent third
party and of the consultant of the Board of directors
were also sent to the Public Prosecutor.
In May and June 2019, in the context of the same
proceeding, the Court of Milan notified Eni and three of
its subsidiaries (ETS SpA, Versalis SpA, Ecofuel SpA)
of various requests for documentation in accordance
with the Italian Code of Criminal Procedure. At the
same time, on May 23, 2019, Eni was served a notice
that the Company is being investigated pursuant to
Legislative Decree No. 231/01, with reference to the
crime sanctioned by the Italian Penal Code concerning
“inducement not to make statements or to make false
statements to the judicial authority”.
The object of the aforementioned requests particularly
concerned the relations with two business partners,
access to Eni offices of certain third parties, also
on behalf of one of the above-mentioned business
partners, the mailbox of some employees and
former employees, the documentation concerning
the relations (and the interruption of those relations)
with the former external lawyer investigated in the
proceeding, the internal audit reports and the reports
of the Company’s bodies that dealt with assessing
internal audits, on
these relationships. Following
June 21, 2019, the Company sued for fraud a former
employee at its subsidiary ETS, who was fired on May
28, 2019, and also filed a complaint before the Judicial
Authority to ascertain possible complicity in fraud of
other third parties.
On August 14, 2019, the Italian tax police sent a
new request for information to Eni, concerning the
economic relations between Eni Group companies
and an external professional.
In November 2019, Eni received a notice to extend the
preliminary investigations. The notice also covered
the investigations of the alleged breach of certain
provisions of Italian Law Decree 231/01 until May
2020 on part of Eni. Furthermore, it was ascertained
that certain former Eni employees have been charged
with various criminal allegations. Those employees
were a former manager of Eni’s legal department,
the former Chief Upstream Officer of Eni and an
employee that was fired in 2013. A number of third
parties have also been indicted, among them, two
former legal consultants of Eni. On January 23, 2020,
a search decree and an indictment were notified to
the Company’s Chief Services & Stakeholder Relations
Officer, the Senior Vice President for Security and to
a manager of the legal department. Following the
requests for review of the aforementioned decree, the
material deposited by the Public Prosecutor’s Office
was made available to the Company, which requested
its examination by the same consultants appointed in
2018 to examine the documentation. Subsequently, in
June, July and September 2020, Eni was notified by
the Public Prosecutor of Milan of several requests for
documentation concerning, in particular: the results of
the inquiries carried out by the internal audit following
an anonymous report relating to a hospitality event
in 2017; some clarifications regarding an invoice
issued by an external law firm; the internal audit
report on relations with a commercial third part; work
commitments of the Chief Services & Stakeholder
Relations Officer relating to certain dates of 2014 and
2016; the documentation concerning the dismissal of
a former Eni employee. All the required documentation
has been produced over time to the Judicial Authority.
On November 9, 2020, the Company was informed of
the notification to Eni’s CEO of a technical assessments
notice, with contextual guarantee information aimed
at allowing participation, through its consultant, in the
scheduled review of the content of a telephone device
seized from a former Eni employee.
Eni SpA – Public Prosecutor of Milan — Insider
trading. In March 2019, a request for extending
certain investigations was notified to Eni’s former
Chief Upstream Officer by the public prosecutor office
of Milan. The commencement of the investigations
was otherwise not notified. The investigations related
to an alleged breach of Italian provisions that regulate
insider
to market-sensitive
information. The breach was allegedly made from
November 1 to December 1, 2016. There were no
more informative details about the alleged breach in
the notified document. This investigation has been
combined into the abovementioned one.
trading and access
(iii)
4. Tax proceedings
(i)
Dispute for omitted payment of a property tax for
some oil offshore platforms located in territorial
waters. Tax disputes are pending with some Italian
local authorities regarding whether Oil & Gas offshore
platforms located within territorial boundaries should
be subject to a property tax in the period 2016-2019.
In 2016 the tax regulatory framework changed due
to enactment of law no. 208/2015, which excluded
from the scope of the property tax the value of
plants instrumental to specific production processes.
In addition, the Finance Department recognized
Management report | Consolidated financial statements | Annex
the
requirements
that offshore platforms met
instrumental plants and
for classification as
consequently are excluded from the scope of the
property tax (resolution no. 3 of June 1, 2016). Based
on this interpretation, Eni did not pay any property
tax for the years 2016-2019. However, the ruling of
the Department of Finance is not binding for local
authorities with taxing powers as recognized by the
Third Instance Court and some of these have issued
assessment notices for 2016-2019. The Company
filed an appeal against these notices. Although Eni
believes that oil platforms located in the territorial sea
should be excluded from the tax base of the property
tax on the base of the interpretation of the law in the
light of the resolution of the Department of Finance,
having assessed the risks of
in pending
disputes, the Company accrued a risk provision, the
amount of which excludes fines since Eni’s conduct
was based on the administrative resolution, as well
as taking into account the reduction of the tax base
excluding the “plant component” as provided by the
law. The proceeding is still ongoing.
Law Decree 124/2019 (enacted with Law 157/2019)
has established, starting from 2020, that marine
platforms are subject to a new property tax that
will replace and supersede any other ordinary local
property tax eventually levied on these plants up to
2019. This rule has therefore sanctioned, starting
from 2020, the existence of the tax requirement for
these plants.
losing
5. Settled proceedings
(i)
(ii)
EniPower SpA. In 2004, the Public Prosecutor of
Milan commenced inquiries into contracts awarded
by Eni’s subsidiary EniPower SpA and as to supplies
provided by other companies to EniPower SpA. It
emerged that illicit payments were made by EniPower
SpA suppliers to a manager of EniPower SpA who
was immediately fired. The Court served EniPower
SpA (the commissioning entity) and Snamprogetti
SpA, now Saipem SpA (contractor of engineering and
procurement services), with notices of investigation
pursuant to Legislative Decree No. 231/01. In August
2007, Eni was notified that the Public Prosecutor
requested the dismissal of EniPower SpA and
Snamprogetti SpA, while the proceeding continues
against former employees of these companies and
employees and managers of the suppliers pursuant
to Legislative Decree No. 231/01. Eni SpA, EniPower
SpA and Snamprogetti SpA presented themselves
as plaintiffs. In September 2011, the Court of Milan
found that nine persons were guilty for the above-
277
mentioned crimes. In addition, they were sentenced
jointly and severally to the payment of all damages
to be assessed through a specific proceeding and
to the reimbursement of the proceeding expenses
incurred by the plaintiffs. The Court also resolved to
dismiss all the criminal indictments for 7 employees,
representing some companies involved as a result
of the statute of limitations, while the trial ended
with an acquittal of 15 defendants. In reference to
the parts involved in the proceeding pursuant to
Legislative Decree No. 231/01, the Court found that
7 companies are responsible for the administrative
offenses ascribed to them, imposing a fine and the
disgorgement of profit. The Court rejected the position
as plaintiffs of the Eni Group companies, reversing the
prior decision made by the Court. This decision may
have been made based on a pronouncement made by
a Third Instance Court that stated the illegitimacy of
the constitution as plaintiffs against any legal entity,
as indicted pursuant to Legislative Decree No. 231/01.
The sentenced parties filed appeal against the above-
mentioned decision. The Appeal Court issued a ruling
that substantially confirmed the first-degree judgment
except for the fact that it ascertained the statute of
limitation with regard to certain defendants. The Third
Instance Court successively annulled the judgment
of the Second Instance Court ascribing the judgment
to another section that, once more, confirmed the
sentence of first instance, excepting the rulings of the
previous appeal sentence not subject to annulment,
including the statute of limitation. The grounds of the
sentence have been filed confirming the motivations
provided by the previous instance Courts. An appeal
was filed at the Third Instance Court solely for the
purposes of the civil proceeding. Following this
ruling by the Court, the criminal proceedings can be
considered concluded.
Eni Rewind SpA – Environmental disaster at
Ferrandina. In January 2018, the Public Prosecutor
of Matera commenced a criminal proceeding against
a manager of the Eni subsidiary Eni Rewind based
on allegations of unlawful handling of waste and
environmental disaster as part of the reclaiming
activities performed at an industrial site (Ferrandina/
Pisticci in the south of Italy). The charge related to an
alleged spillover of effluent in the subsoil and then in
a nearby river due to a damaged pipe dedicated to the
transportation of effluent to a disposal plant owned
by a third party. At the preliminary hearing in October
2019, the Judge dismissed the case on the basis that
the defendant did not commit any crime. The sentence
has become final.
Eni Annual Report 2020
278
(iii) Algeria. On January 15, 2020, the second penal
section of the Court of Appeal of Milan confirmed
the first-degree acquittal sentence against the former
Eni managers in relation to the disputes for the
acquisition of the FCP by Eni, declaring the appeal
inadmissible
proposed by the Public prosecutor
against the Company. On June 12, 2020, the General
Prosecutor filed an appeal in Third Instance Court
for the part of the proceeding relating to Saipem,
not expressly challenging the heads and points of
the judgment relating to the so-called “Eni affair -
FCP”. The Third Instance Court rejected the appeal
pronounced against Saipem, its former managers and
third party accused. In 2012, Eni contacted the US
Department of Justice (DoJ) and the US SEC in order
to voluntarily inform them about this matter and has
kept them informed about the developments in the
Italian Prosecutors’ investigations and proceedings.
Following Eni’s notification, both the US SEC and
the DoJ started their own investigations regarding
this matter. Eni has furnished various information
and documents, including the findings of its internal
reviews, in response to formal and informal requests.
The DoJ notified Eni that based on the information it
currently possessed, closing its investigation of Eni
in connection with Eni’s and Saipem’s businesses
in Algeria without the filing of any charges, ordering
the closure of the proceeding as communicated
to the market on October 1, 2019. In April 2020 Eni,
having informed SEC of the acquittal pronounced on
appeal on January 15, 2020, however concluded the
investigation by the US SEC on Algerian activities of
Saipem SpA, with a transaction that does not involve
the admission of responsibility. The agreement
provided for the payment of USD 19,750,000, which
represents Eni’s part of the tax benefits obtained by
Saipem in relation to the costs incurred by Saipem,
which are non-deductible, in addition to a sum of
compensation for interest equal to USD 4,750,000.
(iv)
Eni Rewind SpA and Versalis SpA – Summon for
alleged environmental damage caused by illegal
waste disposal in the municipality of Melilli (Sicily).
In May 2014, the Municipality of Melilli summoned
Eni’s subsidiaries Eni Rewind and Versalis for the
environmental damage allegedly caused by carrying
out illegal waste disposal activities and unauthorized
landfill. In particular, the plaintiff alleged Eni Rewind
and Versalis were responsible because they produced
the waste and commissioned the waste disposal.
The plaintiff stated that this illegal handling of waste
was part of certain criminal proceedings dating back
to 2001–2003 which would have allegedly traced
the hazardous waste materials back to the Priolo
and Gela industrial sites that are managed by the
above-mentioned Eni’s subsidiaries (in particular, the
waste with high mercury concentration and railway
sleepers no longer in use). Such waste was allegedly
handled and disposed illegally at an unauthorized
landfill owned by a third party. Two subsidiaries of
Eni and a third-party waste company were claimed to
be jointly and severally liable for damage amounting
to €500 million. The third-party company executed
waste disposal at the site. In June 2017, the Judge
accepted all the defensive instances of Eni Rewind and
Versalis, judging the requests of the Municipality to be
inadmissible for lacking right to sue, also considering
the requests to be unfounded or unproved, and
ordered the Municipality to refund the expenses of
the proceeding. In April 2018, the First Instance Judge
rejected the counterclaim filed by the Municipality. An
appeal for revocation is pending at the Third Instance
Court. In July 2020, the appeal to the Third Instance
Court was held. The Judge confirmed the outcome of
the previous degrees of judgment, only ordering the
Company to pay the expenses of the proceeding that
the Company promptly provided.
Assets under concession arrangements
Eni operates under concession arrangements mainly in
the Exploration & Production segment and the Refining &
Marketing business line. In the Exploration & Production
segment, contractual clauses governing mineral concessions,
licenses and exploration permits regulate the access of
Eni to hydrocarbon reserves. Such clauses can differ in
each country. In particular, mineral concessions, licenses
and permits are granted by the legal owners and, generally,
entered into with government entities, State oil companies
and, in some legal contexts, private owners. Pursuant to
the assignment of mineral concessions, Eni sustains all the
operational risks and costs related to the exploration and
development activities and it is entitled to the productions
realized. In respect of the mining concessions received, Eni
pays royalties in accordance with the tax legislation in force in
the country and is required to pay the income taxes deriving
from the exploitation of the concession. In production sharing
agreement and service contracts, realized productions are
defined based on contractual agreements with State oil
companies, which hold the concessions. Such contractual
agreements regulate the recovery of costs incurred for the
exploration, development and operating activities (Cost
Oil) and give entitlement to the own portion of the realized
productions (Profit Oil). In the Refining & Marketing business
line, several service stations and other auxiliary assets of the
distribution service are located in the motorway areas and they
Management report | Consolidated financial statements | Annex 279
are granted by the motorway concession operators following
a public tender for the sub-concession of the supplying of
oil products distribution service and other auxiliary services.
In exchange for the granting of the services described
above, Eni provides to the motorway companies fixed and
variable royalties based on quantities sold. At the end of the
concession period, all non-removable assets are transferred
to the grantor of the concession for no consideration.
Environmental regulations
In the future, Eni will sustain significant expenses in relation
to compliance with environmental, health and safety laws
and regulations and for reclaiming, safety and remediation
works of areas previously used for industrial production and
dismantled sites. In particular, regarding the environmental
risk, management does not currently expect any material
adverse effect upon Eni’s Consolidated Financial Statements,
taking account of ongoing remediation actions, existing
insurance policies and the environmental risk provision
accrued in the Consolidated Financial Statements. However,
management believes that it is possible that Eni may incur
material losses and liabilities in future years in connection
with environmental matters due to: (i) the possibility of
as yet unknown contamination; (ii) the results of ongoing
surveys and other possible effects of statements required
by Legislative Decree 152/2006; (iii) new developments in
environmental regulation (i.e. Law No. 68/2015 on crimes
against the environment and European Directive 2015/2193
on medium combustion plants); (iv) the effect of possible
technological changes relating to future remediation; and (v)
the possibility of litigation and the difficulty of determining
Eni’s liability, if any, as against other potentially responsible
parties with respect to such litigation and the possible
insurance recoveries.
Emission trading
From 2013, the third phase of the European Union
Emissions Trading Scheme (EU-ETS) came in force. The
new phase marked a significant change in the method of
awarding emission allowance from a no-consideration
scheme based on historical emissions to allocation through
auctioning. For the period 2013-2020, the award of free
emission allowances is performed based on European
benchmarks specific to each industrial segment, except for
the thermoelectric sector that is not eligible for allocations
for no consideration. This regulatory scheme implies for
Eni’s plants subject to emission trading a lower assignment
of emission permits compared to the emissions recorded
in the relevant year and, consequently, the necessity of
covering the amounts in excess by purchasing the relevant
emission allowances on the open market. In 2020, the
emissions of carbon dioxide from Eni’s plants were higher
than the free allowances assigned to Eni. Against emissions
of carbon dioxide amounting to approximately 17.32 million
tonnes, Eni was awarded free emission allowances of 6.84
million tonnes, determining a deficit of 10.48 million tonnes.
This deficit was entirely covered through the purchase of
emission allowances in the open market.
Eni Annual Report 2020
280
28 REVENUES AND OTHER INCOME
SALES FROM OPERATIONS
(€ million)
2020
Sales from operations
Products sales and service revenues
Sales of crude oil
Sales of oil products
Sales of natural gas and LNG
Sales of petrochemical products
Sales of other products
Services
Total
Transfer of goods/services
Goods/Services transferred in a specific moment
Goods/Services transferred over a period of time
2019
Sales from operations
Products sales and service revenues
Sales of crude oil
Sales of oil products
Sales of natural gas and LNG
Sales of petrochemical products
Sales of other products
Services
Total
Transfer of goods/services
Goods/Services transferred in a specific moment
Goods/Services transferred over a period of time
2018
Sales from operations
Products sales and service revenues
Sales of crude oil
Sales of oil products
Sales of natural gas and LNG
Sales of petrochemical products
Sales of other products
Services
Total
Transfer of goods/services
Goods/Services transferred in a specific moment
Goods/Services transferred over a period of time
n
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t
c
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d
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P
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n
o
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t
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o
l
p
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t
r
o
P
G
N
L
&
s
a
G
l
a
b
o
G
l
l
i
a
c
m
e
h
C
d
n
a
g
n
i
t
e
k
r
a
M
&
g
n
i
n
fi
e
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r
e
w
o
P
,
e
c
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l
e
s
a
g
i
n
E
s
e
l
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w
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n
e
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e
i
t
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d
n
a
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t
a
r
o
p
r
o
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l
a
t
o
T
6,359
5,362
24,937
7,135
194
43,987
1,969
517
3,505
113
255
6,359
5,896
463
9,024
11,852
20
3,277
36
728
5,000
(2)
364
5,362
24,937
5,239
123
24,639
298
2,741
2,366
2,028
7,135
7,135
10,993
12,369
11,266
3,296
2,515
3,548
43,987
42,987
1,000
19
2
173
194
78
116
10,499
9,230
41,976
7,972
204
69,881
3,505
1,189
5,454
68
283
10,499
9,946
553
17,361
19,615
214
4,088
16
682
41,976
41,727
249
8,881
349
9,230
9,117
113
3,373
2,503
2,096
7,972
7,972
20,866
20,804
17,922
4,110
2,593
3,586
69,881
68,848
1,033
22
6
176
204
86
118
9,943
11,931
46,088
7,684
176
75,822
3,982
1,133
4,554
27
247
18,471
21,266
166
5,539
20
626
11,575
1
355
9,943
11,931
46,088
9,676
267
11,801
130
46,029
59
3,347
2,362
1,975
7,684
7,684
22,453
22,399
19,642
5,574
2,421
3,333
75,822
75,296
526
35
11
130
176
106
70
Management report | Consolidated financial statements | Annex
(€ million)
Revenues associated with contract liabilities at the beginning of the period
Revenues associated with performance obligations totally or partially satisfied in previous years
2020
818
2019
747
10
281
2018
342
11
Sales from operations by industry segment and geographical
area of destination are disclosed in note 35 – Segment
information and information by geographical area, where
revenues for 2019 and 2018 are shown restated following the
design of the new macrostructure of Eni, divided in two General
Departments.
Sales from operations with related parties are disclosed in note
36 – Transactions with related parties.
OTHER INCOME AND REVENUES
(€ million)
Gains from sale of assets and businesses
Other proceeds
2020
10
950
960
2019
152
1,008
1,160
2018
454
662
1,116
include €357 million (€368 million
in
Other proceeds
2019) related to the recovery of the cost share of right-of-
use assets pertaining to partners of unincorporated joint
operations operated by Eni.
Other income and revenues with related parties are disclosed
in note 36 – Transactions with related parties.
29 COSTS
PURCHASE, SERVICES AND OTHER CHARGES
(€ million)
Production costs - raw, ancillary and consumable materials and goods
Production costs - services
Lease expense and other
Net provisions for contingencies
Other expenses
less:
- capitalized direct costs associated with self-constructed assets - tangible assets
- capitalized direct costs associated with self-constructed assets - intangible assets
2020
21,432
9,710
876
349
1,317
33,684
(128)
(5)
33,551
2019
36,272
11,589
1,478
858
879
51,076
(197)
(5)
50,874
2018
41,125
10,625
1,820
1,120
1,130
55,820
(192)
(6)
55,622
Purchase, services and other charges included geological and
geophysical costs of exploration activities for €196 million
(€275 million and €287 million in 2019 and 2018, respectively).
In 2018, the item included operating leases for €872 million.
Costs incurred in connection with research and development
activities expensed through profit and loss, as they did not
meet the requirements to be recognized as long-lived assets,
amounted to €157 million (€194 million and €197 million in
2019 and 2018, respectively).
Royalties on the extraction rights of hydrocarbons amounted
to €673 million (€1,183 million and €1,043 million in 2019 and
2018, respectively).
Additions to provisions net of reversal of unused provisions
mainly related to net additions for litigations amounting
to €76 million (net additions of €60 million and €101
million in 2019 and 2018, respectively) and net reversals
for environmental liabilities amounting to €15 million (net
additions of €329 million and €266 million in 2019 and
2018, respectively). More information is provided in note
20 – Provisions. Net additions to provisions by segment are
disclosed in note 35 – Segment information and information
by geographical area.
Information about leases is disclosed in note 12 – Right-of-use
assets and lease liabilities.
Eni Annual Report 2020
282
PAYROLL AND RELATED COSTS
(€ million)
Wages and salaries
Social security contributions
Cost related to employee benefit plans
Other costs
less:
- capitalized direct costs associated with self-constructed assets - tangible assets
- capitalized direct costs associated with self-constructed assets - intangible assets
2020
2,193
458
102
239
2,992
(118)
(11)
2,863
2019
2,417
449
85
213
3,164
(152)
(16)
2,996
2018
2,409
448
220
170
3,247
(142)
(12)
3,093
Other costs comprised provisions for redundancy incentives
of €105 million (€45 million and €37 million in 2019 and 2018,
respectively) and costs for defined contribution plans of €96
million (€99 million and €95 million in 2019 and 2018, respectively).
Cost related to employee benefit plans are described in note 21
– Provisions for employee benefits.
Costs with related parties are disclosed in note 36 – Transactions
with related parties.
AVERAGE NUMBER OF EMPLOYEES
The Group average number and breakdown of employees by category is reported below:
(number)
Senior managers
Junior managers
Employees
Workers
2020
2019
2018
Subsidiaries Joint operations
Subsidiaries Joint operations
Subsidiaries Joint operations
993
9,280
15,995
4,780
31,048
17
73
349
287
726
1,014
9,267
15,945
4,910
31,136
16
77
361
287
741
999
9,095
16,220
5,259
31,573
17
84
361
283
745
The average number of employees was calculated as the
average between the number of employees at the beginning
and the end of the period. The average number of senior
managers included managers employed in foreign countries,
whose position is comparable to a senior manager’s status.
LONG-TERM MONETARY INCENTIVE PLAN FOR THE MANAGERS OF ENI
On April 13, 2017 and on May 13, 2020, the Shareholders
Meeting approved the Long-Term Monetary Incentive Plan
2017-2019 and 2020-2022 and empowered the Board of
Directors to execute the Plan by authorizing it to dispose
up to a maximum of 11 million of treasury shares in service
of the plan 2017-2019 and 20 million in service of the plan
2020-2022.
The Long-Term Monetary Incentive plans provide for three
annual awards (2017, 2018 and 2019 and 2020, 2021 and
2022, respectively) and are intended for the Chief Executive
Officer of Eni and for the managers of Eni and its subsidiaries
who qualify as “senior managers deemed critical for the
business”, selected among those who are in charge of tasks
directly linked to the Group results or of strategic clout to the
business. The Plans provide the granting of Eni shares for no
consideration to eligible managers after a three-year vesting
period under the condition that they would remain in office
until vesting. Considering that these incentives fall within the
category of employee compensation, in accordance with IFRS,
the cost of the plans is determined based on the fair value of
the financial instruments awarded to the beneficiaries and the
number of shares that are granted at the end of the vesting
period; the cost is accruing along the vesting period.
With reference to the 2017-2019 Plan, the number of shares
that will be granted at the end of the vesting period will
depend: (i) for a 50%, on the market condition in terms of
Total Shareholder Return (TSR) of the Eni share compared to
the TSR of the FTSE Mib index of the Italian Stock Exchange
Management report | Consolidated financial statements | Annex
283
Market, and to a group of Eni’s competitors (“Peer Group”)30
and the TSR of their corresponding stock exchange market31;
(ii) for a 50%, on the growth in the Net Present Value (NPV) of
proved reserves benchmarked against the Peer Group.
With reference to the 2020-2022 Plan, the number of shares
that will be granted at the end of the vesting period will depend:
(i) for 25% on a market objective measured as the difference
between the Total Shareholder Return (TSR) of Eni Shares
and the TSR of the FTSE Mib Index of Italian Stock Exchange
on a three-year period, adjusted with Eni’s correlation index,
compared with similar differences for each company of the
Eni’s group of competitors (Peer Group); (ii) for 20% on a relative
parameter represented by an industrial objective measured in
terms of annual unit value ($/boe) of the Net Present Value of
Proven Reserves (NPV) compared with the analogous value of
each company in the Peer Group, with a final outcome equal to
the average annual results over the three-year period; (iii) for
20% on an absolute parameter represented by an economic-
financial objective measured as the Organic Free Cash Flow
accumulated in the three-year reference period, compared
to the equivalent accumulated value provided for in the first
three years of the Strategic Plan approved by the Board of
Directors in the year of award and kept unchanged during
the performance period. The verification of CFC targets is
conducted net of exogenous variables, using a gap-analysis
approach approved by the Remuneration Committee, in order
to assess the effective corporate performance deriving from
the management action; (iv) for the remaining 35% on an
environmental sustainability and energy transition objective in
a three-year period consisting of three absolute objectives as
follows: (a) for 15% to a decarbonization objective measured
in terms of CO2eq. emissions related to Eni operated upstream
production (tCO2eq./kboe) at the end of the three-year period
compared with the same value expected in the third year of
the Strategic Plan approved by the Board of Directors in the
year of award and kept unchanged during the performance
period; (b) for 10% on an energy transition objective measured
in megawatts (MW) of installed capacity of power generation
from renewable sources, at the end of the three-year
performance period, compared with the same value expected
in the third year of the Strategic Plan approved by the Board
of Directors in the year of award and kept unchanged in
the performance period; (c) for 10% on a circular economy
objective measured in terms of progress of three important
biofuel projects at the end of the three-year performance
period, compared with the progress expected in the third year
of the Strategic Plan approved by the Board of Directors in the
year of award and kept unchanged during the performance
period.
Depending on the performance of the parameters mentioned
above, the number of shares that will vest after three years may
range between 0% and 180% of the initial award. Furthermore,
50% of the shares that will eventually vest is subject to a lock-
up clause of one year after the vesting date.
The number of shares awarded at the grant date was: (i)
2,922,749 shares in 2020, with a weighted average fair value of
€4.67 per share; (ii) 1,759,273 shares in 2019, with a weighted
average fair value of €9.88 per share; (iii) 1,517,975 shares in
2018, with a weighted average fair value of €11.73 per share.
The estimation of the fair value was calculated by adopting
specific valuation
the different
performance parameters provided by the plan (the stochastic
method for the market condition of the plan and the Black-
Scholes model for the component related to the NPV of the
reserves, for the 2017-2019 Plan; the stochastic method for
the 2020-2022 Plan), taking into account the fair value of
the Eni share at the grant date (between €5.885 and €8.303
depending on the grant date in relation to the 2020 award;
€13.714 per share in 2019; €14.246 per share in 2018), reduced
by dividends expected along the vesting period (between 7.0%
and 10.0% of the share price at vesting date in 2020; 6.1% of
the share price at vesting date in 2019; 5.8% of the share price
at vesting date in 2018), considering the volatility of the stock
(between 41% and 44% in relation to the 2020 award; 19%
for attribution 2019; 20% for attribution 2018), the forecasts
for the performance parameters, as well as the lower value
attributable to the shares considering the lock-up period at the
end of the vesting period.
In 2020, the costs related to the long-term monetary incentive
plan, recognized as a component of the payroll cost, amounted
to €7 million (€9 million in 2019; €5 million in 2018) with a
contra-entry to equity reserves.
techniques
regarding
COMPENSATION OF KEY MANAGEMENT PERSONNEL
Compensation,
including contributions and collateral
expenses, of personnel holding key positions in planning,
directing and controlling the Eni Group subsidiaries, including
executive and non-executive officers, general managers and
managers with strategic responsibilities in office during the
year consisted of the following:
(30) The group consists of the following oil companies: Apache, BP, Chevron, ConocoPhillips, Equinor, ExxonMobil, Marathon Oil, Occidental, Royal Dutch Shell and Total.
(31) The performance condition connected with the TSR in accordance with the international accounting standards represents a so-called market condition.
Eni Annual Report 2020 284
(€ million)
Wages and salaries
Post-employment benefits
Other long-term benefits
Indemnities upon termination of employment
2020
2019
2018
30
2
12
21
65
28
2
12
12
54
27
2
10
39
COMPENSATION OF DIRECTORS AND STATUTORY AUDITORS
Compensation of Directors amounted to €7.54 million, €9.2
million and €9.6 million in 2020, 2019 and 2018, respectively.
Compensation of Statutory Auditors amounted to €0.571
million, €0.613 million and €0.604 million in 2020, 2019 and
2018, respectively.
Compensation included emoluments and social security
benefits due for the office as Director or Statutory Auditor
held at the parent company Eni SpA or other Group
subsidiaries, which was recognized as a cost to the Group,
even if not subject to personal income tax.
30 FINANCE INCOME (EXPENSE)
(€ million)
Finance income (expense)
Finance income
Finance expense
Net finance income (expense) from financial assets held for trading
Income (expense) from derivative financial instruments
The analysis of finance income (expense) was as follows:
(€ million)
Finance income (expense) related to net borrowings
Interest and other finance expense on ordinary bonds
Net finance income (expense) on financial assets held for trading
Interest and other expense due to banks and other financial institutions
Interest on lease liabilities
Interest from banks
Interest and other income on financial receivables and securities held for non-operating purposes
Exchange differences
Income (expense) from derivative financial instruments
Other finance income (expense)
Interest and other income on financing receivables and securities held for operating purposes
Capitalized finance expense
Finance expense due to the passage of time (accretion discount)(a)
Other finance income (expense)
(a) The item related to the increase in provisions for contingencies that are shown at present value in non-current liabilities.
2020
2019
2018
3,531
(4,958)
31
351
(1,045)
3,087
(4,079)
127
(14)
(879)
3,967
(4,663)
32
(307)
(971)
2020
2019
2018
(517)
31
(102)
(347)
10
12
(913)
(460)
351
97
73
(190)
(3)
(23)
(1,045)
(618)
127
(122)
(378)
21
8
(962)
250
(14)
112
93
(255)
(103)
(153)
(879)
(565)
32
(120)
18
8
(627)
341
(307)
132
52
(249)
(313)
(378)
(971)
Information about leases is disclosed in note 12 – Right-of-
use assets and lease liabilities.
The analysis of derivative financial income (expense) is
disclosed in note 23 – Derivative financial instruments and
hedge accounting.
Finance income (expense) with related parties are disclosed
in note 36 – Transactions with related parties.
Management report | Consolidated financial statements | Annex
285
31 INCOME (EXPENSE) FROM INVESTMENTS
SHARE OF PROFIT (LOSS) OF EQUITY-ACCOUNTED INVESTMENTS
More information is provided in note 15 – Investments.
Share of profit or loss of equity accounted investments
by industry segment is disclosed in note 35 – Segment
information and information by geographical area.
OTHER GAIN (LOSS) FROM INVESTMENTS
(€ million)
Dividends
Net gain (loss) on disposals
Other net income (expense)
2020
150
(75)
75
2019
247
19
15
281
2018
231
22
910
1,163
Dividend income primarily related to Nigeria LNG Ltd for €113
million and to Saudi European Petrochemical Co for €28 million
(€186 million, €46 million in 2019 and €187 million and €35
million in 2018).
In 2018, other net income included a gain of €889 million deriving
from the business combination between Eni Norge AS and
Point Resources AS, with the establishment of joint venture the
Vår Energi AS, determined by the difference between the book
value of the investment corresponding to the fair value of the
combined net assets and the book value of the net assets sold.
32 INCOME TAXES
(€ million)
Current taxes:
- Italian subsidiaries
- subsidiaries of the Exploration & Production segment - outside Italy
- other subsidiaries - outside Italy
Net deferred taxes:
- Italian subsidiaries
- subsidiaries of the Exploration & Production segment - outside Italy
- other subsidiaries - outside Italy
Current income taxes payable by Italian subsidiaries referred to
foreign taxes for €169 million.
The reconciliation between
the statutory
tax charge
(€ million)
Profit (loss) before taxation
Tax rate (IRES) (%)
Statutory corporation tax charge (credit) on profit or loss
Increase (decrease) resulting from:
- higher tax charges related to subsidiaries outside Italy
- impact pursuant to the write-down of deferred tax assets
- impact pursuant to foreign tax effects of italian entities
- Italian regional income tax (IRAP)
- effect due to the tax regime provided for intercompany dividends
- tax effects related to previous years
- other adjustments
Effective tax charge
2020
2019
2018
199
1,517
84
1,800
672
73
105
850
2,650
347
4,729
152
5,228
599
(172)
(64)
363
5,591
301
4,906
163
5,370
130
497
(27)
600
5,970
calculated by applying the Italian statutory tax rate of 24%
(same amount in 2019 and 2018) and the effective tax
charge is the following:
2020
(5,978)
24.0
(1,435)
1,980
1,785
108
107
96
(30)
39
4,085
2,650
2019
5,746
24.0
1,379
2,934
938
105
25
65
147
(2)
4,212
5,591
2018
10,107
24.0
2,426
3,096
261
46
50
47
(24)
68
3,544
5,970
Eni Annual Report 2020
286
The higher tax charges at non-Italian subsidiaries related to the
Exploration & Production segment for €1,777 million (€2,934
million and €3,014 million in 2019 and in 2018, respectively).
In 2020, the Group incurred income taxes, despite a pre-tax
loss of €5,978 million, due to the economic crisis caused by
the COVID-19 having an enduring impact on the hydrocarbons
demand and by the revision of the long-term prices and of
future cash flows in Eni’s activities. The lower projections of
future taxable income had two impacts: the recognition of
tax charges due to a write-down of deferred tax assets and a
reduced capacity to recognize deferred taxes on the losses of
the period.
33 EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per ordinary share are calculated by
dividing net profit (loss) for the period attributable to Eni’s
shareholders by the weighted average number of ordinary
shares issued and outstanding during the period, excluding
treasury shares.
Diluted earnings (loss) per share are calculated by dividing the
net profit (loss) of the period attributable to Eni’s shareholders
by the weighted average number of shares fully-diluted,
excluding treasury shares, and including the number of
potential shares to be issued in connection with stock-based
compensation plans.
As of December 31, 2020, the shares that could be potentially
issued related the estimation of new shares that will vest in
connection with the 2017-2019 and 2020-2022 long-term
monetary incentive plans.
Reconciliation of the weighted average number of shares used
for the calculation for both basic and diluted earnings (loss)
per share was as follows:
(€ million)
Weighted average number of shares used for basic earnings (loss) per share
Potential shares to be issued for ILT incentive plan
2020
2019
2018
3,572,549,651 3,592,249,603 3,601,140,133
6,465,718
2,251,406
2,782,584
Weighted average number of shares used for diluted earnings (loss) per share
3,579,015,369 3,594,501,009 3,603,922,717
Eni’s net profit (loss)
Basic earnings (loss) per share
Diluted earnings (loss) per share
(€ million)
(8,635)
(€ per share)
(€ per share)
(2.42)
(2.42)
34 EXPLORATION FOR EVALUATION OF OIL & GAS RESOURCES
(€ million)
Revenues related to exploration activity and evaluation
Exploration activity and evaluation costs:
- write-off of exploration and evaluation costs
- costs of geological and geophysical studies
Exploration expense for the year
Intangible assets: proved and unproved exploration licence and leasehold property acquisition costs
Tangible assets: capitalized exploration and evaluation costs
Total tangible and intangible assets
Provision for decommissioning related to exploration activity and evaluation
Exploration expenditure (net cash used in investing activivties)
Geological and geophysical costs (cash flow from operating activities)
Total exploration effort
2020
314
196
510
888
1,341
2,229
93
283
196
479
148
0.04
0.04
2019
34
214
275
489
1,031
1,563
2,594
109
586
275
861
4,126
1.15
1.15
2018
17
93
287
380
1,081
1,267
2,348
77
463
287
750
Management report | Consolidated financial statements | Annex
35 SEGMENT INFORMATION AND INFORMATION BY GEOGRAPHIC AREA
287
SEGMENT INFORMATION
is based on two new General
Effective July 1, 2020, Eni’s management redesigned the
macro-organizational structure of the Group, in line with
its new long-term strategy, disclosed in February 2020 to
the market and aimed at transforming the Company into
a leader in the production and marketing of decarbonized
energy products.
The new organization
Departments:
Natural Resources, to build up the value of Eni’s Oil & Gas
upstream portfolio, with the objective of reducing its carbon
footprint by scaling up energy efficiency and expanding
production in the natural gas business, and its position in the
wholesale market. Furthermore, it will focus its actions on the
development of carbon capture and compensation projects.
The General Department will incorporate the Company’s Oil
& Gas exploration, development and production activities,
natural gas wholesale via pipeline and LNG. In addition, it will
include forests conservation (REDD+) and carbon storage
projects. The company Eni Rewind (environmental activities),
will also be consolidated in this General Department.
Energy Evolution will focus on the evolution of the businesses
of power generation, transformation and marketing of
products from fossil to bio, blue and green. In particular,
it will focus on growing power generation from renewable
energy and biomethane, it will coordinate the bio and circular
evolution of the Company’s refining system and chemical
business, and it will further develop Eni’s retail portfolio,
providing increasingly more decarbonized products for
mobility, household consumption and small enterprises.
The General Department will incorporate the activities of
power generation from natural gas and renewables, the
refining and chemicals businesses, Retail Gas&Power and
mobility Marketing. The companies Versalis (chemical
products) and Eni gas e luce will also be consolidated in this
General Department.
In re-designing the Group’s segment information for financial
reporting purposes, the management evaluated that the
components of the Company whose operating results are
regularly reviewed by the Chief Operating Decision Maker
(CEO) to make decisions about the allocation of resources
and to assess performances would continue being the
single business units which are comprised in the two newly-
established General Departments, rather than the two groups
themselves. Therefore, in order to comply with the provisions
of the international reporting standard that regulates the
segment reporting (IFRS 8), the new reportable segments
of Eni, substantially confirming the pre-existing setup, are
identified as follows:
research, development and
Exploration & Production:
production of oil, condensates and natural gas, forestry
conservation (REDD+) and CO2 capture and storage projects.
Global Gas & LNG Portfolio (GGP): supply and sale of
wholesale natural gas by pipeline, international transport
and purchase and marketing of LNG. It includes gas trading
activities finalized to hedging and stabilizing the trade margins,
as well as optimising the gas asset portfolio.
Refining & Marketing and Chemicals: supply, processing,
distribution and marketing of fuels and chemicals. The
results of the Chemicals segment were aggregated with
the Refining & Marketing performance in a single reportable
segment, because these two operating segments have similar
economic returns. It comprises the activities of trading oil
and products with the aim to execute the transactions on the
market in order to balance the supply and stabilize and cover
the commercial margins.
Eni gas e luce, Power & Renewables: retail sales of gas,
electricity and related services, production and wholesale
sales of electricity from thermoelectric and renewable plants.
It includes trading activities of CO2 emission certificates and
forward sale of electricity with a view to hedging/optimising
the margins of the electricity.
Corporate and Other activities: includes the main business
support functions, in particular holding, central treasury, IT,
human resources, real estate services, captive insurance
activities, research and development, new technologies,
the environmental activity
business digitalization and
developed by the subsidiary Eni Rewind.
Segment information presented to the CEO (i.e. the Chief
Operating Decision Maker, ex IFRS 8) includes: revenues,
operating profit and directly attributable assets and liabilities.
According
international
requirements of
accounting standards regarding segment information in
the event of a reorganization of business segments, the
segment information for the 2019 and 2018 comparative
periods have been restated for homogeneous comparison
as follows.
the
the
to
Eni Annual Report 2020 288
As reported in 2019:
n
o
i
t
c
u
d
o
r
P
&
n
o
i
t
a
r
o
l
p
x
E
r
e
w
o
P
&
s
a
G
23,572
50,015
(13,073)
(11,855)
10,499
7,417
68,915
20,164
38,160
699
9,176
7,852
25,744
55,690
(15,801)
(12,581)
9,943
10,214
63,051
18,110
43,109
629
9,989
8,314
(€ million)
2019
Sales from operations including intersegment sales
Less: intersegment sales
Sales from operations
Operating profit
Identifiable assets(a)
Identifiable liabilities(a)
2018
Sales from operations including intersegment sales
Less: intersegment sales
Sales from operations
Operating profit
Identifiable assets(a)
Identifiable liabilities(a)
(a) Include assets/liabilities directly associated with the generation of operating profit.
As restated:
g
n
i
t
e
k
r
a
M
&
g
n
n
fi
e
R
i
l
i
s
a
c
m
e
h
C
d
n
a
23,334
(2,317)
21,017
(854)
12,336
4,599
25,216
(2,622)
22,594
(380)
11,692
4,319
s
e
i
t
i
v
i
t
c
a
r
e
h
t
O
d
n
a
e
t
a
r
o
p
r
o
C
1,681
(1,476)
205
(710)
1,860
3,927
1,589
(1,413)
176
(691)
1,171
4,072
(€ million)
2019
Sales from operations including intersegment sales
Less: intersegment sales
Sales from operations
Operating profit
Identifiable assets(a)
Identifiable liabilities(a)
2018
Sales from operations including intersegment sales
Less: intersegment sales
Sales from operations
Operating profit
Identifiable assets(a)
Identifiable liabilitie(a)
(a) Include assets/liabilities directly associated with the generation of operating profit.
G
N
L
&
s
a
G
l
a
b
o
G
l
o
i
l
o
f
t
r
o
P
11,779
(2,549)
9,230
431
4,092
3,836
14,807
(2,876)
11,931
387
4,642
4,089
n
o
i
t
c
u
d
o
r
P
&
n
o
i
t
a
r
o
l
p
x
E
23,572
(13,073)
10,499
7,417
68,915
20,164
25,744
(15,801)
9,943
10,214
63,051
18,110
g
n
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t
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k
r
a
M
&
g
n
n
fi
e
R
i
i
l
s
a
c
m
e
h
C
d
n
a
42,360
(384)
41,976
(682)
13,569
6,272
46,483
(395)
46,088
(501)
13,099
6,201
r
e
w
o
P
,
e
c
u
l
e
s
a
g
i
n
E
l
s
e
b
a
w
e
n
e
R
&
8,448
(476)
7,972
74
4,068
2,380
8,218
(534)
7,684
340
4,008
2,364
r
e
h
t
O
d
n
a
e
t
a
r
o
p
r
o
C
s
e
i
t
i
v
i
t
c
a
1,676
(1,472)
204
(688)
1,643
3,890
1,588
(1,412)
176
(668)
1,103
4,051
s
t
fi
o
r
p
p
u
o
r
g
a
r
t
n
i
f
o
s
t
n
e
m
t
s
u
j
d
A
(120)
(492)
(141)
211
(420)
(275)
s
t
fi
o
r
p
p
u
o
r
g
a
r
t
n
i
f
o
s
t
n
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m
t
s
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j
d
A
(120)
(492)
(141)
211
(420)
(275)
l
a
t
o
T
69,881
6,432
91,795
36,401
75,822
9,983
85,483
34,540
l
a
t
o
T
69,881
6,432
91,795
36,401
75,822
9,983
85,483
34,540
Management report | Consolidated financial statements | Annex
Segment Information:
(€ million)
2020
Sales from operations including intersegment sales
Less: intersegment sales
Sales from operations
Operating profit
Net provisions for contingencies
Depreciation and amortization
Impairments of tangible and intangible assets and right-of-use assets
Reversals of tangible and intangible assets
Write-off of tangible and intangible assets
Share of profit (loss) of equity-accounted investments
Identifiable assets(a)
Unallocated assets(b)
Equity-accounted investments
Identifiable liabilities(a)
Unallocated liabilities(b)
2019
Sales from operations including intersegment sales
Less: intersegment sales
Sales from operations
Operating profit
Net provisions for contingencies
Depreciation and amortization
Impairments of tangible and intangible assets and right-of-use assets
Reversals of tangible and intangible assets
Write-off of tangible and intangible assets
289
l
a
t
o
T
43,987
(3,275)
349
(7,304)
(3,855)
672
(329)
(1,733)
s
t
fi
o
r
p
p
u
o
r
g
a
r
t
n
i
f
o
s
t
n
e
m
t
s
u
j
d
A
33
45
32
(402)
79,604
30,044
6,749
G
N
L
&
s
a
G
l
a
b
o
G
l
o
i
l
o
f
t
r
o
P
n
o
i
t
c
u
d
o
r
P
&
n
o
i
t
a
r
o
l
p
x
E
g
n
i
t
e
k
r
a
M
&
g
n
n
fi
e
R
i
i
l
s
a
c
m
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h
C
d
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a
r
e
w
o
P
,
e
c
u
l
e
s
a
g
i
n
E
l
s
e
b
a
w
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n
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R
&
r
e
h
t
O
d
n
a
e
t
a
r
o
p
r
o
C
s
e
i
t
i
v
i
t
c
a
13,590
7,051
25,340
7,536
1,559
(7,231)
(1,689)
(403)
(401)
(1,365)
6,359
(610)
98
(6,273)
(2,170)
282
(322)
(980)
5,362
24,937
7,135
(332)
(2,463)
64
(125)
118
(575)
(2)
(1,605)
334
(15)
(363)
660
(2)
(217)
(56)
55
(7)
6
59,439
4,020
10,716
4,387
194
(563)
26
(146)
(22)
1
(381)
1,444
2,680
259
17,501
3,785
2,605
5,460
217
988
2,426
3,316
(83)
32,405
39,750
23,572
11,779
42,360
8,448
1,676
(13,073)
(2,549)
(384)
(476)
(1,472)
10,499
9,230
41,976
7,972
7,417
97
(7,060)
(1,347)
130
(292)
431
234
(124)
5
(682)
276
(620)
(1,127)
205
(6)
(63)
74
(5)
(190)
(83)
41
(1)
10
204
(688)
307
(144)
(13)
1
(1)
(21)
69,881
6,432
858
(120)
(51)
32
(8,106)
(2,570)
382
(300)
(88)
Capital expenditure in tangible and intangible assets and prepaid right-of-use assets
3,472
11
771
293
107
(10)
4,644
Share of profit (loss) of equity-accounted investments
7
(21)
Identifiable assets(a)
Unallocated assets(b)
Equity-accounted investments
Identifiable liabilities(a)
Unallocated liabilities(b)
68,915
4,092
13,569
4,068
1,643
(492)
91,795
4,108
346
20,164
3,836
3,107
6,272
141
2,380
1,333
3,890
31,645
9,035
(141)
36,401
39,139
Capital expenditure in tangible and intangible assets and prepaid right-of-use assets
6,996
15
933
357
89
(14)
8,376
2018
Sales from operations including intersegment sales
Less: intersegment sales
Sales from operations
Operating profit
Net provisions for contingencies
Depreciation and amortization
Impairments of tangible and intangible assets
Reversals of tangible and intangible assets
Write-off of tangible and intangible assets
Share of profit (loss) of equity-accounted investments
Identifiable assets(a)
Unallocated assets(b)
Equity-accounted investments
Identifiable liabilities(a)
Unallocated liabilities(b)
25,744
14,807
46,483
8,218
1,588
(15,801)
(2,876)
(395)
(534)
(1,412)
9,943
11,931
46,088
7,684
176
340
(668)
10,214
235
(6,152)
(1,025)
299
(97)
158
387
53
(226)
(6)
79
(1)
(2)
(501)
274
(399)
(193)
(2)
(67)
(182)
(50)
48
11
63,051
4,642
13,099
4,008
4,972
355
275
139
18,110
4,089
6,201
2,364
579
(59)
(18)
(168)
1,103
1,303
4,051
75,822
9,983
1,120
211
(21)
30
(6,988)
(1,292)
426
(100)
(68)
(420)
85,483
32,890
7,044
(275)
34,540
32,760
Capital expenditure in tangible and intangible assets
(a) Include assets/liabilities directly associated with the generation of operating profit.
(b) Include assets/liabilities not directly associated with the generation of operating profit.
7,901
26
877
238
94
(17)
9,119
Eni Annual Report 2020
290
FINANCIAL INFORMATION BY GEOGRAPHICAL AREA
Identifiable assets and investments by geographical area of origin
(€ million)
2020
Identifiable assets(a)
Capital expenditure in tangible and intangible assets
and prepaid right-of-use assets
2019
Identifiable assets(a)
Capital expenditure in tangible and intangible assets
and prepaid right-of-use assets
2018
Identifiable assets(a)
Capital expenditure in tangible and intangible assets
(a) Include assets directly associated with the generation of operating profit.
n
a
e
p
o
r
u
E
n
o
i
n
U
r
e
h
t
O
y
l
a
t
I
e
p
o
r
u
E
f
o
t
s
e
R
s
a
c
i
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e
m
A
a
i
s
A
a
c
i
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f
A
s
a
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r
a
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h
t
O
l
a
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T
17,228
4,159
3,174
4,485
16,360
33,341
857
79,604
1,198
152
119
441
1,267
1,443
24
4,644
19,346
7,237
1,151
5,230
17,898
40,021
912
91,795
1,402
306
9
1,017
1,685
3,902
55
8,376
18,646
1,424
7,086
267
1,031
538
4,546
534
16,910
36,155
1,109
85,483
1,782
4,533
41
9,119
Sales from operations by geographical area of destination
(€ million)
Italy
Other European Union
Rest of Europe
Americas
Asia
Africa
Other areas
2020
14,717
9,508
8,191
2,426
4,182
4,842
121
2019
23,312
18,567
6,931
3,842
8,102
8,998
129
2018
25,279
20,408
7,052
5,051
9,585
8,246
201
43,987
69,881
75,822
Following the exit from the European Union in 2020, revenues
relating to the United Kingdom of €4,410 million for 2020
are included in the geographical area “Rest of Europe” while
€6,856 million for 2019 and €6,286 million for 2018 are
included in the geographical area “European Union”.
36 TRANSACTIONS WITH RELATED PARTIES
In the ordinary course of its business, Eni enters into
transactions regarding:
(a) Purchase/supply of goods and services and the provision
of financing to joint ventures, associates and non-
consolidated subsidiaries;
(b) Purchase/supply of goods and services to entities
controlled by the Italian Government;
(c) Purchase/supply of goods and services to companies
related to Eni SpA through members of the Board
of Directors. Most of these transactions are exempt
from the application of the Eni
internal procedure
interests of Directors and
“Transactions
Statutory Auditors and transactions with related parties”
pursuant to the Consob Regulation, since they relate to
ordinary transactions conducted at market or standard
conditions, or because they fall below the materiality
involving
threshold provided for by the procedure. The solely non-
exempted transactions, that were positively examined
and valued in application of the procedure, concerned: (i)
the revision of a service contract connected to network
infrastructures with Vodafone Italia SpA; (ii) the renewal
of a contract for the development of editorial content of
World Energy magazine with Istituto Affari Internazionali.
Both the counterparts are related to Eni SpA through two
members of the Board of Directors;
(d) contributions to non-profit entities correlated to Eni with the
aim to develop solidarity, culture and research initiatives. In
particular these related to: (i) Eni Foundation, established
by Eni as a non-profit entity with the aim of pursuing
exclusively solidarity initiatives in the fields of social
assistance, health, education, culture and environment,
as well as scientific and technological research; and (ii)
Management report | Consolidated financial statements | Annex
291
Eni Enrico Mattei Foundation, established by Eni with
the aim of enhancing, through studies, research and
training initiatives, knowledge enrichment in the fields of
economics, energy and environment, both at the national
and international level.
Transactions with related parties were conducted in the
interest of Eni companies and, with exception of those with
entities whose aim is to develop charitable, cultural and
research initiatives, are related to the ordinary course of Eni’s
business.
Investments
joint arrangements and
associates as of December 31, 2020 are presented separately
in the annex “List of companies owned by Eni SpA as of
December 31, 2020”.
in subsidiaries,
TRANSACTIONS AND BALANCES WITH RELATED PARTIES
December 31, 2020
2020
(€ million)
Receivables
and other
assets
Payables
and other
liabilities
Guarantees
Revenues
Costs
Other operating
(expense)
income
Name
Joint ventures and associates
Agiba Petroleum Co
Angola LNG Supply Services Llc
Coral FLNG SA
Gas Distribution Company of Thessaloniki - Thessaly SA
Saipem Group
Karachaganak Petroleum Operating BV
Mellitah Oil & Gas BV
Petrobel Belayim Petroleum Co
Societa Oleodotti Meridionali SpA
Société Centrale Electrique du Congo SA
Unión Fenosa Gas SA
Vår Energi AS
Other(*)
Unconsolidated entities controlled by Eni
Eni BTC Ltd
Industria Siciliana Acido Fosforico - ISAF SpA (in liquidation)
Other
Entities controlled by the Government
Enel Group
Italgas Group
Snam Group
Terna Group
GSE - Gestore Servizi Energetici
Other(*)
Other related parties
Groupement Sonatrach – Agip «GSA»
and Organe Conjoint des Opérations «OC SH/FCP»
(*) Each individual amount included herein was lower than €50 million.
6
6
87
25
54
65
3
48
11
39
72
52
13
254
141
250
467
399
4
190
24
165
1,079
509
57
456
1
49
18
2
20
57
9
85
66
416
1,794
2,267
306
112
5
117
533
104
1
189
46
52
8
400
1
87
1
23
24
1,818
165
177
211
62
37
49
701
4
52
165
1
10
176
2,443
11
4
15
321
51
3
45
152
586
20
857
2
19
201
52
350
816
156
556
15
1,126
167
3,439
9
9
(3)
(118)
(121)
3,448
(121)
86
8
40
134
551
714
1,012
225
309
63
2,874
53
262
1,021
2,575
2,443
1,199
6,637
13
Eni Annual Report 2020
292
Name
Joint ventures and associates
Agiba Petroleum Co
Angola LNG Supply Services Llc
Coral FLNG SA
Gas Distribution Company of Thessaloniki - Thessaly SA
Saipem Group
Karachaganak Petroleum Operating BV
Mellitah Oil & Gas BV
Petrobel Belayim Petroleum Co
Unión Fenosa Gas SA
Vår Energi AS
Other(*)
Unconsolidated entities controlled by Eni
Eni BTC Ltd
Industria Siciliana Acido Fosforico - ISAF SpA (in liquidation)
Other
Entities controlled by the Government
Enel Group
Italgas Group
Snam Group
Terna Group
GSE - Gestore Servizi Energetici
Other
Other related parties
Groupement Sonatrach – Agip «GSA»
and Organe Conjoint des Opérations «OC SH/FCP»
(*) Each individual amount included herein was lower than €50 million.
December 31, 2019
2019
(€ million)
Receivables
and other
assets
Payables
and other
liabilities
Guarantees
Revenues
Costs
Other operating
(expense)
income
3
15
75
33
57
50
8
32
106
379
101
5
106
485
185
3
278
40
26
10
542
2
75
71
13
227
198
171
1,130
1
143
29
1,983
1
25
26
2,009
284
154
229
45
24
19
755
3
74
181
1,168
510
57
482
1
2,399
180
3
14
197
2,596
229
53
503
1,134
365
1,590
6
1,481
87
5,448
18
18
5,466
602
677
1,208
223
468
35
3,213
37
457
71
27
1
3
7
1
63
112
285
14
6
20
305
105
1
71
171
549
12
909
5
33
1,104
2,841
2,596
1,252
9,173
63
(64)
(1)
(1)
(8)
17
11
20
19
Management report | Consolidated financial statements | Annex
December 31, 2018
2018
(€ million)
Receivables
and other
assets
Payables
and other
liabilities
Guarantees
Revenues
Costs
Other operating
(expense)
income
293
Name
Joint ventures and associates
Agiba Petroleum Co
Angola LNG Supply Services Llc
Coral FLNG SA
Gas Distribution Company of Thessaloniki - Thessaly SA
Saipem Group
Karachaganak Petroleum Operating BV
Mellitah Oil & Gas BV
Petrobel Belayim Petroleum Co
Unión Fenosa Gas SA
Vår Energi AS
Other(*)
Unconsolidated entities controlled by Eni
Eni BTC Ltd
Industria Siciliana Acido Fosforico - ISAF SpA (in liquidation)
Other
Entities controlled by the Government
Enel Group
Italgas Group
Snam Group
Terna Group
GSE - Gestore Servizi Energetici
Other
Other related parties
Groupement Sonatrach – Agip «GSA»
and Organe Conjoint des Opérations «OC SH/FCP»
(*) Each individual amount included herein was lower than €50 million.
joint ventures,
The most significant transactions with
associates and unconsolidated subsidiaries concerned:
Eni’s share of expenses incurred to develop oil fields from
Agiba Petroleum Co, Karachaganak Petroleum Operating
BV, Mellitah Oil & Gas BV, Petrobel Belayim Petroleum Co,
Groupement Sonatrach - Agip «GSA», Organe Conjoint
des Opérations «OC SH/FCP» and, only for Karachaganak
Petroleum Operating BV, purchase of crude oil by Eni Trading
& Shipping SpA; services charged to Eni’s associates are
invoiced on the basis of incurred costs;
a guarantee issued on behalf of Angola LNG Supply Services
Llc to cover the commitments relating to the payment of
the regasification fee;
supply of upstream specialist services and a guarantee issued
on a pro-quota basis granted to Coral FLNG SA on behalf of
the Consortium TJS for the contractual obligations assumed
following the award of the EPCIC contract for the construction
of a floating gas liquefaction plant (for more information see
note 27 – Guarantees, commitments and risks);
the acquisition of transport and distribution services from
the Gas Distribution Company of Thessaloniki - Thessaly SA;
1
14
1
75
27
1
56
4
13
44
236
87
6
93
329
134
5
237
26
67
25
494
1
40
864
96
18
171
134
268
2,029
7
100
25
2,848
1
23
24
2,872
151
146
289
47
85
18
736
2
140
177
1,147
793
57
218
2,392
177
5
14
196
2,588
156
51
420
998
502
2,282
104
4,513
13
13
4,526
514
667
1,184
231
588
34
62
30
1
1
7
123
111
335
11
7
18
353
118
23
109
150
555
45
1,000
3,218
4
34
32
229
37
(26)
11
11
227
(1)
8
74
308
3,750
2,588
1,391
8,005
319
engineering, construction and drilling services by Saipem
Group mainly for the Exploration & Production segment and
residual guarantees issued by Eni SpA relating to bid bonds
and performance bonds;
advances received from Società Oleodotti Meridionali SpA
for the infrastructure upgrade of the crude oil transport
system at the Taranto refinery;
the sale of gas to Société Centrale Electrique du Congo SA;
a performance guarantee given on behalf of Unión Fenosa
Gas SA in relation to contractual commitments related
to the results of operations, sale of gas and fair value of
derivative financial instruments;
guarantees
issued
in compliance with contractual
agreements in the interest of Vår Energi AS, the supply of
upstream specialist services, the purchase of crude oil,
condensates and the realized part of the forward contracts
for the purchase of gas;
a guarantee issued in relation to the construction of an oil
pipeline on behalf of Eni BTC Ltd; and
services for environmental restoration to Industria Siciliana
Acido Fosforico - ISAF SpA (in liquidation).
Eni Annual Report 2020
294
The most significant transactions with entities controlled by
the Italian Government concerned:
sale of fuel, sale and purchase of gas, acquisition of power
distribution services and fair value of derivative financial
instruments with Enel Group;
acquisition of natural gas transportation, distribution and
storage services with Snam Group and Italgas Group on the
basis of the tariffs set by the Italian Regulatory Authority for
Energy, Networks and Environment and purchase and sale
with Snam Group of natural gas for granting the system
balancing on the basis of prices referred to the quotations of
the main energy commodities;
transport capacity rights with Terna Group;
sale and purchase of electricity, gas, environmental
certificates, fair value of derivative financial instruments,
sale of oil products and storage capacity with GSE - Gestore
Servizi Energetici for the setting-up of a specific stock
held by the Organismo Centrale di Stoccaggio Italiano
(OCSIT) according to the Legislative Decree No. 249/2012;
the contribution to cover the charges deriving from the
performance of OCSIT functions and activities and the
contribution paid to GSE for the use of biomethane and other
advanced biofuels in the transport sector.
acquisition of domestic electricity transmission service
and sale and purchase of electricity for granting the system
balancing based on prices referred to the quotations of the
main energy commodities, and derivatives on commodities
entered to hedge the price risk related to the utilization of
Transactions with other related parties concerned:
provisions to pension funds managed by Eni of €40 million;
contributions and service provisions to Eni Enrico Mattei
Foundation for €5 million and to Eni Foundation for €1
million.
FINANCING TRANSACTIONS AND BALANCES WITH RELATED PARTIES
Name
Joint ventures and associates
Angola LNG Ltd
Cardón IV SA
Coral FLNG SA
Coral South FLNG DMCC
Saipem Group
Société Centrale Electrique du Congo SA
Other
Unconsolidated entities controlled by Eni
Other
Entities controlled by the Government
Other
December 31, 2020
2020
(€ million)
Receivables
Payables
Guarantees
Gains
Charges
228
1,304
1
1,533
57
22
7
27
113
1
1
383
288
2
83
15
771
36
36
167
12
179
28
28
11
11
807
218
1,533
114
1
6
18
25
1
1
26
Management report | Consolidated financial statements | Annex
Name
Joint ventures and associates
Angola LNG Ltd
Cardón IV SA
Coral FLNG SA
Coral South FLNG DMCC
Société Centrale Electrique du Congo SA
Other
Unconsolidated entities controlled by Eni
Other
Entities controlled by the Government
Other
Name
Joint ventures and associates
Angola LNG Ltd
Cardón IV SA
Coral FLNG SA
Coral South FLNG DMCC
Shatskmorneftegaz Sàrl
Société Centrale Electrique du Congo SA
Vår Energi AS
Other
Unconsolidated entities controlled by Eni
Other
Entities controlled by the Government
Enel Group
Other
295
December 31, 2019
2019
(€ million)
Receivables
Payables
Guarantees
Gains
Charges
563
253
85
18
919
48
48
4
4
971
5
14
19
28
28
12
12
59
249
1,425
2
1,676
2
20
14
36
77
18
95
1
1
1,676
96
36
December 31, 2018
2018
(€ million)
Receivables
Payables
Guarantees
Gains
Charges
245
1,397
22
1,664
95
7
13
115
705
108
64
38
915
49
49
36
30
494
4
564
25
25
64
8
72
964
661
1,664
115
267
5
9
281
2
2
283
a bank debt guarantee issued on behalf of Coral South FLNG
DMCC as part of the project financing of the Coral FLNG
development project (for more information see note 27 –
Guarantees, commitments and risks);
transactions with
The most significant
associates and unconsolidated subsidiaries concerned:
bank debt guarantees issued on behalf of Angola LNG Ltd;
the financing loan granted to Cardón IV SA for the exploration
joint ventures,
and development activities of a gas field in Venezuela;
lease liabilities towards the Saipem group relating to multi-
the financing loan granted to Coral FLNG SA for the
construction of a floating gas liquefaction plant in Area 4
offshore Mozambique (for more information see note 27 –
Guarantees, commitments and risks);
year contracts for the use of drilling equipment;
the loan granted to Société Centrale Electrique du Congo SA
for the construction of a power plant in Congo.
Eni Annual Report 2020
296
IMPACT OF TRANSACTIONS AND POSITIONS WITH RELATED PARTIES ON THE BALANCE SHEET, PROFIT
AND LOSS ACCOUNT AND STATEMENT OF CASH FLOWS
The impact of transactions and positions with related parties on the balance sheet accounts consisted of the following:
(€ million)
Other current financial assets
Trade and other receivables
Other current assets
Other non-current financial assets
Other non-current assets
Short-term debt
Current portion of long-term lease liabilities
Trade and other payables
Other current liabilities
Non-current lease liabilities
Other non-current liabilities
December 31, 2020
December 31, 2019
Total
254
10,926
2,686
1,008
1,253
2,882
849
Related
parties
Impact %
41
802
145
766
74
52
54
16.14
7.34
5.40
75.99
5.91
1.80
6.36
Total
384
12,873
3,972
1,174
871
2,452
889
12,936
2,100
16.23
15,545
4,872
4,169
1,877
452
112
23
9.28
2.69
1.23
7,146
4,759
1,611
Related
parties
Impact %
60
704
219
911
181
46
5
2,663
155
8
23
15.63
5.47
5.51
77.60
20.78
1.88
0.56
17.13
2.17
0.17
1.43
The impact of transactions with related parties on the profit and loss accounts consisted of the following:
(€ million)
Sales from operations
Other income and revenues
2020
Related
parties
1,164
35
Total
43,987
960
Impact %
2.65
3.65
Total
69,881
1,160
2019
Related
parties
1,248
4
Impact %
1.79
0.34
Total
75,822
1,116
2018
Related
parties
1,383
8
Purchases, services and other
(33,551)
(6,595)
19.66
(50,874)
(9,173)
18.03
(55,622)
(8,009)
Net (impairment losses) reversals of trade
and other receivables
Payroll and related costs
Other operating income (expense)
Finance income
Finance expense
(226)
(2,863)
(766)
3,531
(4,958)
(6)
(36)
13
114
(26)
2.65
1.26
..
3.23
0.52
(432)
(2,996)
287
3,087
(4,079)
28
(28)
19
96
(36)
..
(415)
(3,093)
129
3,967
0.93
6.62
3.11
0.88
26
(22)
319
115
(4,663)
(283)
Impact %
1.82
0.72
14.40
..
0.71
..
2.90
6.07
Main cash flows with related parties are provided below:
(€ million)
Revenues and other income
Costs and other expenses
Other operating (expense) income
Net change in trade and other receivables and payables
Net interests
Net cash provided from operating activities
Capital expenditure in tangible and intangible assets
Net change in accounts payable and receivable in relation to investments
Change in financial receivables
Net cash used in investing activities
Change in financial and lease liabilities
Net cash used in financing activities
Total financial flows to related parties
2020
1,199
2019
1,252
2018
1,391
(5,789)
(6,869)
(5,210)
13
(136)
73
(4,640)
(842)
(370)
(160)
19
(839)
81
(6,356)
(2,332)
(339)
(241)
319
683
110
(2,707)
(2,768)
20
(566)
(1,372)
(2,912)
(3,314)
164
164
(817)
(817)
16
16
(5,848)
(10,085)
(6,005)
Management report | Consolidated financial statements | Annex 297
The impact of cash flows with related parties consisted of the following:
(€ million)
Net cash provided from operating activities
Net cash used in investing activities
Net cash used in financing activities
2020
Related
parties
(4,640)
(1,372)
164
Total
4,822
(4,587)
3,253
Impact %
..
Total
12,392
29.91
(11,413)
5.04
(5,841)
2019
Related
parties
(6,356)
(2,912)
(817)
Impact %
..
25.51
13.99
Total
13,647
(7,536)
(2,637)
2018
Related
parties
(2,707)
(3,314)
16
Impact %
..
43.98
..
37 OTHER INFORMATION ABOUT INVESTMENTS32
INFORMATION ON ENI’S CONSOLIDATED SUBSIDIARIES WITH SIGNIFICANT NON-CONTROLLING INTEREST
In 2020 and 2019, Eni did not own any consolidated subsidiaries with a significant non-controlling interest.
Equity pertaining to minority interests as of December 31, 2020, amounted to €78 million (€61 million December 31, 2019).
CHANGES IN THE OWNERSHIP INTEREST WITHOUT LOSS OF CONTROL
In 2020, Eni did not report any changes in ownership interest without loss or acquisition of control.
In 2019, Eni acquired a 10% stake of Windirect BV.
PRINCIPAL JOINT VENTURES, JOINT OPERATIONS AND ASSOCIATES AS OF DECEMBER 31, 2020
Company name
Joint venture
Vår Energi AS
Saipem SpA
Unión Fenosa Gas SA
Cardón IV SA
Gas Distribution Company
of Thessaloniki- Thessaly SA
Joint Operation
Mozambique Rovuma Venture SpA
GreenStream BV
Associates
Abu Dhabi Oil Refining Co (Takreer)
Angola LNG Ltd
Coral FLNG SA
Registered office
Country of operation
Business segment
% ownership
interest
Eni’s % of the
investment
Forus
(Norway)
San Donato Milanese (MI)
(Italy)
Madrid
(Spain)
Caracas
(Venezuela)
Ampelokipi-Menemeni
(Greece)
San Donato Milanese (MI)
(Italy)
Amsterdam
(Netherlands)
Abu Dhabi
(United Arab Emirates)
Hamilton
(Bermuda)
Maputo
(Mozambique)
Norway
Exploration & Production
Italy
Spain
Corporate and financial companies
Global Gas & LNG Portfolio
Venezuela
Exploration & Production
Greece
Eni gas e luce
Mozambique
Exploration & Production
Libya
Global Gas & LNG Portfolio
United Arab Emirates
Refining & Marketing
Angola
Exploration & Production
Mozambique
Exploration & Production
69.85
30.54
50.00
50.00
49.00
35.71
50.00
20.00
13.60
25.00
69.85
31.08
50.00
50.00
49.00
35.71
50.00
20.00
13.60
25.00
(32) Investments in subsidiaries, joint arrangements and associates as of December 31, 2020 are presented in the annex “List of companies owned by Eni SpA as of
December 31, 2020”. This annex includes also the changes in the scope of consolidation.
Eni Annual Report 2020 298
Main line items of profit and loss and balance sheet related to the principal joint ventures, represented by the amounts
included in the reports accounted under IFRS of each company, are provided in the table below:
(€ million)
Current assets
- of which cash and cash equivalent
Non-current assets
Total assets
Current liabilities
- current financial liabilities
Non-current liabilities
- non-current financial liabilities
Total liabilities
Net equity
Eni’s % of the investment
Book value of the investment
Revenues and other income
Operating expense
Depreciation, amortization and impairments
Operating profit (loss)
Finance income (expense)
Income (expense) from investments
Profit (loss) before income taxes
Income taxes
Net profit (loss)
Other comprehensive income (loss)
Total other comprehensive income (loss)
Net profit (loss) attributable to Eni
2020
a
s
o
n
e
F
n
ó
n
U
i
A
S
s
a
G
599
36
717
A
p
S
m
e
p
i
a
S
6,411
1,687
4,831
11,242
1,316
4,903
609
3,391
2,827
8,294
2,948
31.08
908
7,408
(6,980)
(1,273)
(845)
(166)
37
(974)
(143)
(1,117)
46
(1,071)
(354)
311
99
501
421
812
504
50.00
242
854
(805)
(108)
(59)
(29)
3
(85)
(2)
(87)
(33)
(120)
(68)
S
A
i
g
r
e
n
E
r
å
V
804
222
16,042
16,846
189
33
15,019
4,389
15,208
1,638
69.85
1,144
2,450
(980)
(3,425)
(1,955)
31
(1,924)
603
(1,321)
(273)
(1,594)
(918)
Dividends received from the joint venture
274
3
n
o
i
t
u
b
i
i
r
t
s
D
s
a
G
i
k
i
n
o
l
a
s
s
e
h
T
f
o
A
S
y
l
a
s
s
e
h
T
-
y
n
a
p
m
o
C
A
S
V
I
n
ó
d
r
a
C
t
n
o
i
j
r
e
h
t
O
s
e
r
u
t
n
e
v
235
2,040
2,275
262
1,615
785
1,877
398
50.00
199
612
(453)
(95)
64
(98)
(34)
(58)
(92)
(35)
(127)
(46)
31
10
344
375
38
11
51
39
89
286
49.00
140
62
(19)
(16)
27
(1)
26
(6)
20
20
10
9
858
43
924
1,782
1,022
90
333
237
1,355
427
188
286
(304)
(85)
(103)
(21)
(124)
(4)
(128)
(25)
(153)
(93)
10
Management report | Consolidated financial statements | Annex
(€ million)
Current assets
- of which cash and cash equivalent
Non-current assets
Total assets
Current liabilities
- current financial liabilities
Non-current liabilities
- non-current financial liabilities
Total liabilities
Net equity
Eni’s % of the investment
Book value of the investment
Revenues and other income
Operating expense
Depreciation, amortization and impairments
Operating profit (loss)
Finance income (expense)
Income (expense) from investments
Profit (loss) before income taxes
Income taxes
Net profit (loss)
Other comprehensive income (loss)
Total other comprehensive income (loss)
Net profit (loss) attributable to Eni
Dividends received from the joint venture
2019
a
s
o
n
e
F
n
ó
n
U
i
A
S
s
a
G
585
41
827
A
p
S
m
e
p
i
a
S
7,012
2,272
5,997
13,009
1,412
5,204
557
3,680
3,147
8,884
4,125
30.99
1,250
225
49
563
493
788
624
50.00
326
9,118
(7,972)
1,255
(1,221)
(690)
456
(210)
(18)
228
(130)
98
66
164
4
(53)
(19)
(37)
6
(50)
8
(42)
11
(31)
(14)
S
A
i
g
r
e
n
E
r
å
V
1,385
182
18,427
19,812
2,374
33
13,820
3,929
16,194
3,618
69.60
2,518
2,552
(1,015)
(1,208)
329
(1)
328
(258)
70
40
110
49
1,057
299
t
n
o
i
j
r
e
h
t
O
s
e
r
u
t
n
e
v
n
o
i
t
u
b
i
i
r
t
s
D
s
a
G
i
k
i
n
o
l
a
s
s
e
h
T
f
o
A
S
y
l
a
s
s
e
h
T
-
y
n
a
p
m
o
C
A
S
V
I
n
ó
d
r
a
C
208
6
2,383
2,591
255
2,040
1,140
2,295
296
50.00
148
598
(456)
(86)
56
(133)
(77)
(103)
(180)
5
(175)
(90)
31
12
322
353
24
9
46
33
70
283
49.00
139
58
(16)
(14)
28
(1)
27
(7)
20
20
10
10
551
40
1,085
1,636
819
165
354
274
1,173
463
199
270
(277)
(47)
(54)
(14)
(68)
(12)
(80)
(80)
(40)
6
Eni Annual Report 2020
300
Main line items of profit and loss and balance sheet related to the principal associates represented by the amounts included
in the reports accounted under IFRS of each company are provided in the table below:
(€ million)
Current assets
- of which cash and cash equivalent
Non-current assets
Total assets
Current liabilities
- current financial liabilities
Non-current liabilities
- non-current financial liabilities
Total liabilities
Net equity
Eni’s % of the investment
Book value of the investment
Revenues and other income
Operating expense
Depreciation, amortization and impairments
Operating profit (loss)
Finance income (expense)
Income (expense) from investments
Profit (loss) before income taxes
Income taxes
Net profit (loss)
Other comprehensive income (loss)
Total other comprehensive income (loss)
Net profit (loss) attributable to Eni
Dividends received from the associate
2020
d
t
L
G
N
L
a
l
o
g
n
A
618
428
8,633
9,251
424
101
1,187
999
1,611
7,640
13.60
1,039
976
(548)
(508)
(80)
(96)
l
i
O
i
b
a
h
D
u
b
A
o
C
g
n
i
n
fi
e
R
)
R
E
E
R
K
A
T
(
1,391
97
17,938
19,329
4,897
4,404
2,757
456
7,654
11,675
20.00
2,335
11,933
(12,370)
(851)
(1,288)
(91)
(1,379)
(176)
4
(1,375)
(1,101)
(2,476)
(275)
(176)
(710)
(886)
(24)
A
S
G
N
L
F
l
a
r
o
C
133
83
4,777
4,910
172
4,186
4,186
4,358
552
25.00
138
1
1
(11)
(10)
2
(8)
(48)
(56)
(2)
s
e
t
a
i
c
o
s
s
a
r
e
h
t
O
623
303
4,072
4,695
656
263
3,068
2,928
3,724
971
321
954
(917)
(75)
(38)
(13)
16
(35)
(9)
(44)
(60)
(104)
(26)
13
Management report | Consolidated financial statements | Annex
(€ million)
Current assets
- of which cash and cash equivalent
Non-current assets
Total assets
Current liabilities
- current financial liabilities
Non-current liabilities
- non-current financial liabilities
Total liabilities
Net equity
Eni’s % of the investment
Book value of the investment
Revenues and other income
Operating expense
Depreciation, amortization and impairments
Operating profit (loss)
Finance income (expense)
Income (expense) from investments
Profit (loss) before income taxes
Income taxes
Net profit (loss)
Other comprehensive income (loss)
Total other comprehensive income (loss)
Net profit (loss) attributable to Eni
Dividends received from the associate
2019
d
t
L
G
N
L
a
o
g
n
A
l
890
653
9,952
10,842
185
2,135
1,943
2,320
8,522
13.60
1,159
1,552
(549)
(509)
494
(151)
343
343
162
505
47
A
S
G
N
L
F
l
a
r
o
C
241
240
4,119
4,360
230
3,722
3,722
3,952
408
25.00
102
(12)
(12)
5
(7)
8
1
(2)
l
i
O
i
b
a
h
D
u
b
A
o
C
g
n
i
n
fi
e
R
)
R
E
E
R
K
A
T
(
4,659
42
18,868
23,527
8,470
3,694
912
479
9,382
14,145
20.00
2,829
399
(357)
(335)
(293)
(46)
282
(57)
11
(46)
(59)
(105)
(9)
46
301
s
e
t
a
i
c
o
s
s
a
r
e
h
t
O
838
91
3,259
4,097
585
63
2,677
2,515
3,262
835
264
818
(763)
(28)
27
(2)
35
60
(10)
50
5
55
22
15
38 PUBLIC ASSISTANCE - ITALIAN LAW NO. 124/2017 AND SUBSEQUENT MODIFICATIONS
Under art. 1, paragraphs 125 and 126, of the Italian Law No.
124/2017 and subsequent modifications, the disclosures
about (i) assistances received by Eni SpA and its consolidated
subsidiaries from Italian public authorities and entities with
the exclusion of listed public controlled companies and their
subsidiaries; (ii) assistances granted by Eni SpA and by its fully
consolidated subsidiaries to companies, persons and public and
private entities33, are provided below. Furthermore, it should be
underlined that when Eni acts as operator34 of unincorporated
joint ventures35, a type of joint venture constituted for the
management of oil projects, each consideration made directly
by Eni is reported in its full amount, regardless of whether Eni is
reimbursed proportionally by the non-operating partners through
the mechanism of the cash calls.
The following disclosure requirements do not apply to: (i)
incentives/subventions granted to all those entitled in accordance
with a general assistance aid scheme; (ii) consideration in
exchange for supplied goods/services, included sponsorships;
(iii) reimbursements and indemnities paid to persons engaged
in professional and orientation trainings; (iv) continuous training
contributions to companies granted by inter-professional funds
established in the legal form of association; (v) membership fees
for the participation to industry trade and territorial associations,
as well as to foundations or similar organizations, which perform
activities linked with the Company’s business; (vi) costs incurred
with reference to social projects linked to the investing activities
of the Company.
Assistances are identified on a cash basis36.
The disclosure includes assistance equal or exceeding €10,000,
even though they are granted through several payments during
2020. Under art. 1, subsection 125-quinquies of Law No.
124/2017, for received assistance see the information included in
the Italian State aid Register, prepared in accordance with the art.
52 of the Italian Law 24 December 2012, No. 234.
The granted assistance provided herein is mainly referred to
foundations, associations and other entities for reputational
purposes, donations and support for charitable and
solidarity initiatives:
(33) The following disclosures do not include assistance granted by foreign subsidiaries to foreign beneficiaries.
(34) In the oil projects, the operator is the subject who in accordance with the contractual agreements manages the exploration activities and in this role fulfills the
payments due.
(35) Unincorporated joint ventures means a grouping of companies that operate jointly within the project in accordance with a contract.
(36) In case of non-monetary economic benefits, the cash basis must be assumed substantially referring to the year in which the benefit was enjoyed.
Eni Annual Report 2020
302
Granted subject
Fondazione Policlinico Agostino Gemelli IRCCS
Fondazione Eni Enrico Mattei
Fondazione Teatro alla Scala
Eni Foundation
ASL Taranto
ASL Brindisi
AOR S. Carlo Potenza
Dipartimento della Protezione Civile
Fondazione Giorgio Cini
Policlinico San Donato(*)
The Halo Trust
ASP Siracusa
WEF - World Economic Forum
AUSL Ravenna
World Food Programme
AOU Ospedali Riuniti Ancona
Torino World Affairs Institute (T.wai)
IRCCS Ospedale Sacro Cuore Don Calabria di Negrar (Verona)
ASST Bergamo
ASP Ragusa
ASP Caltanissetta
Council on Foreign Relations
Atlantic Council of the United States, Inc
Ajuda de Desenvolvimento de Povo para Povo (ADPP)
ONG Volontariato Internazionale per lo Sviluppo (VIS)
World Business Council for Sustainable Development
Casa di cura Villa Erbosa-Bologna(*)
Associazione Pionieri e Veterani Eni
EITI - Extractive Industries Transparency Initiative
Bruegel
Fondazione COTEC - Fondazione per l'innovazione
Famiglia di un dipendente scomparso
Parrocchia di S. Barbara a San Donato Milanese
Comunità Frontiera Onlus
Istituti Ospedalieri Bergamaschi - Policlinico San Pietro(*)
Istituti Ospedalieri Bergamaschi - Policlinico San Marco(*)
Istituti Ospedalieri Bresciani - Istituto Clinico San Rocco(*)
Aspen Institute Italia
italiadecide
E4IMPACT Foundation
ASP Messina
Center For Strategic & International Studies
Fondazione Italia Cina
ASL Latina
AOU Sassari
CENSIS - Fondazione Centro Studi Investimenti Sociali
Istituto Clinico Beato Matteo(*)
Institute for Human Rights and Business (IHRB)
Associazione CIVITA
Associazione Italiana Sclerosi Laterale Amiotrofica (AISLA ONLUS)
Council of the Americas
Associazione Amici della Luiss
Centro Studi Americani
Human Foundation
Global Reporting Initiative
Associazione CILLA Liguria
AMICAL
ASST Mantova Ospedale Carlo Poma
AULSS 3 Venezia Mestre
(*) The granted assistance to Gruppo San Donato (GSD) is equal to €661,805. The amount includes also the assistances that individally are lower than €10.000.
Amount paid
(€)
7,500,000
4,956,727
3,094,416
1,343,000
1,084,286
1,023,763
899,067
662,500
500,000
442,935
280,259
279,185
278,707
194,974
183,883
162,697
150,000
132,500
117,110
113,293
109,578
101,509
93,375
87,581
87,581
75,811
71,200
63,500
55,445
50,000
50,000
50,000
40,000
40,000
38,470
37,500
35,600
35,000
35,000
35,000
34,155
32,406
30,002
26,300
25,970
25,000
24,000
22,353
22,000
22,000
21,862
20,000
20,000
20,000
20,000
20,000
15,428
12,985
12,985
Management report | Consolidated financial statements | Annex 303
39 SIGNIFICANT NON-RECURRING EVENTS AND OPERATIONS
In 2020, in 2019 and 2018, Eni did not report any non-recurring events and operations.
40 POSITIONS OR TRANSACTIONS DERIVING FROM ATYPICAL AND/OR UNUSUAL OPERATIONS
In 2020, in 2019 and 2018, no transactions deriving from atypical and/or unusual operations were reported.
41 SUBSEQUENT EVENTS
No significant events were reported after December 31, 2020, apart from what already included in the notes to these Financial
Statements.
Eni Annual Report 2020 304
Supplemental Oil & Gas information (unaudited)
information prepared
in accordance with
The following
“International Financial Reporting Standards”
is
presented based on the disclosure rules of the FASB Extractive
(IFRS)
CAPITALIZED COSTS
Capitalized costs represent
for
proved and unproved mineral properties and related support
equipment and facilities utilized in oil and gas exploration
total expenditures
the
Activities - Oil and Gas (Topic 932). Amounts related to
minority interests are immaterial.
and production activities, together with related accumulated
depreciation, depletion and amortization. Capitalized costs by
geographical area consist of the following:
(€ million)
2020
Consolidated subsidiaries
Proved property
Unproved property
Support equipment and facilities
Incomplete wells and other
Gross Capitalized Costs
Accumulated depreciation,
depletion and amortization
Net Capitalized Costs
consolidated subsidiaries(a)
Equity-accounted entities
Proved property
Unproved property
Support equipment and facilities
Incomplete wells and other
Gross Capitalized Costs
Accumulated depreciation,
depletion and amortization
Net Capitalized Costs equity-
accounted entities(a)
2019
Consolidated subsidiaries
Proved property
Unproved property
Support equipment and facilities
Incomplete wells and other
Gross Capitalized Costs
Accumulated depreciation,
depletion and amortization
Net Capitalized Costs
consolidated subsidiaries(a)
Equity-accounted entities
Proved property
Unproved property
Support equipment and facilities
Incomplete wells and other
Gross Capitalized Costs
Accumulated depreciation,
depletion and amortization
Net Capitalized Costs equity-
accounted entities(a)(b)
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Egypt
Africa Kazakhstan
Rest
of Asia
America
Australia
and Oceania
Total
18,456
6,465
14,596
19,081
39,848
11,278
10,662
14,567
1,359
136,312
20
300
671
311
20
147
454
1,424
1,094
33
216
193
2,163
1,226
2,551
10
109
1,411
34
1,064
1,469
896
20
458
179
11
39
5,477
3,360
7,686
19,447
6,943
17,568
19,523
45,788
12,461
13,576
15,941
1,588
152,835
(15,565)
(5,597)
(12,793)
(12,161)
(32,248)
(2,839)
(9,003)
(12,612)
(805)
(103,623)
3,882
1,346
4,775
7,362
13,540
9,622
4,573
3,329
783
49,212
11,466
2,131
23
1,566
15,186
(6,196)
8,990
68
8
9
85
(59)
26
1,384
17
1,401
(343)
1,058
11
1,833
6
209
11
2,048
(1,076)
11
972
14,751
2,142
37
1,801
18,731
(7,674)
11,057
17,643
6,747
15,512
20,691
43,272
12,118
11,434
15,912
1,360
144,689
18
384
635
323
21
103
502
1,549
1,362
34
225
359
2,361
1,328
2,541
11
116
1,592
36
1,165
1,006
979
23
457
194
12
43
6,014
3,694
7,671
18,680
7,194
18,925
21,309
49,502
13,410
14,068
17,371
1,609
162,068
(14,604)
(5,778)
(12,802)
(12,879)
(33,237)
(2,652)
(9,100)
(13,465)
(754)
(105,271)
4,076
1,416
6,123
8,430
16,265
10,758
4,968
3,906
855
56,797
11,223
2,260
19
945
14,447
(5,287)
9,160
71
8
7
86
(61)
25
1,511
15
1,526
(323)
1,203
2
11
19
32
1,987
7
229
2,223
(20)
(1,124)
12
1,099
14,794
2,271
34
1,215
18,314
(6,815)
11,499
(a) The amounts include net capitalized financial charges totalling €843 million in 2020 and €878 million in 2019 for the consolidates subsidiaries and €170 million in 2020 and €166 million in
2019 for equity-accounted entities.
(b) Includes allocation at fair value of the assets purchased by Vår Energi AS.
Management report | Consolidated financial statements | Annex
COSTS INCURRED
incurred
Costs
represent amounts both capitalized
and expensed in connection with oil and gas producing
activities. Costs incurred by geographical area consist of
the following:
305
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Egypt
Africa Kazakhstan
Rest
of Asia
America
Australia
and Oceania
Total
(€ million)
2020
Consolidated subsidiaries
Proved property acquisitions
Unproved property acquisitions
Exploration
Development(a)
Total costs incurred
consolidated subsidiaries
Equity-accounted entities
Proved property acquisitions
Unproved property acquisitions
Exploration
Development(b)
Total costs incurred
equity-accounted entities
2019
Consolidated subsidiaries
Proved property acquisitions
Unproved property acquisitions
Exploration
Development(a)
Total costs incurred
consolidated subsidiaries
Equity-accounted entities
Proved property acquisitions
Unproved property acquisitions
Exploration
Development(b)
Total costs incurred
equity-accounted entities(c)
2018
Consolidated subsidiaries
Proved property acquisitions
Unproved property acquisitions
Exploration
Development(a)
Total costs incurred
consolidated subsidiaries
Equity-accounted entities
Proved property acquisitions
Unproved property acquisitions
Exploration
Development(b)
Total costs incurred
equity-accounted entities
19
472
491
20
235
255
47
1,481
1,528
62
230
292
1,054
1,178
125
1,574
3,931
20
1,098
1,118
7
196
203
176
1,024
1,200
2
67
422
491
55
69
278
402
3
3
61
620
681
6
6
135
101
749
985
1
94
1,589
1,684
206
1,959
2,165
15
481
496
4
4
5
5
63
437
500
14
14
144
97
106
879
23
232
1,199
1,454
1,226
(1)
(1)
382
487
182
589
1,640
103
103
37
37
215
340
555
(16)
(16)
1
10
11
39
43
82
7
36
43
57
483
3,694
4,234
47
1,504
1,551
144
256
875
8,227
9,502
1,054
1,178
124
1,620
3,976
382
487
750
6,036
7,655
105
(13)
92
26
382
408
106
557
663
43
445
488
102
2,216
2,318
66
1,379
1,445
3
92
95
2
3
5
(a) Includes the abandonment costs of the assets for €516 million in 2020, €2,069 million in 2019, negative for €517 million in 2018.
(b) Includes the abandonment costs of the assets for €424 million in 2020, €838 million in 2019, negative €22 million in 2018.
(c) Includes allocation at fair value of the assets purchased by Vår Energi AS.
Eni Annual Report 2020
306
RESULTS OF OPERATIONS FROM OIL AND GAS PRODUCING ACTIVITIES
those
Results of operations from oil and gas producing activities
represent only
revenues and expenses directly
associated with such activities, including operating overheads.
These amounts do not include any allocation of interest
expenses or general corporate overheads and, therefore, are
not necessarily indicative of the contributions to consolidated
net earnings of Eni. Related income taxes are calculated by
applying the local income tax rates to the pre-tax income
from production activities. Eni is party to certain Production
Sharing Agreements (PSAs), whereby a portion of Eni’s
share of oil and gas production is withheld and sold by its
joint venture partners which are state owned entities, with
proceeds being remitted to the state to fulfil Eni’s PSA related
tax liabilities. Revenue and income taxes include such taxes
owed by Eni but paid by state-owned entities out of Eni’s
share of oil and gas production. Results of operations from
oil and gas producing activities by geographical area consist
of the following:
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Egypt
Africa Kazakhstan
Rest
of Asia
America
Australia
and Oceania
Total
(€ million)
2020
Consolidated subsidiaries
Revenues:
- sales to consolidated entities
- sales to third parties
Total revenues
Production costs
Transportation costs
Production taxes
Exploration expenses
D.D. & A. and Provision for abandonment(a)
Other income (expenses)
799
799
(332)
(4)
(111)
(19)
(1,149)
(255)
Pretax income from producing activities
(1,071)
Income taxes
Results of operations from E&P activities
of consolidated subsidiaries
219
(852)
Equity-accounted entities
Revenues:
- sales to consolidated entities
- sales to third parties
Total revenues
Production costs
Transportation costs
Production taxes
Exploration expenses
D.D. & A. and Provision for abandonment
Other income (expenses)
Pretax income from producing activities
Income taxes
Results of operations from E&P activities
of equity-accounted entities
(a) Includes asset net impairment amounting to €1,865 million.
2,478
2,478
(367)
(11)
(56)
(848)
(204)
992
(519)
473
334
53
387
(139)
(30)
(14)
(252)
(45)
(93)
69
(24)
862
782
1,644
(350)
(161)
(35)
(1,163)
(90)
(155)
469
314
616
1,610
2,226
(371)
(39)
(135)
(124)
(1,158)
(360)
39
(671)
(632)
10
10
(7)
(1)
(2)
(1)
(1)
(2)
1
(1)
2,315
784
3,099
(782)
(21)
(295)
(77)
788
547
1,335
(246)
(164)
(3)
1,333
179
1,512
(236)
(4)
(133)
(104)
(2,187)
(454)
(1,070)
(153)
315
(134)
(90)
(125)
(193)
434
204
638
(272)
(12)
(13)
(112)
(678)
(71)
(520)
86
1
109
110
(17)
(1)
(65)
6
33
6,620
5,964
12,584
(2,762)
(285)
(687)
(510)
(7,861)
(1,147)
(668)
(11)
(1,187)
181
(318)
(434)
22
(1,855)
307
307
(18)
(76)
(50)
(146)
17
(29)
(12)
(2)
(2)
(2)
862
1,230
2,092
(398)
(173)
(81)
(35)
(1,283)
(274)
(152)
441
289
25
(238)
(33)
(271)
131
131
(23)
(11)
(3)
(69)
(35)
(10)
(10)
Management report | Consolidated financial statements | Annex
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Rest
Egypt
Africa Kazakhstan
of Asia America
Australia
and Oceania
Total
307
1,081
4,084
5,165
(520)
(60)
(263)
(30)
(839)
(452)
3,001
(2,561)
3,715
3,715
(330)
(10)
(10)
(978)
(433)
1,954
(839)
440
1,115
15
15
(8)
(1)
(2)
(1)
(1)
2
(2)
618
30
648
(181)
(31)
(51)
(201)
(16)
168
(11)
157
1,080
677
1,757
(336)
(84)
(47)
(722)
(237)
331
(179)
152
4,576
944
5,520
(847)
(39)
(483)
(90)
(3,060)
(502)
499
(268)
231
207
207
(24)
(11)
(7)
(70)
(28)
67
67
1,195
2,367
766
149
1,961
2,516
(255)
(158)
(39)
(444)
(71)
994
(256)
(4)
(252)
(170)
(820)
(76)
938
(326)
(719)
668
219
(3)
(3)
(3)
825
180
1,005
(273)
(15)
(7)
(31)
(607)
(86)
(14)
(5)
(19)
315
315
(25)
(81)
(51)
(133)
25
(54)
(29)
5
227
232
(43)
(6)
(43)
(97)
(1)
42
12,160
10,095
22,255
(3,096)
(322)
(1,194)
(489)
(7,990)
(1,974)
7,190
(31)
(4,612)
11
2,578
1,080
1,214
2,294
(393)
(96)
(90)
(47)
(844)
(402)
422
(235)
187
1,493
1,493
(391)
(5)
(183)
(25)
(944)
(337)
(392)
148
(244)
(€ million)
2019
Consolidated subsidiaries
Revenues:
- sales to consolidated entities
- sales to third parties
Total revenues
Production costs
Transportation costs
Production taxes
Exploration expenses
D.D. & A. and Provision for abandonment(a)
Other income (expenses)
Pretax income from producing activities
Income taxes
Results of operations from E&P activities
of consolidated subsidiaries(b)
Equity-accounted entities
Revenues:
- sales to consolidated entities
- sales to third parties
Total revenues
Production costs
Transportation costs
Production taxes
Exploration expenses
D.D. & A. and Provision for abandonment
Other income (expenses)
Pretax income from producing activities
Income taxes
Results of operations from E&P activities
of equity-accounted entities
(a) Includes asset net impairment amounting to €1,217 million.
(b) Results of operations exclude revenues, DD&A and income taxes associated with 3.8 million boe as part of a long-term supply agreement to a state-owned national oil company, whereby the
buyer has paid the price without lifting the underlying volume in exercise of the take-or-pay clause. The price collected by the buyer has been recognized as revenues in the segment information
of the E&P sector prepared in accordance with IFRS and DD&A and income taxes have been accrued accordingly, because the Group performance obligation under the contract has been fulfilled
and it is very likely that the buyer will not redeem its contractual right to lift within the contractual terms.
Eni Annual Report 2020
308
(€ million)
2018
Consolidated subsidiaries
Revenues:
- sales to consolidated entities
- sales to third parties
Total revenues
Production costs
Transportation costs
Production taxes
Exploration expenses
D.D. & A. and Provision for abandonment(a)
Other income (expenses)
Pretax income from producing activities
Income taxes
Results of operations from E&P activities
of consolidated subsidiaries
Equity-accounted entities
Revenues:
- sales to consolidated entities
- sales to third parties
Total revenues
Production costs
Transportation costs
Production taxes
Exploration expenses
D.D. & A. and Provision for abandonment
Other income (expenses)
Pretax income from producing activities
Income taxes
Results of operations from E&P activities
of equity-accounted entities
(a) Includes asset net impairment amounting to €726 million.
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Rest
Egypt
Africa Kazakhstan
of Asia America
Australia
and Oceania
Total
2,120
2,120
(402)
(8)
(171)
(25)
(281)
(442)
791
(170)
621
2,740
494
3,234
(488)
(142)
(85)
(664)
(193)
1,662
1,277
3,741
5,018
(363)
(50)
(243)
(48)
(582)
(101)
3,631
(1,070)
(2,494)
3,207
3,207
(343)
(11)
(22)
(795)
(239)
1,797
(542)
592
1,137
1,255
15
15
(7)
(1)
(3)
(1)
2
5
(3)
2
(6)
(1)
(7)
(7)
4,701
830
5,531
(974)
(42)
(435)
(44)
(2,490)
(1,126)
420
(264)
156
257
257
(34)
(28)
(26)
224
(27)
366
366
1,140
1,902
769
493
1,909
2,395
(269)
(136)
(3)
(387)
(67)
1,047
(308)
(220)
(7)
(191)
(79)
(941)
(135)
822
(678)
739
144
6
6
(2)
(235)
(3)
(25)
(259)
(2)
934
50
984
(234)
(16)
(69)
(594)
(54)
17
7
24
420
420
(36)
(2)
(114)
(222)
(122)
(76)
(35)
(261)
(111)
4
14,818
190
194
(48)
(6)
(5)
(67)
68
(26)
42
9,774
24,592
(3,341)
(412)
(1,046)
(380)
(6,801)
(2,357)
10,255
(5,545)
4,710
698
698
(79)
(31)
(143)
(241)
(2)
(173)
29
(40)
(11)
Management report | Consolidated financial statements | Annex
309
PROVED RESERVES OF OIL AND NATURAL GAS
Eni’s criteria concerning evaluation and classification of proved
developed and undeveloped reserves comply with Regulation
S-X 4-10 of the U.S. Securities and Exchange Commission
and have been disclosed in accordance with FASB Extractive
Activities - Oil and Gas (Topic 932).
Proved oil and gas reserves are those quantities of oil and gas,
which, by analysis of geoscience and engineering data, can
be estimated with reasonable certainty to be economically
producible, from a given date forward, from known reservoirs,
and under existing economic conditions, operating methods,
and government regulations, prior to the time at which
contracts providing the right to operate expire, unless evidence
indicates that renewal is reasonably certain, regardless of
whether deterministic or probabilistic methods are used for
the estimation. The project to extract the hydrocarbons must
have commenced or the operator must be reasonably certain
that it will commence the project within a reasonable time.
Existing economic conditions include prices and costs at which
economic producibility from a reservoir is to be determined.
The price shall be the average price during the 12-month
period prior to the ending date of the period covered by the
report, determined as an un-weighted arithmetic average of
the first-day-of-the-month price for each month within such
period, unless prices are defined by contractual arrangements,
excluding escalations based upon future conditions.
In 2020, the average price for the marker Brent crude oil was
$41 per barrel.
Net proved reserves exclude interests and royalties owned by
others. Proved reserves are classified as either developed or
undeveloped. Developed oil and gas reserves are reserves that
can be expected to be recovered through existing wells with
existing equipment and operating methods or in which the
cost of the required equipment is relatively minor compared to
the cost of a new well. Undeveloped oil and gas reserves are
reserves of any category that are expected to be recovered from
new wells on undrilled acreage, or from existing wells where a
relatively major expenditure is required for recompletion.
Eni has its proved reserves audited on a rotational basis by
independent oil engineering companies37. The description
of qualifications of the person primarily responsible of the
reserves audit is included in the third-party audit report38.
In the preparation of their reports, independent evaluators rely,
without independent verification, upon data furnished by Eni
with respect to property interest, production, current costs of
operation and development, sale agreements, prices and other
factual information and data that were accepted as represented
by the independent evaluators. These data, equally used by Eni
in its internal process, include logs, directional surveys, core
and PVT (Pressure Volume Temperature) analysis, maps, oil/
gas/water production/injection data of wells, reservoir studies
and technical analysis relevant to field performance, long-term
development plans, future capital and operating costs. In order
to calculate the economic value of Eni equity reserves, actual
prices applicable to hydrocarbon sales, price adjustments
required by applicable contractual arrangements, and other
pertinent information are provided.
In 2020, Ryder Scott Company, DeGolyer and MacNaughton
provided an independent evaluation of about 36%39 of Eni’s
total proved reserves as of December 31, 202040, confirming,
as in previous years, the reasonableness of Eni’s internal
evaluations.
In the three-year period from 2018 to 2020, 92% of Eni’s total
proved reserves were subject to independent evaluation. As
of December 31, 2020, the principal properties which did not
undergo an independent evaluation in the last three years were
Balder in Norway and Merakes in Indonesia.
Eni operates under production sharing agreements in several
of the foreign jurisdictions where it has oil and gas exploration
and production activities. Reserves of oil and natural gas to
which Eni is entitled under PSA arrangements are shown in
accordance with Eni’s economic interest in the volumes of oil
and natural gas estimated to be recoverable in future years.
Such reserves include estimated quantities allocated to Eni
for recovery of costs, income taxes owed by Eni but settled
by its joint venture partners (which are state-owned entities)
out of Eni’s share of production and Eni’s net equity share after
cost recovery. Proved oil and gas reserves associated with
PSAs represented 57%, 57% and 61% of total proved reserves
as of December 31, 2020, 2019 and 2018, respectively, on an
oil-equivalent basis. Similar effects as PSAs apply to service
contracts; proved reserves associated with such contracts
represented 4%, 3% and 3% of total proved reserves on an oil-
equivalent basis as of December 31, 2020, 2019 and 2018,
respectively.
Oil and gas reserves quantities include: (i) oil and natural gas
quantities in excess of cost recovery which the company
has an obligation to purchase under certain PSAs with
governments or authorities, whereby the company serves
(37) From 1991 to 2002 DeGolyer and McNaughton, from 2003 also Ryder Scott. In 2018 and independent evaluation was provided also by Societé Generale de
Surveillance (SGS).
(38) The reports of independent engineers are available on Eni website eni.com, section Publications/Annual Report 2020.
(39) The percentage of 36% increases to 37% considering the certification of A-LNG (proven reserves equal to 87 Mboe net to Eni) conducted by Gaffney Cline for the
shareholders of the A-LNG Consortium (Eni 13.6%).
(40) Including reserves of equity-accounted entities.
Eni Annual Report 2020 310
as producer of reserves. Reserves volumes associated with
oil and gas deriving from such obligation represent 3%, 4%
and 4% of total proved reserves as of December 31, 2020,
2019 and 2018, respectively, on an oil equivalent basis; (ii)
volumes of proved reserves of natural gas to be consumed
in operations amounted to approximately 2,237 BCF at 2020
year-end (2,330 BCF and 2,470 BCF respectively at 2019 and
2018 year-end); (iii) the quantities of hydrocarbons related to
the Angola LNG plant.
Numerous uncertainties are inherent in estimating quantities
of proved reserves, in projecting future productions and
development expenditures. The accuracy of any reserve
estimate is a function of the quality of available data and
engineering and geological interpretation and evaluation. The
results of drilling, testing and production after the date of
the estimate may require substantial upward or downward
revisions. In addition, changes in oil and natural gas prices
have an effect on the quantities of Eni’s proved reserves since
estimates of reserves are based on prices and costs relevant
to the date when such estimates are made. Consequently,
the evaluation of reserves could also significantly differ from
actual oil and natural gas volumes that will be produced.
PROVED UNDEVELOPED RESERVES
Proved undeveloped reserves as of December 31, 2020
totalled 2,005 mmboe, of which 1,064 mmbbl of liquids
mainly concentrated in Africa and Asia and 4,992 BCF
in Africa. Proved
of natural gas particularly
located
undeveloped
reserves of consolidated subsidiaries
amounted to 837 mmbbl of liquids and 4,703 BCF of natural
gas. Changes in Eni’s 2020 proved undeveloped reserves
were as follows:
(mmboe)
Proved undeveloped reserves as of December 31, 2019
Transfer to proved developed reserves
Extensions and discoveries
Revisions of previous estimates
Improved recovery
Proved undeveloped reserves as of December 31, 2020
reserves matured
In 2020, total proved undeveloped reserves decreased by
109 mmboe, including the effect of the update of the gas
conversion rate of +18 mmboe (proved undeveloped reserves
of consolidated companies decreased by 114 mmboe, while
those of joint ventures and associates increased by 5 mmboe).
Main changes derived from:
(i) proved undeveloped
to proved
developed reserves amounted to 206 mmboe and were
driven by progress in development activities, production
start-ups and project revisions. The main reclassifications
to proved developed reserves related to the fields of Zohr
in Egypt (79 mmboe) and Zubair in Iraq (34 mmboe), to the
Area 1 project in Mexico (17 mmboe), to the concession
Umm Shaif/Nasr in the United Arab Emirates (16 mmboe)
and to the Karachaganak field in Kazakhstan (14 mmboe).
(ii) new discoveries and extensions of 40 mmboe, of which 33
mmbbl of oil and 35 BCF of natural gas. The increase in oil
reserves was driven by the FIDs made for the Breidablikk
project in Norway (30 mmboe) and the Pegasus project in
the United States (3 mmboe). The increase of 35 BCF of
natural gas was due to the Mahani field in the United Arab
Emirates;
2,114
(206)
40
53
4
2,005
(iii) revisions of previous estimates were positive for 53
mmboe (which also included the update of the gas
conversion rate), of which 24 mmbbl of oil and around 56
BCF of natural gas. Positive revisions of 319 mmboe were
recorded as result of higher entitlements at the oil fields of
Zubair in Iraq (47 mmboe), of Karachaganak in Kazakhstan
(37 mmboe) and of Area 1 in Mexico (32 mmboe), as well
as of the progress in development activities at the Zohr
gas field in Egypt (37 mmboe), at the field Umm Shaif in
the United Arab Emirates (27 mmboe) and at the Merakes
gas field in Indonesia (44 mmboe). Negative revisions of
266 mmboe were mainly driven by negative price effects
relating to Area A and E in Libya (-41 mmboe), Belayim and
Abu Rudeis in Egypt (-45 mmboe), and by revisions related
to reservoir underperformance at the fields Tuomo West in
Nigeria (-33 mmboe), Val d’Agri in Italy (-23 mmboe), Cafc/
Mle in Algeria (-15 mmboe), Grane in Norway (-12 mmboe),
Nasr in the United Arab Emirates (-6 mmboe), Front Runner
in the United States (-6 mmboe), M’boundi in Congo (-5
mmboe), Blacktip in Australia (-4 mmboe);
(iv) improved recoveries of 4 mmboe mainly referred to the
Burun field in Turkmenistan.
Management report | Consolidated financial statements | Annex 311
PROVED RESERVES OF CRUDE OIL (INCLUDING CONDENSATE AND NATURAL GAS LIQUIDS)
(million barrels)
2020
Consolidated subsidiaries
Reserves at December 31, 2019
of which: developed
undeveloped
Purchase of Minerals in Place
Revisions of Previous Estimates
Improved Recovery
Extensions and Discoveries
Production
Sales of Minerals in Place
Reserves at December 31, 2020
Equity-accounted entities
Reserves at December 31, 2019
of which: developed
undeveloped
Purchase of Minerals in Place
Revisions of Previous Estimates
Improved Recovery
Extensions and Discoveries
Production
Sales of Minerals in Place
Reserves at December 31, 2020
Reserves at December 31, 2020
Developed
consolidated subsidiaries
equity-accounted entities
Undeveloped
consolidated subsidiaries
equity-accounted entities
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Egypt
Africa Kazakhstan
Rest
of Asia
America
Australia
and Oceania
Total
194
137
57
1
(17)
178
178
146
146
32
32
41
37
4
1
(8)
34
424
219
205
(11)
30
(43)
400
434
207
31
176
227
3
224
468
301
167
264
149
115
694
519
175
746
682
64
491
245
246
225
148
77
1
1
(44)
(14)
10
100
114
16
(41)
(23)
(80)
(41)
(32)
5
1
4
(21)
3,124
2,219
905
184
5
5
(263)
383
227
624
805
579
224
1
3,055
12
12
12
395
255
243
12
140
140
227
172
172
55
55
10
7
3
9
(1)
18
642
484
469
15
158
155
3
31
31
(1)
30
254
173
143
30
81
81
477
269
208
(2)
30
(45)
460
3,515
2,451
2,218
233
1,064
837
227
1
1
1
805
716
716
89
89
579
297
297
282
282
Eni Annual Report 2020
312
(million barrels)
2019
Consolidated subsidiaries
Reserves at December 31, 2018
of which: developed
undeveloped
Purchase of Minerals in Place
Revisions of Previous Estimates
Improved Recovery
Extensions and Discoveries
Production
Sales of Minerals in Place(a)
Reserves at December 31, 2019
Equity-accounted entities
Reserves at December 31, 2018
of which: developed
undeveloped
Purchase of Minerals in Place
Revisions of Previous Estimates
Improved Recovery
Extensions and Discoveries
Production
Sales of Minerals in Place
Reserves at December 31, 2019
Reserves at December 31, 2019
Developed
consolidated subsidiaries
equity-accounted entities
Undeveloped
consolidated subsidiaries
equity-accounted entities
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Egypt
Africa Kazakhstan
Rest
of Asia
America
Australia
and Oceania
Total
208
156
52
5
(19)
194
194
137
137
57
57
48
44
4
1
(8)
41
297
154
143
109
45
6
(27)
(6)
424
465
256
37
219
209
4
205
493
317
176
279
153
126
37
10
(62)
2
(27)
468
264
11
11
2
(1)
12
480
313
301
12
167
167
264
149
149
115
115
718
551
167
46
21
(90)
(1)
694
12
8
4
(2)
10
704
526
519
7
178
175
3
704
587
117
476
252
224
79
45
2
(32)
(37)
746
491
746
682
682
64
64
491
245
245
246
246
252
143
109
29
(16)
9
(20)
(29)
225
37
32
5
(5)
(1)
31
256
179
148
31
77
77
5
5
(4)
1
1
1
1
3,183
2,208
975
29
203
34
(295)
(30)
3,124
357
205
152
109
42
6
(31)
(6)
477
3,601
2,488
2,219
269
1,113
905
208
(a) Includes 0.6 Mboe as part of a long-term supply agreement to a state-owned national oil company, whereby the buyer has paid the price without lifting the underlying volume in exercise
of the take-or-pay clause because it is very likely that the buyer will not redeem its contractual right to lift (make up) the volume paid.
Management report | Consolidated financial statements | Annex
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Egypt
Africa Kazakhstan
Rest
of Asia
America
Australia
and Oceania
Total
313
215
169
46
15
(22)
208
208
156
156
52
52
360
219
141
476
306
170
6
73
(40)
(278)
48
297
297
345
198
44
154
147
4
143
(56)
493
12
12
(1)
11
504
328
317
11
176
176
280
203
77
21
7
(28)
(1)
279
279
153
153
126
126
764
546
218
766
547
219
30
(27)
232
81
151
319
(54)
6
1
162
144
18
23
86
(19)
13
(89)
(35)
(28)
718
704
476
252
12
6
6
1
(1)
12
730
559
551
8
171
167
4
136
25
111
(96)
(3)
37
289
175
143
32
114
109
5
704
587
587
117
117
476
252
252
224
224
7
5
2
(1)
(1)
5
5
5
5
3,262
2,220
1,042
319
86
13
100
(318)
(279)
3,183
160
43
117
297
(95)
(5)
357
3,540
2,413
2,208
205
1,127
975
152
(million barrels)
2018
Consolidated subsidiaries
Reserves at December 31, 2017
of which: developed
undeveloped
Purchase of Minerals in Place
Revisions of Previous Estimates
Improved Recovery
Extensions and Discoveries
Production
Sales of Minerals in Place
Reserves at December 31, 2018
Equity-accounted entities
Reserves at December 31, 2017
of which: developed
undeveloped
Purchase of Minerals in Place
Revisions of Previous Estimates
Improved Recovery
Extensions and Discoveries
Production
Sales of Minerals in Place
Reserves at December 31, 2018
Reserves at December 31, 2018
Developed
consolidated subsidiaries
equity-accounted entities
Undeveloped
consolidated subsidiaries
equity-accounted entities
Main changes in proved reserves of crude oil (including
condensates and natural gas liquids) reported in the tables
above for the period 2018, 2019 and 2020 are discussed below.
CONSOLIDATED SUBSIDIARIES
Purchase of Minerals in Place
In 2018, purchase of proved reserves (319 mmbbl) mainly
related to the entry in two Concession Agreements of Lower
Zakum and Umm Shaif and Nasr in Abu Dhabi.
In 2019, purchase of proved reserves (29 mmbbl) related to the
acquisition of 100% of the Oooguruk production field in Alaska.
In 2020, no purchases were made.
Revisions of Previous Estimates
In 2018, revisions of previous estimates of 86 mmbbl were
mainly due to: (i) positive changes in the projects Meleiha in
Egypt, Structure E in Libya and Nikaitchuq in the United States;
(ii) negative changes at Karachaganak in Kazakhstan and
Zubair in Iraq.
In 2019, revisions of previous estimates amounted to 203 mmbbl
and were mainly due to: (i) positive revisions of 79 mmbbl in
Kazakhstan in relation to the progress in development activities
of the Kashagan and Karachaganak fields; (ii) positive revisions of
37 mmbbl in North Africa primarily in relation to the development
of the Berkine Nord project in Algeria and lower contributions
from development projects in Libya; (iii) positive revisions of 46
mmbbl in the Sub-Saharan Africa in relation to the progress in
development activities of projects in Nigeria and Angola; and (iv)
45 mmbbl of upward revisions in the rest of Asia were due to the
progress of development in the Umm Shaiff and other projects
in United Arab Emirates (25 mmbbl) and to entitlement effects
in Iraq, Turkmenistan and Timor Leste. Upward revisions also
include 6 mmbbl in Italy and Rest of Europe and 4 mmbbl in the
United States. Downward revisions (total 24 mmbbl) are related
to Mexico Area 1 (20 mmbbl) due to the removal of uneconomic
volumes and for 4 mmbbl in Australia.
In 2020, revisions of previous estimates amounted to an
increase of 184 mmbbl. Positive revisions of 100 mmbbl
reported in Kazakhstan were driven by higher entitlements and
progress in development activities. In the rest of Asia, positive
revisions of 114 mmbbl were due to higher entitlements in Iraq
(74 mmbbl) and progress at a few projects, among which the
most important was the Umm Shaif/Nasr concession in the
United Arab Emirates (37 mmbbl). In the Sub-Saharan Africa
positive revisions of 10 mmbbl were due to higher entitlements
Eni Annual Report 2020
314
in Nigeria (14 mmbbl), Angola (8 mmbbl) and Ghana (3 mmbbl),
partly offset by negative revisions due to the debooking of the
Loango and Zatchi fields reserves in Congo (-18 mmbbl). In
America, positive revisions of 16 mmbbl were due to higher
entitlements in Mexico (25 mmbbl), partially offset by the
removal of non-economic reserves at various fields in the
United States (-9 mmbbl). In Egypt, negative revisions of 14
mmbbl were mainly due to the Abu Rudeis project. In North
Africa negative revisions of 44 mmbl were driven by price
effects and capital expenditures curtailments in Libya (-30
mmbbl) and Algeria (-17 mmbbl).
Improved Recovery
In 2018, improved recoveries of 13 mmbbl mainly related to
Egypt and Iraq.
In 2019, no improved recoveries were reported.
In 2020, improved recoveries of 5 mmbbl related to the Burun
project in Turkmenistan.
Extensions and Discoveries
In 2018, new discoveries and extensions of 100 mmbbl mainly
related to the sanctioning of the final investment decision for the
Area 1 project in Mexico (85 mmbbl).
In 2019, new discoveries and extensions of 34 mmbbl were
driven for 21 mmbbl by the final investment decisions relating to
the Assa North field in Nigeria and the Agogo field in the operated
Block 15/06 offshore Angola. The remaining extensions and
discoveries related to certain fields in the United States (9
mmbbl in total, relating to Nikaitchuq and Pegasus-2 fields)
and 4 mmbbl in North Africa and Middle East Region driven by
incremental near-field discoveries.
In 2020, new discoveries and extensions added 5 mmbbl related
to the Pegasus and Front Runner fields in the United States and
the Mahani field in the United Arab Emirates 78 BCF related to
the final investment decision relating the Assa North field in
Nigeria and 6 BCF in the United States and United Kingdom.
Sales of Minerals in Place
In 2018, the sale of 279 mmbbl related to the business
combination between Eni Norge AS and Point Resources AS.
The merger agreement provided for the sale of the reserves
of the former subsidiary Eni Norge as part of the business
combination with Point Resources and the acquisition by Eni of
the interest in the reserves held by the joint venture Vår Energi,
in which Eni owns a 70% stake. The merger did not produce
significant effects as the reserves transferred in relation to
the loss of control over the former subsidiary Eni Norge were
offset by the acquisition of Eni’s interest in the reserves of the
equity-accounted entity.
In 2019, the sale of 29 mmbbl related for 28 mmbbl to the sale
of the entire interest in the production assets in Ecuador.
In 2020, no sales of oil properties were reported.
EQUITY-ACCOUNTED ENTITIES
Purchase of Minerals in Place
In 2018, purchase of 297 mmbbl related to the aforementioned
merger operation in Norway leading the acquisition of the
interest in Vår Energi (Eni’s interest 70%).
In 2019, purchase of 109 mmbbl related to the acquisition of
assets of ExxonMobil in Norway by the joint venture Vår Energi.
In 2020, no purchases of proved reserves were made.
Revisions of Previous Estimates
In 2018, negative revisions of previous estimates for 95 mmbbl
included the de-booking of proved undeveloped reserves at a
project in Venezuela (-96 mmbbl) due to the deterioration of
the local operating environment.
In 2019, positive revisions of previous estimates for 42 mmbbl
mainly related to the Rest of Europe area (45 mmbbl) due to
development activities of the Balder X project in Norway.
In 2020, negative revisions of previous estimates amounted
to 2 mmbbl. In the Rest of Europe negative revisions for 11
mmbbl were reported mainly at the Ringhorne East and Ekofisk
fields in Norway driven by price effects. These were partially
offset by positive revisions reported in the Sub-Saharan Africa
up by 9 mmbbl driven by an improved performance at the
Angola LNG project.
Extensions and Discoveries
In 2018, there were no extensions or new discoveries.
In 2019, extensions and new discoveries of 6 mmbbl related to
the development of the Trestakk field in Norway.
In 2020, extensions and new discoveries of 30 mmbbl were
reported as a result of the final investment decision for the
Bredaiblikk project in Norway.
Sales of Minerals in Place
In 2018, no sales were made.
In 2019, sales of 6 mmbbl related to the divestment of minor
assets in Norway.
In 2020, no sales of proved reserves were made.
Management report | Consolidated financial statements | Annex 315
PROVED RESERVES OF NATURAL GAS
(billion cubic feet)
2020
Consolidated subsidiaries
Reserves at December 31, 2019
of which: developed
undeveloped
Purchase of Minerals in Place
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Egypt
Africa Kazakhstan
Rest
of Asia
America
Australia
and Oceania
Total
752
657
95
262
242
20
2,738
1,374
1,364
5,191
4,777
414
4,103
1,858
2,245
1,969
1,969
1,349
685
664
240
186
54
507
322
185
17,111
12,070
5,041
Revisions of Previous Estimates
(288)
5
(259)
(65)
9
138
356
(33)
Improved Recovery
Extensions and Discoveries
Production(a)
Sales of Minerals in Place
(116)
(59)
(278)
(440)
(248)
(104)
(170)
6
54
4
(36)
(137)
64
(33)
(1,484)
Reserves at December 31, 2020
348
208
2,201
4,692
3,864
2,003
1,589
175
474
15,554
Equity-accounted entities
Reserves at December 31, 2019
of which: developed
undeveloped
Purchase of Minerals in Place
Revisions of Previous Estimates
Improved Recovery
Extensions and Discoveries
Production(b)
Sales of Minerals in Place
Reserves at December 31, 2020
Reserves at December 31, 2020
Developed
consolidated subsidiaries
equity-accounted entities
Undeveloped
consolidated subsidiaries
equity-accounted entities
772
597
175
14
14
(128)
1
(134)
510
718
609
194
415
109
14
95
(1)
14
2,215
1,028
1,014
14
1,187
1,187
348
280
280
68
68
4,692
4,511
4,511
181
181
287
88
199
113
(36)
364
4,228
1,921
1,751
170
2,307
2,113
194
1,648
1,648
(12)
(77)
1,559
1,734
1,668
109
1,559
66
66
2,721
2,347
374
(26)
(248)
2,447
18,001
13,009
10,851
2,158
4,992
4,703
289
474
315
315
159
159
2,003
2,003
2,003
1,589
674
674
915
915
(a) It includes production volumes consumed in operations equal to 223 BCF.
(b) It includes production volumes consumed in operations equal to 16 BCF.
Eni Annual Report 2020
316
(billion cubic feet)
2019
Consolidated subsidiaries
Reserves at December 31, 2018
of which: developed
undeveloped
Purchase of Minerals in Place
Revisions of Previous Estimates
Improved Recovery
Extensions and Discoveries
Production(a)
Sales of Minerals in Place(b)
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Egypt
Africa Kazakhstan
Rest
of Asia
America
Australia and
Oceania
Total
1,199
980
219
(310)
320
300
20
4
2
2,890
1,447
1,443
5,275
3,331
1,944
3,506
1,871
1,635
1,989
1,846
143
1,217
822
395
267
467
747
79
104
(137)
(64)
(419)
(551)
277
154
123
7
(23)
4
(24)
(1)
240
1,716
1,716
1
(69)
1,648
1,888
1,834
186
1,648
54
54
651
452
199
17,324
11,203
6,121
7
(108)
1,227
358
(36)
(1,738)
(67)
507
17,111
2,400
2,063
337
405
91
(2)
(173)
2,721
19,832
14,417
12,070
2,347
5,415
5,041
374
507
322
322
185
185
78
(210)
(18)
4,103
310
57
253
13
(36)
287
4,390
1,946
1,858
88
2,444
2,245
199
274
(99)
(198)
(48)
1,969
1,349
1,969
1,969
1,969
1,349
685
685
664
664
Reserves at December 31, 2019
752
262
2,738
5,191
Equity-accounted entities
Reserves at December 31, 2018
of which: developed
undeveloped
Purchase of Minerals in Place
Revisions of Previous Estimates
Improved Recovery
Extensions and Discoveries
Production(c)
Sales of Minerals in Place
Reserves at December 31, 2019
Reserves at December 31, 2019
Developed
consolidated subsidiaries
equity-accounted entities
Undeveloped
consolidated subsidiaries
equity-accounted entities
360
276
84
405
76
(2)
(67)
772
1,034
839
242
597
195
20
175
14
14
1
(1)
14
2,752
1,388
1,374
14
1,364
1,364
752
657
657
95
95
5,191
4,777
4,777
414
414
(a) It includes production volumes consumed in operations equal to 231 BCF.
(b) Includes 17.6 BCF as part of a long-term supply agreement to a state-owned national oil company, whereby the buyer has paid the price without lifting the underlying volume in exercise of
the take-or-pay clause because it is very likely that the buyer will not redeem its contractual right to lift (make up) the volume paid.
(c) It includes production volumes consumed in operations equal to 11 BCF.
Management report | Consolidated financial statements | Annex
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Egypt
Africa Kazakhstan
Rest
of Asia
America
Australia
and Oceania
Total
317
(billion cubic feet)
2018
Consolidated subsidiaries
Reserves at December 31, 2017
of which: developed
undeveloped
Purchase of Minerals in Place
1,131
987
144
896
771
125
3,145
1,233
1,912
4,351
1,421
2,930
3,660
1,693
1,967
23
7
2,108
1,878
230
(22)
1,065
862
203
69
81
205
Revisions of Previous Estimates
138
50
219
2,238
Improved Recovery
Extensions and Discoveries
Production(a)
Sales of Minerals in Place
86
(156)
Reserves at December 31, 2018
1,199
(162)
(464)
320
(474)
2,890
(445)
(869)
5,275
(184)
(97)
(201)
(2)
3,506
1,989
1,217
Equity-accounted entities
Reserves at December 31, 2017
of which: developed
undeveloped
Purchase of Minerals in Place
Revisions of Previous Estimates
Improved Recovery
Extensions and Discoveries
Production(b)
Sales of Minerals in Place
Reserves at December 31, 2018
Reserves at December 31, 2018
Developed
consolidated subsidiaries
equity-accounted entities
Undeveloped
consolidated subsidiaries
equity-accounted entities
14
14
2
(2)
14
2,904
1,461
1,447
14
1,443
1,443
360
360
680
576
300
276
104
20
84
5,275
3,331
3,331
1,944
1,944
349
83
266
(6)
(33)
310
3,816
1,928
1,871
57
1,888
1,635
253
1,199
980
980
219
219
(a) It includes production volumes consumed in operations equal to 222 BCF.
(b) It includes production volumes consumed in operations equal to 8 BCF.
1,989
1,846
1,846
1,217
822
822
143
143
395
395
225
171
54
45
76
(43)
(26)
277
1,819
1,819
(22)
(81)
1,716
1,993
1,870
154
1,716
123
123
709
519
190
17,290
9,535
7,755
69
(16)
2,756
374
(42)
(1,804)
(1,361)
651
17,324
2,182
1,916
266
360
(26)
(116)
2,400
19,724
13,266
11,203
2,063
6,458
6,121
337
651
452
452
199
199
Main changes in proved reserves of natural gas reported
in the tables above for the period 2018, 2019 and 2020 are
discussed below.
CONSOLIDATED SUBSIDIARIES
Purchase of Minerals in Place
In 2018, purchase of 69 BCF essentially related to the entry
in two Concession Agreements in Abu Dhabi as previously
discussed.
In 2019, purchase of 7 BCF related to the Oooguruk field in
Alaska.
In 2020, no purchases were made.
Revisions of Previous Estimates
In 2018, positive revisions of previous estimates of 2,756
BCF mainly related to progress in development activities in
the Zohr and Nidoco NW projects in Egypt (2,238 BCF).
In 2019, positive revisions of previous estimates of 1,227 BCF
mainly related to: (i) the Sub-Saharan Africa area for 747 BCF
following the final investment decision for the upgrading of the
LNG Bonny project in Nigeria (Eni’s interest 10.4%); (ii) Egypt for
467 BCF following the progress in development activities of the
Zohr field and other minor projects; (iii) upward revisions of 267
BCF were reported in North Africa and were mainly driven by
progress in the development at Berkine North fields in Algeria
(227 BCF), while the remaining volumes related to the progress
of activities in Lybia and other fields in Algeria; (iv) in Kazakhstan
we recorded upward revisions of 79 BCF due to better field
performance; (v) in the Rest of Asia the upward revisions related
to Pakistan (23 BCF relating to over nine fields), United Arab
Emirates (13 BCF in three fields), Indonesia at the Jangkrik field
(15 BCF) and Iraq at the Zubair Field (15 BCF) mainly driven by
progress in development activities. Other revisions for 11 BCF
were recorded in the United Kingdom and United States.
In 2020, revisions of previous estimates were a net negative
of 137 BCF. In Italy, 288 BCF of negative revisions were
reported mainly at the Hera Lacina-Linda, Cervia-Arianna,
Luna, Annamaria, Val d’Agri and Porto Garibaldi-Agostino
projects and other gas fields in the Adriatic sea due to price
Eni Annual Report 2020
318
effects. In North Africa, 259 BCF of negative revisions were
driven by price effects in Libya (-287 BCF) in particular at Bahr
Essalam and Area E fields and in various fields in Algeria (+18
BCF). In Egypt, 65 BCF of negative revisions were recorded
at Tuna due to performance revision and at Zohr field due
to price effect. In America, 33 BCF of negative revision were
due to price effects at various US gas fields (-78 BCF), mainly
Alliance fields, partially offset by Area 1 in Mexico (46 BCF).
Revisions were positive for 356 BCF in the Rest of Asia driven
by a better performance at the Merakes projects in Indonesia
(227 BCF) and at the Zubair field in Iraq (97 BCF) due to
improved production expectations. In Kazakhstan, positive
revisions of 138 BCF were reported at the Karachaganak
project due to technical appraisal and higher entitlements.
Improved Recovery
In 2018, 2019 and 2020, no material improved recoveries
were recorded.
Extensions and Discoveries
In 2018, new discoveries and extensions of 374 BCF essentially
related to: (i) Rest of Asia (205 BCF) mainly following to the
final investment decision for the Merakes project in Indonesia;
(ii) Italy (86 BCF) mainly due to the final investment decision
for the Argo and Cassiopea projects; and (iii) America (76 BCF)
due to the final investment decision for the Area 1 operated
project in Mexico.
In 2019, new discoveries and extensions of 358 BCF mainly
related to the Rest of Asia (274 BCF) following to the final
investment decision for the Udr-Ghasha project in the
offshore of the United Arab Emirates.
In 2020, new discoveries and extensions of 64 BCF mainly
related to the Rest of Asia (with an upward revision of 54
BCF) following the final investment decision for the Mahani
field in the United Arab Emirates, with production started-up
in January 2021, and Egypt for the near-field discoveries in
the Bashrush and Abu Madi West concessions.
(869 BCF) following the sale of 10% of the Zohr project
to Mubadala Petroleum; and (ii) Rest of Europe (464 BCF)
mainly following the sale of assets in Croatia and the effects
of the aforementioned business combination in Norway.
In 2019, sales of 67 BCF mainly related to the Rest of Asia
area (48 BCF) following the sale of the 20% stake in the
Merakes discovery in Indonesia.
In 2020, no sales were made.
EQUITY-ACCOUNTED ENTITIES
Purchase of Minerals in Place
In 2018, purchase of 360 BCF related to the aforementioned
merger operation in Norway leading the acquisition of the
interest in Vår Energi.
In 2019, purchase of 405 BCF related to the acquisition of
assets of ExxonMobil in Norway by the joint venture Vår Energi.
In 2020, no purchases were made.
Revisions of Previous Estimates
In 2018, negative revisions of previous estimates of 26 BCF
mainly related to the de-booking of reserves in Venezuela,
already mentioned above.
In 2019, positive revisions of previous estimates of 91 BCF
essentially related to the Rest of Europe (76 BCF) following
the progress in the Balder X project and the Snorre and
Smørbukk fields in Norway.
In 2020, negative revisions of previous estimates of 26 BCF
essentially related to the Rest of Europe (128 BCF) mainly in
relation to the Grane and Midgard projects in Norway. In Sub-
Saharan Africa, 113 BCF of positive revisions were reported
at the Angola LNG project due to a better performance.
Extensions and Discoveries
In 2018, 2019 and 2020, there were no extensions or new
relevant discoveries.
Sales of Minerals in Place
In 2018, sales of 1,361 BCF mainly related to: (i) Egypt
Sales of Minerals in Place
In 2018, 2019 sales were not material in Rest of Asia and
Europe, respectively, while in 2020 no sales were made.
Management report | Consolidated financial statements | Annex 319
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
Estimated future cash inflows represent the revenues that
would be received from production and are determined by
applying the year-end average prices during the years ended.
Future price changes are considered only to the extent provided
by contractual arrangements. Estimated future development
and production costs are determined by estimating the
expenditures to be incurred in developing and producing the
proved reserves at the end of the year. Neither the effects
of price and cost escalations nor expected future changes in
technology and operating practices have been considered.
The standardized measure is calculated as the excess of
future cash inflows from proved reserves less future costs of
producing and developing the reserves, future income taxes
and a yearly 10% discount factor.
Future production costs include the estimated expenditures
related to the production of proved reserves plus any
production taxes without consideration of future inflation.
Future development costs include the estimated costs of
drilling development wells and installation of production
facilities, plus the net costs associated with dismantlement
and abandonment of wells and facilities, under the assumption
that year-end costs continue without considering future
inflation. Future income taxes were calculated in accordance
with the tax laws of the countries in which Eni operates.
The standardized measure of discounted future net cash flows,
related to the preceding proved oil and gas reserves, is calculated
in accordance with the requirements of FASB Extractive Activities
- Oil and Gas (Topic 932). The standardized measure does not
purport to reflect realizable values or fair market value of Eni’s
proved reserves. An estimate of fair value would also take into
account, among other things, hydrocarbon resources other than
proved reserves, anticipated changes in future prices and costs
and a discount factor representative of the risks inherent in the
oil and gas exploration and production activity.
The standardized measure of discounted future net cash flows by geographical area consists of the following:
(€ million)
December 31, 2020
Consolidated subsidiaries
Future cash inflows
Future production costs
Future development
and abandonment costs
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Egypt
Africa Kazakhstan
Rest
of Asia
America
Australia
and Oceania
Total
6,120
(3,587)
1,737
(753)
19,780
(5,431)
26,003
(7,515)
26,901
21,519 22,528
6,638
1,599
132,825
(10,909)
(6,224)
(7,241)
(3,382)
(265)
(45,307)
(1,925)
(756)
(4,378)
(1,638)
(4,257)
(1,743)
(4,511)
(1,786)
(246)
(21,240)
Future net inflow before income tax
Future income tax
Future net cash flows
10 % discount factor
Standardized measure
of discounted future net cash flows
608
(170)
438
(33)
405
Equity-accounted entities
Future cash inflows
Future production costs
Future development
and abandonment costs
Future net inflow before income tax
Future income tax
Future net cash flows
10 % discount factor
Standardized measure
of discounted future net cash flows
Total consolidated subsidiaries
and equity-accounted entities
228
(61)
167
108
275
15,306
(5,942)
(6,244)
3,120
(576)
2,544
(1,055)
1,489
9,971
(4,946)
5,025
(2,413)
16,850
(5,320)
11,530
(4,101)
11,735
(2,988)
8,747
(3,714)
13,552 10,776
(2,313)
(6,774)
11,239
4,002
(6,040)
(1,681)
1,470
(441)
1,029
(482)
1,088
66,278
(140)
(23,153)
948
43,125
(383)
(18,739)
2,612
7,429
5,033
5,199
2,321
547
565
24,386
251
(98)
(29)
124
(54)
70
(43)
27
1,253
(982)
(46)
225
(3)
222
(110)
112
6,291
(1,641)
(137)
4,513
(1,375)
3,138
(1,460)
1,678
23,101
(8,663)
(6,456)
7,982
(2,008)
5,974
(2,668)
3,306
405
1,764
2,639
7,429
5,145
5,199
2,321
2,225
565
27,692
Eni Annual Report 2020
320
(€ million)
December 31, 2019
Consolidated subsidiaries
Future cash inflows
Future production costs
Future development
and abandonment costs
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Egypt
Africa Kazakhstan
Rest
of Asia
America
Australia
and Oceania
Total
12,363
3,268
38,083
37,020
48,778
36,435
31,220
11,378
1,686
220,231
(5,078)
(1,175)
(6,944)
(10,934)
(15,534)
(8,239)
(8,888)
(5,060)
(293)
(62,145)
(3,551)
(1,338)
(4,985)
(1,591)
(6,265)
(2,362)
(6,047)
(2,629)
(225)
(28,993)
Future net inflow before income tax
Future income tax
Future net cash flows
10 % discount factor
Standardized measure
of discounted future net cash flows
3,734
(796)
2,938
(466)
2,472
Equity-accounted entities
Future cash inflows
Future production costs
Future development
and abandonment costs
Future net inflow before income tax
Future income tax
Future net cash flows
10 % discount factor
Standardized measure
of discounted future net cash flows
Total consolidated subsidiaries
and equity-accounted entities
(€ million)
December 31, 2018
Consolidated subsidiaries
Future cash inflows
Future production costs
Future development
and abandonment costs
755
26,154
24,495
(249)
(13,632)
(7,829)
12,522
16,666
(5,852)
(5,822)
26,979
(9,926)
17,053
(6,604)
25,834
16,285
3,689
1,168
129,093
(5,485)
(11,379)
(1,034)
(143)
(50,473)
20,349
4,906
2,655
1,025
78,620
(10,832)
(1,990)
(1,187)
(443)
(33,133)
6,670
10,844
10,449
9,517
2,916
1,468
582
45,487
380
(113)
(23)
244
(77)
167
(88)
79
1,787
(863)
(59)
865
(225)
640
(322)
318
7,730
(2,038)
(145)
5,547
(1,783)
3,764
(1,809)
1,955
34,991
(9,967)
(6,746)
18,278
(9,105)
9,173
(3,763)
5,410
506
63
569
25,094
(6,953)
(6,519)
11,622
(7,020)
4,602
(1,544)
3,058
2,472
3,627
6,749
10,844
10,767
9,517
2,916
3,423
582
50,897
Rest
of Europe
Italy
North
Africa
Sub - Saharan
Egypt
Africa Kazakhstan
Rest
of Asia
America
Australia
and Oceania
Total
18,372
4,895
43,578
39,193
53,534
40,698
33,384
14,192
2,319
250,165
(5,659)
(1,438)
(6,653)
(12,193)
(16,417)
(8,276)
(9,492)
(6,038)
(511)
(66,677)
(4,670)
(1,350)
(4,700)
(2,769)
(6,778)
(2,640)
(5,755)
(2,467)
(291)
(31,420)
Future net inflow before income tax
8,043
2,107
32,225
24,231
30,339
29,782
18,137
5,687
1,517
152,068
Future income tax
Future net cash flows
10 % discount factor
Standardized measure
of discounted future net cash flows
Equity-accounted entities
Future cash inflows
Future production costs
Future development
and abandonment costs
Future net inflow before income tax
Future income tax
Future net cash flows
10 % discount factor
Standardized measure
of discounted future net cash flows
Total consolidated subsidiaries
and equity-accounted entities
(1,671)
6,372
(2,045)
(798)
(17,514)
(7,829)
(11,566)
(6,524)
(11,980)
(1,791)
(289)
(59,962)
1,309
(124)
14,711
16,402
(6,727)
(6,564)
18,773
(7,501)
23,258
6,157
3,896
1,228
92,106
(12,477)
(2,258)
(1,508)
(491)
(39,695)
4,327
1,185
7,984
9,838
11,272
10,781
3,899
2,388
737
52,411
18,608
(4,686)
(3,633)
10,289
(6,822)
3,467
(1,104)
2,363
347
(138)
(3)
206
(43)
163
(76)
87
2,675
(873)
(75)
1,727
(204)
1,523
(793)
730
8,292
(2,192)
(191)
5,909
(1,839)
4,070
(2,009)
2,061
29,922
(7,889)
(3,902)
18,131
(8,908)
9,223
(3,982)
5,241
4,327
3,548
8,071
9,838
12,002
10,781
3,899
4,449
737
57,652
Management report | Consolidated financial statements | Annex
321
CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
Changes in standardized measure of discounted future net cash flows for the years ended December 31, 2020, 2019 and 2018, are
as follows:
(€ million)
2020
Consolidated
subsidiaries
Equity-accounted
entities
Total
Standardized measure of discounted future net cash flows at December 31, 2019
45,487
5,410
50,897
Increase (Decrease):
- sales, net of production costs
- net changes in sales and transfer prices, net of production costs
- extensions, discoveries and improved recovery, net of future production and development costs
- changes in estimated future development and abandonment costs
- development costs incurred during the period that reduced future development costs
- revisions of quantity estimates
- accretion of discount
- net change in income taxes
- purchase of reserves in-place
- sale of reserves in-place
- changes in production rates (timing) and other
Net increase (decrease)
Standardized measure of discounted future net cash flows at December 31, 2020
(€ million)
2019
(10,046)
(34,188)
123
792
4,147
36
7,136
13,336
(2,437)
(21,101)
24,386
(1,490)
(5,324)
142
(834)
1,192
(285)
1,065
3,814
(384)
(2,104)
3,306
(11,536)
(39,512)
265
(42)
5,339
(249)
8,201
17,150
(2,821)
(23,205)
27,692
Consolidated
subsidiaries
Equity-accounted
entities
Total
Standardized measure of discounted future net cash flows at December 31, 2018
52,411
5,241
57,652
Increase (Decrease):
- sales, net of production costs
- net changes in sales and transfer prices, net of production costs
- extensions, discoveries and improved recovery, net of future production and development costs
- changes in estimated future development and abandonment costs
- development costs incurred during the period that reduced future development costs
- revisions of quantity estimates
- accretion of discount
- net change in income taxes
- purchase of reserves in-place
- sale of reserves in-place(a)
- changes in production rates (timing) and other
Net increase (decrease)
Standardized measure of discounted future net cash flows at December 31, 2019
(18,236)
(14,972)
1,240
(1,157)
5,128
5,573
8,666
6,013
260
(429)
990
(6,924)
45,487
(1,675)
(2,247)
86
(916)
687
1,377
1,050
(761)
2,579
(88)
77
169
5,410
(19,911)
(17,219)
1,326
(2,073)
5,815
6,950
9,716
5,252
2,839
(517)
1,067
(6,755)
50,897
(a) Includes volume as part of a long-term supply agreement to a state-owned national oil company, whereby the buyer has paid the price without lifting the underlying volume in exercise of the
take-or-pay clause because it is very likely that the buyer will not redeem its contractual right to lift (make up) the volume paid.
Eni Annual Report 2020
322
(€ million)
2018
Consolidated
subsidiaries
Equity-accounted
entities
Total
Standardized measure of discounted future net cash flows at December 31, 2017
36,993
2,633
39,626
Increase (Decrease):
- sales, net of production costs
- net changes in sales and transfer prices, net of production costs
- extensions, discoveries and improved recovery, net of future production and development costs
- changes in estimated future development and abandonment costs
- development costs incurred during the period that reduced future development costs
- revisions of quantity estimates
- accretion of discount
- net change in income taxes
- purchase of reserves in-place
- sale of reserves in-place
- changes in production rates (timing) and other
Net increase (decrease)
Standardized measure of discounted future net cash flows at December 31, 2018
(19,793)
27,970
1,649
(2,525)
6,468
10,487
5,670
(16,566)
5,369
(8,363)
5,052
15,418
52,411
(445)
671
216
14
(803)
384
193
6,700
(4,322)
2,608
5,241
(20,238)
28,641
1,649
(2,309)
6,482
9,684
6,054
(16,373)
12,069
(8,363)
730
18,026
57,652
Management report | Consolidated financial statements | Annex
323
Certification pursuant to rule 154-bis, paragraph 5
of the Legislative Decree No. 58/1998
(Testo Unico della Finanza)
1. The undersigned Claudio Descalzi and Francesco Esposito, in their quality as Chief Executive Officer and Officer responsible
for the preparation of financial reports of Eni, also pursuant to article 154-bis, paragraphs 3 and 4 of Legislative Decree No.
58 of February 24, 1998, certify that internal controls over financial reporting in place for the preparation of the consolidated
financial statements as of December 31, 2020 and during the period covered by the report, were:
adequate to the Company structure, and
effectively applied during the process of preparation of the report.
2.
Internal controls over financial reporting in place for the preparation of the 2020 consolidated financial statements have been
defined and the evaluation of their effectiveness has been assessed based on principles and methodologies adopted by Eni
in accordance with the Internal Control-Integrated Framework Model issued by the Committee of Sponsoring Organizations
of the Treadway Commission, which represents an internationally-accepted framework for the internal control system.
3. The undersigned officers also certify that:
3.1 2020 consolidated financial statements:
a) have been prepared in accordance with applicable international accounting standards adopted by the European
Community pursuant to Regulation (CE) n. 1606/2002 of the European Parliament and European Council of July 19,
2002;
b) correspond to the accounting books and entries;
c)
fairly and truly represent the financial position, the performance and the cash flows of the issuer and the companies
included in the consolidation as of, and for, the period presented in this report.
3.2 The operating and financial review provides a reliable analysis of business trends and results, including trend analysis of the
issuer and the companies included in the consolidation, as well as a description of the main risks and uncertainties to which
they are exposed..
March 18, 2021
/s/ Claudio Descalzi
Claudio Descalzi
Chief Executive Officer
/s/ Francesco Esposito
Francesco Esposito
Officer responsible for the
preparation of financial reports
324
Independent auditor's report
Independent auditor’s report
in accordance with article 14 of Legislative Decree No. 39 of January 27, 2010 and article 10 of
Regulation (EU) No. 537/2014
To the shareholders of
Eni SpA
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Eni Group (the Group), which comprise the
consolidated balance sheet as of December 31, 2020, the consolidated profit and loss account, the
consolidated statement of comprehensive income, the consolidated statements of changes in equity,
the consolidated statement of cash flows for the year then ended, and notes to the consolidated
financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements give a true and fair view of the financial position of
the Group as of December 31, 2020, and of the result of its operations and cash flows for the year then
ended in accordance with International Financial Reporting Standards as adopted by the European
Union, as well as with the regulations issued to implement article 9 of Legislative Decree No. 38/2005.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISA Italia).
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of this report. We are independent of Eni
SpA (the Company) pursuant to the regulations and standards on ethics and independence applicable
to audits of financial statements under Italian law. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements of the current period. These matters were addressed
in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
325
Key Audit Matters
Auditing procedures performed in
response to key audit matters
Evaluation of hydrocarbon reserves,
measurement of mineral assets and of other
financial statement line items related
thereto
Note 1 “Significant accounting policies, estimates
and judgements”, Note 11 “Property, plant and
equipment”, Note 12 “Right-of-use assets and lease
liabilities”, Note 13 “Intangible assets”, Note 14
“Impairment review of tangible and intangible
assets and right-of-use assets”, Note 15
“Investments” and Note 20 “Provisions” of the
consolidated financial statements
The items “Property, plant and equipment”, “Right-
of-use assets” and “Intangible assets” include
significant amounts related to mineral assets, more
specifically referring to mineral exploitation wells
and plant of the Exploration & Production (E&P)
segment in an amount of Euro 39,648 million, E&P
exploration assets and appraisal amounting to Euro
1,341 million, E&P tangible assets in progress equal
to Euro 7,118 million, Right-of-use assets
amounting to Euro 3,274 million, Exploration rights
in an amount of Euro 888 million.
The carrying amount of the mineral assets also
comprises estimated costs for site restoration and
abandonment and social projects, the provision of
which amounted to Euro 8,454 million at December
31, 2020.
Furthermore, the Group holds investments in the
E&P segment, accounted for with the equity
method, for a total amount of Euro 2,680 million at
December 31, 2020.
Mineral assets are depreciated according to the unit
of production method (also UOP method) based on
the units produced during the year and the
estimated hydrocarbon reserves that can be
produced. At December 31, 2020 depreciation of
mineral assets related to the E&P segment
amounted to Euro 6,273 million.
Our audit procedures consisted in the
comprehension, assessment and verification of
the operating efficacy of relevant controls
implemented by management in respect of the
measurement of hydrocarbon reserves, the
measurement of mineral assets and of the other
financial statement items related thereto.
The audit procedures on the estimate of the
hydrocarbon reserves included, inter alia, the
analysis of the movements in reserves during
the year also compared to the year in which
these reserves were set up, an understanding of
the main assumptions and verification of their
reasonableness.
With reference to the estimate of abandonment
costs, the following additional audit procedures
were also carried out:
(i) We obtained an understanding of the
legislative and regulatory framework and
of the underlying mineral arrangements;
(ii) We compared the costs and related times
of expenses at year-end with the previous
year’s forecasts and, when significant, we
investigated the differences identified and
we also verified the consistency of the
expected expenses and times in
comparison with actual data.
At year-end mineral assets recognised in the
consolidated financial statements are tested for
Regarding the valuation of Exploration rights
and Exploration activities and E&P appraisal,
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impairment. The recoverable amount of mineral
assets is generally taken as being equal to their
value in use and determined discounting the
expected future cash flows from the use of the
assets.
As at December 31, 2020 net impairment losses
related to the mineral assets of the E&P segment
and to the interest in Var Energi AS (valued at
equity), heavily affected by the COVID-19 pandemic
which led to an historic drop in the hydrocarbon
demand and the consequent slump in commodity
prices, amounted to Euro 1,860 million and Euro
918 million respectively.
The estimate of hydrocarbon reserves and the
determination of the value of mineral assets and of
the related items are based on a series of factors,
assumptions and variables, such as:
(i)
(ii)
accuracy of the estimate of the reserves which
depends on the quality of the available
geological, technical and economic data, as
well as the related interpretation and
evaluation by the Group’ internal and external
experts;
the estimate of future production units and
related flows of operating income and expense,
of development and abandonment costs, as
well as the timing these costs are incurred;
(iii) long-term price projections of hydrocarbons,
which include the possible impacts linked to
the energy transition, reflected in the 2021 –
2024 Strategic Plan, and which management
considers to be consistent with the goals of the
2015 Cop21 Paris Agreement on climate;
(iv) changes in the tax legislation, in
(v)
administrative regulations and changes in the
underlying contract types;
the production of oil and natural gas extracted
and subsequent reservoir analyses, which can
entail significant revisions;
(vi) changes in oil and natural gas prices, which
could affect the volumes of reserves compared
to the initial estimate; and
(vii) the discount rate used.
We paid special attention to the risk of incorrect
quantification of the estimates carried out by
management in relation to the valuation of
we discussed the prospects of the main
exploration projects with management, for
which we verified the consistency with the
planned investment provided in the Group’s
forecast plans including, among others, the
achievement of the decarbonization targets set
by the Group.
The audit procedures relating to depreciation
and amortization also included verifying the use
of the UOP rates resulting from the valuation of
the reserves and re-calculations, on a sample
basis, carried out with the support of our
Information Technology experts.
With regard to the impairment test the
following additional audit procedures were also
carried out:
(i) We verified the consistency of the method
used by the Group with the requirements
of IAS 36 and particularly the
appropriateness of the cash flows used
and related consistency with the Group’s
forecast plans;
(ii) For a sample of CGUs, we verified the
reasonableness of the assumptions used
by management to estimate cash flows
and we checked they were in line with the
estimated reserves and site abandonment
and restoration costs;
(iii) We verified the sensitivity analysis
performed by the Company.
We evaluated the technical expertise and
objectivity of the Group’s internal and external
experts involved in the valuation process, as
well as the methods used by them.
Our Corporate Finance and Treasury experts
and those of the Capital Projects &
Infrastructure function supported us in the
verification of the consistency of the
assumptions contained in the 2021 – 2024
Strategic Plan with the changed macroeconomic
perspectives of the E&P segment, also in
relation to the effects of the COVID-19
pandemic, and in particular (i) the examination
of the different valuation models used, (ii) the
verification of the methods adopted to estimate
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hydrocarbon reserves and the measurement of
mineral assets and the other financial statement line
items related thereto considering (i) the high degree
of uncertainty of the estimates and measurements
(ii) the technical complexity of the valuation models
used and (iii) the significant impact of the COVID-
19 pandemic and the consequent drop in the
hydrocarbon consumption which determined the
slump in commodity prices and (iv) the materiality
of the related financial statement line items.
the medium/long-term prices of commodities
including the verification of the consistency of
such prices with the most recent market
consensus, (iii) the verification of inflation
rates, also in comparison with the market prices
and those expressed by sector analysts and (iv)
the examination of the different discount rates
adopted.
Finally, we verified the disclosures provided in
the notes to the financial statements on all the
above-reported matters relating to mineral
assets and the other financial statement line
items related thereto as well as their
consistency with the information contained in
the consolidated non-financial statement on the
achievement of carbon neutrality and the
related climate risks.
Proceedings concerning corporate criminal
and administrative liability and other
criminal proceedings
Note 1 “Significant accounting policies, estimates
and judgements” and Note 27 “Guarantees,
commitments and risks” – Section “Legal
proceedings” – of the consolidated financial
statements
The Group is involved in various legal proceedings
of which we highlight, among others, the corporate
criminal and administrative liability in respect of
the Congo Investigation and the OPL 245 Nigeria,
and Criminal Proceedings 12333/2017.
Regarding the Congo investigation, following the
reduction of the offence of international corruption
and Eni’s adhesion to the hypothesis of agreed
sanctions submitted by the Public Prosecutor, Eni
accrued Euro 11.8 million to the provision for risks.
In relation to the OPL 245 Nigeria proceedings, for
which a trial judgment of acquittal was handed
down on March 17, 2021, and in relation to Criminal
Proceedings 12333/2017 the Group made no
accruals to the risk provision as an unfavourable
outcome has been considered unlikely by the
directors.
Assessing the possible implications for the Group of
such proceedings represented a complex evaluation
We addressed our audit procedures to
comprehend, assess and validate the internal
control system in connection with the process of
management of the proceedings in which the
Group is involved, especially those controls for
the determination of the likelihood to lose the
case and the adequacy of the disclosures.
More specifically, we conducted an
understanding of the estimation process
adopted by the Group in relation to the overall
analysis of the proceedings and the evaluation
of the expected outcome therefrom, as well as
the review of the design and correct operation
of the relevant controls.
In addition to the above, supported also by our
PwC Legal and Forensic experts, we conducted
an understanding and examined the main
assumptions used by the directors in forming
their judgment on the evaluation of the
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process which entailed a significant degree of
professional judgement by the directors as regards
both the quantification of the potential accounting
impacts and the preparation of the financial
statement disclosures.
The directors, in applying their judgment, were
supported by in-house and external legal experts in
charge of assisting them with the various ongoing
proceedings.
outcomes of the significant legal disputes and
on the disclosures provided in the financial
statements, also through:
Examination of the legal documentation
regarding significant proceedings, as well as
the investigation reports prepared by the
experts engaged by the Group and/or by the
Group’s governance bodies.
Examination of the information acquired
through interviews with the Group’s
internal legal counsels, with the Internal
Audit function, with the Compliance
function, with the Board of Statutory
Auditors and with the Control and Risk
Committee.
Examination of the replies obtained to the
requests for external confirmation from
external legal counsels involved in these
significant proceedings.
The findings of the analyses we performed
were compared with the evaluations
expressed in the financial statements and
the disclosures provided by the directors
therein.
Responsibilities of the Directors and the Board of Statutory Auditors for the
Consolidated Financial Statements
The directors are responsible for the preparation of consolidated financial statements that give a true
and fair view in accordance with International Financial Reporting Standards as adopted by the
European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No.
38/2005 and, in the terms prescribed by law, for such internal control as they determine is necessary
to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
The directors are responsible for assessing the Group’s ability to continue as a going concern and, in
preparing the consolidated financial statements, for the appropriate application of the going concern
basis of accounting, and for disclosing matters related to going concern. In preparing the consolidated
financial statements, the directors use the going concern basis of accounting unless they either intend
to liquidate Eni SpA or to cease operations, or have no realistic alternative but to do so.
The board of statutory auditors is responsible for overseeing, in the terms prescribed by law, the
Group’s financial reporting process.
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Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not
a guarantee that an audit conducted in accordance with International Standards on Auditing (ISA
Italia) will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the consolidated financial
statements.
As part of our audit conducted in accordance with International Standards on Auditing (ISA Italia), we
exercised professional judgement and maintained professional scepticism throughout the audit.
Furthermore:
We identified and assessed the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error; we designed and performed audit procedures
responsive to those risks; we obtained audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control;
We obtained an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control;
We evaluated the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors;
We concluded on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern;
We evaluated the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
We obtained sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit opinion on the consolidated financial
statements.
We communicated with those charged with governance, identified at an appropriate level as required
by ISA Italia regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identified
during our audit.
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We also provided those charged with governance with a statement that we complied with the
regulations and standards on ethics and independence applicable under Italian law and communicated
with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determined those matters
that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We described these matters in our auditor’s report.
Additional Disclosures required by Article 10 of Regulation (EU) No. 537/2014
On May 10, 2018, the shareholders of Eni SpA in general meeting engaged us to perform the statutory
audit of the Company’s and the consolidated financial statements for the years ending December 31,
2019 to December 31, 2027.
We declare that we did not provide any prohibited non-audit services referred to in article 5,
paragraph 1, of Regulation (EU) No. 537/2014 and that we remained independent of the Company in
conducting the statutory audit.
We confirm that the opinion on the consolidated financial statements expressed in this report is
consistent with the additional report to the board of statutory auditors, in its capacity as audit
committee, prepared pursuant to article 11 of the aforementioned Regulation.
Report on Compliance with other Laws and Regulations
Opinion in accordance with Article 14, paragraph 2, letter e), of Legislative Decree No.
39/2010 and Article 123-bis, paragraph 4, of Legislative Decree No. 58/1998
The directors of Eni SpA are responsible for preparing a report on operations and a report on the
corporate governance and ownership structure of the Eni Group as of December 31, 2020, including
their consistency with the relevant consolidated financial statements and their compliance with the
law.
We have performed the procedures required under auditing standard (SA Italia) No. 720B in order to
express an opinion on the consistency of the report on operations and of the specific information
included in the report on corporate governance and ownership structure referred to in article 123-bis,
paragraph 4, of Legislative Decree No. 58/1998, with the consolidated financial statements of the Eni
Group as of December 31, 2020 and on their compliance with the law, as well as to issue a statement
on material misstatements, if any.
In our opinion, the report on operations and the specific information included in the report on
corporate governance and ownership structure mentioned above are consistent with the consolidated
financial statements of Eni Group as of December 31, 2020 and are prepared in compliance with the
law.
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With reference to the statement referred to in article 14, paragraph 2, letter e), of Legislative Decree
No. 39/2010, issued on the basis of our knowledge and understanding of the Company and its
environment obtained in the course of the audit, we have nothing to report.
Statement in accordance with article 4 of Consob’s Regulation implementing
Legislative Decree No. 254 of December 30, 2016
The directors of Eni SpA are responsible for the preparation of the non-financial statement pursuant to
Legislative Decree No. 254 of December 30, 2016.
We have verified that the directors approved the non-financial statement.
Pursuant to article 3, paragraph 10, of Legislative Decree No. 254 of December 30, 2016, the non-
financial statement is the subject of a separate statement of compliance issued by ourselves.
Rome, April 2, 2021
PricewaterhouseCoopers SpA
Signed by
Giovanni Andrea Toselli
(Partner)
This report has been translated into English from the Italian original solely for the convenience of
international readers
8 of 8
Annex
2020
1 MANAGEMENT REPORT
2 CONSOLIDATED FINANCIAL STATEMENTS
4 ANNEX
List of companies owned by Eni SpA as of December 31, 2020
Investments owned by Eni as of December 31, 2020
Changes in the scope of consolidation for 2020
2
186
332
334
334
369
334
List of companies owned by Eni SpA
as of December 31, 2020
INVESTMENTS OWNED BY ENI
AS OF DECEMBER 31, 2020
In accordance with the provisions of Articles 38 and 39 of the
Legislative Decree No. 127/1991 and Consob communication
No. DEM/6064293 of July 28, 2006, the list of subsidiaries, joint
arrangements and associates and significant investments
owned by Eni SpA as of December 31, 2020, is presented
below. Companies are divided by business segment and, within
each segment, they are ordered between Italy and outside
Italy and alphabetically. For each company are indicated:
company name, registered head office, operating office,
share capital, shareholders and percentage of ownership;
for consolidated subsidiaries is indicated the equity ratio
attributable to Eni; for unconsolidated investments owned by
consolidated companies is indicated the valuation method. In
the footnotes are indicated which investments are quoted in
the Italian regulated markets or in other regulated markets of
the European Union and the percentage of the ordinary voting
rights entitled to shareholders if different from the percentage
of ownership. The currency codes indicated are reported in
accordance with the International Standard ISO 4217.
As of December 31, 2020, the breakdown of the companies
owned by Eni is provided in the table below:
Fully consolidated subsidiaries
Consolidated joint operations
Investments owned by consolidated companies(b)
Equity-accounted investments
Investments at cost net of impairment losses
Investments at fair value
Investments owned by unconsolidated companies
Owned by controlled companies
Owned by joint arrangements
Italy
38
5
4
9
Subsidiaries
Outside
Italy
Joint arrangements
and associates
Other significant
investments(a)
Total
Italy
Outside
Italy
Total
Italy
Outside
Italy
Total
151
189
4
5
9
30
5
35
35
9
44
24
2
26
46
27
73
4
4
8
86
4
4
22
22
26
26
70
29
99
4
4
8
116
4
22
26
Total
47
186
233
30
(a) Relates to investments other than subsidiaries, joint arrangements and associates with an ownership interest greater than 2% for listed companies or 10% for unlisted companies.
(b) Investments in subsidiaries accounted for using the equity method and at cost net of impairment losses relate to non-significant companies.
SUBSIDIARIES AND
JOINT ARRANGEMENTS
RESIDENT IN STATES OR TERRITORY WITH A
PRIVILEGED TAX REGIME
The Legislative Decree of 29 November 2018, No. 241,
enforcing the EU Directive rules in the matter of tax avoidance
practices, modified the definition of a State or territory with
a privileged tax regime pursuant to Art. 47-bis of the D.P.R.
December 22, 1986, No. 917. Following the aforementioned
amendments and the amendments to Art. 167 of the D.P.R.
December 22, 1986, No. 917, the provisions regarding foreign
subsidiaries, CFC, are applied if the non-resident controlled
entities jointly present the following conditions: (a) they are
subject to an effective taxation of less than half to which
they would have been subject if they were resident in Italy;
(b) more than one third of the proceeds fall into one or more
of the following categories: interests, royalties, dividends,
financial leasing income, income from insurance and banking
activities, income from intra-group services with low or zero
added economic value.
As of December 31, 2020, Eni controls 5 companies that
benefit from a privileged tax regime. Of these 5 companies,
4 are subject to taxation in Italy because they are included
in Eni's tax return, 1 company is not subject to taxation in
Italy for the exemption obtained by the Revenue Agency. No
subsidiary that benefits from a privileged tax regime has
issued financial instruments. All the financial statements for
2020 are audited by PricewaterhouseCoopers.
Management report | Consolidated financial statements | Annex PARENT COMPANY
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Eni SpA(#)
Rome
Italy
EUR
4,005,358,876
Cassa Depositi e Prestiti SpA
Ministero dell'Economia e delle Finanze
Eni SpA
Other shareholders
SUBSIDIARIES
Exploration & Production
IN ITALY
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Eni Angola SpA
Eni Mediterranea Idrocarburi SpA
Eni Mozambico SpA
Eni Timor Leste SpA
Eni West Africa SpA
Floaters SpA
Ieoc SpA
Società Petrolifera Italiana SpA
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ffi
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San Donato
Milanese (MI)
Gela (CL)
San Donato
Milanese (MI)
San Donato
Milanese (MI)
San Donato
Milanese (MI)
San Donato
Milanese (MI)
San Donato
Milanese (MI)
San Donato
Milanese (MI)
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w
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%
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q
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%
Angola
EUR
20,200,000
Eni SpA
100.00
100.00
Italy
Mozambique
EUR
EUR
5,200,000
Eni SpA
200,000
Eni SpA
100.00
100.00
100.00
100.00
East Timor
EUR
4,386,849
Eni SpA
100.00
100.00
Angola
EUR
10,000,000
Eni SpA
100.00
100.00
Italy
Egypt
Italy
EUR
200,120,000
Eni SpA
100.00
100.00
EUR
7,518,000
Eni SpA
100.00
100.00
EUR
8,034,400
Eni SpA
Third parties
99.96
0.04
99.96
335
p
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s
r
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n
w
O
%
25.96
4.37
0.92
68.75
)
*
(
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F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(#) Company with shares quoted in the regulated market of Italy or of other EU countries
Eni Annual Report 2020
336
OUTSIDE ITALY
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w
O
%
o
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a
r
y
t
i
u
q
E
%
Agip Caspian Sea BV
Amsterdam
(Netherlands)
Kazakhstan
EUR
20,005
Eni International BV
100.00
100.00
Agip Energy and Natural Resources
(Nigeria) Ltd
Abuja
(Nigeria)
Nigeria
NGN
5,000,000
Eni International BV
Eni Oil Holdings BV
95.00
5.00
100.00
Agip Karachaganak BV
Amsterdam
(Netherlands)
Kazakhstan
EUR
20,005
Eni International BV
100.00
100.00
Burren Energy (Bermuda) Ltd(1)
Hamilton
(Bermuda)
United
Kingdom
USD
12,002
Burren Energy Plc
100.00
100.00
Burren Energy (Egypt) Ltd
Burren Energy Congo Ltd(2)
Burren Energy India Ltd
Burren Energy Plc
Burren Shakti Ltd(3)
Eni Abu Dhabi BV
Eni AEP Ltd
Eni Albania BV
Eni Algeria Exploration BV
Eni Algeria Ltd Sàrl
Eni Algeria Production BV
Eni Ambalat Ltd
Eni America Ltd
Eni Angola Exploration BV
Eni Angola Production BV
Eni Argentina Exploración y
Explotación SA
Eni Arguni I Ltd
Eni Australia BV
London
(United Kingdom)
Tortola
(British Virgin
Islands)
Egypt
GBP
2
Burren Energy Plc
100.00
Republic of
the Congo
USD
50,000
Burren En. (Berm) Ltd
100.00
100.00
London
(United Kingdom)
United
Kingdom
London
(United Kingdom)
United
Kingdom
Hamilton
(Bermuda)
United
Kingdom
Amsterdam
(Netherlands)
United Arab
Emirates
GBP
2
Burren Energy Plc
100.00
100.00
GBP
28,819,023
Eni UK Holding Plc
Eni UK Ltd
99.99
(..)
100.00
USD
213,138
Burren En. India Ltd
100.00
100.00
EUR
20,000
Eni International BV
100.00
100.00
London
(United Kingdom)
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
Luxembourg
(Luxembourg)
Amsterdam
(Netherlands)
London
(United Kingdom)
Dover
(USA)
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
Buenos Aires
(Argentina)
London
(United Kingdom)
Amsterdam
(Netherlands)
Pakistan
GBP
471,000
Eni UK Ltd
100.00
100.00
Netherlands
EUR
20,000
Eni International BV
100.00
100.00
Algeria
EUR
20,000
Eni International BV
100.00
100.00
Algeria
USD
20,000
Eni Oil Holdings BV
100.00
100.00
Algeria
EUR
20,000
Eni International BV
100.00
100.00
Indonesia
GBP
1
Eni Indonesia Ltd
100.00
100.00
USA
USD
72,000
Eni UHL Ltd
100.00
100.00
Angola
EUR
20,000
Eni International BV
100.00
100.00
Angola
EUR
20,000
Eni International BV
100.00
100.00
Argentina
ARS
205,000,000
Eni International BV
Eni Oil Holdings BV
95.00
5.00
100.00
Indonesia
GBP
1
Eni Indonesia Ltd
100.00
100.00
Australia
EUR
20,000
Eni International BV
100.00
100.00
)
*
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F.C.
F.C.
F.C.
F.C.
Eq.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(1) Company that benefits from a privileged tax regime pursuant to Art. 167, paragraph 4 of the D.P.R. of December 22, 1986, n. 917: the company is not subjected to
taxation in Italy for the exemption obtained by the Revenue Agency.
(2) Company that does not benefit from a privileged tax regime pursuant to Art. 167, paragraph 4 of the D.P.R. of December 22, 1986, n. 917: the company operates with
permanent establishment in Congo and the nominal tax rate is not lower than 50% of that current in Italy.
(3) Company that benefits from a privileged tax regime pursuant to Art. 167, paragraph 4 of the D.P.R. of December 22, 1986, n. 917: the company is subjected to
taxation in Italy because it is included in Eni's tax return.
Management report | Consolidated financial statements | Annex
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O
%
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a
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t
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%
Australia
GBP
20,000,000
Eni International BV
100.00
100.00
337
)
*
(
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F.C.
Bahrain
EUR
20,000
Eni International BV
100.00
100.00
F.C.
USA
USD
1,000 Eni Petroleum Co Inc
100.00
100.00
F.C.
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London
(United Kingdom)
Amsterdam
(Netherlands)
Dover
(USA)
London
(United Kingdom)
United
Kingdom
GBP
London
(United Kingdom)
Indonesia
GBP
1
1
Eni International BV
100.00
Eni Indonesia Ltd
100.00
100.00
Calgary
(Canada)
London
(United Kingdom)
Amsterdam
(Netherlands)
Point-Noire
(Republic of the
Congo)
London
(United Kingdom)
Nicosia
(Cyprus)
Amsterdam
(Netherlands)
Rio de Janeiro
(Brazil)
London
(United Kingdom)
London
(United Kingdom)
Canada
USD
1,453,200,001
Eni International BV
100.00
100.00
Indonesia
USD
2,210,728
Eni Lasmo Plc
100.00
China
EUR
20,000
Eni International BV
100.00
100.00
Republic of
the Congo
USD
17,000,000
Eni E&P Holding BV
Eni Int. NA NV Sàrl
Eni International BV
100.00
99.99
(..)
(..)
Ivory Coast
GBP
1
Eni Lasmo Plc
100.00
100.00
Cyprus
EUR
2,007
Eni International BV
100.00
100.00
Greenland
EUR
20,000
Eni International BV
100.00
Brazil
BRL
1,593,415,000
Eni International BV
Eni Oil Holdings BV
99.99
(..)
Indonesia
GBP
Indonesia
GBP
1
1
Eni Indonesia Ltd
100.00
100.00
Eni Indonesia Ltd
100.00
100.00
London
(United Kingdom)
United
Kingdom
GBP
100
Eni UK Ltd
100.00
100.00
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
Libreville
(Gabon)
London
(United Kingdom)
Amsterdam
(Netherlands)
Netherlands
EUR
20,000
Eni International BV
100.00
100.00
Netherlands
EUR
29,832,777.12
Eni International BV
100.00
100.00
Gabon
XAF
4,000,000,000
Eni International BV
100.00
100.00
Indonesia
GBP
2
Eni Indonesia Ltd
100.00
100.00
Australia
EUR
1,013,439
Eni International BV
100.00
100.00
Eq.
F.C.
F.C.
Eq.
F.C.
F.C.
F.C.
F.C.
Eq.
Eq
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
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Eni Australia Ltd
Eni Bahrain BV
Eni BB Petroleum Inc
Eni BTC Ltd
Eni Bukat Ltd
Eni Canada Holding Ltd
Eni CBM Ltd
Eni China BV
Eni Congo SA
Eni Côte d'Ivoire Ltd
Eni Cyprus Ltd
Eni Denmark BV
Eni do Brasil Investimentos
em Exploração e Produção
de Petróleo Ltda
Eni East Ganal Ltd
Eni East Sepinggan Ltd
Eni Elgin/Franklin Ltd
Eni Energy Russia BV
Eni Exploration & Production
Holding BV
Eni Gabon SA
Eni Ganal Ltd
Eni Gas & Power LNG Australia BV
Eni Ghana Exploration
and Production Ltd
Accra
(Ghana)
Ghana
GHS
21,412,500
Eni International BV
100.00
100.00
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Eni Annual Report 2020
338
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R
n
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a
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y
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y
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u
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l
a
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a
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a
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S
s
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d
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a
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S
p
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s
r
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n
w
O
%
o
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a
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y
t
i
u
q
E
%
Eni Hewett Ltd
Aberdeen
(United Kingdom)
United
Kingdom
GBP
3,036,000
Eni UK Ltd
100.00
100.00
Eni Hydrocarbons Venezuela Ltd
Eni India Ltd
Eni Indonesia Ltd
Eni Indonesia Ots 1 Ltd(4)
Eni International NA NV Sàrl
Eni Investments Plc
Eni Iran BV
Eni Iraq BV
Eni Ireland BV
Eni Isatay BV
Eni JPDA 03-13 Ltd
Eni JPDA 06-105 Pty Ltd
Eni JPDA 11-106 BV
Eni Kenya BV
Eni Krueng Mane Ltd
Eni Lasmo Plc
Eni Lebanon BV
Eni Liverpool Bay Operating Co Ltd
Eni LNS Ltd
Eni Marketing Inc
Eni Maroc BV
Eni México S. de RL de CV
London
(United Kingdom)
London
(United Kingdom)
London
(United Kingdom)
Grand Cayman
(Cayman Islands)
Venezuela
GBP
8,050,500
Eni Lasmo Plc
100.00
100.00
India
GBP
44,000,000
Eni Lasmo Plc
100.00
Indonesia
GBP
100
Eni ULX Ltd
100.00
100.00
Indonesia
USD
1.01
Eni Indonesia Ltd
100.00
100.00
Luxembourg
(Luxembourg)
United
Kingdom
London
(United Kingdom)
United
Kingdom
Iran
Iraq
USD
25,000
Eni International BV
100.00
100.00
GBP
750,050,000
Eni SpA
Eni UK Ltd
99.99
(..)
100.00
EUR
20,000
Eni International BV
100.00
EUR
20,000
Eni International BV
100.00
100.00
Ireland
EUR
20,000
Eni International BV
100.00
100.00
Kazakhstan
EUR
20,000
Eni International BV
100.00
100.00
Australia
GBP
250,000
Eni International BV
100.00
100.00
Australia
AUD
80,830,576
Eni International BV
100.00
100.00
Australia
EUR
50,000
Eni International BV
100.00
100.00
Kenya
EUR
20,000
Eni International BV
100.00
100.00
Indonesia
GBP
2
Eni Indonesia Ltd
100.00
100.00
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
London
(United Kingdom)
Perth
(Australia)
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
London
(United Kingdom)
London
(United Kingdom)
United
Kingdom
GBP 337,638,724.25
Eni Investments Plc
Eni UK Ltd
99.99
(..)
100.00
Amsterdam
(Netherlands)
Lebanon
EUR
20,000
Eni International BV
100.00
100.00
London
(United Kingdom)
United
Kingdom
London
(United Kingdom)
United
Kingdom
GBP
GBP
1
1
Eni UK Ltd
100.00
Eni UK Ltd
100.00
100.00
Dover
(USA)
Amsterdam
(Netherlands)
Lomas De
Chapultepec,
Mexico City
(Mexico)
USA
USD
1,000
Eni Petroleum Co Inc
100.00
100.00
Morocco
EUR
20,000
Eni International BV
100.00
100.00
Mexico
MXN
3,000
Eni International BV
Eni Oil Holdings BV
99.90
0.10
100,00
)
*
(
d
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a
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C
F.C.
F.C.
Eq.
F.C.
F.C.
F.C.
F.C.
Eq.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
Eq.
F.C.
F.C.
F.C.
F.C.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(4) Company that does not benefit from a privileged tax regime pursuant to Art. 167, paragraph 4 of the D.P.R. of December 22, 1986, n. 917: the company operates with
permanent establishment in Indonesia and the nominal tax rate is not lower than 50% of that current in Italy.
Management report | Consolidated financial statements | Annex
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Eni Middle East Ltd
Eni MOG Ltd
(in liquidation)
Eni Montenegro BV
Eni Mozambique Engineering Ltd
Eni Mozambique LNG Holding BV
Eni Muara Bakau BV
Eni Myanmar BV
Eni North Africa BV
Eni North Ganal Ltd
Eni Oil & Gas Inc
Eni Oil Algeria Ltd
Eni Oil Holdings BV
Eni Oman BV
Eni Pakistan Ltd
Eni Pakistan (M) Ltd Sàrl
Eni Petroleum Co Inc
Eni Petroleum US Llc
Eni Portugal BV
Eni RAK BV
Eni Rapak Ltd
Eni RD Congo SA
Eni Rovuma Basin BV
Eni Sharjah BV
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
London
(United Kingdom)
United
Kingdom
London
(United Kingdom)
United
Kingdom
Amsterdam
(Netherlands)
Republic of
Montenegro
London
(United Kingdom)
United
Kingdom
y
c
n
e
r
r
u
C
GBP
GBP
l
a
t
i
p
a
C
e
r
a
h
S
1
0
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Eni ULT Ltd
100.00
100.00
Eni Lasmo Plc
Eni LNS Ltd
99.99
(..)
100.00
EUR
20,000
Eni International BV
100.00
100.00
GBP
1
Eni Lasmo Plc
100.00
100.00
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
London
(United Kingdom)
Dover
(USA)
London
(United Kingdom)
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
London
(United Kingdom)
Luxembourg
(Luxembourg)
Dover
(USA)
Dover
(USA)
Amsterdam
(Netherlands)
Netherlands
EUR
20,000
Eni International BV
100.00
100.00
Indonesia
EUR
20,000
Eni International BV
100.00
100.00
Myanmar
EUR
20,000
Eni International BV
100.00
100.00
Libya
EUR
20,000
Eni International BV
100.00
100.00
Indonesia
GBP
1
Eni Indonesia Ltd
100.00
100.00
USA
USD
100,800
Eni America Ltd
100.00
100.00
Algeria
GBP
1,000
Eni Lasmo Plc
100.00
100.00
Netherlands
EUR
450,000
Eni ULX Ltd
100.00
100.00
Oman
EUR
20,000
Eni International BV
100.00
100.00
Pakistan
GBP
90,087
Eni ULX Ltd
100.00
100.00
Pakistan
USD
20,000
Eni Oil Holdings BV
100.00
100.00
USA
USA
USD
156,600,000
Eni SpA
Eni International BV
63.86
36.14
100.00
USD
1,000
Eni BB Petroleum Inc
100.00
100.00
Portugal
EUR
20,000
Eni International BV
100.00
Amsterdam
(Netherlands)
United Arab
Emirates
EUR
20,000
Eni International BV
100.00
100.00
London
(United Kingdom)
Kinshasa
(Democratic
Republic
of the Congo )
Amsterdam
(Netherlands)
Indonesia
GBP
2
Eni Indonesia Ltd
100.00
100.00
Democratic
Republic of
the Congo
CDF
750,000,000
Eni International BV
Eni Oil Holdings BV
99.99
(..)
Mozambique EUR
20,000
Eni Mozambique LNG
H. BV
100.00
100.00
Amsterdam
(Netherlands)
United Arab
Emirates
EUR
20,000
Eni International BV
100.00
100.00
339
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
Eq.
F.C.
F.C.
Eq.
F.C.
F.C.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Eni Annual Report 2020
340
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Eni South Africa BV
Amsterdam
(Netherlands)
Republic of
South Africa
EUR
20,000
Eni International BV
100.00
100.00
Eni South China Sea Ltd Sàrl
Luxembourg
(Luxembourg)
China
USD
20,000
Eni International BV
100.00
Eni TNS Ltd
Eni Tunisia BV
Eni Turkmenistan Ltd(5)
Eni UHL Ltd
Eni UK Holding Plc
Eni UK Ltd
Eni UKCS Ltd
Aberdeen
(United Kingdom)
United
Kingdom
GBP
1,000
Eni UK Ltd
100.00
100.00
Amsterdam
(Netherlands)
Hamilton
(Bermuda)
Tunisia
EUR
20,000
Eni International BV
100.00
100.00
Turkmenistan USD
20,000
Burren En. (Berm) Ltd
100.00
100.00
London
(United Kingdom)
United
Kingdom
London
(United Kingdom)
United
Kingdom
London
(United Kingdom)
United
Kingdom
London
(United Kingdom)
United
Kingdom
GBP
1
Eni ULT Ltd
100.00
100.00
GBP
424,050,000
Eni Lasmo Plc
Eni UK Ltd
99.99
(..)
100.00
GBP
50,000,000
Eni International BV
100.00
100.00
GBP
100
Eni UK Ltd
100.00
100.00
Eni Ukraine Holdings BV
Eni Ukraine Llc
Eni Ukraine Shallow Waters BV
Amsterdam
(Netherlands)
Kiev
(Ukraine)
Amsterdam
(Netherlands)
Netherlands
EUR
20,000
Eni International BV
100.00
100.00
Ukraine
UAH 90,765,492.19
Eni Ukraine Hold. BV
Eni International BV
99.99
0.01
Ukraine
EUR
20,000
Eni Ukraine Hold. BV
100.00
Eni ULT Ltd
Eni ULX Ltd
London
(United Kingdom)
United
Kingdom
London
(United Kingdom)
United
Kingdom
GBP
93,215,492.25
Eni Lasmo Plc
100.00
100.00
GBP
200,010,000
Eni ULT Ltd
100.00
100.00
Eni US Operating Co Inc
Eni USA Gas Marketing Llc
Eni USA Inc
Eni Venezuela BV
Eni Venezuela E&P Holding SA
Dover
(USA)
Dover
(USA)
Dover
(USA)
Amsterdam
(Netherlands)
Bruxelles
(Belgium)
USA
USA
USA
USD
1,000
Eni Petroleum Co Inc
100.00
100.00
USD
10,000
Eni Marketing Inc
100.00
100.00
USD
1,000
Eni Oil & Gas Inc
100.00
100.00
Venezuela
EUR
20,000
Belgium
USD
254,443,200
Eni Venezuela E&P
Holding
Eni International BV
Eni Oil Holdings BV
100.00
100.00
100.00
99.99
(..)
99.99
(..)
London
(United Kingdom)
United
Kingdom
GBP
0
Eni International BV
Eni Oil Holdings BV
Amsterdam
(Netherlands)
London
(United Kingdom)
London
(United Kingdom)
Vietnam
EUR
20,000
Eni International BV
100.00
100.00
Indonesia
GBP
Indonesia
GBP
1
1
Eni Indonesia Ltd
100.00
100.00
Eni Indonesia Ltd
100.00
100.00
London
(United Kingdom)
United
Kingdom
GBP
1,000
Burren Energy Plc
100.00
Eni Ventures Plc
(in liquidation)
Eni Vietnam BV
Eni West Ganal Ltd
Eni West Timor Ltd
Eni Yemen Ltd
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
Eq.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
Eq.
Eq.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
Co.
F.C.
F.C.
F.C.
Eq.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(5) Company that does not benefit from a privileged tax regime pursuant to Art. 167, paragraph 4 of the D.P.R. of December 22, 1986, n. 917: the company operates with
permanent establishment in Turkmenistan and the nominal tax rate is not lower than 50% of that current in Italy.
Management report | Consolidated financial statements | Annex
e
m
a
n
y
n
a
p
m
o
C
Eurl Eni Algérie
First Calgary Petroleums LP
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Algiers
(Algeria)
Wilmington
(USA)
First Calgary Petroleums Partner
Co ULC
Calgary
(Canada)
Ieoc Exploration BV
Ieoc Production BV
Lasmo Sanga Sanga Ltd(6)
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
Hamilton
(Bermuda)
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Algeria
DZD
1,000,000
Eni Algeria Ltd Sàrl
100.00
Algeria
USD
1
Eni Canada Hold. Ltd
FCP Partner Co ULC
99.99
0.01
100.00
Canada
CAD
10
Eni Canada Hold. Ltd
100.00
100.00
Egypt
EUR
20,000
Eni International BV
100.00
Egypt
EUR
20,000
Eni International BV
100.00
100.00
Indonesia
USD
12,000
Eni Lasmo Plc
100.00
100.00
Liverpool Bay Ltd
London
(United Kingdom)
United
Kingdom
USD
1
Eni ULX Ltd
100.00
Mizamtec Operating Company
S. de RL de CV
Mexico City
(Mexico)
Mexico
MXN
3,000
Nigerian Agip CPFA Ltd
Nigerian Agip Exploration Ltd
Nigerian Agip Oil Co Ltd
OOO “Eni Energhia”
Zetah Congo Ltd(7)
Zetah Kouilou Ltd(7)
Lagos
(Nigeria)
Abuja
(Nigeria)
Abuja
(Nigeria)
Moscow
(Russia)
Nassau
(Bahamas)
Nassau
(Bahamas)
Nigeria
NGN
1,262,500
Nigeria
NGN
5,000,000
Nigeria
NGN
1,800,000
Russia
RUB
2,000,000
Eni US Op. Co Inc
Eni Petroleum Co Inc
NAOC Ltd
Agip En Nat Res. Ltd
Nigerian Agip E. Ltd
Eni International BV
Eni Oil Holdings BV
Eni International BV
Eni Oil Holdings BV
Eni Energy Russia BV
Eni Oil Holdings BV
Republic of
the Congo
Republic of
the Congo
USD
USD
300
Eni Congo SA
Burren En. Congo Ltd
2,000
Eni Congo SA
Burren En. Congo Ltd
Third parties
100.00
100.00
100.00
100.00
99.90
0.10
98.02
0.99
0.99
99.99
0.01
99.89
0.11
99.90
0.10
66.67
33.33
54.50
37.00
8.50
341
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
F.C.
F.C.
Eq.
F.C.
F.C.
Eq.
F.C.
Co.
F.C
F.C.
F.C.
Co.
Co.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(6) Company that does not benefit from a privileged tax regime pursuant to Art. 167, paragraph 4 of the D.P.R. of December 22, 1986, n. 917: the company operates with
permanent establishment in Indonesia and the nominal tax rate is not lower than 50% of that current in Italy.
(7) Company that benefits from a privileged tax regime pursuant to Art. 167, paragraph 4 of the D.P.R. of December 22, 1986, n. 917: the company is subjected to
taxation in Italy because it is included in Eni's tax return.
Eni Annual Report 2020
342
GLOBAL GAS & LNG PORTFOLIO
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Eni Gas Transport Services Srl
Eni Global Energy Markets SpA
(former Eni Energy Activities Srl)
San Donato
Milanese (MI)
Rome
Eni Trading & Shipping SpA
Rome
LNG Shipping SpA
Trans Tunisian Pipeline Co SpA
San Donato
Milanese (MI)
San Donato
Milanese (MI)
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
Italy
Italy
Italy
Italy
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
EUR
120,000
Eni SpA
100.00
EUR
1,050,000
Eni SpA
100.00
100.00
EUR
60,036,650
Eni SpA
100.00
100.00
EUR
240,900,000
Eni SpA
100.00
100.00
Tunisia
EUR
1,098,000
Eni SpA
100.00
100.00
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Eni G&P Trading BV
Eni Gas Liquefaction BV
Société de Service du Gazoduc
Transtunisien SA - Sergaz SA
Société pour la Construction
du Gazoduc Transtunisien
SA - Scogat SA
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
Tunis
(Tunisia)
Tunis
(Tunisia)
Turkey
EUR
70,000
Eni International BV
100.00
100.00
Netherlands
EUR
20,000
Eni International BV
100.00
100.00
Tunisia
TND
99,000
Tunisia
TND
200,000
Eni International BV
Third parties
Eni International BV
Eni SpA
LNG Shipping SpA
Trans Tunis. P. Co SpA
66.67
100.00
66.67
33.33
99.85
0.05
0.05
0.05
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Co.
F.C.
F.C.
F.C.
F.C.
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
F.C.
F.C.
F.C.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Management report | Consolidated financial statements | Annex
REFINING & MARKETING AND CHEMICAL
Refining & Marketing
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
Ecofuel SpA
Eni4Cities SpA
Eni Fuel SpA
Eni Trade & Biofuels SpA
(former Eni Energia Srl)
Petroven Srl
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
San Donato
Milanese (MI)
San Donato
Milanese (MI)
Rome
Rome
Genova
Raffineria di Gela SpA
Gela (CL)
SeaPad SpA
Genova
Servizi Fondo Bombole Metano SpA Rome
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
Eni Abu Dhabi Refining
& Trading BV
Eni Abu Dhabi Refining
& Trading Services BV
Eni Austria GmbH
Eni Benelux BV
Eni Deutschland GmbH
Eni Ecuador SA
Eni France Sàrl
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
Wien
(Austria)
Rotterdam
(Netherlands)
Munich
(Germany)
Quito
(Ecuador)
Lyon
(France)
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
EUR
52,000,000
Eni SpA
100.00
100.00
EUR
50,000
Ecofuel SpA
100.00
EUR
58,944,310
Eni SpA
100.00
100.00
EUR
3,050,000
Eni SpA
100.00
100.00
EUR
918,520
Ecofuel SpA
100.00
100.00
EUR
15,000,000
Eni SpA
100.00
100.00
EUR
12,400,000
Ecofuel SpA
Third parties
EUR
13,580,000.20
Eni SpA
80.00
20.00
100.00
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Netherlands
EUR
20,000
Eni International BV
100.00
100.00
Netherlands
EUR
20,000
Eni Abu Dhabi R&T BV
100.00
Austria
EUR
78,500,000
Eni International BV
Eni Deutsch. GmbH
75.00
25.00
100.00
Netherlands
EUR
1,934,040
Eni International BV
100.00
100.00
Germany
EUR
90,000,000
Ecuador
USD
103,142.08
Eni International BV
Eni Oil Holdings BV
Eni International BV
Esain SA
89.00
11.00
99.93
0.07
100.00
100.00
France
EUR
56,800,000
Eni International BV
100.00
100.00
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
343
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
Eq.
F.C.
F.C.
F.C.
F.C.
Eq.
Co.
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
Eq.
F.C.
F.C.
F.C.
F.C.
F.C.
Eni Annual Report 2020
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
F.C.
Eq.
Eq.
Eq.
100.00
F.C.
Eq.
Eq.
Eq.
344
e
m
a
n
y
n
a
p
m
o
C
Eni Iberia SLU
Eni Lubricants Trading
(Shanghai) Co Ltd
Eni Marketing Austria GmbH
Eni Mineralölhandel GmbH
Eni Schmiertechnik GmbH
Eni Suisse SA
Eni Trading & Shipping Inc
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Spain
EUR
17,299,100
Eni International BV
100.00
100.00
China
EUR
5,000,000
Eni International BV
100.00
100.00
Austria
EUR
19,621,665.23
Eni Mineralölh. GmbH
Eni International BV
99.99
(..)
100.00
Austria
EUR
34,156,232.06
Eni Austria GmbH
100.00
100.00
Germany
EUR
2,000,000
Eni Deutsch. GmbH
100.00
100.00
Switzerland
CHF
102,500,000
Eni International BV
100.00
100.00
USA
USD
36,000,000
ETS SpA
100.00
100.00
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Alcobendas
(Spain)
Shanghai
(China)
Wien
(Austria)
Wien
(Austria)
Wurzburg
(Germany)
Lausanne
(Switzerland)
Dover
(USA)
Eni Transporte y Suministro México,
S. de RL de CV
Mexico City
(Mexico)
Mexico
MXN
3,000
Eni International BV
Eni Oil Holdings BV
99.90
0.10
Eni USA R&M Co Inc
Esacontrol SA
Esain SA
Oléoduc du Rhône SA
OOO “Eni-Nefto”
Tecnoesa SA
Wilmington
(USA)
Quito
(Ecuador)
Quito
(Ecuador)
Valais
(Switzerland)
Moscow
(Russia)
Quito
(Ecuador)
USA
USD
11,000,000
Eni International BV
100.00
Ecuador
USD
60,000
Ecuador
USD
30,000
Eni Ecuador SA
Third parties
Eni Ecuador SA
Tecnoesa SA
87.00
13.00
99.99
(..)
Switzerland
CHF
7,000,000
Eni International BV
100.00
Russia
RUB
1,010,000
Ecuador
USD
36,000
Eni International BV
Eni Oil Holdings BV
Eni Ecuador SA
Esain SA
99.01
0.99
99.99
(..)
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Management report | Consolidated financial statements | Annex
345
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
Chemical
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Versalis SpA
San Donato
Milanese (MI)
Italy
EUR
1,364,790,000
Eni SpA
100.00
100.00
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
Dunastyr Polisztirolgyártó
Zártkörûen
Mûködõ Részvénytársaság
Versalis Americas Inc
Versalis Congo Sarlu
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Budapest
(Hungary)
Dover
(USA)
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Hungary
HUF
4,332,947,072
Versalis SpA
Versalis Deutschland GmbH
Versalis International SA
96.34
1.83
1.83
100.00
USA
USD
100,000
Versalis International SA
100.00
100,00
F.C.
Pointe-Noire
(Republic of the
Congo)
Republic of
the Congo
XAF
1,000,000
Versalis International SA
100.00
100.00
F.C.
Versalis Deutschland GmbH
Versalis France SAS
Versalis International SA
Eschborn
(Germany)
Mardyck
(France)
Bruxelles
(Belgium)
Germany
EUR
100,000
Versalis SpA
100.00
100.00
F.C.
France
EUR
126,115,582.90
Versalis SpA
100.00
100.00
F.C.
Belgium
EUR
15,449,173.88
Versalis SpA
Versalis Deutschland GmbH
Dunastyr Zrt
Versalis France
59.00
23.71
14.43
2.86
100.00
F.C.
Versalis Kimya Ticaret Limited
Sirketi
Istanbul
(Turkey)
Turkey
TRY
20,000
Versalis International SA
100.00
100.00
F.C.
Versalis México S. de RL de CV
Mexico City
(Mexico)
Mexico
MXN
1,000
Versalis Pacific (India) Private Ltd Mumbai
India
INR
238,700
Versalis International SA
Versalis SpA
Versalis Singapore P. Ltd
Third parties
99.00
1.00
99.99
(..)
100.00
F.C.
Eq.
(India)
Shanghai
(China)
Singapore
(Singapore)
Versalis Pacific Trading
(Shanghai) Co Ltd
Versalis Singapore Pte Ltd
Versalis UK Ltd
Versalis Zeal Ltd
China
CNY
1,000,000
Versalis SpA
100.00
100.00
F.C.
Singapore
SGD
80,000
Versalis SpA
100.00
100.00
F.C.
London
(United Kingdom)
United
Kingdom
GBP
4,004,042
Versalis SpA
100.00
100.00
F.C.
Tokoradi
(Ghana)
Ghana
GHS
5,650,000
Versalis International SA
Third parties
80.00
20.00
80.00
F.C.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Eni Annual Report 2020
346
ENI GAS E LUCE, POWER & RENEWABLES
Eni gas e luce
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Eni gas e luce SpA
San Donato
Milanese (MI)
Evolvere Smart Srl
Milan
Evolvere SpA Società Benefit
Milan
Evolvere Venture SpA
Milan
SEA SpA
L'Aquila
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
Italy
Italy
Italy
Italy
Italy
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
EUR
750,000,000
Eni SpA
100.00
100.00
EUR
100,000
Evolvere Venture SpA
100.00
70.52
EUR
1,130,000
Eni gas e luce SpA
Third parties
70.52
29.48
70.52
EUR
50,000
Evolvere SpA Soc. Ben.
100.00
70.52
EUR
100,000
Eni gas e luce SpA
Third parties
60.00
40.00
60.00
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
F.C.
F.C.
F.C.
F.C.
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
o
i
t
a
r
y
t
i
u
q
E
%
51.00
p
i
h
s
r
e
n
w
O
%
51.00
49.00
99.87
0.13
99.87
F.C.
Adriaplin Podjetje za distribucijo
zemeljskega plina doo Ljubljana
Ljubljana
(Slovenia)
Slovenia
EUR
12,956,935
Eni Gas & Power France SA
Levallois Perret
(France)
France
EUR
29,937,600
Eni gas e luce SpA
Third parties
Eni gas e luce SpA
Third parties
Gas Supply Company
Thessaloniki - Thessalia SA
Thessaloniki
(Greece)
Greece
EUR
13,761,788
Eni gas e luce SpA
100.00
100.00
F.C.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Management report | Consolidated financial statements | Annex
Power
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
EniPower Mantova SpA
EniPower SpA
San Donato
Milanese (MI)
San Donato
Milanese (MI)
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
Italy
Italy
347
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
EUR
144,000,000
EniPower SpA
Third parties
86.50
13.50
86.50
EUR
944,947,849
Eni SpA
100.00
100.00
F.C.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Eni Annual Report 2020
348
Renewables
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
CGDB Enrico Srl
CGDB Laerte Srl
Eni New Energy SpA
Wind Park Laterza Srl
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
Arm Wind Llp
Eni Energy Solutions BV
Eni New Energy Egypt SAE
Eni New Energy Pakistan
(Private) Ltd
Eni New Energy US Inc
Eni North Sea Wind Ltd
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
Italy
Italy
Italy
Italy
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
San Donato
Milanese (Mi)
San Donato
Milanese (Mi)
San Donato
Milanese (Mi)
San Donato
Milanese (Mi)
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Nur-Sultan
(Kazakhstan)
Amsterdam
(Netherlands)
Cairo
(Egypt)
Saddar
Town-Karachi
(Pakistan)
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
EUR
10,000
Eni New Energy SpA
100.00
100.00
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
EUR
10,000
Eni New Energy SpA
100.00
100.00
F.C.
EUR
9,296,000
Eni SpA
100.00
100.00
EUR
10,000
Eni New Energy SpA
100.00
100.00
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
F.C.
F.C.
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
Kazakhstan
KZT
7,963,200,000 Eni Energy Solutions BV
100.00
100.00
Netherlands
EUR
20,000
Eni International BV
100.00
100.00
F.C.
Egypt
EGP
250,000
Pakistan
PKR
136,000,000
Eni International BV
Ieoc Exploration BV
Ieoc Production BV
Eni International BV
Eni Oil Holdings BV
Eni Pakistan Ltd (M)
99.98
0.01
0.01
99.98
0.01
0.01
Eq.
100.00
F.C.
Dover
(USA)
USA
London
(United Kingdom)
United
Kingdom
USD
GBP
100
Eni Petroleum Co Inc
100.00
100.00
10,000
Eni Energy Solutions BV
100.00
F.C.
Eq.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Management report | Consolidated financial statements | Annex
CORPORATE AND OTHER ACTIVITIES
Corporate and financial companies
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Agenzia Giornalistica Italia SpA
Rome
D-Service Media Srl
(in liquidation)
D-Share SpA
Eni Corporate University SpA
Eni Energia Italia Srl
Eni Nuova Energia Srl
EniProgetti SpA
EniServizi SpA
Serfactoring SpA
Servizi Aerei SpA
Milan
Milan
San Donato
Milanese (MI)
San Donato
Milanese (MI)
San Donato
Milanese (MI)
Venezia
Marghera (VE)
San Donato
Milanese (MI)
San Donato
Milanese (MI)
San Donato
Milanese (MI)
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
Banque Eni SA
D-Share USA Corp.
Eni Finance International SA
Eni Finance USA Inc
Eni Insurance DAC
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Bruxelles
(Belgium)
New York
(USA)
Bruxelles
(Belgium)
Dover
(USA)
Dublin
(Ireland)
y
c
n
e
r
r
u
C
EUR
EUR
EUR
EUR
EUR
EUR
EUR
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
2,000,000
Eni SpA
100.00
100.00
75,000
D-Share SpA
100.00
121,719.25
Agi SpA
Third parties
55.21
44.79
55.21
3,360,000
Eni SpA
100.00
100.00
50,000
Eni SpA
50,000
Eni SpA
100.00
100.00
2,064,000
Eni SpA
100.00
100.00
EUR
13,427,419.08
Eni SpA
100.00
100.00
EUR
EUR
5,160,000
Eni SpA
Third parties
49.00
51.00
49.00
79,817,238
Eni SpA
100.00
100.00
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
Belgium
EUR
50,000,000
Eni International BV
Eni Oil Holdings BV
USA
USD
0(a)
D-Share SpA
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
100.00
99.90
0.10
100.00
Belgium
USD
1,480,365,336
Eni International BV
Eni SpA
66.39
33.61
100.00
USA
USD
15,000,000
Eni Petroleum Co Inc
100.00
100.00
Ireland
EUR
500,000,000
Eni SpA
100.00
100.00
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(a) Shares without nominal value.
349
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
Eq.
F.C.
F.C.
Co.
Co.
F.C.
F.C.
F.C.
F.C.
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
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d
i
l
o
s
n
o
C
F.C.
Co.
F.C.
F.C.
F.C.
Eni Annual Report 2020
350
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Eni International BV
Amsterdam
(Netherlands)
Netherlands
EUR
641,683,425
Eni SpA
100.00
100.00
Eni International Resources Ltd
London
(United Kingdom)
United
Kingdom
GBP
USD
50,000
Eni SpA
Eni UK Ltd
99.99
(..)
100.00
100
Eni Petroleum Co Inc
100.00
100.00
USA
Eni Next Llc
EniProgetti Egypt Ltd
Dover
(USA)
Cairo
(Egypt)
Egypt
EGP
50,000
EniProgetti SpA
Eni SpA
99.00
1.00
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.C.
F.C.
F.C.
Eq.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Management report | Consolidated financial statements | Annex
Other activities
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
Anic Partecipazioni SpA
(in liquidation)
Eni Rewind SpA
Industria Siciliana Acido
Fosforico - ISAF - SpA
(in liquidation)
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
Gela (CL)
Italy
EUR
23,519,847.16
San Donato
Milanese (MI)
Italy
EUR
355,145,040.30
Gela (CL)
Italy
EUR
1,300,000
Eni Rewind SpA
Third parties
Eni SpA
Third parties
Eni Rewind SpA
Third parties
351
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
o
i
t
a
r
y
t
i
u
q
E
%
100.00
F.C.
Eq.
p
i
h
s
r
e
n
w
O
%
99.97
0.03
99.99
(..)
52.00
48.00
Ing. Luigi Conti Vecchi SpA
Assemini (CA)
Italy
EUR
5,518,620.64
Eni Rewind SpA
100.00
100.00
F.C.
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Eni Rewind International BV
Oleodotto del Reno SA
Amsterdam
(Netherlands)
Coira
(Switzerland)
Netherlands
EUR
20,000
Eni International BV
100.00
Switzerland
CHF
1,550,000
Eni Rewind SpA
100.00
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
Eq.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Eni Annual Report 2020
352
JOINT ARRANGEMENTS AND ASSOCIATES
Exploration & Production
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Mozambique Rovuma Venture SpA(†)
San Donato
Milanese (MI)
Mozambique
EUR
20,000,000
Eni SpA
Third parties
35.71
64.29
35.71
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Agiba Petroleum Co(†)
Angola LNG Ltd
Ashrafi Island Petroleum Co
Barentsmorneftegaz Sàrl(†)
Cairo
(Egypt)
Hamilton
(Bermuda)
Cairo
(Egypt)
Luxembourg
(Luxembourg)
Egypt
EGP
20,000
Angola
USD
9,952,000,000
Egypt
EGP
20,000
Russia
USD
20,000
Cabo Delgado Gas Development
Limitada(†)
Maputo
(Mozambique)
Mozambique MZN
2,500,000
Cardón IV SA(†)
Compañia Agua Plana SA
Coral FLNG SA
Caracas
(Venezuela)
Caracas
(Venezuela)
Maputo
(Mozambique)
Venezuela
VES
172.10
Venezuela
VES
0.001
Eni Venezuela BV
Third parties
Mozambique MZN
100,000,000
Coral South FLNG DMCC Dubai
(United Arab
Emirates)
United Arab
Emirates
AED
500,000
East Delta Gas Co
(in liquidation)
East Kanayis Petroleum Co(†)
East Obaiyed Petroleum Co(†)
El Temsah Petroleum Co
El-Fayrouz Petroleum Co(†)
(in liquidation)
Cairo
(Egypt)
Cairo
(Egypt)
Cairo
(Egypt)
Cairo
(Egypt)
Cairo
(Egypt)
Egypt
Egypt
Egypt
Egypt
Egypt
EGP
EGP
EGP
EGP
EGP
20,000
20,000
20,000
20,000
20,000
Ieoc Production BV
Third parties
Eni Angola Prod. BV
Third parties
Ieoc Production BV
Third parties
Eni Energy Russia BV
Third parties
Eni Mozambique LNG
H. BV
Third parties
Eni Venezuela BV
Third parties
Eni Mozambique LNG
H. BV
Third parties
Eni Mozambique LNG
H. BV
Third parties
Ieoc Production BV
Third parties
Ieoc Production BV
Third parties
Ieoc SpA
Third parties
Ieoc Production BV
Third parties
Ieoc Exploration BV
Third parties
50.00
50.00
13.60
86.40
25.00
75.00
33.33
66.67
50.00
50.00
50.00
50.00
26.00
74.00
25.00
75.00
25.00
75.00
37.50
62.50
50.00
50.00
50.00
50.00
25.00
75.00
50.00
50.00
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
J.O.
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Co.
Eq.
Co.
Eq.
Co.
Eq.
Co.
Eq.
Eq.
Co.
Co.
Co.
Co.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(†) Jointly controlled entity.
Management report | Consolidated financial statements | Annex
353
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
Co.
Co.
Co.
Eq.
Eq.
Co.
Co.
Co.
Co.
Eq.
Co.
Co.
Eq.
Eq.
Eq.
Co.
Co.
e
m
a
n
y
n
a
p
m
o
C
Fedynskmorneftegaz Sàrl(†)
Isatay Operating Company Llp(†)
Karachaganak Petroleum
Operating BV
Karachaganak Project
Development Ltd (KPD)
(in liquidation)
Khaleej Petroleum Co Wll
Liberty National
Development Co Llc
Mediterranean Gas Co
Meleiha Petroleum Company(†)
Mellitah Oil & Gas BV(†)
Nile Delta Oil Co Nidoco
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Luxembourg
(Luxembourg)
Nur-Sultan
(Kazakhstan)
Amsterdam
(Netherlands)
Reading,
Berkshire
(United
Kingdom)
Safat
(Kuwait)
Wilmington
(USA)
Cairo
(Egypt)
Cairo
(Egypt)
Amsterdam
(Netherlands)
Cairo
(Egypt)
North Bardawil Petroleum Co
North El Burg Petroleum Co
Petrobel Belayim Petroleum Co(†)
PetroBicentenario SA(†)
PetroJunín SA(†)
PetroSucre SA
Pharaonic Petroleum Co
Point Resources FPSO AS
Cairo
(Egypt)
Cairo
(Egypt)
Cairo
(Egypt)
Caracas
(Venezuela)
Caracas
(Venezuela)
Caracas
(Venezuela)
Cairo
(Egypt)
Sandnes
(Norway)
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Russia
USD
20,000
Kazakhstan
KZT
400,000
Kazakhstan
EUR
20,000
Eni Energy Russia BV
Third parties
Eni Isatay
Third parties
Agip Karachaganak BV
Third parties
United
Kingdom
GBP
100
Agip Karachaganak BV
Third parties
Kuwait
KWD
250,000
Eni Middle E. Ltd
Third parties
USA
Egypt
Egypt
Lybia
Egypt
USD
EGP
EGP
EUR
EGP
0(a) Eni Oil & Gas Inc
Third parties
20,000
20,000
20,000
20,000
Ieoc Production BV
Third parties
Ieoc Production BV
Third parties
Eni North Africa BV
Third parties
Ieoc Production BV
Third parties
Egypt
Egypt
Egypt
EGP
EGP
EGP
Venezuela
VES
20,000
20,000
20,000
Ieoc Exploration BV
Third parties
Ieoc SpA
Third parties
Ieoc Production BV
Third parties
3,790
Eni Lasmo Plc
Third parties
Venezuela
VES
24,021
Eni Lasmo Plc
Third parties
Venezuela
VES
2,203
Eni Venezuela BV
Third parties
Egypt
EGP
20,000
Ieoc Production BV
Third parties
33.33
66.67
50.00
50.00
29.25
70.75
38.00
62.00
49.00
51.00
32.50
67.50
25.00
75.00
50.00
50.00
50.00
50.00
37.50
62.50
14.20
85.80
30.00
70.00
25.00
75.00
50.00
50.00
40.00
60.00
40.00
60.00
26.00
74.00
25.00
75.00
Norpipe Terminal HoldCo Ltd
London
(United Kingdom)
Norway
GBP
55.69
Eni SpA
Third parties
Norway
NOK
150,100,000
PR FPSO Holding AS
100.00
Point Resources FPSO Holding AS Sandnes
(Norway)
Norway
NOK
60,000
Vår Energi AS
100.00
Port Said Petroleum Co(†)
PR Jotun DA
Cairo
(Egypt)
Sandnes
(Norway)
Egypt
EGP
20,000
Ieoc Production BV
Third parties
Norway
NOK
0(a) PR FPSO AS
PR FPSO Holding AS
50.00
50.00
95.00
5.00
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(†) Jointly controlled entity.
(a) Shares without nominal value.
Eni Annual Report 2020
354
e
m
a
n
y
n
a
p
m
o
C
Raml Petroleum Co
Ras Qattara Petroleum Co
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
Egypt
Egypt
y
c
n
e
r
r
u
C
EGP
EGP
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Cairo
(Egypt)
Cairo
(Egypt)
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
20,000
20,000
Ieoc Production BV
Third parties
Ieoc Production BV
Third parties
Rovuma Basin LNG Land
Limitada(†)
Maputo
(Mozambique)
Mozambique MZN
140,000
Rovuma LNG Investments
(DIFC) Ltd
Rovuma LNG SA
Shorouk Petroleum Company
Dubai
(United Arab
Emirates)
Maputo
(Mozambique)
Cairo
(Egypt)
Mozambique USD
50,000
Mozambique MZN
100,000,000
Egypt
EGP
20,000
Société Centrale Electrique
du Congo SA
Pointe-Noire
(Republic of the
Congo)
Republic of
the Congo
XAF
44,732,000,000
Société Italo Tunisienne
d’Exploitation Pétrolière SA(†)
Sodeps - Société de Developpement
et d’Exploitation du Permis du Sud
SA(†)
Thekah Petroleum Co
(in liquidation)
United Gas Derivatives Co
Tunis
(Tunisia)
Tunis
(Tunisia)
Cairo
(Egypt)
New Cairo
(Egypt)
VIC CBM Ltd(†)
Virginia Indonesia Co CBM Ltd(†)
Vår Energi AS(†)
Vår Energi Marine AS
West Ashrafi Petroleum Co(†)
(in liquidation)
London
(United Kingdom)
London
(United Kingdom)
Forus
(Norway)
Sandnes
(Norway)
Cairo
(Egypt)
Tunisia
TND
5,000,000
Tunisia
TND
100,000
Egypt
EGP
20,000
Egypt
USD
153,000,000
Indonesia
USD
52,315,912
Indonesia
USD
25,631,640
Norway
NOK
399,425,000
Mozambique Rovuma
Venture SpA
Third parties
Eni Mozambique LNG
H. BV
Third parties
Eni Mozambique LNG
H. BV
Third parties
Ieoc Production BV
Third parties
Eni Congo SA
Third parties
Eni Tunisia BV
Third parties
Eni Tunisia BV
Third parties
Ieoc Exploration BV
Third parties
Eni International BV
Third parties
Eni Lasmo Plc
Third parties
Eni Lasmo Plc
Third parties
Eni International BV
Third parties
Norway
NOK
61,000,000
Vår Energi AS
100.00
Egypt
EGP
20,000
Ieoc Exploration BV
Third parties
50.00
50.00
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Co.
Co.
Co.
Eq.
Eq.
Co.
Eq.
Eq.
Co.
Eq.
Eq.
Eq.
Eq.
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
22.50
77.50
37.50
62.50
33.33
66.67
25.00
75.00
25.00
75.00
25.00
75.00
20.00
80.00
50.00
50.00
50.00
50.00
25.00
75.00
33.33
66.67
50.00
50.00
50.00
50.00
69.85
30.15
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(†) Jointly controlled entity.
Management report | Consolidated financial statements | Annex
GLOBAL GAS & LNG PORTFOLIO
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
Mariconsult SpA(†)
Transmed SpA(†)
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Milan
Milan
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
Italy
Italy
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
EUR
EUR
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
120,000
240,000
Eni SpA
Third parties
Eni SpA
Third parties
l
a
t
i
p
a
C
e
r
a
h
S
s
r
e
d
l
o
h
e
r
a
h
S
Angola LNG Supply Services Llc
Blue Stream Pipeline Co BV(†)
GreenStream BV(†)
Premium Multiservices SA
SAMCO Sagl
Transmediterranean
Pipeline Co Ltd(†)(8)
Unión Fenosa Gas SA(†)
Wilmington
(USA)
Amsterdam
(Netherlands)
Amsterdam
(Netherlands)
Tunis
(Tunisia)
Lugano
(Switzerland)
St. Helier
(Jersey)
Madrid
(Spain)
USA
USD
19,278,782
Russia
USD
22,000
Libya
EUR
200,000,000
Tunisia
TND
200,000
Switzerland
CHF
20,000
Jersey
USD
10,310,000
Spain
EUR
32,772,000
Eni USA Gas M. Llc
Third parties
Eni International BV
Third parties
Eni North Africa BV
Third parties
Sergaz SA
Third parties
Transmed. Pip. Co Ltd
Eni International BV
Third parties
Eni SpA
Third parties
Eni SpA
Third parties
355
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq,
Eq.
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
o
i
t
a
r
y
t
i
u
q
E
%
o
i
t
a
r
y
t
i
u
q
E
%
74.62(a)
J.O.
50.00
J.O.
Eq.
Eq.
50.00
J.O.
Eq.
p
i
h
s
r
e
n
w
O
%
50.00
50.00
50.00
50.00
p
i
h
s
r
e
n
w
O
%
13.60
86.40
50.00
50.00
50.00
50.00
49.99
50.01
90.00
5.00
5.00
50.00
50.00
50.00
50.00
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(†) Jointly controlled entity.
(8) Company that benefits from a privileged tax regime pursuant to Art. 167, paragraph 4 of the D.P.R. of December 22, 1986, n. 917: the company is subjected to
taxation in Italy because it is included in Eni's tax return. The company is considered as a controlled entity pursuant to Art. 167, paragraph 3 of the TUIR.
(a) Equity ratio equal to the Eni's working interest.
Eni Annual Report 2020
356
REFINING & MARKETING AND CHEMICAL
Refining & Marketing
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Arezzo Gas SpA(†)
Arezzo
Italy
EUR
394,000
CePIM Centro Padano
Interscambio Merci SpA
Fontevivo (PR)
Italy
EUR
6,642,928.32
Consorzio Operatori GPL di Napoli
Napoli
Costiero Gas Livorno SpA(†)
Livorno
Italy
Italy
EUR
102,000
EUR
26,000,000
Disma SpA
Segrate (MI)
Italy
EUR
2,600,000
Eni Fuel SpA
Third parties
Ecofuel SpA
Third parties
Eni Fuel SpA
Third parties
Eni Fuel SpA
Third parties
Eni Fuel SpA
Third parties
Livorno LNG Terminal SpA
Livorno
Porto Petroli di Genova SpA
Genova
Italy
Italy
EUR
200,000
Costiero Gas L. SpA
Third parties
EUR
2,068,000
Raffineria di Milazzo ScpA(†)
Milazzo (ME)
Italy
EUR
171,143,000
Seram SpA
Fiumicino (RM)
Italy
EUR
852,000
Sigea Sistema Integrato
Genova Arquata SpA
Società Oleodotti
Meridionali - SOM SpA(†)
Genova
Rome
Italy
Italy
EUR
3,326,900
EUR
3,085,000
Ecofuel SpA
Third parties
Eni SpA
Third parties
Eni SpA
Third parties
Ecofuel SpA
Third parties
Eni SpA
Third parties
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
Abu Dhabi Oil Refining Company
(TAKREER)
ADNOC Global Trading Ltd
AET -
Raffineriebeteiligungsgesellschaft
mbH(†)
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Abu Dhabi
(United Arab
Emirates)
Abu Dhabi
(United Arab
Emirates)
Schwedt
(Germany)
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
United Arab
Emirates
United Arab
Emirates
AED
500,000,000
Eni Abu Dhabi R&T
Third parties
USD
1,000
Eni Abu Dhabi R&T
Third parties
Germany
EUR
27,000
Eni Deutsch. GmbH
Third parties
Eni Deutsch. GmbH
Third parties
Bayernoil Raffineriegesellschaft
mbH(†)
Vohburg
(Germany)
Germany
EUR
10,226,000
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(†) Jointly controlled entity.
50.00
50.00
44.78
55.22
25.00
75.00
65.00
35.00
25.00
75.00
50.00
50.00
40.50
59.50
50.00
50.00
25.00
75.00
35.00
65.00
70.00
30.00
p
i
h
s
r
e
n
w
O
%
20.00
80.00
20.00
80.00
33.33
66.67
20.00
80.00
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
Eq.
Co.
65.00
J.O.
Eq.
Eq.
Eq.
50.00
J.O.
Eq.
Eq.
Eq.
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
Eq.
Eq.
o
i
t
a
r
y
t
i
u
q
E
%
20.00
J.O.
Management report | Consolidated financial statements | Annex
357
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
Co.
Eq.
Co.
Eq.
Eq.
Co.
o
i
t
a
r
y
t
i
u
q
E
%
p
i
h
s
r
e
n
w
O
%
49.91
50.09
40.00
60.00
22.50
77.50
25.00
75.00
34.00
66.00
20.00
80.00
20.00
80.00
(a)
50.00
J.O.
34.51
30.07
35.42
50.00
50.00
Eq.
P.N.
e
m
a
n
y
n
a
p
m
o
C
City Carburoil SA(†)
Egyptian International
Gas Technology Co
ENEOS Italsing Pte Ltd
Fuelling Aviation Services GIE
Mediterranée Bitumes SA
Routex BV
Saraco SA
Supermetanol CA(†)
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Rivera
(Switzerland)
Cairo
(Egypt)
Singapore
(Singapore)
Tremblay en
France
(France)
Tunis
(Tunisia)
Amsterdam
(Netherlands)
Meyrin
(Switzerland)
Jose Puerto La
Cruz
(Venezuela)
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
Switzerland
CHF
6,000,000
Egypt
EGP
100,000,000
Singapore
SGD
12,000,000
Eni Suisse SA
Third parties
Eni International BV
Third parties
Eni International BV
Third parties
France
EUR
1
Eni France Sàrl
Third parties
Tunisia
TND
1,000,000
Netherlands
EUR
67,500
Switzerland
CHF
420,000
Venezuela
VES
120.867
Eni International BV
Third parties
Eni International BV
Third parties
Eni Suisse SA
Third parties
Ecofuel SpA
Supermetanol CA
Third parties
TBG Tanklager
Betriebsgesellschaft GmbH(†)
Salzburg
(Austria)
Austria
EUR
43,603.70
Eni Marketing A. GmbH
Third parties
Weat Electronic Datenservice
GmbH
Düsseldorf
(Germany)
Germany
EUR
409,034
Eni Deutsch. GmbH
Third parties
20.00
80.00
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(†) Jointly controlled entity.
(a) Controlling interest: Ecofuel SpA
Third parties
50.00
50.00
Eni Annual Report 2020
358
Chemical
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Brindisi Servizi Generali Scarl
Brindisi
Italy
EUR
1,549,060
Finproject SpA
Morrovalle (MC)
Italy
EUR
18,500,000
IFM Ferrara ScpA
Ferrara
Italy
EUR
5,270,466
Matrìca SpA(†)
Porto Torres
(SS)
Italy
EUR
37,500,000
Priolo Servizi ScpA
Melilli (SR)
Italy
EUR
28,100,000
Ravenna Servizi Industriali ScpA
Ravenna
Italy
EUR
5,597,400
Servizi Porto Marghera Scarl
Venezia
Marghera (VE)
Italy
EUR
8,695,718
Versalis SpA
Eni Rewind SpA
EniPower SpA
Third parties
Versalis SpA
Third parties
Versalis SpA
Eni Rewind SpA
S.E.F. Srl
Third parties
Versalis SpA
Third parties
Versalis SpA
Eni Rewind SpA
Third parties
Versalis SpA
EniPower SpA
Ecofuel SpA
Third parties
Versalis SpA
Eni Rewind SpA
Third parties
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
Lotte Versalis Elastomers Co Ltd(†)
Yeosu
(South Korea)
South Korea
KRW 501,800,000,000
Versalis SpA
Third parties
VPM Oilfield Specialty Chemicals
Llc(†)
Abu Dhabi
(United Arab
Emirates)
United Arab
Emirates
AED
1,000,000
Versalis SpA
Third parties
49.00
20.20
8.90
21.90
40.00
60.00
19.74
11.58
10.70
57.98
50.00
50.00
35.15
5.04
59.81
42.13
30.37
1.85
25.65
48.44
38.39
13.17
p
i
h
s
r
e
n
w
O
%
50.00
50.00
49.00
51.00
o
i
t
a
r
y
t
i
u
q
E
%
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
Eq.
Eq.
Eq.
Eq.
Eq.
Eq.
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
Eq.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(†) Jointly controlled entity.
Management report | Consolidated financial statements | Annex
ENI GAS E LUCE, POWER & RENEWABLES
Eni gas e luce
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
E-Prosume Srl(†)
Milan
Italy
EUR
100,000
Evogy Srl
Seriate (BG)
Italy
EUR
10,000
Evolvere Venture SpA
Third parties
Evolvere Venture SpA
Third parties
PV Family Srl
Cagliari
Renewable Dispatching Srl
Milan
Tate Srl
Bologna
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Italy
Italy
Italy
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
EUR
131,200
Evolvere SpA Soc. Ben.
Third parties
EUR
49,000
EUR
408,509.29
Evolvere Venture SpA
Third parties
Evolvere Venture SpA
Third parties
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
Gas Distribution Company of
Thessaloniki - Thessaly SA(†)
OVO Energy (France) SAS
Ampelokipi
Menemeni
(Greece)
Paris
(France)
Greece
EUR
247,127,605
France
EUR
66,666.66
Eni gas e luce SpA
Third parties
Eni gas e luce SpA
Third parties
o
i
t
a
r
y
t
i
u
q
E
%
o
i
t
a
r
y
t
i
u
q
E
%
p
i
h
s
r
e
n
w
O
%
50.00
50.00
40.00
60.00
23.78
76.22
40.00
60.00
20.00
80.00
p
i
h
s
r
e
n
w
O
%
49.00
51.00
25.00
75.00
359
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
Eq.
Eq.
Eq.
Eq.
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
Eq.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(†) Jointly controlled entity.
Eni Annual Report 2020
360
Power
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Società EniPower Ferrara Srl(†)
San Donato
Milanese (MI)
Italy
EUR
140,000,000
EniPower SpA
Third parties
51.00
49.00
51.00
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
J.O.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(†) Jointly controlled entity.
Management report | Consolidated financial statements | Annex
Renewables
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
Ayla Energy Ltd(†)
Novis Renewables Holdings Llc
Novis Renewables Llc(†)
London
(United Kingdom)
United
Kingdom
Wilmington
(USA)
Wilmington
(USA)
USA
USA
y
c
n
e
r
r
u
C
USD
USD
USD
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
1,000 Eni Energy Solutions BV
Third parties
100
100
Eni New Energy US
Third parties
Eni New Energy US
Third parties
Société Energies Renouvelables
Eni-ETAP SA(†)
Tunis
(Tunisia)
Tunisia
TND
1,000,000
Solenova Ltd(†)
London
(United Kingdom)
United
Kingdom
USD
1,580,000
Eni International BV
Third parties
Eni Energy Solutions BV
Third parties
361
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
Eq.
Eq.
Eq.
Eq.
o
i
t
a
r
y
t
i
u
q
E
%
p
i
h
s
r
e
n
w
O
%
50.00
50.00
49.00
51.00
50.00
50.00
50.00
50.00
50.00
50.00
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(†) Jointly controlled entity.
Eni Annual Report 2020
362
CORPORATE AND OTHER ACTIVITIES
Corporate and financial companies
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
Consorzio per l'attuazione
del Progetto Divertor Tokamak
Test DTT Scarl(†)
Saipem SpA(#)(†)
Frascati (RM)
Italy
EUR
1,000,000
San Donato
Milanese (MI)
Italy
EUR
2,191,384,693
Eni SpA
Third parties
Eni SpA
Saipem SpA
Third parties
o
i
t
a
r
y
t
i
u
q
E
%
p
i
h
s
r
e
n
w
O
%
25.00
75.00
(a)
30.54
1.73
67.73
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
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r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Commonwealth Fusion Systems Llc Wilmington
USA
USD
215,000,514.83
CZero Inc
Form Energy Inc
Tecninco Engineering
Contractors Llp(†)
(USA)
Wilmington
(USA)
Somerville
(USA)
Aksai
(Kazakhstan)
USA
USA
USD
8,116,660.78
USD
124,001,561.31
Eni Next Llc
Third parties
Eni Next Llc
Third parties
Eni Next Llc
Third parties
Kazakhstan
KZT
29,478,455
EniProgetti SpA
Third parties
49.00
51.00
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Co.
Eq.
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
Eq.
Eq.
Eq.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(#) Company with shares quoted in the regulated market of Italy or of other EU countries.
(†) Jointly controlled entity.
(a) Controlling interest: Eni SpA
Third parties
31.08
68.92
Management report | Consolidated financial statements | Annex
Other activities
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
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d
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R
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l
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r
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S
l
s
r
e
d
o
h
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r
a
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S
p
i
h
s
r
e
n
w
O
%
o
i
t
a
r
y
t
i
u
q
E
%
Progetto Nuraghe Scarl
Porto Torres (SS)
Italy
EUR
10,000
Eni Rewind SpA
Third parties
48.55
51.45
363
)
*
(
d
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h
t
e
m
n
o
i
t
a
t
u
l
a
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n
o
i
t
a
d
i
l
o
s
n
o
C
Eq.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Eni Annual Report 2020
364
OTHER SIGNIFICANT INVESTMENTS
Exploration & Production
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
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t
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R
n
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p
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C
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r
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h
S
l
s
r
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d
o
h
e
r
a
h
S
Consorzio Universitario in Ingegneria
per la Qualità e l’Innovazione
Pisa
Italy
EUR
136,000
Eni SpA
Third parties
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
Administradora del Golfo de Paria Este SA
Brass LNG Ltd
Darwin LNG Pty Ltd
New Liberty Residential Co Llc
Nigeria LNG Ltd
North Caspian Operating Co NV
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
Caracas
(Venezuela)
Lagos
(Nigeria)
West Perth
(Australia)
West Trenton
(USA)
Port Harcourt
(Nigeria)
The Hague
(Netherlands)
n
o
i
t
a
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p
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h
S
l
s
r
e
d
o
h
e
r
a
h
S
Venezuela
VES
0.001
Nigeria
USD
1,000,000
Australia
AUD
187,569,921.42
Eni Venezuela BV
Third parties
Eni Int. NA NV Sàrl
Third parties
Eni G&P LNG Aus. BV
Third parties
USA
USD
0(a) Eni Oil & Gas Inc
Third parties
Nigeria
USD
1,138,207,000
Kazakhstan
EUR
128,520
Eni Int. NA NV Sàrl
Third parties
Agip Caspian Sea BV
Third parties
Eni Angola Prod. BV
Third parties
OPCO - Sociedade Operacional Angola LNG SA Luanda
(Angola)
Angola
AOA
7,400,000
Petrolera Güiria SA
SOMG - Sociedade de Operações
e Manutenção de Gasodutos SA
Torsina Oil Co
Caracas
(Venezuela)
Luanda
(Angola)
Cairo
(Egypt)
Venezuela
VES
10
Eni Venezuela BV
Third parties
Angola
AOA
7,400,000
Egypt
EGP
20,000
Eni Angola Prod. BV
Third parties
Ieoc Production BV
Third parties
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(a) Shares without nominal value.
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
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r
o
n
o
i
t
a
d
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l
o
s
n
o
C
F.V.
)
*
(
d
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m
n
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i
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a
t
u
l
a
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r
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n
o
i
t
a
d
i
l
o
s
n
o
C
F.V.
F.V.
F.V.
F.V.
F.V.
F.V.
F.V.
F.V.
F.V.
F.V.
p
i
h
s
r
e
n
w
O
%
20.00
80.00
p
i
h
s
r
e
n
w
O
%
19.50
80.50
20.48
79.52
10.99
89.01
17.50
82.50
10.40
89.60
16.81
83.19
13.60
86.40
19.50
80.50
10.57
89.43
12.50
87.50
Management report | Consolidated financial statements | Annex
GLOBAL GAS & LNG PORTFOLIO
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
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t
a
r
e
p
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f
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r
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n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
Norsea Gas GmbH
Emden
(Germany)
Germany
EUR
1,533,875.64
Eni International BV
Third parties
13.04
86.96
365
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.V.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Eni Annual Report 2020
366
REFINING & MARKETING AND CHEMICAL
Refining & Marketing
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
Società Italiana Oleodotti di Gaeta SpA(9)
Rome
Italy
OUTSIDE ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
ITL
y
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n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
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S
l
s
r
e
d
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
360,000,000
Eni SpA
Third parties
72.48
27.52
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
BFS Berlin Fuelling Services GbR
Hamburg
(Germany)
Germany
EUR
89,199
Compania de Economia Mixta “Austrogas” Cuenca
Ecuador
USD
5,665,329
Dépôt Pétrolier de Fos SA
Dépôt Pétrolier de la Côte d’Azur SAS
(Ecuador)
Fos-Sur-Mer
(France)
Nanterre
(France)
France
EUR
3,954,196.40
France
EUR
207,500
Eni Deutsch. GmbH
Third parties
Eni Ecuador SA
Third parties
Eni France Sàrl
Third parties
Eni France Sàrl
Third parties
Joint Inspection Group Ltd
London
(United Kingdom)
United
Kingdom
GBP
0(a)
Eni SpA
Third parties
Saudi European Petrochemical Co
IBN ZAHR
Al Jubail
(Saudi Arabia)
Saudi Arabia SAR
1,200,000,000
S.I.P.G. Société Immobilière Pétrolière
de Gestion Snc
Sistema Integrado de Gestion
de Aceites Usados
Tanklager - Gesellschaft Tegel (TGT) GbR
TAR - Tankanlage Ruemlang AG
Tema Lube Oil Co Ltd
Tremblay en
France
(France)
Madrid
(Spain)
Hamburg
(Germany)
Ruemlang
(Switzerland)
Accra
(Ghana)
France
EUR
40,000
Spain
EUR
175,713
Germany
EUR
4,953
Switzerland
CHF
3,259,500
Ghana
GHS
258,309
Ecofuel SpA
Third parties
Eni France Sàrl
Third parties
Eni Iberia SLU
Third parties
Eni Deutsch. GmbH
Third parties
Eni Suisse SA
Third parties
Eni International BV
Third parties
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
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o
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t
a
d
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o
s
n
o
C
F.V.
)
*
(
d
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m
n
o
i
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a
t
u
l
a
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r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.V.
F.V.
F.V.
F.V.
F.V.
F.V.
F.V.
F.V.
F.V.
F.V.
F.V.
p
i
h
s
r
e
n
w
O
%
12.50
87.50
13.38
86.62
16.81
83.19
18.00
82.00
12.50
87.50
10.00
90.00
12.50
87.50
15.44
84.56
12.50
87.50
16.27
83.73
12.00
88.00
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
(a) Shares without nominal value.
(9) Company under extraordinary administration procedure pursuant to Law no. 95 of april 3, 1979. The liquidation was concluded on april 28, 2015. The cancellation
has been filed and is pending the authorization by the Ministry of Economic Development.
Management report | Consolidated financial statements | Annex
Chemical
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
Novamont SpA
Novara
Italy
EUR
13,333,500
Versalis SpA
Third parties
367
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.V.
p
i
h
s
r
e
n
w
O
%
25.00
75.00
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Eni Annual Report 2020
368
CORPORATE AND OTHER ACTIVITIES
Other activities
IN ITALY
e
m
a
n
y
n
a
p
m
o
C
e
c
ffi
o
d
e
r
e
t
s
i
g
e
R
n
o
i
t
a
r
e
p
o
f
o
y
r
t
n
u
o
C
y
c
n
e
r
r
u
C
l
a
t
i
p
a
C
e
r
a
h
S
l
s
r
e
d
o
h
e
r
a
h
S
p
i
h
s
r
e
n
w
O
%
Ottana Sviluppo ScpA
(in bankruptcy)
Nuoro
Italy
EUR
516,000
Eni Rewind SpA
Third parties
30.00
70.00
)
*
(
d
o
h
t
e
m
n
o
i
t
a
t
u
l
a
v
r
o
n
o
i
t
a
d
i
l
o
s
n
o
C
F.V.
(*) F.C. = full consolidation, J.O. = joint operation, Eq. = equity-accounted, Co. = valued at cost, F.V. = valued at fair value.
Management report | Consolidated financial statements | Annex
369
Acquisition
Acquisition
Relevancy
Relevancy
Corporate and financial compa-
nies
Exploration & Production
Global Gas & LNG Portfolio
Constitution
Global Gas & LNG Portfolio
Relevancy
Renewables
Refining & Marketing
Eni gas e luce
Eni gas e luce
Eni gas e luce
Eni gas e luce
Relevancy
Relevancy
Acquisition
Acquisition
Acquisition
Acquisition
CHANGES IN THE SCOPE OF CONSOLIDATION FOR 2020
Fully consolidated subsidiaries
COMPANIES INCLUDED (No. 17)
San Donato Milanese (MI)
Renewables
San Donato Milanese (MI)
Renewables
Milan
Amsterdam
Amsterdam
Rome
Dover
Rome
Milan
Milan
Milan
Milan
Mexico City
Takoradi
CGDB Enrico Srl
CGDB Laerte Srl
D-Share SpA
Eni Albania BV
Eni Gas Liquefaction BV
Eni Global Energy Markets SpA
(former Eni Energy Activities Srl)
Eni New Energy US Inc
Eni Trade & Biofuels SpA
(former Eni Energia Srl)
Evolvere Energia SpA
Evolvere Smart Srl
Evolvere SpA Società Benefit
Evolvere Venture SpA
Versalis México S. de RL de CV
Versalis Zeal Ltd
Wind Park Laterza Srl
COMPANIES EXCLUDED (No. 4)
Mizamtec Operating Company S. de RL de CV Mexico City
Exploration & Production
Relevancy
Versalis Kimya Ticaret Limited Sirketi
Istanbul
Chemical
Chemical
Chemical
Relevancy
Relevancy
Change in governance
San Donato Milanese (MI)
Renewables
Acquisition
Eni CBM Ltd
Evolvere Energia SpA
Ieoc Exploration BV
Windirect BV
London
Milan
Amsterdam
Amsterdam
Exploration & Production
Irrelevancy
Eni gas e luce
Merger
Exploration & Production
Irrelevancy
Renewables
Merger
Consolidated joint operations
COMPANIES EXCLUDED (No. 2)
Società Oleodotti Meridionali - SOM SpA
Rome
Refining & Marketing
Change in operations
Termica Milazzo Srl
Milazzo (ME)
Refining & Marketing
Merger
Eni Annual Report 2020