Obligation Eni Spa 0.75% ( XS1412593185 ) en EUR

Eni Spa

100 % ▼

Italie

XS1412593185 ( en EUR )

0.75% par an ( paiement annuel )

17/05/2022 - Obligation échue

Prospectus brochure de l'obligation Eni Spa XS1412593185 en EUR 0.75%, échue

100 000 EUR

700 000 000 EUR

L'Obligation émise par Eni Spa ( Italie ) , en EUR, avec le code ISIN XS1412593185, paye un coupon de 0.75% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 17/05/2022

Debt Issuance Programme Base Prospectus dated 9 October 2015
Eni S.p.A.
(incorporated with limited liability in the Republic of Italy)
as Issuer and as Guarantor of the Notes issued by
eni finance international SA
(incorporated with limited liability in the Kingdom of Belgium)
as Issuer
Euro 20,000,000,000
EURO MEDIUM TERM NOTE PROGRAMME DUE FROM MORE
THAN 12 MONTHS FROM THE DATE OF ORIGINAL ISSUE
Under the Euro Medium Term Note Programme (the "Programme") described in this Debt Issuance Programme Base Prospectus (the "Base Prospectus"), each of Eni
S.p.A. ("Eni" and the "Company") and eni finance international SA ("EFI" and, in its capacity as an issuer of Notes (as defined below), together with Eni in such capacity, the
"Issuers" and each of EFI and Eni, in such capacity, individually, an "Issuer"), in accordance with the Distribution Agreement (as defined on page 136) and the Agency
Agreement (as defined on page 52) and subject to compliance with all relevant laws, regulations and directives, may from time to time issue Euro Medium Term Notes (the
"Notes"). Notes issued by Eni ("Eni Notes") will constitute obbligazioni pursuant to Article 2410 et seq. of the Italian Civil Code. Notes issued by EFI ("EFI Notes") will be
unconditionally and irrevocably guaranteed as to payments of principal, premium (if any) and interest (if any) by Eni (in such capacity, the "Guarantor"). The aggregate nominal
amount of Notes outstanding will not at any time exceed euro 20,000,000,000 (or the equivalent in other currencies).
Application has been made to the Luxembourg Commission de Surveillance du Secteur Financier (the "CSSF"), in its capacity as competent authority under the
Luxembourg Act dated 10 July 2005 (the "Luxembourg Prospectus Act") relating to prospectuses for securities, for the approval of this Base Prospectus as a base prospectus
for the purpose of Article 5.4 of Directive 2003/71/EC, as amended, to the extent that such amendments have been implemented in the relevant Member State of the European
Economic Area (the "Prospectus Directive"). Pursuant to article 7(7) of the Luxembourg Prospectus Act, by approving this prospectus, the CSSF gives no undertaking as to
the economic and financial soundness of the Notes to be issued hereunder or the quality or solvency of the Issuers.
Application has also been made to the Luxembourg Stock Exchange for the Notes described in this Base Prospectus to be admitted to the official list of the Luxembourg
Stock Exchange (the "Official List") and to be admitted to trading on the regulated market of the Luxembourg Stock Exchange during the period of 12 months after the date
hereof. The Luxembourg Stock Exchange's regulated market is a regulated market for the purpose of Directive 2004/39/EC of the European Parliament and of the Council on
markets in financial instruments. The Programme also permits Notes to be issued on the basis that they will not be admitted to listing, trading and/or quotation by any listing
authority, stock exchange and/or quotation system or to be admitted to listing, trading and/or quotation by such other or further listing authorities, stock exchanges and/or
quotation systems. The relevant Final Terms (as defined herein) in respect of the issue of any Notes will specify whether or not such Notes will be listed on the Official List and
admitted to trading on the regulated market of the Luxembourg Stock Exchange and/or such other listing authority, stock exchange and/or quotation system, as the case may
be, on or before the date of issue of the Notes of each Tranche (as defined on page 47).
The minimum denomination of all Notes issued under the Programme shall be euro 100,000 and integral multiples of euro 1,000 in excess thereof (or its equivalent in
any other currency as at the date of issue of the Notes).
Each Series (as defined on page 47) of Eni Notes in bearer form will be represented on issue by a temporary global note in bearer form (each, a "temporary Global
Note") or a permanent global note in bearer form (each, a "permanent Global Note" and, together with the temporary Global Note, the "Global Notes"). EFI Notes will be in
bearer form only and each Series will be represented on issue by a permanent global note in bearer form (each, a "permanent Global Note"). Notes in registered form will be
represented by registered certificates (each a, "Certificate"), one Certificate being issued in respect of each Noteholder's (as defined herein) entire holding of Registered Notes
of one Series. Registered Notes issued in global form will be represented by registered global certificates ("Global Certificates"). If a Global Certificate is held under the New
Safekeeping Structure (the "NSS"), the Global Certificate will be delivered on or prior to the original issue date of the relevant Tranche to a Common Safekeeper for Euroclear
and Clearstream, Luxembourg. In the case of Eni Notes, if the Global Notes are stated in the applicable Final Terms to be issued in new global note ("NGN") form, the Global
Notes will be delivered on or prior to the original issue date of the relevant Tranche to a common safekeeper (the "Common Safekeeper") for Euroclear Bank SA/N.V.
("Euroclear") and Clearstream Banking, société anonyme ("Clearstream, Luxembourg") (the "Common Depositary").
Global Notes which are not issued in NGN form ("Classic Global Notes" or "CGNs") and Global Certificates which are not held under the NSS may (or in the case of
Notes listed on Luxembourg Stock Exchange, will) be deposited on the issue date of the relevant Tranche with a common depositary on behalf of Euroclear and Clearstream,
Luxembourg. In the case of EFI Notes, Global Notes will be deposited with the operator of the X/N Clearing System, currently being the National Bank of Belgium. The
provisions governing the exchange of interests in Global Notes for other Global Notes and Definitive Notes (as defined on page 85) are described in "Overview of Provisions
Relating to the Notes while in Global Form".
The Programme has been rated "A-" by Standard & Poor's Credit Market Services Europe Ltd ("Standard & Poor's") and "A3" by Moody's Investors Service, Limited
("Moody's"). Standard & Poor's and Moody's are established in the European Union and registered under Regulation (EC) No 1060/2009 (as amended) on credit rating
agencies (the "CRA Regulation"), as set out in the list of credit rating agencies registered in accordance with the CRA Regulation published on the website of the European
Securities and Markets Authority ("ESMA") at http://www.esma.europa.eu/page/List-registered-and-certified-CRAs, pursuant to the CRA Regulation. Tranches of Notes issued
under the Programme may be rated or unrated. Where a Tranche of Notes is to be rated, such ratings may not necessarily be the same as the ratings assigned to the
Programme and shall be specified in the relevant Final Terms. A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension,
reduction or withdrawal at any time by the assigning rating agency. Whether or not each credit rating applied for in relation to any Tranche of Notes will be treated as having
been issued by a credit rating agency established in the European Union and registered under the CRA Regulation will be disclosed in the relevant Final Terms.
Prospective investors should have regard to the factors described under the section headed "Risk Factors" in this Base Prospectus. The Base Prospectus
does not describe all of the risks of an investment in the Notes.
The issue price and the amount of the relevant Notes will be determined at the time of the offering of each Tranche based on then prevailing market conditions.
Arranger for the Programme
Goldman Sachs International
Dealers
Banca IMI Barclays
BNP PARIBAS Credit Suisse
Deutsche Bank Goldman Sachs International
HSBC J.P. Morgan
Morgan Stanley The Royal Bank of Scotland
UBS Investment Bank UniCredit Bank

This Base Prospectus comprises two base prospectuses in respect of each of Eni and EFI
for the purposes of Article 5.4 of the Prospectus Directive and for the purpose of giving
information with regard to the Issuers, the Guarantor and its consolidated subsidiaries taken as a
whole (the "Group"), and the Notes and the Guarantee (as defined herein) which, according to the
particular nature of each Issuer, the Guarantor and the Notes, is necessary to enable investors to
make an informed assessment of the assets and liabilities, financial position, profit and losses and
prospects of such Issuer and the Guarantor.
Each Issuer (with respect to itself) and the Guarantor (with respect to itself and jointly and
severally with EFI) (the addresses of the registered office of the Issuers and the Guarantor appear
on page 156 of this Base Prospectus) accepts responsibility for the information contained in this
Base Prospectus. To the best of the knowledge of each Issuer (with respect to itself) and the
Guarantor (with respect to itself and jointly and severally with EFI) (each having taken all
reasonable care to ensure that such is the case), the information contained in this Base
Prospectus is in accordance with the facts in all material respects and does not omit anything
likely to affect the import of such information in any material respect, in each case in the context
of the issue of Notes under the Programme.
This Base Prospectus is to be read in conjunction with all documents which are deemed to
be incorporated herein by reference (see "Documents Incorporated by Reference").
No person has been authorised to give any information or to make any representation other
than those contained in this Base Prospectus in connection with the Programme or with the issue
or sale of the Notes and, if given or made, such information or representation must not be relied
upon as having been authorised by the Issuers, the Guarantor or any of the Dealers or the Arranger
(as defined in "General Description of the Programme"). Neither the delivery of this Base
Prospectus nor any sale made in connection herewith shall, under any circumstances, create any
implication that there has been no change in the affairs of the Issuers or the Guarantor since the
date hereof or the date upon which this Base Prospectus has been most recently amended or
supplemented or that there has been no adverse change in the financial position of either of the
Issuers or the Guarantor since the date hereof or the date upon which this Base Prospectus has
been most recently amended or supplemented or that any other information supplied in
connection with the Programme is correct as of any time subsequent to the date on which it is
supplied or, if different, the date indicated in the document containing the same.
The Notes issued under the Programme are not intended for sale or distribution to, or to be
held by, persons in any jurisdiction other than "professional", "qualified" or "sophisticated"
investors (within the meaning of any applicable laws), including persons whose ordinary activities
involve them acquiring, holding, managing or disposing of investments (as principal or agent) for
the purposes of their businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in any country or jurisdiction in which action for that purpose is
required. The distribution of this Base Prospectus and the offering or sale of the Notes in certain
jurisdictions may be restricted by any applicable laws. Persons into whose possession this Base
Prospectus comes are required by the Issuers, the Guarantor, the Dealers and the Arranger to
inform themselves about and to observe any such restriction. The Notes have not been and will not
be registered under the United States Securities Act of 1933, as amended (the "Securities Act"),
and include Notes in bearer form that are subject to U.S. tax law requirements. Subject to certain
exceptions, Notes may not be offered, sold or delivered within the United States or to U.S. persons.
For a description of certain restrictions on offers and sales of Notes and on distribution of
this Base Prospectus, see "Plan of Distribution" below.
2

This Base Prospectus does not constitute nor shall it be construed as an offer of, or an
invitation by or on behalf of the Issuers, the Guarantor or the Dealers to subscribe for, or purchase,
any Notes.
To the fullest extent permitted by law, none of the Dealers or the Arranger accepts any
responsibility for the contents of this Base Prospectus. The Arranger and each Dealer accordingly
disclaim all and any liability whether arising in tort or contract which it might otherwise have in
respect of the content of this Base Prospectus. None of this Base Prospectus nor any other
financial statements nor any document incorporated by reference herein is intended to provide the
basis of any credit or other evaluation and should not be considered as a recommendation by
either of the Issuers, the Guarantor, the Arranger or the Dealers that any recipient of this Base
Prospectus or any other financial statements should purchase the Notes. Each potential purchaser
of Notes should determine for itself the relevance of the information contained in this Base
Prospectus and its purchase of Notes should be based upon such investigation as it deems
necessary.
None of the Dealers or the Arranger undertakes to review the financial condition or affairs
of the Issuers or the Guarantor during the life of the arrangements contemplated by this Base
Prospectus nor to advise any investor or potential investor in the Notes of any information coming
to the attention of any of the Dealers or the Arranger.
In connection with the issue of any Tranche (as defined in "General Description of the
Programme -- Method of Issue"), the Dealer or Dealers (if any) named as the stabilising
manager(s) (the "Stabilising Manager(s)") in the applicable Final Terms (or any person acting on
behalf of any Stabilising Manager(s)) may over-allot Notes or effect transactions with a view to
supporting the market price of the Notes at a level higher than that which might otherwise prevail.
However, there is no assurance that the Stabilising Manager(s) (or any person acting on behalf of
any Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on
or after the date on which adequate public disclosure of the terms of the offer of the relevant
Tranche is made and, if begun, may be ended at any time, but it must end no later than the earlier
of 30 days after the issue date of the relevant Tranche and 60 days after the date of the allotment
of the relevant Tranche. Any stabilisation action or over-allotment must be conducted by the
relevant Stabilising Manager(s) (or any person acting on behalf of any Stabilising Manager(s)) in
accordance with all applicable laws and rules.
In this Base Prospectus, unless otherwise specified or the context otherwise requires, all
references to "£" or "Sterling" are to the currency of the United Kingdom, all references to "U.S.
dollars" are to the currency of the United States of America and all references to "g", "euro" and
"Euro" are to the lawful currency introduced at the start of the third stage of the European
Economic and Monetary Union pursuant to the Treaty on the Functioning of the European Union,
as amended from time to time.
The language of this Base Prospectus is English. Any foreign language text that is included
with or within this document, or in any document incorporated by reference in this Base
Prospectus, has been included for convenience purposes only and does not form part of this Base
Prospectus.
In compliance with the requirements of the Luxembourg Stock Exchange, this Base
Prospectus is and, in the case of Notes listed on the Official List and admitted to trading on the
regulated market of the Luxembourg Stock Exchange, the relevant Final Terms will be, available on
the website of the Luxembourg Stock Exchange (www.bourse.lu).
For the avoidance of doubt, the contents of any websites referred to herein do not form part
of this Base Prospectus.
3

TABLE OF CONTENTS
Page
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41
PROSPECTUS SUPPLEMENT AND DRAWDOWN PROSPECTUS . . . . . . . . . . . . . . . . . . . . . .
45
GENERAL DESCRIPTION OF THE PROGRAMME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46
TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52
OVERVIEW OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM . . . . . .
83
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90
ENI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
91
EFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118
BELGIAN TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
120
ITALIAN TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
123
LUXEMBOURG TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
131
EU DIRECTIVE ON THE TAXATION OF SAVINGS INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . .
132
TAXATION -- FATCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
134
TAXATION -- THE PROPOSED FINANCIAL TRANSACTION TAX (the "FTT") . . . . . . . . . . . . . .
135
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
136
FORM OF FINAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
140
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
152
4

RISK FACTORS
The Issuers and the Guarantor believe that the following factors may affect their ability to fulfil their
respective obligations under the Notes issued under the Programme and, in the case of the Guarantor,
the Guarantee. All of these factors are contingencies which may or may not occur and the Issuers and the
Guarantor are not in a position to express a view on the likelihood of any such contingency occurring.
Factors which the Issuers and the Guarantor believe may be material for the purpose of assessing
the market risks associated with the Notes issued under the Programme and, in the case of the Guarantor,
the Guarantee are also described below.
The Issuers and the Guarantor believe that the factors described below represent the principal risks
inherent in investing in the Notes issued under the Programme, but the Issuers and the Guarantor may be
unable to pay interest, principal or other amounts on or in connection with any Notes and, in the case of
the Guarantor, the Guarantee for other unknown reasons and the Issuers and the Guarantor do not
represent that the statements below regarding the risks of holding any Notes are exhaustive. Prospective
investors should also read the detailed information set out elsewhere in this Base Prospectus (including
any documents incorporated by reference herein) and reach their own views prior to making any
investment decision.
Risk Factors relating to the Issuers, the Guarantor and their activities
Risk Factors relating to the Issuers, the Guarantor and their activities
Eni's operating results and cash flow and future rate of growth are exposed to the effects of fluctuating
prices of crude oil, natural gas, oil products and chemicals
Prices of oil and natural gas have a history of volatility due to many factors that are beyond Eni's
control. These factors include among other things:
· global and regional dynamics of oil and gas supply and demand. The price of crude oil has
been on a downtrend since the second half of 2014 with oil prices falling from the level of
approximately 110 $/BBL (where "BBL" means barrel) by mid-year down to below the 50-
dollar mark in August 2015. This decline was driven by surging crude oil output mainly in
non-OPEC countries (as defined below), like the United States, Russia, Brazil and Canada,
in the face of a continuing slowdown in global demand. Eni believes that global oil demand
will grow at a moderate pace in the short to medium term due to sluggish economic activity
in Europe and other macroeconomic uncertainties, and more efficient use of fuels and
energy in countries belonging to the Organisation for Economic Co-operation and
Development ("OECD") whereas crude oil production is forecast to grow at a higher pace
than demand;
· global political developments, including sanctions imposed on certain producing countries
and conflict situations;
· global economic and financial market conditions;
· the influence of the Organisation of the Petroleum Exporting Countries ("OPEC") over world
supply and therefore oil prices;
· prices and availability of alternative sources of energy (e.g., nuclear, coal and renewables);
· weather conditions;
· operational issues;
5

· governmental regulations and actions;
· success in development and deployment of new technologies for the recovery of crude oil
and natural gas reserves and technological advances affecting energy consumption; and
· the effect of worldwide energy conservation and environmental protection efforts.
All these factors can affect the global balance between demand and supply for oil and prices of oil.
Price fluctuations may have a material effect on the Group's results of operations and cash flow. Generally
speaking, lower oil prices from one year to another reduce the Group's consolidated results of operations
and cash flow and vice versa. The effect of changes in oil prices on Eni's average realisation for produced
oil and therefore its revenues in the Exploration & Production segment is immediate. Eni estimates that its
consolidated net profit and cash flow vary by approximately 0.15 billion for each one-dollar change in the
price of the Brent crude oil benchmark with respect to the price case assumed in Eni's financial projections
for 2015 at 55 $/BBL. Free cash flow is expected to reduce/increase by a similar amount.
In addition to the adverse effect on revenues, profitability and cash flow, lower oil and gas prices
could result in debooking of proved reserves, if they become uneconomic in this type of environment, and
asset impairments.
Depending on the materiality and rapidity of a decrease in crude oil prices, Eni may also need to
review investment decisions and the viability of development projects.
Lower oil and gas prices over prolonged periods may also adversely affect Eni's results of
operations and cash flows and hence the funds available to finance expansion projects, further reducing
the Company's ability to grow future production and revenues. In addition, they may reduce returns at
development projects, either planned or being implemented forcing the Company to reschedule, postpone
or cancel development projects. Finally, lower oil prices over prolonged periods may trigger a review of the
future recoverability of the Company's carrying amounts of oil and gas properties, resulting in the
recognition of significant impairment charges, and may impact shareholder returns, including dividends
and share buybacks, or share price.
Eni estimates that movements in oil prices impact approximately 50% of Eni's current production.
A further 35% of Eni's current production which derives from production sharing contracts is unaffected by
crude oil price movements which instead impact the Company's volume entitlements (see disclosure
below). Finally, Eni estimates that exposure to changes in crude oil prices of approximately 5-10% of Eni's
production is offset by equivalent and contrary movements in the procurement costs of gas in Eni's long-
term supply contracts which index the cost of gas to crude oil prices.
However, high oil and gas prices can adversely impact the demand for Eni's products and
consequently Eni's profitability, especially in the refining & marketing businesses. Furthermore, a high
price scenario may imply increase of costs and taxes and may negatively impact the share of production
and reserve to which Eni is entitled under some Production Sharing Agreements (PSAs) (See the specific
risks of the Exploration & Production segment in "Risks associated with the exploration and production of
oil and natural gas" below).
In gas markets, price volatility reflects the dynamics of demand and supply for natural gas. In 2014,
gas demand in Europe dropped on average by approximately 12% in the 28 EU countries compared to
the previous year driven by exceptionally mild weather conditions in the first part of the year and
competition from coal and a growing share of electricity generation from renewables. Despite falling
demand, gas supply has continued to increase due to a number of factors, mainly increased availability of
liquefied natural gas ("LNG") on global scale, take-or-pay obligations provided by long-term supply
contracts held by European gas wholesalers and the other trends described in the specific risk-factors
section of Eni's gas & power business below. The increased liquidity of European hubs put significant
downward pressure on spot prices. Eni expects those trends to continue in the foreseeable future due to
6

a weak outlook for gas demand and continued oversupplies. In case Eni fails to renegotiate its long-term
gas supply contract in order to make its gas competitive as market conditions evolve, its profitability and
cash flow in the Gas & Power segment would be significantly impacted by current downward trends in gas
prices.
The Group's results from its Refining & Marketing and Chemicals businesses are primarily
dependent upon the supply and demand for refined products and the associated margins on refined
product sales and petrochemical products sales, with the impact of changes in oil prices on results on
these segments being dependent upon the speed at which the prices of products adjust to reflect
movements in oil prices.
Competition
There is strong competition worldwide, both within the oil industry and with other industries, to supply
energy to the industrial, commercial and residential energy markets
Eni faces strong competition in each of its business segments.
In the current uncertain financial and economic environment, Eni expects that prices of energy
commodities, in particular oil and gas, will be very volatile, with average prices and margins influenced by
changes in the global supply and demand for energy, as well as in the market dynamics. This is likely to
increase competition in all of Eni's businesses, which may impact costs and margins. Competition affects
license costs and product prices, with a consequent effect on Eni's margins and its market shares. Eni's
ability to remain competitive requires continuous focus on technological innovation, reducing unit costs
and improving efficiency. It also depends on Eni's ability to get an access to new investment opportunities,
both in Europe and worldwide.
· In the Exploration & Production segment, Eni faces competition from both international and
state-owned oil companies for obtaining exploration and development rights, and developing
and applying new technologies to maximise hydrocarbon recovery. Furthermore, Eni may
face a competitive disadvantage because of its relatively smaller size compared to other
international oil companies, particularly when bidding for large scale or capital intensive
projects, and may be exposed to industry-wide cost increases to a greater extent compared
to its larger competitors given its potentially smaller market power with respect to suppliers.
If, as a result of those competitive pressures, Eni fails to obtain new exploration and
development acreage, to apply and develop new technologies, and to control costs, its
growth prospects and future results of operations and cash flows may be adversely affected.
· In the Gas & Power segment, Eni faces strong competition from gas and energy players to
sell gas to the industrial segment, the thermoelectric sector and the retail customers both in
the Italian market and in markets across Europe. Competition has been fuelled by ongoing
weak trends in demand due to the downturn and macroeconomic uncertainties, oversupplies
which have been supported by large availability of liquefied natural gas ("LNG") on global
scale, and inter-fuel competition due to rising use of coal in firing power plants due to cost
advantages and a dramatic growth in the adoption of renewable sources of energy
(photovoltaic and solar) which have materially impacted the use of gas in the production of
electricity and hence sales of gas to the thermoelectric industry. The extensive development
of shale gas in the United States was another fundamental trend that aggravated the
oversupply situation in Europe. The continuing growth in the production of shale gas in the
United States increased global gas supplies. These market imbalances in Europe were
exacerbated by the fact that throughout the last decade and up to a few years ago the market
consensus projected that gas demand in the continent would grow steadily till 2020 and
beyond driven by economic growth and increased use of gas-fired power production.
7

European gas wholesalers including Eni committed well in advance to purchasing large
amounts of gas under long-term supply contracts with so-called "take-or-pay" clauses from
the main producing countries bordering Europe (namely Russia and Algeria) and invested
heavily to upgrade existing pipelines and to build new infrastructure along several European
routes in order to expand gas import capacity to continental markets. Long-term gas supply
contracts with take-or-pay clauses expose gas wholesalers to a volume risk as they are
contractually required to purchase minimum annual amounts of gas or, in case of failure, to
pay the underlying price. Due to the trends described above of the prolonged economic
downturn and inter-fuel competition, the projected increases in gas demand failed to
materialise, resulting in a situation of oversupply and pricing pressure. As demand
contracted across Europe, gas supplies built, thus driving the development of very liquid
continental hubs to trade spot gas. Spot prices at continental hubs became the main
benchmarks to which selling prices are indexed in supplies to large industrial customers and
thermoelectric utilities. The profitability of gas operators was negatively impacted by falling
sales prices at those hubs, where prices have been pressured by intense competition among
gas operators in the face of weak demand, oversupplies and the constraint to dispose of
minimum annual volumes of gas to be purchased under long-term supply contracts. Eni
believes that those headwinds have become structural ones and therefore Eni does not
expect any meaningful improvement in the European gas sector for the foreseeable future.
Gas demand will remain weak due to macroeconomic uncertainties and unclear EU policies
regarding how to satisfy energy demand in Europe and the energy mix. Supplies at
continental hubs will continue building up also in view of a possible ramp-up of LNG exports
from the United States due to steady growth in gas production and ongoing projects to
reconvert LNG re-gasification facilities into liquefaction export units and the start of several
LNG projects in the Pacific Region and elsewhere. Eni believes that these ongoing negative
trends may adversely affect the Company's future results of operations and cash flows, also
taking into account the Company's contractual obligations to off-take minimum annual
volumes of gas in accordance to its long-term gas supply contracts with take-or-pay clauses.
· In its Gas & Power segment, Eni is vertically integrated in the production of electricity via its
gas-fired power plants which currently use the combined-cycle technology. In the electricity
business, Eni competes with other producers and traders from Italy or outside of Italy who
sell electricity on the Italian market. Going forward, the Company expects continuing
competition due to the projections of weak economic growth in Italy and Europe over the
foreseeable future, also causing outside players to place excess production in the Italian
market. The economics of the gas-fired electricity business have dramatically changed over
the last few years due to ongoing competitive trends. Spot prices of electricity in the
wholesale market across Europe decreased due to excess supplies driven by the growing
production of electricity from renewable sources, which also benefited from governmental
subsidies, and a recovery in the production of coal-fired electricity generation which was
helped by a substantial reduction in the price of this fuel on the back of a massive oversupply
of coal which occurred on a global scale. As a result of falling electricity prices, margins on
the production of gas-fired electricity went into negative territory. Eni believes that the
profitability outlook in this business will remain weak in the foreseeable future.
· Eni's Refining & Marketing business faces strong competition in the marketing of refined
products to final customers in the retail and wholesale markets in Italy and in certain
countries in Europe where Eni has an established presence. The economics of this business
have progressively deteriorated over the last few years due to structural headwinds in the
industry. Refining and distribution margins have been negatively impacted by a combination
of drivers, including weak demand for fuels due to the economic downturn particularly in Italy,
high crude oil feedstock costs, trends in oil-linked costs of energy and other plant utilities,
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excess refining capacity across Europe and increasing competition of products streams
coming from Russia, the Middle East, East Asia and the United States. This latter trend is of
particular concern as refiners in those areas can leverage on cost advantages due to their
scale and availability of cheap raw materials. The United States for example, have become
a net exporter of refined products, particularly gasoline and middle distillates, due to the tight
oil revolution which has improved the competitiveness of U.S.-based refiners as prices of
U.S. crudes are generally lower than the Brent crude to which crude oil purchases of
European refiners are mainly indexed. Instead, Eni's margins of refined products were
affected by cost disadvantages due to unfavourable geographic location and lack of scale of
Eni's refineries. Furthermore, narrowing price differentials between the Brent benchmark and
heavy crude qualities hit Eni's profitability of complex cycles which depends upon the
availability of cheaper crude qualities than the Brent crude in order to remunerate the higher
operating costs of complex plants. This latter trend reflected reduced supplies of heavy
crudes in the Mediterranean area, reversing the pattern observed historically whereby heavy
crude qualities traded at a discount vs. the Brent benchmark due to their relatively smaller
yield of valuable products. These trends negatively affected Eni's integrated refining and
marketing results of operations and cash flows in recent years. However, in the first half of
2015, this business reported operating profit due to restructuring efforts and a better margin
scenario driven by falling crude oil prices. In the retail marketing of refined products both in
Italy and abroad, Eni competes with oil companies and non-oil operators (such as
supermarket chains and other commercial operators) to obtain concessions to establish and
operate service stations. Eni's service stations compete primarily on the basis of pricing,
services and availability of non-petroleum products. Eni expects that competitive pressures
will continue in the foreseeable future.
· In the Chemical business, Eni faces strong competition from well-established international
players and state-owned petrochemical companies, particularly in the most commoditised
segments such as the production of basic petrochemical products and plastics. Many of
those competitors based in the Far East and the Middle East are able to benefit from cost
advantages due to scale, favourable environmental regulations, availability of cheap
feedstock and proximity to end-markets. Excess capacity and sluggish economic growth in
Europe have exacerbated competitive pressures with negative impacts on profitability.
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. The Company expects
continuing margin pressures in its petrochemical segment in the foreseeable future as a
result of those trends. However, in the first half of 2015, this business reported lower
operating losses compared to the year ago interim period driven by restructuring efforts and
an improved trading environment due to lower oil-based feedstock costs and a recovery in
internal demand.
Management believes that the profitability outlook of Eni's Chemicals business over the long term
will depend on the execution of the strategy intended to reduce the exposure to loss-making,
commoditised businesses, while the Company's presence will grow in the innovative segments of
bio-plastics and niche productions, particularly elastomers and styrene, which reported stable profitability
in recent years. Competition in the oil field services, construction and engineering industries is primarily
based on technical expertise, quality and number of services and availability of technologically advanced
facilities (for example, vessels for offshore construction). Lower oil prices could result in lower margins and
lower demand for oil services. Failure or inability to respond effectively to competition could adversely
impact the Company's growth prospects, future results of operations and cash flows in this business.
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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, 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 environmental risks. The magnitude
of these risks is influenced by the geographic range, operational diversity and technical complexity of Eni's
activities. Eni's future results from operations and liquidity depend on its ability to identify and mitigate the
risks and hazards inherent to operating in those industries.
In the Exploration & Production segment, Eni faces natural hazards and other operational risks
including those relating to the physical 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. Accidents at a single well can lead to loss of life, damage or destruction
to property, environmental damage and consequently potential economic losses that could have a material
and adverse effect on the business, results of operation, liquidity, reputation and prospects of the Group.
Eni's activities in the Refining & Marketing and Chemicals segment also entail health, safety and
environmental risks related to the overall life cycle of the products manufactured, and to raw materials
used in the manufacturing process, such as oil-based feedstock, catalysts, additives and monomer
feedstock. These risks can arise from the intrinsic characteristics of the products involved (flammability,
toxicity, or long-term environmental impacts such as greenhouse gas emissions and risks of various forms
of pollution and contamination of the soil and the groundwater), their use, emissions and discharges
resulting from their manufacturing process, 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 both on the hazardous nature of the products transported, and on
the transportation methods used (mainly pipelines, maritime, river-maritime, rail, road, gas distribution
networks), 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 a loss of containment of hydrocarbons and other hazardous
materials, and, given the high volumes involved, could present a significant risk to people and the
environment.
The Company invests significant resources in order to upgrade the methods and systems for
safeguarding the safety and health of employees, contractors and communities, and the environment; to
prevent risks; to comply with applicable laws and policies; and to respond to and learn from unexpected
incidents. Eni seeks to minimise these operational risks by carefully designing and building facilities,
including wells, industrial complexes, plants and equipment, pipelines, storage sites and distribution
networks, and managing its operations in a safe, compliant and reliable manner. Failure to manage these
risks could effectively result in unexpected incidents, including releases or oil spills, blowouts, fire,
mechanical failures and other incidents resulting in personal injury, loss of life, environmental damage,
legal liabilities and/or damage claims, destruction of crude oil or natural gas wells, as well as damage to
equipment and other property, all of which could lead to a disruption in operations. Eni's operations are
often conducted in difficult and/or environmentally sensitive locations such as the Gulf of Mexico, the
Caspian Sea and the Arctic. In such locations, the consequences of any incident could be greater than in
other locations. Eni also faces risks once production is discontinued, because Eni's activities require
decommissioning of productive infrastructure and environmental site remediation.
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.
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