Obbligazione ENI Energia S.p.A. 3.625% ( XS1023703090 ) in EUR

Emittente ENI Energia S.p.A.
Prezzo di mercato 100 EUR  ▼ 
Paese  Italia
Codice isin  XS1023703090 ( in EUR )
Tasso d'interesse 3.625% per anno ( pagato 1 volta l'anno)
Scadenza 29/01/2029 - Obbligazione è scaduto



Prospetto opuscolo dell'obbligazione ENI S.p.A XS1023703090 in EUR 3.625%, scaduta


Importo minimo /
Importo totale /
Descrizione dettagliata ENI S.p.A. è una multinazionale italiana operante nel settore dell'energia, attiva nell'esplorazione e produzione di idrocarburi, nella raffinazione, nella distribuzione e nella vendita di prodotti energetici, nonché nelle energie rinnovabili.

The Obbligazione issued by ENI Energia S.p.A. ( Italy ) , in EUR, with the ISIN code XS1023703090, pays a coupon of 3.625% per year.
The coupons are paid 1 time per year and the Obbligazione maturity is 29/01/2029







Debt Issuance Programme Base Prospectus dated 18 October 2013
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 15,000,000,000
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 133) and the Agency
Agreement (as defined on page 56) 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 15,000,000,000 (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 51).
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 51) 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 may (or, in the case of Notes listed on the Luxembourg Stock Exchange, 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 86) are described in "Summary 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 153 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.
The Notes issued by an Issuer may not be offered, transferred or sold, directly or indirectly,
as part of their initial distribution or at any time thereafter, to any person (including legal entities)
established, incorporated, domiciled or resident in The Netherlands. For a description of certain
2


restrictions on offers and sales of Notes and on distribution of this Base Prospectus, see "Plan of
Distribution" below.
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,
references to "U.S.$" are to the lawful currency of the United States, to "£" are to the lawful
currency of the United Kingdom, and to "Euro", "euro" and "f" are to the currency introduced on
1 January 1999 pursuant to the Treaty establishing the European Community, as amended from
time to time.
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).
3


TABLE OF CONTENTS
Page
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42
PROSPECTUS SUPPLEMENT AND DRAWDOWN PROSPECTUS . . . . . . . . . . . . . . . . . . . . . .
49
GENERAL DESCRIPTION OF THE PROGRAMME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM . . . . . . .
84
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
91
ENI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92
EFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118
BELGIAN TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
120
ITALIAN TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
123
LUXEMBOURG TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128
EU DIRECTIVE ON THE TAXATION OF SAVINGS INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . .
130
TAXATION -- FATCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
131
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
133
FORM OF FINAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
137
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
149
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 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 applicable to the Group
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.
· In the Exploration & Production segment Eni faces competition from both international oil
companies and state-owned oil companies for obtaining exploration and development rights,
and developing and applying new technologies to maximize 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 cost increases, its growth prospects and future results of operations and cash flows
may be adversely affected.
· In the Gas & Power segment, Eni is facing increasingly strong competition on both the Italian
market and the European market due to continuing slowdown in demand and
macroeconomic uncertainties in the face of large gas availability on the marketplace which
has driven the development of very liquid continental hubs to trade spot gas. Gas supplies
to Europe were fuelled by material additions to global Liquefied Natural Gas ("LNG")
availability by upstream producers and large upgrades of existing pipelines and construction
5


of new infrastructures on several European routes over the latest few years to expand the
import capacity from Russia and Algeria. Those developments were compounded by very
significant increases in the production of shale gas in the United States which reduced the
Country's dependence on imported gas and resulted in diversion of important LNG volumes
to Europe. In 2012, those fundamental shifts in market dynamics coupled with a demand
downturn triggered intense pricing competition among gas operators which negatively
affected profitability. Additionally, gas marketing operators, including Eni, were hit by
diverging trends in the cost of gas supplies compared to selling prices. In fact, procurement
costs of those operators were mainly indexed to the price of oil and its derivatives as
provided by pricing formulas in long-term supply contracts, whereas selling prices were
determined on the basis of spot prices at continental hubs which were pressured by weak
demands, oversupply and competition. Those trends resulted in the Company's Gas &
Power segment reporting sharply higher operating losses in 2012 (euro 3,221 million
compared to a loss of euro 326 million in 2011) with the downtrend continuing well into 2013
when the Company's gas business reported an operating loss of euro 559 million for the first
half of 2013. The Company believes that the outlook for our gas marketing business will
remain weak in the short to medium term as the ongoing trends affecting the sector will take
time to be reversed. These trends may negatively affect the Company's future results of
operations and cash flows in its natural gas business, also taking into account the
Company's contractual obligations to off-take minimum annual volumes of natural gas in
accordance to its long-term gas supply contracts that include take or-pay clauses. See the
sector-specific risk section below.
· Eni also faces competition from large, well-established European utilities and other
international oil and gas companies in growing its market share and acquiring or retaining
clients. A number of large clients, particularly electricity producers and large industrial
buyers, in both the domestic market and other European markets have entered the
wholesale market of natural gas by directly purchasing gas from producers or sourcing it at
the continental spot markets adding further pressures on the economics of gas operators,
including Eni. Management believes that this trend will continue in the future. At the same
time, a number of national gas producers from countries with large gas reserves are planning
to sell natural gas directly to final clients, which would threaten the market position of
companies like Eni which resell gas purchased from producing countries to final customers.
These developments may increase the level of competition in both the Italian and other
European markets and reduce Eni's expected operating profit and cash flows in the gas
business. Finally, following a law decree enacted in March 2012 by the Italian Government
to spur competition in the Italian gas sector, management expects that the Company's selling
margins are likely to come under pressure on sales at the regulated residential and service
segments due to the implementation of a less favorable indexation mechanism of the raw
material cost in supplies to such customers than in the past. This new pricing mechanism will
come into effect from the beginning of the "thermal" year starting 1 October 2013. Such
mechanism envisages a spot-based indexation of the cost of gas replacing the current
oil-linked formula which mirrors a basket of long-term supply contracts. The Company
expects that similar measures will be introduced by other market regulators in European
countries where Eni engages in selling gas to residential clients (see sector-specific risk
factors below).
· In its domestic 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
on the Italian market.
6


· In the retail marketing of refined products both in Italy and abroad, Eni competes with third
parties (including international oil companies and local operators such as supermarket
chains) 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. In Italy, there is an ongoing pressure from political and administrative entities,
including the Italian Antitrust Authority, to increase the level of competition in the retail
marketing of fuels. The above mentioned law decree of March 2012 targeted the Italian fuel
retail market, by relaxing commercial ties between independent operators of service stations
and oil companies, enlarging options to build and operate fully-automated service stations,
and opening up the merchandising of various kinds of goods and services at service stations.
Eni expects developments in this field to further increase pressure on selling margins in the
retail marketing of fuels and to reduce opportunities of increasing market share in Italy.
Furthermore, the ongoing demand downturn in the Italian fuel market is expected to
exacerbate competition among oil companies and other retail operators due to large product
availability in the marketplace.
· In the Chemical segment, Eni faces strong competition from well-established international
players and state-owned petrochemical companies, particularly in the most commoditized
market segments such as the production of basic petrochemicals products and plastics.
Many of those competitors based in the Far East and Middle East are able to benefit from
cost advantages due to larger scale, looser environmental regulations, availability of cheaper
feedstock, and more favorable location and proximity to end-markets. Excess capacity and
sluggish economic growth may exacerbate competitive pressures. Furthermore, Eni expects
that petrochemicals producers based in the U.S. will regain market share in the future,
leveraging on a competitive cost structure due to the increasing availability of cheap
feedstock deriving from the production of domestic shale gas. The Company expects
continuing margin pressures in the foreseeable future as a result of those trends.
· 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. In the first half of 2013
a softer demand environment coupled with Company-specific issues at certain projects
drove a substantial reversal in the profitability at Eni's Engineering & Construction business
segment which expects to report a net loss for the full year 2013. Whilst management
expects the performance of this business to improve in 2014, due to a good level of new
orders acquisition in 2013, the Company's failure or inability to respond effectively to
competition could adversely impact the Company's growth prospects, future results of
operations and cash flows.
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, storage and distribution of petroleum products, production of base
chemicals and special products. 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 our 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 exploration and production, 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
7


openings, leaks that can harm the environment and risks of 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 Chemical segments 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 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), 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.
As to transportation activities related to all Eni's segments of operations, the type of risk depends
not only on the hazardous nature of the products transported, but also 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 dedicates a great deal of efforts and attention to safety, health, the environment and
the prevention of risks; in pursuing compliance with applicable laws and policies; and in responding and
learning from unexpected incidents. Eni seeks to minimize 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 effectively could result in unexpected incidents, including releases or oil spills,
explosions, 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 which the consequences of any incident could be greater
than in other locations. Eni also faces risks once production is discontinued, because our activities require
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. Eni
maintains insurance coverage that includes coverage for physical damage to its assets, third party liability,
workers' compensation, pollution and other damage to the environment and other coverage. Eni's
insurance is subject to caps, exclusion and limitation, and there is no assurance that such coverage will
adequately protect it against liabilities from all potential consequences and damages. In light of the
accident at the Macondo well in the Gulf of Mexico, Eni may not be able to secure similar coverage for the
same costs. Future insurance coverage for the Eni's industry could increase in cost and may include
higher retentions. Also, some forms of insurance may become unavailable in the future or unavailable on
terms that Eni believes are economically acceptable.
The occurrence of the above mentioned events could have a material adverse impact on the Group
business, competitive position, cash flow, results of operations, liquidity, future growth prospects,
shareholders' return and damage to the Group reputation.
Risks associated with the exploration and production of oil and natural gas
The exploration and production of oil and natural gas requires high levels of capital expenditures
and are subject to natural hazards and other uncertainties, including those relating to the physical
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characteristics of oil and gas fields. A description of the main risks facing the Company's business in the
exploration and production of oil and gas is provided below.
(i) Eni's oil and natural gas offshore operations are particularly exposed to health, safety,
security and environmental risks
Eni has material operations relating to the exploration and production of hydrocarbons
located offshore. In 2012, approximately 52 per cent. of our total oil and gas production for
the year derived from offshore fields, mainly in Egypt, Libya, Norway, Italy, Angola, the Gulf
of Mexico, Congo, UK and Nigeria. Offshore operations in the oil and gas industry are
inherently riskier than onshore activities. As the Macondo accident occurred in the Gulf of
Mexico has shown, the potential impacts of offshore accidents and spills to health, safety,
security and the environment can be catastrophic due to the objective difficulties in handling
hydrocarbons containment and other factors. Also offshore operations are subject to marine
perils, including severe storms and other adverse weather conditions and vessel collisions,
as well as interruptions or termination by governmental authorities based on safety,
environmental and other considerations. Failure to manage these risks could result in injury
or loss of life, damage to property, environmental damage, and could result in regulatory
action, legal liability, loss of revenues and damage to our reputation and could have a
material adverse effect on our operations or financial condition. In 2012, a gas leak following
a well operation occurred at a wellhead platform of the Elgin/Franklin gas field, located in the
UK North Sea. The field was operated by an international oil company with Eni holding 21.87
interest in the field. Eni incurred costs to restart the platform operations and reported a
significant loss of production for the year (down by 7 mmBBL). Eni may also incur
environmental liabilities which may arise from the incident that the management does not
perceive as material.
(ii) Exploratory drilling efforts may be unsuccessful
Exploration drilling for oil and gas involves numerous risks including the risk of dry
holes or failure to find commercial quantities of hydrocarbons. The costs of drilling,
completing and operating wells have margins of uncertainty, and drilling operations may be
unsuccessful as a result of a variety of factors, including unexpected drilling conditions,
pressure or heterogeneities in formations, equipment failures, blow-outs and other forms of
accidents, marine risks such as collisions and adverse weather conditions and shortages or
delays in the delivery of equipment. Exploration drilling in offshore areas, particularly in deep
waters, is generally more challenging and riskier than in onshore areas; the same is true for
exploratory activity in remote areas or in challenging environmental conditions in
environmentally-sensitive locations such as those Eni is experiencing in the Barents Sea.
Failure to discover commercial quantities of oil and natural gas could have an adverse
impact on Eni's future growth prospects, results of operations and liquidity. Because Eni
plans to make significant investments in executing high-risk exploration projects, it is likely
that Eni will incur significant exploration and dry hole expenses in future years. Eni plans to
explore for oil and gas onshore and offshore. A number of exploration projects are planned
in deep and ultra-deep waters or at deep drilling depths, where operations are more
challenging and costly than in other areas. Deep water operations generally may require
significant time before commercial production of reserves can commence, increasing both
the operational and financial risks associated with these activities. The Company plans to
conduct exploration projects offshore West Africa (Angola, Nigeria, Congo, Liberia, Ghana
and Gabon), East Africa (Mozambique), the South-East Asia (Indonesia, Vietnam and other
locations), Australia, the Barents Sea and the Black Sea. In 2012, the Company spent
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approximately euro 1.8 billion to conduct exploration projects and it plans to spend
approximately euro 1.4 billion on average in the next four-year plan on exploration activities.
Unsuccessful exploration activities and failure to find additional commercial reserves
could reduce future production of oil and natural gas which is highly dependent on the rate
of success of exploratory activity.
(iii) Development projects bear significant operational risks which may adversely affect actual
returns
Eni is conducting several development projects to produce and market hydrocarbon
reserves. Certain projects target the development of reserves in high-risk areas, particularly
offshore and in remote and hostile environments or environmentally sensitive locations. Eni's
future results of operations and liquidity 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 co-venturers, governments and state-owned
companies, suppliers, customers or others, including, for example, Eni's ability to
negotiate favorable long term contracts to market gas reserves;
· the development of reliable spot markets that may be necessary to support the
development of particular production projects, or commercial arrangements for
pipelines and related equipment to transport and market hydrocarbons;
· timely issuance of permits and licenses by government agencies;
· the Company's relative size compared to its main competitors which may prevent it
from participating in large-scale projects or affect its ability to reap benefits associated
with economies of scale, for example by obtaining more favorable contractual terms
by suppliers of goods and services;
· the ability to design development projects so as to prevent the occurrence of technical
inconvenience;
· delays in manufacturing and delivery of critical equipment, or shortages in the
availability of such equipment, causing cost overruns and delays;
· risks associated with the use of new technologies and the inability to develop
advanced technologies to maximize the recoverability rate of hydrocarbons or gain
access to previously inaccessible reservoirs;
· poor performance in project execution on the part of international contractors who are
awarded project construction activities generally based on the EPC (engineering,
procurement, construction) ­ turn key contractual scheme, which the Company
believes is mainly due to lack of contractual flexibility, poor quality of front end design
engineering and commissioning delays;
· changes in operating conditions and cost overruns. In recent years, the industry has
been impacted by escalating costs of certain critical productive factors including
specialized workforce, procurement costs and costs for leasing third party equipment
or purchase services such as drilling rigs as a result of industry-wide cost inflation,
bottlenecks and other constraints in the worldwide production capacity available to
build critical equipment and facilities and growing complexity and scale of projects,
including environmental and safety costs. Furthermore, there has been an evolution
in the location of our projects, as Eni has been discovering increasingly important
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