Obligation ENI Energia S.p.A. 7.31% ( BE6305946731 ) en USD

ENI Energia S.p.A.

100 % ⇌

Italie

BE6305946731 ( en USD )

7.31% par an ( paiement semestriel )

09/07/2027 - Obligation échue

Prospectus brochure de l'obligation ENI S.p.A BE6305946731 en USD 7.31%, échue

200 000 USD

750 000 000 USD

ENI S.p.A. est une compagnie énergétique italienne intégrée, active dans l'exploration et la production d'hydrocarbures, le raffinage, la distribution et la vente de produits énergétiques, ainsi que dans les énergies renouvelables.

L'Obligation émise par ENI Energia S.p.A. ( Italie ) , en USD, avec le code ISIN BE6305946731, paye un coupon de 7.31% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le 09/07/2027

Debt Issuance Programme Base Prospectus dated 5 October 2017

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 WITH A MATURITY OF 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 140) and the Agency Agreement (as defined on page 54) 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 (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 48).
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"). Bearer Notes cannot be physically delivered in Belgium. Upon exchange into Definitive Notes (as defined herein), EFI will
arrange for the bearer form Notes to be delivered outside Belgium. 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/NV ("Euroclear") and Clearstream Banking S.A.
("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 the 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. Global Notes issued by EFI will be deposited
with the operator of the NBB Securities Settlement System (as defined herein), currently being the National Bank of Belgium or any successor thereto (the "NBB"). Accordingly, EFI Notes will be subject
to the applicable settlement regulations, including the Belgian law of 6 August 1993 on transactions in certain securities, its implementing Belgian Royal Decrees of 26 May 1994 and 14 June 1994 and the
rules of the NBB Securities Settlement System and its annexes, as issued or modified by the NBB from time to time (together the "NBB Securities Settlement System Regulations"). Upon deposit, the
Global Notes will be immobilised. The nominal amount of the Notes will be credited to holders having a book-entry interest in the Global Notes, to the securities accounts they hold with participants in the
NBB Securities Settlement System. Global Notes issued by EFI can only be exchanged in Definitive Notes in certain limited circumstances. The provisions governing the exchange of interests in Global
Notes for other Global Notes and Definitive Notes (as defined on page 88) are described in "Overview of Provisions Relating to the Notes while in Global Form".
The Programme has been rated "BBB+" by Standard & Poor's Credit Market Services Europe Ltd ("Standard & Poor's") and "Baa1" 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.
Notes issued under the Programme will not be offered or sold to "consumers" within the meaning of the Belgian Code of Economic Law (Wetboek van economisch recht/Code de droit économique).
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
NatWest Markets
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
160 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.
PROHIBITION OF SALES TO EEA RETAIL INVESTORS The Notes are not intended, from 1
January 2018, to be offered, sold or otherwise made available to and, with effect from such date,

2

should not be offered, sold or otherwise made available to any retail investor in the European
Economic Area ("EEA"). For these purposes, a retail investor means a person who is one (or more)
of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU ("MiFID II"); (ii)
a customer within the meaning of Directive 2002/92/EC ("IMD"), where that customer would not
qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a
qualified investor as defined in the Prospectus Directive. Consequently, no key information
document required by Regulation (EU) No 1286/2014 (the "PRIIPs Regulation") for offering or
selling the Notes or otherwise making them available to retail investors in the EEA has been
prepared and therefore offering or selling the Notes or otherwise making them available to any retail
investor in the EEA may be unlawful under the PRIIPS Regulation.
Notes issued under the Programme will not be offered or sold to "consumers" within the meaning
of the Belgian Code of Economic Law (Wetboek van economisch recht/Code de droit économique).
For a description of certain 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,
stabilisation may not necessarily occur. 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 cease 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 "", "euro" and "Euro" are to

3

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.

4

TABLE OF CONTENTS
Page
RISK FACTORS ................................................................................................................................................ 6
DOCUMENTS INCORPORATED BY REFERENCE .....................................................................................40
PROSPECTUS SUPPLEMENT AND DRAWDOWN PROSPECTUS ...........................................................46
GENERAL DESCRIPTION OF THE PROGRAMME ....................................................................................47
TERMS AND CONDITIONS OF THE NOTES ..............................................................................................54
OVERVIEW OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM ......................84
USE OF PROCEEDS ........................................................................................................................................94
ENI ..................................................................................................................................................................95
EFI ................................................................................................................................................................124
BELGIAN TAXATION ..................................................................................................................................126
ITALIAN TAXATION ....................................................................................................................................131
LUXEMBOURG TAXATION ........................................................................................................................138
TAXATION -- FATCA WITHHOLDING ......................................................................................................139
PLAN OF DISTRIBUTION ...........................................................................................................................140
FORM OF FINAL TERMS .............................................................................................................................144
GENERAL INFORMATION ..........................................................................................................................156

5

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. From mid-2014, the oil industry has
been negatively affected by a sharp price downturn driven by global oversupplies and a slowdown in
macroeconomic growth. Over this time span, the price of crude oil has lost approximately 50% of its
value. In 2016, after dropping below $30 per barrel ("BBL"), the price of Brent crude started to recover
supported by a less unfavourable supply-demand balance and the agreement sealed in late 2016 by
producing countries belonging to the Organization of the Petroleum Exporting Countries ("OPEC") and
other non-member countries to cut the output. In the first quarter of 2017, the oil price recovery
strengthened. However, in the second quarter 2017, this trend weakened with prices for the Brent marker
losing up to $10/BBL from the $54 average recorded in the first quarter. This slowdown was caused by
faster than anticipated ramp-up of production in Libya and Nigeria (these OPEC countries were
exempted from cuts), the resumption of US unconventional productions and high worldwide crude oil
stockpiles. Eni believes that this reversal in oil price trend is temporary, since in the second half of the
year, the full impact of the OPEC cuts will help crude oil market to achieve a better balance. OPEC,
whose initiative was also upheld by ten non-OPEC producing countries (including Russia), decided to
cut production by 1.8 million barrels per day compared to the levels in October 2016. This level was
reached by all the OPEC countries pushing up production to full capacity, and will be in force until
March 2018. Against this backdrop, based on the latest IEA estimates and Eni's forecasts, management
has retained its view of a production shortfall materializing in 2017, which will support crude oil prices
in the second half of the year. In conclusion, Eni's management has retained its 2017 pricing assumptions
of the Brent crude oil marker at 55 $/BBL adopted in the Company's 2017-2020 strategic plan. These
assumptions are in line with the market consensus of the major investment banks. Looking forward,
management retains a long-term price forecast of $70/BBL for the Brent benchmark crude in 2020 real
terms (i.e. $72 in 2021 when incorporating a 2% long-term inflationary rate) based on the assumption

6

that global oil markets will rebalance driven by the effects of the reduced investments made by
international oil companies during the downturn, while global oil consumptions are expected to grow at
a moderate pace;
·
global political developments, including sanctions imposed on certain producing countries and conflict
situations;
·
global economic and financial market conditions;
·
the influence of the 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;
·
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 intended to reduce
greenhouse gas ("GHG") emissions from human activities.
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. Lower oil
prices from one year to another negatively affect the Group's consolidated results of operations and cash flow,
because revenues are price sensitive; such current prices are reflected in revenues recognized in the Exploration
& Production 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. Based on the current portfolio of oil and gas assets, Eni's
management estimates that the Company's consolidated net profit varies by approximately euro 200 million 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 2017 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 significance and speed 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 flow 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 from development projects, either planned or implemented, forcing the Company to
reschedule, postpone or cancel development projects. The Group is currently planning a capital budget of
approximately euro 31.6 billion in the next four years, excluding expenditures associated with assets which the
Group is planning to divest. This capital budget is significantly lower than the Group's previous financial
projections, down by 8% on a constant exchange rate basis, which reflect management's approach to be more
selective in its spending decisions in a low oil-price environment.
In response to weakened oil and gas industry conditions and resulting revisions made to rating agency
commodity price assumptions, lower commodity prices may also reduce the Group's access to capital and lead
to a downgrade or other negative rating action with respect to the Group's credit rating by rating agencies,

7

including Standard & Poor's Ratings Services ("S&P") and Moody's Investor Services Inc ("Moody's"). These
downgrades may negatively affect the Group's cost of capital, increase the Group's financial expenses, and
may limit the Group's ability to access capital markets and execute aspects of the Group's business plans.
Eni estimates that movements in oil prices impact approximately 50 per cent. of Eni's current production. The
remaining portion of Eni's current production is insulated from crude oil price movements considering that the
Company's property portfolio is characterized by a sizeable presence of production sharing contracts, where,
due to the cost recovery mechanism, the Company is entitled to a larger number of barrels in case of a fall in
crude oil prices. (See the specific risks of the Exploration & Production segment in "Risks associated with the
exploration and production of oil and natural gas" below).
Because of the above mentioned risks, an extended continuation of the current commodity price environment,
or further declines in commodity prices, will materially and adversely affect the Group's business prospects,
financial condition, results of operations, cash flows, liquidity, ability to finance planned capital expenditures
and commitments and may impact shareholder returns, including dividends and the share price.
In gas markets, price volatility reflects the dynamics of demand and supply for natural gas. Over recent years,
in the face of weak demand dynamics in Europe due to the economic downturn and competition from coal and
renewable sources in the production of gas-fired power, gas supplies in Europe have continued to rise. Factors
underlying this rise comprise the increased availability of liquefied natural gas ("LNG") on a global scale,
which in the future will be fuelled by an expected growth in LNG exports from the U.S. and the Asia-Pacific
region, and volumes of contracted supplies of European gas wholesalers under long-term arrangements with
take-or-pay clauses. See also the other trends described in the risk factors relating to Eni's Gas & Power business
below. The increased liquidity of European hubs has put significant downward pressure on spot prices. Eni
expects those trends to continue in the foreseeable future due to a weak outlook for gas demand and continued
oversupplies. If Eni fails to renegotiate its long-term gas supply contracts in order to make its gas competitive
as market conditions evolve, its profitability and cash flow in the Gas & Power segment would be significantly
affected 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 and chemicals products and the associated margins on refined product and
chemicals products sales, with the impact of changes in oil prices on results of 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 licence 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 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 maximize hydrocarbon recovery. Furthermore, Eni may face a competitive

8

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 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. If, because 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 flow 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 and continued oversupplies in the marketplace. These have
been driven by rising production of LNG on global scale and inter-fuel competition. In recent years the
use of gas in gas-fired power plants has been negatively affected by an increase 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). The large-scale development of shale gas in the United States was
another fundamental trend that aggravated the oversupply situation in Europe because many LNG
projects that originally targeted the U.S. market instead provided extra supply to the already saturated
European sector. The continuing growth in the production of shale gas in the United States has 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 until 2020 and beyond, driven by economic growth and the increased adoption of
gas in firing power production. European gas wholesalers including Eni committed 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, the Netherlands, Norway and Algeria). They also
made significant capital expenditures to upgrade existing pipelines and to build new infrastructures 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 materialize, resulting in a situation of oversupply and pricing pressure. As
demand contracted across Europe, gas supplies increased, thus driving the development of very liquid
continental hubs to trade spot gas. Spot prices at continental hubs have become the main benchmarks to
which selling prices are indexed across all end-markets, including large industrial customers,
thermoelectric utilities and the retail segment. 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 does not expect any significant
improvement in the European gas sector in the near future. Eni are currently projecting weak gas demand
trends due to macroeconomic uncertainties and unclear EU policies regarding how to satisfy energy
demand in Europe and the energy mix. Additionally, supplies at continental hubs will continue to build
given the expected ramp-up of LNG exports from the United States due to steady growth in gas
production and ongoing projects to reconvert LNG regasification 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 with its long-term gas supply contracts with take-or-pay clauses.

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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 Italy who sell electricity in the Italian
market. Going forward, the Company expects continuing competition due to the projections of moderate
economic growth in Italy and Europe over the foreseeable future, also causing outside players to place
excess production on the Italian market. The economics of the gas-fired electricity business have
dramatically changed over the latest 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 benefit from governmental subsidies, and
a recovery in the production of coal-fired electricity 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.
·
In the Refining & Marketing segment, Eni faces strong competition both in industrial and in commercial
activities. In 2016 refining margins decreased by approximately 50% y-o-y due to overcapacity in
Europe, global oversupplies and strong competition from cheaper product streams coming from more
efficient refiners in the Middle East, in Asia and elsewhere. Management long-term outlook is that
refining margins will remain under pressure due to structural headwinds in the industry; however in the
first half of 2017 margins were supported by the relative strength of product prices. In marketing, Eni
faces the challenges of growing competition from operators without brands and large retailers, which
leverage on the price awareness of final consumers to increase their market share.
·
In the Chemical business, Eni faces strong competition from well-established international players and
state-owned petrochemical companies, particularly in the most commoditized 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, favorable 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.
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 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 of
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 properties, environmental damage,

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