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SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN
ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of April 2014
Eni S.p.A.
(Exact name of Registrant as specified in its
charter)
Piazzale Enrico
Mattei 1 - 00144 Rome, Italy
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F x Form 40-F o
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2b under the Securities Exchange Act of 1934.)
Yes o No x
(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): )
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Press Release dated April 1, 2014
Press Release dated April 2, 2014
Press Release dated April 9, 2014
Press Release dated April 10, 2014
Press Release dated April 12, 2014
Press Release dated April 16, 2014
Press Release dated April 24, 2014
Press Release dated April 29, 2014
Press Release dated April 30, 2014
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorised.
| Eni S.p.A. |
||||
| Name: Antonio Cristodoro | ||||
| Title: | Head of Corporate Secretary's Staff Office | |||
Date: April 30, 2014
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Eni: Proposal to be voted on in Saipem’s AGM
Rome, April 1, 2014 - At the next Annual General Meeting of Saipem shareholders, which will be held on May 6, 2014, Eni will submit a proposal to the Company’s shareholders regarding the Directors’ term of office, in accordance with agenda item number four. The proposed duration for the Directors to be appointed will be of one financial year, in order to avoid both Eni’s and Saipem’s Board of Directors being up for renewal at the same time.
Company Contacts:
Press Office: Tel. +39.0252031875 - +39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +800 11 22 34 56
Switchboard: +39-0659821
ufficio.stampa@eni.com
segreteriasocietaria.azionisti@eni.com
investor.relations@eni.com
Web site: www.eni.com
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Eni: Report on the purchase of treasury shares
San Donato Milanese (Milan), April 2, 2014 - During the
period from March 24 to March 28, 2014, Eni acquired No. 50,000
shares for a total consideration of euro 893,735.12, within the
authorization to purchase treasury shares approved at Eni’s
Ordinary General Meeting of shareholders on May 10, 2013,
previously subject to disclosure pursuant to Article 144-bis
of Consob Regulation 11971/1999.
The following are details of transactions for the purchase of
treasury shares on the Electronic Stock Market on a daily basis:
Date |
Number of ordinary shares purchased |
Average price (euro) |
Consideration (euro) |
27/03/2014 |
50,000 |
17.8747 |
893,735.12 |
Total |
50,000 |
17.8747 |
893,735.12 |
Following the purchases announced today, considering the treasury shares already held, on March 28, 2014 Eni holds No. 20,238,287 shares equal to 0.56% of the share capital.
Company Contacts:
Press Office: Tel. +39.0252031875 - +39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +800 11 22 34 56
Switchboard: +39-0659821
ufficio.stampa@eni.com
segreteriasocietaria.azionisti@eni.com
investor.relations@eni.com
Web site: www.eni.com
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Eni: Report on the purchase of treasury shares
San Donato Milanese (Milan), April 9, 2014 - During the
period from March 31 to April 4, 2014, Eni acquired No. 305,317
shares for a total consideration of euro 5,539,668.30, within the
authorization to purchase treasury shares approved at Eni’s
Ordinary General Meeting of shareholders on May 10, 2013,
previously subject to disclosure pursuant to Article 144-bis
of Consob Regulation 11971/1999.
The following are details of transactions for the purchase of
treasury shares on the Electronic Stock Market on a daily basis:
Date |
Number of ordinary shares purchased |
Average price (euro) |
Consideration (euro) |
01/04/2014 |
50,000 |
18.1819 |
909,097.41 |
02/04/2014 |
150,000 |
18.1409 |
2,721,135.27 |
03/04/2014 |
75,000 |
18.1061 |
1,357,958.80 |
04/04/2014 |
30,317 |
18.1903 |
551,476.82 |
Total |
305,317 |
18.1440 |
5,539,668.30 |
Following the purchases announced today, considering the treasury shares already held, on April 4, 2014 Eni holds No. 20,543,604 shares equal to 0.57% of the share capital.
Company Contacts:
Press Office: Tel. +39.0252031875 - +39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +800 11 22 34 56
Switchboard: +39-0659821
ufficio.stampa@eni.com
segreteriasocietaria.azionisti@eni.com
investor.relations@eni.com
Web site: www.eni.com
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Eni Annual Report / Letter to shareholders
letter to shareholders
| In 2013 Eni faced
challenging market conditions. Hydrocarbon production in our upstream segment was severely hit by disruptions in Libya and, to a lesser extent, in Nigeria and Algeria due to social unrest, internal conflicts and other geopolitical risks. In our mid-downstream businesses, the economic downturn and strong competition from alternative sources of energy drove a further decline in the consumption of gas and fuels, mainly in Italy. Finally, Saipem reported sharply lower results due to the lower profitability of ongoing contracts. In spite of these extraordinary headwinds, Eni achieved solid operating and financial results leveraging on the strength of its portfolio and the turnaround underway in the mid-downstream businesses. Cash flow generation was robust thanks to the E&P contribution which continued to deliver an average cash flow per barrel of around 30 US dollars, absorbing the lower proceeds in the Countries which were by exceptional events. The ongoing turnaround in the G&P, R&M and Chemical segments delivered a euro 2 billion improvement in operating cash flows. Finally, leveraging on the breadth of our portfolio boosted by the latest exploration successes, we were able to monetize a 20% interest in the Mozambique discovery for euro 3.4 billion |
and our interest
in the Siberian assets of Articgas, with a consideration
of euro 2.2 billion cashed in January 2014, without
affecting our longer term growth prospects. Capital expenditure was kept essentially flat in line with our policy in place from 2009 of strict project selection. In a very challenging year, Eni recorded a 23% increase in net profit from 2012 and maintained the net debt flat. Eni’s strong financial position and underlying growth perspectives underpin our progressive distribution policy, with a 2% increase in the dividend per share and the launch of the share buyback program. In conclusion, at the end of this three-year period, we deliver to our shareholders a Company even more focused on the upstream, with excellent prospects of profitability and cash generation thanks to our portfolio of projects and reserves which is so flexible to enable options for anticipated monetization, and with a clear strategy of turnaround in the mid-downstream businesses. Our balance sheet is stronger with net debt halved compared to three years ago. Exploration is the engine of our strategy in the upstream business. Eni has continued to deliver industry leading results. Since 2008 we have discovered 9.5 bln boe of resources, equal to 2.5 times the production of the period. 2013 has been a brilliant year too, with 1.8 bln boe of resources discovered at a competitive cost of $1.2 per barrel. The main discoveries made in the year were the Agulha prospect and the appraisal of Mamba and Coral in Area 4 in Mozambique, where we estimate an overall mineral potential up to 2,650 billion cubic meters of gas in place, Nené Marine in Congo, which has founded a new oil play with huge potential, |
the appraisal of
Sankofa offshore Ghana, and other successes in Norway,
Australia, Pakistan and Egypt. Exploration success, which owes to our know-how and organization, is the feature that mostly distinguishes Eni among the oil majors. In the next four-year we will pursue even more ambitious exploration targets, by focusing on the emerging plays in Sub-Saharan Africa, the Barents Sea and Asia. In Africa our objectives are pre-saline deposits in Congo, Angola and Gabon, the completion of the appraisal campaign in Mozambique and the launch of exploration activity in the Lamu basin in Kenya. In the Russian section of the Barents Sea we jointly operate with Rosneft a high potential basin where seismic surveys have been started. The Norwegian section of the Barents Sea confirms to be an extraordinary promising area, where, once the operated Goliat has been started marking the first oil project of the region as expected at the end of 2014, we will see a rapid development of the recent discoveries of the area. In the Pacific basin we intend to go ahead with exploration in Vietnam and Myanmar and to confirm our commitment in Indonesia and Australia. Furthermore we intend to explore the Russian and Ukrainian frontier areas of the Black Sea, where the Subbotina oil discovery is in place. We acquired the operatorship of three licenses in the Cypriot deep offshore portion of the Levantine basin, in proximity of large gas discoveries. Our second priority comes through a major review of our legacy assets where we are applying new geological play concepts with exciting results. A remarkable example of the value this approach can bring is by the extraordinary Nené discovery in Marine XII. This is a mature block which has been largely explored in the past, where the application of new geological targets led us to discover more than 2.5 bboe of resources in place. |
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Eni Annual Report / Letter to shareholders
| We maintain a strong
commitment to time-to-market of discovered resources and
continue to be selective in the phased development of our
projects. We plan to start-up 26 new major fields in the next four years, mainly Goliat in the Barents Sea, the Block 15/06 West Hub in Angola, the heavy oil and gas Venezuelan assets and Jangkrik in Indonesia, which will add more than 500 kboe/d by 2017, supporting production growth and the replacement of mature production. Approximately 70% of the planned start-ups will relate to already sanctioned projects, whose costs and schedules are in line with budgets. These progresses have been underpinned by our organizational model which is based on the in-source of critical engineering phases and a strong grip on construction and commissioning activities in order to minimize the risk of cost overruns. Operational efficiency is the other driver of our organization, mainly in the drilling and completion of our wells. 2013 was a record in terms of control of the operational risk as well as health and safety risks with a total recordable injury rate 60% lower than the average recorded in the previous six years, and zero blow-outs for the tenth consecutive year. For the future we intend to target even more challenging targets. In the next four year plan we will invest in training initiatives and sharing of know-how in the prevention of accidents and injuries, in new techniques for the rationale use of resources by optimizing water reinjection and in reducing GHG emissions by means of flaring down projects. Overall in 2013 the E&P Division reported excellent results, in spite of geopolitical factors, and laid the foundations of a new production growth phase which will fuel value and cash generation. The G&P, R&M and Chemical segments intensified turnaround actions in a difficult market scenario. The G&P Division devoted great efforts in the renegotiation of long-term gas supply contracts in order to both align supply costs to market conditions and to reduce the annual minimum take obligations (take-or-pay) ensuring higher flexibility to |
our commercial policies. Our renegotiation strategy is based on a fair distribution of economic benefits between the producer and the acquirer in line with the contractual principles. In 2013 we renegotiated supply terms of 85% of our long-term contracted gas. In 2014-2016, we plan to finalize a new round of renegotiations with expected benefits of euro 2 billion per year on our cost position. Our marketing strategy will deliver increasingly innovative products in order to best suit large customers’ needs and maximize value generation from our physical and contractual assets, overcoming the traditional role of the wholesaler. In the retail segment our mission is to achieve customer satisfaction and fidelity with a multi-Country approach. In doing so, we will evolve into a supplier of value-added energy services and leave behind us the role of a commodity reseller. We serve approximately 10 million of customers across Europe and we intend to increase and retain our customer base leveraging on the Eni’s brand awareness, the quality of service and the innovation. We intend to streamline our fixed-cost structure by reorganizing post-sale activities, restructuring of logistics and simplifying the organizational structure. In the R&M Division we have reduced our refining capacity by 13% since the beginning of the downturn and we are planning for a further cut of 22% in the next four years. In addition we will continue to adopt capital discipline, to increase plants’ flexibility, pursuing at the same time fixed cost reductions and energy saving initiatives. We foresee to consolidate our presence in the retail of fuels in Italy leveraging on the continuous innovation of products and services and the non-oil development. Outside Italy we intend to focus our presence on growing markets and to divest from non-strategic areas. Our Chemical business will progressively reduce its exposure to commodity chemicals, which have been increasingly exposed to international competition. We intend to grow our presence in the green chemicals business and to expand internationally targeting those segments where Eni’s know-how represents a |
competitive advantage. In
the four-year plan, bio-chemicals productions at Porto
Torres and Porto Marghera are expected to start-up. Also
the joint ventures with major operators in the South
Korea and Malaysia in the elastomers will start
production. The technology lever is the driver to upgrade
the business. It is worth mentioning our collaborations
with Genomatica and Yulex for the production of
elastomers from renewable, non-food plantations,
targeting to substitute the traditional oil-based
feedstock. 2013 has been a tough year at Saipem due to a slowdown in the business and issues affecting the profitability of certain large contracts. The Company reacted with a renewed focus on execution activities, an organizational turnaround and the adoption of a more selective commercial strategy. 2014 will be a transitional year with a recovery in profitability, the dimension of which relies upon the effective execution of operational and commercial activities at low-margin contracts still present in the current portfolio, in addition to the speed at which bids underway will be awarded. Results of the year |
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Eni Annual Report / Letter to shareholders
| contributed euro 6.4 billion
to cash generation and mainly related to the Mozambique
deal and the divestment of the financial interests in
Snam and Galp. These inflows financed capital expenditure
of euro 12.75 billion, in line with the last three years
trend, and the dividend payment to Eni’s
shareholders of euro 3.95 billion, maintaining net
borrowings and leverage flat compared to 2012 at euro
15.4 billion and 0.25, respectively. On the basis of the Company’s results, the Board of Directors intends to submit to the Annual Shareholders’ Meeting a dividend proposal of euro 1.10 per share (euro 1.08 in 2012). Corporate Governance |
aimed at ensuring
effectiveness and efficiency of the whole system. In this contest, Eni has developed an integrated risk management system, finalized to the individuation, management and monitoring of all risks, not only industrial. In particular, the risk management system is intended to submit periodically to the Board of Directors the main risks of Eni. Also the internal control model and the integrated risk management system were appreciated by the above-mentioned proxy advisors and institutional investors. Strategies and mid-term objectives |
the mid-downstream
businesses. In Exploration & Production we target an average growth rate of 3% per year, in line with our long-term targets, and the discovery of 3.2 bboe of fresh resources, to be accomplished while at the same time reducing capital expenditure by 5% from the previous four-year plan. Our capital expenditure plan for the 2014-2017 period considers an outlay of euro 54 billion that will be directed for 83% to exploration and development of hydrocarbons reserves. Our operational efforts will on the start-up of our major projects in portfolio, the reduction of time-to-market and to achieve a well balanced risk profile in our countries of presence. The entry into production of high-margin projects will enable us to expand cash generation from operations at a 5% rate per year. We expect that once the turnaround plans have been completed, our mid-downstream business will be able to generate returns also in a trading environment as unfavorable as the one experienced in 2013. The medium-term target is to breakeven in the four year plan. All in all, also supported by a valuable Corporate Governance system, which ensure an effective decisional process, we are confident that the planned strategies and initiatives will allow Eni to perform strongly leveraging on the valuable growth in the E&P and a recover to profitability in the mid-downstream businesses thanks to contract renegotiation, capacity reductions and focus on premium segments. Those drivers and the continuing refocusing of our portfolio will deliver robust cash generation where we are targeting an average 13% increase per year in our free cash flow till 2017 under our price scenario. Such prospects will underpin our progressive dividend policy and the prosecution of the buyback program. |
March 17, 2014
In representation of the Board of Directors
Giuseppe Recchi |
Paolo Scaroni |
| Chairman | Chief Executive Officer and General Manager |
|
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Eni Annual Report / Profile of the year
profile of the year
| Results
> In
2013 Eni achieved solid results in a particularly
difficult market. In spite of geopolitical factors in
Libya, Nigeria and Algeria, the Exploration &
Production Division delivered robust earnings and cash
flow leveraging its cost leadership and extraordinary
exploration successes. The mid-downstream businesses,
which were impacted by the downturn and plunging demand
in Europe and Italy, boosted their restructuring efforts
achieving an impressive euro 2 billion improvement in
cash generation. Finally, the portfolio management
enhanced by the new discoveries of the latest years
enabled Eni to anticipate the monetization of results and
cash. The overall effect of management’s actions in
such a challenging year was to deliver a 23% increase in
net profit versus to euro 5.16 billion, to pay a generous
dividend and to launch a buyback program, while
maintaining a constant debt at euro 15.43 billion. Net cash generated by operating activities of euro 10.97 billion and cash from disposals of euro 6.36 billion, mainly related to the Mozambique deal, were used to fund capital expenditure of euro 12.75 billion and dividend payments of euro 3.95 billion to Eni’s shareholders. Ratio of net borrowings to shareholders’ equity including minority interest – leverage – was 0.25 at December 31, 2013, unchanged compared to December 31, 2012. |
Solid results and cash flow +23% vs. 2012 net profit euro 10.97 bln cash flow Turnaround in |
|
| Dividend
> The Company’s robust results and
strong fundamentals underpin a dividend distribution of
euro 1.10 per share (euro 1.08 in 2012). Management
reaffirms its commitment to deliver a progressive
dividend policy taking into account Eni’s underlying
growth in earnings and cash flow. Hydrocarbon
production > In 2013, hydrocarbon production declined
to 1.619 million boe/d by 4.8% from 2012, reflecting
significant force majeure events in Libya, Nigeria and
Algeria, partly offset by the contribution of the
start-up of new fields and continuing production
ramp-ups. |
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| Proved oil and
natural gas reserves > Proved oil and gas reserves as of
December 31, 2013 were 6.54 bboe. The organic reserve
replacement ratio was 105%. The reserve life index is
11.1 years. Natural gas supply contracts > Renegotiated purchase terms of 85% of the Company’s long-term gas supply contracts, resulting in a euro 1.4 billion cost saving. Natural gas sales > Natural gas sales declined by 2.3% to 93.17 bcm against the backdrop of an ongoing demand downturn, competitive pressure and oversupply. |
Proved reserves 6.54 bboe at year end |
|
| Divestment of Eni’s interest in Eni East Africa > In July 2013, Eni closed the sale of a 28.57% interest in Eni East Africa (EEA) to China National Petroleum Corp (CNPC). CNPC indirectly acquires, through its equity investment in Eni East Africa, a 20% interest in the Area 4 mineral property, located offshore of Mozambique. Eni retains operatorship and a 50% interest through the remaining stake in the investee. The total consideration cashed-in by Eni was euro 3,386 million, with a gain of equivalent amount recorded in profit and loss (euro 3,359 million, euro 2,994 million net of tax charges). | > | Rationalization of E&P |
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| Divestment
of Eni’s interest in Artic Russia >
In January 2014 Eni closed the
sale of its 60% stake in Artic Russia to certain Gazprom
affiliates for a total sale price of euro 2.2 billion. At
the balance sheet date, Eni’s interest in Artic
Russia was stated at fair value due to the loss of joint
control over the investee with a revaluation gain of euro
1,682 million recorded through profit. While with the disposal Eni monetized a mature investment, the Company still maintains a strong commitment in the Russian upstream. |
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| Injury frequency rate -28.7% progressing for the ninth consecutive year |
Safety
> In
2013 Eni continued to implement the communication and
training program “Eni in safety”, with 185
workshops dedicated to Eni’s employees. The benefit
of these and other programs in safety is confirmed by the
positive trend of the injury frequency rate relating to
employees and contractors which improved for the ninth
consecutive year (down by 28.7% from 2012).
Notwithstanding the 10.5% decrease in the fatality index,
six fatal accidents occurred in 2013. Partnership for Sustainable Energy > Among the “UN Sustainable Development Solutions Network (SDSN)”, in 2013 Eni led the Energy For All in Sub-Saharan Africa initiative through international collaborations aimed at devising solutions to fight against energy poverty, in particular in Sub-Saharan Africa. For this purpose, Eni will leverage on the strategic partnership signed with the Earth Institute of the Columbia University. |
|
| > Access
to energy
New agreements in Mozambique |
Relationships
with the territory and local development > In 2013 Eni’s commitment continued
in ensuring access of local communities to energy,
particularly in Sub-Saharan Africa. In Mozambique Eni
announced the construction of a gas fired plant with a
capacity of 75 MW, in the Cabo Delgado area. In Italy,
the Company signed a MoU with the city of L’Aquila
for the restoration of the Basilica of Santa Maria
Collemaggio and the redevelopment of the Parco del Sole. |
|
| Exploration successes 1.8 bln boe at year end |
Exploration
successes > The
exploration activity for the year delivered strong
results adding 1.8 billion boe of resources to the
company’s resource base, with a unit exploration
cost of 1.2 $/boe. In Mozambique, the exploration campaign assessed the potential of the Mamba and Coral discoveries, while the Agulha discovery revealed a new gas accumulation in the Southern section of Area 4. Agulha was the tenth discovery made in Area 4. Management estimates that Area 4 may contain up to 2,650 billion cubic meters of gas in place. In Congo, an exciting discovery was made in the mature Block Marine XII offshore. The Nené Marine oil and gas discovery and the adjacent Litchendjili Marine field found an overall potential of about 2.5 billion boe in place. |
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| In Australia,
the Evans Shoal North-1 discovery, in the Timor Sea, was
estimated to contain a mineral potential of 8 Tcf of gas
in place. Acquired acreage > In the year Eni rejuvenated its mineral right portfolio entering new high potential areas for a total acreage of approximately 120,000 square kilometers. |
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| Start-ups > In
line with production plans, in 2013 eight major projects
have been started up, contributing for 140,000 boe/d to
the year production. The main start-ups related to:
MLE-CAFC (Eni’s interest 75%) and El Merk
(Eni’s interest 12.25%) fields in Algeria, the
liquefaction plant Angola LNG (Eni’s interest
13.6%), the offshore Abo-Phase 3 project in Nigeria, the
giant heavy oil field Junin 5 (Eni’s interest 40%)
in Venezuela, the Skuld field (Eni’s interest 11.5%)
in Norway, the Kashagan field (Eni’s interest
16.81%) in Kazakhstan and the Jasmine project (Eni’s
interest 33%) in the United Kingdom. |
> | Organic growth |
| Versalis > In
2013, Eni’s chemical subsidiary Versalis progressed
with the expansion in the bio-plastic segment and the
diversification of the commodity chemical, by entering
into joint ventures with strategic international partners
active in bio-technologies and rubber, among which
Pirelli, Genomatica, Yulex Corporation and Lotte
Chemical. In the green chemistry business Versalis carried on the ongoing project of converting the Porto Torres site and a relevant agreement has been reached to start the project for the conversion and relaunching of the Porto Marghera site. Green Data Center > In October 2013 Eni launched the Green Data Center, the best in the world for energy efficiency. It hosts Eni’s central computer processing systems, both for information management and seismic simulation processing, allowing a reduction of CO2 emissions by 300,000 tons per year. Transparency in Corporate Reporting > In 2013 Eni has been ranked first in a survey conducted by Transparency International Italy into the corporate reporting on transparency. The survey, which used a sample of the largest Italian companies by market capitalization, has analyzed three areas of transparency in corporate reporting: anti-bribery programs, the organization and the publication of key economic and financial data related to the activities in each Country where the companies operate. Eni’s commitment with the Massachusetts Institute of Technology > In February 2013, Eni renewed its commitment to the MIT Energy Initiative (MITEI) to develop innovative, powerful tools, technologies and solutions to address global energy needs and challenges. |
> | Versalis |
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| Financial highlights (*) | ||||||||||||||
| 2011 | 2012 | 2013 | ||||||||||||
| Net sales from operations | (euro million) | 107,690 | 127,220 | 114,722 | ||||||||||
| Operating profit | 16,803 | 15,071 | 8,856 | |||||||||||
| Adjusted operating profit | 17,230 | 19,798 | 12,618 | |||||||||||
| Net profit (a) | 6,902 | 4,200 | 5,160 | |||||||||||
| Net profit - discontinued operations (a) | (42 | ) | 3,590 | |||||||||||
| Group net profit (a) | 6,860 | 7,790 | 5,160 | |||||||||||
| Adjusted net profit (a) | 6,938 | 7,130 | 4,433 | |||||||||||
| (*)
Pertaining to continuing operations. Following the
divestment of the Regulated Businesses in Italy 2012,
results of Snam are represented as discontinued
operations throughout this Annual Report. (a) Attributable to Eni’s shareholders. (b) The amount of dividends for the year 2013 is based on the Board’s proposal. (c) Number of outstanding shares by reference price at year end. |
Net cash provided by operating activities | 13,763 | 12,356 | 10,969 | ||||||||||
| Capital expenditure | 11,909 | 12,761 | 12,750 | |||||||||||
| Dividends to Eni shareholders pertaining to the period (b) | 3,768 | 3,912 | 3,986 | |||||||||||
| Cash dividends to Eni shareholders | 3,695 | 3,840 | 3,949 | |||||||||||
| Total assets at period end | 142,945 | 139,878 | 138,088 | |||||||||||
| Shareholders' equity including non-controlling interest at period end | 60,393 | 62,558 | 61,174 | |||||||||||
| Net borrowings at period end | 28,032 | 15,511 | 15,428 | |||||||||||
| Net capital employed at period end | 88,425 | 78,069 | 76,602 | |||||||||||
| Share price at period end | (euro) | 16.01 | 18.34 | 17.49 | ||||||||||
| Number of shares outstanding at period end | (million) | 3,622.7 | 3,622.8 | 3,622.8 | ||||||||||
| Market capitalization (c) | (euro billion) | 58.0 | 66.4 | 63.4 | ||||||||||
| Summary financial data | ||||||||||||||
| 2011 | 2012 | 2013 | ||||||||||||
| (a)
Fully diluted. Ratio of net profit from continuing
operations and average number of shares outstanding in
the period. Dollar amounts are converted on the basis of
the average EUR/USD exchange rate quoted by ECB for the
period presented. (b) One American Depositary Receipt (ADR) is equal to two Eni ordinary shares. (c) Calculated assuming the deconsolidation of the Snam group from priors periods. (d) Ratio of dividend for the period and the average price of Eni shares as recorded in December. |
Net profit (*) | |||||||||||||
| - per share (a) | (euro) | 1.90 | 1.16 | 1.42 | ||||||||||
| - per ADR (a) (b) | ($) | 5.29 | 2.98 | 3.77 | ||||||||||
| Adjusted net profit (*) | ||||||||||||||
| - per share (a) | (euro) | 1.92 | 1.97 | 1.22 | ||||||||||
| - per ADR (a) (b) | ($) | 5.35 | 5.06 | 3.24 | ||||||||||
| Adjusted return on average capital employed (ROACE) (c) | (%) | 10.2 | 10.1 | 5.9 | ||||||||||
| Leverage | 0.46 | 0.25 | 0.25 | |||||||||||
| Coverage | 15.4 | 11.9 | 8.9 | |||||||||||
| Current ratio | 1.1 | 1.4 | 1.5 | |||||||||||
| Debt coverage | 51.3 | 79.8 | 71.1 | |||||||||||
| Dividends pertaining to the year | (euro per share) | 1.04 | 1.08 | 1.10 | ||||||||||
| Pay-out | (%) | 55 | 50 | 77 | ||||||||||
| Dividend yield (d) | (%) | 6.6 | 5.9 | 6.5 | ||||||||||
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| Operating and sustainability data | ||||||||||||||
| 2011 | 2012 | 2013 | ||||||||||||
| Employees at period end | (number) | 72,574 | 77,838 | 82,289 | ||||||||||
| of which | ||||||||||||||
| - women | 12,542 | 12,860 | 13,601 | |||||||||||
| - outside Italy | 45,516 | 51,034 | 55,507 | |||||||||||
| Female managers | (%) | 18.5 | 18.9 | 19.4 | ||||||||||
| Training hours | (thousand hours) | 3,127 | 3,132 | 4,350 | ||||||||||
| Employees injury frequency rate | (No. of accidents per million of worked hours) | 0.65 | 0.57 | 0.40 | ||||||||||
| Contractors injury frequency rate | 0.57 | 0.45 | 0.32 | |||||||||||
| Fatality index | (fatal injuries per one hundred millions of worked hours) | 1.94 | 1.10 | 0.98 | ||||||||||
| Oil spills due to operations | (barrels) | 7,295 | 3,759 | 1,901 | ||||||||||
| Direct GHG emissions | (mmtonnes CO2 eq) | 49.13 | 52.50 | 47.30 | ||||||||||
| R&D expenditure (a) | (euro million) | 190 | 211 | 197 | ||||||||||
| Expenditure for the territory (b) | 101 | 91 | 101 | |||||||||||
| Exploration & Production | ||||||||||||||
| Estimated net proved reserves of hydrocarbons (at year end) | (kboe/d) | 7,086 | 7,166 | 6,535 | ||||||||||
| Average reserve life index | (year) | 12.3 | 11.5 | 11.1 | ||||||||||
| Production of hydrocarbons | (kboe/d) | 1,581 | 1,701 | 1,619 | ||||||||||
| Profit per boe (c) | ($/boe) | 17.0 | 16.0 | 15.5 | ||||||||||
| Opex per boe (c) | 7.3 | 7.1 | 8.3 | |||||||||||
| Cash flow per boe | 31.7 | 32.8 | 31.9 | |||||||||||
| Finding & Development cost per boe (d) | 18.8 | 17.4 | 19.2 | |||||||||||
| Gas & Power | ||||||||||||||
| Worldwide gas sales (e) | (bcm) | 96.76 | 95.32 | 93.17 | ||||||||||
| - in Italy | 34.68 | 34.78 | 35.86 | |||||||||||
| - outside Italy | 62.08 | 60.54 | 57.31 | |||||||||||
| Customers in Italy | (million) | 7.10 | 7.45 | 8.00 | ||||||||||
| Electricity sold | (TWh) | 40.28 | 42.58 | 35.05 | ||||||||||
| Customer satisfaction index | (%) | 88.6 | 89.7 | 90.4 | ||||||||||
| Refining & Marketing | ||||||||||||||
| Refinery throughputs on own account | (mmtonnes) | 31.96 | 30.01 | 27.38 | ||||||||||
| Retail market share | (%) | 30.5 | 31.2 | 27.5 | (a)
Net of general and administrative costs. (b) Includes investments for local communities, charities, association fees, sponsorships, payments to Eni Enrico Mattei Foundation and Eni Foundation. (c) Related to consolidated subsidiaries. (d) Three year average. (e) Includes Exploration & Production natural gas sales amounting to 2.61 bcm (2.73 bcm and 2.86 bcm in 2012 and 2011, respectively). |
|||||||||
| Retail sales of petroleum products in Europe | (mmtonnes) | 11.37 | 10.87 | 9.69 | ||||||||||
| Service stations in Europe at year end | (units) | 6,287 | 6,384 | 6,386 | ||||||||||
| Average throughput of service stations in Europe | (kliters) | 2,206 | 2,064 | 1,828 | ||||||||||
| Chemicals | ||||||||||||||
| Production | (ktonnes) | 6,245 | 6,090 | 5,817 | ||||||||||
| Sales of petrochemical products | 4,040 | 3,953 | 3,785 | |||||||||||
| Average plant utilization rate | (%) | 65.3 | 66.7 | 65.3 | ||||||||||
| Engineering & Construction | ||||||||||||||
| Orders acquired | (euro million) | 12,505 | 13,391 | 10,653 | ||||||||||
| Order backlog at period end | 20,417 | 19,739 | 17,514 | |||||||||||
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Eni Annual Report / The competitive environment
the competitive environment
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Eni Annual Report / The competitive environment
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Eni Annual Report / Our strategy
our strategy
|
|||
> |
2014-2017 main targets - Hydrocarbon production: +3% on average per year - Breakeven in mid-downstream businesses in 2015 - Cash flow: +40% in 2014-2015; +55% in 2016-2017 - Capital expenditure plan: -5% vs. 2013-2016 - Cash from disposals: euro 9 billion
(1) Ratio of cash flow (net profit + amortization) and cost incurred (exploration and development investments + proved and unproved reserves purchases). |
In 2013 our upstream
activity was negatively impacted by the increased
political instability in certain countries of operations.
Our mid-downstream businesses recorded operating losses
as they were hit by structural headwinds in the
competitive context and continuing weak demand, against
the backdrop of the European downturn, particularly in
Italy. In order to tackle with a deteriorated trading environment, management has planned a number of actions that are intended to help the Company to achieve strong performances in each of its business segment against prudent, cautious and conservative assumptions about the external context whereby we do not anticipate any meaningful improvement in market conditions and have projected flat production profiles in the Company’s main countries at risk of political instability (i.e. Libya, Nigeria and Algeria). Eni’s strategy confirms the priorities of profitable growth in the upstream, turning around the mid-downstream businesses, recovering profitability at Saipem and monetizing non-core exploration assets. Assuming a Brent price of $90 a barrel for the full year 2017, our projected operating cash flows (up 40% in the two years period 2014-2015 and 55% in 2016-2017) will provide enough resources to maintain the leverage below the ceiling of 0.30, to finance the planned capital expenditure (euro 54 billion) and to ensure a progressive increase in the cash returned to shareholders also through the flexible tool of the buyback program. Our growth strategy in the Exploration & Production Division has been reinvigorated by the extraordinary exploration successes made in the latest years which have build upon an already solid platform of large, conventional producing assets with an efficient cost position. The exploration successes has proven to be an efficient and effective way to increase the resource base, a driver of organic production growth and portfolio diversification also providing a boost to cash generation by early monetization of part of the discovered volumes. In the next four-years Eni targets a robust cash generation coupled with production growth and a rebalanced risk profile of our portfolio. We also plan to increase our resource base leveraging on our leading exploration activity where we boast an impressive track-record in discovering new resources. All these industrial targets are planned to be achieved through a capital expenditure plan 5% lower than the previous one. Under Eni’s price scenario, management expects to increase operating cash flow by 4% on average in the next four years plan. This coupled with a continuing focus on capital discipline will drive the achievement of a self-financing ratio1 of 140% on average. The strong cash generation will be the result of organic production growth, the quality of our portfolio which is largely made-up of conventional asset, our phased approach in giant projects, reduced time-to-market and production optimizations. Average production growth is expected at a rate of 3% in the 2014-2017 period. Growth will be fuelled by new production additions in Eni’s core areas (Sub-Saharan Africa, Venezuela, the Barents Sea and Kazakhstan) leveraging on Eni’s vast knowledge of reservoirs and geological basins, technical and producing synergies, as well as established partnerships with producing Countries. New fields start-ups of 26 major projects, most operated and coming from our exploration activities (including the Goliat in the Barents Sea, the Block 15/06 in the West Hub located in |
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Eni Annual Report / Our strategy
| Angola, gas and heavy oil
assets in Venezuela, OCTP oil development in Ghana and
Jangkrik in Indonesia), will add more than 500 kboe/d of
production in 2017 to support our growth and replace
mature field decline. Since 2008 we discovered approximately 9.5 bboe of resources, largely conventional and at competitive costs, which accounted more than double of our production in the period. Eni confirms its commitment to the exploration strategy as the pillar of the long-term sustainable growth. We plan to execute finding projects in high risk-high reward area and near field activities to target the discovery of 3.2 bboe of new resources at a unit cost of approximately $2.2 per barrel. These discoveries will be developed to ensure high-margin organic growth. Another option is their monetization in advance of development activities by diluting Eni’s interest at an early stage thus reducing the execution and financial risk as it was the case with the Mozambique deal. The achievement of the planned growth targets will be underpinned by a continuing focus on risk mitigation. The main drivers are the diversification of the country presence, the reduction of the time-to-market, the in-source of critical engineering and project management activities, the retention of a large number of operated projects and the contribution to local development (promoting access to energy, education and training and the improvement of health and safety conditions). In particular, Eni reaffirms its commitment to promote access to energy in Sub-Saharan Africa (including Mozambique, Nigeria, Ghana and Congo) involving the construction of power plants, natural gas transportation and distribution facilities as well as isolated systems (off-grid) to provide electricity to remote communities. Notwithstanding Eni’s commitment to maintain long-term relations with host countries, disruptions following socio-political unrest represent an unpredictable factor and a source of possible risks to an upstream company. Following disruptions in Libya, Nigeria and Algeria with a production loss of approximately 110 kboe/d for the full year 2013, the contribution of these important countries to Eni’s production growth profile up to 2015 has been prudently assumed to be marginal. The execution capabilities of contractors in the EPC contractual scheme are a major source of risk to the profitability of development projects. Eni has adopted strong organizational options to ensure effective control on the most important project activities. The Company has elected to execute most of the engineering phase in-house through a reinforced organizational structure. We directly coordinate all the construction phases and deploy our own people to manage hook-up and commissioning. Following this approach management believes that all projects currently being executed which will be started-up in the next four years are as a whole on time and on budget. Operational risk relating to drilling activities will be managed by applying Eni’s rigorous procedures throughout the engineering and execution stages. The main drivers of this will be the adoption of our field-tested proprietary drilling technologies, our excellent skills and know-how and increased control of operations. The excellence in our drilling activities allowed us to achieve zero blow-outs for the tenth consecutive year. The planning of emergency responses and quick remediation in case of accidents, oil spills or gas leaks is as rigorous as our operations. Targets on environmental impact include the reduction in GHG emission rates and the depletion of natural resources by means of flaring down policies and rehabilitation projects of production water. In particular projects of water re-injection in Egypt, Nigeria, Tunisia, Iraq, Angola, Ghana, Norway and Congo are estimated to allow a recovery factor up to 70% of the total water produced in 2017 from a rate of water re-injected of 55% in 2013. Management expects that continuing development proprietary technologies to be applied in complex environment and competence build-up will drive production growth and value creation as well as increase the safety in our operations. Eni estimates to spend euro 500 million in R&D (on an overall Eni’s expenditure of euro 1.2 billion) over the 2014-2017 plan period. |
|
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Eni Annual Report / Our strategy
> |
G&P
turnaround - Renegotiation of supply contracts - Focus on premium segments
|
In the Gas &
Power Division, we expect continuing weak
conditions in the trading environment due to strong
competition, oversupply in Europe and the strengthening
of the role of the continental hubs to trade spot gas. In
this scenario, management believes that the key factors
are the ability to oversee trade hubs, to enhance the
flexibility of our portfolio and to adapt our contracts
and assets to the current tough market environment.
Management reaffirms its commitment in restoring
profitability and preserving cash generation leveraging
on a robust turnaround plan which provides for: (i)
restructuring our supply contracts in order to reach
price alignment with the new market conditions and to
minimize the impact of take-or-pay risks on future cash
flows through a new round of negotiations or
arbitrations; (ii) focus on high-value added businesses,
such as LNG, through integration with upstream segment
and increasing sales in premium markets, on trading
activities, through the enhancement of the physical and
contractual assets in portfolio, as well as the
development of our retail customer base; (iii) the
re-engineering of B2B business with innovative products
for our customers and efficiency actions and integration
with the skills of the trading unit; (iv) process
reengineering and cost cutting in our operations. Management believes that these turnaround drivers will help the Company to restore profitability by 2015 and generate approximately euro 1.2 billion of EBITDA pro-forma adjusted in 2017. In R&D, Eni aims to assess the impact of advanced LNG technologies on the increase of natural gas consumption in the industrial and business segment and to enhance technological developments related to the energy efficiencies in the mid-market and retail (cogeneration, energy storage, smart metering and integration with renewable energy sources). |
|
> |
Optimization
of refinery capacity • Sannazzaro: start-up of EST Plant • Venice: start-up of Green Diesel Plant • Gela: shut down of gasoline production line • Further initiatives |
In the Refining
& Marketing Division a number of additional
actions compared to the previous strategic plan have been
launched in order to face the further worsening of the
trading environment with a refinery margin which fell to
unprecedented levels, down to less than one dollar per
barrel in the last quarter of the year. In the refining activity, Eni will deploy the following initiatives: (i) the reorganization and optimization of refinery plants through rationalizations and reconversion of processes (biorefinery in Venice and restructuring of Gela) resulting in a 22% cut of existing refining capacity in the four-year plan; (ii) higher flexibility, process integration and efficiency to better face market scenario; (iii) the improvement in operating efficiency and energy saving projects. Building on these initiatives, in the 2014-2017 four-year period Eni intends to increase plants’ efficiency and to reach energy savings for a total of 114 ktoe/y. Water reuse projects at Gela and Sannazzaro plants are expected to lead to savings of water use of 5 mmcm/y. In marketing operations management intends to enhance the presence in the fuels market by: (i) gaining higher efficiency results (closing stations with low throughput), developing non-oil operations and LPG and methane distribution; (ii) retaining Eni’s position in the wholesale market also leveraging on opportunities deriving by the closing of third parties’ refinery; (iii) launching innovative activities, by means of new products (LNG in the automotive segment) and innovative services (smart mobility). Building on these initiatives, in the 2014-2017 four-years period Eni expects to increase its adjusted EBIT under constant scenario assumptions (base 2013) by euro 0.7 billion by 2017. Eni’s initiatives in the Research and Development field intend to prove the T-Sand and Zero-Waste technologies in the two-years period 2014-2015 and to define technological solutions to process second generation biomasses for the production of Biofuels at the Venice’s refinery. |
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Eni Annual Report / Our strategy
| Eni’s Chemical
segment has been hindered by falling commodity demand and
increasing competition mainly in its more commoditized
lines of business and in those with low technologic
content. Against the backdrop of this scenario, the 2014-2017 strategic plan sets the stage for: (i) a more adequate and efficient cost position leveraging on the optimization/rationalization of Italian critical industrial sites, and higher integration, optimization and flexibility of production; (ii) the refocusing on premium productions, reducing the exposure to commodity chemicals, the selective development of a technological platform in the elastomers and styrenes, and the expansion of the specialties segment. Eni intends to grow the green chemistry business for the manufacture of eco-compatible chemical products and with high-growth demand rate; (iii) a greater internationalization of the business to serve customers even more global and markets characterized by high-growth demand rates, also through strategic alliances. Energy efficiency programs planned in Porto Marghera and Porto Torres sites will allow energy savings of 44.5 ktoe/year. In the four year plan, Eni expects to invest approximately euro 3.3 million to carry on activities agreed with the relevant Authorities and local people, in order to reconvert critical sites, safeguarding and developing employment and local economy. In light of these initiatives, in the 2014-2017 plan, adjusted EBIT under constant scenario assumptions (base 2013) is expected to increase by euro 0.5 billion in 2017. |
5% reduction in
production
|
< < < |
|
| The Engineering
& Construction segment faced a complex 2013
due to operating difficulties in certain projects in the
Onshore and Offshore activities of the Engineering &
Construction business unit. Saipem expects a recovery in
profitability in 2014 and to gradually improve margins in
the following years leveraging on the completion of
low-margins contracts still present in the current
portfolio, effective commercial discipline and investment
activities recently completed. These actions will
strengthen Saipem’s business model in strategic
areas and markets. As far as R&D is concerned, Saipem intends to focus on the development of technologies in the Engineering & Construction Offshore business unit for working in deep and ultra deep waters, subsea processing and for the installation of underwater pipes in extreme conditions. In the onshore business, it will increase the competitiveness of proprietary technologies and know-how to better preserve environment and reduce GHG emissions. In the Offshore and Onshore drilling business units Saipem plans to develop methodologies and innovative technologies. |
Recovery in |
< |
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Eni Annual Report / Risk Management
risk management
|
||
| Eni has developed and
adopted a model for Integrated Risk Management (IRM) that
targets to achieve an organic and comprehensive view of
the Company main risks1, greater consistency
among internally-developed methodologies and tools to
manage risks and a strengthening of the organization
awareness, at any level, that suitable risk evaluation
and mitigation may influence the delivery of Corporate
targets and value. Integrated Risk Management Model The IRM has been defined and updated consistently with international principles and best practices. It is an integral part of the Internal Control and Risk Management System (see page 29) and is structured on three control levels. |
||
| The first level is represented by risk owners, whose
responsibility lies in risk assumption and related
treatment measures. The second level concerns the risk control functions that cooperate in drafting the methodologies and risk management tools and perform control activities through structures that are independent from operating management. The third level is represented by the independent assurance provider that provides independent certifications on the planning and functioning of risk management processes. (*) Including Integrated Risk
Management department. |
|
|
(1) Potential events that can affect Eni’s activities and whose occurrence could hamper the achievement of the main corporate objectives. |
Risk governance attributes a central role to the Board of Directors. The Board, with the support of the Control and Risk Committee outlines the guidelines for risk management, so as to ensure that the main corporate risks are properly identified and adequately assessed, managed and monitored. |
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Eni Annual Report / Risk Management
| In addition, the Eni Board
of Directors, in fulfilling its responsibilities and its
role of direction and with the support of the Control and
Risk Committee, defines the degree of compatibility of
these risks with the company management consistent with
its strategic targets. For this purpose, Eni’s CEO,
through the process of integrated risk management,
presents at least every six months Eni’s a review of
the main risks to the Board of Directors. The analysis is
based on the scope of the work and risks specific of each
business area and processes aiming at defining an
integrated risk management policy; the CEO also ensures
the evolution of the IRM process consistently with
business dynamics and the regulatory environment. Furthermore, the Risk Committee, chaired by the CEO, holds the role of consulting body for the latter with regards to major risks. For this purpose, the Risk Committee evaluates and expresses opinions, at the instance of CEO, related to the main results of the integrated risk management process. Our process of integrated risk management The IRM model is implemented through a process of integrated management which is both continuous and dynamic, leveraging on the risk management systems already adopted by each business unit and corporate processes, promoting harmonization with methodologies and specific tools of the IRM. The commencement of the risk assessment process includes the definition of its scope, basing on the guidelines defined by the Board of Directors, i.e. the identification of the organizational functions/units and, when necessary, the processes of Eni and its subsidiaries, which might significantly impact the achievement of corporate objectives, and the relevant management to be involved in the IRM process. In 2013, two assessment sessions were performed: the interim top risk assessment performed in the first half of the year, relating to the update and in-depth identification, evaluation and treatment of top risks resulted by the 2012 risk assessment and the yearly risk assessment performed in the second half of the year involving 13 subsidiaries. Based on the major risks identified through the above mentioned assessments, the strategic guidelines and treatment measures for their mitigation/management were identified and submitted to Eni’s management, consistently with the evolution of internal/external context and of the Company’s strategy. The first monitoring assessment of Eni’s top risks identified in 2012 was also performed. The monitoring of main risks and the relevant treatment plans through appropriate indicators (Key Risk Indicator, Key Control Indicator, Key Performance Indicator) allow to identify improvement areas in the management of major risks, analyze their evolution as well as the progress in implementation of further treatment measures decided by the management (also related to the update and development and risk management models) and to timely identify potential new risks. The assessment and monitoring results were submitted to the Risk Committee and to the management and control bodies according to the procedure provided by the Management System Guidelines MSG IRM (interim IRM reporting and annual IRM reporting). The following table summarizes Eni’s main risks in relation to corporate targets, except for scenario risk, linked to operating performance variability related to fluctuations in crude oil prices, natural gas and oil products prices. For further details on these risks, as well as minors uncertainty factors, see the section “Risk factors and uncertainties”. |
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Eni Annual Report / Risk Management
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Eni Annual Report / Risk Management
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Contents
Eni Annual Report / Governance
governance
|
||
| Integrity and transparency
are the principles that have inspired Eni in the
formulation of its Corporate Governance system1
and are the pillars of the Company’s business model.
The Governance system, supplementing Eni’s business
strategy, is designed to sustain the relationship of
trust between Eni and its stakeholders and to help
achieve business results, creating sustainable long-term
value. Eni, as Italy’s top company by capitalization, is committed to building a Corporate Governance system inspired by excellence in a transparent relationship with the market. For this reason, Eni places great emphasis on communication with its stakeholders, taking account of their needs and maintaining an ongoing commitment to helping shareholders effectively exercise their rights, developing an open dialogue that fosters mutual understanding. In this context, in 2013 the Chairman of the Board of Directors of Eni held a series of meetings with institutional investors and the major proxy advisors in Europe and the United States in order to provide them with a complete understanding of Eni’s Corporate Governance system and how it relates to the various regulatory models. |
||
(1) For further information on
Eni’s Corporate Governance system, refer to
Eni’s Corporate Governance Report, which is
published on the Company’s website in the Governance
section. |
Eni’s Corporate Governance
structure The Corporate Governance arrangements of Eni are structured along the lines of the traditional model, which, without prejudice to the responsibilities of the Shareholders’ Meeting, assigns corporate management duties to the Board of Directors, monitoring functions to the Board of Statutory Auditors and the auditing of the financial statements to the audit firm. The Board of Directors and the Board of Statutory Auditors of Eni, as well as their respective Chairmen, are appointed by the Shareholders’ Meeting using a slate voting mechanism. Three directors and two statutory auditors, including the Chairman of the Board of Statutory Auditors, are appointed by non-controlling shareholders, thereby ensuring that the number of representatives of non-controlling shareholders exceeds the minimum established by law. In addition, the number of independent Directors indicated in Eni’s By-laws exceeds that required by law. In fact, the number of independent Directors currently serving (seven2 out of nine Directors, of whom eight are non-executive Directors) is above the minimum set out in the By-laws and in the Corporate Governance rules, as well as the average number of such directors for Italian listed companies in general. The Board’s structure is also balanced in relation to the professional qualifications and experience of the Directors, gained in companies operating primarily in the industrial, banking or financial sectors. Starting from the next election in 2014, the Board of Directors and Board of Statutory Auditors will be assured a balanced gender representation, as provided for By-Law and the Company’s By-laws3. The Board of Directors has appointed a Chief Executive Officer (“CEO”) and granted the Chairman powers, provided for in the Eni By-laws, to identify and promote integrated projects and international agreements of strategic importance. The Board of Directors has established four internal committees with consulting and advisory functions: the Control and Risk Committee4, the Compensation Committee5, the Nomination |
26
Contents
Eni Annual Report / Governance
| Committee and the Oil-Gas
Energy Committee, which report to the Board at each
meeting on the most significant issues addressed. The following chart provides a graphical representation of the Company’s Corporate Governance structure:
|
||
| Decision-making processes The Board of Directors has appointed a Chief Executive Officer to manage the Company, while retaining responsibility over strategic, operational and organizational matters, particularly in the fields of governance, sustainability6, internal control and risk management. The Directors are made knowledgeable and informed about the company’s matters in order to make effective decision-making processes. The Board, thanks to its diversified range of expertise and competences, has the capabilities to perform the in-depth review that is required by the complexity and reach of the Company’s business. The newly-appointed |
(6) More specifically, the Board has retained the exclusive power to set sustainability policies, the results of which are comprehensively reported together with financial and performance information in the Annual Report, as well as to examine and approve the sustainability reporting not covered in the integrated reporting system. |
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Contents
Eni Annual Report / Governance
 (7) Following the program commenced in
2012, Eni conducted a training program in 2013 for new
members of the boards of directors of its Italian
subsidiaries, gradually extending it to its foreign
subsidiaries and investees, with a special emphasis on
business integrity. |
Boards underwent an
induction7 program and other training
initiatives, including visits to a number of key
operating sites, such as in Venezuela in 2013. The
Directors are also promptly and fully informed about
matters on the Board’s agenda. To achieve this, specific procedures have been established for setting the deadline by which documentation must be made available prior to Board meetings, and the Chairman ensures that each Director is able to contribute effectively to Board discussions. Before the Board’s approval of the Company’s strategic guidelines, an annual Strategy Day is organized to evaluate and discuss major issues. The Oil-Gas Energy Committee assists the Board in preparing for the event. The Board’s training and informational activities over the past year have focused on the Board’s duties and responsibilities in the areas of control and risk. The Company also decided to take part in the Global Compact LEAD Board Programme Pilot Phase8, which is devoted to training Directors on sustainability issues, as Eni actively contributed to the development of the program. The Board’s most important duties include appointing key management and control personnel, including the Chief Operating Officers, the Officer in charge of preparing financial reports (Financial Reporting Officer) and the Internal Audit Senior Executive Vice President. The Board is supported by the Nomination Committee in performing these duties. Remuneration policy Eni’s remuneration policy for its Directors and top management is established in accordance with the recommendations of the Corporate Governance Code and best practices in the field. The Policy seeks to retain with high-level professionals and skilled managers and to align the interests of management with the priority objective of creating value for shareholders over the medium/long-term. For this purpose, the remuneration of Eni’s top management is established on the basis of the position and the responsibilities assigned, with due consideration given to market benchmarks for similar positions in companies similar to Eni in dimension and complexity. Remuneration is composed of a balanced mix of fixed and variable elements. Under Eni remuneration policy, considerable importance is given to the variable component, which is linked to the achievement of preset performance and financial targets, business development and operational objectives, also considering the long-term sustainability of the results, in line with the Company’s Strategic Plan. The variable remuneration of Eni’s executive officers having a greater influence on the business performance is characterized by a significant percentage of long-term incentive components, to be paid at the end of a three-year vesting period to reflect the long-term nature of the business. With regard to sustainability issues, the CEO objectives set for the incentives which will be paid in 2014, focused also on maintaining Eni’s presence in the main sustainability indexes, as well as the development of the “Integrity Culture” program. The objectives of the Chief Operating Officers of Eni Divisions and other Managers with strategic responsibilities are assigned on the base of the role and the responsibilities assigned also in terms of health and safety, environmental protection, relations with stakeholders. The remuneration policy is described in the first section of the “Remuneration Report”, available on the Company’s website (www.eni.com) and is presented, on an annual basis, for an advisory vote at the Shareholders Meeting9. |
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Eni Annual Report / Governance
| The internal control and risk management
system Eni has adopted an integrated and comprehensive internal control and risk management system based on reporting tools and flows that, involving all Eni personnel, reach all the way up to the Company’s top management. The members of the Board, as well as the members of the other corporate bodies and all Eni personnel, are required to comply with Eni’s Code of Ethics (as part of the Company’s Model 231), which sets out the rules of conduct for the fair and proper management of the Company’s business. In March 2013, Eni adopted a regulatory instrument for the integrated governance of the internal control and risk management system, the guidelines of which, approved by the Board, set out the duties, responsibilities and procedures for coordinating between the primary system actors. For detailed information on Eni’s risk management system, see the section “Risk management”. An integral part of the Eni internal control system is the internal control system for financial reporting, the objective of which is to provide reasonable certainty of the reliability of financial reporting and the ability of the financial report preparation process to generate such reporting in compliance with generally accepted international accounting standards. Eni’s CEO and Chief Financial Officer (CFO) are responsible for planning, establishing and maintaining the internal control system for financial reporting. The CFO also serves as the officer in charge of preparing financial reports (FRO), who must satisfy specific professional requirements set out in the Eni By-laws. |
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Contents
| Exploration & Production | |||||||||||
| Key performance indicators | |||||||||||
| 2011 | 2012 | 2013 |
| Employees injury frequency rate | (No. of accidents per million of worked hours) | 0.41 | 0.28 | 0.14 | |||||||
| Contractors injury frequency rate | 0.41 | 0.36 | 0.26 | ||||||||
| Fatality index | (No. of fatalities per 100 million of worked hours) | 1.83 | 0.81 | - | |||||||
| Net sales from operations (a) | (euro million) | 29,121 | 35,881 | 31,268 | |||||||
| Operating profit | 15,887 | 18,470 | 14,871 | ||||||||
| Adjusted operating profit | 16,075 | 18,537 | 14,646 | ||||||||
| Adjusted net profit | 6,865 | 7,426 | 5,952 | ||||||||
| Capital expenditure | 9,435 | 10,307 | 10,475 | ||||||||
| Adjusted ROACE | (%) | 17.2 | 17.6 | 13.5 | |||||||
| Profit per boe (b) | ($/boe) | 17.0 | 16.0 | 15.5 | |||||||
| Opex per boe (b) | 7.3 | 7.1 | 8.3 | ||||||||
| Cash flow per boe (d) | 31.7 | 32.8 | 31.9 | ||||||||
| Finding & Development cost per boe (c) (d) | 18.8 | 17.4 | 19.2 | ||||||||
| Average hydrocarbons realizations (d) | 72.26 | 73.39 | 71.87 | ||||||||
| Production of hydrocarbons (d) | (kboe/d) | 1,581 | 1,701 | 1,619 | |||||||
| Estimated net proved reserves of hydrocarbons (d) | (mmboe) | 7,086 | 7,166 | 6,535 | |||||||
| Reserves life index (d) | (years) | 12.3 | 11.5 | 11.1 | |||||||
| Organic reserves replacement ratio (d) | (%) | 143 | 147 | 105 | |||||||
| Employees at year end | (number) | 10,425 | 11,304 | 12,352 | |||||||
| of which: outside Italy | 6,628 | 7,371 | 8,219 | ||||||||
| Oil spills due to operations (>1 bbl) | (bbl) | 2,930 | 3,015 | 1,728 | |||||||
| Oil spills from sabotage (>1 bbl) | 7,657 | 8,436 | 5,493 | ||||||||
| Produced water re-injected | (%) | 43 | 49 | 55 | |||||||
| Direct GHG emissions | (mmtonnes CO2 eq) | 23.59 | 28.46 | 25.71 | |||||||
| of which: from flaring | 9.55 | 9.46 | 8.48 | ||||||||
| Community investment | (euro million) | 62 | 59 | 53 | |||||||
| (a) Before elimination of intragroup sales. (b) Consolidated subsidiaries. (c) Three-year average. (d) Includes Eni’s share of equity-accounted entities. |
| Performance of the year |
›
In 2013, employees and contractors injury frequency rate
continued with a positive trend (down by 48.7% and by 28.8% from
2012, respectively), with a zero fatality index. Eni is engaged
in maintaining a high safety standard in each of its operations,
in particular the “eni in safety” program in the
E&P Division involved more than 1,600 people in Italy and
outside Italy.
›
Direct greenhouse gas emissions decreased by 9.7% compared to the
previous year (down by 10.4% from flaring) due to, in particular,
flaring down projects in Nigeria and higher supply to the power
plants in Congo (in particular to the CEC power plant, Eni’s
interest 20%).
›
Oil spills reported a decline from 2012 (down by 42.7% from
operations; down by 34.9% from sabotage) and zero blow-outs for
the tenth consecutive year.
›
Achieved a record result of 55% in re-injection of the produced
water. In particular, a water re-injection program is planned in
the Nigerian onshore for the next years.
›
In 2013 the E&P Division reported a decline of euro 1,474
million, or 20% from 2012 in adjusted net profit due to
extraordinary disruptions in particular in Libya, Nigeria and
Algeria. Cash generation was strong with $30 per barrel due to
our low cost position.
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Eni Annual Report / Operating Review
›
In 2013, oil and natural gas production of 1,619 kboe/day
declined by 4.8% from 2012 mainly due to geopolitical factors.
The contribution of the start-ups/ramp-ups was partly offset by
the effects of planned facility downtimes and technical problems,
as well as mature field declines.
›
Estimated net proved reserves at December 31, 2013 amounted to
6.54 bboe based on a reference Brent price of $108 per barrel.
The organic reserves replacement ratio was 105% with a reserves
life index of 11.1 years (11.5 years in 2012).
| Portfolio optimization |
›
Concluded the sale of a 20% interest in Area 4 operated by Eni
and located in Mozambique to Chinese partner CNPC, for a total
consideration of euro 3.4 billion. This operation has ensured an
anticipated monetization of future cash flow expected from asset
development. CNPC’s entrance into Area 4 is strategically
significant for the project because of the worldwide importance
of the company in the upstream and downstream sectors.
›
Divested to certain Gazprom subsidiaries a 60% interest in Artic
Russia, the subsidiary owing a 49% stake of Severenergia, which
holds four licenses for the exploration and production of
hydrocarbons in Russia. On January 15, 2014, the consideration
for the disposal equal to euro 2.2 billion was cashed in.
›
Awarded the exploration licenses in emerging basins which
represent new frontiers in oil and gas exploration activity such
as Vietnam, Myanmar and Greenland, in the high potential areas
such as Cyprus, Russian offshore and Kenya, as well as legacy
areas such as Australia, Indonesia, China, Congo, Egypt and
Norway.
| Exploration activity |
In 2013 exploration activity reported a
successful performance, with approximately 1.8 bboe of discovered
resources at an average competitive cost of $1.2 per barrel:
›
Exploration campaign of the year in Mozambique, in the offshore
of the Rovuma basin in the Area 4 (Eni operator with a 50%
interest), regarded the appraisal of the Mamba and Coral
discoveries and a new prospect in the Southern section of Area 4,
with Agulha discovery. Management estimates that Area 4 may
contain up to 2,650 billion cubic meters of gas in place.
›
Recent appraisal of the Sankofa East discovery in the Offshore
Cape Three Points license (Eni operator with a 47.22% interest),
in Ghana, confirming high oil potential of the western part of
the area. The total potential of the Sankofa East oil discovery
is estimated at approximately 450 million barrels of oil in place
with recoverable reserves up to 150 million barrels.
›
Oil Skavl discovery (Eni’s interest 30%) in the Barents Sea
in Norway confirmed an extraordinarily high potential of the
area, in addition to the recent oil and gas Skrugard and Havis
discoveries. The total recoverable resources are estimated at
over 500 million barrels at 100% and are planned to be put in
production by means of fast-track synergic development.
›
Recent discoveries and appraisal activities in the Marine XII
Block (Eni operator with 65%) in Congo achieved the mineral
potential of the area to 2.5 billion boe in place.
›
Further exploration successes of the year were reported in
Australia, Angola, Egypt, Norway and Pakistan where existing
facilities ensure to reduce time-to-market and costs.
›
Achieved a strategic cooperation agreement with Rosnfet for
exploration activities in the Russian offshore (Fedynsky and
Central Barents licenses) where seismic surveys started, and in
the Black Sea (Western Chernomorsky license).
›
Signed an agreement with Quicksilver for joint exploration and
development of unconventional oil reservoirs (shale oil), located
in onshore of the United States. In particular, Eni will
participate with a 50% interest.
›
In 2013 exploration expenditure amounted to euro 1,669 million.
In the year 53 new exploratory wells (27.8 net to Eni) were
completed with an overall commercial success rate of 36.9% (38.5%
net to Eni). In addition 129 exploratory wells drilled are in
progress at year end (55 net to Eni).
| Sustainability and portfolio developments |
›
Developed a training program in the field of human rights for
staff, in particular employed in the security area, at Eni’s
subsidiaries in Indonesia and Algeria. The activities involved
totally approximately 200 employees in the Jakarta and Borneo
area, as well as Algeri.
This Eni’s program is a part of a multi-year project
presented at Global Compact Leaders Summit in September 2013.
›
In 2013 the community investment amounted to euro 53 million
(euro 59 million in 2012). Eni's commitment to "access to
energy" progresses in Congo and Nigeria.
›
Achieved start-up of the accelerated early production of the
giant Junin 5 oil field (Eni’s interest 40%) in the Orinoco
Belt, with 35 bbbl of certified heavy oil in place. Early
production of the first phase is expected to reach a plateau of
75 kbbl/d by the end of 2015.
›
In line with production plans, in addition to the above mentioned
Junin 5, the MLE-CAFC (Eni’s interest 75%) and El Merk
(Eni’s interest 12.25%) fields in Algeria, the liquefaction
plant Angola LNG (Eni’s interest 13.6%) and other projects
in Egypt, Nigeria, Norway and the United Kingdom have been
started-up as well as 7 main FIDs were sanctioned. The start-up
of new fields and continuing production ramp-ups contributed with
140 kboe/day of new production.
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Eni Annual Report / Operating Review
›
Development expenditure was euro 8,580 million (up by 3.3% from
2012) to fuel the growth of major projects particularly in
Norway, the United States, Angola, Congo, Italy, Nigeria,
Kazakhstan, Egypt and the United Kingdom.
›
In 2013 overall R&D expenditure of the Exploration &
Production Division amounted to euro 87 million (euro 94 million
in 2012).
Reserves
| Overview The Company has adopted comprehensive classification criteria for the estimate of proved, proved developed and proved undeveloped oil and gas reserves in accordance with applicable US Securities and Exchange Commission (SEC) regulations, as provided for in Regulation S-X, Rule 4-10. Proved oil and gas reserves are those quantities of liquids (including condensates and natural gas liquids) and natural gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, under existing economic conditions, operating methods, and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain. Oil and natural gas prices used in the estimate of proved reserves are obtained from the official survey published by Platt’s Marketwire, except when their calculation derives from existing contractual conditions. Prices are calculated as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month period prior to the end of the reporting period. Prices include consideration of changes in existing prices provided only by contractual arrangements. Engineering estimates of the Company’s oil and gas reserves are inherently uncertain. Although authoritative guidelines exist regarding engineering criteria that have to be met before estimated oil and gas reserves can be designated as “proved”, the accuracy of any reserve estimate is a function of the quality of available data and engineering and geological interpretation and evaluation. Consequently, the estimated proved reserves of oil and natural gas may be subject to future revision and upward and downward revisions may be made to the initial booking of reserves due to analysis of new information. Proved reserves to which Eni is entitled under concession contracts are determined by applying Eni’s share of production to total proved reserves of the contractual area, in respect of the duration of the relevant mineral right. Proved reserves to which Eni is entitled under PSAs are calculated so that the sale of production entitlements should cover expenses incurred by the Group to develop a field (Cost Oil) and on the Profit Oil set contractually (Profit Oil). A similar scheme applies to buyback and service contracts. |
Reserves
Governance Eni retains rigorous control over the process of booking proved reserves, through a centralized model of reserves governance. The Reserves Department of the Exploration & Production Division is entrusted with the task of: (i) ensuring the periodic certification process of proved reserves; (ii) continuously updating the Company’s guidelines on reserves evaluation and classification and the internal procedures; and (iii) providing training of staff involved in the process of reserves estimation. Company guidelines have been reviewed by DeGolyer and MacNaughton (D&M), an independent petroleum engineering company, which has stated that those guidelines comply with the SEC rules1. D&M has also stated that the Company guidelines provide reasonable interpretation of facts and circumstances in line with generally accepted practices in the industry whenever SEC rules may be less precise. When participating in exploration and production activities operated by other entities, Eni estimates its share of proved reserves on the basis of the above guidelines. The process for estimating reserves, as described in the internal procedure, involves the following roles and responsibilities: (i) the business unit managers (geographic units) and Local Reserves Evaluators (LRE) are in charge with estimating and classifying gross reserves including assessing production profiles, capital expenditure, operating expenses and costs related to asset retirement obligations; (ii) the petroleum engineering department at the head office verifies the production profiles of such properties where significant changes have occurred; (iii) geographic area managers verify the commercial conditions and the progress of the projects; (iv) the Planning and Control Department provides the economic evaluation of reserves; (v) the Reserves Department, through the Division Reserves Evaluators (DRE), provides independent reviews of fairness and correctness of classifications carried out by the above mentioned units and aggregates worldwide reserves data. The head of the Reserves Department attended the “Politecnico di Torino” and received a Master of Science degree in Mining Engineering in 1985. She has more than 25 years of experience in the oil and gas industry and more than 15 years of experience in evaluating reserves. Staff involved in the reserves evaluation process fulfils the professional qualifications requested and maintains the highest level of independence, objectivity and confidentiality in accordance with professional ethics. Reserves Evaluators qualifications comply with international standards defined by the Society of Petroleum Engineers. |
(1) The reports of independent engineers are available on Eni website eni.com section Publications/Annual Report 2009.
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Eni Annual Report / Operating Review
| Reserves
independent evaluation Since 1991, Eni has requested qualified independent oil engineering companies2 to carry out an independent evaluation of part of its proved reserves on a rotational basis. The description of qualifications of the persons primarily responsible for the reserves audit is included in the third party audit report3. In the preparation of their reports, independent evaluators rely, without independent verification, upon information furnished by Eni with respect to property interests, production, current costs of operations and development, sale agreements, prices and other factual information and data that were accepted as represented by the independent evaluators. These data, equally used by Eni in its internal process, include logs, directional surveys, core and PVT (Pressure Volume Temperature) analysis, maps, oil/gas/water production/injection data of wells, reservoir studies, technical analysis relevant to field performance, development plans, future capital and operating costs. In order to calculate the economic value of Eni’s equity reserves, |
actual prices applicable to
hydrocarbon sales, price adjustments required by
applicable contractual arrangements and other pertinent
information are provided by Eni to third party
evaluators. In 2013 Ryder Scott Company and DeGolyer and MacNaughton3 provided an independent evaluation of approximately 30% of Eni’s total proved reserves at December 31, 20134, confirming, as in previous years, the reasonableness of Eni internal evaluation. In the 2011-2013 three year period, 92% of Eni total proved reserves were subject to an independent evaluation. As at December 31, 2013, the main Eni properties not subjected to independent evaluation in the last three years were M’Boundi (Congo) and Elgin Franklin (United Kingdom). Movements in estimated net proved reserves Eni’s estimated proved reserves were determined taking into account Eni’s share of proved reserves of equity-accounted entities. Movements in Eni’s 2013 estimated proved reserves were as follows: |
i
| (mmboe) | Consolidated subsidiaries | Equity-accounted entities | Total |
| Estimated net proved reserves at December 31, 2012 | 5,667 | 1,499 | 7,166 | ||||||||||||
| Extensions, discoveries and other additions, revisions of previous estimates, improved recovery and other factors, excluding price effect | 607 | 607 | |||||||||||||
| Price effect | 14 | 14 | |||||||||||||
| Reserve additions, total | 621 | 621 | |||||||||||||
| Sales of minerals-in-place | (13 | ) | (652 | ) | (665 | ) | |||||||||
| Purchase of minerals-in-place | 4 | 4 | |||||||||||||
| Production of the year | (571 | ) | (20 | ) | (591 | ) | |||||||||
| Estimated net proved reserves at December 31, 2013 | 5,708 | 827 | 6,535 | ||||||||||||
| Organic reserves replacement ratio (%) | 105 | ||||||||||||||
| Additions to proved reserves
booked in 2013 were 621 mmboe and derived from: (i)
revisions of previous estimates were up 508 mmboe mainly
reported in Congo, Iraq, Australia and Nigeria; (ii)
extensions, discoveries and other factors were 108 mmboe,
with major increases booked in Angola, Indonesia and the
United States; (iii) improved recovery were 5 mmboe
reported particularly in Nigeria. Price effects were negligible, leading to an upward revision of 14 mmboe, due to a lowered Brent price used in the reserve estimation process down to $108 per barrel in 2013 compared to $111 per barrel in 2012. Sales of mineral-in-place related to the divestment of assets in Russia (652 mmboe) and the United Kingdom (13 mmboe). |
Acquisitions referred to
interests in assets located in Egypt (4 mmboe). In 2013 Eni achieved an organic reserves replacement ratio5 of 105%. Reserves life index was 11.1 years (11.5 years in 2012). Proved undeveloped reserves Proved undeveloped reserves as of December 31, 2013 totaled 3,108 mmboe, of which 1,361 mmboe of liquids mainly concentrated in Africa and Kazakhstan and 9,592 bcf of natural gas mainly located in Africa and Venezuela. Proved undeveloped reserves of consolidated subsidiaries amounted to 1,248 mmbbl of liquids and 5,900 bcf of natural gas. In 2013, total proved undeveloped reserves decreased by 542 mmboe due to disposal made in Russia as well as upwards and |
(2) From 1991 to 2002, DeGolyer and
MacNaughton; from 2003, also Ryder Scott.
(3) The reports of independent engineers are available on Eni
website eni.com section Publications/Annual Report 2013.
(4) Includes Eni’s share of proved reserves of equity
accounted entities.
(5) Organic ratio of changes in proved reserves for the year
resulting from revisions of previously reported reserves,
improved recovery, extensions and discoveries, to production for
the year. All sources ratio includes sales or purchases of
minerals in place. A ratio higher than 100% indicates that more
proved reserves were added than produced in a year. The Reserves
Replacement Ratio is not an indicator of future production
because the ultimate development and production of reserves is
subject to a number of risks and uncertainties. These include the
risks associated with the successful completion of large-scale
projects, including addressing ongoing regulatory issues and
completion of infrastructure, as well as changes in oil and gas
prices, political risks and geological and environmental risks.
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Eni Annual Report / Operating Review
| downwards revisions related
to contractual and technical review. During 2013, Eni converted 337 mmboe of proved undeveloped reserves to proved developed reserves due to development activities, production start-ups and revisions. The main reclassifications to proved developed reserves are related to the following fields/projects: Kashagan (Kazakhstan), CAFC-MLE and Block 208 (Algeria), Jasmine (United Kingdom) and Zubair (Iraq). In 2013, capital expenditure amounted to approximately euro 2 billion and was made to progress the development of proved undeveloped reserves. Reserves that remain proved undeveloped for five or more years are a result of several physical factors that affect the timing of the projects development and execution, such as the complex nature of the development project in adverse and remote locations, physical limitations of infrastructures or plant capacity and contractual limitations that establish production levels. The Company estimates that approximately 0.8 bboe of proved undeveloped reserves have remained undeveloped for five years or more with respect to the balance sheet date, mainly related to: (i) the Kashagan project in Kazakhstan (0.4 bboe) residual after the start-up of Phase 1 development (Experimental Program) following the completion of the facilities and the drilling campaign (for more details regarding this project please refer to “Main exploration and development projects-Kashagan”); (ii) some Libyan gas fields (0.3 bboe) where development completion and production start-up are planned according to the delivery obligations set |
forth in a long-term gas
supply agreement currently in force. In order to secure fulfillment of the contractual delivery quantities, Eni will implement phased production start-up from the relevant fields, which are expected to be put in production over the next several years; and (iii) other minor projects where development activities are progressing. Delivery commitments Eni sells crude oil and natural gas from its producing operations under a variety of contractual obligations. Some of these contracts, mostly relating to natural gas, specify the delivery of fixed and determinable quantities. Eni is contractually committed under existing contracts or agreements to deliver in the next three years mainly natural gas to third parties for a total of approximately 348 mmboe from producing assets located mainly in Algeria, Australia, Egypt, Libya, Nigeria and Norway. The sales contracts contain a mix of fixed and variable pricing formulas that are generally referenced to the market price for crude oil, natural gas or other petroleum products. Management believes it can satisfy these contracts from quantities available from production of the Company’s proved developed reserves and supplies from third parties based on existing contracts. Production will account for approximately 75% of delivery commitments. Eni has met all contractual delivery commitments as of December 31, 2013. |
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| Estimated net proved hydrocarbons reserves |
| Liquids (mmbbl) | Natural gas (bcf) | Hydrocarbons (mmboe) | Liquids (mmbbl) | Natural gas (bcf) | Hydrocarbons (mmboe) | Liquids (mmbbl) | Natural gas (bcf) | Hydrocarbons (mmboe) |
| Consolidated subsidiaries | 2011 | 2012 | 2013 | |||
| Italy | 259 | 2,491 | 707 | 227 | 1,633 | 524 | 220 | 1,532 | 499 | |||||||||
| Developed | 184 | 1,977 | 540 | 165 | 1,325 | 406 | 177 | 1,266 | 408 | |||||||||
| Undeveloped | 75 | 514 | 167 | 62 | 308 | 118 | 43 | 266 | 91 | |||||||||
| Rest of Europe | 372 | 1,425 | 630 | 351 | 1,317 | 591 | 330 | 1,247 | 557 | |||||||||
| Developed | 195 | 995 | 374 | 180 | 925 | 349 | 179 | 904 | 343 | |||||||||
| Undeveloped | 177 | 430 | 256 | 171 | 392 | 242 | 151 | 343 | 214 | |||||||||
| North Africa | 917 | 6,190 | 2,031 | 904 | 5,558 | 1,915 | 830 | 5,231 | 1,783 | |||||||||
| Developed | 622 | 3,070 | 1,175 | 584 | 2,720 | 1,080 | 561 | 2,432 | 1,003 | |||||||||
| Undeveloped | 295 | 3,120 | 856 | 320 | 2,838 | 835 | 269 | 2,799 | 780 | |||||||||
| Sub-Saharan Africa | 670 | 1,949 | 1,021 | 672 | 2,061 | 1,048 | 723 | 2,374 | 1,155 | |||||||||
| Developed | 483 | 1,437 | 742 | 456 | 1,429 | 716 | 465 | 1,295 | 701 | |||||||||
| Undeveloped | 187 | 512 | 279 | 216 | 632 | 332 | 258 | 1079 | 454 | |||||||||
| Kazakhstan | 653 | 1,648 | 950 | 670 | 2,038 | 1,041 | 679 | 1,957 | 1,035 | |||||||||
| Developed | 215 | 1,480 | 482 | 203 | 1,401 | 458 | 295 | 1,488 | 566 | |||||||||
| Undeveloped | 438 | 168 | 468 | 467 | 637 | 583 | 384 | 469 | 469 | |||||||||
| Rest of Asia | 106 | 685 | 230 | 82 | 562 | 184 | 128 | 744 | 263 | |||||||||
| Developed | 34 | 528 | 129 | 41 | 372 | 108 | 38 | 286 | 90 | |||||||||
| Undeveloped | 72 | 157 | 101 | 41 | 190 | 76 | 90 | 458 | 173 | |||||||||
| America | 132 | 590 | 238 | 154 | 449 | 236 | 147 | 509 | 240 | |||||||||
| Developed | 92 | 385 | 162 | 109 | 334 | 170 | 96 | 310 | 153 | |||||||||
| Undeveloped | 40 | 205 | 76 | 45 | 115 | 66 | 51 | 199 | 87 | |||||||||
| Australia and Oceania | 25 | 604 | 133 | 24 | 572 | 128 | 22 | 848 | 176 | |||||||||
| Developed | 25 | 491 | 112 | 24 | 459 | 107 | 20 | 561 | 123 | |||||||||
| Undeveloped | 113 | 21 | 113 | 21 | 2 | 287 | 53 | |||||||||||
| Total consolidated subsidiaries | 3,134 | 15,582 | 5,940 | 3,084 | 14,190 | 5,667 | 3,079 | 14,442 | 5,708 | |||||||||
| Developed | 1,850 | 10,363 | 3,716 | 1,762 | 8,965 | 3,394 | 1,831 | 8,542 | 3,387 | |||||||||
| Undeveloped | 1,284 | 5,219 | 2,224 | 1,322 | 5,225 | 2,273 | 1,248 | 5,900 | 2,321 | |||||||||
| Equity-accounted entities | ||||||||||||||||||
| Rest of Europe | 2 | |||||||||||||||||
| Developed | ||||||||||||||||||
| Undeveloped | 2 | |||||||||||||||||
| North Africa | 17 | 20 | 21 | 17 | 16 | 20 | 16 | 15 | 19 | |||||||||
| Developed | 16 | 17 | 19 | 17 | 16 | 20 | 16 | 15 | 19 | |||||||||
| Undeveloped | 1 | 3 | 2 | |||||||||||||||
| Sub-Saharan Africa | 22 | 338 | 83 | 16 | 353 | 81 | 15 | 330 | 75 | |||||||||
| Developed | 4 | 4 | 4 | |||||||||||||||
| Undeveloped | 18 | 334 | 79 | 16 | 353 | 81 | 15 | 330 | 75 | |||||||||
| Rest of Asia | 110 | 3,033 | 656 | 114 | 3,043 | 668 | 1 | 28 | 7 | |||||||||
| Developed | 24 | 5 | 8 | 402 | 82 | 14 | 3 | |||||||||||
| Undeveloped | 110 | 3,009 | 651 | 106 | 2,641 | 586 | 1 | 14 | 4 | |||||||||
| America | 151 | 1,307 | 386 | 119 | 3,355 | 730 | 116 | 3,353 | 726 | |||||||||
| Developed | 25 | 8 | 26 | 19 | 6 | 20 | 19 | 5 | 18 | |||||||||
| Undeveloped | 126 | 1,299 | 360 | 100 | 3,349 | 710 | 97 | 3,348 | 708 | |||||||||
| Total equity-accounted entities | 300 | 4,700 | 1,146 | 266 | 6,767 | 1,499 | 148 | 3,726 | 827 | |||||||||
| Developed | 45 | 53 | 54 | 44 | 424 | 122 | 35 | 34 | 40 | |||||||||
| Undeveloped | 255 | 4,647 | 1,092 | 222 | 6,343 | 1,377 | 113 | 3,692 | 787 | |||||||||
| Total including equity-accounted entities | 3,434 | 20,282 | 7,086 | 3,350 | 20,957 | 7,166 | 3,227 | 18,168 | 6,535 | |||||||||
| Developed | 1,895 | 10,416 | 3,770 | 1,806 | 9,389 | 3,516 | 1,866 | 8,576 | 3,427 | |||||||||
| Undeveloped | 1,539 | 9,866 | 3,316 | 1,544 | 11,568 | 3,650 | 1,361 | 9,592 | 3,108 |
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Oil and natural gas production
| In 2013, Eni’s liquids
and gas production of 1,619 kboe/d declined by 4.8% from
the 2012, reflecting significant force majeure events in
particular in Libya, Nigeria and Algeria, which
considerably impacted the production level and the
disposals made in the first half of 2012, while it was
partially helped by the performance of the Elgin-Franklin
field (Eni’s interest 21.87%) in the United Kingdom,
operated by another oil major, which was off line in 2012
due to a gas leak. The contribution of the new
fields’ start-ups and continuing production ramp-ups
mainly in Algeria and Egypt partly offset the effects of
planned facility downtimes and technical problems, in the
North Sea and in the Gulf of Mexico respectively, as well
as mature field declines. The share of oil and natural
gas produced outside Italy was 89% (89% in 2012). Liquids production (833 kbbl/d) decreased by 49 kbbl/d or 5.6% from the previous year, driven mainly by lower production in Libya and Nigeria, planned and extraordinary downtimes and mature field declines. These negatives were partly offset by new field start-ups and production ramp-ups mainly in: (i) Algeria, following the start-up of the MLE-CAFC (Eni’s interest 75%) and the El Merk (Eni’s interest 12.25%) projects; (ii) Egypt, following the ramp-up of Meleiha area (Eni’s interest 76%); and (iii) Iraq, due to increased production at the Zubair field (Eni’s interest 41.6%). Natural gas production (4,320 mmcf/d) reported a decline of 181 mmcf/d from the 2012 (down by 3.9%). The lower production in Nigeria, planned and extraordinary downtimes and mature field declines were partially offset by the contribution of new field start-ups and ramp-ups of the year, mainly in Algeria and the United Kingdom following the start-up of Jasmine field (Eni’s interest 33%). |
Oil and gas production sold
amounted to 555.3 mmboe. The 35.7 mmboe difference over
production (591 mmboe) reflected mainly volumes of
natural gas consumed in operations (30 mmboe).
Approximately 60% of liquids production sold (299.5
mmbbl) was destined to Eni’s Refining &
Marketing Division (of which 25% was processed in
Eni’s refinery). About 27% of natural gas production
sold (1,405 bcf) was destined to Eni’s Gas &
Power Division. In 2013 oil spills from operations and sabotage reported a decrease compared to the previous year, amounting to 42.7% and 34.9%, respectively. Oil spills were concentrated mainly in Nigeria, due to disruptions and force majeure events reported during the year. In particular, a pilot project was launched to identify a technology which can be used to oppose at the illegal bunkering. Eni continues to promote operations aimed at raising safety standards and at ensuring efficient operations management. Productive wells In 2013 oil and gas productive wells were 8,697
(3,424.4 of which represented Eni’s share). In
particular, oil productive wells were 6,099 (2,217.4 of
which represented Eni’s share); natural gas
productive wells amounted to 2,598 (1,207 of which
represented Eni’s share). |
| Productive oil and gas wells (a) |
2013 |
||
Oil wells |
Natural gas wells |
|||
| (units) | Gross |
Net |
Gross |
Net |
||||
| Italy | 240.0 | 194.1 | 615.0 | 531.5 | ||||
| Rest of Europe | 415.0 | 60.8 | 182.0 | 90.2 | ||||
| North Africa | 1,590.0 | 820.4 | 199.0 | 85.8 | ||||
| Sub-Saharan Africa | 2,908.0 | 585.9 | 339.0 | 25.5 | ||||
| Kazakhstan | 104.0 | 29.7 | ||||||
| Rest of Asia | 644.0 | 417.3 | 897.0 | 341.6 | ||||
| America | 191.0 | 105.4 | 352.0 | 129.1 | ||||
| Australia and Oceania | 7.0 | 3.8 | 14.0 | 3.3 | ||||
| 6,099.0 | 2,217.4 | 2,598.0 | 1,207.0 |
(a) Includes 2,162 gross (761.2 net) multiple completion wells (more than one producing into the same well bore). Productive wells are producing wells and wells capable of production. One or more completions in the same bore hole are counted as one well.
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| Oil and natural gas production (a) |
| Liquids (kbbl/d) | Natural gas (mmcf/d) | Hydrocarbons (kboe/d) | Liquids (kbbl/d) | Natural gas (mmcf/d) | Hydrocarbons (kboe/d) | Liquids (kbbl/d) | Natural gas (mmcf/d) | Hydrocarbons (kboe/d) |
| Consolidated subsidiaries | 2011 | 2012 | 2013 | |||
| Italy | 64 | 674.3 | 186 | 63 | 695.1 | 189 | 71 | 630.2 | 186 | |||||||||
| Rest of Europe | 120 | 537.9 | 216 | 95 | 458.4 | 178 | 77 | 429.6 | 155 | |||||||||
| Croatia | 29.9 | 5 | 25.4 | 5 | 43.0 | 8 | ||||||||||||
| Norway | 80 | 284.0 | 131 | 74 | 289.6 | 126 | 60 | 250.5 | 106 | |||||||||
| United Kingdom | 40 | 224.0 | 80 | 21 | 143.4 | 47 | 17 | 136.1 | 41 | |||||||||
| North Africa | 204 | 1,265.1 | 432 | 267 | 1,728.2 | 581 | 248 | 1,668.7 | 551 | |||||||||
| Algeria | 69 | 19.0 | 72 | 71 | 40.1 | 78 | 73 | 81.6 | 88 | |||||||||
| Egypt | 91 | 800.7 | 236 | 88 | 805.9 | 235 | 93 | 734.6 | 227 | |||||||||
| Libya | 36 | 423.2 | 112 | 101 | 863.5 | 258 | 76 | 836.7 | 228 | |||||||||
| Tunisia | 8 | 22.2 | 12 | 7 | 18.7 | 10 | 6 | 15.8 | 8 | |||||||||
| Sub-Saharan Africa | 275 | 506.1 | 366 | 245 | 534.3 | 343 | 242 | 481.7 | 329 | |||||||||
| Angola | 92 | 32.8 | 98 | 78 | 34.8 | 85 | 79 | 32.7 | 84 | |||||||||
| Congo | 87 | 119.1 | 108 | 82 | 120.5 | 104 | 90 | 161.8 | 120 | |||||||||
| Nigeria | 96 | 354.2 | 160 | 85 | 379.0 | 154 | 73 | 287.2 | 125 | |||||||||
| Kazakhstan | 64 | 231.0 | 106 | 61 | 221.7 | 102 | 61 | 213.5 | 100 | |||||||||
| Rest of Asia | 33 | 404.4 | 106 | 41 | 390.1 | 112 | 43 | 354.7 | 108 | |||||||||
| China | 7 | 5.0 | 8 | 8 | 4.4 | 9 | 7 | 3.4 | 8 | |||||||||
| India | 19.6 | 4 | 10.5 | 2 | 7.2 | 1 | ||||||||||||
| Indonesia | 1 | 58.6 | 12 | 1 | 58.9 | 12 | 1 | 55.0 | 11 | |||||||||
| Iran | 6 | 6 | 3 | 3 | 4 | 4 | ||||||||||||
| Iraq | 7 | 7 | 18 | 18 | 22 | 22 | ||||||||||||
| Pakistan | 1 | 321.2 | 58 | 1 | 310.4 | 57 | 283.1 | 52 | ||||||||||
| Turkmenistan | 11 | 11 | 10 | 5.9 | 11 | 9 | 6.0 | 10 | ||||||||||
| America | 55 | 334.0 | 115 | 72 | 283.5 | 124 | 61 | 244.5 | 106 | |||||||||
| Ecuador | 7 | 7 | 25 | 25 | 13 | 13 | ||||||||||||
| Trinidad & Tobago | 56.7 | 10 | 58.5 | 11 | 58.6 | 11 | ||||||||||||
| United States | 48 | 277.3 | 98 | 47 | 225.0 | 88 | 48 | 185.9 | 82 | |||||||||
| Australia and Oceania | 11 | 97.8 | 28 | 18 | 100.8 | 37 | 10 | 110.4 | 30 | |||||||||
| Australia | 11 | 97.8 | 28 | 18 | 100.8 | 37 | 10 | 110.4 | 30 | |||||||||
| 826 | 4,050.6 | 1,555 | 862 | 4,412.1 | 1,666 | 813 | 4,133.3 | 1,565 | ||||||||||
| Equity-accounted entities | ||||||||||||||||||
| Angola | 3 | 1.9 | 4 | 2 | 4.4 | 2 | 14.2 | 3 | ||||||||||
| Brazil | 1 | 1 | 2 | 2 | ||||||||||||||
| Indonesia | 1 | 25.7 | 6 | 1 | 26.0 | 6 | 1 | 24.2 | 5 | |||||||||
| Russia | 2 | 52.4 | 11 | 5 | 141.6 | 31 | ||||||||||||
| Tunisia | 5 | 6.4 | 6 | 4 | 5.3 | 5 | 4 | 5.5 | 5 | |||||||||
| Ukraine | 0.5 | |||||||||||||||||
| Venezuela | 9 | 9 | 9 | 9 | 10 | 0.8 | 10 | |||||||||||
| 19 | 34.0 | 26 | 20 | 88.6 | 35 | 20 | 186.3 | 54 | ||||||||||
| Total | 845 | 4,084.6 | 1,581 | 882 | 4,500.7 | 1,701 | 833 | 4,319.6 | 1,619 |
(a) Includes volumes of gas consumed in operations (451, 383 and 321 mmcf/d in 2013, 2012 and 2011, respectively).
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Eni Annual Report / Operating Review
Drilling
| Exploration In 2013, a total of 53 new exploratory wells were drilled (27.8 of which represented Eni’s share), as compared to 60 exploratory wells drilled in 2012 (34.1 of which represent Eni’s share) and 56 exploratory wells drilled in 2011 (28 of which represented Eni’s share). The following tables show the number of net productive, dry and in progress exploratory wells in the years indicated by the Group and its equity-accounted entities in accordance with the requirements of FASB Extractive Activities - oil&gas (Topic 932). The overall commercial success rate was 36.9% (38.5% net to Eni) as compared to 40% (40.8% net to Eni) in 2012 and 42% (38.6% net to Eni) in 2011. |
Development |
|
| Exploratory Well Activity |
Net wells completed |
Wells in progress at Dec. 31 (a) |
|||
2011 |
2012 |
2013 |
2013 |
|||||
| (units) | Productive |
Dry (b) |
Productive |
Dry (b) |
Productive |
Dry (b) |
Gross |
Net |
||||||||
| Italy | 1.0 | 5.0 | 3.4 | |||||||||||||
| Rest of Europe | 0.3 | 0.7 | 1.0 | 1.0 | 3.4 | 17.0 | 6.2 | |||||||||
| North Africa | 6.2 | 3.4 | 6.3 | 11.3 | 4.9 | 5.4 | 14.0 | 9.8 | ||||||||
| Sub-Saharan Africa | 0.6 | 2.6 | 4.5 | 5.1 | 3.2 | 6.6 | 60.0 | 24.3 | ||||||||
| Kazakhstan | 0.8 | 0.4 | 6.0 | 1.1 | ||||||||||||
| Rest of Asia | 0.2 | 7.6 | 0.5 | 0.6 | 4.3 | 2.7 | 21.0 | 8.2 | ||||||||
| America | 2.5 | 0.1 | 0.2 | 1.2 | 4.0 | 1.2 | ||||||||||
| Australia and Oceania | 1.4 | 0.4 | 0.5 | 2.0 | 0.8 | |||||||||||
| 9.8 | 15.7 | 13.3 | 19.3 | 12.6 | 20.2 | 129.0 | 55.0 | |||||||||
| Development Well Activity |
Net wells completed |
Wells in progress at Dec. 31 |
|||
2011 |
2012 |
2013 |
2013 |
|||||
| (units) | Productive |
Dry (b) |
Productive |
Dry (b) |
Productive |
Dry (b) |
Gross |
Net |
||||||||
| Italy | 25.3 | 18.0 | 1.0 | 7.4 | 1.0 | 3.0 | 3.0 | |||||||||
| Rest of Europe | 3.3 | 0.3 | 2.9 | 0.6 | 6.3 | 31.0 | 5.9 | |||||||||
| North Africa | 55.9 | 1.1 | 46.0 | 1.6 | 61.6 | 3.3 | 20.0 | 11.3 | ||||||||
| Sub-Saharan Africa | 28.2 | 1.0 | 27.4 | 0.3 | 26.3 | 1.2 | 20.0 | 5.1 | ||||||||
| Kazakhstan | 1.3 | 1.4 | 0.3 | 17.0 | 3.1 | |||||||||||
| Rest of Asia | 39.2 | 2.5 | 41.2 | 0.1 | 61.7 | 4.3 | 26.0 | 11.4 | ||||||||
| America | 27.6 | 23.1 | 13.8 | 12.0 | 4.8 | |||||||||||
| Australia and Oceania | 0.4 | 1.0 | 0.4 | |||||||||||||
| 181.2 | 4.9 | 160.0 | 3.6 | 177.4 | 9.8 | 130.0 | 45.0 |
(a) Includes temporary suspended wells pending
further evaluation.
(b) A dry well is an exploratory, development, or extension well
that proves to be incapable of producing either oil or gas
sufficient quantities to justify completion as an oil or gas
well.
Acreage
| As of December 31, 2013,
Eni’s mineral right portfolio consisted of 976
exclusive or shared rights for exploration and
development in 42 Countries on five continents for a
total acreage of 276,256 square kilometers net to Eni of
which developed acreage of 41,538 square kilometers and
undeveloped acreage of 234,718 square kilometers net to
Eni. In 2013, changes in total net acreage mainly derived from: (i) new leases mainly in Cyprus, Kenya, Greenland, Norway, |
Russia and Vietnam for a total acreage of approximately 48,000 square kilometers; (ii) the total relinquishment of licenses mainly in Angola, China, Congo, Egypt, Poland, Russia, Timor Leste, the United States and the United Kingdom, covering an acreage of approximately 15,000 square kilometers; (iii) partial relinquishment or interest reduction in Congo, Indonesia, Mozambique and Timor Leste for approximately 6,000 square kilometers. |
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| Oil and natural gas interests |
December 31, 2012 |
December 31, 2013 |
||
Total net acreage (a) |
Number |
Gross developed acreage (a) (b) |
Gross undeveloped acreage (a) |
Total gross acreage (a) |
Net |
Net undeveloped acreage (a) |
Total net acreage (a) |
|||||||||
| EUROPE | 27,423 | 264 | 16,170 | 40,753 | 56,923 | 10,907 | 26,111 | 37,018 | ||||||||
| Italy | 17,556 | 151 | 10,663 | 10,815 | 21,478 | 8,948 | 8,334 | 17,282 | ||||||||
| Rest of Europe | 9,867 | 113 | 5,507 | 29,938 | 35,445 | 1,959 | 17,777 | 19,736 | ||||||||
| Cyprus | 3 | 12,523 | 12,523 | 10,018 | 10,018 | |||||||||||
| Croatia | 987 | 2 | 1,975 | 1,975 | 987 | 987 | ||||||||||
| Norway | 2,676 | 57 | 2,264 | 9,302 | 11,566 | 346 | 3,433 | 3,779 | ||||||||
| Poland | 1,968 | 2 | 969 | 969 | 969 | 969 | ||||||||||
| Ukraine | 1,941 | 12 | 50 | 3,840 | 3,890 | 30 | 1,911 | 1,941 | ||||||||
| United Kingdom | 914 | 34 | 1,218 | 223 | 1,441 | 596 | 42 | 638 | ||||||||
| Other Countries | 1,381 | 3 | 3,081 | 3,081 | 1,404 | 1,404 | ||||||||||
| AFRICA | 142,796 | 280 | 66,341 | 185,574 | 251,915 | 20,131 | 116,965 | 137,096 | ||||||||
| North Africa | 21,390 | 116 | 32,560 | 14,334 | 46,894 | 14,150 | 6,262 | 20,412 | ||||||||
| Algeria | 1,232 | 42 | 3,223 | 187 | 3,410 | 1,148 | 31 | 1,179 | ||||||||
| Egypt | 4,590 | 53 | 4,926 | 5,460 | 10,386 | 1,778 | 1,887 | 3,665 | ||||||||
| Libya | 13,294 | 10 | 17,947 | 8,687 | 26,634 | 8,950 | 4,344 | 13,294 | ||||||||
| Tunisia | 2,274 | 11 | 6,464 | 6,464 | 2,274 | 2,274 | ||||||||||
| Sub-Saharan Africa | 121,406 | 164 | 33,781 | 171,240 | 205,021 | 5,981 | 110,703 | 116,684 | ||||||||
| Angola | 6,079 | 71 | 6,498 | 14,991 | 21,489 | 802 | 3,641 | 4,443 | ||||||||
| Congo | 5,035 | 28 | 1,835 | 2,890 | 4,725 | 1,017 | 2,108 | 3,125 | ||||||||
| Democratic Republic of Congo | 263 | 1 | 478 | 478 | 263 | 263 | ||||||||||
| Gabon | 7,615 | 6 | 7,615 | 7,615 | 7,615 | 7,615 | ||||||||||
| Ghana | 1,885 | 2 | 4,676 | 4,676 | 1,664 | 1,664 | ||||||||||
| Kenya | 35,724 | 4 | 46,410 | 46,410 | 38,930 | 38,930 | ||||||||||
| Liberia | 2,036 | 3 | 7,365 | 7,365 | 1,841 | 1,841 | ||||||||||
| Mozambique | 9,069 | 1 | 10,207 | 10,207 | 5,103 | 5,103 | ||||||||||
| Nigeria | 7,646 | 41 | 25,448 | 10,838 | 36,286 | 4,162 | 3,484 | 7,646 | ||||||||
| Togo | 6,192 | 2 | 6,192 | 6,192 | 6,192 | 6,192 | ||||||||||
| Other Countries | 39,862 | 5 | 59,578 | 59,578 | 39,862 | 39,862 | ||||||||||
| ASIA | 58,042 | 70 | 19,013 | 168,024 | 187,037 | 6,650 | 72,664 | 79,314 | ||||||||
| Kazakhstan | 869 | 6 | 2,391 | 2,542 | 4,933 | 442 | 427 | 869 | ||||||||
| Rest of Asia | 57,173 | 64 | 16,622 | 165,482 | 182,104 | 6,208 | 72,237 | 78,445 | ||||||||
| China | 10,495 | 8 | 76 | 5,130 | 5,206 | 19 | 5,130 | 5,149 | ||||||||
| India | 6,208 | 11 | 206 | 16,546 | 16,752 | 109 | 6,058 | 6,167 | ||||||||
| Indonesia | 19,734 | 13 | 3,220 | 25,779 | 28,999 | 1,218 | 17,991 | 19,209 | ||||||||
| Iran | 820 | 4 | 1,456 | 1,456 | 820 | 820 | ||||||||||
| Iraq | 352 | 1 | 1,074 | 1,074 | 446 | 446 | ||||||||||
| Pakistan | 10,533 | 18 | 10,390 | 17,731 | 28,121 | 3,396 | 6,939 | 10,335 | ||||||||
| Russia | 1,469 | 3 | 62,592 | 62,592 | 20,862 | 20,862 | ||||||||||
| Timor Leste | 4,118 | 1 | 1,538 | 1,538 | 1,230 | 1,230 | ||||||||||
| Turkmenistan | 200 | 1 | 200 | 200 | 200 | 200 | ||||||||||
| Vietnam | 3 | 21,566 | 21,566 | 10,783 | 10,783 | |||||||||||
| Other Countries | 3,244 | 1 | 14,600 | 14,600 | 3,244 | 3,244 | ||||||||||
| AMERICA | 9,075 | 348 | 4,809 | 15,268 | 20,077 | 3,141 | 6,065 | 9,206 | ||||||||
| Ecuador | 1,985 | 1 | 1,985 | 1,985 | 1,985 | 1,985 | ||||||||||
| Greenland | 1 | 2,630 | 2,630 | 920 | 920 | |||||||||||
| Trinidad & Tobago | 66 | 1 | 382 | 382 | 66 | 66 | ||||||||||
| United States | 4,632 | 331 | 1,640 | 5,089 | 6,729 | 822 | 3,021 | 3,843 | ||||||||
| Venezuela | 1,066 | 6 | 802 | 2,002 | 2,804 | 268 | 798 | 1,066 | ||||||||
| Other Countries | 1,326 | 8 | 5,547 | 5,547 | 1,326 | 1,326 | ||||||||||
| AUSTRALIA AND OCEANIA | 13,834 | 14 | 1,140 | 22,436 | 23,576 | 709 | 12,913 | 13,622 | ||||||||
| Australia | 13,796 | 14 | 1,140 | 22,436 | 23,576 | 709 | 12,913 | 13,622 | ||||||||
| Other Countries | 38 | |||||||||||||||
| Total | 251,170 | 976 | 107,473 | 432,055 | 539,528 | 41,538 | 234,718 | 276,256 |
(a) Square kilometers.
(b) Developed acreage refers to those leases in which at least a
portion of the area is in production or encompasses proved
developed reserves.
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Eni Annual Report / Operating Review
| Main exploration and development projects Italy In the Val d’Agri concession (Eni’s interest 60.77%) the development plan is ongoing as agreed with the Basilicata Region in 1998: (i) the construction of a new gas treatment unit progressed, aiming at improving the environmental performance of the treatment unit and achieving a production capacity of 104 kbbl/d; (ii) start-up of Alli 2 producing well; (iii) the Environmental Monitoring Plan is ongoing and represents an environmental protection excellence. Eni implemented an environmental protection standard by means of the Action Plan for Biodiversity in Val d'Agri launched in 2008 and aimed to reduce impacts of associated operations; (iv) continuing improvement and maintenance activities progressed to optimize environmental and production performance of the field. Other main development activities concerned the maintenance and production optimization at the fields located in the Adriatic offshore and onshore area in Sicily as well as the upgrading of compression and hydrocarbon treatment facilities at the production platforms of the Barbara field. Rest of Europe Norway Exploration activities yielded positive results in the: (i) PL 532 license (Eni’s interest 30%) with the oil and gas Skavl discovery, in addition to the recent oil and gas discoveries of Skrugard and Havis. The total recoverable resources of PL 532 license are estimated at over 500 million barrels at 100% and are planned to be put in production by means of fast-track synergic development; (ii) PL 479 license (Eni’s interest 19.6%) with the Smørbukk near field gas and condensates discovery that will leverage on the synergies with the existing production facilities. During the year, Eni was awarded the operatorship and a 40% interest in the PL 717, PL 712, PL 716 and PL 697 (Eni’s interest 65%) exploration licenses, as well as a 30% stake in the PL 696 and 714 licenses. The Skuld field (Eni’s interest 11.5%) started up with a production of approximately 30 kboe/d (approximately 4 kboe/d net to Eni). Development activities progressed at the Goliat field (Eni operator with a 65% interest) in the Barents Sea. Start-up is expected by the end of 2014, with a production plateau at approximately 56 kboe/d net to Eni in 2015. In 2013 the implementation of oil spill contingency and response was progressed by means of the development of techniques and methodologies to support the oil spill preparedness program which already has been acknowledged by the Norwegian Authorities as the reference standard for all future development projects in the Arctic. The project was launched by Eni and involved other oil companies operating in the oil and gas exploration in the Barents Sea as well as the Norwegian Clean Seas Association for Operating Companies (NOFO) and International Research Institutes. These results were presented at the Norwegian |
Environmental Agency, at the
local administrations and at all stakeholders and
reaffirmed that the Goliat project is characterized by a
well-advance emergency system for the management of an
oil spill, in terms of organization, consolidation of the
emergency apparatus, as well as equipment and technology
development. Activities are expected to be completed in
2014. Other ongoing activities aimed at maintaining and optimizing production at the Ekofisk field (Eni’s interest 12.39%) by means of drilling of infilling wells, upgrading of existing facilities and optimization of water injection. The development of the South Area was completed in the year. United Kingdom Within its strategy of portfolio optimization, Eni finalized the disposal of 19 development/production fields and 11 exploration licenses. Production started at the oil and gas Jasmine field (Eni’s interest 33%), with the installation activities and linkage to productive and treatment facilities. A peak of approximately 117 kbbl/d (approximately 39 kbbl/d net to Eni) is expected in 2014. Other development activities concerned the West Franklin field (Eni’s interest 21.87%) with the construction and installation of production platforms and linkage to nearby treatment facilities. Start-up is expected at the end of 2014. North Africa Algeria In the year, production started at the MLE-CAFC (Eni’s interest 75%) and El Merk (Eni 12.25%) fields. The natural gas treatment plant of the MLE-CAFC project has a production and export capacity of approximately 320 mmcf/d of gas, 15 kbbl/d of oil and condensates and 12 kbbl/d of LPG. Four export pipelines link it to the national grid system. The integrated project MLE-CAFC targets a production plateau of approximately 33 kboe/d net to Eni by 2017. The El Merk field started up with the construction of a gas treatment plant for approximately 600 mmcf/d, two oil trains for 65 kbbl/d each and three export pipelines linked to the local network. Production peak of 18 kboe/d net to Eni is expected in 2015. In 2013 production activities at the Blocks 403 a/d (Eni’s interest 100%) and 403 (Eni’s interest 50%) used technical synergies of R&D Integrated Operations program leveraging on the Centre of Excellence for Electrical Submersible Pump (ESP). In particular, leveraging on the real time analysis of performance data at the producing well, operations were performed in time to avoid possible disruptions, with cost and time savings. Egypt Exploration activities yielded positive results in the: (i) Meleiha development lease (Eni’s interest 76%) with three near field oil and gas discoveries and the Rosa North-1X oil discovery, where the drilling activities are underway. Development activities plan to leverage on the existing production facilities; (ii) two near field oil discoveries in the Belayim concession (Eni 100%). In 2013 Eni was awarded the operatorship and a 100% interest in an exploration block in Egyptian deep waters in the Eastern Mediterranean Sea. Development activities mainly concerned: (i) infilling activities at the Belayim, Denise (Eni’s interest 50%), Tuna (Eni’s interest 50%) fields and the Western Desert Area to optimize the mineral |
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Eni Annual Report / Operating Review
| potential recovery factor;
(ii) completion of the drilling activities at the Seth
field (Eni’s interest 50%); (iii) development
program of the DEKA field (Eni’s interest 50%) and
the Emry Deep discovery (Eni’s interest 76%); and
(iv) the upgrading of the water injection system at the
Abu Rudeis field (Eni’s interest 100%) in the Gulf
of Suez. The level of produced water re-injected is
99.5%, corresponding to approximately 1 mmcf/d. Sub-Saharan Africa Angola Exploration activities yielded positive results in the Block 15/06 (Eni operator with a 35% interest) with the oil offshore Vandumbu 1 discovery. The LNG plant managed by the Angola LNG consortium (Eni’s interest 13.6%) started up and delivered its first cargo in June 2013. The plant envisages the development of 10,594 bcf of gas in 30 years. In 2013 the East Hub project was sanctioned in the Block 15/06, with an estimated mineral potential of over 230 million barrels. The development program includes the drilling of submarine wells that were linked to an FPSO with a capacity of 80 kboe/d. Peak production of 55 kbbl/d is expected in 2017. Development activities progressed at the West Hub project, with start-up expected at the end of 2014. In Block 0 (Eni’s interest 9.8%), activities progressed to reduce flaring gas at the Nemba field. In 2015 once completed flared gas is expected to decrease by approximately 85% from current level. The development activities of the Mafumeira field included the installation of production and treatment platforms and underwater linkage. Start-up is expected by the end of 2015. In the Block 14 KA/IMI (Eni’s interest 10%) the development activities progressed at the Lianzi field by means of the linkage to the existing production facilities. The second phase of Kizomba satellites in the Development Area of former Block 15 (Eni’s interest 20%) progressed as planned. The project provides to put into production three additional discoveries that will be linked to the existing FPSO. Start-up is expected at the end of 2015. Congo Exploration activities yielded positive results in the offshore block Marine XII (Eni operator with a 65% interest) with the oil and gas discovery and the appraisal of the Nené Marine field and with the appraisal of the gas and condensates Litchendjili discovery. The overall discoveries potential is estimated in 2.5 billion boe in place. The block has a further significant oil and gas residual amount that will be assessed by the next exploratory and delineation campaign. The proximity to existing facilities, good productivity of reservoir and low cost will allow to fast track development, targeting start-up in 2015. In 2013 Eni acquired the operatorship of Ngolo exploration block, which is part of the Cuvette Basin, in the joint venture with the Congolese state company Société Nationale des Pétroles du Congo (SNPC). Exploration activities will take place over a period of 10 years. The Cuvette Basin is one of the new themes of frontier exploration activities in Africa. During the year, Eni redefined with the relevant authorities the extension of Madingo, Marine VI and Marine VII exploration |
and development permits,
with the aligning of expiring date within the period
2034-2039, the dilution of Eni’s stake and an
acquisition interest of a new high potential exploration
permit. The approval of the relevant authorities is in
progress. Activities on the M’Boundi field (Eni operator with an 83% interest) moved forward with the application of Eni advanced recovery techniques and a design to monetize associated gas. Gas is sold under long-term contracts to power plants in the area including the CEC Centrale Electrique du Congo (Eni’s interest 20%) with a 300 MW generation capacity. These facilities will also receive in the future gas from the offshore discoveries of the Marine XII permit. In 2013 M’Boundi contractual supplies were approximately 106 mmcf/d (approximately 17 kboe/d net to Eni). Additional gas production will be re-injected within the Eni’s zero gas flaring programs. During the year activities progressed to support the population in M’Boundi area. The social project for 25,000 people provides to improve education, health, access to water and energy. Development program progressed at the Litchendjili sanctioned project in the block Marine XII. The project provides for the installation of a production platform, the construction of transport facilities and of an onshore treatment plant. The start-up is expected by the end of 2015, with a production plateau of approximately 12 kboe/d net to Eni. Production will also feed the CEC power station. Mozambique On July 26, 2013, Eni concluded the sale of a 28.57% interest in Eni East Africa (EEA) to China National Petroleum Corporation (CNPC). EEA retains a 70% interest in the Area 4 mineral property, located offshore of Mozambique. CNPC indirectly acquires, through its equity investment in Eni East Africa, a 20% interest in Area 4, while Eni retains operatorship and a 50% interest through the remaining stake. The total consideration was equal to euro 3,386 million (for further information see “Financial review”). The exploration campaign of the year regarded the appraisal of the Mamba and Coral discoveries. In particular, the delineation of Mamba discovery used the results of the implementation of a propriety process, which includes a study on reservoir characterization, data processing (e-dva™) and analyses of seismic scale. In 2013 Eni made the Agulha discovery, the tenth discovery in a new exploration prospect located in the southern part of Area 4. Management estimates that Area 4 may contain up to 2,650 billion cubic meters of gas in place. In 2014, Eni will continue appraisal activities, particularly regarding the new exploration prospect, where the drilling of two to three additional wells is planned. Leveraging on Eni’s cooperation model, the construction of a gas fired power plant for domestic consumption is being planned with the support of the Mozambican government. In addition, a significant program of ecosystems evaluation and the analysis of biodiversity started in the country. This program will be included in the development project of recent discoveries. Eni continues its recruitment and local training program in order to support the activities of hydrocarbons exploration in the Country. In particular the training program that started with the University of Mozambique involved 75 students during the year. |
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Eni Annual Report / Operating Review
| Nigeria
In the OML 125 block (Eni operator with an 85% interest),
the Abo - Phase 3 project started-up, with production of
approximately 5 kboe/d net to Eni. This project was
sanctioned at the end of 2012 and was used an innovative
technology for the installation of the intelligent
control at the producing wells for simultaneous
production start-up from the different reservoir levels.
This technology allowed a fast track installation with
significant savings. Main activities progressed to support gas production to feed the Bonny liquefaction plant: (i) in the OMLs 60, 61, 62 and 63 blocks (Eni operator with a 20% interest), the Ogbainbiri flowstation was completed with a decline in flared gas of approximately 5 mmcf/d. This facility ensured to treat natural gas production of Ogbainbiri field. In the year, flaring down program includes a reduction of approximately 50 mmcf/d of gas flared leveraging on the upgrade of Idu flowstation completed at the end of 2012; as well as flaring down of Akri with a reduction of approximately 25 mmcf/d of gas flared; (ii) in the OML 28 block (Eni’s interest 5%), within the integrated oil and natural gas project in the Gbaran-Ubie area, the drilling campaign was completed. The development plan provides for the construction of a Central Processing Facility (CPF) with a treatment capacity of approximately 1 bcf/d of gas and 120 kbbl/d of liquids. Further development phases are planned to put in production the residual mineral potential in the area. Other activity during the year concerned: (i) the Forkados-Yokri field (Eni’s interest 5%). The project includes the drilling of 24 producing wells, the upgrading of existing flowstations and the construction of transport facilities; (ii) Bonga NW field in the OML 118 block (Eni’s interest 12.5%). The activities include the drilling and completion of producing and infilling wells; (iii) programs to support local development for improving access to health and education and initiatives in agriculture development; (iv) technical support from the ESP Excellence Centre for data performance analysis in different production site of the country. Real-time monitoring at the producing wells allowed to avoid possible disruptions. Eni holds a 10.4% interest in the Nigeria LNG Ltd joint venture which runs the Bonny liquefaction plant, located in the Eastern Niger Delta. The plant has a design treatment capacity of approximately 1,236 bcf/y of feed gas corresponding to a production of 22 mmtonnes/y of LNG on six trains. The seventh unit is being engineered as it is in the planning phase. When fully operational, total capacity will amount to approximately 30 mmtonnes/y of LNG, corresponding to a feedstock of approximately 1,624 bcf/y. Natural gas supplies to the plant are provided under gas supply agreements with a 20-year term from the SPDC JV (Eni’s interest 5%) and the NAOC JV, the latter operating the OMLs 60, 61, 62 and 63 blocks with an overall amount of approximately 2,825 mmcf/d (approximately 268 mmcf/d net to Eni corresponding to approximately 49 kboe/d). LNG production is sold under long-term contracts and exported to European and American markets by the Bonny Gas Transport fleet, wholly owned by Nigeria LNG Co. Kazakhstan Kashagan On September 11, 2013, following the completion, test and delivery of all infrastructures, the first oil from the giant Kashagan (Eni’s interest 16.81%) field was produced. From October 2013 production has been halted due to a technical issue that occurred to the pipeline transporting acid |
gas from offshore to onshore
facilities, without any impact on the environment and
local communities. Recovery activities are ongoing.
Management believes that from 2015 field production will
recover to the originally expected level and the field
contribution to Eni’s production profile for the
year 2014 has been prudently assumed to be marginal. The Phase 1 (Experimental Program) is targeting an initial production capacity of 150 kbbl/d; when the second treatment offshore train and compression facilities for gas reinjection will be completed and put online enabling to increase the production capacity up to 370 kbbl/d. The partners are planning to further increase available production capacity up to 450 kbbl/d by installing additional gas compression capacity for re-injection in the reservoir. The partners submitted the scheme of this additional phase to the relevant Kazakh Authorities. In 2013 Eni submitted the development program of the Western section of the nearby Kalamkas discovery to the authorities. Sanction is expected in 2014 to start-up with the FEED phase. Eni continues its commitment in the protection of the environment and ecosystems in the Caspian area with the integrated program for the management of biodiversity in the Ural Delta (Ural River Park Project - URPP). The project is almost completed and Eni’s aim to include it in the Man and Biosphere Program of UNESCO with positive consent of Kazakh Authority. Within the agreement signed with the relevant authorities, Eni continues its training program for Kazakh resources management positions. As of December 31, 2013, the aggregate costs incurred by Eni for the Kashagan project capitalized in the financial statements amounted to $8.2 billion (euro 5.9 billion at the EUR/USD exchange rate of December 31, 2013). This capitalized amount included: (i) $6.1 billion relating to expenditure incurred by Eni for the development of the oilfield; and (ii) $2.1 billion relating primarily to accrue finance charges and expenditures for the acquisition of interests in the North Caspian Sea PSA consortium from exiting partners upon exercise of pre-emption rights in previous years. As of December 31, 2013 Eni’s proved reserves booked for the Kashagan field amounted to 565 mmboe, barely unchanged from 2012. Karachaganak The Expansion Project of the Karachaganak field (Eni’s interest 29.25%) is currently under study. The project is aimed for a further developing gas and condensates reserves by means of the installation, in stages, of gas treatment plants and re-injection facilities to support liquids production plateau and increase gas sales. The development plan to increase re-injection capacity is currently in the phase of technical and marketing discussion to be presented to the relevant Authorities, with FEED expected in 2014. In 2013 Eni launched an environmental monitoring program to identify the best available monitoring operations for biodiversity protection. Eni continues its commitment to support local communities by means of the construction of schools and educational facilities as well as health assistance for the villages located in the nearby area of Karachaganak. As of December 31, 2013, Eni’s proved reserves booked for the Karachaganak field amounted to 470 mmboe, barely unchanged from 2012. |
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| Rest
of Asia Indonesia Development activities progressed at the operated Jangkrik (Eni’s interest 55%) and Jau (Eni’s interest 85%) offshore fields. The Jangkrik project includes linkage of production wells to a Floating Production Unit for gas and condensate treatment and the construction of a transportation facility to the Bontang liquefaction plant. Start-up is expected in 2017 with a production peak of 80 kboe/d (42 kboe/d net to Eni) in 2018. The Jau project provides for the drilling of production wells and the linkage to onshore plants via pipeline. Start-up is expected in 2017. Development activities are underway at the Indonesia Deepwater Development project (Eni’s interest 20%), located in the East Kalimantan, to ensure gas supplies to the Bontang plant. The project initially provides for the linkage of the Bangka field to existing production facilities, with start-up expected in 2016. Then the project also provides for the integrated development of the first Hub including the Gendalo, Gandang, Maha fields and the second Hub of the Gehem field. Start up is expected in 2018. Iran The formal hand over of operations to local partners at the Darquain project is almost completed. This was the sole Eni-operated project in the Country. When the final hand over is completed, Eni’s involvements essentially will consist of being reimbursed for its past investments. Iraq In July 2013, Eni signed with the national oil company South Oil Co and the Iraqi Ministry of Oil an amendment to the technical service contract for the development of the Zubair oil field (Eni’s interest 41.6%). The agreement includes a new target plateau at 850 kbbl/d and extends the expiring date of service contract for an additional five years, until 2035. The Rural Support Project to support farms and communities in the area of Zubair field was completed during the year. The program in accordance with the Zubair Agricoltural Department, Farmers Association and with the monitoring of Local Authorities, involved 165 farms during 2012-2013 agricultural season. Russia Eni divested to certain Gazprom subsidiaries its 60% interest in Artic Russia, the subsidiary owing a 49% stake of Severenergia, which holds four licenses for the exploration and production of hydrocarbons in the region of Yamal Nenets (Siberia), among which in particular the on-stream field of Samburgskoye, Eni’s first development in the Russian upstream. On January 15, 2014, the consideration for the disposal equal to euro 2.16 billion ($2,940 million) was cashed in (for further information see the “Financial review”). With this disposal, Eni monetized a mature investment, but maintains a strong commitment in the Russian upstream through the partnership with Rosneft, the projects for exploration in the Russian section of the Black Sea and in the Barents Sea. In June 2013, Eni and Rosneft signed the completion deed relating to the agreements for the joint development of exploration activities in the Russian Barents Sea (Fedynsky and Central Barents licenses, Eni’s interest 33.33%) where seismic surveys have been started, and in the Black Sea (Western Chernomorsky license, Eni’s interest 33.33%). Seismic |
surveys will be performed
under the provisions of Russian environmental
legislation. America United States In March 2013 Eni was the highest bidder in five offshore exploration blocks located in the Mississippi Canyon and Desoto Canyon areas within the Central Gulf of Mexico Lease Sale 227. Relevant authorities approved the bid of one of five blocks. In November 2013, Eni signed an agreement with the American company Quicksilver, for explorating and developing an area with unconventional oil reservoirs (shale oil), onshore the United States. Eni is expected to acquire a 50% interest in the Leon Valley area (West Texas). The work plan provides for the drilling of up to five exploration wells and the geophysical survey, aiming at determining the hydrocarbon potential of the area and the subsequent development plan. Eni will invest up to $52 million, for the completion of the project’s exploration activities. The agreement also establishes that Eni will obtain 50% of another area located in the Leon Valley owned by Quicksilver, without additional costs. Phase 1 of the development plan was sanctioned at the Heidelberg field (Eni’s interest 12.5%) in the deep offshore of the Gulf of Mexico. The project provides for the drilling of 5 producing wells and the installation of a producing platform. Start-up is expected at the end of 2016 with a production of approximately 9 kboe/d net to Eni. Development activities in the Gulf of Mexico mainly concerned: (i) drilling and completion activities at the Hadrian South (Eni’s interest 30%), Lucius/Hadrian North (Eni’s interest 5.4%) and St. Malo (Eni’s interest 1.25%) fields; (ii) infilling activities at the producing operated fields of Appaloosa (Eni’s interest 100%), Longhorn (Eni’s interest 75%), Pegasus (Eni’s interest 58%) and at the non-operated Front Runner field (Eni’s interest 37.5%); and (iii) maintenance of the pipeline linking to the Corral production platform. Drilling activities progressed at the Nikaitchuq (Eni operator with a 100% interest) and Oooguruk (Eni’s interest 30%) fields in Alaska. Venezuela In March 2013, production (accelerated early production) started up at the giant Junin 5 field (Eni’s interest 40%), located in the Orinoco oil belt and containing 35 bbbl of certified heavy oil in place. Early production of the first phase is expected to reach a plateau of 75 kbbl/d by the end of 2015, targeting a long-term production plateau of 240 kbbl/d. The project provides for the construction of a refinery with a capacity of approximately 350 kbbl/d. Eni agreed to finance part of PDVSA’s development costs for the early production phase and engineering activity of refinery plant up to $1.74 billion. Drilling activities and installation of the transport and treatment facilities are ongoing. The sanctioned development plan progressed at the Perla gas discovery, located in the Cardon IV Block (Eni’s interest 50%), in the Gulf of Venezuela. PDVSA exercised its 35% back-in right. Eni will retain the 32.5% joint controlled interest in the company, at the execution of the transfer stake. The early production phase includes the utilization of the existing discovery/appraisal wells and the installation of production |
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| platforms linked by
pipelines to the onshore treatment plant. Target
production of approximately 450 mmcf/d is expected in
2015. The development program will continue with the
drilling of additional wells and the upgrading of
treatment facilities to reach a production plateau of
approximately 1,200 mmcf/d. Capital expenditure Capital expenditure of the Exploration & Production Division (euro 10,475 million) concerned development of oil and gas reserves (euro 8,580 million) directed mainly outside Italy, in particular in Norway, the United States, Angola, Congo, |
Nigeria, Kazakhstan, Egypt
and the United Kingdom. Development expenditures in Italy
concerned the well drilling program and facility
upgrading in Val d’Agri as well as sidetrack and
workover activities in mature fields. About 98% of exploration expenditures were directed outside Italy in particular to Mozambique, Norway, Congo, Togo, Nigeria, the United States and Angola as well as the acquisition of new licenses in the Republic of Cyprus and in Vietnam. In Italy, exploration activities were directed mainly to the Adriatic offshore, Val d’Agri and Po Valley. In 2013 overall expenditure in R&D amounted to euro 87 million. A total of 9 new patents applications were filed, one jointly with Versalis. |
| Capital expenditure | (euro million) | 2011 | 2012 | 2013 | Change | % Ch. |
| Acquisition of proved and unproved properties | 754 | 43 | 109 | 66 | .. | ||||||||
| North Africa | 57 | 14 | 109 | ||||||||||
| Sub-Saharan Africa | 697 | 27 | |||||||||||
| America | 2 | ||||||||||||
| Exploration | 1,210 | 1,850 | 1,669 | (181 | ) | (9.8 | ) | ||||||
| Italy | 38 | 32 | 32 | ||||||||||
| Rest of Europe | 100 | 151 | 357 | 206 | .. | ||||||||
| North Africa | 128 | 153 | 95 | (58 | ) | (37.9 | ) | ||||||
| Sub-Saharan Africa | 482 | 1,142 | 757 | (385 | ) | .. | |||||||
| Kazakhstan | 6 | 3 | 1 | (2 | ) | (66.7 | ) | ||||||
| Rest of Asia | 156 | 193 | 233 | 40 | 20.7 | ||||||||
| America | 60 | 80 | 110 | 30 | 37.5 | ||||||||
| Australia and Oceania | 240 | 96 | 84 | (12 | ) | (12.5 | ) | ||||||
| Development | 7,357 | 8,304 | 8,580 | 276 | 3.3 | ||||||||
| Italy | 720 | 744 | 743 | (1 | ) | (0.1 | ) | ||||||
| Rest of Europe | 1,596 | 2,008 | 1,768 | (240 | ) | (12.0 | ) | ||||||
| North Africa | 1,380 | 1,299 | 808 | (491 | ) | (37.8 | ) | ||||||
| Sub-Saharan Africa | 1,521 | 1,931 | 2,675 | 744 | 38.5 | ||||||||
| Kazakhstan | 897 | 719 | 658 | (61 | ) | (8.5 | ) | ||||||
| Rest of Asia | 361 | 641 | 749 | 108 | 16.8 | ||||||||
| America | 831 | 953 | 1,127 | 174 | 18.3 | ||||||||
| Australia and Oceania | 51 | 9 | 52 | 43 | .. | ||||||||
| Other expenditure | 114 | 110 | 117 | 7 | 6.4 | ||||||||
| 9,435 | 10,307 | 10,475 | 168 | 1.6 |
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| Gas & Power | ||||||||||||||
| Key performance indicators | ||||||||||||||
| 2011 | 2012 | 2013 |
| Employees injury frequency rate | (No. of accidents per million of worked hours) | 2.44 | 1.84 | 1.31 | ||||||||||
| Contractors injury frequency rate | 5.22 | 3.64 | 1.81 | |||||||||||
| Net sales from operations (a) | (euro million) | 33,093 | 36,200 | 32,124 | ||||||||||
| Operating profit | (326 | ) | (3,219 | ) | (2,992 | ) | ||||||||
| Adjusted operating profit | (247 | ) | 356 | (663 | ) | |||||||||
| Marketing | (657 | ) | 47 | (837 | ) | |||||||||
| International transport | 410 | 309 | 174 | |||||||||||
| Adjusted net profit | 252 | 473 | (246 | ) | ||||||||||
| EBITDA pro-forma adjusted | 949 | 1,316 | 6 | |||||||||||
| Marketing | 257 | 858 | (311 | ) | ||||||||||
| International transport | 692 | 458 | 317 | |||||||||||
| Capital expenditure | 192 | 225 | 232 | |||||||||||
| Worldwide gas sales (b) | (bcm) | 96.76 | 95.32 | 93.17 | ||||||||||
| LNG sales (c) | 15.7 | 14.6 | 12.4 | |||||||||||
| Customers in Italy | (million) | 7.10 | 7.45 | 8.00 | ||||||||||
| Electricity sold | (TWh) | 40.28 | 42.58 | 35.05 | ||||||||||
| Employees at period end | (number) | 4,795 | 4,752 | 4,514 | ||||||||||
| Direct GHG emissions | (mmtonnes CO2 eq) | 12.77 | 12.70 | 11.16 | ||||||||||
| Customer satisfaction score (CSS) (d) | (%) | 88.6 | 89.7 | 90.4 | ||||||||||
| Water consumption/withdrawals per kWh eq produced | (cm/kWh eq) | 0.014 | 0.012 | 0.017 | ||||||||||
| (a) Before elimination of intragroup sales (b) Including volumes marketed by the Exploration & Production Division of 2.61 bcm (2.73 bcm and 2.86 bcm in 2012 and 2011, respectively). (c) LNG sales of affiliates and associates of the Gas & Power Division (included in worldwide gas sales) and the Exploration & Production Division. (d) The customer satisfaction score for 2013 relates to the first six months as at the date of publication of this Annual Report the Authority for Electricity and Gas has not yet published the data for the second half of the year. |
| Performance of the year |
›
In 2013 the positive trend in employees and contractors injury
frequency rates was confirmed, with a reduction of 28.9% and
50.1%, respectively.
›
In 2013 Greenhouse gas emissions decreased by 12.1% following
lower power production (-10.5%) as well as lower volumes of gas
transported.
›
In 2013, the water consumption rate of EniPower’s plants
increased both in general (up 24.3% from 2012) and per kWh
produced (up 39.9%), due to production reorganization in a number
of sites, in particular in the Brindisi power plant due to higher
use of sea water in cooling operations.
›
In 2013, adjusted net loss was euro 246 million, decreasing by
euro 719 million from 2012 mainly in the marketing business
reflecting worsening competitive environment, the effects of
which were exacerbated by minimum off-take obligations provided
by long-term supply contracts.
›
Eni gas sales (93.17 bcm) were down by 2.3% compared to 2012.
When excluding the effect of the divestment of Galp, gas sales
were broadly in line with the previous year. Eni’s sales in
the domestic market increased by 1.08 bcm driven by higher spot
sales and by higher sales to importers in Italy (up 1.94 bcm).
This positive trend was more than offset by lower volumes
marketed in the main European markets (down 5.61 bcm),
particularly in Benelux, the Iberian Peninsula and the United
Kingdom, due to declining gas demand and competitive pressure.
›
Electricity sales of 35.05 TWh decreased by 7.53 TWh from 2012,
down 17.7%.
›
In 2013 capital expenditure of euro 232 million mainly concerned
the revamping activities of the cogeneration plant of Bolgiano
and the
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Eni Annual Report / Operating Review
development of its heating cable system (euro 39 million), the
flexibility and upgrading of combined cycle power stations (euro
82 million) as well as gas marketing initiatives (euro 88
million).
›
On March 31, 2014, Eni and Statoil have signed final agreement on
the revision of the long-term gas supply contract currently in
force between the two parties. The revision is reflecting changed
fundamentals in the gas sector and will determine a positive
effect in 2014 profit. The final agreement, which follows the
Heads of Agreement signed on February 27, 2014, implies the end
of the arbitration proceedings previously initiated by Eni.
›
In 2013 EniPower, in the development of Eni’s worldwide
projects, confirmed its role as supplier of technological and
specialist know-how in the electricity and photovoltaic
applications, preserving the attention to access to energy
projects, environmental and social themes. In particular during
the year the company sanctioned the pre-feasibility study of a
power generation plant and its related facilities to be built in
the northern region of Mozambique, near the recently discovered
giant gas fields.
 Marketing Eni operates in a liberalized market where energy customers are allowed to choose the gas supplier and, according to their specific needs, to evaluate the quality of services and offers. Overall Eni supplies approximately 2,600 customers including large companies, power generation companies, wholesalers and distributors of natural gas for automotive use. Residential users are approximately 8 million and include households, professionals, small and medium sized enterprises, and public bodies located all over Italy and approximately 2 million |
customers in European
Countries. In a context characterized by a six percentage
points drop of demand in the Italian market (broadly in
line in the European Union) due to declining consumption
in all the reference segments and increased competitive
pressure, Eni progressed a number of initiatives in order
to mitigate the negative impact of the trading
environment such as renegotiation of supply contracts,
efficiency and optimization actions (for further
information on the European scenario, see chapter on
“Risk factors” below). Natural Gas Supply of natural gas In 2013, Eni’s consolidated subsidiaries supplied 85.67 bcm of natural gas, representing a decrease of 1.02 bcm, or 1.2% from 2012. Gas volumes supplied outside Italy (78.52 bcm from consolidated companies), imported in Italy or sold outside Italy, represented approximately 92% of total supplies, were substantially in line with 2012 (down 0.62 bcm, or 0.8%) due to higher volumes purchased in Russia (up 9.76 bcm) and the Netherlands (up 1.09 bcm), completely offset by lower volumes purchased in particular in Algeria (down 5.14 bcm), Norway (down 2.97 bcm) and Libya (down 0.77 bcm). |
| Supply of natural gas | (bcm) | 2011 | 2012 | 2013 | Change | % Ch. |
| Italy | 7.22 | 7.55 | 7.15 | (0.40 | ) | (5.3 | ) | ||||||||
| Russia | 21.00 | 19.83 | 29.59 | 9.76 | 49.2 | ||||||||||
| Algeria (including LNG) | 13.94 | 14.45 | 9.31 | (5.14 | ) | (35.6 | ) | ||||||||
| Libya | 2.32 | 6.55 | 5.78 | (0.77 | ) | (11.8 | ) | ||||||||
| Netherlands | 11.02 | 11.97 | 13.06 | 1.09 | 9.1 | ||||||||||
| Norway | 12.30 | 12.13 | 9.16 | (2.97 | ) | (24.5 | ) | ||||||||
| United Kingdom | 3.57 | 3.20 | 3.04 | (0.16 | ) | (5.0 | ) | ||||||||
| Hungary | 0.61 | 0.61 | 0.48 | (0.13 | ) | (21.3 | ) | ||||||||
| Qatar (LNG) | 2.90 | 2.88 | 2.89 | 0.01 | 0.3 | ||||||||||
| Other supplies of natural gas | 6.16 | 5.43 | 3.63 | (1.80 | ) | (33.1 | ) | ||||||||
| Other supplies of LNG | 2.23 | 2.09 | 1.58 | (0.51 | ) | (24.4 | ) | ||||||||
| Outside Italy | 76.05 | 79.14 | 78.52 | (0.62 | ) | (0.8 | ) | ||||||||
| TOTAL SUPPLIES OF ENI'S CONSOLIDATED SUBSIDIARIES | 83.27 | 86.69 | 85.67 | (1.02 | ) | (1.2 | ) | ||||||||
| Off-take from (input to) storage | 1.79 | (1.35 | ) | (0.58 | ) | 0.77 | .. | ||||||||
| Network losses, measurement differences and other changes | (0.21 | ) | (0.28 | ) | (0.31 | ) | (0.03 | ) | (10.7 | ) | |||||
| AVAILABLE FOR SALE BY ENI'S CONSOLIDATED SUBSIDIARIES | 84.85 | 85.06 | 84.78 | (0.28 | ) | (0.3 | ) | ||||||||
| Available for sale by Eni's affiliates | 9.05 | 7.53 | 5.78 | (1.75 | ) | (23.2 | ) | ||||||||
| E&P volumes | 2.86 | 2.73 | 2.61 | (0.12 | ) | (4.4 | ) | ||||||||
| TOTAL AVAILABLE FOR SALE | 96.76 | 95.32 | 93.17 | (2.15 | ) | (2.3 | ) |
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 |
Supplies in Italy (7.15 bcm)
slightly decreased from 2012 due to the decline of mature
fields. In 2013, main gas volumes from equity production
derived from: (i) Italian gas fields (6.1 bcm); (ii)
Libyan fields (1.7 bcm); (iii) certain Eni fields located
in the British and Norwegian sections of the North Sea
(1.5 bcm); (iv) the United States (1.2 bcm); (v) other
European areas (Croatia with 0.4 bcm). Considering also direct sales of the Exploration & Production Division and LNG supplied from the Bonny liquefaction plant in Nigeria, supplied gas volumes from equity production were approximately 16 bcm representing 17% of total volumes available for sale. |
| Gas sales by entity | (bcm) | 2011 | 2012 | 2013 | Change | % Ch. |
| Total sales of subsidiaries | 84.05 | 84.30 | 83.60 | (0.70 | ) | (0.8 | ) | ||||||||
| Italy (including own consumption) | 34.60 | 34.66 | 35.76 | 1.10 | 3.2 | ||||||||||
| Rest of Europe | 44.84 | 44.57 | 42.30 | (2.27 | ) | (5.1 | ) | ||||||||
| Outside Europe | 4.61 | 5.07 | 5.54 | 0.47 | 9.3 | ||||||||||
| Total sales of Eni's affiliates (net to Eni) | 9.85 | 8.29 | 6.96 | (1.33 | ) | (16.0 | ) | ||||||||
| Italy | 0.08 | 0.12 | 0.10 | (0.02 | ) | (16.7 | ) | ||||||||
| Rest of Europe | 8.14 | 6.45 | 5.05 | (1.40 | ) | (21.7 | ) | ||||||||
| Outside Europe | 1.63 | 1.72 | 1.81 | 0.09 | 5.2 | ||||||||||
| E&P in Europe and in the Gulf of Mexico | 2.86 | 2.73 | 2.61 | (0.12 | ) | (4.4 | ) | ||||||||
| WORLDWIDE GAS SALES | 96.76 | 95.32 | 93.17 | (2.15 | ) | (2.3 | ) |
| Gas sales by market | (bcm) | 2011 | 2012 | 2013 | Change | % Ch. |
| ITALY | 34.68 | 34.78 | 35.86 | 1.08 | 3.1 | ||||||||||
| Wholesalers | 5.16 | 4.65 | 4.58 | (0.07 | ) | (1.5 | ) | ||||||||
| Italian gas exchange and spot markets | 5.24 | 7.52 | 10.68 | 3.16 | 42.0 | ||||||||||
| Industries | 7.21 | 6.93 | 6.07 | (0.86 | ) | (12.4 | ) | ||||||||
| Medium-sized enterprises and services | 0.88 | 0.81 | 1.12 | 0.31 | 38.3 | ||||||||||
| Power generation | 4.31 | 2.55 | 2.11 | (0.44 | ) | (17.3 | ) | ||||||||
| Residential | 5.67 | 5.89 | 5.37 | (0.52 | ) | (8.8 | ) | ||||||||
| Own consumption | 6.21 | 6.43 | 5.93 | (0.50 | ) | (7.8 | ) | ||||||||
| INTERNATIONAL SALES | 62.08 | 60.54 | 57.31 | (3.23 | ) | (5.3 | ) | ||||||||
| Rest of Europe | 52.98 | 51.02 | 47.35 | (3.67 | ) | (7.2 | ) | ||||||||
| Importers in Italy | 3.24 | 2.73 | 4.67 | 1.94 | 71.1 | ||||||||||
| European markets | 49.74 | 48.29 | 42.68 | (5.61 | ) | (11.6 | ) | ||||||||
| Iberian Peninsula | 7.48 | 6.29 | 4.90 | (1.39 | ) | (22.1 | ) | ||||||||
| Germany/Austria | 6.47 | 7.78 | 8.31 | 0.53 | 6.8 | ||||||||||
| Benelux | 13.84 | 10.31 | 8.68 | (1.63 | ) | (15.8 | ) | ||||||||
| Hungary | 2.24 | 2.02 | 1.84 | (0.18 | ) | (8.9 | ) | ||||||||
| UK/Northern Europe | 4.21 | 4.75 | 3.51 | (1.24 | ) | (26.1 | ) | ||||||||
| Turkey | 6.86 | 7.22 | 6.73 | (0.49 | ) | (6.8 | ) | ||||||||
| France | 7.01 | 8.36 | 7.73 | (0.63 | ) | (7.5 | ) | ||||||||
| Other | 1.63 | 1.56 | 0.98 | (0.58 | ) | (37.2 | ) | ||||||||
| Extra European markets | 6.24 | 6.79 | 7.35 | 0.56 | 8.2 | ||||||||||
| E&P in Europe and in the Gulf of Mexico | 2.86 | 2.73 | 2.61 | (0.12 | ) | (4.4 | ) | ||||||||
| WORLDWIDE GAS SALES | 96.76 | 95.32 | 93.17 | (2.15 | ) | (2.3 | ) |
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| Sales of
natural gas In 2013, Eni’s gas sales were 93.17 bcm, down by 2.3% from 2012. When excluding the effect of the divestment of Galp, gas sales were broadly in line with the previous year. Eni’s sales in the domestic market increased by 1.08 bcm driven by higher spot sales and by higher sales to importers in Italy (up 1.94 bcm). This positive trend was more than offset by lower volumes marketed in the main European markets (down 5.61 bcm, particularly in Benelux, the Iberian Peninsula and the UK) due to declining gas demand and competitive pressure. Higher sales outside Europe (up 0.56 bcm) were driven by increasing LNG sales in the Far East, |
particularly in Japan and
Korea. Exploration & Production sales in Northern
Europe and in the United States (2.61 bcm) declined by
0.12 bcm due to lower sales in the United States. LNG In 2013, LNG sales (12.4 bcm) decreased by 2.2 bcm from 2012. In particular, LNG sales by the Gas & Power segment (8.4 bcm, included in worldwide gas sales) mainly concerned LNG from Qatar, Algeria and Nigeria marketed in Europe, South America and the Far East. |
| LNG sales | (bcm) | 2011 | 2012 | 2013 | Change | % Ch. |
| G&P sales | 11.8 | 10.5 | 8.4 | (2.1 | ) | (20.0 | ) | ||||||||
| Rest of Europe | 9.8 | 7.6 | 4.6 | (3.0 | ) | (39.5 | ) | ||||||||
| Outside Europe | 2.0 | 2.9 | 3.8 | 0.9 | 31.0 | ||||||||||
| E&P sales | 3.9 | 4.1 | 4.0 | (0.1 | ) | (2.2 | ) | ||||||||
| Terminals: | |||||||||||||||
| Soyo (Angola) | 0.1 | 0.1 | .. | ||||||||||||
| Bontang (Indonesia) | 0.6 | 0.6 | 0.5 | (0.1 | ) | (16.7 | ) | ||||||||
| Point Fortin (Trinidad & Tobago) | 0.4 | 0.5 | 0.6 | 0.1 | 22.4 | ||||||||||
| Bonny (Nigeria) | 2.5 | 2.7 | 2.4 | (0.3 | ) | (10.1 | ) | ||||||||
| Darwin (Australia) | 0.4 | 0.3 | 0.4 | 0.1 | 21.2 | ||||||||||
| 15.7 | 14.6 | 12.4 | (2.2 | ) | (15.0 | ) |
Power
| Availability
of electricity Eni’s power generation sites are located in Ferrera Erbognone, Ravenna, Livorno, Taranto, Mantova, Brindisi, Ferrara and Bolgiano. In 2013, power generation was 23.03 TWh, down 2.64 TWh, or 10.3% from 2012. As of December 31, 2013, installed operational capacity was 5.3 GW (5.3 GW as of December 31, 2012). Electricity trading, to increase availability of electricity, lowered by 28.9% to 12.2 TWh due to lower purchases on the market. |
Power
sales In 2013 power sales (35.05 TWh) were directed to the free market (82%), industrial sites (9%), the Italian power exchange (6%) and others (3%). Compared with 2012, electricity sales were down by 17.7%, due to lower volumes traded on the Italian power exchange and declining sales to wholesales, partly offset by higher sales to retail customers. |
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| 2011 | 2012 | 2013 | Change | % Ch. |
| Purchases of natural gas | (mmcm) | 5,008 | 5,206 | 4,635 | (571 | ) | (11.0 | ) | |||||||||
| Purchases of other fuels | (ktoe) | 528 | 462 | 449 | (13 | ) | (2.8 | ) | |||||||||
| Power generation | (TWh) | 25.23 | 25.67 | 23.03 | (2.64 | ) | (10.3 | ) | |||||||||
| Steam | (ktonnes) | 14,401 | 12,603 | 10,099 | (2,504 | ) | (19.9 | ) |
| Availability of electricity | (TWh) |
2011 | 2012 | 2013 | Change | % Ch. |
| Power generation | 25.23 | 25.67 | 23.03 | (2.64 | ) | (10.3 | ) | ||||||||||
| Trading of electricity (a) | 15.05 | 16.91 | 12.02 | (4.89 | ) | (28.9 | ) | ||||||||||
| 40.28 | 42.58 | 35.05 | (7.53 | ) | (17.7 | ) | |||||||||||
| Free market | 27.25 | 31.84 | 28.73 | (3.11 | ) | (9.8 | ) | ||||||||||
| Italian Exchange for electricity | 8.67 | 6.10 | 1.96 | (4.14 | ) | (67.9 | ) | ||||||||||
| Industrial plants | 3.23 | 3.30 | 3.31 | 0.01 | 0.3 | ||||||||||||
| Other (a) | 1.13 | 1.34 | 1.05 | (0.29 | ) | (21.6 | ) | ||||||||||
| Power sales | 40.28 | 42.58 | 35.05 | (7.53 | ) | (17.7 | ) |
(a) Includes positive and negative imbalances.
| In 2013, as part of its activities selling natural gas and electricity with the aim of improving planning of commercial actions and monitoring technologies for energy efficiency, Eni continued successfully the development of “eni kassandra meteo forecast” (e-km™), a proprietary system for forecasting temperatures from meteorological and climate data in the short/long-term (from 1 to 90 days) over large European areas (including Italy, Belgium, Germany and France). The system will be applied to power generation activity at EniPower plants and on the largest Italian cities. | During the year the company continued the development of the proprietary technology “vibroacustic pipeline monitoring system” (e-vpms™) for the continuing remote control based on theoretical models of elastic-acoustic propagation of pipelines, used for the transportation of natural gas, oil and water in variable operating conditions. |
Capital
expenditure
| In 2013, capital expenditure of euro 232 million, mainly related to activities performed to cogeneration plant of Bolgiano (revamping and development of its heating cable system | (euro 39 million), upgrading and other initiatives to improve flexibility of the combined cycle power plants (euro 82 million) and gas marketing initiatives (euro 88 million). |
| Capital expenditure | (euro million) | 2011 | 2012 | 2013 | Change | % Ch. |
| Marketing | 184 | 212 | 209 | (3 | ) | (1.4 | ) | ||||||||
| Marketing | 97 | 81 | 88 | 7 | 8.6 | ||||||||||
| Italy | 45 | 43 | 42 | (1 | ) | (2.3 | ) | ||||||||
| Outside Italy | 52 | 38 | 46 | 8 | 21.1 | ||||||||||
| Power generation | 87 | 131 | 121 | (10 | ) | (7.6 | ) | ||||||||
| International transport | 8 | 13 | 23 | 10 | 76.9 | ||||||||||
| 192 | 225 | 232 | 7 | 3.1 | |||||||||||
| of which: | |||||||||||||||
| Italy | 132 | 174 | 163 | (11 | ) | (6.3 | ) | ||||||||
| Outside Italy | 60 | 51 | 69 | 18 | 35.3 |
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| Refining & Marketing | ||||||||||||||
| Key performance indicators | ||||||||||||||
| 2011 | 2012 | 2013 |
| Employees injury frequency rate | (No. of accidents per million of worked hours) | 1.96 | 1.08 | 0.31 | ||||||||||
| Contractors injury frequency rate | 3.21 | 2.32 | 1.68 | |||||||||||
| Net sales from operations (a) | (euro million) | 51,219 | 62,656 | 57,329 | ||||||||||
| Operating profit | (273 | ) | (1,296 | ) | (1,517 | ) | ||||||||
| Adjusted operating profit | (539 | ) | (321 | ) | (482 | ) | ||||||||
| Adjusted net profit | (264 | ) | (179 | ) | (232 | ) | ||||||||
| Capital expenditure | 866 | 842 | 619 | |||||||||||
| Refinery throughputs on own account | (mmtonnes) | 31.96 | 30.01 | 27.38 | ||||||||||
| Conversion index | (%) | 61 | 61 | 62 | ||||||||||
| Balanced capacity of refineries | (kbbl/d) | 767 | 767 | 787 | ||||||||||
| Retail sales of petroleum products in Europe | (mmtonnes) | 11.37 | 10.87 | 9.69 | ||||||||||
| Service stations in Europe at year end | (units) | 6,287 | 6,384 | 6,386 | ||||||||||
| Average throughput per service station in Europe | (kliters) | 2,206 | 2,064 | 1,828 | ||||||||||
| Retail efficiency index | (%) | 1.50 | 1.48 | 1.28 | ||||||||||
| Employees at period end | (number) | 7,591 | 7,125 | 6,942 | ||||||||||
| Direct GHG emissions | (mmtonnes CO2 eq) | 7.24 | 6.03 | 5.18 | ||||||||||
| SOx emissions (sulphur oxide) | (ktonnes SO2 eq) | 23.07 | 16.99 | 10.80 | ||||||||||
| NOx emissions (nitrogen oxide) | (ktonnes NO2 eq) | 6.74 | 5.87 | 4.51 | ||||||||||
| Water consumption rate (refineries)/refinery throughputs | (cm/tonnes) | 31.03 | 25.43 | 19.98 | ||||||||||
| Biofuels marketed | (mmtonnes) | 13.26 | 14.83 | 10.84 | ||||||||||
| Customer satisfaction index | (likert scale) | 7.74 | 7.90 | 8.10 | ||||||||||
| (a) Before elimination of intragroup sales. |
| Performance of the year |
›
In 2013, the injury frequency rates decreased from 2012 (down
71.4% for employees and 27.5% for contractors).
›
In 2013, the declining trend of Greenhouse gas, SOx
and NOx emissions continued, benefiting from lower
production, energy saving measures and increasing use of natural
gas to replace fuel oil.
›
The water consumption rate of Refining & Marketing Division
declined by more than 21%.
›
In 2013, the Refining & Marketing Division reported sharply
lower adjusted net loss amounting to euro 232 million (euro 179
million in 2012). This decrease reflected plunging refining
margins driven by weak demand for refined products and
overcapacity, the effects of which were exacerbated by shrinking
price differentials between light and heavy crudes due to lower
heavy crudes supplies in the Mediterranean area. The negative
trading environment was partly counteracted by efficiency and
optimization gains. Marketing results declined due to lower sales
related to the declining demand for fuels and mounting
competitive pressure.
›
2013 refining throughputs were 27.38 mmtonnes, down 8.8% from
2012. In Italy, processed volumes decreased (down 9.4%) due to
the planned shutdown of the Venice Refinery following the Green
Refinery project and in all the remaining plants due to their
downsizing on the back of declining refining margins. Outside
Italy, Eni’s refining throughputs decreased by 5.9% in
particular in the Czech Republic.
›
In 2013, retail sales in Italy of 6.64 mmtonnes decreased by
15.2% from 2012. This decline was driven by the current economic
downturn and increased competitive pressure. In 2013 Eni’s
average retail market share was 27.5% decreasing by 3.7
percentage points from 2012 when sales volumes benefited from the
effect of a promotional campaign made during the summer weekends.
›
Retail sales in the Rest of Europe of 3.05 mmtonnes are
substantially unchanged from 2012 (up 0.3%) due to higher volumes
marketed in Germany and Austria, almost completely offset by
lower sales in the Czech Republic and Hungary.
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Eni Annual Report / Operating Review
›
Capital expenditure amounting to euro 619 million related mainly
refining, supply and logistics (euro 444 million) to improve
flexibility and yields, in particular at the Sannazzaro Refinery,
and marketing activities for the streamlining of the retail
distribution network (euro 175 million).
›
In 2013 total expenditure in R&D in the Refining &
Marketing Division amounted to approximately euro 33 million, net
of general and administrative costs. In the year 6 patent
applications were filed.
| Renovation and recovery of Gela Refinery |
In July 2013 Eni announced a plan for the renovation and recovery of the Gela Refinery with a total investment of euro 700 million. The project is aimed to create an economically sound refinery in order to meet the challenges of a competitive and constantly evolving scenario. The refinery will also be redesigned to be more environmentally friendly and respectful of the local area. When fully operational, with its new industrial and organizational structure designed in 2013, the Gela Refinery will be able to generate profits through products more suited to market requirements (maximized production of diesel and interrupted production of gasoline and polyethylene), while at the same time restoring its reliability, flexibility and operational efficiency.
| Smart Mobility |
In December 2013, Eni launched in Milan the initiative Enjoy, a car sharing free floating with the objective of developing products and services for sustainable mobility. This service provided in partnership with major Italian players (Fiat, Trenitalia, Cartasì) allows the customers to pick up and release in any part of the covered area and represents a new and economic, sustainable and efficient alternative to owning car. The service is simple and completely online, the tariffs are all inclusive and competitive. The initiative will be launched in other major Italian cities and abroad, in order to develop and implement more innovative products and services related to mobility.
Supply and Trading
| In 2013, a total of 65.96 mmtonnes of crude were purchased by the Refining & Marketing Division (62.21 mmtonnes in 2012), of which 26.15 mmtonnes from Eni’s Exploration & Production Division, 25.27 mmtonnes on the spot market and 14.54 mmtonnes were purchased under long-term supply contracts with producing Countries. Approximately 26% of crude purchased in 2013 came from Russia, 19% from West Africa, 14% from the North Sea, 12% from North Africa, 6% from the Middle East, 6% from Italy and | 17% from other areas. In 2013 some 43.96 mmtonnes of crude purchased were marketed, (up 7.40 mmtonnes from 2012, or 20.2%). In addition, 5.31 mmtonnes of intermediate products were purchased (4.53 mmtonnes in 2012) to be used as feedstock in conversion plants and 17.79 mmtonnes of refined products (20.52 mmtonnes in 2012) were purchased to be sold on markets outside Italy (13.73 mmtonnes) and on the domestic market (4.06 mmtonnes) as a complement to available production. |
| Purchases | (mmtonnes) | 2011 | 2012 | 2013 | Change | % Ch. |
| Equity crude oil | |||||||||||||||
| Eni's production outside Italy | 24.29 | 23.57 | 22.46 | (1.11 | ) | (4.7 | ) | ||||||||
| Eni's production in Italy | 3.35 | 3.35 | 3.69 | 0.34 | 10.1 | ||||||||||
| 27.64 | 26.92 | 26.15 | (0.77 | ) | (2.9 | ) | |||||||||
| Other crude oil | |||||||||||||||
| Purchases on spot markets | 20.44 | 24.95 | 25.27 | 0.32 | 1.3 | ||||||||||
| Purchases under long-term contracts | 10.94 | 10.34 | 14.54 | 4.20 | 40.6 | ||||||||||
| 31.38 | 35.29 | 39.81 | 4.52 | 12.8 | |||||||||||
| Total crude oil purchases | 59.02 | 62.21 | 65.96 | 3.75 | 6.0 | ||||||||||
| Purchases of intermediate products | 4.26 | 4.53 | 5.31 | 0.78 | 17.2 | ||||||||||
| Purchases of products | 15.85 | 20.52 | 17.79 | (2.73 | ) | (13.3 | ) | ||||||||
| TOTAL PURCHASES | 79.13 | 87.26 | 89.06 | 1.80 | 2.1 | ||||||||||
| Consumption for power generation | (0.89 | ) | (0.75 | ) | (0.55 | ) | 0.20 | 26.7 | |||||||
| Other changes (a) | (1.12 | ) | (1.63 | ) | (1.06 | ) | 0.57 | 35.0 | |||||||
| 77.12 | 84.88 | 87.45 | 2.57 | 3.0 |
(a) Include change in inventories, decrease due to transportation, consumption and losses.
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Refining
| In 2013, refining throughputs were 27.38 mmtonnes, down by 2.63 mmtonnes, or 8.8% from 2012. In Italy, processed volumes decreased by 9.4% from 2012, due to the planned shutdown of the Venice Refinery following the Green Refinery project and in all the remaining plants due to a downsizing of productive assets in relation to declining refining margins. Outside Italy, Eni’s refining throughputs (4.82 mmtonnes) decreased by 5.9% (down approximately 302 ktonnes) mainly reflecting the shutdown at the Kralupy Refinery in the Czech Republic for | maintenance and lower
throughputs in order to mitigate the negative impact of
lower refining margins. Total throughputs in wholly-owned refineries were 18.99 mmtonnes, down by 1.85 mmtonnes (down 8.9%) from 2012 determining a refinery utilization rate of 66%, declining by 6 percentage points from 2012, reflecting the unfavorable scenario. Approximately 23.7% of processed crude was supplied by Eni’s Exploration & Production segment, representing a 0.9 percentage points increase from 2012 (22.8%). |
| Availability of refined products | (mmtonnes) | 2011 | 2012 | 2013 | Change | % Ch. |
| ITALY | |||||||||||||||
| At wholly-owned refineries | 22.75 | 20.84 | 18.99 | (1.85 | ) | (8.9 | ) | ||||||||
| Less input on account of third parties | (0.49 | ) | (0.47 | ) | (0.57 | ) | (0.10 | ) | (21.3 | ) | |||||
| At affiliated refineries | 4.74 | 4.52 | 4.14 | (0.38 | ) | (8.4 | ) | ||||||||
| Refinery throughputs on own account | 27.00 | 24.89 | 22.56 | (2.33 | ) | (9.4 | ) | ||||||||
| Consumption and losses | (1.55 | ) | (1.34 | ) | (1.23 | ) | 0.11 | 8.2 | |||||||
| Products available for sale | 25.45 | 23.55 | 21.33 | (2.22 | ) | (9.4 | ) | ||||||||
| Purchases of refined products and change in inventories | 3.22 | 3.35 | 4.42 | 1.07 | 31.9 | ||||||||||
| Products transferred to operations outside Italy | (1.77 | ) | (2.36 | ) | (1.85 | ) | 0.51 | 21.6 | |||||||
| Consumption for power generation | (0.89 | ) | (0.75 | ) | (0.55 | ) | 0.20 | 26.7 | |||||||
| Sales of products | 26.01 | 23.79 | 23.35 | (0.44 | ) | (1.8 | ) | ||||||||
| OUTSIDE ITALY | |||||||||||||||
| Refinery throughputs on own account | 4.96 | 5.12 | 4.82 | (0.30 | ) | (5.9 | ) | ||||||||
| Consumption and losses | (0.23 | ) | (0.23 | ) | (0.22 | ) | 0.01 | 4.3 | |||||||
| Products available for sale | 4.73 | 4.89 | 4.60 | (0.29 | ) | (5.9 | ) | ||||||||
| Purchases of refined products and change in inventories | 12.51 | 17.29 | 13.69 | (3.60 | ) | (20.8 | ) | ||||||||
| Products transferred from Italian operations | 1.77 | 2.36 | 1.85 | (0.51 | ) | (21.6 | ) | ||||||||
| Sales of products | 19.01 | 24.54 | 20.14 | (4.40 | ) | (17.9 | ) | ||||||||
| Refinery throughputs on own account | 31.96 | 30.01 | 27.38 | (2.63 | ) | (8.8 | ) | ||||||||
| of which: refinery throughputs of equity crude on own account | 6.54 | 6.39 | 5.93 | (0.46 | ) | (7.2 | ) | ||||||||
| Total sales of refined products | 45.02 | 48.33 | 43.49 | (4.84 | ) | (10.0 | ) | ||||||||
| Crude oil sales | 32.10 | 36.56 | 43.96 | 7.40 | 20.2 | ||||||||||
| TOTAL SALES | 77.12 | 84.89 | 87.45 | 2.56 | 3.0 |
 In 2013, work continued at the Sannazzaro de’ Burgondi Refinery for the construction of the first industrial plant employing EST (Eni Slurry Technology). As compared to available refining technologies, EST does not produce by-products but converts |
feedstock completely into
distillates and allows to make valuable use of
distillation residue of heavy and extra-heavy crude and
non conventional resources. An evaluation process and for
the exploitation of heavy crude of licensing out of this
technology to a number of Oil companies for the
application of EST in their productive processes is
ongoing. In addition, Eni is developing the conversion technology by means of Slurry Dual Catalyst (an evolution of EST) that is based on the combination of two different catalysts which could lead to a relevant breakthrough in the EST process, improving products quality and reducing operating costs. In addition at the Sannazzaro Refinery the detailed design of a project for the production of hydrogen by means of the proprietary Hydrogen SCT-CPO (Short Contact Time-Catalytic Partial Oxidation) process is nearing completion. This reforming technology transforms gaseous and liquid hydrocarbons (also derived from biomass) into synthetic gas (carbon monoxide and hydrogen) at competitive costs. |
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| In 2013 Eni commenced
effectively the industrial project “Green
Refinery” that will led the Venice Refinery to be
the first example of conventional refinery converted in
biorefinery. The related works started in September 2013
while their termination is expected within March 2014,
with the start-up of the new biorefinery. The realization
of this project is also supported by the industrial use
of the technology Ecofining developed in
partnership with the American company UOP. In 2013 Eni continued the development of technologies aimed at reducing the environmental footprint of refining activities and producing more environmental sustainable products. Among the main activities were: - the development of the proprietary catalytic system for hydrocracking and dearomatization of gasoil T-Sand for the production of high quality diesel, with low quantities of |
polyaromatics and reduced
emissions of particulate; - the studies on the technologies Zero Waste, a technology for reduction of industrial sludge through a pyrolisis/gasification and inertization process. Considering the relevance of the projects in the next months the first 2 t/h prototype will be realized in the Gela Refinery; - the test on Biodiesel from microalgae performed on the pilot plant of Gela. During the experimental phase were tested and individuated types of microalgae providing good performance at high temperatures (summer periods), and low temperatures (winter period) as well as achieved relevant progresses on an innovative process of lipid extraction; the testing activity for the upgrading of the obtained lipids by this process aimed to produce oil to be treated in GreenDiesel technology plant is ongoing. |
| Product sales in Italy and outside Italy by market | (mmtonnes) | 2011 | 2012 | 2013 | Change | % Ch. |
| Retail | 8.36 | 7.83 | 6.64 | (1.19 | ) | (15.2 | ) | ||||||||
| Wholesale | 9.36 | 8.62 | 8.37 | (0.25 | ) | (2.9 | ) | ||||||||
| Chemicals | 1.71 | 1.26 | 1.32 | 0.06 | 4.8 | ||||||||||
| Other sales | 6.58 | 6.08 | 7.01 | 0.93 | 15.3 | ||||||||||
| Sales in Italy | 26.01 | 23.79 | 23.34 | (0.45 | ) | (1.9 | ) | ||||||||
| Retail rest of Europe | 3.01 | 3.04 | 3.05 | 0.01 | 0.3 | ||||||||||
| Wholesale Rest of Europe | 3.84 | 3.96 | 4.23 | 0.27 | 6.8 | ||||||||||
| Wholesale outside Italy | 0.43 | 0.42 | 0.43 | 0.01 | 2.4 | ||||||||||
| Other sales | 11.73 | 17.12 | 12.44 | (4.68 | ) | (27.3 | ) | ||||||||
| Sales outside Italy | 19.01 | 24.54 | 20.15 | (4.39 | ) | (17.9 | ) | ||||||||
| TOTAL SALES OF REFINED PRODUCTS | 45.02 | 48.33 | 43.49 | (4.84 | ) | (10.0 | ) |
| Marketing of
refined products In 2013, retail sales of
refined products (43.49 mmtonnes) decreased by 4.84
mmtonnes from 2012, down 10%, due mainly to lower volumes
sold to oil companies and traders outside Italy. |
loyalty program for
customers launched in February 2010 for a five year
period, the cards that made at least one transaction in
the period were approximately 2.8 million at December 31,
2013 of which one million was represented by consumer
payment and loyalty cards. Volumes sold to customers
cumulating points on their card were approximately 37% of
total throughputs (net of “iperself” sales that
do not allow to accumulate points). In 2013 even sales of premium fuels (fuels of the “Eni Blu+” line with high performance and lower environmental impact) were affected by the decline in domestic consumption and high price levels and were lower than the previous year. In particular, sales of Eni BluDiesel+ amounted to approximately 231 mmtonnes (approximately 278 mmliters) with a decline of approximately 61 ktonnes from 2012 and represented 5.3% of volumes of gasoil marketed by Eni’s retail network. At December 31, 2013, service stations marketing BluDiesel+ totaled 3,909 units (4,123 at year-end 2012) covering approximately 82% of Eni’s network. Retail sales of BluSuper+ amounted to 30 ktonnes (approximately 41 mmliters), decreasing by 4 ktonnes from 2012, and covered 1.6% of gasoline sales on Eni’s retail network (broadly in line with previous year). As of December 31, 2013, service stations marketing BluSuper+ totaled 2,171 units (2,505 at December 31, 2012), covering approximately 46% of Eni’s network. |
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| In 2013 Eni continued the development of innovative and biofuels with proprietary additives and detergents that provide | better gasoline and gasoil with a “keep clean” component. |
| Retail and wholesales sales of refined products | (mmtonnes) | 2011 | 2012 | 2013 | Change | % Ch. |
| Italy | 17.72 | 16.45 | 15.01 | (1.44 | ) | (8.8 | ) | ||||||||
| Retail sales | 8.36 | 7.83 | 6.64 | (1.19 | ) | (15.2 | ) | ||||||||
| Gasoline | 2.60 | 2.41 | 1.96 | (0.45 | ) | (18.7 | ) | ||||||||
| Gasoil | 5.45 | 5.08 | 4.33 | (0.75 | ) | (14.8 | ) | ||||||||
| LPG | 0.29 | 0.31 | 0.32 | 0.01 | 3.2 | ||||||||||
| Others | 0.02 | 0.03 | 0.03 | ||||||||||||
| Wholesale sales | 9.36 | 8.62 | 8.37 | (0.25 | ) | (2.9 | ) | ||||||||
| Gasoil | 4.18 | 4.07 | 4.09 | 0.02 | 0.5 | ||||||||||
| Fuel Oil | 0.46 | 0.33 | 0.24 | (0.09 | ) | (27.3 | ) | ||||||||
| LPG | 0.31 | 0.30 | 0.30 | ||||||||||||
| Gasoline | 0.19 | 0.20 | 0.25 | 0.05 | 25.0 | ||||||||||
| Lubricants | 0.10 | 0.09 | 0.09 | ||||||||||||
| Bunker | 1.26 | 1.19 | 1.00 | (0.19 | ) | (16.0 | ) | ||||||||
| Jet fuel | 1.65 | 1.56 | 1.58 | 0.02 | 1.3 | ||||||||||
| Other | 1.21 | 0.88 | 0.82 | (0.06 | ) | (6.8 | ) | ||||||||
| Outside Italy (retail+wholesale) | 7.28 | 7.42 | 7.71 | 0.29 | 3.9 | ||||||||||
| Gasoline | 1.79 | 1.81 | 1.73 | (0.08 | ) | (4.4 | ) | ||||||||
| Gasoil | 3.82 | 3.96 | 4.23 | 0.27 | 6.8 | ||||||||||
| Jet fuel | 0.49 | 0.44 | 0.51 | 0.07 | 15.9 | ||||||||||
| Fuel Oil | 0.23 | 0.19 | 0.22 | 0.03 | 15.8 | ||||||||||
| Lubricants | 0.10 | 0.09 | 0.10 | 0.01 | 11.1 | ||||||||||
| LPG | 0.50 | 0.52 | 0.51 | (0.01 | ) | (1.9 | ) | ||||||||
| Other | 0.35 | 0.41 | 0.41 | ||||||||||||
| 25.00 | 23.87 | 22.72 | (1.15 | ) | (4.8 | ) |
 Retail
sales in the Rest of Europe |
particular in Germany and
Austria; (iii) the purchase of 18 service stations, in
particular in France and Germany; (iv) the opening of one
new outlet. Average throughput (2,322 kliters) was in line with 2012 (2,319 kliters). Wholesale and other sales Wholesale sales in Italy (8.37 mmtonnes) declined by approximately 253 ktonnes, down 2.9%, mainly due to lower sales of bunkering and bitumen reflecting a decline in demand, mostly completely offset by higher volumes sold of fuel oil and minor products. Average market share in 2013 was 28.8% (29.5% in 2012). Supplies of feedstock to the petrochemical industry (1.32 mmtonnes) slightly increased from 2012 (up 62 ktonnes) due to higher feedstock supplies. Wholesale sales in the Rest of Europe of approximately 4.23 mmtonnes increased by 6.8% from 2012 due to increased sales in Slovenia and France. Sales declined in Austria. Other sales (19.45 mmtonnes) decreased by 3.75 mmtonnes, or 16.2%, mainly due to lower sales to other oil companies. As concerns the development of bitumen, in 2013 the activities mainly referred to the production of bitumen that are suitable for the production of waterproof membranes. This products will allow the company to enlarge its presence on premium markets. |
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| As to modified
bitumen, the feasibility studies for the
realization of a plant for the production of bitumen
sheet-shaped (RIGEBIT), environmental
friendly and with good commercial perspectives were
concluded. As far as lubricants are concerned, in 2013 Eni qualified three oils for gasoline engines and four oil for gasoil engines with high performances. In the production of industrial lubricants Eni continued the cooperation with GE in particular on two lubricants for high-performance turbines with relevant energy saving characteristics. |
Capital expenditure In 2013, capital expenditure in the Refining & Marketing Division amounted to euro 619 million and regarded mainly: (i) refining, supply and logistics in Italy and outside Italy (euro 444 million), with projects designed to improve the conversion rate and flexibility of refineries, in particular the Sannazzaro Refinery, as well as expenditure on health, safety and environmental upgrades; (ii) upgrading and rebranding of the refined product retail network in Italy (euro 107 million) and in the Rest of Europe (euro 68 million). Overall in the year, expenditure in health, safety and environment amounted to euro 105 million. |
| Capital expenditure | (euro million) | 2011 | 2012 | 2013 | Change | % Ch. |
| Refinery, supply and logistics | 638 | 622 | 444 | (178 | ) | (28.6 | ) | ||||||||
| Italy | 635 | 618 | 444 | (174 | ) | (28.2 | ) | ||||||||
| Outside Italy | 3 | 4 | (4 | ) | .. | ||||||||||
| Marketing | 228 | 220 | 175 | (45 | ) | (20.5 | ) | ||||||||
| Italy | 168 | 163 | 107 | (56 | ) | (34.4 | ) | ||||||||
| Outside Italy | 60 | 57 | 68 | 11 | 19.3 | ||||||||||
| 866 | 842 | 619 | (223 | ) | (26.5 | ) |
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| Versalis | ||||||||||||||
| Key performance indicators | ||||||||||||||
| 2011 | 2012 | 2013 |
| Employees injury frequency rate | (No. of accidents per million of worked hours) | 1.47 | 0.76 | 0.76 | ||||||||||
| Contractors injury frequency rate | 4.60 | 1.67 | 0.30 | |||||||||||
| Net sales from operations (a) | (euro million) | 6,491 | 6,418 | 5,859 | ||||||||||
| Intermediates | 2,987 | 3,050 | 2,709 | |||||||||||
| Polymers | 3,299 | 3,188 | 2,933 | |||||||||||
| Other sales | 205 | 180 | 217 | |||||||||||
| Operating profit | (424 | ) | (681 | ) | (725 | ) | ||||||||
| Adjusted operating profit | (273 | ) | (483 | ) | (386 | ) | ||||||||
| Adjusted net profit | (206 | ) | (395 | ) | (338 | ) | ||||||||
| Capital expenditure | 216 | 172 | 314 | |||||||||||
| Production | (ktonnes) | 6,245 | 6,090 | 5,817 | ||||||||||
| Sales of petrochemical products | 4,040 | 3,953 | 3,785 | |||||||||||
| Average plant utilization rate | (%) | 65.3 | 66.7 | 65.3 | ||||||||||
| Employees at year end | (number) | 5,804 | 5,668 | 5,708 | ||||||||||
| Direct GHG emissions | (mmtonnes CO2 eq) | 4.12 | 3.69 | 3.66 | ||||||||||
| NMVOC (Non-Methane Volatile Organic Compound) emissions | (ktonnes) | 4.18 | 4.40 | 3.93 | ||||||||||
| SOx emissions (sulphur oxide) | (ktonnes SO2 eq) | 3.17 | 2.19 | 1.53 | ||||||||||
| NOx emissions (nitrogen oxide) | (ktonnes NO2 eq) | 4.14 | 3.43 | 3.29 | ||||||||||
| Recycled/reused water | (%) | 81.9 | 81.6 | 86.2 | ||||||||||
| (a) Before elimination of intragroup sales. |
| Performance of the year |
›
In 2013, contractors injury frequency rate continued to follow a
positive trend (down by 81.9% from 2012). Employees injury
frequency rate remained unchanged.
›
In 2013 emissions of greenhouse gas and other emissions in the
atmosphere improved from 2012 following the interruption of
production at the Porto Torres site in the conversion phase.
Further reductions were registered, particularly at the Mantova
site for NOx, and NMVOC as well as at the Dunkerque
site for SOx and NMVOC. Recycled/reused water rate
improved, up to 86.2%.
›
In 2013 adjusted net loss amounting euro 338 million declined by
euro 57 million from 2012, due to a sharp decrease of cracker
margins reported in the first half of 2012.
›
Sales of petrochemical products were 3,785 ktonnes, down by 168
ktonnes, or 4.2% from 2012, due to declining in consumptions.
›
Chemical production volumes were 5,817 ktonnes, decreasing by 273
ktonnes, or 4.5% from 2012, due to declining demand in all
businesses. The steepest decline was reported in elastomers and
polyethylene.
›
In 2013 overall expenditure in R&D amounted to approximately
euro 39 million in line with the previous year. 10 patent
applications were filed, one of which jointly with E&P.
| Business development and sustainability initiatives |
›
As part of the expansion strategy in bioplastic sector and
diversification from the base chemistry, Versalis signed
strategic partnerships with major operators in the field of
biotechnology and rubber:
- with Genomatica, for the establishment of a technology joint
venture for bio-based butadiene production from non-food biomass.
The resulting process will be licensed across Europe, Asia and
Africa by the newly-created joint venture. Versalis will invest
over $20
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million in the development of process
technologies and aims to be the first to license the process and
build commercial plants;
- with Pirelli, a Memorandum of Understanding for joint research
project for the use of guayule-based natural rubber in tyre
production;
- with Yulex Corporation, an agricultural-based biomaterials
company, for a project of guayule-based biorubber production and
a launch of industrial production complex in Southern Europe. The
partnership will cover the entire manufacturing chain. Versalis
will manufacture materials for various applications, with a final
goal of the optimization of the productive process in the tyre
industry;
- with South Korean company Lotte Chemical, Versalis established
a 50:50 joint venture, while with Malaysian company Petronas,
Versalis signed a shareholders agreement. The agreements concern
the development of joint production of styrene and elastomers, as
part of the expansion process in the growing South-East Asian
markets;
- with Neville Venture, Versalis signed an agreement of strategic
partnership for the production of hydrocarbon resins at the
Priolo plant and finalized a license agreement related to the
resins production for various applications such as adhesives,
inks, coatings and rubber;
- with Elevance Renewable Sciences Inc, a United States chemical
company, specialized in production of chemicals from vegetable
oils, with a significant value added, Versalis signed a
Memorandum of Understanding (MoU) for establishing a strategic
partnership, in order to jointly develop and scale a new
technology for a production from vegetable oils, aiming at
developing and scaling of new catalysts. The market applications
of the future production will be specialties with a significant
added value such as personal care products, detergents and
cleaners, bio-lubricants and oilfield chemicals.
›
In the field of Green Chemistry, Versalis continued with the
requalification of the hub of Porto Torres, in order to replace
the traditional activities of the site with activities
characterized by significant perspectives of future growth, by
realizing the products with an elevated biodegradability and/or
produced from row materials obtained from renewable sources. In
2013, Versalis completed the initiatives of restructuration and
reorganization of the distribution network and storage at the
Matrìca plant.
›
In February 2014, Versalis reached an important agreement on the
project of transformation and relaunch of the Porto Marghera site
to redesign production facilities and regain competitiveness.
Versalis expects to invest euro 200 million in Porto Marghera
focused on the optimization and reorganization of cracker
utilities, with significant energy savings, and on the new
initiative of green chemistry.
›
In 2013, as part of the Product Stewardship, Versalis realized a
specific database called Athos (Advanced Tool for the Handling Of
Substances) which collects all the information necessary for the
safe management, for employees and for the environment, of
chemical products processed and utilized at Versalis sites.
Sales - production - prices
| In 2013 sales
of chemical products (3,785 ktonnes) decreased by 168
ktonnes from 2012 (down by 4.2%) against of backdrop of
weakness demand reflecting the current economic downturn
in the main reference markets. The steepest decline was
registered in elastomers (down by 9.7%) and in
intermediates (down by 4.2%). Lower reduction was
reported in polyethylene (down by 3%) and in styrene
(down by 2.9%). Average unit sales prices decreased by 3.2% from 2012, with different trends for the various businesses: olefines prices were affected by a sharp decline in butadiene quotations (down 23%) driven by consumption crisis in Europe, while average styrene prices reported an increase (up 7.5%). Less significant improvement were registered in derivatives (up 1.4%) and in polyethylene (up 1.1%). Chemical production amounted to 5,817 ktonnes, with a decrease of 273 ktonnes, or 4.5% from 2012. This was mainly due to a |
decrease in elastomers (down
11%). Lower decreases were registered in styrenes (down
2.8%), in polyethylene (down 6%) and in intermediates
(down 3.7%). The main decreases in production were
registered at the Priolo plant (down 8.4%) due to the
planned standstill of olefine cracking plant and the
definitive shutdown of Ragusa polyethylene plant (down
12.5%) due to lower volumes of polyethylene and at
Dunkerque (down 5.3%) driven by the weakness of
polyethylene market as well as planned standstill in the
second half of the year. These reductions were partly
offset by higher production at Sarroch (up 11.6%), which
in 2012 was impacted by the standstill for the planned
upkeeping as well as higher levels of benzene and xylene
production. Nominal capacity of plants declined from the previous year due to rationalization measures, with an average plant utilization rate calculated on nominal capacity of 65.3% (66.7% in 2012). |
| Product availability | (ktonnes) | 2011 | 2012 | 2013 | Change | % Ch. |
| Intermediates | 4,101 | 3,595 | 3,462 | (133 | ) | (3.7 | ) | ||||||||
| Polymers | 2,144 | 2,495 | 2,355 | (140 | ) | (5.6 | ) | ||||||||
| Production | 6,245 | 6,090 | 5,817 | (273 | ) | (4.5 | ) | ||||||||
| Consumption and losses | (2,631 | ) | (2,545 | ) | (2,394 | ) | 151 | (5.9 | ) | ||||||
| Purchases and change in inventories | 426 | 408 | 362 | (46 | ) | (11.3 | ) | ||||||||
| 4,040 | 3,953 | 3,785 | (168 | ) | (4.2 | ) |
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Business trends
| Intermediates Intermediates revenues (euro 2,709 million) decreased by euro 341 million from 2012 (down by 11.2%) reflecting decreased volumes sold (down by 4.2%) and average unit prices (down by 1.9%), with different trends in each business: in the olefines sales volumes of ethylene decreased (down 4%) due to the planned standstill at the Priolo plant and lower consumption, with prices slightly decreasing compared to previous year, while butadiene volumes reported a sharp decrease (down by 38%) driven by the weakness of elastomers market and the reduced average prices by 23% reflecting the consumption crisis. In aromatics, benzene sales volumes registered a decline of 7.4%, while xylene volumes increased by 7.5%, with average prices in line with 2012. Revenues from derivatives declined mainly due to lower volumes of phenol/derivatives (down 3.6%) due to lower availability of product following planned downtime at the Mantova plant, partly offset by 1.4% increase in average sale prices. Intermediates production (3,462 ktonnes) registered a decrease from the last year (down by 133 ktonnes, or 3.7%) due |
to reductions in olefines
(down 5.7%) and in derivatives (down 2.4%) driven by
lower utilization of Priolo cracking plant and lower
production of butadiene (down 10.3%) affected by the
planned facility downtimes at the Brindisi and Ravenna
plants. These reductions were partly offset by higher
aromatics production (up by 3% compared to the previous
year) due to higher xylene production. Polymers Polymers revenues (euro 2,933 million) decreased by euro 255 million from 2012, or by 8%, due to average unit prices decreasing by 19% and lower elastomers sale volumes (down by 9.7%) due to the significant decrease in demand from the tyre and automotive industry. This negative performance was partly offset by higher average prices of styrene (up 7.5%) and polyethylene (up 1%) mainly registered in the last part of 2013. Polymer production (2,356 ktonnes) decreased by 140 ktonnes from 2012 (down 5.6%), due mainly to a decline in production at the Ravenna plant and at English sites (Hythe and Grangemouth) reflecting market dynamics. |
Capital
expenditure
| In 2013 capital expenditure amounted to euro 314 million (euro 172 million in 2012) and related mainly: (i) improvement of plants’ efficiency (euro 170 million); (ii) upkeeping of plants (euro 66 million); | (iii) environmental protection, safety and environmental regulation (euro 52 million); (iv) maintenance and savings (euro 14 million). |
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| Engineering & Construction | ||||||||||||
| Key performance indicators | ||||||||||||
| 2011 | 2012 | 2013 |
| Employees injury frequency rate | (No. of accidents per million of worked hours) | 0.44 | 0.54 | 0.46 | ||||||||
| Contractors injury frequency rate | 0.21 | 0.17 | 0.10 | |||||||||
| Fatality index | (No. of fatalities per 100 million of worked hours) | 1.82 | 0.93 | 2.01 | ||||||||
| Net sales from operations (a) | (euro million) | 11,834 | 12,771 | 11,611 | ||||||||
| Operating profit | 1,422 | 1,442 | (83 | ) | ||||||||
| Adjusted operating profit | 1,443 | 1,474 | (84 | ) | ||||||||
| Adjusted net profit | 1,098 | 1,111 | (253 | ) | ||||||||
| Capital expenditure | 1,090 | 1,011 | 902 | |||||||||
| Orders acquired | (euro million) | 12,505 | 13,391 | 10,653 | ||||||||
| Order backlog | 20,417 | 19,739 | 17,514 | |||||||||
| Employees at period end | (number) | 38,561 | 43,387 | 47,209 | ||||||||
| Employees outside Italy | (%) | 86.5 | 88.1 | 89.1 | ||||||||
| Local managers | 41.3 | 41.3 | 41.3 | |||||||||
| Local procurement | 56.4 | 51.8 | 51.1 | |||||||||
| Healthcare expenditure | (euro million) | 32 | 21 | 22 | ||||||||
| Security expenditure | 51 | 82 | 85 | |||||||||
| Direct GHG emissions | (mmtonnes CO2 eq) | 1.32 | 1.54 | 1.54 | ||||||||
| (a) Before elimination of intragroup sales. |
| Performance of the year |
›
In 2013 the injury frequency rate for employees and contractors
declined compared to 2012 (by 14.8% and 41.1%, respectively). In
2013, Eni continued its commitment in education and training for
employees and contractors in the field of health and security,
with the initiatives such as “Leadership in Health and
Safety”, “Working at height and Confined Space” as
well as the use of dedicated HSE training portal and individual
protection equipment.
›
In 2013 procurement amounted to euro 9,066 million, 51.1% of
which referred to local procurement.
›
Health and safety expenditure registered an increase (totally up
by 4% from 2012). In particular, the expenditure for individual
protection equipment increased by 30% and the expenditure for
safety training increased by 10%.
›
In 2013, adjusted net loss amounted to euro 253 million (down by
euro 1,264 million from the adjusted net profit of euro 1,111
million reported in 2012). This result reflected operating and
marketing difficulties encountered in the first half of 2013,
which led management to revise the profit margin estimates for
important orders, in particular for the construction of onshore
industrial complexes.
›
Orders acquired amounted to euro 10,653 million (euro 13,391
million in 2012), 94% of which relating to the works outside
Italy, while 14% orders from Eni Companies.
›
Order backlog amounted to euro 17,514 million at December 31,
2013 (euro 19,739 million at December 31, 2012), of which euro
9,244 million to be fulfilled within 2014.
›
In 2013 overall expenditure in R&D amounted approximately to
euro 15 million, in line with the previous year. 14 patent
applications were filed.
›
Capital expenditure amounted to euro 902 million (euro 1,011
million in 2012), mainly regarded the upgrading of the drilling
and construction fleet.
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| Development and sustainability initiatives |
›
In November 2013 Saipem inaugurated a new fabrication yard in
Edmonton, Canada. The facility will allow to accelerate the
fulfillment of the projects by keeping the workforce active
during adverse weather conditions as well. The yard will be used
for the prefabrication of industrial components and pipes as well
as for the assembly of modules for the different projects in the
oil and gas market, including liquefied natural gas and power
generation.
›
In 2013, in order to exploit value from competences, the
“Onshore EPC Projects, Construction Phase Enhancement”
project was launched, aiming at evaluating the qualitative and
quantitative adequacy level of Saipem’s employees in
“Critical Positions” in the Construction area to
optimize and centralize their planning and development.
›
In 2013, Saipem committed to strengthen relationships with local
stakeholders through the direct involvement activity, studies and
analyses. In the field of training and support for local hiring,
the Memorandum of Mutual Agreement was signed in Brazil; in
Congo, the training on-the-job for local engineers has been
started; in Kazakhstan, some initiatives of professional training
and technical support for local teaching institutions were
fulfilled, in Nigeria, professional training aiming at
development of local entrepreneurs was conducted. In the health
area, programs for diseases prevention in West Africa, South
America, Indonesia and Kazakhstan were completed.
›
In order to guarantee the spread of competences and to share
Saipem’s know-how, training activity was conducted in the
Training Centre of Schiedam (the Netherlands), recognized as a
well-advanced training centre in the HSE offshore area, where
also the complex working conditions in the offshore have been
simulated.
Activity areas
| Engineering
& Construction Offshore In 2013 revenues amounted to euro 5,094 million, decreasing by 2.2% from 2012, due to lower levels of activity in the North Sea, Kazakhstan and Australia. Orders acquired in the year amounted to euro 5,777 million (euro 7,477 million in 2012), mainly related to: (i) EPCI contract on behalf of Total Upstream Nigeria Ltd, for the development of the Egina field in Nigeria that includes engineering, procurement, fabrication, installation and pre-commissioning of subsea pipelines for oil and gas production and gas export, flexible jumpers and umbilicals; (ii) contract on behalf of Burullus Gas Company for the development of the West Delta Deep Marine - Phase IXa Project, about 90 kilometers off the Mediterranean Coast of Egypt. The project is aimed to the installation of subsea facilities (in water depths up to 850 meters) in the West Delta Deep Marine Concession, where Saipem had already successfully performed some previous phases of subsea field development; (iii) EPCI contract on behalf of ExxonMobil pertaining to the engineering, procurement, fabrication and installation of subsea pipelines of production and water injection, rigid jumpers and other related subsea structures as part of Kizomba Satellites Phase 2 project, undertaken in the Angolan offshore. As part of the Trunkline and Production Flowlines project committed by the North Caspian Sea Production Sharing Agreement Consortium in Kazakhstan (in which Eni retains an interest of 16.81%), which provided the engineering, laying and commissioning of pipelines and other facilities, following leakages that were detected in a section of the onshore pipelines, Saipem was requested by the clients to address the issue under the guarantee. Saipem, presuming not to be obliged to perform those works, has invited the client to investigate other possible causes of the issue identified. At present, no dispute is underway between Saipem and the Consortium. |
In 2013 Saipem continued to
pursue the development of state of the art technologies
for working in deep and ultra-deep waters, the design of
floating liquefaction facilities, the development of new
techniques and equipment for the installation and
grounding of underwater pipes in extreme conditions. In
particular, the innovative “Subsea
Processing” system and floating
liquefaction units (FLNG) were developed. In the
process of subsea pipeline construction, new equipment
was applied successfully, which enhanced the process and
the quality of steel pipes’ soldering with carbon
and inoxidable materials. Engineering & Construction Onshore In 2013 revenues amounted to euro 4,619 million, registering a decrease of 24.4% from 2012, due to lower levels of activity in Northern and Western Africa and Middle East. Orders acquired during the year amounted to euro 2,566 million (euro 3,972 million in 2012). Among the main orders acquired were: (i) the EPC contract on behalf of Dangote Fertilizer for the realization of a new ammonia and urea production complex to be realized in Edo State, Nigeria. The contract encompasses the construction of two twin production streams and related utilities and off-site facilities; (ii) the EPC contract on behalf of Star Refinery AS, for the realization of Socar Refinery in Turkey, encompassing the engineering, procurement and construction of a refinery and three crude refinery jetties, to be built in the area adjacent to the Petkim Petrochemical facility; (iii) the EPC contract for Eni related to the improvements to the storage infrastructure for crude oil of Tempa Rossa field, in Italy. R&D activities aiming at improving proprietary process technologies and increasing the company’s environmental services portfolio concerned: (i) the study on the improvement of propriety technology for the production of urea, with the development of a new process “Urea Zero Emission”; (ii) the launch of the innovative project in order to improve energy efficiency. |
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| Offshore
drilling In 2013 revenues amounted to euro 1,177 million, with an increase of 8.1% from 2012. This was due to the entry in full activity of the semisubmersible rigs Scarabeo 8, Scarabeo 3 and Scarabeo 6 and the beginning of operations of Ocean Spur vessels. Orders acquired in the year amounted to euro 1,401 million (euro 1,025 million in 2012), mainly related to: (i) five-year contract extension with Eni for the charter of the drillship Saipem 10000 starting from the third quarter of 2014 for worldwide drilling activity operations; (ii) one-year contract extension on behalf of IEOC, for the utilization of the semi-submersible Scarabeo 4 in Egypt; (iii) two-year contract extension on behalf of Eni for the charter of the Saipem TAD for drilling activity offshore Congo. Onshore drilling In 2013 revenues amounted to euro 721 million, slightly decreasing |
from 2012. Lower levels of activities in Algeria were almost completely absorbed by higher levels of activities in Saudi Arabia, Kazakhstan and Mauritania. Orders acquired in the year amounted to euro 909 million (euro 917 million in 2012), mainly related to: (i) three-year contract extension on behalf of Eni Congo for the management of a client’s plant; (ii) the extension of the drilling contracts with variable duration, on behalf of several clients, in South America; (iii) new contracts by several clients, signed under different terms ranging from six months to five years, for the utilization of 17 rigs in Middle East, the Caspian sea, South America, West Africa, Turkey and Ukraine. Among these newly contracted rigs, two will be working for Shell under a long term Global Framework, engaging Saipem in a call-off agreement to facilitate new Country entries and, for exploration purposes, provide onshore drilling services worldwide, at pre-agreed terms and conditions. |
| Orders acquired | (euro million) | 2011 | 2012 | 2013 | Change | % Ch. |
| 12,505 | 13,391 | 10,653 | (2,738 | ) | (20.4 | ) | |||||||||
| Engineering & Construction Offshore | 6,131 | 7,477 | 5,777 | (1,700 | ) | (22.7 | ) | ||||||||
| Engineering & Construction Onshore | 5,006 | 3,972 | 2,566 | (1,406 | ) | (35.4 | ) | ||||||||
| Offshore drilling | 780 | 1,025 | 1,401 | 376 | 36.7 | ||||||||||
| Onshore drilling | 588 | 917 | 909 | (8 | ) | (0.9 | ) | ||||||||
| of which: | |||||||||||||||
| - Eni | 822 | 631 | 1,514 | 883 | .. | ||||||||||
| - Third parties | 11,683 | 12,760 | 9,139 | (3,621 | ) | (28.4 | ) | ||||||||
| of which: | |||||||||||||||
| - Italy | 1,116 | 485 | 591 | 106 | 21.9 | ||||||||||
| - Outside Italy | 11,389 | 12,906 | 10,062 | (2,844 | ) | (22.0 | ) |
| Order backlog | (euro million) | Dec. 31, 2011 | Dec. 31, 2012 | Dec. 31, 2013 | Change | % Ch. |
| 20,417 | 19,739 | 17,514 | (2,225 | ) | (11.3 | ) | |||||||||
| Engineering & Construction Offshore | 6,600 | 8,721 | 8,447 | (274 | ) | (3.1 | ) | ||||||||
| Engineering & Construction Onshore | 9,604 | 6,701 | 4,436 | (2,265 | ) | (33.8 | ) | ||||||||
| Offshore drilling | 3,301 | 3,238 | 3,390 | 152 | 4.7 | ||||||||||
| Onshore drilling | 912 | 1,079 | 1,241 | 162 | 15.0 | ||||||||||
| of which: | |||||||||||||||
| - Eni | 2,883 | 2,526 | 2,261 | (265 | ) | (10.5 | ) | ||||||||
| - Third parties | 17,534 | 17,213 | 15,253 | (1,960 | ) | (11.4 | ) | ||||||||
| of which: | |||||||||||||||
| - Italy | 1,816 | 1,719 | 784 | (935 | ) | (54.4 | ) | ||||||||
| - Outside Italy | 18,601 | 18,020 | 16,730 | (1,290 | ) | (7.2 | ) |
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Capital expenditure
| Capital expenditure of the Engineering & Construction Division amounted to euro 902 million and mainly related to: (i) the Engineering & Construction Offshore business unit for the completion of the preparation work for a new pipelayer, in continuation of the construction activity for a realization of a new base in Brazil, as well as maintenance and upgrading of already existing assets; (ii) the Engineering & Construction Onshore business unit for the acquisition of equipment and | facilities for the base in Canada, as well as maintenance of the asset base; (iii) the Offshore Drilling business unit for the class reinstatement works on the semi-submersible rig Scarabeo 5 and Scarabeo 7 as well as jack-up Perro Negro 3, in addition to maintenance and upgrading of already existing assets; (iv) in the Onshore Drilling business unit, the preparation work for four new rigs intended to operate in Saudi Arabia and upgrading of the asset base. |
| Capital expenditure | (euro million) | 2011 | 2012 | 2013 | Change | % Ch. |
| Engineering & Construction Offshore | 400 | 505 | 373 | (132 | ) | (26.1 | ) | |||||
| Engineering & Construction Onshore | 45 | 66 | 116 | 50 | 75.8 | |||||||
| Offshore drilling | 507 | 281 | 172 | (109 | ) | (38.8 | ) | |||||
| Onshore drilling | 121 | 120 | 210 | 90 | 75.0 | |||||||
| Other expenditure | 17 | 39 | 31 | (8 | ) | (20.5 | ) | |||||
| 1,090 | 1,011 | 902 | (109 | ) | (10.8 | ) |
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| Financial review |
Profit and loss account1
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| 107,690 | Net sales from operations | 127,220 | 114,722 | (12,498 | ) | (9.8 | ) | ||||||||
| 926 | Other income and revenues | 1,546 | 1,385 | (161 | ) | (10.4 | ) | ||||||||
| (83,199 | ) | Operating expenses | (99,976 | ) | (95,477 | ) | 4,499 | 4.5 | |||||||
| (69 | ) | of which non-recurring items | |||||||||||||
| 171 | Other operating income (expense) | (158 | ) | (71 | ) | 87 | 55.1 | ||||||||
| (8,785 | ) | Depreciation, depletion, amortization and impairments | (13,561 | ) | (11,703 | ) | 1,858 | 13.7 | |||||||
| 16,803 | Operating profit | 15,071 | 8,856 | (6,215 | ) | (41.2 | ) | ||||||||
| (1,146 | ) | Finance income (expense) | (1,347 | ) | (991 | ) | 356 | 26.4 | |||||||
| 2,123 | Net income from investments | 2,881 | 6,115 | 3,234 | .. | ||||||||||
| 17,780 | Profit before income taxes | 16,605 | 13,980 | (2,625 | ) | (15.8 | ) | ||||||||
| (9,903 | ) | Income taxes | (11,661 | ) | (9,008 | ) | 2,653 | 22.8 | |||||||
| 55.7 | Tax rate (%) | 70.2 | 64.4 | (5.8 | ) | ||||||||||
| 7,877 | Net profit - continuing operations | 4,944 | 4,972 | 28 | 0.6 | ||||||||||
| (74 | ) | Net profit - discontinued operations | 3,732 | (3,732 | ) | .. | |||||||||
| 7,803 | Net profit | 8,676 | 4,972 | (3,704 | ) | (42.7 | ) | ||||||||
| Attributable to: | |||||||||||||||
| 6,860 | Eni's shareholders: | 7,790 | 5,160 | (2,630 | ) | (33.8 | ) | ||||||||
| 6,902 | - continuing operations | 4,200 | 5,160 | 960 | 22.9 | ||||||||||
| (42 | ) | - discontinued operations | 3,590 | (3,590 | ) | .. | |||||||||
| 943 | Non-controlling interest: | 886 | (188 | ) | (1,074 | ) | .. | ||||||||
| 975 | - continuing operations | 744 | (188 | ) | (932 | ) | .. | ||||||||
| (32 | ) | - discontinued operations | 142 | (142 | ) | .. |
| Net profit In 2013, net profit attributable to Eni’s shareholders was euro 5,160 million. The result was achieved against the backdrop of tough market conditions which impacted all of Eni’s business segments. The E&P recorded extraordinary disruptions to its producing activities related to geopolitical factors. The mid-downstream businesses were hit by a continued deterioration in selling prices and margins due to the economic downturn and structural headwinds in the trading environment reflecting plunging demand for energy commodities, excess supplies/overcapacity and competitive pressure. Finally Saipem reported extraordinary contract losses. |
Despite these extraordinary negatives, 2013 net profit increased by 22.9% (up euro 960 million) from 2012, driven by the portfolio rationalization permitted by the recent discoveries that has allowed an anticipated monetization of results and cash. Eni has thus monetized a 20% interest in the Mozambique discovery by divesting it to CNPC for a cash consideration of euro 3.4 billion and a net gain recorded in profit of approximately euro 3 billion. It has also divested its 60% stake in Artic Russia for a total consideration of euro 2.2 billion which was cashed-in in January 2014, with the profit for 2013 benefiting of a fair-value revaluation of euro 1.7 billion taken at the investee due to the loss of joint control at the balance sheet date. |
(1) Changes in the Group results are calculated with respect to results earned by the Group’s continuing operations in 2012 considering that at the time Snam was consolidated in the Group accounts and reported as discontinued operations based on IFRS 5. In the circumstances of discontinued operations, the International Financial Reporting Standards require that the profits earned by continuing and discontinued operations are those deriving from transactions external to the Group.
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Adjusted net profit
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| 6,902 | Net profit attributable to Eni's shareholders - continuing operations | 4,200 | 5,160 | 960 | 22.9 | ||||||||||
| (724 | ) | Exclusion of inventory holding (gains) losses | (23 | ) | 438 | ||||||||||
| 760 | Exclusion of special items | 2,953 | (1,165 | ) | |||||||||||
| of which: | |||||||||||||||
| 69 | - non-recurring items | ||||||||||||||
| 691 | - other special items | 2,953 | (1,165 | ) | |||||||||||
| 6,938 | Adjusted net profit attributable to Eni's shareholders - continuing operations (a) | 7,130 | 4,433 | (2,697 | ) | (37.8 | ) |
(a) For a detailed explanation of adjusted operating profit and net profit see paragraph “Reconciliation of reported operating and net profit to results on an adjusted basis”.
| Adjusted net profit
attributable to Eni’s shareholders amounted
to euro 4,433 million, a decrease of euro 2,697 million,
down by 37.8% from 2012. Excluding Snam’s
contribution to continuing operations in 2012, the
decline of 2013 adjusted net profit was 35%. The decline
reflected the lower performance incurred by all the
Divisions reflecting the above mentioned drivers.
Adjusted net profit was calculated by excluding an
inventory holding loss which amounted to euro 438 million
and special gains of euro 1,165 million, net of exchange
rate differences and exchange rate derivative instruments
reclassified in operating profit, as they mainly related
to derivative transactions entered into to manage
exposure to the exchange rate risk implicit in commodity
pricing formulas, resulting in a net negative adjustment
of euro 727 million. Special charges in operating profit of euro 3,046 million mainly related to: i) impairment losses of euro 2,400 million recorded to write down the book values of property, plant and equipment, goodwill and other intangible assets to their lower values-in-use in the gas marketing (euro 1,685 million), electricity generation and refining businesses (euro 633 million). In performing the impairment review, management assumed a reduced profitability outlook in those businesses driven by structural headwinds in demand, excess capacity and oversupplies, rising competitive pressures and other cost disadvantages. Minor impairment losses were incurred at a number of oil & gas properties in the Exploration & Production Division (a net loss of euro 19 million) reflecting downward reserve revisions, almost completely offset by the reversal of assets impaired in previous years following positive revisions of reserves, as well as marginal lines of business in the Chemical segment |
(euro 44 million) due to
lack of profitability perspectives; ii) risk provisions (euro 334 million) related to onerous contracts, net of reversal; iii) exchange rate differences and exchange rate derivative instruments reclassified as operating items, mainly related to derivative transactions entered into to manage exposure to the exchange rate risk implicit in commodity pricing formulas (gain of euro 195 million); iv) provisions for redundancy incentives (euro 270 million in the year) and environmental provisions (euro 205 million); v) the effects of fair-value evaluation of certain commodity derivatives contracts lacking the formal requisites to be accounted as hedges under IFRS (a loss of euro 315 million); vi) net gains on the divestment of marginal properties in the Exploration & Production Division (euro 283 million). Non-operating special items included: i) the gain on the divestment of an interest to CNPC in the Mozambique project (euro 2,994 million net of the related tax effect), the divestment of an interest of 8.19% in the share capital of Galp amounting to euro 98 million, of which euro 67 million related to the reversal of the evaluation reserve and on the divestment of an interest of 11.69% of the share capital of Snam amounting to euro 75 million, of which euro 8 million related to the reversal of the evaluation reserve; ii) the fair-value revaluation of 60% Eni’s stake in the joint venture Artic Russia, based on the Sale and Purchase Agreement signed with Gazprom (euro 1,682 million); iii) a write-off of deferred tax assets which were assessed to be no more recoverable due to the projections of lower earnings before income taxes at Italian activities (euro 954 million); iv) a write-off of deferred tax assets relating to the renegotiation of certain petroleum contracts (euro 490 million). |
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The breakdown of adjusted net profit by Division is shown in the table below:
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| 6,865 | Exploration & Production | 7,426 | 5,952 | (1,474 | ) | (19.8 | ) | ||||||||
| 252 | Gas & Power | 473 | (246 | ) | (719 | ) | .. | ||||||||
| (264 | ) | Refining & Marketing | (179 | ) | (232 | ) | (53 | ) | (29.6 | ) | |||||
| (206 | ) | Versalis | (395 | ) | (338 | ) | 57 | 14.4 | |||||||
| 1,098 | Engineering & Construction | 1,111 | (253 | ) | (1,364 | ) | .. | ||||||||
| (225 | ) | Other activities | (247 | ) | (205 | ) | 42 | 17.0 | |||||||
| (753 | ) | Corporate and financial companies | (976 | ) | (472 | ) | 504 | 51.6 | |||||||
| 1,146 | Impact of unrealized intragroup profit elimination (a) | 661 | 39 | (622 | ) | ||||||||||
| 7,913 | Adjusted net profit - continuing operations | 7,874 | 4,245 | (3,629 | ) | (46.1 | ) | ||||||||
| of which attributable to: | |||||||||||||||
| 975 | - non-controlling interest | 744 | (188 | ) | (932 | ) | .. | ||||||||
| 6,938 | - Eni's shareholders | 7,130 | 4,433 | (2,697 | ) | (37.8 | ) |
(a) This item concerned mainly intragroup sales of commodities, services and capital goods recorded in the assets of the purchasing business segment as of end period.
| Group results were achieved
in a trading environment characterized by lowering oil
and gas realizations in dollar terms due to a slightly
declining Brent price, down by 2.6% from 2012. Refining margins in the Mediterranean area fell to an unprecedented level, down to less than one dollar per barrel (down by 45.3% from 2012) due to structural headwinds in the industry driven by overcapacity, lower demand and increasing competition from imported refined product streams. Furthermore, Eni’s results in the Refining & Marketing Division were affected by narrowing differentials between the heavy crudes processed by Eni’s refineries and the marker Brent which reflected the lower availability of the former in the Mediterranean area. Gas market was characterized by a weak demand, strong |
competitive pressures and
oversupplies. Price competition among operators has been stiff taking into account minimum off-take obligations provided by gas purchase take-or-pay contracts and reduced sales opportunities. Spot prices in Europe increased by 12.2% from 2012, even if this was not reflected in gas margins because of higher oil-linked supply costs. Eni’s results were also impacted by sharply lower margins in the production and sale of electricity due to oversupply and increasing competition from more competitive sources. Results of 2013 were affected by the appreciation of the euro against the dollar (up by 3.3% over the year). |
| 2011 | 2012 | 2013 | % Ch. |
| 111.27 | Average price of Brent dated crude oil (a) | 111.58 | 108.66 | (2.6 | ) | ||||
| 1.392 | Average EUR/USD exchange rate (b) | 1.285 | 1.328 | 3.3 | |||||
| 79.94 | Average price in euro of Brent dated crude oil | 86.83 | 81.82 | (5.8 | ) | ||||
| 2.06 | Average European refining margin (c) | 4.83 | 2.64 | (45.3 | ) | ||||
| 2.90 | Average European refining margin Brent/Ural (c) | 4.94 | 2.60 | (47.4 | ) | ||||
| 1.48 | Average European refining margin in euro | 3.76 | 1.99 | (47.1 | ) | ||||
| 9.03 | Price of NBP gas (d) | 9.48 | 10.64 | 12.2 | |||||
| 1.4 | Euribor - three-month euro rate (%) | 0.6 | 0.2 | (66.7 | ) | ||||
| 0.3 | Libor - three-month dollar rate (%) | 0.4 | 0.3 | (25.0 | ) |
(a) In USD dollars per barrel, Source:
Platt’s Oilgram.
(b) Source: ECB.
(c) In USD per barrel FOB Mediterranean Brent dated crude oil.
Source: Eni calculations based on Platt’s Oilgram data.
(d) In USD per million BTU (British Thermal Unit). Source:
Platt’s Oilgram.
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Analysis of profit and loss account items
Net sales from operations
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| 29,121 | Exploration & Production | 35,881 | 31,268 | (4,613 | ) | (12.9 | ) | ||||||||
| 33,093 | Gas & Power | 36,200 | 32,124 | (4,076 | ) | (11.3 | ) | ||||||||
| 51,219 | Refining & Marketing | 62,656 | 57,329 | (5,327 | ) | (8.5 | ) | ||||||||
| 6,491 | Versalis | 6,418 | 5,859 | (559 | ) | (8.7 | ) | ||||||||
| 11,834 | Engineering & Construction | 12,771 | 11,611 | (1,160 | ) | (9.1 | ) | ||||||||
| 85 | Other activities | 119 | 80 | (39 | ) | (32.8 | ) | ||||||||
| 1,365 | Corporate and financial companies | 1,369 | 1,453 | 84 | 6.1 | ||||||||||
| (54 | ) | Impact of unrealized intragroup profit elimination | (75 | ) | 18 | 93 | |||||||||
| (25,464 | ) | Consolidation adjustments | (28,119 | ) | (25,020 | ) | 3,099 | ||||||||
| 107,690 | 127,220 | 114,722 | (12,498 | ) | (9.8 | ) |
| In 2013, Eni’s net
sales from operations (euro 114,722 million)
decreased by euro 12,498 million from 2012 (down by 9.8%)
reflecting lower realizations on commodities in dollar
terms, negative impact of the appreciation of the euro
against the US dollar, lower production and sales, and a
marked slowdown in the Engineering & Construction
business activity. Revenues generated by the Exploration & Production Division (euro 31,268 million) decreased by euro 4,613 million, or 12.9%, due to lower oil and gas realizations in dollar terms (down by 2.1%), the appreciation of the euro against the US dollar and the extraordinary disruptions in Libya and Nigeria. Revenues generated by the Gas & Power Division (euro 32,124 million) decreased by euro 4,076 million, down by 11.3%, due to continued deterioration in selling prices to large customers in Italy reflecting a weak gas demand and increasing competitive pressure. In addition spot prices at Italian hubs which are the main benchmark for selling prices in short-term supplies to large Italian customers have aligned very rapidly to continental hubs, thus |
driving a large fall in
average realizations. Finally, the segment recorded lower
sales to European target markets (down by 7.2%). Revenues generated by the Refining & Marketing Division (euro 57,329 million) decreased by euro 5,327 million, or 8.5%, mainly reflecting lower sales of refined products (down 4.84 mmtonnes; or 10%, from 2012) and the negative impact of the currency. Revenues generated by Versalis (euro 5,859 million) decreased by euro 559 million, down by 8.7% from 2012 mainly due to a decline in volumes sold (down by 4.2%) against the backdrop of the continuing weak commodity demand, impacted by the economic downturn, declining average sales prices (down by 3.2%), mainly in olefin prices (down by 23%), as result of the fall in butadiene’s unit margins. Revenues generated by the Engineering & Construction business (euro 11,611 million) decreased by euro 1.160 million, or 9.1% due to marketing and operating difficulties, mainly in the first half of 2013 and the decline of business activity in onshore and offshore construction segments. |
Operating expenses
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| 78,795 | Purchases. services and other | 95,363 | 90,213 | (5,150 | ) | (5.4 | ) | ||||||||
| of which: | |||||||||||||||
| 69 | - non-recurring items | ||||||||||||||
| 265 | - other special items | 1,154 | 539 | ||||||||||||
| 4,404 | Payroll and related costs | 4,613 | 5,264 | 651 | 14.1 | ||||||||||
| of which: | |||||||||||||||
| 203 | - provision for redundancy incentives | 64 | 270 | ||||||||||||
| 83,199 | 99,976 | 95,477 | (4,499 | ) | (4.5 | ) |
| In 2013 operating
expenses (euro 95,477 million) decreased by euro
4,499 million, or 4.5%, from 2012. Purchases, services and other costs (euro 90,213 million) decreased by euro 5,150 million, or 5.4%, reflecting lower supply costs in euro terms of raw materials and the benefit of renegotiations of long-term gas supply contracts, some of which were retroactive to previous reporting periods. Purchases, |
services and other costs included special charges of euro 539 million (euro 1,154 million in 2012) mainly related to environmental and onerous contracts risk provisions, net of reversal deriving from renegotiations. In 2012 special charges mainly referred to the extraordinary expenses and risk provisions of euro 945 million incurred in connection with price revisions at long-term gas purchase contracts. |
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| Payroll and related costs (euro 5,264 million) increased by euro 651 million from 2012, or 14.1%, due to an higher average number of employees outside Italy, particularly in the Engineering & Construction business | and higher provision for redundancy incentives (euro 270 million), which included Eni’s cost for 2013-2014 redundancy, pursuant to the provisions of Italian Law No. 223/1991. |
Depreciation, depletion, amortization and impairments
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| 6,251 | Exploration & Production | 7,988 | 7,812 | (176 | ) | (2.2 | ) | ||||||||
| 413 | Gas & Power | 405 | 329 | (76 | ) | (18.8 | ) | ||||||||
| 351 | Refining & Marketing | 331 | 309 | (22 | ) | (6.6 | ) | ||||||||
| 90 | Versalis | 90 | 95 | 5 | 5.6 | ||||||||||
| 596 | Engineering & Construction | 683 | 721 | 38 | 5.6 | ||||||||||
| 2 | Other activities | 1 | 1 | ||||||||||||
| 75 | Corporate and financial companies | 65 | 61 | (4 | ) | (6.2 | ) | ||||||||
| (23 | ) | Impact of unrealized intragroup profit elimination | (25 | ) | (25 | ) | |||||||||
| 7,755 | Total depreciation. depletion and amortization | 9,538 | 9,303 | (235 | ) | (2.5 | ) | ||||||||
| 1,030 | Impairments | 4,023 | 2,400 | (1,623 | ) | (40.3 | ) | ||||||||
| 8,785 | 13,561 | 11,703 | (1,858 | ) | (13.7 | ) |
| Depreciation,
depletion and amortization (euro 9,303 million)
decreased by euro 235 million, down by 2.5% from 2012,
mainly in the Exploration & Production Division due
to lower productions in particular in Libya and Nigeria
and the appreciation of the euro against the US dollar.
The increase recorded in the Engineering &
Construction business (up euro 38 million, or 5.6%) was
due to new vessels and rigs which were brought into
operations. Impairment charges of euro 2,400 million mainly regarded the goodwill and other intangible assets allocated to the gas Marketing activity and impairment losses of refining and electricity plants driven by a reduced profitability outlook on the back of the ongoing European downturn. In performing the impairment review, management |
assumed a reduced
profitability outlook in those businesses driven by a
deteriorating European macroeconomic environment,
volatility in commodity prices and margins, and rising
competitive pressures. Other impairment losses were
incurred at a number of oil&gas properties in the
Exploration & Production Division reflecting downward
reserve revisions almost completely offset by the
reversal of impairment charges made in previous reporting
periods due to positive revisions of reserves, as well as
marginal lines of business in the Chemical segment due to
lack of profitability perspectives. The breakdown of impairment charges by Division is shown in the table below: |
|
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| 189 | Exploration & Production | 547 | 19 | (528 | ) | (96.5 | ) | ||||||||
| 154 | Gas & Power | 2,494 | 1,685 | (809 | ) | (32.4 | ) | ||||||||
| 488 | Refining & Marketing | 843 | 633 | (210 | ) | (24.9 | ) | ||||||||
| 160 | Versalis | 112 | 44 | (68 | ) | (60.7 | ) | ||||||||
| 35 | Engineering & Construction | 25 | (25 | ) | .. | ||||||||||
| 4 | Other activities | 2 | 19 | 17 | .. | ||||||||||
| 1,030 | 4,023 | 2,400 | (1,623 | ) | (40.3 | ) |
Operating profit
The breakdown of the reported operating profit by
Division is provided below:
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| 15,887 | Exploration & Production | 18,470 | 14,871 | (3,599 | ) | (19.5 | ) | ||||||||
| (326 | ) | Gas & Power | (3,219 | ) | (2,992 | ) | 227 | 7.1 | |||||||
| (273 | ) | Refining & Marketing | (1,296 | ) | (1,517 | ) | (221 | ) | (17.1 | ) | |||||
| (424 | ) | Versalis | (681 | ) | (725 | ) | (44 | ) | (6.5 | ) | |||||
| 1,422 | Engineering & Construction | 1,442 | (83 | ) | (1,525 | ) | .. | ||||||||
| (427 | ) | Other activities | (300 | ) | (337 | ) | (37 | ) | (12.3 | ) | |||||
| (319 | ) | Corporate and financial companies | (341 | ) | (399 | ) | (58 | ) | (17.0 | ) | |||||
| 1,263 | Impact of unrealized intragroup profit elimination | 996 | 38 | (958 | ) | ||||||||||
| 16,803 | Operating profit | 15,071 | 8,856 | (6,215 | ) | (41.2 | ) |
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Adjusted operating profit
The breakdown of the adjusted operating profit by
Division is provided below:
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| 16,803 | Operating profit - continuing operations | 15,071 | 8,856 | (6,215 | ) | (41.2 | ) | ||||||||
| (1,113 | ) | Exclusion of inventory holding (gains) losses | (17 | ) | 716 | ||||||||||
| 1,540 | Exclusion of special items | 4,744 | 3,046 | ||||||||||||
| of which: | |||||||||||||||
| 69 | - non-recurring items | ||||||||||||||
| 1,471 | - other special items | 4,744 | 3,046 | ||||||||||||
| 17,230 | Adjusted operating profit - continuing operations | 19,798 | 12,618 | (7,180 | ) | (36.3 | ) | ||||||||
| Breakdown by Division | |||||||||||||||
| 16,075 | Exploration & Production | 18,537 | 14,646 | (3,891 | ) | (21.0 | ) | ||||||||
| (247 | ) | Gas & Power | 356 | (663 | ) | (1,019 | ) | .. | |||||||
| (539 | ) | Refining & Marketing | (321 | ) | (482 | ) | (161 | ) | (50.2 | ) | |||||
| (273 | ) | Versalis | (483 | ) | (386 | ) | 97 | 20.1 | |||||||
| 1,443 | Engineering & Construction | 1,474 | (84 | ) | (1,558 | ) | .. | ||||||||
| (226 | ) | Other activities | (222 | ) | (210 | ) | 12 | 5.4 | |||||||
| (266 | ) | Corporate and financial companies | (325 | ) | (332 | ) | (7 | ) | (2.2 | ) | |||||
| 1,263 | Impact of unrealized intragroup profit elimination and other consolidation adjustments | 782 | 129 | (653 | ) | ||||||||||
| 17,230 | 19,798 | 12,618 | (7,180 | ) | (36.3 | ) |
| Eni’s adjusted
operating profit, calculated by excluding an
inventory holding loss which amounted to euro 716 million
and special gains of euro 3,046 million, amounted to euro
12,618 million, a decrease of euro 7,180 million from the
previous year (down by 36.3%), reflecting a lower
operating performance recorded by the following
Divisions: - Exploration & Production (down euro 3,891 million, or 21%) driven by lower production sold impacted by geopolitical issues mainly in Libya and Nigeria and the appreciation of the euro against the US dollar (approximately euro 560 million); - Gas & Power reported an adjusted operating loss at euro 663 million, down euro 1,019 million from an adjusted operating profit of euro 356 million in 2012. The decline was driven by the continued deterioration in selling prices to large customers in Italy against the backdrop of weak gas demand and increasing |
competitive pressure, as
well as plunging margins on the production and sale of
electricity; - Refining & Marketing reported sharply higher adjusted operating losses (from euro 321 million in 2012 to euro 482 million in 2013), reflecting unprecedented decline in refining margins (the average Brent refining margin decreased to 2.64 $/bbl, or by 45.3% from 2012) driven by weak demand for refined products and overcapacity, the effects of which were exacerbated by shrinking price differentials between light and heavy crudes; - Engineering & Construction reported an adjusted operating loss of euro 84 million (down euro 1,558 million from 2012) due to marketing and operating difficulties incurred in the first half of 2013 resulting in sharply lower revision of margin estimates at certain large contracts for the construction of onshore industrial complexes. |
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Finance income (expense)
| 2011 | (euro million) | 2012 | 2013 | Change |
| (881 | ) | Finance income (expense) related to net borrowings | (929 | ) | (828 | ) | 101 | |||||
| (922 | ) | - finance expense on short and long-term debt | (980 | ) | (923 | ) | 57 | |||||
| 22 | - net interest due to banks | 27 | 43 | 16 | ||||||||
| - net income from financial activities held for trading | 4 | 4 | ||||||||||
| 19 | - net income from receivables and securities for non-financing operating activities | 24 | 48 | 24 | ||||||||
| (112 | ) | Income (expense) on derivative financial instruments | (251 | ) | (92 | ) | 159 | |||||
| 29 | - derivatives on exchange rate | (137 | ) | (91 | ) | 46 | ||||||
| (141 | ) | - derivatives on interest rate | (88 | ) | 40 | 128 | ||||||
| - derivates on securities | (26 | ) | (41 | ) | (15 | ) | ||||||
| (111 | ) | Exchange differences, net | 131 | 36 | (95 | ) | ||||||
| (154 | ) | Other finance income (expense) | (448 | ) | (277 | ) | 171 | |||||
| 75 | - net income from receivables and securities for financing operating activities | 69 | 74 | 5 | ||||||||
| (235 | ) | - finance expense due to the passage of time (accretion discount) | (308 | ) | (240 | ) | 68 | |||||
| 6 | - other finance income (expense) | (209 | ) | (111 | ) | 98 | ||||||
| (1,258 | ) | (1,497 | ) | (1,161 | ) | 336 | ||||||
| 112 | Finance expense capitalized | 150 | 170 | 20 | ||||||||
| (1,146 | ) | (1,347 | ) | (991 | ) | 356 |
| Net finance expense decreased by euro 356 million to euro 991 million from 2012, reflecting lower financial expense on debt (down euro 57 million) due to favorable trends in key market benchmarks and gains recognized in fair value evaluation of certain derivative instruments on interest rates (up euro 128 million) which did not meet the formal criteria to be designated as hedges under IFRS. Negative exchange differences net (down euro 95 million) were | partly offset by lower losses on exchange rate derivatives (up euro 46 million) recognized through profit as lacking the formal criteria for hedge accounting in accordance with IAS 39. Other financial expense decreased by euro 98 million from 2012 mainly due to the fact that the 2012 results reflected finance charges accrued on amounts due to certain gas suppliers following the definition of contractual price revisions. |
Net income from investments
The table below sets forth the breakdown of net income
from investments by Division:
| 2013 (euro million) |
Exploration & Production | Gas & Power | Refining & Marketing |
Engineering & Construction |
Other segments | Group |
| Share of gains (losses) from equity-accounted investments | 129 | 101 | 19 | (12 | ) | 15 | 252 | |||||||||||
| Dividends | 235 | 49 | 116 | 400 | ||||||||||||||
| Gains on disposal | 3,359 | (1 | ) | 67 | 173 | 3,598 | ||||||||||||
| Other income (expense), net | 1,685 | (10 | ) | 23 | 167 | 1,865 | ||||||||||||
| 5,408 | 90 | 158 | (12 | ) | 471 | 6,115 |
| Net income from investments amounted to euro 6,115 million and mainly related to gains on disposal of assets (euro 3,598 million) referred to the gain recorded on the sale of a 28.57% interest in Eni East Africa, which is the operator of Area 4 in Mozambique, to China National Petroleum Corporation (euro 3,359 million) and the fair-value revaluation of Eni’s interest in Artic Russia (euro 1,682 million) due to the loss of joint control at the balance sheet date, following the occurrence of all conditions precedent of the SPA (Sale and Purchase Agreement) with Gazprom. In January 2014, the consideration of the disposal was cashed in. Minor gains were recorded on the divestment of the available-for-sale interests in Snam (euro 75 million of which euro 8 million related to the reversal of the evaluation reserve) and Galp (euro 98 million). | Other income related to: (i)
Eni’s share of profit of entities accounted for
under the equity-accounting method (euro 252 million),
mainly in the Exploration & Production and Gas &
Power Divisions; (ii) dividends received from entities
accounted for at cost (euro 400 million), relating to
Nigeria LNG Ltd (euro 224 million), Snam SpA (euro 72
million) and Galp Energia SGPS SA (euro 43 million). These increases were partly absorbed by the fact that 2012 benefited from gains relating to the divestment of a 9% stake in Galp (euro 311 million) and the revaluation of the residual interest (euro 865 million), as well as a gain recorded on an equity transaction made by Galp’s subsidiary (euro 835 million). |
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The table below sets forth a breakdown of net income/loss from investments for 2013:
| 2011 | (euro million) | 2012 | 2013 | Change |
| 500 | Share of gains (losses) from equity-accounted investments | 278 | 252 | (26 | ) | |||||||
| 659 | Dividends | 431 | 400 | (31 | ) | |||||||
| 1,121 | Gains on disposal | 349 | 3,598 | 3,249 | ||||||||
| (157 | ) | Other income (expense), net | 1,823 | 1,865 | 42 | |||||||
| 2,123 | 2,881 | 6,115 | 3,234 |
Income taxes
| 2011 | (euro million) | 2012 | 2013 | Change |
| Profit before income taxes | ||||||||||||
| 694 | Italy | (723 | ) | (3,848 | ) | (3,125 | ) | |||||
| 17,086 | Outside Italy | 17,328 | 17,828 | 500 | ||||||||
| 17,780 | 16,605 | 13,980 | (2,625 | ) | ||||||||
| Income taxes | ||||||||||||
| 227 | Italy | 945 | 313 | (632 | ) | |||||||
| 9,676 | Outside Italy | 10,716 | 8,695 | (2,021 | ) | |||||||
| 9,903 | 11,661 | 9,008 | (2,653 | ) | ||||||||
| Tax rate (%) | ||||||||||||
| 32.7 | Italy | .. | (8.1 | ) | .. | |||||||
| 56.6 | Outside Italy | 61.8 | 48.8 | (13.0 | ) | |||||||
| 55.7 | 70.2 | 64.4 | (5.8 | ) |
| Income taxes
were euro 9,008 million, down euro 2,653 million compared
to the previous year, mainly reflecting lower income
taxes currently payable which were incurred by
subsidiaries in the Exploration & Production Division
operating outside Italy due to a declining taxable
profit. The reported tax rate was 64.4%, compared to the statutory tax rate of 41.9%, calculated by applying the Italian statutory tax rate on corporate profit of 38% and 3.9% corporate tax rate applicable to net value of production as provided for by Italian laws. The difference between the statutory and effective tax rate was due to: (i) the higher share of taxable profit reported outside Italy by the Exploration & Production Division; (ii) the write-off of deferred tax assets which were assessed to be no more recoverable due to the projections of lower earnings before income taxes at Italian activities for 8.9 percentage points; (iii) the partially non-taxable gains which were recorded on the |
sale of Eni’s 28.57%
interest in Eni East Africa SpA, the non-taxable gains
registered on the sale of on the Galp SGPS and Snam SpA
interests, as well as, with an opposite effect, the
non-deductible charges relating to the goodwill
impairment of the European Market cash generating unit
and to intergroup dividend distribution. Adjusted tax rate, calculated as ratio of income taxes to net profit before taxes on an adjusted basis, was 66.4% and it was higher than in 2012 (59.8%) reflecting the higher share of taxable profit reported by the Exploration & Production Division and the fact that the Company could not recognize any tax-loss carry-forward for Saipem losses. Non-controlling interest Non-controlling interest’s share of loss was euro 188 million and related mainly to Saipem SpA. |
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Divisional performance2
Exploration & Production
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| 15,887 | Operating profit | 18,470 | 14,871 | (3,599 | ) | (19.5 | ) | ||||||||||
| 188 | Exclusion of special items: | 67 | (225 | ) | |||||||||||||
| 190 | - asset impairments | 550 | 19 | ||||||||||||||
| (63 | ) | - net gains on disposal of assets | (542 | ) | (283 | ) | |||||||||||
| - risk provisions | 7 | 7 | |||||||||||||||
| 44 | - provision for redundancy incentives | 6 | 52 | ||||||||||||||
| 1 | - commodity derivatives | 1 | (2 | ) | |||||||||||||
| (2 | ) | - exchange rate differences and derivatives | (9 | ) | (2 | ) | |||||||||||
| 18 | - other | 54 | (16 | ) | |||||||||||||
| 16,075 | Adjusted operating profit | 18,537 | 14,646 | (3,891 | ) | (21.0 | ) | ||||||||||
| (231 | ) | Net financial income (expense) (a) | (264 | ) | (264 | ) | |||||||||||
| 624 | Net income (expense) from investments (a) | 436 | 367 | (69 | ) | ||||||||||||
| (9,603 | ) | Income taxes (a) | (11,283 | ) | (8,797 | ) | 2,486 | ||||||||||
| 58.3 | Tax rate | (%) | 60.3 | 59.6 | (0.7 | ) | |||||||||||
| 6,865 | Adjusted net profit | 7,426 | 5,952 | (1,474 | ) | (19.8 | ) | ||||||||||
| Results also include: | |||||||||||||||||
| 6,440 | - amortization and depreciation | 8,535 | 7,831 | (704 | ) | (8.2 | ) | ||||||||||
| of which: | |||||||||||||||||
| 1,165 | exploration expenditures | 1,835 | 1,736 | (99 | ) | (5.4 | ) | ||||||||||
| 820 | - amortization of exploratory drilling expenditures and other | 1,457 | 1,362 | (95 | ) | (6.5 | ) | ||||||||||
| 345 | - amortization of geological and geophysical exploration expenses | 378 | 374 | (4 | ) | (1.1 | ) | ||||||||||
| Average hydrocarbons realizations | |||||||||||||||||
| 102.11 | Liquids (b) | ($/bbl) | 102.58 | 99.44 | (3.14 | ) | (3.1 | ) | |||||||||
| 6.48 | Natural gas | ($/mcf) | 7.12 | 7.26 | 0.14 | 1.9 | |||||||||||
| 72.26 | Hydrocarbons | ($/boe) | 73.39 | 71.87 | (1.52 | ) | (2.1 | ) |
(a) Excluding special items.
(b) Includes condensates.
| In 2013, the Exploration
& Production Division recorded an adjusted
operating profit of euro 14,646 million,
decreasing by euro 3,891 million from 2012, down by 21%,
due to lower production sold, impacted by extraordinary
disruptions mainly in Libya and Nigeria, the appreciation
of the euro against the US dollar (approximately euro 560
million), as well as lower oil and gas realizations in
dollar terms (down by 2.1%, on average). Special charges excluded from adjusted operating profit amounted to euro 225 million and mainly related to net gains on disposal of |
marginal assets (euro 283
million), partly offset by provision for redundancy
incentives (euro 52 million) and by minor impairment
losses incurred at a number of oil&gas properties
reflecting downward reserve revisions, almost completely
offset by the reversal of impairment charges made in
previous reporting periods due positive revisions of
reserves (net charge of euro 19 million). Adjusted net profit decreased by euro 1,474 million to euro 5,952 million (down by 19.8%) from 2012, due to lower operating performance and lower income from investments. |
(2) For a detailed explanation of adjusted operating profit and net profit see the paragraph “Reconciliation of reported operating profit and reported net profit to results on an adjusted basis”.
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Gas & Power
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| (326 | ) | Operating profit | (3,219 | ) | (2,992 | ) | 227 | 7.1 | |||||||
| (166 | ) | Exclusion of inventory holding (gains) losses | 163 | 191 | |||||||||||
| 245 | Exclusion of special items: | 3,412 | 2,138 | ||||||||||||
| 154 | - asset impairments | 2,494 | 1,685 | ||||||||||||
| - net gains on disposal of assets | (3 | ) | 1 | ||||||||||||
| 77 | - risk provisions | 831 | 292 | ||||||||||||
| - environmental provisions | (2 | ) | (1 | ) | |||||||||||
| 34 | - provisions for redundancy incentives | 5 | 10 | ||||||||||||
| 45 | - commodity derivatives | 314 | |||||||||||||
| (82 | ) | - exchange rate differences and derivatives | (51 | ) | (186 | ) | |||||||||
| 17 | - other | 138 | 23 | ||||||||||||
| (247 | ) | Adjusted operating profit | 356 | (663 | ) | (1,019 | ) | .. | |||||||
| (657 | ) | Marketing | 47 | (837 | ) | (884 | ) | .. | |||||||
| 410 | International transport | 309 | 174 | (135 | ) | (43.7 | ) | ||||||||
| 43 | Net finance income (expense) (a) | 29 | 24 | (5 | ) | ||||||||||
| 363 | Net income (expense) from investments (a) | 261 | 100 | (161 | ) | ||||||||||
| 93 | Income taxes (a) | (173 | ) | 293 | 466 | ||||||||||
| .. | Tax rate (%) | 26.8 | .. | ||||||||||||
| 252 | Adjusted net profit | 473 | (246 | ) | (719 | ) | .. |
(a) Excluding special items.
| In 2013, the Gas & Power
Division reported sharply lower adjusted
operating loss of euro 663 million, compared to
operating profit of euro 356 million registered in 2012. The Marketing business reported a loss of euro 837 million, compared to break-even results achieved in the previous year (adjusted operating profit of euro 47 million). This negative trend reflected increasing competition, an ongoing demand downturn and oversupplies, the effects of which were exacerbated by minimum off-take obligations provided by long-term supply contracts. Based on these trends, Eni’s gas business in Italy was impacted by plummeting prices realized on short-term selling contracts to large Italian clients because those prices are benchmarked to Italian spot prices which have been aligning to continental hubs determining negative margins in comparison with oil-linked supply costs. The decline in spot prices has been transferred to long-term selling contracts. Furthermore, Eni’s results were impacted by sharply lower margins in the production and sale of gas-fired electricity due to oversupply and increasing competition from more competitive sources such as coal-fired electricity and renewables. The |
International transport
activity also registered a decline in operating
performance (down by 43.7%). The special charges excluded from adjusted operating loss amounted to euro 2,138 million related to: (i) impairment losses of euro 1,685 million recorded mainly in the activity of electricity generation (euro 919 million) due to the projections of reduced cash flows, impacted by lower electricity demand and the pressures on margins determined by renewable energy and coal competition, as well as impairment losses recorded to write down the book values of goodwill and other intangible assets to their lower value-in-use mainly in the gas marketing business reflecting structural headwinds; (ii) expenses for fair-valued commodity derivatives of euro 314 million lacking formal prerequisites to be accounted as hedges; (iii) risk provisions of euro 292 million in 2013. The Gas & Power Division reported an adjusted net loss of euro 246 million, representing a decrease of euro 719 million compared to 2012, also due to reduced results from equity-accounted entities. |
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Other performance indicators
Follows a breakdown of the pro-forma adjusted EBITDA
by business:
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| 949 | Pro-forma EBITDA adjusted | 1,316 | 6 | (1,310 | ) | .. | |||||||||
| 257 | Marketing | 858 | (311 | ) | (1,169 | ) | .. | ||||||||
| 44 | of which: +/(-) adjustment on commodity derivatives | ||||||||||||||
| 692 | International transport | 458 | 317 | (141 | ) | (30.8 | ) |
| EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization charges) on an adjusted basis is calculated by adding amortization and depreciation charges to adjusted operating profit, which is also modified to take into account the impact associated with certain derivatives instruments as detailed below. This performance indicator includes the adjusted EBITDA of Eni’s wholly owned subsidiaries and Eni’s share of adjusted EBITDA generated by certain associates which are accounted for under the equity method for IFRS purposes. Management believes that the EBITDA | pro-forma adjusted is an important alternative measure to assess the performance of Eni’s Gas & Power Division, taking into account evidence that this Division is comparable to European utilities in the gas and power generation sector. This measure is provided in order to assist investors and financial analysts in assessing the divisional performance of Eni Gas & Power, as compared to its European peers, as EBITDA is widely used as the main performance indicator for utilities. The EBITDA pro-forma adjusted is a non-GAAP measure under IFRS. |
Refining & Marketing
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| (273 | ) | Operating profit | (1,296 | ) | (1,517 | ) | (221 | ) | (17.1 | ) | |||||
| (907 | ) | Exclusion of inventory holding (gains) losses | (29 | ) | 221 | ||||||||||
| 641 | Exclusion of special items: | 1,004 | 814 | ||||||||||||
| 488 | - asset impairments | 846 | 633 | ||||||||||||
| 10 | - net gains on disposal of assets | 5 | (9 | ) | |||||||||||
| 8 | - risk provisions | 49 | |||||||||||||
| 34 | - environmental provisions | 40 | 93 | ||||||||||||
| 81 | - provisions for redundancy incentives | 19 | 91 | ||||||||||||
| (3 | ) | - commodity derivatives | 5 | ||||||||||||
| (4 | ) | - exchange rate differences and derivatives | (8 | ) | (2 | ) | |||||||||
| 27 | - other | 53 | 3 | ||||||||||||
| (539 | ) | Adjusted operating profit | (321 | ) | (482 | ) | (161 | ) | (50.2 | ) | |||||
| Net finance income (expense) (a) | (11 | ) | (4 | ) | 7 | ||||||||||
| 99 | Net income (expense) from investments (a) | 63 | 70 | 7 | |||||||||||
| 176 | Income taxes (a) | 90 | 184 | 94 | |||||||||||
| (264 | ) | Adjusted net profit | (179 | ) | (232 | ) | (53 | ) | (29.6 | ) |
(a) Excluding special items.
| In 2013, the Refining & Marketing Division reported an adjusted operating loss amounting to euro 482 million, a decline of euro 161 million compared to the previous year (down by 50.2%) due to plummeting refining margin in the Mediterranean area (the average Brent refining margin decreased to 2.64 $/bbl, down by 45.3% from 2012) reflecting weak demand for oil products, excess of capacity and growing competition from streams of products imported from Russia and Asia. Furthermore, Eni’s realized margins were impacted by narrowing differentials between the light and heavy crudes that negatively impacted the profitability of complex cycles. The negative scenario was partly counteracted by efficiency initiatives, in particular those aimed at reducing energy and operating costs and optimizing refinery utilization | rates by reducing the
throughput of less competitive plants. Marketing results registered a decline compared to the previous year, due to lower consumption in retail sales. Special charges excluded from adjusted operating loss amounted to euro 814 million, mainly related to impairment losses of refining plants due to the projection of unprofitable refining margins (euro 633 million), environmental charges (euro 93 million), and provisions for redundancy incentives (euro 91 million). Adjusted net loss was euro 232 million, down euro 53 million from 2012 adjusted net loss of euro 179 million, mainly due to higher operating losses. |
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Versalis
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| (424 | ) | Operating profit | (681 | ) | (725 | ) | (44 | ) | (6.5 | ) | |||||
| (40 | ) | Exclusion of inventory holding (gains) losses | 63 | 213 | |||||||||||
| 191 | Exclusion of special items | 135 | 126 | ||||||||||||
| of which: | |||||||||||||||
| 10 | Non-recurring items | ||||||||||||||
| 181 | Other special items: | 135 | 126 | ||||||||||||
| 160 | - asset impairments | 112 | 44 | ||||||||||||
| - net gains on disposal of assets | 1 | ||||||||||||||
| - risk provisions | 18 | 4 | |||||||||||||
| 1 | - environmental provisions | 61 | |||||||||||||
| 17 | - provisions for redundancy incentives | 14 | 23 | ||||||||||||
| - commodity derivatives | 1 | (1 | ) | ||||||||||||
| - exchange rate differences and derivatives | (11 | ) | (5 | ) | |||||||||||
| 3 | - other | ||||||||||||||
| (273 | ) | Adjusted operating profit | (483 | ) | (386 | ) | 97 | 20.1 | |||||||
| Net finance income (expense) (a) | (3 | ) | (2 | ) | 1 | ||||||||||
| Net income (expense) from investments (a) | 2 | (2 | ) | ||||||||||||
| 67 | Income taxes (a) | 89 | 50 | (39 | ) | ||||||||||
| (206 | ) | Adjusted net profit | (395 | ) | (338 | ) | 57 | 14.4 |
(a) Excluding special items.
| In 2013 the adjusted operating loss of euro 386 million improved by euro 97 million, or 20.1%, as the benchmark margin on cracking recovered from the particularly depressed level reported in the first half of 2012. This trend was offset by lower volumes due to weakness in commodity demand pressured by the economic downturn and increasing competition from Asian producers which left product margins and sales volumes at depressed levels. | Special charges excluded
from adjusted operating loss of euro 126 million, related
mainly to environmental provisions (euro 61 million),
impairment of marginal business lines due to lack of
profitability perspectives (euro 44 million), as well as
to provisions for redundancy incentives (euro 23
million). Adjusted net loss of euro 338 million improved by euro 57 million from the previous year. |
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Engineering & Construction
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| 1,422 | Operating profit | 1,442 | (83 | ) | (1,525 | ) | .. | ||||||||
| 21 | Exclusion of special items: | 32 | (1 | ) | |||||||||||
| 35 | - asset impairments | 25 | |||||||||||||
| 4 | - net gains on disposal of assets | 3 | 107 | ||||||||||||
| 10 | - provision for redundancy incentives | 7 | 2 | ||||||||||||
| (28 | ) | - commodity derivatives | (3 | ) | (1 | ) | |||||||||
| - other | (109 | ) | |||||||||||||
| 1,443 | Adjusted operating profit | 1,474 | (84 | ) | (1,558 | ) | .. | ||||||||
| Net finance income (expense) (a) | (7 | ) | (5 | ) | 2 | ||||||||||
| 95 | Net income (expense) from investments (a) | 55 | (12 | ) | (67 | ) | |||||||||
| (440 | ) | Income taxes (a) | (411 | ) | (152 | ) | 259 | ||||||||
| 28.6 | Tax rate (%) | 27.0 | .. | ||||||||||||
| 1,098 | Adjusted net profit | 1,111 | (253 | ) | (1,364 | ) | .. |
(a) Excluding special items.
| In 2013, the Engineering
& Construction segment registered a steep contraction
in profitability with an adjusted operating loss
of euro 84 million, compared to the operating profit of
euro 1,474 million recorded in 2012. This negative trend
was due to marketing and operating difficulties incurred
in the first half of 2013 which led management to make
sharply lower revision of margin estimates at certain
large contracts for the construction of onshore
industrial complexes and a slowdown in order acquisitions
in Engineering & Construction Onshore and Offshore
businesses. The commercial arbitration with a Group’s subsidiary is ongoing relating to a change order as part of a project to build a gas plant |
in Algeria. It is worth
mentioning that this issue, whichever the outcome, will
not produce any impact on Eni’s consolidated
results. Special charges excluded from adjusted operating profit related mainly to the write-off of Saipem’s Perro Negro 6 drilling rig, following the accident which occurred in July 2013 (euro 107 million), more than offset by relating insurance gain. The adjusted net loss of 2013 amounting to euro 253 million (down euro 1,364 million from the euro 1,111 million profit reported in 2012) is driven by the above mentioned estimate revisions. |
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Other activities3
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| (427 | ) | Operating profit | (300 | ) | (337 | ) | (37 | ) | (12.3 | ) | |||||
| 201 | Exclusion of special items: | 78 | 127 | ||||||||||||
| of which: | |||||||||||||||
| 59 | Non-recurring items | ||||||||||||||
| 142 | Other special items: | 78 | 127 | ||||||||||||
| 4 | - asset impairments | 2 | 19 | ||||||||||||
| (7 | ) | - net gains on disposal of assets | (12 | ) | (3 | ) | |||||||||
| 9 | - risk provisions | 35 | 31 | ||||||||||||
| 141 | - environmental provisions | 25 | 52 | ||||||||||||
| 8 | - provisions for redundancy incentives | 2 | 20 | ||||||||||||
| (13 | ) | - other | 26 | 8 | |||||||||||
| (226 | ) | Adjusted operating profit | (222 | ) | (210 | ) | 12 | 5.4 | |||||||
| 5 | Net finance income (expense) (a) | (24 | ) | 4 | 28 | ||||||||||
| (3 | ) | Net income (expense) from investments (a) | (1 | ) | 1 | 2 | |||||||||
| (1 | ) | Income taxes (a) (b) | |||||||||||||
| (225 | ) | Adjusted net profit | (247 | ) | (205 | ) | 42 | 17.0 |
(a) Excluding special items.
(b) Deferred tax assets relating to Syndial losses are recognized
by the parent company Eni SpA based on intercompany agreements
which regulate the Italian consolidated accounts for tax
purposes.
Corporate and financial companies
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| (319 | ) | Operating profit | (341 | ) | (399 | ) | (58 | ) | (17.0 | ) | |||||
| 53 | Exclusion of special items: | 16 | 67 | ||||||||||||
| (1 | ) | - net gains on disposal of assets | |||||||||||||
| (6 | ) | - risk provisions | 5 | ||||||||||||
| 9 | - provisions for redundancy incentives | 11 | 72 | ||||||||||||
| 51 | - other | (5 | ) | ||||||||||||
| (266 | ) | Adjusted operating profit | (325 | ) | (332 | ) | (7 | ) | (2.2 | ) | |||||
| (876 | ) | Net finance income (expense) (a) | (865 | ) | (554 | ) | 311 | ||||||||
| 1 | Net income (expense) from investments (a) | 99 | 290 | 191 | |||||||||||
| 388 | Income taxes (a) | 115 | 124 | 9 | |||||||||||
| (753 | ) | Adjusted net profit | (976 | ) | (472 | ) | 504 | 51.6 |
(a) Excluding special items.
(3) 2012 results do not include Snam contribution.
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Non-GAAP measures
Reconciliation
of reported operating profit and reported
net profit to results on an adjusted basis
| Management evaluates Group
and business performance on the basis of adjusted
operating profit and adjusted net profit, which are
arrived at by excluding inventory holding gains or
losses, special items and, in determining the business
segments’ adjusted results, finance charges on
finance debt and interest income. The adjusted operating
profit of each business segment reports gains and losses
on derivative financial instruments entered into in order
to manage exposure to movements in foreign currency
exchange rates which impact industrial margins and the
translation of commercial payables and receivables.
Accordingly currency translation effects recorded through
profit and loss are also reported within business
segments’ adjusted operating profit. The taxation
effect of the items excluded from adjusted operating or
net profit is determined based on the specific rate of
taxes applicable to each of them. The Italian statutory
tax rate is applied to finance charges and income (38% is
applied to charges recorded by companies in the energy
sector, whilst a tax rate of 27.5% is applied to all
other companies). Adjusted operating profit and adjusted
net profit are non-GAAP financial measures under either
IFRS or US GAAP. Management includes them in order to
facilitate a comparison of base business performance
across periods, and to allow financial analysts to
evaluate Eni’s trading performance on the basis of
their forecasting models. The following is a description of items that are excluded from the calculation of adjusted results. Inventory holding gain or loss is the difference between the cost of sales of the volumes sold in the period based on the cost of supplies of the same period and the cost of sales of the volumes sold calculated using the weighted average cost method of inventory accounting. Special items include certain significant income or charges pertaining to either: (i) infrequent or unusual events and transactions, being identified as non-recurring items under such circumstances; (ii) certain events or transactions which are not considered to be representative of the ordinary course of business, as in the case of environmental provisions, restructuring charges, asset impairments or write ups and gains or losses on divestments even though they occurred in past periods or are likely to occur in future ones; |
or (iii) exchange rate
differences and derivatives relating to industrial
activities and commercial payables and receivables,
particularly exchange rate derivatives to manage
commodity pricing formulas which are quoted in a currency
other than the functional currency. Those items are
reclassified in operating profit with a corresponding
adjustment to net finance charges, notwithstanding the
handling of foreign currency exchange risks is made
centrally by netting off naturally-occurring opposite
positions and then dealing with any residual risk
exposure in the exchange rate market. As provided for in
Decision No. 15519 of July 27, 2006 of the Italian market
regulator (Consob), non recurring material income or
charges are to be clearly reported in the
management’s discussion and financial tables. Also,
special items include gains and losses on re-measurement
at fair value of certain non hedging commodity
derivatives, including the ineffective portion of cash
flow hedges and certain derivatives financial instruments
embedded in the pricing formula of long-term gas supply
agreements of the Exploration & Production Division.
Furthermore, special items include gains and losses on
re-measurement at fair value of certain non hedging
commodity derivatives, including the ineffective portion
of cash flow hedges and certain derivative financial
instruments embedded in the pricing formula of long-term
gas supply agreements of the Exploration & Production
Division. Finance charges or income related to net borrowings excluded from the adjusted net profit of business segments are comprised of interest charges on finance debt and interest income earned on cash and cash equivalents not related to operations. Therefore, the adjusted net profit of business segments includes finance charges or income deriving from certain segment-operated assets, i.e., interest income on certain receivable financing and securities related to operations and finance charge pertaining to the accretion of certain provisions recorded on a discounted basis (as in the case of the asset retirement obligations in the Exploration & Production Division). Finance charges or interest income and related taxation effects excluded from the adjusted net profit of the business segments are allocated on the aggregate Corporate and financial companies. For a reconciliation of adjusted operating profit and adjusted net profit to reported operating profit and reported net profit see tables below. |
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| 2013 |
| (euro million) | Exploration
& Production |
Gas & Power |
Refining &
Marketing |
Versalis |
Engineering
& Construction |
Corporate and
financial companies |
Other activities |
Impact of
unrealized intragroup profit elimination |
GROUP |
|||||||||
| Operating profit | 14,871 | (2,992 | ) | (1,517 | ) | (725 | ) | (83 | ) | (399 | ) | (337 | ) | 38 | 8,856 | ||||||||||||
| Exclusion of inventory holding (gains) losses | 191 | 221 | 213 | 91 | 716 | ||||||||||||||||||||||
| Exclusion of special items: | |||||||||||||||||||||||||||
| - asset impairments | 19 | 1,685 | 633 | 44 | 19 | 2,400 | |||||||||||||||||||||
| - net gains on disposal of assets | (283 | ) | 1 | (9 | ) | 107 | (3 | ) | (187 | ) | |||||||||||||||||
| - risk provisions | 7 | 292 | 4 | 31 | 334 | ||||||||||||||||||||||
| - environmental charges | (1 | ) | 93 | 61 | 52 | 205 | |||||||||||||||||||||
| - provision for redundancy incentives | 52 | 10 | 91 | 23 | 2 | 72 | 20 | 270 | |||||||||||||||||||
| - commodity derivatives | (2 | ) | 314 | 5 | (1 | ) | (1 | ) | 315 | ||||||||||||||||||
| - exchange rate differences and derivatives | (2 | ) | (186 | ) | (2 | ) | (5 | ) | (195 | ) | |||||||||||||||||
| - other | (16 | ) | 23 | 3 | (109 | ) | (5 | ) | 8 | (96 | ) | ||||||||||||||||
| Special items of operating profit | (225 | ) | 2,138 | 814 | 126 | (1 | ) | 67 | 127 | 3,046 | |||||||||||||||||
| Adjusted operating profit | 14,646 | (663 | ) | (482 | ) | (386 | ) | (84 | ) | (332 | ) | (210 | ) | 129 | 12,618 | ||||||||||||
| Net finance (expense) income (a) | (264 | ) | 24 | (4 | ) | (2 | ) | (5 | ) | (554 | ) | 4 | (801 | ) | |||||||||||||
| Net income (expense) from investments (a) | 367 | 100 | 70 | (12 | ) | 290 | 1 | 816 | |||||||||||||||||||
| Income taxes (a) | (8,797 | ) | 293 | 184 | 50 | (152 | ) | 124 | (90 | ) | (8,388 | ) | |||||||||||||||
| Tax rate (%) | 59.6 | .. | .. | .. | 66.4 | ||||||||||||||||||||||
| Adjusted net profit | 5,952 | (246 | ) | (232 | ) | (338 | ) | (253 | ) | (472 | ) | (205 | ) | 39 | 4,245 | ||||||||||||
| of which attributable to: | |||||||||||||||||||||||||||
| - non-controlling interest | (188 | ) | |||||||||||||||||||||||||
| - Eni's shareholders | 4,433 | ||||||||||||||||||||||||||
| Net profit attributable to Eni's shareholders | 5,160 | ||||||||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | 438 | ||||||||||||||||||||||||||
| Exclusion of special items | (1,165 | ) | |||||||||||||||||||||||||
| Adjusted net profit attributable to Eni's shareholders | 4,433 |
(a) Excluding special items.
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| 2012 | OTHER
ACTIVITIES (a) |
DISCONTINUED
OPERATIONS |
|||
| (euro million) | Exploration
& Production |
Gas & Power (a) |
Refining &
Marketing |
Versalis |
Engineering
& Construction |
Corporate and
financial companies |
Snam |
Other activities |
Impact of
unrealized intragroup profit elimination |
GROUP |
Snam |
Consolidation
adjustments |
Total |
CONTINUING
OPERATIONS |
||||||||||||||
| Operating profit | 18,470 | (3,219 | ) | (1,296 | ) | (681 | ) | 1,442 | (341 | ) | 1,679 | (300 | ) | 208 | 15,962 | (1,679 | ) | 788 | (891 | ) | 15,071 | |||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | 163 | (29 | ) | 63 | (214 | ) | (17 | ) | (17 | ) | ||||||||||||||||||||||||||||||||
| Exclusion of special items: | ||||||||||||||||||||||||||||||||||||||||||
| - asset impairments | 550 | 2,494 | 846 | 112 | 25 | 2 | 4,029 | 4,029 | ||||||||||||||||||||||||||||||||||
| - net gains on disposal of assets | (542 | ) | (3 | ) | 5 | 1 | 3 | (22 | ) | (12 | ) | (570 | ) | 22 | 22 | (548 | ) | |||||||||||||||||||||||||
| - risk provisions | 7 | 831 | 49 | 18 | 5 | 35 | 945 | 945 | ||||||||||||||||||||||||||||||||||
| - environmental charges | (2 | ) | 40 | 71 | 25 | 134 | (71 | ) | (71 | ) | 63 | |||||||||||||||||||||||||||||||
| - provision for redundancy incentives |
6 | 5 | 19 | 14 | 7 | 11 | 2 | 2 | 66 | (2 | ) | (2 | ) | 64 | ||||||||||||||||||||||||||||
| - commodity derivatives | 1 | 1 | (3 | ) | (1 | ) | (1 | ) | ||||||||||||||||||||||||||||||||||
| - exchange rate differences and derivatives |
(9 | ) | (51 | ) | (8 | ) | (11 | ) | (79 | ) | (79 | ) | ||||||||||||||||||||||||||||||
| - other | 54 | 138 | 53 | 26 | 271 | 271 | ||||||||||||||||||||||||||||||||||||
| Special items of operating profit | 67 | 3,412 | 1,004 | 135 | 32 | 16 | 51 | 78 | 4,795 | (51 | ) | (51 | ) | 4,744 | ||||||||||||||||||||||||||||
| Adjusted operating profit | 18,537 | 356 | (321 | ) | (483 | ) | 1,474 | (325 | ) | 1,730 | (222 | ) | (6 | ) | 20,740 | (1,730 | ) | 788 | (942 | ) | 19,798 | |||||||||||||||||||||
| Net finance (expense) income (b) | (264 | ) | 29 | (11 | ) | (3 | ) | (7 | ) | (865 | ) | (54 | ) | (24 | ) | (1,199 | ) | 54 | 54 | (1,145 | ) | |||||||||||||||||||||
| Net income (expense) from investments (b) | 436 | 261 | 63 | 2 | 55 | 99 | 38 | (1 | ) | 953 | (38 | ) | (38 | ) | 915 | |||||||||||||||||||||||||||
| Income taxes (b) | (11,283 | ) | (173 | ) | 90 | 89 | (411 | ) | 115 | (712 | ) | 2 | (12,283 | ) | 712 | (123 | ) | 589 | (11,694 | ) | ||||||||||||||||||||||
| Tax rate (%) | 60.3 | 26.8 | .. | 27.0 | 41.5 | 59.9 | 59.8 | |||||||||||||||||||||||||||||||||||
| Adjusted net profit | 7,426 | 473 | (179 | ) | (395 | ) | 1,111 | (976 | ) | 1,002 | (247 | ) | (4 | ) | 8,211 | (1,002 | ) | 665 | (337 | ) | 7,874 | |||||||||||||||||||||
| of which attributable to: | ||||||||||||||||||||||||||||||||||||||||||
| - non-controlling interest | 886 | (142 | ) | 744 | ||||||||||||||||||||||||||||||||||||||
| - Eni’s shareholders | 7,325 | (195 | ) | 7,130 | ||||||||||||||||||||||||||||||||||||||
| Net profit attributable to Eni’s shareholders | 7,790 | (3,590 | ) | 4,200 | ||||||||||||||||||||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | (23 | ) | (23 | ) | ||||||||||||||||||||||||||||||||||||||
| Exclusion of special items | (442 | ) | 3,395 | 2,953 | ||||||||||||||||||||||||||||||||||||||
| Adjusted net profit attributable to Eni’s shareholders | 7,325 | (195 | ) | 7,130 | ||||||||||||||||||||||||||||||||||||||
(a) Following the divestment plan, Snam results
are reclassified from “Gas & Power” sector to
“Other activities” and accounted as discontinued
operations.
(b) Excluding special items.
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| 2011 | OTHER ACTIVITIES (a) |
DISCONTINUED
OPERATIONS |
|||
| (euro million) | Exploration
& Production |
Gas & Power (a) |
Refining &
Marketing |
Versalis |
Engineering
& Construction |
Corporate and
financial companies |
Snam |
Other activities |
Impact of
unrealized intragroup profit elimination |
GROUP |
Snam |
Consolidation
adjustments |
Total |
CONTINUING
OPERATIONS |
||||||||||||||
| Operating profit | 15,887 | (326 | ) | (273 | ) | (424 | ) | 1,422 | (319 | ) | 2,084 | (427 | ) | (189 | ) | 17,435 | (2,084 | ) | 1,452 | (632 | ) | 16,803 | ||||||||||||||||||||
| Exclusion of inventory holding(gains) losses | (166 | ) | (907 | ) | (40 | ) | (1,113 | ) | (1,113 | ) | ||||||||||||||||||||||||||||||||
| Exclusion of special items | ||||||||||||||||||||||||||||||||||||||||||
| of which: | ||||||||||||||||||||||||||||||||||||||||||
| Non-recurring (income) charges | 10 | 59 | 69 | 69 | ||||||||||||||||||||||||||||||||||||||
| Other special (income) charges: | 188 | 245 | 641 | 181 | 21 | 53 | 27 | 142 | 1,498 | (27 | ) | (27 | ) | 1,471 | ||||||||||||||||||||||||||||
| - environmental charges | 34 | 1 | 10 | 141 | 186 | (10 | ) | (10 | ) | 176 | ||||||||||||||||||||||||||||||||
| - asset impairments | 190 | 154 | 488 | 160 | 35 | (9 | ) | 4 | 1,022 | 9 | 9 | 1,031 | ||||||||||||||||||||||||||||||
| - net gains on disposal of assets | (63 | ) | 10 | 4 | (1 | ) | (4 | ) | (7 | ) | (61 | ) | 4 | 4 | (57 | ) | ||||||||||||||||||||||||||
| - risk provisions | 77 | 8 | (6 | ) | 9 | 88 | 88 | |||||||||||||||||||||||||||||||||||
| - provision for redundancy incentives | 44 | 34 | 81 | 17 | 10 | 9 | 6 | 8 | 209 | (6 | ) | (6 | ) | 203 | ||||||||||||||||||||||||||||
| - commodity derivatives | 1 | 45 | (3 | ) | (28 | ) | 15 | 15 | ||||||||||||||||||||||||||||||||||
| - exchange
rate differences and derivatives |
(2 | ) | (82 | ) | (4 | ) | 3 | (85 | ) | (85 | ) | |||||||||||||||||||||||||||||||
| - other | 18 | 17 | 27 | 51 | 24 | (13 | ) | 124 | (24 | ) | (24 | ) | 100 | |||||||||||||||||||||||||||||
| Special items of operating profit | 188 | 245 | 641 | 191 | 21 | 53 | 27 | 201 | 1,567 | (27 | ) | (27 | ) | 1,540 | ||||||||||||||||||||||||||||
| Adjusted operating profit | 16,075 | (247 | ) | (539 | ) | (273 | ) | 1,443 | (266 | ) | 2,111 | (226 | ) | (189 | ) | 17,889 | (2,111 | ) | 1,452 | (659 | ) | 17,230 | ||||||||||||||||||||
| Net finance (expense) income (b) | (231 | ) | 43 | (876 | ) | 19 | 5 | (1,040 | ) | (19 | ) | (19 | ) | (1,059 | ) | |||||||||||||||||||||||||||
| Net income (expense) from investments (b) | 624 | 363 | 99 | 95 | 1 | 44 | (3 | ) | 1,223 | (44 | ) | (44 | ) | 1,179 | ||||||||||||||||||||||||||||
| Income taxes (b) | (9,603 | ) | 93 | 176 | 67 | (440 | ) | 388 | (918 | ) | (1 | ) | 78 | (10,160 | ) | 918 | (195 | ) | 723 | (9,437 | ) | |||||||||||||||||||||
| Tax rate (%) | 58.3 | .. | .. | 28.6 | 42.2 | 56.2 | 54.4 | |||||||||||||||||||||||||||||||||||
| Adjusted net profit | 6,865 | 252 | (264 | ) | (206 | ) | 1,098 | (753 | ) | 1,256 | (225 | ) | (111 | ) | 7,912 | (1,256 | ) | 1,257 | 1 | 7,913 | ||||||||||||||||||||||
| of which attributable to: | ||||||||||||||||||||||||||||||||||||||||||
| - non-controlling interest | 943 | 32 | 975 | |||||||||||||||||||||||||||||||||||||||
| - Eni's shareholders | 6,969 | (31 | ) | 6,938 | ||||||||||||||||||||||||||||||||||||||
| Net profit attributable to Eni's shareholders | 6,860 | 42 | 6,902 | |||||||||||||||||||||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | (724 | ) | (724 | ) | ||||||||||||||||||||||||||||||||||||||
| Exclusion of special items: | 833 | (73 | ) | 760 | ||||||||||||||||||||||||||||||||||||||
| - non-recurring charges | 69 | 69 | ||||||||||||||||||||||||||||||||||||||||
| - other special (income) charges | 764 | (73 | ) | 691 | ||||||||||||||||||||||||||||||||||||||
| Adjusted net profit attributable to Eni's shareholders | 6,969 | (31 | ) | 6,938 | ||||||||||||||||||||||||||||||||||||||
(a) Following the divestment plan, Snam results
are reclassified from “Gas & Power” sector to
“Other activities” and accounted as discontinued
operations.
(b) Excluding special items.
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Breakdown of Group special items
| 2011 | (euro million) |
2012 | 2013 |
| 69 | Non-recurring charges (income) | ||||||||
| 69 | of which: settlement/payments on antitrust and other Authorities proceedings | ||||||||
| 1,498 | Other special items | 4,795 | 3,046 | ||||||
| 1,022 | - assets impairments | 4,029 | 2,400 | ||||||
| (61 | ) | - net gains on disposal of assets | (570 | ) | (187 | ) | |||
| 88 | - risk provisions | 945 | 334 | ||||||
| 186 | - environmental charges | 134 | 205 | ||||||
| 209 | - provision for redundancy incentives | 66 | 270 | ||||||
| 15 | - commodity derivatives | (1 | ) | 315 | |||||
| (85 | ) | - exchange rate differences and derivatives | (79 | ) | (195 | ) | |||
| 124 | - other | 271 | (96 | ) | |||||
| 1,567 | Special items of operating profit | 4,795 | 3,046 | ||||||
| 89 | Net finance (income) expense | 202 | 190 | ||||||
| of which: | |||||||||
| 85 | - exchange rate differences and derivatives | 79 | 195 | ||||||
| (883 | ) | Net income (expense) from investments | (5,408 | ) | (5,299 | ) | |||
| of which: | |||||||||
| (1,118 | ) | - gains on disposal of assets | (2,354 | ) | (3,599 | ) | |||
| of which: | |||||||||
| (1,044 | ) | - international transport | |||||||
| - divestment of the 28.57% of Eni’s interest in Eni East Africa | (3,359 | ) | |||||||
| - Galp | (311 | ) | (98 | ) | |||||
| - Snam | (2,019 | ) | (75 | ) | |||||
| - gains on investment revaluation | (3,151 | ) | (1,682 | ) | |||||
| of which: | |||||||||
| - Galp | (1,700 | ) | |||||||
| - Snam | (1,451 | ) | |||||||
| - Artic Russia | (1,682 | ) | |||||||
| 191 | impairments of equity investments | 156 | 11 | ||||||
| 60 | Income taxes | (31 | ) | 898 | |||||
| of which: | |||||||||
| - impairment of deferred tax assets of Italian subsidiaries | 803 | 954 | |||||||
| 552 | - deferred tax adjustment on PSAs | 490 | |||||||
| 29 | - re-allocation of tax impact on intercompany dividends and other special items | 147 | 64 | ||||||
| (521 | ) | - taxes on special items | (981 | ) | (610 | ) | |||
| 833 | Total special items of net profit | (442 | ) | (1,165 | ) |
Breakdown of impairments
| 2011 | (euro million) | 2012 | 2013 | Change |
| 893 | Asset impairment | 2,679 | 2,290 | (389 | ) | |||||||
| 152 | Goodwill impairment | 1,347 | 333 | (1,014 | ) | |||||||
| (15 | ) | Revaluations | (3 | ) | (223 | ) | (220 | ) | ||||
| 1,030 | Sub total | 4,023 | 2,400 | (1,623 | ) | |||||||
| 1 | Impairment of losses on receivables related to non-recurring activities | 6 | (6 | ) | ||||||||
| 1,031 | Impairments | 4,029 | 2,400 | (1,629 | ) |
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| Summarized
Group Balance Sheet The summarized group balance sheet aggregates the amount of assets and liabilities derived from the statutory balance sheet in accordance with functional criteria which consider the enterprise conventionally divided into the three fundamental areas focusing on resource investments, operations and financing. Management believes that this summarized group |
balance sheet is useful information in assisting investors to assess Eni’s capital structure and to analyze its sources of funds and investments in fixed assets and working capital. Management uses the summarized group balance sheet to calculate key ratios such as return on capital employed (ROACE) and the proportion of net borrowings to shareholders’ equity (leverage) intended to evaluate whether Eni’s financing structure is sound and well-balanced. |
Summarized Group Balance Sheet (a)
| (euro million) | December 31, 2012 | December 31, 2013 | Change |
| Fixed assets | |||||||||
| Property, plant and equipment | 63,466 | 62,506 | (960 | ) | |||||
| Inventories - Compulsory stock | 2,538 | 2,571 | 33 | ||||||
| Intangible assets | 4,487 | 3,877 | (610 | ) | |||||
| Equity-accounted investments and other investments | 9,347 | 6,961 | (2,386 | ) | |||||
| Receivables and securities held for operating purposes | 1,457 | 1,607 | 150 | ||||||
| Net payables related to capital expenditure | (1,142 | ) | (1,256 | ) | (114 | ) | |||
| 80,153 | 76,266 | (3,887 | ) | ||||||
| Net working capital | |||||||||
| Inventories | 8,496 | 7,883 | (613 | ) | |||||
| Trade receivables | 19,966 | 21,213 | 1,247 | ||||||
| Trade payables | (14,993 | ) | (15,529 | ) | (536 | ) | |||
| Tax payables and provisions for net deferred tax liabilities | (3,204 | ) | (3,005 | ) | 199 | ||||
| Provisions | (13,603 | ) | (13,167 | ) | 436 | ||||
| Other current assets and liabilities | 2,473 | 2,030 | (443 | ) | |||||
| (865 | ) | (575 | ) | 290 | |||||
| Provisions for employee post-retirement benefits | (1,374 | ) | (1,245 | ) | 129 | ||||
| Assets held for sale including related liabilities | 155 | 2,156 | 2,001 | ||||||
| CAPITAL EMPLOYED, NET | 78,069 | 76,602 | (1,467 | ) | |||||
| Eni shareholders' equity | 59,060 | 58,210 | (850 | ) | |||||
| Non-controlling interest | 3,498 | 2,964 | (534 | ) | |||||
| Shareholders’ equity | 62,558 | 61,174 | (1,384 | ) | |||||
| Net borrowings | 15,511 | 15,428 | (83 | ) | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 78,069 | 76,602 | (1,467 | ) |
(a) For a reconciliation to the statutory statement of cash flow see the paragraph “Reconciliation of Summarized Group Balance Sheet and Statement of Cash Flows to Statutory Schemes”.
| The appreciation of the euro
vs. the US dollar as of December 31, 2013 from December
31, 2012 (the EUR/USD exchange rate was 1.379 as of
December 31, 2013, as compared to 1.319 as of December
31, 2012, up by 4.5%) reduced net capital employed, net
equity and net borrowings by euro 2,515 million, euro
1,871 million and euro 644 million, respectively, due to
exchange rate translation differences. Fixed assets amounted to euro 76,266 million, representing a decrease of euro 3,887 million from December 31, 2012. This reflected a reduction of the line-item “Equity accounted investments and other investments” following the disposal of the available-for sale interests in Snam and Galp (euro 2,289 million), while depreciation, depletion, amortization and impairment charges amounted to euro 11,703 million. These declines were partly offset by capital expenditure incurred in the year (euro 12,750 million). As of December 31, 2013 Eni holds 8.54% of the share capital of Snam underlying the euro 1,250 million convertible bond, due in January 2016. Eni also holds 16.15% of Galp’s outstanding share capital, of which 8% |
underlying the approximately
euro 1,028 million exchangeable bond due in November 2015
and 8.15% subject to certain pre-emptive rights and
options exercisable by Amorim Energia. Assets held for sale including related liabilities related to Eni’s interest in Artic Russia, which was stated at the fair value based on the Sale and Purchase Agreement with a Gazprom Group’s subsidiary, for euro 2,131 million. The transaction closed in the first half of January 2014. Net working capital amounted to a negative euro 575 million, representing an increase of euro 290 million from December 31, 2012 mainly due to (i) the net use of risk provisions (up euro 436 million); (ii) the increase in the balance between trade receivables and payables (up euro 711 million); (iii) reduced tax payables and provisions for net deferred tax liabilities (down euro 199 million) due to the recognition of lower net taxes accrued in the year than payments and the write-off of deferred tax assets. These effects were partly offset by lowering gas and petroleum products inventories (down euro 613 million). |
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Leverage and net borrowings
| Leverage is a measure used by management to assess the Company’s level of indebtedness. It is calculated as a ratio of net borrowings – which is calculated by excluding cash and cash equivalents and certain very liquid assets from financial debt to shareholders’ equity, including minority interest. | Management periodically reviews leverage in order to assess the soundness and efficiency of the Group balance sheet in terms of optimal mix between net borrowings and net equity, and to carry out a benchmarking analysis with industry standards. |
| (euro million) | December 31, 2012 | December 31, 2013 | Change |
| Total debt: | 24,463 | 25,879 | 1,416 | ||||||
| - short-term debt | 5,184 | 4,891 | (293 | ) | |||||
| - long-term debt | 19,279 | 20,988 | 1,709 | ||||||
| Cash and cash equivalents | (7,765 | ) | (5,288 | ) | 2,477 | ||||
| Securities held for trading and other securities held for non-operating purposes | (34 | ) | (5,037 | ) | (5,003 | ) | |||
| Financing receivables for non-operating purposes | (1,153 | ) | (126 | ) | 1,027 | ||||
| Net borrowings | 15,511 | 15,428 | (83 | ) | |||||
| Shareholders' equity including non-controlling interest | 62,558 | 61,174 | (1,384 | ) | |||||
| Leverage | 0.25 | 0.25 |
| Net borrowings
as of December 31, 2013, amounted to euro 15,428 million,
substantially in line with 2012 (down euro 83 million). Total debt amounted to euro 25,879 million, of which euro 4,891 million were short-term (including the portion of long-term |
debt due within 12 months
equal to euro 2,149 million) and euro 20,988 million were
long-term. The ratio of net borrowings to shareholders’ equity including non-controlling interest – leverage – was 0.25 at December 31, 2013, in line with December 31, 2012. |
Comprehensive income
(euro million) |
2012 | 2013 |
| Net profit | 8,676 | 4,972 | ||||
| Other items of comprehensive income: | ||||||
| Items not reclassifiable to profit and loss account | ||||||
| Remeasurements of defined benefit plans | (150 | ) | 65 | |||
| Share of "Other comprehensive income" on equity-accounted entities related to remeasurements of defined benefit plans | 1 | (3 | ) | |||
| Taxation | 53 | (40 | ) | |||
| (96 | ) | 22 | ||||
| Items subsequently reclassifiable to profit and loss account | ||||||
| Foreign currency translation differences | (718 | ) | (1,871 | ) | ||
| Fair value evaluation of Eni’s interest in Galp and Snam | 141 | (64 | ) | |||
| Change in the fair value of cash flow hedging derivatives | (102 | ) | (199 | ) | ||
| Change in the fair value of available-for-sale securities | 16 | (1 | ) | |||
| Share of "Other comprehensive income" on equity-accounted entities | 7 | 1 | ||||
| Taxation | 32 | 63 | ||||
| (624 | ) | (2,071 | ) | |||
| Total comprehensive income | 7,956 | 2,923 | ||||
| Attributable to: | ||||||
| - Eni's shareholders | 7,096 | 3,164 | ||||
| - non-controlling interest | 860 | (241 | ) |
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Changes in shareholders’ equity
| (euro million) |
| Shareholders’ equity at December 31, 2012 | 62,558 | |||||
| Total comprehensive income | 2,923 | |||||
| Dividends distributed to Eni’s shareholders | (3,949 | ) | ||||
| Dividends distributed by consolidated subsidiaries | (251 | ) | ||||
| Stock options expired | (13 | ) | ||||
| Effect of changes in consolidation on non-controlling interests | (23 | ) | ||||
| Acquisition of non-controlling interest relating to Tigáz Zrt | (28 | ) | ||||
| Other changes | (43 | ) | ||||
| Total changes | (1,384 | ) | ||||
| Shareholders’ equity at December 31, 2013 | 61,174 | |||||
| Attributable to: | ||||||
| - Eni's shareholders | 58,210 | |||||
| - non-controlling interest | 2,964 |
| Shareholders’ equity including non-controlling interest was euro 61,174 million, representing a decrease of euro 1,384 million from December 31, 2012. This was due to comprehensive income for the year (euro 2,923 million) as a result of net profit (euro 4,972 million), which was partly offset by foreign currency translation differences (euro 1,871 million). This addition to equity was almost | completely offset by dividend payments to Eni’s shareholders and other changes for euro 4,307 million (dividend payments to Eni’s shareholders of euro 3,949 million, including the 2013 interim dividend, and dividends paid to non-controlling interest of Saipem and other subsidiaries). |
Reconciliation of net
profit and shareholders’ equity of the parent
company Eni SpA to consolidated net profit and shareholders’
equity
| Net profit | Shareholders’ equity | |||||||||||
| (euro million) | 2012 | 2013 | December 31, 2012 | December 31, 2013 | ||||||||
| As recorded in Eni SpA’s financial statements | 9,078 | 4,410 | 40,537 | 40,733 | ||||||||
| Excess the net equity stated in the separate accounts of consolidated subsidiaries over the corresponding carrying amounts in the statutory accounts of the parent company | 261 | 1,457 | 21,576 | 21,546 | ||||||||
| Consolidation adjustment: | ||||||||||||
| - differences between purchase cost and underlying carrying amounts of net equity | (2,683 | ) | (499 | ) | 1,503 | 324 | ||||||
| - adjustments to comply with group account policies | 1,222 | (174 | ) | 711 | 605 | |||||||
| - elimination of unrealized intercompany profits | 638 | 219 | (2,652 | ) | (2,639 | ) | ||||||
| - deferred taxation | 160 | (444 | ) | 873 | 323 | |||||||
| - other adjustments | 3 | 10 | 12 | |||||||||
| 8,676 | 4,972 | 62,558 | 61,174 | |||||||||
| Non-controlling interest | (886 | ) | 188 | (3,498 | ) | (2,964 | ) | |||||
| As recorded in the Consolidated Financial Statements | 7,790 | 5,160 | 59,060 | 58,210 |
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Summarized Group Cash Flow Statement
| Eni’s Summarized Group Cash Flow Statement derives from the statutory statement of cash flows. It enables investors to understand the connection existing between changes in cash and cash equivalents (deriving from the statutory cash flows statement) and in net borrowings (deriving from the summarized cash flow statement) that occurred in the reporting period. The measure which links the two statements is represented by the free cash flow which is calculated as difference between the cash flow generated from operations and the net cash used in investing activities. Starting from free cash flow it is possible to determine either: (i) changes | in cash and cash equivalents for the period by adding/deducting cash flows relating to financing debts/receivables (issuance/repayment of debt and receivables related to financing activities), shareholders’ equity (dividends paid, net repurchase of own shares, capital issuance) and the effect of changes in consolidation and of exchange rate differences; and (ii) change in net borrowings for the period by adding/deducting cash flows relating to shareholders’ equity and the effect of changes in consolidation and of exchange rate differences. The free cash flow is a non-GAAP measure of financial performance. |
Summarized Group Cash Flow Statement (a)
| 2011 | (euro million) | 2012 | 2013 | Change |
| 7,877 | Net profit - continuing operations | 4,944 | 4,972 | 28 | ||||||||
| Adjustments to reconcile net profit to net cash provided by operating activities: | ||||||||||||
| 8,606 | - depreciation, depletion and amortization and other non-monetary items | 11,349 | 9,578 | (1,771 | ) | |||||||
| (1,176 | ) | - net gains on disposal of assets | (875 | ) | (3,770 | ) | (2,895 | ) | ||||
| 9,918 | - dividends, interests, taxes and other changes | 11,925 | 9,162 | (2,763 | ) | |||||||
| (1,696 | ) | Changes in working capital related to operations | (3,373 | ) | 486 | 3,859 | ||||||
| (9,766 | ) | Dividends received, taxes paid, interest (paid) received during the period | (11,614 | ) | (9,459 | ) | 2,155 | |||||
| 13,763 | Net cash provided by operating activities - continuing operations | 12,356 | 10,969 | (1,387 | ) | |||||||
| 619 | Net cash provided by operating activities - discontinued operations | 15 | (15 | ) | ||||||||
| 14,382 | Net cash provided by operating activities | 12,371 | 10,969 | (1,402 | ) | |||||||
| (11,909 | ) | Capital expenditure - continuing operations | (12,761 | ) | (12,750 | ) | 11 | |||||
| (1,529 | ) | Capital expenditure - discontinued operations | (756 | ) | 756 | |||||||
| (13,438 | ) | Capital expenditure | (13,517 | ) | (12,750 | ) | 767 | |||||
| (360 | ) | Investments and purchase of consolidated subsidiaries and businesses | (569 | ) | (317 | ) | 252 | |||||
| 1,912 | Disposals | 6,014 | 6,360 | 346 | ||||||||
| 627 | Other cash flow related to capital expenditure, investments and disposals | (136 | ) | (253 | ) | (117 | ) | |||||
| 3,123 | Free cash flow | 4,163 | 4,009 | (154 | ) | |||||||
| 41 | Borrowings (repayment) of debt related to financing activities (b) | (83 | ) | (3,983 | ) | (3,900 | ) | |||||
| 1,104 | Changes in short and long-term financial debt | 5,947 | 1,778 | (4,169 | ) | |||||||
| (4,327 | ) | Dividends paid and changes in non-controlling interests and reserves | (3,746 | ) | (4,231 | ) | (485 | ) | ||||
| 10 | Effect of changes in consolidation and exchange differences | (16 | ) | (50 | ) | (34 | ) | |||||
| (49 | ) | NET CASH FLOW | 6,265 | (2,477 | ) | (8,742 | ) |
Changes in net borrowings
| 2011 | (euro million) | 2012 | 2013 | Change |
| 3,123 | Free cash flow | 4,163 | 4,009 | (154 | ) | |||||||
| Net borrowings of acquired companies | (2 | ) | (21 | ) | (19 | ) | ||||||
| (192 | ) | Net borrowings of divested companies | 12,446 | (16 | ) | (12,462 | ) | |||||
| (517 | ) | Exchange differences on net borrowings and other changes | (340 | ) | 342 | 682 | ||||||
| (4,327 | ) | Dividends paid and changes in non-controlling interest and reserves | (3,746 | ) | (4,231 | ) | (485 | ) | ||||
| (1,913 | ) | CHANGE IN NET BORROWINGS | 12,521 | 83 | (12,438 | ) |
(a) For a reconciliation to the statutory
statement of cash flow see the paragraph “Reconciliation of
Summarized Group Balance Sheet and Statement of Cash Flow to
Statutory Schemes”.
(b) This item includes investments in certain financial
instruments not related to operations (securities, escrow
accounts) to absorb temporary surpluses of cash or as a part of
our ordinary management of financing activities. Due to their
nature and the circumstance that they are very liquid, these
financial instruments are netted against finance debt in
determining net borrowings. Cash flows of such
investments/disposals were as follows:
| 2011 | (euro million) | 2012 | 2013 | Change |
| Financing investments: | ||||||||||||
| (21 | ) | - securities | (5,029 | ) | (5,029 | ) | ||||||
| (26 | ) | - financing receivables | (1,131 | ) | (104 | ) | 1,027 | |||||
| (47 | ) | (1,131 | ) | (5,133 | ) | (4,002 | ) | |||||
| Disposal of financing investments: | ||||||||||||
| 71 | - securities | 4 | 25 | 21 | ||||||||
| 17 | - financing receivables | 1,044 | 1,125 | 81 | ||||||||
| 88 | 1,048 | 1,150 | 102 | |||||||||
| 41 | Cash flows of financial investments not related to operation | (83 | ) | (3,983 | ) | (3,900 | ) |
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| Net cash provided by operating activities (euro 10,969 million) and proceeds from disposals of euro 6,360 million funded cash outflows relating to capital expenditure totaling euro 12,750 million and investments (euro 317 million) and dividend payments and other changes amounting to euro 4,231 million (of which euro 1,993 million relating to 2013 interim dividend) also repaying down the Group net debt by euro 83 million from December 31, 2012. Net cash provided by operating activities was positively influenced by higher receivables due beyond the end of the reporting period, being transferred to financing institutions | compared to the amount transferred at the end of the previous reporting period (up euro 552 million; from euro 2,203 million as of December 31, 2012 to euro 2,755 million as of December 31, 2013). Cash from disposals largely related to the sale of the 28.57% stake in Eni East Africa, currently retaining an interest of 70% in the Area 4 mineral property in Mozambique to China National Petroleum Corp (euro 3,386 million), the divestment of the 11.69% interest in the share capital of Snam (euro 1,459 million), the 8.19% interest in the share capital of Galp (euro 830 million) and marginal assets in the Exploration & Production Division. |
Capital expenditure
| 2011 | (euro million) | 2012 | 2013 | Change | % Ch. |
| 9,435 | Exploration & Production | 10,307 | 10,475 | 168 | 1.6 | ||||||||||
| 754 | - acquisition of proved and unproved properties | 43 | 109 | ||||||||||||
| 1,210 | - exploration | 1,850 | 1,669 | ||||||||||||
| 7,357 | - development | 8,304 | 8,580 | ||||||||||||
| 114 | - other expenditure | 110 | 117 | ||||||||||||
| 192 | Gas & Power | 225 | 232 | 7 | 3.1 | ||||||||||
| 184 | - marketing | 212 | 209 | ||||||||||||
| 8 | - international transport | 13 | 23 | ||||||||||||
| 866 | Refining & Marketing | 842 | 619 | (223 | ) | (26.5 | ) | ||||||||
| 638 | - refining, supply and logistics | 622 | 444 | ||||||||||||
| 228 | - marketing | 220 | 175 | ||||||||||||
| 216 | Versalis | 172 | 314 | 142 | 82.6 | ||||||||||
| 1,090 | Engineering & Construction | 1,011 | 902 | (109 | ) | (10.8 | ) | ||||||||
| 10 | Other activities | 14 | 21 | 7 | 50.0 | ||||||||||
| 128 | Corporate and financial companies | 152 | 190 | 38 | 25.0 | ||||||||||
| (28 | ) | Impact of unrealized intragroup profit elimination | 38 | (3 | ) | (41 | ) | ||||||||
| 11,909 | Capital expenditure - continuing operations | 12,761 | 12,750 | (11 | ) | (0.1 | ) | ||||||||
| 1,529 | Capital expenditure - discontinued operations | 756 | (756 | ) | .. | ||||||||||
| 13,438 | Capital expenditure | 13,517 | 12,750 | (767 | ) | (5.7 | ) |
| In 2013, capital
expenditure amounted to euro 12,750 million
(euro 12,761 million in 2012) relating mainly to: - development activities deployed mainly in Norway, the United States, Angola, Congo, Italy, Nigeria, Kazakhstan, Egypt and the UK and exploratory activities of which 98% was spent outside Italy, primarily in Mozambique, Norway, Congo, Togo, Nigeria, the United States and Angola as well as acquisition of new licenses in the Republic of Cyprus and in Vietnam; |
- upgrading of the fleet
used in the Engineering & Construction Division (euro
902 million); - refining, supply and logistics in Italy and outside Italy (euro 444 million) with projects designed to improve the conversion rate and flexibility of refineries, in particular at the Sannazzaro Refinery, as well as the upgrade of the refined product retail network in Italy and in the rest of Europe (euro 175 million); - initiatives to improve flexibility of the combined cycle power plants (euro 121 million). |
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Reconciliation
of Summarized Group Balance Sheet
and Statement of Cash Flows to Statutory Schemes
Summarized Group Balance Sheet
| (euro million) | December 31, 2012 | December 31, 2013 |
||||||||||||
| Items
of Summarized Group Balance Sheet (where not expressly indicated, the item derives directly from the statutory scheme) |
Notes to the Consolidated Financial Statements | Partial amounts from statutory scheme | Amounts of the summarized Group scheme | Partial amounts from statutory scheme | Amounts of the summarized Group scheme | |||||||||
| Fixed assets | ||||||||||||||
| Property, plant and equipment | 63,466 | 62,506 | ||||||||||||
| Inventories - compulsory stock | 2,538 | 2,571 | ||||||||||||
| Intangible assets | 4,487 | 3,877 | ||||||||||||
| Equity-accounted investments and other investments | 9,347 | 6,961 | ||||||||||||
| Receivables and securities held for operating activities | (see note 9 and note 19) | 1,457 | 1,607 | |||||||||||
| Net payables related to capital expenditure, made up of: | (1,142 | ) | (1,256 | ) | ||||||||||
| - receivables related to disposals | (see note 10) | 209 | 88 | |||||||||||
| - receivables related to disposals | (see note 21) | 752 | 702 | |||||||||||
| - payables related to capital expenditure | (see note 23) | (2,103 | ) | (2,046 | ) | |||||||||
| Total fixed assets | 80,153 | 76,266 | ||||||||||||
| Net working capital | ||||||||||||||
| Inventories | 8,496 | 7,883 | ||||||||||||
| Trade receivables | (see note 10) | 19,966 | 21,213 | |||||||||||
| Trade payables | (see note 23) | (14,993 | ) | (15,529 | ) | |||||||||
| Tax payables and provisions for net deferred tax liabilities, made up of: | (3,204 | ) | (3,005 | ) | ||||||||||
| - income tax payables | (1,622 | ) | (742 | ) | ||||||||||
| - other tax payables | (2,162 | ) | (2,268 | ) | ||||||||||
| - deferred tax liabilities | (6,740 | ) | (6,723 | ) | ||||||||||
| - other tax liabilities | (see note 31) | (1 | ) | (26 | ) | |||||||||
| - current tax assets | 771 | 802 | ||||||||||||
| - other current tax assets | 1,230 | 825 | ||||||||||||
| - deferred tax assets | 5,027 | 4,662 | ||||||||||||
| - other tax assets | (see note 21) | 293 | 465 | |||||||||||
| Provisions | (13,603 | ) | (13,167 | ) | ||||||||||
| Other current assets and liabilities: | 2,473 | 2,030 | ||||||||||||
| - securities held for operating purposes | (see note 9) | 201 | 202 | |||||||||||
| - receivables for operating purposes | (see note 10) | 440 | 488 | |||||||||||
| - other receivables | (see note 10) | 6,751 | 6,648 | |||||||||||
| - other (current) assets | 1,624 | 1,325 | ||||||||||||
| - other receivables and other assets | (see note 21) | 3,355 | 2,516 | |||||||||||
| - advances, other payables | (see note 23) | (6,485 | ) | (6,023 | ) | |||||||||
| - other (current) liabilities | (1,437 | ) | (1,448 | ) | ||||||||||
| - other payables and other liabilities | (see note 31) | (1,976 | ) | (1,678 | ) | |||||||||
| Total net working capital | (865 | ) | (575 | ) | ||||||||||
| Provisions for employee post-retirement benefits | (1,374 | ) | (1,245 | ) | ||||||||||
| Assets held for sale including related liabilities | 155 | 2,156 | ||||||||||||
| made up of: | ||||||||||||||
| - assets held for sale | 516 | 2,296 | ||||||||||||
| - liabilities related to assets held for sale | (361 | ) | (140 | ) | ||||||||||
| CAPITAL EMPLOYED, NET | 78,069 | 76,602 | ||||||||||||
| Shareholders' equity including non-controlling interest | 62,558 | 61,174 | ||||||||||||
| Net borrowings | ||||||||||||||
| Total debt, made up of: | 24,463 | 25,879 | ||||||||||||
| - long-term debt | 19,279 | 20,988 | ||||||||||||
| - current portion of long-term debt | 2,961 | 2,149 | ||||||||||||
| - short-term financial liabilities | 2,223 | 2,742 | ||||||||||||
| less: | ||||||||||||||
| Cash and cash equivalents | (7,765 | ) | (5,288 | ) | ||||||||||
| Securities held for trading and other securities held for non-operating purposes | (see note 9) | (34 | ) | (5,037 | ) | |||||||||
| Financing receivables for non-operating purposes | (see note 10) | (1,153 | ) | (126 | ) | |||||||||
| Total net borrowings (a) | 15,511 | 15,428 | ||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 78,069 | 76,602 |
(a) For details on net borrowings see also note No. 26 to the Consolidated Financial Statements.
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Summarized Group Cash Flow Statement
| (euro million) | 2012 |
2013 | ||||||||||
| Items of Summarized Cash Flow Statement and confluence/reclassification of items in the statutory scheme | Partial amounts from statutory scheme | Amounts of the Summarized Group scheme | Partial amounts from statutory scheme | Amounts of the Summarized Group scheme | ||||||||
| Net profit - continuing operations | 4,944 | 4,972 | ||||||||||
| Adjustments to reconcile net profit to net cash provided by operating activities: | ||||||||||||
| Depreciation, depletion and amortization and other non-monetary items: | 11,349 | 9,578 | ||||||||||
| - depreciation, depletion and amortization | 9,538 | 9,303 | ||||||||||
| - impairment of tangible and intangible assets, net | 4,023 | 2,400 | ||||||||||
| - share of profit (loss) of equity-accounted investments | (278 | ) | (252 | ) | ||||||||
| - other net changes | (1,945 | ) | (1,878 | ) | ||||||||
| - net changes in the provisions for employee benefits | 11 | 5 | ||||||||||
| Net gains on disposal of assets | (875 | ) | (3,770 | ) | ||||||||
| Dividends, interest, income taxes and other changes: | 11,925 | 9,162 | ||||||||||
| - dividend income | (431 | ) | (400 | ) | ||||||||
| - interest income | (108 | ) | (155 | ) | ||||||||
| - interest expense | 803 | 709 | ||||||||||
| - income taxes | 11,661 | 9,008 | ||||||||||
| Changes in working capital related to operations: | (3,373 | ) | 486 | |||||||||
| - inventory | (1,395 | ) | 320 | |||||||||
| - trade receivables | (3,184 | ) | (1,363 | ) | ||||||||
| - trade payables | 2,029 | 706 | ||||||||||
| - provisions for contingencies | 338 | 58 | ||||||||||
| - other assets and liabilities | (1,161 | ) | 765 | |||||||||
| Dividends received, taxes paid, interest (paid) received during the period: | (11,614 | ) | (9,459 | ) | ||||||||
| - dividend received | 988 | 684 | ||||||||||
| - interest received | 91 | 108 | ||||||||||
| - interest paid | (825 | ) | (944 | ) | ||||||||
| - income taxes paid, net of tax receivables received | (11,868 | ) | (9,307 | ) | ||||||||
| Net cash provided by operating activities - continuing operations | 12,356 | 10,969 | ||||||||||
| Net cash provided by operating activities - discontinued operations | 15 | |||||||||||
| Net cash provided by operating activities | 12,371 | 10,969 | ||||||||||
| Capital expenditure: | (13,517 | ) | (12,750 | ) | ||||||||
| - tangible assets | (11,222 | ) | (10,864 | ) | ||||||||
| - intangible assets | (2,295 | ) | (1,886 | ) | ||||||||
| Investments and purchase of consolidated subsidiaries and businesses: | (569 | ) | (317 | ) | ||||||||
| - investments | (391 | ) | (292 | ) | ||||||||
| - consolidated subsidiaries and businesses | (178 | ) | (25 | ) | ||||||||
| Disposals: | 6,014 | 6,360 | ||||||||||
| - tangible assets | 1,229 | 514 | ||||||||||
| - intangible assets | 61 | 16 | ||||||||||
| - changes in consolidated subsidiaries and businesses | 3,521 | 3,401 | ||||||||||
| - investments | 1,203 | 2,429 | ||||||||||
| Other cash flow related to capital expenditure, investments and disposals: | (136 | ) | (253 | ) | ||||||||
| - securities | (17 | ) | (5,048 | ) | ||||||||
| - financing receivables | (1,634 | ) | (989 | ) | ||||||||
| - change in payables and receivables relating to investments and capitalized depreciation | 54 | 48 | ||||||||||
| reclassification: purchase of securities and financing receivables for non-operating purposes | 1,131 | 5,133 | ||||||||||
| - disposal of securities | 52 | 33 | ||||||||||
| - disposal of financing receivables | 1,578 | 1,565 | ||||||||||
| - change in payables and receivables | (252 | ) | 155 | |||||||||
| reclassification: disposal of securities and financing receivables held for non-operating purposes | (1,048 | ) | (1,150 | ) | ||||||||
| Free cash flow | 4,163 | 4,009 |
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continued Summarized Group Cash Flow Statement
| (euro million) | 2012 |
2013 | ||||||||||
| Items of Summarized Cash Flow Statement and confluence/reclassification of items in the statutory scheme | Partial amounts from statutory scheme | Amounts of the summarized Group scheme | Partial amounts from statutory scheme | Amounts of the summarized Group scheme | ||||||||
| Free cash flow | 4,16 | 4,009 | ||||||||||
| Borrowings (repayment) of debt related to financing activities | (83 | ) | (3,983 | ) | ||||||||
| reclassification: purchase of securities and financing receivables held for non-operating purposes | (1,131 | ) | (5,133 | ) | ||||||||
| reclassification: disposal of securities and financing receivables held for non-operating purposes | 1,048 | 1,150 | ||||||||||
| Changes in short and long-term finance debt: | 5,947 | 1,778 | ||||||||||
| - proceeds from long-term finance debt | 10,484 | 5,418 | ||||||||||
| - payments of long-term finance debt | (3,784 | ) | (4,669 | ) | ||||||||
| - increase (decreases) in short-term finance debt | (753 | ) | 1,029 | |||||||||
| Dividends paid and changes in non-controlling interest and reserves: | (3,746 | ) | (4,231 | ) | ||||||||
| - net capital contributions/payments by/to non-controlling interest | (4 | ) | ||||||||||
| - dividends paid by Eni to shareholders | (3,840 | ) | (3,949 | ) | ||||||||
| - dividends paid to non-controlling interest | (539 | ) | (251 | ) | ||||||||
| - disposal (acquisition) of interests in consolidated subsidiaries | 604 | (28 | ) | |||||||||
| - treasury shares sold by consolidated subsidiaries | 29 | 1 | ||||||||||
| Effect of exchange differences on cash and cash equivalents | (12 | ) | (37 | ) | ||||||||
| Effect of changes in consolidation area (inclusion/exclusion of significant/insignificant subsidiaries) | (4 | ) | (13 | ) | ||||||||
| Net cash flow for the period | 6,265 | (2,477 | ) |
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Risk factors and uncertainties
| 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. |
Continent. Due to the
economic and financial crisis and inter-fuel competition,
those projected increases in gas demand failed to
materialize resulting in a situation of oversupply and
pricing pressure. The “shale-gas revolution” in
the USA was another fundamental trend that added to the
oversupply condition in the European marketplace. The
discovery and development of large deposits of shale gas
in the USA has progressively reduced till to zero the
Country’s dependence on LNG imports. As a result of
this, upstream producers were forced to redirect large
LNG supplies to markets elsewhere in the world, including
Europe. Large gas availability on the marketplace in
Europe fuelled by take-or-pay contracts and worldwide LNG
streams has driven the development of very liquid
continental hubs to trade spot gas. Shortly spot prices
at continental hubs have become 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-tem supply contracts. These
negative trends were exacerbated by the fact that spot
prices have ceased to track the oil prices to which
Eni’s long-term supply contracts are linked,
resulting in a decoupling between trends in prices and in
costs. Due to those fundamental shifts in market dynamics
and a current demand downturn, the Company’s Gas
& Power segment incurred operating losses in each of
the latest three years. The outlook in our gas marketing
business will remain weak for the foreseeable future as
management believes that the ongoing negative trends of
poor demand, continuing competition and oversupplies have
become structural headwinds. These developments may
adversely affect the Company’s future results of
operations and cash flows in its gas business, 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 and until the Company manages to
re-negotiate new pricing terms of such contracts which
better tracks market prices than the original oil-linked
indexation. See the sector-specific risk section below. - Eni is also facing 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 have entered the wholesale market of gas by directly purchasing gas from producers or sourcing it at the continental spot markets adding further pressures on the economics of gas operators, |
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| including Eni. Management
believes that this trend will continue in the future. At
the same time, a number of national gas producers
belonging to Countries with large gas reserves have
started to sell natural gas directly to final clients,
entering in direct competition with players like Eni
which resell gas purchased from producing Countries to
final customers. These developments may increase the
level of competition and reduce Eni’s expected
operating profit and cash flows in the gas business.
Finally, gas prices in the residential market have
historically been established by independent,
governmental authorities in Italy and elsewhere in
Europe. The indexation mechanisms used by those
authorities have generally tracked a basket of petroleum
products, mirroring the oil-indexed purchase prices of
gas resellers like Eni, thus enabling resellers to pass a
large part of cost increases of the raw material on to
final customers in the retail market. In recent years,
the Italian authority has introduced a number of
adjustments to the oil-linked formula to take into
account the public goal of containing the impact of
energy inflation on households and other public services
(hospitals, schools, etc.). Finally, following enactment
in Italy of a new regulatory regime which went effective
October 1, 2013, management expects that the
Company’s selling margins in the residential segment
are likely to come under pressure due to the
implementation of a less favorable indexation mechanism
of the raw material cost in supplies to such customers
than in the past. Such new mechanism establishes that the
cost of the raw material be indexed to market benchmarks
recorded at spot markets, as such replacing the previous
oil-linked mechanism which mirrored 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). Management believes these developments will
negatively impact future results of operations and cash
flow. - 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 in 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. The economics of the gas-fired electricity business have dramatically changed over the latest few years due to ongoing competitive trends. As a matter of fact, spot prices of electricity in the wholesale market across Europe have decreased due to excess supplies driven by the growing production of electricity from renewable sources, which also benefit of governmental subsides, and a recovery in the production of coal-fired electricity generation which has been 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. We believe that the profitability outlook in this business will remain weak in the foreseeable future. Due to |
the projections of negative
future cash flows, we decided to recognize an impairment
charge of our power plants in the amount of approximately
euro 1 billion in the 2013 consolidated accounts. - 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. In Italy, the latest administrative measure in this field have targeted to enhance the level of competition in the retail market of fuels, for example by easing the commercial ties between independent and other non-oil 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. These developments have boosted the level of competition in the marketplace adding further pressure on selling prices and reducing opportunities of increasing the market share in Italy. We expect that competitive pressures will continue in the foreseeable future due to anticipated weak trends in the domestic demand for fuels, oversupplies of refined products due to existing excess refining capacity in Europe and growing competition of products streams coming from Russia, the Middle East, East Asia and the United States. Finally, Eni’s margins on refined products have been affected by production cost disadvantages due to unfavorable geographic location and lack of scale of Eni’s Refineries, and narrowing price differentials between the Brent benchmark and heavy crude qualities. This latter trend has reflected ongoing reduced supplies of heavy crudes in the Mediterranean area, reversing the pattern observed historically whereby heavy crude qualities trade at a discount vs. the Brent benchmark due to their relatively smaller yield of valuable products. This negative trend has particularly 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 segment reported losses at the operating level in each of the latest three years driven by the structural headwinds in the industry described above. Based on those trends we believe that the profitability outlook in our Refining & Marketing segment will remain negative over the foreseeable future. - 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 US will regain market share in the future, leveraging on a competitive cost structure due to the increasing availability of cheap |
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| 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. This segment reported operating
losses in each of the latest three years including
significant amounts of asset impairment losses, driven by
the structural headwinds in the industry described above. - 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 2013 a soft demand environment, intense competition among oilfield service providers coupled with Company-specific issues at certain projects drove a substantial reversal in the profitability at Eni’s Engineering & Construction business segment which reported an operating loss for the full year 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 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 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. |
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. 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 invests significant amounts of resources in order to upgrade methods and systems for safeguarding safety and health of employers, 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 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, 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 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 our 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 particular, in the case of oil spills and other environmental damage, current insurance policies cover costs of cleaning up and remediating polluted sites, damage to third parties and containment of physical damage up to $1.1 billion for offshore events and $1.5 billion for onshore plants (refineries). These are complemented by insurance policies that cover owners, operators and renters of vessels with the following maximum amounts: $1 billion for the fleet owned by the subsidiary LNG Shipping in the Gas & Power segment and FPSOs used by the Exploration & Production segment for developing offshore fields; $500 million for time charters. |
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| 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 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 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. |
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. These high-risk projects generally involve
offshore plays located in deep and ultra-deep waters or
at deep drilling depths, where operations are more
challenging and costly than in other areas. Furthermore,
deep and ultra deep water operations 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, Ghana, Liberia and
Gabon), East Africa (Mozambique and Kenya), the
South-East Asia (Indonesia, Vietnam and other locations),
Australia, the Barents Sea and the Black Sea. In 2012,
the Company spent 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. Development projects bear significant operational risks which may adversely affect actual returns Eni is executing 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 equipment and services; - the ability to carefully carry out front-end design engineering at any development projects so as to prevent the occurrence of technical inconvenience during the execution phase; - 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 |
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| 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. We believe this kind of risk may be 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 volumes of reserves in remote and harsh locations or environmentally sensitive locations (i.e. the Barents Sea, Alaska, the Gulf of Mexico, the Caspian Sea) where Eni is experiencing significantly higher operating costs and environmental, safety and other costs than in other locations. The Company expects that costs in its upstream operations will continue to rise in the foreseeable future; - the actual performance of the reservoir and natural field decline; and - the ability and time necessary to build suitable transport infrastructures to export production to final markets. Poor project execution, inadequate front end engineering, delays in the achievement of critical events and production start up, and differences between scheduled and actual timing, as well as cost overruns may adversely affect the economic returns of our development projects. Failure to successfully deliver major projects could negatively impact results of operations, cash flow and the achievement of short-term targets of production growth. Finally, developing and marketing hydrocarbons reserves typically requires several years after a discovery is made. This is because a development project involves an array of complex and lengthy activities, including appraising a discovery in order to evaluate its commercial potential, sanctioning a development project and building and commissioning related facilities. As a consequence, rates of return for such long-lead-time projects are exposed to the volatility of oil and gas prices and costs which may be substantially different from the prices and costs assumed when the investment decision was actually made, leading to lower rates of return. In addition, projects executed with partners and co-venturers reduce the ability of the Company to manage risks and costs, and Eni could have limited influence over and control of the operations, behaviors and performance of its partners. Furthermore, Eni may not have full operation control of the joint ventures in which it participates and may have exposure to counterparty credit risk and disruption of operation and strategic objectives due to the nature of its relationships. We have experienced a few delays at a number of development projects located mainly in Algeria, the UK, Angola and Norway. Those delays were attributable to execution issues and |
delivery of critical
equipment reflecting capacity constraints. These events
have impacted the timing profile of our planned
production growth in the short term. In case the Company is unable to develop and operate major projects as planned, particularly if the Company fails to accomplish budgeted costs and time schedules, it could incur significant impairment charges associated with reduced future cash flows of those projects on capitalized costs. Inability to replace oil and natural gas reserves could adversely impact results of operations and financial condition Eni’s results of operations and financial condition are substantially dependent on its ability to develop and sell oil and natural gas. Unless the Company is able to replace produced oil and natural gas, its reserves will decline. In addition to being a function of production, revisions and new discoveries, the Company’s reserve replacement is also affected by the entitlement mechanism in its Production Sharing Agreements (“PSAs”) and similar contractual schemes. In accordance with such contracts, Eni is entitled to a portion of a field’s reserves, the sale of which is intended to cover expenditures incurred by the Company to develop and operate the field. The higher the reference prices for Brent crude oil used to estimate Eni’s proved reserves, the lower the number of barrels necessary to recover the same amount of expenditures. Future oil and gas production is dependent on the Company’s ability to access new reserves through new discoveries, application of improved techniques, success in development activity, negotiation with Countries and other owners of known reserves and acquisitions. In a number of reserve-rich Countries, national oil companies control a large portion of oil and gas reserves that remain to be developed. To the extent that national oil companies decide to develop those reserves without the participation of international oil companies or if the Company fails to establish partnership with national oil companies, Eni’s ability to access or develop additional reserves will be limited. An inability to replace produced reserves by finding, acquiring and developing additional reserves could adversely impact future production levels and growth prospects. If Eni is unsuccessful, it may not meet its long-term targets of production growth and reserve replacement, and Eni’s future total proved reserves and production will decline, negatively affecting Eni’s future results of operations and financial condition. Changes in crude oil and natural gas prices may adversely affect Eni’s results of operations The exploration and production of oil and gas is a commodity business with a history of price volatility. The single largest variable that affects the Company’s results of operations and financial condition is crude oil prices. Lower crude oil prices have an adverse impact on Eni’s results of operations and cash flows. Eni generally does not hedge exposure of the future expected cash flows of the Group reserves to movements in crude oil price. As a consequence, Eni’s profitability depends heavily on crude oil and natural gas prices. Crude oil and natural gas prices are subject to international supply and demand and other factors that are beyond Eni’s control, including among other things: |
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the control on production exerted by the Organization of
the Petroleum Exporting Countries (“OPEC”)
member Countries which control a significant portion of
the world’s supply of oil and can exercise
substantial influence on price levels; (ii) global geopolitical and economic developments, including sanctions imposed on certain oil-producing Countries on the basis of resolutions of the United Nations or bilateral sanctions or disruptions due to local instability. We believe that crude oil prices were supported in 2013 by a number of interruptions in the output flows that occurred in Countries like Libya, Nigeria and Syria due to local issues driven by political and social instability; (iii) global and regional dynamics of demand and supply of oil and gas. We believes that global oil demand will grow at a moderate pace in the foreseeable future due to sluggish economic activity in Europe and other macroeconomic uncertainties, and more efficient use of fuels and energy in OECD Countries; (iv) prices and availability of alternative sources of energy. Eni believes that gas demand in Europe has been significantly impacted by a shift to the use of coal in firing power plants due to cost advantages compared to gas, as well as the rising contribution of renewable energies in satisfying energy requirements. Eni expects those trends to continue in the future; (v) governmental and intergovernmental regulations, including the implementation of national or international laws or regulations intended to limit greenhouse gas emissions, which could impact the prices of hydrocarbons; and (vi) success in developing and applying new technology. All these factors can affect the global balance between demand and supply for oil and prices of oil. We estimate that movements in oil prices impact approximately 50% of our current production as the remaining portion which derives from Production Sharing Contracts is practically unaffected by crude oil price movements which instead impact the Company’s volume entitlements (see our disclosure under the paragraph “Inability to replace oil and natural gas reserves could adversely impact results of operations and financial condition” above). In addition, we expect that the Company results of operations from 2014 onwards will reflect our decision late in 2013 to fully exploit the benefits of the natural hedging occurring between our Exploration & Production and Gas & Power segments. As a matter of fact, we estimate that the exposure to changes in crude oil prices of approximately 8-10% of our production is offset by equivalent and contrarian movements of the procurement costs of gas in our long-term supply contracts which index the cost of gas to crude oil prices. In previous reporting periods we entered into commodity derivatives to protect margins on gas sales in our Gas & Power business from exposure to crude oil changes and late in 2013 we discontinued this policy with a view to exploit the natural hedge provided by our equity production of crude oil. See the risk factors “exposure to financial risks” below. Lower oil and gas prices over prolonged periods may also adversely affect Eni’s results of operations and cash flows by: (i) reducing rates of return of development projects either |
planned or being
implemented, leading the Company to reschedule, postpone
or cancel development projects, or accept a lower rate of
return on such projects; (ii) reducing the Group’s
liquidity, entailing lower resources to fund expansion
projects, further dampening the Company’s ability to
grow future production and revenues; and (iii) triggering
a review of future recoverability of the Company’s
carrying amounts of oil and gas properties, which could
lead to the recognition of significant impairment
charges. The Company, like other players in the industry, assesses its oil&gas projects based on long-term scenarios for oil prices, which reflect management’s best assumptions about the underlying fundamentals of global demand and supply. This approach supports the achievement of the expected returns on capital projects through the swings of the oil&gas cycle. For the 2014-2017 period Eni assumed a long-term price of $90 a barrel (real terms 2017). In this context the Company approved a capital expenditure plan amounting to euro 54 billion, 82% relating to exploration and development of oil and gas reserves, with a decrease of 5% in comparison with previous plan due to a higher degree of capital selection through a different schedule of project phases. Volatile oil prices represent an uncertainty factor in view of achieving the Company’s operating targets of production growth and reserve replacement due to the relevant amount of Production Sharing Agreements in Eni’s portfolio. Under such contracts, the Company is entitled to receive a portion of the production, the sale of which should cover expenditures incurred and earn the Company a share of profit. Accordingly, the higher the reference prices for crude oil used to determine production and reserve entitlements, the lower the number of barrels to cover the same dollar amounts hence the amounts of booked production and reserves; and vice versa. The Company currently estimates that production entitlements in its PSAs decreases on average by approximately 1,000 bbl/d for a $1 increase in oil prices. The impact of price effects on the Company’s production was immaterial in 2013. This sensitivity analysis relates to the existing Eni portfolio and might vary in the future. Eni expects that tightening regulation in oil and gas activities following the Macondo accident will lead to rising compliance costs and other restrictions The production of oil and natural gas is highly regulated and is subject to conditions imposed by governments throughout the world in matters such as the award of exploration and production interests, the imposition of specific drilling and other work obligations, income taxes and taxes on production, environmental protection measures, control over the development and abandonment of fields and installations, and restrictions on production. Following the Macondo accident in the Gulf of Mexico, Eni expects that governments throughout the world will implement stricter regulation on environmental protection, risk prevention and other forms of restrictions to drilling and other well operations. These new regulations and legislation, as well as evolving practices, could increase the cost of compliance and may also require changes to our drilling operations and exploration and development plans and may lead to higher royalties and taxes. |
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| Uncertainties
in estimates of oil and natural gas reserves Several uncertainties are inherent in estimating quantities of proved reserves and in projecting future rates of production and timing of development expenditures. The accuracy of proved reserve estimates depends on a number of factors, assumptions and variables, among which the most important are the following: - the quality of available geological, technical and economic data and their interpretation and judgment; - projections regarding future rates of production and costs and timing of development expenditures; - changes in the prevailing tax rules, other government regulations and contractual conditions; - results of drilling, testing and the actual production performance of Eni’s reservoirs after the date of the estimates which may drive substantial upward or downward revisions; and changes in oil and natural gas prices which could affect the quantities of Eni’s proved reserves since the estimates of reserves are based on prices and costs existing as of the date when these estimates are made. Lower oil prices or the projections of higher operating and development costs may impair the ability of the Company to economically produce reserves leading to downward reserve revisions. In particular the reserve estimates are subject to revisions as prices fluctuate due to the cost recovery mechanism under the Company’s PSAs and similar contractual schemes. Many of these factors, assumptions and variables involved in estimating proved reserves are subject to change over time therefore impacting the estimates of oil and natural gas reserves. Accordingly, the estimated reserves reported as of the end of the period covered by this filing could be significantly different from the quantities of oil and natural gas that will ultimately be recovered. Any downward revision in Eni’s estimated quantities of proved reserves would indicate lower future production volumes, which could adversely impact Eni’s results of operations and financial condition. Oil and gas activity may be subject to increasingly high levels of income taxes The oil and gas industry is subject to the payment of royalties and income taxes which tend to be higher than those payable in many other commercial activities. In addition, in recent years, Eni has experienced adverse changes in the tax regimes applicable to oil and gas operations in a number of Countries where the Company conducts its upstream operations. As a result of these trends, management estimates that the tax rate applicable to the Company’s oil and gas operations is materially higher than the Italian statutory tax rate for corporate profit which currently stands at 38%. The tax rate of the Company’s Exploration & Production segment for the fiscal year 2013 was approximately 60%. Management believes that the marginal tax rate in the oil and gas industry tends to increase in correlation with higher oil prices which could make it more difficult for Eni to translate higher oil prices into increased net profit. However, the Company does not expect that the marginal tax rate will decrease in response to falling oil prices. Adverse changes in the tax rate applicable to the Group profit before income taxes in its oil and gas operations would have a negative impact on Eni’s future results of |
operations
and cash flows. In the current uncertain financial and economic environment, governments are facing greater pressure on public finances, which may increase their motivation to intervene in the fiscal framework for the oil and gas industry, including the risk of increased taxation, nationalization and expropriations. Eni’s results depend on its ability to identify and mitigate the above mentioned risks and hazards which are inherent to Eni’s operation.
Political considerations A substantial portion of Eni’s oil and gas
reserves and gas supplies are located in Countries which
are politically, socially and economically less stable
than OECD Countries. Therefore Eni is exposed to risks of
material disruptions to its operations in those less
stable Countries. As of December 31, 2013, approximately
78% of Eni’s proved hydrocarbon reserves were
located in such Countries and 62% of Eni’s supplies
of natural gas came from Countries outside OECD
Countries. |
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we operate that have significant risk include, but are
not limited to: the Middle East, Libya, Egypt, Algeria,
Nigeria, Angola, Indonesia, Kazakhstan, Nigeria, Russia,
and Venezuela. In addition, any possible reprisals as a
consequence of military or other action, such as acts of
terrorism in the United States or elsewhere, could have a
material adverse effect on our business, consolidated
results of operations, and consolidated financial
condition. In 2013 our expected production levels in
Nigeria and Libya were negatively impacted by continuing
social unrest, protests, strikes, acts of sabotage and
theft which forced us to disrupt or reduce our producing
activities with an estimated cumulative loss of output of
110 boe/d for the year, negatively affecting our results
of operations and cash flow. Looking forward, we expect
that those risks will continue to affect our operations
in those Countries and we do not plan for any meaningful
recovery in our production plateau in both Countries over
the next couple of years. In 2013 our production in Libya
was 228 kboe/d, down by 12% from 2012; in Nigeria its was
125 kboe/d down by 19% from 2012. For more information
about the status of our operations in Libya see the
paragraph below. While the occurrence of those events
is unpredictable, it is likely that the occurrence of
such events could cause Eni to incur material production
losses or facility disruptions, by this way adversely
impacting Eni’s results of operations and cash flow. |
Country.
However, the Company has not experienced any disruption
at its producing activities in the Country to date. The Company believes that the political outlook in North Africa and the Middle East remains an area of risk for the Company’s operations, results and strategic development.
Risks
in the Company’s Risks associated with the
trading environment |
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| indexed to the price of
crude oil and other derivatives which have diverged from
trends in gas spot prices. Therefore wholesale margins on
gas were squeezed due to this decoupling which has
occurred between spot prices and the oil-linked costs of
purchased gas. Adding to the pressure, reduced sales
opportunities due to weak demand forced operators to
compete even more aggressively on pricing to limit the
financial risks associated with the take-or-pay clause
provided by the long term supply contracts. On their
part, large clients adopted opportunistic supply
patterns, in order to take advantage of the large
availability of spot gas. Finally governmental
administrations in several European Countries have
started to review the indexation mechanism of supply
tariffs in the retail sector in order to make residential
customers benefit from the ongoing trend in gas spot
markets. In Italy, administrative bodies have already
enacted effective October 1, 2013 a new indexation
mechanism of the cost of the raw material in pricing
formulas of the safeguarded retail market whereby the
cost of gas in currently indexed to spot prices thus
replacing the previous oil-linked indexation. This
development will reduce our margins in the residential
sector. See “Regulation of the natural gas market in
Italy” below. We forecast that market conditions will remain unfavorable in the gas sector in Italy and Europe for the foreseeable future due to the structural headwinds described above, volatile commodity prices and lack of visibility. We anticipate a number of risk factors to the profitability outlook of the Company’s gas marketing business over the next two to three years. Those include weak demand growth due to a projected slow recovery in the Euro zone and macroeconomic uncertainties, declining thermoelectric consumption due to inter-fuel competition, continuing oversupplies and strong competition. Eni believes that those trends will negatively impact the gas marketing business future results of operations and cash flows by reducing gas selling prices and margins, also considering Eni’s obligations under its take-or-pay supply contracts (see below). The Company is seeking to improve its cost competitiveness by renegotiating more favorable contractual terms with our long-term suppliers. If we fail to achieve this our profitability could be adversely affected The Company’s long-term supply contracts provide clauses whereby the parties are entitled to renegotiate pricing terms and other contractual conditions from time to time to reflect in a changed market environment. The Company is currently seeking to renegotiate better terms and pricing of our long-term supply contracts to align its cost structure to prices prevailing in the marketplace in order to preserve the profitability of its gas operations and to reduce the annual minim take of its contracts dictated by the take-or-pay clause in order to be more flexible in the current weak demand environment. If Eni fails to obtain the planned benefits, future results and cash flow could be adversely affected. Furthermore, management believes that the results of the Gas & Power segment will become more volatile and unpredictable in future years as contractual renegotiations take time to define, possibly leading |
to large one-off price
adjustments recorded in the reporting period when the new
terms are agreed upon. In addition, in case the parties
fail to arrange renewed contractual terms, both of them
may seek an arbitration ruling, which would increase the
uncertainty regarding the final outcome of the
renegotiation process. A number of clients, to whom Eni
supply on long-term basis, have already requested, and
may request in the future, price revisions and other
contractual changes. The Company expects that current imbalances between demand and supply in the European gas market will persist for sometime In 2013 gas demand fell remarkably, down by 7% and 1% in Italy and Europe, respectively, driven by the economic downturn and sharply lower gas consumption in the thermoelectric sector. While there are signs that demand may have finally bottomed by end of 2013, there is still little visibility on the evolution of gas demand due to the risks and uncertainties associated with a number of ongoing trends: - uncertainties and volatility in the macroeconomic cycle; particularly the anticipated slow recovery of the economic activity in Europe will weigh on the prospects of any sustainable rebound in gas demand; - EU policies intended on one hand to reduce green house gas emissions which should negatively impact the consumption of coal in producing electricity to advantage of gas; on the other hand continuing subsides to promote the development of renewable energy sources might jeopardize a recovery in gas-fired thermoelectric production which management still consider to be potentially the main engine of growth in gas demand; - concrete developments following announcement made by certain national governments in Europe to shut down nuclear plants; - growing adoption of consumption patterns and life-styles characterized by wider sensitivity to energy efficiency. Against these ongoing trends, management has revised downward its estimates for gas demand: it is now assumed an almost flat demand environment in Italy and Europe up to 2017 compared to previous years’ assumptions made in the industrial plan 2013-2016 of a growth rate of 1.7-1.8%. It is worth mentioning that the projected levels of European gas demand in 2017 are significantly lower than the pre-crisis levels registered in 2008 as a result of weak fundamentals. The projected moderate dynamics in demand might not be enough to balance the current situation of oversupply in the marketplace over the next two to three years according to management’s estimates. Gas supplies have been built up in recent years as new, large investments to upgrade import pipelines to Europe have come online from Russia and Algeria and gas wholesalers have contracted important volume of supplies under long-tem arrangement in past years, forecasting certain trends in demand which actually failed to materialize. Furthermore, in the near future management expects the start-up of new infrastructures in various European entry points which will add large amounts of new import capacity |
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Those include a new line of the North Stream pipeline
connecting Russia to Germany through the Baltic Sea as
well as new LNG facilities. In Italy, the gas offered
will increase moderately in the future as a new LNG plant
is expected to start operations at Livorno with a 4 bcm
treatment capacity and effects are in place of Law Decree
No. 130/2010 about storage capacity which is expected to
increase by 4 bcm by 2015. Those negatives will be
partially tempered by a declining availability of LNG on
a worldwide scale which has been absorbed by growing
energy requirements from East Asian economies. In
addition Europe’s internal production is maturing.
However, in the long-term management expects the start-up
of an array of global LNG projects which are expected to
materially add to global LNG supplies as well as it is
likely that the United States will support the
development of gas export from the domestic production.
Overall we see a well supplied global gas market. Those trends represent risks to the Company’s future results of operations and cash flows in its gas business. Current, negative trends in gas demands and supplies may impair the Company’s ability to fulfill its minimum off take obligations in connection with its take-or-pay, long-term gas supply contracts In order to secure long-term access to gas availability, particularly with a view of supplying the Italian gas market and anticipating certain trends in gas demand which actually failed to materialize, Eni has signed a number of long-term gas supply contracts with national operators of key producing Countries that supply the European gas markets. These contracts have been ensuring approximately 80 bcm of gas availability from 2010 (including the Distrigas portfolio of supplies and excluding Eni’s other subsidiaries and affiliates) with a residual life of approximately 14 years and a pricing mechanism that indexes the cost of gas to the price of crude oil and its products (gasoil, fuel oil, etc.). These contracts include take-or-pay clauses whereby the Company is required to off-take minimum, preset volumes of gas in each year of the contractual term or, in case of failure, to pay the whole price, or a fraction of that price, up to the minimum contractual quantity. The take-or-pay clause entitles the Company to off-take pre-paid volumes of gas in later years during the period of contract execution. Amounts of cash prepayments and time schedules for off-taking pre-paid gas vary from contract to contract. Generally, cash prepayments are calculated on the basis of the energy prices current in the year when the Company is scheduled to purchase the gas, with the balance due in the year when the gas is actually purchased. Amounts of pre-payments range from 10 to 100%. of the full price. The right to off-take pre-paid gas expires within a ten-year term in some contracts or remains in place until contract expiration in other arrangements. In addition, the right to off-take the pre-paid gas can be exercised in future years provided that the Company has fulfilled its minimum take obligation in a given year and within the limit of the maximum annual quantity. In this case, Eni will pay the residual price calculating it as the percentage that complements 100%, |
based on the arithmetical
average of monthly base prices current in the year of the
off-take. Similar considerations apply to ship-or-pay
contractual obligations. Management believes that the current market outlook pointing to weak gas demand growth and large gas availability, the possible evolution of sector-specific regulation, as well as strong competitive pressures in the marketplace represent risk factors to the Company’s ability to fulfill its minimum take obligations associated with its long-term supply contracts. Since the beginning of the downturn in the European gas market late in 2009 to the balance sheet date, Eni has incurred the take-or-pay clause as the Company collected lower volumes than its minimum take obligations in each of those years accumulating deferred costs amounting to euro 1.9 billion and has paid the relevant cash advances. Considering ongoing market trends and the Company’s outlook for its sales volumes which are anticipated to remain flat or to decrease slightly in 2014 and in the subsequent years, management believes that the Company’s ability to fulfill its minimum take obligations under current take-or-pay contracts might be at risk. In order to reduce the financial risk the Company may decide to dispose of its gas availability deriving from its minimum take obligations by selling that gas at lower prices thus negatively impacting the results of operations. In addition to the financial risk, failure to off-take the contractual minimum amounts exposes the Company to a price risk, because the purchase price Eni will ultimately be required to pay is based on future energy prices which may be higher than the energy prices prevailing when the off-take obligation arose. In addition, Eni is subject to the risk of not being able to dispose of pre-paid volumes should the total addressable market be smaller than the Company’s gas availability in the relevant period. Finally, the Company expects to incur financing costs considering the cash advances already paid to its suppliers. As a result of those risks, the Company’s selling margins, results of operations and cash flow may be negatively affected. As to the deferred costs stated in the balance sheet, based on management’s outlook for gas demand and offer in Europe, and projections for sales volumes and unit margins in future years, the Company believes that the pre-paid volumes of gas due to the incurrence of the take-or-pay clause will be off-taken in the long-term in accordance to current contractual terms thus recovering the cash advances paid to suppliers. Management plans to use all available options to mitigate the take-or-pay risk and the associated financial risks, particularly with a view to obtain a better balance in the Italian market where the total addressable market is projected to be lower than the total amount of take-or-pay obligations retained by Italian wholesalers. The planned initiatives include the renegotiations of better pricing term in order to align the cost of supplies to the selling benchmarks prevailing in the marketplace in order to regain competitiveness. Also the Company plans to renegotiate the contractual flexibility in order to reduce its minimum take obligations or to gain higher commercial flexibility, and finally it plans to use commercial and other initiatives involving its suppliers in order to restructure its contract portfolio. |
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| Risks associated with sector-specific regulations in Italy Risks associated with the regulatory
powers entrusted to the Italian Authority for Electricity
and Gas in the matter of pricing to residential customers
Environmental,
health Eni has incurred in the past
and expects to incur significant operating expenses and
expenditures in relation to compliance with applicable
environmental, health and safety regulations in future
years |
commence, restrict the
types, quantities and concentration of various substances
that can be released into the environment in connection
with exploration, drilling and production activities, as
well as refining, petrochemicals and other Group
operations, limit or prohibit drilling activities in
certain protected areas, require to remove and dismantle
drilling platforms and other equipment and well plug-in
once oil and gas operations have terminated, provide for
measures to be taken to protect the safety of the
workplace and health of communities involved by the
Company’s activities, and impose criminal or civil
liabilities for polluting the environment or harming
employees’ or communities’ health and safety
resulting from oil, natural gas, refining, petrochemical
and other Group’s operations. These laws and regulations also discipline emissions of substances and pollutants, handling of hazardous materials and discharges to surface and subsurface of water resulting from the operation of oil and natural gas extraction and processing plants, petrochemical plants, refineries, service stations, vessels, oil carriers, pipeline systems and other facilities owned by Eni. In addition, Eni’s operations are subject to laws and regulations relating to the production, handling, transportation, storage, disposal and treatment of waste materials. Breach of environmental, health and safety laws exposes the Company’s employees to criminal and civil liability and the Company to the incurrence of liabilities associated with compensation for environmental, health or safety damage as well as damage to its reputation. Additionally, in the case of violation of certain rules regarding the safeguard of the environment and safety in the workplace, the Company can be liable due to negligent or willful conduct on part of its employees as per Law Decree No. 231/2001. Environmental, health and safety laws and regulations have a substantial impact on Eni’s operations. Management expects that the Group will continue to incur significant amounts of operating expenses and expenditures to comply with laws and regulations addressing the safeguard of the environment, safety on the workplace, health of employees, contractors and communities involved by the Company operations, including: - costs to prevent, control, eliminate or reduce certain types of air and water emissions and handle waste and other hazardous materials, including the costs incurred in connection with government action to address climate change; - remedial and clean-up measures related to environmental contamination or accidents at various sites, including those owned by third parties (see discussion below); - damage compensation claimed by individuals and entities, including local, regional or state administrations, caused by our activities or accidents; and - costs in connection with the decommissioning and removal of drilling platforms and other facilities, and well plugging. Furthermore, in the Countries where Eni operates or expects to operate in the near future, new laws and regulations, the imposition of tougher license requirements, increasingly strict enforcement or new interpretations of existing laws and regulations or the discovery of previously unknown contamination may also cause us to incur material costs resulting from actions taken to comply with such laws and |
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| regulations, including: - modifying operations; - installing pollution control equipment; - implementing additional safety measures; and - performing site clean-ups. As a further result of any new laws and regulations or other factors, Eni may also have to curtail, modify or cease certain operations or implement temporary shutdowns of facilities, which could diminish our productivity and materially and adversely impact our results of operations, including profits. Security threats require continuous assessment and response measures. Acts of terrorism against our plants and offices, pipelines, transportation or computer systems could severely disrupt businesses and operations and could cause harm to people. Existing or future laws, regulations, treaties or international agreements related to greenhouse gases and climate change could have a negative impact on our business and may result in additional compliance obligations with respect to the release, capture, and use of carbon dioxide that could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition Changes in environmental requirements related to greenhouse gases and climate change may negatively impact demand for oil and natural gas exploration and production may decline as a result of environmental requirements (including land use policies responsive to environmental concerns). State, national, and international governments and agencies have been evaluating climate-related legislation and other regulatory initiatives that would restrict emissions of greenhouse gases in areas in which we conduct business. Because our business depends on the global demand for oil and natural gas, existing or future laws, regulations, treaties, or international agreements related to greenhouse gases and climate change, including incentives to conserve energy or use alternative energy sources, could have a negative impact on our business if such laws, regulations, treaties, or international agreements reduce the worldwide demand for oil and natural gas. Likewise, such restrictions may result in additional compliance obligations with respect to the release, capture, sequestration, and use of carbon dioxide that could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition. Eni has incurred in the past and may incur in the future material environmental liabilities in connection with the environmental impact of its past and present industrial activities. Also plaintiffs may seek to obtain compensation for damage resulting from events of contamination and pollution Risks of environmental, health and safety incidences and liabilities are inherent in many of Eni’s operations and products. Notwithstanding management’s belief that Eni adopts high operational standards to ensure safety of its operations and to protect the environment and health of people and employees, it is possible that incidents like blow outs, oil spills, contaminations and similar events could occur that |
would result in damage to
the environment, employees and communities. The
occurrence of any such 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. We are exposed to claims under environmental requirements and, from time-to-time, such claims have been made against us. In Italy, environmental requirements and regulations typically impose strict liability. Strict liability means that in some situations we could be exposed to liability for cleanup and remediation costs, natural resource damages, and other damages as a result of our conduct that was lawful at the time it occurred or the conduct of prior operators or other third parties. We are periodically notified of potential liabilities at Italian sites. These potential liabilities may arise from both historical Eni operations and the historical operations of companies that we have acquired, including a number of industrial sites that the Company disposed of, liquidated, closed or shut down in prior years where Group products have been produced, processed, stored, distributed or sold, such as chemical plants, mineral-metallurgic plants, refineries and other facilities. At those industrial locations Eni has commenced a number of initiatives to restore and cleanup proprietary or concession areas that were allegedly contaminated and polluted by the Group’s industrial activities. Notwithstanding the Group claimed that it cannot be held liable for such past contaminations as permitted by applicable regulations in case of declaration rendered by a guiltless owner i.e. as a result of our conduct that was lawful at the time it occurred, several public administrations have been acting against Eni to claim both the environmental damage and measures to perform additional cleanup and remediation projects in a number of civil and administrative proceedings. We also could be subject to third-party claims, including punitive damages, with respect to environmental matters for which we have been named as a potentially responsible party. Our exposure at these sites may be materially impacted by unforeseen adverse developments both in the final remediation costs and with respect to the final allocation among the various parties involved at the sites. We expect remedial and cleanup activities at our sites to continue the foreseeable future impacting Eni’s liquidity, as with reference to the balance sheet date the Group has accrued risk provisions to cope with all existing environmental liabilities whereby both a legal or constructive obligation to perform a clean-up or other remedial actions is in place and the associated costs can be reasonably estimated. The accrued amounts represent the management’s best estimates of the Company’s liability. Management believes that it is possible that in the future Eni may incur significant environmental expenses and liabilities in addition to the amounts already accrued due to: (i) the likelihood of as yet unknown contamination; (ii) the results of ongoing surveys or surveys to be carried out on the environmental status of certain Eni’s industrial sites as required by the applicable regulations on contaminated sites; (iii) unfavorable developments in ongoing litigation on the environmental status of certain Company’s site where |
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| a number of public
administrations and the Italian Ministry for the
Environment act as plaintiffs; (iv) the possibility that
new litigation might arise; (v) the probability that new
and stricter environmental laws might be implemented; and
(vi) the circumstance that the extent and cost of
environmental restoration and remediation programs are
often inherently difficult to estimate leading to
underestimation of the future costs of remediation and
restoration. As a result of those risks, liability for damages arising as a result of environmental laws could be substantial and could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition.
Risks
related to changes in the price of oil, Operating results in Eni’s Exploration &
Production, Refining & Marketing and Chemical
segments are affected by changes in the price of crude
oil and by the impacts of movements in crude oil prices
on margins of refined and petrochemical products. |
small businesses as spot
prices are progressively replacing oil prices in the
indexation mechanism of the raw material cost in selling
formulas to those customers. See the paragraph
“Risks in the Company’s gas business”
above for more information. In the Refining & Marketing and Chemicals businesses a time lag exists between movements in oil prices and in prices of finished products. Eni’s results of operations are affected by changes in European refining margins Results of operations of Eni’s Refining & Marketing segment are substantially affected by changes in European refining margins which reflect changes in relative prices of crude oil and refined products. The prices of refined products depend on global and regional supply/demand balances, inventory levels, refinery operations, import/export balances and weather. Furthermore, Eni’s realized margins are also affected by relative price movements of heavy or sour crude qualities versus light or sweet crude qualities, taking into account the ability of Eni’s refineries to process complex crudes that represent a cost advantage when market prices of heavy crudes are relatively cheaper than the marker Brent price. In each of the latest three fiscal years, Eni’s refining margins were largely unprofitable as the high cost of oil was only partially transferred to final prices of fuels pressured by weak demand, high worldwide and regional inventory levels and excess refining capacity particularly in the Mediterranean area. Furthermore, the profitability of complex cycles was impaired due to shrinking price differentials between heavy crudes versus light ones. Management does not expect any significant recovery in industry fundamentals over the short to medium term. The sector as a whole will continue to suffer from weak demand and excess capacity, while the cost of oil feedstock may continue rising and price differentials may remain compressed. In this context, management expects that the Company’s refining margins will remain at unprofitable levels in 2014 and possibly beyond. Eni’s results of operations are affected by changes in petrochemical margins Eni’s margins on petrochemical products are affected by trends in demand for petrochemical products and movements in crude oil prices to which purchase costs of petroleum-based feedstock are indexed. Given the commoditized nature of Eni petrochemical products, it is difficult for the Company to transfer higher purchase costs for oil-based feedstock to selling prices to customers. In each of the latest three fiscal years, Eni’s petrochemicals business reported operating losses due to unprofitable margins on basic petrochemicals products, mainly the margin on cracker, reflecting high oil-based feedstock costs and as demand for petrochemicals commodities plunged due to the economic downturn. A weak demand outlook and rising oil-based feedstock costs are expected to continue to adversely affect Eni’s results of operations and liquidity in this business segment in 2014 and possibly beyond. |
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Outlook
| The 2014 outlook features a
moderate strengthening in the global economic recovery.
Still a number of uncertainties are surrounding this
outlook due to weak growth prospects in the Euro-zone and
risks concerning the emerging economies. Crude oil prices
are forecast on a solid trend driven by geopolitical
factors and the resulting technical issues in a few
important producing Countries against the backdrop of
well supplied global markets. Management expects that the
trading environment will remain challenging in the
Company’s businesses. We expect continuing weak
conditions in the European industries of gas
distribution, refining and marketing of fuels and
chemical products, where we do not anticipate any
meaningful improvement in demand, while competition,
excess supplies and overcapacity will continue to weigh
on selling margins of energy commodities. In this
scenario, management reaffirms its commitment in
restoring profitability and preserving cash generation at
the Company’s mid and downstream businesses
leveraging on cost cuts and continuing renegotiation of
long-term gas supply contracts, capacity restructuring
and reconversion and product and marketing innovation. Management expects the key production and sales trends of Eni businesses to be as follows: - Production of liquids and natural gas: production is expected to remain substantially in line to 2013, excluding the impact of the divestment of Eni’s interest in the Russian gas assets of Artic Russia; |
- Gas sales:
natural gas sales are expected to be slightly lower than
2013. Management plans to strengthen marketing efforts
and innovation to fend off competitive pressures both in
the large customers segment and in the retail segment
considering an ongoing demand downturn and oversupplies,
particularly in Italy; - Refining throughputs on Eni’s account: volumes are expected to be slightly lower than those processed in 2013, due to capacity reductions only partially offset by higher output at the new EST technology conversion plant at the Sannazzaro Refinery; - Retail sales of refined products in Italy and the Rest of Europe: retail sales are expected to be slightly lower than in 2013 due to an ongoing demand downturn in Italy and the expected impact of network reorganization in Italy and in Europe; - Engineering & Construction: 2014 will be a transitional year with a recovery in profitability, the dimension of which relies upon the effective execution of operational and commercial activities at low-margin contracts still present in the current portfolio, in addition to the speed at which bids underway will be awarded. In 2014, management expects a capital budget in line with 2013 (euro 12.75 billion in capital expenditure and euro 0.32 billion in financial investments in 2013). Assuming a Brent price of $104 a barrel on average for the full year 2014, the ratio of net borrowings to total equity – leverage – is projected to be almost in line with the level achieved at the end of 2013, due to cash flows from operations and portfolio transactions. |
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| Other information |
| Consob
proceedings On January 29, 2013 Saipem SpA issued a press release announcing a new estimate of earnings for the full year 2012 and issued an earnings guidance for 2013. In connection with that press release, on January 31, 2013 Saipem received a communication from Consob, the Italian market authority, asking the company to describe the process of evaluation and the considerations that led to the decision to issue such a press release and to report to Consob the information and data used to revise the previous earning guidance. On June 14, 2013, Saipem SpA issued a press release further revising its guidance for 2013 operating profit and net profit, Consob sent a new request for information on June 19, 2013, regarding: (i) Saipem’s contractual relationships with the customer Sonatrach starting from January 2013; (ii) the contracts for which the expected margins have been revised downwards and the relevant reasons. On July 1, 2013 Saipem responded to the above requests. On July 19, 2013 Consob communicated to Saipem the commencement of a proceeding to review potential issues of non-compliance of Saipem’s 2012 separate and consolidated financial statements with the accounting standard IAS 11 (Construction contracts). According to Consob’s communication, Saipem should have recognized in the 2012 financial statements the estimate revisions relating to certain contracts which were in progress at December 31, 2012. These estimate revisions were included in the profit warning issued on June 14, 2013 and recognized in the accounts of the first half of 2013. Furthermore, Consob alleged that an increase of costs/losses related to 2012 should have been recorded in the 2012 financial statements, which Saipem did not recognize in either its 2012 Financial Statements or in its 2013 Interim financial statements. In the report on the third quarter of 2013, Saipem announced that it would recognize errors in the separate and consolidated financial statements as of December 31, 2013, in accordance with IAS 8, paragraph 42. Therefore, in the 2013 Annual Report, the comparative financial statements for 2012 were restated to recognize euro 245 million of lower contract revenues relating to the projects whose accounting was |
questioned by Consob. On
December 5, 2013, Consob, after obtaining additional
clarifications and information from Saipem, informed
Saipem that it would dismiss the proceeding without
requesting Saipem to disclose further accounting
information or further challenging the 2012 accounts. On March 14, 2014, the Saipem Board of Directors approved the separate and consolidated financial statements for 2013, which were prepared in accordance with the announcement made in the report on the third quarter of 2013. Specifically, the adjustment made to the 2012 accounts, which were presented as comparative information in the 2013 financial statements, determined a reduction of euro 245 million in the 2012 net profit and in the net equity as of December 31, 2012, without any tax effect, therefore determining a corresponding increase in the 2013 full year result. On August 2, 2013 Consob requested Eni to state its point of view about: (i) the non-compliance issue of Saipem’s 2012 separate and consolidated financial statements with IFRSs; (ii) the impact that such issues may have on the Eni’s financial statements. Eni replied to Consob, with reference to the first item that it was specifically addressed by Saipem; with reference to the possible effect of a restatement of the Saipem’s financial statements on the Eni’s consolidated financial statements, Eni submitted to Consob that, in accordance with IAS 8, any adjustment should be made only if the misstatement can be deemed to be material. Eni believes that the restatement made by Saipem of its accounts cannot be considered material within Eni’s consolidated financial statements, taking into account the size of the restated amount in the context of the Eni’s consolidated results, assets and total equity. Accordingly, Eni’s consolidated accounts for the year 2013 did not reflect the restatement made by Saipem, and Eni’s 2012 comparative financial statements are consistent with those included in the annual report for the year 2012. Therefore, Eni’s consolidated results for the full year 2013 reflect the euro 245 million lower contract revenues (before elimination of an immaterial amount of intercompany profit), which instead were recognized by Saipem in the 2012 restated comparative financial data. The effects of the restatement that was made by Saipem and not by Eni are disclosed below. |
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SUMMARIZED GROUP BALANCE SHEET
| (euro million) | Dec. 31, 2012 | Saipem’s adjustment (*) |
Dec. 31, 2012 restated | |||
| Net capital employed | 78,069 | (245 | ) | 77,824 | |||
| Total Eni’s shareholders’ equity | 62,558 | (245 | ) | 62,313 | |||
| Non-controlling interest | 59,060 | (106 | ) | 58,954 | |||
| Eni’s shareholders’ equity | 3,498 | (139 | ) | 3,359 | |||
| Net borrowings | 15,511 | 15,511 | |||||
| Total liabilities and shareholders’ equity | 78,069 | (245 | ) | 77,824 |
GROUP BALANCE SHEET
| (euro million) | Dec. 31, 2012 | Saipem’s adjustment (*) |
Dec. 31, 2012 restated | |||
| Total assets | 139,878 | (245 | ) | 139,633 | |||
| Total liabilities | 77,320 | 77,320 | |||||
| Total Eni’s shareholders’ equity | 62,558 | (245 | ) | 62,313 | |||
| Non-controlling interest | 3,498 | (139 | ) | 3,359 | |||
| Eni’s shareholders’ equity | 59,060 | (106 | ) | 58,954 | |||
| Total liabilities and shareholders’ equity | 139,878 | (245 | ) | 139,633 |
PROFIT AND LOSS
| (euro million) | 2012 | Saipem’s adjustment (*) |
2012 restated | |||
| Net profit | 8,676 | (245 | ) | 8,431 | |||
| Eni’s shareholders | 7,790 | (106 | ) | 7,684 | |||
| Non-controlling interest | 886 | (139 | ) | 747 |
PROFIT AND LOSS
| (euro million) | 2013 | Saipem’s adjustment (*) |
2013 restated | |||
| Net profit | 4,972 | 245 | 5,217 | ||||||
| Eni’s shareholders | 5,160 | 106 | 5,266 | ||||||
| Non-controlling interest | (188 | ) | 139 | (49 | ) |
(*) Before elimination of immaterial
intersegment profit.
| Treasury
shares As of December 31, 2013, Eni’s treasury shares in portfolio amounted to No. 11,388,287, corresponding to 0.31% of share capital of Eni, represented by No. 3,634,185,330 ordinary shares, for a total book value of euro 201 million. Compared to December 31, 2012, there was no variation regarding the number of Eni’s treasury shares in portfolio. On May 10, 2013, the Ordinary Shareholders’ meeting revoked, for the part that had not been accomplished by the date of meeting, the authorization to purchase ordinary Eni shares, resolved on July 16, 2012 by the Board of Directors. Besides that, the Ordinary Shareholders’ meeting resolved to authorize the Board of Directors to purchase Eni’s shares on the Mercato Telematico Azionario – in one or more transactions and in any case within 18 months from the date of the resolution – up to a maximum number of 363,000,000 ordinary Eni’s shares, for a total amount not less than euro 1.102 and not more than the official price, recorded for the security in the Stock Exchange session |
prior to each individual
transaction, increased by 5% and in any case up to a
total amount of euro 6,000 million, according to the
operational procedures established by the rules that
govern the organization and management of Borsa Italiana
SpA. As of February 28, 2014 Eni repurchased 6,620,916 treasury shares for a total amount of euro 113 million at an average price of euro 17.0865 per share. Continuing listing standards provided by Article No. 36 of Italian exchanges regulation (adopted with Consob Decision No. 16191/2007 as amended) about issuers that control subsidiaries incorporated or regulated in accordance with laws of extra-EU Countries Certain provisions have been enacted regulating continuing Italian listing standards of issuers controlling subsidiaries that are incorporated or regulated in accordance with laws of extra-EU Countries, also having a material impact on the Consolidated Financial Statements of the parent company. |
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| Regarding the aforementioned
provisions, the Company discloses that: - as of December 31, 2013, ten of Eni’s subsidiaries: Burren Energy (Bermuda) Ltd, Eni Congo SA, Eni Norge AS, Eni Petroleum Co Inc, NAOC-Nigerian Agip Oil Co Ltd, Nigerian Agip Exploration Ltd, Burren Energy (Congo) Ltd, Eni Finance USA Inc, Eni Trading & Shipping Inc and Eni Canada Holding Ltd, fall within the scope of the new continuing listing standards. Eni has already adopted adequate procedures to ensure full compliance with the new regulations; - the Company has already adopted adequate procedures to ensure full compliance with the regulation. Branches In accordance with Article No. 2428 of the Italian Civil Code, it is hereby stated that Eni has the following branches: |
San Donato Milanese (MI) -
Via Emilia, 1; San Donato Milanese (MI) - Piazza Vanoni, 1. Subsequent events On March 28, 2014, through an accelerated book-building procedure aimed at institutional investors, Eni sold approximately 7% of the share capital of Galp Energia SGPS SA at the price of euro 12.10 per share, for a total consideration of euro 702.4 million. Following this transaction, Eni retains a 9% interest in Galp, of which 8% underlying the approximately euro 1,028 million exchangeable bond due on November 30, 2015. Other subsequent business developments are described in the operating review of each of Eni’s business segments. |
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Eni Annual Report / Glossary
| Glossary |
| The glossary of oil and gas
terms is available on Eni’s web page at the address
eni.com. Below is a selection of the most frequently used
terms. Financial terms - Dividend Yield Measures the return on a share based on dividends for the year. Calculated as the ratio of dividends per share of the year and the average reference price of shares in the last month of the year. Generally, companies tend to keep a constant dividend yield, as shareholders compare this indicator with the yield of other shares or other financial instruments (e.g. bonds). - Leverage Is a measure of a company’s debt, calculated as the ratio between net financial debt and shareholders’ equity, including minority interests. - ROACE Return On Average Capital Employed Is the return on average capital invested, calculated as the ratio between net income before minority interests, plus net financial charges on net financial debt, less the related tax effect and net average capital employed. - Coverage Financial discipline ratio, calculated as the ratio between operating profit and net finance charges. - Current ratio Measures the capability of the company to repay short-term debt, calculated as the ratio between current assets and current liabilities. - Debt coverage Rating companies use the debt coverage ratio to evaluate debt sustainability. It is calculated as the ratio between net cash provided by operating activities and net borrowings, less cash and cash-equivalents, Securities held for non-operating purposes and financing receivables for non operating purposes. - Profit per boe Measures the return per oil and natural gas barrel produced. It is calculated as the ratio between Results of operations from E&P activities (as defined by FASB Extractive Activities - Oil & Gas Topic 932) and production sold. - Opex per boe Measures efficiency in the oil&gas development activities, calculated as the ratio between operating costs (as defined by FASB Extractive Activities - Oil & Gas Topic 932) and production sold. - Cash flow per boe Represents cash flow per each boe of hydrocarbon produced, less non-monetary items. Calculated as the ratio between Results of operations from E&P activities, net of depreciation, depletion, amortization and |
impairment and exploration
expenses (as defined by FASB Extractive Activities - Oil
& Gas Topic 932) and volumes of oil and gas produced. -
Finding & Development cost per boe Represents
Finding & Development cost per boe of new proved or
possible reserves. It is calculated as the overall amount
of exploration and development expenditure, the
consideration for the acquisition of possible and
probable reserves as well as additions of proved reserves
deriving from improved recovery, extensions, discoveries
and revisions of previous estimates (as defined by FASB
Extractive Activities - Oil & Gas Topic 932). Oil and natural gas activities - Average reserve life index Ratio between the amount of reserves at the end of the year and total production for the year. - Barrel Volume unit corresponding to 159 liters. A barrel of oil corresponds to about 0.137 metric tons. - Boe (Barrel of Oil Equivalent) Is used as a standard unit measure for oil and natural gas. From July 1, 2012, Eni has updated the conversion rate of gas to 5,492 cubic feet of gas equals 1 barrel of oil (it was 5, 550 cubic feet of gas per barrel in previous reporting periods). - Carbon Capture and Storage (CCS) Technique of CO2 capture and storage through an integrated process that involves: (i) capture of CO2 associated with large combustion plants, power generation plants, industrial point sources, as well as natural gas fields; (ii) transport to the storage sites, generally via pipeline; and (iii) sequestration in geological sites on land or under the sea floor. - Concession contracts Contracts currently applied mainly in Western Countries regulating relationships between States and oil companies with regards to hydrocarbon exploration and production. The company holding the mining concession has an exclusive on mining activities and for this reason it acquires a right on hydrocarbons extracted, against the payment of royalties to the State on production and taxes on oil revenues. - Condensates These are light hydrocarbons produced along with gas, that condense to a liquid state at normal temperature and pressure for surface production facilities. - Contingent resources Amounts of oil and gas estimated at a given date that are potentially recoverable by means of development projects that are not considered commercially recoverable due to one or more contingency. |
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| - Conversion Refinery
process allowing the transformation of heavy fractions
into lighter fractions. Conversion processes are
cracking, visbreaking, coking, the gasification of
refinery residues, etc. The ration of overall treatment
capacity of these plants and that of primary crude
fractioning plants is the conversion rate of a refinery.
Flexible refineries have higher rates and higher
profitability. - Deep waters Waters deeper than 200 meters. - Development Drilling and other post-exploration activities aimed at the production of oil and gas. - Elastomers (or Rubber) Polymers, either natural or synthetic, which, unlike plastic, when stress is applied, return, to a certain degree, to their original shape, once the stress ceases to be applied. The main synthetic elastomers are polybutadiene (BR), styrene-butadiene rubber (SBR), ethylenepropylene rubber (EPR), thermoplastic rubber (TPR) and nitrylic rubber (NBR). - Emissions of NMVOC (Non Methane Volatile Organic Compounds) Total direct emissions of hydrocarbons, hydrocarbons substitutes (e.g. mercaptans) and oxygenated hydrocarbons (e.g. MTBE) that evaporate at normal temperature. They include LPG and exclude methane. Main sources are fugitive emissions from storage tanks and pipelines in industrial plants and deposits, distribution networks, flaring (often incomplete), venting, etc. - Emissions of NOx (Nitrogen Oxides) Total direct emissions of nitrogen oxides deriving from combustion processes in air. They include NOx emissions from flaring activities, sulphur recovery processes, FCC regeneration, etc. They include NO and NO2 emissions and exclude N2O emissions. - Emissions of SOx (Sulfur Oxides) Total direct emissions of sulfur oxides including SO2 and SO3 emissions. Main sources are combustion plants, diesel engines (including maritime engines), gas flaring (if the gas contains H2S), sulphur recovery processes, FCC regeneration, etc. - Enhanced recovery Techniques used to increase or stretch over time the production of wells. - EPC (Engineering, Procurement, Construction) A contract typical of onshore construction of large plants in which the contractor supplies engineering, procurement and construction of the plant. The contract is defined "turnkey" when the plant is supplied for start-up. - EPCI (Engineering, Procurement, Commissioning, Installation) A contract typical of offshore construction of complex projects (such as the installation of production platforms or FPSO systems) in which the global or main contractor, usually a company or a consortium of companies, supplies engineering, procurement, construction of plant and infrastructure, transport to the site and all preparatory activities for the start-up of plants. - Exploration Oil and natural gas exploration that includes land surveys, geological and geophysical studies, seismic data gathering and analysis, and well drilling. |
- FPSO vessel
Floating, Production, Storage and Offloading system
made-up of a large capacity oil tanker including a large
hydrocarbon treatment plant. This system, moored at the
bow in order to maintain a geostationary position, is in
fact a temporary fixed platform linking the underwater
wellheads to the treatment, storage and offloading
systems onboard by means of risers from the seabed. - Green House Gases (GHG) Gases in the atmosphere, transparent to solar radiation, can consistently trap infrared radiation emitted by the earth’s surface, atmosphere and clouds. The six relevant greenhouse gases covered by the Kyoto Protocol are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF6). GHGs absorb and emit radiation at specific wavelengths within the range of infrared radiation determining the so called greenhouse phenomenon and the related increase of earth’s average temperature. - Infilling wells Infilling wells are wells drilled in a producing area in order to improve the recovery of hydrocarbons from the field and to maintain and/or increase production levels. - LNG Liquefied Natural Gas obtained through the cooling of natural gas to minus 160 °C at normal pressure. The gas is liquefied to allow transportation from the place of extraction to the sites at which it is transformed and consumed. One ton of LNG corresponds to 1,400 cubic meters of gas. - LPG Liquefied Petroleum Gas, a mix of light petroleum fractions, gaseous at normal pressure and easily liquefied at room temperature through limited compression. - Mineral Potential (Potentially recoverable hydrocarbon volumes) Estimated recoverable volumes which cannot be defined as reserves due to a number of reasons, such as the temporary lack of viable markets, a possible commercial recovery dependent on the development of new technologies, or for their location in accumulations yet to be developed or where evaluation of known accumulations is still at an early stage. - Mineral Storage Volumes of natural gas required for allowing optimal operation of natural gas fields in Italy for technical and economic reasons. - Modulation Storage Volumes of natural gas required for meeting hourly, daily and seasonal swings of demand. - Natural gas liquids Liquid or liquefied hydrocarbons recovered from natural gas through separation equipment or natural gas treatment plants. Propane, normal-butane and isobutane, isopentane and pentane plus, that used to be defined natural gasoline, are natural gas liquids. - Network Code A code containing norms and regulations for access to, management and operation of natural gas pipelines. - Offshore/onshore The term offshore indicates a portion of open sea and, by induction, the activities carried out in such area, while onshore refers to land operations. - Oil spills Discharge of oil or oil products from refining or oil waste occurring in the normal course of operations (when |
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| accidental) or deriving from
actions intended to hinder operations of business units
or from sabotage by organized groups (when due to
sabotage or terrorism). - Olefins (or Alkenes) Hydrocarbons that are particularly active chemically, used for this reason as raw materials in the synthesis of intermediate products and of polymers. - Over/underlifting Agreements stipulated between partners regulate the right of each to its share in the production of a set period of time. Amounts different from the agreed ones determine temporary over/underlifting situations. - Possible reserves Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. - Probable reserves Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. - Production Sharing Agreement Contract in use in non OECD Countries, regulating relationships between States and oil companies with regard to the exploration and production of hydrocarbons. The mining concession is assigned to the national oil company jointly with the foreign oil company who has exclusive right to perform exploration, development and production activities and can enter agreements with other local or international entities. In this type of contract the national oil company assigns to the international contractor the task of performing exploration and production with the contractor’s equipment and financial resources. Exploration risks are borne by the contractor and production is divided into two portions: "Cost Oil" is used to recover costs borne by the contractor, "Profit Oil" is divided between contractor and national company according to variable schemes and represents the profit deriving from exploration and production. Further terms and conditions may vary from one Country to the other. - Proved reserves Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from know reservoirs, and under existing economic conditions. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. - Reserves Quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project. Reserves can be: (i) developed reserves quantities of oil and gas anticipated to be through installed extraction equipment and infrastructure operational at the time of the reserves estimate; |
(ii) undeveloped reserves:
oil and gas expected to be recovered from new wells,
facilities and operating methods. - Reserve replacement ratio Measure of the reserves produced replaced by proved reserves. Indicates the company’s ability to add new reserves through exploration and purchase of property. A rate higher than 100% indicates that more reserves were added than produced in the period. The ratio should be averaged on a three-year period in order to reduce the distortion deriving from the purchase of proved property, the revision of previous estimates, enhanced recovery, improvement in recovery rates and changes in the value of reserves – in PSAs – due to changes in international oil prices. Management also calculates this ratio by excluding the effect of the purchase of proved property in order to better assess the underlying performance of the Company’s operations. - Ship-or-pay Clause included in natural gas transportation contracts according to which the customer for which the transportation is carried out is bound to pay for the transportation of the gas also in case the gas is not transported. - Strategic Storage Volumes of natural gas required for covering lack or reduction of supplies from extra-European sources or crises in the natural gas system. - Swap In the gas sector, the term is referred to a buy/sell contract between some counterparties and is generally aimed to the optimization of transport costs and respective commitments in purchasing and supplying. - Take-or-pay Clause included in natural gas purchase contracts according to which the purchaser is bound to pay the contractual price or a fraction of such price for a minimum quantity of the gas set in the contract also in case it is not collected by the customer. The customer has the option of collecting the gas paid and not delivered at a price equal to the residual fraction of the price set in the contract in subsequent contract years. - Upstream/mid-downstream The term upstream refers to all hydrocarbon exploration and production activities. The term mid-downstream includes all activities inherent to process crude oil and oil-based feedstock for the production of fuels, lubricants and chemicals, as well as the supply, trading and transportation of energy commodities. It also includes the marketing business of refined and chemicals products. - Wholesale sales Domestic sales of refined products to wholesalers/distributors (mainly gasoil), public administrations and end consumers, such as industrial plants, power stations (fuel oil), airlines (jet fuel), transport companies, big buildings and households. They do not include distribution through the service station network, marine bunkering, sales to oil and petrochemical companies, importers and international organizations. - Workover Intervention on a well for performing significant maintenance and substitution of basic equipment for the collection and transport to the surface of liquids contained in a field. |
109
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111
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Eni Annual Report / Consolidated Financial Statements |
Balance sheet
| December 31, 2012 | December 31, 2013 | |||
| (euro million) | Note | Total amount |
|
of which with |
|
Total amount |
of
which with |
|||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | (7) | 7,765 | 5,288 | |||||||||
| Financial assets held for trading | (8) | 5,004 | ||||||||||
| Financial assets available for sale | (9) | 235 | 235 | |||||||||
| Trade and other receivables | (10) | 28,747 | 2,714 | 29,073 | 2,072 | |||||||
| Inventories | (11) | 8,496 | 7,883 | |||||||||
| Current tax assets | (12) | 771 | 802 | |||||||||
| Other current tax assets | (13) | 1,230 | 825 | |||||||||
| Other current assets | (14) | 1,624 | 8 | 1,325 | 15 | |||||||
| 48,868 | 50,435 | |||||||||||
| Non-current assets | ||||||||||||
| Property, plant and equipment | (15) | 63,466 | 62,506 | |||||||||
| Inventory - compulsory stock | (16) | 2,538 | 2,571 | |||||||||
| Intangible assets | (17) | 4,487 | 3,877 | |||||||||
| Equity-accounted investments | (18) | 4,262 | 3,934 | |||||||||
| Other investments | (18) | 5,085 | 3,027 | |||||||||
| Other financial assets | (19) | 1,229 | 642 | 1,097 | 560 | |||||||
| Deferred tax assets | (20) | 5,027 | 4,662 | |||||||||
| Other non-current receivables | (21) | 4,400 | 43 | 3,683 | 42 | |||||||
| 90,494 | 85,357 | |||||||||||
| Assets held for sale | (32) | 516 | 2,296 | |||||||||
| TOTAL ASSETS | 139,878 | 138,088 | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Short-term debt | (22) | 2,223 | 403 | 2,742 | 502 | |||||||
| Current portion of long-term debt | (27) | 2,961 | 2,149 | |||||||||
| Trade and other payables | (23) | 23,581 | 1,616 | 23,598 | 2,164 | |||||||
| Income taxes payable | (24) | 1,622 | 742 | |||||||||
| Other taxes payable | (25) | 2,162 | 2,268 | |||||||||
| Other current liabilities | (26) | 1,437 | 6 | 1,448 | 17 | |||||||
| 33,986 | 32,947 | |||||||||||
| Non-current liabilities | ||||||||||||
| Long-term debt | (27) | 19,279 | 20,988 | |||||||||
| Provisions for contingencies | (28) | 13,603 | 13,167 | |||||||||
| Provisions for employee benefits | (29) | 1,374 | 1,245 | |||||||||
| Deferred tax liabilities | (30) | 6,740 | 6,723 | |||||||||
| Other non-current liabilities | (31) | 1,977 | 16 | 1,704 | ||||||||
| 42,973 | 43,827 | |||||||||||
| Liabilities directly associated with assets held for sale | (32) | 361 | 140 | |||||||||
| TOTAL LIABILITIES | 77,320 | 76,914 | ||||||||||
| SHAREHOLDERS’ EQUITY | (33) | |||||||||||
| Non-controlling interest | 3,498 | 2,964 | ||||||||||
| Eni shareholders’ equity | ||||||||||||
| Share capital | 4,005 | 4,005 | ||||||||||
| Reserve related to the fair value of cash flow hedging derivatives net of tax effect | (16 | ) | (154 | ) | ||||||||
| Other reserves | 49,438 | 51,393 | ||||||||||
| Treasury shares | (201 | ) | (201 | ) | ||||||||
| Interim dividend | (1,956 | ) | (1,993 | ) | ||||||||
| Net profit | 7,790 | 5,160 | ||||||||||
| Total Eni shareholders’ equity | 59,060 | 58,210 | ||||||||||
| TOTAL SHAREHOLDERS’ EQUITY | 62,558 | 61,174 | ||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 139,878 | 138,088 |
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Eni Annual Report / Consolidated Financial Statements |
Profit and loss account
| 2011 | 2012 | 2013 | ||||
| (euro million) | Note | Total amount |
|
of which with |
|
Total amount |
|
of which with |
|
Total amount |
|
of
which with |
||
| REVENUES | ||||||||||||||||||||
| Net sales from operations | (36) | 107,690 | 3,477 | 127,220 | 3,783 | 114,722 | 3,386 | |||||||||||||
| Other income and revenues | 926 | 41 | 1,546 | 56 | 1,385 | 30 | ||||||||||||||
| 108,616 | 128,766 | 116,107 | ||||||||||||||||||
| OPERATING EXPENSES | (37) | |||||||||||||||||||
| Purchases, services and other | 78,795 | 5,880 | 95,363 | 6,604 | 90,213 | 8,506 | ||||||||||||||
| - of which non-recurring charge (income) | (44) | 69 | ||||||||||||||||||
| Payroll and related costs | 4,404 | 33 | 4,613 | 21 | 5,264 | 41 | ||||||||||||||
| OTHER OPERATING (EXPENSE) INCOME | (37) | 171 | 32 | (158 | ) | 10 | (71 | ) | 68 | |||||||||||
| DEPRECIATION, DEPLETION, AMORTIZATION AND IMPAIRMENTS | (37) | 8,785 | 13,561 | 11,703 | ||||||||||||||||
| OPERATING PROFIT | 16,803 | 15,071 | 8,856 | |||||||||||||||||
| FINANCE INCOME (EXPENSE) | (38) | |||||||||||||||||||
| Finance income | 6,376 | 49 | 7,218 | 53 | 5,746 | 56 | ||||||||||||||
| Finance expense | (7,410 | ) | (1 | ) | (8,314 | ) | (4 | ) | (6,649 | ) | (87 | ) | ||||||||
| Financial instruments held for trading | 4 | |||||||||||||||||||
| Derivative financial instruments | (112 | ) | (251 | ) | (92 | ) | ||||||||||||||
| (1,146 | ) | (1,347 | ) | (991 | ) | |||||||||||||||
| INCOME (EXPENSE) FROM INVESTMENTS | (39) | |||||||||||||||||||
| Share of profit (loss) of equity-accounted investments | 500 | 278 | 252 | |||||||||||||||||
| Other gain (loss) from investments | 1,623 | 338 | 2,603 | 5,863 | ||||||||||||||||
| - of which gain on disposals of the 28.57% of Eni East Africa BV |
3,359 | |||||||||||||||||||
| 2,123 | 2,881 | 6,115 | ||||||||||||||||||
| PROFIT BEFORE INCOME TAXES | 17,780 | 16,605 | 13,980 | |||||||||||||||||
| Income taxes | (40) | (9,903 | ) | (11,661 | ) | (9,008 | ) | |||||||||||||
| Net profit for the year - Continuing operations | 7,877 | 4,944 | 4,972 | |||||||||||||||||
| Net profit (loss) for the year - Discontinued operations | (74 | ) | 400 | 3,732 | 2,234 | |||||||||||||||
| Net profit for the year - Continuing operations | 7,803 | 8,676 | 4,972 | |||||||||||||||||
| Attributable to Eni | ||||||||||||||||||||
| Continuing operations | 6,902 | 4,200 | 5,160 | |||||||||||||||||
| Discontinued operations | (42 | ) | 3,590 | |||||||||||||||||
| 6,860 | 7,790 | 5,160 | ||||||||||||||||||
| Attributable to non-controlling interest | (33) | |||||||||||||||||||
| Continuing operations | 975 | 744 | (188 | ) | ||||||||||||||||
| Discontinued operations | (32 | ) | 142 | |||||||||||||||||
| 943 | 886 | (188 | ) | |||||||||||||||||
| Earnings per share attributable to Eni (euro per share) | (41) | |||||||||||||||||||
| Basic | 1.89 | 2.15 | 1.42 | |||||||||||||||||
| Diluted | 1.89 | 2.15 | 1.42 | |||||||||||||||||
| Earnings per share attributable to Eni - Continuing operations (euro per share) | (41) | |||||||||||||||||||
| Basic | 1.90 | 1.16 | 1.42 | |||||||||||||||||
| Diluted | 1.90 | 1.16 | 1.42 |
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Eni Annual Report / Consolidated Financial Statements |
Statement of comprehensive income
| (euro million) | Note | 2011 | 2012 | 2013 | ||||
| Net profit | 7,803 | 8,676 | 4,972 | ||||||||
| Other items of comprehensive income | |||||||||||
| Items not to be reclassified to profit or loss in subsequent periods | |||||||||||
| Revaluations of defined benefit plans | (33) | (150 | ) | 65 | |||||||
| Share of other comprehensive income on equity accounted entities in relation to revaluations of defined benefit plans | (33) | 1 | (3 | ) | |||||||
| Tax effect | (33) | 53 | (40 | ) | |||||||
| (96 | ) | 22 | |||||||||
| Other comprehensive income to be reclassified to profit or loss in subsequent periods | |||||||||||
| Foreign currency translation differences | (33) | 1,031 | (718 | ) | (1,871 | ) | |||||
| Change in the fair value of investments | (33) | 141 | (64 | ) | |||||||
| Change in the fair value of other available-for-sale financial instruments | (33) | (6 | ) | 16 | (1 | ) | |||||
| Change in the fair value of cash flow hedging derivatives | (33) | 352 | (102 | ) | (199 | ) | |||||
| Share of other comprehensive income on equity-accounted entities | (33) | (13 | ) | 7 | 1 | ||||||
| Tax effect | (33) | (128 | ) | 32 | 63 | ||||||
| 1,236 | (624 | ) | (2,071 | ) | |||||||
| Total other items of comprehensive income | 1,236 | (720 | ) | (2,049 | ) | ||||||
| Total comprehensive income | 9,039 | 7,956 | 2,923 | ||||||||
| Attributable to | |||||||||||
| Eni | 8,097 | 7,096 | 3,164 | ||||||||
| Non-controlling interest | 942 | 860 | (241 | ) | |||||||
| 9,039 | 7,956 | 2,923 |
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Eni Annual Report / Consolidated Financial Statements |
Statements of changes in shareholders’ equity
Eni shareholders’ equity |
||
(euro million) |
Share capital |
Legal reserve of Eni SpA |
Reserve for treasury shares |
Reserve related to the fair value of cash flow hedging derivatives net of tax effect |
Reserve related to the fair value of available-for-sale financial instruments net of tax effect |
Reserve for defined benefit plans net of tax effect |
Other reserves |
Cumulative currency translation |
Treasury shares |
Retained earnings |
Interim dividend |
Net profit for the year |
Total |
Non-controlling interest |
Total shareholders’ equity |
||||||||||||||||
| Balance at December 31, 2010 | 4,005 |
959 |
6,756 |
(174 |
) | (3 |
) | 1,518 |
539 |
(6,756 |
) | 39,855 |
(1,811 |
) | 6,318 |
51,206 |
4,522 |
55,728 |
|||||||||||||||||||||||||||
| Net profit of the year | 6,860 |
6,860 |
943 |
7,803 |
|||||||||||||||||||||||||||||||||||||||||
| Other items of comprehensive income | |||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income to be reclassified to profit or loss in subsequent periods | |||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation differences | 1,000 |
31 |
1,031 |
1,031 |
|||||||||||||||||||||||||||||||||||||||||
| Change in the fair value of other available-for-sale financial instruments net of tax effect | (5 |
) | (5 |
) | (5 |
) | |||||||||||||||||||||||||||||||||||||||
| Change in the fair value of cash flow hedge derivatives net of tax effect | 223 |
223 |
223 |
||||||||||||||||||||||||||||||||||||||||||
| Share of "Other comprehensive income" on equity-accounted entities | (12 |
) | (12 |
) | (1 |
) | (13 |
) | |||||||||||||||||||||||||||||||||||||
223 |
(5 |
) | (12 |
) | 1,000 |
31 |
1,237 |
(1 |
) | 1,236 |
|||||||||||||||||||||||||||||||||||
| Total comprehensive income of the year | 223 |
(5 |
) | (12 |
) | 1,000 |
31 |
6,860 |
8,097 |
942 |
9,039 |
||||||||||||||||||||||||||||||||||
| Transactions with shareholders | |||||||||||||||||||||||||||||||||||||||||||||
| Dividend distribution of Eni SpA (euro 0.50 per share in settlement of 2010 interim dividend of euro 0.50 per share) | 1,811 |
(3,622 |
) | (1,811 |
) | (1,811 |
) | ||||||||||||||||||||||||||||||||||||||
| Interim dividend distribution of Eni SpA (euro 0.52 per share) | (1,884 |
) | (1,884 |
) | (1,884 |
) | |||||||||||||||||||||||||||||||||||||||
| Dividend distribution of other companies | (571 |
) | (571 |
) | |||||||||||||||||||||||||||||||||||||||||
| Allocation of 2010 net profit | 2,696 |
(2,696 |
) | ||||||||||||||||||||||||||||||||||||||||||
| Payments by minority shareholders | 26 |
26 |
|||||||||||||||||||||||||||||||||||||||||||
| Acquisition of non-controlling interest relating to Altergaz SA and Tigáz Zrt | (94 |
) | (25 |
) | (119 |
) | (7 |
) | (126 |
) | |||||||||||||||||||||||||||||||||||
| Effect related to the purchase of Italgas SpA by Snam SpA | (5 |
) | (5 |
) | 5 |
||||||||||||||||||||||||||||||||||||||||
| Treasury shares sold following the exercise of stock options exercised by Eni managers | (3 |
) | 3 |
3 |
3 |
3 |
|||||||||||||||||||||||||||||||||||||||
| Treasury shares sold following the exercise of stock options by Saipem and Snam managers | 14 |
(10 |
) | 4 |
13 |
17 |
|||||||||||||||||||||||||||||||||||||||
| Non-controlling interest excluded following the sale of Acqua Campania SpA and the divestment of the control stake in the share capital of Petromar Lda | (10 |
) | (10 |
) | |||||||||||||||||||||||||||||||||||||||||
(3 |
) | (85 |
) | 3 |
2,664 |
(73 |
) | (6,318 |
) | (3,812 |
) | (544 |
) | (4,356 |
) | ||||||||||||||||||||||||||||||
| Other changes in shareholders’ equity | |||||||||||||||||||||||||||||||||||||||||||||
| Cost related to stock options | 2 |
2 |
2 |
||||||||||||||||||||||||||||||||||||||||||
| Stock options expired | (7 |
) | (7 |
) | (7 |
) | |||||||||||||||||||||||||||||||||||||||
| Other changes | (14 |
) | (14 |
) | 1 |
(13 |
) | ||||||||||||||||||||||||||||||||||||||
(19 |
) | (19 |
) | 1 |
(18 |
) | |||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2011 | 4,005 |
959 |
6,753 |
49 |
(8 |
) | 1,421 |
1,539 |
(6,753 |
) | 42,531 |
(1,884 |
) | 6,860 |
55,472 |
4,921 |
60,393 |
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Eni Annual Report / Consolidated Financial Statements |
continued Statements of changes in shareholders’ equity
Eni shareholders’ equity |
||
(euro million) |
Note |
Share capital |
Legal reserve of Eni SpA |
Reserve for treasury shares |
Reserve related to the fair value of cash flow hedging derivatives net of tax effect |
Reserve related to the fair value of available-for-sale financial instruments net of tax effect |
Reserve for defined benefit plans net of tax effect |
Other reserves |
Cumulative currency translation |
Treasury shares |
Retained earnings |
Interim dividend |
Net profit for the year |
Total |
Non-controlling interest |
Total shareholders’ equity |
|||||||||||||||
| Balance at December 31, 2011 | 4,005 | 959 | 6,753 | 49 | (8 | ) | 1,421 | 1,539 | (6,753 | ) | 42,531 | (1,884 | ) | 6,860 | 55,472 | 4,921 | 60,393 | |||||||||||||||||||||||||||||
| Changes in accounting principles (IAS 19) | (52 | ) | (52 | ) | (9 | ) | (61 | ) | ||||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2012 | 4,005 | 959 | 6,753 | 49 | (8 | ) | 1,421 | 1,539 | (6,753 | ) | 42,479 | (1,884 | ) | 6,860 | 55,420 | 4,912 | 60,332 | |||||||||||||||||||||||||||||
| Net profit of the year | 7,790 | 7,790 | 886 | 8,676 | ||||||||||||||||||||||||||||||||||||||||||
| Other items of comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||||
| Items not to be reclassified to profit or loss in subsequent periods | ||||||||||||||||||||||||||||||||||||||||||||||
| Revaluations of defined benefit plans net of tax effect | (33) | (87 | ) | (87 | ) | (10 | ) | (97 | ) | |||||||||||||||||||||||||||||||||||||
| Share of "Other comprehensive income" on equity-accounted entities in relation to revaluations of defined benefit plans net of tax effect | (33) | (1 | ) | (1 | ) | 2 | 1 | |||||||||||||||||||||||||||||||||||||||
| (88 | ) | (88 | ) | (8 | ) | (96 | ) | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income to be reclassified to profit or loss in subsequent periods | ||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation differences | (33) | (597 | ) | (104 | ) | (701 | ) | (17 | ) | (718 | ) | |||||||||||||||||||||||||||||||||||
| Change in the fair value of investments net of tax effect | (33) | 138 | 138 | 138 | ||||||||||||||||||||||||||||||||||||||||||
| Change in the fair value of other available-for-sale financial instruments net of tax effect | (33) | 14 | 14 | 14 | ||||||||||||||||||||||||||||||||||||||||||
| Change in the fair value of cash flow hedge derivatives net of tax effect | (33) | (65 | ) | (65 | ) | (65 | ) | |||||||||||||||||||||||||||||||||||||||
| Share of "Other comprehensive income" on equity-accounted entities | (33) | 8 | 8 | (1 | ) | 7 | ||||||||||||||||||||||||||||||||||||||||
| (65 | ) | 152 | 8 | (597 | ) | (104 | ) | (606 | ) | (18 | ) | (624 | ) | |||||||||||||||||||||||||||||||||
| Total comprehensive income of the year | (65 | ) | 152 | (88 | ) | 8 | (597 | ) | (104 | ) | 7,790 | 7,096 | 860 | 7,956 | ||||||||||||||||||||||||||||||||
| Transactions with shareholders | ||||||||||||||||||||||||||||||||||||||||||||||
| Dividend distribution of Eni SpA (euro 0.52 per share in settlement of 2011 interim dividend of euro 0.52 per share) | 1,884 | (3,768 | ) | (1,884 | ) | (1,884 | ) | |||||||||||||||||||||||||||||||||||||||
| Interim dividend distribution of Eni SpA (euro 0.54 per share) | (33) | (1,956 | ) | (1,956 | ) | (1,956 | ) | |||||||||||||||||||||||||||||||||||||||
| Dividend distribution of other companies | (686 | ) | (686 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Allocation of 2011 net profit | 3,092 | (3,092 | ) | |||||||||||||||||||||||||||||||||||||||||||
| Effect related to the sale of Snam SpA | 371 | 371 | (1,602 | ) | (1,231 | ) | ||||||||||||||||||||||||||||||||||||||||
| Acquisition of non-controlling interest relating to Altergaz SA and Tigáz Zrt | (33) | (4 | ) | (4 | ) | (3 | ) | (7 | ) | |||||||||||||||||||||||||||||||||||||
| Treasury shares sold following the exercise of stock options exercised by Eni managers | (33) | (1 | ) | 1 | 1 | 1 | 1 | |||||||||||||||||||||||||||||||||||||||
| Treasury shares sold following the exercise of stock options by Saipem managers | (33) | 7 | 7 | 22 | 29 | |||||||||||||||||||||||||||||||||||||||||
| (1 | ) | 3 | 1 | 3,464 | (72 | ) | (6,860 | ) | (3,465 | ) | (2,269 | ) | (5,734 | ) | ||||||||||||||||||||||||||||||||
| Other changes in shareholders’ equity | ||||||||||||||||||||||||||||||||||||||||||||||
| Elimination of treasury shares | (6,551 | ) | 6,551 | |||||||||||||||||||||||||||||||||||||||||||
| Reconstitution of the reserve for treasury share | 6,000 | (6,000 | ) | |||||||||||||||||||||||||||||||||||||||||||
| Stock options expired | (7 | ) | (7 | ) | (7 | ) | ||||||||||||||||||||||||||||||||||||||||
| Other changes | (1,140 | ) | 1,156 | 16 | (5 | ) | 11 | |||||||||||||||||||||||||||||||||||||||
| (551 | ) | (1,140 | ) | 6,551 | (4,851 | ) | 9 | (5 | ) | 4 | ||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2012 | (33) | 4,005 | 959 | 6,201 | (16 | ) | 144 | (88 | ) | 292 | 942 | (201 | ) | 40,988 | (1,956 | ) | 7,790 | 59,060 | 3,498 | 62,558 |
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Eni Annual Report / Consolidated Financial Statements |
continued Statements of changes in shareholders’ equity
Eni shareholders’ equity |
||
(euro million) |
Note |
Share capital |
Legal reserve of Eni SpA |
Reserve for treasury shares |
Reserve related to the fair value of cash flow hedging derivatives net of tax effect |
Reserve related to the fair value of available-for-sale financial instruments net of tax effect |
Reserve for defined benefit plans net of tax effect |
Other reserves |
Cumulative currency translation |
Treasury shares |
Retained earnings |
Interim dividend |
Net profit for the year |
Total |
Non-controlling interest |
Total shareholders’ equity |
|||||||||||||||
| Balance at December 31, 2012 | (33) | 4,005 | 959 | 6,201 | (16 | ) | 144 | (88 | ) | 292 | 942 | (201 | ) | 40,988 | (1,956 | ) | 7,790 | 59,060 | 3,498 | 62,558 | ||||||||||||||||||||||||||
| Net profit of the year | 5,160 | 5,160 | (188 | ) | 4,972 | |||||||||||||||||||||||||||||||||||||||||
| Other items of comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||||
| Items not to be reclassified to profit or loss in subsequent periods | ||||||||||||||||||||||||||||||||||||||||||||||
| Revaluations of defined benefit plans net of tax effect | (33) | 18 | 18 | 7 | 25 | |||||||||||||||||||||||||||||||||||||||||
| Share of "Other comprehensive income" on equity-accounted entities in relation to revaluations of defined benefit plans net of tax effect | (33) | (1 | ) | (1 | ) | (2 | ) | (3 | ) | |||||||||||||||||||||||||||||||||||||
| 17 | 17 | 5 | 22 | |||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income to be reclassified to profit or loss in subsequent periods | ||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation differences | (33) | (1 | ) | (1,640 | ) | (171 | ) | (1,812 | ) | (59 | ) | (1,871 | ) | |||||||||||||||||||||||||||||||||
| Change in the fair value of investments net of tax effect | (33) | (62 | ) | (62 | ) | (62 | ) | |||||||||||||||||||||||||||||||||||||||
| Change in the fair value of other available-for-sale financial instruments net of tax effect | (33) | (1 | ) | (1 | ) | (1 | ) | |||||||||||||||||||||||||||||||||||||||
| Change in the fair value of cash flow hedge derivatives net of tax effect | (33) | (138 | ) | (138 | ) | (138 | ) | |||||||||||||||||||||||||||||||||||||||
| Share of "Other comprehensive income" on equity-accounted entities | (33) | 1 | 1 | |||||||||||||||||||||||||||||||||||||||||||
| (138 | ) | (63 | ) | (1 | ) | (1,640 | ) | (171 | ) | (2,013 | ) | (58 | ) | (2,071 | ) | |||||||||||||||||||||||||||||||
| Total comprehensive income of the year | (138 | ) | (63 | ) | 16 | (1,640 | ) | (171 | ) | 5,160 | 3,164 | (241 | ) | 2,923 | ||||||||||||||||||||||||||||||||
| Transactions with shareholders | ||||||||||||||||||||||||||||||||||||||||||||||
| Dividend distribution of Eni SpA (euro 0.54 per share in settlement of 2012 interim dividend of euro 0.54 per share) | (33) | (829 | ) | 1,956 | (3,083 | ) | (1,956 | ) | (1,956 | ) | ||||||||||||||||||||||||||||||||||||
| Interim dividend distribution of Eni SpA (euro 0.55 per share) | (33) | (1,993 | ) | (1,993 | ) | (1,993 | ) | |||||||||||||||||||||||||||||||||||||||
| Dividend distribution of other companies | (251 | ) | (251 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Allocation of 2012 net profit | 4,707 | (4,707 | ) | |||||||||||||||||||||||||||||||||||||||||||
| Acquisition of non-controlling interest relating to Tigáz Zrt | (33) | 4 | 4 | (32 | ) | (28 | ) | |||||||||||||||||||||||||||||||||||||||
| Payments and reimbursements by/to minority shareholders | (33) | (4 | ) | (4 | ) | |||||||||||||||||||||||||||||||||||||||||
| Treasury shares sold following the exercise of stock options by Saipem managers | (33) | 1 | 1 | |||||||||||||||||||||||||||||||||||||||||||
| 4 | 3,878 | (37 | ) | (7,790 | ) | (3,945 | ) | (286 | ) | (4,231 | ) | |||||||||||||||||||||||||||||||||||
| Other changes in shareholders’ equity | ||||||||||||||||||||||||||||||||||||||||||||||
| Exclusion from the consolidation of Distribudora de Gas de Cuyana SA and Inversora de Gas de Cuyana SA following loss of control and Finpipe GIE following the divestment | (23 | ) | (23 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Elimination of intercompany profit between companies with different Group interest | (32 | ) | (32 | ) | 32 | |||||||||||||||||||||||||||||||||||||||||
| Stock options expired | (13 | ) | (13 | ) | (13 | ) | ||||||||||||||||||||||||||||||||||||||||
| Other changes | (24 | ) | (24 | ) | (16 | ) | (40 | ) | ||||||||||||||||||||||||||||||||||||||
| (69 | ) | (69 | ) | (7 | ) | (76 | ) | |||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2013 | (33) | 4,005 | 959 | 6,201 | (154 | ) | 81 | (72 | ) | 296 | (698 | ) | (201 | ) | 44,626 | (1,993 | ) | 5,160 | 58,210 | 2,964 | 61,174 |
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Eni Annual Report / Consolidated Financial Statements |
Statement of cash flows
| (euro million) | Note |
2011 | 2012 | 2013 | ||||
| Net profit of the year - Continuing operation | 7,877 | 4,944 | 4,972 | |||||||||||||||||
| Adjustments to reconcile net profit to net cash provided by operating activities | ||||||||||||||||||||
| Depreciation and amortization | (37) | 7,755 | 9,538 | 9,303 | ||||||||||||||||
| Impairments of tangible and intangible assets, net | (37) | 1,030 | 4,023 | 2,400 | ||||||||||||||||
| Share of (profit) loss of equity-accounted investments | (39) | (500 | ) | (278 | ) | (252 | ) | |||||||||||||
| Gain on disposal of assets, net | (1,176 | ) | (875 | ) | (3,770 | ) | ||||||||||||||
| Dividend income | (39) | (659 | ) | (431 | ) | (400 | ) | |||||||||||||
| Interest income | (99 | ) | (108 | ) | (155 | ) | ||||||||||||||
| Interest expense | 773 | 803 | 709 | |||||||||||||||||
| Income taxes | (40) | 9,903 | 11,661 | 9,008 | ||||||||||||||||
| Other changes | 331 | (1,945 | ) | (1,878 | ) | |||||||||||||||
| Changes in working capital: | ||||||||||||||||||||
| - inventories | (1,400 | ) | (1,395 | ) | 320 | |||||||||||||||
| - trade receivables | 218 | (3,184 | ) | (1,363 | ) | |||||||||||||||
| - trade payables | 34 | 2,029 | 706 | |||||||||||||||||
| - provisions for contingencies | 109 | 338 | 58 | |||||||||||||||||
| - other assets and liabilities | (657 | ) | (1,161 | ) | 765 | |||||||||||||||
| Cash flow from changes in working capital | (1,696 | ) | (3,373 | ) | 486 | |||||||||||||||
| Net change in the provisions for employee benefits | (10 | ) | 11 | 5 | ||||||||||||||||
| Dividends received | 955 | 988 | 684 | |||||||||||||||||
| Interest received | 99 | 91 | 108 | |||||||||||||||||
| Interest paid | (927 | ) | (825 | ) | (944 | ) | ||||||||||||||
| Income taxes paid, net of tax receivables received | (9,893 | ) | (11,868 | ) | (9,307 | ) | ||||||||||||||
| Net cash provided by operating activities - Continuing operations | 13,763 | 12,356 | 10,969 | |||||||||||||||||
| Net cash provided by operating activities - Discontinued operations | 619 | 15 | ||||||||||||||||||
| Net cash provided by operating activities | 14,382 | 12,371 | 10,969 | |||||||||||||||||
| - of which with related parties | (43) | (639 | ) | (1,542 | ) | (3,354 | ) | |||||||||||||
| Investing activities: | ||||||||||||||||||||
| - tangible assets | (15) | (11,658 | ) | (11,222 | ) | (10,864 | ) | |||||||||||||
| - intangible assets | (17) | (1,780 | ) | (2,295 | ) | (1,886 | ) | |||||||||||||
| - consolidated subsidiaries and businesses | (34) | (115 | ) | (178 | ) | (25 | ) | |||||||||||||
| - investments | (18) | (245 | ) | (391 | ) | (292 | ) | |||||||||||||
| - securities | (62 | ) | (17 | ) | (5,048 | ) | ||||||||||||||
| - financing receivables | (715 | ) | (1,634 | ) | (989 | ) | ||||||||||||||
| - change in payables and receivables in
relation to investing activities and capitalized depreciation |
379 | 54 | 48 | |||||||||||||||||
| Cash flow from investing activities | (14,196 | ) | (15,683 | ) | (19,056 | ) | ||||||||||||||
| Disposals: | ||||||||||||||||||||
| - tangible assets | 154 | 1,229 | 514 | |||||||||||||||||
| - intangible assets | 41 | 61 | 16 | |||||||||||||||||
| - consolidated subsidiaries and businesses | (34) | 1,006 | 3,521 | 3,401 | ||||||||||||||||
| - investments | 711 | 1,203 | 2,429 | |||||||||||||||||
| - securities | 128 | 52 | 33 | |||||||||||||||||
| - financing receivables | 695 | 1,578 | 1,565 | |||||||||||||||||
| - change in payables and receivables in relation to disposals | 243 | (252 | ) | 155 | ||||||||||||||||
| Cash flow from disposals | 2,978 | 7,392 | 8,113 | |||||||||||||||||
| Net cash used in investing activities | (11,218 | ) | (8,291 | ) | (10,943 | ) | ||||||||||||||
| - of which with related parties | (43) | (800 | ) | 1,535 | (398 | ) |
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Eni Annual Report / Consolidated Financial Statements |
continued Statement of cash flows
| (euro million) | Note |
2011 | 2012 | 2013 | ||||
| Proceeds from long-term debt | (27) | 4,474 | 10,484 | 5,418 | |||||||
| Repayments of long-term debt | (27) | (889 | ) | (3,784 | ) | (4,669 | ) | ||||
| Increase (decrease) in short-term debt | (22) | (2,481 | ) | (753 | ) | 1,029 | |||||
| 1,104 | 5,947 | 1,778 | |||||||||
| Net capital contributions by non-controlling interest | 26 | (4 | ) | ||||||||
| Sale of treasury shares | 3 | ||||||||||
| Net acquisition of treasury shares different from Eni SpA | 17 | 29 | 1 | ||||||||
| Acquisition of additional interests in consolidated subsidiaries | (126 | ) | 604 | (28 | ) | ||||||
| Dividends paid to Eni’s shareholders | (3,695 | ) | (3,840 | ) | (3,949 | ) | |||||
| Dividends paid to non-controlling interest | (552 | ) | (539 | ) | (251 | ) | |||||
| Net cash used in financing activities | (3,223 | ) | 2,201 | (2,453 | ) | ||||||
| - of which with related parties | (43) | 348 | (94 | ) | 118 | ||||||
| Effect of change in consolidation (inclusion/exclusion of significant/insignificant subsidiaries) | (7 | ) | (4 | ) | (13 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents and other changes | 17 | (12 | ) | (37 | ) | ||||||
| Net cash flow of the year | (49 | ) | 6,265 | (2,477 | ) | ||||||
| Cash and cash equivalents - beginning of the year | (7) | 1,549 | 1,500 | 7,765 | |||||||
| Cash and cash equivalents - end of the year | (7) | 1,500 | 7,765 | 5,288 |
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Eni Annual Report / Notes to the Consolidated Financial Statements |
| Notes to
the Consolidated Financial Statements 1 Basis of presentation The Consolidated Financial
Statements of Eni Group have been prepared in accordance
with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board
(IASB) and adopted by the European Union (EU) pursuant to
Article 6 of the EC Regulation No. 1606/2002, of the
European Parliament and of the Council of July 19, 2002
and in accordance with Article 9 of Legislative Decree
No. 38/20051. Oil and natural gas exploration
and production activity is accounted for in conformity
with internationally accepted accounting standards.
Specifically, this concerns the determination of the
amortization expenses using the unit-of-production method
and the recognition of the production sharing agreement
and buyback contracts. The Consolidated Financial
Statements have been prepared on a historical cost basis,
taking into account where appropriate of any value
adjustments, except for certain items that under IFRS
must be recognized at fair value as described in the
summary of significant accounting policies paragraph.
2 Principles of consolidation Subsidiaries |
as
described below under the item “Non-current
financial assets”. The income and expense of a subsidiary are included in the consolidated financial statements from the acquisition date until the date when the parent ceases to control the subsidiary. Assets and liabilities, revenues and expenses related to fully consolidated subsidiaries are wholly incorporated in the Consolidated Financial Statements; the book value of these subsidiaries is eliminated against the corresponding share of the shareholders’ equity. Equity and net profit of non-controlling interests are included in specific lines of equity and profit and loss account. The purchase of additional equity interests in subsidiaries from non-controlling interests is recognized in the Group shareholders’ equity and represents the excess of the amount paid over the carrying value of the non-controlling interests acquired; similarly, the effects of the sale of non-controlling interests in subsidiaries without loss of control are recognized in equity. Conversely, the sale of equity interests with loss of control determines the recognition in the profit and loss account of: (i) any gain/loss calculated as the difference between the consideration received and the corresponding transferred share of equity; (ii) any gain or loss recognized as a result of remeasuring to fair value any investment retained in the former subsidiary; (iii) any amount related to the former subsidiary previously recognized in other comprehensive income which can be reclassified subsequently to profit and loss account3. Any investment retained in the former subsidiary is recognized at its fair value at the date when control is lost and shall be accounted for in accordance with the applicable measurement criteria. Subsidiaries’ financial statements are audited by external auditors who audit also the information required for the preparation of the Consolidated Financial Statements. Business combinations Business combination transactions are recognized by applying the acquisition method. The consideration transferred in a business combination is measured at the acquisition date and is the sum of the fair value of the assets transferred, the liabilities incurred, as well as any equity instruments issued by the acquirer. Acquisition-related costs are recognized in profit and loss account when they are incurred. At the acquisition date, the acquirer shall measure the identifiable assets acquired and liabilities assumed at their acquisition-date fair values4, unless IFRSs provide exceptions to this measurement principle. The surplus of the cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities is recognized as goodwill; a gain from a bargain purchase is recognized in the profit and loss account. Any non-controlling interest is measured as the proportionate share in the recognized amounts of the acquiree’s identifiable net assets at the acquisition date (partial goodwill method); as an alternative, it is allowed the recognition of the entire amount of goodwill deriving from the acquisition, including also the goodwill attributable to non-controlling interests (full goodwill method). In the last case, non-controlling interests are measured at their fair value which therefore includes the goodwill attributable to them5. The choice of measurement |
(1) The Consolidated Financial
Statements are compliant with IFRSs as issued by the IASB and
effective for the year 2013, except for IFRS 10 “
Consolidated Financial Statements”, IAS 27 “Separate
Financial Statements”, IFRS 11 “Joint
arrangements”, IAS 28 “Investments in Associates and
Joint Ventures” and IFRS 12 “Disclosure of Interests in
Other Entities” (see also “Recent accounting
standards”). Therefore, the above mentioned standards are
effective for 2013 Annual Report on Form 20-F, because, starting
from 2007 Eni has been applying the SEC provisions which allow
foreign private issuers that prepare their financial statements
according to IFRS as issued by the IASB (even if not yet
endorsed) to eliminate of the US GAAP reconciliation of net
income and equity.
(2) According to the requirements of the Framework of
international accounting standards, information is material if
its omission or misstatement could influence the economic
decisions that users make on the basis of the financial
statements.
(3) Conversely, any component related to the former subsidiary
previously recognized in other comprehensive income, which can
not be reclassified subsequently to profit and loss account, are
reclassified within retained earnings.
(4) Fair value measurement principles are described below under
the item “Fair value measurements”.
(5) The choice between partial goodwill and full goodwill method
is made also for business combinations resulting in the
recognition of a gain on bargain purchase in profit and loss
account.
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Eni Annual Report / Notes to the Consolidated Financial Statements |
| basis
of goodwill (partial goodwill method vs. full goodwill
method) is made on a transaction-by-transaction basis. In a business combination achieved in stages, the purchase price is determined by summing the fair value of previously held equity interest in the acquiree and the consideration transferred for the acquisition of control; the previously held equity interest is remeasured at its acquisition-date fair value and the resulting gain or loss, if any, is recognized in profit and loss account. Furthermore, on acquisition of control, any amount of the acquiree previously recognized in other comprehensive income is charged to profit and loss account or in another item of equity, when the amount cannot be reclassified to profit and loss account. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the provisional amounts recognized at the acquisition date shall be retrospectively adjusted within one year from the acquisition date, to reflect new information obtained about facts and circumstances that existed as of the acquisition date. Intercompany transactions Intercompany transactions and
balances, including unrealized profits arising from
intragroup transactions have been eliminated. |
Foreign currency translation Financial statements of foreign companies
having a functional currency other than the euro, that
represents the Group’s functional currency, are
translated into euro using the rates of exchange ruling
at the balance sheet date for assets and liabilities,
historical exchange rates for equity and average exchange
rates for the profit and loss account (source: Bank of
Italy). The cumulative amount of exchange rate
differences is presented in the separate component of the
Group shareholders’ equity “Cumulative currency
translation differences”. Where the foreign
subsidiary is not wholly-owned, the accumulated exchange
differences that are attributable to non-controlling
interests are allocated to, and recognized as part of,
“Non-controlling interest”. Cumulative exchange
rate differences are charged to the profit and loss
account when the entity disposes the entire interest in a
foreign operation or at the loss of control of a foreign
subsidiary. In these cases, cumulative exchange rate
differences are recognized in the profit and loss
account’s item “Other gain (loss) from
investments”. On a partial disposal that does not
involve loss of control of a subsidiary that includes a
foreign operation, the proportionate share of the
cumulative exchange rate differences is reattributed to
the non-controlling interests in that foreign operation. |
| (currency amount for euro 1) | US Dollar |
Pound Sterling |
Norwegian Krone |
Australian Dollar |
Hungarian Forint |
|||||
| 2011 | ||||||||||
| Annual average exchange rate | 1.39 |
0.87 |
7.79 |
1.35 |
279.37 |
|||||
| Exchange rate at year end | 1.29 |
0.84 |
7.75 |
1.27 |
314.58 |
|||||
| 2012 | ||||||||||
| Annual average exchange rate | 1.28 |
0.81 |
7.48 |
1.24 |
289.25 |
|||||
| Exchange rate at year end | 1.32 |
0.82 |
7.35 |
1.27 |
292.30 |
|||||
| 2013 | ||||||||||
| Annual average exchange rate | 1.33 |
0.85 |
7.81 |
1.38 |
296.87 |
|||||
| Exchange rate at year end | 1.38 |
0.83 |
8.36 |
1.54 |
297.04 |
| 3 Summary
of significant accounting policies The most significant accounting policies used in the preparation of the Consolidated Financial Statements are described below. Current assets Cash and cash equivalents include cash on hand, demand deposits, as well as financial assets originally due within 90 |
days,
readily convertible to known amount of cash and subject
to an insignificant risk of changes in value. Available-for-sale financial assets include financial assets other than derivative financial instruments, loans and receivables, held for trading financial assets and held-to-maturity financial assets. Held for trading financial assets and available-for-sale financial assets are measured at fair value with gains or losses recognized in the profit and loss account under “Finance income (expense)” and to the equity reserve6 related to other comprehensive income, respectively. Changes in fair value of available-for-sale financial assets recognized in equity are charged to the profit and loss account when the assets are |
(6) Changes in the carrying amount of available-for-sale financial assets relating to changes in a foreign exchange rates are recognized in the profit and loss account.
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Eni Annual Report / Notes to the Consolidated Financial Statements |
| derecognized
or impaired. The objective evidence that an impairment
loss has occurred is verified considering, interalia,
significant breaches of contracts, serious financial
difficulties or the risk of bankruptcy and other
financial reorganization of the counterparty; impairment
losses of available-for-sale financial assets are
included in the carrying amount. Interest and dividends
on financial assets measured at fair value are accounted
for on an accrual basis in “Finance income (expense)7”
and “Other gain (loss) from investments”,
respectively. When the purchase or sale of a financial asset is under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the market place concerned, the transaction is accounted for on the settlement date. Receivables are measured at amortized cost (see item “Non-current financial assets” below). Transferred financial assets are derecognized when the contractual rights to receive the cash flows of the financial assets are transferred together with the risks and rewards of the ownership. Inventories, including compulsory stocks and excluding construction contracts, are stated at the lower of purchase or production cost and net realizable value. Net realizable value is the net amount expected to be realized from the sale of inventories in the normal course of business, or, with reference to inventories of crude oil and petroleum products already included in binding sale contracts, the contractual sale price. Inventories which are principally acquired with the purpose of selling in the near future and generating a profit from fluctuations in price are measured at fair value less costs to sell. The cost for inventories of hydrocarbons (crude oil, condensates and natural gas) and petroleum products is determined by applying the weighted-average cost method on a three-month basis, or monthly, when it is justified by the use and the turnover of inventories of crude oil and petroleum products; the cost for inventories of the Versalis segment is determined by applying the weighted average cost on an annual basis. Construction contracts are measured using the cost-to-cost method, whereby contract revenue is recognized by reference to the stage of completion of the contract matching it with the contract costs incurred in reaching that stage of completion. Advances are deducted from inventories within the limits of accrued contractual considerations; any excess of such advances over the value of the inventories is recorded as a liability. Losses related to construction contracts are recognized immediately as an expense when it is probable that total contract costs will exceed total contract revenues. Construction contract not yet invoiced, whose payment will be made in a foreign currency, is translated into euro using the rates of exchange ruling at the balance sheet date and the effect of rate changes is reflected in the profit and loss account. When take-or-pay clauses are included in long-term natural gas purchase contracts, uncollected gas volumes which imply the “pay” clause, measured using the price formulas contractually defined, are recognized under “Other assets” as “Deferred costs” as a contra to “Other payables” or, after the settlement, to “Cash and cash equivalents”. The allocated deferred costs are charged to the profit and loss account: (i) when natural gas is actually delivered, the related cost is included in the determination of the weighted-average cost of inventories; and |
(ii)
for the portion which is not recoverable, when it is not
possible to collect gas that was previously uncollected
within the contractually defined deadlines. Furthermore,
the allocated deferred costs are tested for economic
recoverability by comparing the related carrying amount
and their net realizable value, determined adopting the
same criteria described for inventories. Hedging
instruments are described in the item
“Derivatives”. Non-current assets Property, plant and equipment8 |
(7) Interests accrued on
financial assets held for trading impact the total fair value
measurement of the instrument and are recognized, within the item
“Finance income (expense)”, in the sub-item
“Net finance income on financial assets held for
trading”. Conversely, interests accrued on financial assets
available-for-sale are recognized, within the item “Finance
income (expense)”, in the sub-item “Finance
income”.
(8) Recognition and evaluation criteria of exploration and
production activities are described in the section
“Exploration and production activities” below.
(9) The Company recognizes material provisions for the retirement
of assets in the Exploration & Production segment. No
significant asset retirement obligations associated with any
legal obligations to retire refining, marketing and
transportation (downstream) and chemical long-lived assets are
generally recognized, as undetermined settlement dates for asset
retirements do not allow a reasonable estimate of the fair value
of the associated retirement obligation. The Company performs
periodic reviews of its downstream and chemical long-lived assets
for any changes in facts and circumstances that might require
recognition of a retirement obligation.
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| benefits embodied in the asset, shall be recognized prospectively. Assets that can be used free of charge by third parties are depreciated over the shorter term of the duration of the concession or the asset’s useful life. Replacement costs of identifiable components in complex assets are capitalized and depreciated over their useful life; the residual book value of the component that has been substituted is charged to the profit and loss account. Expenditures for ordinary maintenance and repairs are expensed as incurred. The carrying value of property, plant and equipment is reviewed for impairment whenever events indicate that the carrying amounts for those assets may not be recoverable. The recoverability of an asset is assessed by comparing its carrying value with the recoverable amount, which is the higher of fair value less costs to sell or its value in use. Value in use is the present value of the future cash flows expected to be derived from the use of the asset and, if significant and reasonably determinable, the cash flows deriving from its disposal at the end of its useful life, net of disposal costs. Expected cash flows are determined on the basis of reasonable and supportable assumptions that represent management’s best estimate of the range of economic conditions that will exist over the remaining useful life of the asset, giving greater weight to external evidence. Oil, natural gas and petroleum products prices (and to prices for products which derive there from) used to quantify the expected future cash flows are estimated based on forward prices prevailing in the marketplace for the first four years and management’s long-term planning assumptions thereafter. Discounting is carried out at a rate that reflects a current market valuation of the time value of money and of those specific risks of the asset that are not reflected in the estimate of the future cash flows. In particular, the discount rate used is the Weighted Average Cost of Capital (WACC) adjusted for the specific Country risk of the activity. The evaluation of the specific Country risk to be included in the discount rate is provided by external parties. WACC differs considering the risk associated with each operating segments; in particular for the assets belonging to the Gas & Power and Engineering & Construction segments, taking into account their different risk compared with Eni as a whole, specific WACC rates have been defined (for Gas & Power segment on the basis of a sample of companies operating in the same segment; for Engineering & Construction segment on the basis of the market quotation); WACC used for impairment reviews in the Gas & Power segment is adjusted to take into consideration the risk premium of the specific Country of the activity while WACC used for impairment reviews in the Engineering & Construction segment is not adjusted for Country risk as most of the assets are not located in a specific Country. For the other segments, a single WACC is used considering that the risk is the same to that of Eni as a whole. Value in use is calculated net of the tax effect as this method results in values similar to those resulting from discounting pre-tax cash flows at a pre-tax discount rate deriving, through an iteration process, from a post-tax valuation. Valuation is carried out for each single asset or, if the recoverable amount of a single asset cannot be determined, for the smallest identifiable group of assets that generates independent cash inflows from their continuous use, the so-called “cash generating unit”. When an impairment loss no longer | exists,
a reversal of the impairment loss is recognized in the
profit and loss account. The reversal cannot exceed the
carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognized for
the asset in prior years. Intangible
assets |
(10) For the definition of
recoverable amount see item “Property, plant and
equipment”.
(11) Impairment charges recognized in an interim period are not
reversed also when, considering conditions existing in a
subsequent interim period, they would have been recognized in a
smaller amount or would not have been recognized.
(12) When the operator has an unconditional contractual right to
receive cash or another financial asset from or at the direction
of the grantor, considerations received or receivable by the
operator for construction or upgrade of infrastructure are
recognized as a financial asset.
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| Exploration
and production activities13 Acquisition of mineral rights Exploration Development Production |
Production-sharing agreements and buyback
contracts Oil and gas reserves related to production-sharing agreements and buyback contracts are determined on the basis of contractual clauses related to the repayment of costs incurred for the exploration, development and production activities executed through the use of Company’s technologies and financing (Cost Oil) and the Company’s share of production volumes not destined to cost recovery (Profit Oil). Revenues from the sale of the production entitlements against both Cost Oil and Profit Oil are accounted for on an accrual basis whilst exploration, development and production costs are accounted for according to the policies mentioned above. The Company’s share of production volumes and reserves representing the Profit Oil includes the share of hydrocarbons which corresponds to the taxes to be paid, according to the contractual agreement, by the national government on behalf of the Company. As a consequence, the Company has to recognize at the same time an increase in the taxable profit, through the increase of the revenues, and a tax expense. Retirement Grants Non-current financial assets Investments |
(13) IFRS does not have
specific criteria for hydrocarbon exploration and production
activities. Eni continues to use existing accounting policies for
exploration and evaluation of assets previously applied before
the introduction of IFRS 6 “Exploration for and evaluation
of mineral resources”.
(14) In the case of step acquisition of a significant influence
(or joint control), the investment is recognized, at the
acquisition date of significant influence (joint control), at the
amount deriving from the use of the equity method assuming the
adoption of this method since initial acquisition; the
“step-up” of the carrying amount of interests owned
before the acquisition of significant influence (joint control)
is taken to equity.
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| accounted
for using the equity method, not arising from the profit
or loss or from the other comprehensive income, are
recognized in the investor’s profit and loss
account, as they represent, basically, a gain or loss
from a disposal of an interest of the investee’s
equity. Distributions received from an investee are
recorded as a reduction of the carrying amount of the
investment. In applying the equity method, consolidations
adjustments are considered (see also “Principles of
consolidation” paragraph). When there is objective
evidence of impairment (see also section “Current
assets”), the recoverability is tested by comparing
the carrying amount and the related recoverable amount
determined by adopting the criteria indicated in the item
“Property, plant and equipment”. Subsidiaries
excluded from consolidation, jointly controlled entities
and associates are accounted for at cost, net of
impairment losses if this does not result in a
misrepresentation of the Company’s financial
condition. When an impairment loss no longer exists, a
reversal of the impairment loss is recognized in profit
and loss account within “Other gain (loss) from
investments”. The reversal cannot exceed the
previously recognized impairment losses. The sale of equity interests with loss of joint control and significant influence over the investee determines the recognition in the profit and loss account of: (i) any gain/loss calculated as the difference between the consideration received and the corresponding transferred share; (ii) any gain or loss recognized as a result of remeasuring to fair value any investment retained in the former joint venture/associate; (iii) any amount related to the former joint venture/associate previously recognized in other comprehensive income which can be reclassified subsequently to profit and loss account15. Any investment retained in the former joint venture/associate is recognized at its fair value at the date when joint control or significant influence are lost and shall be accounted for in accordance with the applicable measurement criteria. Other investments, included in non-current assets, are recognized at their fair value and their effects are included in the equity reserve related to other comprehensive income; the changes in fair value recognized in equity are charged to the profit and loss account when it is impaired or realized. Galp and Snam shares related to convertible bonds are measured at fair value through profit and loss account, under the fair value option, in order to significantly reduce the accounting mismatch with the recognition of the option embedded in the convertible bond, measured at fair value through profit and loss account. When investments are not traded in a public market and their fair value cannot be reasonably determined, they are accounted for at cost, net of impairment losses; impairment losses shall not be reversed16. The investor’s share of losses of an investee, that exceeds its interest in the investee, is recognized in a specific provision only to the extent the investor is required to fulfill legal or constructive obligations of the investee or to cover its losses. Receivables and financial assets to be held to maturity Receivables and financial assets to be held to maturity are stated at cost represented by the fair value of the initial exchanged amount adjusted to take into account direct external costs related to the transaction (e.g. fees of agents or consultants, etc.). The initial carrying value is then adjusted to take into account principal repayments, reductions |
for
impairment or uncollectibility and amortization of any
difference between the maturity amount and the initial
amount. Amortization is carried out on the basis of the
effective interest rate represented by the rate that
equalizes, at the moment of the initial recognition, the
present value of expected cash flows to the initial
carrying amount (so called “amortized cost
method”). Receivables for finance leases are
recognized at an amount equal to the present value of the
lease payments and the purchase option price or any
residual value; the amount is discounted at the interest
rate implicit in the lease. If there is objective
evidence that an impairment loss has been incurred (see
also point “Current assets”), the impairment
loss is measured by comparing the carrying value with the
present value of the expected cash flows discounted at
the effective interest rate as defined at initial
recognition, or at the moment of its updating to reflect
re-pricings contractually established. Receivables and
financial assets to be held to maturity are presented net
of the allowance for impairment losses; when the
impairment loss is definite the allowance for impairment
losses is reversed for charges, otherwise for excess.
Changes to the carrying amount of receivables or
financial assets in accordance with the amortized cost
method are recognized as “Finance income
(expense)”. Assets
held for sale and discontinued operations |
(15) Conversely,
any component related to the former joint venture/associate
previously recognized in other comprehensive income, which can
not be reclassified subsequently to profit and loss account, are
reclassified within retained earnings.
(16) Impairment charges recognized in an interim period are not
reversed also when, considering conditions existing in a
subsequent interim period, they would have been recognized in a
smaller amount or would not have been recognized.
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| control
of a subsidiary, all the assets and liabilities of that
subsidiary are classified as held for sale, regardless of
whether a non-controlling interest in its former
subsidiary will be retain after the sale. Financial liabilities Debt is measured at amortized cost (see item “Non-current financial assets” above). Financial liabilities are derecognized when they are extinguished, or when the obligation specified in the contract is discharged or cancelled or expires. Provisions for contingencies Provisions for contingencies are
liabilities for expenses and charges of a definite nature
and whose existence is certain or probable but for which
at year-end the timing or amount of future expenditure is
uncertain. Provisions are recognized when: (i) there is a
present obligation, legal or constructive, as a result of
a past event; (ii) it is probable that the settlement of
that obligation will result in an outflow of resources
embodying economic benefits; and (iii) the amount of the
obligation can be reliably estimated. The amount
recognized as a provision is the best estimate of the
expenditure required to settle the present obligation at
the balance sheet date or to transfer it to third parties
at that time. The amount recognized for onerous contracts
is the lower of the cost necessary to fulfill the
obligations, net of expected economic benefits deriving
from the contracts, and any indemnity or penalty arising
from failure to fulfill these obligations. If the effect
of the time value is material, and the payment date of
the obligations can be reasonably estimated, provisions
to be accrued are the present value of the expenditures
expected to be required to settle the obligation at a
discount rate that reflects the Company’s average
borrowing rate taking into account the risks associated
with the obligation. |
Provisions for employee benefits Post-employment benefit plans, including informal arrangements, are classified as either defined contribution plans or defined benefit plans depending on the economic substance of the plan as derived from its principal terms and conditions. In the first case, the Company’s obligation, which consists of making payments to the State or a trust or a fund, is determined on the basis of contributions due. The liabilities related to defined benefit plans, net of any plan assets, are determined on the basis of actuarial assumptions and charged on an accrual basis during the employment period required to obtain the benefits. Net interest includes the return on plan assets and the interests cost to be recognized in the profit and loss account. Net interest is measured by applying to the liability, net of any plan assets, the discount rate used to calculate the present value of the liability; net interest of defined benefit plans is recognized in “Finance income (expense)”. Remeasurements of the net defined benefit liability, comprising actuarial gains and losses, resulting from changes in the actuarial assumptions used or from changes arising from experience adjustments, and the return on plan assets excluding amounts included in net interest, are recognized within statement of comprehensive income. Furthermore, in presence of net assets, changes in their value different from those included in net interest are recognized within statement of comprehensive income. Obligations for long-term benefits are determined by adopting actuarial assumptions. The effects of remeasurements are taken to profit and loss account in their entirety. Treasury shares Treasury shares are recognized
as deductions from equity at cost. Revenues and costs Revenues associated with sales
of products and services are recognized when significant
risks and rewards of ownership have passed to the
customer or when the transaction can be considered
settled and the associated revenue can be reliably
measured. In particular, revenues are recognized for the
sale of: |
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| the transaction at the end of the reporting period can be measured reliably; and (iv) the related costs can be measured reliably. When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognized only to the extent of the expenses recognized that are recoverable. Revenues accrued during the year related to construction contracts are recognized on the basis of contractual revenues with reference to the stage of completion of a contract measured on the cost-to-cost basis. For service concession arrangements (see item “Intangible assets” above) in which customers fees do not provide a reliable distinction between the compensation for construction/update of the infrastructure and the compensation for operating it and in the absence of external benchmarks, revenues recognized during the construction/update phase are limited to the amount of the costs incurred. Additional revenues, derived from a change in the scope of work, are included in the total amount of revenues when it is probable that the customer will approve the variation and the related amount. Claims deriving from additional costs incurred for reasons attributable to the customer are included in the total amount of revenues when it is probable that the counterparty will accept them. Tangible assets, different from an infrastructure used in service concession arrangements, transferred from customers (or constructed using cash transferred from customers) and used to connect them to a network to supply goods and services, are recognized at their fair value as an offset to revenues. When more than one separately identifiable service is provided (for example, connection to a network and supply of goods) the entity shall assess for which one service it receives the transferred asset from the customer and it shall consistently recognize a revenue when the connection is delivered or over the lesser period between the length of the supply and the useful life of the transferred asset. Revenues are measured at the fair value of the consideration received or receivable net of returns, discounts, rebates, bonuses and related taxation. Award credits, related to customer loyalty programs, are recognized as a separate component of the sales transaction which grants the right to customers. Therefore, the portion of revenues related to the fair value of award credits granted is recognized as an offset to the item “Other liabilities”. The liability is charged to the profit and loss account in the period in which the award credits are redeemed by customers or the related right is lost. The exchange of goods and services of a similar nature and value do not give rise to revenues and costs as they do not represent sale transactions. Costs are recognized when the related goods and services are sold or consumed during the year, they are systematically allocated or when their future economic benefits cannot be identified. Costs associated with emission quotas, determined on the basis of the market prices, are recognized in relation to the amount of the carbon dioxide emissions that exceed free allowances. Costs related to the purchase of the emission rights are recognized as intangible assets net of any negative difference between the amount of emissions and the free allowances. Revenues related to emission quotas are recognized when they are sold. In case of sale, if applicable, the acquired emission rights are considered as the first to be sold. Monetary receivables granted as a substitution of emission rights awarded free of charge are recognized as a contra to item “Other income and revenues” of the profit and loss account. Operating lease payments are recognized in the profit and loss account over the length of the contract. Payroll costs include stock options granted to managers, | consistent with their actual
remunerative nature. The instruments granted are recorded
at fair value on the vesting date and are not subject to
subsequent adjustments; the current portion is calculated
pro-rata over the vesting period17. The fair
value of stock options is determined using valuation
techniques which consider conditions related to the
exercise of options, current share prices, expected
volatility and the risk-free interest rate. The fair
value of stock options is recognized as a contra to the
equity item “Other reserves”. The costs for the
acquisition of new knowledge or discoveries, the study of
products or alternative processes, new techniques or
models, the planning and construction of prototypes or,
in any case, costs incurred for other scientific research
activities or technological development, which cannot be
capitalized (see item “Intangible assets”
above), are included in the profit and loss account when
they are incurred. Exchange rate differences Revenues and costs associated with transactions in currencies other than the functional currency are translated into the functional currency by applying the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in currencies other than functional currency are converted by applying the year end exchange rate and the effect is stated in the profit and loss account. Non-monetary assets and liabilities denominated in currencies other than the functional currency valued at cost are translated at the initial exchange rate. Non-monetary items that are measured at fair value, recoverable amount or net realizable value are translated using the exchange rate at the date when the value is determined. Dividends Dividends are recognized at the date of the general shareholders’ meeting in which they were declared, except when the sale of shares before the ex-dividend date is certain. Income taxes Current income taxes are determined on the basis of estimated taxable income. The estimated liability is included in “Income taxes payable”. Current income tax assets and liabilities are measured at the amount expected to be paid to (recovered from) the tax Authorities, using tax rates and the tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets or liabilities are recognized for temporary differences arising between the carrying amounts of the assets and liabilities and their tax bases, based on tax rates and tax laws that have been enacted or substantively enacted for future years. Deferred tax assets are recognized when their recoverability is considered probable; in particular, deferred tax assets are recoverable when it is probable that taxable income will be available in the same year as the reversal of the deductible temporary difference. Similarly, deferred tax assets for the carryforward of unused tax credits and unused tax losses are recognized to the extent that the recoverability is probable. Relating to the temporary differences associated with investments in subsidiaries, jointly controlled entities and associates, the related deferred tax liabilities are not recognized |
(17) Conversely, any component related to the former joint venture/associate previously recognized in other comprehensive income, which can not be reclassified subsequently to profit and loss account, are reclassified within retained earnings.
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| if the
investor is able to control the timing of reversal of the
temporary differences and it is probable that the
temporary difference will not reverse in the foreseeable
future. Deferred tax assets and liabilities are included
in non-current assets and liabilities and are offset at a
single entity level if related to offsettable taxes. The
balance of the offset, if positive, is recognized in the
item “Deferred tax assets”; if negative, in the
item “Deferred tax liabilities”. When the
results of transactions are recognized directly in
shareholders’ equity, the related current and
deferred taxes are also charged to the shareholders’
equity. Derivatives Derivatives, including embedded derivatives which are separated from the host contract, are assets and liabilities measured at their fair value. Derivatives are designated as hedging instruments when the relationship between the derivative and the hedged item is formally documented and the hedge is highly effective and regularly reviewed. When hedging instruments hedge the risk of changes of the fair value of the hedged item (fair value hedge, e.g. hedging of the variability on the fair value of fixed interest rate assets/liabilities), the derivatives are measured at fair value through profit and loss account. Hedged items are consistently adjusted to reflect, in the profit and loss account, the changes of fair value associated with the hedged risk; this applies even if the hedged item should be otherwise measured. When derivatives hedge the cash flow variability risk of the hedged item (cash flow hedge, e.g. hedging the variability on the cash flows of assets/liabilities as a result of the fluctuations of exchange rate), the changes in the fair value of the derivatives, considered an effective hedge, are initially recognized in the equity reserve related to other comprehensive income and then reclassifies to profit and loss account in the same period during which the hedged transaction affects the profit and loss account. The changes in the fair value of derivatives that do not meet the conditions required to qualify for hedge accounting are recognized in the profit and loss account. In particular, the changes in the fair value of non-hedging derivatives on interest rates and exchange rates are recognized in the profit and loss account item “Finance income (expense)”; conversely, the changes in the fair value of non-hedging derivatives on commodities are recognized in the profit and loss account item “Other operating (expense) income”. Economic effects of transactions to buy or sell commodities entered into to meet the entity’s normal operating requirements and for which the settlement is provided with the delivery of the underlying, are recognized on an accrual basis (the so-called normal sale and normal purchase exemption or own use exemption). Fair value measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (not in a forced liquidation or a distress sale) at the measurement date (exit price). Fair value measurement is based on the market conditions existing at the measurement date and on the assumptions of market participants (market-based measurement). A fair value measurement assumes that the transaction to sell the asset or transfer the liability |
takes
place in the principal market for the asset or liability,
or in the absence of a principal market, in the most
advantageous market to which the entity has access,
independently from the entity’s intention to sell
the asset or transfer the liability to be measured. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. Highest and best use is determined from the perspective of market participants, even if the entity intends a different use; an entity’s current use of a non-financial asset is presumed to be its highest and best use, unless market or other factors suggest that a different use by market participants would maximize the value of the asset. The fair value of a liability, both financial and non-financial, or of an equity instrument, in the absence of a quoted price, is measured from the perspective of a market participant that holds the identical item as an asset at the measurement date. The fair value of a liability reflects the effect of a non-performance risk. Non-performance risk includes, but may not be limited to, an entity’s own credit risk. In the absence of available market quotation, fair value is measured by using valuation techniques that are appropriate in the circumstances, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
4 Financial statements and changes in accounting policies Financial
statements18 |
(18) The financial statements
are the same reported in the Annual Report 2012, except for: (i)
the statement of comprehensive income where, based on the
amendments of IAS 1 “Presentation of Financial
Statements”, other comprehensive income are grouped on the
basis of their possibility to be reclassified subsequently to
profit and loss account in accordance with the applicable IFRSs
(reclassification adjustments); and (ii) the adoption of the new
provisions of IAS 19, whose effects are described in the item
“Changes in accounting policies”.
(19) Further information on financial instruments as classified
in accordance with IFRS is provided in Note 35 - Guarantees,
commitments and risks - Other information about financial
instruments.
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| gains
and losses recognized within other comprehensive income.
The effect on the 2012 profit and loss account is not
material. The presentation of net interest on defined
benefit plans within the item “Finance income
(expense)”, previously presented within the payroll
costs, determined an increase of 2012 operating profit of
euro 45 million. Furthermore, starting from January 1, 2013, IFRS 13 “Fair value measurement” is effective (endorsed by Commission Regulation (EU) No. 1255/2012 of December 11, 2012) which provides a framework for fair value measurements, required or permitted by other IFRSs, and for the disclosures about fair value measurements. The effect of adoption of IFRS 13 is not material.
5 Use of accounting estimates The preparation of the
Consolidated Financial Statements requires the use of
estimates and assumptions that affect the assets,
liabilities, revenues and expenses reported in the
financial statements, as well as amounts included in the
notes thereto, including discussion and disclosure of
contingent liabilities. Estimates made are based on
complex or subjective judgments and past experience of
other assumptions deemed reasonable in consideration of
the information available at the time. The accounting
policies and areas that require the most significant
judgments and estimates to be used in the preparation of
the Consolidated Financial Statements are in relation to
the accounting for oil and natural gas activities,
specifically in the determination of proved and proved
developed reserves, impairment of fixed assets,
intangible assets and goodwill, asset retirement
obligations, business combinations, pensions and other
post-retirement benefits, recognition of environmental
liabilities and recognition of revenues in the oilfield
services construction and engineering businesses.
Although the Company uses its best estimates and
judgments, actual results could differ from the estimates
and assumptions used. A summary of significant estimates
follows. |
acquisition
and divestment activity and additional reservoir
development activity. In particular, changes in oil and
natural gas prices could impact the amount of Eni’s
proved reserves in regards to the initial estimate and,
in the case of production-sharing agreements and buyback
contracts, the share of production and reserves to which
Eni is entitled. Accordingly, the estimated reserves
could be materially different from the quantities of oil
and natural as that ultimately will be recovered. Oil and
natural gas reserves have a direct impact on certain
amounts reported in the Consolidated Financial
Statements. Estimated proved reserves are used in
determining depreciation and depletion expenses and
impairment expense. Depreciation and depletion rates on
oil and gas assets using the UOP basis are determined
from the ratio between the amount of hydrocarbons
extracted in the quarter and proved developed reserves
existing at the end of the quarter increased by the
amounts extracted during the quarter. Assuming all other
variables are held constant, an increase in estimated
proved developed reserves for each field decreases
depreciation and depletion expense. Conversely, a
decrease in estimated proved developed reserves increases
depreciation and depletion expense. In addition,
estimated proved reserves are used to calculate future
cash flows from oil and gas properties, which are used to
assess any impairment loss. The larger is the volume of
estimated reserves, the lower is the likelihood of asset
impairment. Impairment of assets Assets are impaired when there are events or changes in circumstances that indicate the carrying values of the assets are not recoverable. Such impairment indicators include changes in the Group’s business plans, changes in commodity prices leading to unprofitable performance, a reduced utilization of the plants and, for oil and gas properties, significant downward revisions of estimated proved reserve quantities or significant increase of the estimated development costs. Determination as to whether and how much an asset is impaired involves management estimates on highly uncertain and complex matters such as future commodity prices, the effects of inflation and technology improvements on operating expenses, production profiles and the outlook for global or regional market supply and demand conditions for crude oil, natural gas, commodity chemicals and refined products. Similar remarks are valid for the physical recoverability of assets recognized in the balance sheet (deferred costs - see also item “Current assets”) related to natural gas volumes not collected under long-term purchase contracts with take-or-pay clauses as well as for the recoverability of deferred tax assets. The amount of an impairment loss is determined by comparing the book value of an asset with its recoverable amount. The recoverable amount is the greater of fair value net of disposal cost or the value in use. The estimated value in use is based on the present values of expected future cash flows net of disposal costs. The expected future cash flows used for impairment analyses are based on judgmental assessments of future production volumes, prices and costs, considering available information at the date of review and are discounted by using a rate which considers the risks specific to the asset. For oil and natural gas properties, the expected future cash flows are estimated principally based on developed and non-developed proved reserves including, among other elements, production taxes and the costs to be incurred for the reserves yet to be developed. Oil, natural gas and petroleum product prices (and prices from products which are derived there from) used to quantify the expected future cash flows are estimated based on forward prices prevailing in the marketplace for the first four years and management’s long-term planning assumptions thereafter. The estimate of the future |
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| amount
of production is based on assumptions related to the
commodity future prices, lifting and development costs,
field decline rates, market demand and other factors. The
discount rate reflects the current market valuation of
the time value of money and of the specific risks of the
asset not reflected in the estimate of the future cash
flows. Goodwill and other intangible assets with an
indefinite useful life are not subject to amortization.
The Company tests for impairment such assets at the
cash-generating unit level on an annual basis and
whenever there is an indication that they may be impaired
In particular, goodwill impairment is based on the lowest
level (cash generating unit) to which goodwill can be
allocated on a reasonable and consistent basis. A cash
generating unit is the smallest aggregate on which the
Company, directly or indirectly, evaluates the return on
the capital expenditure. If the recoverable amount of a
cash generating unit is lower than the carrying amount,
goodwill attributed to that cash generating unit is
impaired up to that difference; if the carrying amount of
goodwill is lower than the amount of the impairment loss,
the assets of the cash generating unit are impaired
pro-rata on the basis of their carrying amount for the
residual difference. Asset retirement obligations Obligations to remove tangible equipment and restore land or seabed require significant estimates in calculating the amount of the obligation and determining the amount required to be recorded presently in the Consolidated Financial Statements. Estimating future asset retirement obligations is complex. It requires management to make estimates and judgments with respect to removal obligations that will come to term many years into the future and contracts and regulations are often unclear as to what constitutes removal. In addition, the ultimate financial impact of environmental laws and regulations is not always clearly known as asset removal technologies and costs constantly evolve in the Countries where Eni operates, as do political, environmental, safety and public expectations. The subjectivity of these estimates is also increased by the accounting method used that requires entities to record the fair value of a liability for an asset retirement obligation in the period when it is incurred (typically, at the time the asset is installed at the production location). When provisions are initially recognized, the related fixed assets are increased by an equal corresponding amount. Then the carrying amount of provisions is adjusted to reflect the passage of time and any change in the estimates following the modification of future cash flows and discount rates adopted. The discount rate used to determine the provision is based on managerial judgments. Business combinations Accounting for business combinations requires the allocation of the purchase price to the identifiable assets and liabilities of the acquired business at their fair values. Any positive residual difference is recognized as “Goodwill”. Any negative residual difference is recognized in the profit and loss account. Management uses all available information to make these fair value measurements and, for major business combinations, engages independent external advisors. Environmental liabilities As other oil and gas companies, Eni is subject to numerous EU, national, regional and local environmental laws and regulations concerning its oil and gas operations, production and other activities. They include legislations that implement international conventions or protocols. Environmental costs are recognized when it becomes probable that |
a
liability will be incurred and a reliable estimate can be
made of the amount of the obligation. Management,
considering the actions already taken, insurance policies
obtained to cover environmental risks and provision for
risks accrued, does not expect any material adverse
effect on Eni’s consolidated results of operations
and financial position as a result of such laws and
regulations. However, there can be no assurance that
there will not be a material adverse impact on Eni’s
consolidated results of operations and financial position
due to: (i) the possibility of an unknown contamination;
(ii) the results of the ongoing surveys and other
possible effects of statements required by applicable
laws; (iii) the possible effects of future environmental
legislations and rules; (iv) the effects of possible
technological changes relating to future remediation; and
(v) the possibility of litigation and the difficulty of
determining Eni’s liability, if any, against other
potentially responsible parties with respect to such
litigations and the possible reimbursements. Provisions for employee benefits Defined benefit plans are evaluated with reference to uncertain events and based upon actuarial assumptions including among others discount rates, expected rates of salary increases, medical cost trends, estimated retirement dates and mortality rates. The significant assumptions used to account for defined benefit plans are determined as follows: (i) discount and inflation rates reflect the rates at which benefits could be effectively settled, taking into account the duration of the obligation. Indicators used in selecting the discount rate include market yields on high quality corporate bonds (or, in the absence of a deep market of these bonds, on the market yields on government bonds). The inflation rates reflect market conditions observed Country by Country; (ii) the future salary levels of the individual employees are determined including an estimate of future changes attributed to general price levels (consistent with inflation rate assumptions), productivity, seniority and promotion; (iii) healthcare cost trend assumptions reflect an estimate of the actual future changes in the cost of the healthcare related benefits provided to the plan participants and are based on past and current healthcare cost trends including healthcare inflation, changes in healthcare utilization and changes in health status of the participants; (iv) demographic assumptions such as mortality, disability and turnover reflect the best estimate of these future events for individual employees involved. Differences in the amount of the net defined benefit liability (asset), deriving from the remeasurements comprising, among others, changes in the current actuarial assumptions, differences in the previous actuarial assumptions and what has actually occurred and differences in the return on plan assets excluding amounts included in net interest, usually occur. Remeasurements are recognized within statement of comprehensive income for defined benefit plans and within profit and loss account for long-term plans. Provisions for contingencies In addition to environmental liabilities, asset retirement obligation and employee benefits, Eni recognizes provisions primarily related to litigations and tax issues. The estimate of these provisions is based on managerial judgments. Revenue recognition Revenue recognition in the Engineering & Construction segment is based on the stage of completion of a contract as measured on the cost-to-cost basis applied to contractual revenues. Use of the stage of completion method requires estimates of future gross profit on a contract by contract |
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| basis.
The future gross profit represents the profit remaining
after deducting costs attributable to the contract from
revenues provided for in the contract. The estimate of
future gross profit is based on a complex estimation
process that includes identification of risks related to
the geographical region where the activity is carried
out, market conditions in that region and any assessment
that is necessary to estimate with sufficient precision
the total future costs as well as the expected timetable
to the end of the contract. Additional revenues, derived
from a change in the scope of work, are included in the
total amount of revenues when it is probable that the
customer will approve the variation and the related
amount. Claims deriving from additional costs incurred
for reasons attributable to the customer are included in
the total amount of revenues when it is probable that the
counterparty will accept them. Revenues from the sale of electricity and gas to retail customers include allocations for the supplies, occurred between the date of the last meters reading and the year end, not yet billed. These estimates are based on the difference between the volumes allocated by the grid managers and the billed volumes, as well as on other factors, considered by the management, which can impact on them.
6 Recent accounting standards Accounting standards and
interpretations issued by the IASB/IFRIC and endorsed by
the EU |
accounts
for assets/liabilities and expenses/revenues relating to
the joint operation on the basis of its rights and
obligations determined and specified in the contractual
arrangements, rather than basing on its ownership
interest in the joint operation. The revised IAS 28
defines, interalia, the accounting treatment to be
adopted on disposal of an equity interest, or a portion
of an equity interest, in a joint venture or an
associate. IFRS 11 and the revised IAS 28 shall be
applied for annual periods beginning on or after January
1, 2014. By Commission Regulation (EU) No. 1254/2012 of December 11, 2012, IFRS 12 “Disclosure of Interests in Other Entities” (hereinafter “IFRS 12”) has been endorsed. The standard combines all the disclosures to be provided in financial statements regarding subsidiaries, joint arrangements, associates and unconsolidated structured entities. IFRS 12 shall be applied for annual periods beginning on or after January 1, 2014. By Commission Regulation (EU) No. 313/2013 of April 4, 2013, the document “Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to International Financial Reporting Standards 10, 11, and 12)” has been endorsed. It provides some clarifications and relieves on the transition requirements of IFRS 10, IFRS 11 and IFRS 12. The provisions shall be applied for annual periods beginning on or after January 1, 201420. By Commission Regulation (EU) No. 1256/2012 of December 13, 2012, the amendments to IAS 32 “Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities” (hereinafter “amendments to IAS 32”) have been endorsed, which state that: (i) in order to set off financial assets and liabilities, the right of set-off must be legally enforceable in all circumstances, such as in the normal course of business, in the event of default or in the event of insolvency or bankruptcy, of one or all of the counterparties; and (ii) in presence of specific characteristics, the gross simultaneous settlement of financial assets and liabilities, that eliminate or result in insignificant credit and liquidity risk, may be considered equivalent to net settlement. The amendments to IAS 32 shall be applied for annual periods beginning on or after January 1, 2014. By Commission Regulation (EU) No. 1374/2013 of December 19, 2013, the amendments to IAS 36 “Recoverable Amount Disclosures for Non-Financial Assets” have been endorsed (hereinafter “amendments to IAS 36”), which supplements the disclosure of information requiring: (i) the recoverable amount of individual assets or cash-generating units for which an impairment loss has been recognized or reversed during the period; and (ii) additional disclosures if recoverable amount is based on fair value less costs of disposal. The amendments to IAS 36 shall be applied for annual periods beginning on or after January 1, 2014. By Commission Regulation (EU) No. 1375/2013 of December 19, 2013, the amendments to IAS 39 “Financial Instruments: Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting” have been endorsed (hereinafter “amendments to IAS 39”). According to these amendments, an entity shall not discontinue hedge accounting in case of novation of the derivative, as a consequence of laws or regulations, which implies that an original counterparty is replaced by a central counterparty. The amendments to IAS 39 shall be applied for annual periods beginning on or after January 1, 2014. |
(20) Under the transition requirements of IFRS 10 and IFRS 11, the new provisions shall be applied in the consolidated financial statements retrospectively starting from January 1, 2014, by adjusting the opening balance sheet as of January 1, 2013 and the 2013 profit and loss account. The application of the new provisions in the consolidated financial statements leads: (i) as of January 1, 2013, an increase in total assets of euro 313 million, an increase in total liabilities of euro 454 million and a decrease in non-controlling interests of euro 141 million; (ii) in the 2013 profit and loss account, an increase in total revenues of euro 23 million, an increase in operating profit of euro 32 million and a decrease in net profit attributable to non-controlling interests of euro 13 million; (iii) as of December 31, 2013, an increase in total assets of euro 253 million, an increase in total liabilities of euro 378 million and a decrease in non-controlling interests of euro 125 million.
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| Accounting
standards and interpretations issued by the IASB/IFRIC
and not yet endorsed by the EU On November 12, 2009, the IASB issued IFRS 9 “Financial Instruments” (hereinafter “IFRS 9”) which changes recognition and measurement criteria of financial assets and their classification in the financial statements. In particular, the new provisions require, interalia, a classification and measurement model of financial assets based exclusively on the following categories: (i) financial assets measured at amortized cost; and (ii) financial assets measured at fair value. The new provisions also require that investments in equity instruments, other than subsidiaries, joint ventures or associates, shall be measured at fair value with effects taken to the profit and loss account. If these investments are not held for trading purposes, subsequent changes in the fair value can be recognized in other comprehensive income, even if dividends are taken to the profit and loss account. Amounts taken to other comprehensive income shall not be subsequently transferred to the profit and loss account even at disposal. In addition, on October 28, 2010, the IASB updated IFRS 9 by incorporating the recognition and measurement criteria of financial liabilities. In particular, the new provisions require, interalia, that if a financial liability is measured at fair value through profit or loss, subsequent changes in the fair value attributable to changes in the own credit risk shall be presented in other comprehensive income; the component related to own credit risk is recognized in profit and loss account if the treatment of the changes in own credit risk would create or enlarge an accounting mismatch. On November 19, 2013, the IASB integrated IFRS 9 with the revised guidance for hedge accounting. The new provisions aim to align hedge accounting more closely with risk management activities and to establish a more principles-based approach to hedge accounting. In particular, the main changes concern: (i) the forward-looking hedge effectiveness assessment rather than bright lines; (ii) the possibility to rebalance the hedging relationship if the risk management objective for that designating hedging relationship remains the same; (iii) the possibility to designate as an hedged item a risk component of a non-financial item, net positions or layer components of items, if specific conditions are met; (iv) the possibility to hedge aggregated exposures, i.e. a combination of a non-derivative exposure and a derivative; and |
(v)
the accounting of time value of purchased options or the
forward elements of forward contracts, excluded from the
hedge effectiveness assessment, which shall be consistent
with the features of the hedged item. Furthermore, in
November 2013, the IASB also removed the effective date
from IFRS 9 and will decide on the effective date when
the entire IFRS 9 project is closer to completion (the
previous effective date was January 1, 2015). On May 20, 2013, the IFRIC issued the interpretation IFRIC 21 “Levies” (hereinafter “IFRIC 21”), which defines the accounting for outflows imposed by governments (e.g. contributions required to operate in a specific market), other than income taxes, fines or penalties. IFRIC 21 sets out criteria for the recognition of the liability, stating that the obligating event that gives rise to the liability, and therefore to its recognition, is the activity that triggers the payment, as identified by the legislation. The provisions of IFRIC 21 shall be applied for annual periods beginning on or after January 1, 2014. On November 21, 2013, the IASB issued the amendments to IAS 19 “Defined Benefit Plans: Employee Contributions”, which allow the recognition of contributions to defined benefit plans from employees or third parties as a reduction of service cost in the period in which the related service is received, provided that the contributions: (i) are set out in the formal conditions of the plan; (ii) are linked to service; and (iii) are independent of number of years of service (e.g. the contributions are a fixed percentage of the employee’s salary or a fixed amount throughout the service period or dependent on the employee’s age). The amendments shall be applied for annual periods beginning on or after July 1, 2014 (for Eni: 2015 financial statements). On December 12, 2013 the IASB issued the documents “Annual Improvements to IFRSs 2010-2012 Cycle” and “Annual Improvements to IFRSs 2011-2013 Cycle”, which include, basically, technical and editorial changes to existing standards. The amendments to the standards shall be applied for annual periods beginning on or after July 1, 2014 (for Eni: 2015 financial statements). Eni is currently reviewing these new IFRS to determine the likely impact on the Group’s results. |
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Current assets
7 Cash and cash equivalents
Cash and cash equivalents of euro 5,288
million (euro 7,765 million at December 31, 2012) included
financing receivables originally due within 90 days amounting to
euro 3,086 million (euro 5,861 million at December 31, 2012)
relating to time deposit with financial institutions having
notice greater than a 48-hour period.
Cash amounting to euro 90 million (euro 84 million at December
31, 2012) was restricted due to judicial investigations and
commercial proceedings in the E&C segment. More information
about the judicial investigations is disclosed in Note 35 -
Guarantees, commitments and risks - Corruption investigations.
The average maturity of financing receivables due within 90 days
was 9 days and the average interest rate amounted to 0.3% (0.5%
at December 31, 2012).
8 Financial assets held for trading
The breakdown by currency of financial assets held for trading or available for sale is presented below:
Nominal value |
Fair value |
Rating - Moody’s |
Rating - S&P |
|||||
| Quoted bonds issued by sovereign states | ||||||||
| Fixed rate bonds | ||||||||
| Netherlands | 150 | 153 | Aaa | AA+ | ||||
| France | 140 | 144 | Aa1 | AA | ||||
| Italy | 115 | 116 | Baa2 | BBB | ||||
| Belgium | 95 | 99 | Aa3 | AA | ||||
| Spain | 55 | 57 | Baa3 | BBB- | ||||
| Austria | 25 | 26 | Aaa | AA+ | ||||
| Germany | 17 | 17 | Aaa | AAA | ||||
| Denmark | 13 | 13 | Aaa | AAA | ||||
| Poland | 10 | 8 | A2 | A- | ||||
| Slovakia | 6 | 7 | A2 | A | ||||
| Sweden | 5 | 5 | Aaa | AAA | ||||
| Europe (Supranational Institutions) | 99 | 100 | from Aaa to Aa1 | from AAA to AA | ||||
| 730 | 745 | |||||||
| Floating rate bonds | ||||||||
| Italy | 667 | 667 | Baa2 | BBB | ||||
| France | 100 | 100 | Aa1 | AA | ||||
| Spain | 100 | 100 | Baa3 | BBB- | ||||
| Netherlands | 56 | 56 | Aaa | AA+ | ||||
| Germany | 50 | 50 | Aaa | AAA | ||||
| Slovakia | 1 | 1 | A2 | A | ||||
| Europe (Supranational Institutions) | 242 | 242 | from Aaa to Aa1 | from AAA to AA | ||||
| 1,216 | 1,216 | |||||||
| Total quoted bonds issued by sovereign states | 1,946 | 1,961 | ||||||
| Other bonds | ||||||||
| Fixed rate bonds | ||||||||
| Quoted bonds issued by industrial companies | 1,494 | 1,574 | from Aaa to Baa3 | from AAA to BBB- | ||||
| Non-quoted bonds issued by industrial companies | 325 | 325 | from P-1 to P-2 | from A-1 to A-2 | ||||
| Quoted bonds issued by financial and insurance companies | 377 | 396 | from Aaa to Baa3 | from AAA to BBB- | ||||
| Non-quoted bonds issued by financial and insurance companies | 218 | 218 | from P-1 to P-2 | from A-1 to A-2 | ||||
| 2,414 | 2,513 | |||||||
| Floating rate bonds | ||||||||
| Bonds issued by industrial companies | 133 | 133 | from Aaa to Baa3 | from AAA to BBB- | ||||
| Bonds issued by financial companies | 397 | 397 | from Aaa to Baa3 | from AAA to BBB- | ||||
| 530 | 530 | |||||||
| Total other bonds | 2,944 | 3,043 | ||||||
| Total other financial assets held for trading | 4,890 | 5,004 |
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The breakdown by currency is provided below:
| (euro million) | December 31, 2013 |
|
| Euro | 4,954 | |
| British pound | 37 | |
| Swiss franc | 13 | |
| 5,004 |
The fair value was estimated on the basis of market quotations for quoted securities and on the basis of appropriate financial valuation methods commonly used for non-quoted securities. More information is disclosed in Note 35 - Guarantees, commitments and risks.
9 Financial assets available for sale
| (euro million) | December 31, 2012 |
December 31, 2013 |
||
| Securities held for operating purposes | ||||
| Quoted bonds issued by sovereign states | 174 | 165 | ||
| Quoted securities issued by financial institutions | 22 | 37 | ||
| Non-quoted securities | 5 | |||
| 201 | 202 | |||
| Securities held for non-operating purposes | ||||
| Quoted bonds issued by sovereign states | 13 | |||
| Quoted securities issued by financial institutions | 21 | 7 | ||
| Non-quoted securities | 26 | |||
| 34 | 33 | |||
| Total | 235 | 235 |
The breakdown by currency is provided below:
| (euro million) | December 31, 2012 |
December 31, 2013 |
||
| Euro | 179 | 173 | ||
| US Dollar | 38 | 58 | ||
| Indian Rupee | 18 | 4 | ||
| 235 | 235 |
At December 31, 2013, bonds issued by sovereign states amounted to euro 165 million (euro 187 million at December 31, 2012). A breakdown by Country is presented below:
Nominal value |
Fair value |
Nominal rate |
Maturity date |
Rating - Moody’s |
Rating - S&P |
|||||||
| Sovereign states | ||||||||||||
| Fixed rate bonds | ||||||||||||
| Belgium | 27 | 30 | from 2.88 to 4.25 | from 2014 to 2021 | Aa3 | AA | ||||||
| Portugal | 22 | 22 | from 3.35 to 4.75 | from 2015 to 2019 | Ba3 | BB | ||||||
| Italy | 15 | 15 | from 2.50 to 4.25 | 2015 | Baa2 | BBB | ||||||
| Slovakia | 14 | 15 | from 3.50 to 4.90 | from 2014 to 2017 | A2 | A | ||||||
| Spain | 14 | 14 | from 3.15 to 4.10 | from 2014 to 2018 | Baa3 | BBB- | ||||||
| Ireland | 13 | 14 | from 4.40 to 4.50 | from 2019 to 2020 | Baa3 | BBB+ | ||||||
| Austria | 12 | 13 | from 3.40 to 3.50 | from 2014 to 2015 | Aaa | AA+ | ||||||
| United States of America | 11 | 11 | from 1.75 to 3.13 | from 2014 to 2019 | Aaa | AA+ | ||||||
| Germany | 10 | 10 | from 3.25 to 4.25 | from 2014 to 2015 | Aaa | AAA | ||||||
| Netherlands | 6 | 7 | 4.00 | from 2016 to 2018 | Aaa | AA+ | ||||||
| France | 5 | 5 | 4.00 | 2014 | Aa1 | AA | ||||||
| Slovenija | 5 | 5 | 4.38 | 2014 | Ba1 | A- | ||||||
| Finland | 4 | 4 | from 1.13 to 1.25 | from 2015 to 2017 | Aaa | AAA | ||||||
| Total | 158 | 165 |
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Securities amounting to euro 44 million were issued by
financial institutions with a rating ranging from Aaa to B2
(Moody’s) and from AAA to BB- (S&P); other quoted
securities amounted to euro 26 million with a rating of B1
(Moody’s) and B- (S&P).
Securities held for operating purposes of euro 202 million (euro
201 million at December 31, 2012) were designated to hedge the
loss provisions of the Group’s insurance company Eni
Insurance Ltd (euro 196 million at December 31, 2012).
The effects of fair value evaluation of securities are set out
below:
| (euro million) | Carrying amount at December 31, 2012 |
Changes recognized in equity |
Carrying amount at December 31, 2013 |
| Fair value | 7 | (1 | ) | 6 | |||||
| Deferred tax liabilities | (1 | ) | (1 | ) | |||||
| Other reserves of shareholders’ equity | 6 | (1 | ) | 5 |
The fair value was estimated on the basis of market quotations for quoted securities and on the basis of appropriate financial valuation methods commonly used for non-quoted securities.
10 Trade and other receivables
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Trade receivables | 19,966 | 21,213 | ||
| Financing receivables: | ||||
| - for operating purposes - short term | 440 | 488 | ||
| - for operating purposes - current portion of long-term receivables | 228 | 510 | ||
| - for non-operating purposes | 1,153 | 126 | ||
| 1,821 | 1,124 | |||
| Other receivables: | ||||
| - from disposals | 209 | 88 | ||
| - other | 6,751 | 6,648 | ||
| 6,960 | 6,736 | |||
| 28,747 | 29,073 |
The increase in trade and
other receivables of euro 1,247 million primarily related to the
Refining & Marketing segment (euro 657 million) and to the
Gas & Power segment (euro 424 million).
Receivables are stated net of the valuation allowance for
doubtful accounts of euro 1,877 million (euro 1,636 million at
December 31, 2012):
| (euro million) | Carrying amount at December 31, 2012 |
|
Additions |
|
Deductions |
|
Other changes |
|
Carrying amount at December 31, 2013 |
| Trade receivables | 1,056 | 384 | (158 | ) | 9 | 1,291 | ||||||
| Financing receivables | 6 | 54 | (8 | ) | 52 | |||||||
| Other receivables | 574 | 36 | (54 | ) | (22 | ) | 534 | |||||
| 1,636 | 474 | (212 | ) | (21 | ) | 1,877 |
Additions to the allowance reserve for
doubtful trade receivable accounts amounted to euro 384 million
(euro 164 million in 2012) and primarily related to the Gas &
Power segment (euro 289 million).
Deductions amounted to euro 158 and related to the Gas &
Power segment for euro 98 million.
At the balance sheet date, Eni had in place transactions to
transfer to factoring institutions certain trade receivables
without recourse for euro 2,533 million, due in 2014 (euro 2,054
million at December 31, 2012, due in 2013). Transferred
receivables related to the Refining & Marketing segment (euro
1,389 million), the Gas & Power segment (euro 1,057 million),
Versalis (euro 75 million) and Engineering & Construction
(euro 12 million). Furthermore, Engineering & Construction
transferred certain trade receivables without recourse due in
2014 for euro 222 million through Eni’s subsidiary
Serfactoring SpA (euro 149 million at December 31, 2012, due in
2013).
Trade receivables amounting to euro 659 million were due in the
Exploration & Production segment and related to hydrocarbons
supplies to Egyptian State-owned companies. In order to reduce
the outstanding amounts, negotiations and contacts are ongoing
with the State companies’ top management and the Ministerial
Authorities, in a context of stable relationships with the
counterparties.
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The ageing of trade and other receivables is presented below:
December 31, 2012 |
December 31, 2013 |
|||
(euro million) |
Trade receivables |
|
Other receivables |
|
Total |
|
Trade receivables |
|
Other receivables |
|
Total |
| Neither impaired nor past due | 16,859 | 5,840 | 22,699 | 16,630 | 5,505 | 22,135 | ||||||
| Impaired (net of the valuation allowance) | 1,257 | 204 | 1,461 | 1,056 | 170 | 1,226 | ||||||
| Not impaired and past due in the following periods: | ||||||||||||
| - within 90 days | 1,295 | 84 | 1,379 | 1,699 | 325 | 2,024 | ||||||
| - 3 to 6 months | 216 | 22 | 238 | 709 | 50 | 759 | ||||||
| - 6 to 12 months | 159 | 239 | 398 | 604 | 185 | 789 | ||||||
| - over 12 months | 180 | 571 | 751 | 515 | 501 | 1,016 | ||||||
| 1,850 | 916 | 2,766 | 3,527 | 1,061 | 4,588 | |||||||
| 19,966 | 6,960 | 26,926 | 21,213 | 6,736 | 27,949 |
Trade receivables not impaired and past
due primarily pertained to high-credit-rating public
administrations, state-owned companies and other highly-reliable
counterparties for oil, natural gas and chemical products
supplies and to retail customers of the Gas & Power segment.
The Gas & Power segment recorded a noticeable increase in the
amounts past due by retail customers, as a consequence of the
financial difficulties and the economic slowdown.
Trade receivables included amounts withheld to guarantee certain
contract work in progress for euro 209 million (euro 178 million
at December 31, 2012).
Trade receivables in currencies other than euro amounted to euro
7,600 million (euro 7,236 million at December 31, 2012).
Financing receivables associated with operating purposes of euro
998 million (euro 668 million at December 31, 2012) included
loans granted to unconsolidated subsidiaries, joint ventures and
associates to cover capital expenditure requirements for euro 595
million for executing industrial projects (euro 351 million at
December 31, 2012) and cash deposits to hedge the loss provision
made by Eni Insurance Ltd for euro 321 million (euro 280 million
at December 31, 2012). Receivables for financial leasing
amounting to euro 26 million at December 31, 2012 were set to
zero as a result of the divestment of Finpipe GIE.
Financing receivables not associated with operating activities
amounted to euro 126 million (euro 1,153 million at December 31,
2012) and related to: (i) restricted deposits in escrow for euro
92 million of Eni Trading & Shipping SpA (euro 93 million at
December 31, 2012) of which euro 82 million with Citigroup Global
Markets Ltd and euro 8 million with BNP Paribas and euro 2
million with ABN AMRO relating to derivatives; (ii) restricted
deposits in escrow of receivables of the Engineering &
Construction segment for euro 25 million (same amount as of
December 31, 2012). The decrease in financing receivables not
associated with operating activities of euro 1,027 million
related to: (i) the collection from Cassa Depositi e Prestiti for
euro 883 million as final installment of the total consideration
of euro 3,517 million relating to the divestment of 1,013,619,522
ordinary shares of Snam SpA; (ii) the collection from Snam SpA of
residual receivables for intercompany transactions for euro 141
million as of December 31, 2013.
Financing receivables in currencies other than euro amounted to
euro 598 million as of December 31, 2013 (euro 331 million as of
December 31, 2012).
Receivables related to divesting activities of euro 88 million
(euro 209 million at December 31, 2012) related to the divestment
of a 3.25% interest in the Karachaganak project (equal to
Eni’s 10% interest) to the Kazakh partner KazMunaiGas for
euro 79 million. A description of the transaction is reported in
Note 21 - Other non-current receivables.
Other receivables of euro 6,648 million (euro 6,751 million at
December 31, 2012) included receivables of euro 575 million
relating to the recovery of costs incurred by the Exploration
& Production segment undergoing arbitration procedure (euro
481 million at December 31, 2012). Receivables for euro 333
million as of December 31, 2012 were fully collected during 2013
and they related to amounts of gas to be delivered to gas
customers who pre-paid the underlying gas volumes in previous
years upon activation of the take-or-pay clause.
Other receivables were as follows:
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Receivables originated from divestments | 209 | 88 | ||
| Accounts receivable from: | ||||
| - joint venture partners in exploration and production | 4,343 | 4,771 | ||
| - non-financial government entities | 33 | 34 | ||
| - insurance companies | 176 | 170 | ||
| - prepayments for services | 616 | 611 | ||
| - from factoring arrangements | 130 | 121 | ||
| - other receivables | 1,453 | 941 | ||
| 6,751 | 6,648 | |||
| 6,960 | 6,736 |
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Receivables from joint venture partners
in exploration and production activities included the share of
the liability for defined-benefit plans of euro 264 million (euro
308 million at December 31, 2012), whereby Eni recognized the
100% – liability of all employees of the operated –
joint ventures (see Note 29 - Provisions for employee benefits).
Receivables from factoring arrangements of euro 121 million (euro
130 million at December 31, 2012) related to Serfactoring SpA and
consisted of advances for factoring arrangements with recourse
and receivables for factoring arrangements without recourse.
Other receivables in currencies other than euro amounted to euro
5,672 million (euro 5,737 million at December 31, 2012).
Because of the short-term maturity and conditions of remuneration
of trade receivables, the fair value approximated the carrying
amount.
Receivables with related parties are described in Note 43 -
Transactions with related parties.
11 Inventories
December 31, 2012 |
December 31, 2013 |
|||
(euro million) |
Crude oil, gas and petroleum products |
|
Chemical products |
|
Work in progress |
|
Other |
|
Total |
|
Crude oil, gas and petroleum products |
|
Chemical products |
|
Work in progress |
|
Other |
|
Total |
| Raw and auxiliary materials and consumables | 948 | 190 | 1,748 | 2,886 | 714 | 192 | 1,843 | 2,749 | ||||||||||||
| Products being processed and semi-finished products | 133 | 15 | 1 | 149 | 114 | 14 | 1 | 129 | ||||||||||||
| Work in progress | 1,595 | 1,595 | 1,627 | 1,627 | ||||||||||||||||
| Finished products and goods | 2,912 | 891 | 44 | 3,847 | 2,495 | 801 | 60 | 3,356 | ||||||||||||
| Certificates and emission rights | 19 | 19 | 22 | 22 | ||||||||||||||||
| 3,993 | 1,096 | 1,595 | 1,812 | 8,496 | 3,323 | 1,007 | 1,627 | 1,926 | 7,883 |
Contract works in progress for euro
1,627 million (euro 1,595 million at December 31, 2012) are
stated net of prepayments for euro 6 million (euro 7 million at
December 31, 2012) which corresponded to the amount of the works
executed and accepted by customers.
Inventories of euro 105 million were pledged as a guarantee for
the payment of storage services.
Changes in inventories and in the loss provision were as follows:
| (euro million) | Carrying amount at the beginning of the year |
Changes |
New or increased provisions |
Deductions |
Changes in the scope of consolidation |
Currency translation differences |
Other changes |
Carrying amount at the end of the year |
| December 31, 2012 | ||||||||||||||||||||||||
| Gross carrying amount | 7,761 | 1,158 | (226 | ) | (18 | ) | (9 | ) | 8,666 | |||||||||||||||
| Loss provision | (186 | ) | (58 | ) | 64 | 10 | 1 | (1 | ) | (170 | ) | |||||||||||||
| Net carrying amount | 7,575 | 1,158 | (58 | ) | 64 | (216 | ) | (17 | ) | (10 | ) | 8,496 | ||||||||||||
| December 31, 2013 | ||||||||||||||||||||||||
| Gross carrying amount | 8,666 | (343 | ) | (3 | ) | (180 | ) | (71 | ) | 8,069 | ||||||||||||||
| Loss provision | (170 | ) | (168 | ) | 149 | 3 | (186 | ) | ||||||||||||||||
| Net carrying amount | 8,496 | (343 | ) | (168 | ) | 149 | (3 | ) | (177 | ) | (71 | ) | 7,883 |
Changes of the year amounting to euro 343 million included the decrease of euro 679 million of the Refining & Marketing segment, partially offset by the increase of euro 190 million of the Exploration & Production segment. Additions of euro 168 million and deductions of euro 149 million of the loss provision related to the Refining & Marketing segment for euro 112 million and euro 118 million, respectively.
12 Current tax assets
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Italian subsidiaries | 487 | 556 | ||
| Foreign subsidiaries | 284 | 246 | ||
| 771 | 802 |
Income taxes are described in Note 40 - Income tax expense.
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13 Other current tax assets
| (euro million) | December 31, 2012 |
December 31, 2013 |
| VAT | 862 | 595 | ||
| Excise and customs duties | 197 | 87 | ||
| Other taxes and duties | 171 | 143 | ||
| 1,230 | 825 |
14 Other current assets
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Fair value of cash flow hedge derivatives | 31 | 14 | ||
| Fair value of other derivatives | 916 | 718 | ||
| Other current assets | 677 | 593 | ||
| 1,624 | 1,325 |
Derivative fair values were
estimated on the basis of market quotations provided by primary
info-provider, or alternatively, appropriate valuation methods
commonly used in the marketplace.
Fair value of cash flow hedge derivatives of euro 14 million
(euro 31 million at December 31, 2012) of the hedges entered by
the Gas & Power segment. These derivatives were entered into
to hedge variability in future cash flows associated to highly
probable future sale transactions of gas or electricity or on
already contracted sales due to different indexation mechanism of
supply costs versus selling prices. A similar scheme applies to
exchange rate hedging derivatives. Negative fair value of
contracts expiring by 2014 is disclosed in Note 26 - Other
current liabilities; positive and negative fair value of
contracts expiring beyond 2014 is disclosed in Note 21 - Other
non-current receivables and in Note 31 - Other non-current
liabilities. The effects of the evaluation at fair value of cash
flow hedge derivatives are given in Note 33 - Shareholders’
equity and in Note 37 - Operating expenses. Sale commitments of
cash flow hedge derivatives amounted to euro 505 million
(purchase and sale commitments of euro 31 million and euro 510
million, respectively, at December 31, 2012). Information on
hedged risks and hedging policies is disclosed in Note 35 -
Guarantees, commitments and risks - Risk factors.
The fair value of other derivative contracts is presented below:
December 31, 2012 |
December 31, 2013 |
|||
| (euro million) |
|
Fair value |
|
Purchase |
|
Sale |
|
Fair value |
|
Purchase |
|
Sale |
| Derivatives on exchange rate | ||||||||||||
| Interest currency swap | 8 | 44 | 6 | 35 | ||||||||
| Currency swap | 158 | 3,349 | 4,597 | 250 | 2,320 | 6,426 | ||||||
| Other | 3 | 215 | 8 | 1 | 68 | 73 | ||||||
| 169 | 3,608 | 4,605 | 257 | 2,423 | 6,499 | |||||||
| Derivatives on interest rate | ||||||||||||
| Interest rate swap | 1 | 23 | 2 | 36 | ||||||||
| 1 | 23 | 2 | 36 | |||||||||
| Derivatives on commodities | ||||||||||||
| Over the counter | 713 | 3,648 | 9,505 | 395 | 6,558 | 9,231 | ||||||
| Future | 26 | 825 | 9 | 64 | 7,666 | 6,340 | ||||||
| Other | 7 | 30 | 1 | |||||||||
| 746 | 4,503 | 9,515 | 459 | 14,224 | 15,571 | |||||||
| 916 | 8,134 | 14,120 | 718 | 16,683 | 22,070 |
Fair value of other derivatives of euro
718 million (euro 916 million at December 31, 2012) consisted of:
(i) euro 369 million (euro 564 million at December 31, 2012) of
derivatives that failed to meet the formal criteria to be
designated as hedges under IFRS because they were entered into in
order to manage net exposures to movements in foreign currencies,
interest rates or commodity prices. Therefore, such derivatives
were not related to specific trade or financing transactions;
(ii) euro 344 million (euro 352 million at December 31, 2012)
related to commodity derivatives entered by the Gas & Power
segment for trading purposes and proprietary trading; (iii) euro
5 million of derivatives related to net settlement agreements, of
which euro 7 million of negative fair value hedge derivatives.
Other assets amounted to euro 593 million (euro 677 million at
December 31, 2012) and included: (i) prepayments and accrued
income for euro 108 million (euro 146 million at December 31,
2012); (ii) prepaid rentals for euro 63 million (euro 51 million
at December 31, 2012); and (iii) prepaid insurance premiums for
euro 53 million (euro 49 million at December 31, 2012).
Prepayments that were made to gas suppliers upon triggering the
take-or-pay clause provided by the relevant long-term supply
arrangements and amounting to euro 129 million as of December 31,
2012 were fully recovered during 2013 through collection of gas.
Transactions with related parties are described in Note 43 -
Transactions with related parties.
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Non-current assets
15 Property, plant and equipment
| (euro million) | Net book value at the beginning of the year |
Additions |
Depreciation |
Impairment losses |
Changes in the scope of consolidation |
Currency translation differences |
Reclassification to assets held for sale |
Other changes |
Net book value at the end of the year |
Gross book value at the end of the year |
Provisions for depreciation and impairments |
| December 31, 2012 | ||||||||||||||||||||||||||||
| Land | 771 | 5 | (109 | ) | (8 | ) | (8 | ) | 4 | 655 | 678 | 23 | ||||||||||||||||
| Buildings | 1,427 | 61 | (108 | ) | (45 | ) | (316 | ) | (2 | ) | (7 | ) | 148 | 1,158 | 3,150 | 1,992 | ||||||||||||
| Plant and machinery | 47,494 | 1,546 | (7,012 | ) | (1,079 | ) | (9,719 | ) | (313 | ) | (304 | ) | 8,283 | 38,896 | 112,170 | 73,274 | ||||||||||||
| Industrial and commercial equipment | 459 | 74 | (112 | ) | (3 | ) | (62 | ) | 3 | 3 | 362 | 1,660 | 1,298 | |||||||||||||||
| Other assets | 829 | 89 | (103 | ) | (75 | ) | (12 | ) | (7 | ) | 5 | 726 | 2,239 | 1,513 | ||||||||||||||
| Tangible assets in progress and advances | 22,598 | 9,447 | (407 | ) | (2,207 | ) | (187 | ) | (130 | ) | (7,445 | ) | 21,669 | 23,400 | 1,731 | |||||||||||||
| 73,578 | 11,222 | (7,335 | ) | (1,609 | ) | (12,425 | ) | (514 | ) | (449 | ) | 998 | 63,466 | 143,297 | 79,831 | |||||||||||||
| December 31, 2013 | ||||||||||||||||||||||||||||
| Land | 655 | 10 | (8 | ) | (19 | ) | (3 | ) | 9 | 644 | 670 | 26 | ||||||||||||||||
| Buildings | 1,158 | 72 | (115 | ) | (37 | ) | 18 | (29 | ) | (7 | ) | 194 | 1,254 | 3,369 | 2,115 | |||||||||||||
| Plant and machinery | 38,896 | 3,820 | (6,995 | ) | (1,847 | ) | (1,523 | ) | (145 | ) | 8,263 | 40,469 | 119,335 | 78,866 | ||||||||||||||
| Industrial and commercial equipment | 362 | 141 | (116 | ) | (4 | ) | (17 | ) | 31 | 397 | 1,758 | 1,361 | ||||||||||||||||
| Other assets | 726 | 80 | (110 | ) | (1 | ) | 1 | (10 | ) | (315 | ) | 371 | 1,908 | 1,537 | ||||||||||||||
| Tangible assets in progress and advances | 21,669 | 6,741 | (219 | ) | (996 | ) | (7,824 | ) | 19,371 | 21,355 | 1,984 | |||||||||||||||||
| 63,466 | 10,864 | (7,336 | ) | (2,116 | ) | 19 | (2,594 | ) | (155 | ) | 358 | 62,506 | 148,395 | 85,889 |
Capital expenditures by segment were the following:
| (euro million) | 2012 |
2013 |
| Capital expenditures | |||||
| Exploration & Production | 8,407 | 8,754 | |||
| Gas & Power | 156 | 152 | |||
| Refining & Marketing | 836 | 612 | |||
| Versalis | 163 | 311 | |||
| Engineering & Construction | 998 | 887 | |||
| Corporate and financial companies | 71 | 130 | |||
| Other activities - Snam | 539 | ||||
| Other activities | 14 | 21 | |||
| Elimination of intra-group profits | 38 | (3 | ) | ||
| 11,222 | 10,864 |
Capital expenditures included
capitalized finance expenses of euro 167 million (euro 173
million in 2012, of which euro 26 million relating to
discontinued operations) and related to the Exploration &
Production segment (euro 124 million), the Refining &
Marketing segment (euro 39 million) and the Versalis segment
(euro 4 million). The interest rates used for capitalizing
finance expense ranged from 2.6% to 5.3% (2.1% and 5.1% at
December 31, 2012).
The main depreciation rates used were substantially unchanged
from the previous year and ranged as follows:
| (%) | |||||||||
| Buildings | 2 |
- |
10 |
||||||
| Plant and machinery | 2 |
- |
10 |
||||||
| Industrial and commercial equipment | 4 |
- |
33 |
||||||
| Other assets | 6 |
- |
33 |
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A breakdown of impairments losses recorded in 2013 and the associated tax effect is provided below:
| (euro million) | 2012 |
2013 |
| Impairment losses | ||||
| Exploration & Production | 547 | 209 | ||
| Gas & Power | 80 | 1,200 | ||
| Refining & Marketing | 843 | 633 | ||
| Versalis | 112 | 55 | ||
| Other segments | 27 | 19 | ||
| 1,609 | 2,116 | |||
| Tax effects | ||||
| Exploration & Production | 154 | 71 | ||
| Gas & Power | 21 | 355 | ||
| Refining & Marketing | 96 | 223 | ||
| Versalis | 33 | 15 | ||
| Other segments | 2 | 5 | ||
| 306 | 669 | |||
| Impairments net of the relevant tax effects | ||||
| Exploration & Production | 393 | 138 | ||
| Gas & Power | 59 | 845 | ||
| Refining & Marketing | 747 | 410 | ||
| Versalis | 79 | 40 | ||
| Other segments | 25 | 14 | ||
| 1,303 | 1,447 |
In assessing whether impairment is
required, the carrying amounts of property, plant and equipment
are compared with their recoverable amounts. The recoverable
amount is the higher of an asset’s fair value less costs to
sell and its value-in-use. Given the nature of Eni’s
activities, information on asset fair value is usually difficult
to obtain unless negotiations with a potential buyer are ongoing.
Therefore, the recoverability is verified by using the
value-in-use which is calculated by discounting the estimated
cash flows arising from the continuing use of an asset. The
valuation is carried out for individual asset or for the smallest
identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or
groups of assets (cash generating unit - CGU). The Group has
identified its CGUs: (i) in the Exploration & Production
segment, individual oilfields or pools of oilfields whereby
technical, economic or contractual features make underlying cash
flows interdependent; (ii) in the Gas & Power segment, in
addition to the CGUs to which the goodwill arisen from
acquisitions was allocated (see Note 17 - Intangible assets), any
of the plants for electricity production have been identified as
being individual cash generating units; (iii) in the Refining
& Marketing segment, refining plants, Country-specific
facilities, retail networks and other distribution channels by
Country (ordinary network, high-ways network, and wholesale
activities); (iv) in the Versalis segment, production plants by
business/plant and related facilities; and (v) in the Engineering
& Construction segment, the business units Offshore E&C,
Onshore E&C and related facilities and individual rigs for
offshore operations.
Recoverable amounts are calculated by discounting the estimated
cash flows deriving from the continuing use of the CGUs and, if
significant and reasonably determinable, the cash flows deriving
from disposal at the end of their useful lives. Cash flows are
determined on the basis of the best information available at the
moment of the assessment deriving: (i) for the first four years
of each projection, from the Company’s four year plan
adopted by the top management which provides information on
expected oil and gas production volumes, sales volumes, capital
expenditures, operating costs and margins and industrial and
marketing set-up, as well as trends on the main macroeconomic
variables, including inflation, nominal interest rates and
exchange rates; (ii) beyond the four-year plan horizon, cash flow
projections are estimated based on management’s long-term
assumptions regarding the main macroeconomic variables (inflation
rates, commodity prices, etc.) and along a time horizon which
considers the following factors: (a) for the oil&gas CGUs,
the residual life of the reserves and the associated projections
of operating costs and development expenditures; (b) for the CGUs
of the Refining & Marketing segment, Versalis and the power
plants, the economical and technical life of the plants and the
associated projections of operating costs, expenditures to
support plant efficiency, refining and selling margins and, in
the case of chemical plants, operating results before
depreciation, interest and taxes, with the adoption of
normalization assumptions when judged to be necessary; and (c)
for the CGUs of the gas market and the Engineering &
Construction segment, the perpetuity method of the last-year-plan
by using a nominal growth rate ranging from 0% to 2% considering
a normalization driver of the perpetuity to reflect any
cyclicality observed in the business; (iii) commodity prices are
estimated on the basis of the forward prices prevailing in the
marketplace as of the balance sheet date for the first four years
of the cash flow projections and the long-term price assumptions
adopted by the Company’s management for strategic planning
purposes and capital budget allocation, considering the supply
and demand fundamentals of the main commodities (see Note 3 -
Summary of significant accounting policies). In particular, the
long-term price of oil adopted for assessing the future cash
flows of the oil&gas CGUs was $90 per barrel which is
adjusted to take into account the expected inflationary rate from
2017 onwards.
Values-in-use are estimated by discounting post-tax cash flows at
a rate which corresponds for the Exploration & Production,
Refining & Marketing and Versalis to the Company’s
weighted average cost of capital net of the risk factors
attributable to Saipem and the G&P segment which are assessed
on a stand alone basis. Then the discount rates are adjusted to
factor in risks specific to each Country of activity (adjusted
post-tax WACC). In 2013, the adjusted post-tax WACC of Eni, which
is the driver for calculating each business segment WACC to
assess the value in use of their respective CGUs, decreased by 40
basis points compared to 2012, primarily as a consequence of the
reduced sovereign risk premium
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Eni Annual Report / Notes to the Consolidated Financial Statements |
incorporated into the yields of ten-year
Italian bonds. The other drivers used in determining the cost of
capital – cost of borrowings to Eni, equity risk, average
premium for Country risk, debt-to-equity ratio – were
assessed to record only marginal variations. In 2013, the
adjusted WACC rates used for impairment test purposes ranged from
6.4% to 12.2%.
Post-tax cash flows and discount rates were adopted as they
resulted in an assessment that substantially approximated a
pre-tax assessment.
Impairment losses recognized in the Gas & Power segment of
euro 1,200 million were mainly recorded at the electric power
plants due to the substantial deterioration in the competitive
scenario reflecting structural weakness in demand and as
gas-fired cycles were at disadvantage compared to coal-fired
production and electricity from renewable sources as a
consequence of cyclical reasons (plunging supply costs of coal
and abundance of emission certificates) or structural reasons
(growth of renewable sources favored by government subsidies). On
the basis of these drivers and the relevant projections of
unprofitable margins for the production and sale of electricity
from combined-cycle power plants, management has impaired the
book value of the electric power plants to their lower
values-in-use. Other impairments related to gas networks in
Hungary due to revisions in the tariff framework and
uncertainties concerning the possible future evolution.
Impairment losses recognized in the Refining & Marketing
segment of euro 633 million related to refining plants as a
consequence of projections of unprofitable margins due to the
structural headwinds in the business due to weak demand, excess
capacity, increased competitive pressure from product streams
coming from Russia, Asia and North America resulting in
continuing pressure on selling prices and, in addition, to
narrowing differential between the prices of heavy crude
qualities vs. the market benchmark Brent causing a substantial
reduction in the conversion premium. Other minor impairments were
recorded to write-off expenditures incurred for safety and plant
upgrades at assets which were fully impaired in previous
reporting periods. The largest impairment loss was recorded to
write-off the book value of a refinery which was tested for
impairment using a post-tax discount rate of 7.1%, corresponding
to a pre-tax discount rate of 8.8%.
Small impairments were recorded at oil&gas properties in the
Exploration & Production segment as a consequence of downward
reserve revisions for euro 209 million, substantially offset by
reversal of previous years write-off amounting to euro 208
million. The largest impairment losses were recorded at two
assets located in Italy which were tested for impairment using a
post-tax discount rate of 6.7%, corresponding to a pre-tax
discount rate of 4.0% and 6.6%, respectively.
In the Versalis segment impairment losses amounted to euro 55
million and mainly related to the write-off of the book value of
marginal production lines which were shut down and to write-off
expenditures incurred for safety and plant upgrades at assets
which were fully impaired in previous reporting periods.
Foreign currency translation differences of euro 2,594 million
primarily related to translations of entities accounts
denominated in US dollar (euro 1,676 million), partially offset
by translations of entities accounts denominated in Norwegian
krone (euro 620 million).
The reclassification to assets held for sale of euro 155 million
comprised certain non-strategic assets of the Exploration &
Production segment (euro 143 million).
Other changes of euro 358 million related to: (i) the recognition
of mineral property in the Exploration & Production segment
for euro 276 million in relation to the renegotiation of the
contractual terms and the duration extension of some development
licenses as a compensation of the renounce to the deferred tax
assets recoverability related to cost incurred and not yet
recovered for tax purposes; (ii) asset reversal of impairment for
euro 223 million, of which euro 208 million were recorded by the
Exploration & Production segment in relation to a gas and
condensate field located in Australia due to positive reserve
revisions (euro 145 million) and an oil assets in the United
States due to improved future production costs (euro 45 million);
(iii) as decrease, the initial recognition of assets and change
in estimates of costs for dismantling and site restoration
amounting to euro 190 million.
Unproved mineral interests included in tangible assets in
progress and advances are presented below:
| (euro million) |
|
Book value |
Acquisitions |
Impairment losses |
Reclassification to Proved Mineral Interest |
Other changes and currency translation differences |
Book value |
| December 31, 2012 | |||||||||||||||
| Congo | 1,280 | (2 | ) | (24 | ) | 1,254 | |||||||||
| Nigeria | 758 | (15 | ) | 743 | |||||||||||
| Turkmenistan | 635 | (109 | ) | (1 | ) | (9 | ) | 516 | |||||||
| Algeria | 485 | (124 | ) | (6 | ) | 355 | |||||||||
| USA | 217 | (62 | ) | (51 | ) | 42 | 146 | ||||||||
| India | 48 | (26 | ) | 22 | |||||||||||
| Other Countries | 73 | (44 | ) | 29 | |||||||||||
| 3,496 | (197 | ) | (222 | ) | (12 | ) | 3,065 | ||||||||
| December 31, 2013 | |||||||||||||||
| Congo | 1,254 | (84 | ) | (51 | ) | 1,119 | |||||||||
| Nigeria | 743 | (32 | ) | 711 | |||||||||||
| Turkmenistan | 516 | (4 | ) | (22 | ) | 490 | |||||||||
| Algeria | 355 | (9 | ) | (15 | ) | 331 | |||||||||
| USA | 146 | (3 | ) | (6 | ) | 137 | |||||||||
| Egypt | 45 | (1 | ) | 44 | |||||||||||
| India | 22 | (2 | ) | 20 | |||||||||||
| Other Countries | 29 | (7 | ) | (6 | ) | (1 | ) | 15 | |||||||
| 3,065 | 45 | (7 | ) | (106 | ) | (130 | ) | 2,867 |
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Accumulated provisions for impairments
amounted to euro 9,882 million (euro 8,058 million at December
31, 2012).
At December 31, 2013, Eni pledged property, plant and equipment
for euro 21 million primarily as collateral against certain
borrowings (the same amount as of December 31, 2012).
Government grants recorded as a decrease of property, plant and
equipment amounted to euro 114 million (euro 132 million at
December 31, 2012).
Assets acquired under financial lease agreements amounted to euro
30 million (euro 39 million at December 31, 2012) for service
stations of the Refining & Marketing segment.
Contractual commitments related to the purchase of property,
plant and equipment are disclosed in Note 35 - Guarantees,
commitments and risks - Liquidity risk.
Property, plant and equipment under concession arrangements are
described in Note 35 - Guarantees, commitments and risks - Asset
under concession arrangements.
Property, plant and equipment by segment
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Property, plant and equipment, gross | ||||||
| Exploration & Production | 103,369 | 107,380 | ||||
| Gas & Power | 4,373 | 4,438 | ||||
| Refining & Marketing | 15,744 | 16,284 | ||||
| Versalis | 5,589 | 5,898 | ||||
| Engineering & Construction | 12,621 | 12,774 | ||||
| Corporate and financial companies | 470 | 589 | ||||
| Other activities | 1,617 | 1,522 | ||||
| Elimination of intra-group profits | (486 | ) | (490 | ) | ||
| 143,297 | 148,395 | |||||
| Accumulated depreciation, amortization and impairment losses | ||||||
| Exploration & Production | 55,836 | 59,223 | ||||
| Gas & Power | 1,961 | 3,301 | ||||
| Refining & Marketing | 11,305 | 12,157 | ||||
| Versalis | 4,661 | 4,793 | ||||
| Engineering & Construction | 4,408 | 4,846 | ||||
| Corporate and financial companies | 243 | 267 | ||||
| Other activities | 1,541 | 1,450 | ||||
| Elimination of intra-group profits | (124 | ) | (148 | ) | ||
| 79,831 | 85,889 | |||||
| Property, plant and equipment, net | ||||||
| Exploration & Production | 47,533 | 48,157 | ||||
| Gas & Power | 2,412 | 1,137 | ||||
| Refining & Marketing | 4,439 | 4,127 | ||||
| Versalis | 928 | 1,105 | ||||
| Engineering & Construction | 8,213 | 7,928 | ||||
| Corporate and financial companies | 227 | 322 | ||||
| Other activities | 76 | 72 | ||||
| Elimination of intra-group profits | (362 | ) | (342 | ) | ||
| 63,466 | 62,506 |
16 Inventory - compulsory stock
Compulsory inventories of euro 2,571 million (euro 2,538 million at December 31, 2012) were primarily held by Italian subsidiaries for euro 2,550 million (euro 2,525 million at December 31, 2012) in accordance with minimum stock requirements of oil and petroleum products set forth by applicable laws.
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17 Intangible assets
| (euro million) | Net book value at the beginning of the year |
Additions |
Amortization |
Impairment losses |
Changes in the scope of consolidation |
Currency translation differences |
Other changes |
Net book value at the end of the year |
Gross book value at the end of the year |
Provisions for depreciation and impairments |
| December 31, 2012 | |||||||||||||||||||||||||
| Intangible assets with finite useful lives | |||||||||||||||||||||||||
| Exploration expenditures | 564 | 1,871 | (1,886 | ) | (10 | ) | 9 | 548 | 2,653 | 2,105 | |||||||||||||||
| Industrial patents and intellectual property rights | 156 | 59 | (58 | ) | (1 | ) | (74 | ) | 1 | 55 | 138 | 1,197 | 1,059 | ||||||||||||
| Concessions, licenses, trademarks and similar items | 847 | 18 | (134 | ) | (1 | ) | (46 | ) | (1 | ) | 683 | 2,516 | 1,833 | ||||||||||||
| Service concession arrangements | 3,690 | 170 | (3 | ) | (37 | ) | (3,716 | ) | (2 | ) | (70 | ) | 32 | 101 | 69 | ||||||||||
| Intangible assets in progress and advances | 248 | 159 | (1 | ) | (57 | ) | (86 | ) | 263 | 269 | 6 | ||||||||||||||
| Other intangible assets | 1,422 | 18 | (127 | ) | (1,030 | ) | 40 | 7 | 32 | 362 | 2,144 | 1,782 | |||||||||||||
| 6,927 | 2,295 | (2,208 | ) | (1,070 | ) | (3,853 | ) | (4 | ) | (61 | ) | 2,026 | 8,880 | 6,854 | |||||||||||
| Intangible assets with indefinite useful lives | |||||||||||||||||||||||||
| Goodwill | 4,023 | (1,347 | ) | (216 | ) | 2 | (1 | ) | 2,461 | ||||||||||||||||
| 10,950 | 2,295 | (2,208 | ) | (2,417 | ) | (4,069 | ) | (2 | ) | (62 | ) | 4,487 | |||||||||||||
| December 31, 2013 | |||||||||||||||||||||||||
| Intangible assets with finite useful lives | |||||||||||||||||||||||||
| Exploration expenditures | 548 | 1,697 | (1,764 | ) | (19 | ) | 462 | 2,712 | 2,250 | ||||||||||||||||
| Industrial patents and intellectual property rights | 138 | 30 | (55 | ) | (2 | ) | (1 | ) | 20 | 130 | 1,239 | 1,109 | |||||||||||||
| Concessions, licenses, trademarks and similar items | 683 | 17 | (115 | ) | (15 | ) | 6 | 576 | 2,491 | 1,915 | |||||||||||||||
| Service concession arrangements | 32 | (2 | ) | 2 | 32 | 48 | 16 | ||||||||||||||||||
| Intangible assets in progress and advances | 263 | 124 | (25 | ) | 362 | 367 | 5 | ||||||||||||||||||
| Other intangible assets | 362 | 18 | (40 | ) | (157 | ) | (1 | ) | (13 | ) | 169 | 2,111 | 1,942 | ||||||||||||
| 2,026 | 1,886 | (1,976 | ) | (174 | ) | (21 | ) | (10 | ) | 1,731 | 8,968 | 7,237 | |||||||||||||
| Intangible assets with indefinite useful lives | |||||||||||||||||||||||||
| Goodwill | 2,461 | (333 | ) | 34 | (17 | ) | 1 | 2,146 | |||||||||||||||||
| 4,487 | 1,886 | (1,976 | ) | (507 | ) | 34 | (38 | ) | (9 | ) | 3,877 |
Capitalized exploration expenditures of
euro 462 million (euro 548 million at December 31, 2012) mainly
related to the residual book value of license acquisition costs
that are amortized on a straight-line basis over the contractual
term of the exploration lease or fully written off against profit
and loss upon expiration of terms or management’s decision
to cease any exploration activities. Additions for the year of
euro 1,697 million (euro 1,871 million in 2012) included
exploration drilling expenditures which are fully capitalized to
reflect their investment nature and then entirely amortized for
euro 1,509 million (euro 1,650 million in 2012) and license
acquisition costs of euro 188 million (euro 221 million in 2012)
primarily related to the acquisition of new exploration acreage
in Cyprus and Vietnam. Amortizations of euro 1,764 million (euro
1,886 million in 2012) included amortizations of license
acquisition costs for euro 255 million (euro 206 million in
2012).
Industrial patents and intellectual property rights of euro 130
million (euro 138 million at December 31, 2012) related to Eni
SpA for euro 86 million (euro 89 million at December 31, 2012)
and essentially concerned costs for the acquisition and internal
development of software and rights for the use of production
processes and software.
Concessions, licenses, trademarks and similar items for euro 576
million (euro 683 million at December 31, 2012) primarily
comprised transmission rights for natural gas imported from
Algeria of euro 523 million (euro 614 million at December 31,
2012) and concessions for mineral exploration of euro 20 million
(euro 47 million at December 31, 2012).
Service concession arrangements of euro 32 million primarily
pertained to gas distribution activities outside Italy (same
amount as of December 31, 2012).
Intangible assets in progress and advances of euro 362 million
(euro 263 million at December 31, 2012) related to Eni SpA for
euro 267 million (euro 189 million at December 31, 2012) and
primarily concerned cost for software development.
Other intangible assets with finite useful lives of euro 169
million (euro 362 million at December 31, 2012) comprised: (i)
royalties for the use of licenses by Versalis SpA amounting to
euro 52 million (euro 56 million at December 31, 2012); and (ii)
the estimated costs of Eni’s social responsibility projects
in relation to oil development programs in Val d’Agri and in
the North Adriatic area connected to mineral rights under
concession for euro 35 million (euro 44 million at December 31,
2012) following commitments made with the Basilicata Region, the
Emilia Romagna Region and the Province and Municipality of
Ravenna. Impairments regarded a loss of euro 157 million recorded
on the customer relationship (euro 774 million in 2012) which was
recognized upon the business combination of Distrigas NV (now Eni
Gas & Power NV) and allocated to the European Market CGU. The
driver of the
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impairments was the continuing
competitive pressure in Benelux considering the reduced
profitability outlook of the European Market CGU in the light of
the structural headwinds of the European gas sector, as described
below in the disclosure about goodwill impairments.
Furthermore, in 2012, an impairment loss of euro 256 million was
recorded to write off the book value of an option to develop an
offshore storage facility for commercial modulation of gas in the
British North Sea, which was recognized upon the acquisition of
Eni Hewett Ltd, driven by continuing weakness in the European gas
scenario.
The main depreciation rates used were substantially unchanged
from the previous year and ranged as follows:
| (%) | |||||||||
| Exploration expenditures | 14 |
- |
33 |
||||||
| Industrial patents and intellectual property rights | 20 |
- |
33 |
||||||
| Concessions, licenses, trademarks and similar items | 3 |
- |
33 |
||||||
| Service concession arrangements | 2 |
- |
4 |
||||||
| Other intangible assets | 4 |
- |
25 |
Impairment losses of intangible assets
with indefinite useful lives (goodwill) amounted to euro 333
million (euro 1,347 million in 2012) and primarily pertained to
the Gas & Power segment for euro 329 million (euro 1,347
million in 2012).
Changes in the scope of consolidation of intangible assets with
indefinite useful lives (goodwill) of euro 34 million comprised
the goodwill recognition made on the purchase price allocation in
the business combination of ASA Trade SpA, a company marketing
gas in Tuscany, following the 100% acquisition (euro 24 million)
and of Est Più SpA, a company marketing gas and electricity in
Friuli Venezia Giulia, following the acquisition of a 30% control
stake (euro 10 million). In 2012, changes in the scope of
consolidation of intangible assets with indefinite useful lives
(goodwill) of euro 216 million comprised the deconsolidation of
Gruppo Snam following the loss of control (euro 314 million) and
the inclusion of Nuon Belgium NV (now merged in Eni Gas &
Power NV) and Nuon Power Generation Walloon NV (now Eni Power
Generation NV) following the 100% acquisition (euro 98 million).
The carrying amount of goodwill at the end of the year was euro
2,146 million (euro 2,461 million at December 31, 2012) net of
cumulative impairments amounting to euro 2,396 million (euro
2,075 million at December 31, 2012). The breakdown of goodwill by
operating segment is as follows:
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Gas & Power | 1,286 | 991 | ||
| Engineering & Construction | 750 | 748 | ||
| Exploration & Production | 265 | 250 | ||
| Refining & Marketing | 160 | 157 | ||
| 2,461 | 2,146 |
Goodwill acquired through business
combinations has been allocated to the cash generating units
(“CGUs”) that are expected to benefit from the
synergies of the acquisition. The CGUs of the Gas & Power
segment are represented by such commercial business units which
cash flows are largely interdependent and therefore benefit from
acquisition synergies. The recoverable amounts of the CGUs are
determined by discounting the future cash flows derived from the
continuing use of the CGUs by applying the perpetuity method to
assess the terminal value. For the determination of the cash
flows see Note 15 - Property, plant and equipment. In the Gas
& Power segment the adjusted WACC discount rates ranged from
6.4% to 10.2% as the WACC of the segment was adjusted to take
into account the specific risks of the countries in which the
activity takes place. For the Engineering & Construction
segment, the rate used was 7.6% and was not adjusted to a
specific country risk as the invested capital of the company
mainly refers to movable properties. Both the segments registered
a reduction of 50-20 basis points due to the lower risk premium
for Italy.
Post-tax cash flows and discount rates were adopted as they
resulted in an assessment that substantially approximated a
pre-tax assessment.
In the Gas & Power segment goodwill has been allocated to the
following CGUs.
Gas & Power segment
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Domestic gas market | 767 | 801 | ||
| Foreign gas market | 519 | 190 | ||
| - of which European market | 511 | 188 | ||
| 1,286 | 991 |
Goodwill allocated to the CGU Domestic Gas market was recognized upon the buy-out of Italgas SpA minorities in 2003 through a public offering (euro 706 million). This CGU engages in supplying gas to residential customers and small businesses. The increase from 2012 of euro 34 million
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comprised the acquisition of local
companies engaged in retail sale activities. The impairment
review performed at the balance sheet date confirmed the
recoverability of the carrying amount of the goodwill.
At December 31, 2013, the residual amounts of goodwill allocated
to the European Gas Market CGUs related to the business
combinations Altergaz SA (now Eni Gas & Power France SA) in
France, Nuon Belgium NV (now merged in Eni Gas & Power NV) in
Belgium which is operating in retail sale activities. At December
31, 2012, these CGUs also comprised the goodwill related to gas
wholesale and LNG activities acquired through Distrigas NV (now
Eni Gas & Power NV) in Belgium and gas wholesale and LNG
activities managed directly by the Gas & Power Division of
Eni SpA involving large customers (North-West Europe area -
France, Germany, Benelux, United Kingdom, Switzerland and
Austria). Those wholesale activities benefited of the synergies
from the business combination of Distrigas.
In performing the impairment review of the recoverability of the
carrying amount of these activities, management recognized an
impairment loss of goodwill amounting to euro 323 million, thus
completely writing off the goodwill allocated to these CGUs,
considering a reduced profitability outlook due to the structural
changes in the economics of the gas business.
The key assumptions adopted in assessing future cash flow
projections of the CGUs included marketing margins, forecast
sales volumes, the discount rate and the growth rates adopted to
determine the terminal value. Information on these drivers was
derived from the four-year plan approved by the Company’s
management which reduced with respect to past reviews the
projected returns and cash flows particularly for the assets
subject to impairment, driven by expectations of a weak recovery
in gas demand due to slow dynamics of European economies and
competition from other resources, persistent oversupply and high
competitive pressure. These drivers will continue to weigh on
spot prices of gas, to which selling prices in the European
markets are benchmarked. Management expects that spot prices of
gas in the next four-year period will show negative spreads
towards the oil-linked costs of gas supplies. In the light of the
expected trends in the gas market, management plans to
renegotiate the economic terms and flexibility conditions at the
Company’s main long-term supply contracts. The expected
results of these renegotiations are factored in the economic and
financial projections of the four-year plan adopted by the
management for the gas business. For the assets subject to
impairment, management is now assuming in the updated plan with
respect to the previous plan: (i) a significant reduction in the
long-term average unit marketing margins; (ii) a reduction in
sales volumes; (iii) a slightly lower discount rate; and (iv) to
assess the terminal value, the long-term growth rate of the
perpetuity was set to zero, unchanged from the previous reporting
period.
The value in use of the CGU European Gas Market which led to an
impairment of the goodwill was assessed by discounting the
associated post-tax cash flows at a post-tax rate of 6.6%
corresponding to a pre-tax rate of 11.4% (7.3% and 12%,
respectively in 2012).
The excess of the recoverable amount of the CGU Domestic Gas
Market over its carrying amount including the allocated portion
of goodwill (headroom) amounting to euro 650 million would be
reduced to zero under each of the following alternative
hypothesis: (i) a decrease of 35% on average in the projected
commercial margins; (ii) a decrease of 35% on average in the
projected sales volumes; (iii) an increase of 7 percentage points
in the discount rate; and (iv) a negative nominal growth rate of
12%. The recoverable amount of the CGU domestic gas market and
the relevant sensitivity analysis were calculated solely on the
basis of retail margins.
Engineering & Construction segment
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Offshore E&C | 415 | 415 | ||
| Onshore E&C | 316 | 314 | ||
| Other | 19 | 19 | ||
| 750 | 748 |
The segment goodwill of euro 748 million
was mainly recognized following the acquisition of Bouygues
Offshore SA, now Saipem SA (euro 710 million) and allocated to
the CGUs Offshore E&C and Onshore E&C. The impairment
review performed at the balance sheet date confirmed the
recoverability of the carrying amounts of both those CGUs,
including the allocated portions of goodwill.
The key assumptions adopted for assessing the recoverable amounts
of those two CGUs which exceeded their respective carrying
amounts related to operating results, the discount rate and the
growth rates of the perpetuity adopted to determine the terminal
value. Information on those drivers were collected from the
four-year-plan approved by the Company’s management, while
the terminal value was estimated by using a perpetual nominal
growth rate of 2% applied to the normalized cash flow of the last
year in the four-year plan. Value in use of both CGUs was
assessed by discounting the associated post-tax cash flows at a
post-tax rate of 7.6% (7.8% in 2012) which corresponds to pre-tax
rates of 10.0% and 11.0% for the Offshore E&C business unit
and the Onshore E&C business unit, respectively (9.9% and
10.7%, respectively in 2012). The headroom of the Offshore
E&C business unit of euro 3,471 million would be reduced to
zero under each of the following alternative changes in the above
mentioned assumptions: (i) a linear decrease of 49% in the
operating result over all the years of the plan and the terminal
value; (ii) an increase of 5 percentage points in the discount
rate; and (iii) negative real growth rate. Changes in each of the
assumptions that would cause the headroom of the Onshore E&C
business unit to be reduced to zero are greater than those
applicable to the Offshore E&C construction CGU described
above.
The Exploration & Production and the Refining & Marketing
segments tested their goodwill, yielding the following results:
(i) in the Exploration & Production segment with goodwill
amounting to euro 250 million, management believes that there are
no reasonably possible changes in the pricing environment and
production/cost profiles that would cause the headroom of the
relevant CGUs to be reduced to zero. Goodwill mainly refers to
the portion of the purchase price that was not allocated to
proved or unproved properties in the business combinations Lasmo,
Burren Energy (Congo) and First Calgary. During 2013, goodwill
attributed to minor activities in Italy was impaired for an
amount of euro 4 million; and (ii) in the
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Refining & Marketing segment goodwill amounted to euro 157 million at the balance sheet date. Goodwill amounting to euro 137 million pertained to retail networks acquired in previous years in Austria, Czech Republic, Hungary and Slovakia for which profitability expectations have remained unchanged from the previous-year impairment review.
18 Investments
Investments accounted for using the equity method
| (euro million) | Book value at the beginning of the year |
Additions |
Divestments and reimbursements |
Share of profit of equity-accounted investments |
Share of loss of equity-accounted investments |
Deduction for dividends |
Changes in the scope of consolidation |
Currency translation differences |
Other changes |
Book value at the end of the year |
| December 31, 2012 | |||||||||||||||||||||||||||
| Investments in unconsolidated entities controlled by Eni | 222 | 6 | (11 | ) | 37 | (4 | ) | (36 | ) | 29 | (2 | ) | (26 | ) | 215 | ||||||||||||
| Joint ventures | 2,598 | 185 | (1 | ) | 319 | (78 | ) | (265 | ) | (473 | ) | (23 | ) | (26 | ) | 2,246 | |||||||||||
| Associates | 3,019 | 139 | (321 | ) | 170 | (151 | ) | (129 | ) | (48 | ) | (32 | ) | (846 | ) | 1,801 | |||||||||||
| 5,839 | 330 | (333 | ) | 526 | (233 | ) | (430 | ) | (492 | ) | (57 | ) | (888 | ) | 4,262 | ||||||||||||
| December 31, 2013 | |||||||||||||||||||||||||||
| Investments in unconsolidated entities controlled by Eni | 215 | 9 | 37 | (9 | ) | (24 | ) | (19 | ) | (6 | ) | (2 | ) | 201 | |||||||||||||
| Joint ventures | 2,246 | 50 | (11 | ) | 198 | (43 | ) | (116 | ) | 7 | (119 | ) | (397 | ) | 1,815 | ||||||||||||
| Associates | 1,801 | 230 | (1 | ) | 134 | (65 | ) | (195 | ) | (73 | ) | 87 | 1,918 | ||||||||||||||
| 4,262 | 289 | (12 | ) | 369 | (117 | ) | (335 | ) | (12 | ) | (198 | ) | (312 | ) | 3,934 |
In 2013, additions of euro 289 million
mainly related to capital contributions to joint ventures and
associates engaged in the realization of projects in the interest
of Eni: Angola LNG Ltd (euro 98 million) which is currently
building a liquefaction plant in order to monetize Eni’s gas
reserves in that Country (Eni’s interest in the project
being 13.6%); South Stream Transport BV (euro 44 million) which
is engaged in the study of feasibility of the South Stream
pipeline; PetroJunin SA (euro 43 million) which is developing gas
and crude oil fields in Venezuela, and; Novamont SpA (euro 41
million) which is engaged in the “green chemistry”
project at the Porto Torres plant.
Divestments and reimbursements of euro 12 million related to the
sale of Est Reti Elettriche SpA.
Eni’s share of profit of equity-accounted investments and
dividend decrease pertained to the following entities:
| (euro million) | December 31, 2012 |
December 31, 2013 |
||
Share of profit of equity-accounted investments |
|
Deduction for dividends |
|
Eni’s interest (%) |
|
Share of profit of equity-accounted investments |
|
Deduction for dividends |
|
Eni’s interest (%) |
| United Gas Derivatives Co | 68 | 60 | 33.33 | 56 | 60 | 33.33 | ||||||
| PetroSucre SA | 3 | 26.00 | 44 | 105 | 26.00 | |||||||
| Unión Fenosa Gas SA | 149 | 108 | 50.00 | 38 | 50.00 | |||||||
| Blue Stream Pipeline Co BV | 39 | 44 | 50.00 | 35 | 54 | 50.00 | ||||||
| Unimar Llc | 38 | 78 | 50.00 | 30 | 19 | 50.00 | ||||||
| Eni BTC Ltd | 30 | 31 | 100.00 | 25 | 22 | 100.00 | ||||||
| CARDÓN IV SA | 1 | 50.00 | 21 | 50.00 | ||||||||
| Supermetanol CA | 18 | 15 | 34.51 | 10 | 15 | 34.51 | ||||||
| Galp Energia SGPS SA (a) | 80 | 55 | 24.34 | |||||||||
| Other investments | 100 | 39 | 110 | 60 | ||||||||
| 526 | 430 | 369 | 335 |
(a) The investment was accounted for under the equity method until the date of loss of significant influence.
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Eni’s share of losses of equity-accounted investments related to the following entities:
| (euro million) | December 31, 2012 |
December 31, 2013 |
||
Share of loss of equity-accounted investments |
|
Eni’s interest (%) |
|
Share of loss of equity-accounted investments |
|
Eni’s interest (%) |
| Angola LNG Ltd | 35 | 13.60 | 42 | 13.60 | ||||
| Petromar Lda | 18 | 70.00 | ||||||
| Société Centrale Electrique du Congo SA | 14 | 20.00 | ||||||
| Zagoryanska Petroleum BV | 50 | 60.00 | 5 | 60.00 | ||||
| Distribuidora de Gas del Centro SA | 12 | 31.35 | ||||||
| EnBW Eni Verwaltungsgesellschaft mbH | 82 | 50.00 | ||||||
| Other investments | 54 | 38 | ||||||
| 233 | 117 |
Losses at the equity-accounted
investments in Angola LNG Ltd (euro 42 million) related to
pre-production expenses and operating costs for commissioning a
re-gasification plant.
Other changes of euro 312 million comprised the reclassification
to assets held for sale of Artic Russia BV for euro 449 million
and, as increase, the reclassification from other investments of
Novamont SpA for euro 35 million and the revaluation of Ceska
Rafinerska AS for euro 21 million. At the balance sheet date,
Eni’s interest in Artic Russia was classified as an asset
held for sale and measured at fair value due to the loss of joint
control over the investee following the satisfaction, before year
end, of all conditions precedent to the Sale Purchase Agreement
signed with Gazprom in November 2013. The re-measurement at fair
value recorded to profit amounted to euro 1,682 million. The
consideration for the disposal was cashed in on January 15, 2014.
List of equity-accounted investments:
| (euro million) | December 31, 2012 |
December 31, 2013 |
|
Net carrying value |
Number of shares held |
Eni’s interest (%) |
Net carrying value |
Number of shares held |
Eni’s interest (%) |
| Investments in unconsolidated entities controlled by Eni | ||||||||||||
| Eni BTC Ltd | 97 | 34,000,000 | 100.00 | 96 | 34,000,000 | 100.00 | ||||||
| Other investments (*) | 118 | 105 | ||||||||||
| 215 | 201 | |||||||||||
| Joint ventures | ||||||||||||
| Unión Fenosa Gas SA | 507 | 273,100 | 50.00 | 547 | 273,100 | 50.00 | ||||||
| Blue Stream Pipeline Co BV | 461 | 1,000 | 50.00 | 424 | 1,000 | 50.00 | ||||||
| Eteria Parohis Aeriou Thessalonikis AE | 131 | 116,546,500 | 49.00 | 130 | 116,546,500 | 49.00 | ||||||
| Raffineria di Milazzo ScpA | 131 | 175,000 | 50.00 | 130 | 175,000 | 50.00 | ||||||
| GreenStream BV | 125 | 100,000,000 | 50.00 | 107 | 100,000,000 | 50.00 | ||||||
| CARDÓN IV SA | 73 | 6,455 | 50.00 | 102 | 8,605 | 50.00 | ||||||
| Unimar Llc | 70 | 50 | 50.00 | 76 | 50 | 50.00 | ||||||
| Supermetanol CA | 62 | 49,000,000 | 34.51 | 55 | 49,000,000 | 34.51 | ||||||
| Eteria Parohis Aeriou Thessalias AE | 46 | 38,445,008 | 49.00 | 45 | 38,445,008 | 49.00 | ||||||
| Transmediterranean Pipeline Co Ltd | 24 | 515,500 | 50.00 | 30 | 515,500 | 50.00 | ||||||
| Petromar Lda | 44 | 1 | 70.00 | 22 | 1 | 70.00 | ||||||
| Artic Russia BV | 436 | 12,000 | 60.00 | |||||||||
| Other investments (*) | 136 | 147 | ||||||||||
| 2,246 | 1,815 | |||||||||||
| Associates | ||||||||||||
| Angola LNG Ltd | 1,060 | 1,279,887,652 | 13.60 | 1,067 | 1,410,127,664 | 13.60 | ||||||
| EnBW Eni Verwaltungsgesellschaft mbH | 162 | 1 | 50.00 | 179 | 1 | 50.00 | ||||||
| PetroSucre SA | 242 | 5,727,800 | 26.00 | 173 | 5,727,800 | 26.00 | ||||||
| United Gas Derivatives Co | 106 | 950,000 | 33.33 | 96 | 950,000 | 33.33 | ||||||
| Novamont SpA | 77 | 6,667 | 25.00 | |||||||||
| Fertilizantes Nitrogenados de Oriente CEC | 68 | 1,933,662,121 | 20.00 | 68 | 1,933,565,443 | 20.00 | ||||||
| PetroJunin SA | 10 | 8,640,000 | 40.00 | 51 | 44,424,000 | 40.00 | ||||||
| South Stream Transport BV | 14 | 82,396 | 20.00 | 51 | 82,396 | 20.00 | ||||||
| Bayernoil Raffineriegesellschaft mbH | 8 | 1 | 20.00 | 35 | 1 | 20.00 | ||||||
| Rosetti Marino SpA | 29 | 800,000 | 20.00 | 32 | 800,000 | 20.00 | ||||||
| Other investments (*) | 102 | 89 | ||||||||||
| 1,801 | 1,918 | |||||||||||
| 4,262 | 3,934 |
(*) Each individual amount included herein was lower than euro 25 million.
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Carrying amounts of equity-accounted
investments included differences between the purchase price of
the interest acquired and the book value of the corresponding
fraction of net equity amounting to euro 334 million, of which
euro 195 million pertained to Unión Fenosa Gas SA (goodwill),
euro 78 million to EnBW Eni Verwaltungsgesellschaft mbH (of which
goodwill euro 16 million) and euro 43 million to Novamont SpA
(goodwill).
The table below sets out the provisions for losses included in
the provisions for contingencies of euro 165 million (euro 176
million at December 31, 2012), primarily related to the following
equity-accounted investments:
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Industria Siciliana Acido Fosforico - ISAF - SpA (under liquidation) | 102 | 92 | ||
| VIC CBM Ltd | 13 | 18 | ||
| Saipon Snc | 14 | |||
| Société Centrale Electrique du Congo SA | 19 | 9 | ||
| Other investments | 42 | 32 | ||
| 176 | 165 |
Other investments
| (euro million) | Net book value at the beginning of the year |
Additions |
Divestments |
Valuation at fair value |
Currency translation differences |
Other changes |
Net book value at the end of the year |
Gross book value at the end of the year |
Accumulated impairment charges |
| December 31, 2012 | |||||||||||||||||||||
| Investments in unconsolidated entities controlled by Eni | 3 | 12 | 15 | 16 | 1 | ||||||||||||||||
| Associates | 13 | (13 | ) | 12 | 12 | 12 | |||||||||||||||
| Other investments: | |||||||||||||||||||||
| - valued at fair value | (358 | ) | 2,528 | 2,612 | 4,782 | 4,782 | |||||||||||||||
| - valued at cost | 383 | 49 | (145 | ) | (3 | ) | (8 | ) | 276 | 277 | 1 | ||||||||||
| 399 | 61 | (516 | ) | 2,528 | (3 | ) | 2,616 | 5,085 | 5,087 | 2 | |||||||||||
| December 31, 2013 | |||||||||||||||||||||
| Investments in unconsolidated entities controlled by Eni | 15 | (1 | ) | 14 | 15 | 1 | |||||||||||||||
| Associates | 12 | 1 | 13 | 13 | |||||||||||||||||
| Other investments: | |||||||||||||||||||||
| - valued at fair value | 4,782 | (2,191 | ) | 179 | 2,770 | 2,770 | |||||||||||||||
| - valued at cost | 276 | 3 | (5 | ) | (8 | ) | (36 | ) | 230 | 233 | 3 | ||||||||||
| 5,085 | 3 | (2,196 | ) | 179 | (8 | ) | (36 | ) | 3,027 | 3,031 | 4 |
Investments in unconsolidated entities
controlled by Eni and associates are stated at cost net of
impairment losses. Other investments, for which fair value cannot
be reliably determined, were recognized at cost and adjusted for
impairment losses.
In 2013, divestments and reimbursements of other investments
valued at fair value for euro 2,191 million are stated net of
gains on disposals (euro 98 million) and related to the sale of
an 11.69% in the share capital of Snam SpA for euro 1,392 million
and an 8.19% in the share capital of Galp Energia SGPS SA for
euro 799 million.
On May 9, 2013, Eni completed the sale of 395,253,345 shares
equal to 11.69% of the share capital of Snam SpA. The offering,
carried out through an accelerated bookbuilding aimed at
qualified institutional investors, was priced at euro 3.69 per
share for a total consideration amounting to euro 1,459 million.
The gain amounted to euro 67 million. Following the placement,
Eni holds 288,683,602 shares equal to 8.54% of the share capital
of Snam which are underlying the euro 1,250 million convertible
bond, issued on January 18, 2013, due on January 18, 2016. At
December 31, 2013, the retained interest in Snam was stated at
fair value for euro 1,174 million, which was determined at a
market price of euro 4.07 per share.
On May 31, 2013, Eni completed the placement of 55,452,341
ordinary shares, corresponding to approximately 6.69% of the
share capital of Galp Energia SGPS SA. The Offering, carried out
through an accelerated bookbuilding procedure aimed at qualified
institutional investors, was priced at euro 12.22 per share for a
total consideration amounting to euro 678 million. The gain
amounted to euro 26 million. Furthermore, during 2013, Eni
executed private placements and spot sales of Galp’s shares
equal to 1.50% of the share capital, for a total consideration of
euro 152 million, at an average price of euro 12.21 per share,
and a gain amounting to euro 5 million. At December 31, 2013, Eni
holds 133,945,630 shares equal to 16.15% of Galp’s
outstanding share capital, of which 8% underlies the exchangeable
(approximately euro 1,028 million) bond issued on November 30,
2012 to be due on November 30, 2015 and 8.15% are subject to
pre-emptive rights or options exercisable by Amorim Energia.
At December 31, 2013, the retained interest in Galp was stated at
fair value for euro 1,596 million determined at a market price of
euro 11.92 per share.
Fair value adjustment of euro 179 million related to Snam SpA and
Galp Energia SGPS SA, of which euro 168 million were reported
through profit as income from
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investments in application of the fair
value option provided by IAS 39 in order to eliminate an
accounting mismatch derived from the measurement at fair value
through profit as a result of the options embedded in the
convertible bonds.
In 2012, divestments of euro 516 million related for euro 358
million to the sale through an accelerated book-building
procedure with institutional investors of 4% of the share capital
of Galp Energia SGPS SA for a total consideration of euro 381
million and a gain on divestment of euro 23 million and to the
sale of Interconnector (UK) Ltd for euro 136 million.
In 2012, adjustment at fair value of euro 2,528 million related
to the initial recognition and subsequent measurement at market
prices of the interests in Snam SpA (euro 1,465 million, of which
euro 1,457 million recognized in the profit and loss account and
euro 8 million in other comprehensive income) and Galp Energia
SGPS SA (euro 1,063 million of which euro 930 million recognized
in the profit and loss account and euro 133 million in other
comprehensive income) that, as a consequence of the loss of
control on Snam following the transaction with Cassa Depositi e
Prestiti and the loss of significant influence on Galp following
Eni’s exit from the shareholders’ pact, were stated as
financial investment in the item “Other investments”.
The fair values were estimated on the basis of market quotations.
The net carrying amount of other investments of euro 3,027
million (euro 5,085 million at December 31, 2012) was related to
the following entities:
| (euro million) | December 31, 2012 |
December 31, 2013 |
|
Net carrying amount |
|
Number of shares held |
|
Eni’s interest (%) |
|
Net carrying amount |
|
Number of shares held |
|
Eni’s interest (%) |
| Investments in unconsolidated entities controlled by Eni | 15 | 14 | ||||||||||
| Associates | 12 | 13 | ||||||||||
| Other investments: | ||||||||||||
| - Galp Energia SGPS SA | 2,374 | 201,839,604 | 24.34 | 1,596 | 133,945,630 | 16.15 | ||||||
| - Snam SpA | 2,408 | 683,936,947 | 20.23 | 1,174 | 288,683,602 | 8.54 | ||||||
| - Nigeria LNG Ltd | 90 | 118,373 | 10.40 | 86 | 118,373 | 10.40 | ||||||
| - Darwin LNG Pty Ltd | 65 | 213,995,164 | 10.99 | 58 | 213,995,164 | 10.99 | ||||||
| - Novamont SpA | 35 | 3,530 | 15.00 | |||||||||
| - other (*) | 86 | 86 | ||||||||||
| 5,058 | 3,000 | |||||||||||
| 5,085 | 3,027 |
(*) Each individual amount included herein was lower than euro 25 million.
Provisions for losses related to other investments, included within the provisions for contingencies, amounted to euro 12 million (euro 18 million at December 31, 2012).
Other information about
investments
The following table summarizes
key financial data, net to Eni, as disclosed in the latest
available financial statements of unconsolidated entities
controlled by Eni, joint ventures and associates:
| (euro million) | December 31, 2012 |
December 31, 2013 |
||
Unconsolidated entities controlled |
|
Joint ventures |
|
Associates |
|
Unconsolidated entities
controlled |
|
Joint ventures |
|
Associates |
| Total assets | 1,604 | 5,032 | 3,223 | 1,633 | 5,068 | 3,080 | |||||||
| Total liabilities | 1,497 | 2,827 | 1,429 | 1,533 | 3,285 | 1,146 | |||||||
| Net sales from operations | 97 | 2,971 | 1,889 | 101 | 2,476 | 1,752 | |||||||
| Operating profit | 5 | 475 | 259 | (4 | ) | 87 | 114 | ||||||
| Net profit | 39 | 237 | 170 | 21 | 130 | 81 |
Total assets and liabilities of unconsolidated controlled entities of euro 1,633 million and euro 1,533 million, respectively (euro 1,604 million and euro 1,497 million at December 31, 2012) pertained to entities acting as sole-operator in the management of oil and gas contracts for euro 1,283 million and euro 1,283 million (euro 1,249 million and euro 1,249 million at December 31, 2012). The residual amount pertained to not significant entities that were excluded from the scope of consolidation for the reasons described in Note 2 - Principles of consolidation.
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19 Other financial assets
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Financing receivables for operating purposes | 1,160 | 1,017 | ||
| Securities held for operating purposes | 69 | 80 | ||
| 1,229 | 1,097 |
Financing receivables for operating
purposes are stated net of the valuation allowance for doubtful
accounts of euro 66 million (euro 30 million at December 31,
2012).
Financing receivables for operating purposes of euro 1,017
million (euro 1,160 million at December 31, 2012) primarily
pertained to loans granted by the Exploration & Production
segment (euro 569 million), the Gas & Power segment (euro 312
million) and the Refining & Marketing segment (euro 88
million). Receivables for financial leasing of euro 21 million at
December 31, 2012 were nil at December 31, 2013, as a result of
the sale of Finpipe GIE. Financing receivables granted to
unconsolidated subsidiaries, joint ventures and associates
amounted to euro 559 million.
Financing receivables for operating purposes in currencies other
than euro amounted to euro 884 million (euro 999 million at
December 31, 2012).
Financing receivables for operating purposes due beyond five
years amounted to euro 551 million (euro 624 million at December
31, 2012).
The valuation at fair value of financing receivables of euro
1,067 million has been estimated based on the present value of
expected future cash flows discounted at rates ranging from 0.5%
to 4.2% (0.4% and 3.3% at December 31, 2012). The fair value
hierarchy is level 2.
Securities of euro 80 million (euro 69 million at December 31,
2012) were designated as held-to-maturity. The following table
analyses securities per issuing entity:
Amortized cost |
Nominal value |
Fair value |
Nominal rate |
Maturity date |
Rating - Moody’s |
Rating - S&P |
| Sovereign states | ||||||||||||||
| Fixed rate bonds | ||||||||||||||
| Italy | 20 | 21 | 22 | from 3.50 to 4.75 | from 2014 to 2021 | Baa2 | BBB | |||||||
| Slovenija | 8 | 8 | 8 | from 4.38 to 4.88 | 2014 | Ba1 | A- | |||||||
| Spain | 3 | 3 | 3 | 3.00 | 2015 | Baa3 | BBB- | |||||||
| Belgium | 2 | 2 | 2 | 1.25 | 2018 | Aa3 | AA | |||||||
| Floating rate bonds | ||||||||||||||
| Italy | 15 | 15 | 15 | from 2014 to 2016 | Baa2 | BBB | ||||||||
| Belgium | 7 | 7 | 7 | 2016 | Aa3 | AA | ||||||||
| Spain | 7 | 7 | 7 | 2015 | Baa3 | BBB- | ||||||||
| France | 5 | 5 | 5 | 2014 | Aa1 | AA | ||||||||
| Slovakia | 2 | 2 | 2 | 2015 | A2 | A | ||||||||
| Total sovereign states | 69 | 70 | 71 | |||||||||||
| Floating rate bonds | ||||||||||||||
| European Investment Bank | 8 | 8 | 8 | from 2016 to 2018 | Aaa | AAA | ||||||||
| Other securities issued by Financial Institutions | 3 | 3 | 3 | 2014 | Baa3 | BBB- | ||||||||
| 80 | 81 | 82 |
Securities with a maturity beyond five
years amounted to euro 5 million.
The fair value of securities was derived from market prices.
Receivables with related parties are described in Note 43 -
Transactions with related parties.
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Eni Annual Report / Notes to the Consolidated Financial Statements |
20 Deferred tax assets
Deferred tax assets are stated net of amounts of deferred tax liabilities that can be offset for euro 3,558 million (euro 3,630 million at December 31, 2012).
| (euro million) | Amount |
|
Additions |
|
Deductions |
|
Currency translation differences |
|
Other changes |
|
Amount
|
| 5,027 | 2,070 | (2,292) | (237) | 94 | 4,662 |
Net decrease of euro 365 million
included: (i) a write-down of euro 954 million that was
recognized on deferred tax assets recorded by the parent company
Eni SpA and other Italian subsidiaries which were part of the
consolidated accounts for Italian tax purposes. Management
recorded a write-down on those deferred tax assets to reflect a
lower likelihood that those deferred tax assets can be recovered
in future periods due to an expected reduction in taxable income
generated in Italy; (ii) a decrease of euro 766 million of
deferred tax assets in relation to the renegotiation of the
contractual terms and the duration extension of some exploration
and development licenses as a compensation of the renounce to the
deferred tax assets recoverability related to cost incurred and
not yet recovered for tax purposes.
Deferred tax assets are further described in Note 30 - Deferred
tax liabilities.
Income taxes are described in Note 40 - Income tax expense.
21 Other non-current receivables
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Tax receivables from: | ||||
| - Italian tax Authorities | ||||
| - income tax | 113 | 133 | ||
| - interest on tax credits | 62 | 65 | ||
| 175 | 198 | |||
| - foreign tax Authorities | 118 | 267 | ||
| 293 | 465 | |||
| Other receivables: | ||||
| - related to divestments | 752 | 702 | ||
| - other non-current | 361 | 148 | ||
| 1,113 | 850 | |||
| Fair value of non-hedging derivatives | 429 | 256 | ||
| Fair value of cash flow hedge derivative instruments | 2 | 6 | ||
| Other asset | 2,563 | 2,106 | ||
| 4,400 | 3,683 |
Receivables originated from divestments
amounted to euro 702 million (euro 752 million at December 31,
2012) and included: (i) the residual outstanding amount of euro
166 million recognized following the compensation agreed with the
Republic of Venezuela for the expropriated Dación oilfield in
2006. The receivable accrues interests at market conditions as
the collection has been fractionated in installments. In 2013,
reimbursements amounted to euro 68 million (US $90 million).
Negotiations for further compensations are ongoing; (ii) the
long-term portion of a receivable of euro 341 million related to
the divestment of the 1.71% interest in the Kashagan project to
the local partner KazMunaiGas on the basis of the agreements
defined with the international partners of the North Caspian Sea
PSA and the Kazakh government, which became effective from
January 1, 2008. The reimbursement of the receivable is provided
for in three annual installments starting from the date when the
production will reach a commercial level. The receivable accrues
interest income at market rates; (iii) the long-term portion of a
receivable of euro 46 million related to the divestment of the
3.25% interest in the Karachaganak project (equal to the
Eni’s 10% interest) to the Kazakh partner KazMunaiGas as
part of an agreement reached in December 2011 between the
Contracting Companies of the Final Production Sharing Agreement
(FPSA) and Kazakh Authorities which settled disputes on the
recovery of the costs incurred by the International Consortium to
develop the field, as well as a certain tax claims. The
agreement, effective from June 28, 2012, entailed a net cash
consideration to Eni, to be paid in cash in three years through
monthly installments starting in July 2012. The receivable
accrues interest income at market rates. In 2013, reimbursements
amounted to euro 82 million. The short-term portion is disclosed
in Note 10 - Trade and other receivables.
Receivables with related parties are described in Note 43 -
Transactions with related parties.
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Eni Annual Report / Notes to the Consolidated Financial Statements |
The fair value of non-hedging derivative contracts was as follows:
December 31, 2012 |
December 31, 2013 |
|||
| (euro million) |
|
Fair value |
|
Purchase |
|
Sale |
|
Fair value |
|
Purchase |
|
Sale |
| Derivatives on exchange rate | ||||||||||||
| Interest currency swap | 235 | 868 | 284 | 138 | 754 | 271 | ||||||
| Currency swap | 29 | 714 | 645 | 47 | 194 | 509 | ||||||
| 264 | 1,582 | 929 | 185 | 948 | 780 | |||||||
| Derivatives on interest rate | ||||||||||||
| Interest rate swap | 80 | 736 | 2 | 58 | 642 | 6 | ||||||
| 80 | 736 | 2 | 58 | 642 | 6 | |||||||
| Derivatives on commodities | ||||||||||||
| Over the counter | 80 | 581 | 547 | 13 | 94 | 46 | ||||||
| Future | 5 | 147 | 4 | |||||||||
| 85 | 728 | 551 | 13 | 94 | 46 | |||||||
| 429 | 3,046 | 1,482 | 256 | 1,684 | 832 |
Derivative fair values are calculated
basing on market quotations provided by primary info-provider, or
in the absence of market information, appropriate valuation
techniques generally adopted in the marketplace.
Fair values of non-hedging derivatives of euro 256 million (euro
429 million at December 31, 2012) consisted of derivatives that
did not meet the formal criteria to be designated as hedges under
IFRS because they were entered into in order to manage net
exposures to foreign currency exchange rates, interest rates and
commodity prices. Therefore, such derivatives did not relate to
specific trade or financing transactions.
Fair value of cash flow hedge derivatives of euro 6 million (euro
2 million at December 31, 2012) related to hedges entered by the
Gas & Power segment. Further information is disclosed in Note
14 - Other current assets. Fair value related to the contracts
expiring beyond 2014 is disclosed in Note 31 - Other non-current
liabilities; fair value related to the contracts expiring in 2014
is disclosed in Note 14 - Other current assets and in Note 26 -
Other current liabilities. The effects of fair value evaluation
of cash flow hedges are disclosed in Note 33 - Shareholders’
equity and Note 37 - Operating expenses.
Nominal values of cash flow hedge derivatives for sale
commitments were euro 132 million (purchase and sale commitments
of euro 21 million and euro 60 million at December 31, 2012,
respectively).
Information on the hedged risks and the hedging policies is
disclosed in Note 35 - Guarantees, commitments and risks - Risk
factors.
Other non-current asset amounted to euro 2,106 million (euro
2,563 million at December 31, 2012), of which euro 1,892 million
(euro 2,367 million at December 31, 2012) were deferred costs
relating to the obligation to pay in advance the contractual
price of the volumes which the Company failed to collect up to
the minimum contractual take in order to fulfill the take-or-pay
clause provided by the relevant long-term supply contracts (see
Other payables of Note 23 - Trade and other payables). The
reduction from the previous year is due to the collection of a
part of the prepaid volumes as a consequence of the benefits
deriving from the renegotiations that ensured improved
flexibility. Those prepayments were classified as non-current
assets, as the Company plans to collect the prepaid quantities
beyond the term of 12 months. In accordance with those
arrangements, the Company is contractually required to collect
minimum annual quantities of gas, or in case of failure, is
contractually obliged to pay the whole price or a fraction of it
for the uncollected volumes up to the minimum annual quantity.
The Company is entitled to collect the prepaid volumes in future
years alongside contract execution, up to contract expiration or
in a shorter term as the case may be. Those deferred costs, which
are equivalent to a receivable in-kind, are stated at the
purchase cost or the net realizable value, whichever is lower.
Prior-years impairment losses are reversed up to the purchase
cost, whenever market conditions indicate that impairment no
longer exits or may have decreased. The amount of pre-paid
volumes reflects ongoing weak market conditions in the European
gas sector due to declining demand and strong competitive
pressures fuelled by oversupplies. Those trends prevented Eni
from fulfilling its minimum take obligations associated with its
gas supply contracts. Management plans to recover those pre-paid
volumes over the long-term by leveraging on a projected sales
expansion in target European Markets and in Italy supported by
the Company’s strengthening market leadership and improved
competitiveness of the Company’s cost position considering
the expected benefits of ongoing and planned contract
renegotiations and the expected benefits associated with the
reduction of minimum take quantities in future years and other
operating flexibilities (i.e. changes in delivery points and LNG
supplies in place of those by pipeline) which the Company plans
to achieve as a result of ongoing and planned contract
renegotiations, including the non renewing of expiring contracts.
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Current liabilities
22 Short-term debt
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Banks | 253 | 258 | ||
| Commercial papers | 1,481 | 1,767 | ||
| Other financial institutions | 489 | 717 | ||
| 2,223 | 2,742 |
The increase in short-term debt of euro
519 million included net assumptions for euro 1,029 million,
partially offset by foreign currency translation differences of
euro 570 million. Commercial papers of euro 1,767 million (euro
1,481 million at December 31, 2012) were issued by the
Group’s financial subsidiaries Eni Finance USA Inc (euro
1,587 million) and Eni Finance International SA (euro 180
million).
The breakdown by currency of short-term debt is provided below:
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Euro | 219 | 465 | ||
| US dollar | 1,815 | 2,056 | ||
| Other currencies | 189 | 221 | ||
| 2,223 | 2,742 |
At December 31, 2013, the weighted
average interest rate on short-term debt was 1.1% (1.5% at
December 31, 2012).
At December 31, 2013, Eni had undrawn committed and uncommitted
borrowing facilities amounting to euro 2,141 million and euro
12,187 million, respectively (euro 1,241 million and euro 10,932
million at December 31, 2012). Those facilities bore interest
rates reflecting prevailing conditions in the marketplace.
Charges for unutilized facilities were immaterial.
At December 31, 2013, Eni was in compliance with covenants and
other contractual provisions in relation to borrowing facilities.
The fair value of short-term debt and loans matched their
respective carrying amounts considering the short-term maturity.
Payables due to related parties are described in Note 43 -
Transactions with related parties.
23 Trade and other payables
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Trade payables | 14,993 | 15,529 | ||
| Down payments and advances | 2,247 | 2,450 | ||
| Other payables: | ||||
| - related to capital expenditures | 2,103 | 2,046 | ||
| - others | 4,238 | 3,573 | ||
| 6,341 | 5,619 | |||
| 23,581 | 23,598 |
The increase in trade receivables
amounting to euro 536 million primarily related to the increase
in the Gas & Power segment (euro 613 million) and in the
Exploration & Production segment (euro 279 million),
partially offset by the decrease in the Refining & Marketing
segment (euro 253 million).
Down payments and advances21 for euro 2,450 million
(euro 2,247 million at December 31, 2012) related to contract
work in progress in the Engineering & Construction segment
for euro 1,223 million and euro 822 million (euro 814 million and
euro 865 million at December 31, 2012, respectively).
(21) Down payments received for long-term contracts in progress correspond to the amounts invoiced to customers in excess of the work accrued at the end of the reporting period based on the percentage of completion. Advances on long-term contracts in progress include advanced payments made by customers and contractually agreed; these advanced payments are used during the contract execution in connection with the invoicing of the works performed.
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Other payables were as follows:
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Payables related to capital expenditures due to | ||||
| - suppliers in relation to investing activities | 1,626 | 1,480 | ||
| - joint venture operators in exploration and production activities | 440 | 479 | ||
| - other | 37 | 87 | ||
| 2,103 | 2,046 | |||
| Other payables | ||||
| - joint venture operators in exploration and production activities | 2,375 | 2,160 | ||
| - employees | 372 | 391 | ||
| - social security entities | 223 | 179 | ||
| - non-financial government entities | 243 | 229 | ||
| - other | 1,025 | 614 | ||
| 4,238 | 3,573 | |||
| 6,341 | 5,619 |
The decrease in other payables of euro
665 million included the amounts paid to the Company’s gas
suppliers relating to the triggering of the take-or-pay clause of
the relevant long-term supply contracts (euro 542 million). For
further information see Note 21 - Other non-current receivables.
The fair value of trade and other payables matched their
respective carrying amounts considering the short-term maturity
of trade payables.
Payables to related parties are described in Note 43 -
Transactions with related parties.
24 Income taxes payable
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Italian subsidiaries | 156 | 71 | ||
| Foreign subsidiaries | 1,466 | 671 | ||
| 1,622 | 742 |
The decrease in income
taxes payable by foreign subsidiaries for euro 795 million
primarily related to the foreign companies of the Exploration
& Production segment (euro 677 million).
Income tax expenses are described in Note 40 - Income taxes.
25 Other taxes payable
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Excise and customs duties | 1,286 | 1,244 | ||
| Other taxes and duties | 876 | 1,024 | ||
| 2,162 | 2,268 |
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26 Other current liabilities
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Fair value of cash flow hedge derivatives | 32 | 213 | ||
| Fair value of other derivatives | 893 | 783 | ||
| Other liabilities | 512 | 452 | ||
| 1,437 | 1,448 |
Derivative fair values were
estimated on the basis of market quotations provided by primary
info-provider, or alternatively, appropriate valuation techniques
commonly used on the marketplace.
The fair value of cash flow hedge derivatives amounted to euro
213 million (euro 32 million at December 31, 2012) and
essentially pertained to hedges entered by the Gas & Power
segment. Those derivatives were designated to hedge exchange rate
and commodity risk exposures as described in Note 14 - Other
current assets. Fair value of contracts expiring by end of 2014
is disclosed in Note 14 - Other current assets; fair value of
contracts expiring beyond 2014 is disclosed in Note 31 - Other
non-current liabilities and in Note 21 - Other non-current
receivables. The effects of the evaluation at fair value of cash
flow hedge derivatives are disclosed in Note 33 -
Shareholders’ equity and in Note 37 - Operating expenses.
The nominal value of cash flow hedge derivatives referred to
purchase and sale commitments for euro 3,689 million and euro
1,393 million, respectively (euro 341 million and euro 271
million at December 31, 2012, respectively).
The fair value of other derivative contracts is presented below:
December 31, 2012 |
December 31, 2013 |
|||
| (euro million) | Fair value |
|
Purchase |
|
Sale |
|
Fair value |
|
Purchase |
|
Sale |
| Derivatives on exchange rate | ||||||||||||
| Currency swap | 180 | 7,531 | 1,291 | 177 | 6,963 | 893 | ||||||
| Outright | 1 | 102 | 102 | 1,983 | ||||||||
| 181 | 7,633 | 1,291 | 279 | 8,946 | 893 | |||||||
| Derivatives on interest rate | ||||||||||||
| Interest rate swap | 1 | 88 | 1 | 121 | ||||||||
| 1 | 88 | 1 | 121 | |||||||||
| Derivatives on commodities | ||||||||||||
| Over the counter | 688 | 8,311 | 2,969 | 489 | 6,187 | 995 | ||||||
| Future | 12 | 382 | 67 | 12 | 181 | 37 | ||||||
| Other | 11 | 2 | 2 | 2 | ||||||||
| 711 | 8,693 | 3,038 | 503 | 6,368 | 1,034 | |||||||
| 893 | 16,326 | 4,417 | 783 | 15,314 | 2,048 |
Fair values of other derivatives of euro
783 million (euro 893 million at December 31, 2012) consisted of:
(i) euro 377 million (euro 538 million at December 31, 2012) of
derivatives that lacked the formal criteria to be designated as
hedges under IFRS because they were entered into in order to
manage net exposures to movements in foreign currencies, interest
rates or commodity prices; (ii) euro 405 million (euro 349
million at December 31, 2012), of commodity derivatives entered
for trading purposes and proprietary trading; (iii) euro 1
million (euro 5 million at December 31, 2012) related to fair
value hedge derivatives; and (iv) euro 1 million as of December
31, 2012 of derivatives embedded in the pricing formulas of
certain long-term supply contracts of gas in the Exploration
& Production segment.
Information on hedged risks and hedging policies is disclosed in
Note 35 - Guarantees, commitments and risks - Risk factors.
The decrease in other current liabilities of euro 60 million
included advances recovered from gas customers who off-took lower
volumes than the contractual minimum take provided by the
relevant long-term supply contract (euro 142 million).
Transactions with related parties are described in Note 43 -
Transactions with related parties.
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Non-current liabilities
27 Long-term debt and current maturities of long-term debt
(euro million) |
At December 31, | Long-term maturity | ||||
Maturity range |
2012 |
2013 |
Current maturity 2014 |
2015 |
2016 |
2017 |
2018 |
After |
Total |
| Banks | 2014-2027 | 4,016 | 2,390 | 397 | 418 | 420 | 223 | 174 | 758 | 1,993 | ||||||||||
| Ordinary bonds | 2014-2043 | 16,824 | 18,151 | 1,698 | 2,203 | 1,496 | 2,655 | 1,176 | 8,923 | 16,453 | ||||||||||
| Convertible bonds | 2015-2016 | 990 | 2,240 | 8 | 1,003 | 1,229 | 2,232 | |||||||||||||
| Other financial institutions | 2014-2027 | 410 | 356 | 46 | 46 | 47 | 49 | 50 | 118 | 310 | ||||||||||
| 22,240 | 23,137 | 2,149 | 3,670 | 3,192 | 2,927 | 1,400 | 9,799 | 20,988 |
Long-term debt and current maturities of
long-term debt of euro 23,137 million (euro 22,240 million at
December 31, 2012) increased by euro 897 million. The increase
comprised new issuance of euro 5,418 million net of repayments
made for euro 4,669 million and currency translation differences
relating foreign subsidiaries and debt denominated in foreign
currency recorded by euro-reporting subsidiaries for euro 36
million.
Debt due to banks of euro 2,390 million (euro 4,016 million at
December 31, 2012) included amounts against committed borrowing
facilities for euro 3 million.
Debt due to other financial institutions of euro 356 million
(euro 410 million at December 31, 2012) included euro 31 million
of finance lease transactions (same amount as of December 31,
2012).
Eni entered into long-term borrowing facilities with the European
Investment Bank. These borrowing facilities are subject to the
maintenance of certain financial ratios based on Eni’s
Consolidated Financial Statements or a minimum level of credit
rating. According to the agreements, should the Company lose the
minimum credit rating, new guarantees would be required to be
agreed upon with the European Investment Bank. In addition, Eni
entered into long and medium-term facilities with Citibank Europe
Plc providing for conditions similar to those applied by the
European Investment Bank. At December 31, 2013 and 2012, debts
subjected to restrictive covenants amounted to euro 1,782 million
and euro 1,994 million, respectively. A possible non-compliance
with those covenants would be immaterial to the Company’s
ability to finance its operations.
As of the balance sheet date, Eni was in compliance with those
covenants.
Ordinary bonds of euro 18,151 million (euro 16,824 million at
December 31, 2012) consisted of bonds issued within the Euro
Medium Term Notes Program for a total of euro 13,945 million and
other bonds for a total of euro 4,206 million.
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The following table provides a breakdown of bonds by issuing entity, maturity date, interest rate and currency as of December 31, 2013:
Amount |
Discount on bond issue and accrued expense |
Total |
Currency |
Maturity |
Rate % |
|||||||
| (euro million) | from |
to |
from |
to |
||||||||||||
| Issuing entity | |||||||||||||||||
| Euro Medium Term Notes | |||||||||||||||||
| Eni SpA | 1,500 | 65 | 1,565 | EUR | 2016 | 5.000 | |||||||||||
| Eni SpA | 1,500 | 11 | 1,511 | EUR | 2019 | 4.125 | |||||||||||
| Eni SpA | 1,250 | 69 | 1,319 | EUR | 2014 | 5.875 | |||||||||||
| Eni SpA | 1,250 | 1 | 1,251 | EUR | 2017 | 4.750 | |||||||||||
| Eni SpA | 1,200 | 18 | 1,218 | EUR | 2025 | 3.750 | |||||||||||
| Eni SpA | 1,000 | 34 | 1,034 | EUR | 2020 | 4.250 | |||||||||||
| Eni SpA | 1,000 | 29 | 1,029 | EUR | 2018 | 3.500 | |||||||||||
| Eni SpA | 1,000 | 18 | 1,018 | EUR | 2020 | 4.000 | |||||||||||
| Eni SpA | 1,000 | 3 | 1,003 | EUR | 2023 | 3.250 | |||||||||||
| Eni SpA | 800 | 1 | 801 | EUR | 2021 | 2.625 | |||||||||||
| Eni SpA | 750 | 10 | 760 | EUR | 2019 | 3.750 | |||||||||||
| Eni Finance International SA | 540 | 12 | 552 | GBP | 2018 | 2021 | 4.750 | 6.125 | |||||||||
| Eni Finance International SA | 445 | 7 | 452 | EUR | 2017 | 2043 | 3.750 | 5.600 | |||||||||
| Eni Finance International SA | 248 | 2 | 250 | YEN | 2014 | 2037 | 1.530 | 2.810 | |||||||||
| Eni Finance International SA | 163 | 3 | 166 | USD | 2014 | 2015 | 4.450 | 4.800 | |||||||||
| Eni Finance International SA | 16 | 16 | EUR | 2015 | variable | ||||||||||||
| 13,662 | 283 | 13,945 | |||||||||||||||
| Other bonds | |||||||||||||||||
| Eni SpA | 1,109 | 1,109 | EUR | 2017 | 4.875 | ||||||||||||
| Eni SpA | 1,000 | 16 | 1,016 | EUR | 2015 | 4.000 | |||||||||||
| Eni SpA | 1,000 | (4 | ) | 996 | EUR | 2015 | variable | ||||||||||
| Eni SpA | 326 | 2 | 328 | USD | 2020 | 4.150 | |||||||||||
| Eni SpA | 254 | 254 | USD | 2040 | 5.700 | ||||||||||||
| Eni SpA | 215 | 215 | EUR | 2017 | variable | ||||||||||||
| Eni USA Inc | 290 | (2 | ) | 288 | USD | 2027 | 7.300 | ||||||||||
| 4,194 | 12 | 4,206 | |||||||||||||||
| 17,856 | 295 | 18,151 |
As of December 31, 2013, ordinary bonds
maturing within 18 months (euro 3,493 million) were issued by Eni
SpA (euro 3,331 million) and Eni Finance International SA (euro
162 million). During 2013, new bonds for euro 3,096 million were
issued by Eni SpA and Eni Finance International (euro 3,022
million and euro 74 million, respectively).
The following table provides a breakdown of convertible bonds by
issuing entity, maturity date, interest rate and currency as of
December 31, 2013:
| (euro million) | Amount |
Discount on bond issue and accrued expense |
Total |
Currency |
Maturity |
Rate % |
| Issuing entity | |||||||||||||
| Eni SpA | 1,250 | (13 | ) | 1,237 | EUR | 2016 | 0.625 | ||||||
| Eni SpA | 1,028 | (25 | ) | 1,003 | EUR | 2015 | 0.250 | ||||||
| 2,278 | (38 | ) | 2,240 |
A bond amounting to euro 1,237 million (nominal value of euro
1,250 million) is convertible into ordinary shares of Snam SpA.
The underlying shares are euro 288.7 million ordinary shares,
corresponding to approximately 8.54% of the current outstanding
share capital of Snam at a strike price of approximately euro
4.33 a share, representing a 20% premium to market prices current
at the date of the issuance.
A bond amounting to euro 1,003 million (nominal value of euro
1,028 million) is convertible into ordinary shares of Galp
Energia SGPS SA. The underlying share are approximately 66.3
million ordinary shares of Galp, corresponding to approximately
8% of the current outstanding share capital of Galp at a strike
price of approximately euro 15.50 a share, representing a 35%
premium to market prices current at the date of the issuance.
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Those convertible bonds are
stated at amortized cost, while the call option embedded in the
bonds is measured at fair value through profit. Changes in fair
value of the shares underlying the bonds were reported through
profit as opposed to equity based on the fair value option
provided by IAS 39 from inception.
The following table provides a breakdown by currency of long-term
debt and its current portion and the related weighted average
interest rates.
December 31, 2012 |
Average rate |
December 31, 2013 |
Average rate |
| Euro | 19,413 | 3.6 | 20,667 | 3.4 | ||||
| US dollar | 1,899 | 5.3 | 1,668 | 5.4 | ||||
| British pound | 564 | 5.3 | 552 | 5.3 | ||||
| Japanese yen | 363 | 2.1 | 250 | 2.2 | ||||
| Other currencies | 1 | 6.7 | ||||||
| 22,240 | 23,137 |
As of December 31, 2013,
Eni had undrawn long-term committed borrowing facilities of euro
4,719 million (euro 6,928 million at December 31, 2012).
Those facilities bore interest rates and charges for unutilized
facilities reflecting prevailing conditions on the marketplace.
Eni has in place a program for the issuance of Euro Medium Term
Notes up to euro 15 billion, of which euro 13.7 billion were
drawn as of December 31, 2013. The Group has credit ratings of A
and A-1 respectively for long and short-term debt assigned by
Standard & Poor’s and A3 and P-2 for long and short-term
debt assigned by Moody’s. The outlook is negative in both
ratings. Eni’s credit rating is linked in addition to the
Company’s industrial fundamentals and trends in the trading
environment to the sovereign credit rating of Italy. On the basis
of the methodologies used by Standard & Poor’s and
Moody’s, a potential downgrade of Italy’s credit rating
may trigger a potential knock-on effect on the credit rating of
Italian issuers such as Eni and make it more likely that the
credit rating of the notes or other debt instruments issued by
the Company could be downgraded.
Fair value of long-term debt, including the current portion of
long-term debt amounted to euro 23,022 million (euro 24,937
million at December 31, 2012):
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Ordinary bonds | 19,239 | 18,071 | ||
| Convertible bonds | 1,059 | 2,188 | ||
| Banks | 4,171 | 2,382 | ||
| Other financial institutions | 468 | 381 | ||
| 24,937 | 23,022 |
Fair value was estimated by discounting
the expected future cash flows at discount rates ranging from
0.5% to 4.2% (0.4% and 3.3% at December 31, 2012). The fair value
of convertible bonds was determined based on market prices. The
fair value hierarchy is level 2.
At December 31, 2013, Eni did not pledge restricted deposits as
collateral against its borrowings.
Analysis of net borrowings
The analysis of net borrowings, as defined in the “Financial
review”, was as follows:
| (euro million) | December 31, 2012 |
|
December 31, 2013 |
|
Current |
Non-current |
Total |
Current |
Non-current |
Total |
|||||||
| A. Cash and cash equivalents | 7,765 | 7,765 | 5,288 | 5,288 | ||||||||||
| B. Held-for-trading financial assets | 5,004 | 5,004 | ||||||||||||
| C. Available-for-sale financial assets | 34 | 34 | 33 | 33 | ||||||||||
| D. Liquidity (A+B) | 7,799 | 7,799 | 10,325 | 10,325 | ||||||||||
| E. Financing receivables | 1,153 | 1,153 | 126 | 126 | ||||||||||
| F. Short-term debt towards banks | 253 | 253 | 258 | 258 | ||||||||||
| G. Long-term debt towards banks | 913 | 3,103 | 4,016 | 397 | 1,993 | 2,390 | ||||||||
| H. Bonds | 2,006 | 15,808 | 17,814 | 1,706 | 18,685 | 20,391 | ||||||||
| I. Short-term debt towards related parties | 403 | 403 | 502 | 502 | ||||||||||
| L. Other short-term liabilities | 1,567 | 1,567 | 1,982 | 1,982 | ||||||||||
| M. Other long-term liabilities | 42 | 368 | 410 | 46 | 310 | 356 | ||||||||
| N. Total borrowings (F+G+H+I+L+M) | 5,184 | 19,279 | 24,463 | 4,891 | 20,988 | 25,879 | ||||||||
| 0. Net borrowings (N-D-E) | (3,768 | ) | 19,279 | 15,511 | (5,560 | ) | 20,988 | 15,428 |
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Financial assets held for trading of
euro 5,004 million were maintained by Eni SpA. For further
information see Note 8 - Financial assets held for trading.
Available-for-sale securities of euro 33 million (euro 34 million
at December 31, 2012) were held for non-operating purposes. The
Company held at the reporting date certain held-to-maturity and
available-for-sale securities which were destined to operating
purposes amounting to euro 282 million (euro 270 million at
December 31, 2012), of which euro 202 million (euro 196 million
at December 31, 2012) were held to hedge the loss reserve of Eni
Insurance Ltd. Those securities are excluded from the calculation
above.
Financing receivables of euro 126 million (euro 1,153 million at
December 31, 2012) were held for non-operating purposes. The
Company held at the reporting date certain financing receivables
which were destined to operating purposes amounting to euro 998
million (euro 668 million at December 31, 2012), of which euro
595 million (euro 351 million at December 31, 2012) were in
respect of financing granted to unconsolidated subsidiaries,
joint ventures and affiliates which executed capital projects and
investments on behalf of Eni’s Group companies and a euro
321 million cash deposit (euro 280 million at December 31, 2012)
to hedge the loss reserve of Eni Insurance Ltd. Those financing
receivables are excluded from the calculation above.
28 Provisions for contingencies
| (euro million) | Carrying amount at December 31, 2012 |
New or increased provisions |
Initial recognition and
changes |
Accretion discount |
Reversal of utilized provisions |
Reversal of unutilized provisions |
Currency translation differences |
Other changes |
Carrying amount at December 31, 2013 |
| Provision for site restoration, abandonment and social projects | 7,407 | (191 | ) | 241 | (300 | ) | (2 | ) | (298 | ) | 45 | 6,902 | ||||||||||||
| Provision for environmental risks | 2,928 | 158 | (3 | ) | (182 | ) | (31 | ) | (2 | ) | (6 | ) | 2,862 | |||||||||||
| Provision for legal and other proceedings | 1,419 | 431 | (781 | ) | (209 | ) | (13 | ) | 13 | 860 | ||||||||||||||
| Provision for taxes | 395 | 130 | (18 | ) | (16 | ) | (14 | ) | 477 | |||||||||||||||
| Provision for redundancy incentives | 202 | 251 | 2 | (51 | ) | (2 | ) | 5 | 407 | |||||||||||||||
| Provision for onerous contracts | 54 | 381 | (39 | ) | (13 | ) | (11 | ) | 372 | |||||||||||||||
| Loss adjustments and actuarial provisions for Eni’s insurance companies | 343 | 156 | (130 | ) | (11 | ) | 358 | |||||||||||||||||
| Provision for green certificates | 241 | 108 | (63 | ) | (11 | ) | 275 | |||||||||||||||||
| Provision for losses on investments | 194 | 28 | (32 | ) | (3 | ) | (10 | ) | 177 | |||||||||||||||
| Provision for disposal and restructuring | 39 | 62 | (3 | ) | (3 | ) | 1 | 96 | ||||||||||||||||
| Provision for OIL insurance cover | 106 | 1 | (5 | ) | (1 | ) | (8 | ) | 93 | |||||||||||||||
| Provision for long-term construction contracts | 52 | 69 | (36 | ) | (2 | ) | 83 | |||||||||||||||||
| Provision for the supply of goods | 24 | (24 | ) | |||||||||||||||||||||
| Other (*) | 199 | 85 | (19 | ) | (4 | ) | (2 | ) | (54 | ) | 205 | |||||||||||||
| 13,603 | 1,860 | (191 | ) | 240 | (1,646 | ) | (312 | ) | (347 | ) | (40 | ) | 13,167 |
(*) Each individual amount included herein was lower than euro 50 million.
Provisions for site restoration,
abandonment and social projects amounted to euro 6,902 million.
Those provisions comprised the discounted estimated costs that
the Company expects to incur for decommissioning oil and natural
gas production facilities at the end of the producing lives of
fields, well-plugging, abandonment and site restoration (euro
6,534 million). Initial recognition and changes in estimates
amounted to euro 191 million and were primarily due to
estimates’ revisions of decommissioning costs, changes in
discount rates and new liabilities of the year in the Exploration
& Production segment. The accretion discount recognized in
the profit and loss account for euro 241 million was determined
by adopting discount rates ranging from 0.7% to 9.4% (from 1.4%
to 9.3% at December 31, 2012). Main expenditures associated with
site restoration and decommissioning operations are expected to
be incurred over a 30-year period starting from 2017.
Provisions for environmental risks amounted to euro 2,862
million. Those provisions comprised the estimated costs for
environmental clean-up and restoration of certain industrial
sites which were owned or held in concession by the Company, and
subsequently divested, shut-down or liquidated. Those
environmental provisions are recognized when an environmental
project is approved by or filed with the relevant administrative
authorities or a constructive obligation has arisen whereby the
Company commits itself to perform certain cleaning-up and
restoration projects and a reliable cost estimation is available.
At December 31, 2013, provisions for environmental risks
primarily related to Syndial SpA (euro 2,353 million) and the
Refining & Marketing segment (euro 381 million). Additions of
euro 158 million primarily related to the Refining &
Marketing segment (euro 75 million) and Syndial SpA (euro 62
million). Utilizations of euro 182 million primarily related to
Syndial SpA (euro 96 million) and the Refining & Marketing
segment (euro 66 million).
Provisions for legal and other proceedings of euro 860 million
comprised the expected liabilities due to failure to perform
certain contractual obligations and estimated future losses on
pending litigation including legal risks of liability, antitrust
proceedings, administrative matters and commercial arbitration
proceedings. These provisions represented the Company’s best
estimate of the expected probable liabilities
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Eni Annual Report / Notes to the Consolidated Financial Statements |
associated with pending litigation and
commercial proceedings and primarily related to the Gas &
Power segment (euro 440 million) and Syndial SpA (euro 157
million). Additions and utilizations of euro 431 million and euro
781 million, respectively, mainly related to the Gas & Power
segment and were recognized to take account of gas price
revisions at both long-term supply and sale contracts, including
the settlement of certain arbitrations. Reversals of unutilized
provision of euro 209 million were primarily made by the Gas
& Power segment.
Provisions for taxes of euro 477 million included the estimated
charges that the Company expects to incur for unsettled tax
claims in connection with uncertainties in the application of tax
rules at certain Italian and foreign subsidiaries in the
Exploration & Production segment (euro 396 million) and the
Engineering & Construction segment (euro 55 million).
Provisions for redundancy incentives of euro 407 million were
recognized due to a restructuring program involving the Italian
personnel for the period 2010-2011 and 2013-2014 in compliance
with Law No. 223/1991. Additions of euro 251 million related to
the restructuring program for the period 2013-2014.
Provisions for onerous contracts of euro 372 million related to
the execution of contracts where the expected costs exceed the
relevant benefits. In particular, the provision comprised the
estimated expected losses on a re-gasification project in the
United States and on an unutilized infrastructure for gas
transportation.
Loss adjustments and actuarial provisions of Eni’s insurance
company Eni Insurance Ltd of euro 358 million represented the
estimated liabilities accrued on the basis for third parties
claims. Against such liability was recorded a receivable of euro
152 million recognized towards insurance companies for
reinsurance contracts.
Provisions for green certificates of euro 275 million included
additional charges that electric power producers must sustain for
using non-renewable sources of energy.
Provisions for losses on investments of euro 177 million were
made with respect to certain investees for which expected or
incurred losses exceeded carrying amounts.
Provisions for disposal and restructuring of euro 96 million
essentially related to the Versalis segment (euro 56 million) and
Syndial SpA (euro 28 million).
Provisions for the Oil mutual insurance scheme of euro 93 million
included the estimated future increase of insurance premiums
which will be charged to Eni in the next five years and that
accrued at the reporting date because of the effective accident
rate occurred in past reporting periods.
Provisions for long-term construction contracts of euro 83
million related to the Engineering & Construction segment.
29 Provisions for employee benefits
| (euro million) | December 31, 2012 |
December 31, 2013 |
| TFR | 354 | 347 | ||
| Foreign defined benefit plans | 671 | 585 | ||
| Supplementary medical reserve for Eni managers (FISDE) and other foreign medical plans | 143 | 136 | ||
| Other foreign long-term benefit plans | 206 | 177 | ||
| 1,374 | 1,245 |
Provisions for benefits upon termination
of employment primarily related to a provisions accrued by
Italian companies for employee retirement, determined using
actuarial techniques and regulated by Article 2120 of the Italian
Civil Code. The benefit is paid upon retirement as a lump sum,
the amount of which corresponds to the total of the provisions
accrued during the employees’ service period based on
payroll costs as revalued until retirement. Following the changes
in the law regime, from January 1, 2007 accruing benefits have
been contributing to a pension fund or a treasury fund held by
the Italian administration for post-retirement benefits (INPS).
For companies with less than 50 employees, it will be possible to
continue the scheme as in previous years. Therefore,
contributions of future TFR provisions to pension funds or the
INPS treasury fund determines that these amounts will be treated
in accordance to a defined contribution scheme. Amounts already
accrued before January 1, 2007 continue to be accounted for as
defined benefits to be assessed based on actuarial assumptions.
Pension funds are defined benefit plans provided by foreign
subsidiaries located mainly in Nigeria, Germany and United
Kingdom. Benefits under these plans consist of payments based on
seniority and the salary paid in the last year of service, or
alternatively, the average annual salary over a defined period
prior to the retirement.
Group companies provide healthcare benefits. Liability to these
plans (FISDE and other foreign healthcare plans) and the current
cost are limited to the contributions made by the Company for
retired managers.
Other benefits primarily consisted of monetary and long-term
incentive schemes to Group managers and Jubilee awards.
Provisions for the monetary incentive scheme are assessed based
on the estimated bonuses which will be granted to those managers
who will achieve certain individual performance goals weighted
with the likelihood that the Company delivers the planned
profitability targets. Provisions for the long-term incentive
scheme are assessed on the basis of the estimated trends of a
performance indicator as benchmarked against a Group of
international oil companies. Both of these incentive schemes
normally vest over a three-year period. Jubilee awards are
benefits due following the attainment of a minimum period of
service and, for the Italian companies, consist of an in-kind
remuneration.
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Present value of employee benefits, estimated by applying actuarial techniques, consisted of the following:
December 31, 2012 |
December 31, 2013 |
|||
| (euro million) | TFR |
Foreign defined benefit plans |
FISDE and other foreign medical plans |
Other foreign long-term benefit plans |
Total |
TFR |
Foreign defined benefit plans |
FISDE and other foreign medical plans |
Other foreign long-term benefit plans |
Total |
||||||||||
| Present value of benefit liabilities at beginning of year | 391 | 1,105 | 124 | 211 | 1,831 | 354 | 1,290 | 143 | 206 | 1,993 | ||||||||||||||||||||
| Current cost | 42 | 1 | 54 | 97 | 58 | 3 | 48 | 109 | ||||||||||||||||||||||
| Interest cost | 15 | 41 | 6 | 5 | 67 | 11 | 45 | 4 | 3 | 63 | ||||||||||||||||||||
| Remeasurements: | 63 | 66 | 24 | 4 | 157 | (5 | ) | (51 | ) | (7 | ) | (25 | ) | (88 | ) | |||||||||||||||
| -
actuarial (gains) losses due to changes in demographic assumptions |
(3 | ) | 6 | (4 | ) | 1 | ||||||||||||||||||||||||
| - actuarial (gains) losses due to changes in financial assumptions |
60 | 38 | 27 | 125 | (45 | ) | (2 | ) | (21 | ) | (68 | ) | ||||||||||||||||||
| - experience (gains) losses | 3 | 28 | (3 | ) | 4 | 32 | (2 | ) | (12 | ) | (1 | ) | (5 | ) | (20 | ) | ||||||||||||||
| Past service cost and settlements | (3 | ) | (3 | ) | 5 | (2 | ) | 3 | ||||||||||||||||||||||
| Plan contributions: | 1 | 1 | ||||||||||||||||||||||||||||
| - employee contributions | 1 | 1 | ||||||||||||||||||||||||||||
| Benefits paid | (34 | ) | (33 | ) | (7 | ) | (49 | ) | (123 | ) | (14 | ) | (33 | ) | (7 | ) | (48 | ) | (102 | ) | ||||||||||
| Changes in the scope of consolidation | (84 | ) | (6 | ) | (23 | ) | (113 | ) | 1 | 1 | ||||||||||||||||||||
| Currency translation differences and other changes | 3 | 72 | 1 | 4 | 80 | (88 | ) | (5 | ) | (93 | ) | |||||||||||||||||||
| Present value of benefit liabilities at end of year (a) | 354 | 1,290 | 143 | 206 | 1,993 | 347 | 1,227 | 136 | 177 | 1,887 | ||||||||||||||||||||
| Plan assets at beginning of year | 570 | 570 | 619 | 619 | ||||||||||||||||||||||||||
| Interest income | 22 | 22 | 22 | 22 | ||||||||||||||||||||||||||
| Return on plan assets | 3 | 3 | 2 | 2 | ||||||||||||||||||||||||||
| Past service cost and settlements | (1 | ) | (1 | ) | ||||||||||||||||||||||||||
| Administration expenses paid | (1 | ) | (1 | ) | ||||||||||||||||||||||||||
| Plan contributions: | 27 | 27 | 39 | 39 | ||||||||||||||||||||||||||
| - employee contributions | 1 | 1 | ||||||||||||||||||||||||||||
| - employer contributions | 27 | 27 | 38 | 38 | ||||||||||||||||||||||||||
| Benefits paid | (20 | ) | (20 | ) | (16 | ) | (16 | ) | ||||||||||||||||||||||
| Currency translation differences and other changes | 17 | 17 | (22 | ) | (22 | ) | ||||||||||||||||||||||||
| Plan assets at end of year (b) | 619 | 619 | 642 | 642 | ||||||||||||||||||||||||||
| Net liability recognized at end of year (a-b) | 354 | 671 | 143 | 206 | 1,374 | 347 | 585 | 136 | 177 | 1,245 |
Foreign defined-benefit
plans amounting to euro 585 million (euro 671 million at December
31, 2012) primarily related to pension plans for euro 395 million
(euro 487 million at December 31, 2012).
Net liability relating to foreign defined-benefit plans included
the liability attributable to joint venture partners operating in
exploration and production activities of euro 264 million (euro
308 million at December 31, 2012). Eni recorded a receivable for
an amount equivalent to such liability.
Other long-term employee benefit plans of euro 177 million (euro
206 million at December 31, 2012) primarily related to deferred
monetary incentive plans for euro 86 million (euro 107 million at
December 31, 2012), Jubilee awards for euro 48 million (euro 56
million at December 31, 2012), the long-term incentive plan for
euro 8 million (euro 11 million at December 31, 2012) and other
foreign long-term plans for euro 35 million (euro 32 million at
December 31, 2012).
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Costs charged to the profit and loss account consisted of the following:
| (euro million) | TFR |
Foreign defined benefit plans |
FISDE and other foreign medical plans |
Other foreign long-term benefit plans |
Total |
| 2012 | |||||||||||||||
| Current cost | 42 | 1 | 54 | 97 | |||||||||||
| Past service cost and settlements | (3 | ) | (3 | ) | |||||||||||
| Interest cost (income), net: | |||||||||||||||
| - interest cost on liabilities | 15 | 41 | 6 | 5 | 67 | ||||||||||
| - interest income on plan assets | (22 | ) | (22 | ) | |||||||||||
| Total interest cost (income), net: | 15 | 19 | 6 | 5 | 45 | ||||||||||
| - of which recognized in payroll and related cost | 5 | 5 | |||||||||||||
| - of which recognized in financial income (expense) | 15 | 19 | 6 | 40 | |||||||||||
| Remeasurements for long-term plans | 4 | 4 | |||||||||||||
| Other costs/Administration expenses paid | |||||||||||||||
| Total | 15 | 58 | 7 | 63 | 143 | ||||||||||
| - of which recognized in payroll and related cost | 39 | 1 | 63 | 103 | |||||||||||
| - of which recognized in financial income (expense) | 15 | 19 | 6 | 40 | |||||||||||
| 2013 | |||||||||||||||
| Current cost | 58 | 3 | 48 | 109 | |||||||||||
| Past service cost and settlements | 6 | (2 | ) | 4 | |||||||||||
| Interest cost (income), net: | |||||||||||||||
| - interest cost on liabilities | 11 | 45 | 4 | 3 | 63 | ||||||||||
| - interest income on plan assets | (22 | ) | (22 | ) | |||||||||||
| Total interest cost (income), net: | 11 | 23 | 4 | 3 | 41 | ||||||||||
| - of which recognized in payroll and related cost | 3 | 3 | |||||||||||||
| - of which recognized in financial income (expense) | 11 | 23 | 4 | 38 | |||||||||||
| Remeasurements for long-term plans | (25 | ) | (25 | ) | |||||||||||
| Other costs/Administration expenses paid | 1 | 1 | |||||||||||||
| Total | 11 | 88 | 7 | 24 | 130 | ||||||||||
| - of which recognized in payroll and related cost | 65 | 3 | 24 | 92 | |||||||||||
| - of which recognized in financial income (expense) | 11 | 23 | 4 | 38 |
Costs recognized in other comprehensive income consisted of the following:
2012 |
2013 |
|||
| (euro million) | TFR |
Foreign defined benefit plans |
FISDE and other foreign medical plans |
Total |
TFR |
Foreign defined benefit plans |
FISDE and other foreign medical plans |
Total |
||||||||
| Remeasurements | ||||||||||||||||||||||||
| Actuarial (gains)/losses due to changes in demographic assumptions | (3 | ) | 6 | (4 | ) | (1 | ) | |||||||||||||||||
| Actuarial (gains)/losses due to changes in financial assumptions | 60 | 38 | 27 | 125 | (45 | ) | (2 | ) | (47 | ) | ||||||||||||||
| Experience (gains) losses | 3 | 28 | (3 | ) | 28 | (2 | ) | (12 | ) | (1 | ) | (15 | ) | |||||||||||
| Return on plan assets | (3 | ) | (3 | ) | (2 | ) | (2 | ) | ||||||||||||||||
| 63 | 63 | 24 | 150 | (5 | ) | (53 | ) | (7 | ) | (65 | ) |
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Plan assets consisted of the following:
| (euro million) | Cash and cash equivalents |
Equity securities |
Debt securities |
Real estate |
Derivatives |
Investment funds |
Assets held by insurance company |
Other |
Total |
|||||||||
| Plan assets with a quoted market price | 20 | 88 | 412 | 9 | 5 | 2 | 1 | 85 | 622 | |||||||||
| Plan assets without a quoted market price | 2 | 7 | 2 | 1 | 5 | 3 | 20 | |||||||||||
| 22 | 88 | 419 | 11 | 5 | 3 | 6 | 88 | 642 |
Plan assets are generally managed by external asset managers
pursuing investment strategies, defined by Eni’s companies,
with the aim of ensuring that assets are sufficient to pay the
benefits. For this purpose, the investments are aimed at
maximizing the expected return and limit the risk level through
proper diversification.
The main actuarial assumptions used in the evaluation of the
liabilities at year end and in the estimate of costs expected for
2014 consisted of the following:
TFR |
Foreign defined benefit plans |
FISDE and other foreign medical plans |
Other foreign long-term benefit plans |
| 2012 | ||||||||||
| Discount rate | (%) | 3.0 | 1.9-15.5 | 3.0 | 1.2-3.0 | |||||
| Rate of compensation increase | (%) | 3.0 | 2.0-14.0 | |||||||
| Rate of price inflation | (%) | 2.0 | 0.5-13.8 | 2.0 | 2.0 | |||||
| Life expectations on retirement at age 65 | (years) | 15-24 | 24 | |||||||
| 2013 | ||||||||||
| Discount rate | (%) | 3.0 | 2.1-13.5 | 3.0 | 1.1-3.0 | |||||
| Rate of compensation increase | (%) | 3.0 | 2.0-14.0 | |||||||
| Rate of price inflation | (%) | 2.0 | 0.6-11.0 | 2.0 | 2.0 | |||||
| Life expectations on retirement at age 65 | (years) | 15-24 | 24 |
The following is an analysis by geographic area of the main actuarial assumptions used in the evaluation of the principal foreign defined-benefit plans:
European Union |
Rest of Europe |
Africa |
Other areas |
Foreign defined benefit plans |
| 2013 | ||||||||||||
| Discount rate | (%) | 2.9-3.3 | 2.1-4.4 | 3.5-13.5 | 2.5-7.8 | 2.1-13.5 | ||||||
| Rate of compensation increase | (%) | 2.0-3.1 | 2.5-4.9 | 5.0-14.0 | 5.0-10.0 | 2.0-14.0 | ||||||
| Rate of price inflation | (%) | 2.0 | 0.6-3.4 | 3.5-11.0 | 3.0-5.5 | 0.6-11.0 | ||||||
| Life expectations on retirement at age 65 | (years) | 21 | 22-24 | 15 | 15-24 |
The discount rate used was determined on the base of corporate
bond yields (rating AA) in Countries with a significant market,
or in the absence, of government bond yields. The demographic
tables adopted are those used by each Country for the assessments
of IAS 19. The inflation rate was determined by considering the
long-term forecasts issued by national or international banks.
The effects of a possible change in the main actuarial
assumptions at the end of the year are listed below:
| (euro million) | Discount rate |
Rate of price inflation |
Rate of increases in pensionable salaries |
Healthcare cost trend rate |
Rate of increases to pensions in payment |
|||||
0.5% Increase |
0.5% Decrease |
0.5% Increase |
0.5% Increase |
0.5% Increase |
0.5% Increase |
|||||||
| Effect on DBO | ||||||||||||
| TFR | (20) | 23 | 15 | .. | ||||||||
| Foreign defined benefit plans | (77) | 77 | 36 | 26 | 28 | |||||||
| FISDE and other foreign medical plans | (8) | 9 | 9 | |||||||||
| Other foreign long-term benefit plans | (3) | 3 | 1 |
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The sensitivity analysis was performed on the basis of the
results for each plan through assessments calculated considering
modified parameters.
The amount of contributions expected to be paid for employee
benefit plans in the next year amounted to euro 109 million, of
which euro 65 million related to defined-benefit plans.
The following is an analysis by maturity date of the liabilities
for employee benefits:
| (euro million) | TFR |
Foreign defined benefit plans |
FISDE and other foreign medical plans |
Other long-term benefits |
| 2014 | 6 | 35 | 7 | 44 | ||||
| 2015 | 6 | 39 | 7 | 46 | ||||
| 2016 | 7 | 43 | 7 | 48 | ||||
| 2017 | 9 | 40 | 7 | 5 | ||||
| 2018 | 12 | 58 | 7 | 3 | ||||
| 2019 and thereafter | 307 | 370 | 101 | 54 |
The weighted-average duration of the liabilities for employee benefits was the following:
| (years) | TFR |
Foreign pension plans |
FISDE and other foreign medical plans |
Other long-term benefits |
| 2012 | ||||||||
| Weighted average duration | 11.6 | 16.1 | 13.4 | 5.1 | ||||
| 2013 | ||||||||
| Weighted average duration | 12.7 | 18.6 | 13.1 | 4.4 |
Transactions with related parties are described in Note 43 - Transactions with related parties.
30 Deferred tax liabilities
Deferred tax liabilities were recognized net of the amounts of deferred tax assets which can be offset for euro 3,558 million (euro 3,630 million at December 31, 2012).
| (euro million) | Amount |
Additions |
Deductions |
Currency translation differences |
Other changes |
Amount |
| 6,740 | 1,120 | (1,047) | (504) | 414 | 6,723 |
Deferred tax assets and liabilities consisted of the following:
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Deferred tax liabilities | 10,370 | 10,281 | ||||
| Deferred tax assets available for offset | (3,630 | ) | (3,558 | ) | ||
| 6,740 | 6,723 | |||||
| Deferred tax assets not available for offset | (5,027 | ) | (4,662 | ) | ||
| Net deferred tax liabilities | 1,713 | 2,061 |
Net deferred tax liabilities of euro 2,061 million (euro 1,713 million at December 31, 2012) included the recognition of the deferred tax effect against equity of: (i) the fair value evaluation of derivatives designated as cash flow hedge (deferred tax assets for euro 70 million); (ii) the revaluation of defined-benefit plans (deferred tax assets for euro 13 million); and (iii) the fair value evaluation of available-for-sale securities (deferred tax liabilities for euro 2 million).
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The most significant temporary differences giving rise to net deferred tax liabilities are disclosed below:
| (euro million) | Carrying amount at December 31, 2012 |
Additions |
Deductions |
Currency translation differences |
Other changes |
Carrying amount at December 31, 2013 |
| Deferred tax liabilities | ||||||||||||||||||
| Accelerated tax depreciation | 7,406 | 736 | (354 | ) | (371 | ) | 194 | 7,611 | ||||||||||
| Difference between the fair value and the carrying amount of assets acquired following business combinations | 1,161 | 157 | (48 | ) | (63 | ) | 93 | 1,300 | ||||||||||
| Site restoration and abandonment (tangible assets) | 537 | 4 | (166 | ) | (47 | ) | 59 | 387 | ||||||||||
| Application of the weighted average cost method in evaluation of inventories | 89 | 27 | (5 | ) | 111 | |||||||||||||
| Capitalized interest expense | 24 | (3 | ) | (7 | ) | 14 | ||||||||||||
| Other | 1,153 | 199 | (467 | ) | (23 | ) | (4 | ) | 858 | |||||||||
| 10,370 | 1,120 | (1,047 | ) | (504 | ) | 342 | 10,281 | |||||||||||
| Deferred tax assets, gross | ||||||||||||||||||
| Carry-forward tax losses | (1,107 | ) | (1,154 | ) | 23 | 80 | (188 | ) | (2,346 | ) | ||||||||
| Site restoration and abandonment (provisions for contingencies) | (2,153 | ) | (75 | ) | 409 | 73 | (150 | ) | (1,896 | ) | ||||||||
| Accruals for impairment losses and provisions for contingencies | (1,884 | ) | (572 | ) | 730 | 3 | 23 | (1,700 | ) | |||||||||
| Non-deductible depreciation and amortization | (2,018 | ) | (134 | ) | 578 | 63 | (110 | ) | (1,621 | ) | ||||||||
| Non-deductible impairment losses | (752 | ) | (642 | ) | 161 | 43 | (1,190 | ) | ||||||||||
| Unrealized intercompany profits | (693 | ) | (5 | ) | 93 | 2 | 135 | (468 | ) | |||||||||
| Other | (1,677 | ) | (457 | ) | 298 | 43 | 224 | (1,569 | ) | |||||||||
| (10,284 | ) | (3,039 | ) | 2,292 | 264 | (23 | ) | (10,790 | ) | |||||||||
| Impairments of deferred tax assets | 1,627 | 969 | (27 | ) | 1 | 2,570 | ||||||||||||
| Deferred tax assets, net | (8,657 | ) | (2,070 | ) | 2,292 | 237 | (22 | ) | (8,220 | ) | ||||||||
| Net deferred tax liabilities | 1,713 | (950 | ) | 1,245 | (267 | ) | 320 | 2,061 |
Italian taxation law allows the
carry-forward of tax losses indefinitely. Foreign taxation laws
generally allow the carry-forward of tax losses over a period
longer than five years, and in many cases, indefinitely. An
average tax rate of 32.2% was applied to tax losses of Italian
subsidiaries to determine the portion of the carry-forwards tax
losses which will be used in future years to offset the expected
taxable profit. This rate was determined considering the
different statutory rates of taxes applicable to all Italian
subsidiaries which are included in the consolidation statement
for Italian fiscal purposes. The corresponding rate for foreign
subsidiaries was 33.5%.
Carry-forward tax losses amounted to euro 7,379 million and can
be used indefinitely for euro 6,124 million. Carry-forward tax
losses regarded Italian companies for euro 3,652 million and
foreign companies euro 3,727 million. Carry-forward tax losses
amounted to euro 6,050 million which are likely to be utilized
against future taxable profit and were in respect of Italian
companies for euro 3,505 million and foreign subsidiaries for
euro 2,545 million. Deferred tax assets recognized on these
losses amounted to euro 1,128 million and euro 852 million,
respectively.
31 Other non-current liabilities
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Fair value of non-hedging derivatives | 271 | 282 | ||
| Fair value of cash flow hedge derivatives | 13 | 1 | ||
| Current income tax liabilities | 1 | 1 | ||
| Other payables | 57 | 75 | ||
| Other liabilities | 1,635 | 1,345 | ||
| 1,977 | 1,704 |
Derivative fair values were estimated on the basis of market prices provided by primary info-provider, or alternatively, appropriate valuation techniques commonly used in the marketplace.
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The fair value of non-hedging derivative contracts and is presented below:
December 31, 2012 |
December 31, 2013 |
|||
| (euro million) | Fair value |
|
Purchase commitments |
|
Sale commitments |
|
Fair value |
|
Purchase commitments |
|
Sale commitments |
| Derivatives on exchange rate | ||||||||||||
| Currency swap | 42 | 2,055 | 420 | 53 | 1,075 | 130 | ||||||
| Outright | 1 | 3 | 36 | 878 | ||||||||
| Interest currency swap | 3 | 74 | ||||||||||
| 43 | 2,058 | 420 | 92 | 1,953 | 204 | |||||||
| Derivatives on interest rate | ||||||||||||
| Interest rate swap | 65 | 530 | 40 | 50 | 390 | |||||||
| 65 | 530 | 40 | 50 | 390 | ||||||||
| Derivatives on commodities | ||||||||||||
| Over the counter | 89 | 405 | 952 | 23 | 31 | 159 | ||||||
| Future | 1 | 66 | 9 | |||||||||
| Other | 13 | 33 | ||||||||||
| 103 | 471 | 994 | 23 | 31 | 159 | |||||||
| Options embedded in convertible bonds | 60 | 127 | ||||||||||
| 271 | 2,529 | 1,944 | 282 | 2,034 | 753 |
Fair value of non-hedging derivatives of
euro 282 million (euro 271 million at December 31, 2012)
consisted of: (i) euro 155 million (euro 198 million at December
31, 2012) of derivatives that lacked the formal criteria to be
designated as hedges under IFRS because they were entered into in
order to manage net business exposures to foreign currency
exchange rates, interest rates or commodity prices. Therefore,
such derivatives were not related to specific trade or financing
transactions; (ii) euro 127 million (euro 60 million at December
31, 2012) related to the call option embedded in the bonds
convertible into Snam SpA and Galp Energia SGPS SA ordinary
shares for euro 81 million and euro 46 million (further
information is disclosed in Note 27 - Long-term debt and current
portion of long-term debt); and (iii) euro 13 million as of
December 31, 2012 of derivatives embedded in the pricing formulas
of certain long-term supply contracts of gas in the Exploration
& Production segment.
Fair value of cash flow hedge derivatives amounted to euro 1
million (euro 13 million at December 31, 2012) and pertained to
hedges entered by the Gas & Power segment. Those derivatives
were designated to hedge exchange rate and commodity risk
exposures as described in Note 14 - Other current assets. Fair
value of contracts expiring beyond 2014 is disclosed in Note 21 -
Other non-current receivables; fair value of contracts expiring
by 2014 is disclosed in Note 26 - Other current liabilities and
in Note 14 - Other current assets. The effects of fair value
evaluation of cash flow hedge derivatives are disclosed in Note
33 - Shareholders’ equity and in Note 37 - Operating
expenses.
The nominal value of these derivatives referred to purchase and
sale commitments for euro 1 million and euro 24 million,
respectively (euro 24 million and euro 223 million at December
31, 2012, respectively).
Information on the hedged risks and the hedging policies is shown
in Note 35 - Guarantees, commitments and risks - Risk factors.
Other liabilities of euro 1,345 million (euro 1,635 million at
December 31, 2012) included advances received from Suez following
a long-term agreement for supplying natural gas and electricity
of euro 876 million (euro 968 million at December 31, 2012) and
advances relating to amounts of gas of euro 149 million (euro 380
million at December 31, 2012) which were collected for amounts
lower than the minimum take for the year by certain of Eni’s
clients, reflecting take-or-pay clauses contained in the
long-term sale contracts. Management believes that the underlying
gas volumes will be collected beyond the twelve-month time
horizon.
Transactions with related parties are described in Note 43 -
Transactions with related parties.
32 Assets held for sale and liabilities directly associated with assets held for sale
Assets held for sale and liabilities
directly associated with assets held for sale of euro 2,296
million and euro 140 million, respectively, related to: (i) a 60%
stake in Artic Russia BV (entire stake owned). At the balance
sheet date, Eni’s interest in Artic Russia was classified as
an asset held for sale and measured at fair value due to the loss
of joint control over the investee following the satisfaction,
before year end, of all conditions precedent to the Sale Purchase
Agreement signed with Gazprom in November 2013. The net book
value of the interest of euro 2,131 million comprised the
re-measurement at fair value of euro 1,682 million recorded
through profit. The consideration for the disposal was cashed in
on January 15, 2014. The fair value was determined on the basis
of the sale price. Artic Russia owns a 49% stake in Severenergia,
a subsidiary which holds four licenses for the exploration and
production of hydrocarbons in the Region of Yamal Nenets
(Siberia); (ii) non-strategic assets and liabilities directly
associated in the Exploration & Production segment (euro 143
million and euro 140 million, respectively).
During the course of 2013, Eni concluded the disposal of
non-strategic assets of the Exploration & Production segment
for a book value of euro 329 million and liabilities directly
associated of euro 195 million and the investment in Super
Octanos CA pertaining to the Refining & Marketing segment
(euro 52 million).
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33 Shareholders’ equity
Non-controlling interest
| (euro million) | Net profit |
Shareholders’ equity |
||
2012 |
2013 |
December 31, 2012 |
December 31, 2013 |
| Saipem SpA | 628 | (190 | ) | 3,216 | 2,748 | |||||
| Società EniPower Ferrara Srl | 9 | 9 | 87 | 95 | ||||||
| Hindustan Oil Exploration Co Ltd | (55 | ) | (10 | ) | 65 | 53 | ||||
| Tigáz Zrt | (47 | ) | (2 | ) | 33 | |||||
| Snam SpA | 356 | |||||||||
| Others | (5 | ) | 5 | 97 | 68 | |||||
| 886 | (188 | ) | 3,498 | 2,964 |
Eni shareholders’ equity
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Share capital | 4,005 | 4,005 | ||||
| Legal reserve | 959 | 959 | ||||
| Reserve for treasury shares | 6,201 | 6,201 | ||||
| Reserve related to the fair value of cash flow hedging derivatives net of the tax effect | (16 | ) | (154 | ) | ||
| Reserve related to the fair value of available-for-sale securities net of the tax effect | 144 | 81 | ||||
| Reserve related to the defined benefit plans net of tax effect | (88 | ) | (72 | ) | ||
| Other reserves | 292 | 296 | ||||
| Cumulative currency translation differences | 942 | (698 | ) | |||
| Treasury shares | (201 | ) | (201 | ) | ||
| Retained earnings | 40,988 | 44,626 | ||||
| Interim dividend | (1,956 | ) | (1,993 | ) | ||
| Net profit for the year | 7,790 | 5,160 | ||||
| 59,060 | 58,210 |
Share capital
At December 31, 2013, the parent company’s issued share
capital consisted of euro 4,005,358,876 represented by
3,634,185,330 ordinary shares without nominal value (same amounts
as of December 31, 2012).
On May 10, 2013, Eni’s Shareholders’ Meeting declared:
(i) to distribute a dividend of euro 0.54 a share, with the
exclusion of treasury shares held at the ex-dividend date, in
full settlement of the 2012 dividend of euro 1.08 a share, of
which euro 0.54 a share paid as interim dividend. The balance was
paid on May 23, 2013, to shareholders on the register on May 20,
2013, record date May 22; (ii) to cancel, for the portion not yet
implemented as of the date of the Shareholders’ Meeting, the
authorization granted to the Board of Directors to acquire
treasury shares as resolved at the Shareholders’ Meeting of
July 16, 2012; (iii) to authorize the Board of Directors to
purchase on the Mercato Telematico Azionario – in one or
more transactions and in any case within 18 months from the date
of the resolution – up to a maximum number of 363,000,000
ordinary Eni shares, for a price comprised from a minimum
consideration of euro 1.102 and up the a maximum per-share-price
as high as the official price of the Eni share reported by the
Borsa Italiana the trading day prior to each individual
transaction, plus 5%, and in any case up to a total amount of
euro 6 billion, in accordance with the procedures established in
the Rules of the Markets organized and managed by Borsa Italiana
SpA. In order to respect the limit envisaged in the third
paragraph of Article 2357 of the Italian Civil Code, the number
of shares to be acquired and the relative amount shall take into
account the number and amount of Eni shares already held in the
portfolio.
Legal reserve
This reserve represents earnings restricted from the payment of
dividends pursuant to Article 2430 of the Italian Civil Code. The
legal reserve has reached the maximum amount required by the
Italian Law.
Reserve for treasury shares
The reserve for treasury shares represents the reserve which was
established in previous reporting period to repurchase the
Company shares in accordance with resolutions at Eni’s
Shareholders’ Meetings. The amount of euro 6,201 million
(same amount as of December 31, 2012) included the net book value
of treasury shares purchased of euro 201 million.
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Reserves related to the fair value
evaluation of cash flow hedging derivatives, available-for-sale
financial assets and defined benefit plans
The evaluation at fair value of cash flow hedging
derivatives, available-for-sale financial instruments and
defined-benefit plans, net of the related tax effect, consisted
of the following:
| Cash flow hedge derivatives | Available-for-sale financial instruments | Defined benefit plans | Total | |||||
| (euro million) | Gross reserve |
|
Deferred tax liabilities |
|
Net reserve |
|
Gross reserve |
|
Deferred tax liabilities |
|
Net reserve |
|
Gross reserve |
|
Deferred tax liabilities |
|
Net reserve |
|
Gross reserve |
|
Deferred tax liabilities |
|
Net reserve |
|
| Reserve as of December 31, 2011 | 77 | (28 | ) | 49 | (9 | ) | 1 | (8 | ) | 68 | (27 | ) | 41 | |||||||||||||||||||||||
| Changes of the year 2012 | (24 | ) | 9 | (15 | ) | 157 | (5 | ) | 152 | (138 | ) | 50 | (88 | ) | (5 | ) | 54 | 49 | ||||||||||||||||||
| Foreign currency translation differences | ||||||||||||||||||||||||||||||||||||
| Amount recognized in the profit and loss account | (78 | ) | 28 | (50 | ) | (78 | ) | 28 | (50 | ) | ||||||||||||||||||||||||||
| Reserve as of December 31, 2012 | (25 | ) | 9 | (16 | ) | 148 | (4 | ) | 144 | (138 | ) | 50 | (88 | ) | (15 | ) | 55 | 40 | ||||||||||||||||||
| Changes of the year 2013 | (301 | ) | 93 | (208 | ) | 9 | 9 | 55 | (38 | ) | 17 | (237 | ) | 55 | (182 | ) | ||||||||||||||||||||
| Foreign currency translation differences | (2 | ) | 1 | (1 | ) | (2 | ) | 1 | (1 | ) | ||||||||||||||||||||||||||
| Amount recognized in the profit and loss account | 102 | (32 | ) | 70 | (74 | ) | 2 | (72 | ) | 28 | (30 | ) | (2 | ) | ||||||||||||||||||||||
| Reserve as of December 31, 2013 | (224 | ) | 70 | (154 | ) | 83 | (2 | ) | 81 | (85 | ) | 13 | (72 | ) | (226 | ) | 81 | (145 | ) |
Reserve for available-for-sale financial
instruments of euro 81 million (euro 144 million at December 31,
2012), net of the related tax effect, comprised the fair value
valuation of the residual interests in Galp Energia SGPS SA for
euro 76 million (Galp Energia SGPS SA for euro 130 million and
Snam SpA for euro 8 million at December 31, 2012) and other
securities for euro 5 million (euro 6 million at December 31,
2012). Negative reserve for defined-benefit plans of euro 72
million (negative for euro 88 million at December 31, 2012), net
of the related tax effect, related to investments accounted for
under the equity method for euro 2 million (negative for euro 1
million at December 31, 2012).
Other reserves
Other reserves amounted to euro 296 million (euro 292
million at December 31, 2012) and related to:
- a reserve of euro 247 million represented the increase in
Eni’s shareholders’ equity associated with a business
combination under common control, whereby the parent company Eni
SpA divested its subsidiary Snamprogetti SpA to Saipem Projects
SpA (both merged into Saipem SpA) at a price higher than the book
value of the interest transferred (same amount as of December 31,
2012);
- a reserve of euro 157 million deriving from Eni SpA’s
equity (same amount as of December 31, 2012);
- a reserve of euro 18 million related to the sale of treasury
shares to Saipem managers upon exercise of stock options (same
amount as of December 31, 2012);
- a reserve of euro 5 million represented the impact on
Eni’s shareholders’ equity associated with the
acquisition of a non-controlling interest of 47.60% in the
subsidiary Tigáz Zrt (euro 1 million at December 31, 2012);
- a negative reserve of euro 124 million represented the impact
on Eni’s shareholders’ equity associated with the
acquisition of a non-controlling interest of 45.93% in the
subsidiary Altergaz SA, now Eni Gas & Power France SA (same
amount as of December 31, 2012);
- a negative reserve of euro 7 million related to the share of
“Other comprehensive income” on equity-accounted
entities (same amount as of December 31, 2012).
Cumulative foreign currency translation differences
The cumulative foreign currency translation differences
arose from the translation of financial statements denominated in
currencies other than euro.
Treasury shares
A total of 11,388,287 Eni’s ordinary shares (same
amount as of December 31, 2012) were held in treasury for a total
cost of euro 201 million (same amount as of December 31, 2012).
Outstanding treasury shares represented by 2,980,725 ordinary
shares (8,259,520 ordinary shares at December 31, 2012) were
underlying certain residual stock-based compensation plans and
amounted to euro 53 million (euro 161 million at December 31,
2012). The decrease of 5,278,795 shares in the number of shares
underlying those plans related to expired awards.
More information about stock option plans is disclosed in Note 37
- Operating expenses.
Interim dividend
The interim dividend for the year 2013 amounted to euro
1,993 million corresponding to euro 0.55 per share, as resolved
by the Board of Directors on September 19, 2013, in accordance
with Article 2433-bis, paragraph 5 of the Italian Civil Code; the
dividend was paid on September 26, 2013.
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Distributable reserves
At December 31, 2013, Eni shareholders’ equity included
distributable reserves of approximately euro 47,300 million.
Reconciliation of net profit and shareholders’ equity of the parent company Eni SpA to consolidated net profit and shareholders’ equity
Net profit |
Shareholders’ equity |
|||
| (euro million) | 2012 |
2013 |
|
December 31, 2012 |
December 31, 2013 |
| As recorded in Eni SpA’s Financial Statements | 9,078 | 4,410 | 40,537 | 40,733 | ||||||||
| Excess of net equity stated in the separate accounts of consolidated subsidiaries over the corresponding carrying amounts of the parent company | 261 | 1,457 | 21,576 | 21,546 | ||||||||
| Consolidation adjustments: | ||||||||||||
| - difference between purchase cost and underlying carrying amounts of net equity | (2,683 | ) | (499 | ) | 1,503 | 324 | ||||||
| - adjustments to comply with group account policies | 1,222 | (174 | ) | 711 | 605 | |||||||
| - elimination of unrealized intercompany profits | 638 | 219 | (2,652 | ) | (2,369 | ) | ||||||
| - deferred taxation | 160 | (444 | ) | 873 | 323 | |||||||
| - other adjustments | 3 | 10 | 12 | |||||||||
| 8,676 | 4,972 | 62,558 | 61,174 | |||||||||
| Non-controlling interest | (886 | ) | 188 | (3,498 | ) | (2,964 | ) | |||||
| As recorded in Consolidated Financial Statements | 7,790 | 5,160 | 59,060 | 58,210 |
34 Other information
Main
acquisitions
ASA Trade SpA
In March 2013, Eni finalized the
purchase of a 100% interest in Asa Trade SpA, a company marketing
gas in Tuscany. The allocation of the purchase cost of euro 29
million to assets and liabilities was made on a definitive basis.
The final allocation of the purchase costs is disclosed below:
| (euro million) | ASA Trade SpA |
|
Carrying value |
Fair value |
|||
| Current assets | 27 | 27 | ||
| Goodwill | 24 | |||
| Other non-current assets | 3 | 3 | ||
| Assets acquired | 30 | 54 | ||
| Current liabilities | 25 | 25 | ||
| Liabilities acquired | 25 | 25 | ||
| Eni’s shareholders equity | 5 | 29 |
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Supplemental cash flow information
| (euro million) |
|
2011 |
2012 |
2013 |
| Effect of investment of companies included in consolidation and businesses | |||||||||
| Current assets | 108 | 51 | |||||||
| Non-current assets | 122 | 171 | 39 | ||||||
| Net borrowings | 46 | (12 | ) | ||||||
| Current and non-current liabilities | (4 | ) | (99 | ) | (36 | ) | |||
| Net effect of investments | 118 | 226 | 42 | ||||||
| Non-controlling interests | (3 | ) | |||||||
| Fair value of investments held before the acquisition of control | (8 | ) | |||||||
| Purchase price | 115 | 226 | 34 | ||||||
| less: | |||||||||
| Cash and cash equivalents | (48 | ) | (9 | ) | |||||
| Cash flow on investments | 115 | 178 | 25 | ||||||
| Effect of disposal of consolidated subsidiaries and businesses | |||||||||
| Current assets | 618 | 2,112 | 61 | ||||||
| Non-current assets | 136 | 18,740 | 50 | ||||||
| Net borrowings | 257 | (12,443 | ) | 16 | |||||
| Current and non-current liabilities | (662 | ) | (4,123 | ) | (77 | ) | |||
| Net effect of disposals | 349 | 4,286 | 50 | ||||||
| Fair value of share capital held after the sale of control | (943 | ) | |||||||
| Gain on disposal | 727 | 2,021 | 3,359 | ||||||
| Non-controlling interest | (5 | ) | (1,840 | ) | (8 | ) | |||
| Selling price | 1,071 | 3,524 | 3,401 | ||||||
| less: | |||||||||
| Cash and cash equivalents | (65 | ) | (3 | ) | |||||
| Cash flow on disposals | 1,006 | 3,521 | 3,401 |
The divestments made in 2013 were: (i) the sale of a 28.57% interest in the share capital of Eni East Africa SpA to China National Petroleum Corp (CNPC) for a total consideration of euro 3,386 million. Eni East Africa is the operator of the discovery Area 4 in Mozambique. Through its 28.57% equity investment in Eni East Africa, CNPC indirectly acquired a 20% interest in Area 4; (ii) the divestment of the entire stake retained in Finpipe GIE (63.33%) which currently owns the gas transport network which has been leased to the Belgian company Fluxys. The cash consideration amounted to euro 15 million.
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35 Guarantees, commitments and risks
Guarantees
December 31, 2012 |
December 31, 2013 |
|||
(euro million) |
Unsecured guarantees |
Other |
Total |
Unsecured guarantees |
Other |
Total |
| Consolidated subsidiaries | 11,350 | 11,350 | 11,961 | 11,961 | ||||||||
| Unconsolidated subsidiaries | 161 | 161 | 160 | 160 | ||||||||
| Joint ventures and associates | 6,208 | 892 | 7,100 | 6,274 | 223 | 6,497 | ||||||
| Others | 2 | 289 | 291 | 2 | 174 | 176 | ||||||
| 6,210 | 12,692 | 18,902 | 6,276 | 12,518 | 18,794 |
Other guarantees issued on behalf of
consolidated subsidiaries of euro 11,961 million (euro 11,350
million at December 31, 2012) primarily consisted of: (i)
guarantees given to third parties relating to bid bonds and
performance bonds for euro 7,858 million (euro 7,511 million at
December 31, 2012), of which euro 4,920 million related to the
Engineering & Construction segment (euro 5,491 million at
December 31, 2012); (ii) VAT recoverable from tax Authorities for
euro 1,408 million (euro 1,370 million at December 31, 2012); and
(iii) insurance risk for euro 293 million reinsured by Eni (euro
298 million at December 31, 2012). At December 31, 2013, the
underlying commitment covered by such guarantees was euro 11,781
million (euro 11,266 million at December 31, 2012).
Other guarantees issued on behalf of unconsolidated subsidiaries
of euro 160 million (euro 161 million at December 31, 2012)
consisted of letters of patronage and other guarantees issued to
commissioning entities relating to bid bonds and performance
bonds for euro 147 million (euro 154 million at December 31,
2012). At December 31, 2013, the underlying commitment covered by
such guarantees was euro 29 million (euro 34 million at December
31, 2012).
Unsecured guarantees and other guarantees issued on behalf of
joint ventures and associates of euro 6,497 million (euro 7,100
million at December 31, 2012) primarily consisted of: (i) an
unsecured guarantee of euro 6,122 million (same amount as of
December 31, 2012) given by Eni SpA to Treno Alta Velocità - TAV
SpA (now RFI - Rete Ferroviaria Italiana SpA) for the proper and
timely completion of a project relating to the Milan-Bologna
fast-track railway by CEPAV Uno (Consorzio Eni per l’Alta
Velocità); consortium members, excluding entities controlled by
Eni, gave Eni liability of surety letters and bank guarantees
amounting to 10% of their respective portion of the work; (ii)
unsecured guarantees and other guarantees given to banks in
relation to loans and lines of credit received for euro 253
million (euro 828 million at December 31, 2012); the contract
released by Eni SpA on behalf of Blue Stream Pipeline Co BV (Eni
50%) to a consortium of international financial institutions
(euro 657 million at December 31, 2012) extinguished in 2013; and
(iii) unsecured guarantees and other guarantees given to
commissioning entities relating to bid bonds and performance
bonds for euro 62 million (euro 91 million at December 31, 2012).
At December 31, 2013, the underlying commitment covered by such
guarantees was euro 382 million (euro 456 million at December 31,
2012).
Unsecured and other guarantees given on behalf of third parties
of euro 176 million (euro 291 million at December 31, 2012)
primarily consisted of: (i) guarantees issued on behalf of Gulf
LNG Energy and Gulf LNG Pipeline and on behalf of Angola LNG
Supply Service Llc (Eni 13.6%) as security against payment
commitments of fees in connection with the re-gasification
activity (euro 147 million). The expected commitment has been
valued at euro 147 million (euro 159 million at December 31,
2012); and (ii) guarantees issued by Eni SpA to banks and other
financial institutions in relation to loans and lines of credit
for euro 10 million on behalf of minor investments or companies
sold (same amount as of December 31, 2012). At December 31, 2013
the underlying commitment covered by such guarantees was euro 162
million (euro 278 million at December 31, 2012).
Commitments and risks
| (euro million) | December 31, 2012 |
December 31, 2013 |
| Commitments | 16,247 | 14,200 | ||
| Risks | 431 | 377 | ||
| 16,678 | 14,577 |
Other commitments of euro 14,200 million (euro 16,247 million at December 31, 2012) related to: (i) parent company guarantees that were issued in connection with certain contractual commitments for hydrocarbon exploration and production activities and quantified, on the basis of the capital expenditures to be incurred, to euro 9,804 million (euro 11,260 million at December 31, 2012); (ii) a commitment entered into by Eni USA Gas Marketing Llc on behalf of Angola LNG Supply Service Llc for the acquisition of re-gasified gas at the Pascagoula plant (USA). The expected commitment has been estimated at euro 2,228 million (euro 2,613 million at December 31, 2012) and it has included in the off-balance sheet contractual commitments in the following paragraph “Liquidity risk”; (iii) a commitment entered into by Eni USA Gas Marketing Llc on behalf of Gulf LNG Energy for the acquisition of re-gasification capacity at the Pascagoula terminal (6 bcm/y) over a twenty-year period (until 2031). The expected commitment has been estimated at euro 1,059 million (euro 1,167 million at December 31, 2012) and it has been included in the off-balance sheet contractual commitments in the following paragraph “Liquidity risk”; (iv) a commitment entered into by Eni USA Gas Marketing Llc on behalf of Cameron LNG Llc, a company belonging to Sempra Group, for the acquisition of re-gasification capacity at the Cameron plant (USA) (6 bcm/y) over a twenty-year period (until 2029). The expected commitment has been estimated at euro 852 million (euro 946 million at December 31, 2012) and it has been included in the off-balance sheet contractual commitments in the following paragraph “Liquidity risk”. In February 2014, Sempra obtained the authorization the competent US Authorities to export LNG, while the authorization to convert the terminal
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into a LNG plant is still pending. In
this case Eni would be enabled to exercise an early termination
of the contract, significantly reducing future purchase
commitments provided for by the original contract; (v) a
memorandum of intent signed with the Basilicata Region, whereby
Eni has agreed to invest euro 138 million in the future, also on
account of Shell Italia E&P SpA, in connection with
Eni’s development plan of oil fields in Val d’Agri
(euro 139 million at December 31, 2012). The commitment has been
included in the off-balance sheet contractual commitments in the
following paragraph “Liquidity risk”; and (vi) a
commitment entered into by Eni USA Gas Marketing Llc for the
contract of gas transportation from the Cameron plant (USA) to
the American network over a twenty-year period (until 2029). The
expected commitment has been estimated at euro 90 million (euro
100 million at December 31, 2012) and it has been included in the
off-balance sheet contractual commitments in the following
paragraph “Liquidity risk”.
Risks of euro 377 million (euro 431 million at December 31, 2012)
primarily concerned potential risks associated with: (i) the
value of assets of third parties under the custody of Eni for
euro 90 million (euro 123 million at December 31, 2012); and (ii)
contractual assurances given to acquirers of certain investments
and businesses of Eni for euro 287 million (euro 308 million at
December 31, 2012).
Non-quantifiable commitments
A parent company guarantee was issued on behalf of
CARDÓN IV (Eni’s interest 50%), a joint venture operating
in the Perla oilfield located in Venezuela, for the supplying to
PDVSA GAS of gas quantities until 2036 (end of the concession
agreement). At December 31, 2012, the commitment amounted to a
maximum of $800 million corresponding for Eni to the maximum
amount of the penalty clause provided for in case of an
unilateral and anticipated resolution of the supply contract. Eni
replaced such guarantee in March 2013, as a consequence of
ongoing contract renegotiations. In particular, the penalty
clause for unilateral anticipated resolution and, consequently,
the maximum value of the guarantee will be determined by applying
the local legislation in case of non-fulfillment. The
valorization of the gas to be provided for by Eni amounted to a
total of $11 billion. As well as not corresponding to an
effective evaluation of the guarantee issued, such amount
represents the maximum exposure risk for Eni. A similar guarantee
was issued to Eni by PDVSA relating to the fulfillment of the
commitments relating to the gas quantities to be collected by
PDVSA GAS.
Following the integration signed on April 19, 2011, Eni confirmed
to RFI - Rete Ferroviaria Italiana SpA its commitment, previously
assumed under the convention signed with Treno Alta Velocità -
TAV SpA (now RFI - Rete Ferroviaria Italiana SpA) on October 15,
1991, to guarantee a correct and timely execution of the section
Milano-Brescia of the high-speed railway from Milan to Verona.
Such integration provides for CEPAV (Consorzio Eni per
l’Alta Velocità) Due to act as General Contractor. In order
to pledge the guarantee given, the regulation of CEPAV Due binds
the associates to give proper sureties and guarantees on behalf
of Eni.
Eni is liable for certain non-quantifiable risks related to
contractual assurances given to acquirers of certain of
Eni’s assets, including businesses and investments, against
certain contingent liabilities deriving from tax, social security
contributions, environmental issues and other matters applicable
to periods during which such assets were operated by Eni. Eni
believes such matters will not have a material adverse effect on
Eni’s results of operations and liquidity.
Risk factors
Financial risks
Financial risks are those connected with market, credit and
liquidity.
Management of financial risks is based on guidelines issued
centrally aiming at adapting and coordinating Eni policies on
financial risks matters (“Guidelines on financial risks
management and control”). The basis of this policy is the
pooled and integrated management of commodity risks and the
development of asset backed trading activities for optimizing
Eni’s exposure to such risks.
Market risk
Market risk is the possibility that changes in currency
exchange rates, interest rates or commodity prices will adversely
affect the value of the Group’s financial assets,
liabilities or expected future cash flows. The Company actively
manages market risk in accordance with a set of policies and
guidelines that provide a centralized model of handling finance,
treasury and risk management operations based on the
Company’s departments of operational finance: the parent
company’s (Eni SpA) finance department, Eni Finance
International, Eni Finance USA and Banque Eni, which is subject
to certain bank regulatory restrictions preventing the
Group’s exposure to concentrations of credit risk, and Eni
Trading & Shipping, that is in charge to execute certain
activities relating to commodity derivatives. In particular Eni
SpA and Eni Finance International manage subsidiaries’
financing requirements in and outside Italy, respectively,
covering funding requirements and using available surpluses. All
transactions concerning currencies and derivative contracts on
interest rates and currencies are managed by the parent company,
including the negotiation of emission trading certificates. The
commodity risk of each business unit (Eni’s Divisions or
subsidiaries) is pooled and managed by the Midstream Department,
while Eni Trading & Shipping executes the negotiation of
commodity derivatives. Eni Trading & Shipping SpA and Eni SpA
perform trading activities in financial derivatives on external
trading venues, such as European and non-European regulated
markets, Multilateral Trading Facility (MTF) or similar and
brokerage platforms (i.e. SEF), and over the counter on a
bilateral basis with external counterparties. Other legal
entities belonging to Eni that require financial derivatives
enter into these operations through Eni Trading & Shipping
SpA and Eni SpA on the basis of the relevant asset class
expertises. Eni uses derivative financial instruments
(derivatives) in order to minimize exposure to market risks
related to fluctuations in exchange rates relating to those
transactions denominated in a currency other than the functional
currency (the Euro) and interest rates, as well as to optimize
exposure to commodity prices fluctuations taking into account the
currency in which commodities are quoted. Eni monitors every
activity in derivatives classified as risk-reducing (in
particular, Back to Back activities, Flow Hedging activities,
Asset Backed Hedging activities and Portfolio Management
activities) directly or indirectly related to covered industrial
assets, so as to effectively optimize the risk profile to which
Eni is exposed or could be exposed. If the result of the
monitoring shows that derivatives should not be considered as
risk-reducing, these derivatives are reclassified in proprietary
trading. As the proprietary trading is considered separately from
the other
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activities, its exposure is subject to
specific controls, both in terms of VaR and Stop Loss, and in
terms of nominal gross value. For Eni, the gross nominal value of
proprietary trading activities is compared with the limits set by
the relevant international standards.
The framework defined by Eni’s policies and guidelines
prescribes that measurement and control of market risk be
performed on the basis of maximum tolerable levels of risk
exposure defined in terms of limits of stop loss, which expresses
the maximum tolerable amount of losses associated with a certain
portfolio of assets over a pre-defined time horizon, or in
accordance with value at risk techniques. These techniques make a
statistical assessment of the market risk on the Group’s
activity, i.e. potential gain or loss in fair values, due to
changes in market conditions taking account of the correlation
existing among changes in fair value of existing instruments.
Eni’s finance department defines the maximum tolerable
levels of risk exposure to changes in interest rates and foreign
currency exchange rates in terms of value at risk, pooling Group
companies’ risk positions.
Eni’s calculation and measurement techniques for interest
rate and foreign currency exchange rate risks are in accordance
with banking standards, as established by the Basel Committee for
bank activities surveillance. Tolerable levels of risk are based
on a conservative approach, considering the industrial nature of
the company. Eni’s guidelines prescribe that Eni Group
companies minimize such kinds of market risks by transferring
risk exposure to the parent company finance department.
Eni’s guidelines define rules to manage the commodity risk
aiming at optimizing core activities and pursuing preset targets
of stabilizing industrial and commercial margins. The maximum
tolerable level of risk exposure is defined in terms of value at
risk and stop loss in connection with exposure deriving from
commercial activities and from Asset Backed Trading activities as
well as exposure deriving from proprietary trading executed by
the subsidiary Eni Trading & Shipping. Internal mandates to
manage the commodity risk provide for a mechanism of allocation
of the Group maximum tolerable risk level to each business unit.
In this framework, Eni Trading & Shipping, in addition to
managing risk exposure associated with its own commercial
activity and proprietary trading, pools the Midstream Department
requests for negotiating commodity derivatives and execute them
on the marketplace.
Following the cash inflow from the disposal of the Snam group,
Eni decided to retain a cash reserve according to the provisions
of the financial plan on the safeguard of assets, cash
availability and optimization of return from strategic cash. The
management of strategic cash represents for Eni a new type of
market risk, i.e. the price risk of strategic cash. This type of
risk is part of the management of strategic cash pursued through
transactions on own risk in view of optimizing financial returns,
while respecting authorized risk levels, safeguarding the
Company’s assets and retaining quick access to liquidity.
The four different market risks, whose management and control
have been summarized above, are described below.
Exchange rate risk
Exchange rate risk derives from the fact that Eni’s
operations are conducted in currencies other than the euro
(mainly the US dollar). Revenues and expenses denominated in
foreign currencies may be significantly affected by exchange
rates fluctuations due to conversion differences on single
transactions arising from the time lag existing between execution
and definition of relevant contractual terms (economic risk) and
conversion of foreign currency-denominated trade and financing
payables and receivables (transactional risk). Exchange rate
fluctuations affect the Group’s reported results and net
equity as financial statements of subsidiaries denominated in
currencies other than the euro are translated from their
functional currency into euro. Generally, an appreciation of the
US dollar versus the euro has a positive impact on Eni’s
results of operations, and vice versa. Eni’s foreign
exchange risk management policy is to minimize transactional
exposures arising from foreign currency movements and to optimize
exposures arising from commodity risk. Eni does not undertake any
hedging activity for risks deriving from the translation of
foreign currency denominated profits or assets and liabilities of
subsidiaries which prepare financial statements in a currency
other than the euro, except for single transactions to be
evaluated on a case-by-case basis. Effective management of
exchange rate risk is performed within Eni’s central finance
department which pools Group companies’ positions, hedging
the Group net exposure through the use of certain derivatives,
such as currency swaps, forwards and options. Such derivatives
are evaluated at fair value on the basis of market prices
provided by specialized info-providers. Changes in fair value of
those derivatives are normally recognized through profit and loss
as they do not meet the formal criteria to be recognized as
hedges in accordance with IAS 39. The VaR techniques are based on
variance/covariance simulation models and are used to monitor the
risk exposure arising from possible future changes in market
values over a 24-hour period within a 99% confidence level and a
20-day holding period.
Interest rate risk
Changes in interest rates affect the market value of
financial assets and liabilities of the company and the level of
finance charges. Eni’s interest rate risk management policy
is to minimize risk with the aim to achieve financial structure
objectives defined and approved in the management’s finance
plans. Borrowing requirements of Group companies are pooled by
the Group’s central finance department in order to manage
net positions and the funding of portfolio developments
consistently with management’s plans while maintaining a
level of risk exposure within prescribed limits. Eni enters into
interest rate derivative transactions, in particular interest
rate swaps, to effectively manage the balance between fixed and
floating rate debt. Such derivatives are evaluated at fair value
on the basis of market prices provided from specialized sources.
Changes in fair value of those derivatives are normally
recognized through the profit and loss account as they do not
meet the formal criteria to be accounted for under the hedge
accounting method in accordance with IAS 39. Value at risk
deriving from interest rate exposure is measured daily on the
basis of a variance/covariance model, with a 99% confidence level
and a 20-day holding period.
Commodity risk
Eni’s results of operations are affected by changes
in the prices of commodities. A decrease in oil and gas prices
generally has a negative impact on Eni’s results of
operations and vice versa, and may jeopardize the achievement of
the financial targets preset in the Company’s plans and
budget.
The commodity price risk arises in connection with the following
exposures:
a) Strategic exposure: exposures directly identified by the Board
of Directors as a result of strategic investment decisions or
outside the planning horizon
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of risk. These exposures include those
associated with the program for the production of proved and
unproved oil and gas reserves, long-term gas supply contracts for
the portion not balanced by ongoing or highly probable sale
contracts, refining margins identified by the Board of Directors
as of strategic nature (the remaining volumes can be allocated to
the active management of the margin or to asset-backed hedging
activities) and minimum compulsory stocks.
b) Commercial exposure: includes the exposures related to the
components underlying the contractual arrangements of industrial
and commercial activities and, if related to take-or-pay
commitments, to the components related to the time horizon of the
four-year plan and budget and the relevant activities of risk
management. Commercial exposures are characterized by a
systematic risk management activity conducted on the basis of
risk/return assumptions by implementing one or more strategies
and subjected to specific risk limits (VaR, Stop Loss). In
particular, the commercial exposures include exposures subjected
to asset-backed hedging activities, arising from the
flexibility/optionality of assets.
c) Proprietary trading exposure: includes operations
independently conducted for profit purposes in the short-term,
and normally not finalized to the delivery, both within the
commodity and financial markets, with the aim to obtain a profit
upon the occurrence of a favorable result in the market, in
accordance with specific limits of authorized risk (VaR, Stop
Loss). In the proprietary trading exposures are included the
origination activities, if not connected to contractual or
physical assets.
Strategic risk is not subject to systematic activity of
management/coverage that is eventually carried out only in case
of specific market or business conditions. Because of the
extraordinary nature, hedging activities related to strategic
risks are delegated to the top management. Strategic risk is
subject to measuring and monitoring but is not subject to
specific risk limits. If previously authorized by the Board of
Directors, exposures related to strategic risk can be used in
combination with other commercial exposures in order to exploit
opportunities for natural compensation between the risks (natural
hedge) and consequently reduce the use of derivatives (by
activating logics of internal market).
Eni manages exposure to commodity price risk arising in normal
trading and commercial activities in view of achieving stable
economic results.
The commodity risk and the exposure to commodity prices
fluctuations embedded in commodities quoted in currencies other
than the euro at each business unit (Eni’s Divisions or
subsidiaries) is pooled and managed by the Portfolio Management
unit of the Midstream department for commodities, and by
Eni’s finance department for exchange rate requirements. The
Midstream department manages business units’ risk exposures
to commodities, pooling and optimizing Group companies’
exposures and hedging net exposures on the trading venues through
the Trading unit of Eni Trading & Shipping. In order to
manage commodity price risk, Eni uses derivatives traded on the
organized markets of ICE and NYMEX (futures) and derivatives
traded over the counter (swaps, forward, contracts for
differences and options) with the underlying commodities being
crude oil, refined products or electricity. Such derivatives are
evaluated at fair value on the basis of market prices provided
from specialized sources or, absent market prices, on the basis
of estimates provided by brokers or suitable evaluation
techniques. Value at risk deriving from commodity exposure is
measured daily on the basis of a historical simulation technique,
with a 95% confidence level and a one-day holding period.
Price risk of the strategic liquidity
Market risk deriving from liquidity management is
identified as the possibility that changes in prices of financial
instruments (bonds, money market instruments and mutual funds)
would impact the value of these instruments when evaluated at
fair value. In order to manage the investment activity of the
strategic liquidity, Eni defined a specific investment policy
with aims and constraints in terms of financial activities and
operational boundaries, as well as governance guidelines
regulating management and control systems. The setting up and
maintenance of a reserve of liquidity is mainly aimed to: (i)
guarantee of financial flexibility. Liquidity should allow Eni
Group to fund any extraordinary need (such as difficulty in
access to credit, exogenous shock, macroeconomic environment, as
well as merger and acquisitions); (ii) maintain/improve the
current credit rating by strengthening balance sheet structure,
as well as the concurrent availability of a liquidity reserve
which will meet the requirements of rating agencies.
Strategic liquidity management is regulated in terms of Value at
Risk (measured on the basis of a historical simulation technique,
with a one-day holding period and a 99% confidence level), Stop
Loss and other operating limits in terms of concentration,
duration, ratings, liquidity and instruments to invest on.
Financial leverage or short selling are not allowed. Activities
in terms of strategic liquidity management started in the second
half of the year.
The following table shows amounts in terms of value at risk,
recorded in 2013 (compared with 2012) relating to interest rate
and exchange rate risks in the first section, and commodity risk
in the second section.
(Value at risk - parametric method variance/covariance; holding period: 20 days; confidence level: 99%)
| 2012 | 2013 | |||
| (euro million) | High | Low | Average | At year end | High | Low | Average | At year end |
| Interest rate (1) | 8.69 | 1.41 | 3.13 | 1.88 | 3.67 | 1.49 | 2.07 | 2.15 | ||||||||
| Exchange rate (1) | 1.31 | 0.12 | 0.44 | 0.19 | 0.37 | 0.07 | 0.14 | 0.24 |
(1) Value at risk deriving from interest and exchange rates exposures include the following finance department: Eni Corporate Treasury Department, Eni Finance International, Banque Eni and Eni Finance USA.
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(Value at risk - Historic simulation weighted method; holding period: 1 day; confidence level: 95%)
| 2012 | 2013 | |||
| (euro million) | High | Low | Average | At year end | High | Low | Average | At year end |
| Commercial exposures | ||||||||||||||||
| - Management Portfolio (1) | 84.20 | 35.65 | 59.61 | 40.99 | 108.13 | 36.59 | 59.92 | 66.44 | ||||||||
| Trading (2) | 5.88 | 1.11 | 2.80 | 1.24 | 7.50 | 1.36 | 4.11 | 2.93 |
(1) Refers to the Midstream
Department (risk exposure from Refining & Marketing Division
and Gas & Power Division), Versalis, Eni Trading &
Shipping BV (Amsterdam) and the subsidiaries outside Italy
pertaining to the Division.
(2) Cross-commodity proprietary trading, both for commodity
contracts and financial derivatives, refers to Eni Trading &
Shipping SpA (London-Bruxelles-Singapore) and Eni Trading &
Shipping Inc (Houston).
(Value at risk - Historic simulation method; holding period: 1 day; confidence level: 99%)
| 2012 | 2013 | |||
| (euro million) | High | Low | Average | At year end | High | Low | Average | At year end |
| Strategic liquidity (1) | 1.07 | 0.32 | 0.89 | 0.92 |
(1) The management of the strategic liquidity portfolio started from July 2013.
Credit risk
Credit risk is the potential
exposure of the Group to losses in case counterparties fail to
perform or pay amounts due. The Group manages differently credit
risk depending on whether credit risk arises from exposure to
financial counterparties or to customers relating to outstanding
receivables. Individual business units and Eni’s corporate
financial and accounting units are responsible for managing
credit risk arising in the normal course of the business. The
Group has established formal credit systems and processes to
ensure that before trading with a new counterpart can start, its
creditworthiness is assessed. Also credit litigation and
receivable collection activities are assessed. Eni’s
corporate units define directions and methods for quantifying and
controlling customer’s reliability. With regard to risk
arising from financial counterparties deriving from current and
strategic use of liquidity, Eni has established guidelines prior
to entering into cash management and derivative contracts to
assess the counterparty’s financial soundness and rating in
view of optimizing the risk profile of financial activities while
pursuing operational targets. Maximum limits of risk exposure are
set in terms of maximum amounts of credit exposures for
categories of counterparties as defined by the Company’s
Board of Directors taking into account the credit ratings
provided by primary credit rating agencies on the marketplace.
Credit risk arising from financial counterparties is managed by
the Group operating finance department, including Eni’s
subsidiary Eni Trading & Shipping which specifically engages
in commodity derivatives transactions and by Group companies and
Divisions, only in the case of physical transactions with
financial counterparties consistently with the Group centralized
finance model. Eligible financial counterparties are closely
monitored to check exposures against limits assigned to each
counterparties on a daily basis.
Liquidity risk
Liquidity risk is the risk that suitable sources of
funding for the Group may not be available, or the Group is
unable to sell its assets on the marketplace in order to meet
short-term finance requirements and to settle obligations. Such a
situation would negatively impact Group results as it would
result in the Company incurring higher borrowing expenses to meet
its obligations or under the worst of conditions the inability of
the Company to continue as a going concern. As part of its
financial planning process, Eni manages the liquidity risk by
targeting such a capital structure as to allow the Company to
maintain a level of liquidity adequate to the Group’s needs,
optimizing the opportunity cost of maintaining liquidity reserves
also achieving an efficient balance in terms of maturity and
composition of finance debt. For this purpose, Eni holds a
significant amount of liquidity reserve (financial assets plus
committed credit lines), which aims to (a) deal with identified
risk factors that could significantly affect the cash flow
expected in the Financial Plan (i.e. changes in the scenario
and/or production volumes, delays in disposals, limitations in
profitable acquisitions), (b) ensure a full coverage of
short-term debt and the coverage of medium and long-term debts
with a maturity of 24 months, even in case of restrictions to the
credit access, (c) ensuring the availability of an adequate level
of financial flexibility to support the Group's development
plans.
The financial asset reserve will be employed with a short-term
profile and fast liquidability, favoring investments with very
low risk profile.
At present, the Group believes to have access to sufficient
funding to meet the current foreseeable borrowing requirements as
a consequence of the availability of financial assets and lines
of credit and the access to a wide range of funding at
competitive costs through the credit system and capital markets.
Eni has in place a program for the issuance of Euro Medium Term
Notes up to euro 15 billion, of which about euro 13.7 billion
were drawn as of December 31, 2013.
The Group has credit ratings of A and A-1 respectively for long
and short-term debt assigned by Standard & Poor’s and A3
and P-2 assigned by Moody’s; the outlook is negative in both
ratings. Eni’s credit rating is linked in addition to the
Company’s industrial fundamentals and trends in the trading
environment to the sovereign credit rating of Italy. On the basis
of the methodologies used by Standard & Poor’s and
Moody’s, a potential downgrade of Italy’s credit rating
may trigger a potential knock-on effect on the credit rating of
Italian issuers such as Eni and make it more likely that the
credit rating of the notes or other debt instruments issued by
the Company could be downgraded. Eni, through the constant
monitoring of the international economic environment and
continuing dialogue with financial investors and rating agencies,
believes to be ready to perceive emerging critical issues
screened by the financial community and to be able to react
quickly to any changes in the financial and the global
macroeconomic environment and
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implement the necessary actions to
mitigate such risks, coherently with Company strategies.
In the course of 2013, Eni issued bonds for a total amount of
euro 4.3 billion, of which euro 3.1 billion related to the Euro
Medium Term Notes Program and euro 1.2 billion related to bonds
exchangeable into Snam ordinary shares.
At December 31, 2013, Eni maintained short-term committed and
uncommitted unused borrowing facilities of euro 14.3 billion, of
which euro 2.1 billion were committed, and long-term committed
borrowing facilities of euro 4.7 billion which were completely
undrawn at the balance sheet date. These facilities bore interest
rates and fees for unused facilities that reflected prevailing
market conditions.
The tables below summarize the Group main contractual obligations
(undiscounted) for finance debt repayments, including expected
payments for interest charges, and trade and other payables
maturities outstanding at period end.
Finance debt repayments including expected payments for
interest charges and derivatives
The tables below summarize the Group main contractual
obligations for finance debt repayments, including expected
payments for interest charges and derivatives.
| (euro million) | Maturity year |
|
2013 |
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 and thereafter |
|
Total |
| December 31, 2012 | ||||||||||||||
| Non-current liabilities | 2,555 | 2,090 | 3,941 | 2,180 | 2,956 | 8,275 | 21,997 | |||||||
| Current financial liabilities | 2,223 | 2,223 | ||||||||||||
| Fair value of derivative instruments | 925 | 132 | 89 | 2 | 11 | 50 | 1,209 | |||||||
| 5,703 | 2,222 | 4,030 | 2,182 | 2,967 | 8,325 | 25,429 | ||||||||
| Interest on finance debt | 840 | 725 | 622 | 550 | 465 | 1,491 | 4,693 | |||||||
| Guarantees to banks | 212 | 212 |
| (euro million) | Maturity year |
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 |
|
2019 and thereafter |
|
Total |
| December 31, 2013 | ||||||||||||||
| Non-current liabilities | 1,757 | 3,713 | 3,224 | 2,951 | 1,406 | 9,841 | 22,892 | |||||||
| Current financial liabilities | 2,742 | 2,742 | ||||||||||||
| Fair value of derivative instruments | 996 | 243 | 1 | 5 | 34 | 1,279 | ||||||||
| 5,495 | 3,956 | 3,225 | 2,956 | 1,406 | 9,875 | 26,913 | ||||||||
| Interest on finance debt | 821 | 712 | 651 | 558 | 430 | 1,698 | 4,870 | |||||||
| Guarantees to banks | 254 | 254 |
Trade and other payables
The tables below summarize the
Group trade and other payables by maturity.
| (euro million) | Maturity year |
|
2013 |
|
2014-2017 |
|
2018 and thereafter |
|
Total |
| December 31, 2012 | ||||||||
| Trade payables | 14,993 | 14,993 | ||||||
| Other payables and advances | 8,588 | 19 | 38 | 8,645 | ||||
| 23,581 | 19 | 38 | 23,638 |
| (euro million) | Maturity year |
|
2014 |
|
2015-2018 |
|
2019 and thereafter |
|
Total |
| December 31, 2013 | ||||||||
| Trade payables | 15,529 | 15,529 | ||||||
| Other payables and advances | 8,069 | 18 | 57 | 8,144 | ||||
| 23,598 | 18 | 57 | 23,673 |
Expected payments by period under
contractual obligations and commercial commitments
The Group has in place a number of contractual obligations
arising in the normal course of the business. To meet these
commitments, the Group will have to make payments to third
parties. The Company’s main obligations pertain to
take-or-pay clauses contained in the Company’s gas supply
contracts or shipping arrangements, whereby the Company
obligations consist of off-taking minimum quantities of product
or service or, in case
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of failure, paying the corresponding cash amount that entitles the Company the right to off-take the product or the service in future years. Future obligations in connection with these contracts were calculated by applying the forecasted prices of energy or services included in the four-year business plan approved by the Company’s Board of Directors. The table below summarizes the Group principal contractual obligations as of the balance sheet date, shown on an undiscounted basis.
| (euro million) | Maturity year |
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 |
|
2019 and thereafter |
|
Total |
| Operating lease obligations (a) | 706 | 423 | 335 | 263 | 191 | 349 | 2,267 | |||||||
| Decommissioning liabilities (b) | 214 | 162 | 206 | 304 | 331 | 13,125 | 14,342 | |||||||
| Environmental liabilities (c) | 279 | 329 | 246 | 126 | 114 | 622 | 1,716 | |||||||
| Purchase obligations (d) | 21,304 | 20,307 | 17,947 | 16,437 | 15,508 | 150,867 | 242,370 | |||||||
| - Gas | ||||||||||||||
| - take-or-pay contracts | 18,228 | 18,724 | 16,427 | 14,967 | 14,277 | 143,912 | 226,535 | |||||||
| - ship-or-pay contracts | 1,903 | 1,322 | 1,272 | 1,232 | 998 | 5,037 | 11,764 | |||||||
| - other take-or-pay or ship-or-pay obligations | 130 | 125 | 118 | 109 | 104 | 480 | 1,066 | |||||||
| - other purchase obligations (e) | 1,043 | 136 | 130 | 129 | 129 | 1,438 | 3,005 | |||||||
| Other obligations | 3 | 3 | 3 | 3 | 3 | 123 | 138 | |||||||
| - Memorandum of intent relating Val d’Agri | 3 | 3 | 3 | 3 | 3 | 123 | 138 | |||||||
| 22,506 | 21,224 | 18,737 | 17,133 | 16,147 | 165,086 | 260,833 |
(a) Operating leases primarily
regarded assets for drilling activities, time charter and
long-term rentals of vessels, lands, service stations and office
buildings. Such leases did not include renewal options. There are
no significant restrictions provided by these operating leases
which limit the ability of the Company to pay dividend, use
assets or to take on new borrowings.
(b) Represents the estimated future costs for the decommissioning
of oil and natural gas production facilities at the end of the
producing lives of fields, well-plugging, abandonment and site
restoration.
(c) Environmental liabilities do not include the environmental
charge of 2010 amounting to euro 1,109 million for the proposal
to the Italian Ministry for the Environment to enter into a
global transaction related to nine sites of national interest
because the dates of payment are not reasonably estimable.
(d) Represents any agreement to purchase goods or services that
is enforceable and legally binding and that specifies all
significant terms.
(e) Mainly refers to arrangements to purchase capacity
entitlements at certain re-gasification facilities in the US
(euro 1,911 million).
Capital expenditure commitments
In the next four years Eni plans
to make capital expenditures of euro 53.8 billion. The table
below summarizes Eni’s capital expenditure commitments for
property, plant and equipment and capital projects. Capital
expenditures are considered to be committed when the project has
received the appropriate level of internal management approval.
At this stage, procurement contracts to execute those projects
have already been awarded or are being awarded to third parties.
The amounts shown in the table below include committed
expenditures to execute certain environmental projects.
Maturity year |
||
| (euro million) | 2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 and thereafter |
|
Total |
| Committed on major projects | 5,697 | 5,246 | 4,908 | 3,224 | 17,709 | 36,784 | ||||||
| Other committed projects | 7,555 | 4,902 | 2,865 | 1,705 | 865 | 17,892 | ||||||
| 13,252 | 10,148 | 7,773 | 4,929 | 18,574 | 54,676 |
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Other information about financial
instruments
The carrying amount of financial
instruments and relevant economic effect as of and for the years
ended December 31, 2012 and 2013 consisted of the following:
2012 |
2013 |
|||
Finance income
(expense) |
Finance
income (expense) |
||||
| (euro million) | Carrying amount |
Profit and loss account |
Equity |
Carrying amount |
Profit and loss account |
Equity |
| Held-for-trading financial instruments | ||||||||||||||||||
| Securities (a) | 5,004 | 4 | ||||||||||||||||
| Non-hedging derivatives (b) | 183 | (395 | ) | (22 | ) | (180 | ) | |||||||||||
| Trading derivatives (b) | 3 | (13 | ) | (61 | ) | (8 | ) | |||||||||||
| Held-to-maturity financial instruments | ||||||||||||||||||
| Securities (a) | 69 | 1 | 80 | 1 | ||||||||||||||
| Available-for-sale financial instruments | ||||||||||||||||||
| Securities (a) | 235 | 8 | 16 | 235 | 7 | (1 | ) | |||||||||||
| Investments valued at fair value | ||||||||||||||||||
| Other non-current investments (c) | 4,782 | 4,717 | 141 | 2,770 | 456 | (64 | ) | |||||||||||
| Other non-current investments - Held-for-sale investments (c) | 2,131 | 1,702 | ||||||||||||||||
| Receivables and payables and other assets/liabilities valued at amortized cost | ||||||||||||||||||
| Trade receivables and other (d) | 28,039 | (54 | ) | 28,799 | (277 | ) | ||||||||||||
| Financing receivables (a) | 2,981 | 70 | 2,141 | 11 | ||||||||||||||
| Trade payables and other (e) | 23,638 | 104 | 23,673 | 28 | ||||||||||||||
| Financing payables (a) | 24,463 | (831 | ) | 25,879 | (845 | ) | ||||||||||||
| Net assets (liabilities) for hedging derivatives (f) | (17 | ) | (290 | ) | (202 | ) | (501 | ) |
(a) Income or expense were
recognized in the profit and loss account within Finance income
(expense).
(b) In the profit and loss account, economic effects were
recognized as loss within "Other operating income
(loss)” for euro 96 million (loss for euro 157 million in
2012) and as expense within Finance income (expense) for euro 92
million (expense for euro 251 million in 2012).
(c) Income was recognized in the profit and loss account within
"Income (expense) from investments" for euro 2,158
million (income for euro 1,247 million in 2012) and within
"Net profit (loss) for the period - Discontinued
operations" for euro 3,470 million.
(d) In the profit and loss account, economic effects were
essentially recognized as expense within "Purchase, services
and other" for euro 311 million (expense for euro 25 million
in 2012) (impairments net of reversal) and as income for euro 34
million within "Finance income (expense)" (expense for
euro 29 million in 2012) (exchange rate differences at year-end
and amortized cost).
(e) In the profit and loss account, exchange differences arising
from accounts denominated in foreign currency and translated into
euro at year-end were primarily recognized within "Finance
income (expense)".
(f) In the profit and loss account, income or expense were
recognized within "Net sales from operations" and
"Purchase, services and other" as expense for euro 526
million (expense for euro 289 million at December 31, 2012) and
as income within "Finance income (expense)" for euro 25
million (expense for euro 1 million in 2012) (time value
component).
Disclosures about the offsetting of
financial instruments
The table below summarizes the disclosures about the
offsetting of financial instruments.
| (euro million) | Gross amount of financial assets and liabilities |
Gross amount of financial assets and liabilities subject to offsetting |
Net amount of financial assets and liabilities |
| December 31, 2012 | ||||||
| Financial assets | 29,853 | 1,106 | 28,747 | |||
| Trade and other receivables | ||||||
| Financial liabilities | 24,687 | 1,106 | 23,581 | |||
| Trade and other liabilities | ||||||
| December 31, 2013 | ||||||
| Financial assets | ||||||
| Trade and other receivables | 30,468 | 1,395 | 29,073 | |||
| Other current assets | 1,620 | 295 | 1,325 | |||
| Other non-current assets | 3,718 | 35 | 3,683 | |||
| Financial liabilities | ||||||
| Trade and other liabilities | 24,993 | 1,395 | 23,598 | |||
| Other current liabilities | 1,752 | 304 | 1,448 | |||
| Other non-current liabilities | 1,730 | 26 | 1,704 |
The offsetting of financial assets and liabilities of euro 1,725 million (euro 1,106 million at December 31, 2012) related for euro 1,084 million (euro 1,047 million at December 31, 2012) the offsetting of receivables and debts pertaining to the Exploration & Production segment towards state entities.
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Disclosures on fair value of
financial instruments
Following the classification of financial assets and
liabilities, measured at fair value in the balance sheet, is
provided according to the fair value hierarchy defined on the
basis of the relevance of the inputs used in the measurement
process. In particular, on the basis of the features of the
inputs used in making the measurements, the fair value hierarchy
shall have the following levels:
a) Level 1: quoted prices (unadjusted) in active markets for
identical financial assets or liabilities;
b) Level 2: measurements based on the basis of inputs, other than
quoted prices above, which, for assets and liabilities that have
to be measured, can be observable directly (e.g. prices) or
indirectly (e.g. deriving from prices);
c) Level 3: inputs not based on observable market data.
Financial instruments measured at fair value in the balance sheet
as of at December 31, 2013, were classified as follows: (i) Level
1 “Quoted financial assets held for trading”,
“Financial assets available for sale”,
“Inventories - Certificates and emission rights”,
“Derivatives - Futures” and “Other
investments” valued at fair value; and (ii) Level 2,
derivative instruments different from “Non-quoted financial
assets held for trading”, “Derivative financial
instruments other than futures” included in “Other
current assets”, “Other non-current assets”,
“Other current liabilities” and “Other non-current
liabilities”. During 2013, there were no transfers between
the different hierarchy levels of fair value.
The table below summarizes the amount of financial instruments
valued at fair value:
| (euro million) | Note |
December 31, 2012 |
December 31, 2013 |
|||
| Level 1 | Level 2 | Level 1 | Level 2 |
| Current assets | ||||||||||
| Quoted financial assets held for trading | (8) | 4,461 | ||||||||
| Non-quoted financial assets held for trading | (8) | 543 | ||||||||
| Financial assets available for sale | (9) | 235 | 235 | |||||||
| Inventories - Certificates and emission rights | (11) | 19 | 22 | |||||||
| Derivatives - Futures | (14) | 26 | 64 | |||||||
| Cash flow hedge derivatives | (14) | 31 | 14 | |||||||
| Non-hedging and trading derivatives | (14) | 890 | 654 | |||||||
| Non-current assets | ||||||||||
| Other investments valued at fair value | (18) | 4,782 | 2,770 | |||||||
| Other investments held for sale valued at fair value | (32) | 2,131 | ||||||||
| Derivatives - Futures | (21) | 5 | ||||||||
| Cash flow hedge derivatives | (21) | 2 | 6 | |||||||
| Non-hedging derivatives | (21) | 424 | 256 | |||||||
| Current liabilities | ||||||||||
| Derivatives - Futures | (26) | 12 | 12 | |||||||
| Cash flow hedge derivatives | (26) | 32 | 213 | |||||||
| Non-hedging and trading derivatives | (26) | 881 | 771 | |||||||
| Non-current liabilities | ||||||||||
| Non-hedging derivatives - Futures | (31) | 1 | ||||||||
| Cash flow hedge derivatives | (31) | 13 | 1 | |||||||
| Non-hedging derivatives | (31) | 270 | 282 |
Legal proceedings
Eni is a Party to a number of civil
actions and administrative arbitral and other judicial
proceedings arising in the ordinary course of business.
Based on information available to date, and taking into account
the existing risk provisions, Eni believes that the foregoing
will not have an adverse effect on Eni’s Consolidated
Financial Statements. The following is a description of the most
significant proceedings currently pending. Unless otherwise
indicated below, no provisions have been made for these legal
proceedings as Eni believes that negative outcomes are not
probable or because the amount of the provision cannot be
estimated reliably.
1. Environment
1.1 Criminal proceedings in the matters of environment, health
and safety
| (i) | Fatal accident Truck Center Molfetta - Prosecuting body: Public Prosecutor of Trani. On May 11, 2010, Eni SpA, eight employees of the Company and a former employee were notified of closing of the investigation into alleged manslaughter, grievous bodily harm and illegal disposal of waste materials in relation to a fatal accident occurred in March 2008 that caused the death of four workers deputed to the cleaning of a tank car owned by a company part of the Italian Railways Group. The tank was used for the transportation of liquid sulphur produced by Eni in the Refinery of Taranto. The Public Prosecutor has removed three defendants and transmitted evidence to the Judge for the Preliminary Investigations requesting to dismiss the proceeding. The Judge for the Preliminary Investigations accepted the above mentioned request. In the hearing of April 19, 2011, the Judge admitted as plaintiffs against the above mentioned individuals all the parts, excluding the relatives of one of the victims, whose position has been declared inadmissible lacking of cause of action. The Judge declared inadmissible all the requests brought by other parties to act as plaintiffs against Eni. On December 5, 2011, the Judge pronounced an acquittal sentence for the individuals involved and for Eni SpA, as the indictment is groundless. The first hearing of the appeal filed by the Public Prosecutor has not been scheduled yet. |
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| (ii) | Syndial SpA (company incorporating EniChem Agricoltura SpA - Agricoltura SpA in liquidation - EniChem Augusta Industriale Srl - Fosfotec Srl) - Proceeding about the industrial site of Crotone. A criminal proceeding is pending before the Public Prosecutor of Crotone relating to allegations of environmental disaster, poisoning of substances used in the food chain and omitted clean-up due to the activity at a landfill site which was taken over by Eni’s subsidiary in 1991 following the divestment of an industrial complex by Montedison (now Edison SpA). The landfill site had been filled with industrial waste from Montedison activities till 1989 and then no additional waste was discharged there. Eni’s subsidiary carried out the clean-up of the landfill in 1999 through 2000. The defendants are certain managers at Eni’s subsidiaries which have owned and managed the landfill since 1991. At the conclusion of the analysis conducted by the experts, the documents were returned to the Public Prosecutor of Crotone for further investigations and possible requests of trial. | |
| (iii) | Eni SpA - Gas & Power Division - Industrial site of Praia a Mare. Based on complaints filed by certain offended persons, the Public Prosecutor of Paola started an enquiry about alleged diseases related to tumors which those persons contracted on the workplace. Those persons were employees at an industrial complex owned by a Group subsidiary many years ago. On the basis of the findings of independent appraisal reports, in the course of 2009 the Public Prosecutor resolved that a number of ex-manager of that industrial complex would stand trial. In the preliminary hearing held in November 2010, 189 persons entered the trial as plaintiff; while 107 persons were declared as having been offended by the alleged crime. The plaintiffs have requested that both Eni and Marzotto SpA would bear civil liability. However, compensation for damages suffered by the offended persons has yet to be determined. Upon conclusion of the preliminary hearing, the Public Prosecutor resolved that all defendants would stand trial for culpable manslaughter, culpable injuries, environmental disaster and negligent conduct about safety measures on the workplace. Following a settlement agreement with Eni, Marzotto SpA has entered settlement agreements with all plaintiffs, except for the local administrations. The proceeding is pending. | |
| (iv) | Syndial SpA and Versalis SpA - Porto Torres dock - Prosecuting body: Public Prosecutor of Sassari. In July 2012, the Judge for the Preliminary Hearing, following a request of the Public Prosecutor of Sassari, requested the performance of a probationary evidence relating to the functioning of the hydraulic barrier of Porto Torres site (ran by Syndial SpA) and its capacity to avoid the dispersion of contamination released by the site in the near portion of sea. Syndial SpA and Versalis SpA have been notified that its chief executive officers and other managers are being investigated. | |
| (v) | Syndial SpA - Public Prosecutor of Gela. An investigation before the Public Prosecutor of Gela is pending regarding a number of former Eni employees. In particular the proceeding involves 17 former managers of the companies ANIC SpA, EniChem SpA, EniChem Anic SpA, Anic Agricoltura SpA, Agip Petroli SpA and Praoil Aromatici e Raffinazione Srl who were previously in charge of conducting operations and granting security at Clorosoda plant in Gela. The proceeding regards the crimes of culpable manslaughter and grievous bodily harm related to the death of 12 former employees and alleged diseases which those persons may have contracted at the above mentioned plant. Alleged crimes relate to the period from 1969, when operations on Clorosoda plant have commenced, to 1998, when the clean-up activities have terminated. The Public Prosecutor requested the performance of a medico-legal appraisal on over 100 people employed on the abovementioned plant to verify the relation of causality between the deaths occurred and the eventual pathologies affecting these individuals, and the exposures related to the work performed and missing implementation by the relevant company functions of the measures necessary for ensuring the employee health and security in relation to the risks connected with the mentioned working activities. The proceeding is at a preliminary phase. | |
| (vi) | Seizure of areas located in the Municipalities of Cassano allo Jonio and Cerchiara di Calabria - Prosecuting body: Public Prosecutor of Castrovillari. Certain areas owned by Eni in the Municipalities of Cassano allo Jonio and Cerchiara di Calabria have been seized by the Judicial Authority pending an investigation about an alleged improper handling of industrial waste from the processing of zinc ferrites at the industrial site of Pertusola Sud, which was subsequently shut down, and illegal storing in the seized areas. The circumstances under investigation are the same considered in a criminal action for alleged omitted clean-up which was concluded in 2008 without any negative outcome on part of Eni’s employees. Eni’s subsidiary Syndial SpA has removed any waste materials from the landfills Syndial entered a transaction agreement with the municipality of Cerchiara to settle all damages caused by the unauthorized landfills to the territory of the Municipality. The municipality of Cerchiara renounced to all claims in relation to the circumstances investigated in the criminal proceeding. Eni’s subsidiary has also arranged a similar transaction with the Municipality of Cassano. The criminal proceeding is still pending. | |
| (vii) | Syndial SpA - Proceeding on the asbestos at the Ravenna site. A criminal proceeding is pending before the Tribunal of Ravenna about the crimes of culpable manslaughter, injuries and environmental disaster which would have been allegedly committed by former Syndial employees at the site of Ravenna. The site was taken over by Syndial following a number of corporate mergers and acquisitions. The alleged crimes would date back to 1991. In the proceeding there are 75 offended people. The plaintiffs include relatives of the alleged victims and various local administrations and other institutional bodies, including local trade unions. The advocacy of Syndial claimed the statute of limitation about the crime of environmental disaster which would exclude the alleged crimes of manslaughter and injury. On February 6, 2014 the Judge for the Preliminary Hearing at Ravenna decided that all defendants would stand trial and ascertained the statute of limitation only with reference to the alleged crime of culpable injury. The proceeding is entering the hearing phase. |
1.2 Civil and administrative proceedings in the matters of environment, health and safety
| (i) | Syndial SpA (former EniChem SpA) - Summon for alleged environmental damage caused by DDT pollution in the Lake Maggiore - Prosecuting body: Ministry for the Environment. In May 2003, the Ministry for the Environment summoned Syndial (former EniChem) to obtain a sentence condemning the Eni subsidiary to compensate an alleged environmental damage caused by the activity of the Pieve Vergonte plant in the years 1990 through 1996. With a temporarily executive sentence dated July 3, 2008, the District Court of Turin sentenced the subsidiary Syndial SpA to compensate environmental damages amounting to euro 1,833.5 million, plus legal interests that accrue from the filing of the decision. Syndial and Eni technical-legal consultants have considered the decision and the amount of the compensation to be without factual and legal basis and have concluded that a negative outcome of this proceeding is unlikely. Particularly, Eni and its subsidiary deem the amount of the environmental damage to be absolutely wholly groundless as the sentence has been considered to lack sufficient elements to support such a material amount of the |
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| liability charged to Eni and its subsidiary with respect to the volume of pollutants ascertained by the Italian Environmental Minister. Based on these technical-legal advices also supported by external accounting consultants, no provisions have been made against the proceeding. In July 2009, Syndial filed an appeal against the abovementioned sentence, and consequently the proceeding would continue before a second degree court. In the hearing of June 15, 2012, before the Second Degree Court of Turin, the Minister of the Environment, formalized trough the Board of State Lawyers its decision to not execute the sentence until a final verdict on the whole matter is reached. | ||
| The second degree court requested Syndial to stand as defendant and then requested a technical appraisal of the matter. This technical appraisal reached a favorable outcome for Syndial; however such outcome has been questioned by the Board of State Lawyers. The hearing for the discussion of the conclusions has not been scheduled yet. | ||
| (ii) | Action commenced by the Municipality of Carrara for the remediation and reestablishment of previous environmental conditions at the Avenza site and payment of environmental damage. The Municipality of Carrara commenced an action before the Court of Genova requesting Syndial SpA to remediate and restore previous environmental conditions at the Avenza site and the payment of environmental damage (amounting to euro 139 million), further damages of various types (e.g. damage to the natural beauty of this site) amounting to euro 80 million as well as damages relating to loss of profit and property amounting to approximately euro 16 million. This request is related to an accident that occurred in 1984, as a consequence of which EniChem Agricoltura SpA (later merged into Syndial SpA), at the time owner of the site, carried out safety and remediation works. The Ministry for the Environment joined the action and requested environmental damage payment – from a minimum of euro 53.5 million to a maximum of euro 93.3 million – to be broken down among the various companies that ran the plant in the past. With a sentence of March 2008, the Court of Genova rejected all claims made by the Municipality of Carrara and the Ministry for the Environment. The Second Instance Court too confirmed the decision issued in the first judgment and rejected all the claims made by the plaintiffs. The Ministry for the Environment filed an appeal before a third instance court on the belief that Syndial is to be held responsible for the environmental damage as the Eni subsidiary took over the site from the previous owners assuming all existing liabilities; it was responsible for managing the plant and inadequately remediating the site after the occurrence of an incident in 1984 and for omitted clean-up. Syndial established itself as defendant. The proceeding is pending. | |
| (iii) | Ministry for the Environment - Augusta harbor. The Italian Ministry for the Environment with various administrative acts prescribed companies running plants in the petrochemical site of Priolo to perform safety and environmental remediation works in the Augusta harbor. Companies involved include Eni subsidiaries Versalis, Syndial and Eni Refining & Marketing Division. Pollution has been detected in this area primarily due to a high mercury concentration which is allegedly attributed to the industrial activity of the Priolo petrochemical site. The abovementioned companies opposed said administrative actions, objecting in particular to the way in which remediation works have been designed and modes whereby information on pollutants concentration has been gathered. A number of administrative proceedings were started on this matter, which were reunified before the Regional Administrative Court of Catania. In October 2012, said Court ruled in favor of Eni’s subsidiaries against the Ministry prescriptions about the removal of pollutants and the construction of a physical barrier. The Court ruling was based on a sentence filed by the Court of Justice of the European Community. Specifically, the European Court confirmed the EU principle of the liability associated with the environmental damage, while at the same time reaffirming the necessity to ascertain the relation between cause and effect and identify the entity that is actually liable for polluting. It must be noted that the Public Prosecutor of Siracusa commenced a criminal action against unknown persons in order to verify the effective contamination of the Augusta harbor and the risks relating to the execution of the clean-up project proposed by the Ministry. The technical assessment disposed by the Public Prosecutor generated the following outcomes: a) no public health risk in the Augusta harbor; b) absence of any involvement on part of Eni companies in the contamination; and c) drainages dangerousness. Based on those findings, the Public Prosecutor decided to dismiss the proceeding. | |
| (iv) | Claim for preventive technical inquiry - Court of Gela. In February 2012, Eni’s subsidiaries Raffineria di Gela SpA and Syndial SpA and the parent company Eni SpA (involved in this matter through the operations of the Refining & Marketing Division) were notified a claim issued by 18 parents of children born malformed in the municipality of Gela between 1992 and 2007. The claim for preventive technical inquiry aims at verifying the relation of causality between the malformation pathologies suffered by the children of the plaintiffs and the environmental pollution caused by the Gela site (pollution deriving from the existence and activities at the industrial plants of the Gela Refinery and Syndial SpA), quantifying the alleged damages suffered and eventually identifying the terms and conditions to settle the claim. The examination of the claims filed by the plaintiffs confirmed the lack of evidence in the relation of causality. In any case, the same issue was the subject of previous inquiries in a number of proceedings, all resolved without the ascertainment of any illicit behavior on part of Eni or its subsidiaries. A technical appraisal of the matter is pending. Furthermore, 15 more claims were notified to Eni’s subsidiaries on the same matter. Those proceedings are ongoing. | |
| (v) | Environmental claim relating to the Municipality of Cengio - Plaintiffs: The Ministry for the Environment and the Delegated Commissioner for Environmental Emergency in the territory of the Municipality of Cengio. The Ministry for the Environment and the Delegated Commissioner for Environmental Emergency in the territory of the Municipality of Cengio summoned Eni’s subsidiary Syndial before a Civil Court and sentenced the Eni’s subsidiary to compensate the environmental damage relating to the site of Cengio. The plaintiffs accused Syndial of negligence in performing the clean-up and remediation of the site. On the contrary, Syndial believes to have executed properly and efficiently the clean-up work in accordance with the framework agreement signed with the involved administrations including the Ministry of the Environment in 2000. On February 6, 2013, a Court in Genoa ruled the resumption of the proceeding and established a technical appraisal to verify the existence of the environmental damage. The proceeding is pending. | |
| (vi) | Syndial SpA and Versalis SpA - Porto Torres - Prosecuting body: Public Prosecutor of Sassari. The Public Prosecutor of Sassari (Sardinia) resolved that a number of officers and senior managers of companies engaging in petrochemicals operations at the site of Porto Torres, including the manager responsible for plant operations of the Company’s fully-owned subsidiary Syndial, would stand trial due to allegations of environmental damage and poisoning of water and crops. The Province of Sassari, the Municipality of Porto Torres and other entities have been acting as plaintiffs. The Judge for the Preliminary Hearing admitted as plaintiffs the above mentioned parts, but based on the exceptions issued by Syndial on the lack of connection between the action as plaintiff and the charge, denied that the claimants would act as plaintiff with regard to the serious pathologies related to the existence of poisoning agents in the marine fauna of the industrial port of Porto Torres. The trial before a jurisdictional body of the Italian criminal law which is charged with judging the most serious crimes, was annulled as that jurisdictional body |
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| did not recognize the gravity elements justifying its judgment due to a different crime allegation in the notice of conclusion of the preliminary investigation with respect to the crime allegation presented in the request of trial filed by the Public Prosecutor. In February 2013, the Prosecutor of Sassari has notified the conclusion of preliminary investigations and requested a new imputation for negligent behavior instead of illicit conduct. In the conclusions of the preliminary hearing, the GUP of Sassari dismissed the accusation as a result of the statute of limitations. The Public Prosecutor filed an appeal before a Third Instance Court. | ||
| (vii) | Kashagan. On March 7, 2014, the Atyrau Region Environmental Department ("ARED") launched a series of civil claims against the consortium developing the Kashagan field. These proceedings allege certain emissions associated with gas flaring occurring during commissioning have resulted in infringements of environmental laws and environmental damages. The aggregate value of the civil claims is approximately US$737 million (KZT 134 billion), of which Eni ’s share would be approximately US$124 million (KZT 22.5 billion). The Kashagan project’s consortium disputes these allegations. |
2. Court inquiries and of other Regulatory Authorities
| (i) | Fos Cavaou. An arbitration proceeding before the International Chamber of Commerce of Paris between the client company Société du Terminal Methanier Fos Cavaou (now FOSMAX LNG) and the contractor STS – a French consortium participated by Saipem SA (50%), Technimont SpA (49%) and Sofregaz SA (1%) – is pending. The memorandum filed by FOSMAX LNG supporting the arbitration proceeding claimed the payment of euro 264 million for damage payment, delay penalties and costs incurred for the termination of the works. Approximately euro 142 million of the total amount requested related to loss of profit, which is an item that cannot be compensated based on the existing contractual provisions with the exception of fraudulent and serious culpable behavior. STS filed counterclaim for a total amount of approximately euro 338 million as damage repayment due to the alleged excessive interference of FOSMAX LNG in the execution of the works and payment of extra works not recognized by the client. Both parties filed their memoranda. Management expects the arbitration experts to issue a final ruling by the end of 2014. | |
| (ii) | Eni SpA - Reorganization procedure of the airlines companies Volare Group, Volare Airlines and Air Europe - Prosecuting body: Delegated Commissioner. In March 2009, Eni and its subsidiary Sofid (now Eni Adfin) were notified of a bankruptcy claw back as part of a reorganization procedure filed by the airlines companies Volare Group, Volare Airlines and Air Europe which commenced under the provisions of Ministry of Production Activities, on November 30, 2004. The request regarded the override of all the payments made by those entities to Eni and Eni Adfin, as Eni agent for the receivables collection, in the year previous to the insolvency declaration from November 30, 2003 to November 29, 2004, for a total estimated amount of euro 46 million plus interest. Eni and Eni Adfin were admitted as defendants. After the conclusion of the investigation, a court ruled against the claims made by the commissioners of the reorganization procedures. The relevant ruling was filed on March 1, 2012. The commissioners filed a counterclaim against the first degree sentence. | |
| (iii) | Reorganization procedure of Alitalia Linee Aeree Italiane SpA under extraordinary administration. On January 23, 2013, the Italian airline company Alitalia undergoing a reorganization procedure summoned before the Court of Rome Eni, Exxon Italia and Kuwait Petroleum Italia SpA to obtain a compensation for alleged damages caused by a presumed anticompetitive behavior on part of the three petroleum companies in the supply of jet fuel in the years 1998 through 2009. The claim was based on a deliberation filed by the Italian Antitrust Authority on June 14, 2006. The antitrust deliberation accused Eni and other five petroleum companies of anticompetitive agreements designed to split the market for jet fuel supplies and blocking the entrance of new players in the years 1998 through 2006. The antitrust findings were substantially endorsed by an administrative court. Alitalia has made a claim against the three petroleum companies jointly and severally presenting two alternative ways to assess the alleged damages. A first assessment of the overall damages amounted to euro 908 million. This was based on the presumption that the anti competitive agreements among the defendants would have prevented Alitalia from autonomously purchasing supplies of jet fuel in the years when the existence of the anti competitive agreements were ascertained by the Italian Antitrust Authority and in subsequent years until Alitalia ceased to operate airline activity. Alitalia asserts the incurrence of higher supply costs of jet fuel of euro 777 million excluding interest accrued and other items which add to the lower profitability caused by a reduced competitive position in the marketplace estimated at euro 131 million. An alternative assessment of the overall damage made by Alitalia stands at euro 395 million of which euro 334 million of higher purchase costs for jet fuel and euro 61 million of lower profitability due to the reduced competitive position on the marketplace. The proceeding of first instance is at a preliminary stage, as a number of pre-trial issues determined a substantial stalemate situation. |
3. Antitrust, EU Proceedings, Actions of the Authority for Electricity and Gas and of other Regulatory Authorities
| (i) | Inquiries in relation to alleged anticompetitive agreements in the area of elastomers - Prosecuting Body: European Commission. On November 29, 2006, the European Commission ascertaining anticompetitive agreements in the field of BR and ESBR elastomers fined Eni and its subsidiary Versalis SpA (former Polimeri Europa SpA) for an amount of euro 272.25 million. Eni and its subsidiary filed claims against this decision before the European Court of First Instance in February 2007. On July 13, 2011, the First Instance Court filed the decision to reduce the above mentioned fine to the amount of euro 181.5 million. In particular the Court annulled the increase of the fine related to the aggravating circumstance of recidivism. The companies involved in the decision and the European Commission filed a claim before the European Court of Justice. In addition the European Commission communicated to the decision to start an inquiry for the determination of a new sanction. The Company filed an appeal against this decision. On March 1, 2013, the Commission communicated to Eni and Versalis the commencement of a new proceeding for a new evaluation of the existence of the requirement for the application of an increased fine based on the aggravating circumstance of recidivism. In August 2007, with respect to the above mentioned decision of the European Commission, Eni submitted a request for a negative ascertainment with the Court of Milan aimed at proving the non-existence of alleged damages suffered by tire BR/SBR manufacturers. This judgment is pending. Then, subsidiaries of Dow Chemical summoned Eni and Versalis in order to be indemnified and held harmless as part of a proceeding commenced before the Commercial Court of London where tire producers have been claiming compensation for the damages which were allegedly caused by the companies which have been part of the alleged trust on BR elastomers, among which the same Dow Chemical. Eni, Versalis and Dow Chemical have agreed to suspend the judgment also because Eni and Versalis have appealed the |
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| jurisdiction of the British Court. In December 2012, the First Instance Court of the European Union reduced to euro 106 million the fine imposed to Eni and its subsidiary Polimeri Europa from the original amount of euro 132.16 million sanctioned on December 5, 2007, relating to alleged anti competitive practices in the in CR elastomers sector, with other chemical companies, in violation of Article 81 of EC Treaty and of Article 53 of SEE agreement. In March 2013, Eni and Versalis have appealed against this decision before the EU Court of Justice in order to obtain the complete annulment of the economic sanction. Also the European Commission has appealed against the decision. Pending the decision, Eni accrued a provision with respect to this proceeding. | ||
| (ii) | Preliminary investigation of the Italian Authority for Electricity and Gas about the invoicing to retail clients of gas and electricity. With a resolution on October 31, 2013, the Italian AEEG resolved to commence a preliminary investigation to ascertain whether Eni violated certain administrative provisions that regulate the periodical invoicing in the retail selling of gas and electricity. The investigation also includes alleged delays in the invoice of certain documentation which is required in case of change of supplier. Upon the finalization of the investigation, the AEEG may impose an administrative sanction including a possible fine in accordance to Law 481/95 currently not estimable. |
4. Court inquiries
| (i) | EniPower SpA. In June 2004, the Milan Public Prosecutor commenced inquiries into contracts awarded by Eni’s subsidiary EniPower and on supplies from other companies to EniPower. These inquiries were widely covered by the media. It emerged that illicit payments were made by EniPower suppliers to a manager of EniPower who was immediately dismissed. The Court presented EniPower (commissioning entity) and Snamprogetti (now Saipem SpA) (contractor of engineering and procurement services) with notices of process in accordance with existing laws regulating the administrative responsibility of companies (Legislative Decree No. 231/2001). In accordance with its transparency and integrity guidelines, Eni took the necessary steps in acting as plaintiff in the expected legal action in order to recover any damage that could have been caused to Eni by the illicit behavior of its suppliers and of their and Eni employees. In the meantime, preliminary investigations have found that both EniPower and Snamprogetti are not to be considered defendants in accordance with existing laws regulating the administrative responsibility of companies (Legislative Decree No. 231/2001). In August 2007, Eni was notified that the Public Prosecutor requested the dismissal of EniPower SpA and Snamprogetti SpA, while the proceeding continues against former employees of these companies and employees and managers of the suppliers under the provisions of Legislative Decree No. 231/2001. Eni SpA, EniPower and Snamprogetti presented themselves as plaintiffs in the preliminary hearing. In the preliminary hearing related to the main proceeding on April 27, 2009, the Judge for the Preliminary Hearings requested all the parties that have not requested the plea-bargain to stand in trial, excluding certain defendants as a result of the statute of limitations. During the hearing on March 2, 2010, the Court confirmed the admission as plaintiffs of Eni SpA, EniPower SpA and Saipem SpA against the inquired parts under the provisions of Legislative Decree No. 231/2001. Further employees of the companies involved were identified as defendants to account for their civil responsibility. After the filing of the pleadings occurred in the hearing of July 12, 2011, the proceeding was postponed to September 20, 2011. In that date the Court of Milan concluded that nine persons were guilty for the above mentioned crimes. In addition they were sentenced jointly and severally to the payment of all damages to be assessed through a dedicated proceeding and to the reimbursement of the proceeding expenses incurred by the plaintiffs. The Court also resolved to dismiss all the criminal indictments for 7 employees, representing some companies involved as a result of the statute of limitations while the trial ended with an acquittal of 15 individuals. In relation to the companies involved in the proceeding, the Court found that 7 companies are liable based on the provisions of Legislative Decree No. 231/2001, imposing a fine and the disgorgement of profit. Eni SpA and its subsidiaries, EniPower and Saipem which took over Snamprogetti, acted as plaintiffs in the proceeding also against the mentioned companies. The Court rejected the position as plaintiffs of the Eni Group companies, reversing a prior decision made by the Court. This decision may have been made probably on the basis of a pronouncement made by a Supreme Court which stated the illegitimacy of the constitution as plaintiffs made against any legal entity which is indicted under the provisions of Legislative Decree No. 231/2001. The Court filed the ground of the judgment in December 19, 2011. The condemned parties filed an appeal against the above mentioned decision. The appeal court issued a ruling which substantially confirmed the first-degree judgment except for the fact that it ascertained the statute of limitation with regard to certain defendants. | |
| (ii) | TSKJ Consortium Investigations by US, Italian, and other Authorities. Snamprogetti Netherlands BV has a 25% participation in the TSKJ Consortium companies. The remaining participations are held in equal shares of 25% by KBR, Technip, and JGC. Beginning in 1994 the TSKJ Consortium was involved in the construction of natural gas liquefaction facilities at Bonny Island in Nigeria. Snamprogetti SpA, the holding company of Snamprogetti Netherlands BV, was a wholly owned subsidiary of Eni until February 2006, when an agreement was entered into for the sale of Snamprogetti to Saipem SpA and Snamprogetti was merged into Saipem as of October 1, 2008. Eni holds a 43% participation in Saipem. In connection with the sale of Snamprogetti to Saipem, Eni agreed to indemnify Saipem for a variety of matters, including potential losses and charges resulting from the investigations into the TSKJ matter referred to below, even in relation to Snamprogetti subsidiaries. In recent years the proceeding was settled with the US Authorities and certain Nigerian Authorities, which had been investing into the matter. | |
| The proceedings in the US: following an investigation that lasted several years, in 2010 the Department of Justice and the SEC entered into settlements with each of the TSKJ consortium members. In particular, in July 2010, Snamprogetti Netherlands BV entered into a deferred prosecution agreement with the DoJ, consented to the filing of criminal information, and agreed to pay a fine of $240 million. In addition Snamprogetti Netherlands BV and Eni reached an agreement with the SEC to resolve the investigation and jointly agreed to pay disgorgement to the SEC of $125 million. All amounts due to the US Authorities were paid by Eni in accordance with the indemnity granted by Eni in connection with its sale of Snamprogetti to Saipem. Following the two-year period set out in the deferred prosecution agreement, in September 2012 the DoJ dismissed the criminal information filed against Snamprogetti Netherlands BV, thereby dismissing the criminal proceeding against Snamprogetti Netherlands BV. | ||
| The proceedings in Italy: the events under investigation covered the period since 1994 and also concerned the period of time subsequent to the June 8, 2001, enactment of Italian Legislative Decree No. 231 concerning the liability of legal entities. The proceeding set by the Public Prosecutor of Milan investigated Eni SpA and Saipem SpA for liability of legal entities arising from offences involving alleged international corruption charged to former |
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| managers of Snamprogetti SpA. The Public Prosecutor of Milan requested Eni SpA and Saipem SpA to be debarred from activities involving – directly or indirectly – any agreement with the Nigerian National Petroleum Corporation and its subsidiaries. In particular, the Public Prosecutor claimed the inadequacy and violation of the organizational, management and control model adopted to prevent those offences charged to people subject to direction and supervision. Subsequently, the Public Prosecutor of Milan, with respect to the guarantee payment amounting to euro 24,530,580 even in the interest of Saipem SpA, renounced to contest the decision of rejection of precautionary measures of disqualification for Eni SpA and Saipem SpA. The charged crimes involved alleged corruptive events that have occurred in Nigeria after July 31, 2004. It is also stated the aggravating circumstance that Snamprogetti SpA reported a relevant profit (estimated at approximately $65 million). The Public Prosecutor requested five former employees of Snamprogetti SpA (now Saipem) and Saipem SpA (as legal entity incorporating Snamprogetti) to stand trial. In the course of the proceeding, the Court dismissed the case with respect to the position of the individuals who were acting as plaintiffs for the expiration of the statute of limitations while the proceeding continued for Saipem SpA. Afterwards, the Court condemned Saipem SpA to pay a fine amounting to euro 600,000 and the disgorgement of the guarantee payment of euro 24,530,580, made by Snamprogetti Netherlands BV. Saipem filed an appeal against the sentence issued by the First Instance Court. At the moment, the date of the hearing has not been scheduled. | ||
| (iii) | Gas metering. With the proceeding No. 11183/06 the Public Prosecutor at the Court of Milan accused Eni, certain top managers of Eni and of the Group companies of alleged breaches of the Italian Criminal Law, starting from 2003, regarding the use of instruments for measuring gas, in relation to the payments of excise duties and the billing of clients as well as relations with the Supervisory Authorities. The allegation regards, inter alia, the offense contemplated by Legislative Decree of June 8, 2001, No. 231, which establishes the liability of the legal entity for crimes committed by its employee in the interests of such legal entity, or to its advantage. Accordingly, notice of the commencement of investigations was served upon Eni Group companies (Eni, Snam Rete Gas and Italgas) as well as third party companies. During the years, the investigations of the Public Prosecutor led to two distinctive proceedings known as "the Croatian Gas" and "Excise Duties". The first proceeding was dismissed against all defendants by the Judge of the Preliminary Hearing on January 24, 2012. The Supreme Degree Court confirmed the Judge decision against the recourse presented by the public prosecutors, who nonetheless challenged the Judge decision only in relation with a few defendants. Also the proceeding about excise duties resulted in a favorable outcome to all defendants – who were employees and former employees of Eni’s Gas & Power Division – because the Judge ascertained that the investigated facts did not enter into the specifics of the alleged crimes. Again in 2013, the Supreme Degree Court confirmed the Judge decision against the recourse presented by the public prosecutors. | |
| (iv) | Algeria - Corruption investigation. Authorities in Italy and in other Countries are investigating allegations of corrupt payments in connection with the award of certain contracts to Saipem. On February 4, 2011, Eni received from the Public Prosecutor of Milan an information request pursuant to Article 248 of the Italian Code of Criminal Procedure. The request related to allegations of international corruption and pertained to certain activities performed by Saipem Group companies in Algeria (in particular the contract between Saipem and Sonatrach relating to the construction of the GK3 gas pipeline and the contract between Galsi, Saipem and Technip relating to the engineering of the ground section of a gas pipeline). For that reason, the notification was forwarded by Eni to Saipem. The crime of international corruption is among the offenses contemplated by Legislative Decree of June 8, 2001, No. 231, relating to corporate responsibility for crimes committed by employees which provides fines and interdictions to the company and the disgorgement of profit. Saipem promptly began to collect documentation in response to the requests of the Public Prosecutor. The documents were produced on February 16, 2011. Eni also filed documentation relating to the MLE project (in which the Eni’s Exploration & Production Division participates) even if not required, with respect to which investigations in Algeria are ongoing. On November 22, 2012, the Public Prosecutor of Milan served Saipem a notice stating that it had commenced an investigation for alleged liability of the Company for international corruption in accordance to Article 25, second and third paragraph of Legislative Decree No. 231/2001. Furthermore the prosecutor requested the production of certain documents relating to certain activities in Algeria. Subsequently, on November 30, 2012, Saipem was served a notice of seizure, then, on December 18, 2012, a request for documentation and finally, on January 16, 2013, a search warrant was issued, in order to acquire further documentation in particular relating to certain intermediary contracts and sub-contracts entered into by Saipem in connection with its Algerian business. The investigation relates to alleged corruption which, according to the Public Prosecutor, had occurred with regard to certain contracts awarded to Saipem in Algeria up until March 2010. The former CEO of Saipem, who was resigned from the office at the end of 2012, and the former COO of the business unit Engineering & Construction of Saipem, who was fired at the beginning of 2013, as well as other Saipem employees and former employees are under investigation. On February 7, 2013, on mandate from the Public Prosecutor of Milan, the Italian financial police visited Eni’s headquarters in Rome and San Donato Milanese and executed searches and seized documents relating to Saipem’s activity in Algeria. On the same occasion, Eni was served a notice that an investigation had commenced in accordance with Article 25, third and fourth paragraph of Legislative Decree No. 231/2001 with respect to Eni, Eni’s CEO, Eni’s former CFO, and another senior manager. Eni’s former CFO had previously served as Saipem’s CFO including during the period in which alleged corruption took place and before being appointed as CFO of Eni in 2008. He departed from Eni in connection with the bribery investigation. The proceeding was unified with the Iraq - Kazakhstan proceeding, concerning a different line of investigation, as it related to the activities carried out by Eni in Iraq and Kazakhstan. More information is provided in the specific section of this report. Saipem, which is fully cooperating with the judicial Authority since the beginning of the investigation, has also promptly undertaken management and administrative changes. Saipem has commenced an internal investigation in relation to the contracts in question with the support of external advisors; such internal investigation is conducted in agreement with the statutory bodies deputed to the Company’s control and the Italian Public Prosecutor has been informed of this internal investigation. In addition, in the course of 2013, Saipem has completed a review aimed at verifying the correct application of internal procedures and controls relating to anti-corruption and prevention of illicit activities, with the assistance of external consultants. Saipem provided Eni the findings of its internal review; Eni is still evaluating those findings. Moreover, Saipem’s Board resolved to initiate legal action to protect the interests of the Company against certain former employees and suppliers, reserving any further action if additional factors emerge. In August 2013, in relation to the criminal proceeding the press reported that the former Chief Operating Officer of the Business Unit Engineering & Construction of Saipem, who had been fired by the company, was subject to a precautionary detention measure in prison. This measure, as reported by the press, was subsequently canceled in December 2013 by granting house arrest. Finally, as requested by |
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| the US Department of Justice (DoJ), in the course of 2013, Saipem entered into a tolling agreement with the DoJ to extend the statute of limitations applicable to possible violations of the federal laws of the USA in relation to certain past activities conducted by Saipem and its subsidiaries. The tolling agreement does not constitute an admission on part of Saipem of any wrongdoing or a concession of the jurisdiction of the USA to bring a proceeding. Saipem intends to fully cooperate also as part of any possible investigation made by US Authorities. Furthermore, Eni, albeit denying any involvement in the matter, has commenced an internal investigation with the assistance of external consultants, in addition to the review activities performed by its audit and internal control departments and a dedicated team to the Algerian matters. To date, excepting further investigation if necessary, the following preliminary results have been reached: (i) the review of the documents seized by the Milan prosecutors and the examination of internal records held by Eni’s global procurement department have not found any evidence that Eni entered into intermediary or any other contractual arrangements with the third parties involved in the prosecutors’ investigation; the brokerage contracts, that have identified, were signed by Saipem or its subsidiaries or predecessor companies; (ii) the internal review made on a voluntary basis of the MLE project, the only project that Eni understands to be under the prosecutors’ investigation where the client is an Eni group company. That review has not found evidence that any Eni employee engaged in wrongdoing in connection with the award to Saipem of two main contracts to execute the project (EPC and Drilling). The findings of Eni’s internal review have been provided to the judicial Authority in order to reaffirm Eni’s willingness to fully cooperate. Furthermore, with the assistance of external consultants, Eni has been reviewing the extent of its operating control over Saipem with regard to both legal and accounting and administrative issues. The findings of the review performed have confirmed the autonomy of Saipem from the parent company. Finally, Eni has contacted the US Authorities – the DoJ and the US SEC – in order to voluntary inform them about this matter, considering the developments in the Italian prosecutors’ investigations since the end of 2012. Following this informal contact between Eni and the US Authorities, both the US SEC and the DoJ have started their own investigations about this matter. Eni has furnished various information and documents, including the findings of its internal reviews, in response to formal and informal requests. Investigations are also ongoing in Algeria where the bank accounts of a Saipem’s subsidiary, Saipem Contracting Algérie SpA, have been blocked by the Algerian Authorities with a balance equivalent to about euro 80 million at current exchange rates. Those bank accounts related to two ongoing projects in Algeria. In 2012, a notice of investigation was served to Saipem Contracting Algérie SpA. The company is alleged to have taken advantage of the Authority or influence of representatives of a government owned industrial and trading company in order to inflate prices in relation to contracts awarded by said company. In January 2013, the Judicial Authority in Algeria ordered Saipem’s Algerian subsidiary to stand trial and reaffirmed the blockage of the above mentioned bank accounts. Saipem Contracting Algérie SpA has lodged an appeal against this decision before the Supreme Court. Furthermore, also the parent company Saipem is being investigated by the Judicial Authority in Algeria for alleged corrupt payments. The various authorities are ongoing and it is not possible to predict their outcome. They could result in legal liability on the part of individuals or entities found in violation of the FCPA, Italian and other anti-corruption laws. | ||
| (v) | Iraq - Kazakhstan. A criminal proceeding is pending before the Public Prosecutor of Milan in relation to alleged crimes of international corruption involving Eni’s activities in Kazakhstan regarding the management of the Karachaganak plant and the Kashagan project, as well as handling of assignment procedures of work contracts by Agip KCO. The crime of "international corruption" is sanctioned, in accordance to the Italian criminal code, by Legislative Decree June 8, 2001, No. 231, which holds legal entities liable for the crimes committed by their employees on their behalf. The Company has filed the documents collected and is fully collaborating with the Public Prosecutor. A number of managers and a former manager are involved in the investigation. The above mentioned proceeding has been reunified with another (the so-called "Iraq proceeding") regarding a parallel proceeding related to Eni’s activities in Iraq, disclosed in the following paragraphs. On June 21, 2011, Eni Zubair SpA and Saipem SpA in Fano (Italy) were notified that a search warrant had been issued to search the offices and homes of certain employees of the Group and of certain third parties. In particular the homes and offices of an employee of Eni Zubair and a manager of Saipem were searched by the Authorities. The accusation is of criminal conspiracy and corruption in relation with the activity of Eni Zubair in Iraq and of Saipem in the "Jurassic" project in Kuwait. The Public Prosecutor of Milan has charged Eni Zubair, Eni and Saipem with the accusations as a result of the alleged illicit actions of their employees. If the charges are valid, Eni considers those employees to have breached the Company’s Code of Ethics. The Eni Zubair employee resigned and the Company, accepting the resignation, reserved the right to take action against the individual to defend its interests and subsequently commenced a legal action against the other persons mentioned in the seizure act. Notwithstanding that the Eni Group companies appear to be offended parties in respect of the illicit conduct under investigation associated with these accusations, Eni SpA and Saipem SpA also received, at the same time the search warrant was issued, a notification pursuant to the Legislative Decree No. 231/2001. Eni SpA was notified by the Public Prosecutor of a request of extension of the preliminary investigations that has led up to the involvement of another employee as well as other suppliers in the proceeding. Eni performed a review of the whole matter also with the support of an external consulting firm which issued its final appraisal report on July 25, 2012. According to the opinion of its legal team, the Company’s watch structure and Internal control committee, Saipem too commenced through its Internal Audit department an internal review about the project with the support of an external consultant. The Public Prosecutor of Milan requested Eni SpA to be debarred for one year and six months from performing any industrial activities involving the production sharing contract of 1997 with the Republic of Kazakhstan and in the subsequent administrative or commercial arrangements, or the prosecution of the mentioned activities under the supervision of a commissioner pursuant to Article 15 of the Legislative Decree No. 231 of 2001. In the subsequent hearings, Eni filed defensive memorandum; also the Public Prosecutor filed further documentation supporting the request of precautionary measures. On July 16, 2013, the Judge for Preliminary Investigation rejected the request for precautionary measures requested by the Public Prosecutor of Milan, because considered groundless. The Public Prosecutor promptly appealed the decision before a higher-degree court. After the appeal hearing, on October 21, 2013 such court rejected the appeal filed by the Public Prosecutor. The Re-examination Court rejected the appeal with judgment upon the merits due to the lack of serious evidence against Eni, accepting the defense arguments for which Eni suffered severe damages as a consequence of poor performances of some suppliers involved in the Kashagan project. In addition, the Court declared the lack of precautionary requirements considering the reorganization of the activities in Kazakhstan and taking into account of the initiatives of internal audit and control promptly adopted by Eni. The Public Prosecutor's office did not appeal against the sentence of the Re-examination Court. Also based on this decision, on March 13, 2014, the Eni legal team requested to the Public Prosecutor to dismiss the proceeding. |
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5. Tax Proceedings
| Italy |
| (i) | Eni SpA - Dispute for the omitted payment of a municipal tax related to oil platforms located in territorial waters in the Adriatic Sea. With a formal assessment presented in December 1999, the Municipality of Pineto (Teramo) claimed Eni SpA omitted payment of a municipal tax on real estate for the period from 1993 to 1998 on four oil platforms located in the Adriatic Sea which constitute municipal waters. Eni was requested to pay a total of approximately euro 17 million including interest and a fine. Eni filed a counterclaim stating that the sea where the platforms are located is not part of the municipal territory and the tax application as requested by the Municipality lacked objective fundamentals. The claim has been accepted in the first two degrees of judgment at the Provincial and Regional Tax Commissions. However, the supreme degree Court overturned both judgments, declaring that a Municipality can consider requesting a tax on real estate in the sea facing its territory and with the decision of February 2005 sent the proceeding to another section of the Regional Tax Commission in order to rule on the matters of the proceeding. This commission requested an independent consultant to assess the tax and technical aspects of the matter. The independent consultant confirmed that Eni’s offshore installations lack any ground to be subject to the municipal tax that was claimed by the local Municipality. Those findings were accepted by the Regional Tax Commission with a ruling made on January 19, 2009. On January 25, 2011, the Municipality notified Eni of an appeal to the Supreme Degree Court for the cancellation of the above mentioned ruling. Also on December 28, 2005, the Municipality of Pineto presented similar claims relating to the same Eni platforms for the years 1999 to 2004. The total amount requested was euro 25 million including interest and penalties. Eni filed a counterclaim which was accepted by the First Degree Judge with a decision of December 4, 2007. Also a second degree court ruled in favor of Eni’s recourses with a sentence filed in June 2012. Terms are pending to file a counterclaim before a third degree court. Similar formal assessments related to Eni oil and gas offshore platforms were presented by the Municipalities of Falconara Marittima, Tortoreto, Pedaso, and also from 2009 the Gela Municipality. The total amounts of those claims were approximately euro 7.5 million. The Company filed appeal against all those claims. A tax commission in Sicily ruled in favor of Eni accepting the recourse against the tax claims presented by the municipality of Gela. |
| Outside Italy |
| (i) | Eni Angola Production BV. In 2009 the Ministry of the Finance of Angola, following a fiscal audit, filed a notice of tax assessment for fiscal years 2002 to 2007 in which it claimed the improper deductibility of amortization charges recognized on assets in progress related to the payment of the Petroleum Income Tax that was made by Eni Angola Production BV as co-operator of the Cabinda concession. The Company filed an appeal against this decision. The judgment is still pending before the Supreme Court. Eni accrued a provision with respect to this proceeding. | |
| (ii) | Eni’s subsidiary in Indonesia. A tax proceeding is pending against Eni’s subsidiary Lasmo Sanga Sanga Ltd as the Tax Administration of Indonesia has questioned the application of a tax rate of 10% on the profit earned by the local branch of Eni’s subsidiary for fiscal years 2002 through 2009. Eni’s subsidiary, which is resident in the UK for tax purposes, believes that the 10% tax rate is warranted by the current treaty for the avoidance of double taxation. On the contrary, the Tax Administration of Indonesia has claimed the application of the local tax rate of 20%. The greater taxes due in accordance to the latter rate have been disbursed amounting to $134 million including interest expense. Eni’s subsidiary has filed an appeal claiming the opening of an amicable procedure to settle the matter and avoid bearing a tax regime not in compliance with the UK/Indonesia treaty. Eni accrued a provision with respect to this proceeding. |
6. Settled legal proceedings
| (i) | Investigation of the quality of groundwater in the area of the Refinery of Gela. This criminal proceeding held by the Public Prosecutor of Gela relating to alleged pollution of ground at the Eni Gela Refinery was dismissed because the statute of limitations expired. | |
| (ii) | Alleged negligent fire (Priolo). Due to the immateriality of the proceeding, no more information will be reported about a pending investigation of the Public Prosecutor of Siracusa relating to certain Eni managers who were in charge of conducting operations at the Refinery of Priolo aimed at ascertaining whether Eni they acted with negligence in connection with a fire that occurred at the Priolo plants on April 30 and May 1-2, 2006. | |
| (iii) | Groundwater at the Priolo site - Prosecuting body: Public Prosecutor of Siracusa. The Public Prosecutor of Siracusa who has started an investigation in order to ascertain the level of contamination of the groundwater at the Priolo site requested to dismiss the case. | |
| (iv) | Syndial SpA (former EniChem SpA) - Claim of environmental damages, allegedly caused by industrial activities in the area of Crotone - Prosecuting Bodies: the Council of Ministers, the Ministry for the Environment, the Delegated Commissioner for Environmental Emergency in the Calabria Region and the Calabria Region. The Council of Ministers, the Ministry for the Environment, the Delegated Commissioner for Environmental Emergency in the Calabria Region and the Calabria Region summoned Syndial before the Civil Court of Milan to obtain a sentence condemning the Eni subsidiary to compensate the environmental damage and clean-up and remediation costs caused by the operations of Pertusola Sud SpA (merged in EniChem, now Syndial) at the Crotone site. The original compensation claimed for environmental remediation and clean-up amounted to euro 2,720 million which comprised both the Calabria Region claims and the Ministry for the Environment claims. In order to settle the whole matter, in 2008 Syndial decided to take over the remediation activities in the area and on December 5, 2008 filed a comprehensive clean-up project. This project, which was approved in almost its entirety by the Ministry for the Environment and the Calabria Region, has been considered substantially adequate also by the Court. On February 24, 2012, the Court sentenced Syndial to correctly execute the environmental clean-up of the site in accordance with the approved remediation plan and to pay to the Presidency of the Council of Ministers and the Ministry for Environment the sum of euro 56.2 million plus interest charges accrued from the plaintiffs’ claims. The sentence of the Court has now become final. | |
| (v) | Saipem SpA - CEPAV Uno. Saipem holds an interest in the CEPAV Uno consortium (50.36%) which in 1991 signed a contract with TAV SpA (now RFI - Rete Ferroviaria Italiana SpA) for the construction of a fast-track railway infrastructure for high speed/high capacity trains from Milan to |
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| Bologna. An arbitration proceeding has arisen to define certain amounts claimed by the Consortium against the buyer for alleged changes in the scope of work, as the counterparties failed to reach an amicable settlement of the issues. The Arbitration Committee resolved a partial award to the consortium amounting to euro 54.253 million that was disbursed by RFI on February 7, 2013. Then, the consortium filed three further claims amounting to euro 2,108 million to take into account alleged damages, higher costs incurred for changes in the scope of work and other factors in addition to interest accrued and revaluation. In December 2013, the Consortium and RFI entered into a global transaction whereby RFI paid euro 200 million to compensate the Consortium for all pending claims, including the partial award of the arbitration experts. RFI will give the Consortium the agreed 80% of the performance bids and the relevant advances. | ||
| (vi) | Inquiry in relation to gas transportation. The inquiry held by the Italian Antitrust Authority about alleged anti competitive behavior charged to Eni in connection with the refusal to dispose of secondary transport capacity on the Transitgas and TAG pipelines to third parties was dismissed following acceptance by the Authority of the commitments presented by Eni. | |
| (vii) | Trading. In the investigation regarding two former Eni managers who were allegedly bribed by third parties to facilitate the conclusion of transactions with oil trading companies, Eni was acting as plaintiff in this proceeding and summoned the two people to be compensated for the economic damages suffered through the abuse of working relations and activities. The proceeding closed due to the statute of limitations with respect to the above mentioned managers. | |
| (viii) | Libya. On June 10, 2011, Eni received by the US SEC a formal judicial request of collection and presentation of documents (subpoena) related to Eni’s activity in Libya from 2008 until now in relation to an ongoing investigation without further clarifications or specific alleged violations in connection to "certain illicit payments to Libyan officials" possibly violating the US Foreign Corruption Practice Act. Following a number of discussions with the US SEC and the provision of information and documentations, on April 29, 2013, the US SEC communicated to Eni the closing of the investigations without further claims or other observations. |
Assets under concession arrangements
Eni operates under concession arrangements mainly in the
Exploration & Production segment and the Refining &
Marketing segment. In the Exploration & Production segment
contractual clauses governing mineral concessions, licenses and
exploration permits regulate the access of Eni to hydrocarbon
reserves. Such clauses can differ in each Country. In particular,
mineral concessions, licenses and permits are granted by the
legal owners and, generally, entered into with government
entities, State oil companies and, in some legal contexts,
private owners. As a compensation for mineral concessions, Eni
pays royalties and taxes in accordance with local tax
legislation. Eni sustains all the operational risks and costs
related to the exploration and development activities and it is
entitled to the productions realized. In Production Sharing
Agreement and in buyback contracts, realized productions are
defined on the basis of contractual agreements drawn up with
State oil companies which hold the concessions. Such contractual
agreements regulate the recovery of costs incurred for the
exploration, development and operating activities (cost oil) and
give entitlement to the own portion of the realized productions
(profit oil). In the Refining & Marketing segment several
service stations and other auxiliary assets of the distribution
service are located in the motorway areas and they are granted by
the motorway concession operators following a public tender for
the sub-concession of the supplying of oil products distribution
service and other auxiliary services. Such assets are amortized
over the length of the concession (generally, 5 years for Italy).
In exchange of the granting of the services described above, Eni
provides to the motorway companies fixed and variable royalties
on the basis of quantities sold. At the end of the concession
period, all non-removable assets are transferred to the grantor
of the concession. Assets under concessions relating to natural
gas storage in Italy and to the gas distribution of the Gas &
Power segment pertained to Snam Group that was deconsolidated
following the sale of control.
Environmental regulations
Risks associated with the footprint of Eni’s
activities on the environment, health and safety are described in
“Financial Review”, paragraph “Risk factors and
uncertainties”. In the future, Eni will sustain significant
expenses in relation to compliance with environmental, health and
safety laws and regulations and for reclaiming, safety and
remediation works of areas previously used for industrial
production and dismantled sites. In particular, regarding the
environmental risk, management does not currently expect any
material adverse effect upon Eni’s consolidated financial
statements, taking account of ongoing remedial actions, existing
insurance policies and the environmental risk provision accrued
in the consolidated financial statements. However, management
believes that it is possible that Eni may incur material losses
and liabilities in future years in connection with environmental
matters due to: (i) the possibility of as yet unknown
contamination; (ii) the results of the ongoing surveys and the
other possible effects of statements required by Legislative
Decree No. 152/2006 of the Ministry for the Environment; (iii)
new developments in environmental regulation; (iv) the effect of
possible technological changes relating to future remediation;
and (v) the possibility of litigation and the difficulty of
determining Eni’s liability, if any, as against other
potentially responsible parties with respect to such litigation
and the possible insurance recoveries.
Emission trading
The third phase of the European Union Emissions Trading
Scheme (EU-ETS) came in force since January 1, 2013. Phase three
sees a turn in the main method of assignment of the permits that
change from allocating for free on the base of historical
emissions to allocating through auctioning. In particular, for
the period 2013-2020, the free allocation of permits is done
using European benchmarks specific to each industrial segment,
except for the thermoelectric sector which is not eligible for
free allocations. For this reason, starting from 2013, Eni
benefits from a lower allocation of emission permits compared to
the emissions provided for plants subject to emissions trading.
This situation implies for Eni a progressive use of the permits
accumulated in the period 2008-2012 and, subsequently, the
supplying of the amounts required by the compliance through the
marketplace. As of December 31, 2013, the final quotas freely
assigned to Eni's plants for the period 2013-2020 are still under
approval by each state of the European Union. In 2013, the
emissions of carbon dioxide from Eni’s plants were higher
than the permits assigned. Against emissions of carbon dioxide
amounting to approximately 20.42 millions tonnes were assigned to
Eni emission permits for a total amount of 9.24 million tonnes,
determining a deficit of 11.8 million tonnes. This deficit was
partially offset by using permits accumulated in the period
2008-2012 (7.14 million tonnes), while the remaining emissions
permits were acquired through the marketplace (4.04 million
tonnes).
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36 Revenues
Following is a summary of the main components of “Revenues”.
Net sales from operations
| (euro million) | 2011 |
2012 |
2013 |
| Revenues from sales and services | 107,248 | 126,482 | 114,547 | |||
| Change in contract work in progress | 442 | 738 | 175 | |||
| 107,690 | 127,220 | 114,722 |
Revenues from sales and services were stated net of the following items:
| (euro million) | 2011 |
2012 |
2013 |
| Excise taxes | 11,863 | 13,308 | 12,204 | |||
| Exchanges of oil sales (excluding excise taxes) | 2,470 | 2,177 | 2,018 | |||
| Services billed to joint venture partners | 3,375 | 4,422 | 5,459 | |||
| Sales to service station managers for sales billed to holders of credit cards | 1,810 | 2,010 | 1,909 | |||
| Exchanges of other products | 9 | |||||
| 19,527 | 21,917 | 21,590 |
Revenues from sales and services of euro
114,547 million (euro 107,248 million and euro 126,482 million in
2011 and 2012, respectively) included revenues recognized in
connection with contract works in the Engineering &
Construction segment for euro 10,413 million (euro 10,510 million
and euro 10,914 million in 2011 and 2012, respectively), of which
euro 926 million related to additional considerations under
negotiation (additional consideration measured on the base of the
stage of completion for a total amount of euro 1,018 million as
of December 31, 2012).
Net sales from operations by industry segment and geographic area
of destination are disclosed in Note 42 - Information by industry
segment and geographic financial information.
Net sales from operations with related parties are disclosed in
Note 43 - Transactions with related parties.
Other income and revenues
| (euro million) | 2011 |
2012 |
2013 |
| Gains from sale of assets | 97 | 701 | 369 | |||
| Lease and rental income | 96 | 94 | 87 | |||
| Compensation for damages | 66 | 56 | 65 | |||
| Gains on price adjustments under overlifting/underlifting transactions | 99 | 67 | 44 | |||
| Contract penalties and other trade revenues | 21 | 69 | 35 | |||
| Other proceeds (*) | 547 | 559 | 785 | |||
| 926 | 1,546 | 1,385 |
(*) Each individual amount included herein was lower than euro 50 million.
Gains from sale of assets of euro 369
million related for euro 350 million to the Exploration &
Production segment.
Other income and revenues with related parties are disclosed in
Note 43 - Transactions with related parties.
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37 Operating expenses
Following is a summary of the main components of “Operating expenses”.
Purchase, services and other
| (euro million) | 2011 |
2012 |
2013 |
| Production costs - raw, ancillary and consumable materials and goods | 60,826 | 74,767 | 66,912 | ||||||
| Production costs - services | 13,551 | 15,354 | 18,023 | ||||||
| Operating leases and other | 3,045 | 3,434 | 3,673 | ||||||
| Net provisions for contingencies | 527 | 871 | 857 | ||||||
| Other expenses | 1,140 | 1,342 | 1,134 | ||||||
| 79,089 | 95,768 | 90,599 | |||||||
| less: | |||||||||
| - capitalized direct costs associated with self-constructed assets - tangible assets | (226 | ) | (326 | ) | (310 | ) | |||
| - capitalized direct costs associated with self-constructed assets - intangible assets | (68 | ) | (79 | ) | (76 | ) | |||
| 78,795 | 95,363 | 90,213 |
Services included brokerage fees related
to the Engineering & Construction segment for euro 5 million
(euro 12 million and euro 6 million in 2011 and 2012,
respectively).
Costs incurred in connection with research and development
activity recognized in profit and loss, as they did not meet the
requirements to be recognized as long-lived assets, amounted to
euro 197 million (euro 190 million and euro 211 million in 2011
and 2012, respectively).
Operating leases and other comprised operating leases for euro
1,592 million (euro 1,295 million and euro 1,432 million in 2011
and 2012, respectively) and royalties on the extraction of
hydrocarbons for euro 1,413 million (euro 1,295 million and euro
1,555 million in 2011 and 2012, respectively).
Other expenses of euro 1,134 million included losses on disposal
of tangible and intangible assets for euro 182 million, of which
euro 108 million related to the Engineering & Construction
segment and euro 66 million to the Exploration & Production
segment.
Future minimum lease payments expected to be paid under
non-cancelable operating leases are provided below:
| (euro million) | 2011 |
2012 |
2013 |
| To be paid within 1 year | 838 | 722 | 706 | |||
| Between 2 and 5 years | 1,380 | 1,289 | 1,212 | |||
| Beyond 5 years | 254 | 560 | 349 | |||
| 2,472 | 2,571 | 2,267 |
Operating leases primarily regarded
drilling rigs, time charter and long-term rentals of vessels,
land, service stations and office buildings. Such leases
generally did not include renewal options. There are no
significant restrictions provided by these operating leases which
may limit the ability of Eni to pay dividends, use assets or take
on new borrowings.
Risk provisions net of reversal of unused provisions amounted to
euro 857 million (euro 527 million and euro 871 million in 2011
and 2012, respectively) and mainly related to provisions for
legal and other proceedings amounting to euro 222 million (net
provisions of euro 166 million and euro 688 million in 2011 and
in 2012) and to environmental liabilities amounting to euro 127
million (net provisions of euro 174 million and euro 67 million
in 2011 and 2012, respectively).
More information is provided in Note 28 - Provisions for
contingencies.
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Payroll and related costs
| (euro million) | 2011 |
2012 |
2013 |
| Wages and salaries | 3,435 | 3,886 | 4,366 | ||||||
| Social security contributions | 675 | 674 | 651 | ||||||
| Cost related to defined benefits plans | 148 | 103 | 92 | ||||||
| Other costs | 334 | 187 | 409 | ||||||
| 4,592 | 4,850 | 5,518 | |||||||
| less: | |||||||||
| - capitalized direct costs associated with self-constructed assets - tangible assets | (144 | ) | (182 | ) | (194 | ) | |||
| - capitalized direct costs associated with self-constructed assets - intangible assets | (44 | ) | (55 | ) | (60 | ) | |||
| 4,404 | 4,613 | 5,264 |
Other costs of euro 409 million (euro
334 million and euro 187 million in 2011 and 2012, respectively)
comprised provisions for redundancy incentives of euro 279
million (euro 203 million and euro 64 million in 2011 and 2012,
respectively) and costs for defined contribution plans of euro
109 million (euro 94 million and euro 100 million in 2011 and
2012, respectively).
Cost related to employee benefit plans are described in Note 29 -
Provisions for employee benefits.
Average number of employees
The Group average number and breakdown of employees by
category is reported below:
| (number) | 2011 |
2012 |
2013 |
| Senior managers | 1,461 | 1,471 | 1,475 | |||
| Junior managers | 12,796 | 12,976 | 13,418 | |||
| Employees | 35,309 | 37,258 | 39,220 | |||
| Workers | 23,605 | 23,501 | 25,951 | |||
| 73,171 | 75,206 | 80,064 |
The average number of employees was
calculated as the average between the number of employees at the
beginning and end of the period. The average number of senior
managers included managers employed and operating in foreign
Countries, whose position is comparable to a senior manager
status.
Stock-based compensation
As of December 31, 2013, the stock option plan incentive
scheme outstanding is represented by the 2006-2008 assignment,
approved by the Eni Shareholders’ Meeting on May 25, 2006.
Afterwards, Eni terminated any stock-based incentive schemes.
The stock options plan outstanding, entitled for no consideration
to Eni’s Group companies top managers and managers with
strategic responsibilities (excluding Group listed subsidiaries),
grants to purchase treasury shares with a 1 to 1 ratio. The
strike price was determined as arithmetic average of official
prices registered on the Mercato Telematico Azionario in the
month preceding the grant date or the average carrying amount of
treasury shares as of the day preceding the grant, if greater.
At December 31, 2013, 2,980,725 options, related to the 2008
plan, were outstanding for the purchase of 2,980,725 Eni ordinary
shares (no par value) with a weighted-average strike price of
euro 22.54.
At December 31, 2013, the residual life of the 2008 plan was 7
months.
The scheme evolution is provided below:
2011 |
2012 |
2013 |
||||
Number |
|
Average strike price (euro) |
|
Market price (a) (euro) |
|
Number |
|
Average strike price (euro) |
|
Market price (a) (euro) |
|
Number |
|
Average strike price (euro) |
|
Market price (a) (euro) |
| Rights outstanding as of January 1 | 15,737,120 | 23.005 | 16.398 | 11,873,205 | 23.101 | 15.941 | 8,259,520 | 23.545 | 18.457 | ||||||||||||
| Rights exercised in the period | (208,900 | ) | 14.333 | 16.623 | (93,000 | ) | 16.576 | 16.873 | |||||||||||||
| Rights cancelled in the period | (3,655,015 | ) | 23.187 | 17.474 | (3,520,685 | ) | 22.233 | 16.637 | (5,278,795 | ) | 24.112 | 16.278 | |||||||||
| Rights outstanding as of December 31 | 11,873,205 | 23.101 | 15.941 | 8,259,520 | 23.545 | 18.457 | 2,980,725 | 22.540 | 17.533 | ||||||||||||
| of which exercisable as of December 31 | 11,863,335 | 23.101 | 15.941 | 8,243,205 | 23.544 | 18.457 | 2,969,450 | 22.540 | 17.533 |
(a) Market price relating to new rights granted, rights exercised in the period and rights cancelled in the period corresponds to the average market value (arithmetic average of official prices recorded on Mercato Telematico Azionario in the month preceding: (i) the date of the Board of Directors resolution regarding the stock option assignment; (ii) the date on which the emission/transfer of the shares granted were recorded in the grantee’s securities account; and (iii) the date of the unilateral termination of employment for rights cancelled), weighted with the number of shares. Market price of stock at the beginning and end of the year is the price recorded at December 31.
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The average fair value weighted with the number of options granted during the year 2008 was euro 2.60 per share. The fair value was determined by applying the following assumptions:
2008 |
| Risk-free interest rate | (%) | 4.9 | |
| Expected life | (years) | 6 | |
| Expected volatility | (%) | 19.2 | |
| Expected dividends | (%) | 6.1 |
Costs of the year related to stock
option plans amounted to euro 3 million in 2011, no costs in 2012
and 2013.
Compensation of key management personnel
Compensation of personnel holding key positions in
planning, directing and controlling the Eni Group subsidiaries,
including executive and nonexecutive officers, general managers
and managers with strategic responsibilities in office at end of
each year amounted (including contributions and ancillary costs)
to euro 34 million, euro 33 million and euro 38 million for 2011,
2012 and 2013, respectively, and consisted of the following:
| (euro million) | 2011 |
2012 |
2013 |
| Wages and salaries | 21 | 21 | 25 | |||
| Post-employment benefits | 1 | 1 | 2 | |||
| Other long-term benefits | 10 | 11 | 11 | |||
| Indemnities upon termination of employment | 2 | |||||
| 34 | 33 | 38 |
The increase from the previous periods
primarily related to a different composition of the key
management personnel.
Compensation of Directors and Statutory Auditors
Compensation of Directors amounted to euro 8.4 million,
euro 13.2 million and euro 11.4 million for 2011, 2012 and 2013,
respectively. Compensation of Statutory Auditors amounted to euro
0.513 million, euro 0.467 million and euro 0.474 million in 2011,
2012 and 2013, respectively.
Compensations included emoluments and social security benefits
due for the office as director or statutory auditor held at the
parent company Eni SpA or other Group subsidiaries, which was
recognized as cost to the Group, even if not subjected to
personal income tax.
Other operating income (loss)
The analysis of net income (loss) of financial
derivatives was as follows:
| (euro million) | 2011 |
2012 |
2013 |
| Net income (loss) on cash flow hedging derivatives | (17 | ) | (1 | ) | 25 | ||||
| Net income (loss) on other derivatives | 188 | (157 | ) | (96 | ) | ||||
| 171 | (158 | ) | (71 | ) |
Net income (loss) on other derivatives
related to the ineffective portion of the hedging relationship of
commodity derivatives which was recognized through profit and
loss in the Gas & Power segment.
Net losses on trading and non-hedging derivatives related to: (i)
gains and losses on fair value measurement and settlement of
commodity derivatives entered into by the Gas & Power segment
to optimize commercial margins and for proprietary trading (net
loss of euro 8 million); (ii) gains and losses on fair value
measurement and settlement of commodity derivatives which could
not be elected for hedge accounting under IFRS because they
related to net exposure to commodity risk (net loss of euro 91
million); (iii) fair value evaluation at certain derivatives
embedded in the pricing formulas of long-term gas supply
contracts in the Exploration & Production segment (net gain
of euro 3 million).
Operating costs are disclosed in Note 43 - Transactions with
related parties.
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Depreciation, depletion, amortization and impairments
| (euro million) | 2011 |
2012 |
2013 |
| Depreciation, depletion and amortization: | |||||||||
| - tangible assets | 6,178 | 7,335 | 7,336 | ||||||
| - intangible assets | 1,582 | 2,208 | 1,976 | ||||||
| 7,760 | 9,543 | 9,312 | |||||||
| Impairments: | |||||||||
| - tangible assets | 891 | 1,609 | 2,116 | ||||||
| - intangible assets | 154 | 2,417 | 507 | ||||||
| 1,045 | 4,026 | 2,623 | |||||||
| less: | |||||||||
| - reversal of impairments - tangible assets | (15 | ) | (3 | ) | (223 | ) | |||
| - capitalized direct costs associated with self-constructed assets - tangible assets | (3 | ) | (1 | ) | (3 | ) | |||
| - capitalized direct costs associated with self-constructed assets - intangible assets | (2 | ) | (4 | ) | (6 | ) | |||
| 8,785 | 13,561 | 11,703 |
Depreciation, depletion, amortization and impairments by industry segment are disclosed in Note 42 - Information by industry segment and geographic information.
38 Finance income (expense)
| (euro million) | 2011 |
2012 |
2013 |
| Finance income (expense) | |||||||||
| Finance income | 6,376 | 7,218 | 5,746 | ||||||
| Finance expense | (7,410 | ) | (8,314 | ) | (6,649 | ) | |||
| Net finance income on financial assets held for trading | 4 | ||||||||
| (1,034 | ) | (1,096 | ) | (899 | ) | ||||
| Gain (loss) on derivative financial instruments | (112 | ) | (251 | ) | (92 | ) | |||
| (1,146 | ) | (1,347 | ) | (991 | ) |
The breakdown by lenders or type of net finance gains or losses is provided below:
| (euro million) | 2011 |
2012 |
2013 |
| Finance income (expense) related to net borrowings | |||||||||
| Interest and other finance expense on ordinary bonds | (610 | ) | (729 | ) | (742 | ) | |||
| Interest due to banks and other financial institutions | (312 | ) | (251 | ) | (181 | ) | |||
| Interest and other income on financing receivables and securities held for non-operating purposes | 19 | 24 | 48 | ||||||
| Interest from banks | 22 | 27 | 43 | ||||||
| Net finance income on financial assets held for trading | 4 | ||||||||
| (881 | ) | (929 | ) | (828 | ) | ||||
| Exchange differences | |||||||||
| Positive exchange differences | 6,191 | 7,010 | 5,481 | ||||||
| Negative exchange differences | (6,302 | ) | (6,879 | ) | (5,445 | ) | |||
| (111 | ) | 131 | 36 | ||||||
| Other finance income (expense) | |||||||||
| Capitalized finance expense | 112 | 150 | 170 | ||||||
| Interest and other income on financing receivables and securities held for operating purposes | 75 | 69 | 74 | ||||||
| Finance expense due to passage of time (accretion discount) (a) | (235 | ) | (308 | ) | (240 | ) | |||
| Other finance income (expense) | 6 | (209 | ) | (111 | ) | ||||
| (42 | ) | (298 | ) | (107 | ) | ||||
| (1,034 | ) | (1,096 | ) | (899 | ) |
(a) The item related to the increase in provisions for contingencies that are shown at present value in non-current liabilities.
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Derivative financial instruments consisted of the following:
| (euro million) | 2011 |
2012 |
2013 |
| Derivatives on interest rate | (141 | ) | (88 | ) | 40 | ||||
| Options | (26 | ) | (41 | ) | |||||
| Derivatives on exchange rate | 29 | (137 | ) | (91 | ) | ||||
| (112 | ) | (251 | ) | (92 | ) |
Net loss from derivatives of euro 92
million (a net loss of euro 112 million and euro 251 million in
2011 and 2012, respectively) were recognized in connection with
fair value valuation of certain derivatives which lacked the
formal criteria to be treated in accordance with hedge accounting
under IFRS as they were entered into for amounts equal to the net
exposure to exchange rate risk and interest rate risk, and as
such, they cannot be referred to specific trade or financing
transactions. Exchange rate derivatives were entered into in
order to manage exposures to foreign currency exchange rates
arising from the pricing formulas of commodities in the Gas &
Power segment. The lack of formal requirements to qualify these
derivatives as hedges under IFRS also entailed the recognition in
profit or loss of currency translation differences on assets and
liabilities denominated in currencies other than functional
currency, as this effect cannot be offset by changes in the fair
value of the related instruments. Loss on options of euro 41
million related to the measurement at fair value of the options
embedded in the bonds convertible into ordinary shares of Galp
Energia SGPS SA (income for euro 14 million) and Snam SpA (loss
for euro 55 million). More information is provided in Note 27 -
Long-term debt and current maturities of long-term debt.
More information is provided in Note 43 - Transactions with
related parties.
39 Income (expense) from investments
Share of profit (loss) of equity-accounted investments
| (euro million) | 2011 |
2012 |
2013 |
| Share of profit of equity-accounted investments | 634 | 526 | 369 | ||||||
| Share of loss of equity-accounted investments | (106 | ) | (233 | ) | (117 | ) | |||
| Decreases (increases) in the provision for losses on investments | (28 | ) | (15 | ) | |||||
| 500 | 278 | 252 |
More information is provided in Note 18
- Equity-accounted investments.
Share of profit (loss) of equity accounted investments by
industry segment is disclosed in Note 42 - Information by
industry segment and geographic information.
Other gain (loss) from investments
| (euro million) | 2011 |
2012 |
2013 |
| Net gains on disposals | 1,121 | 349 | 3,598 | ||||
| Dividends | 659 | 431 | 400 | ||||
| Other net income (expense) | (157 | ) | 1,823 | 1,865 | |||
| 1,623 | 2,603 | 5,863 |
Net gains on disposals for 2013 amounted
to euro 3,598 million and related: (i) for euro 3,359 million to
the sale of a 28.57% interest in the share capital of Eni East
Africa SpA to China National Petroleum Corporation (CNPC). Eni
East Africa is the operator of the discovery Area 4 in
Mozambique. Through its equity investment in Eni East Africa,
CNPC indirectly acquired a 20% interest in Area 4, while Eni
retained the 50% interest through the remaining controlling stake
in Eni East Africa SpA; (ii) for euro 98 million to the sale of a
8.19% of the share capital of Galp Energia SGPS SA, of which euro
67 million related to the reversal of the reserve for fair value
evaluation. (iii) for euro 75 million to the sale of a 11.69% of
the share capital of Snam SpA, of which euro 8 million related to
the reversal of the reserve for fair value evaluation; (iv) for
euro 63 million to the sale of a 49% (entire stake own) of the
share capital of Super Octanos CA. Net gains on disposals for
2012 amounted to euro 349 million and related for euro 311
million to Galp Energia SGPS SA as Eni divested 5% of the share
capital of the investee to Amorim Energia BV and a further 4%
through an accelerated book-building procedure to institutional
investors. Net gains on disposals for 2011 amounted to euro 1,121
million and pertained to the divestment of the 100% interest in
Eni Gas Transport International SA (euro 647 million), the 89%
interest (entire stake own) in Trans Austria Gasleitung GmbH
(euro 338 million), the 100% interest in Gas Brasiliano
Distribuidora SA (euro 50 million) and the 46% interest (entire
stake own) in Transitgas AG (euro 34 million).
In 2013, dividend income for euro 400 million primarily related
to the Nigeria LNG Ltd (euro 224 million), Snam SpA (euro 72
million) and Galp Energia SGPS SA (euro 43 million). In 2012,
dividend income for euro 431 million primarily related to the
Nigeria LNG Ltd (euro 331 million). In 2011, dividend income for
euro 659 million related to the Nigeria LNG Ltd (euro 483
million), Trans Austria Gasleitung GmbH (euro 82 million) and
Saudi European Petrochemical Co “IBN ZAHR” (euro 67
million).
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In 2013, other net income of euro 1,865 million included: (i) the revaluation of the 60% stake in Artic Russia BV (entire stake owned). At the balance sheet date, Eni’s interest in Artic Russia was classified as an asset held for sale and measured at fair value due to the loss of joint control over the investee following the satisfaction, before year end, of all conditions precedent to the Sale Purchase Agreement signed with Gazprom in November 2013. The re-measurement at fair value recorded to profit amounted to euro 1,682 million. The consideration for the disposal was cashed in on January 15, 2014; (ii) the remeasurement at market fair value at the balance sheet date of 288.7 million shares of Snam SpA and of euro 66.3 million of Galp Energia SGPS SA underlying two convertible bonds issued on January 18, 2013 and on November 30, 2012, respectively, for which was applied the fair value option (income for euro 158 million and euro 10 million, respectively); (iii) the revaluation of Ceska Rafinerska AS (euro 21 million). In 2012, other net income of euro 1,823 million included: (i) an extraordinary income of euro 835 million recognized in connection with a capital increase made by Galp’s subsidiary Petrogal whereby a new shareholder subscribed its share by contributing a cash amount fairly in excess of the net book value of the interest acquired; (ii) a revaluation gain of euro 865 million of the interest in Galp Energia SGPS SA (28.34%) measured at fair value at the price current at the date when Eni ceased to retain a significant influence over the investee and a gain on the re-measurement at market fair value at the balance sheet date of euro 65 million of part of residual interest in Galp Energia SGPS SA (8%) which was underlying a convertible bond based on the fair value option provided by IAS 39; (iii) the remeasurement at market fair value at the balance sheet date of 288.7 million shares of Snam SpA underlying a convertible bond issued on January 18, 2013 for which was applied the fair value option (income for euro 6 million). In 2011, other net expense of euro 157 million included the full write-down of the book value of the Ceska Rafinerska AS due to management’s expectations of incurring future losses driven by a negative outlook in the refining segment (euro 157 million).
40 Income taxes
| (euro million) | 2011 |
2012 |
2013 |
| Current taxes: | |||||||||
| - Italian subsidiaries | 620 | 755 | 812 | ||||||
| - foreign subsidiaries of the Exploration & Production segment | 8,286 | 10,214 | 7,602 | ||||||
| - foreign subsidiaries | 635 | 455 | 299 | ||||||
| 9,541 | 11,424 | 8,713 | |||||||
| Net deferred taxes: | |||||||||
| - Italian subsidiaries | (418 | ) | 376 | (196 | ) | ||||
| - foreign subsidiaries of the Exploration & Production segment | 936 | 129 | 756 | ||||||
| - foreign subsidiaries | (156 | ) | (268 | ) | (265 | ) | |||
| 362 | 237 | 295 | |||||||
| 9,903 | 11,661 | 9,008 |
Income taxes currently payable by
Italian subsidiaries amounted to euro 812 million and were in
respect of the Italian corporate taxation (IRES for euro 262
million and IRAP for euro 74 million) and foreign taxes on the
share of profit earned outside Italy for euro 476 million.
The effective tax rate was 64.4% (55.7% and 70.2% in 2011 and
2012, respectively) compared with a statutory tax rate of 43.1%
(43.1% and 43.9% in 2011 and 2012, respectively). This was
calculated by applying the Italian statutory tax rate on
corporate profit of 38.0%22 and a 3.9% corporate tax
rate applicable to the net value of production as provided for by
Italian laws.
The difference between the statutory and effective tax rate was
due to the following factors:
| (%) | 2011 |
2012 |
2013 |
| Statutory tax rate | 43.1 | 43.9 | 43.1 | ||||||
| Items increasing (decreasing) statutory tax rate: | |||||||||
| - higher foreign subsidiaries tax rate | 12.7 | 16.9 | 16.1 | ||||||
| - impact pursuant to the write down of deferred tax assets and recalculation of tax rates | 7.7 | 8.9 | |||||||
| - impact pursuant to the Italian Windfall Corporate tax as per Law 7/2009 | 1.0 | 1.5 | 1.3 | ||||||
| - permanent differences and other adjustments | (1.1 | ) | 0.2 | (5.0 | ) | ||||
| 12.6 | 26.3 | 21.3 | |||||||
| 55.7 | 70.2 | 64.4 |
(22) Includes a 5.5% supplemental tax rate on taxable profit of energy companies in Italy (whose primary activity is the production and marketing of hydrocarbons and electricity and with annual revenues in excess of euro 25 million) effective from January 1, 2008 and further increases of 1% effective from January 1, 2009, pursuant to the Law Decree No. 112/2008 (converted into Law No. 133/2008) and 4% effective from January 1, 2011, pursuant the Law Decree No. 138/2011 (converted into Law No. 148/2011) which enlarged the scope of application to include renewable energy companies and gas transport and distribution companies.
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In 2013, the increased tax rate at
foreign subsidiaries primarily related to 14.9 percentage points
in the Exploration & Production segment (17.2 and 17.8
percentage points in 2011 and 2012, respectively).
A write down of deferred tax assets impacted the Group tax rate
by 8.9 percentage points and was recorded by the parent company
Eni SpA and other Italian subsidiaries which were part of the
consolidated accounts for Italian tax purposes. Such write-down
reflected a lower likelihood that those deferred tax assets can
be recovered in future periods due to an expected reduction in
taxable income generated in Italy.
In 2013, the decrease due to permanent differences and other
adjustments of 5.0 percentage points comprised an effect of 6.6
percentage points due to non-taxable gains on sale relating to
the transactions of the 28.57% at Eni East Africa SpA and an
effect of 0.9 percentage points due to non-taxable gains on sale
and revaluation relating to the transactions at Galp Energia SGPS
SA and Snam SpA. Such decrease was partially offset by an effect
of 1.0 percentage points due to a non-deductible impairment of
the goodwill allocated to the European gas market CGU and an
effect of 0.8 percentage points due to the tax regime provided
for intercompany dividends. In 2012, the increase due to
permanent differences and other adjustments of 0.2 percentage
points comprised an effect of 3.3 percentage points due to a
non-deductible impairment of the goodwill allocated to the
European gas market CGU and a negative effect of 4.5 percentage
points due to non-taxable gains on the sale and revaluation
relating to the transactions at Galp Energia SGPS SA. In 2011,
the decrease for permanent differences and other adjustments of
1.1 percentage points were due to a non-deductible provision
accrued to reflect the expected loss deriving from an antitrust
proceeding in the European sector of rubbers (0.2 percentage
points).
41 Earnings per share
Basic earnings per ordinary share are
calculated by dividing net profit for the period attributable to
Eni’s shareholders by the weighted average number of
ordinary shares issued and outstanding during the period,
excluding treasury shares.
The average number of ordinary shares used for the calculation of
the basic earnings per share outstanding at December 31, 2011,
2012 and 2013, was 3,622,616,182, 3,622,764,007 and
3,622,797,043, respectively.
Diluted earnings per share are calculated by dividing net profit
for the period attributable to Eni’s shareholders by the
weighted average number of shares fully-diluted including shares
outstanding in the year including the number of potential shares
outstanding in connection with stock-based compensation plans.
As of December 31, 2011, 2012 and 2013, there were no shares that
could be potentially issued and, therefore, the weighted-average
number of shares used in the calculation of the basic earnings
coincides to the weighted-average number of shares used in the
calculation of diluted earnings.
2011 |
2012 |
2013 |
| Average number of shares used for the calculation of the basic and diluted earnings per share | 3,622,616,182 | 3,622,764,007 | 3,622,797,043 | ||||||
| Eni’s net profit | (euro million) | 6,860 | 7,790 | 5,160 | |||||
| Basic and diluted earning per share | (euro per share) | 1.89 | 2.15 | 1.42 | |||||
| Eni’s net profit - Continuing operations | (euro million) | 6,902 | 4,200 | 5,160 | |||||
| Basic and diluted earning per share | (euro per share) | 1.90 | 1.16 | 1.42 | |||||
| Eni’s net profit - Discontinued operations | (euro million) | (42 | ) | 3,590 | |||||
| Basic and diluted earning per share | (euro per share) | (0.01 | ) | 0.99 |
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42 Information by industry segment and geographic financial information
Information by industry segment
Other activities (d) |
Discontinued operations (d) |
|||||
| (euro million) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2011 | |||||||||||||||||||||||||||||||||||||||
| Net sales from operations (a) | 29,121 | 33,093 | 51,219 | 6,491 | 11,834 | 1,365 | 3,591 | 85 | (54 | ) | |||||||||||||||||||||||||||||
| Less: intersegment sales | (18,444 | ) | (1,344 | ) | (2,791 | ) | (289 | ) | (1,324 | ) | (1,249 | ) | (1,692 | ) | (23 | ) | |||||||||||||||||||||||
| Net sales to customers | 10,677 | 31,749 | 48,428 | 6,202 | 10,510 | 116 | 1,899 | 62 | (54 | ) | 109,589 | (1,899 | ) | 107,690 | |||||||||||||||||||||||||
| Operating profit | 15,887 | (326 | ) | (273 | ) | (424 | ) | 1,422 | (319 | ) | 2,084 | (427 | ) | (189 | ) | 17,435 | (2,084 | ) | 1,452 | 16,803 | |||||||||||||||||||
| Provisions for contingencies | 53 | 113 | 57 | 11 | 79 | 13 | 24 | 201 | 551 | (24 | ) | 527 | |||||||||||||||||||||||||||
| Depreciation, amortization and impairments | 6,440 | 567 | 839 | 250 | 631 | 75 | 533 | 6 | (23 | ) | 9,318 | (533 | ) | 8,785 | |||||||||||||||||||||||||
| Share of profit (loss) of equity-accounted investments | 119 | 232 | 100 | 95 | (1 | ) | 44 | (45 | ) | 544 | (44 | ) | 500 | ||||||||||||||||||||||||||
| Identifiable assets (b) | 56,139 | 18,708 | 15,031 | 3,066 | 13,521 | 810 | 17,649 | 378 | (1,060 | ) | 124,242 | ||||||||||||||||||||||||||||
| Unallocated assets | 18,703 | ||||||||||||||||||||||||||||||||||||||
| Equity-accounted investments | 2,317 | 1,990 | 890 | 38 | 179 | 7 | 385 | 37 | 5,843 | ||||||||||||||||||||||||||||||
| Identifiable liabilities (c) | 13,844 | 8,428 | 5,972 | 761 | 5,437 | 1,095 | 2,465 | 3,020 | (54 | ) | 40,968 | ||||||||||||||||||||||||||||
| Unallocated liabilities | 41,584 | ||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 9,435 | 192 | 866 | 216 | 1,090 | 128 | 1,529 | 10 | (28 | ) | 13,438 |
| 2012 | |||||||||||||||||||||||||||||||||||||||
| Net sales from operations (a) | 35,881 | 36,200 | 62,656 | 6,418 | 12,771 | 1,369 | 2,646 | 119 | (75 | ) | |||||||||||||||||||||||||||||
| Less: intersegment sales | (20,322 | ) | (2,031 | ) | (2,966 | ) | (411 | ) | (1,107 | ) | (1,242 | ) | (1,274 | ) | (40 | ) | |||||||||||||||||||||||
| Net sales to customers | 15,559 | 34,169 | 59,690 | 6,007 | 11,664 | 127 | 1,372 | 79 | (75 | ) | 128,592 | (1,372 | ) | 127,220 | |||||||||||||||||||||||||
| Operating profit | 18,470 | (3,219 | ) | (1,296 | ) | (681 | ) | 1,442 | (341 | ) | 1,679 | (300 | ) | 208 | 15,962 | (1,679 | ) | 788 | 15,071 | ||||||||||||||||||||
| Provisions for contingencies | 41 | 471 | 93 | 22 | 36 | 140 | 72 | 68 | 943 | (72 | ) | 871 | |||||||||||||||||||||||||||
| Depreciation, amortization and impairments | 8,535 | 2,899 | 1,174 | 202 | 708 | 65 | 284 | 3 | (25 | ) | 13,845 | (284 | ) | 13,561 | |||||||||||||||||||||||||
| Share of profit (loss) of equity-accounted investments | 39 | 144 | 40 | 2 | 55 | (1 | ) | 38 | (1 | ) | 316 | (38 | ) | 278 | |||||||||||||||||||||||||
| Identifiable assets (b) | 59,254 | 19,736 | 14,818 | 3,151 | 14,430 | 966 | 474 | (776 | ) | 112,053 | |||||||||||||||||||||||||||||
| Unallocated assets | 27,825 | ||||||||||||||||||||||||||||||||||||||
| Equity-accounted investments | 2,159 | 1,549 | 273 | 50 | 189 | 6 | 36 | 4,262 | |||||||||||||||||||||||||||||||
| Identifiable liabilities (c) | 16,170 | 10,208 | 6,243 | 750 | 5,210 | 1,185 | 2,954 | 21 | 42,741 | ||||||||||||||||||||||||||||||
| Unallocated liabilities | 34,579 | ||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 10,307 | 225 | 842 | 172 | 1,011 | 152 | 756 | 14 | 38 | 13,517 |
(a) Before elimination of
intersegment sales.
(b) Includes assets directly associated with the generation of
operating profit.
(c) Includes liabilities directly associated with the generation
of operating profit.
(d) The results of Snam has been reclassified from the “Gas
& Power” segment to “Other activities” segment
and in the discontinued operations.
The new provisions of IAS 19 were applied retrospectively starting from January 1, 2013, by adjusting the opening balance sheet as of January 1, 2012 and the 2012 profit and loss account.
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| (euro million) | Exploration |
Gas & Power |
Refining
|
Versalis |
Engineering
|
Corporate and financial companies |
Other activities |
Intragroup profits |
Total |
| 2013 | ||||||||||||||||||||||||||
| Net sales from operations (a) | 31,268 | 32,124 | 57,329 | 5,859 | 11,611 | 1,453 | 80 | 18 | ||||||||||||||||||
| Less: intersegment sales | (18,218 | ) | (1,215 | ) | (2,902 | ) | (289 | ) | (1,018 | ) | (1,339 | ) | (39 | ) | ||||||||||||
| Net sales to customers | 13,050 | 30,909 | 54,427 | 5,570 | 10,593 | 114 | 41 | 18 | 114,722 | |||||||||||||||||
| Operating profit | 14,871 | (2,992 | ) | (1,517 | ) | (725 | ) | (83 | ) | (399 | ) | (337 | ) | 38 | 8,856 | |||||||||||
| Provisions for contingencies | 61 | 321 | 100 | 65 | 76 | 178 | 77 | (21 | ) | 857 | ||||||||||||||||
| Depreciation, amortization and impairments | 7,831 | 2,014 | 942 | 139 | 721 | 61 | 20 | (25 | ) | 11,703 | ||||||||||||||||
| Share of profit (loss) of equity-accounted investments | 129 | 101 | 19 | (12 | ) | 7 | 8 | 252 | ||||||||||||||||||
| Identifiable assets (b) | 59,811 | 17,349 | 14,531 | 3,169 | 14,271 | 968 | 255 | (793 | ) | 109,561 | ||||||||||||||||
| Unallocated assets | 28,527 | |||||||||||||||||||||||||
| Equity-accounted investments | 1,730 | 1,561 | 293 | 148 | 166 | 36 | 3,934 | |||||||||||||||||||
| Identifiable liabilities (c) | 15,645 | 9,591 | 5,974 | 844 | 5,505 | 1,606 | 2,740 | (86 | ) | 41,819 | ||||||||||||||||
| Unallocated liabilities | 35,095 | |||||||||||||||||||||||||
| Capital expenditures | 10,475 | 232 | 619 | 314 | 902 | 190 | 21 | (3 | ) | 12,750 |
(a) Before elimination of
intersegment sales.
(b) Includes assets directly associated with the generation of
operating profit.
(c) Includes liabilities directly associated with the generation
of operating profit.
Environmental provisions incurred by Eni
SpA due to intercompany guarantees on behalf of Syndial have been
reported within the segment reporting unit “Other
activities”.
Intersegment revenues are conducted on an arm’s length
basis.
Geographic financial information
Identifiable assets and investments by geographic area
origin.
| (euro million) | Italy |
Other European Union |
Rest of Europe |
Americas |
Asia |
Africa |
Other areas |
Total |
| 2011 | ||||||||||||||||
| Identifiable assets (a) | 47,908 | 16,450 | 6,509 | 7,465 | 14,077 | 29,942 | 1,891 | 124,242 | ||||||||
| Capital expenditures | 3,587 | 1,343 | 1,168 | 978 | 1,608 | 4,369 | 385 | 13,438 | ||||||||
| 2012 | ||||||||||||||||
| Identifiable assets (a) | 31,406 | 15,203 | 10,289 | 7,167 | 14,828 | 31,350 | 1,810 | 112,053 | ||||||||
| Capital expenditures | 2,886 | 1,259 | 1,626 | 1,184 | 1,663 | 4,725 | 174 | 13,517 | ||||||||
| 2013 | ||||||||||||||||
| Identifiable assets (a) | 28,577 | 14,409 | 7,882 | 8,637 | 17,278 | 30,997 | 1,781 | 109,561 | ||||||||
| Capital expenditures | 2,003 | 1,084 | 1,552 | 1,503 | 1,799 | 4,556 | 253 | 12,750 |
(a) Includes assets directly associated with the generation of operating profit.
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Sales from operations by geographic area destination
| (euro million) | 2011 |
2012 |
2013 |
| Italy | 31,906 | 33,998 | 32,044 | |||
| Other European Union | 35,920 | 35,908 | 31,629 | |||
| Rest of Europe | 7,153 | 9,610 | 11,458 | |||
| Americas | 9,612 | 15,282 | 7,741 | |||
| Asia | 10,258 | 16,394 | 18,547 | |||
| Africa | 11,333 | 14,681 | 12,079 | |||
| Other areas | 1,508 | 1,347 | 1,224 | |||
| 107,690 | 127,220 | 114,722 |
Following the accession of the Croatia to the European Union, the relevant geographic information related to prior periods has been restated accordingly.
43 Transactions with related parties
In the ordinary course of its business
Eni enters into transactions regarding:
(a) exchanges of goods, provision of services and financing with
joint ventures, associates and non-consolidated subsidiaries;
(b) exchanges of goods and provision of services with entities
controlled by the Italian Government;
(c) contributions to entities with a non-company form with the
aim to develop solidarity, culture and research initiatives. In
particular these related to: (i) Eni Foundation established by
Eni as a non-profit entity with the aim of pursuing exclusively
solidarity initiatives in the fields of social assistance,
health, education, culture and environment as well as research
and development; (ii) Eni Enrico Mattei Foundation established by
Eni with the aim of enhancing, through studies, research and
training initiatives, knowledge in the fields of economics,
energy and environment, both at the national and international
level.
Transactions with related parties were conducted in the interest
of Eni companies and, with exception of those with entities with
the aim to develop solidarity, culture and research initiatives,
on arm’s length basis.
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Trade and other transactions with related parties
(euro million) |
December 31, 2011 |
2011 |
||
Costs |
Revenues |
||||
| Name | Receivables and other assets |
|
Payables and other liabilities |
|
Guarantees |
|
Goods |
|
Services |
|
Other |
|
Goods |
|
Services |
|
Other |
|
Other operating (expense) income |
| Continuing operations | ||||||||||||||||||||
| Joint ventures and associates | ||||||||||||||||||||
| ACAM Clienti SpA | 14 | 2 | 6 | 60 | ||||||||||||||||
| Agiba Petroleum Co | 3 | 5 | 86 | |||||||||||||||||
| Azienda Energia e Servizi Torino SpA | 1 | 63 | 43 | |||||||||||||||||
| Bayernoil Raffineriegesellschaft mbH | 33 | 1 | 25 | 59 | 2 | |||||||||||||||
| Blue Stream Pipeline Co BV | 8 | 12 | 146 | 2 | ||||||||||||||||
| Bronberger & Kessler und Gilg & Schweiger GmbH & Co KG | 16 | 147 | ||||||||||||||||||
| CEPAV (Consorzio Eni per l’Alta Velocità) Due | 24 | 91 | 84 | 38 | ||||||||||||||||
| CEPAV (Consorzio Eni per l’Alta Velocità) Uno | 42 | 10 | 6,074 | 4 | 21 | |||||||||||||||
| GasVersorgung Süddeutschland GmbH | 29 | 201 | ||||||||||||||||||
| Gaz de Bordeaux SAS | 11 | 69 | ||||||||||||||||||
| Karachaganak Petroleum Operating BV | 38 | 205 | 1,108 | 256 | 23 | 8 | 5 | |||||||||||||
| KWANDA - Suporte Logistico Lda | 54 | 2 | 2 | 13 | ||||||||||||||||
| Mellitah Oil & Gas BV | 28 | 141 | 71 | 3 | ||||||||||||||||
| Petrobel Belayim Petroleum Co | 25 | 46 | 576 | 69 | ||||||||||||||||
| Petromar Lda | 74 | 6 | 57 | 7 | 68 | |||||||||||||||
| Raffineria di Milazzo ScpA | 29 | 31 | 322 | 232 | 16 | 1 | ||||||||||||||
| Saipon Snc | 21 | 48 | 5 | |||||||||||||||||
| Super Octanos CA | 6 | 35 | 58 | 7 | 1 | |||||||||||||||
| Supermetanol CA | 10 | 72 | 1 | |||||||||||||||||
| Trans Austria Gasleitung GmbH | 33 | 160 | 3 | 54 | ||||||||||||||||
| Unión Fenosa Gas SA | 58 | 130 | 1 | |||||||||||||||||
| Other (*) | 181 | 100 | 3 | 37 | 310 | 70 | 131 | 89 | 7 | |||||||||||
| 604 | 790 | 6,243 | 1,333 | 2,132 | 93 | 983 | 390 | 11 | ||||||||||||
| Unconsolidated subsidiaries | ||||||||||||||||||||
| Agip Kazakhstan North Caspian Operating Co NV | 149 | 238 | 781 | 7 | 1,182 | 7 | ||||||||||||||
| Eni BTC Ltd | 157 | |||||||||||||||||||
| Other (*) | 53 | 68 | 6 | 11 | 51 | 3 | 11 | 11 | 8 | |||||||||||
| 202 | 306 | 163 | 11 | 832 | 10 | 11 | 1,193 | 15 | ||||||||||||
| 806 | 1,096 | 6,406 | 1,344 | 2,964 | 103 | 994 | 1,583 | 26 | ||||||||||||
| Entities controlled by the Government | ||||||||||||||||||||
| Enel Group | 83 | 48 | 5 | 429 | 1 | 33 | 85 | |||||||||||||
| Finmeccanica Group | 48 | 51 | 14 | 53 | 22 | 12 | ||||||||||||||
| GSE - Gestore Servizi Energetici | 149 | 158 | 615 | 54 | 607 | 10 | ||||||||||||||
| Terna Group | 19 | 52 | 119 | 110 | 23 | 56 | 26 | 11 | 32 | |||||||||||
| Other (*) | 61 | 41 | 1 | 77 | 1 | 49 | 4 | |||||||||||||
| 360 | 350 | 754 | 669 | 79 | 767 | 133 | 15 | 32 | ||||||||||||
| 1,166 | 1,446 | 6,406 | 2,098 | 3,633 | 182 | 1,761 | 1,716 | 41 | 32 |
| Discontinued operations | ||||||||||||||||||||
| Joint ventures and associates | ||||||||||||||||||||
| Azienda Energia e Servizi Torino SpA | 1 | |||||||||||||||||||
| Other (*) | 1 | 4 | 1 | |||||||||||||||||
| 1 | 5 | 1 | ||||||||||||||||||
| Entities controlled by the Government | ||||||||||||||||||||
| Enel Group | 1 | 397 | 1 | |||||||||||||||||
| Finmeccanica Group | 1 | |||||||||||||||||||
| Other (*) | 4 | 3 | ||||||||||||||||||
| 1 | 5 | 400 | 1 | |||||||||||||||||
| 2 | 5 | 405 | 2 | |||||||||||||||||
| 1,166 | 1,446 | 6,406 | 2,098 | 3,635 | 187 | 1,761 | 2,121 | 43 | 32 |
(*) Each individual amount included herein was lower than euro 50 million.
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||
Costs |
Revenues |
||||
| Name | Receivables and other assets |
|
Payables and other liabilities |
|
Guarantees |
|
Goods |
|
Services |
|
Other |
|
Goods |
|
Services |
|
Other |
|
Other operating (expense) income |
| Continuing operations | |||||||||||||||||||||
| Joint ventures and associates | |||||||||||||||||||||
| ACAM Clienti SpA | 19 | 1 | 2 | 65 | 1 | ||||||||||||||||
| Agiba Petroleum Co | 3 | 67 | 96 | ||||||||||||||||||
| Azienda Energia e Servizi Torino SpA | 86 | ||||||||||||||||||||
| Bayernoil Raffineriegesellschaft mbH | 38 | 2 | 30 | 56 | 1 | ||||||||||||||||
| Blue Stream Pipeline Co BV | 3 | 11 | 155 | 1 | |||||||||||||||||
| Bronberger & Kessler und Gilg & Schweiger GmbH & Co KG | 9 | 84 | |||||||||||||||||||
| CEPAV (Consorzio Eni per l’Alta Velocità) Due | 51 | 51 | 51 | 85 | |||||||||||||||||
| CEPAV (Consorzio Eni per l’Alta Velocità) Uno | 66 | 19 | 6,122 | 5 | 16 | ||||||||||||||||
| EnBW Eni Verwaltungsgesellschaft mbH | 60 | 287 | |||||||||||||||||||
| Gaz de Bordeaux SAS | 56 | ||||||||||||||||||||
| GreenStream BV | 9 | 21 | 121 | 1 | 1 | ||||||||||||||||
| InAgip doo | 54 | 10 | 24 | 53 | 1 | ||||||||||||||||
| Karachaganak Petroleum Operating BV | 28 | 56 | 1,331 | 244 | 14 | 5 | 8 | ||||||||||||||
| KWANDA - Suporte Logistico Lda | 54 | 1 | 2 | 7 | |||||||||||||||||
| Mellitah Oil & Gas BV | 7 | 47 | 166 | 5 | 12 | ||||||||||||||||
| Petrobel Belayim Petroleum Co | 31 | 328 | 585 | 79 | |||||||||||||||||
| Raffineria di Milazzo ScpA | 20 | 9 | 365 | 4 | 218 | 7 | 1 | ||||||||||||||
| Saipon Snc | 112 | 42 | 25 | ||||||||||||||||||
| Supermetanol CA | 16 | 74 | 1 | ||||||||||||||||||
| Toscana Energia SpA | 86 | 1 | |||||||||||||||||||
| Unión Fenosa Gas SA | 2 | 3 | 57 | 6 | 120 | 1 | |||||||||||||||
| Other (*) | 155 | 30 | 47 | 15 | 145 | 8 | 149 | 100 | 5 | ||||||||||||
| 683 | 708 | 6,272 | 1,450 | 2,187 | 33 | 1,043 | 343 | 9 | |||||||||||||
| Unconsolidated subsidiaries | |||||||||||||||||||||
| Agip Kazakhstan North Caspian Operating Co NV | 236 | 172 | 605 | 2 | 1,064 | 5 | |||||||||||||||
| Eni BTC Ltd | 154 | ||||||||||||||||||||
| Industria Siciliana Acido Fosforico - ISAF SpA (in liquidation) | 54 | 3 | 4 | 7 | 7 | ||||||||||||||||
| Other (*) | 14 | 59 | 2 | 7 | 50 | 4 | 17 | 3 | 7 | ||||||||||||
| 304 | 234 | 160 | 7 | 655 | 6 | 17 | 1,074 | 19 | |||||||||||||
| 987 | 942 | 6,432 | 1,457 | 2,842 | 39 | 1,060 | 1,417 | 28 | |||||||||||||
| Entities controlled by the Government | |||||||||||||||||||||
| Enel Group | 16 | 8 | 4 | 554 | 55 | 90 | 1 | (7 | ) | ||||||||||||
| Finmeccanica Group | 30 | 50 | 14 | 70 | 17 | 1 | |||||||||||||||
| Snam Group | 182 | 482 | 46 | 13 | 558 | 2 | 102 | 26 | 1 | ||||||||||||
| Terna Group | 47 | 61 | 166 | 126 | 12 | 95 | 67 | 14 | 17 | ||||||||||||
| GSE - Gestore Servizi Energetici | 86 | 66 | 627 | 58 | 777 | 18 | 12 | ||||||||||||||
| Other (*) | 42 | 28 | 59 | 3 | 57 | 1 | |||||||||||||||
| 403 | 695 | 46 | 824 | 1,367 | 75 | 1,103 | 203 | 28 | 10 | ||||||||||||
| Pension funds and foundations | 1 | 21 | |||||||||||||||||||
| 1,390 | 1,638 | 6,478 | 2,281 | 4,209 | 135 | 2,163 | 1,620 | 56 | 10 | ||||||||||||
| Discontinued operations | |||||||||||||||||||||
| Joint ventures and associates | |||||||||||||||||||||
| Azienda Energia e Servizi Torino SpA | 1 | 1 | |||||||||||||||||||
| Toscana Energia SpA | 1 | ||||||||||||||||||||
| Other (*) | 1 | ||||||||||||||||||||
| 3 | 1 | ||||||||||||||||||||
| Entities controlled by the Government | |||||||||||||||||||||
| Enel Group | 87 | 295 | |||||||||||||||||||
| Other (*) | 1 | 3 | 1 | ||||||||||||||||||
| 87 | 1 | 298 | 1 | ||||||||||||||||||
| 87 | 1 | 301 | 2 | ||||||||||||||||||
| Total | 1,390 | 1,638 | 6,478 | 2,281 | 4,296 | 136 | 2,163 | 1,921 | 58 | 10 |
(*) Each individual amount included herein was lower than euro 50 million.
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2013 |
||
Costs |
Revenues |
|||||||
| Name | Receivables and other assets |
|
Payables and other liabilities |
|
Guarantees |
|
Goods |
|
Services |
|
Other |
|
Goods |
|
Services |
|
Other |
|
Other operating (expense) income |
| Joint ventures and associates | ||||||||||||||||||||
| Agiba Petroleum Co | 1 | 69 | 132 | |||||||||||||||||
| Bayernoil Raffineriegesellschaft mbH | 33 | 2 | 53 | 122 | ||||||||||||||||
| Blue Stream Pipeline Co BV | 10 | 101 | ||||||||||||||||||
| CEPAV (Consorzio Eni per l’Alta Velocità) Due | 78 | 165 | 127 | 168 | ||||||||||||||||
| CEPAV (Consorzio Eni per l’Alta Velocità) Uno | 42 | 16 | 6,122 | 2 | 44 | |||||||||||||||
| EnBW Eni Verwaltungsgesellschaft mbH | 33 | 165 | 1 | |||||||||||||||||
| GreenStream BV | 3 | 14 | 116 | 1 | 4 | |||||||||||||||
| InAgip doo | 57 | 22 | 63 | 34 | ||||||||||||||||
| Karachaganak Petroleum Operating BV | 26 | 220 | 1,218 | 275 | 4 | 19 | ||||||||||||||
| KWANDA - Suporte Logistico Lda | 55 | 5 | 2 | 1 | 6 | |||||||||||||||
| Mellitah Oil & Gas BV | 7 | 61 | 16 | 215 | 3 | |||||||||||||||
| Petrobel Belayim Petroleum Co | 32 | 360 | 570 | 47 | ||||||||||||||||
| Petromar Lda | 71 | 7 | 29 | 6 | 1 | 69 | ||||||||||||||
| PetroSucre SA | 57 | 1 | ||||||||||||||||||
| Raffineria di Milazzo ScpA | 22 | 7 | 310 | 199 | 4 | |||||||||||||||
| Saipon Snc | 64 | 31 | 1 | |||||||||||||||||
| Supermetanol CA | 25 | 78 | 1 | |||||||||||||||||
| Unión Fenosa Gas Comercializadora SA | 23 | 1 | 1 | 254 | ||||||||||||||||
| Unión Fenosa Gas SA | 2 | 1 | 57 | 32 | 17 | 2 | 1 | |||||||||||||
| Other (*) | 112 | 92 | 4 | 10 | 199 | 6 | 147 | 68 | 5 | |||||||||||
| 685 | 1,108 | 6,245 | 1,375 | 2,241 | 44 | 783 | 471 | 7 | ||||||||||||
| Unconsolidated subsidiaries | ||||||||||||||||||||
| Agip Kazakhstan North Caspian Operating Co NV | 115 | 153 | 506 | 16 | 541 | 4 | ||||||||||||||
| Eni BTC Ltd | 147 | |||||||||||||||||||
| Industria Siciliana Acido Fosforico ISAF SpA (in liquidation) | 62 | 1 | 10 | 2 | ||||||||||||||||
| Other (*) | 16 | 56 | 2 | 6 | 45 | 3 | 13 | 8 | 5 | |||||||||||
| 193 | 210 | 159 | 6 | 551 | 19 | 13 | 551 | 9 | ||||||||||||
| 878 | 1,318 | 6,404 | 1,381 | 2,792 | 63 | 796 | 1,022 | 16 | ||||||||||||
| Entities controlled by the Government | ||||||||||||||||||||
| Enel Group | 134 | 29 | 2 | 848 | 78 | 109 | 2 | 49 | ||||||||||||
| Finmeccanica Group | 20 | 51 | 7 | 54 | 17 | 2 | ||||||||||||||
| Snam Group | 337 | 564 | 13 | 38 | 2,038 | 4 | 792 | 87 | 1 | |||||||||||
| Terna Group | 46 | 61 | 134 | 149 | 13 | 126 | 38 | 2 | 19 | |||||||||||
| GSE - Gestore Servizi Energetici | 86 | 135 | 811 | 96 | 265 | 21 | 9 | |||||||||||||
| Other (*) | 34 | 21 | 58 | 4 | 31 | 2 | ||||||||||||||
| 657 | 861 | 13 | 992 | 3,147 | 117 | 1,309 | 259 | 14 | 68 | |||||||||||
| Pension funds and foundations | 2 | 4 | 51 | |||||||||||||||||
| 1,535 | 2,181 | 6,417 | 2,373 | 5,943 | 231 | 2,105 | 1,281 | 30 | 68 |
(*) Each individual amount included herein was lower than euro 50 million.
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Most significant transactions with joint
ventures, associates and unconsolidated subsidiaries concerned:
- sale of gas outside Italy to EnBW Eni Verwaltungsgesellschaft
mbH and Unión Fenosa Gas Comercializadora SA;
- provisions of specialized services in upstream activities and
Eni’s share of expenses incurred to develop oil fields from
Agiba Petroleum Co, Agip Kazakhstan North Caspian Operating Co
NV, Karachaganak Petroleum Operating BV, Mellitah Oil & Gas
BV, Petrobel Belayim Petroleum Co and, only with Karachaganak
Petroleum Operating BV, purchase of oil products and with Agip
Kazakhstan North Caspian Operating Co NV, provisions of services
by the Engineering & Construction segment; services charged
to Eni’s associates are invoiced on the basis of incurred
costs;
- payments for refining services to Bayernoil
Raffineriegesellschaft mbH and Raffineria di Milazzo ScpA on the
basis of incurred costs;
- acquisition of natural gas transport services outside Italy
from Blue Stream Pipeline Co BV and GreenStream BV;
- supply of oil products from Raffineria di Milazzo ScpA on the
basis of prices referred to the quotations on international oil
markets, as they would be conducted on an arm’s length
basis;
- transactions related to the planning and the construction of
the tracks for high speed/high capacity trains from Milan to
Bologna with CEPAV (Consorzio Eni per l’Alta Velocità) Uno
and related guarantees;
- transactions related to the planning and the construction of
the tracks for high speed/high capacity trains from Milan to
Verona with CEPAV (Consorzio Eni per l’Alta Velocità) Due;
- transactions with InAgip doo related to the redetermination of
the interest in an offshore field located in the Adriatic Sea;
- planning, construction and technical assistance to support by
KWANDA - Suporte Logistico Lda and Petromar Lda;
- guarantees issued on behalf of Petromar Lda and Saipon Snc in
relation to contractual commitments related to the execution of
project planning and realization;
- mainly dividends receivables to be cashed in from PetroSucre
SA;
- supply of petrochemical products from Supermetanol CA on the
basis of prices referred to the quotations on international
markets;
- performance guarantees given on behalf of Unión Fenosa Gas SA
in relation to contractual commitments related to the results of
operations and sales of LNG;
- guarantees issued in relation to the construction of an oil
pipeline on behalf of Eni BTC Ltd;
- services for the environmental restoration to Industria
Siciliana Acido Fosforico - ISAF - SpA (in liquidation).
The most significant transactions with entities controlled by the
Italian Government concerned:
- sale of fuel oil, sale and purchase of electricity, acquisition
of electricity transmission services and fair value of derivative
financial instruments with Enel Group;
- a long-term contract for the maintenance at the Group’s
combined-cycle power plants with Finmeccanica Group;
- acquisition of natural gas transportation, distribution and
storage services from Snam Group on the basis of tariffs set by
the Authority for Electricity and Gas;
- supply of natural gas to Snam Group on the basis of prices
referred to the quotations of the main energy commodities, as
they would be conducted on an arm’s length basis;
- sale and purchase of electricity and green certificates with
GSE - Gestore Servizi Energetici;
- sale and purchase of electricity, the acquisition of domestic
electricity transmission service and the fair value of derivative
financial instruments included in the prices of electricity
related to sale/purchase transactions with Terna Group.
Transactions with pension funds and foundation concerned:
- provisions to pension funds for euro 41 million;
- contributions to Eni Foundation for euro 10 million and to Eni
Enrico Mattei Foundation for euro 4 million.
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Financing transactions with related parties
| (euro million) | December 31, 2011 |
2011 |
||
| Name | Receivables |
|
Payables |
|
Guarantees |
|
Charges |
|
Gains |
|
Income from equity instruments |
| Joint ventures and associates | ||||||||||||
| Artic Russia BV | 3 | 204 | ||||||||||
| Bayernoil Raffineriegesellschaft mbH | 107 | |||||||||||
| Blue Stream Pipeline Co BV | 291 | 669 | 6 | |||||||||
| CEPAV (Consorzio Eni per l’Alta Velocità) Due | 84 | |||||||||||
| GreenStream BV | 503 | 1 | 26 | |||||||||
| Raffineria di Milazzo ScpA | 60 | 88 | 1 | |||||||||
| Société Centrale Electrique du Congo SA | 93 | 6 | ||||||||||
| Transmediterranean Pipeline Co Ltd | 115 | 4 | ||||||||||
| Unión Fenosa Gas SA | 85 | |||||||||||
| Other (*) | 104 | 64 | 1 | 9 | ||||||||
| 982 | 444 | 1,051 | 1 | 46 | ||||||||
| Unconsolidated subsidiaries | ||||||||||||
| Other (*) | 57 | 59 | 1 | 3 | ||||||||
| 57 | 59 | 1 | 3 | |||||||||
| Entities controlled by the Government | ||||||||||||
| Cassa Depositi e Prestiti Group | 338 | |||||||||||
| 338 | ||||||||||||
| 1,039 | 503 | 1,052 | 1 | 49 | 338 |
(*) Each individual amount included herein was lower than euro 50 million.
| (euro million) | December 31, 2012 |
2012 |
||
| Name | Receivables |
|
Payables |
|
Guarantees |
|
Charges |
|
Gains |
|
Income from equity instruments |
| Continuing operations | ||||||||||||
| Joint ventures and associates | ||||||||||||
| Bayernoil Raffineriegesellschaft mbH | 94 | 1 | ||||||||||
| Blue Stream Pipeline Co BV | 291 | 657 | 2 | 3 | ||||||||
| CARDÓN IV SA | 80 | 3 | ||||||||||
| CEPAV (Consorzio Eni per l’Alta Velocità) Due | 84 | |||||||||||
| GreenStream BV | 453 | 29 | ||||||||||
| Raffineria di Milazzo ScpA | 40 | 75 | 2 | |||||||||
| Société Centrale Electrique du Congo SA | 92 | 5 | ||||||||||
| Transmediterranean Pipeline Co Ltd | 82 | 6 | ||||||||||
| Other (*) | 94 | 63 | 7 | 1 | 2 | |||||||
| 935 | 354 | 828 | 3 | 46 | ||||||||
| Unconsolidated subsidiaries | ||||||||||||
| Other (*) | 58 | 49 | 1 | 1 | ||||||||
| 58 | 49 | 1 | 1 | |||||||||
| Entities controlled by the Government | ||||||||||||
| Cassa Depositi e Prestiti Group | 883 | 6 | ||||||||||
| Snam Group | 141 | 1 | ||||||||||
| 1,024 | 7 | |||||||||||
| 2,017 | 403 | 829 | 4 | 53 | ||||||||
| Discontinued operations | ||||||||||||
| Entities controlled by the Government | ||||||||||||
| Cassa Depositi e Prestiti Group | 2,019 | |||||||||||
| 2,019 | ||||||||||||
| 2,017 | 403 | 829 | 4 | 53 | 2,019 |
(*) Each individual amount included herein was lower than euro 50 million.
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| (euro million) | December 31, 2013 |
2013 |
||
| Name | Receivables |
|
Payables |
|
Guarantees |
|
Charges |
|
Gains |
|
Income from equity instruments |
| Joint ventures and associates | ||||||||||||
| Bayernoil Raffineriegesellschaft mbH | 84 | |||||||||||
| Blue Stream Pipeline Co BV | 281 | 2 | ||||||||||
| CARDÓN IV SA | 236 | 10 | ||||||||||
| CEPAV (Consorzio Eni per l’Alta Velocità) Due | 150 | |||||||||||
| GreenStream BV | 405 | 1 | 25 | |||||||||
| Matrica SpA | 100 | 4 | ||||||||||
| Raffineria di Milazzo ScpA | 60 | 83 | 2 | |||||||||
| Shatskmorneftegaz Sarl | 51 | 13 | ||||||||||
| Société Centrale Electrique du Congo SA | 74 | 5 | ||||||||||
| Unión Fenosa Gas SA | 120 | |||||||||||
| Other (*) | 85 | 42 | 14 | 72 | 11 | |||||||
| 1,095 | 444 | 252 | 87 | 52 | ||||||||
| Unconsolidated subsidiaries | ||||||||||||
| Other (*) | 59 | 57 | 1 | 1 | ||||||||
| 59 | 57 | 1 | 1 | |||||||||
| Entities controlled by the Government | 1 | 3 | ||||||||||
| 1,154 | 502 | 253 | 87 | 56 |
(*) Each individual amount included herein was lower than euro 50 million.
Most significant transactions with joint
ventures, associates and unconsolidated subsidiaries concerned:
- a cash deposit at Eni’s financial companies on behalf of
Blue Stream Pipeline Co BV and Unión Fenosa Gas SA;
- bank debt guarantees issued on behalf of CEPAV (Consorzio Eni
per l’Alta Velocità) Due and Raffineria di Milazzo ScpA;
- financing loans granted to Bayernoil Raffineriegesellschaft mbH
for capital expenditures in refining plants, to CARDÓN IV SA for
the exploration and development activities of a gas field and to
Société Centrale Electrique du Congo SA for the construction of
an electric plant in Congo;
- financing loans granted to GreenStream BV for the construction
of natural gas transmission facilities and transport services;
- financing loans granted to Matrica SpA in relation to the
“Green Chemistry” project at the Porto Torres plant;
- financing loans granted to Shatskmorneftegaz Sarl in relation
to exploration activities in the Black Sea.
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Impact of transactions and positions
with related parties on the balance sheet, profit and loss
account and statement of cash flows
The impact of transactions and
positions with related parties on the balance sheet consisted of
the following:
December 31, 2011 |
December 31, 2012 |
December 31, 2013 |
||||
| (euro million) | Total |
Related parties |
Impact % |
Total |
Related parties |
Impact % |
Total |
Related parties |
Impact % |
| Trade and other receivables | 24,595 | 1,496 | 6.08 | 28,747 | 2,714 | 9.44 | 29,073 | 2,072 | 7.13 | |||||||||
| Other current assets | 2,326 | 2 | 0.09 | 1,624 | 8 | 0.49 | 1,325 | 15 | 1.13 | |||||||||
| Other non-current financial assets | 1,578 | 704 | 44.61 | 1,229 | 642 | 52.24 | 1,097 | 560 | 51.05 | |||||||||
| Other non-current assets | 4,225 | 3 | 0.07 | 4,400 | 43 | 0.98 | 3,683 | 42 | 1.14 | |||||||||
| Current financial liabilities | 4,459 | 503 | 11.28 | 2,223 | 403 | 18.13 | 2,742 | 502 | 18.31 | |||||||||
| Trade and other payables | 22,912 | 1,446 | 6.31 | 23,581 | 1,616 | 6.85 | 23,598 | 2,164 | 9.17 | |||||||||
| Other liabilities | 2,237 | 1,437 | 6 | 0.42 | 1,448 | 17 | 1.17 | |||||||||||
| Other non-current liabilities | 2,900 | 1,977 | 16 | 0.81 | 1,704 |
The impact of transactions with related parties on the profit and loss accounts consisted of the following:
2011 |
2012 |
2013 |
||||
| (euro million) | Total |
Related parties |
Impact % |
Total |
Related parties |
Impact % |
Total |
Related parties |
Impact % |
| Continuing operations | ||||||||||||||||||||
| Net sales from operations | 107,690 | 3,477 | 3.23 | 127,220 | 3,783 | 2.97 | 114,722 | 3,386 | 2.95 | |||||||||||
| Other income and revenues | 926 | 41 | 4.43 | 1,546 | 56 | 3.62 | 1,385 | 30 | 2.17 | |||||||||||
| Purchases, services and other | 78,795 | 5,880 | 7.46 | 95,363 | 6,604 | 6.93 | 90,213 | 8,506 | 9.43 | |||||||||||
| Payroll and related costs | 4,404 | 33 | 0.75 | 4,613 | 21 | 0.46 | 5,264 | 41 | 0.78 | |||||||||||
| Other operating income (expense) | 171 | 32 | 18.71 | (158 | ) | 10 | .. | (71 | ) | 68 | .. | |||||||||
| Financial income | 6,376 | 49 | 0.77 | 7,218 | 53 | 0.73 | 5,746 | 56 | 0.97 | |||||||||||
| Financial expense | 7,410 | 1 | 0.01 | 8,314 | 4 | 0.05 | 6,649 | 87 | 1.31 | |||||||||||
| Other gain (loss) from investments | 1,623 | 338 | 20.83 | 2,603 | 5,863 | |||||||||||||||
| Discontinued operations | ||||||||||||||||||||
| Net sales from operations | 1,906 | 407 | 21.35 | 1,886 | 303 | 16.07 | ||||||||||||||
| Operating expenses | 1,274 | 7 | 0.55 | 995 | 88 | 8.84 | ||||||||||||||
| Income (expense) from investments | 48 | 3,508 | 2,019 | 57.55 |
Transactions with related parties were
part of the ordinary course of Eni’s business and were
mainly conducted on an arm’s length basis.
Main cash flows with related parties are provided below:
| (euro million) | 2011 |
2012 |
2013 |
| Revenues and other income | 3,518 | 3,839 | 3,416 | ||||||
| Costs and other expenses | (4,497 | ) | (5,375 | ) | (7,337 | ) | |||
| Other operating income (loss) | 32 | 10 | 68 | ||||||
| Net change in trade and other receivables and liabilities | (140 | ) | (280 | ) | 446 | ||||
| Net interests | 48 | 49 | 53 | ||||||
| Net cash provided from operating activities - Continuing operations | (1,039 | ) | (1,757 | ) | (3,354 | ) | |||
| Net cash provided from operating activities - Discontinued operations | 400 | 215 | |||||||
| Net cash provided from operating activities | (639 | ) | (1,542 | ) | (3,354 | ) | |||
| Capital expenditures in tangible and intangible assets | (1,416 | ) | (1,250 | ) | (1,210 | ) | |||
| Disposal of investments | 533 | 3,517 | |||||||
| Net change in accounts payable and receivable in relation to investments | (21 | ) | 261 | (13 | ) | ||||
| Change in financial receivables | 104 | (993 | ) | 825 | |||||
| Net cash used in investing activities | (800 | ) | 1,535 | (398 | ) | ||||
| Change in financial liabilities | 348 | (94 | ) | 118 | |||||
| Net cash used in financing activities | 348 | (94 | ) | 118 | |||||
| Total financial flows to related parties | (1,091 | ) | (101 | ) | (3,634 | ) |
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The impact of cash flows with related parties consisted of the following:
2011 |
2012 |
2013 |
||||
| (euro million) | Total |
Related parties |
Impact % |
Total |
Related parties |
Impact % |
Total |
Related parties |
Impact % |
| Cash provided from operating activities | 14,382 | (639 | ) | .. | 12,371 | (1,542 | ) | .. | 10,969 | (3,354 | ) | .. | ||||||||||||
| Cash used in investing activities | (11,218 | ) | (800 | ) | 7.13 | (8,291 | ) | 1,535 | .. | (10,943 | ) | (398 | ) | 3.64 | ||||||||||
| Cash used in financing activities | (3,223 | ) | 348 | .. | 2,201 | (94 | ) | .. | (2,453 | ) | 118 | .. |
44 Significant non-recurring events and operations
In 2012 and in 2013, Eni did not report
any non-recurring events and operations.
In 2011, a non-recurring provision amounting to euro 69 million
was made to reflect the expected liabilities on an antitrust
proceeding in the European sector of rubbers taking into account
an unfavorable sentence issued by the Court of Justice of the
European Community on the matter.
45 Positions or transactions deriving from atypical and/or unusual operations
In 2011, 2012 and 2013 no transactions deriving from atypical and/or unusual operations were reported.
46 Subsequent events
On March 31, 2014, Eni and Statoil have signed final agreement on the revision of the long-term gas supply contract currently in force between the two parties. The revision is reflecting changed fundamentals in the gas sector and will determine a positive effect in 2014 profit. The final agreement, which follows the Heads of Agreement signed on February 27, 2014, implies the end of the arbitration proceedings previously initiated by Eni.
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Supplemental oil and gas information (unaudited)
The following information pursuant to “International Financial Reporting Standards” (IFRS) is presented in accordance with FASB Extractive Activities - Oil & Gas (Topic 932). Amounts related to minority interests are not significant.
Capitalized costs
Capitalized costs represent the
total expenditures for proved and unproved mineral interests and
related support equipment and facilities utilized in oil and gas
exploration and production activities, together with related
accumulated depreciation, depletion and amortization. Capitalized
costs by geographical area consist of the following:
| (euro million) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
Americas |
Australia and Oceania |
Total |
| 2012 | |||||||||||||||||||||||||||
| Consolidated subsidiaries | |||||||||||||||||||||||||||
| Proved mineral interests | 12,579 | 12,428 | 16,240 | 20,875 | 2,451 | 6,477 | 10,018 | 1,894 | 82,962 | ||||||||||||||||||
| Unproved mineral interests | 31 | 324 | 411 | 3,047 | 39 | 1,467 | 1,249 | 200 | 6,768 | ||||||||||||||||||
| Support equipment and facilities | 267 | 39 | 1,421 | 961 | 75 | 78 | 59 | 12 | 2,912 | ||||||||||||||||||
| Incomplete wells and other | 732 | 3,347 | 3,181 | 974 | 5,746 | 358 | 876 | 1 | 15,215 | ||||||||||||||||||
| Gross Capitalized Costs | 13,609 | 16,138 | 21,253 | 25,857 | 8,311 | 8,380 | 12,202 | 2,107 | 107,857 | ||||||||||||||||||
| Accumulated depreciation, depletion and amortization | (9,364 | ) | (9,346 | ) | (10,671 | ) | (14,225 | ) | (928 | ) | (6,002 | ) | (7,879 | ) | (832 | ) | (59,247 | ) | |||||||||
| Net Capitalized Costs consolidated subsidiaries (a) (b) | 4,245 | 6,792 | 10,582 | 11,632 | 7,383 | 2,378 | 4,323 | 1,275 | 48,610 | ||||||||||||||||||
| Equity-accounted entities | |||||||||||||||||||||||||||
| Proved mineral interests | 1 | 83 | 52 | 964 | 322 | 1,422 | |||||||||||||||||||||
| Unproved mineral interests | 54 | 279 | 333 | ||||||||||||||||||||||||
| Support equipment and facilities | 7 | 6 | 3 | 16 | |||||||||||||||||||||||
| Incomplete wells and other | 22 | 1 | 1,052 | 114 | 200 | 1,389 | |||||||||||||||||||||
| Gross Capitalized Costs | 77 | 91 | 1,104 | 1,363 | 525 | 3,160 | |||||||||||||||||||||
| Accumulated depreciation, depletion and amortization | (55 | ) | (72 | ) | (421 | ) | (111 | ) | (659 | ) | |||||||||||||||||
| Net Capitalized Costs equity-accounted entities (a) (b) | 22 | 19 | 1,104 | 942 | 414 | 2,501 | |||||||||||||||||||||
| 2013 | |||||||||||||||||||||||||||
| Consolidated subsidiaries | |||||||||||||||||||||||||||
| Proved mineral interests | 13,516 | 12,497 | 18,237 | 21,854 | 2,351 | 6,604 | 10,652 | 1,662 | 87,373 | ||||||||||||||||||
| Unproved mineral interests | 31 | 385 | 428 | 2,835 | 37 | 1,441 | 1,419 | 190 | 6,766 | ||||||||||||||||||
| Support equipment and facilities | 269 | 37 | 1,370 | 992 | 78 | 90 | 57 | 12 | 2,905 | ||||||||||||||||||
| Incomplete wells and other | 799 | 2,803 | 1,105 | 1,851 | 6,069 | 634 | 669 | 24 | 13,954 | ||||||||||||||||||
| Gross Capitalized Costs | 14,615 | 15,722 | 21,140 | 27,532 | 8,535 | 8,769 | 12,797 | 1,888 | 110,998 | ||||||||||||||||||
| Accumulated depreciation, depletion and amortization | (10,269 | ) | (8,581 | ) | (11,370 | ) | (15,562 | ) | (1,000 | ) | (6,269 | ) | (8,406 | ) | (723 | ) | (62,180 | ) | |||||||||
| Net Capitalized Costs consolidated subsidiaries (a) (b) | 4,346 | 7,141 | 9,770 | 11,970 | 7,535 | 2,500 | 4,391 | 1,165 | 48,818 | ||||||||||||||||||
| Equity-accounted entities | |||||||||||||||||||||||||||
| Proved mineral interests | 2 | 77 | 34 | 438 | 429 | 980 | |||||||||||||||||||||
| Unproved mineral interests | 52 | 74 | 126 | ||||||||||||||||||||||||
| Support equipment and facilities | 7 | 1 | 3 | 11 | |||||||||||||||||||||||
| Incomplete wells and other | 20 | 4 | 1,059 | 378 | 1,461 | ||||||||||||||||||||||
| Gross Capitalized Costs | 74 | 88 | 1,093 | 513 | 810 | 2,578 | |||||||||||||||||||||
| Accumulated depreciation, depletion and amortization | (56 | ) | (67 | ) | (405 | ) | (145 | ) | (673 | ) | |||||||||||||||||
| Net Capitalized Costs equity-accounted entities (a) (b) | 18 | 21 | 1,093 | 108 | 665 | 1,905 |
(a) The amounts include net
capitalized financial charges totaling euro 672 million in 2012
and euro 715 million in 2013 for the consolidated subsidiaries
and euro 24 million in 2012 and euro 12 million in 2013 for
equity-accounted entities.
(b) The amounts do not include costs associated with exploration
activities which are capitalized in order to reflect their
investment nature and amortized in full when incurred. The
“Successful Effort Method” application would have led
to an increase in net capitalized costs of euro 4,071 million in
2012 and euro 3,703 million in 2013 for the consolidated
subsidiaries and euro 74 million in 2012 and euro 76 million in
2013 for equity-accounted entities.
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Costs incurred
Costs incurred represent amounts
both capitalized and expensed in connection with oil and gas
producing activities. Costs incurred by geographical area consist
of the following:
| (euro million) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
Americas |
Australia and Oceania |
Total |
| 2011 | ||||||||||||||||||
| Consolidated subsidiaries | ||||||||||||||||||
| Proved property acquisitions | ||||||||||||||||||
| Unproved property acquisitions | 57 | 697 | 754 | |||||||||||||||
| Exploration | 38 | 100 | 128 | 482 | 6 | 156 | 60 | 240 | 1,210 | |||||||||
| Development (a) | 815 | 1,921 | 1,487 | 1,698 | 935 | 385 | 971 | 70 | 8,282 | |||||||||
| Total costs incurred consolidated subsidiaries | 853 | 2,021 | 1,672 | 2,877 | 941 | 541 | 1,031 | 310 | 10,246 | |||||||||
| Equity-accounted entities | ||||||||||||||||||
| Proved property acquisitions | ||||||||||||||||||
| Unproved property acquisitions | ||||||||||||||||||
| Exploration | 5 | 5 | 8 | 9 | 27 | |||||||||||||
| Development (b) | 2 | 3 | 659 | 68 | 154 | 886 | ||||||||||||
| Total costs incurred equity-accounted entities | 7 | 3 | 664 | 76 | 163 | 913 | ||||||||||||
| 2012 | ||||||||||||||||||
| Consolidated subsidiaries | ||||||||||||||||||
| Proved property acquisitions | 14 | 27 | 2 | 43 | ||||||||||||||
| Unproved property acquisitions | ||||||||||||||||||
| Exploration | 32 | 151 | 153 | 1,142 | 3 | 193 | 80 | 96 | 1,850 | |||||||||
| Development (a) | 1,045 | 2,485 | 1,441 | 2,246 | 762 | 702 | 1,071 | 16 | 9,768 | |||||||||
| Total costs incurred consolidated subsidiaries | 1,077 | 2,636 | 1,608 | 3,415 | 765 | 895 | 1,153 | 112 | 11,661 | |||||||||
| Equity-accounted entities | ||||||||||||||||||
| Proved property acquisitions | ||||||||||||||||||
| Unproved property acquisitions | ||||||||||||||||||
| Exploration | 13 | 2 | 11 | 4 | 30 | |||||||||||||
| Development (b) | 19 | 7 | 117 | 188 | 154 | 485 | ||||||||||||
| Total costs incurred equity-accounted entities | 32 | 9 | 128 | 192 | 154 | 515 | ||||||||||||
| 2013 | ||||||||||||||||||
| Consolidated subsidiaries | ||||||||||||||||||
| Proved property acquisitions | 64 | 64 | ||||||||||||||||
| Unproved property acquisitions | 45 | 45 | ||||||||||||||||
| Exploration | 32 | 357 | 95 | 757 | 1 | 233 | 110 | 84 | 1,669 | |||||||||
| Development (a) | 697 | 1,855 | 765 | 2,617 | 600 | 719 | 1,141 | 57 | 8,451 | |||||||||
| Total costs incurred consolidated subsidiaries | 729 | 2,212 | 969 | 3,374 | 601 | 952 | 1,251 | 141 | 10,229 | |||||||||
| Equity-accounted entities | ||||||||||||||||||
| Proved property acquisitions | ||||||||||||||||||
| Unproved property acquisitions | ||||||||||||||||||
| Exploration | 5 | 3 | 81 | 1 | 90 | |||||||||||||
| Development (b) | 1 | 5 | 39 | 353 | 318 | 716 | ||||||||||||
| Total costs incurred equity-accounted entities | 6 | 8 | 39 | 434 | 319 | 806 |
(a) Includes the abandonment
costs of the assets for euro 918 million in 2011, for euro 1,381
million in 2012 and negative for euro 191 million in 2013.
(b) Includes the abandonment costs of the assets for euro 15
million in 2011, for euro 63 million in 2012 and for euro 10
million in 2013.
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Results of operations from
oil and gas producing activities
Results of operations from oil
and gas producing activities represent only those revenues and
expenses directly associated with such activities, including
operating overheads. These amounts do not include any allocation
of interest expense or general corporate overhead and, therefore,
are not necessarily indicative of the contributions to
consolidated net earnings of Eni. Related income taxes are
computed by applying the local income tax rates to the pre-tax
income from producing activities. Eni is a party to certain
Production Sharing Agreements (Pass), whereby a portion of
Eni’s share of oil and gas production is withheld and sold
by its joint venture partners which are state owned entities,
with proceeds being remitted to the state in satisfaction of
Eni’s PSA related tax liabilities. Revenue and income taxes
include such taxes owed by Eni but paid by state-owned entities
out of Eni’s share of oil and gas production. Results of
operations from oil and gas producing activities by geographical
area consist of the following:
| (euro million) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
Americas |
Australia and Oceania |
Total |
| 2011 | |||||||||||||||||||||||||||
| Consolidated subsidiaries | |||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||
| - sales to consolidated entities | 3,583 | 3,695 | 1,956 | 5,945 | 411 | 178 | 1,634 | 93 | 17,495 | ||||||||||||||||||
| - sales to third parties | 514 | 5,090 | 1,937 | 1,268 | 1,233 | 132 | 344 | 10,518 | |||||||||||||||||||
| Total revenues | 3,583 | 4,209 | 7,046 | 7,882 | 1,679 | 1,411 | 1,766 | 437 | 28,013 | ||||||||||||||||||
| Operations costs | (284 | ) | (566 | ) | (483 | ) | (830 | ) | (171 | ) | (183 | ) | (364 | ) | (88 | ) | (2,969 | ) | |||||||||
| Production taxes | (245 | ) | (165 | ) | (853 | ) | (37 | ) | (1,300 | ) | |||||||||||||||||
| Exploration expenses | (38 | ) | (113 | ) | (128 | ) | (509 | ) | (6 | ) | (177 | ) | (136 | ) | (58 | ) | (1,165 | ) | |||||||||
| D.D. & A. and provision for abandonment (a) | (606 | ) | (704 | ) | (843 | ) | (1,435 | ) | (112 | ) | (486 | ) | (901 | ) | (103 | ) | (5,190 | ) | |||||||||
| Other income (expense) | (562 | ) | 142 | (508 | ) | (314 | ) | (160 | ) | (151 | ) | 125 | 8 | (1,420 | ) | ||||||||||||
| Pretax income from producing activities | 1,848 | 2,968 | 4,919 | 3,941 | 1,230 | 377 | 490 | 196 | 15,969 | ||||||||||||||||||
| Income taxes | (761 | ) | (2,043 | ) | (3,013 | ) | (2,680 | ) | (413 | ) | (157 | ) | (184 | ) | (120 | ) | (9,371 | ) | |||||||||
| Results of operations from E&P activities of consolidated subsidiaries (b) | 1,087 | 925 | 1,906 | 1,261 | 817 | 220 | 306 | 76 | 6,598 | ||||||||||||||||||
| Equity-accounted entities | |||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||
| - sales to consolidated entities | |||||||||||||||||||||||||||
| - sales to third parties | 2 | 19 | 93 | 89 | 262 | 465 | |||||||||||||||||||||
| Total revenues | 2 | 19 | 93 | 89 | 262 | 465 | |||||||||||||||||||||
| Operations costs | (11 | ) | (10 | ) | (9 | ) | (17 | ) | (47 | ) | |||||||||||||||||
| Production taxes | (1 | ) | (4 | ) | (113 | ) | (118 | ) | |||||||||||||||||||
| Exploration expenses | (6 | ) | (5 | ) | (8 | ) | (9 | ) | (28 | ) | |||||||||||||||||
| D.D. & A. and provision for abandonment | (1 | ) | (24 | ) | (23 | ) | (21 | ) | (69 | ) | |||||||||||||||||
| Other income (expense) | (4 | ) | 6 | 11 | (20 | ) | (51 | ) | (58 | ) | |||||||||||||||||
| Pretax income from producing activities | (9 | ) | 9 | 65 | 29 | 51 | 145 | ||||||||||||||||||||
| Income taxes | (4 | ) | (35 | ) | (32 | ) | (4 | ) | (75 | ) | |||||||||||||||||
| Results of operations from E&P activities of equity-accounted entities (b) | (9 | ) | 5 | 30 | (3 | ) | 47 | 70 |
(a) Includes asset impairments
amounting to euro 189 million in 2011.
(b) The “Successful Effort Method” application would
have led to an increase of euro 118 million in 2011 for the
consolidated subsidiaries and an increase of euro 20 million in
2011 for equity-accounted entities.
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| (euro million) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
Americas |
Australia and Oceania |
Total |
| 2012 | |||||||||||||||||||||||||||
| Consolidated subsidiaries | |||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||
| - sales to consolidated entities | 3,712 | 3,177 | 2,338 | 6,040 | 459 | 425 | 1,614 | 425 | 18,190 | ||||||||||||||||||
| - sales to third parties | 50 | 715 | 9,129 | 2,243 | 1,368 | 1,387 | 106 | 333 | 15,331 | ||||||||||||||||||
| Total revenues | 3,762 | 3,892 | 11,467 | 8,283 | 1,827 | 1,812 | 1,720 | 758 | 33,521 | ||||||||||||||||||
| Operations costs | (302 | ) | (655 | ) | (606 | ) | (913 | ) | (188 | ) | (209 | ) | (361 | ) | (134 | ) | (3,368 | ) | |||||||||
| Production taxes | (307 | ) | (390 | ) | (818 | ) | (43 | ) | (1,558 | ) | |||||||||||||||||
| Exploration expenses | (32 | ) | (154 | ) | (153 | ) | (993 | ) | (3 | ) | (230 | ) | (147 | ) | (123 | ) | (1,835 | ) | |||||||||
| D.D. & A. and provision for abandonment (a) | (779 | ) | (683 | ) | (1,137 | ) | (1,750 | ) | (120 | ) | (720 | ) | (1,256 | ) | (167 | ) | (6,612 | ) | |||||||||
| Other income (expenses) | (198 | ) | (122 | ) | (934 | ) | (435 | ) | 206 | (149 | ) | 74 | (42 | ) | (1,600 | ) | |||||||||||
| Pretax income from producing activities | 2,144 | 2,278 | 8,247 | 3,374 | 1,722 | 461 | 30 | 292 | 18,548 | ||||||||||||||||||
| Income taxes | (919 | ) | (1,524 | ) | (5,194 | ) | (2,508 | ) | (736 | ) | (176 | ) | (14 | ) | (164 | ) | (11,235 | ) | |||||||||
| Results of operations from E&P activities of consolidated subsidiaries (b) | 1,225 | 754 | 3,053 | 866 | 986 | 285 | 16 | 128 | 7,313 | ||||||||||||||||||
| Equity-accounted entities | |||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||
| - sales to consolidated entities | |||||||||||||||||||||||||||
| - sales to third parties | 2 | 20 | 44 | 144 | 300 | 510 | |||||||||||||||||||||
| Total revenues | 2 | 20 | 44 | 144 | 300 | 510 | |||||||||||||||||||||
| Operations costs | (10 | ) | (5 | ) | (14 | ) | (20 | ) | (49 | ) | |||||||||||||||||
| Production taxes | (1 | ) | (3 | ) | (4 | ) | (128 | ) | (136 | ) | |||||||||||||||||
| Exploration expenses | (5 | ) | (2 | ) | (11 | ) | (4 | ) | (22 | ) | |||||||||||||||||
| D.D. & A. and provision for abandonment | (50 | ) | (2 | ) | (13 | ) | (41 | ) | (35 | ) | (141 | ) | |||||||||||||||
| Other income (expenses) | (7 | ) | 2 | (48 | ) | (6 | ) | (55 | ) | (114 | ) | ||||||||||||||||
| Pretax income from producing activities | (61 | ) | 5 | (33 | ) | 75 | 62 | 48 | |||||||||||||||||||
| Income taxes | (3 | ) | 4 | (36 | ) | (38 | ) | (73 | ) | ||||||||||||||||||
| Results of operations from E&P activities of equity-accounted entities (b) | (61 | ) | 2 | (29 | ) | 39 | 24 | (25 | ) |
(a) Includes asset impairments
amounting to euro 547 million in 2012.
(b) The “Successful Effort Method” application would
have led to an increase of euro 189 million in 2012 for the
consolidated subsidiaries and a decrease of euro 2 million in
2012 for equity-accounted entities.
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| (euro million) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
Americas |
Australia and Oceania |
Total |
| 2013 | |||||||||||||||||||||||||||
| Consolidated subsidiaries | |||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||
| - sales to consolidated entities | 3,784 | 2,468 | 2,341 | 5,264 | 396 | 870 | 1,537 | 146 | 16,806 | ||||||||||||||||||
| - sales to third parties | 704 | 7,723 | 1,855 | 1,175 | 864 | 93 | 338 | 12,752 | |||||||||||||||||||
| Total revenues | 3,784 | 3,172 | 10,064 | 7,119 | 1,571 | 1,734 | 1,630 | 484 | 29,558 | ||||||||||||||||||
| Operations costs | (391 | ) | (717 | ) | (649 | ) | (932 | ) | (192 | ) | (224 | ) | (342 | ) | (119 | ) | (3,566 | ) | |||||||||
| Production taxes | (326 | ) | (317 | ) | (710 | ) | (38 | ) | (25 | ) | (1,416 | ) | |||||||||||||||
| Exploration expenses | (32 | ) | (288 | ) | (95 | ) | (869 | ) | (1 | ) | (205 | ) | (136 | ) | (110 | ) | (1,736 | ) | |||||||||
| D.D. & A. and provision for abandonment (a) | (909 | ) | (573 | ) | (1,192 | ) | (1,882 | ) | (111 | ) | (524 | ) | (848 | ) | 43 | (5,996 | ) | ||||||||||
| Other income (expense) | (271 | ) | 161 | (1,009 | ) | (519 | ) | (105 | ) | (140 | ) | 20 | (11 | ) | (1,874 | ) | |||||||||||
| Pretax income from producing activities | 1,855 | 1,755 | 6,802 | 2,207 | 1,162 | 603 | 324 | 262 | 14,970 | ||||||||||||||||||
| Income taxes | (873 | ) | (1,006 | ) | (4,281 | ) | (1,702 | ) | (396 | ) | (178 | ) | (117 | ) | (149 | ) | (8,702 | ) | |||||||||
| Results of operations from E&P activities of consolidated subsidiaries (b) | 982 | 749 | 2,521 | 505 | 766 | 425 | 207 | 113 | 6,268 | ||||||||||||||||||
| Equity-accounted entities | |||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||
| - sales to consolidated entities | |||||||||||||||||||||||||||
| - sales to third parties | 20 | 26 | 199 | 243 | 488 | ||||||||||||||||||||||
| Total revenues | 20 | 26 | 199 | 243 | 488 | ||||||||||||||||||||||
| Operations costs | (11 | ) | (44 | ) | (18 | ) | (23 | ) | (96 | ) | |||||||||||||||||
| Production taxes | (4 | ) | (14 | ) | (113 | ) | (131 | ) | |||||||||||||||||||
| Exploration expenses | (8 | ) | (3 | ) | (25 | ) | (1 | ) | (37 | ) | |||||||||||||||||
| D.D. & A. and provision for abandonment | (1 | ) | (1 | ) | (65 | ) | (40 | ) | (107 | ) | |||||||||||||||||
| Other income (expense) | (4 | ) | 5 | (12 | ) | (13 | ) | (38 | ) | (62 | ) | ||||||||||||||||
| Pretax income from producing activities | (13 | ) | 6 | (30 | ) | 64 | 28 | 55 | |||||||||||||||||||
| Income taxes | (4 | ) | (10 | ) | (35 | ) | 30 | (19 | ) | ||||||||||||||||||
| Results of operations from E&P activities of equity-accounted entities (b) | (13 | ) | 2 | (40 | ) | 29 | 58 | 36 |
(a) Includes asset impairments
amounting to euro 15 million in 2013.
(b) The “Successful Effort Method” application would
have led to a decrease of euro 20 million in 2013 for the
consolidated subsidiaries and an increase of euro 6 million in
2013 for equity-accounted entities.
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Oil and natural gas reserves
Eni’s criteria concerning
evaluation and classification of proved developed and undeveloped
reserves follow Regulation S-X 4-10 of the US Securities
and Exchange Commission and have been disclosed in accordance
with FASB Extractive Activities - Oil & Gas (Topic 932).
Proved oil and gas reserves are those quantities of oil and gas,
which, by analysis of geoscience and engineering data, can be
estimated with reasonable certainty to be economically
producible, from a given date forward, from known reservoirs, and
under existing economic conditions, operating methods, and
government regulations, prior to the time at which contracts
providing the right to operate expire, unless evidence indicates
that renewal is reasonably certain, regardless of whether
deterministic or probabilistic methods are used for the
estimation. The project to extract the hydrocarbons must have
commenced or the operator must be reasonably certain that it will
commence the project within a reasonable time. Existing economic
conditions include prices and costs at which economic
producibility from a reservoir is to be determined. The price
shall be the average price during the 12-month period prior to
the ending date of the period covered by the report, determined
as an unweighted arithmetic average of the first-day-of-the-month
price for each month within such period, unless prices are
defined by contractual arrangements, excluding escalations based
upon future conditions. In 2013, the average price for the marker
Brent crude oil was $108 per barrel. Net proved reserves exclude
interests and royalties owned by others. Proved reserves are
classified as either developed or undeveloped. Developed oil and
gas reserves are reserves that can be expected to be recovered
through existing wells with existing equipment and operating
methods or in which the cost of the required equipment is
relatively minor compared to the cost of a new well. Undeveloped
oil and gas reserves are reserves of any category that are
expected to be recovered from new wells on undrilled acreage, or
from existing wells where a relatively major expenditure is
required for recompletion. Since 1991, Eni has requested
qualified independent oil engineering companies to carry out an
independent evaluation23 of part of its proved
reserves on a rotational basis. The description of qualifications
of the person primarily responsible of the reserves audit is
included in the third party audit report24. In the
preparation of their reports, independent evaluators rely,
without independent verification, upon data furnished by Eni with
respect to property interest, production, current costs of
operation and development, sale agreements, prices and other
factual information and data that were accepted as represented by
the independent evaluators. These data, equally used by Eni in
its internal process, include logs, directional surveys, core and
PVT (Pressure Volume Temperature) analysis, maps, oil/gas/water
production/injection data of wells, reservoir studies and
technical analysis relevant to field performance, long-term
development plans, future capital and operating costs. In order
to calculate the economic value of Eni equity reserves, actual
prices applicable to hydrocarbon sales, price adjustments
required by applicable contractual arrangements, and other
pertinent information are provided. In 2013, Ryder Scott Company
and DeGolyer and MacNaughton24 provided an independent
evaluation of about 30% of Eni’s total proved reserves as of
December 31, 201325, confirming, as in previous years,
the reasonableness of Eni’s internal evaluations. In the
three year period from 2011 to 2013, 92% of Eni’s total
proved reserves were subject to independent evaluation. As of
December 31, 2013, the principal properties not subjected to
independent evaluation in the last three years are M’Boundi
(Congo) and Elgin Franklin (UK). Eni operates under Production
Sharing Agreements, PSAs, in several of the foreign jurisdictions
where it has oil and gas exploration and production activities.
Reserves of oil and natural gas to which Eni is entitled under
PSA arrangements are shown in accordance with Eni’s economic
interest in the volumes of oil and natural gas estimated to be
recoverable in future years. Such reserves include estimated
quantities allocated to Eni for recovery of costs, income taxes
owed by Eni but settled by its joint venture partners (which are
state-owned entities) out of Eni’s share of production and
Eni’s net equity share after cost recovery. Proved oil and
gas reserves associated with PSAs represented 49%, 47% and 51% of
total proved reserves as of December 31, 2011, 2012 and 2013,
respectively, on an oil-equivalent basis. Similar effects as PSAs
apply to service and “buyback” contracts; proved
reserves associated with such contracts represented 1%, 2% and 3%
of total proved reserves on an oil-equivalent basis as of
December 31, 2011, 2012 and 2013, respectively. Oil and gas
reserves quantities include: (i) oil and natural gas quantities
in excess of cost recovery which the company has an obligation to
purchase under certain PSAs with governments or authorities,
whereby the company serves as producer of reserves. Reserves
volumes associated with oil and gas deriving from such obligation
represent 0.8%, 1.1% and 1% of total proved reserves as of
December 31, 2011, 2012 and 2013, respectively, on an oil
equivalent basis; (ii) volumes of natural gas used for own
consumption; (iii) the quantities of hydrocarbons related to the
Angola LNG plant. Numerous uncertainties are inherent in
estimating quantities of proved reserves, in projecting future
productions and development expenditures. The accuracy of any
reserve estimate is a function of the quality of available data
and engineering and geological interpretation and evaluation. The
results of drilling, testing and production after the date of the
estimate may require substantial upward or downward revisions. In
addition, changes in oil and natural gas prices have an effect on
the quantities of Eni’s proved reserves since estimates of
reserves are based on prices and costs relevant to the date when
such estimates are made. Consequently, the evaluation of reserves
could also significantly differ from actual oil and natural gas
volumes that will be produced.
The following table presents yearly changes in estimated proved
reserves, developed and undeveloped, of crude oil (including
condensate and natural gas liquids) and natural gas as of
December 31, 2011, 2012 and 2013.
(23) From 1991 to 2002 DeGolyer and McNaughton,
from 2003 also Ryder Scott.
(24) The reports of independent engineers are available on Eni
website eni.com, section Publications/Annual Report 2013.
(25) Including reserves of equity-accounted entities.
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Crude oil (including condensate and natural gas liquids)
| (million barrels) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
Americas |
Australia and Oceania |
Total |
| 2011 | |||||||||||||||||||||||||||
| Reserves of consolidated subsidiaries at December 31, 2010 |
248 | 349 | 978 | 750 | 788 | 139 | 134 | 29 | 3,415 | ||||||||||||||||||
| of which: developed | 183 | 207 | 656 | 533 | 251 | 39 | 62 | 20 | 1,951 | ||||||||||||||||||
| of which: undeveloped | 65 | 142 | 322 | 217 | 537 | 100 | 72 | 9 | 1,464 | ||||||||||||||||||
| Purchase of minerals in place | |||||||||||||||||||||||||||
| Revisions of previous estimates | 34 | 58 | 10 | 14 | (112 | ) | (20 | ) | 1 | (15 | ) | ||||||||||||||||
| Improved recovery | 2 | 2 | 2 | 6 | |||||||||||||||||||||||
| Extensions and discoveries | 9 | 2 | 11 | 17 | 39 | ||||||||||||||||||||||
| Production | (23 | ) | (44 | ) | (75 | ) | (100 | ) | (23 | ) | (13 | ) | (20 | ) | (4 | ) | (302 | ) | |||||||||
| Sales of minerals in place | (2 | ) | (7 | ) | (9 | ) | |||||||||||||||||||||
| Reserves
of consolidated subsidiaries at December 31, 2011 |
259 | 372 | 917 | 670 | 653 | 106 | 132 | 25 | 3,134 | ||||||||||||||||||
| Reserves of equity-accounted entities at December 31, 2010 |
19 | 6 | 44 | 139 | 208 | ||||||||||||||||||||||
| of which: developed | 18 | 4 | 5 | 25 | 52 | ||||||||||||||||||||||
| of which: undeveloped | 1 | 2 | 39 | 114 | 156 | ||||||||||||||||||||||
| Purchase of minerals in place | |||||||||||||||||||||||||||
| Revisions of previous estimates | 11 | 6 | 11 | 28 | |||||||||||||||||||||||
| Improved recovery | 1 | 1 | |||||||||||||||||||||||||
| Extensions and discoveries | 6 | 60 | 4 | 70 | |||||||||||||||||||||||
| Production | (2 | ) | (1 | ) | (4 | ) | (7 | ) | |||||||||||||||||||
| Sales of minerals in place | |||||||||||||||||||||||||||
| Reserves
of equity-accounted entities at December 31, 2011 |
17 | 22 | 110 | 151 | 300 | ||||||||||||||||||||||
| Reserves at December 31, 2011 | 259 | 372 | 934 | 692 | 653 | 216 | 283 | 25 | 3,434 | ||||||||||||||||||
| Developed | 184 | 195 | 638 | 487 | 215 | 34 | 117 | 25 | 1,895 | ||||||||||||||||||
| consolidated subsidiaries | 184 | 195 | 622 | 483 | 215 | 34 | 92 | 25 | 1,850 | ||||||||||||||||||
| equity-accounted entities | 16 | 4 | 25 | 45 | |||||||||||||||||||||||
| Undeveloped | 75 | 177 | 296 | 205 | 438 | 182 | 166 | 1,539 | |||||||||||||||||||
| consolidated subsidiaries | 75 | 177 | 295 | 187 | 438 | 72 | 40 | 1,284 | |||||||||||||||||||
| equity-accounted entities | 1 | 18 | 110 | 126 | 255 |
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| (million barrels) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
Americas |
Australia and Oceania |
Total |
| 2012 | |||||||||||||||||||||||||||
| Reserves of consolidated subsidiaries at December 31, 2011 |
259 | 372 | 917 | 670 | 653 | 106 | 132 | 25 | 3,134 | ||||||||||||||||||
| of which: developed | 184 | 195 | 622 | 483 | 215 | 34 | 92 | 25 | 1,850 | ||||||||||||||||||
| of which: undeveloped | 75 | 177 | 295 | 187 | 438 | 72 | 40 | 1,284 | |||||||||||||||||||
| Purchase of minerals in place | |||||||||||||||||||||||||||
| Revisions of previous estimates | (9 | ) | 10 | 55 | 26 | 62 | (9 | ) | 40 | 6 | 181 | ||||||||||||||||
| Improved recovery | 1 | 20 | 7 | 28 | |||||||||||||||||||||||
| Extensions and discoveries | 3 | 10 | 65 | 8 | 86 | ||||||||||||||||||||||
| Production | (23 | ) | (35 | ) | (98 | ) | (90 | ) | (22 | ) | (15 | ) | (26 | ) | (7 | ) | (316 | ) | |||||||||
| Sales of minerals in place | (6 | ) | (23 | ) | (29 | ) | |||||||||||||||||||||
| Reserves
of consolidated subsidiaries at December 31, 2012 |
227 | 351 | 904 | 672 | 670 | 82 | 154 | 24 | 3,084 | ||||||||||||||||||
| Reserves of equity-accounted entities at December 31, 2011 |
17 | 22 | 110 | 151 | 300 | ||||||||||||||||||||||
| of which: developed | 16 | 4 | 25 | 45 | |||||||||||||||||||||||
| of which: undeveloped | 1 | 18 | 110 | 126 | 255 | ||||||||||||||||||||||
| Purchase of minerals in place | |||||||||||||||||||||||||||
| Revisions of previous estimates | (1 | ) | 2 | 1 | |||||||||||||||||||||||
| Improved recovery | |||||||||||||||||||||||||||
| Extensions and discoveries | 1 | 3 | 4 | ||||||||||||||||||||||||
| Production | (1 | ) | (1 | ) | (1 | ) | (4 | ) | (7 | ) | |||||||||||||||||
| Sales of minerals in place | (4 | ) | (28 | ) | (32 | ) | |||||||||||||||||||||
| Reserves
of equity-accounted entities at December 31, 2012 |
17 | 16 | 114 | 119 | 266 | ||||||||||||||||||||||
| Reserves at December 31, 2012 | 227 | 351 | 921 | 688 | 670 | 196 | 273 | 24 | 3,350 | ||||||||||||||||||
| Developed | 165 | 180 | 601 | 456 | 203 | 49 | 128 | 24 | 1,806 | ||||||||||||||||||
| consolidated subsidiaries | 165 | 180 | 584 | 456 | 203 | 41 | 109 | 24 | 1,762 | ||||||||||||||||||
| equity-accounted entities | 17 | 8 | 19 | 44 | |||||||||||||||||||||||
| Undeveloped | 62 | 171 | 320 | 232 | 467 | 147 | 145 | 1,544 | |||||||||||||||||||
| consolidated subsidiaries | 62 | 171 | 320 | 216 | 467 | 41 | 45 | 1,322 | |||||||||||||||||||
| equity-accounted entities | 16 | 106 | 100 | 222 |
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| (million barrels) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
Americas |
Australia and Oceania |
Total |
| 2013 | |||||||||||||||||||||||||||
| Reserves of consolidated subsidiaries at December 31, 2012 | 227 | 351 | 904 | 672 | 670 | 82 | 154 | 24 | 3,084 | ||||||||||||||||||
| of which: developed | 165 | 180 | 584 | 456 | 203 | 41 | 109 | 24 | 1,762 | ||||||||||||||||||
| of which: undeveloped | 62 | 171 | 320 | 216 | 467 | 41 | 45 | 1,322 | |||||||||||||||||||
| Purchase of minerals in place | 3 | 3 | |||||||||||||||||||||||||
| Revisions of previous estimates | 19 | 16 | 12 | 83 | 31 | 62 | 11 | 2 | 236 | ||||||||||||||||||
| Improved recovery | 5 | 5 | |||||||||||||||||||||||||
| Extensions and discoveries | 1 | 2 | 51 | 4 | 58 | ||||||||||||||||||||||
| Production | (26 | ) | (28 | ) | (91 | ) | (88 | ) | (22 | ) | (16 | ) | (22 | ) | (4 | ) | (297 | ) | |||||||||
| Sales of minerals in place | (10 | ) | (10 | ) | |||||||||||||||||||||||
| Reserves
of consolidated subsidiaries at December 31, 2013 |
220 | 330 | 830 | 723 | 679 | 128 | 147 | 22 | 3,079 | ||||||||||||||||||
| Reserves of equity-accounted entities at December 31, 2012 | 17 | 16 | 114 | 119 | 266 | ||||||||||||||||||||||
| of which: developed | 17 | 8 | 19 | 44 | |||||||||||||||||||||||
| of which: undeveloped | 16 | 106 | 100 | 222 | |||||||||||||||||||||||
| Purchase of minerals in place | |||||||||||||||||||||||||||
| Revisions of previous estimates | (1 | ) | 1 | ||||||||||||||||||||||||
| Improved recovery | |||||||||||||||||||||||||||
| Extensions and discoveries | |||||||||||||||||||||||||||
| Production | (1 | ) | (2 | ) | (4 | ) | (7 | ) | |||||||||||||||||||
| Sales of minerals in place | (111 | ) | (111 | ) | |||||||||||||||||||||||
| Reserves
of equity-accounted entities at December 31, 2013 |
16 | 15 | 1 | 116 | 148 | ||||||||||||||||||||||
| Reserves at December 31, 2013 | 220 | 330 | 846 | 738 | 679 | 129 | 263 | 22 | 3,227 | ||||||||||||||||||
| Developed | 177 | 179 | 577 | 465 | 295 | 38 | 115 | 20 | 1,866 | ||||||||||||||||||
| consolidated subsidiaries | 177 | 179 | 561 | 465 | 295 | 38 | 96 | 20 | 1,831 | ||||||||||||||||||
| equity-accounted entities | 16 | 19 | 35 | ||||||||||||||||||||||||
| Undeveloped | 43 | 151 | 269 | 273 | 384 | 91 | 148 | 2 | 1,361 | ||||||||||||||||||
| consolidated subsidiaries | 43 | 151 | 269 | 258 | 384 | 90 | 51 | 2 | 1,248 | ||||||||||||||||||
| equity-accounted entities | 15 | 1 | 97 | 113 |
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Natural Gas (a)
| (billion cubic feet) | Italy (b) |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
Americas |
Australia and Oceania |
Total |
| 2011 | |||||||||||||||||||||||||||
| Reserves of consolidated subsidiaries at December 31, 2010 |
2,644 | 1,401 | 6,207 | 2,127 | 1,874 | 871 | 530 | 544 | 16,198 | ||||||||||||||||||
| of which: developed | 2,061 | 1,103 | 3,100 | 1,550 | 1,621 | 560 | 431 | 539 | 10,965 | ||||||||||||||||||
| of which: undeveloped | 583 | 298 | 3,107 | 577 | 253 | 311 | 99 | 5 | 5,233 | ||||||||||||||||||
| Purchase of minerals in place | 9 | 9 | |||||||||||||||||||||||||
| Revisions of previous estimates | 80 | 199 | 436 | (11 | ) | (142 | ) | (38 | ) | 51 | 96 | 671 | |||||||||||||||
| Improved recovery | 3 | 3 | |||||||||||||||||||||||||
| Extensions and discoveries | 4 | 18 | 9 | 18 | 131 | 180 | |||||||||||||||||||||
| Production | (246 | ) | (196 | ) | (462 | ) | (185 | ) | (84 | ) | (148 | ) | (122 | ) | (36 | ) | (1,479 | ) | |||||||||
| Sales of minerals in place | |||||||||||||||||||||||||||
| Reserves
of consolidated subsidiaries at December 31, 2011 |
2,491 | 1,425 | 6,190 | 1,949 | 1,648 | 685 | 590 | 604 | 15,582 | ||||||||||||||||||
| Reserves of equity-accounted entities at December 31, 2010 |
24 | 118 | 1,520 | 22 | 1,684 | ||||||||||||||||||||||
| of which: developed | 22 | 4 | 214 | 6 | 246 | ||||||||||||||||||||||
| of which: undeveloped | 2 | 114 | 1,306 | 16 | 1,438 | ||||||||||||||||||||||
| Purchase of minerals in place | 2 | 2 | |||||||||||||||||||||||||
| Revisions of previous estimates | (2 | ) | 147 | 372 | 11 | 528 | |||||||||||||||||||||
| Improved recovery | |||||||||||||||||||||||||||
| Extensions and discoveries | 74 | 1,150 | 1,274 | 2,498 | |||||||||||||||||||||||
| Production | (2 | ) | (1 | ) | (9 | ) | (12 | ) | |||||||||||||||||||
| Sales of minerals in place | |||||||||||||||||||||||||||
| Reserves
of equity-accounted entities at December 31, 2011 |
2 | 20 | 338 | 3,033 | 1,307 | 4,700 | |||||||||||||||||||||
| Reserves at December 31, 2011 | 2,491 | 1,427 | 6,210 | 2,287 | 1,648 | 3,718 | 1,897 | 604 | 20,282 | ||||||||||||||||||
| Developed | 1,977 | 995 | 3,087 | 1,441 | 1,480 | 552 | 393 | 491 | 10,416 | ||||||||||||||||||
| consolidated subsidiaries | 1,977 | 995 | 3,070 | 1,437 | 1,480 | 528 | 385 | 491 | 10,363 | ||||||||||||||||||
| equity-accounted entities | 17 | 4 | 24 | 8 | 53 | ||||||||||||||||||||||
| Undeveloped | 514 | 432 | 3,123 | 846 | 168 | 3,166 | 1,504 | 113 | 9,866 | ||||||||||||||||||
| consolidated subsidiaries | 514 | 430 | 3,120 | 512 | 168 | 157 | 205 | 113 | 5,219 | ||||||||||||||||||
| equity-accounted entities | 2 | 3 | 334 | 3,009 | 1,299 | 4,647 |
(a) Values lower
than 1 bcf are not disclosed in this table.
(b) Including, approximately 767 and 767 bcf of natural gas held
in storage at December 31, 2010 and December 31, 2011,
respectively.
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| (billion cubic feet) | Italy (b) |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
Americas |
Australia and Oceania |
Total |
| 2012 | |||||||||||||||||||||||||||
| Reserves of consolidated subsidiaries at December 31, 2011 |
2,491 | 1,425 | 6,190 | 1,949 | 1,648 | 685 | 590 | 604 | 15,582 | ||||||||||||||||||
| of which: developed | 1,977 | 995 | 3,070 | 1,437 | 1,480 | 528 | 385 | 491 | 10,363 | ||||||||||||||||||
| of which: undeveloped | 514 | 430 | 3,120 | 512 | 168 | 157 | 205 | 113 | 5,219 | ||||||||||||||||||
| Purchase of minerals in place | |||||||||||||||||||||||||||
| Revisions of previous estimates | 154 | 45 | 284 | 141 | 18 | (41 | ) | 5 | 606 | ||||||||||||||||||
| Improved recovery | |||||||||||||||||||||||||||
| Extensions and discoveries | 24 | 15 | 1 | 113 | 469 | 2 | 4 | 628 | |||||||||||||||||||
| Production | (254 | ) | (168 | ) | (633 | ) | (196 | ) | (81 | ) | (143 | ) | (104 | ) | (37 | ) | (1,616 | ) | |||||||||
| Sales of minerals in place | (782 | ) | (89 | ) | (139 | ) | (1,010 | ) | |||||||||||||||||||
| Reserves
of consolidated subsidiaries at December 31, 2012 |
1,633 | 1,317 | 5,558 | 2,061 | 2,038 | 562 | 449 | 572 | 14,190 | ||||||||||||||||||
| Reserves of equity-accounted entities at December 31, 2011 |
2 | 20 | 338 | 3,033 | 1,307 | 4,700 | |||||||||||||||||||||
| of which: developed | 17 | 4 | 24 | 8 | 53 | ||||||||||||||||||||||
| of which: undeveloped | 2 | 3 | 334 | 3,009 | 1,299 | 4,647 | |||||||||||||||||||||
| Purchase of minerals in place | |||||||||||||||||||||||||||
| Revisions of previous estimates | (2 | ) | (2 | ) | 3 | 1 | 1,340 | 1,340 | |||||||||||||||||||
| Improved recovery | |||||||||||||||||||||||||||
| Extensions and discoveries | 17 | 38 | 739 | 794 | |||||||||||||||||||||||
| Production | (2 | ) | (2 | ) | (29 | ) | (33 | ) | |||||||||||||||||||
| Sales of minerals in place | (3 | ) | (31 | ) | (34 | ) | |||||||||||||||||||||
| Reserves
of equity-accounted entities at December 31, 2012 |
16 | 353 | 3,043 | 3,355 | 6,767 | ||||||||||||||||||||||
| Reserves at December 31, 2012 | 1,633 | 1,317 | 5,574 | 2,414 | 2,038 | 3,605 | 3,804 | 572 | 20,957 | ||||||||||||||||||
| Developed | 1,325 | 925 | 2,736 | 1,429 | 1,401 | 774 | 340 | 459 | 9,389 | ||||||||||||||||||
| consolidated subsidiaries | 1,325 | 925 | 2,720 | 1,429 | 1,401 | 372 | 334 | 459 | 8,965 | ||||||||||||||||||
| equity-accounted entities | 16 | 402 | 6 | 424 | |||||||||||||||||||||||
| Undeveloped | 308 | 392 | 2,838 | 985 | 637 | 2,831 | 3,464 | 113 | 11,568 | ||||||||||||||||||
| consolidated subsidiaries | 308 | 392 | 2,838 | 632 | 637 | 190 | 115 | 113 | 5,225 | ||||||||||||||||||
| equity-accounted entities | 353 | 2,641 | 3,349 | 6,343 |
(b) Including, approximately 767 bcf of natural gas held in storage at December 31, 2011.
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| (billion cubic feet) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
Americas |
Australia and Oceania |
Total |
| 2013 | |||||||||||||||||||||||||||
| Reserves of consolidated subsidiaries at December 31, 2012 |
1,633 | 1,317 | 5,558 | 2,061 | 2,038 | 562 | 449 | 572 | 14,190 | ||||||||||||||||||
| of which: developed | 1,325 | 925 | 2,720 | 1,429 | 1,401 | 372 | 334 | 459 | 8,965 | ||||||||||||||||||
| of which: undeveloped | 308 | 392 | 2,838 | 632 | 637 | 190 | 115 | 113 | 5,225 | ||||||||||||||||||
| Purchase of minerals in place | 5 | 5 | |||||||||||||||||||||||||
| Revisions of previous estimates | 105 | 103 | 253 | 475 | (3 | ) | 104 | 142 | 316 | 1,495 | |||||||||||||||||
| Improved recovery | |||||||||||||||||||||||||||
| Extensions and discoveries | 24 | 1 | 24 | 14 | 208 | 7 | 278 | ||||||||||||||||||||
| Production | (230 | ) | (157 | ) | (609 | ) | (176 | ) | (78 | ) | (130 | ) | (89 | ) | (40 | ) | (1,509 | ) | |||||||||
| Sales of minerals in place | (17 | ) | (17 | ) | |||||||||||||||||||||||
| Reserves
of consolidated subsidiaries at December 31, 2013 |
1,532 | 1,247 | 5,231 | 2,374 | 1,957 | 744 | 509 | 848 | 14,442 | ||||||||||||||||||
| Reserves of equity-accounted entities at December 31, 2012 |
16 | 353 | 3,043 | 3,355 | 6,767 | ||||||||||||||||||||||
| of which: developed | 16 | 402 | 6 | 424 | |||||||||||||||||||||||
| of which: undeveloped | 353 | 2,641 | 3,349 | 6,343 | |||||||||||||||||||||||
| Purchase of minerals in place | |||||||||||||||||||||||||||
| Revisions of previous estimates | 1 | (18 | ) | 16 | (2 | ) | (3 | ) | |||||||||||||||||||
| Improved recovery | |||||||||||||||||||||||||||
| Extensions and discoveries | |||||||||||||||||||||||||||
| Production | (2 | ) | (5 | ) | (60 | ) | (67 | ) | |||||||||||||||||||
| Sales of minerals in place | (2,971 | ) | (2,971 | ) | |||||||||||||||||||||||
| Reserves
of equity-accounted entities at December 31, 2013 |
15 | 330 | 28 | 3,353 | 3,726 | ||||||||||||||||||||||
| Reserves at December 31, 2013 | 1,532 | 1,247 | 5,246 | 2,704 | 1,957 | 772 | 3,862 | 848 | 18,168 | ||||||||||||||||||
| Developed | 1,266 | 904 | 2,447 | 1,295 | 1,488 | 300 | 315 | 561 | 8,576 | ||||||||||||||||||
| consolidated subsidiaries | 1,266 | 904 | 2,432 | 1,295 | 1,488 | 286 | 310 | 561 | 8,542 | ||||||||||||||||||
| equity-accounted entities | 15 | 14 | 5 | 34 | |||||||||||||||||||||||
| Undeveloped | 266 | 343 | 2,799 | 1,409 | 469 | 472 | 3,547 | 287 | 9,592 | ||||||||||||||||||
| consolidated subsidiaries | 266 | 343 | 2,799 | 1,079 | 469 | 458 | 199 | 287 | 5,900 | ||||||||||||||||||
| equity-accounted entities | 330 | 14 | 3,348 | 3,692 |
Standardized measure of discounted future net cash flows
Estimated future cash inflows represent the revenues that would be received from production and are determined by applying the year-end average prices during the years ended. Future price changes are considered only to the extent provided by contractual arrangements. Estimated future development and production costs are determined by estimating the expenditures to be incurred in developing and producing the proved reserves at the end of the year. Neither the effects of price and cost escalations nor expected future changes in technology and operating practices have been considered. The standardized measure is calculated as the excess of future cash inflows from proved reserves less future costs of producing and developing the reserves, future income taxes and a yearly 10% discount factor. Future production costs include the estimated expenditures related to the production of proved reserves plus any production taxes without consideration of future inflation. Future development costs include the estimated costs of drilling development wells and installation of production facilities, plus the net costs associated with dismantlement and abandonment of wells and facilities, under the assumption that year-end costs continue without considering future inflation. Future income taxes were calculated in accordance with the tax laws of the Countries in which Eni operates. The standardized measure of discounted future net cash flows, related to the preceding proved oil and gas reserves, is calculated in accordance with the requirements of FASB Extractive Activities - Oil & Gas (Topic 932). The standardized measure does not purport to reflect realizable values or fair market value of Eni’s proved reserves. An estimate of fair value would also take into account, among other things, hydrocarbon resources other than proved reserves, anticipated changes in future prices and costs and a discount factor representative of the risks inherent in the oil and gas exploration and production activity.
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The standardized measure of discounted future net cash flows by geographical area consists of the following:
| (euro million) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
Americas |
Australia and Oceania |
Total |
| December 31, 2011 | |||||||||||||||||||||||||||
| Consolidated subsidiaries | |||||||||||||||||||||||||||
| Future cash inflows | 38,200 | 37,974 | 109,825 | 59,263 | 50,443 | 10,403 | 11,980 | 5,185 | 323,273 | ||||||||||||||||||
| Future production costs | (5,740 | ) | (7,666 | ) | (17,627 | ) | (15,191 | ) | (7,845 | ) | (3,852 | ) | (2,687 | ) | (813 | ) | (61,421 | ) | |||||||||
| Future development and abandonment costs | (4,712 | ) | (7,059 | ) | (9,639 | ) | (5,734 | ) | (3,705 | ) | (2,842 | ) | (1,836 | ) | (224 | ) | (35,751 | ) | |||||||||
| Future net inflow before income tax | 27,748 | 23,249 | 82,559 | 38,338 | 38,893 | 3,709 | 7,457 | 4,148 | 226,101 | ||||||||||||||||||
| Future income tax | (9,000 | ) | (15,912 | ) | (46,676 | ) | (23,075 | ) | (9,866 | ) | (1,124 | ) | (2,474 | ) | (1,254 | ) | (109,381 | ) | |||||||||
| Future net cash flows | 18,748 | 7,337 | 35,883 | 15,263 | 29,027 | 2,585 | 4,983 | 2,894 | 116,720 | ||||||||||||||||||
| 10% discount factor | (9,692 | ) | (2,572 | ) | (16,191 | ) | (4,833 | ) | (17,599 | ) | (559 | ) | (1,914 | ) | (1,122 | ) | (54,482 | ) | |||||||||
| Standardized
measure of discounted future net cash flows of consolidated subsidiaries at December 31, 2011 |
9,056 | 4,765 | 19,692 | 10,430 | 11,428 | 2,026 | 3,069 | 1,772 | 62,238 | ||||||||||||||||||
| Equity-accounted entities | |||||||||||||||||||||||||||
| Future cash inflows | 21 | 649 | 1,866 | 6,141 | 15,067 | 23,744 | |||||||||||||||||||||
| Future production costs | (5 | ) | (259 | ) | (471 | ) | (1,540 | ) | (4,598 | ) | (6,873 | ) | |||||||||||||||
| Future development and abandonment costs | (2 | ) | (36 | ) | (147 | ) | (1,247 | ) | (1,754 | ) | (3,186 | ) | |||||||||||||||
| Future net inflow before income tax | 14 | 354 | 1,248 | 3,354 | 8,715 | 13,685 | |||||||||||||||||||||
| Future income tax | (3 | ) | (3 | ) | (189 | ) | (824 | ) | (5,368 | ) | (6,387 | ) | |||||||||||||||
| Future net cash flows | 11 | 351 | 1,059 | 2,530 | 3,347 | 7,298 | |||||||||||||||||||||
| 10% discount factor | (183 | ) | (475 | ) | (1,825 | ) | (2,155 | ) | (4,638 | ) | |||||||||||||||||
| Standardized
measure of discounted future net cash flows of equity-accounted entities at December 31, 2011 |
11 | 168 | 584 | 705 | 1,192 | 2,660 | |||||||||||||||||||||
| Total consolidated subsidiaries and equity-accounted entities at December 31, 2011 | 9,056 | 4,776 | 19,860 | 11,014 | 11,428 | 2,731 | 4,261 | 1,772 | 64,898 |
| December 31, 2012 | |||||||||||||||||||||||||||
| Consolidated subsidiaries | |||||||||||||||||||||||||||
| Future cash inflows | 30,308 | 38,912 | 108,343 | 56,978 | 53,504 | 7,881 | 11,008 | 4,957 | 311,891 | ||||||||||||||||||
| Future production costs | (5,900 | ) | (8,190 | ) | (18,555 | ) | (14,844 | ) | (9,561 | ) | (2,854 | ) | (2,520 | ) | (921 | ) | (63,345 | ) | |||||||||
| Future development and abandonment costs | (3,652 | ) | (7,511 | ) | (8,412 | ) | (6,873 | ) | (3,802 | ) | (1,974 | ) | (1,502 | ) | (197 | ) | (33,923 | ) | |||||||||
| Future net inflow before income tax | 20,756 | 23,211 | 81,376 | 35,261 | 40,141 | 3,053 | 6,986 | 3,839 | 214,623 | ||||||||||||||||||
| Future income tax | (6,911 | ) | (15,063 | ) | (44,256 | ) | (21,348 | ) | (10,293 | ) | (903 | ) | (2,906 | ) | (1,181 | ) | (102,861 | ) | |||||||||
| Future net cash flows | 13,845 | 8,148 | 37,120 | 13,913 | 29,848 | 2,150 | 4,080 | 2,658 | 111,762 | ||||||||||||||||||
| 10% discount factor | (5,519 | ) | (2,630 | ) | (16,539 | ) | (4,976 | ) | (17,943 | ) | (496 | ) | (1,337 | ) | (1,030 | ) | (50,470 | ) | |||||||||
| Standardized
measure of discounted future net cash flows of consolidated subsidiaries at December 31, 2012 |
8,326 | 5,518 | 20,581 | 8,937 | 11,905 | 1,654 | 2,743 | 1,628 | 61,292 | ||||||||||||||||||
| Equity-accounted entities | |||||||||||||||||||||||||||
| Future cash inflows | 1 | 658 | 3,594 | 6,689 | 18,132 | 29,074 | |||||||||||||||||||||
| Future production costs | (203 | ) | (576 | ) | (2,216 | ) | (5,003 | ) | (7,998 | ) | |||||||||||||||||
| Future development and abandonment costs | (1 | ) | (17 | ) | (101 | ) | (1,061 | ) | (2,563 | ) | (3,743 | ) | |||||||||||||||
| Future net inflow before income tax | 438 | 2,917 | 3,412 | 10,566 | 17,333 | ||||||||||||||||||||||
| Future income tax | (36 | ) | (1,291 | ) | (795 | ) | (5,729 | ) | (7,851 | ) | |||||||||||||||||
| Future net cash flows | 402 | 1,626 | 2,617 | 4,837 | 9,482 | ||||||||||||||||||||||
| 10% discount factor | (206 | ) | (962 | ) | (1,747 | ) | (3,621 | ) | (6,536 | ) | |||||||||||||||||
| Standardized
measure of discounted future net cash flows of equity-accounted entities at December 31, 2012 |
196 | 664 | 870 | 1,216 | 2,946 | ||||||||||||||||||||||
| Total consolidated subsidiaries and equity-accounted entities at December 31, 2012 | 8,326 | 5,518 | 20,777 | 9,601 | 11,905 | 2,524 | 3,959 | 1,628 | 64,238 |
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Eni Annual Report / Supplemental oil and gas information |
| (euro million) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
Americas |
Australia and Oceania |
Total |
| December 31, 2013 | |||||||||||||||||||||||||||
| Consolidated subsidiaries | |||||||||||||||||||||||||||
| Future cash inflows | 28,829 | 33,319 | 92,661 | 58,252 | 50,754 | 12,487 | 10,227 | 5,294 | 291,823 | ||||||||||||||||||
| Future production costs | (6,250 | ) | (6,836 | ) | (16,611 | ) | (15,986 | ) | (9,072 | ) | (3,876 | ) | (2,379 | ) | (1,417 | ) | (62,427 | ) | |||||||||
| Future development and abandonment costs | (4,593 | ) | (6,202 | ) | (8,083 | ) | (7,061 | ) | (3,445 | ) | (3,960 | ) | (1,561 | ) | (279 | ) | (35,184 | ) | |||||||||
| Future net inflow before income tax | 17,986 | 20,281 | 67,967 | 35,205 | 38,237 | 4,651 | 6,287 | 3,598 | 194,212 | ||||||||||||||||||
| Future income tax | (5,776 | ) | (12,746 | ) | (35,887 | ) | (20,491 | ) | (9,939 | ) | (1,391 | ) | (2,387 | ) | (1,093 | ) | (89,710 | ) | |||||||||
| Future net cash flows | 12,210 | 7,535 | 32,080 | 14,714 | 28,298 | 3,260 | 3,900 | 2,505 | 104,502 | ||||||||||||||||||
| 10% discount factor | (5,048 | ) | (2,110 | ) | (14,327 | ) | (5,619 | ) | (16,984 | ) | (1,683 | ) | (1,353 | ) | (1,201 | ) | (48,325 | ) | |||||||||
| Standardized
measure of discounted future net cash flows of consolidated subsidiaries at December 31, 2013 |
7,162 | 5,425 | 17,753 | 9,095 | 11,314 | 1,577 | 2,547 | 1,304 | 56,177 | ||||||||||||||||||
| Equity-accounted entities | |||||||||||||||||||||||||||
| Future cash inflows | 524 | 4,041 | 262 | 17,239 | 22,066 | ||||||||||||||||||||||
| Future production costs | (164 | ) | (1,465 | ) | (38 | ) | (5,467 | ) | (7,134 | ) | |||||||||||||||||
| Future development and abandonment costs | (17 | ) | (85 | ) | (73 | ) | (2,299 | ) | (2,474 | ) | |||||||||||||||||
| Future net inflow before income tax | 343 | 2,491 | 151 | 9,473 | 12,458 | ||||||||||||||||||||||
| Future income tax | (20 | ) | (1,617 | ) | (61 | ) | (4,156 | ) | (5,854 | ) | |||||||||||||||||
| Future net cash flows | 323 | 874 | 90 | 5,317 | 6,604 | ||||||||||||||||||||||
| 10% discount factor | (175 | ) | (401 | ) | (20 | ) | (3,681 | ) | (4,277 | ) | |||||||||||||||||
| Standardized
measure of discounted future net cash flows of equity-accounted entities at December 31, 2013 |
148 | 473 | 70 | 1,636 | 2,327 | ||||||||||||||||||||||
| Total consolidated subsidiaries and equity-accounted entities at December 31, 2013 | 7,162 | 5,425 | 17,901 | 9,568 | 11,314 | 1,647 | 4,183 | 1,304 | 58,504 |
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Eni Annual Report / Supplemental oil and gas information |
Changes in standardized measure of discounted future net cash flows
Changes in standardized measure of discounted future net cash flows for the years ended December 31, 2011, 2012 and 2013, are as follows:
| (euro million) | Consolidated subsidiaries |
Equity-accounted entities |
Total |
| Standardized measure of discounted future net cash flows at December 31, 2010 | 46,077 | 1,083 | 47,160 | ||||||
| Increase (Decrease): | |||||||||
| - sales, net of production costs | (23,744 | ) | (300 | ) | (24,044 | ) | |||
| - net changes in sales and transfer prices, net of production costs | 40,961 | 442 | 41,403 | ||||||
| - extensions, discoveries and improved recovery, net of future production and development costs | 1,580 | 2,457 | 4,037 | ||||||
| - changes in estimated future development and abandonment costs | (3,890 | ) | (392 | ) | (4,282 | ) | |||
| - development costs incurred during the period that reduced future development costs | 7,301 | 866 | 8,167 | ||||||
| - revisions of quantity estimates | 1,337 | (87 | ) | 1,250 | |||||
| - accretion of discount | 8,640 | 235 | 8,875 | ||||||
| - net change in income taxes | (17,067 | ) | (1,678 | ) | (18,745 | ) | |||
| - purchase of reserves-in-place | 37 | 10 | 47 | ||||||
| - sale of reserves-in-place | (146 | ) | (146 | ) | |||||
| - changes in production rates (timing) and other | 1,152 | 24 | 1,176 | ||||||
| Net increase (decrease) | 16,161 | 1,577 | 17,738 | ||||||
| Standardized measure of discounted future net cash flows at December 31, 2011 | 62,238 | 2,660 | 64,898 | ||||||
| Increase (Decrease): | |||||||||
| - sales, net of production costs | (28,595 | ) | (325 | ) | (28,920 | ) | |||
| - net changes in sales and transfer prices, net of production costs | 2,264 | (56 | ) | 2,208 | |||||
| - extensions, discoveries and improved recovery, net of future production and development costs | 4,868 | 812 | 5,680 | ||||||
| - changes in estimated future development and abandonment costs | (3,802 | ) | (357 | ) | (4,159 | ) | |||
| - development costs incurred during the period that reduced future development costs | 8,199 | 409 | 8,608 | ||||||
| - revisions of quantity estimates | 3,725 | 824 | 4,549 | ||||||
| - accretion of discount | 12,527 | 477 | 13,004 | ||||||
| - net change in income taxes | 2,207 | (830 | ) | 1,377 | |||||
| - purchase of reserves-in-place | |||||||||
| - sale of reserves-in-place | (1,509 | ) | (615 | ) | (2,124 | ) | |||
| - changes in production rates (timing) and other | (830 | ) | (53 | ) | (883 | ) | |||
| Net increase (decrease) | (946 | ) | 286 | (660 | ) | ||||
| Standardized measure of discounted future net cash flows at December 31, 2012 | 61,292 | 2,946 | 64,238 | ||||||
| Increase (Decrease): | |||||||||
| - sales, net of production costs | (24,576 | ) | (261 | ) | (24,837 | ) | |||
| - net changes in sales and transfer prices, net of production costs | (3,632 | ) | (223 | ) | (3,855 | ) | |||
| - extensions, discoveries and improved recovery, net of future production and development costs | 1,699 | 3 | 1,702 | ||||||
| - changes in estimated future development and abandonment costs | (6,821 | ) | (427 | ) | (7,248 | ) | |||
| - development costs incurred during the period that reduced future development costs | 8,456 | 665 | 9,121 | ||||||
| - revisions of quantity estimates | 6,385 | (298 | ) | 6,087 | |||||
| - accretion of discount | 11,937 | 521 | 12,458 | ||||||
| - net change in income taxes | 5,587 | 379 | 5,966 | ||||||
| - purchase of reserves-in-place | 74 | 74 | |||||||
| - sale of reserves-in-place | (252 | ) | (770 | ) | (1,022 | ) | |||
| - changes in production rates (timing) and other | (3,972 | ) | (208 | ) | (4,180 | ) | |||
| Net increase (decrease) | (5,115 | ) | (619 | ) | (5,734 | ) | |||
| Standardized measure of discounted future net cash flows at December 31, 2013 | 56,177 | 2,327 | 58,504 |
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Eni Annual Report / List of Eni's subsidiaries |
List of Eni’s consolidated subsidiaries at December 31, 2013
| Subsidiary | Country of Incorporation |
Eni’s share |
| Exploration & Production | ||||
| Eni Angola SpA | Italy | 100.00 | ||
| Eni East Africa SpA | Italy | 71.43 | ||
| Eni Mediterranea Idrocarburi SpA | Italy | 100.00 | ||
| Eni Mozambico SpA | Italy | 100.00 | ||
| Eni Timor Leste SpA | Italy | 100.00 | ||
| Eni West Africa SpA | Italy | 100.00 | ||
| Eni Zubair SpA | Italy | 100.00 | ||
| Floaters SpA | Italy | 100.00 | ||
| Ieoc SpA | Italy | 100.00 | ||
| Società Adriatica Idrocarburi SpA | Italy | 100.00 | ||
| Società Ionica Gas SpA | Italy | 100.00 | ||
| Società Oleodotti Meridionali - SOM SpA | Italy | 70.00 | ||
| Società Petrolifera Italiana SpA | Italy | 99.96 | ||
| Tecnomare - Società per lo Sviluppo delle Tecnologie Marine SpA | Italy | 100.00 | ||
| Agip Caspian Sea BV | Netherlands | 100.00 | ||
| Agip Energy and Natural Resources (Nigeria) Ltd | Nigeria | 100.00 | ||
| Agip Karachaganak BV | Netherlands | 100.00 | ||
| Agip Oil Ecuador BV | Netherlands | 100.00 | ||
| Burren Energy (Bermuda) Ltd | Bermuda | 100.00 | ||
| Burren Energy (Services) Ltd | United Kingdom | 100.00 | ||
| Burren Energy Congo Ltd | British Virgin Islands | 100.00 | ||
| Burren Energy India Ltd | United Kingdom | 100.00 | ||
| Burren Energy Ltd | Cyprus | 100.00 | ||
| Burren Energy Plc | United Kingdom | 100.00 | ||
| Burren Resources Petroleum Ltd | Bermuda | 100.00 | ||
| Burren Shakti Ltd | Bermuda | 100.00 | ||
| Eni AEP Ltd | United Kingdom | 100.00 | ||
| Eni Algeria Exploration BV | Netherlands | 100.00 | ||
| Eni Algeria Ltd Sàrl | Luxembourg | 100.00 | ||
| Eni Algeria Production BV | Netherlands | 100.00 | ||
| Eni Ambalat Ltd | United Kingdom | 100.00 | ||
| Eni America Ltd | United States of America | 100.00 | ||
| Eni Angola Exploration BV | Netherlands | 100.00 | ||
| Eni Angola Production BV | Netherlands | 100.00 | ||
| Eni Arguni I Ltd | United Kingdom | 100.00 | ||
| Eni Australia BV | Netherlands | 100.00 | ||
| Eni Australia Ltd | United Kingdom | 100.00 | ||
| Eni BB Petroleum Inc | United States of America | 100.00 | ||
| Eni Bukat Ltd | United Kingdom | 100.00 | ||
| Eni Bulungan BV | Netherlands | 100.00 | ||
| Eni Canada Holding Ltd | Canada | 100.00 | ||
| Eni CBM Ltd | United Kingdom | 100.00 | ||
| Eni China BV | Netherlands | 100.00 | ||
| Eni Congo SA | Democratic Republic of Congo | 100.00 | ||
| Eni Croatia BV | Netherlands | 100.00 | ||
| Eni Cyprus Ltd | Cyprus | 100.00 | ||
| Eni Dación BV | Netherlands | 100.00 | ||
| Eni Denmark BV | Netherlands | 100.00 | ||
| Eni East Sepinggan Ltd | United Kingdom | 100.00 |
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Eni Annual Report / List of Eni's subsidiaries |
| Subsidiary | Country of Incorporation |
Eni’s share |
| Exploration & Production | ||||
| Eni Elgin/Franklin Ltd | United Kingdom | 100.00 | ||
| Eni Energy Russia BV | Netherlands | 100.00 | ||
| Eni Engineering E&P Ltd | United Kingdom | 100.00 | ||
| Eni Exploration & Production Holding BV | Netherlands | 100.00 | ||
| Eni Gabon SA | Gabon | 99.96 | ||
| Eni Ganal Ltd | United Kingdom | 100.00 | ||
| Eni Gas & Power LNG Australia BV | Netherlands | 100.00 | ||
| Eni Ghana Exploration and Production Ltd | Ghana | 100.00 | ||
| Eni Hewett Ltd | United Kingdom | 100.00 | ||
| Eni India Ltd | United Kingdom | 100.00 | ||
| Eni Indonesia Ltd | United Kingdom | 100.00 | ||
| Eni International NA NV Sàrl | Luxembourg | 100.00 | ||
| Eni International Resources Ltd | United Kingdom | 100.00 | ||
| Eni Investments Plc | United Kingdom | 100.00 | ||
| Eni Iran BV | Netherlands | 100.00 | ||
| Eni Iraq BV | Netherlands | 100.00 | ||
| Eni Ireland BV | Netherlands | 100.00 | ||
| Eni JPDA 03-13 Ltd | United Kingdom | 100.00 | ||
| Eni JPDA 06-105 Pty Ltd | Australia | 100.00 | ||
| Eni JPDA 11-106 BV | Netherlands | 100.00 | ||
| Eni Kenya BV | Netherlands | 100.00 | ||
| Eni Krueng Mane Ltd | United Kingdom | 100.00 | ||
| Eni Lasmo Plc | United Kingdom | 100.00 | ||
| Eni Liberia BV | Netherlands | 100.00 | ||
| Eni Liverpool Bay Operating Co Ltd (former Eni Transportation Ltd) | United Kingdom | 100.00 | ||
| Eni LNS Ltd | United Kingdom | 100.00 | ||
| Eni Mali BV | Netherlands | 100.00 | ||
| Eni Marketing Inc | United States of America | 100.00 | ||
| Eni Middle East BV | Netherlands | 100.00 | ||
| Eni Middle East Ltd | United Kingdom | 100.00 | ||
| Eni MOG Ltd (in liquidation) | United Kingdom | 100.00 | ||
| Eni Muara Bakau BV | Netherlands | 100.00 | ||
| Eni Norge AS | Norway | 100.00 | ||
| Eni North Africa BV | Netherlands | 100.00 | ||
| Eni North Ganal Ltd | United Kingdom | 100.00 | ||
| Eni Oil & Gas Inc | United States of America | 100.00 | ||
| Eni Oil Algeria Ltd | United Kingdom | 100.00 | ||
| Eni Oil Holdings BV | Netherlands | 100.00 | ||
| Eni Pakistan (M) Ltd Sàrl | Luxembourg | 100.00 | ||
| Eni Pakistan Ltd | United Kingdom | 100.00 | ||
| Eni Papalang Ltd | United Kingdom | 100.00 | ||
| Eni Petroleum Co Inc | United States of America | 100.00 | ||
| Eni Petroleum US Llc | United States of America | 100.00 | ||
| Eni Polska spólka z ograniczona odpowiedzialnoscia | Poland | 100.00 | ||
| Eni Popodi Ltd | United Kingdom | 100.00 | ||
| Eni Rapak Ltd | United Kingdom | 100.00 | ||
| Eni RD Congo SA (former Eni RD Congo SPRL) | Democratic Republic of Congo | 100.00 | ||
| Eni South Salawati Ltd | United Kingdom | 100.00 | ||
| Eni TNS Ltd | United Kingdom | 100.00 | ||
| Eni Togo BV | Netherlands | 100.00 | ||
| Eni Trinidad and Tobago Ltd | Trinidad & Tobago | 100.00 |
223
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Eni Annual Report / List of Eni's subsidiaries |
| Subsidiary | Country of Incorporation |
Eni’s share |
| Exploration & Production | ||||
| Eni Tunisia BV | Netherlands | 100.00 | ||
| Eni UHL Ltd | United Kingdom | 100.00 | ||
| Eni UK Holding Plc | United Kingdom | 100.00 | ||
| Eni UK Ltd | United Kingdom | 100.00 | ||
| Eni UKCS Ltd | United Kingdom | 100.00 | ||
| Eni Ukraine Holdings BV | Netherlands | 100.00 | ||
| Eni Ukraine Llc | Ukraine | 100.00 | ||
| Eni ULT Ltd | United Kingdom | 100.00 | ||
| Eni ULX Ltd | United Kingdom | 100.00 | ||
| Eni US Operating Co Inc | United States of America | 100.00 | ||
| Eni USA Gas Marketing Llc | United States of America | 100.00 | ||
| Eni USA Inc | United States of America | 100.00 | ||
| Eni Venezuela BV | Netherlands | 100.00 | ||
| Eni Vietnam BV | Netherlands | 100.00 | ||
| Eni West Timor Ltd | United Kingdom | 100.00 | ||
| First Calgary Petroleums LP | United States of America | 100.00 | ||
| First Calgary Petroleums Partner Co ULC | Canada | 100.00 | ||
| Hindustan Oil Exploration Co Ltd | India | 47.18 | ||
| Ieoc Exploration BV | Netherlands | 100.00 | ||
| Ieoc Production BV | Netherlands | 100.00 | ||
| Lasmo Sanga Sanga Ltd | Bermuda | 100.00 | ||
| Nigerian Agip Exploration Ltd | Nigeria | 100.00 | ||
| Nigerian Agip Oil Co Ltd | Nigeria | 100.00 | ||
| OOO "Eni Energhia" | Russia | 100.00 | ||
| Gas & Power | ||||
| ASA Trade SpA | Italy | 100.00 | ||
| EniPower Mantova SpA | Italy | 86.50 | ||
| EniPower SpA | Italy | 100.00 | ||
| Est Più SpA | Italy | 100.00 | ||
| LNG Shipping SpA | Italy | 100.00 | ||
| Società EniPower Ferrara Srl | Italy | 51.00 | ||
| Trans Tunisian Pipeline Co SpA | Italy | 100.00 | ||
| Adriaplin Podjetje za distribucijo zemeljskega plina doo Ljubljana | Slovenia | 51.00 | ||
| Distrigas LNG Shipping SA | Belgium | 100.00 | ||
| Eni G&P France BV | Netherlands | 100.00 | ||
| Eni G&P Trading BV | Netherlands | 100.00 | ||
| Eni Gas & Power France SA | France | 99.81 | ||
| Eni Gas & Power GmbH | Germany | 100.00 | ||
| Eni Gas & Power NV | Belgium | 100.00 | ||
| Eni Gas Transport Services SA (in liquidation) | Switzerland | 100.00 | ||
| Eni Power Generation NV | Belgium | 100.00 | ||
| Eni Wind Belgium NV | Belgium | 100.00 | ||
| Société de Service du Gazoduc Transtunisien SA - Sergaz SA | Tunisia | 66.67 | ||
| Société pour la Construction du Gazoduc Transtunisien SA - Scogat SA | Tunisia | 100.00 | ||
| Tigáz Tiszántúli Gázszolgáltató Zártkörûen Mûködõ Részvénytársaság | Hungary | 98.04 | ||
| Tigáz-Dso Földgázelosztó kft | Hungary | 98.04 |
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Eni Annual Report / List of Eni's subsidiaries |
| Subsidiary | Country of Incorporation |
Eni’s share |
| Refining & Marketing | ||||
| Costiero Gas Livorno SpA | Italy | 65.00 | ||
| Ecofuel SpA | Italy | 100.00 | ||
| Eni Fuel Centrosud SpA | Italy | 100.00 | ||
| Eni Fuel Nord SpA | Italy | 100.00 | ||
| Eni Rete oil&nonoil SpA | Italy | 100.00 | ||
| Eni Trading & Shipping SpA | Italy | 100.00 | ||
| Petrolig Srl | Italy | 70.00 | ||
| Petroven Srl | Italy | 68.00 | ||
| Raffineria di Gela SpA | Italy | 100.00 | ||
| Eni Austria GmbH | Austria | 100.00 | ||
| Eni Benelux BV | Netherlands | 100.00 | ||
| Eni Ceská Republika Sro | Czech Republic | 100.00 | ||
| Eni Deutschland GmbH | Germany | 100.00 | ||
| Eni Ecuador SA | Ecuador | 100.00 | ||
| Eni France Sàrl | France | 100.00 | ||
| Eni Hungaria Zrt | Hungary | 100.00 | ||
| Eni Iberia SLU | Spain | 100.00 | ||
| Eni Marketing Austria GmbH | Austria | 100.00 | ||
| Eni Mineralölhandel GmbH | Austria | 100.00 | ||
| Eni Romania Srl | Romania | 100.00 | ||
| Eni Schmiertechnik GmbH | Germany | 100.00 | ||
| Eni Slovenija doo | Slovenia | 100.00 | ||
| Eni Slovensko Spol Sro | Slovakia | 100.00 | ||
| Eni Suisse SA | Switzerland | 100.00 | ||
| Eni Trading & Shipping BV | Netherlands | 100.00 | ||
| Eni Trading & Shipping Inc | United States of America | 100.00 | ||
| Eni USA R&M Co Inc | United States of America | 100.00 | ||
| Esain SA | Ecuador | 100.00 | ||
| Versalis | ||||
| Versalis SpA | Italy | 100.00 | ||
| Dunastyr Polisztirolgyártó Zártkoruen Mûködõ Részvénytársaság | Hungary | 100.00 | ||
| Eni Chemicals Trading (Shanghai) Co Ltd | China | 100.00 | ||
| Polimeri Europa France SAS | France | 100.00 | ||
| Polimeri Europa GmbH | Germany | 100.00 | ||
| Polimeri Europa UK Ltd | United Kingdom | 100.00 | ||
| Versalis International SA | Belgium | 100.00 | ||
| Versalis Pacific Trading (Shanghai) Co Ltd | China | 100.00 | ||
| Engineering & Construction | ||||
| Denuke Scarl | Italy | 23.71 | ||
| Saipem SpA | Italy | 43.11 | ||
| Servizi Energia Italia SpA | Italy | 43.11 | ||
| Snamprogetti Chiyoda SAS di Saipem SpA | Italy | 43.07 | ||
| Andromeda Consultoria Tecnica e Representações Ltda | Brazil | 43.11 | ||
| Boscongo SA | Republic of the Congo | 43.11 | ||
| Construction Saipem Canada Inc | Canada | 43.11 | ||
| ER SAI Caspian Contractor Llc | Kazakhstan | 21.56 | ||
| ERS - Equipment Rental & Services BV | Netherlands | 43.11 | ||
| ERSAI Marine Llc | Kazakhstan | 21.56 | ||
| Global Petroprojects Services AG | Switzerland | 43.11 | ||
| Moss Maritime AS | Norway | 43.11 |
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| Subsidiary | Country of Incorporation |
Eni’s share |
| Engineering & Construction | ||||
| Moss Maritime Inc | United States of America | 43.11 | ||
| North Caspian Service Co Llp | Kazakhstan | 43.11 | ||
| Petrex SA | Peru | 43.11 | ||
| Professional Training Center Llc | Kazakhstan | 21.56 | ||
| PT Saipem Indonesia | Indonesia | 43.11 | ||
| Saigut SA de Cv | Mexico | 43.11 | ||
| Saimep Limitada | Mozambique | 43.11 | ||
| Saimexicana SA de Cv | Mexico | 43.11 | ||
| Saipem (Beijing) Technical Services Co Ltd | China | 43.11 | ||
| Saipem (Malaysia) Sdn Bhd | Malaysia | 17.84 | ||
| Saipem (Nigeria) Ltd | Nigeria | 38.55 | ||
| Saipem (Portugal) Comércio Marítimo, Sociedade Unipessoal Lda | Portugal | 43.11 | ||
| Saipem America Inc | United States of America | 43.11 | ||
| Saipem Asia Sdn Bhd | Malaysia | 43.11 | ||
| Saipem Australia Pty Ltd | Australia | 43.11 | ||
| Saipem Canada Inc (former Snamprogetti Canada Inc) | Canada | 43.11 | ||
| Saipem Contracting (Nigeria) Ltd | Nigeria | 42.23 | ||
| Saipem Contracting Algérie SpA | Algeria | 43.11 | ||
| Saipem Contracting Netherlands BV | Netherlands | 43.11 | ||
| Saipem do Brasil Serviçõs de Petroleo Ltda | Brazil | 43.11 | ||
| Saipem Drilling Co Private Ltd | India | 43.11 | ||
| Saipem Drilling Norway AS | Norway | 43.11 | ||
| Saipem India Projects Ltd | India | 43.11 | ||
| Saipem Ingenieria y Construcciones SLU | Spain | 43.11 | ||
| Saipem International BV | Netherlands | 43.11 | ||
| Saipem Libya Llc - SA.LI.CO. Llc | Libya | 43.11 | ||
| Saipem Ltd | United Kingdom | 43.11 | ||
| Saipem Luxembourg SA | Luxembourg | 43.11 | ||
| Saipem Maritime Asset Management Luxembourg Sàrl | Luxembourg | 43.11 | ||
| Saipem Mediteran Usluge doo (in liquidation) | Croatia | 43.11 | ||
| Saipem Misr for Petroleum Services SAE | Egypt | 43.11 | ||
| Saipem Norge AS | Norway | 43.11 | ||
| Saipem Offshore Norway AS | Norway | 43.11 | ||
| Saipem SA | France | 43.11 | ||
| Saipem Services México SA de Cv | Mexico | 43.11 | ||
| Saipem Services SA | Belgium | 43.11 | ||
| Saipem Singapore Pte Ltd | Singapore | 43.11 | ||
| Saipem UK Ltd (in liquidation) | United Kingdom | 43.11 | ||
| Saipem Ukraine Llc | Ukraine | 43.11 | ||
| Sajer Iraq Co for Petroleum Services Trading General Contracting & Transport Llc | Iraq | 25.87 | ||
| Saudi Arabian Saipem Ltd | Saudi Arabia | 25.87 | ||
| Sigurd Rück AG | Switzerland | 43.11 | ||
| Snamprogetti Engineering & Contracting Co Ltd | Saudi Arabia | 30.18 | ||
| Snamprogetti Engineering BV | Netherlands | 43.11 | ||
| Snamprogetti Ltd (in liquidation) | United Kingdom | 43.11 | ||
| Snamprogetti Lummus Gas Ltd | Malta | 42.68 | ||
| Snamprogetti Netherlands BV | Netherlands | 43.11 | ||
| Snamprogetti Romania Srl | Romania | 43.11 | ||
| Snamprogetti Saudi Arabia Co Ltd Llc | Saudi Arabia | 43.11 | ||
| Sofresid Engineering SA | France | 43.11 | ||
| Sofresid SA | France | 43.11 | ||
| Sonsub International Pty Ltd | Australia | 43.11 |
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| Subsidiary | Country of Incorporation |
Eni’s share |
| Other activities | ||||
| Ing. Luigi Conti Vecchi SpA | Italy | 100.00 | ||
| Syndial SpA - Attività Diversificate | Italy | 100.00 | ||
| Corporate and financial companies | ||||
| Agenzia Giornalistica Italia SpA | Italy | 100.00 | ||
| Eni Adfin SpA | Italy | 99.63 | ||
| Eni Corporate University SpA | Italy | 100.00 | ||
| EniServizi SpA | Italy | 100.00 | ||
| Serfactoring SpA | Italy | 48.82 | ||
| Servizi Aerei SpA | Italy | 100.00 | ||
| Banque Eni SA | Belgium | 100.00 | ||
| Eni Finance International SA | Belgium | 100.00 | ||
| Eni Finance USA Inc | United States of America | 100.00 | ||
| Eni Insurance Ltd | Ireland | 100.00 | ||
| Eni International BV | Netherlands | 100.00 |
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Eni Annual Report / Consolidated Sustainability Statements |
Notes on the Consolidated Sustainability Statements
n Preparation criteria
In 2013 Eni continued its commitment to
integrated reporting, preparing the Annual Report 2013 in
accordance with the principles and contents of the framework
issued by the International Integrated Reporting Council (IIRC).
This section, entitled “2013 Consolidated Sustainability
Statements” (hereafter, Consolidated Sustainability
Statements), reports the main results for the 2011-2013 period
and the year’s projects.
The section is based on the “Sustainability Reporting
Guidelines & Oil and Gas Sector Supplement - Version
3.1” issued by the GRI (Global Reporting Initiative), with
particular reference to the standards of materiality,
completeness, stakeholder inclusiveness and sustainability
context, and is also prepared considering the IPIECA/API/OGP
"Oil and gas industry guidance on voluntary sustainability
reporting". Eni is working towards the adoption of the new
G4 Sustainability Reporting Guidelines issued in May 2013 and
adheres to the GRI G4 Pioneers Program. The program, initiated in
October 2013 by the GRI, aims to assist companies during this
transitional phase to achieve full implementation of the
guidelines.
Materiality and stakeholder inclusiveness
To identify the issues to be reported on in this
document, a materiality analysis was carried out, taking into
account the importance of the various topics for external
stakeholders as well as their relative significance within the
company.
The level of external interest in sustainability issues is found
through an analysis that considers the following factors: the
energy, political, economic and social scenario, at a global and
local level, the benchmarking on a panel of companies from the
oil&gas and other sectors similar to Eni in size and
geographic characteristics, capital market and ethics rating
agency demands, analysis of the press and the web and the
requests that major stakeholders have made to Eni, using
different methods and communication channels. In addition to the
financial community, the stakeholders considered are governments
and local institutions, international and national associations,
NGOs and citizens interested in Eni’s work and Eni’s
people (for further information see the section “Stakeholder
engagement”).
The level of internal significance is determined on the basis of
analysis of short-term and long-term strategy and objectives,
combined with evaluation of the results and sustainability
performance for the reporting year. Joint consideration of
external and internal significance leads to the identification of
areas of priority and of greater materiality to the company,
shared with all the units concerned and approved by the top
management.
Reporting perimeter and sustainability context
The sustainability information contained in this section
and in the Operating and Financial Review section of the Annual
Report is integrated at several levels within the document.
Within the Operating and Financial Review, financial information
has been integrated with sustainability information with regard
to the operating context, strategy, business model and integrated
risk management system, as well as Governance.
The following section contains Eni’s consolidated
performance indicators for the 2011-2013 period and an analysis
of the relative trends. The information included relates to Eni
SpA and its consolidated subsidiaries. The consolidation
perimeter is the same as that for the 2013 Consolidated Financial
Statements, with the exception of certain data specifically
indicated in the text. With regard to data on health, safety and
the environment, the consolidation scope is defined using the
operational criterion (control of operations). Under this
approach, for example, emissions reported represent 100% of the
emissions for each installation operated by Eni.
Vice versa, the equity share criterion, used in the consolidated
financial statements, requires that the emissions associated with
an installation reflect the percentage financial interest in that
particular installation.
Principles of quality assurance for sustainability
reporting
The performance data shown have been reported with the
aim of giving a balanced and clear picture of company actions and
characteristics.
The collection process for information and quantitative data has
been structured to ensure comparability of data across several
years, to enable a correct reading of the information and a
complete view for all the stakeholders interested in the trends
in Eni’s performance.
The indicators and specific data for the various business sectors
are shown on the website eni.com.
The Consolidated Sustainability Statements are based on the
measurement processes defined in the reporting procedures: lower
or different levels of accuracy are indicated in the margin for
the data presented. During data input by the people responsible
for each topic, in addition to loading data for the reporting
year, the two previous years were also verified and updated.
Therefore, any changes in the data for 2011 and 2012 compared to
those published last year are due to these adjustments. The data
were collected using a dedicated information system, which
guarantees the reliability of information flows and accurate
monitoring. The sustainability information has been certified by
an independent entity, the auditing company for the consolidated
financial statements of the Eni Group as of December 31, 2013.
Calculation methods
The methods used to calculate added value, the injury
frequency rate and injury severity rate, the refining energy
intensity index, the emission index and the value generated by
research are shown below.
Added value represents the wealth generated by the company in
carrying out its activities. The form chosen for this report is
total added value net of amortization. Total net added value is
divided between the following beneficiaries: employees (direct
remuneration composed of wages,
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salaries and TFR /employee termination
indemnity /and indirect remuneration consisting of social welfare
contributions); Public Administration (income tax); financial
backers (medium and long-term interest paid for the availability
of borrowed capital); shareholders (dividends distributed); and
the company (retained earnings).
With regard to safety performance, injury frequency and severity
rates are shown for employees and contractors. The frequency rate
is calculated as the number of accidents leading to days of
absence26 (including fatalities) divided by millions
of worked hours; the severity rate is defined as the ratio
between the days of absence due to accidents (excluding
fatalities) and thousands of worked hours.
The energy intensity index of refineries represents the total
value of energy actually used in a given year in the various
refinery processing plants, divided by the corresponding value
determined on the basis of predefined standard consumption values
for each processing plant.
For comparisons between years, 1994 data have been taken as the
baseline (100%).
In order to highlight medium and long-term performance on CO2
emissions, three indexes have been defined to represent the
following operating contexts: hydrocarbon production, refining
and electricity generation. These indexes take into account the
substantial differences in working conditions recorded over the
years and allow for performance comparison by normalization of
the emissions based on operating data.
The indexes of refineries are calculated from the equivalent
distillation capacity provided by a third party entity; the
hydrocarbon production indexes cover effective gross production;
and the energy sector indexes measure electrical and thermal
energy produced in equivalent kWh. Greenhouse gas emissions (GHG)
relate to CO2 and CH4 (methane); methane is
converted into CO2 eq using a Global Warming Potential
(GWP) of 21.
The method for assessing the value generated from research allows
the benefits of R&D to be calculated in terms of both
tangible and intangible value.
The tangible benefit is measured by the economic benefits linked
to the application of innovative product/process technologies. In
detail, the total tangible benefit is measured as 100% of the
company share [of profits] from projects involving the
application of technology, before tax.
The economic benefits may be based on actual results or expected
value (Net Present Value - NPV).
The assumptions applied on a case by case basis for the
calculation are shared with the relevant technical
structures/business lines. The tangible benefits are identified
in a “what if” scenario, that is, as the difference
derived from comparison with the application of the best
alternative technology or, in the case of new products, as the
difference compared to the margin generated by the products
replaced.
Intangible benefits are identified by assessing on the one hand
the effectiveness and efficiency of company innovative capacity
over time through the number of first time patent applications
filed and on the other, the spread of specialist know-how and the
effectiveness of research in providing support for operating
activities.
n Disclosure on management approach
Sustainability management model
Sustainability is part of Eni’s business model and is
integrated in all company processes: from planning, monitoring
and control to risk prevention and management, from the
implementation of operations to reporting and communication with
internal and external stakeholders.
According to this, all corporate targets are pursued with an
approach strongly oriented towards operational excellence,
technological innovation, cooperation in the development of the
Countries involved, the central importance of people, responsible
business management based on strict financial discipline, the
highest ethical principles and the synergies resulting from
integration along the entire energy supply chain.
Eni’s Board of Directors has a central role in determining
sustainability policies and strategies and in approving the
sustainability results, which are also presented at the Annual
General Meeting.
Since 2011, following the approval of the Board of Directors, Eni
has had a Sustainability Policy that outlines the fundamental
sustainability principles upon which the Company bases its
operations and forms part of the highest level of Eni’s new
internal regulatory system.
To maintain high standards in operating activities, Eni has set
priority sustainability goals to be pursued with projects and
initiatives included in the Strategic Plan. Implementation of
projects relating to priority goals is supported by economic
incentives. Project progress status and achievement of targets
are monitored by the Sustainability Unit via a system of annual
and semi-annual reporting. The approval of the related action
plans and the review of the major achievements are subject to the
highest levels of corporate decision-making.
Regulatory system
Eni undertakes to ensure the integrity, transparency,
fairness and efficiency of its processes by adopting appropriate
tools, standards and rules for the conduct of activities and the
exercise of powers, promoting rules of conduct based on the
principles of traceability and segregation of duties.
Eni’s regulatory system is based on a coherent reference
framework, which includes the essential elements of the By-Laws,
the Code of Ethics, the Corporate Governance Code, the Principles
of Model 231, the SOA Principles and the CoSO Report.
The system is made up of policy, coordination and control tools
(Policies and Management System Guidelines - MSGs) and
operational tools (Procedures and Operating Instructions). The
Policies are approved by the Board of Directors of Eni SpA and
define the principles and general rules of conduct on which
Eni’s activities must, without exception, be based. Eni has
ten policies: “Our people”, “Our partners in the
value chain”, “Global compliance”, “Corporate
Governance”, “Operational Excellence”, “Our
institutional partners”, “Information management”,
“Sustainability”, “Our tangible and intangible
assets” and “The integrity of our operations”.
(26) The term “day of absence” means absence from work of at least one calendar day, excluding the day of the accident.
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The MSGs issued by Eni provide
guidelines for the management of operating and business support
processes, including sustainability aspects. They are also used
to describe Compliance and Governance models. Each individual
company formally adopts the MSGs and adapts its own regulatory
framework as a result. By the end of 2013, Eni had issued
twenty-eight process MSGs and ten for Compliance/Governance,
thereby completing the redesign of its processes, redefinition of
the governance/compliance guidelines and simplification of the
regulatory framework.
In conclusion, the procedures define the operating methods which
must be used to carry out company activities while the Operating
Instructions define detailed operating procedures for a specific
department, organizational unit or professional area.
Economic performance and market presence
Making use of the integrated business model, Eni has
identified a long-term sustainable growth and value creation
strategy for shareholders, the implementation of which is based
on specific guidelines and strategies at the business level. In
2013 Eni achieved solid results in a difficult market (see the
“Profile of the year”). In a market environment that is
expected to remain difficult, Eni’s strategy for the
2014-2017 period will be based on selective growth in activities
of the E&P sector, accelerated restructuring of mid and
downstream activities and value creation resulting from disposals
and disciplined investment management. All these operations will
result in an increase in the cash flow over the four years to
sustain progressive growth in dividends for shareholders and a
strong financial position for Eni (see “Our strategy”).
Management of procurement activities
The purpose of the procurement process is to
translate the requirements expressed by company units into a
supply of goods, works or services from suppliers, in line with
quality standards, time schedules and other specific
requirements, while minimizing procurement costs as far as
possible. Furthermore, each phase of the procurement process
complies with Eni HSEQ principles.
In order to manage this process in a systematic and structured
manner, Eni has adopted the “MSG Procurement”, which:
(i) regulates the various phases and activities included in the
procurement process, such as procurement planning, tender
management, contract award and post-award contract management;
(ii) establishes the roles and responsibilities of the main
actors involved in the procurement process; (iii) defines the
general rules for key crosscutting activities in the procurement
process, such as vendor management, procurement monitoring and
reporting and document management.
Audits are performed continuously on vendors both at the
qualifying stage and during service provision.
Indirect economic impacts
In addition to direct employment, Eni participates
in the development of the Countries in which it operates by
strengthening the supply chain linked to induced activity and
implementing specific local development projects. Eni, in its
areas of expertise, systematically makes use of the supply of
local goods and services as well as the local workforce, thus
responding to the demand of many national and international
stakeholders to create value locally. Many affiliates have
adopted local procedures that define the process to be followed
for using local labor from the areas surrounding our operations
in each region. In operational contexts, market analysis is
systematically conducted at a local level in order to include
companies from the local area in the vendor lists. Also, when
selecting international companies, one of the technical
assessment criteria is the percentage of local content and the
presence of a plan to develop it. Eni promotes annual training
programs with the aim of enabling local personnel to obtain high
responsibility jobs and to replace international staff.
Environment
Eni’s environmental commitment is one of the
pillars of its sustainability strategy. Eni has adopted a unique
system for managing Health, Safety and the Environment (HSE).
Management of environmental issues is based on prevention,
protection, information and participation criteria and its goals
are: identification of significant environmental aspects and
adoption of the best technologies; mitigation of environmental
impacts; management of a system to prevent events with a direct
or indirect adverse environmental impact, connected to specific
production unit activities; and the adoption of site-specific
methods for protecting biodiversity. Eni has defined and
constantly updates an integrated health, safety and environmental
(HSE) management system managed by the HSE corporate department,
which is responsible for promoting the management and continuous
improvement of HSE performance. The tools used by Eni to manage
environmental issues are the policies “Operational
excellence”, “The integrity of our operations”,
“Sustainability” and the MSG HSE in addition to the
various procedures and operating instructions (OPI). Work on HSE
topics is coordinated by an HSE Coordination Committee, chaired
by Eni’s Safety, Health and Environment Manager, and is made
up of Managers of the business unit HSE functions.
Energy
Energy efficiency is, for Eni, a key factor in good
management and sustainability. It is linked not only to
responsible management of resources but also to reduction of the
impact of GHG emissions and control of emissions of nitrogen
oxides and sulphur, indicators of the proper functioning of the
combustion processes and choice of the best fuels. Eni undertakes
to reduce greenhouse gas emissions by improving efficiency and
increasing the use of fuels with a lower carbon content, and
promotes an informed and sustainable use of energy through
information campaigns and internal and external education and
through the inclusion of sustainability criteria in the selection
and evaluation of suppliers. Eni is also steadily reducing its
emissions indexes for the amount of energy produced/developed and
promotes the development of gas associated with oil in all
projects.
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Water
Eni is aware that access to water is an important
issue for development and has undertaken to optimize the use of
fresh water in the production cycle to limit the impact on its
availability for local communities. Over the last few years Eni
has been constantly reducing its fresh water use by implementing
the best technologies and aims to gradually increase the
re-injection of the water from extraction and production back
into the reservoirs of origin.
To assess the impact of its activities in the so-called
“water stressed” zones, where even a low consumption of
fresh water could compete with primary needs, Eni has decided to
apply the Global Water Tool developed by WBCSD and adapted to the
oil&gas sector by IPIECA in 2011.
Biodiversity
Eni considers the preservation of biodiversity and
ecosystem services to be an essential component of sustainable
development when implementing its industrial projects and
undertakes to integrate this preservation goal in its own
activities throughout the lifecycle of its facilities and in all
the contexts in which it operates. In its design and operational
practices, Eni considers the presence of protected areas and
areas that are significant in terms of biodiversity, the presence
of threatened species and ecosystem services of environmental and
social importance. Eni identifies and assesses the potential
impacts of its operational activities on biodiversity and
implements mitigation actions to offset and minimize the effects.
Eni also evaluates the interaction between its activities and the
ecosystem services, in particular by promoting efficient water
management, especially in areas subject to water stress, and by
reducing emissions into the air, water and soil. For this
purpose, Eni has adopted protocols developed within the framework
of IPIECA and contributes to the global mapping of protected
areas through the Proteus project. Eni has adopted site specific
methods for protecting biodiversity that are based on the
principles of the Convention on Biological Diversity, the
guidelines of the Energy and Biodiversity Initiative and the
operational tools developed by the IPIECA-OGP Biodiversity
Working Group. Eni maps its operational sites in relation to the
areas of high biodiversity value to differentiate its operational
practices on the basis of their relevance and identify priorities
for implementing specific action plans.
Emissions
Eni has established a carbon management strategy
for reducing greenhouse gas emissions and manages participation
in the European Emission Trading system through complex
management procedures including physical accounting, reporting
and monitoring of emissions, as well as the related operations
for the administration of quotas and the related trading. For
other emissions (SOx, NOx, etc.), Eni undertakes to apply the
Best Available Techniques (BAT) and best standard procedures to
reduce emissions and control the main pollutants in the
atmosphere.
Waste
In all the places where it operates, Eni is
committed to complying with the existing legislation on waste and
reducing the environmental impact associated with different
phases of the management process. Moreover, as established by the
EU, Eni has adopted the principles of the waste management
hierarchy with the aim of preventing the production of waste,
minimizing disposals in landfills and increasing recovery.
Labor practices and adequate working conditions
Part of Eni’s culture and the basis for the success
of the company is the central importance given by Eni to its
people: from employment protection to the development of skills
and competencies and creation of a work environment which offers
equal opportunities to all based on shared, merit-based criteria,
without discrimination. These principles are confirmed in
Eni’s Code of Ethics which explicitly refers to the United
Nations Universal Declaration of Human Rights, the ILO
Fundamental Conventions and the OECD Guidelines for Multinational
Enterprises; particular emphasis is given to the protection of
labor and trade union freedom, repudiating “any sort of
discrimination, corruption, forced labor or child labor”.
The promotion of international labor standards in all contexts is
the focus of Eni’s regulatory documents, the trade union
agreements in force at the national and international level,
personnel management and development processes and training and
communication initiatives.
Health and safety
The health and safety of Eni’s people, the
community and Eni’s partners are a priority for Eni in
pursuing its business activities. All of Eni’s
organizational solutions guarantee respect and protection for
health and safety based on the principles of precaution,
prevention, protection and continuous improvement, making all
company levels responsible for achieving this. Operating sites
conduct risk assessment activities to identify the major threats
to personnel safety. Eni has a health management system based on
the OHSAS 18001 international standard and annually introduces
specific safety goals connected to the remuneration of Eni’s
people. Campaigns to raise awareness, information provision and
specific training courses on the subject for the whole workforce,
without exception, are an additional element of Eni’s safety
culture, which is seen as an essential component of Eni’s
corporate culture.
Employment and quality of work
The strategic importance of Eni’s people is
enshrined in the Policy “Our people” where it states
that “people are the indispensable and essential element for
the very existence of the company and business goals can be
achieved only through their dedication and professionalism”.
The Policy emphasizes the importance of the human factor and the
drivers that determine development and improvement, identifies
the principles and values that should inspire actions and
behaviors and affirms Eni’s commitment to supporting
“the observance of the rights enshrined in the Universal
Declaration of Human Rights”.
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These principles are reflected in the
MSG “Human Resources” that standardizes and defines all
the processes within the sphere of Human Resources.
For Eni, offering quality work also means enhancing the working
practices, results, professional skills, experience and potential
of its people using integrated and consistent assessment systems.
The remuneration systems are also oriented to guarantee
recognition of the contribution of our people to the achievement
of company objectives. In relation to these principles, the
remuneration policies are defined in an integrated manner at the
global level, in line with the reference indicators for the local
markets and specific sectors. Eni “encourages, in its labor
relations, the adoption of conduct based on mutual respect and
condemns any form of behavior interpretable as bullying or
harassment” and as part of this commitment has developed a
web seminar on “non discrimination” which explains the
ILO Convention 111, one of the documents that governs the
international standards on workplace discrimination. This
initiative, evaluated as a “best practice” by the
International Labor Organization (ILO) was inspired by our belief
that awareness by all people of the importance of equality and
non discrimination is an essential requirement for the creation
of an inclusive environment, which promotes respect for and gives
value to diversity.
Freedom of association and collective bargaining
In conducting its activities Eni guarantees freedom
of association and the effective recognition of the right to
collective bargaining. In order to develop an effective and
continuous trade union dialogue, Eni has set up with the Trade
Unions an industrial relations model with phases that allow for
all the information, consultation and engagement needed to meet
business and organizational requirements. The industrial
relations model ensures broad prior participation, guaranteeing
the existence of a process of continuous dialogue with the trade
unions during changes involving the company and the workers.
Therefore, Eni protects people’s right to form and join the
trade union of their choice without discrimination, interference
or prior authorization, with the sole constraint of the rules of
the organization involved. Eni’s Industrial Relations are
regulated at the national level by the 2001 Industrial Relations
Protocol and by the agreement on development and competitiveness
and for a new industrial relations model signed on May 26, 2011.
Issues of note in relation to industrial relations activities at
an international level are the relations with the European Works
Council (CAE) on the progress of Eni policies within the European
framework and with the representatives of the European Risk
Observatory for Workers’ Safety and Health.
Diversity and equal opportunities
Eni promotes behaviors aimed at improving
diversity, inclusion and non-discrimination and is committed to
creating a work environment where personal and cultural
characteristics are considered a resource and a source of mutual
enrichment.
As enshrined in the Policy “Our People”, Eni respects
the dignity of each individual and offers equal opportunities
regardless of race, color, gender or any other individual status
unrelated to the requirements contained in the job specification.
The respect of equal opportunities is guaranteed by the
application of internal systems and procedures for selection,
evaluation and development and Compensation & Benefit based
on the enhancement of skills and merit and a fair compensation
system. In fact the pay gap analysis, conducted using a
methodology that, in remuneration comparisons, neutralizes any
effects arising from differences in position and seniority level,
reveals a general uniformity of remuneration between genders.
Training and awareness
Eni has developed training paths for its people
that represent privileged tools for promoting personal and
professional development and contributing to the quality of work.
Eni Corporate University is the main route that Eni uses to
develop and enhance knowledge and people’s managerial and
technical-professional skills. The different courses provide both
for strengthening of the process of cultural, professional and
managerial growth and in-depth exploration of specialist topics
with a direct impact on the business. For members of the Board of
Directors, a series of specific training and awareness
initiatives on issues linked to sustainability are provided as
part of the Board Induction process.
Human Rights
Eni operates in accordance with the highest
international standards concerning the responsibilities of
companies with regard to Human Rights, including the Guiding
Principles for Business and Human Rights approved by the UN
Council for Human Rights in 2011. These guidelines require that
companies implement a coherent system of rules designed to
prevent, manage and report Human Rights violations and adopt a
due diligence process, understood as a management system that
enables measures and functional processes to be adopted to
achieve these goals. Eni’s regulatory system explicitly
requires that “the company undertakes to respect
internationally recognized Human Rights as part of its activities
and to promote respect as part of activities contracted out to,
or conducted with, partners and by its stakeholders”. Since
2007 Eni has adopted a Guideline which regulates the protection
and promotion of Human Rights in all the company’s actions.
In the same year the Code of Ethics, which describes the
company’s expectations with regard to various areas relating
to Human Rights, was approved. Over the years measures to respect
Human Rights have been integrated in the various corporate
regulatory instruments relating to Sustainability, Human
Resources, Security, Sustainability Stakeholders Engagement and
Community Relations, HSE, Planning and Control, Procurement,
Energy and Environmental Industrial Project Development and
Integrated Risk Management.
The commitment to respect Human Rights is also met at Eni through
initiatives and projects focused on priority areas identified
through the Human Rights Compliance Assessment project. The
related improvement actions are carried out by the relevant
departments with the support of a specialist function and are
coordinated by a multi-departmental Working Group.
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Indigenous peoples
Eni undertakes to respect the rights of indigenous
peoples on the basis of Convention No. 169 of the ILO concerning
Indigenous and Tribal Peoples. Compliance with this international
standard is provided for in the Eni Guidelines for the protection
and promotion of Human Rights. Other references to the methods by
which Eni intends to implement the Convention are explained in
the Sustainability policy and in the MSG Sustainability
Stakeholders Engagement and Community Relations. Corporate tools
and methodologies reflect this approach, starting with the
standards for the assessment of environmental, social and health
impact.
In contexts where indigenous populations are present, the
adoption of specific policies, which enshrine Eni’s
commitment to respect the rights of indigenous peoples and to
take their expectations into account in business decisions, is
encouraged. To date, Indigenous Peoples Policies have been
adopted for Eni’s operations in Australia and Norway.
Security
Security activities, governed by the MSG Security,
are aimed at ensuring the protection of people and assets from
any security threat stemming from the criminal acts of third
parties that could cause direct or indirect damage, including
damage to Eni’s reputation. This objective is achieved
through the implementation of an effective and efficient system
of Security Risk Management that defines the organization and
tools needed to determine the nature of the threats, track the
evolution of vulnerability over time, understand the potential
consequences of future events and develop a strategic approach to
their management and mitigation, as required. Preventive and
defensive measures are taken that are most suitable to minimize
the impact and the likelihood of adverse events occurring, always
in full compliance with Human Rights and the highest
international standards.
In support of these objectives, clauses related to Human Rights
protection are inserted in contracts with security services
providers, and training courses are carried out that also involve
representatives of public security forces.
Society
Eni operates by defining long-term cooperation
agreements with governments and joint ventures with the National
Oil Companies, taking into account the importance of enhancing
the skills of local people and businesses and promoting the
transfer of knowledge and the growth of local professionalism.
This willingness to take action and create development
opportunities for the local population is put into practice by
signing a Memorandum of Understanding (MoU).
Eni identifies and assesses the environmental, social, economic
and cultural impacts generated by its activities, including those
on the indigenous peoples, ensuring their mitigation and
implementing improvement processes. The company adopts
appropriate tools to manage and plan projects in order to
identify, define and manage the initiatives for the benefit of
the local communities. The process involves the use of specific
operating procedures: Stakeholder Management Process; Social
Baseline Analysis; Social Impact Assessment, Community Investment
Planning, Monitoring & Evaluation. In 2013 the MSG
“Stakeholder Engagement and Community Relations” was
issued with the aim of: (i) regulating the phases and activities
of the process of stakeholder engagement and sustainability
relations with local communities and relations with the other
business processes; (ii) establishing roles and responsibilities
of the main macro players involved in the process of stakeholder
engagement sustainability and community relations.
Local communities
The MSG “Stakeholder Engagement and Community
Relations” regulates the community relations sub-process in
order to manage relationships with the local communities residing
in a specific territory in which Eni operates, including
responses to their demands, and generate value in the territory
through projects for local sustainable development. This
sub-process, performed by the relevant company function, defines
the management procedures for community relations and
relationships with local communities relating to specific aspects
of Eni’s business in a specific territory. These procedures
include: (i) identifying the community relations strategy and the
related directions for the implementation of Eni’s
cooperation and development model in the territories where it has
a presence, adopting an inclusive approach with stakeholders and
local communities; (ii) defining, planning, mapping and
implementing community relations; (iii) defining methodologies
and tools that the company departments responsible must use for
proper planning and management of community relations.
Eni also has appropriate standards for the assessment of impacts
on local communities: i) the ESIA which gives further depth to
the cultural and socio-economic part of the impact analysis; ii)
the ESHIA which provides a combined and integrated assessment of
the environmental and social and health impact of projects. In
addition to direct employment, Eni participates in the
development of the Countries in which it operates by
strengthening the supply chain linked to induced activity and
implementing specific local development projects. Eni manages
relationships with the territories in a fair and transparent
manner, establishing an ongoing dialogue with stakeholders. In
order to guarantee access to information and community
participation, Eni has units responsible for relations with the
territory in all its subsidiaries.
Anti-corruption
Eni believes that corruption is an unacceptable
obstacle to business efficiency and fair competition. Therefore,
Eni uses its internal organizational and regulatory structure to
combat corruption and ensure respect for transparency as part of
its business model.
Since January 1, 2010 Eni has set up an Anti-Corruption Legal
Support Unit (ACLSU) which provides Anti-Corruption consulting
and specialist assistance for Eni’s people and Eni’s
non-listed subsidiaries. The Anti-Corruption Legal Support,
Sustainability and Internal Control System unit currently
performs the role of the ACLSU.
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Moreover, since January 1, 2012 the
current MSG Anti-Corruption has been updated to include the UK
Bribery Act of 2010 (in force since July 1, 2011) and
supplemented with the Anti-Corruption Regulatory Instruments,
which replace the previous Ancillary Procedures.
In 2013, under its new Regulatory System, Eni continued the
process of revising and reissuing the Ancillary Anti-Corruption
Procedures issued under the previous system, which covered
sponsorship and Non-Profit Organizations. Rules for some specific
relationships such as those with brokers and JV Partners had
already been formulated in 2012.
Grievance Mechanism
Eni has a dedicated channel for reporting any
suspected or known violation, including corruption. This
disclosure channel, provided by the procedure
"Whistleblowing Reports" received (including
anonymously) by Eni and by its subsidiaries in Italy and abroad,
allows employees, members of corporate bodies or third parties to
submit, also confidentially or anonymously, reports of problems
relating to the internal control system (compliance with laws and
regulations, and corporate rules and procedures, fraud relating
to corporate assets and company information, company’s
administrative liability, etc.) or other matters in breach of
Eni’s Code of Ethics (issues related to ethical behavior,
cases of bullying, harassment, conflicts relating to the
management of the personnel concerned, etc.). Eni, in order to
facilitate the receipt of reports, provides all possible channels
of communication, including ordinary post, fax numbers, voice
mail, electronic mail and communication tools on Eni’s
intranet/internet websites.
Eni guarantees receipt, analysis and initiation of an
investigation conducted by the Internal Audit Department. The
outcomes of these investigations are submitted to the control and
supervisory bodies in charge.
To support wide-ranging and sustained stakeholder engagement,
which Eni pursues to improve relationships with local
communities, enable more responsive and responsible management
and contribute to long-term business prospects and social
well-being, mechanisms for collecting and managing alerts are
already active in Countries were Eni has a long established
presence such as Nigeria, Kazakhstan and Pakistan; others are
being strengthened in new countries of activity such as Ghana.
Special attention is paid to situations where indigenous
communities are present, such as in Australia, Ecuador and
Norway. As part of its role in the project promoted by IPIECA to
define sector-specific guidelines for the Grievance Mechanism,
Eni has started a pilot project aimed at developing a
site-specific mechanism for complaints in local communities and
to define the basis for a valid best practice for the whole
Group.
Product Responsibility
All Eni’s activities are carried out with
commitment and professional rigor, with a duty to provide
adequate professional input for the functions and
responsibilities assigned and to act so as to protect Eni’s
prestige and reputation. Business objectives, project proposals
and implementation, investments and actions must all be aimed at
increasing the long term value of the company’s operating
assets, technological know-how and knowledge as well as creating
value and wealth for all the stakeholders, especially our
customers.
Consumer health and safety
Eni pursues business success with a strong market
orientation, recognizing that the appreciation of those who
demand products or services is of primary importance for the
success of the company, and endeavors to assure the quality of
the goods and services provided. It pursues business success in
its markets by offering quality products and services under
competitive conditions, and in accordance with all the standards
established to protect fair competition. Eni is committed to
respecting the right of consumers of not receiving products which
are harmful to their health and physical integrity and to have
complete information on the products offered.
Satisfaction of our customers and consumers
Customer Satisfaction (CS) is regularly monitored
in all Eni businesses involving the sale of products or services
to end customers (fuel and gas distribution, power generation,
natural gas and energy sales, engineering and construction,
petrochemicals). In the Gas & Power sector, Eni conducts CS
surveys among its customers to monitor the level of CS and to
achieve continuous improvement in the quality of services. The
retail and back office processes are certified by DNV in
accordance with UNI EN ISO 9001: 2008.
In the fuel distribution sector (R&M), satisfaction is
evaluated by assigning detailed targets to service stations and
sales agents; in addition, the performance of the vendors is
measured using Mystery Shopping surveys (performed three times a
year in each service station) and the CS Index.
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n Stakeholder engagement
| Stakeholders | Engagement procedures | Topics of interest | Eni’s Actions |
| Financial community | - Continuous
dialogue through the Investor Relations section of
eni.com - Quarterly conference calls - Annual live group presentations - One-to-one meetings with analysts and portfolio managers during the year - Participation during the year in thematic conferences (Upstream Project Seminar, Natural Global Resources Conference, Global Energy Conference, Pan European Strategic Decision Conference) |
- Quarterly
and annual results - In-depth review of strategies and results - Corporate Governance - Risk management |
- Thematic
presentations - Meetings with SRI focused on Eni’s integrated risk management model with in-depth analysis of compliance, Country and operations risks - Roadshows in major financial centers (the first roadshow in 2013 was dedicated to Corporate Governance) - Cycle of meetings with institutional investors and the main proxy advisors in Europe and the United States on Eni’s Corporate Governance system |
| Eni’s people | - MyEni and
MyEni International Portal - Cascade Program - Knowledge Management Systems - Participatory Industrial Relations System |
- Health and
safety in the workplace - Integrity - Transparency - Professional Development and sharing of know-how - Diversity management - Work-life balance |
- Health
promotion initiatives - Launch of Moka, the corporate social network - Training programs and on-the-job training - Initiatives for work-life balance: extension of work at home project - Renewal of industry-specific Collective Bargaining Agreement - Dialogue with the European Works Council (CAE) on Eni’s policies within the European framework and with the representatives of the European Observatory for Safety and Health at Work |
| Local communities | - Road Shows - Meetings and public forums with communities - Participation in community social gatherings - Regular use of information channels for local communities - Formal tools for managing claims (grievance mechanism) - Formal tools for participatory management of social projects |
- Transparency
and local information on business topics - Assessment, mitigation and management of environmental, social impacts and Human Rights impacts - Eni’s Contribution to economic and social development - Community investment strategy - Management of social projects |
- Publication
of Local Reports and site-specific websites - Projects to benefit the community - Organization of workshops (in 2013 in Maputo, Mozambique) - Public consultation forums held in Nigeria on impact assessment processes for business activities - Use of mechanisms for collecting and managing live reports in Countries of long-standing presence and in new Countries |
| Suppliers | - Meetings - Involvement in specific projects - Local content development plans |
- Supplier
qualification and qualification audits - Feedback on contract performance - SA 8000 Audit - Raising awareness on climate change/emissions - Participation of local firms in Eni’s supply chain |
- Development
of suppliers’ organizational, technical, quality,
HSE and Human Rights skills - Support improvement following negative ratings resulting from audits - Check on observance of Human Rights in the supply chain - Call on significant suppliers to take part in the Carbon Disclosure Supply Chain - Issue of procedure on the management of Local Content within the procurement process |
| Customers and consumers | - Telephone
surveys and regular quality reviews and questionnaires - Telephone or face to face interviews at sales outlets - Focus groups on satisfaction with and ease of use of online services - Online forums |
- Checks on
customer satisfaction and tests of new services - Analysis of satisfaction and dissatisfaction with the services offered (gas, electricity, fuels) - Advice and technical assistance - Energy consumption habits |
- Planning of
corrective actions to address areas of improvement
identified for R&M wholesale customers - Calibration of trade and pricing initiatives - Definition of new supply models - Launch of targeted initiatives - Application of a new model for relations with Consumer Associations in order to better combine culture, consumer rights and energy |
| National Parliament and Public Ministries | -
Hearings/fact-finding investigations in Committee on
request - Participation in technical roundtables, responses to consultations, position papers, six-monthly/monthly/on request one-on-one meetings |
- Exploration
activities in Italy - Regulation of G&P business activities - Security of supply - Green economy - Environment (e.g. industrial site remediation, return of reclaimed areas) - International cooperation |
- Inspections
and institutional visits at the production sites - Information, awareness-raising initiatives and technical studies - Active participation with regard to energy efficiency issues (submission of projects to obtain white certificates) and in discussions related to future sustainability of Italian and European energy - Participation in the intergovernmental roundtable on cooperation for development |
| Institutions, Local and National Authorities | -
Institutional meetings, technical roundtables and
monthly/weekly or on request hearings - Written communications - Working Roundtables - Responses to consultations - Meetings on specific topics on a monthly basis or upon request - Sending of data/information via email or the intranet on a monthly basis or on request |
- Development
projects and enhancement projects linked to relevant
activities - Local development - Renewable energy subsidies - Codes and rates of access to G&P infrastructure services - Regulation of business relationships with retail customers - Regulation of sales rates in the protected market |
- Information,
awareness-raising technical, in-depth and procedural
initiatives - Inspections and institutional site visits - Participation in the work of the ANCI National Assembly and monitoring of Cinsedo activities - Active participation in meetings |
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| Stakeholders | Engagement procedures | Topics of interest | Eni’s Actions |
| Business associations and Confindustria | - Meetings,
regional workshops and participation in Commissions/Six
monthly/monthly or on request Technical Committees - Meetings with businesses associated with regional Confindustria branches and participation in association activities - Meetings with local companies |
- Corporate
Sustainability - Environment - Safety - Supplier qualification systems |
-
Participation in Technical Committees and Working Groups
(e.g. Technical Energy Committee) - Workshops on the supplier qualification process - Holding of regional meetings to provide information on Eni’s activities in the field of environmental sustainability and safety |
| European institutions and international organizations | - One to one
meetings, technical roundtables, written communications,
responses to consultations, on a daily basis or on
request - Conference calls and Corporate Advisory Panel - Participation in industrial associations, institutional working groups and public events and/or hearings at the European Parliament - Cooperation with the OECD National Contact Points and participation in specific initiatives |
- European
energy strategy - Environmental and tax policy - Regulation of the financial markets for raw materials - Regulation of the internal gas market - Transparency of extractive industry payments - Access to energy projects - Issues relating to the refining industry - Dissemination and application of the OECD Guidelines for multinational businesses |
- Presence at
the coordination roundtable to support Italian
participation in the work of the Arctic Council - Contribution to European Commission consultations (White Paper on energy and climate policies for 2030 and carbon leakage) - Participation in the Policy Dialogue on Natural Resource-based Development organized by the OECD |
| The United Nations system | - Inclusion in
the LEAD program of the Global Compact and presence on
its Steering Committee - Active participation in the various activities promoted by the LEAD Program - Collaboration agreements (e.g. ISPAC) - Presence in the Leadership Council of the Sustainable Development Solutions Network of the United Nations |
- Sustainable
development goals - Human rights and businesses - Decent work - Anti-Corruption - Transparency - Environment - Access to energy |
-
Participation in the main meetings between the United
Nations and businesses (UN Private Sector Focal Points
Meeting; UN Global Compact Leaders Summit; UN Annual
Forum on Business and Human Rights) - Participation in the Proteus 2012 initiative promoted by UNEP - Participation in the Global Compact Business for Peace program - Running of the initiative "Energy for All in Sub-Saharan Africa" - Contribution to the work of the Thematic Group Good Governance of Extractive and Land Resources |
| Other sustainability organizations | - Membership
and participation in the WBCSD, Business for Social
Responsibility, World Economic Forum, GGFR (Global Gas
Flaring Reduction Initiative), EITI (Extractive
Industries Transparency Initiative), PACI (Partnering
Against Corruption Initiative) and IPIECA - Membership of the GRI and the IIRC |
- Assessment
of social and environmental impacts - Transparency and reporting - Integrated reporting and value creation - Human Rights |
-
Participation in WBCSD working groups - Participation in IPIECA working groups (on Human Rights, reporting, climate change, etc.) - Participation in the consultations on the new EITI Standard and the "Open for Growth: Trade, Tax and Transparency Event" - Participation in the GRI G4 Pioneer Program - Participation in the Pilot Program of the IIRC |
| National and international NGOs | -
Collaboration and organization of joint events - Conferences on specific topics - Constant dialogue and meetings on request - Participation in networks (Sodalitas, Anima per il Sociale) |
- Global
energy issues - Human Rights - Impact assessments - Anti-Corruption - Sustainability of operations in Nigeria (spill prevention and management, flaring reduction, reclamation and compensation for local communities) - Transparency in corporate reporting |
- Cooperation
with Legambiente on the Energythink initiative - Agreement with Transparency International to develop an innovative "Country Assessment" methodology - Participation in the research conducted by Transparency International on "transparency in corporate reporting" - Dialogue with Amnesty International about the activities in Nigeria and the protection of Human Rights of populations living near the extraction sites |
| Universities and research centers | -
Collaboration agreements and strategic partnerships - Corporate advisory panel - Official bilateral meetings, every six months or on request - Exchange of communications, sharing of information and one-on-one meetings where appropriate - Thematic workshops and periodic meetings with partners to verify the progress of activities and disseminate the results |
- Support
activities for businesses (exploration and production,
innovative technologies for refining and petrochemicals) - Renewable energies (photovoltaics and concentrated solar power, biomass) - Environmental protection technologies |
- Creation of
"virtual labs" in collaboration with
universities, research centers and companies - Renewal of framework agreements with the Polytechnics of Milan and Turin, and with the National Research Council (CNR) - Renewal of the collaboration agreement with the Massachusetts Institute of Technology in Boston (USA) - Continuation of the strategic alliance with Stanford University on core technologies of the oil&gas business and environmental remediation - Signing of the agreement with the Earth Institute at Columbia University to strengthen the planning, monitoring and evaluation of Eni’s local development investments |
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Board of Directors
| 2011 | 2012 | 2013 |
| Members of the Board of Directors | (number) | 9 | 9 | 9 | ||||
| - executive | 1 | 1 | 1 | |||||
| - non-executive | 8 | 8 | 8 | |||||
| - independent | 7 | 7 | 7 | |||||
| - non-independent | 2 | 2 | 2 | |||||
| - members of minorities | 3 | 3 | 3 | |||||
| Board of Directors Annual Meetings | 18 | 16 | 13 | |||||
| Average attendance at Board meetings | (%) | 97 | 97 | 97 | ||||
| Board induction annual sessions | (number) | 6 | 3 | 3 | ||||
| Presence of women on the Boards of Directors of Eni Group companies | (%) | 5.7 | 8.1 | 14.0 | ||||
| Presence of women on the Boards of Statutory Auditors of Eni Group companies | 8.5 | 15.0 | 27.6 |
The Board of Directors of Eni SpA is
composed of 9 directors, including 8 non-executive directors and
7 who meet the requirements of independence as required by law
and the Self Discipline Code for listed companies of December
2011 which Eni adheres to. Three board members are appointed by
non-controlling shareholders.
The “ongoing induction” training program for board
members and statutory auditors of Eni SpA continued throughout
2013. The topics explored were the tasks and the responsibilities
of the Board of Directors in the light of the current situation,
with particular reference to business risks. Some business issues
were also examined with visits to operating sites and, picking up
on the positive experience of the “Strategy Day”
initiated in 2012, the Board meeting on July 9, 2013 included an
in-depth discussion of some strategic planning issues.
Drawing inspiration from the Board Induction for the Board of
Directors of Eni SpA and in line with the culture of corporate
integrity that guides Eni’s actions, in 2013 the second
training plan (Welcome Board) was implemented for members of the
boards of directors of Eni’s subsidiaries and companies in
which Eni has a stake.
In 2013 Eni’s Board of Directors – after an evaluation
by the Nomination Committee and with the support of an external
consultant to ensure objectivity in the process – carried
out a Board Review for the eighth consecutive year and, due to
the forthcoming expiry of the mandate, decided not to undertake a
“Peer Review” of the Directors as had been done in
previous years.
In compliance with the recommendations of the Corporate
Governance Code, taking into account the results of the
self-assessment, and with the support of the Nomination
Committee, the Board made its recommendations to the Shareholders
for the approaching renewal of the bodies with regard to the
positions and professional figures whose presence on the Board
and Committees were considered suitable.
Starting with the upcoming renewals of the corporate bodies of
Eni SpA, when the financial statements for 2013 are approved, in
deciding the composition of the Board of Directors and the Board
of Statutory Auditors the shareholders must ensure balanced
gender representation, as required by law and adopted since 2012
in the Company’s Articles of Association. In particular, the
underrepresented gender must, for the first term of office,
represent at least one-fifth of the directors and of the standing
statutory auditors elected and at least one-third in the two
subsequent terms. In 2011, Eni’s Board of Directors had
already recommended anticipating the implementation of the Gender
Equality Law (effective from renewals after February 2013) in the
Italian unlisted subsidiaries, and thus the threshold of more
than 1/3 women on the Boards of Directors and Statutory Auditors
was reached as soon as the 2012 renewals took place, for
appointments for which Eni was responsible as a shareholder.
During 2013 the same companies amended their articles of
association to ensure compliance with the required composition of
the governing bodies (Boards of Directors and Statutory Auditors)
for the three consecutive mandates, even in case of a
replacement, ensuring in particular that the underrepresented
gender will represent at least one fifth of each body in the
first term, and one-third in the next two terms. The main effect
of Eni’s commitment to promoting initiatives to support the
principles of the law on gender balance has been a significant
increase in the female presence in the governing bodies. The
internal regulations on the “Corporate Governance of Eni
companies” approved by the Board of Directors on May 30,
2013, which updated the guidelines previously issued by the Board
of Directors on Corporate Governance – without prejudice to
the legal requirements – provide that the choice of members
of the administration and control bodies (boards) of Eni’s
subsidiaries, including those abroad, must take into account,
where possible, the need for gender diversification.
In addition, in 2013, for the first year, a monitoring model was
defined for the composition of the Boards of Directors of
Eni’s subsidiaries in Italy and abroad, with particular
attention to gender but also to diversity in terms of
professional characteristics, nationality, age, experience and
seniority in office. The main objective of this activity is to
monitor the trend of diversification in the Boards of Directors
and identify any improvement actions needed.
To respond to the growing need for a continuous dialogue between
the companies and shareholders, in 2013, the Chairman of
Eni’s Board of Directors sponsored a series of meetings with
the institutional investors and the main proxy advisor in Europe
and the United States, focused on Eni’s Corporate Governance
system, enabling a better appreciation of its features, also in
the light of the various regulatory models of reference.
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Shareholders
Shareholders breakdown on the basis of nominative claims of the receivers of Eni’s dividends in advance for the year 2013 (ex-dividend date September 23, 2013 - payment date September 26, 2013)
| Number of shares | % |
| Controlling shareholders | 1,093,731,615 | 30.10 | ||
| Institutional investors | 2,189,202,455 | 60.24 | ||
| Retail investors | 335,491,826 | 9.23 | ||
| Own shares at the dividend payment date (treasury shares) | 11,388,287 | 0.31 | ||
| Others (shares for which no nominative claims were received) | 4,371,147 | 0.12 | ||
| Share capital | 3,634,185,330 | 100.00 |
As of December 31, 2013, the controlling
shareholders held 1,093,731,615 shares in Eni, equal to 30.10% of
the company share capital (4.34% Ministry of the Economy and
Finance and 25.76% Cassa Depositi e Prestiti – CDP SpA
– controlled by the same Ministry).
As of December 31, 2013 the company’s capital amounted to
euro 4,005,358,876, fully paid up, represented by 3,634,185,330
registered ordinary shares with no indication of par value.
The internal control and risk management system
| 2011 | 2012 | 2013 |
| Integrated audit actions: | (number) | 64 | 83 | 65 | ||||
| - scheduled audits | 40 | 59 | 49 | |||||
| - spot audits | 7 | 8 | 5 | |||||
| - follow-ups | 17 | 16 | 11 | |||||
| Number of recommendations (corrective actions) | 1,088 | 1,150 | 907 | |||||
| Number of Risk Assessment actions | 78 | 98 | 35 | |||||
| Average time of completion of corrective actions | (day) | 80 | 83 | 78 | ||||
| Participants in training sessions on the Internal Control and Risk Management system by typology: | (number) | - | 284 | 1,216 | ||||
| - e-learning | - | 64 | 610 | |||||
| - workshop | - | 220 | 606 |
The Internal Control and Risk Management
System (ICRMS), the main aspects of which are described in the
“Other information” section of the Annual Report, is
subjected to regular audits and updates, in order to ensure its
ongoing adequacy and effectiveness in controlling the main areas
of risk for company activities. This is assessed in relation to
the typical features of the company’s operating sectors and
its organizational structure and based on any new legislation or
regulations.
A key role in the audit and assessment process for the ICRMS as a
whole is given to the Internal Audit department, which conducts
audits (operational, financial and compliance audits focusing on
the aspects covered by Italian Legislative Decree 231/01) to
implement the annual Audit Plan prepared using a “top-down,
risk based” approach and approved, together with the
resource budget, by the Board of Directors and, for aspects
relevant for the purposes of Italian Legislative Decree 231/01,
by Eni SpA’s Vigilance Body.
With reference to the main activities performed by the Internal
Audit department, it is noted that:
- the number of integrated audits conducted in 2013 is in line
with the average of all the audits conducted in the last five
years. In particular there was a recorded increase in the average
duration of the integrated audits conducted in 2013 due to the
addition of the Anti-Corruption audits and the independent
monitoring carried out for Sarbanes Oxley purposes;
- the average number of corrective actions per audit has remained
stable for the various sectors, and to date substantial
observance of the implementation times for planned actions has
been recorded, confirming the attention paid by the audited
structures to the time-scales agreed;
- risk assessment activities in 2013 were reduced after the
process of integrated risk management got up to speed. The
results are used by Internal Audit to plan their audit
activities, adding more detailed analysis where deemed necessary
in terms of risk assessment;
- there was a sharp increase in the number of ICRMS training
initiatives compared to the previous year. These were aimed at
the management of Eni SpA and its main subsidiaries in Italy and
abroad and designed to provide an organic and integrated vision
of the ICRMS and develop awareness of the role of management in
the implementation and operation of an effective and efficient
ICRMS. In particular, in 2013 “on site” workshops were
conducted in about 15 Countries in addition to Italy.
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Management of reports
| (number) | 2011 | 2012 | 2013 |
| Internal control system reports sent to Internal Audit by area reported: | 86 | 86 | 110 | |||
| - procurement | 25 | 31 | 40 | |||
| - human resources | 7 | 9 | 11 | |||
| - legal affairs | 0 | 0 | 0 | |||
| - commercial | 18 | 9 | 7 | |||
| - administration and finance | 2 | 7 | 4 | |||
| - assets acquisition | 0 | 0 | 0 | |||
| - contractual management | 8 | 9 | 22 | |||
| - logistics | 9 | 6 | 1 | |||
| - other corporate areas (security, HSE, etc.) | 17 | 15 | 25 | |||
| Internal control system reports closed in the year owing to completion of investigations: | 88 | 86 | 101 | |||
| - grounded for which corrective actions were taken on the Internal Audit system | 3 | 7 | 12 | |||
| - grounded for which measures were taken against
employees/suppliers and other corrective actions were
taken (against clients/managers/agents/third parties; technical/operational interventions; complaints to public authorities, etc.) |
9 | 14 | 18 | |||
| - ungrounded with actions | 26 | 23 | 27 | |||
| - generic | 14 | 5 | 4 | |||
| - ungrounded | 34 | 37 | 40 | |||
| Reports on Other matters sent to Internal Audit by area reported: | 68 | 87 | 120 | |||
| - human resources | 18 | 33 | 37 | |||
| - Code of Ethics | 42 | 43 | 71 | |||
| - relations with third parties | 8 | 5 | 12 | |||
| - others | 0 | 6 | 0 | |||
| Reports on Other matters closed in the year owing to completion of investigations: | 90 | 77 | 99 | |||
| - grounded for which improvement actions were taken | 0 | 2 | 2 | |||
| - grounded
for which measures were taken against employees/suppliers
and other corrective actions were taken (against clients/managers/agents/third parties; technical /operational interventions; complaints to public authorities, etc.) |
13 | 12 | 12 | |||
| - ungrounded with actions | 19 | 12 | 26 | |||
| - generic | 2 | 7 | 5 | |||
| - ungrounded | 56 | 44 | 54 |
From January 1 to December 31, 2013, 357
reports were received, grouped together in 230 files, 110 (48%)
of which concern topics relevant to the “Internal control
system” and 120 of which relate to “Other matters”
(52%). In the same period, 200 files were archived in total, 101
of which concerned the “Internal control system” (51%)
and 99 of which concerned “Other matters” (49%).
The audits carried out on the 200 files archived in 2013 had the
following results:
- for 44 files (22%) the audits confirmed, at least in part, the
content of the notification and the appropriate corrective
actions were taken;
- for 147 cases the audits did not find any evidence to confirm
the facts reported; nevertheless for 53 files (27%) improvement
actions were taken in any case by the company structures
involved. In conclusion, improvement actions were adopted in 49%
of cases;
- in 9 cases the facts reported were found to be of a generic
nature.
The number of reports received through active channels of
communication in the last three years confirms widespread
awareness of the reporting procedure (Whistleblowing procedure).
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Added value
| (euro million) | 2011 | 2012 | 2013 |
| Overall distributed net added value: | 23,294 | 22,475 | 20,421 | |||
| - of which to human resources | 4,592 | 4,895 | 5,518 | |||
| - of which to shareholders | 3,978 | 4,139 | 4,227 | |||
| - of which to States and Public Administrations | 9,903 | 11,659 | 9,008 | |||
| - of which to financial backers | 922 | 980 | 923 | |||
| - of which to Company system | 3,899 | 802 | 745 |
The distributed net added value in 2013
was euro 20,421 million, a reduction compared to the previous
period primarily due to: (i) less production in the E&P
sector due to extraordinary interruptions and the appreciation of
the euro against the dollar; (ii) extraordinary losses on
contracts in the Engineering & Construction sector in the
first half of the year.
Added value in 2013 was divided as follows:
- 44% to the State and Public Administrations through taxes on
the income of both Italian and overseas businesses;
- 27% to human resources remunerated through wages, salaries and
welfare contributions;
- 21% to shareholders remunerated through the distribution of
dividends;
- 5% to the financial backers, remunerated through financial
charges;
- 4% to the company system, paid through the share of net profit
reinvested in the company (profit for the year net of dividends
and the share used to restore the plant and equipment and
intangible fixed assets used in the production process).
Relations with customers and consumers
| Eni call center performance | 2011 (a) | 2012 | 2013 | AEEG (b) standard |
| Percentage of telephone calls of customers that spoke to an operator | (%) | 97.7 | 97.1 | 95.5 | 80 | |||||
| Average waiting time at call center | (seconds) | 102 | 105 | 90 | 240 | |||||
| First Call Resolution (FCR) | (%) | 88 | 88 | 89 | - | |||||
| Self Care (operations carried out autonomously by customers out of total operations requested) | 32 | 43 | 51 | - |
(a) The data refer to the
G&P sector (before the creation of a single Eni call center).
(b) Italian Regulatory Authority For Electricity and Gas.
Since September 2012 the toll free
number for customer service (800 900 700) has become the only
phone access channel for Eni’s retail customers in Italy,
configured to respond to all requests for service and information
about gas, electricity and fuel. This has resulted in three
important improvements in the service for consumers: the creation
of a single point of contact with Eni, a uniform customer
experience and improvements in terms of service – including the extension in call center opening
times (customers, including car drivers, who wish to contact Eni
and holders of the you&eni card, now have free access 24
hours a day, seven days a week).
The results achieved by Eni’s one-stop call center, against
a background of rising contact requests resulting from the
increased number of gas and electricity customers and the
extension of the service to the R&M sector, include a
reduction in the average waiting time, which fell from 105
seconds in 2012 to 90 seconds in 2013. First Call Resolution
(FCR) also improved, rising to 89%. In this area, moreover, the
number of operations carried out independently by gas and
electricity customers (self care) as a percentage of total
operations requested increased significantly, rising from 43% in
2012 to 51% in 2013. This result has been achieved through the
introduction of a series of new “automated” services,
both IT services and IVR (Interactive Voice Response) telephone
and web-based devices, which allow gas and electricity customers
to meet a series of needs without requesting support from an
operator.
G&P Segment
| G&P customer satisfaction on telephone services | 2011 | 2012 | 2013 |
| Eni customer satisfaction score | (%) | 88.6 | 89.7 | 90.4 (b) | ||||
| Panel Average (a) | 88.9 | 91.2 | 93.1 |
(a) The panel analyzed refers
to companies representing more than 50% of the market with more
than 50,000 customers (Source: AEEG survey – carried out on
the first half of 2013 – relating to the quality of
telephone services of providers of electricity and gas).
(b) The customer satisfaction score for 2013 relates to the first
six months as at the date of publication of this document the
Authority for Electricity and Gas had not yet published the data
for the second half of the year.
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Once again in 2013 there was further
progress in the G&P sector on the program of initiatives to
increase customer satisfaction and to become a point of reference
for the quality of gas and electricity services. Against this
background the customer satisfaction score (CSS) increased to
90.4% compared with 89.7% in 2012.
During 2013 in Italy the G&P sector continued its strategy of
launching innovative products and services that make it easier
for customers to choose the gas and electricity contract that
most closely meets their energy needs, manage their bills and
choose the best services connected to the gas and electricity
supply, with “best in class” multi-channel access.
From the viewpoint of the range of services on offer, 2013 saw
the confirmation for domestic customers of the “eni3”
package, further enhanced during the summer of 2013 with the
launch of the “eni3summer” campaign. In addition, in
the last quarter of 2013 the new “fixa super-Luce”
package was launched, with a price that freezes the energy
component of the cost of electricity for 2 years. In 2013 the
“suMisura” package, dedicated to business activities
such as shops, bars and restaurants, was also enhanced; this
gives gas and electricity customers the opportunity to take
advantage of the offer that best adapts to their energy needs,
based on their energy consumption profile. The
“sottoControllo” package, dedicated to small and
medium-sized enterprises, was also launched. On the side of
customer care, transparent contracts and assistance for retail
gas and electricity customers, the G&P Division has continued
to: (i) apply a restrictive selection process to sales business
partners, combining this with contractual tools designed to
prevent, deter and sanction potential misconduct by the indirect
sales force (sales agents and call centre staff); (ii) roll out
an extensive e-learning system to train sales staff; (iii) offer
a simpler and more rapid process for customers to notify a change
of mind about a proposed contract, by telephone or fax; (iv) make
confirmation “check” calls the rule for all contract
proposals signed up to through agencies, “eni energy
stores” and phone sales.
These activities have substantially reduced to percentages close
to zero the problem of so-called “unwanted contracts”.
In 2013 the “webolletta” service was widened to reach
800,000 customers, with over 2 million bills consulted on-line.
The service allows users to view their bill in their own reserved
area 10 days before the normal date of delivery of the paper
copy.
The 2013 data on brand awareness of Eni as an electricity and gas
supplier showed an increase compared to 2012 (spontaneous
awareness increased from 44.9% to 51.6% and total awareness from
79.6% to 83%).
R&M Market
| Customer satisfaction | 2011 | 2012 | 2013 |
| Customer satisfaction index | (Likert scale) | 7.74 | 7.90 | 8.10 | ||||
| Customers involved in the satisfaction survey | (number) | 30,524 | 30,438 | 29,863 |
In the Refining & Marketing sector
in Italy at the end of 2012, new cards that combine the functions
of consumer loyalty and payment cards were launched and in one
year, more than 1 million cards have been issued, 40% of which
were issued to new customers. The database of you&eni
customers has thus expanded, reaching about 7 million cards.
In 2013 Customer Relationship Management (CRM) initiatives
targeted at customers registered in the you&eni program were
implemented, offering members bonuses and discounts following the
adoption of good practice and involving program partners in the
development of special offers to support the points collection.
Moreover, to ensure excellent service, periodic training courses
are held for operators on various topics, not only from the
technical point of view but also on the relationship with the end
user. As part of these, particular attention is paid to training
the eni café managers.
In Milan on December 16, 2013, Eni launched “Enjoy”,
the Smart Mobility Initiative offering customers mobility
products and services with low environmental impact, with a
specific focus on car sharing, a service that promotes the
transition from the logic of possessing a car to the logic of
sharing it, so that the private car can be relinquished, with
significant benefits in terms of reducing emissions, but without
sacrificing flexibility in terms of meeting mobility needs. The
car, thus, passes from consumer good to service asset.
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People safety
| 2011 | 2012 | 2013 |
| Injury frequency rate | (number of injuries/million of worked hours) | 0.60 | 0.49 | 0.35 | ||||
| - employees | 0.65 | 0.57 | 0.40 | |||||
| - contractors | 0.57 | 0.45 | 0.32 | |||||
| Injury severity rate | (days of absence/thousand of worked hours) | 0.021 | 0.021 | 0.014 | ||||
| - employees | 0.025 | 0.026 | 0.018 | |||||
| - contractors | 0.018 | 0.017 | 0.012 | |||||
| Total recordable injury rate (TRIR) | (total recordable incidents/million of worked hours) | 1.51 | 1.17 | 1.04 | ||||
| - employees | 1.75 | 1.45 | 1.35 | |||||
| - contractors | 1.37 | 1.01 | 0.86 | |||||
| Fatality index | (fatal injuries/one hundred million of worked hours) | 1.94 | 1.10 | 0.98 | ||||
| - employees | 1.19 | 0.87 | 1.74 | |||||
| - contractors | 2.38 | 1.23 | 0.53 | |||||
| Near misses | (number) | 2,723 | 2,862 | 3,961 | ||||
| Training hours on safety | (hours) | 1,354,705 | 1,259,228 | 2,112,319 | ||||
| - to senior managers | 8,244 | 5,046 | 7,290 | |||||
| - to managers/supervisors | 131,541 | 69,890 | 73,067 | |||||
| - to employees | 474,568 | 312,817 | 996,364 | |||||
| - to workers | 740,352 | 871,475 | 1,035,598 | |||||
| Safety expenditures and investments | (euro thousand) | 320,118 | 370,950 | 408,794 | ||||
| - current spending | 193,227 | 260,420 | 253,312 | |||||
| - investments | 126,891 | 110,530 | 155,482 |
In 2013 continued the trend of
improvement in the safety field, with the lowest accident rates
in the last nine years and the number of injuries down 32% from
2012 and more than 70% compared to 2006, going from more than 750
events to just over 200 in 2013. The injury frequency rate
decreased by 28.9% for employees and by 29% for contractors,
compared to 2012. The injury frequency rate for the total Eni
workforce (equal to 0.35) decreased by 28.7% compared to 2012.
In 2013 there were 4 fatal accidents involving employees (in 2012
there were 2 and in 2011 there were 3) and 2 involving
contractors (in 2012 there were 5 and in 2011 there were 10). All
the fatal accidents in 2013 took place in the Engineering &
Construction sector. During 2013 the project “zero
fatalities” continued, aimed at even more aggressively
addressing the main causes of fatal accidents. In this context, a
video was made that illustrates the “golden rules” for
preventing falls from height, intended for all staff (employees
and contractors) on the operating sites.
2013 saw the continuation of “eni in safety”
communication and training program (with 200 workshops held) and
its extension to the contractors deemed most critical; the
“Safety road show” campaign also continued, with visits
to Eni operations sites in Italy and abroad and the overall
participation of more than 2,500 people including employees and
contractors.
Total safety costs increased by 10.2% compared to 2012 as a
result of the increase in investments (up 40.7%), particularly in
the E&P field where more than euro 43 million was invested in
specific studies of safety procedures and standards and,
secondly, in investments in the chemical sector for systems and
fire-fighting equipment (equal to more than euro 10 million).
Current costs, while remaining essentially stable (down 2.7%),
indicate a growing financial commitment with regard to plant and
equipment (in 2013 spending almost more than doubled in value
compared to 2012) for the E&P, R&M and Chemical sectors,
which recorded costs of over euro 20 million each.
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People health
| 2011 | 2012 | 2013 |
| Health Impact Assessments carried out | (number) | 20 | 28 | 23 | ||||
| Environmental surveys | 6,655 | 7,030 | 6,707 | |||||
| OHSAS 18001 certifications | 74 | 100 | 108 | |||||
| Employees included in health surveillance programs | 65,396 | 71,186 | 73,741 | |||||
| Professional illnesses reported | 135 | 69 | 68 | |||||
| Diagnostic examinations | 342,058 | 341,995 | 355,762 | |||||
| Services provided by Company health structures: | 509,473 | 536,958 | 548,386 | |||||
| - to employees | 412,941 | 442,177 | 449,690 | |||||
| - to others subjects | 96,532 | 94,781 | 98,696 | |||||
| Vaccinations provided by Company structures: | 31,397 | 23,700 | 22,795 | |||||
| - to employees | 20,917 | 18,635 | 17,700 | |||||
| - to others subjects | 10,480 | 5,065 | 5,095 | |||||
| Per capita health expenditures | (euro) | 1,088 | 619 | 624 | ||||
| Health and hygiene expenditure and investments: | (euro thousand) | 78,950 | 48,192 | 51,317 | ||||
| - current spending | 78,006 | 47,298 | 50,984 | |||||
| - investments | 945 | 894 | 333 |
In 2013 the implementation program for
the health and safety management system went ahead in all Eni
companies with the aim of obtaining the OHSAS 18001 certification
by 2015 for all Eni subsidiaries with a significant HSE risk
profile. In particular:
- in the E&P sector, all the certifications obtained in
previous periods were reconfirmed and certification was acquired
for the jointly controlled company InAgip doo;
- in the G&P sector, where all the EniPower electric power
plants reconfirmed their certifications, the coverage of foreign
gas transport activities was further extended with the
certification of its subsidiaries Sergaz SA, Adriaplin doo and
Eni Gas & Power France SA;
- in the R&M sector, activities continued for the maintenance
and the extension of certifications in the areas of industry,
logistics and trade, with coverage for reclamation activities in
unused sites, for the Gela Refinery (in addition to the four
other refineries already certified) and the subsidiaries Costiero
Gas Livorno SpA, Petrolig Srl, Eni Austria GmbH, Eni Marketing
Austria GmbH, Eni Mineralolhandel GmbH and Oleoduc du Rhone SA;
- in the Chemicals sector, coverage has been confirmed for all
the Italian and overseas plants;
- in the Engineering & Construction sector all the
certifications already obtained in recent years have been
confirmed the operational companies Saipem Contracting
Netherlands BV - Sharjah Branch and PT Saipem Indonesia Karimun
Branch in the Engineering & Construction sector were also
certified and certification was completed at Saipem SpA with
coverage also for drilling activities.
Implementation of the periodic environmental/exposure monitoring
campaigns and the provision of health services is ongoing. In
2013 the E&P, R&M and G&P sectors also carried out
evaluation studies of the health profile of the Countries where
Eni operates and risk analyses for the health of both employees
and the communities, through the Health Risk Assessment and
Health Survey. In 2013 there was an overall reduction in the
number of environmental surveys (due to the subsidiary G&P
Distribuidora de Gas Cuyana leaving the consolidation domain and
the trend observed for Other Activities, as well as the final
closure of the dichloroethane plant at the site of Assemini),
while the number of diagnostic examinations increased (due to the
contribution of the E&C sector with over 30,000 more
examinations than in 2012) as did the services provided by health
care facilities (stable or growing in most areas of the sectors).
The total number of vaccinations fell due to the drop in E&C
which was only partially offset by the increase in the Congo and
Nigeria for the E&P sector.
Eni’s consolidated figure for recognized occupational
diseases has remained stable at 2012 values, halved compared to
previous years.
Total spending on health (up 6.5% over 2012) shows a growing
financial commitment with respect to occupational medicine
(E&P and Chemicals sectors), industrial hygiene (E&P,
R&M and Chemicals sectors) and training and information
(E&P, Chemicals and Engineering & Construction sectors
and corporate and finance company sectors).
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Employment
| (number) | 2011 | 2012 | 2013 |
| Employees as of December 31 | 72,574 | 77,838 | 82,289 | |||
| - men | 60,032 | 64,978 | 68,688 | |||
| - women | 12,542 | 12,860 | 13,601 | |||
| - Italy | 27,058 | 26,804 | 26,782 | |||
| - Abroad | 45,516 | 51,034 | 55,507 | |||
| Employees abroad by type | 45,516 | 51,034 | 55,507 | |||
| - locals | 34,801 | 39,668 | 43,121 | |||
| - Italian expatriates | 3,208 | 3,867 | 3,955 | |||
| - International expatriates (including TCN) | 7,507 | 7,499 | 8,431 | |||
| Employees by type of contract | 72,574 | 77,838 | 82,289 | |||
| - temporary | 30,664 | 35,896 | 38,813 | |||
| - permanent | 41,910 | 41,942 | 43,476 | |||
| - part time | 1,044 | 1,132 | 1,060 | |||
| - full time | 71,530 | 76,706 | 81,229 | |||
| Senior Managers employed | 1,468 | 1,474 | 1,475 | |||
| - of which women | 152 | 159 | 160 | |||
| Managers/Supervisors employed | 12,754 | 13,199 | 13,637 | |||
| - of which women | 2,477 | 2,615 | 2,767 | |||
| Employees | 36,019 | 38,497 | 39,943 | |||
| - of which women | 9,394 | 9,777 | 10,310 | |||
| Workers employed | 22,333 | 24,668 | 27,234 | |||
| - of which women | 519 | 309 | 364 | |||
| Employees age band 18-24 | 3,587 | 4,203 | 4,636 | |||
| - of which women | 668 | 669 | 751 | |||
| Employees age band 25-39 | 31,859 | 35,161 | 36,906 | |||
| - of which women | 5,738 | 6,079 | 6,421 | |||
| Employees age band 40-54 | 29,190 | 29,998 | 31,200 | |||
| - of which women | 5,209 | 5,089 | 5,250 | |||
| Employees age band over 55 | 7,938 | 8,476 | 9,547 | |||
| - of which women | 927 | 1,023 | 1,179 | |||
| Employees by educational qualification | 72,574 | 77,838 | 82,289 | |||
| - less than secondary school diploma | 17,677 | 15,535 | 10,406 | |||
| - secondary school diploma | 32,631 | 35,154 | 40,030 | |||
| - degree | 19,446 | 23,565 | 26,911 | |||
| - post-graduate education | 2,820 | 3,584 | 4,942 | |||
| Number of hiring | 5,592 | 6,372 | 6,666 | |||
| - of which women | 1,157 | 950 | 961 | |||
| Number of resolutions | 5,163 | 5,242 | 5,853 | |||
| - of which women | 833 | 693 | 610 |
In 2013, a rise of 4,451 in the number
of workers as compared to 2012 was recorded, an increase of 5.7%.
This is the result of a reduction of 22 in the number of workers
employed in Italy (currently 26,782 people, 32.5% of total
employment) and an increase of 4,473 in the number of workers
employed abroad (currently 55,507, 67.5% of total employment).
In Italy, 1,565 persons were recruited, 579 of whom were given a
fixed term contract.
The majority of recruitment to permanent (open-ended) contracts
and apprenticeships (986 in total) involved graduates (623),
recruited mainly into operating positions. In Italy, 1,514 work
contracts were terminated, 844 of which were permanent
(open-ended) contracts and 670 of which were fixed term. These
reductions are mainly related to the restructuring measures being
implemented.
The average age of people working for Eni is 43.7 in Italy and
38.9 abroad, in line with the average age in 2012 abroad and
slightly higher for Italy.
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International development
| (number) | 2011 | 2012 | 2013 |
| Employees in Africa | 13,501 | 11,882 | 12,413 | |||
| - of which women | 1,021 | 1,069 | 1,137 | |||
| Employees in Americas | 8,194 | 9,403 | 13,547 | |||
| - of which women | 1,270 | 1,244 | 1,556 | |||
| Employees in Asia | 13,545 | 17,495 | 17,596 | |||
| - of which women | 1,334 | 1,448 | 1,522 | |||
| Employees in Australia and Oceania | 402 | 1,119 | 1,139 | |||
| - of which women | 97 | 172 | 162 | |||
| Employees in Italy | 27,058 | 26,804 | 26,782 | |||
| - of which women | 6,022 | 6,114 | 6,245 | |||
| Employees in the Rest of Europe | 9,874 | 11,135 | 10,812 | |||
| - of which women | 2,798 | 2,813 | 2,979 | |||
| Local employees abroad by professional category | 34,801 | 39,668 | 43,121 | |||
| - of which senior managers | 228 | 223 | 216 | |||
| - of which managers/supervisors | 3,476 | 3,798 | 4,001 | |||
| - of which employees | 17,529 | 19,683 | 20,522 | |||
| - of which workers | 13,568 | 15,964 | 18,382 | |||
| Employees in non-OECD Countries | 34,313 | 37,659 | 38,336 |
The majority of new recruits abroad in
2013 were for the Engineering & Construction sector (up
3,872) due to the increase in local and expatriate resources
needed to support ongoing construction projects (in Mexico,
Canada, Australia, the Arabian Peninsula and Northwest Africa),
prefabrication activities in Brazil and to a lesser extent
engineering centers in India and Nigeria.
The increase in the E&P sector (up 848 persons) can be
attributed to the increase in manpower in the developing
Countries (Angola, Mozambique, Indonesia, Norway, Kazakhstan) and
Countries with operations activities (Iraq, Libya, USA), the
opening of new exploration branches (Cyprus, Vietnam and Kenya),
the acquisition of Eni engineering from Saipem (approximately 120
persons) and the sale of assets in Russia.
In 2013 the company Versalis International was founded, which
incorporated the companies PE Benelux and PE Iberica and the
non-consolidated companies PE Polska, Norden and PE Hellas; this
resulted in a slight increase in the sector (31 persons).
The G&P sector showed a decrease (-290 persons), due almost
entirely to the deconsolidation of the Argentine company
Distribuidora de Gas Cuyana.
In total, there are 3,955 Italian expatriates working abroad in
the consolidated companies. The number of local overseas
employees has increased compared to 2012 (+8.7%). The main
category involved is workers (+15%); there has also been an
increase in the number of white collar employees (+4.3%) and
managers/supervisors (+5.3%); the number of directors and senior
managers has slightly decreased.
Equal opportunities
| 2011 | 2012 | 2013 |
| Women employees in service | (%) | 17.28 | 16.52 | 16.53 | ||||
| Women hired | 20.71 | 14.91 | 14.42 | |||||
| Women in managerial position (senior and middle managers) | 18.49 | 18.91 | 19.37 | |||||
| Women senior managers | 10.35 | 10.79 | 10.85 | |||||
| Replacement rate by gender | 1.08 | 1.22 | 1.14 | |||||
| - men | 1.02 | 1.19 | 1.09 | |||||
| - women | 1.39 | 1.37 | 1.58 | |||||
| Employees who took parental leave | (number) | 567 | 522 | 641 | ||||
| - of which women | 458 | 409 | 500 | |||||
| Employees returning from parental leave | 539 | 477 | 586 | |||||
| - of which women | 427 | 352 | 452 | |||||
| Pay gap senior managers (women vs. men) | (%) | 96 | 97 | 96 | ||||
| Pay gap middle managers and senior staff (women vs. men) | 97 | 96 | 98 | |||||
| Pay gap employees (women vs. men) | 96 | 97 | 94 | |||||
| Pay gap workers (women vs. men) | 101 | 104 | 102 | |||||
| Total pay gap (women vs. men) | 98 | 100 | 98 |
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At the end of 2013 13,601 women worked
in Eni (16.53% of the total workforce), of which 6,245 in Italy
(23.3% of the Italian workforce) and 7,356 abroad (13.3% of the
overseas workforce). In Italy, 25.5% of the 623 people recruited
during 2012 were women. It is to be noted that in 2013 the rate
of replacement for women (permanent recruitment divided by
termination of permanent contracts) increased compared to 2012
both in Italy and at an international level (altogether 1.37 in
2012 and 1.58 in 2013).
The percentage of women occupying managerial positions (women
managers and executives) rose from 18.49% in 2011 to 18.91% in
2012 and 19.37% in 2013.
In 2013 the survey of the gender pay gap was updated, using the
same method as in 2011 and 2012, which neutralized, in the pay
comparison, any effects deriving from differences in role and
seniority. This survey was conducted at a worldwide level on a
sample of more than 90% of the Eni workforce (about 76,000 people
in more than 60 Countries), with an increase of 13% over the 2012
sample. The results of the analysis at a global level show on
average a substantial alignment between the pay of the female
population and that of the male population for the same role and
seniority.
Enhancing people
| (%) | 2011 | 2012 | 2013 |
| Employees covered by management review (a) | 100 | 100 | 100 | |||
| Employees covered by performance assessment tools (senior managers, managers/supervisors and young graduates) | 53 | 55 | 60 | |||
| Employees covered by potential assessment (young graduates and experts) | 41 | 33 | 23 (b) |
(a) Percentage referred only to
the senior managers to whom the review process is applicable.
(b) Percentage decrease due to the extension of the analysis
perimeter for young graduates up to 7 years of service.
Development of knowledge and appreciation of the skills of
Eni’s people has continued during 2013 with an approach
focused more than ever on the use of development tools in our
foreign operations.
During 2013, as every year, a complete
map of managerial resources was drawn up through the tool of
management review. For specific segments of managerial resources,
the assessment of skills and competencies was further developed.
The results of this contributed to the updating of the
“succession plan” and to the presentation of relevant
positions to Eni’s Nomination Committee. The process of
mapping resources has also involved the population of young
people and graduates who are annually evaluated by their
counselor using a Segmentation tool. In particular, during 2013,
more than half of Eni’s people were mapped and, in
particular, 86% of the managers and 41% of the young graduates.
Eni’s commitment to performance assessment is ongoing, with
total coverage, in Italy and abroad, of 97% for directors and
senior managers and 57% for managerial staff and young graduates,
with an overall total of 60%. During 2013 the Performance and
Feedback process was completed and communication meetings
required for the implementation of the system were initiated. The
new process involves the participation of the entire company
population, in Italy and abroad, with mandatory application of
performance management for all executives, managers and young
graduates. The feedback process has been extended to the entire
population. 2014 will see the launch of a simplification project
for the two processes and the support tools in order to increase
their effectiveness in terms of policy, guidance and monitoring
of individual results and behaviors to be improved (also with
reference to the induction process for new recruits), and to
progressively expand the feedback targets.
During 2013 a total of three 360° Feedback campaigns were
launched (two of which were completed within the year) for a
total of 370 participants; of these, 157 were delivered in
English or French. The process, which between 2011 and 2012
involved staff in Italy, aims to raise participants’
awareness of their own behavior, from the viewpoint of managers,
peers/colleagues and partners.
As regards to the assessment of potential, in order to better
reflect the internationality of the business, it was decided to
extend the boundary of the analysis, expanding the population of
young graduates to include people with up to 7 years of service
(until last year it was a maximum of 5 years). The trend in the
percentage of employees covered by potential assessment (young
graduates and experts) is the indicator most affected by the
increase in the reference pool. Reading the data in absolute
terms, the total number of assessments is rising: in 2013 a total
of 883 reviews were performed, up 10% compared to 2012, which saw
a total of 797 initiatives. In addition to this index, it is
worth noting the evaluation activities carried out during the
year on the population of managers and executives with an amount
of 120 Individual Assessments and Management Appraisals.
Training
| 2011 | 2012 | 2013 |
| Training hours by type | (hours) | 3,126,935 | 3,132,350 | 4,349,352 (a) | ||||
| - HSE and quality | 1,594,357 | 1,547,274 | 2,213,450 | |||||
| - Languages and ICT | 297,012 | 311,142 | 339,058 | |||||
| - Conduct/Communication/Institutional | 198,073 | 213,779 | 233,949 | |||||
| - Professional - transversal | 320,211 | 251,668 | 334,018 | |||||
| - Professional - technical/commercial | 717,282 | 808,487 | 1,228,877 | |||||
| Training expenditures (a) | (euro million) | 49.98 | 55. 67 | 75.91 |
(a) The total cost includes the activities carried out during 2013 as part of the project in Iraq for the subsidiary Zubair Field Operation Division.
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During 2013, the number of hours of
training increased by approximately 39% compared to the previous
year, while the total cost of training increased by about 36%,
with an increase in activities performed abroad.
Eni continued its partnerships with the academic world,
developing a university network focused on oil and gas themes
and, in general, broadening relations with academic institutions
and the top business schools. In particular, through Eni
Corporate University, several initiatives have been established
with prestigious Universities: the specialized master in
“Petroleum Engineering and Operations” and the master
of science in “Petroleum Engineering” in partnership
with the Politecnico di Torino; the specialized master in
“Design of Oil & Gas Plants” and “Safety and
Environmental Management in the Oil & Gas Industry” with
the Università di Bologna; master of science “Energy
Orientation - Hydrocarbons” with the Politecnico di Milano
and “Geology of Hydrocarbons” with the Università di
Perugia; also in progress is the fifth edition of the first level
master’s course in “Management of Health, Safety,
Environment & Quality System” organized in partnership
with the Università di Pisa and with the cooperation of the
QUINN consortium; and the “Integrated petroleum geoscience
course” was run with the Università di Perugia.
The 4th Edition of the “eni program for
management development” was carried out in partnership with
the SDA Bocconi School of Management, where 28 young managers
were involved from all Eni’s locations in Italy and abroad.
The program is designed to provide methodologies and tools for
acquiring an integrated vision of the company, an understanding
of the economic and financial dynamics, the management of new
business development models in international contexts and the
acquisition of team leadership and team working skills.
In partnership with the Imperial College Business School and the
Oxford Said Business School, a development path for excellence
was created, the “ETS Summer School”, for 35 young
people on general management, finance and trade topics.
Altogether, in 2013, 160 participants were involved and monitored
including students at masters level, masters graduate students
and research fellows; all participants in the major initiatives
were recruited by companies/divisions of the Group.
Anti-Corruption training and awareness
Anti-corruption training is compulsory and is extended
to all people at risk, in Italy and abroad. The aim of the
training is to illustrate the applicable Anti-Corruption laws,
Eni’s Anti-Corruption compliance program and to provide the
knowledge and tools to recognize potentially criminal conduct,
the actions to be taken, and the risks, responsibilities and
sanctions that may result, in order to prevent and combat
instances of corruption.
Training is delivered through on-line courses (e-learning) and
workshop training events carried out directly by the
Anti-Corruption legal office (ACSLU) in Italy and abroad. In 2012
a new version of e-learning was developed, taking into account
the changes in the international legislation on Anti-Corruption
and, consequently, domestic regulations. This new version of the
e-learning was delivered from 2013 onwards.
In 2013, approximately 9,200 employees were trained using the new
e-learning cycle.
With specific reference to classroom training events, 57 sessions
were held in 2013 (13 Anti-Corruption workshops at subsidiaries
abroad; 5 seminars dedicated to specific functions such as Legal
Affairs, Internal Audit and Communications within Eni; 8 seminars
for top management; 4 “Responsible Leadership”
seminars; 1 Welcome Board for board members of Eni and its
subsidiaries; 11 “Safety Roadshows”; and 15
“institutional manager training” sessions) attended by
about 1,570 persons.
Involving people
| 2011 | 2012 | 2013 |
| Users with access to the MyEni portal | (number) | 25,746 | 23,578 | 25,088 | ||||
| Cascade Program meetings | 565 | 569 | 1,000 (a) | |||||
| - Countries involved | 40 | 44 | 44 | |||||
| - Satisfaction of participants (positive feedback on the initiative) | (%) | 87 | 88 | 87 |
(a) The first business meetings were made available on the corporate intranet, and staff meetings in the units were given priority for all subsequent meetings.
During 2013 the MyEni intranet was
reconfirmed as the main tool for entry into the world of Eni,
communication, and support for daily activities. The Italian
version is visible to 25,088 persons, whereas the international
version (MyEni International) is today reachable by every
associate connected to the Eni telecommunications network and is
the home page in 43 associate companies, open to a total of
approximately 8,100 persons.
The Cascade program, targeted at all Eni people with the aim of
communicating the company’s strategies by business area, was
run for the seventh time in 2013. This year the formula was
revamped with the aim of making the program more interactive and
timely. The intranet was used to make the first business meetings
available and staff meetings in the units were prioritized for
all subsequent meetings. The level of general satisfaction with
the initiative was high and in line with the 2012 level. In
addition to Italy, the Cascade has involved 43 Countries.
Also in 2013, Eni’s commitment continued in the form of its
proposal to introduce a qualitatively and quantitatively
attractive corporate welfare model, as an incentive for the
engagement of Eni’s people. The priority areas for the
initiative were confirmed, linked to the themes of “Health
Promotion”, “Work-Life Balance” and “Time
& money saving”.
In 2013, investment in “Health Promotion” was
especially significant with the launch of the new project
“Prevent with Eni” and the development of the
“Early Detection Plan”, which is aimed at expanding the
cancer screening plan with the inclusion of more medical
services. The goal is to offer a package, with check-ups and more
in-depth and comprehensive tests every two years to support
secondary prevention. The project was
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started in November at three pilot sites
(Ravenna, Brindisi and Genoa) with a potential pool of 1,000
people. Since the start date, about 90 people have joined the
initiative. In 2014 the project will be expanded into several
other venues, involving potentially about 3,300 of Eni’s
people in Italy.
As part of Work-Life Balance, organized activities continued with
the aim of supporting Eni’s people with childcare; the
initiatives, which in 2013 involved more than 2,600 children and
teenagers in total, included the organization of summer holidays,
themed trips, summer campuses in the city and the Eni crèche and
Infants’ school. In line with Eni’s commitment to
promoting initiatives to support young people and their personal
and professional training, a new initiative was launched in 2013
aimed at the children of Eni’s people aged between 16 and 18
years. This initiative, formed in collaboration with the
Fondazione Intercultura (a non-profit partner of the most
important worldwide intercultural exchange organizations) allowed
10 study trips abroad to be provided, enabling children to live
and study in another Country for a whole academic year and enjoy
a unique experience, learning a foreign language, sharing
different cultures and customs, but above all developing a
multicultural perspective.
In the field of “Time & Money Saving”, to support
people’s spending power in this particularly difficult
economic period, the existing agreements have been revamped (for
travel, leisure, cars, clothing, healthcare, etc.) and new ones
have been started, including e-commerce agreements for some of
the categories of goods most commonly purchased by households.
Moreover in 2013, in Italy and abroad, all the activities that
aim to promote a strong connection between Eni’s people and
the company went ahead (seniority awards, support to associations
for employees and former employees, contributions for after-work
facilities) as well as local-level initiatives involving Eni
people (anniversaries, holidays and sporting events). As part of
this, 1,726 persons in Eni were involved in the “Snow
Trophy”, organized in Folgaria, with a total of 27
participating companies, including 9 foreign companies. The
initiative, the proceeds of which went to support the Smile Train
Italia non-profit organization, provided an opportunity for
colleagues working in different geographical and organizational
areas to meet and share their experience.
Industrial relations
| (number) | 2011 | 2012 | 2013 |
| Employees covered by collective contracting (Italy) | 30,506 | 30,480 | 30,590 | |||
| Consultations, negotiations with trade unions on organizational changes (Italy) (a) | 437 | 359 | 278 |
(a) The minimum notification period for operational changes is in line with the provisions of the applicable laws and union agreements signed in the individual Countries in which Eni operates.
In 2013, in line with the agreement for
development and competitiveness and for a new industrial
relations model dated May 26, 2011, meetings with the trade
unions produced agreements to support and promote efficiency
processes in organizational and productive facilities, in
particular the redevelopment project at the Assemini and Priolo
petrochemical plants and the industrial conversion of the Gela
Refinery.
In July, with the signing of specific trade union agreements, a
redundancy and relocation program was launched, for a maximum of
1,000 employees and in compliance with corporate technical and
organizational needs; this agreement identifies all the measures
required to minimize the impact on resources. The
redundancy/relocation program will end in 2014. Over the
2013-2015 period, Eni will also move on, with a view to
professional and occupational replacement, to the progressive
inclusion of 300 graduates/post graduates and fixed-term
administrative workers and fixed-term contract workers for the
oil and energy sector.
The home working pilot project, started in May 2012, represents a
positive means of encouraging the right forms of work-life of
balance: accordingly, a widening of the trial has been agreed
into other Eni businesses as well as its extension to special
situations involving employees with disabilities.
As for associations, of note among the main national collective
labor agreements applied in Eni is the renewal in Italy of the
Collective Bargaining Labor Agreement for Oil and Energy.
In relation to industrial relations activities at an
international level, the relations with the European Works
Council (CAE) on the progress of Eni policies within the European
framework and with the representatives of the European Risk
Observatory for Workers’ Safety and Health are also worthy
of note. The 2013 meeting was held in July in Bruges. One day was
devoted to a seminar workshop for delegates with information on
the European Union guidelines and measures concerning energy
policy and employment policies and Eni projects to further
integrity and non-discrimination.
A work environment that “does not discriminate” by
gender, orientation, culture and age, is, in fact, an essential
element of respect for fundamental personal rights and is also
conducive to the enhancement and development of individual skills
and capacities.
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Employment disputes
| 2011 | 2012 | 2013 |
| Employment disputes | (number) | 1,170 | 1,383 | 1,607 | ||||
| Prevention/disputes ratio | 952/1,170 | 864/1,383 | 577/1,607 | |||||
| Disputes/employees ratio | (%) | 1.39 | 1.80 | 1.95 |
In 2013, Eni’s commitment to
preventing and managing work disputes was maintained, working at
the pre-trial phase with effective tools to reduce the number of
legal disputes and the consequent costs.
Thanks to the continued legal assistance provided, the level of
conflict remained low, taking into account the size of the
company and the complex structure of employment legislation,
particularly in Italy.
The number of cases reaching the Italian and non-Italian courts
connected with work contracts such as claims for superior
grading, recognition of pay differences and, in particular for
Italy, alleged downgrading and deskilling remained at an
extremely low level (0.35% of employees in service in December
2013). This confirms a model of work organization which allows
Eni’s people to make the most of their skills and potential
with the support of a shared system of skill classification.
The majority of disputes (18% of the total) concern occupational
illnesses and represent, at this time, a typical feature of
Italian employment disputes; they are due to claims for alleged
exposure to potentially damaging agents, often linked to the
industrial sites acquired by Eni.
About 16% of the total disputes, however, relate to claims
following outsourcing by Eni, such as transfers of company
branches and service contracts.
Moreover, concerning disputes abroad, particular importance is
assumed by requests for profit sharing in addition to the pay
claims already referred to.
Spending for the territory
| (euro million) | 2011 | 2012 | 2013 |
| Total spending for the territory: | 100.885 | 90.568 | 100.547 | |||
| - of which interventions on the territories from agreements, conventions and PSA | 69.279 | 63.052 | 57.570 | |||
| - of which short-terms investments linked to initiatives in favor of the territories | 0.865 | 3.377 | 0.813 | |||
| - of which association memberships fees | 1.624 | 1.803 | 1.800 | |||
| - of which contributions to the Eni Foundation | 3.000 | - | 10.000 | |||
| - of which sponsorships for the territory | 22.399 | 18.618 | 26.469 | |||
| - of which contributions to Eni Enrico Mattei Foundation | 3.718 | 3.718 | 3.895 |
In 2013, the overall cost for the territory amounted to over euro 100 million and included local projects stemming from agreements, conventions and PSA (community investments) and donations linked to local initiatives, membership fees for associations, sponsorships and contributions to the Eni Enrico Mattei Foundation. Over euro 57 million (about 60% of the total) was invested in community projects, established through agreements or conventions with local stakeholders, to encourage and promote community development in the Countries in which Eni works.
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Community Investment
| (euro million) | 2011 | 2012 | 2013 |
| Interventions on the territories from agreements, conventions and PSA by category: | 69.279 | 63.052 | 57.570 | |||
| - training/professional coaching | 4.570 | 9.886 | 13.527 | |||
| - environment | 15.899 | 9.698 | 9.164 | |||
| - culture | 1.938 | 1.300 | 1.713 | |||
| - instruction and education | 3.207 | 3.789 | 5.384 | |||
| - health | 2.035 | 3.886 | 2.931 | |||
| - infrastructure development | 18.334 | 20.344 | 15.176 | |||
| - socio-economic development | 6.794 | 6.357 | 5.792 | |||
| - relationships with communities | 7.134 | 7.077 | 2.332 | |||
| - access to energy | 9.368 | 0.715 | 1.551 |
The cost in 2013 of community projects deriving from local agreements and conventions (community investment) amounted to more than euro 57 million, about 93% of which was spent in the area of exploration and production activities. Spending on the African continent remained constant, with a positive trend in Sub-Saharan Africa, where euro 25.7 million was spent in 2013 against the previous year’s euro 23.2. Regarding the E&P figures, the total for 2013 was euro 53.3 million, less than the total for 2012 of euro 59.5 million. This decrease is explained by reduced investment, mainly in infrastructure development in Kazakhstan, and the reduction in spending on training in Egypt; at the same time, there was increased investment in terms of access to energy, instruction, education and training. Concerning access to energy, the increase is attributable to the progress in electrification projects for local communities in Nigeria.
Sponsorship for the territory
| (euro thousand) | 2011 | 2012 | 2013 |
| Sponsorships for the territory by intervention sector: | 22,399 | 18,618 | 26,469 | |||
| - health | 168 | 40 | - | |||
| - training | 71 | 185 | 183 | |||
| - education | 436 | 862 | 366 | |||
| - environment | 233 | 69 | 122 | |||
| - culture | 15,771 | 13,678 | 21,438 | |||
| - social infrastructures | 162 | 37 | 60 | |||
| - social interventions | 5,559 | 3,748 | 4,300 |
Eni also works to benefit local communities through support for initiatives selected on the basis of different criteria, such as affinity with the image and identity of the company, links with the territory, adherence to business goals and, as a common denominator, consistency with sustainability principles. In 2013, local sponsorship amounted to euro 26.5 million, almost all in Italy; more than 80% was dedicated to the promotion of cultural activities in regions where Eni is present. Among these, a few examples of excellence are the strategic partnership with Expo 2015 for sustainability initiatives in African countries and the collaboration with the Louvre and the Vatican Museums for the promotion of art and culture.
Local content
Ratio between Eni minimum wage policy and market minimum wage (1st decile) - (middle managers - senior staff)
| Ratio | Countries | |
| 100 - 115 | Australia, Italy, the Netherlands, Hungary, Belgium, Germany, France, Libya, Romania, Norway, United Kingdom | |
| 116 - 130 | United States, Angola, Countries of the Gulf Area | |
| 131 - 150 | Peru, Venezuela, Algeria | |
| 151 - 180 | China, Kazakhstan, Brazil | |
| > 180 | Egypt, Indonesia, Russia, India | |
| 135 | Global Average |
In its policy for local personnel (see the detail on local overseas employees by professional category in the International Development section), Eni defines relevant salary levels in terms of minimum/maximum range, in relation to market data for each individual Country, monitored annually using international providers.
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The comparison between the minimum levels defined in Eni policies and the minimum market levels supplied by providers (1st decile of local pay levels) refers to the section of the workforce composed of middle managers and senior staff. The analysis carried out relates to a sample of about 14,000 resources in 24 Countries chosen from those most representative in terms of business presence and strategic importance. The results of the analysis show that on average the minimum levels defined in Eni’s policy are in line with or superior to the market minimums.
| Procurement by geographical area 2013 | Africa | Americas | Asia | Italy | Rest of Europe | Oceania |
| Number of suppliers used | (number) | 7,105 | 6,116 | 5,246 | 9,980 | 9,940 | 520 | |||||||
| Total procurement | (euro million) | 8,434 | 2,871 | 5,036 | 10,714 | 5,340 | 419 | |||||||
| - of which in goods | (%) | 17.5 | 24.4 | 16.2 | 11.2 | 17.9 | 10.3 | |||||||
| - of which in works | 16.3 | 26.4 | 21.5 | 12.4 | 26.1 | 1.0 | ||||||||
| - of which in services | 60.8 | 48.1 | 49.2 | 73.1 | 53.7 | 88.2 | ||||||||
| - of which unidentifiable | 5.4 | 1.1 | 13.1 | 3.3 | 2.3 | 0.5 |
In 2013 more than 34.8 thousand suppliers worldwide worked for Eni, some of which operated on more than one continent; in particular, more than 20% were on the African continent, in line with the previous year (20% in 2012). Eni is committed to maximizing the participation of local enterprises when pursuing its business activities and contributing to the growth of local supply chains, including in developing and emerging Countries. In 2013 the total share of procurement from local markets increased, reaching 63%, with steady growth in Africa where the share of local procurement rose from 54% to nearly 60%. In 2013, among 54 countries under investigation, the share of procurement from local markets was higher than 50% in 39 Countries, with peaks of over 80% in several Countries including Nigeria (94%), Kenya (100%), Gabon (81%), Indonesia (92%), Vietnam (87%), Poland (94%), Venezuela (92%) and Ecuador (89%).
Local procurement 2013 by Country
| % procurement on local market | Countries | |
| 0 - 25% | UAE, Luxembourg, Malaysia, Mozambique, Peru, Portugal | |
| 26 - 49% | Angola, China, Germany, Iran, Iraq, Libya, Norway, Czech Republic, Slovenia | |
| 50 - 74% | Algeria, Saudi Arabia, Brazil, Republic of Congo, Croatia, Egypt, France, Ghana, United Kingdom, India, Kazakhstan, the Netherlands, Pakistan, Switzerland, Togo, Tunisia, Hungary | |
| 75 - 100% | Argentina, Australia, Austria, Belgium, Canada, Cyprus, Ecuador, Gabon, Indonesia, Italy, Kenya, Mexico, Nigeria, Poland, Romania, Russia, Singapore, Spain, United States, Ukraine, Venezuela, Vietnam |
Relations with suppliers
| 2011 | 2012 | 2013 |
| Procurement by macro-class: | (euro million) | 32,586 | 31,811 | 32,814 | ||||
| - works | 6,782 | 7,024 | 5,948 | |||||
| - services | 15,990 | 15,283 | 20,047 | |||||
| - goods | 6,743 | 5,449 | 5,200 | |||||
| - unidentifiable | 3,071 | 4,055 | 1,620 | |||||
| Supplier concentration top 20 | (%) | 20 | 15 | 17 | ||||
| Suppliers used | (number) | 31,878 | 32,621 | 34,848 | ||||
| Qualification cycles carried out during the year | 26,936 | 31,991 | 46,913 | |||||
| - of which with negative results | (%) | 13 | 6 | 9 | ||||
| Checks carried out following negative feedback and consequent actions taken: | (number) | 365 | 381 | 451 | ||||
| - suspensions | 73 | 69 | 106 | |||||
| - revocations | 56 | 53 | 9 | |||||
| - states of attention | 236 | 259 | 336 |
In 2013, Eni’s total procurement
valued euro 32.8 billion. The process of extending vendor
management models (Assessment Process Level systems and training)
to 4 foreign Countries has continued (in Angola, Congo, Tunisia
and Pakistan). Suppliers are subjected to qualification and audit
processes as well as performance assessment procedures and
verification of corrective actions implemented. Monitoring of
suppliers not yet in line with Eni standards (including
sustainability requirements) has continued, with the production
of monthly reports. In 2013, monitoring activities related in
particular to four foreign enterprises and two Italian ones: Eni
Gabon, Eni G&P France, Eni Indonesia, Eni Norge, Gela
Refinery and Syndial. Communication initiatives were carried out
to spread good practices and awareness of procurement issues
overseas (in Pakistan, Mozambique, Norway and Angola) in addition
to updates on sustainability topics for the personnel of
associates at head office.
The status of initiatives encouraging the promotion of good
practices in the supply chain management has been maintained.
These include participation in the Carbon Disclosure Project
Supply Chain, involving significant Eni suppliers; the IPIECA
Supply Chain Task Force Working Group on the development of
environmental topics and CSR in the supply chain; and
participation in the Sustainable Supply Chain Working Group as
part of Global Compact Network Italia.
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Transparency over payments
Payments made by Eni to governments of Producing Countries that subscribe to the Extractive Industries Transparency Initiative (EITI)
| Countries | Year (a) | Local currency | Amounts in local currency (thousands) | Amounts in US$ (thousands) | Total amount in US$ (thousands) |
| Norway | 2012 | NOK | 9,264,035 | - | 1,592,273 | |||||
| Profit Taxes (b) | 9,212,315 | 1,583,384 | ||||||||
| Fees (c) | 51,720 | 8,889 | ||||||||
| Democratic Republic of Congo | 2011 | CDF | 40,461 | 44 | ||||||
| Profit Taxes (b) | 40,461 | 44 | ||||||||
| Trinidad & Tobago | 2011 | TT$ | 81,069 | 12,711 | ||||||
| Profit Taxes (b) | 81,069 | 12,711 | ||||||||
| Indonesia | 2009 | - | 29,520 | 29,520 | ||||||
| Profit Taxes (b) | 29,520 | 29,520 | ||||||||
| Nigeria | 2011 | - | 1,650,573 | 1,650,573 | ||||||
| Profit Taxes (b) | 1,073,957 | 1,073,957 | ||||||||
| Royalties | 488,050 | 488,050 | ||||||||
| Fees (c) | 305 | 305 | ||||||||
| Other significant benefits to government agreed by MSWG | 88,261 | 88,261 | ||||||||
| East Timor | 2011 | 401,269 | 401,269 | |||||||
| Host government’s production entitlement (e.g. Profit oil) | 205,826 | 205,826 | ||||||||
| Profit Taxes (b) | 169,821 | 169,821 | ||||||||
| Royalties | 2,757 | 2,757 | ||||||||
| Fees (c) | 410 | 410 | ||||||||
| Other significant benefits to government agreed by MSWG | 22,455 | 22,455 | ||||||||
| Kazakhstan | 2011 | KZT | 9,432,211 | 1,194,496 | 1,258,823 | |||||
| Host government’s production entitlement (e.g. Profit oil) | 417,705 | 417,705 | ||||||||
| Profit Taxes (b) | 953,183 | 723,850 | 730,351 | |||||||
| Bonuses (d) | 52,941 | 52,941 | ||||||||
| Other significant benefits to government agreed by MSWG | 8,479,028 | 57,826 | ||||||||
| Republic of Congo (e) | 2012 | 100,523 | 100,523 | |||||||
| State-owned company production entitlement | 41,034 | 41,034 | ||||||||
| Profit Taxes (b) | 16,851 | 16,851 | ||||||||
| Fees (c) | 1,354 | 1,354 | ||||||||
| Bonuses (d) | 15,000 | 15,000 | ||||||||
| Other significant benefits to government agreed by MSWG | 26,284 | 26,284 | ||||||||
| Mozambique | 2011 | MZN | 110,029 | 1,100 | 5,142 | |||||
| Profit Taxes (b) | 110,029 | 4,042 | ||||||||
| Other significant benefits to government agreed by MSWG | 1,100 | 1,100 | ||||||||
| Iraq | 2010 | 43,750 | 43,750 | |||||||
| Bonuses (d) | 43,750 | 43,750 | ||||||||
| Togo | 2011 | XOF | 1,107,796 | 500 | 2,851 | |||||
| Profit Taxes (b) | 1,107,796 | 2,351 | ||||||||
| Other significant benefits to government agreed by MSWG | 500 | 500 | ||||||||
| Gabon | 2010 | - | 25 | 25 | ||||||
| Fees (c) | 25 | 25 |
(a) Last local financial year
in which the data is referenced and in which the EITI disclosures
has been made.
(b) Corporate tax-other tax on income/profit or production e.g.
petroleum revenue tax.
(c) Signature, discovery and production bonus.
(d) On License, rental and any consideration for license and or
concessions.
(e) In addition to the amount shown in the table, some of the
transfers made by Eni in Congo are “in kind” for a
total of 11,171 kboe, which refers to the profit share in oil and
the royalties pertaining to the Republic of the Congo, net of the
barrels conferred to Eni by the Republic of the Congo on the
basis of commercial agreements.
In 2013, Eni continued to participate in
reconciliation and publication of payments made to producer
Countries adhering to the Extractive Industries Transparency
Initiative (EITI).
The table below shows the data on payments made by Eni and
included in the latest EITI Report published in the respective
Countries.
For Iraq, the 2011 EITI Report also includes purchases of crude
oil made by Eni Trading and Shipping. For these purchases, Eni
Trading and Shipping paid an amount equal to 1,306,390,867 USD in
2011.
Eni also takes an active part in the local multi-stakeholder EITI
working groups, either directly or through participation in trade
associations.
Again in 2013 Eni contributed financially to the functioning of
the EITI Secretariat.
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Royalties paid by Eni in Italy in the 2011-2013 period
| (euro thousand) | 2011 | 2012 | 2013 |
| Royalties paid (a) | 203,886 | 237,517 | 298,383 | |||
| - of which to State | 97,682 | 96,948 | 138,302 | |||
| - of which to Regions | 83,730 | 109,949 | 125,596 | |||
| - of which to Basilicata | 53,516 | 77,255 | 91,862 | |||
| - of which to Municipalities | 22,474 | 30,619 | 34,486 |
(a) The data include Eni SpA (E&P Division), Enimed, Società Adriatica Idrocarburi and Società Ionica Gas.
Human Rights
| 2011 | 2012 | 2013 |
| Hours of training on Human Rights | (number) | 518 | 576 | 667 | ||||
| Reports received on probable Human Rights violations | 39 | 39 | 43 | |||||
| Reports on Human Rights violations closed in the year | 32 | 48 | 44 | |||||
| - groundless reports or only partially grounded reports with corrective and/or improvement actions taken | 13 | 15 | 20 | |||||
| - groundless reports | 19 | 33 | 24 | |||||
| Suppliers subjected to qualification procedures including screening on Human Rights | 11,471 | 12,471 | 14,833 | |||||
| % procurement from suppliers subjected to qualification procedures including screening on Human Rights | (%) | 90 | 88 | 87 | ||||
| SA 8000 audits carried out | (number) | 16 | 16 | 23 | ||||
| - of which follow-ups | 8 | 8 | 9 | |||||
| Security contracts containing clauses on Human Rights | (%) | 50 | 65 | 84 | ||||
| Security personnel trained on Human Rights | (number) | 169 | 1,008 | 235 | ||||
| Critical sites covered by assessments | 30 | 11 | 21 | |||||
| Sites verified by means of check list | 147 | 121 | 194 | |||||
| Countries with armed guards protecting sites | 12 | 10 | 11 | |||||
| Training hours of specific nature to security managers | 672 | 1,476 | 4,700 |
With reference to the management of
whistleblowing concerning Human Rights topics, it is noted that
during 2013:
- 43 files were opened, mainly relating to alleged abuses of
workers’ rights and referring to issues of harassment,
bullying and workplace safety;
- 44 files were closed, 4 of which were found to be justified and
16 of which were not, for which corrective and/or improvement
actions were adopted anyway. These actions mainly focused on
abuses of workers’ rights with regard to the issues of
bullying, harassment and workplace safety.
The company’s commitment to carrying out audits and
inspections on the conduct of suppliers has been maintained, with
particular reference to the protection of Human Rights. In 2013,
SA 8000 Audits were performed on 14 suppliers/sub-suppliers in
Australia/East Timor, Ecuador, Congo and Pakistan, and follow-up
SA 8000 audits were performed on 9 suppliers (in Congo and
Ecuador) audited in 2012. Regarding the involvement of personnel
in this area, SA 8000 auditor training was given to 5 procurement
staff in Italy.
In 2013 Secur, in collaboration with the Sustainability Unit and
the E&P Division, and with the support of ECU, continued its
work on the promotion and development of two training projects on
“Security & Human Rights” for Security Forces
working at Eni sites in Indonesia and Algeria.
150 agents of private security forces and 2 security managers
were trained through these courses, for a total of 13 training
sessions. In particular:
- in Indonesia in November 2013, 10 training sessions were held
for a total of 151 participants, including 99 members of the
Public and Private Security Forces. These sessions were held in
Jakarta (Java), Jayapura (Papua) and Balikpapan (Borneo). The
training courses were targeted at Indonesian Army and Navy
personnel, Indonesian police officers and members of the
Indonesian Human Rights Commission. Moreover, through this
training project, for the first time employees of other companies
in the oil&gas industry (“Chemical Gas Indonesia”
and “Vico Indonesia”) were involved as well as
representatives of local NGOs;
- in Algeria in December 2013, 3 training sessions were conducted
in Algiers, for a total of 57 participants, including 6 from Eni,
belonging to the HR and Security departments and 51 agents of
Private Security Forces.
During 2013, 7 training courses were conducted on topics of
specific interest to Security staff, for a total of 4,700 hours
training and 114 participants, 83 of whom were trained in Human
Rights (43 in Italy and 40 in Kuala Lumpur (Malaysia)
respectively). The latter staff were trained as part of a broader
training project called “Security in the oil&gas
Industry”.
Finally, regarding the conduct clause aimed at ensuring respect
for Human Rights, this was included in 84% of the contracts
concluded with Security Services providers, compared to 65% in
2012. There is, therefore, a strongly positive trend in the
number of security contracts containing Human Rights clauses.
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Technological innovation
| 2011 | 2012 | 2013 |
| R&D expenditures | (euro million) | 246 | 263 | 218 | ||||
| - R&D expenditures net of general and administrative costs | 190 | 211 | 197 | |||||
| Tangible value generated by R&D activities (a) | - | - | 937 | |||||
| Personnel employed in R&D activities (full time equivalent) | (number) | 925 | 975 | 986 | ||||
| First patent filing applications | 79 | 74 | 59 | |||||
| Existing patents | 8,884 | 8,931 | 9,427 | |||||
| Patents average life | (years) | 8.84 | 8.86 | 9.26 |
(a) Recent refinements made to the calculation methodology make the 2013 value non comparable with the years 2011 and 2012 which aren't therefore reported. The 2013 value refers to E&P activities, G&P, R&M and Versalis sectors.
Eni’s financial commitment in the
field of scientific research and technological development
amounted to euro 197 million in 2013 (or euro 218 million if the
general overheads attributable to research activities nd
amortization and depreciation are included).
The tangible value generated by R&D is measured by the
economic benefits related to the application of the innovative
product/process technologies. In detail, the total tangible
benefit is measured as 100% of the company share [of profits]
from projects involving the application of technology, before
tax. The economic benefits may be based on actual results or
expected value (Net Present Value, NPV).
The assumptions applied on a case by case basis for the
calculation are shared with the relevant technical
structures/business lines. The tangible benefits are identified
in a “what if” scenario, that is, as the difference
derived from comparison with the application of the best
alternative technology or, in the case of new products, as the
difference compared to the margin generated by the products
replaced. The value created in 2013 by the innovative products
and technologies of the E&P, G&P, R&M sectors and
Versalis amounted overall to euro 937 million. Compared to the
overall value generated by R&D, the share based on actual s
is 77%, and on expected return (assessed in terms of Net Present
Value) is 23%. Compared to the cost incurred by Eni (net of
Saipem) for R&D activities, the value created gives rise to a
benefit/cost ratio of 5.7 in 2013.
The people involved in R&D activities as of December 31, 2013
numbered 986 persons (FTE), in line with the figure from 2012.
In terms of management of the Intellectual Property supporting
technological innovation, in addition to the 59 new patent
applications, 2013 was dedicated to conducting the evaluations
(19) needed to determine the freedom for the implementation of
the proprietary technologies closest to industrial production,
with respect to third party rights.
The size of the total patent portfolio at the end of 2013 showed
an increase of 5.6% compared to the previous year. The increase
relates to the portfolio of Eni, Versalis and Engineering &
Construction and is attributable mainly to the extension of
protection overseas for inventions patented in previous years.
Knowledge management
| (number) | 2011 | 2012 | 2013 |
| Knowledge community/network by application sector: | 58 | 63 | 65 | |||
| - business | 53 | 53 | 55 | |||
| - transversal | 5 | 10 | 10 | |||
| Participants in knowledge community/network by application sector: | 3,634 | 4,732 | 5,676 | |||
| - business | 3,376 | 4,098 | 4,909 | |||
| - transversal | 258 | 634 | 767 |
In 2013, knowledge management
initiatives confirmed the trend towards growing the dissemination
of knowledge already demonstrated in recent years, thus
evidencing the continued investment in tools and processes aimed
at improving knowledge management and knowledge sharing and
dissemination among Eni’s people (5,676 participants, up 20%
compared to 2012). During 2013, the design, development and
launch of the new E&P intranet for knowledge management was
completed, called #KMS, available throughout Eni. Among the most
important innovations, in addition to the ease of use and
development of up-to-date features for collaborative and
professional networking, #KMS can display people, expertise,
geographical areas and technical disciplines, creating greater
opportunities for multidisciplinary and multicultural synergies
among users and guaranteeing maximum accessibility to Communities
of Practice, KM Webinars – the use of which is constantly
growing (290 webinars = up 38% compared to 2012, with total
participation of 12,700) – and knowledge repositories.
Likewise through the new #KMS portal, during 2013 the pilot
project Innovation Idea Management (IIM) was developed, with the
aim of increasing the innovative capacity of the E&P Division
and promoting the creativity of Eni’s People worldwide. This
is an innovative approach based on the mechanisms of creative
collaboration, allowing free participation by Eni people,
regardless of their geographical location and seniority. The
pilot was successfully concluded in November 2013 and the IIM
process became an integral part of the function provided by #KMS.
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The environmental management system
| 2011 | 2012 | 2013 |
| ISO 14001 certifications | (number) | 103 | 108 | 112 | ||||
| ISO 50001 certifications | 3 | 6 | 8 | |||||
| EMAS registrations | 9 | 10 | 10 | |||||
| Total systems audits (internal and made from external certification bodies) | 1,744 | 3,475 | 2,555 | |||||
| - of which made from external certification bodies (ISO 14001) (a) | 36 | 117 | 90 | |||||
| - of which made from external certification bodies (OHSAS 18001) (a) | 23 | 133 | 99 | |||||
| Audits of other typology (EMAS, ISO 50001, ISO 9001, audits on supplier/contractors, etc.) | 2,152 | 2,842 | 1,165 | |||||
| Environmental expenditures | (euro thousand) | 893,421 | 743,400 | 734,381 | ||||
| - current spending | 551,799 | 468,263 | 491,043 | |||||
| - investments | 341,622 | 275,136 | 243,338 |
(a) The figures don't include E&P subsidiaries.
The majority of management systems for
the main operating units are registered under the ISO 14001
standard and in Europe the main production units have undergone
the EMAS registration process. By 2015 ISO 14001 certification is
expected for all the subsidiaries that have a significant HSE
risk profile. In 2013 more than 70% of such companies were
already certified, in particular:
- in the E&P sector, all the previously obtained
certifications were maintained;
- in the G&P sector, where ISO 14001 certification had
already been completed in 2011 for all the production plants and
where the Ferrera Erbognone, Mantua, Ravenna and Ferrara plants
are covered by EMAS Registration, all the existing certifications
from previous periods were confirmed and the subsidiary Adriaplin
doo obtained certification;
- in the R&M sector the task of maintaining the existing
certifications continued (in particular for all the refineries)
as well as the extension of certificates with coverage for
reclamation activities in unused sites and the subsidiaries Eni
Austria GmbH and Oléoduc du Rhône SA;
- in the Chemicals sector, coverage has been confirmed for all
the Italian and foreign plants;
- in the Engineering & Construction sector all the
certifications already obtained in recent years have been
confirmed; the operational companies Saipem Contracting
Netherlands BV - Sharjah Branch and PT Saipem Indonesia Karimun
Branch in the Engineering & Construction sector were also
certified and certification was completed at Saipem SpA with
coverage also for drilling activities.
In 2013 Eni obtained 2 new ISO 50001 energy management system
certifications (Oberhausen Petrochemical Plant and certification
of ICT corporate headquarters) which have been added to those
obtained previously (in the Refineries in Venice, Livorno,
Sannazzaro and Taranto, the Szazhalombatta plant in the Chemicals
sector and the Corporate offices).
Environmental spending recorded an overall light decline (down
1.2% compared to 2012), linked to the decline in investments
(down 11.6%) in the E&P sector (down 15.5%, totaling
approximately euro -18.2 million), R&M (-16.7%, totaling
approximately euro -17.7 million) and other activities (-41.7%,
totaling approximately euro -4.5 million). In the E&P sector,
the reduction in investments is primarily linked to Nigeria, due
to the completion of the big flaring down project of Idu in 2012,
the Akri and Ogbainbiri projects in the third quarter of 2013
(these were associated with lower investments compared to Idu) as
well as completion of the project in Italy to replace the
Perla-Prezioso Sealine.
Climate change
| 2011 | 2012 | 2013 |
| Direct GHG emissions | (tonnes CO2 eq) | 49,128,806 | 52,498,789 | 47,299,618 | ||||
| - of which CO2 from combustion and process | (tonnes) | 35,319,845 | 36,365,220 | 34,171,339 | ||||
| - of which CO2 equivalent from flaring | (tonnes CO2 eq) | 9,553,894 | 9,461,518 | 8,478,376 | ||||
| - of which CO2 equivalent from unburnt methane and fugitive emissions | 3,222,051 | 4,475,756 | 2,902,091 | |||||
| - of which CO2 equivalents from venting | 1,033,017 | 2,196,295 | 1,747,812 | |||||
| CO2 emissions from Eni plants subject to EU ETS | 23,615,602 | 22,099,231 | 20,417,804 | |||||
| Quotas allocated to Eni plants subject to EU ETS | 25,373,975 | 24,978,257 | 9,233,300 | |||||
| Eni plants subject to EU ETS | (number) | 39 | 39 | 40 | ||||
| Indirect GHG emissions from purchases from other companies (Scope 2) (a) | (tonnes CO2 eq) | 1,190,860 | 846,294 | 756,062 | ||||
| Indirect CO2 emissions from sales of products and activities contracted out to third parties (Scope 3) (b) | (Mtonnes CO2 eq) | 301.623 | 290.205 | 282.922 | ||||
| CO2 eq emissions/100% operated hydrocarbon gross production (E&P) | (tonnes CO2 eq/toe) | 0.206 | 0.225 | 0.222 | ||||
| CO2 eq emissions/kWh eq (EniPower) | (g CO2 eq/kWheq) | 403.934 | 399.204 | 406.501 | ||||
| CO2 eq emissions/uEDC (R&M) | (tonnes CO2 eq/kbbl/SD) | 1,231 | 1,143 | 1,049 | ||||
| Volume of gas sent to flaring | (MSm3) | 4,433 | 4,506 | 3,762 | ||||
| Volume of gas sent to venting | 26.32 | 25.92 | 20.65 |
(a) The 2013 figure also
includes indirect emissions of N2O from purchases from
other companies.
(b) The figure includes GHG indirect emissions (CO2,
CH4 and N2O) from drilling activities
contracted out to third parties in the E&P sector, from sales
of petroleum products and natural gas (excluding oil products
sold to Eni group companies and sold by Eni Trading &
Shipping to third companies), from business travel and from road
transport contracted to third parties on highway and maritime
transport. Only for 2011 and solely for drilling activities
contracted to third parties in the E&P sector, the figure
refers only to CO2.
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In 2013 greenhouse gas emissions were reduced in all sectors
(in particular, down 9.7% in E&P, down 12.1% in G&P and
down 14.1% in R&M), causing an overall decline in Eni of 9.9%
compared to the previous year.
The change was caused not only by lower production levels, but
also by the implementation of specific strategies to reduce
greenhouse gas emissions (in particular flaring down activities)
and improvement actions designed to increase energy efficiency,
as demonstrated by the improvement in the sector emission indexes
for E&P and refining. In the thermoelectric sector accidental
events (such as lengthy downtimes of the most efficient
production units at Ferrera Erbognone and Mantua) and the need,
for market reasons, to use the combined cycles at low loads,
resulted in a reduction of overall performance and increased CO2
emissions per unit of product, resulting in an increase in the
performance index, which still remained below the threshold set
for the reference period (415 g CO2 eq/kWheq).
The overall GHG performance positively affected the results
obtained by the E&P sector with the flaring down projects,
with volumes sent to flaring reduced by 16.5% compared to 2012
and the respective greenhouse gas emissions by 10.4%. Remembering
that 2011 performance is not representative as it was affected by
reduced production in Libya due to the Country’s political
situation, the 2013 result also stands out as positive compared
to 2010, with a reduction of more than 29% in the GHG emissions
index from flaring per unit produced.
In Congo the development of the M’Boundi field continued
with the application of advanced recovery techniques and economic
enhancement of the associated gas, and an increase in 2013 of the
quantities sold under long-term contracts to power stations in
the area, including the Centrale Electrique du Congo (CEC) with a
production capacity of 300 MW. In Nigeria the Akri and Ogbainbiri
flaring down projects commenced; the completion of the upgrade at
the Ogbainbiri flowstation will reduce gas volumes sent to
flaring by 0.11 million cubic meters a day. In 2013 the flaring
down program in the area was accompanied by the completion of the
upgrade of the flowstation at the Idu field, with a reduction of
the gas flared amounting to 1.4 million cubic meters per day. GHG
emissions from venting were also reduced compared to 2012 (down
20.4%), as well as the volume of gas sent to venting (down
20.3%).
In Europe, within the framework of the Emissions Trading Scheme
(ETS), in 2013 Eni’s consolidated greenhouse gas emissions
were 7.6% less than those for 2012. The quotas assigned in 2013
were drastically reduced compared to the historical series due to
the new allocation system in effect for the third ETS period
(2013-2020), while installations grew from 39 to 40 due to the
entry of the Goliat site run by the subsidiary Eni Norge in the
E&P sector.
The declining trend in emissions at the installations subject to
ETS regards all the sectors, with the sole exceptions of E&P,
where emissions (equal to 6% of the total) are increasing (up
31.7% compared to 2012) due to the Val d’Agri installation,
Florence FPSO reaching peak production and the commencement of
activities at the Goliat site and in the chemicals sector, where
they remained essentially stable (down 0.4%), contributing to 18%
of the total. In G&P, emissions, which accounted for 51% of
Eni’s total, were reduced by 9.6% due to the general decline
of electricity production (down 11%) and in R&M, which
accounted for 25% of the total, there was a decline of 14.2% as a
result of the suspension of part of the activities in the Gela
Refinery and a general reduction of processing activities (down
7%).
Indirect GHG emissions other than those due to the acquisitions
from other companies (so-called Scope 3) showed a reduction (down
2.5% compared to 2012), related to the declining contribution of
emissions associated with products sold due to the reduction in
sales.
Energy efficiency
| 2011 | 2012 | 2013 |
| Electricity produced by type of source (EniPower): | (TWh) | 25.40 | 1.08 | 23.14 | ||||
| - of which natural gas | 23.52 | 1.03 | 21.52 | |||||
| - of which oil products | 1.89 | 1.57 | 1.61 | |||||
| - of which other fuels | 0.00 | 0.00 | 0.01 | |||||
| Energy consumption from production activities/100% operated hydrocarbon gross production (E&P) | (GJ/toe) | 1.615 | 1.557 | 1.536 | ||||
| Energy Intensity Index (R&M) | (%) | 79.4 | 76.9 | 76.3 | ||||
| Net consumption of primary resources: | (toe) | 14,304,869 | 14,629,243 | 14,174,056 | ||||
| - natural gas | 9,202,030 | 10,126,614 | 9,912,862 | |||||
| - oil products | 4,896,890 | 4,286,526 | 4,135,872 | |||||
| - other fuels | 205,949 | 216,103 | 125,322 | |||||
| Primary energy purchased from other Companies by type (a): | (GJ) | 94,263,949 | 83,652,390 | 61,127,412 | ||||
| - electricity | 25,336,671 | 15,388,688 | 17,870,260 | |||||
| - primary resources | 63,506,165 | 63,387,463 | 38,958,392 | |||||
| - steam | 5,362,328 | 4,822,549 | 4,298,683 | |||||
| - direct heat process | 58,785 | 53,507 | 0 | |||||
| - waste heat recovery | 0 | 183 | 77 | |||||
| Energy efficiency and climate change expenditures (b): | (euro thousand) | 120,212 | 72,042 | 75,349 | ||||
| - current spending | 1,175 | 822 | 198 | |||||
| - investments | 119,037 | 71,220 | 75,151 |
(a) The indicator measures only
energy purchased by Eni for its own consumption and does not
include the quota bought and sold on the market, therefore the
2011-2012 data differ from the last year disclosure.
(b) The figure is part of the environmental expenditures reported
in the table “The environmental management system”.
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Initiatives to improve energy efficiency
include, in addition to traditional investments, interventions of
a managerial nature such as the adoption and certification of
Energy Management Systems (EMS). At the end of 2013, Eni’s
energy management systems in the R&M Refineries of Livorno,
Sannazzaro, Taranto and Venice were certified ISO 50001 as well
as the chemical plants in Oberhausen and Szazhalombatta and the
corporate headquarters of Eni SpA.
In the downstream sector, implementation of the measures in the
energy saving plan continued, allowing excellent results to be
achieved in terms of reducing consumption and containing
emissions into the atmosphere. The measures undertaken between
2008 and 2013 enabled energy savings of over 300 thousand
toe/year, the equivalent of a reduction in emissions of
approximately 800 thousand tonnes of CO2. In the
refining sector, the measures undertaken in 2013 were able to
produce savings at a rate of about 34 ktoe/y; for the chemicals
sector, the measures undertaken in 2013 will lead to savings at a
rate of about 23 ktoe/y.
In the G&P sector initiatives continued to improve energy
efficiency and achieve technical and economic optimization of
electricity generation plant use, with repowering of the
turbo-units of the power plants at Ferrera Erbognone, Mantua and
Ferrara. In addition, EniPower continued to invest in renewable
and alternative resources through the construction of
photovoltaic plants and biomass power station at Porto Torres to
produce electricity.
Other emissions into the atmosphere
| 2011 | 2012 | 2013 |
| NOx (nitrogen oxide) emissions | (tonnes NO2 eq) | 97,114 | 115,571 | 101,832 | ||||
| NOx emissions/100% operated hydrocarbon gross production | (tonnes NO2 eq/ktoe) | 0.486 | 0.571 | 0.538 | ||||
| NOx emissions/kWh eq (EniPower) | (g NO2 eq/kWh eq) | 0.162 | 0.155 | 0.158 | ||||
| NOx emissions/uEDC (R&M Refineries) | (tonnes NO2 eq/kbbl/SD) | 1.14 | 1.11 | 0.91 | ||||
| SOx (sulphur oxide) emissions | (tonnes SO2 eq) | 37,943 | 30,137 | 27,949 | ||||
| SOx emissions/100% operated hydrocarbon gross production | (tonnes SO2 eq/ktoe) | 0.055 | 0.044 | 0.091 | ||||
| SOx emissions/kWheq (EniPower) | (g SO2 eq/kWh eq) | 0.037 | 0.027 | 0.017 | ||||
| SOx emissions/uEDC (R&M Refineries) | (tonnes SO2 eq/kbbl/SD) | 3.93 | 3.22 | 2.19 | ||||
| NMVOC (Non-Methane Volatile Organic Compounds) emissions | (tonnes) | 46,228 | 48,702 | 43,536 | ||||
| TSP (Total Suspended Particulate) emissions | 3,297 | 3,548 | 2,848 | |||||
| Air protection expenditures (a) | (euro thousand) | 46,736 | 56,882 | 69,153 | ||||
| - current spending | 16,608 | 15,795 | 20,707 | |||||
| - investments | 30,128 | 41,087 | 48,446 |
(a) The figure is part of the environmental expenditures reported in the table “The environmental management system”.
In 2013 emissions of NOx were reduced by
a total of 11.9% from 2012, thanks to the contribution of all the
business areas (in particular, down 13.7% in E&P, down 26.1%
in G&P, and down 23.1% in R&M). The E&P sector, which
accounts for more than 60% of Eni’s total figure, reduced
its emissions by over 9,700 tonnes, due to the change of fuel mix
used in different Countries (Indonesia, Kazakhstan, Ecuador and
Nigeria), with a consequent improvement in the emission index per
unit produced (down 5.9%). The refining sector significantly
improved its performance (down 17.9% reduction recorded in the
emission index), in particular due to projects underway at the
Refineries in Sannazzaro and Gela, which at peak production
result in the benefit of no NOx emissions for
approximately 110 t/y.
In the field of electricity generation, where full operation of
VeLoNOx burners at peak production reduced emissions of NOx
by more than 20%, the index of emissions per unit produced did
not decline (up 1.5%), due to unscheduled shutdowns in some
plants and, due to market needs, combined cycles not running at
full speed.
In 2013 total emissions of SOx went down 7.3% compared
to 2012. The declining trends were established mainly in the
refining sectors (down 6,186 tonnes), chemicals (down 661 tonnes)
and G&P (down 393 tonnes), while E&P (up 5,028 tonnes)
and E&C (up 91 tonnes) showed a growing trend.
In the refining sector, which contributes about 38% of the
consolidated Eni total, the declining trends (down 36.4% compared
to 2012 for emissions and down 32% for the index referring to
production) are to be attributed both to reduced processing in
the refineries and to a change in the used fuel mix (increased
use of natural gas in the refineries and consequently reduced use
of fuel oil and coke) as well as energy-saving initiatives. The
positive performance was also boosted by the work performed at
the Gela Refinery to interconnect the four-stack chimney with the
SNOx chimney, which allows the fumes sent to the
latter to be maximized. Also at the Gela Refinery, the creation
of a new SRU unit is planned with the expected benefit of no SOx
emission at full production for about 740 t/y.
In the E&P sector the increase in SOx emissions
compared to 2012 (both in absolute terms and relative to units
produced) is mainly attributable to the Libyan contribution, a
result not fully accounted during 2012 due to the difficult
situation in the Country and, secondly, to the subsidiary Agip
Karachaganak (Kazakhstan) due to greater accuracy in the
estimation of emissions.
NMVOC and TSP emissions went down 10.6% and 19.7%, respectively
compared to 2012. The changes are mainly attributable to the
E&P sector due to the reduction of flaring. The reduction of
volatile organic compounds was also affected by fewer movements
of petroleum products in R&M and specific operations
undertaken at the Mantua and Dunkirk petrochemical plants.
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Reclamation
| 2011 | 2012 | 2013 |
| Waste from reclamation activities | (tonnes) | 10,852,410 | 10,102,297 | 11,976,764 | ||||
| - of which hazardous | 2,886,996 | 3,754,056 | 3,968,183 | |||||
| - of which non-hazardous | 7,965,414 | 6,348,241 | 7,345,262 | |||||
| Soils and groundwater reclamation expenditures (a) | (euro thousand) | 336,525 | 197,468 | 193,977 | ||||
| - current spending | 271,582 | 182,112 | 186,014 | |||||
| - investments | 64,943 | 15,356 | 7,963 |
(a) The figure is part of the environmental expenditures reported in the table “The environmental management system”.
In Italy Eni operates in 17 Sites of
National Interest where a reclamation process is in progress and
the number of procedures opened in the Country as a whole exceeds
900; clearly there is extreme variability in the scale of the
issues related to the reclamation activities, which involve the
refineries, petrochemicals and well areas as well as fuel
retailers.
Reclamation activities have mainly been carried out through
Syndial, a company dedicated to the reclamation and remediation
of contaminated sites following decommissioning (63% of total
expenditure in 2013) followed by R&M (22%) and the Chemicals
sector (12%).
Total spending on reclamation in 2013 is broadly in line with
that for the previous year, which was significantly lower than
2011 due to delays in granting some preliminary authorizations by
the Public Administration, which had an impact on Syndial’s
activities.
In 2013, activities focused on the ongoing restoration of major
sites (Gela, Priolo, Assemini and Porto Marghera). Syndial
started to apply sustainable remediation principles (using the
in-house application “Sustainable Assessment
Framework”) for the appraisal of the projects in Ravenna,
Brindisi and Porto Torres. An example of application of the
sustainability principles that all business units are moving
towards is the start of solar electricity production from the
EniPower plant built on the former phosphogypsum landfill at
Gela, allowing considerable savings of resources and a reduction
in carbon dioxide emissions of approximately 4,500 tonnes/year.
The commitment of R&M continued concerning the management of
safety measures and reclamation in the marketing sector (fuel
sales outlets) as well as in the industrial sector. The most
significant activities included the completion of the
installation of drainage systems in Taranto as well as the
reclamation works in the area of the refinery tank park.
In the chemicals sector, reclamation activities continued on
sites with approved projects; in particular, Sarroch tested the
IWS (In Well Stripping) technology as the first stage of the
aquifer reclamation project, which will involve the reduction of
discharges into the surface water. At the Ferrara plant, the
process of reclamation of the surface soil matrix and the wetting
water ended positively: this is one of the most important
projects and is unique in Italy in terms of the extension of the
reclamation area inside a petrochemical plant.
E&P is committed to reclamation both in Italy and abroad
where, in addition to the conclusion of activities at the site of
Abu-Rudeis/Belayim (Egypt) and follow-up remediation of two
“burning pits” in Congo, a project to run pilot trials
with “Thermal Desorption technology and Three Phase
Recovery” is underway in Nigeria to provide a more
sustainable alternative, with the widespread adoption of
“enhanced natural attenuation” in the Region.
Regarding the production of waste from reclamation, 95% of the
volume produced refers to polluted groundwater, a slight increase
compared to the previous year due to the peak flow from TAF
(groundwater treatment) plants managed primarily by Syndial which
undertook recovery initiatives like the production of demi water
downstream of the TAF facility in Assemini for reuse within the
production cycle or the passage of treated water from the TAF in
Brindisi to EniPower for industrial use.
The project in Priolo is also expected to be completed; this
involves placing a portion of the treated water from the TAF in
the industrial water network used for production activities on
the multi-company site (the remainder will be used in the
groundwater barrier below the ERG/MED area) as well as energy
optimization of TAF facilities, in order to improve the processes
and reduce the consumption of raw materials and energy. The
operative TAF in Sicily can handle highly contaminated
groundwater with an efficiency level in terms of reclamation
higher than anywhere else in the world, based on the quality of
the water resulting from the reclamation.
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Eni Annual Report / Consolidated Sustainability Statements |
Protection of water resources and biodiversity
| 2011 | 2012 | 2013 |
| Total water withdrawals: | (Mm3) | 2,577.98 | 2,359.21 | 2,206.36 | ||||
| - of which sea water | 2,375.83 | 2,142.82 | 2,002.22 | |||||
| - of which fresh water | 187.6 | 191.4 | 185.696 | |||||
| - of which salt/salty water taken from underground or surface sources | 14.55 | 24.59 | 18.44 | |||||
| Water withdrawals/kWheq produced (EniPower) | (m3/kWh eq) | 0.0136 | 0.0119 | 0.0166 | ||||
| Water withdrawals/crude and semi-finished products processing (R&M) | (m3/tonne) | 31.03 | 25.43 | 19.98 | ||||
| Total production and/or process water extracted (E&P) (a): | (Mm3) | 58.16 | 61.17 | 61.32 | ||||
| - of which injected into deep wells for disposal purposes | - | 9.44 | 13.40 | |||||
| - of which re-injected | 25.18 | 20.82 | 20.02 | |||||
| - of which discharged into surface water body or into sea | 30.47 | 26.94 | 24.60 | |||||
| - of which sent to evaporation ponds | 2.51 | 3.97 | 3.30 | |||||
| Production water re-injected including the one injected into deep wells for disposal purposes/Total production water | (%) | 43 | 49 | 55 | ||||
| TAF treated groundwater used in the production cycle (Syndial) | (Mm3) | - | 0.47 | 0.68 | ||||
| Concentration of oil in production water | (mg/l) | 13.5 | 9.61 | 7.79 | ||||
| Total recycled and/or reused water | (Mm3) | 519.43 | 519.93 | 735.89 | ||||
| Percentage of fresh water reused | (%) | 73.5 | 73.1 | 79.9 | ||||
| Fresh water discharged | (Mm3) | 131.6 | 130.62 | 138.28 | ||||
| Sea water discharged | 1,866.96 | 1,931.74 | 1,823.73 | |||||
| Water resources and drains expenditures and investments (b): | (euro thousand) | 76,298 | 83,415 | 51,337 | ||||
| - current spending | 46,167 | 39,808 | 37,159 | |||||
| - investments | 30,131 | 43,607 | 14,178 | |||||
| Expenditures on landscape protection and ecosystems and biodiversity conservation (b) | 11,094 | 5,863 | 5,925 |
(a) Since 2012, the amount
includes the contribution of production water injected into deep
wells for disposal purposes.
(b) The figure is part of the environmental expenditures and
investments reported in the table “The environmental
management system”.
In 2013 there was a reduction in total
water extraction compared to 2012 of 6.5% (equal to about -153 Mm3)
mainly due to the decrease in sea water extraction in the
refining sector (where the Gela Refinery alone reduced
withdrawals of seawater by more than 137 Mm3 due to
plant shutdowns).
The fresh water withdrawn, representing 8% of the total water
resources used, decreased compared to 2012 (down 3%), due to a
decline recorded by the E&P sector (where activities of the
Libyan Abu Attifel, El Feel and Wafa fields were stopped or
reduced) and Other Activities (where the ethylchloride plant was
shut down at the Assemini site). The parameter is also in decline
in the sectors R&M (down 2.9%, amounting to approximately
-0.5 Mm3) and G&P (down 7%, amounting to about -2
Mm3).
The percentage of reused fresh water increased overall compared
to 2012, reaching almost 80%.
There was further improvement in the performance relating to
production water in the E&P sector, with a percentage of
re-injection rising to 54% (the best result ever, an increase of
more than 10% compared to 2012). Performance was positively
influenced by the completion in late 2012 of the Belayim project
in Egypt, with a re-injection of 99.5% (equal to 27,265 cubic
meters/day).
The concentration of hydrocarbons in the production water fell
compared to 2012 (down 18.9%).
Syndial increased the quantity of groundwater treated through TAF
and used subsequently in its own production cycles (up 45.9%
compared to 2012).
Eni is committed to integrating management of biodiversity and
ecosystem services in all its operational enterprises throughout
the project life cycle, in particular in the upstream sector. In
order to achieve the goal of defining integrated action plans for
biodiversity and ecosystem services in 20% of the Assessment
Units exposed to biodiversity risk in 2012, specific Biodiversity
Risk Assessment and Action Plans will be implemented to identify,
assess and mitigate the potential impacts associated with E&P
activities in any operating environment. Currently, the sites
involved are DIME (Val d’Agri), Agip Oil Ecuador (Villano),
KPO (Karachaganak), Eni Congo (M’Boundi), Eni Pakistan (Bhit
and Badhra) and Eni US Operating Co (Nikaitchuq). The new
exploratory and development projects will continue to ensure the
proper integration of the issues of biodiversity and ecosystem
services in pre-ESHIA.
Internationally, Eni’s commitment will continue in WBCSD,
BSR, IPIECA and OGP with the chairmanship of the Biodiversity
Working Group (BESWG). Moreover, membership of the Proteus
partnership was renewed; this is an initiative promoted by
UNEP-WCMC with the private sector that provides access to both
the World Database on Protected Areas (WDPA) and the Integrated
Biodiversity Assessment Tool (IBAT).
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Eni Annual Report / Consolidated Sustainability Statements |
Oil spills
| 2011 | 2012 | 2013 |
| Total number of oil spills (>1 barrel) (a) | (number) | 418 | 329 | 386 | ||||
| Total volume of oil spills (>1 barrel) (a): | (barrels) | 14,952 | 12,428 | 7,903 | ||||
| - of which from sabotage and terrorism | 7,657 | 8,669 | 6,002 | |||||
| - of which due to operations | 7,295 | 3,759 | 1,901 | |||||
| Spill prevention expenditures and investments (b): | (euro thousand) | 40,530 | 63,771 | 51,141 | ||||
| - current spending | 4,252 | 8,354 | 10,054 | |||||
| - investments | 36,278 | 55,417 | 41,087 |
(a) In 2011, with the exception
of the E&P sector, oil spills of less than one barrel were
included.
(b) The figure is part of the environmental spending and
investments shown in the statement “The environmental
management system”.
In 2013 the total number of oil spills
increased (up 17.3%), while the volume spilled decreased
significantly (down 36.4%), both for spills from acts of sabotage
and terrorism (down 30.8%) and from operations (down 49.4%).
As in previous years (except for 2011, characterized by one spill
in the E&C sector of over 4,000 barrels in Algeria), the
total figure for 2013 is determined essentially by the
performance of the E&P sector (which is responsible for more
than 95% of the events and more than 90% of the volume spilled).
In 2013, E&P, despite an increase in the total number of oil
spills, recorded a decline in the volume spilled (down 36.9%
compared to 2012) and an improvement in the index for the volume
spilled from operational accidents per million boe produced (down
38% compared to 2012). In particular, in 2013 the target
scheduled for 2016 for reducing the index of boe spilled per Mboe
produced was achieved ahead of time. In E&P over 60% of the
volume of oil spills from operational accidents in 2013 is
attributable to activities in Nigeria, as well as all the spills
from acts of sabotage and terrorism, with the exception of one
event that occurred in Egypt.
Eni’s total spending on spill prevention in 2013 remains
above euro 50 million.
Waste from production activities
| 2011 | 2012 | 2013 |
| Waste from production activities | (tonnes) | 1,309,135 | 1,378,385 | 1,599,997 | ||||
| - of which from drilling activities | 388,539 | 342,026 | 366,440 | |||||
| Hazardous waste from production activities | 476,552 | 365,695 | 374,421 | |||||
| Non-hazardous waste from production activities | 832,582 | 1,012,690 | 1,225,576 | |||||
| Waste from production activities recovered and/or recycled: | 232,884 | 315,880 | 180,825 | |||||
| - of which hazardous | 73,174 | 67,203 | 47,566 | |||||
| - of which non-hazardous | 159,710 | 248,677 | 133,259 | |||||
| Waste from production activities disposed: | 982,423 | 1,038,709 | 1,401,739 | |||||
| - of which hazardous | 326,495 | 278,812 | 316,765 | |||||
| - of which non-hazardous | 655,927 | 759,897 | 1,084,974 | |||||
| Waste from drilling activities / drilled meters | (tonnes/m) | 0.340 | 0.512 | 0.584 | ||||
| Waste management expenditures and investments (a): | (euro thousand) | 96,263 | 92,113 | 95,422 | ||||
| - current spending | 83,403 | 91,341 | 95,074 | |||||
| - investments | 12,860 | 772 | 348 |
(a) The figure is part of the environmental expenditures and investments reported in the table “The environmental management system”.
Waste from production activities in 2013
(about 1.6 million tonnes) increased by 16.1% compared to the
previous year (up 2.4% hazardous waste and up 21% non-hazardous
waste) due to the contribution of all the businesses, with the
sole exception of Other Activities. In particular, the rising
trend is attributable to Engineering & Construction (up about
130,000 tonnes), G&P (up 37,000 tonnes), R&M (up about
32,000 tonnes) and E&P (up about 19,000 tonnes). As better
shown below, the increase or decrease in the volume of waste
reflects the frequency of scheduled maintenance and the opening
and operation of work sites.
In the Engineering & Construction sector the rising trend,
for hazardous waste, is related to increased offshore drilling
activity and, for non-hazardous waste, to increased onshore
construction activities, with particular reference to the
“Shah Plant and Pipeline” project.
In G&P non-hazardous waste increased as a result of
construction activities at various plants (over 25,000 tonnes at
Bolgiano for revamping, over 7,000 tonnes at Mantua for
decommissioning of thermal power stations and more than 5,000
tonnes at Ferrera Erbognone for the arrangement of the area for
external companies and the construction of a new warehouse).
R&M was affected by the special five-year maintenance tasks
performed in the Taranto Refinery, where the quantities of
non-hazardous waste products more than doubled, exceeding 40,000
tonnes.
The increase in waste production in the E&P sector solely
relates to non-hazardous waste (from increases recorded in Egypt
at the subsidiaries Petrobel and Agiba and in Italy due to the
increase of production waters stored and disposed of as waste and
increasing onshore activities compared to 2012). Hazardous waste
conversely decreased due to the completion of construction
activities in Algeria at the MLE CTH field and the Bolashak site
in Kazakhstan.
The volume sent for recovery from production activities in 2013
decreased by 42.8% compared to 2012; the trend consolidates a
reduction in both hazardous waste (down 29.2%) and non-hazardous
waste (down 46.4%) and is primarily attributable to the E&P
sector where the quantities were considerably reduced (down
approx. 134,000 tonnes), likewise in relation to the conclusion
of the construction activities in the Bolashak site.
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Certification pursuant to rule 154-bis, paragraph 5 of the Legislative Decree No. 58/1998 (Testo Unico della Finanza)
| 1. | The undersigned Paolo Scaroni and Massimo Mondazzi, in their quality as Chief Executive Officer and manager responsible for the preparation of financial reports of Eni, respectively, also pursuant to rule 154-bis, paragraphs 3 and 4 of Legislative Decree No. 58 of February 24, 1998, certify that internal controls over financial reporting in place for the preparation of the Annual Report as of December 31, 2013 and during the period covered by the report, were: | |
| • adequate to the Company structure, and | ||
| • effectively applied during the process of preparation of the report. | ||
| 2. | Internal controls over financial reporting in place for the preparation of the 2013 consolidated accounts have been defined and the evaluation of their effectiveness has been assessed based on principles and methodologies adopted by Eni in accordance with the Internal Control-Integrated Framework Model issued by the Committee of Sponsoring Organizations of the Treadway Commission, which represents an internationally-accepted framework for the internal control system. To the end of the present certification, the certifying officers have considered the disclosure published on page 104-105 in the paragraph other information about Eni’s subsidiary Saipem, which is consolidated on a line-by-line basis in Eni’s annual report of 2013 being a controlled entity of Eni. | |
| 3. | The undersigned officers also certify that: | |
| 3.1 | This 2013 consolidated Annual Report: |
| a) | was prepared in accordance with the evaluation and measurement criteria adopted by the European Commission according European Regulation (CE) No. 1606/2002 of the European Parliament and European Council of July 19, 2002; | |
| b) | corresponds to the Company’s evidence and accounting books and entries; | |
| c) | fairly represents the financial condition, results of operations and cash flows of the parent company and the Group consolidated companies as of, and for, the period presented in this report. |
| 3.2 | The operating and financial review provides a reliable analysis of business trends and results, including trend analysis of the parent company and the Group companies, as well as a description of the main risks and uncertainties. |
March 17, 2014
| /s/ Paolo Scaroni ————————— Paolo Scaroni Chief Executive Officer |
/s/Massimo Mondazzi ————————— Massimo Mondazzi Chief Financial Officer |
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Table of Contents
Annual Report on Form 20-F 2013
Rome, April 10, 2014 - Today Eni’s Annual
Report on Form 20-F for the year ended December 31, 2013,
has been filed with the U.S. Securities and Exchange Commission
(SEC).
The Annual Report on Form 20-F 2013 is available on the
Publications section of Eni’s website, www.eni.com.
Shareholders can receive a hard copy of Eni’s Annual Report
on Form 20-F 2013, free of charge, by filling in the request form
found in the Publications section or by emailing a request to
segreteriasocietaria.azionisti@eni.com or to
investor.relations@eni.com.
Company Contacts:
Press Office: Tel. +39.0252031875 - +39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +800 11 22 34 56
Switchboard: +39-0659821
ufficio.stampa@eni.com
segreteriasocietaria.azionisti@eni.com
investor.relations@eni.com
Web site: www.eni.com
Table of Contents
Eni: deposited candidates slates for appointment to the Saipem Board of Directors and Board of Statutory Auditors and proposals for Saipem Shareholders’ Meeting
San Donato Milanese (Milan), April 12, 2014 - With
reference to Saipem’s Ordinary Shareholders' Meeting,
convened on May 6, 2014, on single call, Eni has deposited the
slates of candidates for appointment to the Board of Directors
and the Board of Statutory Auditors, in accordance with Articles
19 and 27 of the By-laws.
Candidates for appointment to Saipem’s Board of Directors
are as follows: Francesco Carbonetti, Umberto Vergine, Enrico
Laghi, Rosario Bifulco, Nella Ciuccarelli and Fabrizio Barbieri.
Francesco Carbonetti, Enrico Laghi, Nella Ciuccarelli and Rosario
Bifulco stated at the time they accepted their application to the
Board, their possession of independence requirements prescribed
by law (Article 147-ter of Legislative Decree No.
58/1998) and by the Corporate Governance Code of listed
companies, which Saipem has adopted.
For the effective Statutory Auditors section, candidates for
Saipem’s Board of Statutory Auditors are Anna Gervasoni and
Massimo Invernizzi, and for the alternate Statutory Auditors
section, Elisabetta Maria Corvi.
At Saipem’s Ordinary Shareholders' Meeting, Eni will submit
the following proposals to shareholders, in addition to that
already disclosed on the one-financial year duration of
Directors’ tenure:
• to appoint Francesco Carbonetti as Chairman of the Board
of Directors;
• to determine the gross annual remuneration payable to each
Director at euro 60,000, plus reimbursement of expenses incurred;
• to determine the gross annual remuneration payable to the
Chairman of the Board of Statutory Auditors and each effective
Statutory Auditor, respectively, at euro 70,000 and euro 50,000,
plus reimbursement of expenses incurred.
- 1 -
Table of Contents
Eni is grateful to the outgoing Directors, to
Chairman Alberto Meomartini and to Deputy Chairman Piergaetano
Marchetti, for their contribution, during a complex period for
the business, to the safeguard of the interest of all
shareholders. In particular, Eni wishes to express its thanks to
Mr Piergaetano Marchetti for his significant contribution on
corporate governance.
Eni holds 189,423,307 ordinary shares of Saipem, representing
42.924% of all ordinary shares with voting rights at the Ordinary
Shareholders’ Meeting.
Company Contacts:
Press Office: Tel. +39.0252031875 - +39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +800 11 22 34 56
Switchboard: +39-0659821
ufficio.stampa@eni.com
segreteriasocietaria.azionisti@eni.com
investor.relations@eni.com
Web site: www.eni.com
- 2 -
Table of Contents
Eni: Report on the purchase of treasury shares
San Donato Milanese (Milan), April 16, 2014 - During
the period from April 7 to April 11, 2014, Eni acquired No.
349,683 shares for a total consideration of euro 6,367,401.14,
within the authorization to purchase treasury shares approved at
Eni’s Ordinary General Meeting of shareholders on May 10,
2013, previously subject to disclosure pursuant to Article 144-bis
of Consob Regulation 11971/1999.
The following are details of transactions for the purchase of
treasury shares on the Electronic Stock Market on a daily basis:
Date |
Number of ordinary shares purchased |
Average price (euro) |
Consideration (euro) |
07/04/2014 |
111,451 |
18.2234 |
2,031,011.64 |
08/04/2014 |
33,232 |
18.1359 |
602,691.12 |
09/04/2014 |
30,000 |
18.2701 |
548,102.20 |
10/04/2014 |
40,000 |
18.3860 |
735,441.70 |
11/04/2014 |
135,000 |
18.1493 |
2,450,154.48 |
Total |
349,683 |
18.2091 |
6,367,401.14 |
Following the purchases announced today, considering the treasury shares already held, on April 11, 2014 Eni holds No. 20,893,287 shares equal to 0.57% of the share capital.
Company Contacts:
Press Office: Tel. +39.0252031875 - +39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +800 11 22 34 56
Switchboard: +39-0659821
ufficio.stampa@eni.com
segreteriasocietaria.azionisti@eni.com
investor.relations@eni.com
Web site: www.eni.com
Table of Contents
Eni: Report on the purchase of treasury shares
San Donato Milanese (Milan), April 24, 2014 - During
the period from April 14 to April 17, 2014, Eni acquired No.
540,000 shares for a total consideration of euro 10,008,221.19,
within the authorization to purchase treasury shares approved at
Eni’s Ordinary General Meeting of shareholders on May 10,
2013, previously subject to disclosure pursuant to Article 144-bis
of Consob Regulation 11971/1999.
The following are details of transactions for the purchase of
treasury shares on the Electronic Stock Market on a daily basis:
Date |
Number of ordinary shares purchased |
Average price (euro) |
Consideration (euro) |
14/04/2014 |
130,000 |
18.3093 |
2,380,213.32 |
15/04/2014 |
130,000 |
18.4693 |
2,401,006.82 |
16/04/2014 |
140,000 |
18.6488 |
2,610,835.39 |
17/04/2014 |
140,000 |
18.6869 |
2,616,165.66 |
Total |
540,000 |
18.5337 |
10,008,221.19 |
Following the purchases announced today, considering the treasury shares already held, on April 18, 2014 Eni holds No. 21,433,287 shares equal to 0.59% of the share capital.
Company Contacts:
Press Office: Tel. +39.0252031875 - +39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +800 11 22 34 56
Switchboard: +39-0659821
ufficio.stampa@eni.com
segreteriasocietaria.azionisti@eni.com
investor.relations@eni.com
Web site: www.eni.com
Table of Contents
Eni: first quarter results of 2014
Rome, April 29, 2014 - Eni, the international oil and gas company, today announces its group results for the first quarter of 20141 (unaudited).
Financial highlights
| • | Adjusted operating profit: euro 3.49 billion, down 6.8% from the first quarter 2013; | |
| • | Adjusted net profit: euro 1.19 billion, down 14.3% from the first quarter 2013; | |
| • | Net profit: euro 1.30 billion, down 15.6% from the first quarter 2013; | |
| • | Operating cash flow2: euro 2.15 billion; | |
| • | Leverage at 0.22 compared to 0.25 at December 31, 2013. |
Operational highlights
| • | Oil and gas production: 1.583 mmboe/d, up by 0.6% on homogeneous basis3; | |
| • | Renegotiated the Norwegian long-term gas supply contract; | |
| • | Cashed the euro 2.2 billion of the Artic Russia deal; | |
| • | Divested a 7% interest in Galp Energia for a cash consideration of euro 0.7 billion4; | |
| • | Buy back program: repurchased 8.85 million shares at a cost of euro 0.15 billion as of March 31, 2014; | |
| • | Discovered 200 million boe of resources. |
Paolo Scaroni, Chief Executive Officer,
commented:
"Eni delivered solid results in the first quarter 2014,
despite a difficult market environment, thanks to a good
performance in E&P and progress in the mid and downstream
businesses, in particular with the renegotiation of the Statoil
gas supply contract. The outlook for 2014 is in line with our
expectations, benefiting from the ramp-up of new projects and
restructuring activities in G&P, R&M and Chemicals, in
the context of continued volatility in Libya and weakness in
European demand."
(1) This press release represents the quarterly
report prepared in compliance with Italian listing standards as
provided by Article 154-ter of the Italian code for securities
and exchanges (Testo Unico della Finanza).
(2) Net cash provided by operating activities.
(3) Excluding the effect of Artic Russia divestment.
(4) Cashed in April 2014.
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Financial Highlights
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | ||||
| SUMMARY GROUP RESULTS (a) | (euro million) | |||||||||||||
| 3,507 | Adjusted operating profit (b) | 3,746 | 3,491 | (6.8 | ) | |||||||||
| 1,301 | Adjusted net profit | 1,385 | 1,187 | (14.3 | ) | |||||||||
| 0.36 | - per share (euro) (c) | 0.38 | 0.33 | (13.2 | ) | |||||||||
| 0.98 | - per ADR ($) (c) (d) | 1.00 | 0.90 | (10.0 | ) | |||||||||
| (647 | ) | Net profit | 1,543 | 1,303 | (15.6 | ) | ||||||||
| (0.18 | ) | - per share (euro) (c) | 0.43 | 0.36 | (16.3 | ) | ||||||||
| (0.49 | ) | - per ADR ($) (c) (d) | 1.14 | 0.99 | (13.2 | ) | ||||||||
(a) Attributable to Eni’s shareholders.
(b) For a detailed explanation of adjusted operating profit and
net profit see paragraph "Reconciliation of reported
operating and net profit to results on an adjusted basis".
(c) Fully diluted. Dollar amounts are converted on the basis of
the average EUR/USD exchange rate quoted by the ECB for the
periods presented.
(d) One ADR (American Depositary Receipt) is equal to two Eni
ordinary shares.
Adjusted operating profit
In the first quarter of 2014, adjusted operating
profit was euro 3.49 billion, down 6.8% compared to the first
quarter of 2013. This decline was driven by lower results
achieved by the Exploration & Production Division (adjusted
operating profit down by 13.7%), negatively influenced by a weak
oil price environment (Brent benchmark down 3.9%) and the
appreciation of the euro against the dollar (up 3.7%), and the
Refining & Marketing Division, where operating losses were
66.4% more than in the previous-year quarter due to a continuing
deterioration in the refining scenario and lower fuels demand.
The Engineering & Construction segment reported a 37.3%
reduction in operating profit due to the lower profitability of
current contract works.
The Gas & Power Division reported a better operating
performance (from a euro 211 million operating loss in the first
quarter of 2013 to an operating profit of euro 241 million)
against the backdrop of declining demand and ongoing competitive
pressure. The division benefited in particular from the
renegotiation of the Norwegian long-term gas supply contract with
economic effects retroactive to the previous thermal year.
Adjusted net profit
Adjusted net profit of the first quarter of 2014
amounted to euro 1.19 billion, down by 14.3% from the first
quarter of 2013. This was driven by a lower operating performance
and an increased adjusted consolidated tax rate (up 3 percentage
points) due mainly to the Exploration & Production Division
as a growing share of taxable profit was earned by subsidiaries
subject to a higher tax rate.
Capital expenditure
Capital expenditure for the first quarter of 2014
amounted to euro 2.54 billion, mainly related to the development
of oil and gas reserves and exploration projects.
Balance sheet and cash flow
As of March 31, 2014, net borrowings5
amounted to euro 13.8 billion, down euro 1.16 billion from the
close of the previous reporting period. This decline reflected
net cash provided by operating activities (euro 2.15
billion), which nonetheless was impacted by lower trade
receivables due beyond the end of the quarter transferred to
factoring institutions as compared with the end of 2013 (down
euro 750 million), and the proceeds from disposals mainly
relating to the divestment of Eni's interest in Artic Russia
(euro 2.18 billion). These inflows were partially offset by cash
outflows relating to capital expenditure of the period.
The ratio of net borrowings to shareholders’ equity
including non-controlling interest – leverage6
– decreased to 0.22 at March 31, 2014 with respect to 0.25
at December 31, 2013.
(5) Information on net borrowings composition
is furnished on page 25.
(6) Non-GAAP financial measures disclosed throughout this press
release are accompanied by explanatory notes and tables to help
investors gain a full understanding of said measures in line with
guidance provided for by CESR Recommendation No. 2005-178b. See
page 25 for leverage.
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Operational highlights and trading environment
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | ||||
| KEY STATISTICS | |||||||||||
| 1,577 | Production of oil and natural gas | (kboe/d) | 1,600 | 1,583 | (1.1 | ) | |||||
| 816 | - Liquids | (kbbl/d) | 818 | 822 | 0.5 | ||||||
| 4,177 | - Natural gas | (mmcf/d) | 4,290 | 4,182 | (2.5 | ) | |||||
| 25.56 | Worldwide gas sales | (bcm) | 30.17 | 26.76 | (11.3 | ) | |||||
| 8.75 | Electricity sales | (TWh) | 9.16 | 8.25 | (9.9 | ) | |||||
| 2.33 | Retail sales of refined products in Europe | (mmtonnes) | 2.33 | 2.16 | (7.3 | ) | |||||
Exploration & Production
In the first quarter of 2014, Eni’s liquids and
gas production was 1.583 million boe/d. On a homogeneous basis,
excluding the effects of the assets disposal in Siberia (26
kboe/d), production increased by 0.6% due to production ramp-ups
mainly in the United Kingdom and Algeria, partially offset by
continuing political instability in Libya and mature fields
declines.
Gas & Power
In the first quarter of 2014, Eni’s natural gas
sales were 26.76 bcm, decreasing by 3.41 bcm, or 11.3%, from the
first quarter of 2013, down by 11.3%. The decline was caused by
continuing weakness in demand, competitive pressure and
oversupplies as well as unusual weather conditions. Sales in the
domestic market (11.18 bcm) declined by 10.8% in almost all
segments. Sales in Europe (12.13 bcm) decreased by 12.9% mainly
in Germany/Austria, Benelux and France.
Refining & Marketing
In the first quarter of 2014, European refining
margins remained at depressed levels (2.07$/barrel on average for
the Brent/Ural benchmark, down by 51.9% from the first quarter of
2013) driven by structural headwinds in the industry:
overcapacity, lower demand and increasing competitive pressure
from import streams of refined products from Russia, Middle East
and the USA. Furthermore, Eni’s refining margins were
affected by narrowing differentials between the heavy crudes
processed by Eni’s refineries and the marker Brent,
reflecting the lower availability of the former in the
Mediterranean area.
In the first quarter of 2014, retail sales in Italy were 1.45
mmtonnes, decreasing by 12.1% driven by reduced domestic
consumption and increasing competitive pressure. Eni’s
retail market share decreased by 2.9 percentage points to 26.2%,
from 29.1% in the corresponding period of 2013.
Retail sales in the European market slightly increased due to the
higher volumes marketed mainly in Germany, Austria and Hungary
(up by 4.4% to 0.71 mmtonnes).
Business developments
Gas contract renegotiations
On March 31, 2014, Eni and Statoil signed final
agreements on the revision of the long-term gas supply contract
currently in force between the two parties. The revision reflects
the changed fundamentals in the gas sector and is retroactive to
the previous thermal year. The final agreement, which follows the
Heads of Agreement signed on February 27, 2014, implies the end
of the arbitration proceedings previously initiated by Eni.
Divestment of Galp SGPS SA
On March 28, 2014, through an accelerated
book-building process aimed at institutional investors, Eni sold
approximately 7% of the share capital of Galp Energia SGPS SA at
the price of euro 12.10 per share, for a total consideration of
euro 702.4 million, cashed in April 2014. Following this
transaction, Eni retains a 9% interest in Galp, of which 8%
underlying the approximately euro 1,028 million exchangeable bond
due on November 30, 2015.
Versalis
As part of Eni’s strategy of developing new
initiatives aimed at the reduction of the company’s exposure
to commodity chemicals and at diversification into the use of
environmentally friendly chemicals, Versalis commenced the
renovation of the Porto Marghera complex. This process will
involve capital expenditure of euro 200 million aimed at
optimizing the cracking plant, upgrading plant utilities able to
deliver significant energy savings, and developing innovative
green chemical projects in partnership with the American company
Elevance Renewable Science Inc. The green projects will develop,
through unique world-scale plants, new technologies to produce
bio-chemical intermediates from vegetable oils destined for use
in industrial
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sectors with high added value industrial applications such as detergents, bio-lubricants and chemicals for the oil industry. The project will take advantage of existing infrastructures and product streams.
Acquisition of Acam Clienti
Eni acquired the entire share capital of the company
Acam Clienti SpA, increasing its existing stake of 49% with the
acquisition of the remaining 51% interest from third parties.
Acam Clienti operates primarily in the province of La Spezia,
with a portfolio of 98,000 residential gas customers and around
12,000 electricity customers (small to mid-sized enterprises).
The acquisition is in line with Eni’s commitment to develop
its market share in the retail gas and electricity segment, where
the Company boasts established expertise.
Framework Agreement with the Italian
Consiglio Nazionale delle Ricerche
Eni has renewed its Framework Agreement with the
Italian Consiglio Nazionale delle Ricerche (CNR) as the two
parties close cooperation on the research of strategic issues for
the European and the Italian energy system and protecting the
environmental continues. The research guidelines will focus on
the testing of new techniques for the characterization of
hydrocarbon reservoirs; environmental monitoring activity aimed
at the sustainability of the production of oil and gas,
eco-sustainable solutions for mobility and environmental
protection; the experimentation of advanced solar energy cells.
Outlook
The 2014 outlook is linked in part to a moderate strengthening
of the global economic recovery. A number of uncertainties
surrounding this outlook remain due to weak growth prospects in
the Euro-zone and risks from the emerging economies.
Crude oil prices are forecast on a solid trend driven by
geopolitical factors and the resulting technical issues in a
number of important producing Countries against the backdrop of
well supplied global markets. Management expects that the trading
environment will remain challenging for the Company’s
businesses. We expect continuing weak conditions in the European
industries of gas distribution, refining and marketing of fuels
and chemical products, where we do not anticipate any meaningful
improvement in demand, while competition, excess supplies and
overcapacity will continue to weigh on selling margins of energy
commodities. In light of this, management reaffirms its
commitment to restoring profitability and preserving cash
generation at the Company’s mid and downstream businesses
leveraging on cost cuts and continuing renegotiation of long-term
gas supply contracts, capacity restructuring and reconversion and
product and marketing innovation.
| Management expects the following production and sales trends of Eni's businesses: |
| - | Production of liquids and natural gas: production is expected to remain substantially in line to 2013, excluding the impact of the divestment of Eni’s interest in the Artic Russia gas assets; | |
| - | Gas sales: natural gas sales are expected to be slightly lower than 2013. Management plans to strengthen marketing efforts and innovation to fend off competitive pressures both in the large customers segment and in the retail segment considering an ongoing demand downturn and oversupplies, particularly in Italy; | |
| - | Refining throughputs on Eni’s account: volumes are expected to be slightly lower than those processed in 2013, due to capacity reductions only partially offset by higher output at the new EST technology conversion plant at the Sannazzaro Refinery; | |
| - | Retail sales of refined products in Italy and the Rest of Europe: retail sales are expected to be slightly lower than in 2013 due to an ongoing demand downturn in Italy and the expected impact of network reorganization in Italy and in Europe; | |
| - | Engineering & Construction: 2014 will be a transitional year with profitability expected to recover, the extent of which will be determined by the effective execution of operational and commercial activities on low-margin contracts still present in the current portfolio and by how quickly bids currently under consideration are awarded. |
In 2014, management expects a capital budget in line with 2013 (euro 12.80 billion in capital expenditure and euro 0.32 billion in financial investments in 2013). Assuming a Brent price of $106 a barrel and an euro/dollar exchange rate of 1.33 on average for the full year 2014, the ratio of net borrowings to total equity – leverage – is projected to be almost in line with the level achieved at the end of 2013, due to cash flows from operations and portfolio transactions.
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This press release for the first quarter of 2014 (unaudited) provides data and information on business and financial performance in compliance with article 154-ter of the Italian code for securities and exchanges ("Testo Unico della Finanza" - TUF). Results and cash flow are presented for the first quarter of 2014 and for the first quarter and the fourth quarter of 2013. Information on liquidity and capital resources relates to end of the period as of March 31, 2014, and December 31, 2013. Statements presented in this press release are comparable with those presented in the management’s disclosure section of the Company’s annual report and interim report. Quarterly accounts set forth herein have been prepared in accordance with the evaluation and recognition criteria set by the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission according to the procedure set forth in Article 6 of the European Regulation (CE) No. 1606/2002 of the European Parliament and European Council of July 19, 2002, which differ from those used in preparing Eni annual report for the year 2013 as explained below.
With effect from January 1, 2014, Eni adopted,
among others, the new accounting standards IFRS 10
"Consolidated Financial Statements", and IFRS 11
‘Joint Arrangements’ which were issued by the IASB in
May 2011 and were adopted by the European Commission in December
2012 with regulation No. 1254. Therefore the comparative data
presented in this press release has been restated as a result of
the adoption of the above mentioned new accounting standards
which were illustrated in the explanatory notes to the
consolidated financial statements for the year 2013 filed with
the Italian securities and exchange authorities on April 10,
2014. We note that those new accounting standard have been
instead used in preparing Eni’s Annual report on Form 20-F
that was filed with the US Securities and Exchange Commission the
same day.
The main impact of this suite of new standards for Eni is that
certain of the group’s jointly controlled entities, which
were previously equity-accounted, now fall under the definition
of a joint operation under IFRS 11 and so we now recognize the
group’s assets, liabilities, revenue and expenses relating
to these arrangements. Whilst the effect on the group’s
reported income and net assets as a result of the new
requirements is not material, the change impacts certain of the
component lines of the income statement, balance sheet and cash
flow statement. On the balance sheet, there was a reduction in
investments in joint ventures of approximately euro 781 million
as at December 31, 2013, which has been replaced with the
recognition (on the relevant line items, principally property,
plant and equipment) of our share of the assets and liabilities
relating to these arrangements.
The following tables set out the adjustments made to certain
selected line items of the comparative amounts as a result of the
adoption of the accounting standards. Full restated quarterly
information and annual restated information for 2013 is disclosed
on pages 31-39 of this press release.
| (euro million) |
| First Quarter 2013 | Second Quarter 2013 | Third Quarter 2013 | Fourth Quarter 2013 | |||||
| As reported | As restated | As reported | As restated | As reported | As restated | As reported | As restated | |||||||||
| PROFIT AND LOSS ACCOUNT | ||||||||||||||||||||||||
| Operating profit | 3,834 | 3,867 | 1,459 | 1,471 | 3,303 | 3,302 | 260 | 248 | ||||||||||||||||
| of which: | ||||||||||||||||||||||||
| G&P | (105 | ) | (89 | ) | (454 | ) | (442 | ) | (446 | ) | (434 | ) | (1,987 | ) | (2,002 | ) | ||||||||
| R&M | (48 | ) | (30 | ) | (509 | ) | (511 | ) | (145 | ) | (139 | ) | (815 | ) | (812 | ) | ||||||||
| Net income from investments | 148 | 121 | 526 | 511 | 3,639 | 3,646 | 1,802 | 1,807 | ||||||||||||||||
| Net profit attributable to Eni’s shareholders | 1,543 | 1,543 | 275 | 275 | 3,989 | 3,989 | (647 | ) | (647 | ) | ||||||||||||||
| BALANCE SHEET | ||||||||||||||||||||||||
| Property, plant and equipment | 65,442 | 66,810 | 64,441 | 65,780 | 63,785 | 65,082 | 62,506 | 63,763 | ||||||||||||||||
| Equity-accounted investments | 4,411 | 3,551 | 4,518 | 3,643 | 4,468 | 3,608 | 3,934 | 3,153 | ||||||||||||||||
| Total assets | 147,415 | 148,746 | 137,585 | 137,887 | 137,815 | 138,989 | 138,088 | 138,341 | ||||||||||||||||
| CASH FLOW STATEMENT | ||||||||||||||||||||||||
| Net cash provided by operating activities | 2,798 | 2,814 | 1,954 | 2,001 | 3,036 | 3,027 | 3,181 | 3,184 | ||||||||||||||||
| Net cash provided by investing activities | (2,244 | ) | (2,250 | ) | (408 | ) | (431 | ) | (4,303 | ) | (4,329 | ) | (3,988 | ) | (3,971 | ) | ||||||||
| Net cash flow for the period | 2,331 | 2,325 | (2,246 | ) | (2,187 | ) | (1,834 | ) | (1,878 | ) | (728 | ) | (765 | ) | ||||||||||
Non-GAAP financial measures and other performance indicators disclosed throughout this press release are accompanied by explanatory notes and tables to help investors to gain a full understanding of said measures in line with guidance provided by recommendation CESR/05-178b.
Eni’s Chief Financial Officer, Massimo Mondazzi, in his position as manager responsible for the preparation of the Company’s financial reports, certifies, that data and information disclosed in this press release correspond to the Company’s evidence and accounting books and records, pursuant to rule 154-bis paragraph 2 of Legislative Decree No. 58/1998.
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Disclaimer
This press release, in particular
the statements under the section "Outlook", contains
certain forward-looking statements particularly those regarding
capital expenditure, development and management of oil and gas
resources, dividends, buy-back program, allocation of future cash
flow from operations, future operating performance, gearing,
targets of production and sales growth, new markets and the
progress and timing of projects. By their nature, forward-looking
statements involve risks and uncertainties because they relate to
events and depend on circumstances that will or may occur in the
future. Actual results may differ from those expressed in such
statements, depending on a variety of factors, including the
timing of bringing new fields on stream; management’s
ability in carrying out industrial plans and in succeeding in
commercial transactions; future levels of industry product
supply; demand and pricing; operational problems; general
economic conditions; political stability and economic growth in
relevant areas of the world; changes in laws and governmental
regulations; development and use of new technology; changes in
public expectations and other changes in business conditions; the
actions of competitors and other factors discussed elsewhere in
this document. Due to the seasonality in demand for natural gas
and certain refined products and the changes in a number of
external factors affecting Eni’s operations, such as prices
and margins of hydrocarbons and refined products, Eni’s
results from operations and changes in net borrowings for the
fourth quarter of the year cannot be extrapolated on an annual
basis.
The all sources reserve replacement ratio disclosed elsewhere in
this press release is calculated as ratio of changes in proved
reserves for the year resulting from revisions of previously
reported reserves, improved recovery, extensions, discoveries and
sales or purchases of minerals in place, to production for the
year. A ratio higher than 100% indicates that more proved
reserves were added than produced in a year. The Reserve
Replacement Ratio is a measure used by management to indicate the
extent to which production is replaced by proved oil and gas
reserves. The Reserve Replacement Ratio is not an indicator of
future production because the ultimate development and production
of reserves is subject to a number of risks and uncertainties.
These include the risks associated with the successful completion
of large-scale projects, including addressing ongoing regulatory
issues and completion of infrastructure, as well as changes in
oil and gas prices, political risks and geological and other
environmental risks.
Company Contacts
Press Office: Tel. +39.0252031875 - +39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +80011223456
Switchboard: +39-0659821
ufficio.stampa@eni.com
segreteriasocietaria.azionisti@eni.com
investor.relations@eni.com
Web site: www.eni.com
* * *
Eni
Società per Azioni Roma, Piazzale Enrico Mattei, 1
Share capital: euro 4,005,358,876 fully paid
Tax identification number 00484960588
Tel.: +39 0659821 - Fax: +39 0659822141
* * *
This press release for the first quarter 2014 (unaudited) is also available on the Eni web site eni.com.
- 6 -
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| Quarterly consolidated
report Summary results for the first quarter of 2014 |
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | ||||
| 25,635 | Net sales from operations | 31,166 | 29,203 | (6.3 | ) | |||||||
| 248 | Operating profit | 3,867 | 3,646 | (5.7 | ) | |||||||
| 385 | Exclusion of inventory holding (gains) losses | 10 | 7 | |||||||||
| 2,874 | Exclusion of special items | (131 | ) | (162 | ) | |||||||
| 3,507 | Adjusted operating profit | 3,746 | 3,491 | (6.8 | ) | |||||||
| Breakdown by Division: | ||||||||||||
| 3,320 | Exploration & Production | 3,998 | 3,450 | (13.7 | ) | |||||||
| 341 | Gas & Power | (211 | ) | 241 | .. | |||||||
| (92 | ) | Refining & Marketing | (134 | ) | (223 | ) | (66.4 | ) | ||||
| (130 | ) | Versalis | (63 | ) | (89 | ) | (41.3 | ) | ||||
| 155 | Engineering & Construction | 204 | 128 | (37.3 | ) | |||||||
| (51 | ) | Other activities | (55 | ) | (45 | ) | 18.2 | |||||
| (82 | ) | Corporate and financial companies | (82 | ) | (81 | ) | 1.2 | |||||
| 46 | Impact of unrealized intragroup profit elimination and other consolidation adjustments (a) | 89 | 110 | |||||||||
| (216 | ) | Net finance (expense) income (b) | (218 | ) | (235 | ) | ||||||
| 132 | Net income from investments (b) | 114 | 196 | |||||||||
| (2,063 | ) | Income taxes (b) | (2,245 | ) | (2,231 | ) | ||||||
| 60.3 | Tax rate (%) | 61.6 | 64.6 | |||||||||
| 1,360 | Adjusted net profit | 1,397 | 1,221 | (12.6 | ) | |||||||
| (647 | ) | Net profit attributable to Eni’s shareholders | 1,543 | 1,303 | (15.6 | ) | ||||||
| 229 | Exclusion of inventory holding (gains) losses | 7 | 6 | |||||||||
| 1,719 | Exclusion of special items | (165 | ) | (122 | ) | |||||||
| 1,301 | Adjusted net profit attributable to Eni’s shareholders | 1,385 | 1,187 | (14.3 | ) | |||||||
| Net profit attributable to Eni’s shareholders | ||||||||||||
| (0.18 | ) | per share (euro) | 0.43 | 0.36 | (16.3 | ) | ||||||
| (0.49 | ) | per ADR ($) | 1.14 | 0.99 | (13.2 | ) | ||||||
| Adjusted net profit attributable to Eni’s shareholders | ||||||||||||
| 0.36 | per share (euro) | 0.38 | 0.33 | (13.2 | ) | |||||||
| 0.98 | per ADR ($) | 1.00 | 0.90 | (10.0 | ) | |||||||
| 3,622.8 | Weighted average number of outstanding shares (c) | 3,622.8 | 3,617.9 | |||||||||
| 3,184 | Net cash provided by operating activities | 2,814 | 2,151 | (23.6 | ) | |||||||
| 3,789 | Capital expenditure | 3,122 | 2,545 | (18.5 | ) | |||||||
(a) Unrealized intragroup profit
elimination mainly pertained to intra-group sales of commodities,
services and capital goods recorded in the assets of the
purchasing business segment as of the end of the period.
(b) Excluding special items.
(c) Fully diluted (million shares).
Trading environment indicators
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | ||||
| 109.27 | Average price of Brent dated crude oil (a) | 112.60 | 108.20 | (3.9 | ) | ||||
| 1.361 | Average EUR/USD exchange rate (b) | 1.321 | 1.370 | 3.7 | |||||
| 80.29 | Average price in euro of Brent dated crude oil | 85.24 | 78.98 | (7.3 | ) | ||||
| 0.48 | Average European refining margin (c) | 3.97 | 1.70 | (57.2 | ) | ||||
| 0.64 | Average European refining margin Brent/Ural (c) | 4.30 | 2.07 | (51.9 | ) | ||||
| 0.35 | Average European refining margin in euro | 3.01 | 1.24 | (58.8 | ) | ||||
| 10.95 | Price of NBP gas (d) | 11.46 | 9.95 | (13.2 | ) | ||||
| 0.2 | Euribor - three-month euro rate (%) | 0.2 | 0.3 | 50.0 | |||||
| 0.2 | Libor - three-month dollar rate (%) | 0.3 | 0.2 | (33.3 | ) | ||||
(a) In USD per barrel. Source:
Platt’s Oilgram.
(b) Source: ECB.
(c) In USD per barrel FOB Mediterranean Brent dated crude oil.
Source: Eni calculations based on Platt’s Oilgram data.
(d) In USD per million BTU (British Thermal Unit). Source:
Platt’s Oilgram.
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Group results
In the first quarter of 2014 Eni reported operating
profit of euro 3,646 million, down 5.7% from the quarter of
the previous year, and net profit attributable to its
shareholders amounting to euro 1,303 million, down 15.6%.
The quarterly operating performance was negatively impacted by a
difficult trading environment on the back of lower Brent prices
(down 3.9%), structural headwinds in energy demand and
competitive pressure across Europe and in Italy, as well as the
appreciation of the euro against the dollar (up 3.7%). Saipem
also reported lower results due to lower profitability of
contract works underway.
These negatives were partly offset by progress in the turnaround
strategy in the mid-downstream businesses, mainly due to the
renegotiation of the Norwegian long-term gas supply contract with
economic effects retroactive to the previous thermal year.
The reduction in net profit was also affected by a 4 percentage
point increase in the Group tax rate, which was due to the
Exploration & Production Division as a growing share of
taxable profit was earned by subsidiaries subject to a higher tax
rate.
In the first quarter of 2014, adjusted operating profit amounted to euro 3,491 million and decreased by 6.8% from the first quarter of 2013. Adjusted net profit attributable to Eni’s shareholders of euro 1,187 million was down by euro 198 million, or 14.3% form a year ago. Adjusted net profit was calculated by excluding an inventory holding loss of euro 6 million and special gains of euro 122 million, stated net of exchange rate differences and exchange rate derivative instruments reclassified in operating profit (a loss of euro 15 million in the quarter) as they mainly related to derivative transactions entered into to manage exposure to the exchange rate risk implicit in commodity pricing formulas.
Special items of the operating profit (net gains of euro 162 million) related to: (i) the effects of fair-value evaluation of certain commodity derivatives contracts lacking the formal requisites to be accounted as hedges under IFRS (a gain of euro 263 million); (ii) impairment (euro 55 million) of capital expenditure made at assets impaired in previous reporting periods, mainly in the Refining & Marketing Division; (iii) environmental provisions and provisions for redundancy incentives (euro 8 million and euro 7 million, respectively).
Results by Divisions
Group adjusted net profit reflected lower adjusted
operating performance reported by the Exploration &
Production, Refining & Marketing, Versalis and Engineering
& Construction segments. A countertrend was recorded by the
Gas & Power Division benefiting from natural gas contracts
renegotiations.
Exploration & Production
In the first quarter of 2014, the Exploration &
Production Division reported a 13.7% decrease in adjusted
operating profit, down euro 548 million to euro 3,450 million
driven by lower oil and gas realizations in dollar terms (down by
1% on average) and the appreciation of the euro against the
dollar (up 3.7%). Adjusted net profit of euro 1,313 million
decreased by 21.3% also reflecting a higher adjusted tax rate (up
3.7 percentage points).
Gas & Power
In the first quarter of 2014, the Gas & Power Division
reported an adjusted operating profit of euro 241 million, which
was much better than the previous-quarter loss of euro 211
million thanks to the help of a contract renegotiation related to
the long-term supply of Norwegian gas, with economic effects
retroactive to the previous thermal year. This positive trend was
partly offset by continuing margin and volume weakness for gas
and electricity reflecting poor demand, unusual weather
conditions and strong competitive pressure.
Adjusted net profit for the quarter of euro 157 million,
increased by euro 298 million from the same period of 2013, when
the Gas & Power Division reported an adjusted net loss of
euro 141 million.
Refining & Marketing
In the first quarter of 2014, the Refining & Marketing
Division reported an adjusted operating loss of euro 223 million
which was euro 89 million more than the first quarter of 2013,
down by 66.4%. This negative trend was caused by a continuing
deterioration in the refining trading environment and lower fuels
demand, mainly in the Mediterranean area. The adjusted net loss
of euro 159 million was sharply lower than the first quarter of
2013, when a net loss of euro 51 million was recorded.
Engineering & Construction
In the first quarter of 2014, the Engineering &
Construction segment reported an adjusted operating profit of
euro 128 million, down by 37.3% from the first quarter of 2013
due to lower profitability of contract works underway. Adjusted
net profit of euro 95 million was down by 26.9%.
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Versalis
In the first quarter of 2014, Versalis reported an adjusted
operating loss of euro 89 million, down by 41.3% from the first
quarter of 2013. The negative performance reflected continuing
weakness in plastic commodity demand and increasing competition
from Asian producers which left product margins and sales volumes
at depressed levels. Adjusted net loss at euro 75 million was
euro 17 million larger than in the first quarter of 2013, down by
29.3%.
Summarized Group Balance Sheet7
| (euro million) | ||||||
| Jan. 1, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Change | ||||
| Fixed assets | ||||||||||||
| 64,798 | Property, plant and equipment | 63,763 | 64,195 | 432 | ||||||||
| 2,541 | Inventories - Compulsory stock | 2,573 | 2,555 | (18 | ) | |||||||
| 4,487 | Intangible assets | 3,876 | 3,826 | (50 | ) | |||||||
| 8,538 | Equity-accounted investments and other investments | 6,180 | 6,302 | 122 | ||||||||
| 1,126 | Receivables and securities held for operating purposes | 1,339 | 1,383 | 44 | ||||||||
| (1,139 | ) | Net payables related to capital expenditure | (1,255 | ) | (1,095 | ) | 160 | |||||
| 80,351 | 76,476 | 77,166 | 690 | |||||||||
| Net working capital | ||||||||||||
| 8,578 | Inventories | 7,939 | 7,448 | (491 | ) | |||||||
| 19,958 | Trade receivables | 21,212 | 22,739 | 1,527 | ||||||||
| (15,052 | ) | Trade payables | (15,584 | ) | (14,904 | ) | 680 | |||||
| (3,265 | ) | Tax payables and provisions for net deferred tax liabilities | (3,062 | ) | (4,276 | ) | (1,214 | ) | ||||
| (13,567 | ) | Provisions | (13,120 | ) | (13,220 | ) | (100 | ) | ||||
| 1,735 | Other current assets and liabilities | 1,274 | 2,507 | 1,233 | ||||||||
| (1,613 | ) | (1,341 | ) | 294 | 1,635 | |||||||
| (1,407 | ) | Provisions for employee post-retirement benefits | (1,279 | ) | (1,274 | ) | 5 | |||||
| 155 | Assets held for sale including related liabilities | 2,156 | 12 | (2,144 | ) | |||||||
| 77,486 | CAPITAL EMPLOYED, NET | 76,012 | 76,198 | 186 | ||||||||
| 59,060 | Eni shareholders’ equity | 58,210 | 59,568 | 1,358 | ||||||||
| 3,357 | Non-controlling interest | 2,839 | 2,831 | (8 | ) | |||||||
| 62,417 | Shareholders’ equity | 61,049 | 62,399 | 1,350 | ||||||||
| 15,069 | Net borrowings | 14,963 | 13,799 | (1,164 | ) | |||||||
| 77,486 | TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 76,012 | 76,198 | 186 | ||||||||
| 0.24 | Leverage | 0.25 | 0.22 | (0.03 | ) | |||||||
Fixed assets amounted to euro 77,166 million, representing an increase of euro 690 million from December 31, 2013, reflecting capital expenditure incurred in the period (euro 2,545 million), partly offset by depreciation, depletion, amortization and impairment charges (euro 2,291 million).
Net working capital amounted to a positive euro 294 million, representing an increase of euro 1,635 million from the close of the previous reporting period mainly due to a higher balance of trade receivables and trade payables (up by euro 2,207 million) in the Gas & Power segment, which were also influenced by the effects of the renegotiation of the Norwegian long-term gas supply contract. These increases were partly offset by increased tax payables and provisions for net deferred tax liabilities accrued in the quarter (up by euro 1,214 million) mainly reflecting the fact that Italian excise taxes due on the volumes of fuels and gas delivered to final clients in the second half of December 2013 were paid before year-end, whereas they are customarily paid the following month. Additionally, gas inventories decreased in the quarter.
Shareholders’ equity including non-controlling interest was euro 62,399 million, representing an increase of euro 1,350 million from December 31, 2013. This was due to comprehensive income for the period (euro 1,545 million) as a result of net profit of euro 1,337 million and a positive variation of the reserve for cash flow hedges (euro 249 million).
(7) The summarized group balance sheet aggregates the amount of assets and liabilities derived from the statutory balance sheet in accordance with functional criteria which consider the enterprise conventionally divided into the three fundamental areas focusing on resource investments, operations and financing. Management believes that this summarized group balance sheet is useful information in assisting investors to assess Eni’s capital structure and to analyze its sources of funds and investments in fixed assets and working capital. Management uses the summarized group balance sheet to calculate key ratios such as the proportion of net borrowings to shareholders’ equity (leverage) intended to evaluate whether Eni’s financing structure is sound and well-balanced.
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Summarized Group Cash Flow Statement8
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | |||
| (588 | ) | Net profit | 1,555 | 1,337 | |||||
| Adjustments to reconcile net profit to net cash provided by operating activities: | |||||||||
| 2,948 | - depreciation, depletion and amortization and other non-monetary items | 2,110 | 2,112 | ||||||
| (266 | ) | - net gains on disposal of assets | (51 | ) | (5 | ) | |||
| 2,483 | - dividends, interest, taxes and other changes | 2,372 | 2,390 | ||||||
| 906 | Changes in working capital related to operations | (508 | ) | (1,734 | ) | ||||
| (2,299 | ) | Dividends received, taxes paid, interest (paid) received | (2,664 | ) | (1,949 | ) | |||
| 3,184 | Net cash provided by operating activities | 2,814 | 2,151 | ||||||
| (3,789 | ) | Capital expenditure | (3,122 | ) | (2,545 | ) | |||
| (101 | ) | Investments and purchase of consolidated subsidiaries and businesses | (113 | ) | (60 | ) | |||
| 350 | Disposals | 75 | 2,177 | ||||||
| (51 | ) | Other cash flow related to capital expenditure, investments and disposals | (24 | ) | (161 | ) | |||
| (407 | ) | Free cash flow | (370 | ) | 1,562 | ||||
| (380 | ) | Borrowings (repayment) of debt related to financing activities | 934 | (17 | ) | ||||
| 31 | Changes in short and long-term financial debt | 1,809 | (56 | ) | |||||
| Dividends paid and changes in non-controlling interest and reserves | (63 | ) | (195 | ) | |||||
| (9 | ) | Effect of changes in consolidation and exchange differences | 15 | (1 | ) | ||||
| (765 | ) | NET CASH FLOW | 2,325 | 1,293 | |||||
Change in net borrowings
| (euro million) |
| Fourth Quarter 2013 | Full Year 2013 | Full Year 2014 | |||
| (407 | ) | Free cash flow | (370 | ) | 1,562 | ||||
| (15 | ) | Net borrowings of acquired companies | (6 | ) | (19 | ) | |||
| 146 | Exchange differences on net borrowings and other changes | (11 | ) | (184 | ) | ||||
| Dividends paid and changes in non-controlling interest and reserves | (63 | ) | (195 | ) | |||||
| (276 | ) | CHANGE IN NET BORROWINGS | (450 | ) | 1,164 | ||||
Net cash provided by operating activities (euro 2,151
million) and proceeds from disposals of euro 2,177 million,
mainly related to the divestment of Eni’s share in Artic
Russia finalized in the first half of January 2014, funded cash
outflows relating to capital expenditure totaling euro 2,545
million and also paid down the Group net debt by euro 1,164
million.
Dividends paid and changes in non-controlling interest and
reserves mainly related to Eni’s share repurchase (euro 151
million).
Other information
Continuing listing standards provided by Article No. 36 of
Italian exchanges regulation about issuers that control
subsidiaries incorporated or regulated in accordance with laws of
extra-EU Countries.
Certain provisions have been enacted to regulate continuing
Italian listing standards of issuers controlling subsidiaries
that are incorporated or regulated in accordance with laws of
extra-EU Countries, also having a material impact on the
consolidated financial statements of the parent company.
Regarding the aforementioned provisions, as of March 31, 2014,
the following Eni’s subsidiaries: Burren Energy (Bermuda)
Ltd, Eni Congo SA, Eni Norge AS, Eni Petroleum Co Inc,
NAOC-Nigerian Agip Oil Co Ltd, Nigerian Agip Exploration Ltd,
Burren Energy (Congo) Ltd, Eni Finance USA Inc, Eni Trading &
Shipping Inc and Eni Canada Holding Ltd – fall within the
scope of the new continuing listing standards. Eni has already
adopted adequate procedures to ensure full compliance with the
new regulations.
Financial and operating information by Division for the first quarter 2014 is provided in the following pages.
(8) Eni’s summarized group cash flow statement derives from the statutory statement of cash flows. It enables investors to understand the link existing between changes in cash and cash equivalents (deriving from the statutory cash flows statement) and in net borrowings (deriving from the summarized cash flow statement) that occurred from the beginning of the period to the end of period. The measure enabling such a link is represented by the free cash flow which is the cash in excess of capital expenditure needs. Starting from free cash flow it is possible to determine either: (i) changes in cash and cash equivalents for the period by adding/deducting cash flows relating to financing debts/receivables (issuance/repayment of debt and receivables related to financing activities), shareholders’ equity (dividends paid, net repurchase of own shares, capital issuance) and the effect of changes in consolidation and of exchange rate differences; (ii) changes in net borrowings for the period by adding/deducting cash flows relating to shareholders’ equity and the effect of changes in consolidation and of exchange rate differences. The free cash flow is a non-GAAP measure of financial performance.
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Exploration & Production
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | ||||
| RESULTS | (euro million) | |||||||||||||
| 7,585 | Net sales from operations | 7,781 | 7,434 | (4.5 | ) | |||||||||
| 3,499 | Operating profit | 4,052 | 3,430 | (15.4 | ) | |||||||||
| (179 | ) | Exclusion of special items: | (54 | ) | 20 | |||||||||
| (22 | ) | - asset impairments | ||||||||||||
| (197 | ) | - gains on disposal of assets | (51 | ) | (1 | ) | ||||||||
| 7 | - risk provisions | |||||||||||||
| 42 | - provision for redundancy incentives | 1 | 10 | |||||||||||
| (1 | ) | - commodity derivatives | 2 | 1 | ||||||||||
| (2 | ) | - exchange rate differences and derivatives | (7 | ) | 10 | |||||||||
| (6 | ) | - other | 1 | |||||||||||
| 3,320 | Adjusted operating profit | 3,998 | 3,450 | (13.7 | ) | |||||||||
| (71 | ) | Net finance income (expense) (a) | (63 | ) | (67 | ) | ||||||||
| 52 | Net income (expense) from investments (a) | 20 | 28 | |||||||||||
| (2,115 | ) | Income taxes (a) | (2,286 | ) | (2,098 | ) | ||||||||
| 64.1 | Tax rate | (%) | 57.8 | 61.5 | ||||||||||
| 1,186 | Adjusted net profit | 1,669 | 1,313 | (21.3 | ) | |||||||||
| Results also include: | ||||||||||||||
| 2,046 | - amortization and depreciation | 1,753 | 1,870 | 6.7 | ||||||||||
| of which: | ||||||||||||||
| 420 | exploration expenditure | 390 | 357 | (8.5 | ) | |||||||||
| 300 | - amortization of exploratory drilling expenditures and other | 330 | 279 | (15.5 | ) | |||||||||
| 120 | - amortization of geological and geophysical exploration expenses | 60 | 78 | 30.0 | ||||||||||
| 3,045 | Capital expenditure | 2,330 | 2,111 | (9.4 | ) | |||||||||
| of which: | ||||||||||||||
| 367 | - exploratory expenditure (b) | 466 | 298 | (36.1 | ) | |||||||||
| Production (c) (d) | ||||||||||||||
| 816 | Liquids (e) | (kbbl/d) | 818 | 822 | 0.5 | |||||||||
| 4,177 | Natural gas | (mmcf/d) | 4,290 | 4,182 | (2.5 | ) | ||||||||
| 1,577 | Total hydrocarbons | (kboe/d) | 1,600 | 1,583 | (1.1 | ) | ||||||||
| Average realizations | ||||||||||||||
| 101.00 | Liquids (e) | ($/bbl) | 102.32 | 99.40 | (2.9 | ) | ||||||||
| 7.26 | Natural gas | ($/mcf) | 7.18 | 7.47 | 4.1 | |||||||||
| 74.73 | Total hydrocarbons | ($/boe) | 72.10 | 71.49 | (0.8 | ) | ||||||||
| Average oil market prices | ||||||||||||||
| 109.27 | Brent dated | ($/bbl) | 112.60 | 108.20 | (3.9 | ) | ||||||||
| 80.29 | Brent dated | (euro/bbl) | 85.24 | 78.98 | (7.3 | ) | ||||||||
| 97.38 | West Texas Intermediate | ($/bbl) | 94.30 | 97.30 | 3.2 | |||||||||
| 3.84 | Gas Henry Hub | ($/mmbtu) | 3.49 | 5.17 | 48.1 | |||||||||
(a) Excluding special items.
(b) Includes exploration licenses, acquisition costs and
exploration bonuses.
(c) Supplementary operating data is provided on page 41.
(d) Includes Eni’s share of production of equity-accounted
entities.
(e) Includes condensates.
Results
In the first quarter of 2014, the Exploration & Production Division reported an adjusted operating profit of euro 3,450 million, representing a decrease of euro 548 million, or 13.7% from the first quarter of 2013, driven by lower oil prices for market benchmarks (Brent crude price down by 3.9%) and by the appreciation of the euro against the dollar which impacted the translation of the results reported by subsidiaries whose functional currency is the US dollar.
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Special items excluded from adjusted operating profit amounted to a net charge of euro 20 million mainly related to a provision for redundancy incentives and exchange rate differences and exchange rate derivative instruments reclassified in operating profit (a loss of euro 10 million).
Adjusted net profit amounted to euro 1,313 million, decreasing by euro 356 million, or 21.3% from the first quarter of 2013, due to lower operating performance and an increase in the tax rate by 3.7 percentage point due to a growing share of taxable profit that was earned by subsidiaries subject to a higher tax rate.
Operating review
In the first quarter of 2014, Eni’s liquids and gas production was 1.583 million boe/d. On a homogeneous basis, excluding the effects of the assets disposal in Siberia (26 kboe/d) production increases by 0.6%, due to production ramp-ups mainly in the United Kingdom and Algeria, partially offset by continuing political instability in Libya and mature fields declines. The share of oil and natural gas produced outside Italy was 89%.
Liquids production (822 kbbl/d) increased from the first quarter of 2013. New field start-ups and production ramp-ups mainly in the UK, Algeria and the United States more than offset the effects of the divestment of the Siberian assets (4 kbbl/d) as well as lower productions in Libya and Angola.
Natural gas production for the first quarter of 2014 was 4,182 mmcf/d. When excluding the effect of the divestment of the Siberian assets (118 mmcf/d), natural gas production was in line with the level of the same quarter of the previous year. The contribution of new field start-ups and ramp-ups mainly in the UK and Algeria was offset by mature fields declines.
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Gas & Power
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | ||||
| RESULTS | (euro million) | |||||||||||||
| 8,721 | Net sales from operations | 10,865 | 9,224 | (15.1 | ) | |||||||||
| (2,002 | ) | Operating profit | (89 | ) | 613 | .. | ||||||||
| 202 | Exclusion of inventory holding (gains) losses | (37 | ) | (108 | ) | |||||||||
| 2,141 | Exclusion of special items: | (85 | ) | (264 | ) | |||||||||
| (1 | ) | - environmental charges | ||||||||||||
| 1,685 | - asset impairments | 1 | ||||||||||||
| 1 | - gains on disposal of assets | |||||||||||||
| 374 | - risk provisions | (102 | ) | |||||||||||
| 9 | - provision for redundancy incentives | 1 | 1 | |||||||||||
| 96 | - commodity derivatives | (79 | ) | (265 | ) | |||||||||
| (31 | ) | - exchange rate differences and derivatives | 82 | (1 | ) | |||||||||
| 8 | - other | 13 | ||||||||||||
| 341 | Adjusted operating profit | (211 | ) | 241 | .. | |||||||||
| 296 | Marketing | (292 | ) | 204 | .. | |||||||||
| 45 | International transport | 81 | 37 | (54.3 | ) | |||||||||
| 2 | Net finance income (expense) (a) | 3 | 2 | |||||||||||
| 3 | Net income from investments (a) | 17 | 32 | |||||||||||
| (107 | ) | Income taxes (a) | 50 | (118 | ) | |||||||||
| 30.9 | Tax rate | (%) | .. | 42.9 | ||||||||||
| 239 | Adjusted net profit | (141 | ) | 157 | .. | |||||||||
| 83 | Capital expenditure | 26 | 28 | 7.7 | ||||||||||
| Natural gas sales (b) | (bcm) | |||||||||||||
| 10.70 | Italy | 12.53 | 11.18 | (10.8 | ) | |||||||||
| 14.86 | International sales | 17.64 | 15.60 | (11.7 | ) | |||||||||
| 12.70 | - Rest of Europe | 15.14 | 13.32 | (12.0 | ) | |||||||||
| 1.47 | - Extra European markets | 1.79 | 1.59 | (11.2 | ) | |||||||||
| 0.69 | - E&P sales in Europe and in the Gulf of Mexico | 0.71 | 0.67 | (5.6 | ) | |||||||||
| 25.56 | WORLDWIDE GAS SALES | 30.17 | 26.76 | (11.3 | ) | |||||||||
| of which: | ||||||||||||||
| 23.03 | - sales of consolidated subsidiaries | 27.46 | 24.37 | (11.3 | ) | |||||||||
| 1.84 | - Eni’s share of sales of natural gas of affiliates | 2.00 | 1.72 | (14.0 | ) | |||||||||
| 0.69 | - E&P sales in Europe and in the Gulf of Mexico | 0.71 | 0.67 | (5.6 | ) | |||||||||
| 8.75 | Electricity sales | (TWh) | 9.16 | 8.25 | (9.9 | ) | ||||||||
(a) Excluding special items.
(b) Supplementary operating data is provided on page 42.
Results
In the first quarter of 2014, the Gas & Power Division
reported an adjusted operating profit of euro 241 million,
up by euro 452 million compared to the first quarter of 2013.
This was driven by the renegotiations of the Norwegian long-term
gas supply contract, the economic effects of which were
retroactive to the previous thermal year. This positive effect
was partially offset by lower margins and sales of gas and
electricity due to lower sales prices, structural demand
headwinds, oversupplies and strong competition.
The International transport activity reduced its operating profit
(down by euro 44 million).
Special items excluded from adjusted operating profit amounted to net gains of euro 265 million mainly related to the effects of fair-value evaluation of certain commodity derivatives contracts lacking the formal requisites to be accounted as hedges under IFRS.
The Gas & Power Division reported an adjusted net profit of euro 157 million, which was much better than the previous-quarter loss of euro 141 million, up by euro 298 million, due to a better operating performance and higher results from equity-accounted entities.
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Operating review
In the first quarter of 2014, Eni’s natural gas sales were 26.76 bcm (including Eni’s own consumption, Eni’s share of sales made by equity-accounted entities and upstream sales in Europe and in the Gulf of Mexico), representing a decrease of 3.41 bcm compared to the first quarter of 2013 (down by 11.3%). Sales in Italy decreased by 10.8% to 11.18 bcm driven by an ongoing demand downturn, competitive pressure, mild climate as well as a worsening trading environment for electricity sales reflecting higher use of hydroelectric sources and lower demand. Sales in Europe of 12.13 bcm decreased by 1.79 bcm (down 12.9%) driven by lower volumes marketed in Germany/Austria, Benelux and France due to competitive pressure, partially offset by higher sales in Spain and Turkey due to effective marketing policies.
Electricity sales were 8.25 TWh in the first quarter of 2014, decreasing by 9.9%, from a year earlier due to lower volumes traded on the free market (down by 0.78 TWh).
Other performance indicators
Follows a breakdown of the pro-forma adjusted
EBITDA by business:
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | ||||
| 506 | Pro-forma adjusted EBITDA | (69 | ) | 387 | .. | |||||
| 417 | Marketing | (181 | ) | 312 | .. | |||||
| 89 | International transport | 112 | 75 | (33.0 | ) | |||||
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization charges) on an adjusted basis is calculated by adding amortization and depreciation charges to adjusted operating profit. This performance indicator includes the adjusted EBITDA of Eni’s wholly owned subsidiaries and Eni’s share of adjusted EBITDA generated by certain associates which are accounted for under the equity method for IFRS purposes. Management believes that the pro-forma EBITDA adjusted is an important alternative measure to assess the performance of Eni’s Gas & Power Division, taking into account evidence that this Division is comparable to European utilities in the gas and power generation sector. This measure is provided in order to assist investors and financial analysts in assessing the divisional performance of Gas & Power, as compared to its European peers, as EBITDA is widely used as the main performance indicator for utilities. The pro-forma EBITDA adjusted is a non-GAAP measure under IFRS.
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Refining & Marketing
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | ||||
| RESULTS | (euro million) | |||||||||||||
| 11,376 | Net sales from operations | 13,866 | 13,347 | (3.7 | ) | |||||||||
| (812 | ) | Operating profit | (30 | ) | (361 | ) | .. | |||||||
| 31 | Exclusion of inventory holding (gains) losses | (97 | ) | 64 | ||||||||||
| 689 | Exclusion of special items: | (7 | ) | 74 | ||||||||||
| 58 | - environmental charges | 7 | 8 | |||||||||||
| 569 | - asset impairments | 16 | 53 | |||||||||||
| (5 | ) | - gains on disposal of assets | ||||||||||||
| 85 | - provision for redundancy incentives | 1 | 1 | |||||||||||
| (4 | ) | - commodity derivatives | (2 | ) | ||||||||||
| (11 | ) | - exchange rate differences and derivatives | (21 | ) | 6 | |||||||||
| (3 | ) | - other | (10 | ) | 8 | |||||||||
| (92 | ) | Adjusted operating profit | (134 | ) | (223 | ) | (66.4 | ) | ||||||
| (2 | ) | Net finance income (expense) (a) | (1 | ) | ||||||||||
| 16 | Net income (expense) from investments (a) | 35 | 34 | |||||||||||
| 74 | Income taxes (a) | 48 | 31 | |||||||||||
| .. | Tax rate | (%) | .. | .. | ||||||||||
| (4 | ) | Adjusted net profit | (51 | ) | (159 | ) | .. | |||||||
| 272 | Capital expenditure | 88 | 111 | 26.1 | ||||||||||
| Global indicator refining margin | ||||||||||||||
| 0.48 | Brent dated | ($/bbl) | 3.97 | 1.70 | (57.2 | ) | ||||||||
| 0.64 | Brent/Ural | ($/bbl) | 4.30 | 2.07 | (51.9 | ) | ||||||||
| REFINING THROUGHPUTS AND SALES | (mmtonnes) | |||||||||||||
| 4.47 | Refining throughputs of wholly-owned refineries | 4.91 | 4.03 | (17.9 | ) | |||||||||
| 6.50 | Refining throughputs on own account | 6.96 | 5.88 | (15.5 | ) | |||||||||
| 5.29 | - Italy | 5.83 | 4.77 | (18.2 | ) | |||||||||
| 1.21 | - Rest of Europe | 1.13 | 1.11 | (1.8 | ) | |||||||||
| 2.33 | Retail sales | 2.33 | 2.16 | (7.3 | ) | |||||||||
| 1.57 | - Italy | 1.65 | 1.45 | (12.1 | ) | |||||||||
| 0.76 | - Rest of Europe | 0.68 | 0.71 | 4.4 | ||||||||||
| 3.28 | Wholesale sales | 2.80 | 2.69 | (3.9 | ) | |||||||||
| 2.17 | - Italy | 1.86 | 1.68 | (9.7 | ) | |||||||||
| 1.11 | - Rest of Europe | 0.94 | 1.01 | 7.4 | ||||||||||
| 0.11 | Wholesale sales outside Europe | 0.10 | 0.10 | |||||||||||
(a) Excluding special items.
Results
In the first quarter of 2014, the Refining & Marketing Division reported an adjusted operating loss amounting to euro 223 million, which was euro 89 million more than the previous quarter of 2013, down 66.4%. This negative trend reflected structural headwinds in the industry (the Brent/Ural benchmark being on average 2.07 $/barrel, down by 51.9% from the first quarter of 2013) affected by excess capacity, weak demand for oil products, and increasing competitive pressure from product streams imported by Russia, Middle East and the USA. Furthermore, Eni’s results in Refining & Marketing were affected by narrowing differentials between the heavy crudes processed by Eni’s refineries and the marker Brent which reflected lower availability of the former in the Mediterranean area. This trend was partly counteracted by efficiency initiatives, in particular aimed at reducing energy and operating costs and optimizing refinery utilization rates by reducing throughput of less competitive plants. Marketing results registered a decline compared to the same quarter of the previous year, due to lower consumption in retail sales and increasing competitive pressure.
Special charges excluded from adjusted operating loss amounted to euro 74 million in the first quarter of 2014 and related to: (i) impairment losses of capital expense made at plans which were completely written off in previous reporting periods (euro 53 million); (ii) environmental charges (euro 8 million); (iii) expenses for restructuring of certain service stations (euro 8 million); and (iv) and exchange rate differences and exchange rate derivative instruments reclassified in operating profit (a charge of euro 6 million).
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Adjusted net loss was euro 159 million, down by euro 108 million from the adjusted net loss reported in the first quarter of 2013.
Operating review
Eni’s refining throughputs for the first quarter
of 2014 were 5.88 mmtonnes, down 15.5% from the first quarter of
2013. In Italy, processed volumes decreased due to the planned
shutdown of the Venice refinery following the start of the Green
Refinery project, maintenance standstill at Sannazzaro site, and
the anticipated planned standstill at Milazzo refinery. These
negatives were partly offset by higher volumes processed at the
Gela plant, due to a better performance.
Outside Italy, Eni’s refining throughputs of 1.11 mmtonnes
were substantially unchanged from the same quarter of 2013.
Retail sales in Italy were 1.45 mmtonnes in the first quarter 2014 and declined by 0.20 mmtonnes, or 12.1% from the corresponding period of the previous year. This decline was driven by sharply lower consumption of gasoil and gasoline. In the first quarter of 2014 Eni’s market share decreased by 2.9 percentage points from the first quarter of 2013 (from 29.1% to 26.2%).
Wholesale sales in Italy (1.68 mmtonnes) decreased by approximately 180 ktonnes (down 9.7%) from the first quarter of 2013 due to lower sales of gasoil, bunkering and LPG reflecting declining demand offset by higher volumes of minor products and jet fuel marketed. Average market share in the first quarter of 2014 was 26.9%.
Retail sales in the rest of Europe were approximately 710 ktonnes increasing by 4.4% from the first quarter of 2013 mainly due to higher volumes sold in Germany, Austria, and Hungary.
Wholesale sales in the rest of Europe were 1.01 mmtonnes in the first quarter of 2014 increasing by 7.4% from the first quarter of 2013 mainly in the Iberian Peninsula, Slovenia, Austria and Hungary. Lower sales were registered in Germany.
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Summarized Group profit and loss account
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | |||||
| 25,635 | Net sales from operations | 31,166 | 29,203 | (6.3 | ) | |||||||
| 670 | Other income and revenues | 239 | 160 | (33.1 | ) | |||||||
| (21,244 | ) | Operating expenses | (25,414 | ) | (23,674 | ) | 6.8 | |||||
| (24 | ) | Other operating income (expense) | 41 | 248 | .. | |||||||
| (4,789 | ) | Depreciation, depletion, amortization and impairments | (2,165 | ) | (2,291 | ) | (5.8 | ) | ||||
| 248 | Operating profit | 3,867 | 3,646 | (5.7 | ) | |||||||
| (257 | ) | Finance income (expense) | (182 | ) | (236 | ) | (29.7 | ) | ||||
| 1,807 | Net income from investments | 121 | 213 | 76.0 | ||||||||
| 1,798 | Profit before income taxes | 3,806 | 3,623 | (4.8 | ) | |||||||
| (2,386 | ) | Income taxes | (2,251 | ) | (2,286 | ) | (1.6 | ) | ||||
| .. | Tax rate (%) | 59.1 | 63.1 | |||||||||
| (588 | ) | Net profit | 1,555 | 1,337 | (14.0 | ) | ||||||
| of which attributable: | ||||||||||||
| (647 | ) | - Eni's shareholders | 1,543 | 1,303 | (15.6 | ) | ||||||
| 59 | - non-controlling interest | 12 | 34 | |||||||||
| (647 | ) | Net profit attributable to Eni’s shareholders | 1,543 | 1,303 | (15.6 | ) | ||||||
| 229 | Exclusion of inventory holding (gains) losses | 7 | 6 | |||||||||
| 1,719 | Exclusion of special items | (165 | ) | (122 | ) | |||||||
| 1,301 | Adjusted net profit attributable to Eni’s shareholders (a) | 1,385 | 1,187 | (14.3 | ) | |||||||
(a) For a detailed explanation of adjusted operating profit and adjusted net profit see the paragraph "Reconciliation of reported operating profit and reported net profit to results on an adjusted basis".
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Non-GAAP measures
Reconciliation of reported operating profit and reported
net profit to results on an adjusted basis
Management evaluates Group and business performance on the
basis of adjusted operating profit and adjusted net profit, which
are arrived at by excluding inventory holding gains or losses,
special items and, in determining the business segments’
adjusted results, finance charges on finance debt and interest
income. The adjusted operating profit of each business segment
reports gains and losses on derivative financial instruments
entered into to manage exposure to movements in foreign currency
exchange rates which impact industrial margins and translation of
commercial payables and receivables. Accordingly also currency
translation effects recorded through profit and loss are reported
within business segments’ adjusted operating profit.
The taxation effect of the items excluded from adjusted operating
or net profit is determined based on the specific rate of taxes
applicable to each of them. The Italian statutory tax rate is
applied to finance charges and income. Adjusted operating profit
and adjusted net profit are non-GAAP financial measures under
either IFRS, or US GAAP. Management includes them in order to
facilitate a comparison of base business performance across
periods, and to allow financial analysts to evaluate Eni’s
trading performance on the basis of their forecasting models.
The following is a description of items that are excluded from the calculation of adjusted results.
Inventory holding gain or loss is the difference between the cost of sales of the volumes sold in the period based on the cost of supplies of the same period and the cost of sales of the volumes sold calculated using the weighted average cost method of inventory accounting.
Special items include certain significant income or
charges pertaining to either: (i) infrequent or unusual events
and transactions, being identified as non-recurring items under
such circumstances; (ii) certain events or transactions which are
not considered to be representative of the ordinary course of
business, as in the case of environmental provisions,
restructuring charges, asset impairments or write ups and gains
or losses on divestments even though they occurred in past
periods or are likely to occur in future ones; or (iii) exchange
rate differences and derivatives relating to industrial
activities and commercial payables and receivables, particularly
exchange rate derivatives to manage commodity pricing formulas
which are quoted in a currency other than the functional
currency. Those items are reclassified in operating profit with a
corresponding adjustment to net finance charges, notwithstanding
the handling of foreign currency exchange risks is made centrally
by netting off naturally-occurring opposite positions and then
dealing with any residual risk exposure in the exchange rate
market.
As provided for in Decision No. 15519 of July 27, 2006 of the
Italian market regulator (Consob), non recurring material income
or charges are to be clearly reported in the management’s
discussion and financial tables. Also, special items include
gains and losses on re-measurement at fair value of certain non
hedging commodity derivatives, including the ineffective portion
of cash flow hedges and certain derivatives financial instruments
embedded in the pricing formula of long-term gas supply
agreements of the Exploration & Production Division.
Finance charges or income related to net borrowings
excluded from the adjusted net profit of business segments are
comprised of interest charges on finance debt and interest income
earned on cash and cash equivalents not related to operations.
Therefore, the adjusted net profit of business segments includes
finance charges or income deriving from certain segment-operated
assets, i.e., interest income on certain receivable financing and
securities related to operations and finance charge pertaining to
the accretion of certain provisions recorded on a discounted
basis (as in the case of the asset retirement obligations in the
Exploration & Production Division). Finance charges or
interest income and related taxation effects excluded from the
adjusted net profit of the business segments are allocated on the
aggregate Corporate and financial companies.
For a reconciliation of adjusted operating profit, adjusted net profit to reported operating profit and reported net profit see tables below.
- 18 -
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| (euro million) |
| First Quarter 2014 | Exploration & Production | Gas & Power | Refining & Marketing | Versalis | Engineering & Construction |
Corporate and financial companies | Other activities | Impact of unrealized intragroup profit elimination | GROUP | |||||||||
| Reported operating profit | 3,430 | 613 | (361 | ) | (128 | ) | 127 | (80 | ) | (52 | ) | 97 | 3,646 | ||||||||||||||
| Exclusion of inventory holding (gains) losses | (108 | ) | 64 | 38 | 13 | 7 | |||||||||||||||||||||
| Exclusion of special items: | |||||||||||||||||||||||||||
| environmental charges | 8 | 8 | |||||||||||||||||||||||||
| asset impairments | 1 | 53 | (1 | ) | 2 | 55 | |||||||||||||||||||||
| gains on disposal of assets | (1 | ) | (1 | ) | |||||||||||||||||||||||
| risk provisions | 4 | 4 | |||||||||||||||||||||||||
| provisions for redundancy incentives | 10 | 1 | 1 | (5 | ) | 7 | |||||||||||||||||||||
| commodity derivatives | 1 | (265 | ) | (2 | ) | 2 | 1 | (263 | ) | ||||||||||||||||||
| exchange rate differences and derivatives | 10 | (1 | ) | 6 | 15 | ||||||||||||||||||||||
| other | 8 | 5 | 13 | ||||||||||||||||||||||||
| Special items of operating profit | 20 | (264 | ) | 74 | 1 | 1 | (1 | ) | 7 | (162 | ) | ||||||||||||||||
| Adjusted operating profit | 3,450 | 241 | (223 | ) | (89 | ) | 128 | (81 | ) | (45 | ) | 110 | 3,491 | ||||||||||||||
| Net finance (expense) income (a) | (67 | ) | 2 | (1 | ) | (1 | ) | (1 | ) | (167 | ) | (235 | ) | ||||||||||||||
| Net income from investments (a) | 28 | 32 | 34 | 8 | 94 | 196 | |||||||||||||||||||||
| Income taxes (a) | (2,098 | ) | (118 | ) | 31 | 15 | (40 | ) | 13 | (34 | ) | (2,231 | ) | ||||||||||||||
| Tax rate (%) | 61.5 | 42.9 | .. | 29.6 | 64.6 | ||||||||||||||||||||||
| Adjusted net profit | 1,313 | 157 | (159 | ) | (75 | ) | 95 | (141 | ) | (45 | ) | 76 | 1,221 | ||||||||||||||
| of which: | |||||||||||||||||||||||||||
| - Adjusted net profit of non-controlling interest | 34 | ||||||||||||||||||||||||||
| - Adjusted net profit attributable to Eni’s shareholders | 1,187 | ||||||||||||||||||||||||||
| Reported net profit attributable to Eni’s shareholders | 1,303 | ||||||||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | 6 | ||||||||||||||||||||||||||
| Exclusion of special items | (122 | ) | |||||||||||||||||||||||||
| Adjusted net profit attributable to Eni’s shareholders | 1,187 | ||||||||||||||||||||||||||
(a) Excluding special items.
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Table of Contents
| (euro million) |
| First Quarter 2013 | Exploration & Production | Gas & Power | Refining & Marketing | Versalis | Engineering & Construction |
Corporate and financial companies | Other activities | Impact of unrealized intragroup profit elimination | GROUP | |||||||||
| Reported operating profit | 4,052 | (89 | ) | (30 | ) | (94 | ) | 203 | (77 | ) | (72 | ) | (26 | ) | 3,867 | ||||||||||||
| Exclusion of inventory holding (gains) losses | (37 | ) | (97 | ) | 29 | 115 | 10 | ||||||||||||||||||||
| Exclusion of special items: | |||||||||||||||||||||||||||
| environmental charges | 7 | 7 | |||||||||||||||||||||||||
| asset impairments | 16 | 1 | 17 | ||||||||||||||||||||||||
| gains on disposal of assets | (51 | ) | 1 | (50 | ) | ||||||||||||||||||||||
| risk provisions | (102 | ) | (102 | ) | |||||||||||||||||||||||
| provisions for redundancy incentives | 1 | 1 | 1 | 1 | 4 | ||||||||||||||||||||||
| commodity derivatives | 2 | (79 | ) | (77 | ) | ||||||||||||||||||||||
| exchange rate differences and derivatives | (7 | ) | 82 | (21 | ) | 2 | 56 | ||||||||||||||||||||
| other | 1 | 13 | (10 | ) | (6 | ) | 16 | 14 | |||||||||||||||||||
| Special items of operating profit | (54 | ) | (85 | ) | (7 | ) | 2 | 1 | (5 | ) | 17 | (131 | ) | ||||||||||||||
| Adjusted operating profit | 3,998 | (211 | ) | (134 | ) | (63 | ) | 204 | (82 | ) | (55 | ) | 89 | 3,746 | |||||||||||||
| Net finance (expense) income (a) | (63 | ) | 3 | (1 | ) | (1 | ) | (156 | ) | (218 | ) | ||||||||||||||||
| Net income from investments (a) | 20 | 17 | 35 | 42 | 114 | ||||||||||||||||||||||
| Income taxes (a) | (2,286 | ) | 50 | 48 | 6 | (73 | ) | 41 | (31 | ) | (2,245 | ) | |||||||||||||||
| Tax rate (%) | 57.8 | .. | .. | 36.0 | 61.6 | ||||||||||||||||||||||
| Adjusted net profit | 1,669 | (141 | ) | (51 | ) | (58 | ) | 130 | (155 | ) | (55 | ) | 58 | 1,397 | |||||||||||||
| of which: | |||||||||||||||||||||||||||
| - Adjusted net profit of non-controlling interest | 12 | ||||||||||||||||||||||||||
| - Adjusted net profit attributable to Eni’s shareholders | 1,385 | ||||||||||||||||||||||||||
| Reported net profit attributable to Eni’s shareholders | 1,543 | ||||||||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | 7 | ||||||||||||||||||||||||||
| Exclusion of special items | (165 | ) | |||||||||||||||||||||||||
| Adjusted net profit attributable to Eni’s shareholders | 1,385 | ||||||||||||||||||||||||||
(a) Excluding special items.
- 20 -
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| (euro million) |
| Fourth Quarter 2013 | Exploration & Production | Gas & Power | Refining & Marketing | Versalis | Engineering & Construction |
Corporate and financial companies | Other activities | Impact of unrealized intragroup profit elimination | GROUP | |||||||||
| Reported operating profit | 3,499 | (2,002 | ) | (812 | ) | (332 | ) | 166 | (153 | ) | (93 | ) | (25 | ) | 248 | ||||||||||||
| Exclusion of inventory holding (gains) losses | 202 | 31 | 81 | 71 | 385 | ||||||||||||||||||||||
| Exclusion of special items: | |||||||||||||||||||||||||||
| environmental charges | (1 | ) | 58 | 58 | 30 | 145 | |||||||||||||||||||||
| asset impairments | (22 | ) | 1,685 | 569 | 38 | 15 | 2,285 | ||||||||||||||||||||
| gains on disposal of assets | (197 | ) | 1 | (5 | ) | (4 | ) | (1 | ) | (206 | ) | ||||||||||||||||
| risk provisions | 7 | 374 | 1 | 382 | |||||||||||||||||||||||
| provisions for redundancy incentives | 42 | 9 | 85 | 22 | (5 | ) | 69 | 19 | 241 | ||||||||||||||||||
| commodity derivatives | (1 | ) | 96 | (4 | ) | (1 | ) | (2 | ) | 88 | |||||||||||||||||
| exchange rate differences and derivatives | (2 | ) | (31 | ) | (11 | ) | 4 | (40 | ) | ||||||||||||||||||
| other | (6 | ) | 8 | (3 | ) | 2 | (22 | ) | (21 | ) | |||||||||||||||||
| Special items of operating profit | (179 | ) | 2,141 | 689 | 121 | (11 | ) | 71 | 42 | 2,874 | |||||||||||||||||
| Adjusted operating profit | 3,320 | 341 | (92 | ) | (130 | ) | 155 | (82 | ) | (51 | ) | 46 | 3,507 | ||||||||||||||
| Net finance (expense) income (a) | (71 | ) | 2 | (2 | ) | (1 | ) | (1 | ) | (153 | ) | 10 | (216 | ) | |||||||||||||
| Net income from investments (a) | 52 | 3 | 16 | 1 | (9 | ) | 67 | 2 | 132 | ||||||||||||||||||
| Income taxes (a) | (2,115 | ) | (107 | ) | 74 | 14 | (44 | ) | 185 | (70 | ) | (2,063 | ) | ||||||||||||||
| Tax rate (%) | 64.1 | 30.9 | .. | 30.3 | 60.3 | ||||||||||||||||||||||
| Adjusted net profit | 1,186 | 239 | (4 | ) | (116 | ) | 101 | 17 | (39 | ) | (24 | ) | 1,360 | ||||||||||||||
| of which: | |||||||||||||||||||||||||||
| - Adjusted net profit of non-controlling interest | 59 | ||||||||||||||||||||||||||
| - Adjusted net profit attributable to Eni’s shareholders | 1,301 | ||||||||||||||||||||||||||
| Reported net profit attributable to Eni's shareholders | (647 | ) | |||||||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | 229 | ||||||||||||||||||||||||||
| Exclusion of special items | 1,719 | ||||||||||||||||||||||||||
| Adjusted net profit attributable to Eni's shareholders | 1,301 | ||||||||||||||||||||||||||
(a) Excluding special items.
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Breakdown of Eni Group's special items
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | ||||
| 145 | Environmental charges | 7 | 8 | ||||||
| 2,285 | Asset impairments | 17 | 55 | ||||||
| (206 | ) | Gains on disposal of assets | (50 | ) | (1 | ) | |||
| 382 | Risk provisions | (102 | ) | 4 | |||||
| 241 | Provisions for redundancy incentives | 4 | 7 | ||||||
| 88 | Commodity derivatives | (77 | ) | (263 | ) | ||||
| (40 | ) | Exchange rate differences and derivatives | 56 | 15 | |||||
| (21 | ) | Other | 14 | 13 | |||||
| 2,874 | Special items of operating profit | (131 | ) | (162 | ) | ||||
| 41 | Net finance (income) expense | (36 | ) | 1 | |||||
| of which: | |||||||||
| 40 | exchange rate differences and derivatives | (56 | ) | (15 | ) | ||||
| (1,675 | ) | Net income from investments | (7 | ) | (17 | ) | |||
| of which: | |||||||||
| (3 | ) | - gains on disposal of assets | (2 | ) | |||||
| (3 | ) | of which: Galp | (2 | ) | |||||
| (1,682 | ) | - gains on investment revaluation | |||||||
| (1,682 | ) | of which: Artic Russia | |||||||
| 11 | - impairments of equity investments | ||||||||
| 479 | Income taxes | 9 | 56 | ||||||
| of which: | |||||||||
| 954 | impairment of deferred tax assets of Italian subsidiaries | ||||||||
| 347 | deferred tax adjustment on PSAs | ||||||||
| 45 | re-allocation of tax impact on intercompany dividends and other special items | 10 | |||||||
| (867 | ) | taxes on special items of operating profit | 9 | 46 | |||||
| 1,719 | Total special items of net profit | (165 | ) | (122 | ) | ||||
Net sales from operations
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | |||||
| 7,585 | Exploration & Production | 7,781 | 7,434 | (4.5 | ) | |||||||
| 8,721 | Gas & Power | 10,865 | 9,224 | (15.1 | ) | |||||||
| 11,376 | Refining & Marketing | 13,866 | 13,347 | (3.7 | ) | |||||||
| 1,343 | Versalis | 1,543 | 1,402 | (9.1 | ) | |||||||
| 3,155 | Engineering & Construction | 2,989 | 2,891 | (3.3 | ) | |||||||
| 15 | Other activities | 22 | 15 | (31.8 | ) | |||||||
| 418 | Corporate and financial companies | 326 | 329 | 0.9 | ||||||||
| 47 | Impact of unrealized intragroup profit elimination | (229 | ) | (13 | ) | |||||||
| (7,025 | ) | Consolidation adjustments | (5,997 | ) | (5,426 | ) | ||||||
| 25,635 | 31,166 | 29,203 | (6.3 | ) | ||||||||
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Operating expenses
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | |||||
| 19,732 | Purchases, services and other | 24,181 | 22,333 | (7.6 | ) | |||||||
| 527 | of which: other special items | (95 | ) | 12 | ||||||||
| 1,512 | Payroll and related costs | 1,233 | 1,341 | 8.8 | ||||||||
| 241 | of which: provisions for redundancy incentives and other | 4 | 7 | |||||||||
| 21,244 | 25,414 | 23,674 | (6.8 | ) | ||||||||
Depreciation, depletion, amortization and impairments
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | |||||
| 2,068 | Exploration & Production | 1,753 | 1,870 | 6.7 | ||||||||
| 121 | Gas & Power | 110 | 84 | (23.6 | ) | |||||||
| 92 | Refining & Marketing | 81 | 73 | (9.9 | ) | |||||||
| 30 | Versalis | 21 | 23 | 9.5 | ||||||||
| 184 | Engineering & Construction | 175 | 176 | 0.6 | ||||||||
| 1 | Other activities | |||||||||||
| 14 | Corporate and financial companies | 14 | 16 | 14.3 | ||||||||
| (6 | ) | Impact of unrealized intragroup profit elimination | (6 | ) | (6 | ) | ||||||
| 2,504 | Total depreciation, depletion and amortization | 2,148 | 2,236 | 4.1 | ||||||||
| 2,285 | Impairments | 17 | 55 | .. | ||||||||
| 4,789 | 2,165 | 2,291 | 5.8 | |||||||||
Net income from investments
| (euro million) | |||||||||||
| First Quarter of 2014 | Exploration & Production | Gas &Power | Refining & Marketing | Engineering & Construction | Other activities | Group | |||||
| Share of gains (losses) from equity-accounted investments | 25 | 32 | 9 | 66 | ||||||||
| Dividends | 3 | 33 | 36 | |||||||||
| Net gains on disposal | 3 | 2 | 5 | |||||||||
| Other income (expense), net | 12 | 94 | 106 | |||||||||
| 28 | 44 | 33 | 12 | 96 | 213 | |||||||
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Income taxes
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | Change | |||||
| Profit before income taxes | ||||||||||
| (2,409 | ) | Italy | 84 | 454 | 370 | |||||
| 4,207 | Outside Italy | 3,722 | 3,169 | (553 | ) | |||||
| 1,798 | 3,806 | 3,623 | (183 | ) | ||||||
| Income taxes | ||||||||||
| 301 | Italy | 96 | 244 | 148 | ||||||
| 2,085 | Outside Italy | 2,155 | 2,042 | (113 | ) | |||||
| 2,386 | 2,251 | 2,286 | 35 | |||||||
| Tax rate (%) | ||||||||||
| .. | Italy | .. | 53.7 | .. | ||||||
| 49.6 | Outside Italy | 57.9 | 64.4 | 6.5 | ||||||
| .. | 59.1 | 63.1 | 4.0 | |||||||
Adjusted net profit by Division
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | |||||
| 1,186 | Exploration & Production | 1,669 | 1,313 | (21.3 | ) | |||||||
| 239 | Gas & Power | (141 | ) | 157 | .. | |||||||
| (4 | ) | Refining & Marketing | (51 | ) | (159 | ) | .. | |||||
| (116 | ) | Versalis | (58 | ) | (75 | ) | (29.3 | ) | ||||
| 101 | Engineering & Construction | 130 | 95 | (26.9 | ) | |||||||
| (39 | ) | Other activities | (55 | ) | (45 | ) | 18.2 | |||||
| 17 | Corporate and financial companies | (155 | ) | (141 | ) | 9.0 | ||||||
| (24 | ) | Impact of unrealized intragroup profit elimination (a) | 58 | 76 | ||||||||
| 1,360 | 1,397 | 1,221 | (12.6 | ) | ||||||||
| Attributable to: | ||||||||||||
| 1,301 | - Eni’s shareholders | 1,385 | 1,187 | (14.3 | ) | |||||||
| 59 | - Non-controlling interest | 12 | 34 | .. | ||||||||
(a) This item concerned mainly intragroup sales of commodities, services and capital goods recorded in the assets of the purchasing business segment as of end of the period.
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Leverage and net borrowings
Leverage is a measure used by management to assess the Company’s level of indebtedness. It is calculated as a ratio of net borrowings – which is calculated by excluding cash and cash equivalents and certain very liquid assets from finance debt to shareholders’ equity, including non-controlling interest. Management periodically reviews leverage in order to assess the soundness and efficiency of the Group balance sheet in terms of optimal mix between net borrowings and net equity, and to carry out benchmark analysis with industry standards.
| (euro million) |
Dec. 31, 2013 |
March 31, 2014 |
Change |
||||
| Total debt | 25,560 | 25,710 | 150 | ||||||
| Short-term debt | 4,685 | 3,740 | (945 | ) | |||||
| Long-term debt | 20,875 | 21,970 | 1,095 | ||||||
| Cash and cash equivalents | (5,431 | ) | (6,724 | ) | (1,293 | ) | |||
| Securities held for trading and other securities held for non-operating purposes | (5,037 | ) | (5,042 | ) | (5 | ) | |||
| Financing receivables for non-operating purposes | (129 | ) | (145 | ) | (16 | ) | |||
| Net borrowings | 14,963 | 13,799 | (1,164 | ) | |||||
| Shareholders’ equity including non-controlling interest | 61,049 | 62,399 | 1,350 | ||||||
| Leverage | 0.25 | 0.22 | (0.03 | ) | |||||
Bonds maturing in the 18-month period starting on March 31, 2014
| (euro
million) |
| Issuing entity | Amount at March 31, 2014 (a) |
| Eni SpA | 2,026 |
| Eni Finance International SA | 163 |
| 2,189 | |
(a) Amounts include interest
accrued and discount on issue.
Bonds issued in the first quarter of 2014 (guaranteed by Eni SpA)
| Issuing entity | Nominal amount |
Currency |
Amounts at March 31, 2014 (a) |
Maturity |
Rate |
% |
||||||
| Eni SpA | 1,000 | EUR | 998 | 2029 | fixed | 3.625 | ||||||
| 998 | ||||||||||||
(a) Amounts include interest accrued and discount on issue.
- 25 -
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Consolidated financial statements
GROUP BALANCE SHEET
| (euro million) | ||||
| Jan. 1, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | |||
| ASSETS | |||||||||
| Current assets | |||||||||
| 7,936 | Cash and cash equivalents | 5,431 | 6,724 | ||||||
| Other financial activities held for trading | 5,004 | 5,008 | |||||||
| 237 | Other financial assets available for sale | 235 | 266 | ||||||
| 28,618 | Trade and other receivables | 28,890 | 31,259 | ||||||
| 8,578 | Inventories | 7,939 | 7,448 | ||||||
| 771 | Current tax assets | 802 | 768 | ||||||
| 1,239 | Other current tax assets | 835 | 880 | ||||||
| 1,617 | Other current assets | 1,325 | 2,714 | ||||||
| 48,996 | 50,461 | 55,067 | |||||||
| Non-current assets | |||||||||
| 64,798 | Property, plant and equipment | 63,763 | 64,195 | ||||||
| 2,541 | Inventory - compulsory stock | 2,573 | 2,555 | ||||||
| 4,487 | Intangible assets | 3,876 | 3,826 | ||||||
| 3,453 | Equity-accounted investments | 3,153 | 3,181 | ||||||
| 5,085 | Other investments | 3,027 | 3,121 | ||||||
| 913 | Other financial assets | 858 | 825 | ||||||
| 5,005 | Deferred tax assets | 4,658 | 4,500 | ||||||
| 4,398 | Other non-current receivables | 3,676 | 3,180 | ||||||
| 90,680 | 85,584 | 85,383 | |||||||
| 516 | Assets held for sale | 2,296 | 12 | ||||||
| 140,192 | TOTAL ASSETS | 138,341 | 140,462 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
| Current liabilities | |||||||||
| 2,032 | Short-term debt | 2,553 | 2,978 | ||||||
| 3,015 | Current portion of long-term debt | 2,132 | 762 | ||||||
| 23,666 | Trade and other payables | 23,701 | 22,518 | ||||||
| 1,633 | Income taxes payable | 755 | 797 | ||||||
| 2,188 | Other taxes payable | 2,291 | 3,054 | ||||||
| 1,418 | Other current liabilities | 1,437 | 2,295 | ||||||
| 33,952 | 32,869 | 32,404 | |||||||
| Non-current liabilities | |||||||||
| 19,145 | Long-term debt | 20,875 | 21,970 | ||||||
| 13,567 | Provisions for contingencies | 13,120 | 13,220 | ||||||
| 1,407 | Provisions for employee benefits | 1,279 | 1,274 | ||||||
| 6,745 | Deferred tax liabilities | 6,750 | 6,997 | ||||||
| 2,598 | Other non-current liabilities | 2,259 | 2,198 | ||||||
| 43,462 | 44,283 | 45,659 | |||||||
| 361 | Liabilities directly associated with assets held for sale | 140 | |||||||
| 77,775 | TOTAL LIABILITIES | 77,292 | 78,063 | ||||||
| SHAREHOLDERS’ EQUITY | |||||||||
| 3,357 | Non-controlling interest | 2,839 | 2,831 | ||||||
| Eni shareholders’ equity: | |||||||||
| 4,005 | Share capital | 4,005 | 4,005 | ||||||
| (16 | ) | Reserve related to the fair value of cash flow hedging derivatives net of tax effect | (154 | ) | 19 | ||||
| 49,438 | Other reserves | 51,393 | 54,593 | ||||||
| (201 | ) | Treasury shares | (201 | ) | (352 | ) | |||
| (1,956 | ) | Interim dividend | (1,993 | ) | |||||
| 7,790 | Net profit | 5,160 | 1,303 | ||||||
| 59,060 | Total Eni shareholders’ equity | 58,210 | 59,568 | ||||||
| 62,417 | TOTAL SHAREHOLDERS’ EQUITY | 61,049 | 62,399 | ||||||
| 140,192 | TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 138,341 | 140,462 | ||||||
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Table of Contents
GROUP PROFIT AND LOSS ACCOUNT
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | ||||
| REVENUES | |||||||||
| 25,635 | Net sales from operations | 31,166 | 29,203 | ||||||
| 670 | Other income and revenues | 239 | 160 | ||||||
| 26,305 | Total revenues | 31,405 | 29,363 | ||||||
| OPERATING EXPENSES | |||||||||
| 19,732 | Purchases, services and other | 24,181 | 22,333 | ||||||
| 1,512 | Payroll and related costs | 1,233 | 1,341 | ||||||
| (24 | ) | OTHER OPERATING (EXPENSE) INCOME | 41 | 248 | |||||
| 4,789 | DEPRECIATION, DEPLETION, AMORTIZATION AND IMPAIRMENTS | 2,165 | 2,291 | ||||||
| 248 | OPERATING PROFIT | 3,867 | 3,646 | ||||||
| FINANCE INCOME (EXPENSE) | |||||||||
| 1,282 | Finance income | 1,938 | 1,553 | ||||||
| (1,464 | ) | Finance expense | (2,149 | ) | (1,744 | ) | |||
| 4 | Income (expense) from other financial activities held for trading | 4 | |||||||
| (79 | ) | Derivative financial instruments | 29 | (49 | ) | ||||
| (257 | ) | (182 | ) | (236 | ) | ||||
| INCOME (EXPENSE) FROM INVESTMENTS | |||||||||
| 21 | Share of profit (loss) of equity-accounted investments | 44 | 66 | ||||||
| 1,786 | Other gains (losses) from investments | 77 | 147 | ||||||
| 1,807 | 121 | 213 | |||||||
| 1,798 | PROFIT BEFORE INCOME TAXES | 3,806 | 3,623 | ||||||
| (2,386 | ) | Income taxes | (2,251 | ) | (2,286 | ) | |||
| (588 | ) | Net profit | 1,555 | 1,337 | |||||
| Attributable to: | |||||||||
| (647 | ) | - Eni’s shareholders | 1,543 | 1,303 | |||||
| 59 | - non-controlling interest | 12 | 34 | ||||||
| Net profit per share (euro per share) | |||||||||
| (0.18 | ) | - basic | 0.43 | 0.36 | |||||
| (0.18 | ) | - diluted | 0.43 | 0.36 | |||||
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COMPREHENSIVE INCOME
| (euro million) |
| First Quarter 2013 | First Quarter 2014 | ||
| Net profit for the period | 1,555 | 1,337 | ||||
| Other items of comprehensive income: | ||||||
| Items to be reclassified to profit and loss account | ||||||
| - foreign currency translation differences | 1,152 | 18 | ||||
| - fair value evaluation of Eni’s interest in Galp and Snam | 75 | 14 | ||||
| - change in the fair value of cash flow hedging derivatives | (33 | ) | 249 | |||
| - change in the fair value of available-for-sale securities | 3 | |||||
| - share of "Other comprehensive income" on equity-accounted entities | (1 | ) | ||||
| - taxation | 12 | (76 | ) | |||
| Total other items of comprehensive income | 1,205 | 208 | ||||
| Total comprehensive income | 2,760 | 1,545 | ||||
| Attributable to: | ||||||
| - Eni’s shareholders | 2,716 | 1,510 | ||||
| - non-controlling interest | 44 | 35 | ||||
CHANGES IN SHAREHOLDERS’ EQUITY
| (euro million) |
| Shareholders’ equity at December 31, 2013 | 61,049 | ||||
| Total comprehensive income | 1,545 | ||||
| Dividends distributed by consolidated subsidiaries | (44 | ) | |||
| Purchase of Eni’s shares | (151 | ) | |||
| Total changes | 1,350 | ||||
| Shareholders’ equity at March 31, 2014 | 62,399 | ||||
| Attributable to: | |||||
| - Eni’s shareholders | 59,568 | ||||
| - non-controlling interest | 2,831 | ||||
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GROUP CASH FLOW STATEMENT
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | ||||
| (588 | ) | Net profit | 1,555 | 1,337 | |||||
| Adjustments to reconcile net profit to net cash provided by operating activities: | |||||||||
| 2,504 | Depreciation, depletion and amortization | 2,148 | 2,236 | ||||||
| 2,285 | Impairments of tangible and intangible assets, net | 17 | 55 | ||||||
| (21 | ) | Share of loss of equity-accounted investments | (44 | ) | (66 | ) | |||
| (266 | ) | Gains on disposal of assets, net | (51 | ) | (5 | ) | |||
| (43 | ) | Dividend income | (35 | ) | (36 | ) | |||
| (34 | ) | Interest income | (31 | ) | (31 | ) | |||
| 174 | Interest expense | 187 | 171 | ||||||
| 2,386 | Income taxes | 2,251 | 2,286 | ||||||
| (1,805 | ) | Other changes | (18 | ) | (111 | ) | |||
| Changes in working capital: | |||||||||
| 629 | - inventories | 261 | 502 | ||||||
| (2,717 | ) | - trade receivables | (3,631 | ) | (1,359 | ) | |||
| 1,970 | - trade payables | 1,502 | (733 | ) | |||||
| 544 | - provisions for contingencies | (437 | ) | 90 | |||||
| 480 | - other assets and liabilities | 1,797 | (234 | ) | |||||
| 906 | Cash flow from changes in working capital | (508 | ) | (1,734 | ) | ||||
| (15 | ) | Net change in the provisions for employee benefits | 7 | (2 | ) | ||||
| 118 | Dividends received | 34 | 107 | ||||||
| 35 | Interest received | 20 | 17 | ||||||
| (115 | ) | Interest paid | (439 | ) | (193 | ) | |||
| (2,337 | ) | Income taxes paid, net of tax receivables received | (2,279 | ) | (1,880 | ) | |||
| 3,184 | Net cash provided by operating activities | 2,814 | 2,151 | ||||||
| Investing activities: | |||||||||
| (3,340 | ) | - tangible assets | (2,620 | ) | (2,210 | ) | |||
| (449 | ) | - intangible assets | (502 | ) | (335 | ) | |||
| 3 | - consolidated subsidiaries and businesses | (28 | ) | (15 | ) | ||||
| (104 | ) | - investments | (85 | ) | (45 | ) | |||
| (506 | ) | - securities | (10 | ) | (64 | ) | |||
| (323 | ) | - financing receivables | (321 | ) | (484 | ) | |||
| 57 | - change in payables and receivables in relation to investments and capitalized depreciation | (81 | ) | (114 | ) | ||||
| (4,662 | ) | Cash flow from investments | (3,647 | ) | (3,267 | ) | |||
| Disposals: | |||||||||
| 306 | - tangible assets | 52 | |||||||
| 9 | - intangible assets | ||||||||
| - consolidated subsidiaries and businesses | |||||||||
| 35 | - investments | 23 | 2,177 | ||||||
| 1 | - securities | 19 | 35 | ||||||
| 316 | - financing receivables | 1,281 | 468 | ||||||
| 24 | - change in payables and receivables in relation to disposals | 22 | (19 | ) | |||||
| 691 | Cash flow from disposals | 1,397 | 2,661 | ||||||
| (3,971 | ) | Net cash used in investing activities (*) | (2,250 | ) | (606 | ) | |||
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GROUP CASH FLOW STATEMENT (continued)
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | ||||
| 564 | Proceeds from long-term debt | 988 | 2,241 | ||||||
| (612 | ) | Repayments of long-term debt | (101 | ) | (2,666 | ) | |||
| 79 | Increase (decrease) in short-term debt | 922 | 369 | ||||||
| 31 | 1,809 | (56 | ) | ||||||
| Acquisition of interests in consolidated subsidiaries | (25 | ) | |||||||
| Dividends paid to non-controlling interests | (38 | ) | (44 | ) | |||||
| Net purchase of treasury shares | (151 | ) | |||||||
| 31 | Net cash used in financing activities | 1,746 | (251 | ) | |||||
| 2 | Effect of change in consolidation (inclusion/exclusion of significant/insignificant subsidiaries) | ||||||||
| (11 | ) | Effect of exchange rate changes on cash and cash equivalents and other changes | 15 | (1 | ) | ||||
| (765 | ) | Net cash flow for the period | 2,325 | 1,293 | |||||
| 6,196 | Cash and cash equivalents - beginning of the period | 7,936 | 5,431 | ||||||
| 5,431 | Cash and cash equivalents - end of the period | 10,261 | 6,724 | ||||||
(*) Net cash used in investing activities included investments and divestments (on net basis) in held-for-trading financial assets and other investments/divestments in certain short-term financial assets. Due to their nature and the circumstance that they are very liquid, these financial assets are netted against finance debt in determining net borrowings. Cash flows of such investments were as follows:
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | ||||
| Financing investments: | |||||||||
| (507 | ) | - securities | (28 | ) | |||||
| 38 | - financing receivables | (168 | ) | (67 | ) | ||||
| (469 | ) | (168 | ) | (95 | ) | ||||
| Disposal of financing investments: | |||||||||
| 1 | - securities | 14 | 27 | ||||||
| 88 | - financing receivables | 1,088 | 51 | ||||||
| 89 | 1,102 | 78 | |||||||
| (380 | ) | Net cash flows from financing activities | 934 | (17 | ) | ||||
SUPPLEMENTAL INFORMATION
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | ||||
| Effect of investment of companies included in consolidation and businesses | |||||||||
| 25 | Current assets | 26 | 60 | ||||||
| 12 | Non-current assets | 27 | 32 | ||||||
| (7 | ) | Net borrowings | (5 | ) | (19 | ) | |||
| (17 | ) | Current and non-current liabilities | (19 | ) | (43 | ) | |||
| 13 | Net effect of investments | 29 | 30 | ||||||
| (8 | ) | Fair value of investments held before the acquisition of control | (15 | ) | |||||
| 5 | Purchase price | 29 | 15 | ||||||
| less: | |||||||||
| (8 | ) | Cash and cash equivalents | (1 | ) | |||||
| (3 | ) | Cash flow on investments | 28 | 15 | |||||
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IFRS 10 and 11 application: 2013 restatement
Profit and loss account
| (euro million) |
2013 |
2013 Full Year |
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||
| REVENUES | |||||||||||||||
| 114,697 | Net sales from operations | 31,166 | 28,089 | 29,807 | 25,635 | ||||||||||
| 1,387 | Other income and revenues | 239 | 136 | 342 | 670 | ||||||||||
| 116,084 | 31,405 | 28,225 | 30,149 | 26,305 | |||||||||||
| OPERATING EXPENSES | |||||||||||||||
| 90,003 | Purchases, services and other | 24,181 | 22,834 | 23,256 | 19,732 | ||||||||||
| 5,301 | Payroll and related costs | 1,233 | 1,353 | 1,203 | 1,512 | ||||||||||
| (71 | ) | OTHER OPERATING (EXPENSE) INCOME | 41 | (51 | ) | (37 | ) | (24 | ) | ||||||
| 11,821 | DEPRECIATION, DEPLETION, AMORTIZATION AND IMPAIRMENTS | 2,165 | 2,516 | 2,351 | 4,789 | ||||||||||
| 8,888 | OPERATING PROFIT | 3,867 | 1,471 | 3,302 | 248 | ||||||||||
| FINANCE INCOME (EXPENSE) | |||||||||||||||
| 5,732 | Finance income | 1,938 | 1,276 | 1,236 | 1,282 | ||||||||||
| (6,653 | ) | Finance expense | (2,149 | ) | (1,656 | ) | (1,384 | ) | (1,464 | ) | |||||
| 4 | Financial instruments held for trading | 4 | |||||||||||||
| (92 | ) | Derivative financial instruments | 29 | (48 | ) | 6 | (79 | ) | |||||||
| (1,009 | ) | (182 | ) | (428 | ) | (142 | ) | (257 | ) | ||||||
| INCOME (EXPENSE) FROM INVESTMENTS | |||||||||||||||
| 222 | Share of profit (loss) of equity-accounted investments | 44 | 117 | 40 | 21 | ||||||||||
| 5,863 | Other gains (losses) from investments | 77 | 394 | 3,606 | 1,786 | ||||||||||
| 6,085 | 121 | 511 | 3,646 | 1,807 | |||||||||||
| 13,964 | PROFIT BEFORE INCOME TAXES | 3,806 | 1,554 | 6,806 | 1,798 | ||||||||||
| (9,005 | ) | Income taxes | (2,251 | ) | (1,674 | ) | (2,694 | ) | (2,386 | ) | |||||
| 4,959 | NET PROFIT | 1,555 | (120 | ) | 4,112 | (588 | ) | ||||||||
| attributable to: | |||||||||||||||
| 5,160 | - Eni’s shareholders | 1,543 | 275 | 3,989 | (647 | ) | |||||||||
| (201 | ) | - non-controlling interest | 12 | (395 | ) | 123 | 59 | ||||||||
| Earnings per share attributable to Eni’s shareholders (euro per share) | |||||||||||||||
| 1.42 | - Basic | 0.43 | 0.07 | 1.10 | (0.18 | ) | |||||||||
| 1.42 | - Diluted | 0.43 | 0.07 | 1.10 | (0.18 | ) | |||||||||
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Adjusted operating profit
| (euro million) |
2013 |
2013 Full Year |
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||
| 14,643 | Exploration & Production | 3,998 | 3,409 | 3,916 | 3,320 | ||||||||||
| (638 | ) | Gas & Power | (211 | ) | (424 | ) | (344 | ) | 341 | ||||||
| (457 | ) | Refining & Marketing | (134 | ) | (176 | ) | (55 | ) | (92 | ) | |||||
| (386 | ) | Versalis | (63 | ) | (82 | ) | (111 | ) | (130 | ) | |||||
| (99 | ) | Engineering & Construction | 204 | (678 | ) | 220 | 155 | ||||||||
| (210 | ) | Other activities | (55 | ) | (52 | ) | (52 | ) | (51 | ) | |||||
| (332 | ) | Corporate and financial companies | (82 | ) | (76 | ) | (92 | ) | (82 | ) | |||||
| 129 | Impact of unrealized intragroup profit elimination and other adjustments | 89 | 38 | (44 | ) | 46 | |||||||||
| 12,650 | Adjusted operating profit | 3,746 | 1,959 | 3,438 | 3,507 | ||||||||||
Adjusted net profit
| (euro million) |
2013 |
2013 Full Year |
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||
| 5,950 | Exploration & Production | 1,669 | 1,441 | 1,654 | 1,186 | ||||||||||
| (253 | ) | Gas & Power | (141 | ) | (227 | ) | (124 | ) | 239 | ||||||
| (232 | ) | Refining & Marketing | (51 | ) | (139 | ) | (38 | ) | (4 | ) | |||||
| (338 | ) | Versalis | (58 | ) | (78 | ) | (86 | ) | (116 | ) | |||||
| (253 | ) | Engineering & Construction | 130 | (649 | ) | 165 | 101 | ||||||||
| (205 | ) | Other activities | (55 | ) | (58 | ) | (53 | ) | (39 | ) | |||||
| (476 | ) | Corporate and financial companies | (155 | ) | (129 | ) | (209 | ) | 17 | ||||||
| 39 | Impact of unrealized intragroup profit elimination and other adjustments (a) | 58 | 20 | (15 | ) | (24 | ) | ||||||||
| 4,232 | Adjusted net profit | 1,397 | 181 | 1,294 | 1,360 | ||||||||||
| attributable to: | |||||||||||||||
| 4,433 | - Eni’s shareholders | 1,385 | 576 | 1,171 | 1,301 | ||||||||||
| (201 | ) | - non-controlling interest | 12 | (395 | ) | 123 | 59 | ||||||||
(a) This item concerned mainly intragroup sales of commodities, services and capital goods recorded in the assets of the purchasing business segment as of end period.
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Breakdown of Eni Group’s special items
| (euro million) |
2013 |
2013 Full Year |
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||
| 205 | Environmental charges | 7 | 47 | 6 | 145 | ||||||||||
| 2,400 | Asset impairments | 17 | 71 | 27 | 2,285 | ||||||||||
| (187 | ) | Net gains on disposal of assets | (50 | ) | (16 | ) | 85 | (206 | ) | ||||||
| 334 | Risk provisions | (102 | ) | 27 | 27 | 382 | |||||||||
| 270 | Provisions for redundancy incentives | 4 | 15 | 10 | 241 | ||||||||||
| 315 | Commodity derivatives | (77 | ) | 131 | 173 | 88 | |||||||||
| (195 | ) | Exchange rate differences and derivatives | 56 | (127 | ) | (84 | ) | (40 | ) | ||||||
| (96 | ) | Other | 14 | 14 | (103 | ) | (21 | ) | |||||||
| 3,046 | Special items of operating profit | (131 | ) | 162 | 141 | 2,874 | |||||||||
| 190 | Net finance (income) expense | (36 | ) | 155 | 30 | 41 | |||||||||
| of which: | |||||||||||||||
| 195 | - exchange rate differences and derivatives | (56 | ) | 127 | 84 | 40 | |||||||||
| (5,299 | ) | Net income (expense) from investments | (7 | ) | (195 | ) | (3,422 | ) | (1,675 | ) | |||||
| of which: | |||||||||||||||
| (3,599 | ) | - gains on disposal of assets | (174 | ) | (3,422 | ) | (3 | ) | |||||||
| of which: | |||||||||||||||
| (3,359 | ) | divestment of the 28.57% of Eni’s interest in Eni East Africa | (3,359 | ) | |||||||||||
| (98 | ) | Galp | (95 | ) | (3 | ) | |||||||||
| (75 | ) | Snam | (75 | ) | |||||||||||
| (1,682 | ) | - gains on investment revaluation | (1,682 | ) | |||||||||||
| (1,682 | ) | of which: Artic Russia | (1,682 | ) | |||||||||||
| 11 | - impairments of equity investments | 11 | |||||||||||||
| 898 | Income taxes | 9 | (24 | ) | 434 | 479 | |||||||||
| of which: | |||||||||||||||
| 954 | - impairment of deferred tax assets of Italian subsidiaries | 954 | |||||||||||||
| 490 | - deferred tax adjustment on PSAs | 143 | 347 | ||||||||||||
| 64 | - re-allocation of tax impact on intercompany dividends and other special items | 41 | (22 | ) | 45 | ||||||||||
| (610 | ) | - taxes on special items | 9 | (65 | ) | 313 | (867 | ) | |||||||
| (1,165 | ) | Total special items of net profit | (165 | ) | 98 | (2,817 | ) | 1,719 | |||||||
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Table of Contents
Summarized Group Balance Sheet
| (euro million) |
2013 |
|
March 31 |
June 30 |
September 30 |
December 31 |
||||
| Fixed assets | ||||||||||||
| Property, plant and equipment | 66,810 | 65,780 | 65,082 | 63,763 | ||||||||
| Inventories - compulsory stock | 2,585 | 2,361 | 2,559 | 2,573 | ||||||||
| Intangible assets | 4,564 | 4,533 | 4,423 | 3,876 | ||||||||
| Equity-accounted investments and other investments | 8,780 | 6,462 | 6,616 | 6,180 | ||||||||
| Receivables and securities held for operating purposes | 1,167 | 1,163 | 1,282 | 1,339 | ||||||||
| Net payables related to capital expenditure | (1,062 | ) | (1,271 | ) | (1,152 | ) | (1,255 | ) | ||||
| 82,844 | 79,028 | 78,810 | 76,476 | |||||||||
| Net working capital | ||||||||||||
| Inventories | 8,332 | 8,094 | 8,742 | 7,939 | ||||||||
| Trade receivables | 23,981 | 20,317 | 18,605 | 21,212 | ||||||||
| Trade payables | (16,877 | ) | (13,185 | ) | (13,669 | ) | (15,584 | ) | ||||
| Tax payables and provisions for net deferred tax liabilities | (4,590 | ) | (3,163 | ) | (3,034 | ) | (3,062 | ) | ||||
| Provisions | (13,244 | ) | (13,151 | ) | (12,811 | ) | (13,120 | ) | ||||
| Other current assets and liabilities | 1,431 | 1,102 | 1,937 | 1,274 | ||||||||
| (967 | ) | 14 | (230 | ) | (1,341 | ) | ||||||
| Provisions for employee post-retirement benefits | (1,427 | ) | (1,433 | ) | (1,431 | ) | (1,279 | ) | ||||
| Assets held for sale including related liabilities | 177 | 92 | 25 | 2,156 | ||||||||
| CAPITAL EMPLOYED, NET | 80,627 | 77,701 | 77,174 | 76,012 | ||||||||
| Eni shareholders’ equity | 61,774 | 58,977 | 59,683 | 58,210 | ||||||||
| Non-controlling interest | 3,334 | 2,740 | 2,804 | 2,839 | ||||||||
| Shareholders’ equity | 65,108 | 61,717 | 62,487 | 61,049 | ||||||||
| Net borrowings | 15,519 | 15,984 | 14,687 | 14,963 | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 80,627 | 77,701 | 77,174 | 76,012 | ||||||||
| Leverage | 0.24 | 0.26 | 0.24 | 0.25 | ||||||||
- 34 -
Table of Contents
Group balance sheet
| (euro million) |
2013 |
|
March 31 |
June 30 |
September 30 |
December 31 |
||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | 10,261 | 8,074 | 6,196 | 5,431 | ||||||||
| Other financial activities held for trading | 4,522 | 5,004 | ||||||||||
| Other financial assets available for sale | 226 | 216 | 208 | 235 | ||||||||
| Trade and other receivables | 32,502 | 28,538 | 27,459 | 28,890 | ||||||||
| Inventories | 8,332 | 8,094 | 8,742 | 7,939 | ||||||||
| Current tax assets | 838 | 758 | 697 | 802 | ||||||||
| Other current tax assets | 1,106 | 1,053 | 1,070 | 835 | ||||||||
| Other current assets | 1,549 | 1,383 | 1,349 | 1,325 | ||||||||
| 54,814 | 48,116 | 50,243 | 50,461 | |||||||||
| Non-current assets | ||||||||||||
| Property, plant and equipment | 66,810 | 65,780 | 65,082 | 63,763 | ||||||||
| Inventory - compulsory stock | 2,585 | 2,361 | 2,559 | 2,573 | ||||||||
| Intangible assets | 4,564 | 4,533 | 4,423 | 3,876 | ||||||||
| Equity-accounted investments | 3,551 | 3,643 | 3,608 | 3,153 | ||||||||
| Other investments | 5,229 | 2,819 | 3,008 | 3,027 | ||||||||
| Other financial assets | 872 | 851 | 897 | 858 | ||||||||
| Deferred tax assets | 5,197 | 5,481 | 5,221 | 4,658 | ||||||||
| Other non-current receivables | 4,596 | 3,840 | 3,559 | 3,676 | ||||||||
| 93,404 | 89,308 | 88,357 | 85,584 | |||||||||
| Assets held for sale | 528 | 463 | 389 | 2,296 | ||||||||
| TOTAL ASSETS | 148,746 | 137,887 | 138,989 | 138,341 | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Short-term debt | 2,889 | 2,764 | 2,727 | 2,553 | ||||||||
| Current portion of long-term debt | 4,123 | 2,814 | 2,919 | 2,132 | ||||||||
| Trade and other payables | 26,257 | 22,371 | 22,008 | 23,701 | ||||||||
| Income taxes payable | 1,615 | 1,071 | 1,002 | 755 | ||||||||
| Other taxes payable | 3,587 | 2,940 | 2,595 | 2,291 | ||||||||
| Other current liabilities | 1,497 | 1,186 | 1,323 | 1,437 | ||||||||
| 39,968 | 33,146 | 32,574 | 32,869 | |||||||||
| Non-current liabilities | ||||||||||||
| Long-term debt | 19,021 | 18,717 | 20,024 | 20,875 | ||||||||
| Provisions for contingencies | 13,244 | 13,151 | 12,811 | 13,120 | ||||||||
| Provisions for employee benefits | 1,427 | 1,433 | 1,431 | 1,279 | ||||||||
| Deferred tax liabilities | 7,028 | 6,789 | 6,750 | 6,750 | ||||||||
| Other non-current liabilities | 2,599 | 2,563 | 2,548 | 2,259 | ||||||||
| 43,319 | 42,653 | 43,564 | 44,283 | |||||||||
| Liabilities directly associated with assets held for sale | 351 | 371 | 364 | 140 | ||||||||
| TOTAL LIABILITIES | 83,638 | 76,170 | 76,502 | 77,292 | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||
| Non-controlling interest | 3,334 | 2,740 | 2,804 | 2,839 | ||||||||
| Eni shareholders’ equity | ||||||||||||
| Share capital | 4,005 | 4,005 | 4,005 | 4,005 | ||||||||
| Reserve related to the fair value of cash flow hedging derivatives net of tax effect | (37 | ) | (15 | ) | (115 | ) | (154 | ) | ||||
| Other reserves | 56,464 | 53,370 | 52,180 | 51,393 | ||||||||
| Treasury shares | (201 | ) | (201 | ) | (201 | ) | (201 | ) | ||||
| Interim dividend | (1,993 | ) | (1,993 | ) | ||||||||
| Net profit | 1,543 | 1,818 | 5,807 | 5,160 | ||||||||
| Total Eni shareholders’ equity | 61,774 | 58,977 | 59,683 | 58,210 | ||||||||
| TOTAL SHAREHOLDERS’ EQUITY | 65,108 | 61,717 | 62,487 | 61,049 | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 148,746 | 137,887 | 138,989 | 138,341 | ||||||||
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Summarized Group Cash Flow Statement
| (euro million) |
2013 |
2013 Full Year |
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||
| 4,959 | Net profit | 1,555 | (120 | ) | 4,112 | (588 | ) | ||||||||
| Adjustments to reconcile net profit to net cash provided by operating activities: | |||||||||||||||
| 9,723 | - depreciation, depletion and amortization and other non-monetary items | 2,110 | 2,593 | 2,072 | 2,948 | ||||||||||
| (3,770 | ) | - net gains on disposal of assets | (51 | ) | (117 | ) | (3,336 | ) | (266 | ) | |||||
| 9,174 | - dividends, interest, taxes and other changes | 2,372 | 1,562 | 2,757 | 2,483 | ||||||||||
| 456 | Changes in working capital related to operations | (508 | ) | 454 | (396 | ) | 906 | ||||||||
| (9,516 | ) | Dividends received, taxes paid, interest (paid) received during the period | (2,664 | ) | (2,371 | ) | (2,182 | ) | (2,299 | ) | |||||
| 11,026 | Net cash provided from operating activities | 2,814 | 2,001 | 3,027 | 3,184 | ||||||||||
| (12,800 | ) | Capital expenditure | (3,122 | ) | (2,825 | ) | (3,064 | ) | (3,789 | ) | |||||
| (317 | ) | Investments and purchase of consolidated subsidiaries and businesses | (113 | ) | (63 | ) | (40 | ) | (101 | ) | |||||
| 6,360 | Disposals | 75 | 2,390 | 3,545 | 350 | ||||||||||
| (243 | ) | Other cash flow related to capital expenditure, investments and disposals | (24 | ) | 47 | (215 | ) | (51 | ) | ||||||
| 4,026 | Free cash flow | (370 | ) | 1,550 | 3,253 | (407 | ) | ||||||||
| (3,981 | ) | Borrowings (repayment) of debt related to financing activities | 934 | 20 | (4,555 | ) | (380 | ) | |||||||
| 1,715 | Changes in short and long-term financial debt | 1,809 | (1,601 | ) | 1,476 | 31 | |||||||||
| (4,225 | ) | Dividends paid and changes in non-controlling interests and reserves | (63 | ) | (2,128 | ) | (2,034 | ) | |||||||
| (40 | ) | Effect of changes in consolidation and exchange differences | 15 | (28 | ) | (18 | ) | (9 | ) | ||||||
| (2,505 | ) | NET CASH FLOW | 2,325 | (2,187 | ) | (1,878 | (765 | ) | |||||||
Change in net borrowings
| (euro million) |
2013 |
2013 Full Year |
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||
| 4,026 | Free cash flow | (370 | ) | 1,550 | 3,253 | (407 | ) | ||||||||
| (21 | ) | Net borrowings of acquired companies | (6 | ) | (15 | ) | |||||||||
| (23 | ) | Net borrowings of divested companies | (23 | ) | |||||||||||
| 349 | Exchange differences on net borrowings and other changes | (11 | ) | 113 | 101 | 146 | |||||||||
| (4,225 | ) | Dividends paid and changes in non-controlling interest and reserves | (63 | ) | (2,128 | ) | (2,034 | ) | |||||||
| 106 | CHANGE IN NET BORROWINGS | (450 | ) | (465 | ) | 1,297 | (276 | ) | |||||||
- 36 -
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Group cash flow statement
| (euro million) |
2013 |
2013 Full Year |
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||
| 4,959 | Net profit | 1,555 | (120 | ) | 4,112 | (588 | ) | ||||||||
| Adjustments to reconcile net profit to net cash provided by operating activities: | |||||||||||||||
| 9,421 | Depreciation, depletion and amortization | 2,148 | 2,445 | 2,324 | 2,504 | ||||||||||
| 2,400 | Impairments of tangible and intangible assets, net | 17 | 71 | 27 | 2,285 | ||||||||||
| (222 | ) | Share of loss of equity-accounted investments | (44 | ) | (117 | ) | (40 | ) | (21 | ) | |||||
| (3,770 | ) | Gains on disposal of assets, net | (51 | ) | (117 | ) | (3,336 | ) | (266 | ) | |||||
| (400 | ) | Dividend income | (35 | ) | (271 | ) | (51 | ) | (43 | ) | |||||
| (142 | ) | Interest income | (31 | ) | (28 | ) | (49 | ) | (34 | ) | |||||
| 711 | Interest expense | 187 | 187 | 163 | 174 | ||||||||||
| 9,005 | Income taxes | 2,251 | 1,674 | 2,694 | 2,386 | ||||||||||
| (1,882 | ) | Other changes | (18 | ) | 185 | (244 | ) | (1,805 | ) | ||||||
| Changes in working capital: | |||||||||||||||
| 350 | - inventories | 261 | 423 | (963 | ) | 629 | |||||||||
| (1,379 | ) | - trade receivables | (3,631 | ) | 3,246 | 1,723 | (2,717 | ) | |||||||
| 703 | - trade payables | 1,502 | (3,391 | ) | 622 | 1,970 | |||||||||
| 59 | - provisions for contingencies | (437 | ) | 145 | (193 | ) | 544 | ||||||||
| 723 | - other assets and liabilities | 1,797 | 31 | (1,585 | ) | 480 | |||||||||
| 456 | Cash flow from changes in working capital | (508 | ) | 454 | (396 | ) | 906 | ||||||||
| 6 | Net change in the provisions for employee benefits | 7 | 9 | 5 | (15 | ) | |||||||||
| 630 | Dividends received | 34 | 375 | 103 | 118 | ||||||||||
| 97 | Interest received | 20 | 37 | 5 | 35 | ||||||||||
| (942 | ) | Interest paid | (439 | ) | (255 | ) | (133 | ) | (115 | ) | |||||
| (9,301 | ) | Income taxes paid, net of tax receivables received | (2,279 | ) | (2,528 | ) | (2,157 | ) | (2,337 | ) | |||||
| 11,026 | Net cash provided by operating activities | 2,814 | 2,001 | 3,027 | 3,184 | ||||||||||
| Investing activities: | |||||||||||||||
| (10,913 | ) | - tangible assets | (2,620 | ) | (2,282 | ) | (2,671 | ) | (3,340 | ) | |||||
| (1,887 | ) | - intangible assets | (502 | ) | (543 | ) | (393 | ) | (449 | ) | |||||
| (25 | ) | - consolidated subsidiaries and businesses | (28 | ) | 3 | ||||||||||
| (292 | ) | - investments | (85 | ) | (63 | ) | (40 | ) | (104 | ) | |||||
| (5,048 | ) | - securities | (10 | ) | (8 | ) | (4,524 | ) | (506 | ) | |||||
| (978 | ) | - financing receivables | (321 | ) | (161 | ) | (173 | ) | (323 | ) | |||||
| 50 | - change in payables and receivables in relation to investments and capitalized depreciation | (81 | ) | 220 | (146 | ) | 57 | ||||||||
| (19,093 | ) | Cash flow from investments | (3,647 | ) | (2,837 | ) | (7,947 | ) | (4,622 | ) | |||||
| Disposals: | |||||||||||||||
| 514 | - tangible assets | 52 | 134 | 22 | 306 | ||||||||||
| 16 | - intangible assets | 4 | 3 | 9 | |||||||||||
| 3,401 | - consolidated subsidiaries and businesses | 3,401 | |||||||||||||
| 2,429 | - investments | 23 | 2,252 | 119 | 35 | ||||||||||
| 36 | - securities | 19 | 8 | 8 | 1 | ||||||||||
| 1,561 | - financing receivables | 1,281 | (21 | ) | (15 | ) | 316 | ||||||||
| 155 | - change in payables and receivables in relation to disposals | 22 | 29 | 80 | 24 | ||||||||||
| 8,112 | Cash flow from disposals | 1,397 | 2,406 | 3,618 | 691 | ||||||||||
| (10,981 | ) | Net cash used in investing activities (*) | (2,250 | ) | (431 | ) | (4,329 | ) | (3,971 | ) | |||||
- 37 -
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Group cash flow statement (continued)
| (euro million) |
2013 |
2013 Full Year |
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||
| 5,418 | Proceeds from long-term debt | 988 | 1,606 | 2,260 | 564 | ||||||||||
| (4,720 | ) | Repayments of long-term debt | (101 | ) | (3,213 | ) | (794 | ) | (612 | ) | |||||
| 1,017 | Increase (decrease) in short-term debt | 922 | 6 | 10 | 79 | ||||||||||
| 1,715 | 1,809 | (1,601 | ) | 1,476 | 31 | ||||||||||
| 1 | Net capital contributions by non-controlling interest | 1 | |||||||||||||
| 1 | Disposal of treasury shares made by consolidated subsidiaries other than the parent company | 1 | |||||||||||||
| (28 | ) | Acquisition of interests in consolidated subsidiaries | (25 | ) | (3 | ) | |||||||||
| (3,949 | ) | Dividends paid to Eni’s shareholders | (1,956 | ) | (1,993 | ) | |||||||||
| (250 | ) | Dividends paid to non-controlling interests | (38 | ) | (172 | ) | (40 | ) | |||||||
| (2,510 | ) | Net cash used in financing activities | 1,746 | (3,729 | ) | (558 | ) | 31 | |||||||
| 2 | Effect of change in consolidation (inclusion/exclusion of significant/insignificant subsidiaries) | 2 | |||||||||||||
| (42 | ) | Effect of exchange rate changes on cash and cash equivalents and other changes | 15 | (28 | ) | (18 | ) | (11 | ) | ||||||
| (2,505 | ) | Net cash flow for the period | 2,325 | (2,187 | ) | (1,878 | ) | (765 | ) | ||||||
| 7,936 | Cash and cash equivalents - beginning of the period | 7,936 | 10,261 | 8,074 | 6,196 | ||||||||||
| 5,431 | Cash and cash equivalents - end of the period | 10,261 | 8,074 | 6,196 | 5,431 | ||||||||||
(*) Net cash used in investing activities included investments in certain financial assets to absorb temporary surpluses of cash or as a part of our ordinary management of financing activities. Due to their nature and the circumstance that they are very liquid, these financial assets are netted against finance debt in determining net borrowings. Cash flows of such investments were as follows:
| (euro million) |
2013 |
2013 Full Year |
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||
| Financing investments: | |||||||||||||||
| (5,029 | ) | - securities | (4,522 | ) | (507 | ) | |||||||||
| (105 | ) | - financing receivables | (168 | ) | 26 | (1 | ) | 38 | |||||||
| (5,134 | ) | (168 | ) | 26 | (4,523 | ) | (469 | ) | |||||||
| Disposal of financing investments: | |||||||||||||||
| 28 | - securities | 14 | 8 | 5 | 1 | ||||||||||
| 1,125 | - financing receivables | 1,088 | (14 | ) | (37 | ) | 88 | ||||||||
| 1,153 | 1,102 | (6 | ) | (32 | ) | 89 | |||||||||
| (3,981 | ) | Cash flows of financial investments not related to operation | 934 | 20 | (4,555 | ) | (380 | ) | |||||||
- 38 -
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Supplemental cash flow information
| (euro million) |
2013 |
2013 Full Year |
|
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||
| Effect of investment of companies included in consolidation and businesses | |||||||||||||||
| 51 | Current assets | 26 | 25 | ||||||||||||
| 39 | Non-current assets | 27 | 12 | ||||||||||||
| (12 | ) | Net borrowings | (5 | ) | (7 | ) | |||||||||
| (36 | ) | Current and non-current liabilities | (19 | ) | (17 | ) | |||||||||
| 42 | Net effect of investments | 29 | 13 | ||||||||||||
| (8 | ) | Fair value of investments held before the acquisition of control | (8 | ) | |||||||||||
| 34 | Purchase price | 29 | 5 | ||||||||||||
| less: | |||||||||||||||
| (9 | ) | Cash and cash equivalents | (1 | ) | (8 | ) | |||||||||
| 25 | Cash flow on investments | 28 | (3 | ) | |||||||||||
| Effect of disposal of consolidated subsidiaries and businesses | |||||||||||||||
| 47 | Current assets | 47 | |||||||||||||
| 41 | Non-current assets | 41 | |||||||||||||
| 23 | Net borrowings | 23 | |||||||||||||
| (69 | ) | Current and non-current liabilities | (69 | ) | |||||||||||
| 42 | Net effect of disposals | 42 | |||||||||||||
| 3,359 | Gain on disposal | 3,359 | |||||||||||||
| 3,401 | Selling price | 3,401 | |||||||||||||
| less: | |||||||||||||||
| Cash and cash equivalents | |||||||||||||||
| 3,401 | Cash flow on disposals | 3,401 | |||||||||||||
- 39 -
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CAPITAL EXPENDITURE
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | |||||
| 3,045 | Exploration & Production: | 2,330 | 2,111 | (9.4 | ) | |||||
| 109 | - acquisition of proved and unproved properties | |||||||||
| 367 | - exploration | 466 | 298 | (36.1 | ) | |||||
| 2,524 | - development | 1,844 | 1,784 | (3.3 | ) | |||||
| 45 | - other expenditure | 20 | 29 | 45.0 | ||||||
| 83 | Gas & Power: | 26 | 28 | 7.7 | ||||||
| 73 | - Marketing | 25 | 27 | 8.0 | ||||||
| 10 | - International transport | 1 | 1 | |||||||
| 272 | Refining & Marketing: | 88 | 111 | 26.1 | ||||||
| 173 | - Refinery, supply and logistics | 63 | 84 | 33.3 | ||||||
| 99 | - Marketing | 25 | 27 | 8.0 | ||||||
| 129 | Versalis | 53 | 58 | 9.4 | ||||||
| 222 | Engineering & Construction | 339 | 204 | (39.8 | ) | |||||
| 12 | Other activities | 1 | 2 | 100.0 | ||||||
| 63 | Corporate and financial companies | 62 | 23 | (62.9 | ) | |||||
| (37 | ) | Impact of unrealized intragroup profit elimination | 223 | 8 | ||||||
| 3,789 | 3,122 | 2,545 | (18.5 | ) | ||||||
| In the first quarter of 2014, capital expenditure amounted to euro 2,545 million (euro 3,122 million in the first quarter of 2013) relating mainly to: |
| - | development activities deployed mainly in Norway, the United States, Angola, Italy, Nigeria, Congo and Kazakhstan and exploratory activities of which 97% was spent outside Italy, primarily in Mozambique, Nigeria, Norway, Angola and Liberia; | |
| - | upgrading of the fleet used in the Engineering & Construction Division (euro 204 million); | |
| - | refining, supply and logistics in Italy and outside Italy (euro 84 million) with projects designed to improve the conversion rate and flexibility of refineries, as well as the restructuring of the refined product retail network in Italy and in the rest of Europe (euro 27 million); | |
| - | initiatives to improve flexibility of the combined cycle power plants (euro 15 million). |
EXPLORATION & PRODUCTION CAPITAL EXPENDITURE BY GEOGRAPHIC AREA
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | |||||
| 249 | Italy | 197 | 206 | 4.6 | |||||
| 453 | Rest of Europe | 583 | 370 | (36.5 | ) | ||||
| 415 | North Africa | 192 | 186 | (3.1 | ) | ||||
| 1,001 | Sub-Saharan Africa | 731 | 769 | 5.2 | |||||
| 171 | Kazakhstan | 160 | 113 | (29.4 | ) | ||||
| 271 | Rest of Asia | 209 | 194 | (7.2 | ) | ||||
| 406 | America | 251 | 250 | (0.4 | ) | ||||
| 79 | Australia and Oceania | 7 | 23 | .. | |||||
| 3,045 | 2,330 | 2,111 | (9.4 | ) | |||||
- 40 -
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Exploration & Production
PRODUCTION OF OIL AND NATURAL GAS BY REGION
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | ||||
| 1,577 | Production of oil and natural gas (a) (b) | (kboe/d) | 1,600 | 1,583 | ||||
| 192 | Italy | 180 | 182 | |||||
| 173 | Rest of Europe | 158 | 192 | |||||
| 506 | North Africa | 554 | 542 | |||||
| 316 | Sub-Saharan Africa | 313 | 324 | |||||
| 102 | Kazakhstan | 103 | 102 | |||||
| 143 | Rest of Asia | 141 | 96 | |||||
| 116 | America | 119 | 117 | |||||
| 29 | Australia and Oceania | 32 | 28 | |||||
| 137.4 | Production sold (a) | (mmboe) | 135.8 | 134.7 | ||||
PRODUCTION OF LIQUIDS BY REGION
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | ||||
| 816 | Production of liquids (a) | (kbbl/d) | 818 | 822 | ||||
| 77 | Italy | 63 | 75 | |||||
| 82 | Rest of Europe | 79 | 97 | |||||
| 241 | North Africa | 254 | 246 | |||||
| 224 | Sub-Saharan Africa | 237 | 232 | |||||
| 60 | Kazakhstan | 60 | 59 | |||||
| 48 | Rest of Asia | 44 | 29 | |||||
| 76 | America | 69 | 77 | |||||
| 8 | Australia and Oceania | 12 | 7 | |||||
PRODUCTION OF NATURAL GAS BY REGION
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | ||||
| 4,177 | Production of natural gas (a) (b) | (mmcf/d) | 4,290 | 4,182 | ||||
| 631 | Italy | 646 | 590 | |||||
| 497 | Rest of Europe | 434 | 521 | |||||
| 1,453 | North Africa | 1,647 | 1,630 | |||||
| 507 | Sub-Saharan Africa | 415 | 508 | |||||
| 232 | Kazakhstan | 233 | 236 | |||||
| 521 | Rest of Asia | 528 | 367 | |||||
| 220 | America | 275 | 216 | |||||
| 116 | Australia and Oceania | 112 | 114 | |||||
(a) Includes Eni’s share of production of
equity-accounted entities
(b) Includes volumes of gas consumed in operation (401 and 377
mmcf/d in the first quarter 2014 and 2013, respectively and 430
mmcf/d in the fourth quarter 2013).
- 41 -
Table of Contents
Natural gas sales by market
| (bcm) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | % Ch. | |||||
| 10.70 | ITALY | 12.53 | 11.18 | (10.8 | ) | ||||
| 1.27 | Wholesalers | 2.40 | 1.43 | (40.4 | ) | ||||
| 3.98 | Italian exchange for gas and spot markets | 2.78 | 3.79 | 36.3 | |||||
| 1.40 | Industries | 1.70 | 1.20 | (29.4 | ) | ||||
| 0.34 | Medium-sized enterprises and services | 0.45 | 0.62 | 37.8 | |||||
| 0.56 | Power generation | 0.75 | 0.45 | (40.0 | ) | ||||
| 1.60 | Residential | 2.89 | 2.21 | (23.5 | ) | ||||
| 1.55 | Own consumption | 1.56 | 1.48 | (5.1 | ) | ||||
| 14.86 | INTERNATIONAL SALES | 17.64 | 15.60 | (11.6 | ) | ||||
| 12.70 | Rest of Europe | 15.14 | 13.32 | (12.0 | ) | ||||
| 0.89 | Importers in Italy | 1.22 | 1.19 | (2.5 | ) | ||||
| 11.81 | European markets | 13.92 | 12.13 | (12.9 | ) | ||||
| 1.26 | Iberian Peninsula | 1.24 | 1.52 | 22.6 | |||||
| 2.18 | Germany/Austria | 2.83 | 2.15 | (24.0 | ) | ||||
| 2.18 | Benelux | 2.86 | 2.33 | (18.5 | ) | ||||
| 0.60 | Hungary | 0.86 | 0.68 | (20.9 | ) | ||||
| 1.06 | UK | 1.27 | 0.89 | (29.9 | ) | ||||
| 1.89 | Turkey | 1.79 | 1.99 | 11.2 | |||||
| 2.24 | France | 2.76 | 2.38 | (13.8 | ) | ||||
| 0.40 | Other | 0.31 | 0.19 | (38.7 | ) | ||||
| 1.47 | Extra European markets | 1.79 | 1.59 | (11.2 | ) | ||||
| 0.69 | E&P sales in Europe and in the Gulf of Mexico | 0.71 | 0.67 | (5.6 | ) | ||||
| 25.56 | WORLDWIDE GAS SALES | 30.17 | 26.76 | (11.3 | ) | ||||
- 42 -
Table of Contents
Versalis
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | ||||
| Sales | (euro million) | |||||||
| 632 | Intermediates | 683 | 627 | |||||
| 659 | Polymers | 807 | 737 | |||||
| 52 | Other revenues | 53 | 38 | |||||
| 1,343 | 1,543 | 1,402 | ||||||
| Production | (ktonnes) | |||||||
| 805 | Intermediates | 894 | 832 | |||||
| 562 | Polymers | 603 | 609 | |||||
| 1,367 | 1,497 | 1,441 | ||||||
Engineering & Construction
| (euro million) |
| Fourth Quarter 2013 | First Quarter 2013 | First Quarter 2014 | ||||
| Orders acquired | ||||||
| 911 | Engineering & Construction Offshore | 1,005 | 2,752 | |||
| 390 | Engineering & Construction Onshore | 913 | 975 | |||
| 381 | Offshore drilling | 905 | 81 | |||
| 410 | Onshore drilling | 60 | 141 | |||
| 2,092 | 2,883 | 3,949 | ||||
| (euro million) |
Dec. 31, 2013 |
March 31, 2014 |
||
| Order backlog | 17,514 |
18,520 |
- 43 -
Table of Contents
Eni: Report on the purchase of treasury shares
San Donato Milanese (Milan), April 30, 2014 - During
the period from April 22 to April 25, 2014, Eni acquired No.
530,000 shares for a total consideration of euro 9,860,611.61,
within the authorization to purchase treasury shares approved at
Eni’s Ordinary General Meeting of shareholders on May 10,
2013, previously subject to disclosure pursuant to Article 144-bis
of Consob Regulation 11971/1999.
The following are details of transactions for the purchase of
treasury shares on the Electronic Stock Market on a daily basis:
Date |
Number of ordinary shares purchased |
Average price (euro) |
Consideration (euro) |
22/04/2014 |
130,000 |
18.6806 |
2,428,480.63 |
23/04/2014 |
130,000 |
18.6374 |
2,422,867.53 |
24/04/2014 |
130,000 |
18.6254 |
2,421,295.51 |
25/04/2014 |
140,000 |
18.4855 |
2,587,967.94 |
Total |
530,000 |
18.6049 |
9,860,611.61 |
Following the purchases announced today, considering the treasury shares already held, on April 25, 2014 Eni holds No. 21,963,287 shares equal to 0.60% of the share capital.
Company Contacts:
Press Office: Tel. +39.0252031875 - +39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +800 11 22 34 56
Switchboard: +39-0659821
ufficio.stampa@eni.com
segreteriasocietaria.azionisti@eni.com
investor.relations@eni.com
Web site: www.eni.com