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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 2013
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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Notice of Shareholders’ Meeting 2013
Report of the Board of Directors to the Shareholders’ Meeting
Press Release dated April 9, 2013
Press Release dated April 24, 2013
Press Release dated April 24, 2013
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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, 2013
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Published on April 3, 2013
ENI S.P.A. ORDINARY
SHAREHOLDERS' MEETING ON MAY
10, 2013 REPORT
OF THE BOARD OF DIRECTORS |
The Italian text prevails over the English translation.
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ENI S.P.A.
ORDINARY SHAREHOLDERS' MEETING
ON MAY 10, 2013
ON SINGLE CALL
REPORT OF THE BOARD OF DIRECTORS
ON THE ITEMS OF THE AGENDA
ITEM 1
ENI S.P.A.
FINANCIAL STATEMENTS AT DECEMBER 31, 2012
RELATED RESOLUTIONS.
ENI CONSOLIDATED
FINANCIAL
STATEMENTS AT DECEMBER
31, 2012
REPORTS OF THE DIRECTORS, OF THE BOARD
OF STATUTORY
AUDITORS AND OF THE AUDIT FIRM.
Dear Shareholders,
the document "Annual Report at December 31, 2012" of
Eni S.p.A., available at the Company's registered office, on the
Company's website and at Borsa Italiana S.p.A. (the Italian Stock
Exchange), includes the draft of the financial statements of Eni
S.p.A. and the consolidated financial statements, along with the
Directors' report on operations and the declaration pursuant to
Article 154-bis, paragraph 5 of Legislative Decree no. 58
of February 24, 1998 (Consolidated Law on Finance, hereinafter
"T.U.F."). The Reports of the Audit Firm and of the
Board of Statutory Auditors are available in complete form to the
public together with the Annual Report.
Reference is therefore made to these documents.
Dear Shareholders, you are invited to resolve as follows:
"The Ordinary Shareholders' Meeting
resolves
to approve the financial statements at December 3l, 2012 of Eni S.p.A. which report a net profit amounting to 9,078,358,525.02 euro."
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ITEM 2
ALLOCATION OF NET PROFIT
Dear Shareholders,
in regard to the results achieved, you are invited to resolve as
follows:
"The Ordinary Shareholders' Meeting
resolves
to allocate the net profit for the period of 9,078,358,525.02 euro, of which 7,122,048,121.80 euro remains following the distribution of the 2012 interim dividend of 0.54 euro per share, resolved by the Board of Directors on September 20, 2012, as follows:
- the amount of 2,603,272,923.40 euro to the reserve required by Article 6, paragraph 1, letter a) of Legislative Decree no. 38 of February 28, 2005;
- the amount of 3,391,234,297.34 euro to the optional reserve;
- as to the remaining profit and, where necessary, using the available reserve, to shareholders in the form of a dividend of 0.54 euro per share owned and outstanding at the ex-dividend date, excluding treasury shares on that date, thus completing payment of the dividend for the financial year 2012. The total dividend per share for financial year 2012 therefore amounts to 1.08 euro per share;
- the payment of the balance of the 2012 dividend in the amount of 0.54 euro, payable starting from May 23, 2013, with an ex-dividend date of May 20, 2013 and a record date of May 22, 2013.
ITEM 3
REMUNERATION REPORT: POLICY ON
REMUNERATION
Dear Shareholders,
the Remuneration report has been prepared on the basis of Article
123-ter of the T.U.F. and of Article 84-quater of
the Issuers' Regulation (adopted by Consob with Resolution no.
11971 of May 14, 1999, as amended).
Pursuant to the sixth paragraph of Article 123-ter of the
T.U.F., the Shareholders' Meeting shall resolve in favour or
against the first section of the Remuneration report regarding
the Company's policy on the remuneration of Board directors,
general managers and executives with strategic responsibilities
and the procedures used to adopt and implement this policy. The
resolution is not binding.
Please refer to the Remuneration report approved by the Board of Directors on March 14, 2013 and available to the public in accordance with terms and procedures required by law.
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Dear Shareholders, you are invited to resolve as follows:
"The Ordinary Shareholders' Meeting
resolves
in favour of the first section of the Remuneration report regarding the Company's policy on the remuneration of Board directors, general managers and executives with strategic responsibilities and the procedures used to adopt and implement this policy".
ITEM 4
AUTHORISATION OF BUY-BACK PLAN OF
ENI SHARES AFTER FIRST
CANCELLING THE
PREVIOUS BUY-BACK PLAN AUTHORISED BY THE SHAREHOLDERS'
MEETING ON JULY
16, 2012, WITH RESPECT TO THAT
PORTION NOT IMPLEMENTED. RELATED
AND
CONSEQUENT RESOLUTIONS.
Dear Shareholders,
you are asked to authorise the buy-back of Eni ordinary shares,
pursuant to Article 2357 of the Italian Civil Code and to Article
132 of the T.U.F. – after first cancelling the previous
buy-back plan authorised by the Shareholders' Meeting of July 16,
2012, with respect to the portion not implemented – under
the terms and procedures specified herein, in accordance with
Article 144-bis of the Issuers' Regulation.
1. Reasons for which authorisation to acquire treasury shares is requested
The purchase of treasury shares represents an effective and flexible management tool to increase value for shareholders over time in line with the remuneration policies of other major oil companies.
2. Maximum number and class of the shares to which the authorisation refers
Authorisation is requested for the purchase, including in
multiple tranches, of Eni S.p.A. ordinary shares, up to a maximum
number of 363 million shares, corresponding to approximately
9.9885% of the share capital.
More specifically, as of March 13, 2013, Eni's treasury shares
amount to a total number of 11,388,287 ordinary shares,
representing 0.31% of share capital. Eni's subsidiaries do not
hold shares in the Company.
3. Useful information for the purpose of a thorough assessment of compliance with the provisions of Article 2357, paragraph 3, of the Italian Civil Code
The maximum number of treasury shares held by Eni S.p.A., also
taking into account any ordinary shares that may be held by
subsidiaries, must never exceed the maximum limit established by
the pro tempore applicable regulations.
In order to ensure compliance with the limits under the law,
appropriate measures will be taken in each case to ensure timely
and complete disclosure regarding the shareholdings of Eni
S.p.A.'s subsidiaries.
For the purchase in question, the intention is to allocate a
total amount of euro 6,000,000,000.00 (six billion euro and zero
cents) to a specific reserve designated for the purchase of
treasury shares formed by using the existing budgetary reserves.
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The purchase of treasury shares will therefore take place
through the utilisation of the above mentioned reserves and hence
within the limits of the available reserves reported in the most
recent financial statements and, at the time of each acquisition,
the necessary accounting entries will be made in observance of
the provisions of law and the applicable accounting principles.
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.
4. Duration for which the authorisation is requested
Authorisation to purchase treasury shares is requested for a period of eighteen months, beginning from the relative resolution of the Ordinary Shareholders' Meeting. The Board of Directors may proceed to purchase treasury shares, one or more times and at any time, in the amount and times freely determined in respect of the applicable regulations, with the speed held to be appropriate for the interests of the Company.
5. Minimum and maximum price for the treasury shares to be purchased
Purchases of treasury shares shall be carried out in respect of the operating conditions established for market practices governing the acquisition of treasury shares, admitted by Consob pursuant to Article 180, paragraph 1, letter c ) of the T.U.F. with Resolution no. 16839 of March 19, 2009, as well as EC Regulation no. 2273/2003 of December 22, 2003, where applicable, without prejudice to the fact that the unit price cannot in any case be lower than a minimum of euro 1.102 (one point one zero two euro), and no greater than the reference price recorded on the trading day before each individual purchase operation, plus 5%.
6. Methods by which the purchase shall be made
The acquisitions shall be carried out on the Mercato Telematico Azionario of Borsa Italiana S.p.A. in accordance with Article 144-bis, paragraph 1, letter b) of the Issuers' Regulations and the provisions in any case applicable, so as to allow respect for the equal treatment of shareholders as envisaged in Article 132 of the T.U.F., and hence on regulated markets, in accordance with the procedures established in the Rules of the Markets organised and managed by Borsa Italiana S.p.A., which do not allow for the direct matching of buy orders with sell orders.
***
Dear Shareholders, you are invited to resolve as follows:
"The Ordinary Shareholders' Meeting
resolves
1) to cancel, for the portion not yet
implemented as of the date of the Shareholders' Meeting,
the authorisation to the Board of Directors to acquire treasury
shares as resolved by the Shareholders ' Meeting of July
16, 2012;
2) to authorise the Board of Directors,
pursuant to Article 2357 of the Italian Civil Code, to
purchase on the Mercato Telematico Azionario – in one or
more transactions and in any case within 18 (eighteen)
months from the date of this resolution – up to a
maximum number of 363,000,000 (three hundred and sixty-three
million) ordinary Eni
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shares, for a price of no less than euro
1,102 (one point one zero two euro) and not more than
the official price reported by Borsa Italiana for the
shares on the trading day prior to each individual
transaction, plus 5%, and in any case up to a total amount of
euro 6,000,000,000.00 (six billion euro and zero cents)
in accordance with the procedures established in the Rules
of the Markets organised and managed by Borsa Italiana S.p.A.
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;
3) to grant the Board of Directors all the
broadest powers to execute this resolution, including
through the use of delegation, including the possible assignment
of tasks to intermediaries authorised pursuant to law,
with the speed held to be appropriate for the interests
of the Company, as permitted by applicable regulations, in the
manner envisaged in Article 144-bis, paragraph 1, letter
b) of the Issuers' Regulation, taking into account market
practices inherent to the acquisition of treasury shares admitted
by Consob pursuant to Article 180, paragraph 1, letter c)
of the T.U.F., with Resolution no. 16839 of March 19,
2009, as well as EC Regulation no. 2273/2003 of December 22,
2003, where applicable".
The Chairman of the
Board of Directors |
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Eni Group worldwide presence
—————————————————
Eni is an integrated energy company, active
in 90 Countries in the world with a staff of around 78,000
employees.
Eni boasts a strong position in the oil&gas value chain,
from the hydrocarbon exploration phase to the product marketing.
Our strong presence in the gas market and in the liquefaction of
natural gas, our skills in the power generation and refinery
activities, strengthened by world class skills in engineering and
project management, allow us to catch opportunities in the market
and to realize integrated projects.
| Europe Austria, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, Ukraine Africa |
Asia and
Oceania Australia, Azerbaijan, China, India, Indonesia, Iran, Iraq, Japan, Kazakhstan, Kuwait, Malaysia, Myanmar, Oman, Pakistan, Papua-New Guinea, Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Korea, Syria, Taiwan, Thailand, Timor Leste, Turkmenistan, the United Arab Emirates, Vietnam, Yemen Americas |
|
Disclaimer
This annual report contains certain forward-looking statements in particular under the section "Outlook" regarding capital expenditures, development and management of oil and gas resources, dividends, allocation of future cash flow from operations, future operating performance, gearing, targets of production and sale 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.
"Eni" means the parent company Eni SpA and its consolidated subsidiaries.
Ordinary Shareholders’ Meeting of May
10, 2013.
The notice convening the meeting was published on "Il Sole
24 Ore" and "Financial Times WWE" of April 3,
2013.
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(1) The Snam contribution excluded is the result of Snam transactions with Eni included in the continuing operations according to IFRS 5. Adjusted operating profit and adjusted net profit are not provided by IFRS.
|
Results >
In 2012 Eni reported net profit
at euro 7.79 billion including Eni’s share of Snam
results. Net profit of continuing operations amounted to
euro 4.2 billion which excludes Snam’s contribution
to Group results, reclassified as discontinued operations
following the ownership unbundling finalized in October
2012. Adjusted net profit, which excludes special items, was euro 7.13 billion, up by 2.7% from a year ago. It was up by 7.6% when excluding Snam’s results included in the continuing operations1. These results were driven by an excellent performance reported by the Exploration & Production Division on the back of a recovery in Libyan production. Eni’s financial structure was strengthened by asset divestments amounting to approximately euro 6.6 billion mainly relating to the sale of significant stakes in Snam and Galp, and by the deconsolidation of Snam’s financial debt of euro 12.45 billion. Leverage decreased to 0.25 at December 31, 2012 from 0.46 at December 31, 2011. Eni intends to monetize its residual interests in Snam and Galp with a market value of approximately euro 5 billion to further strengthen the balance sheet. Net cash generated by operating activities from continuing operations amounted to euro 12.36 billion and together with the robust proceeds from divestments enabled the Company to finance capital expenditure and other investments of euro 13.33 billion and to pay dividends to Eni’s shareholders and other minorities for euro 4.38 billion, while reducing net borrowings by euro 12.52 billion. Dividend > The Company’s excellent results and robust fundamentals underpin a dividend distribution of euro 1.08 per share, representing a 4% increase from 2011, in line with the company’s dividend policy. Management reaffirms its commitment to deliver industry-leading returns to the Company’s shareholders.
|
|
|
Net proved oil and gas reserves |
Oil and
natural gas production > In 2012, Eni reported liquids and
gas production at 1,701 kboe/d. On a comparable basis, a
production growth rate of 7% was achieved driven by the
almost complete resumption of the Company’s
activities in Libya and continuing production start-ups
and ramp-ups. Eni targets a production growth average
rate of more than 4% on average over the next four-year
period, leveraging on a strong project pipeline, a
resource base at best ever levels and the Eni
co-operation model. Proved oil and natural gas reserves > Eni’s net proved oil and gas reserves as of December 31, 2012 were at the eight-year record of 7.17 bboe. The organic reserve replacement ratio was 147% on a comparable basis. The reserve life index is 11.5 years. Natural gas sales > Natural gas sales of 95.32 bcm were barely unchanged from 2011, excluding the volume impact caused by the loss of significant influence at Galp. In a scenario characterized by weak demand and rising competitive pressure, Eni’s marketing initiatives were focused on maintaining gas sales in Italy, boosting Eni’s presence in key European markets (France, Germany and others) and continuing expansion in the international market of LNG. |
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| Safety > In 2012 the injury frequency rate
relating to employees and contractors decreased by 12.3%
and 21.1% respectively, compared to 2011. This positive
trend progressed for the eighth consecutive year.
Notwithstanding the 43.3% decrease in the fatality index,
seven fatal accidents occurred in 2012. Eni is engaged in
maintaining high level of safety in each of its
activities. Eni leads Energy for All
in Sub-Saharan Africa > On November 28, 2012, during the first
meeting of the Leadership Council of the Sustainable
Development Solutions Network (SDSN), Eni was appointed
to lead Energy for All in Sub-Saharan Africa, an
initiative aimed at devising solutions for a more general
access to energy in the technological, institutional,
political-managerial and business expertise. |
||
| Exploration
success > 2012
was a record year for exploration at Eni with discovered
resources of 3.64 bboe, about six time yearly production. The exploration success achieved in Mozambique at the Mamba complex (Eni operator with a 70% interest) confirmed Mamba to be the largest discovery ever in Eni’s history with estimated full mineral potential of 75 Tcf of gas in place. The agreement signed in December 2012 with Anadarko Petroleum Corporation for the coordinated development of offshore activities and the joint construction of onshore facilities is a crucial step towards the start of the Mozambique project, whose FID is expected in 2014. The Skrugard and Havis oil and gas discoveries in the Barents Sea in the PL 532 prospect (Eni 30%) found a combined amount of 500 million barrels of recoverable resources (100%) and will be jointly developed in a fast and efficient way. Appraisal activities at the Sankofa discovery in the offshore Cape Three Points license operated by Eni (47.22% interest) in Ghana confirmed the high potential of the area estimated at around 450 million barrels of oil in place. Exploration licenses have been acquired in high potential Countries such as Kenya, Liberia, Vietnam, Cyprus and offshore Russia and in shale gas plays in Ukraine as well as in other established areas such as China, Pakistan, Indonesia and Norway. Business
developments > The
Authorities of Venezuela sanctioned the full field
development plan of the giant Perla gas project, located
in Cardón IV Block (Eni 50%) offshore the Gulf of
Venezuela. Production plateau is estimated at 1,200
mmcf/d. |
Exploration success |
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| > Business developments Acquired exploration licenses in high potential areas of Kenya, Liberia, offshore Russia, Vietnam, Ukraine during the year. > Downstream activities |
through 2013 marking another
forward step in the full recovery of upstream activities
in the Country. The Green Refinery project was launched, which targets the conversion of the Venice plant into a "bio-refinery" to produce bio-fuels leveraging on a proprietary technology. Within its strategy of international expansion in markets with interesting growth prospects, Versalis, Eni’s chemical subsidiary, signed agreements with major chemical operators in South Korea and Malaysia to build and operate elastomers facilities based on Versalis’ proprietary technologies and know-how. Access to CPLI > In 2012 Eni has been the only energy company to gain access to the Carbon Performance Leadership Index (CPLI) that rates the performance of industrial companies in reducing GHG emissions and mitigating the risks associated with climate change. This performance is even more significant when one considers that the energy segment is responsible for over 40% of total GHG emissions of companies included in the Global 500 Index that includes the 500 companies with highest market capitalization. In 2012, Eni was included for the sixth consecutive year in the Dow Jones Sustainability Index and in the FTSE4Good. Eni at Rio+20 > At the United Nations Conference on Sustainable Development (Rio +20), Eni took part actively in all the main events for industrial companies. Following the United Nations request, Eni confirmed its commitment in terms of reduction of gas flaring and greenhouse gas emissions, access to sustainable energy, green chemistry and fight against corruption. Cooperation to development > Eni continues to apply its cooperation model in the host oil-rich Countries. The model integrates the traditional business of exploring and developing hydrocarbons with solutions responding to the requirements of local communities in terms of economic and social development. In 2012, Eni started up projects in Russia and Mozambique and carried out actions for improving health conditions, education and access to potable water in Congo, Nigeria, Ghana and Iraq. |
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| Financial highlights (*) | ||||||||||||||
| 2010 | 2011 | 2012 | ||||||||||||
| Net sales from operations - continuing operations | (euro million) | 96,617 | 107,690 | 127,220 | ||||||||||
| Operating profit - continuing operations | 15,482 | 16,803 | 15,026 | |||||||||||
| Adjusted operating profit - continuing operations | 16,845 | 17,230 | 19,753 | |||||||||||
| Net profit - continuing operations (a) | 6,252 | 6,902 | 4,198 | |||||||||||
| Net profit - discontinued operations (a) | 66 | (42 | ) | 3,590 | (*) Pertaining to continuing operations. Following the divestment of the Regulated Businesses in Italy, 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 2012 is based on the Board’s proposal. (c) Number of outstanding shares by reference price at year end. |
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| Net profit (a) | 6,318 | 6,860 | 7,788 | |||||||||||
| Adjusted net profit - continuing operations (a) | 6,770 | 6,938 | 7,128 | |||||||||||
| Net cash provided by operating activities - continuing operations | 14,140 | 13,763 | 12,356 | |||||||||||
| Capital expenditure - continuing operations | 12,450 | 11,909 | 12,761 | |||||||||||
| Dividends to Eni shareholders pertaining to the period (b) | 3,622 | 3,768 | 3,913 | |||||||||||
| Cash dividends to Eni shareholders | 3,622 | 3,695 | 3,840 | |||||||||||
| Total assets at period end | 131,860 | 142,945 | 139,641 | |||||||||||
| Shareholders' equity including non-controlling interest at period end | 55,728 | 60,393 | 62,713 | |||||||||||
| Net borrowings at period end | 26,119 | 28,032 | 15,511 | |||||||||||
| Net capital employed at period end | 81,847 | 88,425 | 78,224 | |||||||||||
| Share price at period end | (euro) | 16.34 | 16.01 | 18.34 | ||||||||||
| Number of shares outstanding at period end | (million) | 3,622.7 | 3,622.7 | 3,622.8 | ||||||||||
| Market capitalization (c) | (euro billion) | 59.2 | 58.0 | 66.4 | ||||||||||
| Summary financial data | ||||||||||||||
| 2010 | 2011 | 2012 | ||||||||||||
| Net profit - continuing operations | ||||||||||||||
| - per share (a) | (euro) | 1.72 | 1.90 | 1.16 | ||||||||||
| - per ADR (a) (b) | ($) | 4.59 | 5.29 | 2.98 | (a) Fully diluted. Ratio of net profit from continuing operations and average number of shares outstanding in the period. Dollar amounts are converted on the basis of the average EUR/USD exchange rate quoted by ECB for the period presented. (b) One American Depositary Receipt (ADR) is equal to two Eni ordinary shares. (c) The Snam contribution excluded is the result of Snam transactions with Eni included in the continuing operations according to IFRS 5. (d) Ratio of dividend for the period and the average price of Eni shares as recorded in December. |
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| Adjusted net profit - continuing operations | ||||||||||||||
| - per share (a) | (euro) | 1.87 | 1.92 | 1.97 | ||||||||||
| - per ADR (a) (b) | ($) | 4.96 | 5.35 | 5.06 | ||||||||||
| Adjusted return on average capital employed (ROACE) (c) | (%) | 11.1 | 10.2 | 10.1 | ||||||||||
| Leverage | 0.47 | 0.46 | 0.25 | |||||||||||
| Coverage | 22.2 | 15.4 | 11.7 | |||||||||||
| Current ratio | 1.0 | 1.1 | 1.4 | |||||||||||
| Debt coverage | 56.3 | 51.3 | 80.5 | |||||||||||
| Dividends pertaining to the year | (euro per share) | 1.00 | 1.04 | 1.08 | ||||||||||
| Pay-out | (%) | 57 | 55 | 50 | ||||||||||
| Dividend yield (d) | (%) | 6.1 | 6.6 | 5.9 | ||||||||||
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| Operating and sustainability data | ||||||||||||||
| 2010 | 2011 | 2012 | ||||||||||||
| Employees at period end | (units) | 73,768 | 72,574 | 77,838 | ||||||||||
| of which - women | 12,161 | 12,542 | 12,860 | |||||||||||
| of which - outside Italy | 45,967 | 45,516 | 51,034 | |||||||||||
| Female managers | (%) | 18.0 | 18.5 | 18.9 | ||||||||||
| Training hours | (thousand hours) | 2,949 | 3,127 | 3,132 | ||||||||||
| Employees injury frequency rate | (No. of accidents per million of worked hours) | 0.80 | 0.65 | 0.57 | ||||||||||
| Contractors injury frequency rate | 0.71 | 0.57 | 0.45 | |||||||||||
| Fatality index | (fatal injuries per one hundred millions of worked hours) | 4.77 | 1.94 | 1.10 | ||||||||||
| Oil spills | (barrels) | 4,269 | 7,295 | 3,856 | ||||||||||
| GHG emission | (mmtonnes CO2 eq) | 58.26 | 49.12 | 52.49 | ||||||||||
| R&D expenditures (a) | (euro million) | 218 | 190 | 211 | ||||||||||
| Expenditures for the territory (b) | (euro million) | 107 | 101 | 91 | ||||||||||
| Exploration & Production | ||||||||||||||
| Net proved reserves of hydrocarbons (at year end) | (kboe/d) | 6,843 | 7,086 | 7,166 | ||||||||||
| Average reserve life index | (year) | 10.3 | 12.3 | 11.5 | ||||||||||
| Production of hydrocarbons | (kbbl/d) | 1,815 | 1,581 | 1,701 | ||||||||||
| Profit per boe (c) | ($/boe) | 11.91 | 16.98 | 15.95 | ||||||||||
| Opex per boe (c) | 6.14 | 7.28 | 7.10 | |||||||||||
| Cash flow per boe | 25.52 | 31.65 | 32.77 | |||||||||||
(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 2.73 bcm (2.86 bcm and 5.65 bcm in 2011 and 2010, respectively). |
Finding & Development cost per boe (d) | 19.32 | 18.82 | 17.37 | ||||||||||
| Gas & Power | ||||||||||||||
| Worldwide gas sales (e) | (bcm) | 97.06 | 96.76 | 95.32 | ||||||||||
| - in Italy | 34.29 | 34.68 | 34.78 | |||||||||||
| - outside Italy | 62.77 | 62.08 | 60.54 | |||||||||||
| Customers in Italy | (million) | 6.88 | 7.10 | 7.45 | ||||||||||
| Electricity sold | (TWh) | 39.54 | 40.28 | 42.58 | ||||||||||
| Customer satisfaction index | (%) | 87.4 | 88.6 | 89.8 | ||||||||||
| Refining & Marketing | ||||||||||||||
| Refinery throughputs on own account | (mmtonnes) | 34.80 | 31.96 | 30.01 | ||||||||||
| Retail market share | (%) | 30.4 | 30.5 | 31.2 | ||||||||||
| Retail sales of petroleum products in Europe | (mmtonnes) | 11.73 | 11.37 | 10.87 | ||||||||||
| Service stations in Europe at year end | (units) | 6,167 | 6,287 | 6,384 | ||||||||||
| Average throughput of service stations in Europe | (kliters) | 2,353 | 2,206 | 2,064 | ||||||||||
| Chemicals | ||||||||||||||
| Production | (ktonnes) | 7,220 | 6,245 | 6,090 | ||||||||||
| Sales of petrochemical products | 4,731 | 4,040 | 3,953 | |||||||||||
| Average plant utilization rate | (%) | 72.9 | 65.3 | 66.7 | ||||||||||
| Engineering & Construction | ||||||||||||||
| Orders acquired | (euro million) | 12,935 | 12,505 | 13,391 | ||||||||||
| Order backlog at year end | 20,505 | 20,417 | 19,739 | |||||||||||
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Eni Annual Report / Letter to shareholders
| More focused and
financially stronger: this is Eni at the end of 2012. Our resource base and growth prospects are more promising than ever before. The deconsolidation and well-devised divestment of Snam and the commencement of Galp disposition have enabled us to nearly cut in half the debt-to-equity ratio. Leveraging on those solid premises we are ready to tackle our two major future challenges: to grow our oil&gas production and drive our mid-downstream businesses back to profitability. Exploration has achieved record results for the year. We have added 3.6 billion boe of new resources, or almost six times our 2012 production, while finding costs have declined below $1 USD per boe. These exceptional achievements owe to our strategic approach in selecting geological plays, proprietary technologies and in-depth knowledge of core basins. The quality leap we have made in exploration provides us with a competitive edge and strengthens our growth prospects. Africa is our first great frontier. The Rovuma basin in Mozambique confirmed to be a world-class play due to the Mamba discovery in late 2011. Appraisal activities performed in 2012 allowed to estimate the potential of the Eni-operated area up to 75 Tcf of gas in place, making Mamba the largest finding in our history. The geology of the discovered reservoirs is excellent and we expect to tap these huge resources by drilling few wells to the benefit of the project’s profitability. We acquired three exploration leases offshore the Luma basin in Kenya |
which shows great affinity
with the Mozambican areas. In West Africa we have made the large Sankofa oil discovery offshore Ghana and we have enhanced our position in the emerging pre-saline plays of the African continental shelf in Angola, Congo, Gabon, and with our entry in Liberia. This exploration targets very interesting potential that can be rapidly put in production at competitive costs. The Norwegian section
of the Barents Sea is one of our most successful emerging
areas, particularly the Havis and Skurgard twin
discoveries have found an oil potential of approximately
500 million barrels. New important prospects are opening
up in the Russian section of this sea where, in
cooperation with Rosneft, we are engineering exploration
of a block extending for about 55,000 square kilometers
where we have high expectations for giant oil&gas
discoveries. |
gas plays in Indonesia and
Australia, currently in an advanced appraisal and
pre-development phase, and for the future Vietnam, where
we acquired three offshore licenses covering an area of
21,000 square kilometers, and one block in China. The
area can count on fast-increasing demand for energy and
the availability of gas infrastructures which reduce the
time-to-market of our discoveries. We are progressing in
our unconventional plays in North Africa, Eastern Europe,
China, Pakistan and Indonesia that provide synergies with
existing operations. We increased our presence in Ukraine
by purchasing rights on an area of approximately 3,800
square kilometers containing shale gas. Activities for the year have featured the almost complete recovery of our pre-crisis production plateau in Libya thanks to the strong cooperation |
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Paolo Scaroni |
Giuseppe Recchi |
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Eni Annual Report / Letter to shareholders
| with the local State Company
NOC, in spite of the complex transition phase the Country
is undergoing. We have achieved many important steps both
technical and commercial at several ongoing projects: the
giant Kashagan field in Kazakhstan, whose commercial
first production is expected within contractual date of
June 2013; MLE in Algeria started-up at the beginning of
2013; the hubs of Block 15/06 in Angola; gas projects in
Siberia; Goliat in the Barents Sea; and the sanctioning
of Perla and the start-up of Junin phase 1 in Venezuela.
Following our framework agreement with Anadarko, we laid
the foundation for commencing the Mozambique project,
where we expect a FID in 2014. We are well aware of the
challenges that face our industry in putting reserves to
production due to capacity constraints for critical
facilities and equipment and lack of flexibility of EPC
contractual schemes. Nonetheless, we are striving to
improve our ability of delivering projects on time and on
budget. Our approach to managing upstream activities,
driven by operational excellence, asset selection and the
cooperation model with host Countries, underpins our
capability to handle at best the major risks inherent in
the oil world. Overall 2012 has been an excellent year
for our Exploration & Production Division. The Gas & Power, Refining & Marketing and Chemical Divisions suffered from the weaknesses in their respective markets: plunging demand, strong competition and excess supply in the light of the continuing escalating costs of oil-linked supplies. In the Gas & Power Division we have opened renegotiations regarding around 80% of our supply base. We have launched a reorganization to integrate the supply activities of the Gas & Power and Refining & Marketing Divisions together with our trading, risk management and |
the wholesale activities of
gas and LNG. This integration will allow us to capture
opportunities from market trends and synergies in
commodity risk management. In refining, we have
intensified efficiency efforts delivering savings of
around euro 150 million and in fuel distribution we have
launched promotional campaigns that delighted our
customers and helped mitigate the impact of the downturn
on our retail sales, as witnessed by an increased market
share (from 30.1 to 31.2%). In Chemicals we are working
to reduce our exposure to commodity chemicals. A common
element to all our mid and downstream businesses is an
ongoing strategy to internationalize operations by
gaining higher exposure to the growing Asian markets. In
this framework are included the agreements for the supply
of LNG to Korean and Japanese operators, the
establishment of joint ventures in the field of
elastomers with South Korean and Malaysian operators and
the beginning of lubricants distribution in China. We have stepped up hiring by 7%, accompanied by our constant focus on the protection of safety, enhancement of individual skills and full involvement of all our employees in the corporation life. The responsible use of resources was another feature of our 2012 performance where we have achieved an all time low in gas flaring and a record amount of re-injected water in field. In the area of cooperation with producing Countries we have been awarded a leading role in coordinating and implementing the UN initiative "Energy for All in Sub-Saharan Africa". Results of the year In 2012 Eni reported net profit of continuing operations at euro 4.2 billion (euro 7.79 billion including Eni’s share of Snam results). Driven by the excellent Exploration & Production, adjusted net profit increased by 2.7% to euro 7.13 billion, and when excluding Snam’s |
contribution to continuing
operations, the underlying result was up by 7.6%. Ratio of net borrowings to total equity almost halved from 2011, declining to 0.25 thanks to the proceeds from the disposal of significant stakes in Snam and Galp and the deconsolidation of Snam’s finance debt. Net cash generated by operating activities from continuing operations amounted to euro 12.36 billion and the divestment of non strategic assets yielded euro 1.5 billion. Those inflows enabled the Company to finance capital expenditure and other investments of euro 13.33 billion and to pay dividends to Eni’s shareholders for euro 3.84 billion and to minorities for euro 0.54 billion. Adjusted return on invested capital was 10.1%. On the basis of the Company’s strong results and in line with our progressive dividend policy, the Board of Directors intends to submit to the Annual Shareholders’ Meeting a dividend proposal of euro 1.08 per share, up 4% from 2011. Adjusted operating
profit in the Exploration & Production Division
was a record at euro 18.52 billion, with an increase of
15.2% from 2011 driven by an ongoing production recovery
in Libya and operating efficiency. Liquids and gas
production was 1.7 million boe/d, a growth rate of 7%.
Eni’s net proved oil and gas reserves at period end
amounted to 7.17 billion boe, the highest in eight years.
The organic reserve replacement ratio was 147% at a
reference oil price of $111 per barrel. Adjusted operating profit in the Gas & Power Division was euro 354 million, driven by the contribution of the international transport business. The Marketing business, after the sharp losses reported in 2011, ended the year in positive territory (improving by euro 702 million) benefiting from the renegotiations of long-term supply contracts and the resumption of Libyan supplies. Sales of natural gas, excluding Galp’s share, were resilient thanks to a |
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Eni Annual Report / Letter to shareholders
| strong presence in the
Italian residential market, an ongoing expansion in the
strategic markets of France and Germany/Austria and
increasing international sales in the LNG global market.
Eni’s customer portfolio at year end increased to
7.45 million. The Refining & Marketing Division reported a remarkable improvement, cutting operating losses by 39% (reporting an operating loss of euro 328 million in 2012) thanks to efficiency in energy consumption, maintenance and fixed costs and optimization of refinery setup and yields. Retail sales of fuels in Italy declined less than demand (down 6.3%), while in Europe they saw a progress of 1%. The Chemical segment was affected by sharply lower margins at commodity chemicals pressured by high costs for oil-based feedstock driving a loss of euro 485 million, down significantly from 2011 (down 77.7%). Capital expenditure
plan The 2013 outlook features the uncertainties that surround the global economic recovery, particularly in |
the Eurozone, and restraint
shown by businesses and households in investments and
consumption decisions. A number of factors will
contribute to support the price of oil including ongoing
geopolitical risk as well as improved balance between
world demand and supplies of crude oil and oil products.
For investment evaluation purposes, we assume a full-year
average price of $90 a barrel for the Brent crude
benchmark. In our mid and downstream businesses, we
expect the persistence of weak trends in demand, volatile
margins and the risks of new increases in the costs of
oil-based supplies. Competitive pressures and excess
capacity will continue to dampen recovery prospects. Against
this backdrop, we confirm our growth strategy in the
upstream business and of consolidating and optimizing our
mid and downstream businesses. Our capital expenditure
plans for the 2013-2016 four year period reflects these
guidelines with an outlay of euro 56.8 billion (up 6%
from 2011) that will be directed for 83% to exploration
and development of oil and gas while being selective in
the expenditure projects at the other businesses. |
In the Gas & Power
Division the main drivers will be the renegotiation of
gas supply costs, sales maximization and supply and
logistics optimizations to reduce the take-or-pay risk. For
the downstream oil and Chemicals Divisions we target cost
efficiencies and a reduction in the exposure to
loss-making activities leveraging on growth in innovative
and sustainable niches (biofuels and green chemistry). All in all in 2012 Eni delivered robust results with a record performance in Exploration & Production and good progress in restructuring downstream activities. Our solid resource base and continuing progress in development activities supported by a stronger balance sheet have strengthened our excellent competitive positioning and from there we expect to achieve leading production growth in our upstream while creating sustainable value to our shareholders. |
March 14, 2013
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 / Our business model
| Eni’s excellent market position and competitive advantages derive from the Company’s strategic decision-making which is consistent with the long-term nature of the business, and relies on a sustainable business model founded on a consolidated and distinctive way of doing business, in a framework of clear and straightforward rules of corporate governance and respectful of the highest ethical standards and rigorous risk management. In 2012 Eni laid the foundations for a new growth phase of its oil and gas production, one which promises to outperform | the industry over the medium and long-term. In the meanwhile, Eni has started the reorganization of its downstream activities to manage the current European downturn. In the Chemical segment, Eni has progressed at repositioning the business to deliver sustainable results. Eni’s strategies, decisions in terms of resource allocation and day-by-day operations underpin sustainable value creation to shareholders and, more generally, all of our stakeholders: the host communities where we work and engage in promoting better | socio-economic standards and responsibly using resources; our people to whom we dedicate our best efforts to preserve health and safety of the workplace and to enhance each individual’s contribution and diversity; our suppliers, partners and public administrations with whom we interact by running our operations in a transparent manner, respecting human rights and tackling with corruption; finally our clients to whom we offer competitive and up with the times commercial choices and high quality services. |
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| Follows the description of
certain initiatives contributing to Eni’s 2012
financial and sustainability performance1. > In running its operations, Eni is engaged in the responsible and efficient usage of resources, in respect of the environment in which it operates. The reduction in gas flaring is underpinned by our ability in monetizing our reserves of associated gas by means of marketing it in local outlets and LNG international markets, field reinjection and power plants construction. The Idu Project in Nigeria allowed us to economically exploit approximately 1.4 million cubic meters/day. These volumes which in the past were simply burned off have been recovered and used for local requirements. 90% of associated gas produced in Nigeria has been monetized and carbon emissions were reduced. > The effective use of natural resources and optimization in hydrocarbon production boosted to an all-time high the volumes of water re-injected, equal to 49% in 2012. The water re-injection project at the Belayim field in Egypt accounted for 99% of ground water re-injected compared to the total amount of produced water, increasing the hydrocarbon recovery index. > Our way of doing business, based on operating excellence, reliability of equipment and relentless focus on health safety and the environment, is committed to mitigating operational risks, the main threat to our upstream operations in terms of environmental and financial performance and reputation. This approach, based on the most advanced asset integrity methodologies for the development and production of fields, is applied in our operations and confirmed also by the next four-year exploration plan, mainly in frontier areas (deepwater, high pressure, high temperature wells that represent 3% of Eni total planned wells or Arctic activities) with the construction of infrastructure and equipment tailor-made for the specific features of those environments and fields. > Eni continues to upgrade the energy efficiency of its operations in order to achieve a rational use of energy and process optimization also by adopting Energy Management System (EMS). In the latest years some of Eni’s operational sites adopted these systems in accordance with the recently enacted EN 16001 or ISO 50001 standards. In future years more sites are going to adopt these standards. In the Refining & Marketing and Chemical divisions, energy saving initiatives concluded in 2012 allowed to reach savings of more than euro 60 million, with a reduction of 100 ktoe and over 297 ktoe of CO2/y emissions. > The enhancement of our customer base benefited from the upgrading of the Eni brand, the offering of new products, mainly the "eni3" (gas, electricity and fuels), the launch of new fidelity and credit cards as well as the maintenance of high quality services. These drivers and other commercial initiatives ("riparti con eni" and "iperself 24") helped boost our notoriety index and market share (up 3.5 percentage points the market share in the gas market; up 0.7 percentage points the market share in the fuel retail market in Italy), notwithstanding weak demand and competitive pressure. > Plurality is one of the distinctive elements of Eni’s business featured by a strong international note. Local personnel represent approximately 50% of Eni employees and covers 10% of the total managerial positions outside Italy. In 2012, in the E&P Division, Eni launched certain development programs in its subsidiaries outside Italy through an assessment of local and international skills involving 1,836 persons among which graduates and senior staff/managers. The reward model, applied worldwide, targets to fairly define base salaries of all Eni’s employees. Furthermore, in 2012 a project has been launched which aims at benchmarking the worldwide competitiveness of the reward systems adopted by Eni, mainly referring to strategic and senior positions within the Company. Eni is committed to the respect of fundamental labor rights in all the Countries in which operates promoting their application with its contractors. In 2012, a survey on the application of the highest labor standards has been made, mainly outside Italy. |
(1) Detailed information on sustainability performance are available in the section "2012 Consolidated Sustainability Statements". |
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Eni Annual Report / The competitive environment
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Eni Annual Report / The competitive environment
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Eni Annual Report / Our strategy
| Eni’s strategy for the
2013-2016 four-year period confirms the priorities of
profitably growing oil and gas production, recovering
profitability in the downstream gas sector, improving
efficiency in downstream oil, chemicals and general
services supporting business activities, as well as
retaining the global leadership in Engineering &
Construction focusing on the most technologically
advanced and innovative segments. Following the divestment of Snam, Eni has a more flexible financial structure and a business model more focused on upstream activities. Net cash generated by operating activities and portfolio management will enable Eni to finance the planned relevant capital expenditure to fuel long-term growth (euro 56.8 billion), to remunerate Eni’s shareholders and to strengthen its finance.
|
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 |
In Exploration &
Production, Eni confirms its strategy of organic
growth focused on exploration and reserve replacement as
major drivers for value creation. Average production
growth is expected at a rate of more than 4% in the
2013-2016 period, confirming the targets made public.
Growth will be fuelled by new production additions in
Eni’s core areas (North Africa, Sub-Saharan Africa,
Venezuela, Barents Sea, Yamal Peninsula, Kazakhstan, Iraq
and the Far East) leveraging Eni’s vast knowledge of
reservoirs and geological basins, technical and producing
synergies, as well as established partnerships with
producing Countries. The main driver for growth will be the start-up of new fields, more than 90% of which relates to already sanctioned projects or projects that will be sanctioned by 2013. The long-term sustainable growth will leverage on Eni’s commitment in exploration activities, with planned expenses of euro 5.5 billion, which are intended to pursue finding projects in well-established basins and in high potential frontier areas. A further driver of production growth is technological innovation is aimed at developing drilling techniques to be applied in complex environments and monetizing gas reserves. Over the next four years, Eni will make capital expenditure of approximately euro 1.1 billion, of which euro 400 million in the Exploration & Production Division. We plan to increase returns at our oil and gas projects by reducing time to market, as 90% of the discoveries made in 2008-2012 will reach production within 8 years from their discovery. Furthermore, we plan to retain large volumes of operated production, in order to directly manage schedules and budget costs of development projects. To manage the risks of "project delivery" we intend (i) to in-source critical engineering and project management activities also redeploying to other areas key competences which will be freed with the start-up of certain strategic projects and increase direct control and governance on construction activities; (ii) to put in place framework agreements with major suppliers, using standardized specifications to speed up pre-award process for critical equipment and plants, increasing focus on supply chain programming to optimize the order flow. Management believes that in the next four years Eni’s Exploration & Production activities will retain significant risks relating to our strong presence in Countries which we believe to be politically less stable than OECD Countries and our exposure to complex projects because they are conducted in harsh, remote and environmentally-sensitive areas (Arctic, Gulf of Mexico, deep offshore, etc.). Management plans to mitigate those risks by expanding the geographic reach of our operations and continuing deployment of the Eni cooperation model |
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Eni Annual Report / Our strategy
| with host Countries based on
the commitment to maximize the value delivered to local
communities by the upstream activity and invest in
long-term initiatives that benefit the Country (access to
energy, education, and health). Furthermore Eni intends to minimize financial exposure in Countries with political risk through well-designed agreements and a selected plan of cash-outs for each project. Operational risk relating to drilling activities will be managed by applying Eni’s rigorous procedures throughout the engineering and execution stages, leveraging on proprietary drilling technologies, excellent skills and know-how, increased control of operations and specific technologies aimed at minimizing blow-out risks and responding quickly and effectively in case of emergencies in the next four years, Eni plans to hire more than 2,200 people to support business expansion. In order to tighten up and improve models and instruments for the development of host Countries, several initiatives have been planned, including infrastructure improvements in Libya and Kazakhstan, training and education programs in Mozambique, Kazakhstan and Turkmenistan, and projects to develop energy access in Nigeria, Ghana and Algeria. Eni confirms its commitment to improving the safety of employees and contractors, strengthening the tools for management, training and control, and ensuring asset integrity and process security. Environmental impact targets include the containment of accidental oil spills from 2.9 boe/mmboe to 2.4 boe/mmboe by 2016, an over 30% reduction in GHG emission rates in the Exploration & Production segment for each thousand toe of gross operated production by 2015 as compared to 2010, by means of flaring down policies especially in Africa and energy efficiency programs. Projects for production water reinjection will lead to a rate of reinjection of 65% of total water produced by 2016. In the Gas & Power
Division the competitive scenario is expected to remain
weak on the back of the economic downturn in the
Eurozone, oversupply overhang, very liquid continental
hubs for spot transactions and competitive pressure. This
scenario influenced the gas market over the latest years,
driving a progressive deterioration in results of
operations and cash flows due to a continuing slowdown in
spot prices, pressed by weak fundamentals, while
divergent trends in oil-linked supply costs have squeezed
commercial margins. |
|
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Eni Annual Report / Our strategy
 |
more sophisticated
customers’ needs. Furthermore, management intends to
exploit synergies deriving from the integration of the
Group commodity risk management and trading with the
supply activities of the Gas & Power and the Refining
& Marketing Divisions and the non-retail commercial
sales of gas and LNG to fully centralize and optimize
Eni’s commodity risk exposure. The mitigation of the take-or-pay risk associated with long-term supply contracts is assuming a primary importance in the gas sector. In order to minimize the impact on future cash flows, management intends to renegotiate gas supply contracts and achieve a reduction in the annual minimum take, increased flexibility in logistics and commercial activities, as well as to optimize gas portfolio and maximize gas sales. The power generation business model confirms the adoption of the combined cycle gas fired technology. Energy saving initiatives are planned. We project to boost the use of renewable energy by increasing the installed capacity of photovoltaic modules up to 20.2 MW to produce clean power at our industrial sites. In the 2013-2016 period, Eni will launch a "water & energy" project for achieving energy savings also with a more rational use of water. The Refining & Marketing Division
will continue facing a weak refining outlook plagued by
declining fuels demand, excess capacity and risks of
margin pressure due to upward trends in oil-linked raw
material costs. In the refining activity Eni expects to
gradually recover profitability throughout the plan
period leveraging: (i) optimization of industrial plants
and of logistics operations by means of higher
flexibility, process integration and efficiency; (ii)
selective investments which will target to upgrade
conversion capacity and asset integrity; (iii) the
conversion of the Venice plant into a
"bio-refinery" to produce bio-fuels; (iv) cost
reduction programs. Eni’s Chemical segment is exposed to
fluctuations in the economic cycles, competitive
pressures and the risk of increases in the cost of
oil-based raw materials in particular in its more
commoditized lines of business and in those with low
technologic content. |
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Eni Annual Report / Our strategy
| and restructuring them. In
2012 Matrìca SpA, a new 50-50 joint venture with
Novamont, started the construction of the first two
plants of the Green Pole project (bio-monomers and
bio-lubricants). When fully operational in 2016-2017, the
pole will include 6 plants and one research centre, with
a total expenditure of approximately euro 500 million
(including interventions on local infrastructure). New
research lines have been activated in the area of
products from renewable sources. In this field, Eni
signed an agreement with Genomatica, a company active in
bio-technologies and yulex. The recent strategic alliances in Asia, supported by our technological know-how and the enhancement of Eni’s proprietary technology platform confirm a greater internationalization of our business, projecting it towards markets characterized by high-growth demand rates. In the Engineering & Construction
segment, Eni confirms its target of consolidating the
global competitive position achieved in the offshore and
onshore businesses and its role as high-quality niche
player in the deepwater drilling business. Saipem will
leverage on the enhancement of the EPC(I)-oriented
business model, its world-class technology, engineering
and delivering skills, its strong local presence and
established relationships with oil Majors and National
Oil Companies. |
|
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Eni Annual Report / Risk Management
(1) Potential events that can affect Eni’s activities and whose occurrence could hamper the achievement of the main corporate objectives. |
Eni has developed and
adopted a model for Integrated Risk Management (IRM) that
targets to achieve a comprehensive and selective 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 consistently with international principles and best practices. It is an integral part of the Internal Control and Risk Management System (see page 24) and is structured on three 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. |
 |
|
| Its strong point is
represented by risk governance that 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. The CEO implements the guidelines defined by the Board, overseeing the design, implementation and management of the Internal Control and Risk Management System, constantly checking its adequacy and efficacy. In particular, through the process of Integrated Risk Management, the CEO ensures the identification, assessment, management, and monitoring of major risks and the evolution of the IRM process consistently with business dynamics and the regulatory environment. The outcome of the process for reviewing the major risks and implementing the relevant treatment plans are presented to the Risk Committee, chaired by the CEO. The CEO then presents them to the Board of Directors which in turn assesses at least once a year the adequacy and efficacy of the Internal Control and Risk Management System with reference to Eni’s fundamentals and the risk profile assumed and compatible with corporate objectives. |
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Eni Annual Report / Risk Management
| Our process of integrated risk management The
IRM model is implemented through a process of integrated
management which is both continuous and dynamic and
leverages on the risk management systems already adopted
by each business unit and corporate processes. |
 (2) Impacts or effects that would take place in a given time frame in case of occurrence of a risk. |
| The monitoring
of main risks and the related treatment plans through
specific indicators (Key Risk Indicator, Key Control
Indicator, Key Performance Indicator) allow to identify
improvement areas in the management of major risks, to
analyze their evolution in terms of treatment measures
(also with reference to developing and updating risk
management models) and to timely identify potential new
risks. In order to support decision making processes and to allow an integrated risk management, reporting activities ensure the availability and representation of information collected and processed in the model phases at the various corporate levels. |
_ | Main
risks identified, monitored and managed by Eni ________________________________ |
|
› financial › country risk › regulatory developments › operating › environment › strategic A
detailed description |
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Eni Annual Report / Governance
| Eni considers sound
Corporate Governance1 to be a foundation stone
of its business model, understanding that good governance
is a prerequisite for pursuing its corporate mission
while ensuring compliance with standards of fairness and
cost effectiveness: the governance system is designed to
support the relationship of trust between Eni and its
stakeholders and, supplementing Eni’s business
strategy, to help achieve stable results and create
sustainable value over a long-term period. Eni, as
Italy’s top company by capitalization, is committed
to building a Corporate Governance system inspired by
excellence. In line with the principles set out in its
Corporate Governance Policy, Eni has participated in the
debate on issues regarding the management and control of
listed companies, developing a number of proposals for
the Italian Corporate Governance system. Many of the
proposals were included in the recommendations introduced
with the Corporate Governance Code in December 20112.
Furthermore, with a view to continuously improving the
Corporate Governance system of Eni and its subsidiaries,
numerous internal initiatives were undertaken in 2012 to
implement as completely as possible the recommendations
set out in the Code and, above all, to promote the
highest standards that Eni pursues in this field. Eni’s Corporate Governance structure |
||
(1) For further information on
Eni’s Corporate Governance system, please refer to
Eni’s Corporate Governance Report, published on the
Company’s website in the Governance section. |
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 statutory auditing of the accounts to the audit firm. The Board of Directors and the Board of Statutory Auditors of Eni 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 the non-controlling shareholders. In addition, of the nine directors, eight are non-executive directors, and seven of these meet the independence requirements as provided for by law and the Corporate Governance recommendations. Starting with the next election, the Board of Directors and Board of Statutory Auditors must have balanced representation of the genders, as provided for by law and already incorporated into the Company’s By-laws as of 2012. The Board of Directors, which plays a central role in the Company’s governance, has appointed a Chief Executive Officer and delegated to the Chairman powers to identify and pursue integrated projects and international agreements of strategic importance. Among those powers reserved to the Board, it has identified the most important strategic, operational and organizational responsibilities, in addition to those that cannot be delegated by law. Specifically, it has reserved to itself a central role in the areas of internal control and risk management, as well as in setting the key Corporate Governance3 guidelines for Eni. The Board has also retained the exclusive power to set sustainability policies and agree upon the results to be presented to the Shareholders’ Meeting through an integrated reporting system that demonstrates how good performance in sustainability creates long-term value. The Board of Directors has established four internal committees with consulting and advisory functions: the Control and Risk Committee, the Compensation Committee, the |
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Eni Annual Report / Governance
| Nomination Committee and the
Oil-Gas Energy Committee. The following chart provides a graphical representation of the Company’s Corporate Governance structure:
|
a) Appointed by the minority list. |
|
| In order for the Board to
take strategic decisions in an informed manner,
adequately overseeing and monitoring operations, the
Directors must be kept fully informed in a timely manner.
For that purpose, Board meetings follow specific
procedures and are carefully planned, with the help of
the Board Secretary, by the Chairman, who provides
leadership and moderates the discussion so as to give
each Director the opportunity to make an effective
contribution. In addition, following the appointment of the corporate boards in June 2011, Eni introduced a new training program (the "Board Induction") for newly appointed Directors and Statutory Auditors, in which other members of the two bodies were also invited to participate. The program continued in 2012 ("Ongoing Induction"), with an in-depth examination of business issues and with visits to a number of operating facilities. Sustainability and business ethics were also addressed in the induction process, with the goal of training Directors and Statutory Auditors to understand how social and environmental issues affect the business environment, and how social and regulatory trends can create new opportunities and risks4. In 2012, Eni also conducted a training program for new members of the boards of directors of Eni’s subsidiaries, emphasizing the contribution of diversity within the boards. The Board also conducted, for the seventh consecutive year, a self-assessment ("Board Review") of |
(4) Eni is member of the UN Global Compact LEAD Group, actively contributing to the "Board Education Program" project. |
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Eni Annual Report / Governance
 |
the composition of the Board
and its operation, with the support of an independent
external advisor. At the same time, with the support of
the same external advisor, Eni’s Board also carried
out a peer review process for Directors for the second
year consecutive. The peer review process consists of an
evaluation by each Director of the contribution made by
the other Directors. The board review and the peer review
are instruments for continually improving the quality of
Eni governance and the effectiveness of the Board. 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 attract personnel with high-level professional and management skills and to align the interests of management with the priority objective of creating value for shareholders over the medium/long-term. For that purpose, the structure of 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 and the significance of the persons involved. Remuneration is composed of a balanced mix of fixed and variable components. Under the Eni remuneration policy, considerable importance is given to the variable component, which is linked to results through a system of incentives tied to the achievement of performance/financial, business development and operational objectives, defined in terms of the sustainability of the results, in line with the Company’s Strategic Plan5. The remuneration policies were submitted to the Shareholders’ Meeting of 2012 and received its full support6.
|
|
(5) For more information, see the
Remuneration Report, available on the Company’s
website, in which the Remuneration Policy is subject to
an advisory vote of the Shareholders’ Meeting. (6) More specifically, Eni received a vote that was much higher than the average for major Italian listed companies. Of the 56.4% of the share capital represented at the meeting, 92.6% of the shares present voted in favor, corresponding to 52.2% of Eni share capital. |
The internal control and risk management
system Eni has adopted an integrated,
comprehensive internal control and risk management system
based on tools and the circulation of information that,
involving all Eni personnel, reach all the way up to the
Company’s top management. |
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| The project to rationalize
the control and risk management system also led to the
adoption, in March 2013, of a unified integrated risk
management manual setting out the duties, the
responsibilities and the procedures for coordinating the
actions of the main actors involved. More specifically,
the Board has sought to govern the coordination between
the system actors in order to maximize its efficiency and
reduce duplication, unifying the schedule for reporting
to top management, thereby permitting the Board, with the
support of the Control and Risk Committee, to assess the
system with a complete vision of the situation. An integral part of the Eni internal control system is the internal control system for financial reporting, the goal of which is to provide reasonable certainty as to the reliability of the financial reporting itself and as to the ability of the financial report preparation process to generate such information in accordance with generally accepted international accounting standards. Eni’s CEO and 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 Bylaws. The nomination for the position is proposed by the CEO in agreement with the Chairman. The CFO/FRO establishes the administrative and accounting procedures for preparing the periodic accounting documentation and any other financial disclosures, certifies along with the CEO the adequacy and effective application of these procedures, as well as the veracity of accounting documents and their compliance with applicable regulations. The CFO/FRO plays an important role in providing support to the unit responsible for the Company’s Integrated Risk Management process. Transparency and communication with the public The foregoing reflects, albeit in brief, the most important management and control issues that characterize the governance system and rules. Eni also places great emphasis on open, transparent communication with its shareholders and all other stakeholders, underscoring its continuing commitment to ensuring that each and every shareholder can effectively exercise their rights. Eni is committed to making complete, timely, understandable, freely accessible information available to all. Information is a strategic business asset and as such must be managed so as to ensure that the interests of the Company, its shareholders and the market are protected. To this end, on October 29, 2012, the Eni Board of Directors, acting on the proposal of the CEO after consultation with the Control and Risk Committee, approved the new Market Abuse procedure, establishing the principles for the proper internal management and disclosure of corporate information, consolidating in one set of rules the three previous regulations on market abuse in order to rationalize Company rules for preventing market abuse and make them more effective. |
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| Exploration & Production | |||||||||||
| Key performance indicators | |||||||||||
| 2010 | 2011 | 2012 | |||||||||
| Employees injury frequency rate | (No. of accidents per million of worked hours) | 0.72 | 0.41 | 0.28 | |||||||
| Contractors injury frequency rate | 0.48 | 0.41 | 0.36 | ||||||||
| Fatality index | (No. of fatalities per 100 million of worked hours) | 7.90 | 1.83 | 0.81 | |||||||
| Net sales from operations (a) | (euro million) | 29,497 | 29,121 | 35,881 | |||||||
| Operating profit | 13,866 | 15,887 | 18,451 | ||||||||
| Adjusted operating profit | 13,898 | 16,075 | 18,518 | ||||||||
| Adjusted net profit | 5,609 | 6,865 | 7,425 | ||||||||
| Capital expenditure | 9,690 | 9,435 | 10,307 | ||||||||
| Adjusted ROACE | (%) | 16.0 | 17.2 | 17.6 | |||||||
| Profit per boe (b) | ($/boe) | 11.91 | 16.98 | 15.95 | |||||||
| Opex per boe (b) | 6.14 | 7.28 | 7.10 | ||||||||
| Cash flow per boe (d) | 25.52 | 31.65 | 32.77 | ||||||||
| Finding & Development cost per boe (c) (d) | 19.32 | 18.82 | 17.37 | ||||||||
| Average hydrocarbons realizations (d) | 55.60 | 72.26 | 73.39 | ||||||||
| Production of hydrocarbons (d) (e) | (kboe/d) | 1,815 | 1,581 | 1,701 | |||||||
| Estimated net proved reserves of hydrocarbons (d) (e) | (mmboe) | 6,843 | 7,086 | 7,166 | |||||||
| Reserves life index (d) (e) | (years) | 10.3 | 12.3 | 11.5 | |||||||
| Organic reserves replacement ratio net of updating the natural gas conversion factor (d) | (%) | 127 | 143 | 147 | |||||||
| Employees at year end | (units) | 10,276 | 10,425 | 11,304 | |||||||
| of which: outside Italy | 6,370 | 6,628 | 7,371 | ||||||||
| Oil spills | (bbl) | 3,820 | 2,930 | 3,093 | |||||||
| Oil spills from sabotage and terrorism | 18,695 | 7,657 | 8,384 | ||||||||
| Produced water re-injected | (%) | 44 | 43 | 49 | |||||||
| Direct GHG emissions | (mmtonnes CO2 eq) | 31.20 | 23.59 | 28.46 | |||||||
| of which: from flaring | 13.83 | 9.55 | 9.46 | ||||||||
| Community investment | (euro million) | 72 | 62 | 59 | |||||||
| (a) Before
elimination of intragroup sales. (b) Consolidated subsidiaries. (c) Three-year average. (d) Includes Eni’s share of equity-accounted entities. (e) From July 1, 2012, Eni has updated the natural gas conversion factor from 5,550 to 5,492 standard cubic feet of gas per barrel of oil equivalent. The effect of this update on production expressed in boe was 9 kboe/d for the full-year 2012 and on the initial reserves balance as of January 1, 2012 amounted to 40 mmboe. For further information see the paragraph "Summary of significant accounting policies" in the Notes to the Consolidated Financial Statements. |
| Performance of the year |
›
In 2012 employees and contractors injury frequency rate declined
by 31.7% and 12.2% compared to the previous year. Eni continues
to promote operations aimed at ensuring high safety standards.
›
Total greenhouse gas emissions increased by 20.6% due to the
recovery of activities in Libya. Greenhouse gas emissions from
flaring were in line with 2011 (down 0.9%).
›
Oil spills increased in the full year (up 5.6% from accidents and
up 9.5% from sabotage and terrorism) due to force majeure and
security issues in Nigeria.
›
Achieved the best ever levels in re-injection of the produced
water with a level of 49%. In particular, the water re-injection
project at the Belayim field (Eni’s interest 100%) in Egypt
reported a level equal to 99%.
›
In 2012 the E&P Division reported a record performance with
an adjusted net profit amounting to euro 7,425 million (up 8.2%
from
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Eni Annual Report / Operating Review
2011) driven by an ongoing production recovery in Libya.
›
Eni reported oil and natural gas production for the full year of
1,701 kboe/day (up 7% form 2011)1 sustained by the
recovery of activities in Libya, the start-up/ramp-up of fields,
particularly in Russia and Australia, and higher production in
Iraq.
›
Estimated net proved reserves at December 31, 2012 was an
eight-year record at 7.17 bboe based on a reference Brent price
of $111 per barrel. The organic reserves ratio was 147% 1
with a reserves life index of 11.5 years (12.3 years in 2011).
All sources reserves replacement ratio was 107%1.
| Exploration activity |
Full year 2012 was a record for exploration, adding 3.64 bboe of discovered resources, about six times production of the year, increasing Eni’s reserves to best ever levels with rapid time-to-market and cost effectiveness. Eni’s approach in the selective development initiatives, advanced technologies and knowledge management of core basins will be the key to achieve future targets: › The exploration campaign executed in Mozambique in the Area 4 offshore the Rovuma basin proved the Mamba gas complex to be the largest discovery in the Company’s exploration history. Eni estimates the full mineral potential of Area 4 at 75 Tcf of gas in place. The geological studies confirmed the high productivity of exploration wells. This means that this huge resource base can be exploited with a limited number of producing wells that will make the upstream project highly efficient. › In the Barents Sea, appraisal activities at the Skrugard discovery and the new Havis discovery showed recoverable reserves estimated at approximately 500 mmbbl at 100% in the license PL 532 (Eni’s interest 30%). › In Ghana, appraisal activities at the Sankofa discovery in the Offshore Cape Three Points license (Eni operator with a 47.22% interest) confirmed the overall potential of the discovery to be around 450 million barrels of oil in place. › A relevant onshore discovery in Pakistan with an estimated resource from 300 to 400 bcf of gas in place and in line with Eni’s strategy of focusing on conventional and synergic assets. › Onshore exploration activity in Libya was resumed by drilling the A1-108/4 exploration well that will reach a total depth of approximately 4,420 meters. This is the first well of an onshore exploration campaign that will continue in 2013, marking a relevant step in the full recovery of Eni’s upstream activity in the Country. › Other significant exploration successes were achieved in Egypt, Congo, Indonesia, Angola, the United States and Nigeria where synergies with existing infrastructures ensure to reduce time-to-market discovered resources. › Eni’s portfolio was boosted with the acquisition of new exploration acreage in high potential areas such as Kenya, Liberia, Vietnam, Cyprus, offshore Russia and shale gas in Ukraine, as well as legacy areas such as China, Pakistan, Indonesia and Norway. › In 2012 exploration expenditure amounted to euro 1,850 million (up 52.9% from 2011) to complete 60 new exploratory wells (34.1 net to Eni). The overall commercial success rate was 40% (40.8% net to Eni). In addition 144 exploratory wells drilled are in progress at year end (62 net to Eni). |
| Sustainability and portfolio developments |
› Signed an agreement with CNPC/Petrochina to sell 28.57% of the share capital of our subsidiary Eni East Africa, which currently owns 70% interest in Area 4 in Mozambique, for an agreed price equal to $4,210 million. The deal is subject to approval by relevant authorities. Once finalized, CNPC indirectly acquires, through its 28.57% equity investment in Eni East Africa, a 20% interest in Area 4, while Eni will retain the 50% interest through the remaining controlling stake in Eni East Africa. › The international Contracting Companies of the Final Production Sharing Agreement (FPSA) of the Karachaganak field and the Republic of Kazakhstan closed a settlement agreement of all pending claims relating to the recovery of costs incurred to develop the field. The Contracting Companies divested 10% of their rights and interest in the project to Kazakhstan’s KazMunaiGas for $1 billion net cash consideration ($325 million being Eni’s share). Eni’s interest in the Karachaganak project has been reduced to 29.25% from the 32.5% previously held. › Signed an agreement with Anadarko Petroleum Corporation establishing basic principles for the coordinated development of common offshore activities in Area 4, operated by Eni and Area 1, operated by Anadarko. Furthermore, the two companies will jointly plan and construct onshore LNG liquefaction facilities in Northern Mozambique. › Signed a Memorandum of Understanding with the Vietnamese national oil company PetroVietnam for the development of business opportunities in Vietnam and abroad. › The Consortium partners and the Authority of the Republic of Kazakhstan reached an agreement on the Amendment to the sanctioned development plan of the Kashagan field (Amendment 4) which included an update to the project schedule, a revision of investments estimate and the settlement of all pending claims relating to recoverable costs and other tax matters. The commercial production start-up is expected by the end of the first half of 2013. › Achieved a Memorandum of Understanding with the Authority of the Yamal-Nenets, in Russia, for implementing joint socio-economic and cultural projects in the area. › Developed a training program in the field of human rights for staff, in particular employed in the security area, at Eni’s subsidiaries in Congo and Angola. The activities involved about 900 employees in the Pointe Noire and Luanda area, respectively. |
(1) Excluding the impact of updating the natural gas conversion rate.
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Eni Annual Report / Operating Review
›
Divested production and development assets in Italy, Nigeria,
Norway, the United Kingdom and offshore Gulf of Mexico confirming
a selective growth approach to optimize Eni’s asset
portfolio and to enhance the competitiveness of Eni’s
full-cycle production costs.
›
Sanctioned by Venezuelan authorities the development plan of the
Perla gas project, in Block Cardón IV (Eni’s interest 50%),
in the Gulf of Venezuela. In 2012 two more phases were sanctioned
to reach a plateau production of approximately 1,200 mmcf/d.
›
Made final investment decisions to develop fields, in addition to
the above mentioned Perla field, in Angola, Congo and Nigeria as
well as other minor projects in Italy which are expected to add
59 kboe/d in 2016.
›
Development expenditure was euro 8,304 million (up 12.9% from
2011) to fuel the growth of major projects in Norway, the United
States, Congo, Italy, Kazakhstan, Angola and Algeria.
›
In 2012 overall R&D expenditure of the Exploration &
Production Division amounted to approximately euro 94 million
(euro 90 million in 2011).
| Reserves Overview |
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 rules2. 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 others 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. |
(2) 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
| 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. Reserves independent evaluation |
data of wells, reservoir
studies, technical analysis relevant to field
performance, long-term 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 2012 Ryder Scott Company and DeGolyer and MacNaughton3 provided an independent evaluation of approximately 33% of Eni’s total proved reserves at December 31, 20125, confirming, as in previous years, the reasonableness of Eni internal evaluation. In the 2010-2012 three year period, 92% of Eni total proved reserves were subject to an independent evaluation. As at December 31, 2012, the principal Eni properties not subjected to independent evaluation in the last three years were Bouri and Bu Attifel (Libya) and M’Boundi (Congo). Movements in estimated net proved reserves |
i
| (mmboe) | Consolidated subsidiaries | Equity-accounted entities | Total |
| Estimated net proved reserves at December 31, 2011 | 5,940 | 1,146 | 7,086 | |||||||||||||||||
| Extensions, discoveries and other additions, revisions of previous estimates, improved recovery and other factors, excluding price effect | 609 | 406 | 1,015 | |||||||||||||||||
| Price effect | (60 | ) | (2 | ) | (62 | ) | ||||||||||||||
| Reserve additions, total | 549 | 404 | 953 | |||||||||||||||||
| Sales of minerals-in-place | (212 | ) | (38 | ) | (250 | ) | ||||||||||||||
| Production of the year | (610 | ) | (13 | ) | (623 | ) | ||||||||||||||
| Estimated net proved reserves at December 31, 2012 | 5,667 | 1,499 | 7,166 | |||||||||||||||||
| Organic reserves replacement ratio (a) | (%) | 147 | ||||||||||||||||||
| All sources reserves replacement ratio (a) | (%) | 107 | ||||||||||||||||||
(a) Net of updating the natural gas conversion factor. This factor has been updated to 1 barrel of oil = 5,492 cubic feet of gas in 2012.
| Additions to proved reserves
booked in 2012 were 953 mmboe (including the impact of
gas conversion factor update equal to 40 mmboe) and
derived from: (i) revisions of previous estimates were
576 mmboe mainly reported in Venezuela, Kazakhstan,
Nigeria and Egypt; (ii) extensions, discoveries and other
factors were 349 mmboe, with major increases booked in
Venezuela, Kazakhstan and Angola; (iii) improved recovery
were 28 mmboe mainly reported in Algeria and Nigeria. In spite of stable Brent price at $111 per barrel, all sources additions were adversely affected by the unfavorable |
movements in oil and gas
prices on reserves entitlements in certain PSAs and
service contracts and in the economics of marginal
productions (down 62 mmboe). Sales of minerals-in-place were 250 mmboe and resulted from the disposals of Snam (in particular the divestment of 139 mmboe of Stogit reserves) and Galp (38 mmboe) (for more details see "Disposals") as well as the change of participation interest in the Karachaganak field (48 mmboe; see "Main exploration and development projects-Karachaganak) and other non strategic assets (25 mmboe). |
(3) From 1991 to 2002, DeGolyer and
MacNaughton; from 2003, also Ryder Scott.
(4) The reports of independent engineers are available on Eni
website eni.com section Publications/Annual Report 2012.
(5) Includes Eni’s share of proved reserves of equity
accounted entities
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Eni Annual Report / Operating Review
| In 2012 Eni achieved an
organic reserves replacement ratio6 of 147% on
a comparable basis i.e. excluding the effect of the
revision of the gas conversion rate. All sources reserves
replacement ratio was 107% on a homogeneous basis.
Reserves life index was 11.5 years (12.3 years in 2011). Proved undeveloped reserves |
production levels. The
Company estimates that approximately 1.1 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
(approximately 0.6 bboe) where development activities are
progressing and production start-up is targeted by the
end of the first half 2013. (For more details regarding
this project please refer to "Main exploration and
development projects-Kashagan"); (ii) some Libyan
gas fields (0.27 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 projects including a gas
asset located in Siberia where development activities are
progressing. Delivery commitments |
(6) 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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| Estimated net proved hydrocarbons reserves (a) |
| Liquids (mmbbl) | Natural gas (bcf) | Hydrocarbons (mmboe) | Liquids (mmbbl) | Natural gas (bcf) | Hydrocarbons (mmboe) | Liquids (mmbbl) | Natural gas (bcf) | Hydrocarbons (mmboe) |
| Consolidated subsidiaries | 2010 | 2011 | 2012 | |||
| Italy | 248 | 2,644 | 724 | 259 | 2,491 | 707 | 227 | 1,633 | 524 | |||||||||
| Developed | 183 | 2,061 | 554 | 184 | 1,977 | 540 | 165 | 1,325 | 406 | |||||||||
| Undeveloped | 65 | 583 | 170 | 75 | 514 | 167 | 62 | 308 | 118 | |||||||||
| Rest of Europe | 349 | 1,401 | 601 | 372 | 1,425 | 630 | 351 | 1,317 | 591 | |||||||||
| Developed | 207 | 1,103 | 405 | 195 | 995 | 374 | 180 | 925 | 349 | |||||||||
| Undeveloped | 142 | 298 | 196 | 177 | 430 | 256 | 171 | 392 | 242 | |||||||||
| North Africa | 978 | 6,207 | 2,096 | 917 | 6,190 | 2,031 | 904 | 5,558 | 1,915 | |||||||||
| Developed | 656 | 3,100 | 1,215 | 622 | 3,070 | 1,175 | 584 | 2,720 | 1,080 | |||||||||
| Undeveloped | 322 | 3,107 | 881 | 295 | 3,120 | 856 | 320 | 2,838 | 835 | |||||||||
| Sub-Saharan Africa | 750 | 2,127 | 1,133 | 670 | 1,949 | 1,021 | 672 | 2,061 | 1,048 | |||||||||
| Developed | 533 | 1,550 | 812 | 483 | 1,437 | 742 | 456 | 1,429 | 716 | |||||||||
| Undeveloped | 217 | 577 | 321 | 187 | 512 | 279 | 216 | 632 | 332 | |||||||||
| Kazakhstan | 788 | 1,874 | 1,126 | 653 | 1,648 | 950 | 670 | 2,038 | 1,041 | |||||||||
| Developed | 251 | 1,621 | 543 | 215 | 1,480 | 482 | 203 | 1,401 | 458 | |||||||||
| Undeveloped | 537 | 253 | 583 | 438 | 168 | 468 | 467 | 637 | 583 | |||||||||
| Rest of Asia | 139 | 871 | 295 | 106 | 685 | 230 | 82 | 562 | 184 | |||||||||
| Developed | 39 | 560 | 139 | 34 | 528 | 129 | 41 | 372 | 108 | |||||||||
| Undeveloped | 100 | 311 | 156 | 72 | 157 | 101 | 41 | 190 | 76 | |||||||||
| America | 134 | 530 | 230 | 132 | 590 | 238 | 154 | 449 | 236 | |||||||||
| Developed | 62 | 431 | 141 | 92 | 385 | 162 | 109 | 334 | 170 | |||||||||
| Undeveloped | 72 | 99 | 89 | 40 | 205 | 76 | 45 | 115 | 66 | |||||||||
| Australia and Oceania | 29 | 544 | 127 | 25 | 604 | 133 | 24 | 572 | 128 | |||||||||
| Developed | 20 | 539 | 117 | 25 | 491 | 112 | 24 | 459 | 107 | |||||||||
| Undeveloped | 9 | 5 | 10 | 113 | 21 | 113 | 21 | |||||||||||
| Total consolidated subsidiaries | 3,415 | 16,198 | 6,332 | 3,134 | 15,582 | 5,940 | 3,084 | 14,190 | 5,667 | |||||||||
| Developed | 1,951 | 10,965 | 3,926 | 1,850 | 10,363 | 3,716 | 1,762 | 8,965 | 3,394 | |||||||||
| Undeveloped | 1,464 | 5,233 | 2,406 | 1,284 | 5,219 | 2,224 | 1,322 | 5,225 | 2,273 | |||||||||
| Equity-accounted entities | ||||||||||||||||||
| Rest of Europe | 2 | |||||||||||||||||
| Developed | ||||||||||||||||||
| Undeveloped | 2 | |||||||||||||||||
| North Africa | 19 | 24 | 23 | 17 | 20 | 21 | 17 | 16 | 20 | |||||||||
| Developed | 18 | 22 | 22 | 16 | 17 | 19 | 17 | 16 | 20 | |||||||||
| Undeveloped | 1 | 2 | 1 | 1 | 3 | 2 | ||||||||||||
| Sub-Saharan Africa | 6 | 118 | 28 | 22 | 338 | 83 | 16 | 353 | 81 | |||||||||
| Developed | 4 | 4 | 5 | 4 | 4 | 4 | ||||||||||||
| Undeveloped | 2 | 114 | 23 | 18 | 334 | 79 | 16 | 353 | 81 | |||||||||
| Rest of Asia | 44 | 1,520 | 317 | 110 | 3,033 | 656 | 114 | 3,043 | 668 | |||||||||
| Developed | 5 | 214 | 43 | 24 | 5 | 8 | 402 | 82 | ||||||||||
| Undeveloped | 39 | 1,306 | 274 | 110 | 3,009 | 651 | 106 | 2,641 | 586 | |||||||||
| America | 139 | 22 | 143 | 151 | 1,307 | 386 | 119 | 3,355 | 730 | |||||||||
| Developed | 25 | 6 | 26 | 25 | 8 | 26 | 19 | 6 | 20 | |||||||||
| Undeveloped | 114 | 16 | 117 | 126 | 1,299 | 360 | 100 | 3,349 | 710 | |||||||||
| Total equity-accounted entities | 208 | 1,684 | 511 | 300 | 4,700 | 1,146 | 266 | 6,767 | 1,499 | |||||||||
| Developed | 52 | 246 | 96 | 45 | 53 | 54 | 44 | 424 | 122 | |||||||||
| Undeveloped | 156 | 1,438 | 415 | 255 | 4,647 | 1,092 | 222 | 6,343 | 1,377 | |||||||||
| Total including equity-accounted entities | 3,623 | 17,882 | 6,843 | 3,434 | 20,282 | 7,086 | 3,350 | 20,957 | 7,166 | |||||||||
| Developed | 2,003 | 11,211 | 4,022 | 1,895 | 10,416 | 3,770 | 1,806 | 9,389 | 3,516 | |||||||||
| Undeveloped | 1,620 | 6,671 | 2,821 | 1,539 | 9,866 | 3,316 | 1,544 | 11,568 | 3,650 |
(a) From July 1, 2012, Eni has updated the natural gas conversion factor from 5,550 to 5,492 standard cubic feet of gas per barrel of oil equivalent. For further information see the paragraph "Summary of significant accounting policies" in the Notes to the Consolidated Financial Statements.
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Oil and natural gas production
| Eni reported liquids and gas
production for the full year of 1,701 kboe/d. This was
calculated assuming a natural gas conversion factor to
barrel equivalent which was updated to 5,492 cubic feet
of gas equal 1 barrel of oil from July 1, 2012. On a
comparable basis, i.e. when excluding the effect of
updating the gas conversion factor, production reported
an increase of 7% for the full year. The performance was
driven by an ongoing recovery in Libyan production and
continuing field start-up and ramp-up mainly in Russia
and Australia as well as increased production in Iraq.
These positives were partly offset by the temporary
shutdown of the Elgin/Franklin field (Eni’s interest
21.87%) in the UK due to a gas leak, losses in Nigeria
due to force majeure and mature field declines. The share
of oil and natural gas produced outside Italy was 89%
(88% in 2011). Liquids production (882 kbbl/d) increased by 37 kbbl/d, or 4.4%, due to the ramp-up of Libyan production and growth registered mainly in: (i) Australia, due to the ramp-up of the Kitan field (Eni operator with a 40% interest); and (ii) Iraq, due to increased production at the Zubair field (Eni’s interest 32.8%). Production declined in the United Kingdom and Nigeria following the driver described above and mature field declines, mainly in Angola. Natural gas production (4,501 mmcf/d) increased by 416 mmcf/d, or 9.5%. The performance was driven by the ramp-up of Libyan production and start-ups in: (i) Samburgskoye field (Eni’s interest 29.4%) in Russia, by means of start-up of the first and the second train with an expected production level of 95 kboe/d (28 kboe/d net to Eni); and (ii) Seth field in the Ras el Barr offshore concession (Eni’s interest 50%) in Egypt. Production plateau is expected at approximately 170 mmcf/d (approximately 11 kboe/d net to Eni). These positives were partly offset by lower production in the United Kingdom and facilities downtime in the United States. |
Oil and gas production sold
amounted to 598.7 mmboe. The 23.9 mmboe difference over
production (622.6 mmboe) reflected mainly volumes of
natural gas consumed in operations (25.5 mmboe).
Approximately 57% of liquids production sold (325.4
mmbbl) was destined to Eni’s Refining &
Marketing Division (of which 25% was processed in
Eni’s refinery); about 29% of natural gas production
sold (1,501 bcf) was destined to Eni’s Gas &
Power Division. In 2012 oil spills reported an increase compared to the previous year (up 5.6% from accidents and up 9.5% from sabotage and terrorism). Oil spills from sabotage and terrorism were concentrated mainly in Nigeria, while oil spills from accidents were mainly recorded in Congo, Egypt and Nigeria. Eni continues to promote operations aimed at raising safety standards and at ensuring efficient operations management: oil spills from accidents on production showed a decrease of 4.4% from 2011 and the expenditure to implement safety at the plants has doubled in the year, exceeding euro 30 million. Productive wells In 2012 oil and gas productive wells were 8,512
(3,213.1 of which represented Eni’s share). In
particular, oil productive wells were 5,927 (2,037.8 of
which represented Eni’s share); natural gas
productive wells amounted to 2,585 (1,175.3 of which
represented Eni’s share). |
| Productive oil and gas wells at Dec. 31, 2012 (a) |
2012 |
||
Oil Wells |
Natural gas Wells |
|||
| (units) | Gross |
Net |
Gross |
Net |
||||
| Italy | 242.0 | 196.1 | 621.0 | 536.6 | ||||
| Rest of Europe | 460.0 | 69.7 | 180.0 | 89.2 | ||||
| North Africa | 1,447.0 | 702.3 | 154.0 | 59.2 | ||||
| Sub-Saharan Africa | 2,858.0 | 542.2 | 383.0 | 27.6 | ||||
| Kazakhstan | 102.0 | 29.1 | ||||||
| Rest of Asia | 642.0 | 404.1 | 889.0 | 336.6 | ||||
| America | 169.0 | 90.5 | 344.0 | 122.8 | ||||
| Australia and Oceania | 7.0 | 3.8 | 14.0 | 3.3 | ||||
| 5,927.0 | 2,037.8 | 2,585.0 | 1,175.3 |
(a) Includes 2,203 gross (747.7 net to Eni) 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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Eni Annual Report / Operating Review
| Oil and natural gas production (a) (b) |
| 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 | 2010 | 2011 | 2012 | |||
| Italy | 61 | 673.2 | 183 | 64 | 674.3 | 186 | 63 | 695.1 | 189 | |||||||||
| Rest of Europe | 121 | 559.2 | 222 | 120 | 537.9 | 216 | 95 | 458.4 | 178 | |||||||||
| Croatia | 45.3 | 8 | 29.9 | 5 | 25.4 | 5 | ||||||||||||
| Norway | 74 | 271.6 | 123 | 80 | 284.0 | 131 | 74 | 289.6 | 126 | |||||||||
| United Kingdom | 47 | 242.3 | 91 | 40 | 224.0 | 80 | 21 | 143.4 | 47 | |||||||||
| North Africa | 297 | 1,667.3 | 597 | 204 | 1,265.1 | 432 | 267 | 1,728.2 | 581 | |||||||||
| Algeria | 74 | 20.2 | 77 | 69 | 19.0 | 72 | 71 | 40.1 | 78 | |||||||||
| Egypt | 96 | 755.1 | 232 | 91 | 800.7 | 236 | 88 | 805.9 | 235 | |||||||||
| Libya | 116 | 871.1 | 273 | 36 | 423.2 | 112 | 101 | 863.5 | 258 | |||||||||
| Tunisia | 11 | 20.9 | 15 | 8 | 22.2 | 12 | 7 | 18.7 | 10 | |||||||||
| Sub-Saharan Africa | 318 | 440.7 | 397 | 275 | 506.1 | 366 | 245 | 534.3 | 343 | |||||||||
| Angola | 110 | 31.1 | 115 | 92 | 32.8 | 98 | 78 | 34.8 | 85 | |||||||||
| Congo | 98 | 67.9 | 110 | 87 | 119.1 | 108 | 82 | 120.5 | 104 | |||||||||
| Nigeria | 110 | 341.7 | 172 | 96 | 354.2 | 160 | 85 | 379.0 | 154 | |||||||||
| Kazakhstan | 65 | 237.0 | 108 | 64 | 231.0 | 106 | 61 | 221.7 | 102 | |||||||||
| Rest of Asia | 47 | 435.0 | 125 | 33 | 404.4 | 106 | 41 | 390.1 | 112 | |||||||||
| China | 6 | 6.7 | 7 | 7 | 5.0 | 8 | 8 | 4.4 | 9 | |||||||||
| India | 1 | 36.6 | 8 | 19.6 | 4 | 10.5 | 2 | |||||||||||
| Indonesia | 1 | 65.5 | 13 | 1 | 58.6 | 12 | 1 | 58.9 | 12 | |||||||||
| Iran | 21 | 21 | 6 | 6 | 3 | 3 | ||||||||||||
| Iraq | 5 | 5 | 7 | 7 | 18 | 18 | ||||||||||||
| Pakistan | 1 | 326.2 | 59 | 1 | 321.2 | 58 | 1 | 310.4 | 57 | |||||||||
| Turkmenistan | 12 | 12 | 11 | 11 | 10 | 5.9 | 11 | |||||||||||
| America | 60 | 396.0 | 132 | 55 | 334.0 | 115 | 72 | 283.5 | 124 | |||||||||
| Ecuador | 11 | 11 | 7 | 7 | 25 | 25 | ||||||||||||
| Trinidad & Tobago | 63.6 | 12 | 56.7 | 10 | 58.5 | 11 | ||||||||||||
| United States | 49 | 332.4 | 109 | 48 | 277.3 | 98 | 47 | 225.0 | 88 | |||||||||
| Australia and Oceania | 9 | 95.7 | 26 | 11 | 97.8 | 28 | 18 | 100.8 | 37 | |||||||||
| Australia | 9 | 95.7 | 26 | 11 | 97.8 | 28 | 18 | 100.8 | 37 | |||||||||
| 978 | 4,504.1 | 1,790 | 826 | 4,050.6 | 1,555 | 862 | 4,412.1 | 1,666 | ||||||||||
| Equity-accounted entities | ||||||||||||||||||
| Angola | 3 | 0.8 | 3 | 3 | 1.9 | 4 | 2 | 4.4 | 2 | |||||||||
| Brazil | 1 | 1 | 2 | 2 | ||||||||||||||
| Indonesia | 1 | 28.9 | 6 | 1 | 25.7 | 6 | 1 | 26.0 | 6 | |||||||||
| Russia | 2 | 52.4 | 11 | |||||||||||||||
| Tunisia | 4 | 5.9 | 5 | 5 | 6.4 | 6 | 4 | 5.3 | 5 | |||||||||
| Ukraine | 0.5 | |||||||||||||||||
| Venezuela | 11 | 11 | 9 | 9 | 9 | 9 | ||||||||||||
| 19 | 35.6 | 25 | 19 | 34.0 | 26 | 20 | 88.6 | 35 | ||||||||||
| Total | 997 | 4,539.7 | 1,815 | 845 | 4,084.6 | 1,581 | 882 | 4,500.7 | 1,701 | |||||||||
| Oil and natural gas production net of updating the natural gas conversion factor | - | - | 1,815 | - | - | 1,581 | - | 1,692 |
(a) From July 1, 2012, Eni has updated the
natural gas conversion factor from 5,550 to 5,492 standard cubic
feet of gas per barrel of oil equivalent.
(b) Includes volumes of gas consumed in operations (383, 321 and
318 mmcf/d in 2012, 2011 and 2010, respectively).
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Eni Annual Report / Operating Review
Drilling
| Exploration In 2012, a total of 60 new exploratory wells7 were drilled (34.1 of which represented Eni’s share), as compared to 56 exploratory wells drilled in 2011 (28 of which represent Eni’s share) and 47 exploratory wells drilled in 2010 (23.8 of which represent 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 40% (40.8% net to Eni) as compared to 42% (38.6% net to Eni) and 41% (39% net to Eni) in 2011 and 2010, respectively. |
Development |
|
| Exploratory Well Activity |
Net wells completed |
Wells in progress at Dec. 31 (a) |
|||
2010 |
2011 |
2012 |
2012 |
|||||
| (units) | Productive |
Dry (b) |
Productive |
Dry (b) |
Productive |
Dry (b) |
Gross |
Net |
||||||||
| Italy | 0.5 | 1.0 | 5.0 | 3.4 | ||||||||||||
| Rest of Europe | 1.7 | 1.1 | 0.3 | 0.7 | 1.0 | 1.0 | 19.0 | 7.2 | ||||||||
| North Africa | 9.3 | 8.1 | 6.2 | 3.4 | 6.3 | 11.3 | 17.0 | 11.7 | ||||||||
| Sub-Saharan Africa | 2.3 | 4.7 | 0.6 | 2.6 | 4.5 | 5.1 | 57.0 | 24.2 | ||||||||
| Kazakhstan | 0.8 | 8.0 | 1.4 | |||||||||||||
| Rest of Asia | 1.0 | 2.8 | 0.2 | 7.6 | 0.5 | 0.6 | 27.0 | 11.2 | ||||||||
| America | 6.3 | 2.5 | 0.1 | 10.0 | 2.4 | |||||||||||
| Australia and Oceania | 1.0 | 0.4 | 1.4 | 0.4 | 1.0 | 0.5 | ||||||||||
| 15.3 | 23.9 | 9.8 | 15.7 | 13.3 | 19.3 | 144.0 | 62.0 | |||||||||
| Development Well Activity |
Net wells completed |
Wells in progress at Dec. 31 |
|||
2010 |
2011 |
2012 |
2012 |
|||||
| (units) | Productive |
Dry (b) |
Productive |
Dry (b) |
Productive |
Dry (b) |
Gross |
Net |
||||||||
| Italy | 23.9 | 1.0 | 25.3 | 18.0 | 1.0 | 3.0 | 2.6 | |||||||||
| Rest of Europe | 2.9 | 0.2 | 3.3 | 0.3 | 2.9 | 0.6 | 9.0 | 1.8 | ||||||||
| North Africa | 44.3 | 0.3 | 55.9 | 1.1 | 46.0 | 1.6 | 19.0 | 8.1 | ||||||||
| Sub-Saharan Africa | 28.0 | 2.5 | 28.2 | 1.0 | 27.4 | 0.3 | 19.0 | 4.4 | ||||||||
| Kazakhstan | 1.8 | 1.3 | 1.4 | 16.0 | 2.9 | |||||||||||
| Rest of Asia | 41.7 | 1.8 | 39.2 | 2.5 | 41.2 | 0.1 | 36.0 | 14.2 | ||||||||
| America | 27.6 | 0.5 | 27.6 | 23.1 | 7.0 | 2.9 | ||||||||||
| Australia and Oceania | 1.5 | 0.4 | ||||||||||||||
| 171.7 | 6.3 | 181.2 | 4.9 | 160.0 | 3.6 | 109.0 | 36.9 |
(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, 2012,
Eni’s mineral right portfolio consisted of 1,072
exclusive or shared rights for exploration and
development in 43 Countries on five continents for a
total acreage of 251,170 square kilometers net to Eni of
which developed acreage of 40,939 square kilometers and
undeveloped acreage of 210,231 square kilometers. In 2012, changes in total net acreage mainly derived from: |
(i) new leases mainly in China, Indonesia, Kenya, Liberia, Norway, Pakistan and Ukraine for a total acreage of approximately 51,000 square kilometers; (ii) partial relinquishment or interest reduction in Algeria, Australia, Egypt, India, Ireland, Nigeria, Timor Leste, the United States, the United Kingdom and Pakistan covering an acreage of approximately 22,000 square kilometers; (iii) the total relinquishment of leases in Brazil and Mali for a total acreage of approximately 22,000 square kilometers. |
(7) Including temporary suspended wells pending further evaluation.
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Eni Annual Report / Operating Review
| Oil and natural gas interests |
December 31, 2011 |
December 31, 2012 |
||
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 | 26,023 | 288 | 17,191 | 27,199 | 44,390 | 11,150 | 16,273 | 27,423 | ||||||||
| Italy | 16,872 | 151 | 10,847 | 11,438 | 22,285 | 9,011 | 8,545 | 17,556 | ||||||||
| Rest of Europe | 9,151 | 137 | 6,344 | 15,761 | 22,105 | 2,139 | 7,728 | 9,867 | ||||||||
| Croatia | 987 | 2 | 1,975 | 1,975 | 987 | 987 | ||||||||||
| Norway | 2,335 | 52 | 2,264 | 6,226 | 8,490 | 346 | 2,330 | 2,676 | ||||||||
| Poland | 1,968 | 3 | 1,968 | 1,968 | 1,968 | 1,968 | ||||||||||
| United Kingdom | 1,014 | 65 | 2,055 | 647 | 2,702 | 776 | 138 | 914 | ||||||||
| Ukraine | 45 | 12 | 50 | 3,840 | 3,890 | 30 | 1,911 | 1,941 | ||||||||
| Other Countries | 2,802 | 3 | 3,080 | 3,080 | 1,381 | 1,381 | ||||||||||
| AFRICA | 137,220 | 287 | 64,075 | 192,079 | 256,154 | 19,891 | 122,905 | 142,796 | ||||||||
| North Africa | 30,532 | 119 | 31,988 | 17,691 | 49,679 | 14,066 | 7,324 | 21,390 | ||||||||
| Algeria | 9,065 | 41 | 2,640 | 1,158 | 3,798 | 1,071 | 161 | 1,232 | ||||||||
| Egypt | 5,898 | 57 | 4,937 | 7,845 | 12,782 | 1,771 | 2,819 | 4,590 | ||||||||
| Libya | 13,295 | 10 | 17,947 | 8,688 | 26,635 | 8,950 | 4,344 | 13,294 | ||||||||
| Tunisia | 2,274 | 11 | 6,464 | 6,464 | 2,274 | 2,274 | ||||||||||
| Sub-Saharan Africa | 106,688 | 168 | 32,087 | 174,388 | 206,475 | 5,825 | 115,581 | 121,406 | ||||||||
| Angola | 6,218 | 78 | 4,804 | 20,037 | 24,841 | 636 | 5,443 | 6,079 | ||||||||
| Congo | 5,020 | 26 | 1,835 | 7,681 | 9,516 | 1,027 | 4,008 | 5,035 | ||||||||
| 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 | 5,144 | 5,144 | 1,885 | 1,885 | ||||||||||
| Kenya | 3 | 35,724 | 35,724 | 35,724 | 35,724 | |||||||||||
| Liberia | 3 | 8,145 | 8,145 | 2,036 | 2,036 | |||||||||||
| Mozambique | 9,502 | 1 | 12,956 | 12,956 | 9,069 | 9,069 | ||||||||||
| Nigeria | 8,491 | 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 | 61,502 | 5 | 59,578 | 59,578 | 39,862 | 39,862 | ||||||||||
| ASIA | 55,284 | 73 | 17,126 | 101,554 | 118,680 | 5,778 | 52,264 | 58,042 | ||||||||
| Kazakhstan | 880 | 6 | 324 | 4,609 | 4,933 | 95 | 774 | 869 | ||||||||
| Rest of Asia | 54,404 | 67 | 16,802 | 96,945 | 113,747 | 5,683 | 51,490 | 57,173 | ||||||||
| China | 5,365 | 11 | 200 | 10,456 | 10,656 | 39 | 10,456 | 10,495 | ||||||||
| India | 9,206 | 11 | 206 | 16,546 | 16,752 | 109 | 6,099 | 6,208 | ||||||||
| Indonesia | 17,719 | 13 | 1,735 | 28,490 | 30,225 | 656 | 19,078 | 19,734 | ||||||||
| Iran | 820 | 4 | 1,456 | 1,456 | 820 | 820 | ||||||||||
| Iraq | 352 | 1 | 1,074 | 1,074 | 352 | 352 | ||||||||||
| Pakistan | 9,289 | 19 | 8,430 | 20,210 | 28,640 | 2,478 | 8,055 | 10,533 | ||||||||
| Russia | 1,469 | 4 | 3,501 | 1,495 | 4,996 | 1,029 | 440 | 1,469 | ||||||||
| Timor Leste | 6,740 | 2 | 5,148 | 5,148 | 4,118 | 4,118 | ||||||||||
| Turkmenistan | 200 | 1 | 200 | 200 | 200 | 200 | ||||||||||
| Other Countries | 3,244 | 1 | 14,600 | 14,600 | 3,244 | 3,244 | ||||||||||
| AMERICA | 10,209 | 409 | 4,571 | 14,180 | 18,751 | 3,074 | 6,001 | 9,075 | ||||||||
| Brazil | 795 | |||||||||||||||
| Ecuador | 1,985 | 1 | 1,985 | 1,985 | 1,985 | 1,985 | ||||||||||
| Trinidad & Tobago | 66 | 1 | 382 | 382 | 66 | 66 | ||||||||||
| United States | 5,123 | 393 | 1,826 | 6,206 | 8,032 | 925 | 3,707 | 4,632 | ||||||||
| Venezuela | 914 | 6 | 378 | 2,427 | 2,805 | 98 | 968 | 1,066 | ||||||||
| Other Countries | 1,326 | 8 | 5,547 | 5,547 | 1,326 | 1,326 | ||||||||||
| AUSTRALIA AND OCEANIA | 25,685 | 15 | 1,980 | 23,102 | 25,082 | 1,046 | 12,788 | 13,834 | ||||||||
| Australia | 25,647 | 14 | 1,980 | 22,338 | 24,318 | 1,046 | 12,750 | 13,796 | ||||||||
| Other Countries | 38 | 1 | 764 | 764 | 38 | 38 | ||||||||||
| Total | 254,421 | 1,072 | 104,943 | 358,114 | 463,057 | 40,939 | 210,231 | 251,170 |
(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.
35
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Eni Annual Report / Operating Review
Main
exploration
and development projects
| Italy Main
activity for the year was focused on maintenance and
optimization of producing fields and existing facilities. Rest of Europe Norway Exploration activities yielded
positive results in the: (i) PL 532 license (Eni’s
interest 30%) with the appraisal campaign for the
assessment of mineral potential of the oil and gas
Skrugard discovery and the new Havis oil and gas
discovery. The total recoverable reserves of the PL 532
license are estimated at approximately 500 mmbbl at 100%.
Both fields are planned to be put in production by means
of a fast-track synergic development; (ii) PL 533 license
(Eni’s interest 40%) with the gas and condensate
Salina discovery. |
were a joint effort between
the operator Eni, its partner in the field and the
Norwegian Clean Seas Association for Operating Companies
(NOFO). Several public and private sector operators
contributed with personnel and equipment to activities
such as the use of fishing vessels for coastal cleaning
operations, and the use of actual contingency resources
during all phases of an oil spill response. These results
showed that the Goliat project is characterized by a
well-advance emergency system for the management of an
oil spill, especially in terms of increased resources,
organizational innovation, consolidation of the
contingency apparatus, as well as equipment development
and investment. The Norwegian Authorities acknowledged this project as the reference standard for all future development projects in the Arctic. United Kingdom In
2012 Eni signed an agreement for the divestment of the
following development/production assets: Mariner
(Eni’s interest 20%), Andrew (Eni’s interest
16.21%), Kinnoul (Eni’s interest 16.67%), Flotta
Catchment Area (Eni’s interest 20%) and a few minor
ones. At the end of the year, the sale of Mariner was
completed. The completion date for the other assets is
expected in 2013. These agreements confirmed Eni’s
approach to optimize its producing asset portfolio in the
Country. North Africa Algeria Production started at the MLE
field (Eni’s interest 75%) as part of the MLE-CAFC
integrated project. A natural gas treatment plant started
operations with a production and export capacity of
approximately 320 mmcf/d of gas, 15 kbbl/d of oil and
condensates and 12 kbbl/d of GPL. Four export pipelines
link it to the national grid system. Egypt Exploration activities yielded positive results in the: (i) Belayim concession (Eni’s interest 100%) with the BLNE-2 and BMSW-1 oil discoveries that were linked to the existing facilities; (ii) Nile Delta (Eni’s interest 50%) with the gas offshore discoveries |
36
Contents
Eni Annual Report / Operating Review
| of Ha’py-12, Taurt
North-1, Seth South-1, Plio-1C and with the gas onshore
discovery of El Qara N-2; (iii) Meleiha development lease
(Eni’s interest 56%) with the Rosa North-1X, Emry
Deep 1X and 4X oil discoveries. The Emry Deep field
started-up with approximately 18 kbbl/d (approximately 6
kbbl/d net to Eni); (iv) West Razzak development lease
(Eni’s interest 80%) with the Aghar NN-1X oil
discovery. These recent discoveries are characterized by a fast track time-to-market and in line with Eni’s strategy of focusing on conventional and synergic assets. In 2012, Eni started-up the gas offshore Seth field located in the Ras el Barr concession (Eni’s interest 50%). Production is processed at the El Gamil onshore plant. Production plateau is expected at approximately 170 mmcf/d (approximately 11 kboe/d net to Eni). In 2012, the Belayim water injection system has been upgraded in order to optimize the recovery of its mineral potential. The level of produced water re-injected is 99%, corresponding to approximately 1 mmcf/d. Infilling and drilling activities are still in progress. Other activities for the year concerned: (i) the upgrading of the El Gamil and Abu Madi plants by adding new compression capacity to support production; (ii) completion and start-up of a hybrid solar/fossil facility in the Aghar field in the West Razzak development lease. The proprietary technology allows to save fuel during oil production by utilizing photovoltaic panels in parallel. Sub-Saharan Africa Angola Exploration activities yielded
positive results in: (i) Block 15/06 (Eni operator with a
35% interest) with the oil Vandumbu 1 discovery, first
commitment well of the second exploration period; (ii)
Block 2 (Eni’s interest 20%) with the gas and
condensates Etele Tampa 7 well. |
2013. In the year a new
agreement has been reached by the partners and local
authorities for the sale of LNG on Asian and European
markets. Congo Exploration activities
yielded positive results in the offshore block Marine XII
(Eni operator with a 65% interest) with the Nene Marine 1
gas discovery that confirmed the high mineral potential
of the area. Ghana Exploration activities yielded
positive results in the Offshore Cape Three Points
license (Eni operator with a 47.22% interest) with the:
(i) Sankofa East-1X well, the first commercial oil
discovery in the area that flowed at approximately 5
kbbl/d of high quality oil in test production; (ii) the
Sankofa East-2A appraisal well that confirmed the high
mineral potential of the western area. The total
potential of the Sankofa discovery is estimated at 450
mmbbl of oil in place with recoverable reserves up to 150
mmbbl. Studies for a fast track commercial development
are underway. Mozambique On March 13, 2013, Eni signed an agreement with CNPC/Petrochina to sell 28.57% of the share capital of the subsidiary Eni East Africa, which currently owns 70% interest |
37
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Eni Annual Report / Operating Review
| in Area 4, for an agreed
price equal to $4,210 million. The deal is subject to
approval by relevant authorities. Once finalized, CNPC
indirectly acquires, through its 28.57% equity investment
in Eni East Africa, a 20% interest in Area 4, while Eni
will retain the 50% interest through the remaining
controlling stake in Eni East Africa. In addition, Eni and CNPC signed a joint study agreement for the development of the Rongchang block with shale gas resources, over an area of approximately 2,000 square kilometers, located in the Sichuan Basin, in China. This block is currently the most interesting area in the Country. In 2012 exploration and appraisal campaigns achieved new exploration successes in Area 4 (Eni operator with a 70% interest) located in the Rovuma Basin with the Mamba South 2, Mamba North 1, Mamba North East 1 and 2 as well as Coral 1 and 2 gas discoveries. The latest Mamba North East and Coral discoveries are particularly significant since they confirm a new exploration play in Area 4, which is independent from Mamba’s structure. Eni estimates the full mineral potential of Area 4 at 75 Tcf of gas in place. FID is expected in 2014. In early 2013 a new exploration success was achieved with the delineation of Coral 3 gas well that strengthen the mineral potential of the area operated by Eni. The wells, drilled at the Coral prospect, showed excellent results during the production test. Eni plans to drill a further delineation well, Mamba South 3, before moving back to exploration drilling in the southern sector of Area 4. In December 2012, Eni signed an agreement with Anadarko Petroleum Corporation establishing basic principles for the coordinated development of common offshore activities in Area 4, operated by Eni and Area 1, operated by Anadarko. Furthermore, the two companies plan to jointly design and construct onshore LNG liquefaction facilities in Northern Mozambique. Feasibility studies are underway to promote some initiatives in the Country such as schooling, health, socio-economic development and the environment. A first program has been launched for the recruitment of 45 recent graduates of the University of Mozambique to spend two years of training in Italy. More recently, in November 2012, a second selection campaign has been launched for a further training initiative to be carried out in 2013. Nigeria Exploration
activities yielded positive results in: (i) Block OPL 282
(Eni’s interest 90%) with the Tinpa 1 well
containing oil; and (ii) Block OPL 2009 (Eni’s
interest 49%) with the Afiando 1 and 2 oil wells. |
access to drinkable water by
means of facilities installed in 13 communities; (iii)
fifteen projects for electricity supply. Activities are
underway to reach other 22 local communities. In blocks OMLs 60, 61, 62 and 63 (Eni operator with a 20% interest), activities progressed to support gas production to feed the Bonny liquefaction plant. Development activities concerned the Tuomo gas field aimed at supplying 170 mmcf/d net to Eni of feed gas to the sixth train for 20 years. The flowstation at Ogbainbiri is nearing completion. This facility will ensure approximately 310 mmcf/d of feed gas to the fourth and the fifth trains. Flaring down program continued with the upgrading of the flowstation at the Idu field with a decline in flared gas of 45 mmcf/d. In block OML 28 (Eni’s interest 5%) the integrated oil and natural gas project in the Gbaran-Ubie area is underway. The development plan provides for the construction of a Central Processing Facility (CPF) with treatment capacity of approximately 1 bcf/d of gas and 120 kbbl/d of liquids in order to feed gas the Bonny liquefaction plant. Activities progressed at the Abo Phase 3 project in block OML 125 (Eni operator with an 85% interest). Start-up is expected in 2013. Eni holds a 10.4% interest in the Nigeria LNG Ltd 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 joint venture (Eni’s interest 5%) and the NAOC JV, the latter operating the OMLs 60, 61, 62 and 63 blocks with an overall amount of 2,825 mmcf/d (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 Eni holds a 16.81% working
interest in the North Caspian Sea Production Sharing
Agreement (NCSPSA). The NCSPSA defines terms and
conditions for the exploration and development of the
Kashagan field which was discovered in the Northern
section of the contractual area in the year 2000 over an
undeveloped area extending for approximately 4,600 square
kilometers. Management believes this field contains a
large amount of hydrocarbon resources which will
eventually be developed in phases. |
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Eni Annual Report / Operating Review
| and production activities
have been delegated by NCOC BV to the main partners of
the Consortium: Eni has retained the responsibility for
the development of Phase 1 of the project (the so-called
"Experimental Program") and, when sanctioned,
the onshore part of Phase 2. On May 23, 2012 the Consortium partners and the Authority of the Republic of Kazakhstan signed an agreement to amend the sanctioned development plan at the Experimental Program of the Kashagan field (Amendment 4) which included an update to the project schedule, a revision of investment estimates and a settlement agreement of all pending claims relating to recoverable costs and other tax matters. The amendment also included a commercial framework to supply a share of the natural gas produced from Kashagan to the domestic market and an agreement whereby the international partners of the Consortium shall finance the share of project cost to be borne by the Kazakh KMG partner, in excess to the amounts sanctioned in the original budget costs (Amendment 3). In 2012 the Experimental Program progressed at the last phase of mechanical completion while commissioning and pre-start up activities achieved an advanced stage. Production plants are planned to be handed over to the production organization and tested. Start-up and commercial production is expected by the end of the first half of 2013, as agreed with the Republic of Kazakhstan. The Phase 1 (Experimental Program) targets an initial production capacity of 150 kbbl/d; by 2014 a second treatment 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 and sanction is expected in 2013 to start-up with 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 is to include it in the Man and Biosphere Program of UNESCO under the patronage of the Kazakh Minister for Environmental Protection. As of December 31, 2012, the aggregate costs incurred by Eni for the Kashagan project capitalized in the financial statements amounted to $7.5 billion (euro 5.7 billion at the EUR/USD exchange rate of December 31, 2012). This capitalized amount included: (i) $5.7 billion relating to expenditure incurred by Eni for the development of the oil field; and (ii) $1.8 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, 2012 Eni’s proved reserves booked for the Kashagan field amounted to approximately 600 mmboe, recording an increase compared to 2012 reflecting the settlement agreement signed with Kazakh Authority whereby Eni will be able to produce and market volumes of natural gas from Kashagan. |
Karachaganak
On June 28, 2012 the international Contracting Companies
of the Final Production Sharing Agreement (FPSA) of the
giant Karachaganak gas-condensate field and the Republic
of Kazakhstan closed a settlement agreement of all
pending claims relating to the recovery of costs incurred
to develop the field and certain tax matters. The
contracting companies transferred 10% of their rights and
interest in the project to Kazakhstan’s KazMunaiGas
for $1 billion net cash consideration ($325 million being
Eni’s share; for further information see the
disclosure on fixed assets at the "Summarized group
balance sheet" paragraph, in the Financial Review).
From the effective date of June 28, 2012, Eni’s
interest in the Karachaganak project has been reduced to
29.25% from the 32.5% previously held. The agreement also
includes the allocation of an additional 2 million tonnes
per year capacity in the Caspian Pipeline Consortium
(CPC) export pipeline towards the Black Sea. Phase 3 of the Karachaganak project is currently under study. The project is aimed at further developing gas and condensates reserves by means of the installation, in stages, of gas treatment plants and re-injection facilities to increase gas sales and liquids production. The development plan is currently in the phase of technical and marketing definition to be presented to the relevant Authorities. Eni continues its commitment to support local communities by means of the construction of schools and educational facilities, water and energy systems and the implementation of free health assistance for the villages located in the nearby area of Karachaganak. As of December 31, 2012, Eni’s proved reserves booked for the Karachaganak field amounted to approximately 500 mmboe, reporting a slightly decrease from 2011 deriving mainly from the divestment of Eni’s stake in the project, partly offset by upwards revisions. Rest of Asia Indonesia In May 2012, Eni was awarded
the East Sepinggan block (Eni’s interest 100%),
located offshore in Kutei Basin, including several
exploration discoveries, supported by the nearby Bontang
LNG processing facility. The commitment activity foresees
performing of geological and geophysical studies,
acquisition of seismic data and the drilling of one well
over the next three years. |
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Eni Annual Report / Operating Review
| 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 facilities, then for the
integrated development of four fields through a first Hub
serving the Gendalo, Gandang, Maha and a second Hub for
Gehem. 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 Development activities progressed
at the Zubair oil field (Eni 32.8%). The contracts have
been awarded for the first expansion of the actual
production capacity to double the current production
level in 2014. Pakistan Exploration activity yielded
positive results with a relevant gas discovery in the
onshore concession Badhra Area B. The discovery is
estimated to hold from 300 to 400 bcf of gas in place. A
further outline of the discovery will require additional
wells. This exploration success benefited from the
application of the Common Reflection Surface Stack
(e-crs™), an innovative proprietary algorithms
application for processing seismic data that allowed to
improve the reservoir structure knowledge thus
successfully positioning the discovery well. The
development of resources will leverage on the nearby Bhit
treatment plant operated by Eni with a 40% interest. Russia In June 2012, Eni and the
Authority of the Yamal-Nenets Autonomous District signed
a Memorandum of Understanding which outlines a plan for
implementing joint socio-economic and cultural projects
in the area. The agreement includes training initiatives
in the oil&gas sector, cultural programs and
financial support. |
of the Fedynsky and
Tsentralno-Barentsevsky licenses, located offshore Russia
in the Barents Sea, and Zapadno-Cernomorsky, located
offshore Russia in the Black Sea. Finalization is
expected in 2013. In 2012, production started-up at the Samburgskoye field (Eni’s interest 29.4%) located in the Yamal-Nenets area, in Siberia, by means of the first and the second train with an expected production level of 95 kboe/d (28 kboe/d net to Eni). Development activities progressed with completion expected in 2015 and production peak of 146 kboe/d (43 kboe/d net to Eni) in 2016. The gas production is sold to Gazprom under the agreement signed in September 2011 while the condensate production is sold to Novatek under the relevant agreement signed in 2012. Eni retains the right to lift its share of natural gas and sell it to any third parties in the domestic market. Planned activities progressed at the sanctioned Urengoiskoye field (Eni’s interest 29.4%). Start-up is expected in 2014. America United States In March 2013, Eni was
awarded five offshore blocks, located in Mississippi
Canyon and Desoto Canyon in the Gulf of Mexico.
Exploration outlining activity of the Heidelberg oil
discovery (Eni’s interest 12.5%) in the Gulf of
Mexico yielded positive results and increased recoverable
resources up to approximately 200 mmbbl. Studies are
underway for a fast track development. Venezuela In March 2013, production
started up at the giant Junin 5 field (Eni’s
interest 40%) with 35 bbbl of certified heavy oil in
place, located in the Orinoco oil belt. Early production
of the first phase is expected at plateau of 75 kbbl/d in
2015, targeting a long-term production plateau of 240
kbbl/d to be reached by 2018. The project provides also
for the construction of a refinery with a capacity of
approximately 350 kbbl/d. The drilling activity started
during the year. 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. Eni signed a loan agreement in the fourth
quarter 2012. |
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Eni Annual Report / Operating Review
| its 35% back-in right in
2012 and the completion of the stake transfer is expected
in 2013. Eni retains the 32.5% joint controlled interest
in the company. The early production phase includes the
utilization of the already successfully drilled
discovery/appraisal wells and the installation of
production platforms linked by pipelines to the onshore
treatment plant. Target production of approximately 300
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. In 2012 the FIDs of the further phases were sanctioned. Activity progressed at the Corocoro producing field (Eni’s interest 26%), in the Gulfo de Paria. In 2012, the start-up of the Central Production Facility (CPF) allowed to achieve a production peak of approximately 42 kbbl/d (approximately 11 kbbl/d net to Eni). |
Capital expenditure Capital
expenditure of the Exploration & Production Division
(euro 10,307 million) concerned development of oil and
gas reserves (euro 8,304 million) directed mainly outside
Italy, in particular in Norway, the United States, Congo,
Kazakhstan, Angola and Algeria. 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. |
| Capital expenditure | (euro million) | 2010 | 2011 | 2012 | Change | % Ch. |
| Acquisition of proved and unproved properties | 754 | 43 | (711 | ) | (94.3 | ) | ||||||
| North Africa | 57 | 14 | ||||||||||
| Sub-Saharan Africa | 697 | 27 | ||||||||||
| America | 2 | |||||||||||
| Exploration | 1,012 | 1,210 | 1,850 | 640 | 52.9 | |||||||
| Italy | 34 | 38 | 32 | (6 | ) | (15.8 | ) | |||||
| Rest of Europe | 114 | 100 | 151 | 51 | 51.0 | |||||||
| North Africa | 84 | 128 | 153 | 25 | 19.5 | |||||||
| Sub-Saharan Africa | 406 | 482 | 1,142 | 660 | .. | |||||||
| Kazakhstan | 6 | 6 | 3 | (3 | ) | (50.0 | ) | |||||
| Rest of Asia | 223 | 156 | 193 | 37 | 23.7 | |||||||
| America | 119 | 60 | 80 | 20 | 33.3 | |||||||
| Australia and Oceania | 26 | 240 | 96 | (144 | ) | (60.0 | ) | |||||
| Development | 8,578 | 7,357 | 8,304 | 947 | 12.9 | |||||||
| Italy | 630 | 720 | 744 | 24 | 3.3 | |||||||
| Rest of Europe | 863 | 1,596 | 2,008 | 412 | 25.8 | |||||||
| North Africa | 2,584 | 1,380 | 1,299 | (81 | ) | (5.9 | ) | |||||
| Sub-Saharan Africa | 1,818 | 1,521 | 1,931 | 410 | 27.0 | |||||||
| Kazakhstan | 1,030 | 897 | 719 | (178 | ) | (19.8 | ) | |||||
| Rest of Asia | 311 | 361 | 641 | 280 | 77.6 | |||||||
| America | 1,187 | 831 | 953 | 122 | 14.7 | |||||||
| Australia and Oceania | 155 | 51 | 9 | (42 | ) | (82.4 | ) | |||||
| Other expenditure | 100 | 114 | 110 | (4 | ) | (3.5 | ) | |||||
| 9,690 | 9,435 | 10,307 | 872 | 9.2 |
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| Gas & Power | |||||||||||
| Key performance indicators (*) | |||||||||||
| 2010 | 2011 | 2012 |
| Employees injury frequency rate | (No. of accidents per million of worked hours) | 3.97 | 2.44 | 1.84 | |||||||||
| Contractors injury frequency rate | 4.00 | 5.22 | 3.64 | ||||||||||
| Net sales from operations (a) | (euro million) | 27,806 | 33,093 | 36,200 | |||||||||
| Operating profit | 896 | (326 | ) | (3,221 | ) | ||||||||
| Adjusted operating profit | 1,268 | (247 | ) | 354 | |||||||||
| Marketing | 923 | (657 | ) | 45 | |||||||||
| International transport | 345 | 410 | 309 | ||||||||||
| Adjusted net profit | 1,267 | 252 | 473 | ||||||||||
| EBITDA pro-forma adjusted | 2,562 | 949 | 1,314 | ||||||||||
| Marketing | 1,863 | 257 | 856 | ||||||||||
| International transport | 699 | 692 | 458 | ||||||||||
| Capital expenditure | 265 | 192 | 225 | ||||||||||
| Worldwide gas sales (b) | (bcm) | 97.06 | 96.76 | 95.32 | |||||||||
| LNG sales (c) | 15.00 | 15.70 | 14.60 | ||||||||||
| Customers in Italy | (million) | 6.88 | 7.10 | 7.45 | |||||||||
| Electricity sold | (TWh) | 39.54 | 40.28 | 42.58 | |||||||||
| Employees at period end | (units) | 5,072 | 4,795 | 4,752 | |||||||||
| Direct GHG emissions | (mmtonnes CO2 eq) | 13.41 | 12.77 | 12.70 | |||||||||
| Customer satisfaction score (CSS) (d) | (%) | 87.4 | 88.6 | 89.8 | |||||||||
| Water consumption/withdrawals per kWheq produced | (cm/kWh eq) | 0.013 | 0.014 | 0.012 | |||||||||
| (*) Following
the divestment plan of the Regulated Businesses in Italy,
results of the Gas & Power Division include Marketing
and International transport activities. Reference periods
have been restated accordingly. (a) Before elimination of intragroup sales. (b) Include volumes marketed by the Exploration & Production Division of 2.73 bcm (2.86 and 5.65 bcm in 2010 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) 2012 figure is calculated as the average of the CSS detected by the AEEG in the first half of 2012 and the result detected by the Eni satisfaction survey in the second half of 2012. |
| Performance of the year |
›
In 2012, Eni’s continuous commitment and the resources
dedicated to safety allowed to improve significantly the main
accident frequency rates. In particular the positive trend was
confirmed for employees (down 24.6% from 2011), while the rate
for contractors returned to levels lower than in 2010, improving
by 30% from 2011.
›
In 2012, the water consumption rate of EniPower’s plants
declined both in absolute value (down 11.2% from 2011) and per
kWheq produced (down 13.8%).
›
In 2012, adjusted net profit was euro 473 million, almost doubled
from 2011 due to a significantly improved in performance of the
Marketing business in a scenario characterized by weak demand and
rising competitive pressure. This performance offset the decline
in selling prices reflecting in part the benefits associated with
the renegotiations of the supply contracts, certain of which have
been finalized after 2011 year-end and the improvement in the
supply mix also following the full recovery of Libyan supplies.
›
Worldwide gas sales decreased by 1.5% to 95.32 bcm due to lower
European demand and mounting competitive pressures. Sales in
Italy were in line with 2011, while they declined slightly in
European markets, in particular in Benelux due to competitive
pressure and Iberian Peninsula due to the exclusion of Galp
sales.
›
Electricity sales of 42.58 TWh increased by 2.30 TWh from 2011,
up 5.7%.
›
Capital expenditure of euro 225 million concerned essentially
flexibility and upgrading of combined cycle power stations (euro
131 million) and initiatives in gas marketing (euro 81 million).
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Eni Annual Report / Operating Review
| Commercial agreements in the Far East |
› In January 2013, Eni signed a trilateral agreement with Korea Gas Corporation and Japanese company Chubu Electric Power Company for the sale of 28 loads of LNG (liquefied natural gas) corresponding to 1.7 million tonnes of LNG in the 2013-2017 period.
| Entry in the French and Belgian markets |
› In October 2012, Eni launched its brand in the gas retail market in France and in the business and retail gas and power market in Belgium. The Eni brand substituted the local operators ones acquired in the past few years with the aim of becoming one of the major retail operators in France and Belgium while consolidating its leadership on the Belgian business market.
 Marketing Eni operates in a liberalized market where energy customers are allowed to choose the supplier of gas 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 7.45 million and include households, professionals, small and medium sized enterprises, and public bodies located all over Italy and |
2.09 million customers in
European Countries. In a context characterized by a 4%
drop of demand on the domestic market (down 4% in the
European Union) due to declining consumption in all
reference segments and increased competitive pressure
(for further information on the European scenario, see
chapter on "Risk factors" below), Eni
consolidated its strategy of market share recovery with
relevant commercial initiatives aimed at favoring
consumption with adequate pricing policies and product
innovation (market share was up 3.5 percentage points in
Italy, from 40.8% in 2011, to 44.3% in 2012). Natural gas Supply of natural gas |
| Supply of natural gas | (bcm) | 2010 | 2011 | 2012 | Change | % Ch. |
| Italy | 7.29 | 7.22 | 7.55 | 0.33 | 4.6 | ||||||||||
| Russia | 14.29 | 21.00 | 19.83 | (1.17 | ) | (5.6 | ) | ||||||||
| Algeria (including LNG) | 16.23 | 13.94 | 14.45 | 0.51 | 3.7 | ||||||||||
| Libya | 9.36 | 2.32 | 6.55 | 4.23 | .. | ||||||||||
| Netherlands | 10.16 | 11.02 | 11.97 | 0.95 | 8.6 | ||||||||||
| Norway | 11.48 | 12.30 | 12.13 | (0.17 | ) | (1.4 | ) | ||||||||
| United Kingdom | 4.14 | 3.57 | 3.20 | (0.37 | ) | (10.4 | ) | ||||||||
| Hungary | 0.66 | 0.61 | 0.61 | ||||||||||||
| Qatar (LNG) | 2.90 | 2.90 | 2.88 | (0.02 | ) | (0.7 | ) | ||||||||
| Other supplies of natural gas | 4.42 | 6.16 | 5.43 | (0.73 | ) | (11.9 | ) | ||||||||
| Other supplies of LNG | 1.56 | 2.34 | 2.14 | (0.20 | ) | (8.5 | ) | ||||||||
| OUTSIDE ITALY | 75.20 | 76.16 | 79.19 | 3.03 | 4.0 | ||||||||||
| TOTAL SUPPLIES OF ENI’S CONSOLIDATED SUBSIDIARIES | 82.49 | 83.38 | 86.74 | 3.36 | 4.0 | ||||||||||
| Offtake from (input to) storage | (0.20 | ) | 1.79 | (1.35 | ) | (3.14 | ) | .. | |||||||
| Network losses, measurement differences and other changes | (0.11 | ) | (0.21 | ) | (0.28 | ) | (0.07 | ) | (33.3 | ) | |||||
| AVAILABLE FOR SALE BY ENI’S CONSOLIDATED SUBSIDIARIES | 82.18 | 84.96 | 85.11 | 0.15 | 0.2 | ||||||||||
| Available for sale by Eni’s affiliates | 9.23 | 8.94 | 7.48 | (1.46 | ) | (16.3 | ) | ||||||||
| E&P volumes | 5.65 | 2.86 | 2.73 | (0.13 | ) | (4.5 | ) | ||||||||
| TOTAL AVAILABLE FOR SALE | 97.06 | 96.76 | 95.32 | (1.44 | ) | (1.5 | ) |
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 Increased volumes were purchased also from the Netherlands (up 0.95 bcm) and from Algeria (up 0.51 bcm). Declines were recorded in gas purchases from Russia |
(down 1.17 bcm) due to the
recovery of Libyan supplies, the UK (down 0.37 bcm) and
Norway (down 0.17 bcm). Supplies in Italy (7.55 bcm)
increased slightly from 2011 also due to higher domestic
production that offset the decline of mature fields. In
2012, main gas volumes from equity production derived
from: (i) Italian gas fields (6.7 bcm); (ii) certain Eni
fields located in the British and Norwegian sections of
the North Sea (1.9 bcm); (iii) Libyan fields (1.8 bcm)
increasing by almost 1.2 bcm due to the effect of force
majeure recorded in 2011; (iv) the United States (1.6
bcm); (v) other European areas (Croatia with 0.2 bcm). |
| Gas sales by entity | (bcm) | 2010 | 2011 | 2012 | Change | % Ch. |
| Total sales of subsidiaries | 82.00 | 84.37 | 84.67 | 0.30 | 0.4 | |||||||
| Italy (including own consumption) | 34.23 | 34.60 | 34.66 | 0.06 | 0.2 | |||||||
| Rest of Europe | 46.74 | 45.16 | 44.94 | (0.22 | ) | (0.5 | ) | |||||
| Outside Europe | 1.03 | 4.61 | 5.07 | 0.46 | 10.0 | |||||||
| Total sales of Eni’s affiliates (net to Eni) | 9.41 | 9.53 | 7.92 | (1.61 | ) | (16.9 | ) | |||||
| Italy | 0.06 | 0.08 | 0.12 | 0.04 | 50.0 | |||||||
| Rest of Europe | 7.78 | 7.82 | 6.08 | (1.74 | ) | (22.3 | ) | |||||
| Outside Europe | 1.57 | 1.63 | 1.72 | 0.09 | 5.5 | |||||||
| E&P in Europe and in the Gulf of Mexico | 5.65 | 2.86 | 2.73 | (0.13 | ) | (4.5 | ) | |||||
| WORLDWIDE GAS SALES | 97.06 | 96.76 | 95.32 | (1.44 | ) | (1.5 | ) |
| Gas sales by market | (bcm) | 2010 | 2011 | 2012 | Change | % Ch. |
| ITALY | 34.29 | 34.68 | 34.78 | 0.10 | 0.3 | |||||||
| Wholesalers | 4.84 | 5.16 | 4.65 | (0.51 | ) | (9.9 | ) | |||||
| Gas release | 0.68 | |||||||||||
| Italian gas exchange and spot markets | 4.65 | 5.24 | 7.52 | 2.28 | 43.5 | |||||||
| Industries | 6.41 | 7.21 | 6.93 | (0.28 | ) | (3.9 | ) | |||||
| Medium-sized enterprises and services | 1.09 | 0.88 | 0.81 | (0.07 | ) | (8.0 | ) | |||||
| Power generation | 4.04 | 4.31 | 2.55 | (1.76 | ) | (40.8 | ) | |||||
| Residential | 6.39 | 5.67 | 5.89 | 0.22 | 3.9 | |||||||
| Own consumption | 6.19 | 6.21 | 6.43 | 0.22 | 3.5 | |||||||
| INTERNATIONAL SALES | 62.77 | 62.08 | 60.54 | (1.54 | ) | (2.5 | ) | |||||
| Rest of Europe | 54.52 | 52.98 | 51.02 | (1.96 | ) | (3.7 | ) | |||||
| Importers in Italy | 8.44 | 3.24 | 2.73 | (0.51 | ) | (15.7 | ) | |||||
| European markets | 46.08 | 49.74 | 48.29 | (1.45 | ) | (2.9 | ) | |||||
| Iberian Peninsula | 7.11 | 7.48 | 6.29 | (1.19 | ) | (15.9 | ) | |||||
| Germany/Austria | 5.67 | 6.47 | 7.78 | 1.31 | 20.2 | |||||||
| Benelux | 15.64 | 13.84 | 10.31 | (3.53 | ) | (25.5 | ) | |||||
| Hungary | 2.36 | 2.24 | 2.02 | (0.22 | ) | (9.8 | ) | |||||
| UK/Northern Europe | 4.45 | 4.21 | 4.75 | 0.54 | 12.8 | |||||||
| Turkey | 3.95 | 6.86 | 7.22 | 0.36 | 5.2 | |||||||
| France | 6.09 | 7.01 | 8.36 | 1.35 | 19.3 | |||||||
| Other | 0.81 | 1.63 | 1.56 | (0.07 | ) | (4.3 | ) | |||||
| Extra European markets | 2.60 | 6.24 | 6.79 | 0.55 | 8.8 | |||||||
| E&P in Europe and in the Gulf of Mexico | 5.65 | 2.86 | 2.73 | (0.13 | ) | (4.5 | ) | |||||
| WORLDWIDE GAS SALES | 97.06 | 96.76 | 95.32 | (1.44 | ) | (1.5 | ) |
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| Sales of
natural gas In 2012, sales of natural gas were 95.32 bcm, down 1.44 bcm, or 1.5% from 2011. Sales included Eni’s own consumption, Eni’s share of sales made by equity-accounted entities and Exploration & Production sales in Europe and in the Gulf of Mexico. Despite a 4% decline in natural gas demand, sales volumes on the Italian market were substantially stable at 34.78 bcm (up 0.10 bcm, or 0.3% from 2011). Lower sales to the power generation segment (down 1.76 bcm), industrial customers (down 0.51 bcm) and wholesalers (down 0.28 bcm), due to the negative scenario and increasing competitive pressure, were offset by higher sales on the Italian exchange for gas and spot markets (up 2.28 bcm) and, at a lower extent, to the residential segment (up 0.22 bcm) reflecting efficient commercial initiatives. Sales to shippers were down 0.51 bcm, or 15.7%, due to the discontinuance of certain supply contracts despite the recovery of Libyan supplies. Sales on target markets in Europe of 48.29 bcm showed a slight decline from 2011 (down 2.9%). This decline was mainly due to |
a decline in sales in
Benelux (down 3.53 bcm) and in the Iberian Peninsula
(down 1.19 bcm) due to the exclusion of Galp sales after
the loss of control (for more detailed information see
the "Divestments" chapter below) offset only in
part by increases recorded in France (up 1.35 bcm) and
Germany/Austria (up 1.31 bcm) due commercial initiatives
performed. Sales to markets outside Europe increased by 0.55 bcm due to higher LNG sales in the Far East, in particular in Japan. Exploration & Production sales in Northern Europe and in the United States (2.73 bcm) declined by 0.13 bcm due to lower sales in the North Sea. LNG In 2012, LNG sales (14.6 bcm) decreased by 1.1 bcm from 2011. In particular, LNG sales by the Gas & Power segment (10.5 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) | 2010 | 2011 | 2012 | Change | % Ch. |
| G&P sales | 11.2 | 11.8 | 10.5 | (1.3 | ) | (11.0 | ) | |||||
| Italy | 0.2 | |||||||||||
| Rest of Europe | 9.8 | 9.8 | 7.6 | (2.2 | ) | (22.4 | ) | |||||
| Outside Europe | 1.2 | 2.0 | 2.9 | 0.9 | 45.0 | |||||||
| E&P sales | 3.8 | 3.9 | 4.1 | 0.2 | 4.9 | |||||||
| Terminals: | ||||||||||||
| Bontang (Indonesia) | 0.7 | 0.6 | 0.6 | |||||||||
| Point Fortin (Trinidad & Tobago) | 0.6 | 0.4 | 0.5 | 0.1 | 22.5 | |||||||
| Bonny (Nigeria) | 2.2 | 2.5 | 2.7 | 0.2 | 6.8 | |||||||
| Darwin (Australia) | 0.3 | 0.4 | 0.3 | (0.1 | ) | (17.5 | ) | |||||
| 15.0 | 15.7 | 14.6 | (1.1 | ) | (7.1 | ) |
| Power Availability of electricity |
to higher volumes traded on
the Italian power exchange benefiting from lower purchase
prices. Power sales |
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| 2010 | 2011 | 2012 | Change | % Ch. |
| Purchases of natural gas | (mmcm) | 5,154 | 5,008 | 5,206 | 198 | 4.0 | ||||||||
| Purchases of other fuels | (ktoe) | 547 | 528 | 462 | (66 | ) | (12.5 | ) | ||||||
| Power generation | (TWh) | 25.63 | 25.23 | 25.67 | 0.44 | 1.7 | ||||||||
| Steam | (ktonnes) | 10,983 | 14,401 | 12,603 | (1,798 | ) | (12.5 | ) |
| Availability of electricity | (TWh) |
2010 | 2011 | 2012 | Change | % Ch. |
| Power generation | 25.63 | 25.23 | 25.67 | 0.44 | 1.7 | |||||||
| Trading of electricity (a) | 13.91 | 15.05 | 16.91 | 1.86 | 12.4 | |||||||
| 39.54 | 40.28 | 42.58 | 2.30 | 5.7 | ||||||||
| Free market (b) | 27.84 | 27.25 | 31.84 | 4.59 | 16.8 | |||||||
| Italian Exchange for electricity | 7.13 | 8.67 | 6.10 | (2.57 | ) | (29.6 | ) | |||||
| Industrial plants | 3.21 | 3.23 | 3.30 | 0.07 | 2.2 | |||||||
| Other (a) (b) | 1.36 | 1.13 | 1.34 | 0.21 | 18.6 | |||||||
| Power sales | 39.54 | 40.28 | 42.58 | 2.30 | 5.7 |
(a) Includes positive and negative imbalances.
(b) Network losses have been restated from the item
"Other" to "Free Market".
| In 2012, as a 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 the development of "eni kassandra meteo forecast" (e-kmf®), a proprietary system for forecasting temperatures | from meteorological and climate data in the 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. |
Capital expenditure
| In 2012, capital expenditure of euro 225 million, mainly related to upgrading and other initiatives to improve flexibility of the | combined cycle power plants (euro 131 million) and gas marketing initiatives (euro 81 million). |
| Capital expenditure | (euro million) | 2010 | 2011 | 2012 | Change | % Ch. |
| Marketing | 248 | 184 | 212 | 28 | 15.2 | |||||||
| Marketing | 133 | 97 | 81 | (16 | ) | (16.5 | ) | |||||
| Italy | 40 | 45 | 43 | (2 | ) | (4.4 | ) | |||||
| Outside Italy | 93 | 52 | 38 | (14 | ) | (26.9 | ) | |||||
| Power generation | 115 | 87 | 131 | 44 | 50.6 | |||||||
| International transport | 17 | 8 | 13 | 5 | 62.5 | |||||||
| Capital expenditure | 265 | 192 | 225 | 33 | 17.2 | |||||||
| of which: | ||||||||||||
| Italy | 155 | 132 | 174 | 42 | 31.8 | |||||||
| Outside Italy | 110 | 60 | 51 | (9 | ) | (15.0 | ) |
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| Refining & Marketing | |||||||||||
| Key performance indicators | |||||||||||
| 2010 | 2011 | 2012 |
| Employees injury frequency rate | (No. of accidents per million of worked hours) | 1.77 | 1.96 | 1.08 | ||||||||||
| Contractors injury frequency rate | 3.59 | 3.21 | 2.32 | |||||||||||
| Net sales from operations (a) | (euro million) | 43,190 | 51,219 | 62,656 | ||||||||||
| Operating profit | 149 | (273 | ) | (1,303 | ) | |||||||||
| Adjusted operating profit | (181 | ) | (539 | ) | (328 | ) | ||||||||
| Adjusted net profit | (56 | ) | (264 | ) | (179 | ) | ||||||||
| Capital expenditure | 711 | 866 | 842 | |||||||||||
| Refinery throughputs on own account | (mmtonnes) | 34.80 | 31.96 | 30.01 | ||||||||||
| Conversion index | (%) | 61 | 61 | 61 | ||||||||||
| Balanced capacity of refineries | (kbbl/d) | 757 | 767 | 767 | ||||||||||
| Retail sales of petroleum products in Europe | (mmtonnes) | 11.73 | 11.37 | 10.87 | ||||||||||
| Service stations in Europe at year end | (units) | 6,167 | 6,287 | 6,384 | ||||||||||
| Average throughput per service station in Europe | (kliters) | 2,353 | 2,206 | 2,064 | ||||||||||
| Retail efficiency index | (%) | 1.53 | 1.50 | 1.48 | ||||||||||
| Employees at period end | (units) | 8,022 | 7,591 | 7,125 | ||||||||||
| Direct GHG emissions | (mmtonnes CO2 eq) | 7.76 | 7.23 | 6.03 | ||||||||||
| SOx emissions (sulphur oxide) | (ktonnes SO2 eq) | 28.05 | 23.07 | 16.99 | ||||||||||
| NOx emissions (nitrogen oxide) | (ktonnes NO2 eq) | 7.96 | 6.74 | 5.87 | ||||||||||
| Water consumption rate (refineries)/refinery throughputs | (cm/tonnes) | 28.36 | 30.98 | 25.33 | ||||||||||
| Biofuels marketed | (mmtonnes) | 17.79 | 13.26 | 14.83 | ||||||||||
| Customer satisfaction index | (likert scale) | 7.84 | 7.74 | 7.90 |
| (a) Before elimination of intragroup sales. |
| Performance of the year |
›
The injury frequency rates decreased from 2011(down 45% for
employees and 27.7% for contractors).
›
In 2012 continued the declining trend of GHG, NOx and
SOx emissions, benefiting from energy saving measures
and increasing use of natural gas to replace fuel oil.
›
The 2012 scenario was weighted down by a steep fall in fuel
demand in Italy and continued deteriorating fundamentals in the
refining activity amidst volatile margins. Against this backdrop,
Eni’s Refining & Marketing Division managed to reduce
adjusted operating loss by euro 85 million from 2011 (down euro
179 million). This result reflects the better operating
performances and improved efficiency and performance of
refineries. Results posted by the Marketing activity were
impacted by falling demand for fuel, high competitive pressure
and increased expenses associated with certain marketing
initiatives including a special discount on prices at the pump
during the summer week-ends.
›
In 2012 refining throughputs were 30.01 mmtonnes, down 6.1% from
2011. In Italy, processed volumes decreased (down 7.8%) due to
scheduled standstills in order to mitigate the negative impact of
the trading environment mainly at the Taranto and Gela
refineries. Outside Italy, Eni’s refining throughputs
increased by 3.2% in particular in the Czech Republic.
›
Retail sales in Italy of 7.83 mmtonnes decreased by 6.3% from
2011. This decline was driven by sharply lower consumption of
gasoil and gasoline in Italy (down 8.3% from 2011) and increased
competitive pressure. In 2012 Eni’s average retail market
share was 31.2% increasing by 0.7 percentage points from 2011
benefiting from the commercial initiatives made in the third
quarter of 2012.
›
Retail sales in the rest of Europe of 3.04 mmtonnes improved
slightly from 2011 (up 1%). Volume additions in Austria and
Switzerland, reflecting successful commercial initiatives were
offset by lower sales in Eastern Europe due to declining demand.
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›
Capital expenditure of euro 842 million related mainly refining,
supply and logistics (euro 583 million) to improve plants
flexibility and yields, in particular at the Sannazzaro refinery,
and marketing for the streamlining and rebranding of the retail
distribution network (euro 223 million).
›
In 2012 total expenditure in R&D in the Refining &
Marketing Division amounted to approximately euro 34 million, net
of general and administrative costs. In the year 7 patent
applications were filed.
| Green Refinery |
In October 2012, the Green Refinery project was launched, which targets the conversion of the Venice plant into a "bio-refinery", on which a patent application is pending, to produce innovative and high-quality bio-fuels. The project will involve an estimated investment of approximately euro 100 million leveraging the Ecofining technology developed and licensed by Eni. Biofuel production will start from January 1, 2014 and will grow progressively as new facilities enter into operation. The new facilities to be built under the project will be completed in the first half of 2015.
Supply and Trading
| In 2012, a total of 62.21 mmtonnes of crude were purchased by the Refining & Marketing Division (59.02 mmtonnes in 2011), of which 26.92 mmtonnes from Eni’s Exploration & Production Division, 24.95 mmtonnes on the spot market and 10.34 mmtonnes were purchased under long-term supply contracts with producing Countries. Approximately 25% of crude purchased in 2012 came from Russia, 19% from West Africa, 12% from the North Sea, 10% from North Africa, 8% from the Middle East, 6% from Italy and 20% from other | areas. In 2012 some 36.56 mmtonnes of crude purchased were marketed, (down 4.46 mmtonnes from 2011, or 13.9%). In addition, 4.53 mmtonnes of intermediate products were purchased (4.26 mmtonnes in 2011) to be used as feedstock in conversion plants and 20.52 mmtonnes of refined products (15.85 mmtonnes in 2011) were purchased to be sold on markets outside Italy (17.24 mmtonnes) and on the domestic market (3.28 mmtonnes) as a complement to available production. |
| Purchases | (mmtonnes) | 2010 | 2011 | 2012 | Change | % Ch. |
| Equity crude oil | |||||||||||||||
| Eni's production outside Italy | 26.90 | 24.29 | 23.57 | (0.72 | ) | (3.0 | ) | ||||||||
| Eni's production in Italy | 3.24 | 3.35 | 3.35 | ||||||||||||
| 30.14 | 27.64 | 26.92 | (0.72 | ) | (2.6 | ) | |||||||||
| Other crude oil | |||||||||||||||
| Purchases on spot markets | 20.95 | 20.44 | 24.95 | 4.51 | 22.1 | ||||||||||
| Purchases under long-term contracts | 17.16 | 10.94 | 10.34 | (0.60 | ) | (5.5 | ) | ||||||||
| 38.11 | 31.38 | 35.29 | 3.91 | 12.5 | |||||||||||
| Total crude oil purchases | 68.25 | 59.02 | 62.21 | 3.19 | 5.4 | ||||||||||
| Purchases of intermediate products | 3.05 | 4.26 | 4.53 | 0.27 | 6.3 | ||||||||||
| Purchases of products | 15.28 | 15.85 | 20.52 | 4.67 | 29.5 | ||||||||||
| TOTAL PURCHASES | 86.58 | 79.13 | 87.26 | 8.13 | 10.3 | ||||||||||
| Consumption for power generation | (0.92 | ) | (0.89 | ) | (0.75 | ) | 0.14 | 15.7 | |||||||
| Other changes (a) | (2.69 | ) | (1.12 | ) | (1.63 | ) | (0.51 | ) | (45.5 | ) | |||||
| 82.97 | 77.12 | 84.88 | 7.76 | 10.1 |
(a) Include change in inventories, decrease due to transportation, consumption and losses.
Refining
| In 2012, refining throughputs were 30.01 mmtonnes, down by 1.95 mmtonnes, or 6.1% from 2011. In Italy, processed volumes decreased by 7.8% from 2011, due to scheduled standstills in order to mitigate the negative impact of the trading environment mainly at the Taranto and Gela refineries (the | latter two production lines
have been shut down since June 2012). These negatives
were partly offset by higher volumes processed in the
last part of the year at the Venice plant (temporarily
shut down from November 2011 to April 2012). Outside Italy, Eni’s refining throughputs increased by 3.2% (up |
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| approximately 160 ktonnes)
mainly due to higher throughputs in the Czech Republic
after planned standstills at the Litvinov Refinery in
2011. Total throughputs in wholly-owned refineries were 20.84 mmtonnes, down by 1.91 mmtonnes (down 8.4%) from 2011 |
determining a refinery utilization rate of 73%, declining by six percentage points from 2011 consistent with the unfavorable scenario. Approximately 22.8% of volumes of processed crude was supplied by Eni’s Exploration & Production segment representing a 0.5 percentage point increase from 2011 (22.3%). |
| Availability of refined products | (mmtonnes) | 2010 | 2011 | 2012 | Change | % Ch. |
| ITALY | |||||||||||||||
| At wholly-owned refineries | 25.70 | 22.75 | 20.84 | (1.91 | ) | (8.4 | ) | ||||||||
| Less input on account of third parties | (0.50 | ) | (0.49 | ) | (0.47 | ) | 0.02 | 4.1 | |||||||
| At affiliated refineries | 4.36 | 4.74 | 4.52 | (0.22 | ) | (4.6 | ) | ||||||||
| Refinery throughputs on own account | 29.56 | 27.00 | 24.89 | (2.11 | ) | (7.8 | ) | ||||||||
| Consumption and losses | (1.69 | ) | (1.55 | ) | (1.34 | ) | 0.21 | 13.5 | |||||||
| Products available for sale | 27.87 | 25.45 | 23.55 | (1.90 | ) | (7.5 | ) | ||||||||
| Purchases of refined products and change in inventories | 4.24 | 3.22 | 3.35 | 0.13 | 4.0 | ||||||||||
| Products transferred to operations outside Italy | (4.18 | ) | (1.77 | ) | (2.36 | ) | (0.59 | ) | (33.3 | ) | |||||
| Consumption for power generation | (0.92 | ) | (0.89 | ) | (0.75 | ) | 0.14 | 15.7 | |||||||
| Sales of products | 27.01 | 26.01 | 23.79 | (2.22 | ) | (8.5 | ) | ||||||||
| OUTSIDE ITALY | |||||||||||||||
| Refinery throughputs on own account | 5.24 | 4.96 | 5.12 | 0.16 | 3.2 | ||||||||||
| Consumption and losses | (0.24 | ) | (0.23 | ) | (0.23 | ) | |||||||||
| Products available for sale | 5.00 | 4.73 | 4.89 | 0.16 | 3.4 | ||||||||||
| Purchases of refined products and change in inventories | 10.61 | 12.51 | 17.29 | 4.78 | 38.2 | ||||||||||
| Products transferred from Italian operations | 4.18 | 1.77 | 2.36 | 0.59 | 33.3 | ||||||||||
| Sales of products | 19.79 | 19.01 | 24.54 | 5.53 | 29.1 | ||||||||||
| Refinery throughputs on own account | 34.80 | 31.96 | 30.01 | (1.95 | ) | (6.1 | ) | ||||||||
| of which: refinery throughputs of equity crude on own account | 5.02 | 6.54 | 6.39 | (0.15 | ) | (2.3 | ) | ||||||||
| Total sales of refined products | 46.80 | 45.02 | 48.33 | 3.31 | 7.4 | ||||||||||
| Crude oil sales | 36.17 | 32.10 | 36.56 | 4.46 | 13.9 | ||||||||||
| TOTAL SALES | 82.97 | 77.12 | 84.89 | 7.77 | 10.1 |
 During 2012 work continued at the Sannazzaro de’ Burgondi Refinery for the construction of the first industrial plant employing EST (Eni Slurry Technology). The plant is expected to start up in 2013. 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. 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
nanocatalysts could lead to a relevant breakthrough in
the EST process, increasing its productivity and
improving product quality, declining expenditure and
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. In line with its commitment to reduce the environmental footprint of its industrial operations and to pay special attention to the protection of the environment and to creating strong relations with the people and the areas where it operates, Eni continued to experiment in the Zero Waste project, a technology for pyrolysis/gasification and inertization of industrial sludge, monetizing its energy content. In particular in 2012, the technology has been tested in a pilot plant with capacity of 50 kg/h installed on the site of New Materials Development Centre in Rome with two long-time test runs on sludge from the Gela |
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| Refinery and storage
residues from the Venice Refinery (each run lasting 480
and 48 hours, respectively). Within its Biodiesel from microalgae project testing continued at the pilot plant in Gela aimed at defining the algae growth parameters (pH, salinity, nutrients, etc.). An innovative process for lipidic extraction by means of pre-treatment of algal paste, followed by extraction with solvents is under study. At the same time characterization of the extracted bio-oil is proceeding while |
new pre-treatment processes
are being tested to make the product suitable as a
feedstock to be turned into bio-fuel. Marketing of refined products In 2012, retail sales of refined products (48.33 mmtonnes) increased by 3.31 mmtonnes from 2011, up 7.4%, mainly due to increased volumes sold to oil companies and traders outside Italy. |
| Product sales in Italy and outside Italy by market | (mmtonnes) | 2010 | 2011 | 2012 | Change | % Ch. |
| Retail | 8.63 | 8.36 | 7.83 | (0.53 | ) | (6.3 | ) | |||||
| Wholesale | 9.45 | 9.36 | 8.62 | (0.74 | ) | (7.9 | ) | |||||
| Chemicals | 1.72 | 1.71 | 1.26 | (0.45 | ) | (26.3 | ) | |||||
| Other sales | 7.21 | 6.58 | 6.08 | (0.50 | ) | (7.6 | ) | |||||
| Sales in Italy | 27.01 | 26.01 | 23.79 | (2.22 | ) | (8.5 | ) | |||||
| Retail rest of Europe | 3.10 | 3.01 | 3.04 | 0.03 | 1.0 | |||||||
| Wholesale rest of Europe | 3.88 | 3.84 | 3.96 | 0.12 | 3.1 | |||||||
| Wholesale outside Italy | 0.42 | 0.43 | 0.42 | (0.01 | ) | (2.3 | ) | |||||
| Other sales | 12.39 | 11.73 | 17.12 | 5.39 | 46.0 | |||||||
| Sales outside Italy | 19.79 | 19.01 | 24.54 | 5.53 | 29.1 | |||||||
| TOTAL SALES OF REFINED PRODUCTS | 46.80 | 45.02 | 48.33 | 3.31 | 7.4 |
| Retail
sales in Italy In 2012, retail sales in Italy of 7.83 mmtonnes decreased by approximately 530 ktonnes, down 6.3%, from 2011 driven by lower consumption of gasoil and gasoline, in particular in highway service station related to the decline in freight transportation. Average gasoline and gasoil throughput (1,976 kliters) decreased by approximately 197 kliters from 2011. Eni’s retail market share for 2012 was 31.2%, up 0.7 percentage points from 2011. At December 31, 2012, Eni’s retail network in Italy consisted of 4,780 service stations, 79 more than at December 31, 2011 (4,701 service stations), resulting from the positive balance of acquisitions/releases of lease concessions (92 units) and the opening of new service stations (10 units), partly offset by the closing of service stations with low throughput (23 units). In 2012 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 were lower than the previous year. In particular, sales of Eni BluDiesel+ amounted to approximately 292 mmtonnes (approximately 350 mmliters) with a decline of approximately 201 ktonnes from 2011 and represented 6% of volumes of gasoil marketed by Eni’s retail network. At December 31, 2012, service stations marketing BluDiesel+ |
totaled 4,123 units (4,130
at 2011 year-end) covering approximately 86% of
Eni’s network. Retail sales of BluSuper+ amounted to
approximately 35 ktonnes (approximately 47 mmliters),
decreasing by 27 ktonnes from 2011, and covered 1.5% of
gasoline sales on Eni’s retail network (down 0.9%
from a year ago). At December 31, 2012, service stations
marketing BluSuper+ totaled 2,505 units (2,703 at
December 31, 2011), covering approximately 52% of
Eni’s network. Within the initiatives aimed at favoring consumption in a negative economic scenario and at creating a sounder customer relationship, Eni launched two relevant campaigns: (i) in the summer of 2012 for twelve weekends in Eni stations the "riparti con eni" initiative provided customers in the hyperself mode of service an exceptionally lower price equal all over the Country; (ii) the launch of a new "loyalty card", available in reloadable, prepaid and credit card versions, through which customers can accumulate many more points in the Eni and Agip branded service stations that can be used for all daily purchases made outside of the Eni network in over 30 million stores. In 2012 Eni continued the development of innovative and bio-fuels with proprietary additives and detergents that provide better gasoline and gasoil with a "keep clean" component. Eni also continues its activity in the area of special fuels for racing (Aprilia racing, Ducati, Moto 2, Moto 3, Superbike). |
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| Retail and wholesales sales of refined products | (mmtonnes) | 2010 | 2011 | 2012 | Change | % Ch. |
| Italy | 18.08 | 17.72 | 16.45 | (1.27 | ) | (7.2 | ) | |||||
| Retail sales | 8.63 | 8.36 | 7.83 | (0.53 | ) | (6.3 | ) | |||||
| Gasoline | 2.76 | 2.60 | 2.41 | (0.19 | ) | (7.3 | ) | |||||
| Gasoil | 5.58 | 5.45 | 5.08 | (0.37 | ) | (6.8 | ) | |||||
| LPG | 0.26 | 0.29 | 0.31 | 0.02 | 6.9 | |||||||
| Lubricants | 0.03 | 0.02 | 0.03 | 0.01 | 50.0 | |||||||
| Wholesale sales | 9.45 | 9.36 | 8.62 | (0.74 | ) | (7.9 | ) | |||||
| Gasoil | 4.36 | 4.18 | 4.07 | (0.11 | ) | (2.6 | ) | |||||
| Fuel Oil | 0.44 | 0.46 | 0.33 | (0.13 | ) | (28.3 | ) | |||||
| LPG | 0.33 | 0.31 | 0.30 | (0.01 | ) | (3.2 | ) | |||||
| Gasoline | 0.16 | 0.19 | 0.20 | 0.01 | 5.3 | |||||||
| Lubricants | 0.10 | 0.10 | 0.09 | (0.01 | ) | (10.0 | ) | |||||
| Bunker | 1.35 | 1.26 | 1.19 | (0.07 | ) | (5.6 | ) | |||||
| Jet fuel | 1.46 | 1.65 | 1.56 | (0.09 | ) | (5.5 | ) | |||||
| Other | 1.25 | 1.21 | 0.88 | (0.33 | ) | (27.3 | ) | |||||
| Outside Italy (retail + wholesale) | 7.40 | 7.28 | 7.42 | 0.14 | 1.9 | |||||||
| Gasoline | 1.85 | 1.79 | 1.81 | 0.02 | 1.1 | |||||||
| Gasoil | 3.95 | 3.82 | 3.96 | 0.14 | 3.7 | |||||||
| Jet fuel | 0.40 | 0.49 | 0.44 | (0.05 | ) | (10.2 | ) | |||||
| Fuel Oil | 0.25 | 0.23 | 0.19 | (0.04 | ) | (17.4 | ) | |||||
| Lubricants | 0.10 | 0.10 | 0.09 | (0.01 | ) | (10.0 | ) | |||||
| LPG | 0.49 | 0.50 | 0.52 | 0.02 | 4.0 | |||||||
| Other | 0.36 | 0.35 | 0.41 | 0.06 | 17.1 | |||||||
| 25.48 | 25.00 | 23.87 | (1.13 | ) | (4.5 | ) |
 Retail
sales in the Rest of Europe |
in particular in Austria;
(iv) the opening of 2 new outlets. Average throughput (2,319 kliters) increased by 20 kliters from 2010 (2, 299 kliters). Wholesale
and other sales |
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| As concerns the production
of industrial lubricants for high-performance
turbines, Eni started cooperating with GE for reaching
new formulas capable of effecting a significant reduction
in power loss on the bearings of turbomachines. Within its quality management system certified under UNI EN ISO 9001 2008, the marketing and wholesale lines planned and applied a plan for assessing customer satisfaction in the wholesale segment. The project concerns the measurement of customer satisfaction on service levels, purchased products and all the elements that form the relationship between Eni and its customers in order to identify strong points and areas for improvement leading to corrective actions and improving satisfaction levels. |
Capital expenditure In
2012, capital expenditure in the Refining & Marketing
Division amounted to euro 842 million and regarded
mainly: |
| Capital expenditure | (euro million) | 2010 | 2011 | 2012 | Change | % Ch. |
| Refinery, supply and logistics | 446 | 629 | 622 | (7 | ) | (1.1 | ) | |||||
| Italy | 444 | 626 | 618 | (8 | ) | (1.3 | ) | |||||
| Outside Italy | 2 | 3 | 4 | 1 | 33.3 | |||||||
| Marketing | 246 | 228 | 220 | (8 | ) | (3.5 | ) | |||||
| Italy | 170 | 168 | 163 | (5 | ) | (3.0 | ) | |||||
| Outside Italy | 76 | 60 | 57 | (3 | ) | (5.0 | ) | |||||
| Other | 19 | 9 | (9 | ) | .. | |||||||
| 711 | 866 | 842 | (24 | ) | (2.8 | ) |
| Overall in the year,
expenditure in health, safety and environment amounted to
euro 127 million. In 2012 full operations were reached at the Eni Refining & Marketing photovoltaic park made up of more than 100 photovoltaic plants installed on the roofs of shelters and buildings in Eni service stations located in areas well exposed |
to solar radiation thus maximizing yields. At year end 2012 a total of approximately 2 million kWh have been produced resulting in revenues of over euro 1 million as targeted and leading to total CO2 emission savings of approximately 900 tonnes. In 2013 energy produced in this way will be used also for recharging electrical cars in selected plants. |
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| Chemicals | |||||||||||
| Key performance indicators | |||||||||||
| 2010 | 2011 | 2012 |
| Employees injury frequency rate | (No. of accidents per million of worked hours) | 1.54 | 1.47 | 0.76 | ||||||||||
| Contractors injury frequency rate | 5.94 | 4.60 | 1.66 | |||||||||||
| Net sales from operations (a) | (euro million) | 6,141 | 6,491 | 6,418 | ||||||||||
| Basic petrochemicals | 2,833 | 2,987 | 3,110 | |||||||||||
| Polymers | 3,126 | 3,299 | 3,128 | |||||||||||
| Other sales | 182 | 205 | 180 | |||||||||||
| Operating profit | (86 | ) | (424 | ) | (683 | ) | ||||||||
| Adjusted operating profit | (96 | ) | (273 | ) | (485 | ) | ||||||||
| Adjusted net profit | (73 | ) | (206 | ) | (395 | ) | ||||||||
| Capital expenditure | 251 | 216 | 172 | |||||||||||
| Production | (ktonnes) | 7,220 | 6,245 | 6,090 | ||||||||||
| Sales of petrochemical products | 4,731 | 4,040 | 3,953 | |||||||||||
| Average plant utilization rate | (%) | 72.9 | 65.3 | 66.7 | ||||||||||
| Employees at year end | (units) | 5,972 | 5,804 | 5,668 | ||||||||||
| Direct GHG emissions | (mmtonnes CO2 eq) | 4.69 | 4.12 | 3.69 | ||||||||||
| NMVOC (Non-Methan Volatile Organic Compound) emissions | (ktonnes) | 4.71 | 4.18 | 4.40 | ||||||||||
| SOx emissions (sulphur oxide) | (ktonnes SO2 eq) | 3.30 | 3.17 | 2.19 | ||||||||||
| NOx emissions (nitrogen oxide) | (ktonnes NO2 eq) | 4.87 | 4.14 | 3.43 | ||||||||||
| Recycled/reused water | (%) | 82.7 | 81.8 | 81.5 |
| (a) Before elimination of intragroup sales. |
| Performance of the year |
›
In 2012 the employees and contractors injury frequency rates
continued to follow the positive trends of previous years (down
48.3% and 63.9%, respectively).
›
In 2012 emissions of greenhouse gases, NOx and SO2
decreased due to lower sales volumes and to energy saving
interventions performed in the year. An increase in NMVOC
emissions is due mainly to the Dunkirk site because the NMVOC
recovery plant was unavailable for emissions from the
polyethylene silos.
›
In 2012 the sector reported a significant increase in adjusted
net loss (euro 395 million, down euro 189 million) from 2011, due
to a weak trend in demand for commodities reflecting the economic
downturn and a fall in unit margins.
›
Sales of petrochemical products were 3,953 ktonnes, down 87
ktonnes, or 2.1% from 2011, due to declining consumption.
›
Petrochemical production volumes were 6,090 ktonnes, decreasing
by 155 ktonnes, down 2.48%, due a steep decline in demand for
petrochemical products in all businesses, in particular the
steepest decline was reported in polyethylene.
›
In 2012 overall expenditure in R&D amounted to approximately
euro 38 million in line with the previous year. A total of new 18
patent applications were filed, including one in collaboration
with Exploration and Production division.
| Expansion on international markets |
› In the field of internationalization strategy, in October 2012, Versalis signed 2 joint venture agreements with major chemical operators in South Korea and Malaysia to build and operate facilities for the production of elastomers incorporating Versalis proprietary technologies and know-how. These initiatives are in line with Eni’s strategy of international expansion in Asian markets with interesting growth prospects, where Versalis has a leading position (elastomers).
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Eni Annual Report / Operating Review
| Bio-based chemicals |
›
In January 2013, Versalis and Yulex, an agricultural-based
biomaterials company, signed a strategic partnership to
manufacture guayule-based bio-rubber materials in a production
complex in Southern Europe. The partnership will cover the entire
manufacturing chain from crop science to bio-rubber extraction to
the construction of a biomass power station. Versalis will
manufacture materials for consumer and medical specialty markets
with hypoallergenic qualities that are expected to generate
higher margins.
The partnership will leverage Yulex’s core competencies
including crop science and bio-rubber extraction technologies, to
boost Versalis’ bio-based portfolio. The investment will
include an ambitious research project to develop technologies
targeting the tire industry.
With its market leading position in the elastomer industry
Versalis plans to expand its leading-edge technologies in the
synthetic rubber business by including guayule rubber as a
supplementary business opportunity and an increased commercial
offering.
In June 2012, a Memorandum of Understanding has been signed with
Genomatica and Novamont to establish a technological joint
venture in Italy governing a four-year research project aimed at
developing a new technology for the production of butadiene from
renewable feedstocks. This joint venture will also hold exclusive
right for the industrial application of the research results,
including licensing it to third parties.
Sales - production - prices
| In 2012 sales of
petrochemical products (3,953 ktonnes) decreased by 87
ktonnes (down 2.2%) from 2011 mainly due to a substantial
decrease in demand reflecting the current economic
downturn in the main reference markets. Average unit sales prices increased slightly (up 1.3%) from 2011, in particular aromatics (up 12%), phenolderivatives (up 10%) and styrene (up 6%). Elastomer average unit prices declined (down 1.3%). Petrochemical production (6,090 ktonnes) decreased by 155 ktonnes from 2011, or 2.5%, Main decreases were registered in styrenes and elastomers (down 10.3% and 9.4%, |
respectively). Excluding the
shutdown of the Porto Torres plant (except for nytrilic
rubber) for the start of the green chemistry project and
the divestment of the Feluy plant, volumes increased by
approximately 2%. Outside Italy, production increased at the Dunkirk site (up 20%) that in 2011 had been affected by a slow start of the new EVA/LDPE swing line. Nominal capacity of plants declined from the previous year due to the mentioned divestment of the Feluy plant and the shutdown of the Porto Torres plant, while the average plant utilization rate, calculated on nominal capacity, was 66.7% (65.3% in 2011). |
| Product availability | (ktonnes) | 2010 | 2011 | 2012 | Change | % Ch. |
| Intermediates | 4,860 | 4,101 | 4,112 | 11 | 0.3 | ||||||||||
| Polymers | 2,360 | 2,144 | 1,978 | (166 | ) | (7.7 | ) | ||||||||
| Production | 7,220 | 6,245 | 6,090 | (155 | ) | (2.5 | ) | ||||||||
| Consumption and losses | (2,912 | ) | (2,631 | ) | (2,545 | ) | 86 | (3.3 | ) | ||||||
| Purchases and change in inventories | 423 | 426 | 408 | (18 | ) | (4.2 | ) | ||||||||
| 4,731 | 4,040 | 3,953 | (87 | ) | (2.2 | ) |
Business trends
| Intermediates Intermediate revenues (euro 3,110 million) increased by euro 123 million from 2011 (up 4%) due to the positive performance of derivatives, reflecting increased sales volumes (up 21%) and average unit prices (up 10%) due to a more dynamic market and product availability. Sales volumes of olefins and aromatics declined (down 2% and 4.5%, respectively) due to the shutdown of the polyethylene line in the Sicilian plants due to their lack of profitability and demand decline. Average unit prices of olefins were stable, while aromatics prices increased by 12% driven by the price of benzene (up 18.7%). Intermediates production (4,112.5 ktonnes) was in line with last year (up 0.3%). An increase was registered in derivatives |
(up 12%) for
phenol/derivatives and styrene monomer that last year had
been affected by the planned facility downtimes at the
Mantova plant. Production of olefins and aromatics declined by 2.7% and 5.4%, respectively. The latter were affected by the planned facility downtime at the Sarroch plant and the decline in activity at the Priolo plant aimed at countering the negative scenario. Polymers |
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Eni Annual Report / Operating Review
| Italian and European
markets, offset in part by slight increases in the
markets of Eastern Europe. Unit prices of elastomers declined (down 1.3%) due to lower unit prices for SBR/BR rubbers, affected by the downturn of the automotive industry and of polyethylene (down 0.4%), despite an improvement in the second part of the year. Average styrene prices increased by 6%, driven by the price of expandable polystyrene. Polymer production (1,978 ktonnes) decreased by 167 ktonnes |
from 2011 (down 7.8%), due
mainly to a decline in elastomer production (down 9.4%)
at Ravenna and Ferrara for the downturn of the automotive
industry and of polyethylene (down 6%). At the beginning
of the year production at the Sicilian plants was
shutdown, including the cracker, due to the sharp decline
in demand for polyethylene. The decline in styrene production (down 10.3%) was due to the divestment of compact and expandable polystyrene plant of Feluy (Belgium) at the end of 2011. |
Capital expenditure
| In 2012 capital expenditure amounted to euro 172 million (euro 216 million in 2011) and regarded mainly: (i) plant upgrades (euro 53 million) in particular in Ravenna; (ii) energy recovery (euro 41 million), mainly related to energy savings projects aimed at | reducing CO2 emissions; (iii) environmental protection, safety and environmental regulation (euro 38 million), relating primarily to the optimization of discharge water treatment; (iv) upkeeping of plants (euro 25 million). |
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| Engineering & Construction | |||||||||||
| Key performance indicators | |||||||||||
| 2010 | 2011 | 2012 |
| Employees injury frequency rate | (No. of accidents per million of worked hours) | 0.45 | 0.44 | 0.54 | |||||||
| Contractors injury frequency rate | 0.33 | 0.21 | 0.17 | ||||||||
| Fatality index | (No. of fatalities per 100 million of worked hours) | 2.14 | 1.82 | 0.93 | |||||||
| Net sales from operations (a) | (euro million) | 10,581 | 11,834 | 12,771 | |||||||
| Operating profit | 1,302 | 1,422 | 1,433 | ||||||||
| Adjusted operating profit | 1,326 | 1,443 | 1,465 | ||||||||
| Adjusted net profit | 994 | 1,098 | 1,109 | ||||||||
| Capital expenditure | 1,552 | 1,090 | 1,011 | ||||||||
| Orders acquired | (euro million) | 12,935 | 12,505 | 13,391 | |||||||
| Order backlog | 20,505 | 20,417 | 19,739 | ||||||||
| Employees at period end | (units) | 38,826 | 38,561 | 43,387 | |||||||
| Employees outside Italy | (%) | 87.3 | 86.5 | 89.2 | |||||||
| Local managers | 45.3 | 43.0 | 42.3 | ||||||||
| Local procurement | 61.3 | 56.4 | 51.8 | ||||||||
| Healthcare expenditure | (euro thousand) | 19,506 | 32,410 | 21,236 | |||||||
| Security expenditure | 26,403 | 50,541 | 81,777 | ||||||||
| Direct GHG emissions | (mmtonnes CO2 eq) | 1.11 | 1.32 | 1.54 |
| (a) Before elimination of intragroup sales. |
| Performance of the year |
›
The percentage of manager positions covered by local personnel is
higher than 40% of total manager positions, except for France and
Italy, reflecting however fluctuations due to he opening of new
yards and short-term projects.
›
The overall amount of procurement was euro 9,584 million, of
which euro 7,802 million related to operating projects, 51.8% of
which was procured with local suppliers.
›
In 2012 the employees injury frequency rate worsened from 2011
(by 22.7%) while it improved for contractors by 19%. Saipem
continues to strive to mitigate and reduce accidents and injuries
to its employees and contractors by means of training and
awareness campaigns, such as the "Working at height",
the dedicated HSE training portal and training courses for crane
operators.
›
Safety and environment expenditure increased by 24% from 2011
(from euro 83 million to euro 103 million).
›
In 2012 the Engineering & Construction sector reported
adjusted net profit amounting to euro 1,109 million, in line with
2011 (up 1%). This result reflects the good operating performance
recorded mainly in the Drilling businesses deriving from the full
operations of Scarabeo 9 and to greater profitability from the
Saipem 10000 vessel, almost totally offset by the decline in
performance of the Engineering & Construction business due to
falling demand for oilfield services and lower margins at certain
works related to the general downturn especially in the second
half of the year.
›
Capital expenditure amounted to euro 1,011 million (euro 1,090
million in 2011) and mainly regarded the upgrading of the
drilling and construction fleet.
›
In 2012 overall expenditure in R&D amounted approximately to
euro 15 million in line with 2011. A total of 13 new patent
applications were filed.
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Eni Annual Report / Operating Review
| Activity of the year |
›
Orders acquired amounted to euro 13,391 million (euro 12,505
million in 2011), of which 96% represented by projects to be
carried out outside Italy, while orders from Eni companies
amounted to 5% of the total.
›
Order backlog amounted to euro 19,739 million at December 31,
2012 (euro 20,417 million at December 31, 2011), of which euro
10,943 million to be carried out within 2013. The decline in
order backlog reflects the cancellation of the Jurassic contract
(euro 700 million) in the third quarter of 2012 in the
Engineering & Construction Onshore business.
| Activity areas Engineering & Construction Offshore Engineering & Construction
Onshore |
the Jurassic contract in the
third quarter of 2012. Among the main orders acquired
were: (i) a turn-key contract for Shell concerning the
SSAGS (Southern Swamp Associated Gas) project concerning
the construction of four compression stations and new
production facilities for the treatment of collected gas
in various areas of the Delta State in Nigeria; (ii) an
EPC contract for Saudi Aramco and Sumitomo Chemical for
the Naphtha and Aromatics Package (RP2) of the Rabigh II
project which provides for the expansion of the
integrated petrochemical and refining complex of Rabigh,
a city located on the western coast of Saudi Arabia. This
expansion will allow to treat additional 30 mmcf of
ethane per day and 3 mmtonnes of naphtha per year, to the
current production capacity of 20 mmtonnes of oil per
year. R&D activities aiming at improving proprietary process technologies and increasing the company’s service portfolio concerned: (i) a study on the improvement of environmental compatibility of the proprietary technology for the production of Urea; (ii) development of new technologies for reducing the cost of carbon capture; (iii) application of a Life Cycle Assessment technology to the environmental impact assessment of a project in Congo. Offshore
drilling Onshore drilling |
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Eni Annual Report / Operating Review
| Orders acquired | (euro million) | 2010 | 2011 | 2012 | Change | % Ch. |
| 12,935 | 12,505 | 13,391 | 886 | 7.1 | ||||||||
| Engineering & Construction Offshore | 4,600 | 6,131 | 7,477 | 1,346 | 22.0 | |||||||
| Engineering & Construction Onshore | 7,744 | 5,006 | 3,972 | (1,034 | ) | (20.7 | ) | |||||
| Offshore drilling | 326 | 780 | 1,025 | 245 | 31.4 | |||||||
| Onshore drilling | 265 | 588 | 917 | 329 | 56.0 | |||||||
| of which: | ||||||||||||
| - Eni | 962 | 822 | 631 | (191 | ) | (23.2 | ) | |||||
| - Third parties | 11,973 | 11,683 | 12,760 | 1,077 | 9.2 | |||||||
| of which: | ||||||||||||
| - Italy | 825 | 1,116 | 485 | (631 | ) | (56.5 | ) | |||||
| - Outside Italy | 12,110 | 11,389 | 12,906 | 1,517 | 13.3 |
| Order backlog | (euro million) | Dec. 31, 2010 | Dec. 31, 2011 | Dec. 31, 2012 | Change | % Ch. |
| 20,505 | 20,417 | 19,739 | (678 | ) | (3.3 | ) | ||||||
| Engineering & Construction Offshore | 5,544 | 6,600 | 8,721 | 2,121 | 32.1 | |||||||
| Engineering & Construction Onshore | 10,543 | 9,604 | 6,701 | (2,903 | ) | (30.2 | ) | |||||
| Offshore drilling | 3,354 | 3,301 | 3,238 | (63 | ) | (1.9 | ) | |||||
| Onshore drilling | 1,064 | 912 | 1,079 | 167 | 18.3 | |||||||
| of which: | ||||||||||||
| - Eni | 3,349 | 2,883 | 2,526 | (357 | ) | (12.4 | ) | |||||
| - Third parties | 17,156 | 17,534 | 17,213 | (321 | ) | (1.8 | ) | |||||
| of which: | ||||||||||||
| - Italy | 1,310 | 1,816 | 1,719 | (97 | ) | (5.3 | ) | |||||
| - Outside Italy | 19,195 | 18,601 | 18,020 | (581 | ) | (3.1 | ) |
Capital expenditure
| Capital expenditure of the Engineering & Construction Division amounted to euro 1,011 million mainly regarded: (i) construction of a new pipelayer, the construction of a new fabrication yard in Indonesia, the progression of the construction of a new fabrication yard in Brazil and upkeep works in the Engineering & Construction Offshore business; (ii) activities | for the completion of the construction of the Scarabeo 8 and the upgrading of the Scarabeo 6 to make it capable of drilling up to 1,100 meters of water; (iii) realization/development of operating structures in the Offshore Drilling business unit; (iv) purchase of materials and equipment and planned upkeep of the current asset base in the Onshore Drilling business. |
| Capital expenditure | (euro million) | 2010 | 2011 | 2012 | Change | % Ch. |
| Engineering & Construction Offshore | 706 | 400 | 505 | 105 | 26.3 | |||||||
| Engineering & Construction Onshore | 11 | 45 | 66 | 21 | 46.7 | |||||||
| Offshore drilling | 559 | 507 | 281 | (226 | ) | (44.6 | ) | |||||
| Onshore drilling | 253 | 121 | 120 | (1 | ) | .. | ||||||
| Other expenditure | 23 | 17 | 39 | 22 | .. | |||||||
| 1,552 | 1,090 | 1,011 | (79 | ) | (7.2 | ) |
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Eni Annual Report / Operating Review
| Divestment of Eni’s interest in Snam |
On October 15, 2012, following the completion of certain
conditions precedent, including, in particular, antitrust
approval, Eni finalized the divestment to Cassa Depositi e
Prestiti SpA ("CDP"), an entity controlled by the
Italian Ministry of Economy and Finance, of 1,013,619,522
ordinary shares of Snam SpA, corresponding to 30% less 1 share of
the voting shares at a price of euro 3.47 a share, as provided
for by the sale and purchase contract of June 15, 2012. The gain
on the disposal of this interest amounting to euro 2.02 billion
was accounted in the profit and loss.
The total consideration of euro 3,517 million has been paid for
75% at the balance sheet date. The balance of euro 879 million
has been paid in February 2013. The exclusion of Snam from
consolidation effective form the fourth quarter 2012 allowed to
reduce financial debt by euro 12.45 billion. Prior to the
divestment, Snam had already reimbursed intercompany loans via
third-party financing.
The transaction implements the provisions of Law No. 27/2012,
pursuant to which Eni was mandated to divest its shareholding in
Snam in accordance with the model of ownership unbundling as per
Legislative Decree No. 93/2011, and in accordance with the
criteria, terms and conditions defined in the Decree of the
President of the Council of Ministers issued on May 25, 2012 (the
"DPCM") and designed to ensure the complete
independence of Snam from the largest gas production and sale
company in Italy.
Furthermore, the DPCM provided the divestment of the residual
shareholding of Eni in Snam through transparent and
non-discriminatory sales procedures targeted to both retail and
institutional investors. On July 18, 2012, Eni finalized the sale
of a further 5% interest in Snam (178,559,406 ordinary shares).
The total consideration amounted to euro 612.5 million,
corresponding to euro 3.43 per share. The deal was carried out
through an accelerated book-building procedure aimed at Italian
and foreign institutional investors.
Including the sale of the above mentioned 5% interest made to
institutional investors in July, after the transaction with CDP
the residual interest of Eni in Snam is equal to 20.2% at the
balance sheet date. This interest was classified as a financial
instrument and measured at fair value corresponding to market
prices which brought profit a revaluation gain of euro 1,451
million at the price current at the transaction date of euro 3.5
a share with future changes in fair value recognized in equity,
except for those shares which are underlying a convertible bond.
In January 2013, Eni finalized the divestment of part of its
interest in Snam with the placement of euro 1,250 million
aggregate principal amount of senior, unsecured bonds,
exchangeable into ordinary shares of Snam. The bonds have
maturity of 3 years and pay a coupon of 0.625% per annum. The
bonds will be exchangeable into Snam ordinary shares at an
exchange price of euro 4.33 per Snam ordinary share, representing
approximately a 20% premium to the Snam current reference price.
Underlying the Bonds are approximately 288.7 million ordinary
shares of Snam, corresponding to approximately 8.54% of the
currently outstanding share capital of Snam. Changes in fair
value of those shares were reported through profit as opposed to
equity based on the fair value option provided by IAS 39 from
inception, i.e. the transaction date with CDP. Those changes were
immaterial at the balance sheet date. In case the strike price is
not reached, Eni retains the option at the expiration of bonds to
reimburse bondholders with the underlying Snam shares at the
market price current at the reimbursement date.
Following these transactions, Eni’s residual stake in Snam
at the balance sheet date amounted to 20.2% of the total capital
equal to 683.9 million shares booked at fair value for euro 2,408
million determined at a price of euro 3.52 per share.
At the date of the closing of the transaction, the counterparty
CDP holds a stake in Eni that allows for a significant influence
on the latter and is subject, with Eni, to the MEF’s common
control. Consequently, the transaction qualifies as material
transaction with related parties, as the value of the transaction
is above certain established thresholds applicable to sale
transactions pursuant to the Consob Regulation (No. 17221 of
March 12, 2010 as updated by Reg. 17389 of June 23, 2010) and the
internal procedures adopted by the Company1.
A full review of transaction is disclosed in the Information
Statement, published on June 6, 2012 (and available at the Eni
website eni.com) in application of the Consob Regulation No.
11971 of May 14, 1999 and later additions and modifications (for
further information see the paragraph "Transactions with
related parties" in the "Other information"
section).
(1) Eni’s Management System Guideline "Transactions involving directors’ and statutory auditors’ interests and transactions with related parties" has been approved by Eni’s Board of Directors on November 18, 2010 and amended on January 19, 2012. It is published on Eni’s website in the Corporate Governance section.
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Eni Annual Report / Operating Review
| Divestment of Eni’s interest in Galp |
On July 20, 2012, as part of the agreements signed on March
29, 2012 by Eni and the other relevant shareholders of the
Portuguese company Galp Energia, Amorim Energia and Caixa Geral
de Depòsitos SA, Eni sold a 5% interest in Galp to Amorim
Energia. The transaction covered 41.5 million shares at the price
of euro 14.25 per share, for a total consideration of euro 582
million and a capital gain registered in profit of euro 288
million. Following the sale Eni ceased to be part of the existing
shareholders’ agreement governing the investee and
Eni’s residual interest in Galp Energia of 28.34% was stated
as a financial instrument measured at fair value represented by
the market price of Galp which resulted in gain of euro 865
million at the price current at the transaction date of euro
10.78 a share with future changes in fair value recognized in
equity, except for the Galp shares which are underlying
convertible bonds.
As part of the March agreement, Eni has the right to sell up to
18% of Galp shares on the market (which could potentially
increase by 2% if convertible bonds are issued) and a pre-emption
right is granted to Amorim on the residual 10.34% shares of Galp
owned by Eni through a combination of a call option on a 5%
interest and a right of first refusal on the remaining 5.34%, or
on the whole 10.34% in case Amorim does not exercise the call
option.
On November 27, 2012, through an accelerated book-building
procedure aimed at Italian and foreign institutional investors,
Eni sold approximately 33.2 million shares of Galp Energia,
corresponding to 4% of its share capital at the price of euro
11.48 per share for a total consideration of approximately euro
381 million and a gain of euro 23 million recorded in profit.
Concurrently with the Equity Offering, Eni has completed the
placement of approximately euro 1,028 million aggregate principal
amount of senior, unsecured bonds, exchangeable into ordinary
Galp shares. The Bonds will have a maturity of 3 years and will
pay a coupon of 0.25% per annum. The Bonds will be exchangeable
into Galp ordinary shares at an exchange price of approximately
euro 15.50 per share, representing a 35% premium to the Equity
Offering placing price of euro 11.48 per share. Underlying the
exchangeable bonds are approximately 66.3 million ordinary shares
of Galp, corresponding to approximately 8% of the currently
outstanding share capital of Galp. Changes in fair value of those
shares were reported through profit as opposed to equity based on
the fair value option provided by IAS 39 from inception, i.e. the
transaction date with Amorim; considering the current price of
Galp shares of euro 11.76 a share at period end, a revaluation
gain of euro 65 million was recorded in profit which was
partially offset by a negative change in the fair value of the
call option embedded in the bonds amounting to euro 26 million.
In case the strike price is not reached, Eni retains the option
at the expiration of bonds to reimburse bondholders with the
underlying Galp shares at the market price current at the
reimbursement date. Following these transactions, Eni’s
residual stake in Galp at the balance sheet date amounted to
24.34% of the total capital equal to 201.84 million shares booked
at fair value for euro 2,374 million determined at a price of
euro 11.76 per share.
As a consequence of the Exchangeable Bond Offering, as per the
agreements signed on March 29, 2012, Amorim Energia has a right
of first refusal of up to 3.34% or up to 8.34% respectively,
depending on whether or not the call option will be executed.
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Eni Annual Report / Financial review and other information
| In accordance with the guidelines of IFRS 5, results of the Italian regulated businesses managed by Snam have been reported as discontinued operations throughout the whole of 2012 until loss of control on the entity which occurred in October 2012 as part of a transaction to divest approximately 30% of the share | capital of Snam to an Italian entity, Cassa Depositi e Prestiti. The divestment took place in accordance to Article 15 of Law Decree No. 1 of January 24, 2012, enacted into Law No. 27 of March 24, 2012 which mandated the ownership unbundling of Snam. Prior year data have been reclassified. |
Profit and loss account1
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 96,617 | Net sales from operations | 107,690 | 127,220 | 19,530 | 18.1 | ||||||||||
| 967 | Other income and revenues | 926 | 1,546 | 620 | 67.0 | ||||||||||
| (73,202 | ) | Operating expenses | (83,199 | ) | (100,021 | ) | (16,822 | ) | (20.2 | ) | |||||
| 246 | of which non-recurring items | (69 | ) | ||||||||||||
| 131 | Other operating income (expense) | 171 | (158 | ) | (329 | ) | .. | ||||||||
| (9,031 | ) | Depreciation, depletion, amortization and impairments | (8,785 | ) | (13,561 | ) | (4,776 | ) | (54.4 | ) | |||||
| 15,482 | Operating profit | 16,803 | 15,026 | (1,777 | ) | (10.6 | ) | ||||||||
| (749 | ) | Finance income (expense) | (1,146 | ) | (1,307 | ) | (161 | ) | (14.0 | ) | |||||
| 1,112 | Net income from investments | 2,123 | 2,881 | 758 | (35.7 | ) | |||||||||
| 15,845 | Profit before income taxes | 17,780 | 16,600 | (1,180 | ) | (6.6 | ) | ||||||||
| (8,581 | ) | Income taxes | (9,903 | ) | (11,659 | ) | (1,756 | ) | (17.7 | ) | |||||
| 54.2 | Tax rate (%) | 55.7 | 70.2 | 14.5 | |||||||||||
| 7,264 | Net profit - continuing operations | 7,877 | 4,941 | (2,936 | ) | (37.3 | ) | ||||||||
| 119 | Net profit - discontinued operations | (74 | ) | 3,732 | 3,806 | .. | |||||||||
| 7,383 | Net profit | 7,803 | 8,673 | 870 | 11.1 | ||||||||||
| Attributable to: | |||||||||||||||
| 6,318 | Eni’s shareholders: | 6,860 | 7,788 | 928 | 13.5 | ||||||||||
| 6,252 | - continuing operations | 6,902 | 4,198 | (2,704 | ) | (39.2 | ) | ||||||||
| 66 | - discontinued operations | (42 | ) | 3,590 | 3,632 | .. | |||||||||
| 1,065 | Non-controlling interest: | 943 | 885 | (58 | ) | (6.2 | ) | ||||||||
| 1,012 | - continuing operations | 975 | 743 | (232 | ) | (23.8 | ) | ||||||||
| 53 | - discontinued operations | (32 | ) | 142 | 174 | .. |
| Net profit In 2012, net profit attributable to Eni’s shareholders from continuing operations was euro 4,198 million, a decrease of euro 2,704 million, down by 39.2% from 2011. The result was negatively impacted by a lower operating profit, down by euro 1,777 million driven by the recognition of impairment losses of euro 4,029 million (euro 1,031 million in 2011) which were incurred on tangible and intangible assets, mostly in the gas marketing and refining businesses due to a reduced profitability outlook on the back of the ongoing European downturn. In addition, net profit reflected increased income taxes (up |
by euro 1,756 million) due to higher taxable income reported by the Exploration & Production Division, subject to higher tax rates, and a write-down of euro 1,030 million recognized to reflect a lower likelihood that certain deferred tax assets of Italian subsidiaries can be recovered in future periods due to an expected reduction in taxable income generated in Italy, and as Eni has lost the availability of Snam taxable profit against which Italian tax assets can be utilized following the deconsolidation of Snam. Net finance and exchange rate charges increased by euro 161 million due to the negative |
(1) 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. Therefore, profits earned by the discontinued operations, in this case the Snam operations, on sales to the continuing operations are eliminated on consolidation from the discontinued operations and attributed to the continuing operations and vice versa. This representation does not indicate the profits earned by continuing and Snam operations, as if they were standalone entities, for past periods or likely to be earned in future periods. Results attributable to individual segments are not affected by this representation as reported at the paragraph "Reconciliation of reported operating profit and reported net profit to results on an adjusted basis".
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| impact of downward estimate
revisions of certain discounted provisions following a
changed interest rate environment. On a positive side, net profit for the year reflected higher net profit from investments (up by euro 758 million) due to gains from the disposal of part of Eni’s interest in Galp, including the fair value revaluation of the residual interest as well as an extraordinary gain registered on Eni’s interest in Galp due to the Galp-Petrogal transaction, for an overall gain of euro 2.08 billion. These positive effects were partly offset by lower income from equity accounted entities, impairments of certain interests (euro 156 million) as well as by the circumstance that in 2011 a gain of euro 1,044 million |
was recorded on the
divestment of Eni’s interests in the international
gas pipelines. Adjusted net profit attributable to
Eni’s shareholders including results from
discontinued operations amounted to euro 7,788 million,
an increase of euro 928 million (up 13.5% from 2011). |
Adjusted net profit
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 6,252 | Net profit attributable to Eni’s shareholders - continuing operations | 6,902 | 4,198 | (2,704 | ) | (39.2 | ) | ||||||||
| (610 | ) | Exclusion of inventory holding (gains) losses | (724 | ) | (23 | ) | |||||||||
| 1,128 | Exclusion of special items | 760 | 2,953 | ||||||||||||
| of which: | |||||||||||||||
| (246 | ) | - non-recurring items | 69 | ||||||||||||
| 1,374 | - other special items | 691 | 2,953 | ||||||||||||
| 6,770 | Adjusted net profit attributable to Eni’s shareholders - continuing operations (a) | 6,938 | 7,128 | 190 | 2.7 |
(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 from continuing
operations of euro 7,128 million increased by euro
190 million from 2011, or 2.7%. When excluding
Snam’s contribution to results from continuing
operations which corresponds to Snam margins on
intercompany transactions as per IFRS 5, the year on year
increase in adjusted net profit was equal to 7.6%. The increase reflected an improved performance reported by the Exploration & Production Division and the downstream businesses, partly offset by lower income from investments, increasing taxable profit reported by the Exploration & Production Division subject to higher tax rates, as well as a write-down of deferred tax assets of Italian subsidiaries which were not included within special charges albeit being a non-recurring item (approximately euro 230 million). Adjusted net profit was calculated by excluding an inventory holding gain amounting to euro 23 million and special charges of euro 2,953 million, with an overall positive impact of euro 2,930 million. Special
charges in operating profit from continuing
operations of euro 4,744 million mainly related to: |
Exploration & Production
Division reflecting downward reserve revisions and a
changed pricing environment, as well as marginal lines of
business in the Chemical segment due to lack of
profitability perspectives; (ii) extraordinary expenses and risk provisions of euro 945 million incurred in connection with price revisions at long-term gas purchase contracts which were presented as special items given the contractual time span for price revisions expired in previous periods and relating to gas volumes purchased in previous reporting periods, including the one related to the settlement of an arbitration proceeding with GasTerra; (iii) exchange rate differences and exchange rate derivative instruments reclassified as operating items (a loss of euro 79 million) as they mainly related to derivative transactions entered into to manage exposure to the exchange rate risk implicit in commodity pricing formulas; (iv) provisions for redundancy incentives (euro 64 million) and environmental issues (euro 63 million); (v) a gain on the divestment of a 10% interest in the Karachaganak project to the Kazakh partner KazMunaiGas as part of the settlement agreement (euro 343 million). Special
items in net profit included: |
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| at market fair value through
profit (euro 865 million) as well as a gain recognized on
occasion of a capital increase made by Galp’s
subsidiary Petrogal whereby a new shareholder, Sinopec,
subscribed for its share of the capital increase by
contributing a cash amount which was in excess of the net
book value of the interest acquired (euro 835 million); (ii) a write-down incurred at Italian subsidiaries’ deferred tax assets which regarded the opening balances of such deferred tax assets in the amount of approximately euro 800 million out of a global write-down of euro 1,030 million. This |
impairment was recognized to
reflect a lower likelihood that certain deferred tax
assets of Italian subsidiaries can be recovered in future
periods due to an expected reduction in taxable income
generated in Italy, and as Eni has lost the availability
of Snam taxable profit against which Italian tax assets
can be utilized following the deconsolidation of Snam. The breakdown of adjusted net profit from continuing operations by division is shown in the table below: |
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 5,609 | Exploration & Production | 6,865 | 7,425 | 560 | 8.2 | ||||||||||
| 1,267 | Gas & Power | 252 | 473 | 221 | 87.7 | ||||||||||
| (56 | ) | Refining & Marketing | (264 | ) | (179 | ) | 85 | 32.2 | |||||||
| (73 | ) | Chemicals | (206 | ) | (395 | ) | (189 | ) | (91.7 | ) | |||||
| 994 | Engineering & Construction | 1,098 | 1,109 | 11 | 1.0 | ||||||||||
| (216 | ) | Other activities | (225 | ) | (247 | ) | (22 | ) | (9.8 | ) | |||||
| (867 | ) | Corporate and financial companies | (753 | ) | (976 | ) | (223 | ) | (29.6 | ) | |||||
| 1,124 | Impact of unrealized intragroup profit elimination (a) | 1,146 | 661 | (485 | ) | ||||||||||
| 7,782 | Adjusted net profit - continuing operations | 7,913 | 7,871 | (42 | ) | (0.5 | ) | ||||||||
| of which attributable to: | |||||||||||||||
| 1,012 | - Non-controlling interest | 975 | 743 | (232 | ) | (23.8 | ) | ||||||||
| 6,770 | - Eni’s shareholders | 6,938 | 7,128 | 190 | 2.7 |
(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 a marker Brent price of $111.58 per barrel, almost in line with 2011. The gas market was influenced by weak demand as a consequence of the European economic slowdown. In the meantime the marketplace was well supplied, with very liquid continental hubs for spot transactions. 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 5% from 2011, even if this was not reflected in gas margins because of higher oil-linked supply costs and competitive | pressure. Refining margins showed a recovery from the depressed levels registered a year ago (the benchmark margin on Brent crude averaged $4.83 per barrel, up $2.77 per barrel). However the absolute size of margins remained in unprofitable territory due to volatility of trading environment and weak fuel demand on the back of the economic downturn, excess capacity and high cost of oil feedstock and oil-linked energy utilities. Furthermore, Eni’s complex refineries were impacted by narrowing price differentials between light and heavy crudes. Results for the year were helped by the appreciation of the US dollar over the euro (up 7.7%). |
| 2010 | 2011 | 2012 | % Ch. |
| 79.47 | Average price of Brent dated crude oil (a) | 111.27 | 111.58 | 0.3 | |||||
| 1.327 | Average EUR/USD exchange rate (b) | 1.392 | 1.285 | (7.7 | ) | ||||
| 59.89 | Average price in euro of Brent dated crude oil | 79.94 | 86.83 | 8.6 | |||||
| 2.66 | Average European refining margin (c) | 2.06 | 4.83 | .. | |||||
| 3.47 | Average European refining margin Brent/Ural (c) | 2.90 | 4.94 | 70.3 | |||||
| 2.00 | Average European refining margin in euro | 1.48 | 3.76 | .. | |||||
| 6.56 | Price of NBP gas (d) | 9.03 | 9.48 | 5.0 | |||||
| 0.8 | Euribor - three-month euro rate (%) | 1.4 | 0.6 | (57.1 | ) | ||||
| 0.3 | Libor - three-month dollar rate (%) | 0.3 | 0.4 | 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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Analysis of profit and loss account items - continuing operations
Net sales from operations
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 29,497 | Exploration & Production | 29,121 | 35,881 | 6,760 | 23.2 | ||||||||||
| 27,806 | Gas & Power | 33,093 | 36,200 | 3,107 | 9.4 | ||||||||||
| 43,190 | Refining & Marketing | 51,219 | 62,656 | 11,437 | 22.3 | ||||||||||
| 6,141 | Chemicals | 6,491 | 6,418 | (73 | ) | (1.1 | ) | ||||||||
| 10,581 | Engineering & Construction | 11,834 | 12,771 | 937 | 7.9 | ||||||||||
| 105 | Other activities | 85 | 119 | 34 | 40.0 | ||||||||||
| 1,386 | Corporate and financial companies | 1,365 | 1,369 | 4 | 0.3 | ||||||||||
| 100 | Impact of unrealized intragroup profit elimination | (54 | ) | (75 | ) | (21 | ) | ||||||||
| (22,189 | ) | Consolidation adjustment | (25,464 | ) | (28,119 | ) | (2,655 | ) | |||||||
| 96,617 | 107,690 | 127,220 | 19,530 | 18.1 |
| Eni’s net sales from
operations from continuing operations (euro 127,220
million) increased by euro 19,530 million from 2011 (up
18.1%) reflecting higher realizations on commodities in
dollar terms and the positive impact of the appreciation
of the US dollar against the euro. Revenues generated by the Exploration & Production Division (euro 35,881 million) increased by euro 6,760 million, or 23.2%, due to higher volumes of production sold following the ongoing recovery on Libyan activities, higher realizations in dollar terms (oil up 0.5%; natural gas up 9.9%) as well as currency translation effects. Revenues generated by the Gas & Power Division (euro 36,200 million) increased by euro 3,107 million, or 9.4%, due to trends in energy parameters which are reflected in gas prices and a slight recovery in spot prices. |
Revenues generated by the
Refining & Marketing Division (euro 62,656 million)
increased by euro 11,437 million, or 22.3%, mainly
reflecting higher average selling prices of refined
products and the positive impact of the appreciation of
the dollar against the euro, as well as higher sales
volumes (up 3.31 mmtonnes, or 7.4%). Revenues generated by the Chemical business (euro 6,418 million) decreased by euro 73 million, down 1.1% from 2011, mainly due to a decline in volumes sold (down 2.1%) against the backdrop of the continuing weak commodity demand, impacted by the economic downturn, only partially offset by a recovery in average sale prices. Revenues generated by the Engineering & Construction business (euro 12,771 million) increased by euro 937 million, or 7.9%, as a result of increased activities in the Engineering & Construction business, mainly in the Middle and Far East. |
Operating expenses
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 68,774 | Purchases, services and other | 78,795 | 95,363 | 16,568 | 21.0 | ||||||||||
| (246 | ) | of which: - non-recurring items | 69 | ||||||||||||
| 1,459 | of which: - other special items | 265 | 1,154 | ||||||||||||
| 4,428 | Payroll and related costs | 4,404 | 4,658 | 254 | 5.8 | ||||||||||
| 400 | of which: - provision for redundancy incentives | 203 | 64 | ||||||||||||
| 73,202 | 83,199 | 100,021 | 16,822 | 20.2 |
| Operating expenses
(euro 100,021 million) increased by euro 16,822 million,
or 20.2%, from 2011. Purchases, services and other costs (euro 95,363 million) increased by euro 16,568 million, or 21%, reflecting higher supply costs of purchased oil, gas and petrochemical feedstock on the back of the energy trading environment and the appreciation of the dollar against the euro. Purchases, costs and other costs included |
special charges of euro 1,154 million (euro 334 million in 2011) mainly referring to the extraordinary expenses and risk provisions of euro 945 million incurred in connection with price revisions at long-term gas purchase contracts which were presented as special items given the contractual time span for price revisions expired in previous periods and relating to gas volumes purchased in previous reporting periods, including the one relating to the |
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| settlement of an arbitration
proceeding with GasTerra, as well as to environmental and
other risk provisions. Payroll and related costs (euro 4,658 million) increased by euro 254 million, or 5.8%, from 2011 due to a higher average number of employees outside Italy (following higher activity levels in |
the Engineering & Construction and Exploration & Production businesses), higher unit labor cost outside Italy and the appreciation of the dollar against the euro. These increases were partly offset by a decrease in the average number of employees in Italy and a lower provision for redundancy incentives. |
Depreciation, depletion, amortization and impairments
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 6,928 | Exploration & Production | 6,251 | 7,988 | 1,737 | 27.8 | ||||||||||
| 425 | Gas & Power | 413 | 405 | (8 | ) | (1.9 | ) | ||||||||
| 333 | Refining & Marketing | 351 | 331 | (20 | ) | (5.7 | ) | ||||||||
| 83 | Chemicals | 90 | 90 | ||||||||||||
| 513 | Engineering & Construction | 596 | 683 | 87 | 14.6 | ||||||||||
| 2 | Other activities | 2 | 1 | (1 | ) | (50.0 | ) | ||||||||
| 79 | Corporate and financial companies | 75 | 65 | (10 | ) | (13.3 | ) | ||||||||
| (20 | ) | Impact of unrealized intragroup profit elimination | (23 | ) | (25 | ) | (2 | ) | |||||||
| 8,343 | Total depreciation, depletion and amortization | 7,755 | 9,538 | 1,783 | 23.0 | ||||||||||
| 688 | Impairments | 1,030 | 4,023 | 2,993 | .. | ||||||||||
| 9,031 | 8,785 | 13,561 | 4,776 | 54.4 |
| Depreciation, depletion
and amortization (euro 9,538 million) increased by
euro 1,783 million, up 23%, from 2011, mainly in the
Exploration & Production Division (up euro 1,737
million, or 27.8%) due to an ongoing recovery in Libyan
activities, rising expenses incurred in connection with
ongoing exploration activities (up euro 580 million on a
constant exchange rate basis), the start-up of new fields
and the appreciation of the US dollar against the euro
(up 7.7%). The increase recorded in the Engineering &
Construction business (up euro 87 million, or 14.6%) was
due to new vessels and rigs which were brought into
operations. Impairment charges of euro 4,023 million mainly regarded the goodwill and other intangible assets allocated to the gas |
Marketing activity (euro 2,494 million) and impairment losses of refining plants (euro 843 million) 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 (euro 547 million) reflecting downward reserve revisions and a changed pricing environment, as well as marginal lines of business in the Chemical segment (euro 112 million) due to lack of profitability perspectives. |
The breakdown of impairment charges by Division is shown in the table below:
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 123 | Exploration & Production | 189 | 547 | 358 | .. | ||||||||||
| 426 | Gas & Power | 154 | 2,494 | 2,340 | .. | ||||||||||
| 76 | Refining & Marketing | 488 | 843 | 355 | 72.7 | ||||||||||
| 52 | Chemicals | 160 | 112 | (48 | ) | (30.0 | ) | ||||||||
| 3 | Engineering & Construction | 35 | 25 | (10 | ) | (28.6 | ) | ||||||||
| 8 | Other activities | 4 | 2 | (2 | ) | (50.0 | ) | ||||||||
| 688 | 1,030 | 4,023 | 2,993 | .. |
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Operating profit
The breakdown of the reported operating profit by
Division is provided below:
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 13,866 | Exploration & Production | 15,887 | 18,451 | 2,564 | 16.1 | ||||||||||
| 896 | Gas & Power | (326 | ) | (3,221 | ) | (2,895 | ) | .. | |||||||
| 149 | Refining & Marketing | (273 | ) | (1,303 | ) | (1,030 | ) | .. | |||||||
| (86 | ) | Chemicals | (424 | ) | (683 | ) | (259 | ) | (61.1 | ) | |||||
| 1,302 | Engineering & Construction | 1,422 | 1,433 | 11 | 0.8 | ||||||||||
| (1,384 | ) | Other activities | (427 | ) | (302 | ) | 125 | 29.3 | |||||||
| (361 | ) | Corporate and financial companies | (319 | ) | (345 | ) | (26 | ) | (8.2 | ) | |||||
| 1,100 | Impact of unrealized intragroup profit elimination | 1,263 | 996 | (267 | ) | ||||||||||
| 15,482 | Operating profit | 16,803 | 15,026 | (1,777 | ) | (10.6 | ) |
Adjusted operating profit
The breakdown of the adjusted operating profit by
Division is provided below:
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 15,482 | Operating profit - continuing operations | 16,803 | 15,026 | (1,777 | ) | (10.6 | ) | ||||||||
| (881 | ) | Exclusion of inventory holding (gains) losses | (1,113 | ) | (17 | ) | |||||||||
| 2,244 | Exclusion of special items | 1,540 | 4,744 | ||||||||||||
| of which: | |||||||||||||||
| (246 | ) | - non-recurring items | 69 | ||||||||||||
| 2,490 | - other special items | 1,471 | 4,744 | ||||||||||||
| 16,845 | Adjusted operating profit - continuing operations | 17,230 | 19,753 | 2,523 | 14.6 | ||||||||||
| Breakdown by division: | |||||||||||||||
| 13,898 | Exploration & Production | 16,075 | 18,518 | 2,443 | 15.2 | ||||||||||
| 1,268 | Gas & Power | (247 | ) | 354 | 601 | .. | |||||||||
| (181 | ) | Refining & Marketing | (539 | ) | (328 | ) | 211 | 39.1 | |||||||
| (96 | ) | Chemicals | (273 | ) | (485 | ) | (212 | ) | 77.7 | ||||||
| 1,326 | Engineering & Construction | 1,443 | 1,465 | 22 | 1.5 | ||||||||||
| (205 | ) | Other activities | (226 | ) | (224 | ) | 2 | 0.9 | |||||||
| (265 | ) | Corporate and financial companies | (266 | ) | (329 | ) | (63 | ) | (23.7 | ) | |||||
| 1,100 | Impact of unrealized intragroup profit elimination and other consolidation adjustment | 1,263 | 782 | (481 | ) | ||||||||||
| 16,845 | 17,230 | 19,753 | 2,523 | 14.6 |
| Eni’s adjusted
operating profit from continuing operations amounted
to euro 19,753 million, an increase of euro 2,523 million
from the previous year (up 14.6%), reflecting an improved
performance reported by the Exploration & Production
Division and the downstream businesses. Adjusted
operating profit is calculated by excluding an inventory
holding gain of euro 17 million and special charges of
euro 4,744 million. The increase was mainly due to an
improved operating performance recorded by the following
Divisions: - Exploration & Production (up euro 2.443 million, or 15.2%) driven by an ongoing recovery in Libyan activities and the appreciation of the US dollar over the euro (approximately euro 1,100 million). These positives were partly offset by higher exploration costs incurred due to increased activities as well as higher operating costs and depreciation charges in connection with new field start-ups/ramp-ups; - Gas & Power reverted to operating profit at euro 354 million, which |
was an improvement of euro
601 million from previous year (from an operating loss of
euro 247 million in 2011). The Gas Marketing business
improvement was driven by the benefits associated with
supply contract renegotiations, including the recognition
of better supply costs retroactive to the beginning of
2011, and an ongoing recovery at Libyan supplies; - Refining & Marketing decreased the adjusted operating loss by euro 211 million to euro 328 million (up by 39.1% from 2011), reflecting efficiency gains and optimization measures, and better plant availability. These positives were partly offset by the lower performance reported by the Marketing activity, which was impacted by falling demand for fuel, high competitive pressure and increased expenses associated with certain marketing initiatives including a special discount on prices at the pump during the summer weekends ("riparti con eni"); - Engineering & Construction increased by euro 22 million, or |
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| 1.5%, reflecting higher revenues and better margins on works executed in the first nine months of the year, partly offset by the decrease recorded in the last part of the year in the Engineering & Construction business which was hit by a slowdown in activities and lower profitability of certain contracts, affected by the current economic downturn. | These increases were partly offset by the lower operating performance recorded in the Chemical segment impacted by weak commodity demand on the back of the economic downturn and unprofitable product margins on oil-based commodities which were squeezed by high crude oil costs, particularly in the first quarter of the year. |
Finance income (expense)
| 2010 | (euro million) | 2011 | 2012 | Change |
| (730 | ) | Finance income (expense) related to net borrowings | (881 | ) | (929 | ) | (48 | ) | ||||
| (765 | ) | - Finance expense on short and long-term debt | (922 | ) | (980 | ) | (58 | ) | ||||
| 17 | - Net interest due to banks | 22 | 27 | 5 | ||||||||
| 18 | - Net income from receivables and securities for non-financing operating activities | 19 | 24 | 5 | ||||||||
| (131 | ) | Income (expense) on derivative financial instruments | (112 | ) | (251 | ) | (139 | ) | ||||
| (111 | ) | - Derivatives on exchange rate | 29 | (137 | ) | (166 | ) | |||||
| (39 | ) | - Derivatives on interest rate | (141 | ) | (88 | ) | 53 | |||||
| 19 | - Derivates on securities | (26 | ) | (26 | ) | |||||||
| 92 | Exchange differences, net | (111 | ) | 131 | 242 | |||||||
| (130 | ) | Other finance income (expense) | (154 | ) | (408 | ) | (254 | ) | ||||
| 73 | - Net income from receivables and securities for financing operating activities | 75 | 69 | (6 | ) | |||||||
| (236 | ) | - Finance expense due to the passage of time (accretion discount) | (235 | ) | (308 | ) | (73 | ) | ||||
| 33 | - Other | 6 | (169 | ) | (175 | ) | ||||||
| (899 | ) | (1,258 | ) | (1,457 | ) | (199 | ) | |||||
| 150 | Finance expense capitalized | 112 | 150 | 38 | ||||||||
| (749 | ) | (1,146 | ) | (1,307 | ) | (161 | ) |
| Net finance expense increased by euro 161 million to euro 1,307 million from 2011 due to a negative impact associated with estimate revision of certain discounted provisions due to a changed interest rate environment recorded in the line item "Accretion discount" (down by euro 73 million), higher finance charges (down by euro 58 million) and other finance expense (down by euro 175 million) reflecting | finance charges accrued on amounts due to certain gas suppliers following the definition of contractual price revisions. Lower negative exchange differences net (up by euro 242 million) were partly offset by losses on exchange rate derivatives (down euro 166 million, from a gain of euro 29 million to a loss of euro 137 million) recognized through profit as lacking the formal criteria for hedge accounting. |
Net income from investments
The table below sets forth the breakdown of net income
from investments by Division:
| 2012 (euro million) |
Exploration & Production | Gas & Power | Refining & Marketing |
Engineering & Construction |
Other segments | Group |
| Share of gains (losses) from equity-accounted investments | 39 | 144 | 40 | 55 | 278 | |||||||||||||
| Dividends | 346 | 5 | 51 | 29 | 431 | |||||||||||||
| Gains on disposal | 11 | 28 | (1 | ) | 311 | 349 | ||||||||||||
| Other income (expense), net | 1 | 51 | 1,771 | 1,823 | ||||||||||||||
| 397 | 177 | 142 | 54 | 2,111 | 2,881 |
| Net income from investments amounted to euro 2,881 million and related to: (i) Eni’s share of profit of entities accounted for under the equity-accounting method (euro 278 million) mainly in the Gas & Power Division; (ii) dividends received by entities accounted for at cost (euro 431 million); (iii) gains | on disposal of assets (euro 349 million) mainly relating to the divestment of a 9% interest in Galp; (iv) other net income (euro 1,823 million) reflecting the fair value revaluation of the residual interest of Eni in Galp and the Petrogal transaction (see below for further details). |
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The table below sets forth a breakdown of net income/loss from investments for 2012:
| 2010 | (euro million) | 2011 | 2012 | Change |
| 493 | Share of gains (losses) from equity-accounted investments | 500 | 278 | (222 | ) | |||||||
| 264 | Dividends | 659 | 431 | (228 | ) | |||||||
| 332 | Gains on disposal | 1,121 | 349 | (772 | ) | |||||||
| 23 | Other income (expense), net | (157 | ) | 1,823 | 1,980 | |||||||
| 1,112 | 2,123 | 2,881 | 758 |
| Income from investments increased by euro 758 million due to the recording of higher gains on disposal and revaluation of interests, mainly relating to the divestment of a 9% interest in Galp (euro 311 million) in two tranches (a 5% interest sold to Amorim BV in July 2012 and a 4% sold through an accelerated book-building procedure in November 2012) and the revaluation of the residual interest at market fair value through profit (euro 865 million) as well as the gain recorded on Eni’s shareholding in Galp due to the capital increase made by Galp’s subsidiary Petrogal whereby a new shareholder, Sinopec, subscribed for its share of the capital increase by contributing a cash amount which was | in excess of the net book value of the interest acquired (euro 835 million). Furthermore, a fair value gain of euro 65 million was recorded through profit regarding a 8% interest in Galp which was placed on the market through a convertible bond on November 27, 2012 subsequent to the initial revaluation. These gains were partly offset by the fact that 2011 benefited from relevant gains recorded on the divestment of Eni’s interests in the international gas pipelines (euro 1,044 million). Eni’s lower share of profit of entities accounted for under the equity-accounting method reflected the negative trend of the gas market, the loss of significant influence on Galp from mid-2012 and lower results reported by Nigeria LNG. |
Income taxes
| 2010 | (euro million) | 2011 | 2012 | Change |
| Profit before income taxes | ||||||||||||
| 887 | Italy | 694 | (723 | ) | (1,417 | ) | ||||||
| 14,958 | Outside Italy | 17,086 | 17,323 | 237 | ||||||||
| 15,845 | 17,780 | 16,600 | (1,180 | ) | ||||||||
| Income taxes | ||||||||||||
| 265 | Italy | 227 | 945 | 718 | ||||||||
| 8,316 | Outside Italy | 9,676 | 10,714 | 1,038 | ||||||||
| 8,581 | 9,903 | 11,659 | 1,756 | |||||||||
| Tax rate (%) | ||||||||||||
| 29.9 | Italy | 32.7 | .. | .. | ||||||||
| 55.6 | Outside Italy | 56.6 | 61.8 | 5.2 | ||||||||
| 54.2 | 55.7 | 70.2 | 14.5 |
| Income taxes were euro
11,659 million, up euro 1,756 million, or 17.7% compared
to the previous year mainly reflecting higher income
taxes currently payable which were incurred by
subsidiaries in the Exploration & Production Division
operating outside Italy due to higher taxable profit. The reported tax rate was 70.2% and reflected: (i) a write-down of euro 1,030 million which was recognized to reflect a lower likelihood that certain deferred tax assets of Italian subsidiaries can be recovered in future periods due to an expected reduction in taxable income generated in Italy, and as Eni has lost the availability of Snam taxable profit against which Italian tax assets can be utilized following the deconsolidation of Snam; (ii) a shift from profit earned by associates to increased taxable income reported by the Exploration & Production Division, subject to higher tax rates, that replaced the above mentioned lower profit from associates; (iii) the significant amount of non-deductible charges (mainly the goodwill |
impairment of the European
Market cash generating unit). The impact of these drivers was partly offset by the non-taxable gains which were recorded on the Galp interest and the fact that based on the accounting provided by IFRS 5 the Group taxable income from continuing operations benefited from Snam’s margins on intercompany transactions which are deprived of any tax impact. Adjusted tax rate, calculated as ratio of income taxes to net profit before taxes on an adjusted basis, was 59.8%, increasing from 2011 (54.4% in 2011), reflecting the higher share of taxable profit reported by the Exploration & Production Division and the amount of the write-down taken at the deferred tax assets of Italian subsidiaries (euro 230 million) which remained in adjusted results. Non-controlling interest |
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Divisional performance2
Exploration & Production
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 13,866 | Operating profit | 15,887 | 18,451 | 2,564 | 16.1 | ||||||||||||
| 32 | Exclusion of special items: | 188 | 67 | ||||||||||||||
| 127 | - asset impairments | 190 | 550 | ||||||||||||||
| (241 | ) | - gains on disposal of assets | (63 | ) | (542 | ) | |||||||||||
| 97 | - provision for redundancy incentives | 44 | 6 | ||||||||||||||
| 30 | - environmental charges | ||||||||||||||||
| - risk provisions | 7 | ||||||||||||||||
| - re-measurement gains/losses on commodity derivatives | 1 | 1 | |||||||||||||||
| 14 | - exchange rate differences and derivatives | (2 | ) | (9 | ) | ||||||||||||
| 5 | - other | 18 | 54 | ||||||||||||||
| 13,898 | Adjusted operating profit | 16,075 | 18,518 | 2,443 | 15.2 | ||||||||||||
| (205 | ) | Net financial income (expense) (a) | (231 | ) | (248 | ) | (17 | ) | |||||||||
| 274 | Net income (expense) from investments (a) | 624 | 436 | (188 | ) | ||||||||||||
| (8,358 | ) | Income taxes (a) | (9,603 | ) | (11,281 | ) | (1,678 | ) | |||||||||
| 59.8 | Tax rate (%) | 58.3 | 60.3 | 2.0 | |||||||||||||
| 5,609 | Adjusted net profit | 6,865 | 7,425 | 560 | 8.2 | ||||||||||||
| Results also include: | |||||||||||||||||
| 7,051 | - amortization and depreciation | 6,440 | 8,535 | 2,095 | 32.5 | ||||||||||||
| of which: | |||||||||||||||||
| 1,199 | exploration expenditures | 1,165 | 1,835 | 670 | 57.5 | ||||||||||||
| 802 | - amortization of exploratory drilling expenditures and other | 820 | 1,457 | 637 | 77.7 | ||||||||||||
| 397 | - amortization of geological and geophysical exploration expenses | 345 | 378 | 33 | 9.6 | ||||||||||||
| Average hydrocarbons realizations | |||||||||||||||||
| 72.76 | Liquids (b) | ($/bbl) | 102.11 | 102.58 | 0.47 | 0.5 | |||||||||||
| 6.02 | Natural gas | ($/mmcf) | 6.48 | 7.12 | 0.64 | 9.9 | |||||||||||
| 55.60 | Hydrocarbons | ($/boe) | 72.26 | 73.39 | 1.13 | 1.6 |
(a) Excluding special items.
(b) Includes condensates.
| In 2012, the Exploration
& Production Division recorded an adjusted
operating profit of euro 18,518 million, increasing
by euro 2,443 million from 2011, up 15.2%, due to the
ongoing recovery in Libyan activities and the
appreciation of the US dollar over the euro (up by
approximately euro 1,100 million), partly offset by
higher exploration costs, related to increasing
exploration activities, higher operating expenses and
development amortizations related to new fields
start-up/ramp-up. Special charges excluded from adjusted operating profit amounted to euro 67 million and mainly related to: (i) impairment losses at proved and unproved properties (euro 550 million in the full year) that were driven by downward reserves revisions, |
price changes and revised
profitability outlook mainly on certain gas assets in the
United States and India and on an oil asset in
Turkmenistan; (ii) gains on disposal of assets (euro 542
million), including a gain on the divestment of a 10%
interest in the Karachaganak field to the Kazakh partner
KazMunaiGas as part of the settlement agreement; (iii)
risk provisions and employee redundancy incentives as
well as other charges. Adjusted net profit increased by euro 560 million to euro 7,425 million (up 8.2%) from 2011, due to an improved operating performance, partly offset by lower income from investments and a higher adjusted tax rate (up 2 percentage points). |
(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
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 896 | Operating profit | (326 | ) | (3,221 | ) | (2,895 | ) | .. | |||||||
| (117 | ) | Exclusion of inventory holding (gains) losses | (166 | ) | 163 | ||||||||||
| 489 | Exclusion of special items: | 245 | 3,412 | ||||||||||||
| of which: | |||||||||||||||
| (270 | ) | Non-recurring items | |||||||||||||
| 759 | Other special items | 245 | 3,412 | ||||||||||||
| 426 | - asset impairments | 154 | 2,494 | ||||||||||||
| 78 | - risk provisions | 77 | 831 | ||||||||||||
| - gains on disposal of assets | (3 | ) | |||||||||||||
| 16 | - environmental provisions | (2 | ) | ||||||||||||
| 52 | - provisions for redundancy incentives | 34 | 5 | ||||||||||||
| 30 | - re-measurement gains/losses on commodity derivatives | 45 | |||||||||||||
| 195 | - exchange rate differences and derivatives | (82 | ) | (51 | ) | ||||||||||
| (38 | ) | - other | 17 | 138 | |||||||||||
| 1,268 | Adjusted operating profit | (247 | ) | 354 | 601 | .. | |||||||||
| 923 | Marketing | (657 | ) | 45 | 702 | .. | |||||||||
| 345 | International transport | 410 | 309 | (101 | ) | (24.6 | ) | ||||||||
| 34 | Net finance income (expense) (a) | 43 | 31 | (12 | ) | ||||||||||
| 362 | Net income (expense) from investments (a) | 363 | 261 | (102 | ) | ||||||||||
| (397 | ) | Income taxes (a) | 93 | (173 | ) | (266 | ) | ||||||||
| 23.9 | Tax rate (%) | .. | 26.8 | ||||||||||||
| 1,267 | Adjusted net profit | 252 | 473 | 221 | 87.7 |
(a) Excluding special items.
| In 2012 the Gas & Power
Division reported improved adjusted operating
profit, up by euro 601 million (from a loss of euro
247 million reported in 2011 to a profit of euro 354
million). This was due to the Marketing business (up by
euro 702 million), while the International Transport
business reported lower results (down by euro 101
million, or 24.6%) due to the divestment of the
Company’s interests in the entities engaged in the
International Transport of gas from Northern Europe and
Russia which was executed in 2011. The Marketing performance was driven by the benefits of supply contracts renegotiations, certain of which were retroactive to the beginning of 2011, and a recovery in Libyan supplies. These positives absorbed the weak trading environment and margin pressure due to the ongoing trends in oil-linked supply costs and strong competition. Operating profit was also impacted by the negative effects of price revisions at certain long-term gas suppliers and customers; this was also due to the settlement of a number of arbitration proceedings, including the one relating to the definition of an arbitration proceeding with GasTerra. Special charges excluded from adjusted operating profit amounted to euro 3,412 million and mainly included: |
(i) impairment losses of
goodwill and other intangible assets amounting to euro
2,494 million, which were mainly recorded at the European
gas market cash generating unit. These impairment losses
were recorded to write down the book value of those
assets to their value-in-use. Management expectations
pointed to a reduced profitability outlook in this
business due to downward projections of demand growth,
persistence of oversupplies in the gas market and rising
competitive pressure adversely impacting selling prices
and margins; (ii) extraordinary expenses and risk
provisions of euro 831 million incurred in connection
with price revisions at long-term gas purchase contracts
which were presented as special items given the
contractual time span for price revision expired in
previous periods and relating to gas volumes purchased in
previous reporting periods; (iii) exchange rate
differences and derivatives reclassified as operating
items euro 51 million. Adjusted net profit for the full year 2012 was euro 473 million, an increase of euro 221 million from 2011 due to a better operating performance. |
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Other performance indicators
Follows a breakdown of the pro-forma adjusted EBITDA
by business:
| 2010 | (euro million) | 2011 | 2012 | Change |
| 2,562 | Pro-forma EBITDA adjusted | 949 | 1,314 | 365 | ||||||||
| 1,863 | Marketing | 257 | 856 | 599 | ||||||||
| 116 | of which: +/(-) adjustment on commodity derivatives | 44 | (44 | ) | ||||||||
| 699 | International transport | 692 | 458 | (234 | ) |
| 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. In order to calculate the EBITDA pro-forma adjusted, the adjusted operating profit of the Marketing business has been modified to take into account the impact of the settlement of certain commodity and exchange rate derivatives that do not meet the formal criteria to be classified as hedges under the IFRS. These are entered into by the Company in view of | certain amounts of gas and electricity that the Company expects to supply at fixed prices during future periods. The impact of those derivatives has been allocated to the EBITDA pro-forma adjusted relating to the reporting periods during which those supplies at fixed prices are recognized. 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
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 149 | Operating profit | (273 | ) | (1,303 | ) | (1,030 | ) | .. | |||||||
| (659 | ) | Exclusion of inventory holding (gains) losses | (907 | ) | (29 | ) | |||||||||
| 329 | Exclusion of special items: | 641 | 1,004 | ||||||||||||
| 76 | - asset impairments | 488 | 846 | ||||||||||||
| 169 | - environmental provisions | 34 | 40 | ||||||||||||
| (16 | ) | - gains on disposal of assets | 10 | 5 | |||||||||||
| 2 | - risk provisions | 8 | 49 | ||||||||||||
| 113 | - provisions for redundancy incentives | 81 | 19 | ||||||||||||
| (10 | ) | - re-measurement gains/losses on commodity derivatives | (3 | ) | |||||||||||
| (10 | ) | - exchange rate differences and derivatives | (4 | ) | (8 | ) | |||||||||
| 5 | - other | 27 | 53 | ||||||||||||
| (181 | ) | Adjusted operating profit | (539 | ) | (328 | ) | 211 | 39.1 | |||||||
| Net finance income (expense) (a) | (4 | ) | (4 | ) | |||||||||||
| 92 | Net income (expense) from investments (a) | 99 | 63 | (36 | ) | ||||||||||
| 33 | Income taxes (a) | 176 | 90 | (86 | ) | ||||||||||
| (56 | ) | Adjusted net profit | (264 | ) | (179 | ) | 85 | 32.2 |
(a) Excluding special items.
| In 2012, Eni’s Refining & Marketing Division managed to limit adjusted operating losses to euro 328 million with a 39.1% reduction from 2011 (up euro 211 million). The 2012 scenario was characterized by weak and volatile margins, although they recovered somewhat from a year ago. Continuing weakness in margins was driven by excess capacity, sharply lower demand for fuels particularly in the Italian market, and high supply costs of oil-based feedstock and utilities. Against this backdrop, the improvement reported by the refining activity was due to | efficiency gains and
optimization measures and reduced refinery downtime. On
the negative side, the Marketing activity reported lower
results, which were impacted by falling demand for fuel,
high competitive pressure and increased expenses
associated with certain marketing initiatives including a
special discount on prices at the pump during the summer
weekends ("riparti con eni"). Special charges excluded from adjusted operating loss amounting to euro 1,004 million, mainly related to refinery impairment charges |
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| (euro 846 million) due to management’s projections of unprofitable margins and lower future cash flows, risk provisions (euro 49 million) and environmental provisions (euro 40 million). | Adjusted net loss declined by euro 85 million (from a loss of euro 264 million in 2011 to a loss of euro 179 million in 2012) due to operating performance. |
Chemicals
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| (86 | ) | Operating profit | (424 | ) | (683 | ) | (259 | ) | (61.1 | ) | |||||
| (105 | ) | Exclusion of inventory holding (gains) losses | (40 | ) | 63 | ||||||||||
| 95 | Exclusion of special items | 191 | 135 | ||||||||||||
| of which: | |||||||||||||||
| Non-recurring items | 10 | ||||||||||||||
| 95 | Other special items: | 181 | 135 | ||||||||||||
| 52 | - asset impairments | 160 | 112 | ||||||||||||
| - gains on disposal of assets | 1 | ||||||||||||||
| - risk provisions | 18 | ||||||||||||||
| - environmental provisions | 1 | ||||||||||||||
| 26 | - provisions for redundancy incentives | 17 | 14 | ||||||||||||
| - re-measurement gains/losses on commodity derivatives | 1 | ||||||||||||||
| 17 | - exchange rate differences and derivatives | (11 | ) | ||||||||||||
| - other | 3 | ||||||||||||||
| (96 | ) | Adjusted operating profit | (273 | ) | (485 | ) | (212 | ) | (77.7 | ) | |||||
| Net finance income (expense) (a) | (1 | ) | (1 | ) | |||||||||||
| 1 | Net income (expense) from investments (a) | 2 | 2 | ||||||||||||
| 22 | Income taxes (a) | 67 | 89 | 22 | |||||||||||
| (73 | ) | Adjusted net profit | (206 | ) | (395 | ) | (189 | ) | (91.7 | ) |
(a) Excluding special items.
| In 2012, the Chemicals Division reported a deeper adjusted operating loss of euro 485 million, almost double compared to 2011 (a loss of euro 273 million). This negative trend was driven by the fall in commodities demand due to the economic downturn and the unprofitable product margins of oil-based commodities which were squeezed by high crude oil costs, particularly in the first quarter of 2012, leading to a negative benchmark margin of cracking. | Special charges
excluded from adjusted operating loss of euro 135
million, related mainly to impairment of marginal
business lines due to lack of profitability perspectives,
as well as to provisions for redundancy incentives and
risk provisions. Adjusted net loss (euro 395 million) was almost double compared to 2011. |
Engineering & Construction
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 1,302 | Operating profit | 1,422 | 1,433 | 11 | 0.8 | ||||||||||
| 24 | Exclusion of special items: | 21 | 32 | ||||||||||||
| of which: | |||||||||||||||
| 24 | Non-recurring items | ||||||||||||||
| Other special items | 21 | 32 | |||||||||||||
| 3 | - asset impairments | 35 | 25 | ||||||||||||
| 5 | - gains on disposal of assets | 4 | 3 | ||||||||||||
| 14 | - provision for redundancy incentives | 10 | 7 | ||||||||||||
| (22 | ) | - re-measurement gains/losses on commodity derivatives | (28 | ) | (3 | ) | |||||||||
| 1,326 | Adjusted operating profit | 1,443 | 1,465 | 22 | 1.5 | ||||||||||
| 33 | Net finance income (expense) (a) | ||||||||||||||
| 10 | Net income (expense) from investments (a) | 95 | 55 | (40 | ) | ||||||||||
| (375 | ) | Income taxes (a) | (440 | ) | (411 | ) | 29 | ||||||||
| 27.4 | Tax rate (%) | 28.6 | 27.0 | (1.6 | ) | ||||||||||
| 994 | Adjusted net profit | 1,098 | 1,109 | 11 | 1.0 |
(a) Excluding special items.
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| The Engineering &
Construction business reported an adjusted operating
profit increasing by 1.5% to euro 1,465 million. The
result reflected higher revenues and better margins on
the works executed, mainly in the first nine months, in
the Engineering & Construction business unit, in
Middle and Far East, as well as in offshore drilling,
where the Scarabeo 8 and Scarabeo 9 activity compensated
the negative impact of the upgrade shutdown of the
semi-submersible platforms Scarabeo 3 and Scarabeo 6. The annual performance was hit by a slowdown in activities and lower profitability of the Engineering & Construction segment, in the fourth quarter, which was affected by the current economic downturn. |
Special charges
excluded from adjusted operating profit amounted to euro
32 million and related mainly to impairment of equipment
of the semi-submersible platforms Scarabeo 8 and Castoro
9, provisions for redundancy incentives and
re-measurement gains on commodity derivatives. Adjusted net profit was euro 1,109 million, increasing by euro 11 million from 2011, reflected a higher adjusted operating profit and lower adjusted tax rate (down approximately 2 percentage points), partly offset by lower income from investments. |
Other activities (*)
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| (1,384 | ) | Operating profit | (427 | ) | (302 | ) | 125 | 29.3 | |||||||
| 1,179 | Exclusion of special items: | 201 | 78 | ||||||||||||
| of which: | |||||||||||||||
| Non-recurring items | 59 | ||||||||||||||
| 1,179 | Other special items | 142 | 78 | ||||||||||||
| 1,145 | - environmental provisions | 141 | 25 | ||||||||||||
| 8 | - asset impairments | 4 | 2 | ||||||||||||
| - gains on disposal of assets | (7 | ) | (12 | ) | |||||||||||
| 7 | - risk provisions | 9 | 35 | ||||||||||||
| 10 | - provisions for redundancy incentives | 8 | 2 | ||||||||||||
| 9 | - other | (13 | ) | 26 | |||||||||||
| (205 | ) | Adjusted operating profit | (226 | ) | (224 | ) | 2 | 0.9 | |||||||
| (9 | ) | Net financial income (expense) (a) | 5 | (22 | ) | (27 | ) | ||||||||
| (2 | ) | Net income (expense) from investments (a) | (3 | ) | (1 | ) | 2 | ||||||||
| Income taxes (a) (b) | (1 | ) | |||||||||||||
| (216 | ) | Adjusted net profit | (225 | ) | (247 | ) | (22 | ) | (9.8 | ) |
(*) Excluding Snam results.
(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
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| (361 | ) | Operating profit | (319 | ) | (345 | ) | (26 | ) | (8.2 | ) | |||||
| 96 | Exclusion of special items: | 53 | 16 | ||||||||||||
| - gains on disposal of assets | (1 | ) | |||||||||||||
| 88 | - provisions for redundancy incentives | (6 | ) | 5 | |||||||||||
| 8 | - risk provisions | 9 | 11 | ||||||||||||
| - other | 51 | ||||||||||||||
| (265 | ) | Adjusted operating profit | (266 | ) | (329 | ) | (63 | ) | (23.7 | ) | |||||
| (783 | ) | Net financial income (expense) (a) | (876 | ) | (861 | ) | 15 | ||||||||
| Net income (expense) from investments (a) | 1 | 99 | 98 | ||||||||||||
| 181 | Income taxes (a) | 388 | 115 | (273 | ) | ||||||||||
| (867 | ) | Adjusted net profit | (753 | ) | (976 | ) | (223 | ) | .. |
(a) Excluding special items.
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Eni Annual Report / Financial review and other information
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 (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. 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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| 2012 | OTHER
ACTIVITIES (a) |
DISCONTINUED
OPERATIONS |
|||
| (euro million) | Exploration
& Production |
Gas & Power (a) |
Refining &
Marketing |
Chemicals |
Engineering
& Construction |
Corporate and
financial companies |
Snam |
Other activities |
Impact of
unrealized intragroup profit elimination |
GROUP |
Snam |
Consolidation
adjustments |
Total |
CONTINUING
OPERATIONS |
||||||||||||||
| Operating profit | 18,451 | (3,221 | ) | (1,303 | ) | (683 | ) | 1,433 | (345 | ) | 1,676 | (302 | ) | 208 | 15,914 | (1,676 | ) | 788 | (888 | ) | 15,026 | |||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||||||
| - 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 | ||||||||||||||||||||||||||||
| - re-measurement gains/losses on 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 | 18,518 | 354 | (328 | ) | (485 | ) | 1,465 | (329 | ) | 1,727 | (224 | ) | (6 | ) | 20,692 | (1,727 | ) | 788 | (939 | ) | 19,753 | |||||||||||||||||||||
| Net finance (expense) income (b) | (248 | ) | 31 | (4 | ) | (1 | ) | (861 | ) | (51 | ) | (22 | ) | (1,156 | ) | 51 | 51 | (1,105 | ) | |||||||||||||||||||||||
| Net income (expense) from investments (b) | 436 | 261 | 63 | 2 | 55 | 99 | 38 | (1 | ) | 953 | (38 | ) | (38 | ) | 915 | |||||||||||||||||||||||||||
| Income taxes (b) | (11,281 | ) | (173 | ) | 90 | 89 | (411 | ) | 115 | (712 | ) | 2 | (12,281 | ) | 712 | (123 | ) | 589 | (11,692 | ) | ||||||||||||||||||||||
| Tax rate (%) | 60.3 | 26.8 | .. | 27.0 | 41.5 | 59.9 | 59.8 | |||||||||||||||||||||||||||||||||||
| Adjusted net profit | 7,425 | 473 | (179 | ) | (395 | ) | 1,109 | (976 | ) | 1,002 | (247 | ) | (4 | ) | 8,208 | (1,002 | ) | 665 | (337 | ) | 7,871 | |||||||||||||||||||||
| of which attributable to: | ||||||||||||||||||||||||||||||||||||||||||
| - non-controlling interest | 885 | (142 | ) | 743 | ||||||||||||||||||||||||||||||||||||||
| - Eni’s shareholders | 7,323 | (195 | ) | 7,128 | ||||||||||||||||||||||||||||||||||||||
| Net profit attributable to Eni’s shareholders |
7,788 | (3,590 | ) | 4,198 | ||||||||||||||||||||||||||||||||||||||
| 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 |
7,323 | (195 | ) | 7,128 |
(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 |
Chemicals |
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 | ||||||||||||||||||||||||||||
| - asset impairments | 190 | 154 | 488 | 160 | 35 | (9 | ) | 4 | 1,022 | 9 | 9 | 1,031 | ||||||||||||||||||||||||||||||
| - gains on disposal of assets | (63 | ) | 10 | 4 | (1 | ) | (4 | ) | (7 | ) | (61 | ) | 4 | 4 | (57 | ) | ||||||||||||||||||||||||||
| - risk provisions | 77 | 8 | (6 | ) | 9 | 88 | 88 | |||||||||||||||||||||||||||||||||||
| - environmental charges | 34 | 1 | 10 | 141 | 186 | (10 | ) | (10 | ) | 176 | ||||||||||||||||||||||||||||||||
| -
provision for redundancy incentives |
44 | 34 | 81 | 17 | 10 | 9 | 6 | 8 | 209 | (6 | ) | (6 | ) | 203 | ||||||||||||||||||||||||||||
| - re-measurement gains/losses on 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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| 2010 | OTHER ACTIVITIES (a) |
DISCONTINUED
OPERATIONS |
|||
| (euro million) | Exploration
& Production |
Gas & Power (a) |
Refining &
Marketing |
Chemicals |
Engineering
& Construction |
Corporate and
financial companies |
Snam |
Other activities |
Impact of
unrealized intragroup profit elimination |
GROUP |
Snam |
Consolidation
adjustments |
Total |
CONTINUING
OPERATIONS |
||||||||||||||
| Operating profit | 13,866 | 896 | 149 | (86 | ) | 1,302 | (361 | ) | 2,000 | (1,384 | ) | (271 | ) | 16,111 | (2,000 | ) | 1,371 | (629 | ) | 15,482 | ||||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | (117 | ) | (659 | ) | (105 | ) | (881 | ) | (881 | ) | ||||||||||||||||||||||||||||||||
| Exclusion of special items | ||||||||||||||||||||||||||||||||||||||||||
| of which: | ||||||||||||||||||||||||||||||||||||||||||
| Non-recurring (income) charges | (270 | ) | 24 | (246 | ) | (246 | ) | |||||||||||||||||||||||||||||||||||
| Other special (income) charges: | 32 | 759 | 329 | 95 | 96 | 46 | 1,179 | 2,536 | (46 | ) | (46 | ) | 2,490 | |||||||||||||||||||||||||||||
| - asset impairments | 127 | 426 | 76 | 52 | 3 | 10 | 8 | 702 | (10 | ) | (10 | ) | 692 | |||||||||||||||||||||||||||||
| - gains on disposal of assets | (241 | ) | (16 | ) | 5 | 4 | (248 | ) | (4 | ) | (4 | ) | (252 | ) | ||||||||||||||||||||||||||||
| - risk provisions | 78 | 2 | 8 | 7 | 95 | 95 | ||||||||||||||||||||||||||||||||||||
| - environmental charges | 30 | 16 | 169 | 9 | 1,145 | 1,369 | (9 | ) | (9 | ) | 1,360 | |||||||||||||||||||||||||||||||
| -
provision for redundancy incentives |
97 | 52 | 113 | 26 | 14 | 88 | 23 | 10 | 423 | (23 | ) | (23 | ) | 400 | ||||||||||||||||||||||||||||
| - re-measurement gains/losses on commodity derivatives |
30 | (10 | ) | (22 | ) | (2 | ) | (2 | ) | |||||||||||||||||||||||||||||||||
| -
exchange rate differences and derivatives |
14 | 195 | (10 | ) | 17 | 216 | 216 | |||||||||||||||||||||||||||||||||||
| - other | 5 | (38 | ) | 5 | 9 | (19 | ) | (19 | ) | |||||||||||||||||||||||||||||||||
| Special items of operating profit | 32 | 489 | 329 | 95 | 24 | 96 | 46 | 1,179 | 2,290 | (46 | ) | (46 | ) | 2,244 | ||||||||||||||||||||||||||||
| Adjusted operating profit | 13,898 | 1,268 | (181 | ) | (96 | ) | 1,326 | (265 | ) | 2,046 | (205 | ) | (271 | ) | 17,520 | (2,046 | ) | 1,371 | (675 | ) | 16,845 | |||||||||||||||||||||
| Net finance (expense) income (b) | (205 | ) | 34 | 33 | (783 | ) | 22 | (9 | ) | (908 | ) | (22 | ) | (22 | ) | (930 | ) | |||||||||||||||||||||||||
| Net income from investments (b) | 274 | 362 | 92 | 1 | 10 | 44 | (2 | ) | 781 | (44 | ) | (44 | ) | 737 | ||||||||||||||||||||||||||||
| Income taxes (b) | (8,358 | ) | (397 | ) | 33 | 22 | (375 | ) | 181 | (667 | ) | 102 | (9,459 | ) | 667 | (78 | ) | 589 | (8,870 | ) | ||||||||||||||||||||||
| Tax rate (%) | 59.8 | 23.9 | .. | 27.4 | 31.6 | 54.4 | 53.3 | |||||||||||||||||||||||||||||||||||
| Adjusted net profit | 5,609 | 1,267 | (56 | ) | (73 | ) | 994 | (867 | ) | 1,445 | (216 | ) | (169 | ) | 7,934 | (1,445 | ) | 1,293 | (152 | ) | 7,782 | |||||||||||||||||||||
| of which attributable to: | ||||||||||||||||||||||||||||||||||||||||||
| - non-controlling interest | 1,065 | (53 | ) | 1,012 | ||||||||||||||||||||||||||||||||||||||
| - Eni’s shareholders | 6,869 | (99 | ) | 6,770 | ||||||||||||||||||||||||||||||||||||||
| Net profit attributable to Eni’s shareholders | 6,318 | (66 | ) | 6,252 | ||||||||||||||||||||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | (610 | ) | (610 | ) | ||||||||||||||||||||||||||||||||||||||
| Exclusion of special items: | 1,161 | (33 | ) | 1,128 | ||||||||||||||||||||||||||||||||||||||
| - non-recurring charges | (246 | ) | (246 | ) | ||||||||||||||||||||||||||||||||||||||
| - other special (income) charges | 1,407 | (33 | ) | 1,374 | ||||||||||||||||||||||||||||||||||||||
| Adjusted net profit attributable to Eni’s shareholders | 6,869 | (99 | ) | 6,770 |
(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 special items (including discontinued operations)
| 2010 | (euro million) |
2011 | 2012 | ||||||
| (246 | ) | Non-recurring charges (income) | 69 | ||||||
| (246 | ) | of which: settlement/payments on antitrust and other Authorities proceedings | 69 | ||||||
| 2,536 | Other special items | 1,498 | 4,795 | ||||||
| 702 | - assets impairments | 1,022 | 4,029 | ||||||
| (248 | ) | - gains on disposal of assets | (61 | ) | (570 | ) | |||
| 95 | - risk provisions | 88 | 945 | ||||||
| 1,369 | - environmental charges | 186 | 134 | ||||||
| 423 | - provision for redundancy incentives | 209 | 66 | ||||||
| (2 | ) | - re-measurement gains/losses on commodity derivatives | 15 | (1 | ) | ||||
| 216 | - exchange rate differences and derivatives | (85 | ) | (79 | ) | ||||
| (19 | ) | - other | 124 | 271 | |||||
| 2,290 | Special items of operating profit | 1,567 | 4,795 | ||||||
| (181 | ) | Net finance (income) expense | 89 | 202 | |||||
| of which: | |||||||||
| (216 | ) | - exchange rate differences and derivatives | 85 | 79 | |||||
| (324 | ) | Net income from investments | (883 | ) | (5,408 | ) | |||
| of which: | |||||||||
| (332 | ) | gains on disposal of assets | (1,118 | ) | (2,354 | ) | |||
| of which: international transport | (1,044 | ) | |||||||
| Galp | (311 | ) | |||||||
| Snam | (2,019 | ) | |||||||
| gains on investment revaluation | (3,151 | ) | |||||||
| of which: | |||||||||
| Galp | (1,700 | ) | |||||||
| Snam | (1,451 | ) | |||||||
| 28 | impairments | 191 | 156 | ||||||
| (624 | ) | Income taxes | 60 | (31 | ) | ||||
| of which: | |||||||||
| - deferred tax liabilities on Italian subsidiaries | 803 | ||||||||
| - deferred tax adjustment in a Production Sharing Agreement | 552 | ||||||||
| 29 | - re-allocation of tax impact on Eni SpA dividends and other special items | (29 | ) | 147 | |||||
| (653 | ) | - taxes on special items of operating profit | (521 | ) | (981 | ) | |||
| 1,161 | Total special items of net profit | 833 | (442 | ) |
Breakdown of impairments
| 2010 | (euro million) | 2011 | 2012 | Change |
| 258 | Asset impairment | 893 | 2,679 | 1,786 | ||||||||
| 430 | Goodwill impairment | 152 | 1,347 | 1,195 | ||||||||
| Revaluations | (15 | ) | (3 | ) | 12 | |||||||
| 688 | Sub total | 1,030 | 4,023 | 2,993 | ||||||||
| 4 | Impairment of losses on receivables related to non-recurring activities | 1 | 6 | 5 | ||||||||
| 692 | Impairments | 1,031 | 4,029 | 2,998 |
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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, 2011 | December 31, 2012 | Change |
| Fixed assets | |||||||||
| Property, plant and equipment | 73,578 | 63,466 | (10,112 | ) | |||||
| Inventories - Compulsory stock | 2,433 | 2,538 | 105 | ||||||
| Intangible assets | 10,950 | 4,487 | (6,463 | ) | |||||
| Equity-accounted investments and other investments | 6,242 | 9,350 | 3,108 | ||||||
| Receivables and securities held for operating purposes | 1,740 | 1,457 | (283 | ) | |||||
| Net payables related to capital expenditure | (1,576 | ) | (1,142 | ) | 434 | ||||
| 93,367 | 80,156 | (13,211 | ) | ||||||
| Net working capital | |||||||||
| Inventories | 7,575 | 8,496 | 921 | ||||||
| Trade receivables | 17,709 | 19,966 | 2,257 | ||||||
| Trade payables | (13,436 | ) | (14,993 | ) | (1,557 | ) | |||
| Tax payables and provisions for net deferred tax liabilities | (3,503 | ) | (3,318 | ) | 185 | ||||
| Provisions | (12,735 | ) | (13,603 | ) | (868 | ) | |||
| Other current assets and liabilities | 281 | 2,347 | 2,066 | ||||||
| (4,109 | ) | (1,105 | ) | 3,004 | |||||
| Provisions for employee post-retirement benefits | (1,039 | ) | (982 | ) | 57 | ||||
| Assets held for sale including related liabilities | 206 | 155 | (51 | ) | |||||
| CAPITAL EMPLOYED, NET | 88,425 | 78,224 | (10,201 | ) | |||||
| Eni shareholders’ equity | 55,472 | 59,199 | 3,727 | ||||||
| Non-controlling interest | 4,921 | 3,514 | (1,407 | ) | |||||
| Shareholders’ equity | 60,393 | 62,713 | 2,320 | ||||||
| Net borrowings | 28,032 | 15,511 | (12,521 | ) | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 88,425 | 78,224 | (10,201 | ) |
(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 Group’s Balance
Sheet as of December 31, 2012 was impacted by the
appreciation of the euro against the US dollar, which was
up by 2% from December 31, 2011 (from 1.294 to 1.319
dollars per euro as of December 31, 2012). This trend
decreased net capital employed and net equity by euro 709
million and euro 717 million, respectively, as well as
increased net borrowings by euro 8 million, as a result
of exchange rate differences. At December 31, 2012, net capital employed totaled euro 78,224 million, representing a decrease of euro 10,201 million from December 31, 2011 reflecting the deconsolidation of Snam and its subsidiaries’ assets, following loss of control as part of the transaction with Cassa Depositi e Prestiti. Fixed assets |
the deconsolidation of Snam
and its subsidiaries’ assets and depreciation,
depletion, amortization and impairment charges (euro
13,561 million), partly offset by capital expenditure
incurred by continuing operations (euro 12,761 million). The item "Equity-accounted investments and other investments" increased by euro 3,108 million due to the increased book value of Eni’s residual interests in Snam and Galp which were reclassified as available-for-sale financial assets and initially measured at market fair value through profit at the date of loss of control and of the significant influence in the investees, and then re-measured at market fair value at the balance sheet date. At the balance sheet date, the residual interest of 20.2% in Snam was substantially unchanged from the initial recognition value equal to euro 2,408 million. Furthermore, the residual stake in Galp (an interest of 24.34%) was valued at euro 2,374 million, and included: (i) Eni’s share of the gain on the capital increase made by Galp’s subsidiary |
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| Petrogal whereby a new
shareholder, Sinopec subscribed for its share of the
capital increase by contributing a cash amount which was
in excess of the net book value of the interest acquired
(euro 835 million); (ii) the market fair value evaluation
at the date of loss of significant influence (euro 865
million) and the re-measurement at market fair value at
the balance sheet date (euro 198 million), net of the 5%
interest sold to Amorim BV and the 4% interest sold
through an accelerated book-building procedure, for a
total amount of euro 652 million. Net payables related to investing activities decreased following recognition of a receivable relating to the divestment of a 10% interest in the Karachaganak project to the Kazakh partner KazMunaiGas, amounting to euro 212 million as at the balance sheet date, as the first tranches were reimbursed as part of the settlement agreement. Net working capital |
- increased "Other
current assets, net" (up by euro 2,006 million)
referring mainly to: i) the deconsolidation of Snam; ii)
the payment of payables due to the Company’s gas
suppliers which were recorded on the take-or-pay position
accrued in 2012 including payment of outstanding
receivables at the beginning of the year (approximately
euro 500 million); - increasing oil, gas and petroleum products inventories, in particular contracts work in progress (up euro 921 million); - increasing the balance between trade receivables and payables (up euro 700 million), in particular in the Gas & Power Division. Those increases were partly absorbed by higher risk provisions mainly accrued in connection with the price revision at certain gas contracts and estimate revisions caused by a reduction in interest rates used to discount the liabilities. Net assets held for sale including related liabilities (euro 155 million) mainly related to non-strategic assets of the Exploration & Production Division and the company Super Octanos in the Refining & Marketing Division. |
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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, 2011 | December 31, 2012 | Change |
| Total debt: | 29,597 | 24,463 | (5,134 | ) | |||||
| - Short-term debt | 6,495 | 5,184 | (1,311 | ) | |||||
| - Long-term debt | 23,102 | 19,279 | (3,823 | ) | |||||
| Cash and cash equivalents | (1,500 | ) | (7,765 | ) | (6,265 | ) | |||
| Securities held for non-operating purposes | (37 | ) | (34 | ) | 3 | ||||
| Financing receivables for non-operating purposes | (28 | ) | (1,153 | ) | (1,125 | ) | |||
| Net borrowings | 28,032 | 15,511 | (12,521 | ) | |||||
| Shareholders’ equity including non-controlling interest | 60,393 | 62,713 | 2,320 | ||||||
| Leverage | 0.46 | 0.25 | (0.21 | ) |
| Net borrowings as of
December 31, 2012 amounted to euro 15,511 million and
decreased by euro 12,521 million from December 31, 2011
mainly due to the divestment of a 30% interest in Snam to
Cassa Depositi e Prestiti (euro 3,517 million) and,
following the loss of control in this entity, the
deconsolidation of Snam net borrowings of euro 12,448
million. Prior to the divestment, Snam had already
reimbursed intercompany loans. Total debt amounted to euro 24,463 million, of which euro 5,184 million were short-term (including the portion of long-term debt due |
within 12 months equal to
euro 2,961 million) and euro 19,279 million were
long-term. Financing receivables for non-operating purposes amounted to euro 1,153 million including receivables vs. Cassa Depositi e Prestiti related to the third tranche of the payment of Snam transaction (euro 879 million), paid in February 2013. The ratio of net borrowings to shareholders’ equity including non-controlling interest – leverage – decreased to 0.25 at December 31, 2012, from 0.46 as of December 31, 2011. |
Comprehensive income
| 2010 | (euro million) | 2011 | 2012 |
| 7,383 | Net profit | 7,803 | 8,673 | ||||||
| Other items of comprehensive income: | |||||||||
| 2,169 | Foreign currency translation differences | 1,031 | (717 | ) | |||||
| Fair value evaluation of Eni’s interest in Galp | 133 | ||||||||
| Fair value evaluation of Eni’s interest in Snam | 8 | ||||||||
| 443 | Change in the fair value of cash flow hedging derivatives | 352 | (102 | ) | |||||
| (9 | ) | Change in the fair value of available-for-sale securities | (6 | ) | 16 | ||||
| (10 | ) | Share of "Other comprehensive income" on equity-accounted entities | (13 | ) | 7 | ||||
| (175 | ) | Taxation | (128 | ) | 32 | ||||
| 2,418 | 1,236 | (623 | ) | ||||||
| 9,801 | Total comprehensive income | 9,039 | 8,050 | ||||||
| Attributable to: | |||||||||
| 8,699 | - Eni’s shareholders | 8,097 | 7,183 | ||||||
| 1,102 | - Non-controlling interest | 942 | 867 |
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Changes in Shareholders’ equity
| (euro million) |
| Shareholders’ equity including non-controlling interest at December 31, 2011 | 60,393 | |||||
| Comprehensive income | 8,050 | |||||
| Dividends distributed to Eni’s shareholders | (3,840 | ) | ||||
| Dividends distributed by consolidated subsidiaries | (686 | ) | ||||
| Impact of Snam divestment on non-controlling interest | (1,602 | ) | ||||
| Gain on the divestment of Eni’s stake in Snam | 371 | |||||
| Sale of treasury shares of Saipem | 29 | |||||
| Stock options expired | (7 | ) | ||||
| Acquisition of non-controlling interest relating to Altergaz SA and Tigáz Zrt | (7 | ) | ||||
| Other changes | 12 | |||||
| Total changes | 2,320 | |||||
| Shareholders’ equity including non-controlling interest at December 31, 2012 | 62,713 | |||||
| Attributable to: | ||||||
| - Eni’s shareholders | 59,199 | |||||
| - Non-controlling interest | 3,514 |
| Shareholders’ equity including non-controlling interest was euro 62,713 million, representing an increase of euro 2,320 million from December 31, 2011. This was due to comprehensive income for the year (euro 8,050 million) as a result of net profit (euro 8,673 million), the revaluation of Eni’s residual interests in Galp and Snam at market fair value through equity at period end (up euro 133 million and euro 8 million, respectively) as they were classified as a financial instrument excluding those portions of interest revaluation that were recognized through profit as management elected the fair value option for the shares underlying convertible bonds in accordance with IFRS. Shareholders’ equity was | negatively impacted by foreign currency translation differences (euro 717 million). In addition, total equity increased following the divestment of a 5% non-controlling interest in Snam to institutional investors that occurred in July 2012, i.e. before loss of control which also determined an increase in the Group’s equity as the transaction consideration was higher than the corresponding book value disposed of (euro 371 million). These additions were partly absorbed by dividend payments to Eni’s shareholders and non-controlling interest (for a total amount of euro 4,526 million) and by the impact on non-controlling interest following the deconsolidation of Snam (euro 1,602 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) | 2011 | 2012 | Dec. 31, 2011 | Dec. 31, 2012 | ||||||||
| As recorded in Eni SpA’s financial statements | 4,213 | 9,078 | 35,255 | 40,577 | ||||||||
| Excess of net equity in individual accounts of consolidated subsidiaries over their corresponding carrying amounts in the statutory accounts of the parent company | 3,972 | 258 | 24,355 | 21,663 | ||||||||
| Consolidation adjustment: | ||||||||||||
| - differences between purchase cost and underlying carrying amounts of net equity | (320 | ) | (2,683 | ) | 4,400 | 1,503 | ||||||
| - elimination of tax adjustments and compliance with Group account policies | (248 | ) | 1,222 | (673 | ) | 739 | ||||||
| - elimination of unrealized intercompany profits | 115 | 638 | (4,291 | ) | (2,652 | ) | ||||||
| - deferred taxation | 71 | 160 | 1,337 | 873 | ||||||||
| - other adjustments | 10 | 10 | ||||||||||
| 7,803 | 8,673 | 60,393 | 62,713 | |||||||||
| Non-controlling interest | (943 | ) | (885 | ) | (4,921 | ) | (3,514 | ) | ||||
| As recorded in the Consolidated Financial Statements | 6,860 | 7,788 | 55,472 | 59,199 |
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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 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; 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)
| 2010 | (euro million) | 2011 | 2012 | Change |
| 7,264 | Net profit - continuing operations | 7,877 | 4,941 | (2,936 | ) | |||||||
| Adjustments to reconcile net profit to net cash provided by operating activities: | ||||||||||||
| 8,521 | - depreciation, depletion and amortization and other non-monetary items | 8,606 | 11,354 | 2,748 | ||||||||
| (558 | ) | - net gains on disposal of assets | (1,176 | ) | (875 | ) | 301 | |||||
| 8,829 | - dividends, interests, taxes and other changes | 9,918 | 11,923 | 2,005 | ||||||||
| (1,158 | ) | Changes in working capital related to operations | (1,696 | ) | (3,373 | ) | (1,677 | ) | ||||
| (8,758 | ) | Dividends received, taxes paid, interest (paid) received | (9,766 | ) | (11,614 | ) | (1,848 | ) | ||||
| 14,140 | Net cash provided by operating activities - continuing operations | 13,763 | 12,356 | (1,407 | ) | |||||||
| 554 | Net cash provided by operating activities - discontinued operations | 619 | 15 | (604 | ) | |||||||
| 14,694 | Net cash provided by operating activities | 14,382 | 12,371 | (2,011 | ) | |||||||
| (12,450 | ) | Capital expenditure - continuing operations | (11,909 | ) | (12,761 | ) | (852 | ) | ||||
| (1,420 | ) | Capital expenditure - discontinued operations | (1,529 | ) | (756 | ) | 773 | |||||
| (13,870 | ) | Capital expenditure | (13,438 | ) | (13,517 | ) | (79 | ) | ||||
| (410 | ) | Investments and purchase of consolidated subsidiaries and businesses | (360 | ) | (569 | ) | (209 | ) | ||||
| 1,113 | Disposals | 1,912 | 6,014 | 4,102 | ||||||||
| 228 | Other cash flow related to capital expenditure, investments and disposals | 627 | (136 | ) | (763 | ) | ||||||
| 1,755 | Free cash flow | 3,123 | 4,163 | 1,040 | ||||||||
| (26 | ) | Borrowings (repayment) of debt related to financing activities (b) | 41 | (83 | ) | (124 | ) | |||||
| 2,272 | Changes in short and long-term financial debt | 1,104 | 5,947 | 4,843 | ||||||||
| (4,099 | ) | Dividends paid and changes in non-controlling interest and reserves | (4,327 | ) | (3,746 | ) | 581 | |||||
| 39 | Effect of changes in consolidation and exchange differences | 10 | (16 | ) | (26 | ) | ||||||
| (59 | ) | NET CASH FLOW | (49 | ) | 6,265 | 6,314 |
Change in net borrowings
| 2010 | (euro million) | 2011 | 2012 | Change |
| 1,755 | Free cash flow | 3,123 | 4,163 | 1,040 | ||||||||
| (33 | ) | Net borrowings of acquired companies | (2 | ) | (2 | ) | ||||||
| Net borrowings of divested companies | (192 | ) | 12,446 | 12,638 | ||||||||
| (687 | ) | Exchange differences on net borrowings and other changes | (517 | ) | (340 | ) | 177 | |||||
| (4,099 | ) | Dividends paid and changes in non-controlling interest and reserves | (4,327 | ) | (3,746 | ) | 581 | |||||
| (3,064 | ) | CHANGE IN NET BORROWINGS | (1,913 | ) | 12,521 | 14,434 |
(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:
| 2010 | (euro million) | 2011 | 2012 | Change |
| Financing investments: | ||||||||||||
| (50 | ) | - securities | (21 | ) | 21 | |||||||
| (13 | ) | - financing receivables | (26 | ) | (1,131 | ) | (1,105 | ) | ||||
| (63 | ) | (47 | ) | (1,131 | ) | (1,084 | ) | |||||
| Disposal of financing investments: | ||||||||||||
| 5 | - securities | 71 | 4 | (67 | ) | |||||||
| 32 | - financing receivables | 17 | 1,044 | 1,027 | ||||||||
| 37 | 88 | 1,048 | 960 | |||||||||
| (26 | ) | Cash flows of financial investments not related to operation | 41 | (83 | ) | (124 | ) |
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| Net cash provided by operating activities of continuing operations (euro 12,356 million) and proceeds from disposals of euro 6,014 million funded cash outflows relating to capital expenditure totaling euro 12,761 million and investments (euro 569 million) relating to the acquisition of Nuon in Belgium and joint venture projects, as well as dividend payments amounting to euro 4,379 million (of which euro 1,956 million relating to the 2012 interim dividend and euro 1,884 million to the balance dividend for fiscal year 2011 to Eni’s shareholders and the remaining part related to other dividend payments to non-controlling interests). | Disposals of assets mainly regarded the divestment of 30% interest less one share in Snam to Cassa Depositi e Prestiti (euro 3,517 million), two tranches of the interest in Galp for an overall amount of euro 963 million (a 5% interest sold to Amorim BV and a 4% sold through an accelerated book-building procedure), a 10% interest in the Karachaganak field (approximately euro 500 million) and other non-strategic assets in the Exploration & Production Division (euro 695 million). The proceeds on the divestment of a 5% interest in Snam before loss of control to institutional investors (euro 612 million) were recognized as an equity transaction. |
Capital expenditure
| 2010 | (euro million) | 2011 | 2012 | Change | % Ch. |
| 9,690 | Exploration & Production | 9,435 | 10,307 | 872 | 9.2 | ||||||||||
| - acquisition of proved and unproved properties | 754 | 43 | |||||||||||||
| 1,012 | - exploration | 1,210 | 1,850 | ||||||||||||
| 8,578 | - development | 7,357 | 8,304 | ||||||||||||
| 100 | - other expenditure | 114 | 110 | ||||||||||||
| 265 | Gas & Power | 192 | 225 | 33 | 17.2 | ||||||||||
| 248 | - marketing | 184 | 212 | ||||||||||||
| 17 | - international transport | 8 | 13 | ||||||||||||
| 711 | Refining & Marketing | 866 | 842 | (24 | ) | (2.8 | ) | ||||||||
| 446 | - refining, supply and logistics | 629 | 622 | ||||||||||||
| 246 | - marketing | 228 | 220 | ||||||||||||
| 19 | - other activities | 9 | |||||||||||||
| 251 | Chemicals | 216 | 172 | (44 | ) | (20.4 | ) | ||||||||
| 1,552 | Engineering & Construction | 1,090 | 1,011 | (79 | ) | (7.2 | ) | ||||||||
| 22 | Other activities | 10 | 14 | 4 | .. | ||||||||||
| 109 | Corporate and financial companies | 128 | 152 | 24 | 18.8 | ||||||||||
| (150 | ) | Impact of unrealized intragroup profit elimination | (28 | ) | 38 | 66 | |||||||||
| 12,450 | Capital expenditure - continuing operations | 11,909 | 12,761 | 852 | 7.2 | ||||||||||
| 1,420 | Capital expenditure - discontinued operations | 1,529 | 756 | (773 | ) | (50.6 | ) | ||||||||
| 13,870 | Capital expenditure | 13,438 | 13,517 | 79 | 0.6 |
| In 2012, capital
expenditure of continuing operations amounted to
euro 12,761 million, mainly relating to: - development activities deployed mainly in Norway, the United States, Congo, Italy, Kazakhstan, Angola and Algeria, and exploratory activities of which 98% was spent outside Italy, primarily in Mozambique, Liberia, Ghana, Indonesia, Nigeria, Angola and Australia; - upgrading of the fleet used in the Engineering & Construction Division (euro 1,011 million); - refining, supply and logistics with projects designed to improve the conversion rate and flexibility of refineries(euro 622 million); in particular at the Sannazzaro refinery, as well as upgrading and rebranding of the refined product retail network (euro 220 million); |
- initiatives to improve
flexibility of the combined cycle power plants (euro 131
million). Dividends paid and changes in non-controlling interests and reserves amounting to euro 3,746 million mainly related to the payment of cash dividends to Eni shareholders (euro 3,840 million of which euro 1,956 million, relating to the 2012 interim dividend) and the distribution of dividends to non-controlling interest by Snam, Saipem and other consolidated subsidiaries (euro 539 million), as well as the proceeds on the divestment of an interest of 5% in Snam before loss of control to institutional investors (euro 612 million) recognized as an equity transaction. |
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Discontinued operations
Main financial data of discontinued operations are provided below. These figures are represented net and gross of intercompany transactions which, for the year 2012, were accounted for until the loss of control date (conventionally October 1, 2012).
Snam - results of operations and liquidity from third-party transactions
| (euro million) | 2011 | 2012 | ||||
| Revenues | 1,906 | 1,886 | ||||
| Operating expenses | (1,274 | ) | (998 | ) | ||
| Operating profit | 632 | 888 | ||||
| Finance income (expense) | 17 | (51 | ) | |||
| Profit before gains on disposal of assets | 697 | 875 | ||||
| Gains on disposal | 2,019 | |||||
| Gains on revaluation | 1,451 | |||||
| Profit before income taxes | 697 | 4,345 | ||||
| Income taxes | (771 | ) | (568 | ) | ||
| Taxation on gains on disposal of assets | (45 | ) | ||||
| Net profit | (74 | ) | 3,732 | |||
| of which: | ||||||
| - Eni’s shareholders | (42 | ) | 3,590 | |||
| - Non-controlling interest | (32 | ) | 142 | |||
| Net profit per share | - | 0.99 | ||||
| Net borrowings | - | 11,416 | ||||
| Net cash provided by operating activities | 619 | 15 | ||||
| Net cash provided by investing activities | (1,516 | ) | (1,004 | ) | ||
| Net cash provided by financing activities | (356 | ) | 11,172 | |||
| Capital expenditure | 1,529 | 756 |
Snam - results of operations and liquidity from third-party and intercompany transactions
| (euro million) | 2011 | 2012 | ||||
| Revenues | 3,662 | 2,754 | ||||
| Operating expenses | (1,578 | ) | (1,078 | ) | ||
| Operating profit | 2,084 | 1,676 | ||||
| Finance income (expense) | (497 | ) | (376 | ) | ||
| Profit before gains on disposal of assets | 1,635 | 1,338 | ||||
| Gains on disposal | 2,019 | |||||
| Gains on revaluation | 1,451 | |||||
| Profit before income taxes | 1,635 | 4,808 | ||||
| Income taxes | (771 | ) | (568 | ) | ||
| Taxation on gains on disposal of assets | (45 | ) | ||||
| Net profit | 864 | 4,196 | ||||
| of which: | ||||||
| - Eni’s shareholders | 479 | 3,839 | ||||
| - Non-controlling interest | 385 | 356 | ||||
| Net profit per share | 0.13 | 1.06 | ||||
| Net borrowings | 11,197 | 12,448 | ||||
| Net cash provided by operating activities | 1,572 | 412 | ||||
| Net cash provided by investing activities | (1,655 | ) | (1,070 | ) | ||
| Net cash provided by financing activities | 18 | 663 | ||||
| Capital expenditure | 1,529 | 756 |
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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, 2011 | December 31, 2012 |
||||||||||||
| 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 | 73,578 | 63,466 | ||||||||||||
| Inventories - Compulsory stock | 2,433 | 2,538 | ||||||||||||
| Intangible assets | 10,950 | 4,487 | ||||||||||||
| Equity-accounted investments and other investments | 6,242 | 9,350 | ||||||||||||
| Receivables and securities held for operating activities | (see note 9 and note 18) | 1,740 | 1,457 | |||||||||||
| Net payables related to capital expenditure, made up of: | (1,576 | ) | (1,142 | ) | ||||||||||
| - receivables related to disposals | (see note 9) | 169 | 209 | |||||||||||
| - receivables related to disposals | (see note 20) | 535 | 752 | |||||||||||
| - payables related to capital expenditure | (see note 22) | (2,280 | ) | (2,103 | ) | |||||||||
| Total fixed assets | 93,367 | 80,156 | ||||||||||||
| Net working capital | ||||||||||||||
| Inventories | 7,575 | 8,496 | ||||||||||||
| Trade receivables | (see note 9) | 17,709 | 19,966 | |||||||||||
| Trade payables | (see note 22) | (13,436 | ) | (14,993 | ) | |||||||||
| Tax payables and provisions for net deferred tax liabilities, made up of: | (3,503 | ) | (3,318 | ) | ||||||||||
| - income tax payables | (2,092 | ) | (1,622 | ) | ||||||||||
| - other tax payables | (1,896 | ) | (2,162 | ) | ||||||||||
| - deferred tax liabilities | (7,120 | ) | (6,740 | ) | ||||||||||
| - other tax liabilities | (see note 30) | (1 | ) | |||||||||||
| - current tax assets | 549 | 771 | ||||||||||||
| - other current tax assets | 1,388 | 1,230 | ||||||||||||
| - deferred tax assets | 5,514 | 4,913 | ||||||||||||
| - other tax assets | (see note 20) | 154 | 293 | |||||||||||
| Provisions | (12,735 | ) | (13,603 | ) | ||||||||||
| Other current assets and liabilities: | 281 | 2,347 | ||||||||||||
| - securities held for operating purposes | (see note 8) | 225 | 201 | |||||||||||
| - receivables for operating purposes | (see note 9) | 468 | 440 | |||||||||||
| - other receivables | (see note 9) | 6,059 | 6,625 | |||||||||||
| - other (current) assets | 2,326 | 1,624 | ||||||||||||
| - other receivables and other assets | (see note 20) | 3,536 | 3,355 | |||||||||||
| - advances, other payables | (see note 22) | (7,196 | ) | (6,485 | ) | |||||||||
| - other (current) liabilities | (2,237 | ) | (1,437 | ) | ||||||||||
| - other payables and other liabilities | (see note 30) | (2,900 | ) | (1,976 | ) | |||||||||
| Total net working capital | (4,109 | ) | (1,105 | ) | ||||||||||
| Provisions for employee post-retirement benefits | (1,039 | ) | (982 | ) | ||||||||||
| Assets held for sale including related liabilities | 206 | 155 | ||||||||||||
| Made up of: | ||||||||||||||
| - assets held for sale | 230 | 516 | ||||||||||||
| - liabilities related to assets held for sale | (24 | ) | (361 | ) | ||||||||||
| CAPITAL EMPLOYED, NET | 88,425 | 78,224 | ||||||||||||
| Shareholders’ equity including non-controlling interest | 60,393 | 62,713 | ||||||||||||
| Net borrowings | ||||||||||||||
| Total debt, made up of: | 29,597 | 24,463 | ||||||||||||
| - long-term debt | 23,102 | 19,279 | ||||||||||||
| - current portion of long-term debt | 2,036 | 2,961 | ||||||||||||
| - short-term financial liabilities | 4,459 | 2,223 | ||||||||||||
| less: | ||||||||||||||
| Cash and cash equivalents | (1,500 | ) | (7,765 | ) | ||||||||||
| Securities held for non-operating purposes | (see note 8) | (37 | ) | (34 | ) | |||||||||
| Financing receivables for non-operating purposes | (see note 9) | (28 | ) | (1,153 | ) | |||||||||
| Total net borrowings (a) | 28,032 | 15,511 | ||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 88,425 | 78,224 |
(a) For details on net borrowings see also note 26 to the Consolidated Financial Statements.
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Summarized Group Cash Flow Statement
| (euro million) | 2011 |
2012 | ||||||||||
| 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 | 7,877 | 4,941 | ||||||||||
| Adjustments to reconcile net profit to net cash provided by operating activities: | ||||||||||||
| Depreciation, depletion and amortization and other non-monetary items: | 8,606 | 11,354 | ||||||||||
| - depreciation, depletion and amortization | 7,755 | 9,538 | ||||||||||
| - impairment of tangible and intangible assets, net | 1,030 | 4,023 | ||||||||||
| - share of profit (loss) of equity-accounted investments | (500 | ) | (278 | ) | ||||||||
| - other net changes | 331 | (1,945 | ) | |||||||||
| - net changes in the provisions for employee benefits | (10 | ) | 16 | |||||||||
| Net gains on disposal of assets | (1,176 | ) | (875 | ) | ||||||||
| Dividends, interest, income taxes and other changes: | 9,918 | 11,923 | ||||||||||
| - dividend income | (659 | ) | (431 | ) | ||||||||
| - interest income | (99 | ) | (108 | ) | ||||||||
| - interest expense | 773 | 803 | ||||||||||
| - income taxes | 9,903 | 11,659 | ||||||||||
| Changes in working capital related to operations: | (1,696 | ) | (3,373 | ) | ||||||||
| - inventory | (1,400 | ) | (1,395 | ) | ||||||||
| - trade receivables | 218 | (3,184 | ) | |||||||||
| - trade payables | 34 | 2,029 | ||||||||||
| - provisions for contingencies | 109 | 338 | ||||||||||
| - other assets and liabilities | (657 | ) | (1,161 | ) | ||||||||
| Dividends received, taxes paid, interest (paid) received during the period: | (9,766 | ) | (11,614 | ) | ||||||||
| - dividend received | 955 | 988 | ||||||||||
| - interest received | 99 | 91 | ||||||||||
| - interest paid | (927 | ) | (825 | ) | ||||||||
| - income taxes paid, net of tax receivables received | (9,893 | ) | (11,868 | ) | ||||||||
| Net cash provided by operating activities - continuing operations | 13,763 | 12,356 | ||||||||||
| Net cash provided by operating activities - discontinued operations | 619 | 15 | ||||||||||
| Net cash provided by operating activities | 14,382 | 12,371 | ||||||||||
| Capital expenditure: | (13,438 | ) | (13,517 | ) | ||||||||
| - tangible assets | (11,658 | ) | (11,222 | ) | ||||||||
| - intangible assets | (1,780 | ) | (2,295 | ) | ||||||||
| Investments and purchase of consolidated subsidiaries and businesses: | (360 | ) | (569 | ) | ||||||||
| - investments | (245 | ) | (391 | ) | ||||||||
| - consolidated subsidiaries and businesses | (115 | ) | (178 | ) | ||||||||
| Disposals: | 1,912 | 6,014 | ||||||||||
| - tangible assets | 154 | 1,229 | ||||||||||
| - intangible assets | 41 | 61 | ||||||||||
| - changes in consolidated subsidiaries and businesses | 1,006 | 3,521 | ||||||||||
| - investments | 711 | 1,203 | ||||||||||
| Other cash flow related to capital expenditure, investments and disposals: | 627 | (136 | ) | |||||||||
| - securities | (62 | ) | (17 | ) | ||||||||
| - financing receivables | (715 | ) | (1,634 | ) | ||||||||
| - change in payables and receivables relating to investments and capitalized depreciation | 379 | 54 | ||||||||||
| reclassification: purchase of securities and financing receivables for non-operating purposes | 47 | 1,131 | ||||||||||
| - disposal of securities | 128 | 52 | ||||||||||
| - disposal of financing receivables | 695 | 1,578 | ||||||||||
| - change in payables and receivables | 243 | (252 | ) | |||||||||
| reclassification: disposal of securities and financing receivables held for non-operating purposes | (88 | ) | (1,048 | ) | ||||||||
| Free cash flow | 3,123 | 4,163 |
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continued Summarized Group Cash Flow Statement
| (euro million) | 2011 |
2012 | ||||||||||
| 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 | 3,123 | 4,163 | ||||||||||
| Borrowings (repayment) of debt related to financing activities | 41 | (83 | ) | |||||||||
| reclassification: purchase of securities and financing receivables held for non-operating purposes | (47 | ) | (1,131 | ) | ||||||||
| reclassification: disposal of securities and financing receivables held for non-operating purposes | 88 | 1,048 | ||||||||||
| Changes in short and long-term finance debt: | 1,104 | 5,947 | ||||||||||
| - proceeds from long-term finance debt | 4,474 | 10,484 | ||||||||||
| - payments of long-term finance debt | (889 | ) | (3,784 | ) | ||||||||
| - increase (decrease) in short-term finance debt | (2,481 | ) | (753 | ) | ||||||||
| Dividends paid and changes in non-controlling interest and reserves: | (4,327 | ) | (3,746 | ) | ||||||||
| - net capital contributions/payments by/to non-controlling interest | 26 | |||||||||||
| - dividends paid by Eni to shareholders | (3,695 | ) | (3,840 | ) | ||||||||
| - dividends paid to non-controlling interest | (552 | ) | (539 | ) | ||||||||
| - Disposal (acquisition) of interests in consolidated subsidiaries | (126 | ) | 604 | |||||||||
| - treasury shares sold by consolidated subsidiaries | 17 | 29 | ||||||||||
| - sale (purchase) of treasury shares | 3 | |||||||||||
| Effect of exchange differences on cash and cash equivalents | 17 | (12 | ) | |||||||||
| Effect of changes in consolidation area (inclusion/exclusion of significant/insignificant subsidiaries) | (7 | ) | (4 | ) | ||||||||
| NET CASH FLOW FOR THE PERIOD | (49 | ) | 6,265 |
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Risk factors and uncertainties
| Foreword The main
risks that the Company is facing and actively monitoring
and managing are: (i) financial risks mainly related to
market risk deriving from exposure to fluctuations in
commodity prices, interest rates, foreign currency
exchange rates and the credit risk deriving from the
possible default of a counterparty as well as the
liquidity risk deriving from the risk that suitable
sources of funding for the Group’s operations may
not be available; (ii) the Country risk in the upstream
business; (iii) risks arising from any possible
development in the regulatory framework; (iv) operational
risks (in particular risks deriving from exploration and
production activities and those relating to HSE issues);
(v) strategic risks, mainly those related to the exposure
to a set of market variables which the Company has opted
to retain based on strategic considerations, trends in
the competitive environment, particularly in the natural
gas market, and cyclicality of the oil&gas sector. 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 ("Eni Guidelines on Management and Control of Financial Risks"). 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 as well as Eni
Trading & Shipping, that is in charge to execute
certain activities relating to commodity derivatives and
negotiate the emission of trading certificates. 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. The
commodity risk of each business unit (Eni’s
Divisions or subsidiaries) is pooled and managed by Eni
Trading business unit, with Eni Trading & Shipping
executing the negotiation of commodity derivatives
(execution activity). 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 does not
enter into derivative transactions on interest rates or
exchange rates on a speculative basis. The optimization in managing the commodity risk involves a whole set of transactions in commodity derivatives with the aim of: a) hedging certain underlying commodity prices set in contractual arrangements with third parties. Hedging derivatives can be entered also to hedge highly probable future transactions; b) effectively managing the economic margin (positioning). It consists in entering purchase/sale commodity contracts in both commodity and financial markets aiming at altering the risk profile associated to a portfolio of physical assets of each business unit in order to improve margins associated to those assets in case of favorable trends in the commodity pricing environment; c) arbitrage. It consists in entering purchase/sale commodity contracts in both commodity and financial markets, targeting the possibility to earn a profit (or reducing the logistical costs associated to owned assets) leveraging on price differences in the marketplace; d) proprietary trading. It consists in entering purchase/sale commodity contracts in both commodity and financial markets, targeting to earn an uncertain profit based on expected trends in the commodity pricing environment; e) Asset Backed Trading (ABT). It consists in entering proprietary trading activities in commodity and financial markets, in order to maximize the economic value of the flexibilities associated with Eni’s assets and contracts. Price risks related to asset backed trading activities are mitigated |
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| by the natural hedge granted
by the assets’ availability. Such risk management
activity can be implemented through strategies of dynamic
forward trading where the underlying items are
represented by the Company’s assets. Furthermore, the Company may enter derivative contracts on commodities as part of origination activities. Under this scheme, the Company acting as the originator may combine a number of derivative contracts in order to manage a given risk exposure of a third party or a business unit, normally in the wholesale market of commodities. Such trading activities may be naturally hedged by the existing assets of the originator, or, in case of absence of a suitable asset, they are managed by either trading the associated price or volume risk exposure or hedging each price or volume component of the base contract. 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. With regard to commodity risk, Eni’s policies and guidelines define rules to manage this 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 Group companies requests for negotiating commodity derivatives, ensuring execution services to the Trading Business Unit. The three different market risks, whose management and control have been summarized above, are described below. Exchange rate risk |
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 |
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| 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. Eni manages exposure to commodity price risk arising in normal trading and commercial activities in view of achieving stable margins. In order to accomplish this, 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. 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 recognized as hedges in accordance with IAS 39.
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. The following table shows amounts in terms of value at risk, recorded in 2012 (compared with 2011) relating to interest rate and exchange rate risks in the first section, and commodity risk in the second section. VaR values are stated in euro as stated in the revision of "Eni Guidelines on Management and Control of Financial Risks" approved by the Board of Directors on December 15, 2011. |
(Value at Risk - parametric method variance/covariance; holding period: 20 days; confidence level: 99%)
| 2011 | 2012 | |||
| (euro million) | High | Low | Avg | At period end | High | Low | Avg | At period end | ||||||||
| Interest rate (a) | 5.34 | 1.07 | 2.65 | 2.92 | 8.69 | 1.41 | 3.13 | 1.88 | ||||||||
| Exchange rate (a) | 0.85 | 0.15 | 0.44 | 0.34 | 1.31 | 0.12 | 0.44 | 0.19 |
(a) 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.
(Value at Risk - Historic simulation method; holding period: 1 day; confidence level: 95%)
| 2011 | 2012 | |||
| (euro million) (*) | High | Low | Avg | At period end | High | Low | Avg | At period end | ||||||||
| Area oil, products (a) | 44.28 | 9.05 | 25.60 | 9.05 | 35.70 | 5.66 | 18.02 | 10.88 | ||||||||
| Area Gas & Power (b) | 77.83 | 24.57 | 44.77 | 51.41 | 67.41 | 30.89 | 44.39 | 31.35 |
(*) From January 2012, the value at risk is
expressed in euro terms, following a review of "Eni
Guidelines on Management and Control of Financial Risks"
approved by the Board of Directors on December 15, 2011. The
value at risk, previously, has been expressed in dollars. 2011
values have been restated accordingly and converted at the
average exchange rate published by ECB for the period.
(a) Area oil, products refers to the Eni SpA Trading Department
(risk exposure from Refining & Marketing Division), Versalis
and Eni Trading & Shipping.
(b) The Gas & Power area refers to the Eni SpA Trading
Department (risk exposure from Gas & Power Division) and
Tigáz.
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, 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 central 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 counterparty on a daily basis. Exceptional market conditions occurred since 2008 have forced the Group to adopt contingency plans and under certain circumstances to suspend eligibility to be a Group financial counterparty. Actions implemented also have been intended to limit concentrations of credit risk by maximizing counterparty diversification and turnover. |
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| 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. The Group capital structure is set
according to the Company’s industrial targets and
within the limits established by the Company’s Board
of Directors who are responsible for prescribing the
maximum ratio of debt to total equity and minimum ratio
of medium and long-term debt to total debt as well as
fixed rate medium and long-term debt to total medium and
long-term debt. In spite of ongoing tough credit market
conditions resulting in higher spreads to borrowers, the
Company has succeeded in maintaining access to a wide
range of funding at competitive rates through the capital
markets and banks. |
in the trading environment;
(ii) increase the level of liquidity to face possible
extraordinary needs; (iii) increase the flexibility of
the Company’s financial structure considering
lingering uncertainties in the credit markets, in a
similar way as the policies adopted by the peer group
companies and with a view of improving the Company’s
financial rating assessment. Cash stock will be available
only for short-term operations, with a very low risk
profile. At present, the Group believes it has access to sufficient funding and has also both committed and uncommitted borrowing facilities to meet currently foreseeable borrowing requirements. At December 31, 2012, Eni maintained short-term committed and uncommitted unused borrowing facilities of euro 12,173 million, of which euro 1,241 million were committed, and long-term committed borrowing facilities of euro 6,928 million which were completely drawn at the balance sheet date. These facilities bore interest rates and fees for unused facilities that reflected prevailing market conditions. Eni has in place a program for the issuance of Euro Medium Term Notes up to euro 15 billion, of which about euro 12.3 billion were drawn as of December 31, 2012. 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 ratings are potentially exposed to risk of further downgrading of the sovereign credit rating of Italy in addition to a possible deterioration in the global macroeconomic outlook, particularly the risks of a break-up of the Euro-zone. On the basis of the methodologies used by Standard & Poor’s and Moody’s, a potential downgrade of Italy’s credit rating may have 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 implement the necessary actions to mitigate such risks, coherently with Company strategies. 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. The Group has in place a number of contractual obligations arising in the normal course of the business. To meet these |
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| Current and non-current finance debt | ||
Maturity year |
||
| (euro million) | 2013 |
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 and thereafter |
|
Total |
| Non-current debt | 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 |
| Trade and other payables | ||
Maturity year |
||
| (euro million) | 2013 | 2014-2017 | 2018 and thereafter | Total |
| Trade payables | 14,993 | 14,993 | ||||||
| Advances, other payables | 8,588 | 19 | 38 | 8,645 | ||||
| 23,581 | 19 | 38 | 23,638 |
| 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 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. In the next four years Eni plans to make capital expenditures are considered to be committed when the project has |
| Expected payments by period under contractual obligations and commercial commitments |
Maturity year |
||
| (euro million) | 2013 |
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 and thereafter |
|
Total |
| Operating lease obligations (1) | 722 | 515 | 323 | 250 | 201 | 560 | 2,571 | |||||||
| Decommissioning liabilities (2) | 174 | 198 | 85 | 259 | 555 | 13,777 | 15,048 | |||||||
| Environmental liabilities (3) | 362 | 375 | 260 | 160 | 69 | 551 | 1,777 | |||||||
| Purchase obligations (4) | 20,761 | 19,486 | 19,394 | 17,815 | 16,482 | 169,815 | 263,753 | |||||||
| - Gas | ||||||||||||||
| Natural gas to be purchased in connection with take-or-pay contracts | 18,463 | 17,763 | 17,840 | 16,377 | 15,094 | 161,787 | 247,324 | |||||||
| Natural gas to be transported in connection with ship-or-pay contracts | 1,746 | 1,303 | 1,263 | 1,159 | 1,119 | 5,515 | 12,105 | |||||||
| - Other take-or-pay and ship-or-pay obligations | 171 | 170 | 163 | 156 | 146 | 909 | 1,715 | |||||||
| - Other purchase obligations (5) | 381 | 250 | 128 | 123 | 123 | 1,604 | 2,609 | |||||||
| Other obligations | 4 | 3 | 3 | 3 | 3 | 123 | 139 | |||||||
| - Memorandum of intent relating to Val d’Agri | 4 | 3 | 3 | 3 | 3 | 123 | 139 | |||||||
| 22,023 | 20,577 | 20,065 | 18,487 | 17,310 | 184,826 | 283,288 |
(1) 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.
(2) 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.
(3) Environmental liabilities do not include the environmental
charge amounting to euro 1,109 million for the proposal to the
Ministry for the Environment to enter into a global transaction
related to nine sites of national interest because the dates of
payment cannot reasonably be estimated.
(4) Represents any agreement to purchase goods or services that
is enforceable and legally binding and that specifies all
significant terms.
(5) Includes arrangements to purchase capacity entitlements at
certain re-gasification facilities in the US of euro 2,113
million.
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| received of euro 56.8 billion. The table below summarizes Eni’s capital expenditures 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 euro 600 million of committed expenditures to execute certain environmental projects. |
| Capital expenditure commitments | ||
Maturity year |
||
| (euro million) | 2013 |
|
2014 |
|
2015 |
|
2016 |
|
2017 and thereafter |
|
Total |
| Committed on major projects | 6,718 | 7,680 | 6,897 | 3,991 | 11,839 | 37,125 | ||||||
| Other committed projects | 6,940 | 3,782 | 1,584 | 1,100 | 8,496 | 21,902 | ||||||
| 13,658 | 11,462 | 8,481 | 5,091 | 20,335 | 59,027 |
| Country risk Substantial
portions of Eni’s hydrocarbons reserves are located
in Countries outside the EU and North America, certain of
which may be politically or economically less stable. At
December 31, 2012, approximately 70% of Eni’s proved
hydrocarbons reserves were located in such Countries.
Similarly, a substantial portion of Eni’s natural
gas supplies comes from Countries outside the EU and
North America. In 2012, approximately 59% of Eni’s
domestic supply of natural gas came from such Countries.
Developments in the political framework, economic crisis,
social unrest can compromise temporarily or permanently
Eni’s ability to operate or to economically operate
in such Countries, and to have access to oil and gas
reserves. Further risks associated with activities in
those Countries are represented by: (i) lack of well
established and reliable legal systems and uncertainties
surrounding enforcement of contractual rights; (ii)
unfavorable developments in laws and regulations leading
to expropriation of Eni’s titles and mineral assets,
changes in unilateral contractual clauses reducing the
value of Eni’s assets; (iii) restrictions on
exploration, production, imports and exports; (iv) tax or
royalty increases; (v) civil and social unrest leading to
sabotages, acts of violence and incidents; and (vi)
difficulties in awarding international suppliers in
critical operating environments. While the occurrence of
these events is unpredictable, the occurrence of any such
risks could have a material adverse impact on Eni’s
financial condition and results of operations. Eni
periodically monitors political, social and economic
risks of approximately 60 Countries where it has
invested, or, with regard to upstream projects
evaluation, where Eni is planning to invest in order to
assess returns of single projects based also on the
evaluation of each Country’s risk profile. In recent
years, unfavorable developments in the regulatory
framework, mainly regarding tax issues, have been
implemented or announced also in EU Countries and in
North America. |
has resulted in changes in
governments, unrest and violence and consequential
economic disruptions. Notwithstanding the progressive
normalization observed during 2012, the socio-political
stability of the region still represent an area of
concern involving risks and uncertainties in the near
future along with the geopolitical risks related to the
relationships between Western Countries and certain
Middle Eastern Countries currently subject to economic
sanctions from the USA and the EU. As of the balance
sheet date at December 31, 2012, approximately 30% of the
Company’s proved oil&gas reserves were located
in North Africa, while Eni’s presence in Iran has
become marginal. During 2012 Eni has progressively recovered its production levels in Libya, where in 2011 due to political unrest and internal conflict it had been forced to shutdown almost all its producing facilities including gas exports for a period of 8 months with relevant consequences on volumes and operating results of the period. In 2012 production at Eni’s Libyan sites flowed at approximately 258 kboe/d, very near to the pre-crisis production plateau. Risks associated with evolution In consideration of the peculiarities of the business
and of the contexts where Eni operates, the main risks
are the following: |
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| The occurrence of the above
mentioned risks due to inaccurate application of any
relevant regulations or the necessity to upgrade plants
and equipment to new technical and environmental
requirements could have a significant impact on the
Company’s results of operations and liquidity as
well as reputational damages. Eni monitors risks associated with evolution of regulatory framework through dedicated internal structures and eventual participation to work groups and associations aimed at promoting the best practices on this field. On the anti-corruption field, in 2012 Eni adopted and promoted to all Eni employees and contractors, in Italy and abroad, the principles and rules to be followed in order to grant the compliance to anti-corruption laws. Operational risk Operational risks could arise from the inadequacy or dysfunction of Company processes. The main operational risks are those related to exploration and production of oil and natural gas as well as operation and HSE. Risks
associated with the exploration The exploration and production of oil and natural gas
requires high levels of capital expenditures and entails
particular economic risks. It is subject to natural
hazards and other uncertainties including those relating
to the physical characteristics of oil and natural gas
fields. Drilling for oil and gas involves numerous risks
including the risk of dry holes or failure to find
commercial quantities of hydrocarbons. |
region and Siberia. As a
consequence, rates of return for such long-lead-time
projects are exposed to the volatility of oil and gas
prices and to higher development and production costs.
Management estimates that the industry experiences an
average delay of 20% in the start-up of the projects due
to the execution difficulties of EPC (engineering,
procurement, construction) contracts related to lack of
flexibility, low quality in front-end engineering, delays
in commissioning as well as bottlenecks in the available
production capacity for building upstream plants and
facilities that lead to continuous delays. The nature of the Group exploration and development activities expose us to a wide range of hazards affecting the environment, health and security of people and local communities, mainly in the conventional and deep offshore where Eni in 2012 produced approximately 52% of its total oil and natural gas production. The occurrence of any such hazards relating for example to blow-outs, explosions, marine collisions, geological risks including unexpected drilling conditions, pressure or irregularities in formations, equipment failures or other negative events could potentially cause casualties, environmental damages and consequently could have an adverse material impact on Eni’s future growth prospects, results of operations and liquidity as well as reputation. These risks are particularly perceived in environmentally sensitive locations such as the Gulf of Mexico, the Caspian Sea and the Arctic region, where the Company performs drilling activities for exploration and development of hydrocarbon resources. The Company has performed specific reviews of the potentially more serious situations with a view of identifying the mitigation measures more suitable for the minimization of the blow-out risks. Particularly, Eni has adopted specific guidelines for drilling activities thus reinforcing the control on the design and the management of drilling operations of critical wells, operated and non operated, type HP/HT or deep waters wells, providing adequate approval steps for drilling new wells1, utilizing effective equipment for well operations and ensuring control of operations trough the visualization and communication of data in real time to the headquarters (Real Time Drilling Center) and strengthening of training activities. The main drivers for the mitigation of such risks are, represented by the quality of oil&gas assets and direct control of operations. Management has assessed that the Company retains a low-risk portfolio of mineral interests since they are mostly located onshore or in shallow-waters with a low percentage of wells with high temperature and high pressure, the riskiest from an operating point of view. In particular the Group forecast a 3% rate of such wells on the overall number of wells expected to be drilled in the next four years. The direct management of operations will allow Eni to expand its know-how, management systems and operating practices considered best in class in risks mitigation. In the next four years management plans to increase by 80% gross operated production from the actual levels to 5.2 million boe/d, aiming at reducing indirect risks related to the management of operations conducted by third parties such as in joint venture projects. |
(1) Wells presenting one of the following characteristics: critical environmental conditions; proximity to urban/suburban areas; presence of H2S quantities.
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| Operating risks and related HSE
risks The nature of the Group’s
operations in Italy and abroad in the exploration,
development and production of hydrocarbons, refining and
fuel and other inflammable materials transportation and
petrochemical productions exposes us to a wide range of
health, safety, and environmental risks. The causes could
be accidents, technical failure, malfunctioning,
explosions, fires, oil and gas spills, pollutants
emissions, toxic emissions and marine collisions (see
paragraph "Specific risks associated with the
exploration and production of oil and natural gas"
above). The scope of these risks is influenced by the
geographic range, the presence of environmentally
sensitive locations and technical complexity of
industrial activities. For these reasons activities in
the oil and gas sector are subject to the respect of
severe laws to preserve the environment, health and
security which are applicable in the various
jurisdictions where Eni operates, including legislations
that apply international agreements. Environmental laws
impose various restrictions and prohibitions, entail the
control and respect of limits to the emissions of
pollutant substances that can be released in air, water
and soil, limiting gas flaring and venting, prescribing
the correct management of waste. In addition operators
are subject to increasingly stringent and rigorous
obligations in relation to prevention and integral
reduction of pollution. Costs associated with the respect
of the above mentioned environmental legislation
represent a significant cost for the company in the
present and future years. Breach of environmental, health
and safety laws exposes employees to criminal and civil
liabilities and in the case of violation of certain rules
regarding safety on the workplace also companies can be
liable as provided for by a general EU rule on businesses
liability due to negligent or willful conduct on part of
their employees as adopted in Italy with Law Decree No.
231/2001. Furthermore Legislative Decree No. 121/2011
extended the liability of the Company to crimes against
the environment committed by its employees. |
contaminated by industrial
activities in previous years and the amount of which
could have been reliably estimated. Management believes that it is possible that in the future Eni may incur significant environmental liabilities in addition to amounts already accrued in the balance sheet due to the detection of new contaminations, results of ongoing and future sites reviews basing on actual and perspective legislation, outcome of ongoing criminal and civil proceedings and other risk factors ( see paragraph "Regulation on environmental matters", note 34 to the Condensed Consolidated Financial Statements). Eni performs activities of hydrocarbon exploration, development and production trough drilling and other wells operations in complex ecosystems such as the Gulf of Mexico, the Caspian sea and the Arctic in the Barents Sea where an accident or an oil spill could cause serious consequences to the environment. At those locations Eni adopts operating practices and mitigation measures aimed at reducing the probability of occurrence of risks with impacts on environment and people. For the main HSE regulation and operative systems adopted for the management of the risk see the paragraph below. The respect for biodiversity, safeguard of ecosystems, efficient use of natural resources constitute a basic element for the hydrocarbon exploration and production activities, in geographic areas where these conditions could limit the license operatorship. Eni defined a number of monitoring instruments in order to mitigate the above mentioned risks on the issues related to climate changes, water resources and biodiversity, as well as the evaluation of emerging risks. The company is also active member of International work groups (OGP and IPIECA) with the objective to define the operating guidelines to favor the reduction of the environmental and social footprint of oil&gas activities. Environmental laws impose restrictions on the types, quantities and concentration of various substances that can be released into the environment and on discharges to surface and subsurface water, as well as habitat conservation and related ecosystems. Rules on the prevention of pollution and for cleaning up polluted sites have been tightened everywhere. The adoption of systems of environmental management ensure legislation compliance, continuous improvement of environmental performance and efficiency of performer actions in terms of preventions and reduction of possible environmental impacts and implementation of a rigid control. The
critical issues related to environment, health and
communities is emerging not only in new contest for Eni,
but also in those where the company performs established
industrial activities; the focus on these aspects is
evident in the new legislation that could impose strict
limits to industrial activities with potential economic
and employment effects and potential risk of sanction or
requests of repayment. In the last years Authorities are
evaluating more and more preventively the potential
impact on local communities of the new and ongoing
industrial activities in order to activate the necessary
preventive actions in the design and authorization phase. |
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| have become integrated
following the approval of two directives, CE No.
1907/2006 called REACH (Registration, Evaluation,
Authorization and Restriction of Chemicals) and CE No.
1272/2008 called CLP (Classification, Labeling and
Packaging). These two rulings, assuming full force in
2018, introduced new obligations with a relevant
organizational impact on Eni’s activities, in
particular in relation with customers, suppliers and
contractors. In addition, the lack of respect of the
relevant legislation implies heavy criminal and civil
sanctions, and/or the suspension of production and
marketing. In July 2012, the EU Council approved the 2012/18/EU Directive of July 4, 2012 concerning the risk of serious accidents connected with the handling of noxious substances and intended to substitute the 96/82/CE Directive. Under the new terms member states will have to adopt new laws for the control of serious accidents related to certain dangerous substances within June 1, 2015. The directive provides for a new classification of substances in the light of the most recent European regulations, the opportunity to modulate the application of the directive according to the actual danger of the substances, the increase in information to be supplied to relevant Authorities and the general public. As concerns the protection of health and safety in the workplace, Italian laws stress the importance of organizational and management models that exempt companies from administrative responsibility in case of breach of laws concerning health and safety on the workplace. Eni made the adoption of such systems mandatory in all its companies that have high HSE risk levels. Eni’s strategies and actions for health, safety and environment are implemented according to the company’s policies and are included in a new HSE Management System Guideline (MSG). The process described in the MSG is based on the principle of precaution in order to reach the maximum efficacy in preventing, managing and controlling risks in HSE. The MSG is a single tool shared by the whole Eni Group and spelling roles responsibilities of the various organizational levels, organizing all the activities required in HSE processes and their interaction with other processes while disseminating shared methods and criteria across Eni. The procedure is based on an annual cycle of planning, implementation, control, review of results and definition of new objectives. The model is directed towards the prevention of risks, the systematic monitoring and control of HSE performance, in a continuous improvement cycle. The integrated management system of health, safety and environmental matters is supported by the adoption of a continuous process of identification, evaluation and mitigation of risks in all the Divisions and companies of the Eni Group adopting management systems that keep account of specific operations and aims at the constant improvement of processes and plants. Eni is targeting to achieve total certification of its plants under OHSAS 18001 and ISO 14001. The plan for the completion of the OHSAS 18001 risk certification for all Eni sites is expected to be concluded within 2013. The system for monitoring HSE risks is based on the monitoring of HSE indicators at quarterly, semi-annual and annual intervals and on an audit plan performed on all the industrial sites consisting of: - technical audits aimed at verifying the existence of |
adequate management systems,
their proper application, adequacy, consistency and
compliance with Eni’s HSE management model, Ethical
Code and Model 231; - audits for the confirmation/renewal of certification performed annually by external certifying entities; - control of compliance with existing HSE regulations; - specific audits on relevant issues (e.g. following events/accidents/reported failures). Eni believes that
its effort of codifying all operational stages of
industrial processes may reduce the risk of human fault
in handling plants operations. Accidents which occurred
in the past few years in the industry drive Eni to pay
greater attention to process safety and asset integrity,
also by means of activities aimed at increasing the
awareness of middle management and a widespread
dissemination of assessment tools and process audit
plans. |
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| of hydrocarbons. In order to
achieve the highest security standards of our operations
in the Gulf of Mexico, we entered a consortium led by
Helix that worked at the containment of the oil spill at
the Macondo well. The Helix Fast Response System (HFRS)
performs certain activities associated with underwater
containment of erupting wells, evacuation of hydrocarbon
on the sea surface, storage and transport to the
coastline. In a consortium with other major oil
companies, Eni activated an agreement with Wild Well
Control for the use of global subsea well containment
equipment that can be carried by plane to any region
where Eni deep water operations are underway. Following the accident at the Macondo field, oil companies set up a number of Joint Industry Project (JIP) on oil spill response. Eni is an active member of JIP promoted by OGP and IPIECA and in collaboration with other oil companies. Eni is developing own patented technologies aimed at reducing accident risk and to accelerate the recovery of eventual oil spill in the sea. These projects have the objective to enlarge the oil company knowledge, on antipollution strategies in consideration of the marine ecosystems where they operate, to reinforce the relationship between the operators and promote, also between institutions, the optimization of techniques and a more rational use of pollutants elements. In addition Eni signed a Memorandum of Understanding with the Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea (REMPEC) and the Department of Merchant Shipping of Cyprus (DMS) for collaboration to the project "Mediterranean Decision Support System for Marine Safety (MEDESS-4MS) aimed at reinforcing the marine security through risks and impacts of oil spills mitigation in Mediterranean Area. With Legislative Decree No. 128 on June 29, 2010, Italian Authorities passed legislation that introduced certain restrictions to activities for exploring and producing hydrocarbons, without affecting titles for conducting oil and gas operations at that date. Article 6, line 16 of this decree has been partly amended by Article 35 of Legislative Decree No. 83 of June 22, 2012. The new law excludes from the prohibition of exploration and production the marine concessions beyond 12 miles from the coastline for which request had already been filed at the date of introduction of Legislative Decree 128/2010. Following the incident at the Macondo well, European Authorities started discussing a new version of a regulation for offshore exploration and production of oil and gas aimed at unifying the European attitude to these activities and substituting existing national laws. Strategic risks The strategic risks may arise from changes in the
fundamental trends of the industry, ineffective
management decisions with respect to the competitive
environment, or exposure to market variables out of
management’s control. |
and guidelines do not
foresee any mandate to manage, or any maximum tolerable
level of risk exposure. To date, exposures to strategic
risk are identified by Eni’s Board of Directors as
part of the strategic decision-making process. Those
exposures are those associated with plans for the
commercial development 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 and minimum compulsory stock.
Relating to refining margins, the Board of Directors
defines the maximum level of product volumes associated
to these margins to be managed through strategies of
asset-backed trading. Any hedging activity of the strategic risk is the sole responsibility of Eni’s top management, due to the extraordinary conditions that may lead to such a decision. This kind of strategic risk is not subject to specific risk limits due to nature; however it is subject to monitoring and assessment activities. Another strategic risk is represented by evolutions in the technology scenario which may be triggered by the introduction of breakthrough technologies materially impacting Eni’s businesses. The Group has established at corporate level some department in charge of monitoring the evolution of certain technologies of interest and the possible impacts deriving by their application. Furthermore, Eni’s direct involvement and investments in research and development activities are very important factors which contribute to mitigate the technological risks. Availability of updated and innovative technological solutions’ to support the business, diversification of the technological portfolio and optimal capital expenditure allocation between cross initiatives and business-specific themes of research are strong factors behind the mitigation of the technological risk. Among strategic risks are also classified those associated with the competitive environment in the European natural gas market and with the sector specific regulation, as well as with risks associated with the cyclicality of the oil and gas sector. Risks
and uncertainties associated Management expects the outlook in the European gas sector to remain unfavorable over the short to the medium-term due to continuing demand weakness and oversupplies, against the backdrop of the economic downturn. In 2012, gas demand fell across Italy and Europe by an estimated 4% and 2% respectively, driven by the economic recession and a sharp reduction in power generation use. The latter was due to both a slowdown in industrial activity and inter-fuel competition as gas was displaced in firing power generation by continuing growth in renewables and a shift to coal due to cost advantages also reflecting lower costs to acquire emission allowances. Management believes that these negative trends will weigh on the recovery prospects of gas demand in the short and medium-term: for 2013 a null increase |
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| is expected; in the
long-term the Company expects an average increase of
1.7-1.8% by 2020, in Italy and Europe, respectively, in
consideration of an expected improvement in the economic
cycle and partial recovery in power generation demand due
to the closing of obsolete nuclear plants and
environmental restraints on coal use. In addition,
management expects the levels of European gas demand for
2016 to be significantly lower than the pre-crisis levels
registered in 2008 as a result of weak fundamentals. In the latest years competitive dynamics and the economics of the European gas sector have structurally changed reflecting reduced sales opportunities due to lower gas demand, abundant supplies on the marketplace related to worldwide flows of LNG and continuing pipeline upgrades for importing natural gas from Algeria and Russia to Europe and other factors as the relevant increase of shale gas production in the United States. On the one hand, high liquidity at the main European hubs for spot gas has favored the development of well established market prices which have become the prevailing benchmark for bilateral selling contracts to European customers. In spite of the fact that worldwide LNG surplus has been absorbed by growing energy needs in Asia, spot prices in Europe have been affected by continuing weak trends in demand and rising competitive pressure leading to unrelenting price softness. On the other side of the equation, European gas intermediaries have seen their profit margins squeezed by rising trends in costs of gas supplies that are indexed to the price of oil and its derivatives, as provided by pricing formulas in long-term supply contracts. In addition, minimum off-take obligations in connection with take-or-pay, long-term gas supply contracts and the necessity to minimize the associated financial exposure have forced gas operators to compete more aggressively on pricing in consideration of lower selling opportunities, with negative effects on selling prices, and hence profitability (see next paragraph on risks related to take-or-pay contracts). Final clients, especially large and well-established ones, have benefited from the ongoing market trends and large availability of spot gas to achieve more favorable pricing and flexibility conditions. In Italy gas selling prices have been converging towards the spot prices at the continental hubs both in the business segment, where the alignment process is substantially completed, and the residential market in the light of the recently-enacted liberalization measures of the Italian Government and expected development in the regulatory agenda. The risk of decline in regulated tariffs to the residential sector involves other important European markets (see Regulatory risks below). These drivers determined the continuing erosion of natural gas margins and consequently progressively lower profitability for Eni’s marketing activity. Management believes that in the next two/three years the performance of the Company’s gas marketing activity will be at risk based on weakening demand due to macroeconomic headwinds, possible new hikes in the oil-linked costs of supplies, large gas availability on the marketplace and ongoing competitive pressures leading to continuing price and margin erosion. Those trends are expected to negatively affect future results of operations and cash flow also considering the take-or-pay obligations provided |
by the Company’s
long-term supply contracts (see below). Against this
scenario the Company set the following priorities:
preserve the operating cash flow during the worst phase
of the downturn which is expected to continue well in
2013 and recover the profitability in subsequent years
leveraging the expected realignment of the actual market
imbalances and a gradual recovery in the spreads between
the oil-linked cost of gas supplies and selling prices at
spot markets. Main driver for the achievement of these objectives is the renegotiation of pricing and other conditions of supply contracts. In fact, take-or-pay supply contracts include revisions clauses allowing the counterparties to renegotiate the economic terms and other conditions periodically in relation to the changes in the market and scenario. Consequently management is seeking to renegotiate with all the Company’s main gas suppliers in order to increase exposure to spot prices in the indexation mechanism in the pricing formulas of gas supplied. The outcome of those renegotiations is uncertain about both the amount of the economic benefits which will eventually be achieved and the timing of recognition in profit. Furthermore, in case counterparties fail to arrange revised contractual terms, ongoing supply contracts provide a chance to each of them to recur to an arbitration proceeding for a definition of the commercial transaction. This adds to the level of uncertainty surrounding those renegotiations. Considering also ongoing price renegotiations with Eni clients, results of gas Marketing activity are subjects to an increasing rate of volatility and unpredictability. Looking forward to the long period, management believes the occurrence of a new downturn in the gas sector to be possible considering the risks on the supply side due to new LNG flows in relation to the start up of huge upstream projects (i.e. Mozambique), the likely commencement of gas export from the USA and shale gas developments in Europe and Asia. Based on the expected evolution in the trading environment on both the short and the long-term and the reduced profitability outlook of the gas sector which have been reflected in the updated future cash flows of the industrial plan 2013-2016 and the terminal value of the Company’s gas marketing business, management recognized impairment losses of euro 2 billion to align the book values of gas assets to their lower values-in-use when preparing the consolidated accounts as of December 31, 2012. Those losses mainly related to the goodwill and other intangible assets recognized upon the Distrigas acquisition and allocated to the European market cash generating unit. The main driver of those impairment losses was an expected decline in the projected margins assumed in the normalized results and cash flows to determine the terminal value of the business which took into account an expected long-term cyclicality of gas business. These margins have been reduced by two thirds with respect to the margin projections adopted in the industrial plan 2012-2015 and the impairment review of the annual report 2011. The economic benefits expected from ongoing or planned renegotiations of supply contracts as well as pricing revisions associated with selling contracts have been factored into the cash flow projections of the gas marketing business to assess the recoverability of its book value, including goodwill, in this annual report as of December 31, 2012. |
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| Current
negative trends in the gas scenario 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, Eni has signed a number of long-term gas supply contracts with key producing Countries that supply the European gas markets. These contracts have been ensuring approximately 80 bcm/y 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 16 years and a pricing mechanism that indexes the cost of gas to the price of crude oil and its derivatives (gasoil, fuel oil, etc.). These contracts provide take-or-pay clauses whereby the Company is required to off-take minimum predetermined 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, applied to uncollected volumes up to the minimum contractual quantity. The take-or-pay clause entitles the Company to off-take pre-paid volumes of gas in subsequent years during the period of contract execution. Amounts of cash pre-payments and time schedules for off-taking pre-paid gas vary from contract to contract. Generally speaking, cash pre-payments are calculated on the basis of the energy prices current in the year of non-fulfillment with the balance due in the year when the gas is actually collected. Amounts of pre-payments range from 10 to 100 percent 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, rights to collect pre-paid gas in future years can be exercised provided that the Company has fulfilled its minimum take obligation in a given year and within the limit of the maximum annual quantity that can be collected in each contractual year. In this case, Eni pays 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. In case Eni fails to off-take the contractual minimum amounts in a given year, it will be exposed to a price risk in the future, because the purchase price Eni will ultimately be required to pay is based on prices prevailing after the date on which the off-take obligation arose. In addition, Eni is subject to the risk of not being able to dispose of pre-paid volumes. Management believes that the weak industry outlook weighed down by declining demand and large gas availability on the marketplace, the possible evolution of sector-specific regulation and strong competitive pressures represent risk factors to the Company’s ability to fulfill its minimum take obligations associated with its long-term supply contracts. From the beginning of the downturn in the European gas market up to date, Eni has incurred the take-or-pay clause as the Company off-took lower volumes than its minimum take obligations accumulating deferred costs for an amount of euro 2.37 billion (net of limited amounts of volume make-up) paying the associated cash advances to its gas suppliers. Considering the Company’s outlook for its sales volumes which are anticipated to remain stable in 2013 and to grow at a moderate pace in the |
subsequent years, management
intends to adopt the adequate initiatives to mitigate the
financial exposure risk related to take-or-pay
obligations mainly in the domestic market where the
expected volume of demand is lower in comparison with the
minimum contracted supplies which Italian gas
intermediaries are obliged to fulfill. The initiatives to
mitigate the take-or-pay risk include the likely benefits
expected from contract renegotiations which may
temporarily reduce the annual minimum take, more flexible
off-take conditions such as change in the delivery point
or the possibility to replace supplies via pipeline with
equivalent volumes of LNG. Based on the Company’s
selling programs and higher flexibility already achieved
or to be achieved through the abovementioned
renegotiations, management believes that it is likely
that in the next four-year plan 2013-2016 Eni will manage
to fulfill its minimum take obligations associated with
its supply contracts thus minimizing the risk on
liquidity. These projections could be subject to the risks of further contraction in demand or total addressable market. 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 contractual term thus recovering the cash advances paid to suppliers. Risks
associated with sector-specific regulations in Italy |
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| Point). The Italian
Authority managing energy services has elected certain
virtual storage operators at the continental hubs and the
Italian Virtual Exchange Point to be the providers of
those services. Industrial investors will then benefit
from the price differentials due to the seasonal swings
of gas demand. As provided by Storage Decree, Eni has
committed to contribute up to 50% of those economic
benefits according to terms and conditions set by the
Italian Ministry for Economic Development and the AEEG.
Eni believes that this new gas regulation will increase
the competitiveness of the wholesale natural gas market
in Italy. The AEEG is entrusted with certain powers in the matters of monitoring natural gas prices and setting pricing mechanisms for supplies to users which are entitled to be safeguarded in accordance with current regulations. In fact, those clients which mainly include households and residential customers have the right to obtain gas from their suppliers at a regulated tariff set by the Authority. The AEEG decisions in this field could limit the capacity of the operators to transfer cost increases in the raw material onto final prices to customers. The Authority has established a mechanism for updating tariffs by indexing them to a preset basket of hydrocarbons. Also a floor has been established in the form of a fixed amount that applies only at certain low level of International prices of hydrocarbons. Clients who are eligible to the tariff mechanism set by the Authority are residential clients who did not opt for choosing a supplier at the opening of the market (including those who consume less than 200,000 cm per year and residential buildings). The above-mentioned Legislative Decree No. 93/2011 enlarged this category by including all customers consuming less than 50,000 cm per year and certain public services (for example hospitals and other assistance facilities). Law Decree No. 1 enacted by the Italian Government on January 24, 2012, the so called Liberalization Decree converted to law No. 27 on March 24, 2012, has charged the AEEG with the task of gradually introducing reference to the price of certain benchmarks quoted at continental hubs in the indexation mechanism of the cost of gas in the pricing of sales to the above mentioned customers from the second quarter of 2012. The AEEG has updated the indexation mechanism by increasing the weight of spot prices in the indexation of the supply costs of gas whereby spot prices have represented a share of 3% and 4% of the cost of gas in the second and third quarter of 2012, respectively, and 5% in the period October 2012-March 2013 with the remaining part indexed to the supply cost provided by a panel of oil-linked long-term contracts. Furthermore, the AEEG is planning to progressively align the cost component relating to the raw material to spot prices, granting to operators with long-term contracts a component of price related to the security of supply. Similarly other regulatory authorities in European Countries where Eni is present are planning to issue a regulation aimed at introducing a hub component in the pricing formulas related to retail clients as well as measures to boost liquidity and competitiveness in the gas market. The ability of the Company to set its commercial margins and its pricing policies is also constrained by Law Decree No. 112 of June 2008 which enacted a windfall tax on profits of energy |
companies with a
supplemental tax rate of 6.5 percentage points that has
been recently increased by further four percentage points
for the three-year period 2011-2013. This supplemental
tax rate adds to the ordinary statutory tax rate of 27.5%
charged on the income earned by corporations. The decree
also prohibits energy companies from transferring to
prices to final customers the higher income taxes
incurred in connection with the windfall tax. The AEEG is
entrusted with the responsibility of monitoring
compliance with the rule. As of recently, the Italian administrative Authorities released a number of resolutions intended to increase competition in the natural gas market in Italy: - in 2010, a national trading platform was started where gas importers would have to trade volumes of gas corresponding to a legal obligation on part of Italian importers and producers. Under those provisions, importers from extra-EU Countries are required to supply a set percentage of imported volumes in a given thermal year and to trade them at the national trading platform on a spot basis. Permission to import gas from extra-EU Countries is granted to gas operators upon fulfillment of that obligation. Also royalties in-kind owed to the Italian State on gas production are to be traded on that trading platform; - the AEEG resolved to commence a spot market to balance daily flows of supplies and off-takes by all the gas operators in the Italian gas sector. From the start-up date on December 1, 2011 to the end of March 2012, Snam Rete Gas has performed the task of settling daily imbalances at the price corresponding to the daily price recorded on the balancing market where those imbalances are daily disposed of or purchased. From the second quarter of 2012, each of the gas companies have been held responsible for settling their respective daily imbalances, whereby individual bid or ask offers are combined together to grant the daily balancing of the system. The decrees of the Ministry for Economic Development of February 15, 2013 and other AEEG norms, introduced and regulated changes to criteria of assignment of storage capacity in application of Article 14 of Law Decree No. 1/2012 sanctioning that: - the storage capacity that would be available as a result of new mechanisms for determining the volumes of strategic storage, as well as new modalities of calculation of obligation limitations based on the criteria issued by the Ministry for the Economic Development, are assigned, for a space determined by the Ministry itself, for the offer to industrial sector, integrated transportation services trough International pipelines and re-gasification, including natural gas storage, allowing the supplies of natural gas from abroad, in accordance with security criteria requested, as well as by re-gasification companies, as a guaranty for the respect of re-gasification programs of their customers when non predictable events occur; - part of the space of modulation storage devoted to the needs of "vulnerable events", to be assigned, for the needs of the clients themselves, with procedure of competitive bid, and the part of the same space of storage modulation to be assigned with ongoing allocation procedures have been determined. |
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| Measures aimed at increasing
competitiveness in the Italian gas market represent risk
factors and uncertainties to Eni’s gas business.
Management believes that any developments in that matter
may negatively affect the Company’s expected results
of operations and cash flow in its gas business. Risks associated
with the cyclicality Eni’s results of operations and cash flow, mainly
in the Exploration & Production Division, are greatly
influenced by trends in oil and gas prices. Generally
speaking, an increase in oil prices positively impact
Eni’s consolidated operating result; vice versa in
case of a decline in oil prices. The same applies to gas
prices. In 2012, the price of the Brent marker averaged
$111.6 a barrel, barely in line with previous year in a
scenario of extreme volatility. The first quarter of 2012
was marked by very high prices peaking at $130 per barrel
driven by steady demand from China and other emerging
Countries in addition to the impact of geopolitical
factors. In the second quarter the trend reversed as
Brent prices fell to $90 per barrel driven by a global
economic slowdown and expectations of further price
declines. In the second half of the year the price of the
marker Brent recovered up to the current level of $110 a
barrel due to a number of geopolitical factors and to a
more stable macroeconomic scenario. In the same period,
gas prices continued on a declining trend dragged down by
excess gas availability and weak European and US demand. |
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 2012. However, this
sensitivity analysis only applies to small deviations
from the 90 $/bbl scenario that have been used in the
Company’s 2013-2016 four year plan and the impact on
Eni’s production may increase more than
proportionally as the deviation increases. This
sensitivity analysis relates to the existing Eni
portfolio and might vary in the future. In the Gas & Power Division, rising oil prices represent a risk to the profitability of gas sales as supplies are mainly indexed to the cost of oil and certain refined products, while selling prices particularly outside Italy are predominantly linked to certain market benchmarks quoted at continental hubs. In the current trading environment, spot prices at those hubs are particularly depressed due to oversupply conditions and weak demand. In addition, the Italian Authority for Electricity and Gas and other regulatory authorities in European Countries may limit the ability of the Company to pass cost increases onto selling prices in supplies to residential customers and small businesses as those authorities set the indexation mechanism of the raw material cost in selling formulas to those customers. (For further details see Gas & Power Division specific-sector risks discussed above). The Refining & Marketing and the Chemical Divisions are also exposed to movements in oil prices and the speed at which the prices of refined products and chemical products adjust to reflect changes in the cost of oil-based feedstock. Normally, a time lag occurs between movements in oil prices and those of refined and chemical products. As a consequence, in a period of rapidly escalating feedstock costs, margins on refined and petrochemical products are negatively affected in the short-term. In 2012, the Refining & Marketing segment continued to incur operating losses in a context of extreme margin volatility. Despite a rebound in the prices of refined products prices from 2011, costs of oil-based feedstock and oil-linked costs for plant utilities were only partially transferred to prices at the pump pressured by weak demand and excess capacity. In addition, compressed price differentials between sour and sweet crude impaired the profitability at Eni’s complex refineries. Looking forward, management expects a depressed trading environment in the foreseeable future due to weak industry fundamentals and an anticipated weak demand in the face of the European economic downturn. Based on his view of a reduced profit outlook for the refining and marketing business, reflected in the industrial Plan 2013-2016, management recognized impairment losses of euro 846 million to align the book |
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| values of the Company’s
refineries and other assets to their lower values-in-use
at the balance sheet date. Marketing of refined products in Italy was negatively affected by a steep decline in demand for fuels (down 10%) and excess product availability that led operators to compete aggressively on pricing. Management expects continuing weak trends in demand due to the prospects of a sluggish economic recovery, mainly in Italy. Management planned optimization actions at refineries, efficiency improvements (fixed and logistic costs, energy consumption), selected capital expenditures and a number of initiatives in the marketing segment aimed at mitigating the scenario volatility and the cyclicality of the business in order to recover profitability as fast as possible. In addition to volatile costs of oil-based feedstock, Eni’s chemical operations are exposed to the cyclicality of demand due to the commoditized nature of Eni’s product portfolio and underlying weaknesses in the industry plagued by low-entry barriers, excess capacity and intense competitive pressure. In 2012, Eni’s chemical business doubled operating losses to euro 485 million from 2011 due to sharply lower margins on basic petrochemical products, mainly the margin on cracker, registered in the first quarter of 2012, and lower demand due to the current economic downturn. Short to medium-term prospects remain uncertain due to a weak macroeconomic outlook in Europe, high cost of oil based feedstock and competitive pressure. In addition to Asian and Middle-Eastern competitors, management expects a recovery of market share by North-American players advantaged by the use of shale gas as low cost feedstock. To cope with the structural challenges of the Company’s chemical business, management decided to implement a strategic shift targeting to restore the economic equilibrium of Versalis over the medium-term. This new strategy features a gradual reduction of the exposure to loss-making, |
commoditized businesses
while growing the Company’s presence in niche
productions, particularly elastomers and styrene, which
showed a good resilience during the downturn,
international expansion as well as starting innovative
productions in the field of biochemistry. An example in
point is the launch of the "green chemistry"
project at the Porto Torres plant which envisages
restructuring an old plant into a modern facility to
produce bioplastics for which attractive growth rates are
seen. The Engineering & Construction segment is exposed to the volatility of the oil cycle considering that oil companies tend to reduce capital expenditures and reschedule exploration and development projects during a downturn. This business unit has managed through the years to progressively reduce its exposure to the more volatile segments of the industry leveraging on higher portfolio diversification and a strong competitive position in the segment of large upstream projects in frontier areas and complex environment with an important technological content that are traditionally less exposed to the cyclical nature of this market. However, the uncertainties pending on the evolution of the macroeconomic scenario, gas demand and competitive dynamics led management to revise down short-term profitability expectations of the business reflecting an anticipated slowdown in order acquisitions, the start of lower margin projects enabling the company to enter in emerging areas and the conclusion of orders with high profitability acquired in previous years in the Onshore and Offshore Engineering and Construction businesses. Management believes that the business retains excellent long-term perspectives leveraging on a technologically advanced fleet of drilling and construction vessels, personnel competence, local content and competitive positioning that will lead Saipem to reconsolidate its orders backlog. |
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Outlook
| The 2013 outlook features
the uncertainties that surround the global economic
recovery, particularly in the Eurozone, and restraint
shown by businesses and households in investments and
consumption decisions. A number of factors will
contribute to support the price of oil including ongoing
geopolitical risk as well as improved balance between
world demand and supplies of crude oil and oil products.
For investment evaluation purposes and short-term
financial projections, Eni assumes a full-year average
price of $90 a barrel for the Brent crude benchmark.
Management expects continuing weak conditions in the
European gas, refining and marketing of fuels and
chemical sectors. Demand for energy commodities is
anticipated to remain sluggish due to the economic
stagnation; unit margins are exposed to competitive
pressure and the risk of new increases in the costs of
oil-based raw materials in an extremely volatile
environment. In this scenario, the recovery of
profitability in the Gas & Power, Refining &
Marketing and Chemicals Divisions will depend greatly on
management actions to optimize operations and improve the
cost position. Management expects the key production
and sales trends of Eni businesses to be as follows: |
- Refining throughputs on
Eni’s account: in a scenario of stagnant
consumption, volumes are expected to be substantially in
line with those processed in 2012 (30.01 million tonnes
in 2012). This projection assumes the restart of the Gela
plant in June 2013 and the start-up of the new EST
technology conversion plant at Sannazzaro, as well as the
shut down of the Venice plant to start the Green Refinery
project; - Retail sales of refined products in Italy and the Rest of Europe: retail sales are expected to be in line with those of 2012 (10.87 million tonnes, 2012 total), net of the effect of the "riparti con eni" marketing campaign which was executed in the summer of 2012. Management expects a modest fall in domestic retail volumes due to an anticipated contraction in domestic demand, the effect of which will be absorbed by the expected increase in sales in the Rest of Europe. In this intensely competitive context, management intends to preserve the Company’s market share in Italy by leveraging marketing initiatives to build loyalty and retain customers, the strength of the Eni brand with the completion of network rebranding, service excellence and development of the oil and non-oil offer; - Engineering & Construction: the profitability prospects of this business are expected to be adversely affected by the conclusion of highly-profitable projects, an anticipated slowdown in order acquisitions and the start of lower margin projects in the Onshore and Offshore Engineering and Construction businesses. In 2013, management expects a capital budget in line with 2012 (euro 12.76 billion in capital expenditure and euro 0.57 billion in financial investments in 2012, excluding the Snam investments). In 2013 the company will be focused on the development of hydrocarbons reserves in Western and Northern Africa, Norway, Iraq and Venezuela, the exploration projects in Western Africa, Egypt, the United States and emerging areas, as well as optimization and selective growth initiatives in other sectors, the start-up of the Green Refinery works in Venice, and elastomers and green businesses in the Chemical sector in Porto Torres. Assuming a Brent price of $90 a barrel on average for the full year 2013, the ratio of net borrowings to total equity – leverage – is projected to be almost in line with the level achieved at the end of 2012, due to cash flows from operations and portfolio management. |
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Eni Annual Report / Other information
| Treasury
shares As of December 31, 2012, 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. The decrease of No. 371,266,546 shares held in treasury compared to December 31, 2011 (No. 382,654,833 shares) was due to the cancellation of No. 371,173,546 shares, as resolved by the Extraordinary and Ordinary Shareholders’ meeting held on July 16, 2012 and to the sale of No. 93,000 shares following 2004 stock option plans. Since 2009 Eni has not undergoing buy back programs. On July 16, 2012, the Extraordinary and Ordinary Shareholders’ meeting resolved to cancel 371,173,546 treasury shares and to authorize the Board of Directors to purchase – 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 on the Mercato Telematico Azionario and up to a total amount of euro 6,000 million. 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. Regarding the aforementioned provisions, the Company discloses that: - as of December 31, 2012, the provisions of Article No. 36 of Italian exchanges regulation in accordance with Italian continuing listing standards apply to 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; - the Company has already adopted adequate procedures to ensure full compliance with the regulation. Branches Subsequent events |
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Eni Annual Report / 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). |
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 improve 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. |
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Eni Annual Report / Glossary
| - 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 (Sufur 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. - EPIC (Engineering, Procurement, Installation, Commissioning) 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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Eni Annual Report / Glossary
| 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/downstream The term upstream refers to all hydrocarbon exploration and production activities. The term downstream includes all activities inherent to the oil sector that are downstream of exploration and production activities. - 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. |
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Eni Annual Report / Consolidated Financial Statements |
Balance sheet
| December 31, 2011 | December 31, 2012 | |||
| (euro million) | Note | Total amount |
|
of which with |
|
Total amount |
of
which with |
|||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | (7) | 1,500 | 7,765 | |||||||||
| Other financial assets available for sale | (8) | 262 | 235 | |||||||||
| Trade and other receivables | (9) | 24,595 | 1,496 | 28,621 | 2,714 | |||||||
| Inventories | (10) | 7,575 | 8,496 | |||||||||
| Current tax assets | (11) | 549 | 771 | |||||||||
| Other current tax assets | (12) | 1,388 | 1,230 | |||||||||
| Other current assets | (13) | 2,326 | 2 | 1,624 | 8 | |||||||
| 38,195 | 48,742 | |||||||||||
| Non-current assets | ||||||||||||
| Property, plant and equipment | (14) | 73,578 | 63,466 | |||||||||
| Inventory - compulsory stock | (15) | 2,433 | 2,538 | |||||||||
| Intangible assets | (16) | 10,950 | 4,487 | |||||||||
| Equity-accounted investments | (17) | 5,843 | 4,265 | |||||||||
| Other investments | (17) | 399 | 5,085 | |||||||||
| Other financial assets | (18) | 1,578 | 704 | 1,229 | 642 | |||||||
| Deferred tax assets | (19) | 5,514 | 4,913 | |||||||||
| Other non-current receivables | (20) | 4,225 | 3 | 4,400 | 43 | |||||||
| 104,520 | 90,383 | |||||||||||
| Assets held for sale | (31) | 230 | 516 | |||||||||
| TOTAL ASSETS | 142,945 | 139,641 | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Short-term debt | (21) | 4,459 | 503 | 2,223 | 403 | |||||||
| Current portion of long-term debt | (26) | 2,036 | 2,961 | |||||||||
| Trade and other payables | (22) | 22,912 | 1,446 | 23,581 | 1,616 | |||||||
| Income taxes payable | (23) | 2,092 | 1,622 | |||||||||
| Other taxes payable | (24) | 1,896 | 2,162 | |||||||||
| Other current liabilities | (25) | 2,237 | 1,437 | 6 | ||||||||
| 35,632 | 33,986 | |||||||||||
| Non-current liabilities | ||||||||||||
| Long-term debt | (26) | 23,102 | 19,279 | |||||||||
| Provisions for contingencies | (27) | 12,735 | 13,603 | |||||||||
| Provisions for employee benefits | (28) | 1,039 | 982 | |||||||||
| Deferred tax liabilities | (29) | 7,120 | 6,740 | |||||||||
| Other non-current liabilities | (30) | 2,900 | 1,977 | 16 | ||||||||
| 46,896 | 42,581 | |||||||||||
| Liabilities directly associated with assets held for sale | (31) | 24 | 361 | |||||||||
| TOTAL LIABILITIES | 82,552 | 76,928 | ||||||||||
| SHAREHOLDERS’ EQUITY | (32) | |||||||||||
| Non-controlling interest | 4,921 | 3,514 | ||||||||||
| Eni shareholders’ equity | ||||||||||||
| Share capital | 4,005 | 4,005 | ||||||||||
| Reserve related to cash flow hedging derivatives net of tax effect | 49 | (16 | ) | |||||||||
| Other reserves | 53,195 | 49,579 | ||||||||||
| Treasury shares | (6,753 | ) | (201 | ) | ||||||||
| Interim dividend | (1,884 | ) | (1,956 | ) | ||||||||
| Net profit | 6,860 | 7,788 | ||||||||||
| Total Eni shareholders’ equity | 55,472 | 59,199 | ||||||||||
| TOTAL SHAREHOLDERS’ EQUITY | 60,393 | 62,713 | ||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 142,945 | 139,641 |
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Eni Annual Report / Consolidated Financial Statements |
Profit and loss account
| 2010 | 2011 | 2012 | ||||
| (euro million) | Note | Total amount |
|
of which with |
|
Total amount |
|
of which with |
|
Total amount |
|
of
which with |
||
| REVENUES | (35) | |||||||||||||||||||
| Net sales from operations | 96,617 | 2,905 | 107,690 | 3,477 | 127,220 | 3,783 | ||||||||||||||
| Other income and revenues | 967 | 57 | 926 | 41 | 1,546 | 56 | ||||||||||||||
| 97,584 | 108,616 | 128,766 | ||||||||||||||||||
| OPERATING EXPENSES | (36) | |||||||||||||||||||
| Purchases, services and other | 68,774 | 5,820 | 78,795 | 5,880 | 95,363 | 6,604 | ||||||||||||||
| - of which non-recurring charge (income) | (43) | (246 | ) | 69 | ||||||||||||||||
| Payroll and related costs | 4,428 | 28 | 4,404 | 33 | 4,658 | 21 | ||||||||||||||
| OTHER OPERATING (EXPENSE) INCOME | (36) | 131 | 41 | 171 | 32 | (158 | ) | 10 | ||||||||||||
| DEPRECIATION, DEPLETION, AMORTIZATION AND IMPAIRMENTS | (36) | 9,031 | 8,785 | 13,561 | ||||||||||||||||
| OPERATING PROFIT | 15,482 | 16,803 | 15,026 | |||||||||||||||||
| FINANCE INCOME (EXPENSE) | (37) | |||||||||||||||||||
| Finance income | 6,109 | 41 | 6,376 | 49 | 7,218 | 53 | ||||||||||||||
| Finance expense | (6,727 | ) | (7,410 | ) | (1 | ) | (8,274 | ) | (4 | ) | ||||||||||
| Derivative financial instruments | (131 | ) | (112 | ) | (251 | ) | ||||||||||||||
| (749 | ) | (1,146 | ) | (1,307 | ) | |||||||||||||||
| INCOME (EXPENSE) FROM INVESTMENTS | (38) | |||||||||||||||||||
| Share of profit (loss) of equity-accounted investments | 493 | 500 | 278 | |||||||||||||||||
| Other gain (loss) from investments | 619 | 1,623 | 338 | 2,603 | ||||||||||||||||
| 1,112 | 2,123 | 2,881 | ||||||||||||||||||
| PROFIT BEFORE INCOME TAXES | 15,845 | 17,780 | 16,600 | |||||||||||||||||
| Income taxes | (39) | (8,581 | ) | (9,903 | ) | (11,659 | ) | |||||||||||||
| Net profit for the year - Continuing operations | 7,264 | 7,877 | 4,941 | |||||||||||||||||
| Net profit (loss) for the year - Discontinued operations | (31) | 119 | 365 | (74 | ) | 400 | 3,732 | 2,234 | ||||||||||||
| Net profit for the year | 7,383 | 7,803 | 8,673 | |||||||||||||||||
| Attributable to Eni | ||||||||||||||||||||
| - continuing operations | 6,252 | 6,902 | 4,198 | |||||||||||||||||
| - discontinued operations | (31) | 66 | (42 | ) | 3,590 | |||||||||||||||
| 6,318 | 6,860 | 7,788 | ||||||||||||||||||
| Attributable to non-controlling interest | (32) | |||||||||||||||||||
| - continuing operations | 1,012 | 975 | 743 | |||||||||||||||||
| - discontinued operations | (31) | 53 | (32 | ) | 142 | |||||||||||||||
| 1,065 | 943 | 885 | ||||||||||||||||||
| Earnings per share attributable to Eni (euro per share) | (40) | |||||||||||||||||||
| - basic | 1.74 | 1.89 | 2.15 | |||||||||||||||||
| - diluted | 1.74 | 1.89 | 2.15 | |||||||||||||||||
| Earnings per share attributable to Eni | ||||||||||||||||||||
| - Continuing operations (euro per share) | (40) | |||||||||||||||||||
| - basic | 1.72 | 1.90 | 1.16 | |||||||||||||||||
| - diluted | 1.72 | 1.90 | 1.16 |
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Eni Annual Report / Consolidated Financial Statements |
Statement of comprehensive income
| (euro million) | Note | 2010 | 2011 | 2012 | ||||
| Net profit | 7,383 | 7,803 | 8,673 | ||||||||
| Other items of comprehensive income | |||||||||||
| Foreign currency translation differences | (32) | 2,169 | 1,031 | (717 | ) | ||||||
| Change in the fair value of investments | (32) | 141 | |||||||||
| Change in the fair value of other available-for-sale financial instruments | (32) | (9 | ) | (6 | ) | 16 | |||||
| Change in the fair value of cash flow hedging derivatives | (32) | 443 | 352 | (102 | ) | ||||||
| Share of "Other comprehensive income" on equity-accounted entities | (32) | (10 | ) | (13 | ) | 7 | |||||
| Taxation | (32) | (175 | ) | (128 | ) | 32 | |||||
| Total other items of comprehensive income | 2,418 | 1,236 | (623 | ) | |||||||
| Total comprehensive income | 9,801 | 9,039 | 8,050 | ||||||||
| Attributable to: | |||||||||||
| - Eni | 8,699 | 8,097 | 7,183 | ||||||||
| - non-controlling interest | 1,102 | 942 | 867 | ||||||||
| 9,801 | 9,039 | 8,050 |
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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 |
Other reserves |
Cumulative currency translation |
Treasury shares |
Retained earnings |
Interim dividend |
Net profit for the year |
Total |
Non- |
Total shareholders’ equity |
||||||||||||||
| Balance at December 31, 2009 | 4,005 | 959 | 6,757 | (439 | ) | 5 | 1,492 | (1,665 | ) | (6,757 | ) | 39,160 | (1,811 | ) | 4,367 | 46,073 | 3,978 | 50,051 | ||||||||||||||||||||||||
| Net profit of the year | 6,318 | 6,318 | 1,065 | 7,383 | ||||||||||||||||||||||||||||||||||||||
| Other items of comprehensive income | ||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation differences | (2 | ) | 2,204 | (75 | ) | 2,127 | 42 | 2,169 | ||||||||||||||||||||||||||||||||||
| Change in the fair value of cash flow hedging derivatives net of tax effect | 267 | 267 | 267 | |||||||||||||||||||||||||||||||||||||||
| Change in the fair value of other available-for-sale financial instruments net of tax effect | (8 | ) | (8 | ) | (8 | ) | ||||||||||||||||||||||||||||||||||||
| Share of "Other comprehensive income" on equity-accounted entities | (5 | ) | (5 | ) | (5 | ) | (10 | ) | ||||||||||||||||||||||||||||||||||
| 265 | (8 | ) | (5 | ) | 2,204 | (75 | ) | 2,381 | 37 | 2,418 | ||||||||||||||||||||||||||||||||
| Total comprehensive income of the year | 265 | (8 | ) | (5 | ) | 2,204 | (75 | ) | 6,318 | 8,699 | 1,102 | 9,801 | ||||||||||||||||||||||||||||||
| Transactions with shareholders | ||||||||||||||||||||||||||||||||||||||||||
| Dividend distribution of Eni SpA (euro 0.50 per share in settlement of 2009 interim dividend of euro 0.50 per share) | 1,811 | (3,622 | ) | (1,811 | ) | (1,811 | ) | |||||||||||||||||||||||||||||||||||
| Interim dividend distribution of Eni SpA (euro 0.50 per share) | (1,811 | ) | (1,811 | ) | (1,811 | ) | ||||||||||||||||||||||||||||||||||||
| Dividend distribution of other companies | (514 | ) | (514 | ) | ||||||||||||||||||||||||||||||||||||||
| Allocation of 2009 net profit | 745 | (745 | ) | |||||||||||||||||||||||||||||||||||||||
| Effect related to the purchase of Italgas SpA and Stogit SpA by Snam SpA | 56 | 56 | (56 | ) | ||||||||||||||||||||||||||||||||||||||
| Treasury shares sold following the exercise of stock options by Eni managers | (1 | ) | 1 | 1 | 1 | 1 | ||||||||||||||||||||||||||||||||||||
| Treasury shares sold following the exercise of stock options by Saipem and Snam managers | 10 | 10 | 27 | 37 | ||||||||||||||||||||||||||||||||||||||
| Non-controlling interest recognized following the acquisition of the control stake in the share capital of Altergaz SA | 7 | 7 | ||||||||||||||||||||||||||||||||||||||||
| Non-controlling interest excluded following the divestment of the control stake in the share capital of GreenStream BV | (37 | ) | (37 | ) | ||||||||||||||||||||||||||||||||||||||
| (1 | ) | 56 | 1 | 756 | (4,367 | ) | (3,555 | ) | (573 | ) | (4,128 | ) | ||||||||||||||||||||||||||||||
| Other changes in shareholders’ equity | ||||||||||||||||||||||||||||||||||||||||||
| Cost related to stock options | 7 | 7 | 7 | |||||||||||||||||||||||||||||||||||||||
| Stock options expired | (6 | ) | (6 | ) | (6 | ) | ||||||||||||||||||||||||||||||||||||
| Stock warrants on Altergaz SA | (25 | ) | (25 | ) | (25 | ) | ||||||||||||||||||||||||||||||||||||
| Other changes | 13 | 13 | 15 | 28 | ||||||||||||||||||||||||||||||||||||||
| (25 | ) | 14 | (11 | ) | 15 | 4 | ||||||||||||||||||||||||||||||||||||
| 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 |
113
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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 |
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 | |||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation differences | (32) | 1,000 |
31 |
1,031 |
1,031 |
||||||||||||||||||||||||||||||||||||||
| Change in the fair value of cash flow hedging derivatives net of tax effect | (32) | 223 |
223 |
223 |
|||||||||||||||||||||||||||||||||||||||
| Change in the fair value of other available-for-sale financial instruments net of tax effect | (32) | (5 |
) | (5 |
) | (5 |
) | ||||||||||||||||||||||||||||||||||||
| Share of "Other comprehensive income" on equity-accounted entities | (32) | (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) | (32) | (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 | (32) | (94 |
) | (25 |
) | (119 |
) | (7 |
) | (126 |
) | ||||||||||||||||||||||||||||||||
| Effect related to the purchase of Italgas SpA by Snam SpA | (32) | (5 |
) | (5 |
) | 5 |
|||||||||||||||||||||||||||||||||||||
| Treasury shares sold following the exercise of stock options exercised by Eni managers | (32) | (3 |
) | 3 |
3 |
3 |
3 |
||||||||||||||||||||||||||||||||||||
| Treasury shares sold following the exercise of stock options by Saipem and Snam managers | (32) | 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 | (32) | 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 |
114
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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 |
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 | (32) |
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 |
|||||||||||||||||||||||||
| Net profit of the year | 7,788 |
7,788 |
885 |
8,673 |
|||||||||||||||||||||||||||||||||||||||
| Other items of comprehensive income | |||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation differences | (32) |
(596 |
) | (104 |
) | (700 |
) | (17 |
) | (717 |
) | ||||||||||||||||||||||||||||||||
| Change in the fair value of investments | (32) |
138 |
138 |
138 |
|||||||||||||||||||||||||||||||||||||||
| Change in the fair value of other available-for-sale financial instruments net of tax effect | (32) |
14 |
14 |
14 |
|||||||||||||||||||||||||||||||||||||||
| Change in the fair value of cash flow hedging derivatives net of tax effect | (32) |
(65 |
) | (65 |
) | (65 |
) | ||||||||||||||||||||||||||||||||||||
| Share of "Other comprehensive income" on equity-accounted entities | (32) |
8 |
8 |
(1 |
) | 7 |
|||||||||||||||||||||||||||||||||||||
(65 |
) | 152 |
8 |
(596 |
) | (104 |
) | (605 |
) | (18 |
) | (623 |
) | ||||||||||||||||||||||||||||||
| Total comprehensive income of the year | (65 |
) | 152 |
8 |
(596 |
) | (104 |
) | 7,788 |
7,183 |
867 |
8,050 |
|||||||||||||||||||||||||||||||
| 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) |
(32) | 1,884 |
(3,768 |
) | (1,884 |
) | (1,884 |
) | |||||||||||||||||||||||||||||||||||
| Interim dividend distribution of Eni SpA (euro 0.54 per share) | (32) | (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 | (32) | (4 |
) | (4 |
) | (3 |
) | (7 |
) | ||||||||||||||||||||||||||||||||||
| Treasury shares sold following the exercise of stock options exercised by Eni managers | (32) | (1 |
) | 1 |
1 |
1 |
1 |
||||||||||||||||||||||||||||||||||||
| Treasury shares sold following the exercise of
stock options by Saipem managers |
(32) |
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 | (32) |
4,005 |
959 |
6,201 |
(16 |
) | 144 |
292 |
943 |
(201 |
) | 41,040 |
(1,956 |
) | 7,788 |
59,199 |
3,514 |
62,713 |
115
Contents
Eni Annual Report / Consolidated Financial Statements |
Statement of cash flows
| (euro million) | Note |
2010 | 2011 | 2012 | ||||
| Net profit of the year - Continuing operations | 7,264 | 7,877 | 4,941 | ||||||||
| Adjustments to reconcile net profit to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | (36) | 8,343 | 7,755 | 9,538 | |||||||
| Impairments of tangible and intangible assets, net | (36) | 688 | 1,030 | 4,023 | |||||||
| Share of (profit) loss of equity-accounted investments | (38) | (493 | ) | (500 | ) | (278 | ) | ||||
| Gain on disposal of assets, net | (558 | ) | (1,176 | ) | (875 | ) | |||||
| Dividend income | (38) | (264 | ) | (659 | ) | (431 | ) | ||||
| Interest income | (95 | ) | (99 | ) | (108 | ) | |||||
| Interest expense | 607 | 773 | 803 | ||||||||
| Income taxes | (39) | 8,581 | 9,903 | 11,659 | |||||||
| Other changes | (39 | ) | 331 | (1,945 | ) | ||||||
| Changes in working capital: |
| - inventories | (1,141 | ) | (1,400 | ) | (1,395 | ) | |||||
| - trade receivables | (1,923 | ) | 218 | (3,184 | ) | ||||||
| - trade payables | 2,811 | 34 | 2,029 | ||||||||
| - provisions for contingencies | 575 | 109 | 338 | ||||||||
| - other assets and liabilities | (1,480 | ) | (657 | ) | (1,161 | ) |
| Cash flow from changes in working capital | (1,158 | ) | (1,696 | ) | (3,373 | ) | |||||
| Net change in the provisions for employee benefits | 22 | (10 | ) | 16 | |||||||
| Dividends received | 766 | 955 | 988 | ||||||||
| Interest received | 124 | 99 | 91 | ||||||||
| Interest paid | (630 | ) | (927 | ) | (825 | ) | |||||
| Income taxes paid, net of tax receivables received | (9,018 | ) | (9,893 | ) | (11,868 | ) | |||||
| Net cash provided by operating activities - Continuing operations | 14,140 | 13,763 | 12,356 | ||||||||
| Net cash provided by operating activities - Discontinued operations | (31) | 554 | 619 | 15 | |||||||
| Net cash provided by operating activities | 14,694 | 14,382 | 12,371 | ||||||||
| - of which with related parties | (42) | (2,229 | ) | (639 | ) | (1,542 | ) | ||||
| Investing activities: | |||||||||||
| - tangible assets | (14) | (12,308 | ) | (11,658 | ) | (11,222 | ) | ||||
| - intangible assets | (16) | (1,562 | ) | (1,780 | ) | (2,295 | ) | ||||
| - consolidated subsidiaries and businesses | (33) | (143 | ) | (115 | ) | (178 | ) | ||||
| - investments | (17) | (267 | ) | (245 | ) | (391 | ) | ||||
| - securities | (50 | ) | (62 | ) | (17 | ) | |||||
| - financing receivables | (866 | ) | (715 | ) | (1,634 | ) | |||||
| - change in payables and receivables in relation to investing activities and capitalized depreciation | 261 | 379 | 54 | ||||||||
| Cash flow from investing activities | (14,935 | ) | (14,196 | ) | (15,683 | ) | |||||
| Disposals: | |||||||||||
| - tangible assets | 272 | 154 | 1,229 | ||||||||
| - intangible assets | 57 | 41 | 61 | ||||||||
| - consolidated subsidiaries and businesses | (33) | 215 | 1,006 | 3,521 | |||||||
| - investments | 569 | 711 | 1,203 | ||||||||
| - securities | 14 | 128 | 52 | ||||||||
| - financing receivables | 841 | 695 | 1,578 | ||||||||
| - change in payables and receivables in relation to disposals | 2 | 243 | (252 | ) | |||||||
| Cash flow from disposals | 1,970 | 2,978 | 7,392 | ||||||||
| Net cash used in investing activities | (12,965 | ) | (11,218 | ) | (8,291 | ) | |||||
| - of which with related parties | (42) | (1,626 | ) | (800 | ) | 1,535 |
116
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Eni Annual Report / Consolidated Financial Statements |
continued Statement of cash flows
| (euro million) | Note |
2010 | 2011 | 2012 | ||||
| Proceeds from long-term debt | (26) | 2,953 | 4,474 | 10,484 | |||||||
| Repayments of long-term debt | (26) | (3,327 | ) | (889 | ) | (3,784 | ) | ||||
| Increase (decrease) in short-term debt | (21) | 2,646 | (2,481 | ) | (753 | ) | |||||
| 2,272 | 1,104 | 5,947 | |||||||||
| Net capital contributions by non-controlling interest | 26 | ||||||||||
| Sale of treasury shares | 3 | ||||||||||
| Net acquisition of treasury shares different from Eni SpA | 37 | 17 | 29 | ||||||||
| Acquisition of additional interests in consolidated subsidiaries | (126 | ) | 604 | ||||||||
| Dividends paid to Eni’s shareholders | (3,622 | ) | (3,695 | ) | (3,840 | ) | |||||
| Dividends paid to non-controlling interest | (514 | ) | (552 | ) | (539 | ) | |||||
| Net cash used in financing activities | (1,827 | ) | (3,223 | ) | 2,201 | ||||||
| - of which with related parties | (42) | (23 | ) | 348 | (94 | ) | |||||
| Effect of change in consolidation (inclusion/exclusion of significant/insignificant subsidiaries) | (7 | ) | (4 | ) | |||||||
| Effect of exchange rate changes on cash and cash equivalents and other changes | 39 | 17 | (12 | ) | |||||||
| Net cash flow of the year | (59 | ) | (49 | ) | 6,265 | ||||||
| Cash and cash equivalents - beginning of the year | (7) | 1,608 | 1,549 | 1,500 | |||||||
| Cash and cash equivalents - end of the year | (7) | 1,549 | 1,500 | 7,765 |
117
Contents
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 principles.
Specifically, this concerns the determination of the
amortization expenses using the unit-of-production method
and the recognition of the production-sharing agreement
and buy- back 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 Interest in consolidated companies 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 by attributing to each of the
balance sheet items its fair value. |
(1) Differences in certain
respects between IFRS as endorsed by the EU and IFRS as issued by
IASB are on matters that do not relate to Eni. On this basis, the
Consolidated Financial Statements are fully compliant with IFRS
as issued by the IASB and effective for the year 2012.
(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) The choice between partial goodwill and full goodwill method
is available also for business combinations resulting in the
recognition of a "negative goodwill" in profit or loss
account (gain on bargain purchase).
118
Contents
Eni Annual Report / Notes to the Consolidated Financial Statements |
| 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: (i) of
any gain/loss calculated as the difference between the
consideration received and the corresponding transferred
share of equity; (ii) of the amount of any gain or loss
recognized as a result of remeasuring to fair value any
investment retained in the former subsidiary; (iii) of
any component related to the former subsidiary previously
recognized in other comprehensive income. The retained
investment is remeasured to its fair value at the date
when control is lost and shall be accounted for in
accordance with the applicable measurement criteria4. Intercompany transactions Intercompany transactions and balances, including unrealized profits arising from intragroup transactions have been eliminated. Unrealized profits with companies accounted for using the equity method are eliminated for the share of the Group shareholders’ equity. In both cases, unrealized losses are not eliminated as evidence of an impairment of the asset transferred. |
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 accounts and average
rates for the profit and loss account (source: Bank of
Italy). Cumulative exchange rate differences resulting
from this translation are recognized in
shareholders’ equity under "Other
reserves" in proportion to the Group’s interest
and under "Non-controlling interest" for the
portion related to non-controlling interests. 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. On the partial disposal, without
losing control, the proportionate share of cumulative
amount of exchange differences related to the disposed
interest is recognized in equity to non-controlling
interests. Financial statements of foreign subsidiaries
which are translated into euro are denominated in the
functional currencies of the Countries where the entities
operate. The US dollar is the prevalent functional
currency for the entities that do not use the euro. |
| (currency amount for euro 1) | US Dollar |
Pound Sterling |
Norwegian Krone |
Australian Dollar |
Hungarian Forint |
|||||
| 2010 | ||||||||||
| Annual average exchange rate | 1.33 |
0.86 |
8.00 |
1.44 |
275.48 |
|||||
| Exchange rate at year end | 1.34 |
0.86 |
7.80 |
1.31 |
277.95 |
|||||
| 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 |
| 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. |
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 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 insolvency of the
counterparty; asset write downs are included in the
carrying amount. 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. The fair value of financial instruments is determined by market quotations or, where there is no active market, it is estimated adopting suitable financial valuation models which take into account all the factors adopted by market operators and prices obtained in similar recent transactions in the market. |
(4) Same criteria are applicable to sales implying the loss of joint control or significant influence over an investee.
119
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Eni Annual Report / Notes to the Consolidated Financial Statements |
| Interests
and dividends on available-for-sale financial assets are
accounted for on an accrual basis in "Financial
income (expense)" 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
generally established 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 "Financial fixed
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 of natural gas 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 Petrochemical 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 an offset 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 section "Derivative
Instruments". Non-current assets Property, plant and equipment5 |
(5) Recognition and evaluation
criteria of exploration and production activities are described
in the section "Exploration and production activities"
below.
(6) 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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| 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. If there is no binding sales agreement, fair value is estimated on the basis of market values, recent transactions, or the best available information that shows the proceeds that the Company could reasonably expect to collect from the disposal of the asset. 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 documented assumptions that represent the best estimate of the future economic conditions during the remaining useful life of the asset, giving more importance to independent assumptions. 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. The WACC differs considering the risk associated with individual 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, 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 impairments 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 impairments 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 the
reasons for their impairment cease to exist, Eni makes a
reversal that is recognized in the profit or loss account
as income from asset revaluation. This reversed amount
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 |
(7) For the definition of
recoverable amount see item "Property, plant and
equipment".
(8) 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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| has
the right to operate the infrastructure, controlled by
the grantor, in order to provide the public service9. Exploration and production activities10 11 Acquisition of mineral
rights Exploration Development |
Production Production costs are those costs incurred to operate and maintain wells and field equipment and are expensed as incurred. Production-sharing
agreements and buy-back contracts Retirement Grants Financial fixed assets Investments |
(9) 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.
(10) 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".
(11) With reference to the preparation of the 2012 Consolidated
Financial Statements, prospectively starting from July 1, 2012,
Eni has updated the conversion rate of natural 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). This update
reflected changes in Eni’s gas properties that took place in
the last three years and was assessed by collecting data on the
heating power of gas in all Eni’s gas fields currently on
stream. The effect of this update on production expressed in boe
was 9 kboe/d for the full year 2012. Other per-boe indicators
were only marginally affected by the update (e.g. realization
prices, costs per boe) and also negligible was the impact on
depletion charges. Other oil companies may use different
conversion rates.
(12) 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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| 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
section "Property, plant and equipment".
Subsidiaries excluded from consolidation, jointly
controlled entities and associates are accounted for at
cost, adjusted for impairment losses if this does not
result in a misrepresentation of the Company’s
financial condition. When the reasons for their
impairment cease to exist, investments are revalued
within the limit of the impairment made and their effects
are included in "Other gain (loss) from
investments". 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, adjusted for impairment losses; impairment losses shall not be reversed13. 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 |
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 "Financial income (expense)". Assets held for sale and discontinued
operations Financial
liabilities Provisions for
contingencies |
(13) 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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| 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. The increase in the provision due to the passage of time is recognized as "Financial income (expense)". When the liability regards a tangible asset (e.g. site dismantling and restoration), the provision is stated with a corresponding entry to the asset to which it refers. Charges to the profit and loss account are made with the amortization process. Costs that the Company expects to bear in order to carry out restructuring plans are recognized when the Company has a detailed formal plan for the restructuring and has raised a valid expectation in the affected parties that it will carry out the restructuring. Provisions are periodically reviewed and adjusted to reflect changes in the estimates of costs, timing and discount rates. Changes in provisions are recognized in the same profit and loss account item that had previously held the provision, or, when the liability regards tangible assets (i.e. site dismantling and restoration), changes in the provision are recognized with a corresponding entry to the assets to which they refer, to the extent of the assets’ carrying amounts; any excess amount is recognized to the profit and loss account. In note 27, the following contingent liabilities are described: (i) possible, but not probable obligations arising from past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the Company’s control; and (ii) present obligations arising from past events whose amount cannot be reliably measured or whose settlement will probably not result in an outflow of resources embodying economic benefits. Provisions for employee
benefits |
from
changes in the actuarial assumptions used or from a
change in the conditions of the plan. Obligations for
long-term benefits are determined by adopting actuarial
assumptions. The effect of changes in actuarial
assumptions or a change in the characteristics of the
benefit is taken to the profit or loss in its entirety. Treasury shares Revenues and costs |
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| 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 direct taxation.
Award credits, related to customer loyalty programs, are
recognized as a separate component of the sales
transaction which grant 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 recorded when the related goods
and services are sold or consumed during the year or
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 the amount assigned.
Costs related to the purchase of the emission rights are
recorded as intangible assets net of any negative
difference between the amount of emissions and the quotas
assigned. Revenues related to emission quotas are
recognized when they are realized through a sale
transaction. 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
an offset to item "Other income" of the profit
and loss account. Operating lease payments are recognized
in the profit and loss account over the length of the
contract. Labor 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 period14. 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 recorded as a charge to
"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. Exchange rate differences |
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 Income taxes Derivatives |
(14) The period between the date of the award and the date at which the option can be exercised.
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| 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 "Financial 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). 4 Financial statements15 Assets and liabilities on the balance sheet are classified as current and non-current. Items on the profit and loss account are presented by nature16. The statement of comprehensive income shows net profit integrated with income and expenses that are recognized directly in equity according to IFRS. The statement of changes in shareholders’ equity includes profit and loss for the year, transactions with shareholders and other changes in shareholders’ equity. The statement of cash flows is presented using the indirect method, whereby net profit is adjusted for the effects of non-cash transactions. 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. Oil and gas activities |
(15) The financial statements
are the same reported in the Annual Report 2011, except for the
presentation of Gruppo Snam as discontinued operations due to the
sale of 30% less one share of the outstanding shares of Snam SpA
to Gruppo Cassa Depositi e Prestiti. After the disposal, Eni
exits the regulated businesses in Italy. The effects of the
presentation as discontinued operations are indicated in note 31
- Discontinued operations, assets held for sale and liabilities
directly associated with assets held for sale.
(16) Further information on financial instruments as classified
in accordance with IFRS is provided in note 34 - Guarantees,
commitments and risks - Other information about financial
instruments.
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| determining
whether or not property impairment is to be carried out.
The larger the volume of estimated reserves, the lower
the likelihood of asset impairment. Impairment of assets |
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 liabilities are initially recorded, the related fixed assets are increased by an equal corresponding amount. The liabilities are updated with the passage of time (i.e. interest accretion) and any change in the estimates following the modification of future cash flows and discount rate adopted. The recognized asset retirement obligations are based on future retirement cost estimates and incorporate many assumptions such as: expected recoverable quantities of crude oil and natural gas, abandonment time, future inflation rates and the risk-free rate of interest adjusted for the Company’s credit costs. Business combinations Environmental liabilities |
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| responsible
parties with respect to such litigations and the possible
insurance recoveries. Provisions
for employee benefits Contingencies Revenue recognition in the
Engineering & Construction segment |
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 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 income, derived
from a change in the scope of work, is 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. 6 Recent accounting principles Accounting standards and
interpretations issued by the IASB/IFRIC and endorsed by
the EU |
(17) Under the transition requirements of IAS 19, the new provisions shall be 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 as if the new provisions of IAS 19 had always been applied. Currently, Eni estimates that the application of the new provisions leads a pre-tax and post-tax effect amounting to, respectively: (i) a decrease of equity as of January 1, 2012 of euro 123 and euro 61 million; (ii) a decrease of equity as of December 31, 2012 of euro 269 and euro 155 million, whose euro 149 and euro 96 million related to the 2012 actuarial gains and losses recognized in other comprehensive income. The effect on the 2012 profit and loss account is not material.
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| interalia,
a new definition of control to be consistently applied to
all entities (included vehicles). According to this
definition, an entity controls an investee when it is
exposed, or has rights, to its (positive and negative)
returns from its involvement and has the ability to
affect those returns through its power over the investee.
The standard provides some indicators to be considered in
assessing control which include, interalia, potential
voting rights, protective rights, the presence of agency
relationships and franchise agreements. Furthermore, the
new provisions acknowledge the existence of control of an
investee even if the investor holds less than majority of
voting rights due to shareholding dispersion or passive
attitude of other shareholders. IFRS 10 and the revised IAS 27 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 11 "Joint Arrangements" (hereinafter "IFRS 11") and the revised IAS 28 "Investments in Associates and Joint Ventures" (hereinafter "revised IAS 28") have been endorsed. Depending on the rights and obligations of the parties arising from arrangements, IFRS 11 classifies joint arrangements into two types – joint operations and joint ventures – and states the required accounting treatment. With reference to joint ventures, the new provisions require to account for them using the equity method, eliminating proportionate consolidation. A joint operator 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. 1255/2012 of December 11, 2012, IFRS 13 "Fair Value Measurement" (hereinafter "IFRS 13") has been endorsed. The standard defines a framework for fair value measurements, required or permitted by other IFRSs, and the required disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset (or paid to transfer a liability) in an orderly transaction between market participants at the measurement date. IFRS 13 shall be applied for annual periods beginning on or after January 1, 2013. 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 "the Amendments to IAS 32") and the Amendments to IFRS 7 "Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities" (hereinafter "the Amendments to IFRS 7") have been endorsed. The documents state, respectively, the requirements for offsetting financial assets and financial liabilities and the related disclosures. In particular, the Amendments to IAS |
32
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 IFRS 7 relating to disclosures shall be applied for
annual periods beginning on or after January 1, 2013.
Conversely, the Amendments to IAS 32 shall be applied for
annual periods beginning on or after January 1, 2014. Accounting standards and
interpretations issued by the IASB/IFRIC and not yet
endorsed by the EU 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 7,765 million (euro 1,500 million at December 31, 2011) included financing receivables originally due within 90 days amounting to euro 5,861 million (euro 323 million at December 31, 2011). Cash and cash equivalents increased as a consequence of the reimbursement of intercompany loans mainly made by Snam prior to the divestment. The latter were related to amounts on deposit with financial institutions accessible only on a 48-hour notice. Restricted cash amounted to euro 84 million and referred to the Saipem segment as a consequence of judicial investigations and commercial proceedings. More information about the judicial investigations is disclosed in note 34 - Guarantees, commitments and risks - Algeria - Corruption investigation. The average maturity of financing receivables due within 90 days was 23 days and the effective average interest rate amounted to 0.5% (1.1% at December 31, 2011).
8 Other financial assets available for sale
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Securities held for operating purposes | ||||
| Listed bonds issued by sovereign states | 173 | 174 | ||
| Listed securities issued by financial institutions | 47 | 22 | ||
| Non-quoted securities | 5 | 5 | ||
| 225 | 201 | |||
| Securities held for non-operating purposes | ||||
| Listed bonds issued by sovereign states | 16 | 13 | ||
| Listed securities issued by financial institutions | 21 | 21 | ||
| 37 | 34 | |||
| Total | 262 | 235 |
At December 31, 2011 and December 31,
2012, no financial assets were held for trading.
At December 31, 2012, bonds issued by sovereign states amounted
to euro 187 million (euro 189 million at December 31, 2011). A
break-down 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 | 28 | 31 | from 2.35 to 4.38 | from 2014 to 2021 | Aa3 | AA | ||||||
| Italy | 23 | 23 | from 2.50 to 5.25 | from 2013 to 2034 | Baa2 | BBB+ | ||||||
| Austria | 17 | 17 | from 1.57 to 3.15 | from 2013 to 2015 | Aaa | AA+ | ||||||
| Portugal | 24 | 23 | from 2.73 to 3.83 | from 2013 to 2019 | Ba3 | BB | ||||||
| Spain | 14 | 14 | from 3.00 to 3.83 | from 2014 to 2018 | Baa3 | BBB- | ||||||
| Netherlands | 12 | 13 | from 2.46 to 3.02 | from 2013 to 2016 | Aaa | AAA | ||||||
| Germany | 10 | 10 | from 2.67 to 2.78 | from 2014 to 2015 | Aaa | AAA | ||||||
| France | 10 | 10 | from 2.20 to 3.01 | from 2013 to 2014 | Aa1 | AA+ | ||||||
| Finland | 2 | 1 | 1.60 | 2015 | Aaa | AAA | ||||||
| Slovakia | 14 | 15 | from 0.34 to 4.81 | from 2013 to 2017 | A2 | A | ||||||
| Ireland | 13 | 13 | from 4.61 to 4.68 | from 2019 to 2020 | Ba1 | BBB+ | ||||||
| United States of America | 15 | 12 | from 2.54 to 3.54 | from 2014 to 2019 | Aaa | AA+ | ||||||
| Floating rate bonds | ||||||||||||
| Italy | 5 | 5 | 2013 | Baa2 | BBB+ | |||||||
| Total sovereign states | 187 | 187 |
Securities amounting to euro 48 million were issued by financial institutions with a rating ranging from Aaa to Baa3 (Moody’s) and from AAA to BBB- (S&P).
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The effects of fair value evaluation of securities are set out below:
| (euro million) | Carrying amount at December 31, 2011 |
|
Changes recognized in equity |
|
Carrying amount at December 31, 2012 |
| Fair value | (9 | ) | 16 | 7 | |||||
| Deferred tax liabilities | 1 | (2 | ) | (1 | ) | ||||
| Other reserves of shareholders’ equity | (8 | ) | 14 | 6 |
Securities held for operating purposes
of euro 201 million (euro 225 million at December 31, 2011) were
designed to hedge the loss provisions of the Group’s
insurance company Eni Insurance Ltd for euro 196 million (euro
220 million at December 31, 2011).
The break-down by currency of other financial assets held for
trading or available for sale is presented below:
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Euro | 193 | 179 | ||
| US Dollar | 51 | 38 | ||
| Indian Rupee | 18 | 18 | ||
| 262 | 235 |
The fair value of securities was calculated basing on quoted market prices.
9 Trade and other receivables
| (euro million) | December 31, 2011 |
December 31, 2012 |
| Trade receivables | 17,709 | 19,966 | ||
| Financing receivables: | ||||
| - for operating purposes - short-term | 468 | 440 | ||
| - for operating purposes - current portion of long-term receivables | 162 | 228 | ||
| - for non-operating purposes | 28 | 1,153 | ||
| 658 | 1,821 | |||
| Other receivables: | ||||
| - from disposals | 169 | 209 | ||
| - other | 6,059 | 6,625 | ||
| 6,228 | 6,834 | |||
| 24,595 | 28,621 |
Receivables are stated net of the valuation allowance for doubtful accounts of euro 1,636 million (euro 1,651 million at December 31, 2011):
| (euro million) | Carrying amount at December 31, 2011 |
|
Additions |
|
Deductions |
|
Other changes |
|
Carrying amount at December 31, 2012 |
| Trade receivables | 1,067 | 164 | (169 | ) | (6 | ) | 1,056 | |||||
| Financing receivables | 6 | 6 | ||||||||||
| Other receivables | 578 | 7 | (11 | ) | 574 | |||||||
| 1,651 | 171 | (180 | ) | (6 | ) | 1,636 |
At the balance sheet date, Eni had in
place transactions to transfer to factoring institutions certain
trade receivables without recourse due in 2013 for euro 2,054 of
which without notification for euro 1,709 million (euro 1,779
million at December 31, 2011 without notification, due in 2012).
Transferred receivables mainly related to the Refining &
Marketing segment (euro 1,225 million), the Gas & Power
segment (euro 754 million) and the Chemical segment (euro 75
million). Following the contractual arrangements with the
financing institutions relating to receivables without
notification, Eni collects the transferred receivables and
transfers the collected amounts to those institutions.
Furthermore, Engineering & Construction transferred without
notification certain trade receivables without recourse due in
2013 for euro 149 million through Eni’s subsidiary
Serfactoring SpA (euro 188 million at December 31, 2011, due in
2012).
The increase in trade receivables from the prior year balance
sheet date of euro 2,257 million mainly related to increases in
the Gas & Power segment (euro 2,843 million) and the
Exploration & Production segment (euro 482 million) and a
decrease of euro 976 as a consequence of the deconsolidation of
Snam and its subsidiaries.
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Trade and other receivables were as follows:
December 31, 2011 |
December 31, 2012 |
|||
(euro million) |
Trade receivables |
|
Other receivables |
|
Total |
|
Trade receivables |
|
Other receivables |
|
Total |
| Neither impaired nor past due | 14,505 | 5,062 | 19,567 | 16,859 | 5,714 | 22,573 | ||||||
| Impaired (net of the valuation allowance) | 977 | 221 | 1,198 | 1,257 | 204 | 1,461 | ||||||
| Not impaired and past due in the following periods: | ||||||||||||
| - within 90 days | 953 | 86 | 1,039 | 1,295 | 84 | 1,379 | ||||||
| - 3 to 6 months | 360 | 61 | 421 | 216 | 22 | 238 | ||||||
| - 6 to 12 months | 441 | 190 | 631 | 159 | 239 | 398 | ||||||
| - over 12 months | 473 | 608 | 1,081 | 180 | 571 | 751 | ||||||
| 2,227 | 945 | 3,172 | 1,850 | 916 | 2,766 | |||||||
| 17,709 | 6,228 | 23,937 | 19,966 | 6,834 | 26,800 |
Trade receivables not impaired and past
due primarily pertained to high-credit-rating public
administrations and other highly-reliable counterparties for oil,
natural gas and chemical products supplies.
Additions to the allowance reserve for doubtful trade receivable
accounts amounted to euro 164 million (euro 167 million in 2011)
and primarily related to the Gas & Power segment (euro 118
million), the Refining & Marketing segment (euro 18 million)
and Chemical segment (euro 17 million). Deductions amounted to
euro 169 million (euro 52 million in 2011) and related to the Gas
& Power segment (euro 132 million) and the Refining &
Marketing segment (euro 26 million).
Trade receivables included amounts withheld to guarantee certain
contract work in progress for euro 178 million (euro 103 million
at December 31, 2011).
Trade receivables in currencies other than euro amounted to euro
7,236 million.
Receivables related to divesting activities of euro 209 million
(euro 169 million at December 31, 2011) included the current
portion of receivables relating to the divestment of a 1.71%
interest in the Kashagan project for euro 114 million and 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 82 million. A description of both transactions is reported
in note 20 - Other non-current receivables.
Other receivables of euro 6,625 million (euro 6,059 million at
December 31, 2011) included receivables for euro 481 million
(euro 504 million at December 31, 2011) relating to the recovery
of costs incurred to develop an oil&gas project in the
Exploration & Production segment that is currently undergoing
arbitration procedure and for euro 333 million amounts of gas to
be delivered to gas customers which off-took lower gas volumes
than the contractual minimum take thus triggering the take-or-pay
clause provided for by the relevant long-term sales contracts.
Deferred revenues amounting to euro 522 million are stated among
other current and non-current liabilities.
Financing receivables associated with financing operating
activities of euro 668 million (euro 630 million at December 31,
2011) included loans made to unconsolidated subsidiaries, joint
ventures and associates for executing industrial project for euro
351 million (euro 345 million at December 31, 2011), cash
deposits to hedge the loss provision made by Eni Insurance Ltd
for euro 280 million (euro 250 million at December 31, 2011) and
receivables for financial leasing for euro 26 million (euro 31
million at December 31, 2011). More information about receivables
for financial leasing is disclosed in note 18 - Other financial
assets.
Financing receivables not related to operating activities
amounted to euro 1,153 million (euro 28 million at December 31,
2011) and primarily related to: (i) receivables from Cassa
Depositi e Prestiti for euro 883 million, of which euro 879
million as settlement of the total consideration of euro 3,517
million relating to the divestment of 1,013,619,522 ordinary
shares of Snam SpA and euro 4 million of interests on delay in
payment; (ii) residual receivables from Snam SpA for euro 141
million; (iii) restricted deposits in escrow for euro 93 million
of Eni Trading & Shipping SpA of which euro 72 million with
Citigroup Global Markets Ltd and euro 21 million with commercial
counterparts relating to derivatives; (iv) restricted deposits in
escrow of receivables of the Engineering & Construction
segment for euro 25 million (euro 28 million at December 31,
2011).
Financing receivables in currencies other than euro amounted to
euro 331 million.
Other receivables were as follows:
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Receivables originated from divestments | 169 | 209 | ||
| Accounts receivable from: | ||||
| - joint venture operators in exploration and production | 3,827 | 4,217 | ||
| - non-financial government entities | 62 | 33 | ||
| - insurance companies | 171 | 176 | ||
| - prepayments for services | 837 | 616 | ||
| - from factoring arrangements | 150 | 130 | ||
| - other receivables | 1,012 | 1,453 | ||
| 6,059 | 6,625 | |||
| 6,228 | 6,834 |
Receivables deriving from factoring arrangements of euro 130 million (euro 150 million at December 31, 2011) related to Serfactoring SpA and consisted primarily of advances for factoring arrangements with recourse and receivables for factoring arrangements without recourse.
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Other receivables in currencies other
than euro amounted to euro 5,737 million.
Receivables with related parties are described in note 42 -
Transactions with related parties.
Because of the short-term maturity of trade receivables, the fair
value approximated their carrying amount.
| 10 Inventories | December 31, 2011 |
December 31, 2012 |
||
(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 | 892 | 172 | 1,722 | 2,786 | 948 | 190 | 1,748 | 2,886 | ||||||||||||
| Products being processed and semi-finished products | 127 | 25 | 1 | 153 | 133 | 15 | 1 | 149 | ||||||||||||
| Work in progress | 869 | 869 | 1,595 | 1,595 | ||||||||||||||||
| Finished products and goods | 2,892 | 804 | 71 | 3,767 | 2,912 | 891 | 63 | 3,866 | ||||||||||||
| 3,911 | 1,001 | 869 | 1,794 | 7,575 | 3,993 | 1,096 | 1,595 | 1,812 | 8,496 |
Work in progress increased by euro 726
million since the amount of work done was higher than the amount
invoiced according to contractual terms.
Contract works in progress for euro 1,595 million (euro 869
million at December 31, 2011) are stated net of prepayments for
euro 7 million (euro 11 million at December 31, 2011) which
corresponded to the amount of the works executed and accepted by
customers.
Changes in inventories and in the loss provision were as follows:
| (euro million) | Carrying amount at the beginning of the year |
Additions |
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, 2011 | ||||||||||||||||||||||||
| Gross carrying amount | 6,694 | 1,091 | (20 | ) | 38 | (42 | ) | 7,761 | ||||||||||||||||
| Loss provision | (105 | ) | (94 | ) | 20 | (2 | ) | (5 | ) | (186 | ) | |||||||||||||
| Net carrying amount | 6,589 | 1,091 | (94 | ) | 20 | (20 | ) | 36 | (47 | ) | 7,575 | |||||||||||||
| 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 |
Additions for the year amounting to euro 1,158 million were recorded in the Engineering & Construction segment (euro 762 million) and the Refining & Marketing segment (euro 252 million). Changes in the scope of consolidation of euro 216 million related for euro 215 million to the deconsolidation of Snam and its subsidiaries as a consequence of the loss of control.
11 Current tax assets
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Italian subsidiaries | 399 | 487 | ||
| Foreign subsidiaries | 150 | 284 | ||
| 549 | 771 |
Income taxes are described in note 39 - Income tax expense.
12 Other current tax assets
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| VAT | 581 | 862 | ||
| Excise and customs duties | 239 | 197 | ||
| Other taxes and duties | 568 | 171 | ||
| 1,388 | 1,230 |
The decrease in other taxes and duties amounting to euro 397 million was mainly related to foreign subsidiaries of the Exploration & Production segment (euro 323 million).
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Eni Annual Report / Notes to the Consolidated Financial Statements |
13 Other current assets
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Fair value of non-hedging and trading derivatives | 1,562 | 916 | ||
| Fair value of cash flow hedge derivatives | 157 | 31 | ||
| Other current assets | 607 | 677 | ||
| 2,326 | 1,624 |
The fair value of non-hedging derivative contracts and derivatives contracts held for trading is presented below:
December 31, 2011 |
December 31, 2012 |
|||
| (euro million) |
|
Fair value |
|
Purchase |
|
Sale |
|
Fair value |
|
Purchase |
|
Sale |
| Derivatives on exchange rate | ||||||||||||
| Interest currency swap | 16 | 50 | 8 | 44 | ||||||||
| Currency swap | 204 | 5,819 | 833 | 158 | 3,349 | 4,597 | ||||||
| Outright | 2 | 116 | 3 | 215 | 8 | |||||||
| 222 | 5,985 | 833 | 169 | 3,608 | 4,605 | |||||||
| Derivatives on interest rate | ||||||||||||
| Interest rate swap | 6 | 1,885 | 1 | 23 | ||||||||
| 6 | 1,885 | 1 | 23 | |||||||||
| Derivatives on commodities | ||||||||||||
| Over the counter | 1,181 | 5,644 | 4,378 | 713 | 3,648 | 9,505 | ||||||
| Future | 68 | 452 | 438 | 26 | 825 | 9 | ||||||
| Other | 85 | 581 | 7 | 30 | 1 | |||||||
| 1,334 | 6,096 | 5,397 | 746 | 4,503 | 9,515 | |||||||
| 1,562 | 12,081 | 8,115 | 916 | 8,134 | 14,120 |
Derivative fair values were estimated on
the basis of market quotations provided by primary info-provider,
or in the absence of market information, appropriate valuation
methods commonly used on the marketplace.
Fair values of non-hedging and trading derivatives of euro 916
million (euro 1,562 million at December 31, 2011) consisted of:
(i) euro 564 million (euro 1,450 million at December 31, 2011) 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 movements in foreign currencies,
interest rates or commodity prices. Therefore, such derivatives
were not related to specific trade or financing transactions;
(ii) euro 352 million (euro 112 million at December 31, 2011) of
commodity and trading derivatives entered by the Gas & Power
segment in order to optimize the economic margin and by Eni
Trading & Shipping SpA for trading purposes.
Fair value of cash flow hedge derivatives of euro 31 million
(euro 157 million at December 31, 2011) pertained to 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 2013 is disclosed in note 25 - Other current
liabilities; positive and negative fair value of contracts
expiring beyond 2013 is disclosed in note 20 - Other non-current
receivables and in note 30 - Other non-current liabilities. The
effects of the evaluation at fair value of cash flow hedge
derivatives are given in note 32 - Shareholders’ equity and
in note 36 - Operating expenses.
Purchase and sale commitments of cash flow hedge derivatives
amounted to euro 31 million and euro 510 million, respectively
(purchase and sale commitments of euro 3,297 million and euro 610
million, respectively, at December 31, 2011).
Information on hedged risks and hedging policies is disclosed in
note 34 - Guarantees, commitments and risks - Risk factors.
Other assets amounted to euro 677 million (euro 607 million at
December 31, 2011) and included: (i) prepayments and accrued
income for euro 146 million (euro 260 million at December 31,
2011); (ii) prepayments of euro 129 million that were made to gas
suppliers upon triggering the take-or-pay clause provided by the
relevant long-term supply arrangements to be collected within
2013; (iii) rentals for euro 51 million (euro 18 million at
December 31, 2011); and (iv) insurance premiums for euro 49
million (euro 64 million at December 31, 2011).
Transactions with related parties are described in note 42 -
Transactions with related parties.
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Non-current assets
14 Property, plant and equipment
| (euro million) | Net book amount at the beginning of the year |
Additions |
Depreciation |
Impairments |
Changes in the scope of consolidation |
Currency translation differences |
Reclassification to assets held for sale |
Other changes |
Net book at the end of the year |
Gross book amount at the end of the year |
Provisions for depreciation and impairments |
| December 31, 2011 | |||||||||||||||||||||||||||||||||
| Land | 665 | 9 | 100 | (9 | ) | (2 | ) | 8 | 771 | 799 | 28 | ||||||||||||||||||||||
| Buildings | 832 | 305 | (131 | ) | (40 | ) | 12 | (9 | ) | 458 | 1,427 | 3,544 | 2,117 | ||||||||||||||||||||
| Plant and machinery | 42,991 | 3,704 | (6,094 | ) | (601 | ) | 16 | 866 | (209 | ) | 6,821 | 47,494 | 121,166 | 73,672 | |||||||||||||||||||
| Industrial and commercial equipment | 991 | 383 | (206 | ) | (2 | ) | (5 | ) | (702 | ) | 459 | 1,789 | 1,330 | ||||||||||||||||||||
| Other assets | 1,172 | 117 | (113 | ) | (5 | ) | (116 | ) | 6 | (1 | ) | (231 | ) | 829 | 2,308 | 1,479 | |||||||||||||||||
| Tangible assets in progress and advances | 20,753 | 7,140 | (243 | ) | 523 | (5,575 | ) | 22,598 | 24,257 | 1,659 | |||||||||||||||||||||||
| 67,404 | 11,658 | (6,544 | ) | (891 | ) | 1,393 | (221 | ) | 779 | 73,578 | 153,863 | 80,285 | |||||||||||||||||||||
| 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 |
Capital expenditures by segment were the following:
| (euro million) | 2011 |
2012 |
| Capital expenditures | |||||
| Exploration & Production | 8,162 | 8,407 | |||
| Gas & Power | 128 | 156 | |||
| Refining & Marketing | 860 | 836 | |||
| Chemicals | 216 | 163 | |||
| Engineering & Construction | 1,084 | 998 | |||
| Corporate and financial companies | 73 | 71 | |||
| Other activities - Snam (a) | 1,153 | 539 | |||
| Other activities | 10 | 14 | |||
| Elimination of intragroup profits | (28 | ) | 38 | ||
| 11,658 | 11,222 |
(a) Capital expenditures for 2011 pertaining to the segment Other activities - Snam has been reclassified from the Gas & Power segment.
Capital expenditures included
capitalized finance expenses of euro 173 million, of which euro
26 million relating to discontinued operations (euro 147 million
in 2011, of which euro 36 million relating to discontinued
operations) and related to the Exploration & Production
segment (euro 105 million), the Refining & Marketing segment
(euro 39 million) and the Chemical segment (euro 3 million). The
interest rates used for capitalizing finance expense ranged from
2.1% to 5.1% (1.0% and 3.7% at December 31, 2011).
The main depreciation rates used 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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The break-down of impairments losses recorded in 2012 amounting to euro 1,609 million (euro 891 million in 2011) and the associated tax effect is provided below:
| (euro million) | 2011 |
2012 |
| Impairment losses | ||||
| Refining & Marketing | 484 | 843 | ||
| Exploration & Production | 189 | 547 | ||
| Chemicals | 174 | 112 | ||
| Gas & Power | 5 | 80 | ||
| Other segments | 39 | 27 | ||
| 891 | 1,609 | |||
| Tax effects | ||||
| Refining & Marketing | 194 | 96 | ||
| Exploration & Production | 65 | 154 | ||
| Chemicals | 47 | 33 | ||
| Gas & Power | 2 | 21 | ||
| Other segments | 1 | 2 | ||
| 309 | 306 | |||
| Impairments net of the relevant tax effects | ||||
| Refining & Marketing | 290 | 747 | ||
| Exploration & Production | 124 | 393 | ||
| Chemicals | 127 | 79 | ||
| Gas & Power | 3 | 59 | ||
| Other segments | 38 | 25 | ||
| 582 | 1,303 |
In assessing whether impairment is
required, the carrying values 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 main 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 Refining & Marketing
segment, refining plants, warehouses and commercial facilities
relating to each distribution channels and by Country (ordinary
network, high-ways network, and wholesale activities); (iii) in
the Chemical segment, production plants by business and related
facilities; and (iv) in the Engineering & Construction
segment, the business units E&C Offshore and E&C Onshore,
onshore drilling facilities and individual rigs for offshore
operations. The recoverable amount is calculated by discounting
the estimated cash flows deriving from the continuing use of the
CGU and, if significant and reasonably determinable, the cash
flows deriving from its disposal at the end of its useful life.
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 and the Chemical segment, the economical and technical
life of the plants and associated projections of operating costs,
expenditures to support plant efficiency, refining and marketing
margins and, in the case of chemical plants their normalized
operating results before depreciation, interest and taxes; 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
possible adjustments 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 (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 2016 onwards.
Values-in-use are estimated by discounting post-tax cash flows at
a rate which corresponds for the Exploration & Production,
Refining & Marketing and Chemical segments 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 2012 the adjusted post-tax rates
used for assessing values-in-use marginally decreased from the
previous year reflecting a reduction in the financial parameters
used for assessing the cost of capital: cost of borrowings to Eni
determined
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Eni Annual Report / Notes to the Consolidated Financial Statements |
by expected trends for borrowing spreads
and management’s estimates about the composition of the
Company’s finance debt and risk-free yields reflecting an
expected decline in the risk premium of Italy. Those positive
factors were partially absorbed by the increased weight of net
equity in the determination of the cost of capital to the Group
as the Board of Directors has reassessed the optimal mix between
internally-generated funds versus third parties borrowings
following the divestment of Snam. It is worth mentioning that the
increased equity risk of the Eni share due to the divestment of a
business with low volatility had no impact on the assessment of
the cost of capital used for the impairment evaluations in the
Exploration & Production, Refining & Marketing and
Chemical segments. This conclusion is underpinned by the fact
that in the past management adopted discount rates which excluded
the mitigating effect of the lower volatility of Snam in the
Eni’s portfolio. In 2012, the adjusted WACC used for
impairment test purposes ranged from 7.2% to 13.0%.
Post-tax cash flows and discount rates were adopted as they
resulted in an assessment that substantially approximated a
pre-tax assessment.
The amount of impairment losses recorded in the Refining &
Marketing segment of euro 843 million reflected management’s
expectations of a reduced profitability outlook due to continuing
weak trading conditions in the refining business negatively
affected by rising feedstock costs, higher costs for energy
utilities which are indexed to the price of crude oil, excess
capacity in the Mediterranean area and anticipated poor demand
for fuels on the back of the economic downturn. Based on these
drivers, management recognized impairment losses at the
Company’s refining plants by adjusting their book value to
their lower values-in-use considering expectations of
unprofitable margins in the long-term. Other minor impairments
were recorded at a retail network, marginal lines of business and
certain safety and maintenance expenditures incurred in the
period that were written-off because they related to assets
previously impaired. The largest impairment losses were recorded
at two refineries which were tested for impairment using a
post-tax discount rate of 7.6%, corresponding to a pre-tax
discount rate of 10.2% and 9.0%, respectively.
The Exploration & Production segment recorded asset
impairments amounting to euro 547 million of which euro 350
million related to proved properties and euro 197 million to
unproved properties. The main drivers were downward reserve
revisions and decreasing prices of oil and gas properties located
in USA, of a gas property located in India and changed economics
of an oil property located in Turkmenistan. These impairment
losses were assessed using a post-tax discount rate of: (i) 7.3%,
corresponding to a pre-tax discount rate of 10.9%, for an asset
located in USA; (ii) 8.2%, corresponding to a pre-tax discount
rate of 13.6%, for an asset located in India; (iii) 8.3%,
corresponding to a pre-tax discount rate of 15.7%, for an asset
located in Turkmenistan.
In the Chemical segment impairment losses amounted to euro 112
million and related to loss-making business lines producing
olefins and polyethylene at the Brindisi (Italy) and Dunkerque
(France) plants and expenditures incurred in the period that were
written-off because they related to assets previously impaired.
The Gas & Power segment recorded impairment losses of euro 80
million relating for euro 71 million to the tangible assets
existing at an offshore storage field in the British section of
the North Sea which development project has been suspended in the
light of continuing weakness in the gas scenario.
Change in the scope of consolidation of euro 12,425 million
comprised the deconsolidation of Snam following the sale to Cassa
Depositi e Prestiti SpA of a 30% stake and loss of control
therein (euro 12,432 million) and the inclusion in the scope of
consolidation following the finalization of the 100% acquisition
of Nuon Belgium NV (now merged in Eni Gas & Power NV) and
Nuon Power Generation Walloon NV (now Eni Power Generation NV)
which markets gas and electricity mainly to residential and
business customers in Belgium (euro 7 million).
Foreign currency translation differences of euro 514 million were
primarily related to translations of entities accounts
denominated in US dollar (euro 759 million), partially offset by
translations of entities accounts denominated in Norwegian krone
(euro 207 million).
The reclassification to assets held for sale of euro 449 million
comprised certain non-strategic assets of the Exploration &
Production segment (euro 434 million).
Other changes of euro 998 million related to the initial
recognition and change in estimates of the costs for dismantling
and site restoration of euro 1,418 million, of which euro 1,351
million regarded the Exploration & Production segment. Such
increase was partially offset by sales for a book value of euro
515 million and by depreciations related to the discontinued
operations for euro 194 million. Sales of euro 515 million
related to certain non-strategic assets of the Exploration &
Production segment for euro 467 million, of which euro 163
million relating to the sale of the 3.25% interest in the
Karachaganak project (equal to the Eni’s 10% interest). More
information is disclosed in note 20 - Other non-current
receivables.
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Unproved mineral interests included in tangible assets in progress and advances are presented below:
| (euro million) |
|
Book amount |
Acquisitions |
Impairment losses |
Transfers to Proved Mineral Interest |
Other changes and currency translation differences |
Book amount |
| December 31, 2011 | ||||||||||||||||||
| Congo | 1,248 | (8 | ) | 40 | 1,280 | |||||||||||||
| Nigeria | 697 | 61 | 758 | |||||||||||||||
| Turkmenistan | 688 | (70 | ) | 17 | 635 | |||||||||||||
| Algeria | 446 | 57 | (34 | ) | 16 | 485 | ||||||||||||
| USA | 718 | (64 | ) | (458 | ) | 21 | 217 | |||||||||||
| India | 55 | (7 | ) | 48 | ||||||||||||||
| Other Countries | 106 | (34 | ) | 1 | 73 | |||||||||||||
| 3,261 | 754 | (64 | ) | (604 | ) | 149 | 3,496 | |||||||||||
| 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 |
Impairment losses of euro 197 million
are discussed in the previous paragraph.
Accumulated provisions for impairments amounted to euro 6,816
million and euro 8,058 million at December 31, 2011 and 2012,
respectively.
At December 31, 2012, Eni pledged property, plant and equipment
for euro 21 million primarily as collateral against certain
borrowings (euro 27 million as of December 31, 2011).
Government grants recorded as a decrease of property, plant and
equipment amounted to euro 132 million (euro 724 million at
December 31, 2011).
The decrease of euro 592 million related for euro 524 million to
the deconsolidation of Snam.
Assets acquired under financial lease agreements amounted to euro
39 million (euro 19 million at December 31, 2011), of which euro
29 million related to service stations in the Refining &
Marketing segment and euro 10 million related to FPSO ships used
by the Exploration & Production segment to support oil
production and treatment activities.
Contractual commitments related to the purchase of property,
plant and equipment are disclosed in note 34 - Guarantees,
commitments and risks - Liquidity risk.
Property, plant and equipment under concession arrangements are
described in note 34 - Guarantees, commitments and risks - Asset
under concession arrangements.
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Property, plant and equipment by segment
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Property, plant and equipment, gross | ||||||
| Exploration & Production | 96,561 | 103,369 | ||||
| Gas & Power | 4,206 | 4,373 | ||||
| Refining & Marketing | 14,884 | 15,744 | ||||
| Chemicals | 5,438 | 5,589 | ||||
| Engineering & Construction | 11,809 | 12,621 | ||||
| Corporate and financial companies | 422 | 470 | ||||
| Other activities - Snam (a) | 19,449 | |||||
| Other activities | 1,617 | 1,617 | ||||
| Elimination of intragroup profits | (523 | ) | (486 | ) | ||
| 153,863 | 143,297 | |||||
| Accumulated depreciation, amortization and impairment losses | ||||||
| Exploration & Production | 51,034 | 55,836 | ||||
| Gas & Power | 1,705 | 1,961 | ||||
| Refining & Marketing | 10,126 | 11,305 | ||||
| Chemicals | 4,478 | 4,661 | ||||
| Engineering & Construction | 3,840 | 4,408 | ||||
| Corporate and financial companies | 226 | 243 | ||||
| Other activities - Snam (a) | 7,433 | |||||
| Other activities | 1,541 | 1,541 | ||||
| Elimination of intragroup profits | (98 | ) | (124 | ) | ||
| 80,285 | 79,831 | |||||
| Property, plant and equipment, net | ||||||
| Exploration & Production | 45,527 | 47,533 | ||||
| Gas & Power | 2,501 | 2,412 | ||||
| Refining & Marketing | 4,758 | 4,439 | ||||
| Chemicals | 960 | 928 | ||||
| Engineering & Construction | 7,969 | 8,213 | ||||
| Corporate and financial companies | 196 | 227 | ||||
| Other activities - Snam (a) | 12,016 | |||||
| Other activities | 76 | 76 | ||||
| Elimination of intragroup profits | (425 | ) | (362 | ) | ||
| 73,578 | 63,466 |
(a) Property, plant and equipment as of December 31, 2011 pertaining to the segment Other activities - Snam has been reclassified from the Gas & Power segment.
15 Inventory - compulsory stock
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Crude oil and petroleum products | 2,284 | 2,538 | ||
| Natural gas | 149 | |||
| 2,433 | 2,538 |
Compulsory inventories were primarily held by Italian subsidiaries (euro 2,418 million and euro 2,525 million at December 31, 2011 and 2012, respectively) in accordance with minimum stock requirements of oil, petroleum products and natural gas set forth by applicable laws. Compulsory stock of natural gas went to zero at period-end as a consequence of the deconsolidation of Snam.
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16 Intangible assets
| (euro million) | Net book amount at the beginning of the year |
Additions |
Amortization |
Impairment losses |
Changes in the scope of consolidation |
Currency translation differences |
Other changes |
Net book amount at the end of the year |
Gross book amount at the end of the year |
Provisions for depreciation and impairments |
| December 31, 2011 | |||||||||||||||||||||||||
| Intangible assets with finite useful lives | |||||||||||||||||||||||||
| Exploration expenditures | 538 | 1,245 | (1,244 | ) | 17 | 8 | 564 | 2,634 | 2,070 | ||||||||||||||||
| Industrial patents and intellectual property rights | 150 | 37 | (85 | ) | (2 | ) | (1 | ) | 57 | 156 | 1,474 | 1,318 | |||||||||||||
| Concessions, licenses, trademarks and similar items | 575 | 10 | (159 | ) | 421 | 847 | 2,827 | 1,980 | |||||||||||||||||
| Service concession arrangements | 3,562 | 308 | (142 | ) | (13 | ) | (25 | ) | 3,690 | 6,361 | 2,671 | ||||||||||||||
| Intangible assets in progress and advances | 658 | 171 | (581 | ) | 248 | 254 | 6 | ||||||||||||||||||
| Other intangible assets | 1,514 | 9 | (128 | ) | 7 | 20 | 1,422 | 2,074 | 652 | ||||||||||||||||
| 6,997 | 1,780 | (1,758 | ) | (2 | ) | 10 | (100 | ) | 6,927 | 15,624 | 8,697 | ||||||||||||||
| Intangible assets with indefinite useful lives | |||||||||||||||||||||||||
| Goodwill | 4,175 | (152 | ) | 2 | (2 | ) | 4,023 | ||||||||||||||||||
| 11,172 | 1,780 | (1,758 | ) | (154 | ) | 12 | (102 | ) | 10,950 | ||||||||||||||||
| 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 |
Capitalized exploration expenditures at
the end of the year of euro 548 million 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
1,871 million included exploration drilling expenditures which
are fully capitalized to reflect their investment nature and then
entirely amortized for euro 1,650 million (euro 973 million in
2011) and license acquisition costs of euro 221 million (euro 270
million in 2011) primarily related to the acquisition of new
exploration acreage in Liberia, Indonesia and Kenya.
Concessions, licenses, trademarks and similar items for euro 683
million primarily comprised transmission rights for natural gas
imported from Algeria (euro 614 million) and concessions for
mineral exploration (euro 47 million).
Service concession arrangements of euro 32 million primarily
pertained to foreign gas distribution activities (euro 3,690
million, of which euro 3,618 million in Italy at December 31,
2011). The decrease of euro 3,658 million was essentially a
consequence of the deconsolidation of Snam (euro 3,716 million).
Other intangible assets with finite useful lives of euro 362
million decreased by euro 1,060 million due to impairment losses
recorded at intangible assets in the Gas & Power segment. A
loss of euro 774 million (euro 511 million net of tax effect) was
recorded on the customer relationship which was recognized upon
the business combination of Distrigas NV (now Eni Gas & Power
NV) and then allocated to the European Market CGU. The impairment
review to test the recoverability of the book value of such CGU
brought to a lower value-in-use which was partly attributed to
said customer relationship. In particular the driver of the
impairments was affected by a continuing loss of customers in
Benelux, primarily in the wholesaler segment, considering the
reduced profitability outlook in the light of continuing demand
weakness, rising competitive pressure and oversupplies, as
described below in the commentary about the impairment loss
attributed to the European Market CGU. The residual book value of
the customer relationship amounted to euro 168 million (euro 111
million net of taxes) at the balance sheet date and will continue
being amortized in accordance to the supply contract having the
longest term (19 years at inception). An impairment loss of euro
256 million was recorded to write
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Eni Annual Report / Notes to the Consolidated Financial Statements |
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.
Other intangible assets also comprised: (i) royalties for the use
of licenses by Versalis SpA amounting to euro 56 million (euro 60
million at December 31, 2011); and (ii) estimated costs for
Eni’s social responsibility projects in relation to oil
development programs in Val d’Agri and in North Adriatic
area connected to mineral rights under concession for euro 44
million (euro 50 million at December 31, 2011) following
commitments made with the Basilicata Region, the Emilia Romagna
Region and the Province and Municipality of Ravenna.
The main amortization rates used were 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 life (goodwill) amounted to euro 1,347
million and pertained to the Gas & Power segment.
Changes in the scope of consolidation of intangible assets with
indefinite useful life (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
2,461 million (euro 4,023 million at December 31, 2011) net of
cumulative impairments amounting to euro 2,075 million (euro 726
million at December 31, 2011). The break-down of goodwill by
operating segment is as follows:
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Gas & Power | 2,531 | 1,286 | ||
| Engineering & Construction | 749 | 750 | ||
| Exploration & Production | 270 | 265 | ||
| Refining & Marketing | 159 | 160 | ||
| Other activities - Snam (a) | 314 | |||
| 4,023 | 2,461 |
(a) Goodwill as of December 31, 2011, pertaining to the segment Other activities - Snam has been reclassified from the Gas & Power segment.
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 whose
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 deriving from the
continuing use of the CGUs and, if significant and reasonably
determinable, the cash flows deriving from their disposal at the
end of the useful life. For the determination of the cash flows
see note 14 - Property, plant and equipment.
Values-in-use are determined by discounting post-tax cash flows
at a rate which corresponds: (i) in Exploration & Production,
Refining & Marketing and Chemical segments to the
Company’s weighted average cost of capital net of the risk
factors attributable to Saipem and the Gas & Power 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 2012 the adjusted post-tax
rates used for assessing values-in-use marginally decreased from
the previous year reflecting a reduction in the financial
parameters used for assessing the cost of capital: cost of
borrowings to Eni determined by expected trends for borrowing
spreads and management’s estimates about the composition of
the Company’s finance debt and reduced risk-free yields
reflecting an expected decline in the risk premium of Italy.
Those positive factors were partially absorbed by the increased
weight of net equity in the determination of the cost of capital
to the Group as the Board of Directors has reassessed the optimal
mix between internally-generated funds versus third parties
borrowings following the divestment of Snam. It is worth
mentioning that the increased equity risk of the Eni share due to
the divestment of a business with low volatility had no impact on
the assessment of the cost of capital used for the impairment
evaluations in the Exploration & Production, Refining &
Marketing and Chemical segments. This conclusion is underpinned
by the fact that in the past management adopted discount rates
which excluded the mitigating effect of the lower volatility of
Snam in the Eni’s portfolio. In 2012, the adjusted WACC used
for impairment test purposes ranged from 7.2% to 13.0%; (ii) the
impairment test rate for the Gas & Power segment was
estimated on the basis of a sample of comparable companies in the
utility industry. The impairment test rate for the Engineering
& Construction segment was derived from market data. Rates
used in the Gas & Power segment were adjusted to take into
consideration risks specific to each Country of activity, while
rates used in the Engineering & Construction segment did not
reflect any Country risks as most of the Company assets are not
permanently located in a specific Country. Rates for the Gas
& Power segment ranged from 6.9% to 8.5%, substantially
unchanged from the previous year. In the Engineering &
Construction segment, the discount rate was 7.8%, with a decrease
of 0.7 percentage points from the previous year due to a lower
equity risk.
Post-tax cash flows and discount rates were adopted as they
resulted in an assessment that substantially approximated a
pre-tax assessment.
Goodwill has been allocated to the following CGUs.
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Gas & Power segment
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Domestic gas market | 767 | 767 | ||
| Foreign gas market | 1,763 | 519 | ||
| - of which European market | 1,668 | 511 | ||
| Other | 1 | |||
| 2,531 | 1,286 |
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 impairment review performed at the balance
sheet date confirmed the recoverability of the carrying amount of
that CGU, including the allocated goodwill.
Goodwill allocated to the CGU European Market was mainly
recognized upon the purchase price allocations in the business
combinations mainly of Distrigas NV (now Eni Gas & Power NV)
in Belgium and other smaller entities (Altergaz SA, now Eni Gas
& Power France SA in France) in previous years and, in
January 2012, the 100% acquisition of Nuon Belgium NV (now merged
in Eni Gas & Power NV) and Nuon Power Generation Walloon NV
(now Eni Power Generation NV), companies marketing gas and
electricity mainly to residential and professional customers in
Belgium (euro 98 million). The CGU European Market comprises gas
marketing activities managed by the companies acquired and gas
marketing activities managed directly or indirectly by the Gas
& Power Division of the parent Company Eni SpA (North-West
Europe area, France, Germany, Benelux, United Kingdom,
Switzerland and Austria). Those business units jointly benefited
from the business combination synergies. In performing the
impairment review of the recoverability of the CGU carrying
amount at the balance sheet date, management recognized an
impairment loss amounting to euro 1,255 million considering a
reduced profitability outlook and fundamental modifications
pointing to a higher cyclicality of the gas business.
The key assumptions adopted in assessing future cash flow
projections of both the CGUs Domestic Market and European Market
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 top management
which reduced with respect to past reviews the projected returns
and cash flows particularly in the European Market, driven by
expectations for continuing demand weakness on the back of the
current economic downturn and rising competitive pressures. The
European Market CGU is expected to be negatively affected by
declining marketing margins due to continuing weak trends in spot
prices of gas against which selling prices in the European
Markets are benchmarked, and the projections in 2013 of negative
spreads towards the oil-linked costs of gas supplies. Other
elements of risk are tied with ongoing development in pricing
regulation in the retail segment across several European
Countries driven by growing pressure by administrative
authorities. In the light of the expected trends in the gas
market, management planned 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 European Market CGU, management is now assuming in the
updated plan with respect to the previous plan: (i) a reduction
of 33% on average in unit marketing margins used to assess the
European Market CGU in the four-year period of the plan and a
one-third reduction in unit marketing margins used in the
perpetuity to assess the terminal value of the CGU on the basis
of the business cyclicality; (ii) a decline of 3% in sales
volumes over the plan period; (iii) a slightly lower discount
rate; and (iv) to assess the terminal value, a growth rate for
the long period of the perpetuity of the last-year equal to zero,
unchanged from previous assumptions.
Value in use of the CGU European Market was assessed by
discounting the associated post-tax cash flows at a post-tax rate
of 7.3% corresponding to the pre-tax rate of 12.0% (7.5% and
9.3%, respectively in 2011). Value-in-use of the CGU Italian
Market was assessed by discounting the associated post-tax cash
flows at a post-tax rate of 6.9% corresponding to the pre-tax
rate of 14.0% (7.0% and 13.1%, respectively in 2011).
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 549 million would be
reduced to zero under each of the following alternative
hypothesis: (i) a decrease of 32.3% on average in the projected
commercial margins; (ii) a decrease of 32.3% on average in the
projected sales volumes; (iii) an increase of 8.2 percentage
points in the discount rate; and (iv) a negative nominal growth
rate of 13.2%. The recoverable amount of the CGU and the relevant
sensitivity analysis were calculated solely on the basis of
retail margins, thus excluding wholesale and business client
margins (industrial, thermoelectric and others).
Furthermore, Eni recorded impairments of the goodwill allocated
to marginal activities of the gas segment (Tigáz in Hungary,
Adriaplin in Slovenia and other subsidiaries in Argentina) as a
consequence of the lack of profitability prospects in the
relevant local markets due to tariff revisions and other factors
(euro 44 million) and, as well, of the Hewett project in the
North Sea due to the drivers described above (euro 48 million).
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Engineering & Construction segment
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Offshore E&C | 415 | 415 | ||
| Onshore E&C | 315 | 316 | ||
| Other | 19 | 19 | ||
| 749 | 750 |
The segment goodwill of euro 750 million
was mainly recognized following the acquisition of Bouygues
Offshore SA, now Saipem SA (euro 710 million) and allocated to
the CGUs E&C Offshore and E&C Onshore. 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 adopted to determine the terminal value. Information
on those drivers were collected from the four-year-plan approved
by the Company’s top management, while the terminal value
was estimated by using a perpetual nominal growth rate of 2%
applied to the cash flow of the last year in the four-year plan
normalized. Value in use of both CGUs was assessed by discounting
the associated post-tax cash flows at a post-tax rate of 7.8%
(8.5% in 2011) which corresponds to the pre-tax rate of 9.9% and
10.7% for the E&C Offshore business unit and the E&C
Onshore one respectively (11.1% and 12.1%, respectively in 2011).
The headroom of the E&C Offshore business unit of euro 3,224
million would be reduced to zero under each of the following
alternative changes in the above mentioned assumptions: (i) a
decrease of 44% in the operating result of the four-year plan;
(ii) an increase of about 4 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 E&C Onshore
business unit to be reduced to zero are greater than those
applicable to the E&C Offshore 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 265 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 executed in previous
reporting periods; and (ii) in the Refining & Marketing
segment goodwill amounted to euro 160 million at the balance
sheet date. Goodwill amounting to euro 141 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 and marginal lines of business in Italy and
Europe for euro 19 million.
17 Investments
Investments accounted for using the equity method
| (euro million) | Book amount 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 amount at the end of the year |
| December 31, 2011 | ||||||||||||||||||||||||||||||
| Investments in unconsolidated entities controlled by Eni | 256 | 8 | (19 | ) | 35 | (7 | ) | (39 | ) | 4 | (16 | ) | 222 | |||||||||||||||||
| Joint ventures | 2,735 | 93 | (35 | ) | 376 | (68 | ) | (276 | ) | 45 | (268 | ) | 2,602 | |||||||||||||||||
| Associates | 2,677 | 134 | (34 | ) | 267 | (31 | ) | (138 | ) | 45 | 99 | 3,019 | ||||||||||||||||||
| 5,668 | 235 | (88 | ) | 678 | (106 | ) | (453 | ) | 94 | (185 | ) | 5,843 | ||||||||||||||||||
| December 31, 2012 | ||||||||||||||||||||||||||||||
| Investments in unconsolidated entities controlled by Eni | 222 | 6 | (11 | ) | 37 | (4 | ) | (36 | ) | 29 | (2 | ) | (26 | ) | 215 | |||||||||||||||
| Joint ventures | 2,602 | 185 | (1 | ) | 319 | (78 | ) | (265 | ) | (473 | ) | (23 | ) | (19 | ) | 2,247 | ||||||||||||||
| Associates | 3,019 | 139 | (321 | ) | 170 | (151 | ) | (129 | ) | (48 | ) | (32 | ) | (844 | ) | 1,803 | ||||||||||||||
| 5,843 | 330 | (333 | ) | 526 | (233 | ) | (430 | ) | (492 | ) | (57 | ) | (889 | ) | 4,265 |
Additions of euro 330 million mainly
related to a capital contribution made to Angola LNG Ltd (euro
108 million) which is currently engaged in building a
liquefaction plant in order to monetize Eni’s gas reserves
in that Country (Eni’s interest in the project being 13.6%).
Other capital contributions related to the subscription of the
new companies Gas Bridge 1 BV and Gas Bridge 2 BV by Snam SpA for
a total amount of euro 133 million.
Divestments and reimbursements of euro 333 million related to the
sale of 5% of the share capital of Galp Energia SGPS SA to Amorim
Energia BV with a book value of euro 294 million. Further
information about this transaction is disclosed in the commentary
of other changes.
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Eni’s share of profit of equity-accounted investments and dividend decrease pertained to the following entities:
| (euro million) | December 31, 2011 |
December 31, 2012 |
||
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 (%) |
| Unión Fenosa Gas SA | 152 | 148 | 50.00 | 149 | 108 | 50.00 | ||||||
| Galp Energia SGPS SA (a) | 144 | 39 | 33.34 | 80 | 55 | 24.34 | ||||||
| United Gas Derivatives Co | 49 | 44 | 33.33 | 68 | 60 | 33.33 | ||||||
| Blue Stream Pipeline Co BV | 34 | 9 | 50.00 | 39 | 44 | 50.00 | ||||||
| Unimar Llc | 32 | 50.00 | 38 | 78 | 50.00 | |||||||
| Eni BTC Ltd | 28 | 34 | 100.00 | 30 | 31 | 100.00 | ||||||
| Supermetanol CA | 17 | 25 | 34.51 | 18 | 15 | 34.51 | ||||||
| Saipon Snc | 31 | 60.00 | 10 | 60.00 | ||||||||
| PetroSucre SA | 37 | 26.00 | 3 | 26.00 | ||||||||
| Azienda Energia e Servizi Torino SpA | 23 | 26 | 49.00 | |||||||||
| Other investments | 131 | 128 | 91 | 39 | ||||||||
| 678 | 453 | 526 | 430 |
(a) The investment was accounted for under the equity method until the date of loss of significant influence.
Eni’s share of losses of equity-accounted investments related to the following entities:
| (euro million) | December 31, 2011 |
December 31, 2012 |
||
Share of loss of equity-accounted investments |
|
Eni’s interest (%) |
|
Share of loss of equity-accounted investments |
|
Eni’s interest (%) |
| EnBW Eni Verwaltungsgesellschaft mbH | 30 | 50.00 | 82 | 50.00 | ||||
| Zagoryanska Petroleum BV | 50 | 60.00 | ||||||
| Angola LNG Ltd | 35 | 13.60 | ||||||
| Distribuidora de Gas del Centro SA | 12 | 31.35 | ||||||
| Pokrovskoe Petroleum BV | 9 | 30.00 | 8 | 30.00 | ||||
| Artic Russia BV | 7 | 60.00 | 7 | 60.00 | ||||
| Enirepsa Gas Ltd | 14 | 50.00 | 6 | 50.00 | ||||
| Inversora de Gas del Centro SA | 5 | 25.00 | ||||||
| PetroJunin SA | 5 | 40.00 | ||||||
| South Stream Transport BV | 5 | 20.00 | ||||||
| GreenStream BV | 23 | 50.00 | 1 | 50.00 | ||||
| CARDÓN IV SA | 12 | 50.00 | ||||||
| Other investments | 11 | 17 | ||||||
| 106 | 233 |
Losses at equity-accounted investments
were driven by: (i) a reduced profitability outlook at EnBW Eni
Verwaltungsgesellschaft mbH which led to write down the expected
synergies deriving from the business combination (euro 82
million); (ii) a downward reserve revision of a joint project in
the Ukraine at Zagoryanska Petroleum BV (euro 50 million); (iii)
non-capitalizable exploration and pre-production expenses at
Angola LNG Ltd (euro 35 million); and (iv) reduced expectations
for a tariff increase in local markets driving down future cash
flows at Distribuidora de Gas del Centro SA (euro 12 million) and
Inversora de Gas del Centro SA (euro 5 million).
Changes in the scope of consolidation of equity-accounted
investments of euro 521 million related to deconsolidation of
Snam.
Other changes of euro 889 million mainly related to the fact that
the book value of Galp Energia SGPS SA amounting to euro 1,669
million was reclassified to other investments due to loss of
significant influence on the investees as a consequence of the
sale of 5% of the share capital of the entities to Amorim Energia
BV, thus sanctioning Eni’s exit from the current
shareholders’ agreement governing Galp. The transaction was
executed on July 20, 2012 and involved the sale of 41.5 million
shares of Galp at a price of euro 14.25 a share, for a total
consideration of euro 582 million that correspond to a book value
of euro 294 million. Eni’s interest in Galp Energia
decreased to 28.34% and was stated as an available-for-sale
financial asset. On the other hand, prior to the described
transaction, Eni had recorded an increase in the book value of
Galp amounting to euro 835 million driven by a capital increase
made by Galp’s subsidiary Petrogal whereby a new shareholder
subscribed for its share of the capital increase by contributing
a cash amount which was fairly in excess of the net book value of
the interest acquired.
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List of equity-accounted investments:
| (euro million) | December 31, 2011 |
December 31, 2012 |
|
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 | ||||||||||||
| Eni BTC Ltd | 100 | 34,000,000 | 100.00 | 97 | 34,000,000 | 100.00 | ||||||
| Other investments (*) | 122 | 118 | ||||||||||
| 222 | 215 | |||||||||||
| Joint ventures | ||||||||||||
| Unión Fenosa Gas SA | 465 | 273,100 | 50.00 | 507 | 273,100 | 50.00 | ||||||
| Blue Stream Pipeline Co BV | 476 | 1,000 | 50.00 | 461 | 1,000 | 50.00 | ||||||
| Artic Russia BV | 428 | 12,000 | 60.00 | 436 | 12,000 | 60.00 | ||||||
| Raffineria di Milazzo ScpA | 130 | 175,000 | 50.00 | 132 | 175,000 | 50.00 | ||||||
| Eteria Parohis Aeriou Thessalonikis AE | 130 | 116,546,500 | 49.00 | 131 | 116,546,500 | 49.00 | ||||||
| GreenStream BV | 128 | 100,000,000 | 50.00 | 125 | 100,000,000 | 50.00 | ||||||
| CARDÓN IV SA | 74 | 6,455 | 50.00 | 73 | 6,455 | 50.00 | ||||||
| Unimar Llc | 111 | 50 | 50.00 | 70 | 50 | 50.00 | ||||||
| Supermetanol CA | 59 | 49,000 | 34.51 | 62 | 49,000 | 34.51 | ||||||
| Eteria Parohis Aeriou Thessalias AE | 45 | 38,445,008 | 49.00 | 46 | 38,445,008 | 49.00 | ||||||
| Petromar Lda | 23 | 1 | 70.00 | 42 | 1 | 70.00 | ||||||
| Est Reti Elettriche SpA (ex Est Più SpA) | 30 | 2,940,000 | 70.00 | 12 | 1,221,500 | 70.00 | ||||||
| Saipon Snc | 30 | 12,000 | 60.00 | 9 | 12,000 | 60.00 | ||||||
| Azienda Energia e Servizi Torino SpA | 169 | 54,150,000 | 49.00 | |||||||||
| Toscana Energia SpA | 159 | 70,304,854 | 48.08 | |||||||||
| Zagoryanska Petroleum BV | 32 | 10,800 | 60.00 | 10,800 | 60.00 | |||||||
| Other investments (*) | 113 | 141 | ||||||||||
| 2,602 | 2,247 | |||||||||||
| Associates | ||||||||||||
| Angola LNG Ltd | 1,008 | 1,141,284,004 | 13.60 | 1,060 | 1,279,887,652 | 13.60 | ||||||
| PetroSucre SA | 244 | 5,727,800 | 26.00 | 242 | 5,727,800 | 26.00 | ||||||
| EnBW Eni Verwaltungsgesellschaft mbH | 237 | 1 | 50.00 | 163 | 1 | 50.00 | ||||||
| United Gas Derivatives Co | 102 | 950,000 | 33.33 | 106 | 950,000 | 33.33 | ||||||
| Fertilizantes Nitrogenados de Oriente CEC | 68 | 1,933,662,121 | 20.00 | 68 | 1,933,662,121 | 20.00 | ||||||
| Rosetti Marino SpA | 25 | 800,000 | 20.00 | 29 | 800,000 | 20.00 | ||||||
| Termica di Milazzo Srl | 26 | 9,296,400 | 40.00 | 23 | 9,296,400 | 40.00 | ||||||
| Distribuidora de Gas del Centro SA | 31 | 50,303,329 | 31.35 | 14 | 50,303,329 | 31.35 | ||||||
| Galp Energia SGPS SA | 1,103 | 276,472,161 | 33.34 | |||||||||
| ACAM Gas SpA | 48 | 3,336,410 | 49.00 | |||||||||
| Gaz de Bordeaux SAS | 26 | 257,576 | 34.00 | |||||||||
| Other investments (*) | 101 | 98 | ||||||||||
| 3,019 | 1,803 | |||||||||||
| 5,843 | 4,265 |
(*) Each individual amount included herein was lower than euro 25 million.
Carrying amounts of investments in
unconsolidated entities controlled by Eni, joint ventures and
associates, included differences between the purchase price and
the corresponding net equity amounting to euro 275 million, of
which euro 195 million referred to Unión Fenosa Gas SA
(goodwill) and euro 80 million to EnBW Eni
Verwaltungsgesellschaft mbH (of which goodwill euro 16 million).
The table below sets out the provisions for losses included in
the provisions for contingencies of euro 176 million (euro 151
million at December 31, 2011), primarily related to the following
equity-accounted investments:
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Industria Siciliana Acido Fosforico - ISAF - SpA (in liquidation) | 100 | 102 | ||
| Société Centrale Electrique du Congo SA | 19 | |||
| Southern Gas Constructors Ltd | 11 | 10 | ||
| Charville - Consultores e Serviços Lda | 7 | 7 | ||
| Other investments | 33 | 38 | ||
| 151 | 176 |
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Eni Annual Report / Notes to the Consolidated Financial Statements |
Other investments
| (euro million) | Net book amount at the beginning of the year |
Additions |
Divestments |
Valuation at fair value |
Currency translation differences |
Other changes |
Value at the end of the year |
Gross book amount at the end of the year |
Accumulated impairment charges |
| December 31, 2011 | |||||||||||||||||||||
| Investments in unconsolidated entities controlled by Eni | 29 | 2 | (1 | ) | (27 | ) | 3 | 3 | |||||||||||||
| Associates | 10 | (10 | ) | 13 | 13 | 21 | 8 | ||||||||||||||
| Other investments | 383 | 8 | 7 | (15 | ) | 383 | 390 | 7 | |||||||||||||
| 422 | 10 | (4 | ) | (29 | ) | 399 | 414 | 15 | |||||||||||||
| December 31, 2012 | |||||||||||||||||||||
| Investments in unconsolidated entities controlled by Eni | 3 | 12 | 15 | 16 | 1 | ||||||||||||||||
| Associates | 13 | (13 | ) | 12 | 12 | 12 | |||||||||||||||
| Other investments | 383 | 49 | (503 | ) | 2,528 | (3 | ) | 2,604 | 5,058 | 5,059 | 1 | ||||||||||
| 399 | 61 | (516 | ) | 2,528 | (3 | ) | 2,616 | 5,085 | 5,087 | 2 |
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.
Additions of euro 61 million mainly related to the acquisition of
a 15% interest in the share capital of Novamont SpA for euro 35
million and of the 5.2% of the share capital of Genomatica Inc
for euro 12 million and to a capital contribution made to
Servizio Fondo Bombole Metano SpA for euro 12 million.
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 (further information is
disclosed in the next paragraph) and to the sale of
Interconnector (UK) Ltd for euro 136 million.
Valuation 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) and Galp
Energia SGPS SA (euro 1,063 million) that, as a consequence of
the loss of control on Snam following the transaction with Cassa
Depositi e Prestiti (see note 31 - Discontinued operations,
assets held for sale and liabilities directly associated with
assets held for sale) 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 initial recognition corresponded to the
market prices recorded on the date of sale of control/significant
influence which occurred on October 15, 2012 and July 20, 2012,
respectively. The difference between the initial measurement at
market prices and the book value of the underlying interests was
reported through profit. The subsequent changes in the market
prices of the share from the initial recognition to the balance
sheet date were reported in comprehensive income, with the
exception of the shares underlying convertible bonds which
changes in market prices were reported through profit as
management elected to apply the fair value option provided by IAS
39 in order to eliminate an accounting mismatch deriving from the
measurement at fair value through profit of the options embedded
in the convertible bonds. More explicitly: (i) at the date of
loss of control the residual interest in Snam amounted to 683.9
million of shares equal to 20.23% of the share capital which were
initially recognized at a market fair value of euro 2,394
million, calculated at the price of euro 3.5 a share current at
the date of loss of control which resulted in a revaluation gain
of euro 1,451 million reported as discontinued operation. The
fair value option was applied to 288.7 million shares underlying
a convertible bond issued on January 15, 2013 which resulted in a
fair value gain through the income statement of euro 6 million
reported as continuing operation following the re-measurement at
market fair value at the balance sheet date; positive changes in
fair value of the residual interest in Snam of euro 8 million was
recorded in other components of comprehensive income. At December
31, 2012, the residual interest in Snam, equal to 20.23% of the
share capital, was stated at a fair value of euro 2,408 million
at the current market price of euro 3.52 a share; (ii) at the
date of loss of Eni’s significant influence the residual
interest in Galp amounted to 235 million of shares equal to
28.34% of the share capital which were initially recognized at a
market fair value of euro 2,534 million, measured at the market
price of euro 10.78 a share current at the date of loss of
significance influence which brought to profit a revaluation gain
of euro 865 million. On November 27, 2012, through an accelerated
book-building procedure, Eni sold 33.2 million shares of Galp
Energia, corresponding to 4% of its share capital at a price of
euro 11.48 a share with a gain of euro 23 million. The fair value
option was applied to 66.3 million shares, equal to the 8% of
share capital of Galp, which were underlying a convertible bond
issued at the same time as the 4% sale. At December 31, 2012, the
residual interest in Galp of 201.84 million of shares equal to
24.34% of the share capital was stated at a market value of euro
2,374 million at the market price of euro 11.76 a share. The fair
value option on part of the interest in Galp brought profit a
gain of euro 65 million relating to the share underlying the
convertible bond; a positive change in market value at the
residual interest in Galp was brought to other components of
comprehensive income (euro 133 million).
Other changes of euro 2,616 million related to the
reclassification from investments accounted for using the equity
method of Galp Energia SGPS SA for euro 1,669 million and the
book value of Snam SpA before fair value valuation for euro 943
million.
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The net carrying amount of other investments of euro 5,085 million (euro 399 million at December 31, 2011) was related to the following entities:
| (euro million) | December 31, 2011 |
December 31, 2012 |
|
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 (*) | 3 | 15 | ||||||||||
| Associates | 13 | 12 | ||||||||||
| Other investments: | ||||||||||||
| - Snam SpA | 2,408 | 683,936,947 | 20.23 | |||||||||
| - Galp Energia SGPS SA | 2,374 | 201,839,604 | 24.34 | |||||||||
| - Nigeria LNG Ltd | 91 | 118,373 | 10.40 | 90 | 118,373 | 10.40 | ||||||
| - Darwin LNG Pty Ltd | 73 | 213,995,164 | 10.99 | 65 | 213,995,164 | 10.99 | ||||||
| - Novamont SpA | 35 | 3,530 | 15.00 | |||||||||
| - Interconnector (UK) Ltd | 136 | 2,050,017 | 16.07 | |||||||||
| - other (*) | 83 | 86 | ||||||||||
| 383 | 5,058 | |||||||||||
| 399 | 5,085 |
(*) 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 18 million (euro 21 million at December 31, 2011) and were primarily in relation to the following entities:
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Caspian Pipeline Consortium R - Closed Joint Stock Co | 16 | 14 | ||
| Other investments | 5 | 4 | ||
| 21 | 18 |
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, 2011 |
December 31, 2012 |
||
Unconsolidated entities controlled |
|
Joint ventures |
|
Associates |
|
Unconsolidated entities
controlled |
|
Joint ventures |
|
Associates |
| Total assets | 2,393 | 5,655 | 6,165 | 1,604 | 5,032 | 3,223 | |||||||
| Total liabilities | 2,279 | 3,085 | 3,144 | 1,497 | 2,827 | 1,429 | |||||||
| Net sales from operations | 86 | 3,011 | 6,347 | 97 | 2,971 | 1,889 | |||||||
| Operating profit | (2 | ) | 484 | 316 | 5 | 475 | 259 | ||||||
| Net profit | 41 | 299 | 234 | 39 | 237 | 170 |
Total assets and liabilities of unconsolidated controlled entities of euro 1,604 million and euro 1,497 million, respectively (euro 2,393 million and euro 2,279 million at December 31, 2011) pertained to entities acting as sole-operator in the management of oil and gas contracts for euro 1,249 million and euro 1,249 million (euro 2,027 million and euro 2,027 million at December 31, 2011). The residual amount pertained to not significant entities that were excluded from the scope of consolidation for the reasons described in note 1 - Basis of presentation.
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18 Other financial assets
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Receivables for financing operating activities | 1,516 | 1,160 | ||
| Securities held for operating purposes | 62 | 69 | ||
| 1,578 | 1,229 |
Receivables for financing operating
activities are stated net of the valuation allowance for doubtful
accounts of euro 30 million (euro 32 million at December 31,
2011).
Operating financing receivables of euro 1,160 million (euro 1,516
million at December 31, 2011) primarily pertained to loans
granted by the Exploration & Production segment (euro 567
million), the Gas & Power segment (euro 429 million) and the
Refining & Marketing segment (euro 98 million) and
receivables for financial leasing for euro 21 million (euro 47
million at December 31, 2011). Financing receivables granted to
unconsolidated subsidiaries, joint ventures and associates
amounted to euro 642 million.
Receivables for financial leasing pertained to the disposal of
the Belgian gas network by Finpipe GIE.
The following table shows principal receivable by maturity date,
which was obtained by summing future lease payment receivables
discounted at the effective interest rate, interest and the
nominal value of future lease receivables:
| (euro million) | Maturity range |
||
Within 12 months |
|
Between one |
|
Total |
| Principal receivable | 26 | 21 | 47 | |||
| Interests | 3 | 3 | ||||
| Undiscounted value of future lease payments | 26 | 24 | 50 |
Receivables with a maturity date within
one year is disclosed among current assets in the item trade
receivables for operating purposes - current portion of long-term
receivables in note 9 - Trade and other receivables.
Receivables for financing operating activities in currencies
other than euro amounted to euro 999 million (euro 1,338 million
at December 31, 2011).
Receivables for financing operating activities due beyond five
years amounted to euro 624 million (euro 896 million at December
31, 2011).
The valuation at fair value of financing receivables of euro
1,217 million has been determined based on the present value of
expected future cash flows discounted at rates ranging from 0.4%
to 3.3% (0.7% and 3.1% at December 31, 2011).
Securities of euro 69 million (euro 62 million at December 31,
2011), designated as held-to-maturity investments, are listed
bonds issued by sovereign states (euro 65 million) and by the
European Investment Bank (euro 4 million). 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 | 21 | from 3.75 to 4.75 | from 2013 to 2021 | Baa2 | BBB+ | |||||||
| Slovenia | 9 | 9 | 9 | from 3.42 to 4.88 | from 2013 to 2014 | Baa2 | A- | |||||||
| Floating rate bonds | ||||||||||||||
| Italy | 12 | 12 | 12 | from 2014 to 2016 | Baa2 | BBB+ | ||||||||
| Belgium | 7 | 7 | 7 | 2016 | Aa3 | AA | ||||||||
| France | 5 | 5 | 5 | 2014 | Aa1 | AA+ | ||||||||
| Spain | 10 | 9 | 9 | from 2014 to 2015 | Baa3 | BBB- | ||||||||
| Slovakia | 2 | 2 | 2 | 2015 | A2 | A | ||||||||
| Total sovereign states | 65 | 65 | 65 | |||||||||||
| European Investment Bank | 4 | 4 | 4 | 2018 | Aaa | AAA | ||||||||
| 69 | 69 | 69 |
Securities with a maturity beyond five
years amounted to euro 12 million.
The valuation at fair value of financial securities has resulted
in marginal effects. The fair value of securities was derived
from quoted market prices.
Receivables with related parties are described in note 42 -
Transactions with related parties.
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Eni Annual Report / Notes to the Consolidated Financial Statements |
19 Deferred tax assets
Deferred tax assets are stated net of amounts of deferred tax liabilities that can be offset for euro 3,630 million (euro 4,045 million at December 31, 2011).
| (euro million) | Amount |
|
Additions |
|
Deductions |
|
Changes in the scope of consolidation |
|
Currency translation differences |
|
Other changes |
|
Amount
|
| 5,514 | 1,642 | (1,326) | (1,208) | (58) | 349 | 4,913 |
The deductions of euro 1,326 million
comprised a write-down of euro 1,030 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, and as Eni has lost the availability of Snam
taxable profit against which Italian tax assets can be utilized
following the deconsolidation of Snam.
Deferred tax assets are described in note 29 - Deferred tax
liabilities.
Income taxes are described in note 39 - Income tax expense.
20 Other non-current receivables
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Tax receivables from: | ||||
| - Italian tax authorities | ||||
| . income tax | 16 | 113 | ||
| . interest on tax credits | 66 | 62 | ||
| 82 | 175 | |||
| - foreign tax authorities | 72 | 118 | ||
| 154 | 293 | |||
| Other receivables: | ||||
| - related to divestments | 535 | 752 | ||
| - other non-current | 258 | 361 | ||
| 793 | 1,113 | |||
| Fair value of non-hedging derivatives | 714 | 429 | ||
| Fair value of cash flow hedge derivative instruments | 33 | 2 | ||
| Other asset | 2,531 | 2,563 | ||
| 4,225 | 4,400 |
The increase in income tax receivables
from Italian tax authorities of euro 97 million related to Eni
SpA for euro 85 million and comprised the tax relief provided for
by Article 2, paragraph 1, of the Law Decree 201/2011 that allow
to refund of tax payments of IRES made in excess in fiscal years
prior to 2012 as a consequence of the non-deductibility of
payroll costs relating to IRAP.
Receivables originated from divestments amounted to euro 752
million (euro 535 million at December 31, 2011) and comprised:
(i) the residual outstanding amount of euro 236 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. As agreed by
the parties, the reimbursement can be made in kind through
equivalent assignment of volumes of crude oil. In 2012, the
reimbursement amounted to euro 71 million (US $92 million).
Negotiations for further compensations are ongoing; (ii) the
long-term portion of a receivable of euro 229 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 Kashagan government, which became effective from
January 1, 2008. The reimbursement of the receivable is provided
for in three annual instalments commencing from the date of the
production start-up which is planned within June 2013. The
receivable accrues interest income at market rates. The
short-term portion is disclosed in note 9 - Trade and other
receivables; (iii) the long-term portion of a receivable of euro
130 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,
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Eni Annual Report / Notes to the Consolidated Financial Statements |
entailed a net cash consideration to
Eni, to be paid in cash in three years through monthly
instalments starting from July 2012. The receivable accrues
interest income at market rates. In the second half of 2012,
reimbursements amounted to euro 41 million. The short-term
portion is disclosed in note 9 - Trade and other receivables.
Receivables with related parties are described in note 42 -
Transactions with related parties.
The fair value of non-hedging derivative contracts was as
follows:
December 31, 2011 |
December 31, 2012 |
|||
| (euro million) |
|
Fair value |
|
Purchase |
|
Sale |
|
Fair value |
|
Purchase |
|
Sale |
| Derivatives on exchange rate | ||||||||||||
| Interest currency swap | 277 | 948 | 219 | 235 | 868 | 284 | ||||||
| Currency swap | 16 | 197 | 29 | 714 | 645 | |||||||
| 293 | 1,145 | 219 | 264 | 1,582 | 929 | |||||||
| Derivatives on interest rate | ||||||||||||
| Interest rate swap | 82 | 713 | 300 | 80 | 736 | 2 | ||||||
| 82 | 713 | 300 | 80 | 736 | 2 | |||||||
| Derivatives on commodities | ||||||||||||
| Over the counter | 326 | 3,010 | 922 | 80 | 581 | 547 | ||||||
| Future | 2 | 120 | 5 | 147 | 4 | |||||||
| Other | 11 | 116 | ||||||||||
| 339 | 3,130 | 1,038 | 85 | 728 | 551 | |||||||
| 714 | 4,988 | 1,557 | 429 | 3,046 | 1,482 |
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 429 million (euro
714 million at December 31, 2011) 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 related to
specific trade or financing transactions.
Fair value of cash flow hedge derivatives of euro 2 million (euro
33 million at December 31, 2011) related to the Gas & Power
segment. Further information is disclosed in note 13 - Other
current assets. Fair value related to the contracts expiring
beyond 2013 is disclosed in note 30 - Other non-current
liabilities; fair value related to the contracts expiring in 2013
is disclosed in note 13 - Other current assets and in note 25 -
Other current liabilities. The effects of fair value evaluation
of cash flow hedges are disclosed in note 32 - Shareholders’
equity and note 36 - Operating expenses.
The nominal values of cash flow hedge derivatives for purchase
and sale commitments were euro 21 million and euro 60 million,
respectively (euro 204 million and euro 379 million at December
31, 2011, respectively).
Information on the hedged risks and the hedging policies is
disclosed in note 34 - Guarantees, commitments and risks - Risk
factors.
Other non-current asset amounted to euro 2,563 million (euro
2,531 million at December 31, 2011), of which euro 2,367 million
(euro 2,227 million at December 31, 2011) were deferred costs
relating to gas quantities which, although not off-taken, the
Company has obligation to prepay by disbursing the whole
contractual price of a fraction of it in order to fulfill the
take-or-pay clauses provided by the relevant long-term supply
contracts (see Other payables of note 22 - Trade and other
payables). In accordance to those arrangements, the Company is
contractually required to off-take minimum annual quantities of
gas, or in case of failure is held 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 off-take the pre-paid
volumes in future years alongside the contract execution, for its
entire duration or a shorter term as the case may be. Those
prepayments were classified as non-current assets, as the Company
plans to off-take the prepaid quantities beyond the term of 12
months. The increase of euro 140 million from December 31, 2011
was due to the gas volumes for which the take-or-pay obligation
has been triggered in 2012; such increase was partially offset by
the renegotiation of certain contracts which were finalized in
2012 with effects retroactive to the beginning of 2011 and
provided for a reduction in the contractual minimum take. 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 leveraging on:
(i) the expected developing trends in long-term gas demand; (ii)
a projected sales expansion in target European Markets and Italy
supported by the Company’s strengthening market leadership
and an improved competitiveness of the Company’s cost
position considering the expected benefits of ongoing and planned
contract renegotiations; (iii) 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
has already achieved or plans to achieve as a result of ongoing
and planned contract renegotiations, including the no renewal of
expiring contracts.
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Current liabilities
21 Short-term debt
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Banks | 786 | 253 | ||
| Commercial papers | 2,997 | 1,481 | ||
| Other financial institutions | 676 | 489 | ||
| 4,459 | 2,223 |
The decrease in short-term debt of euro
2,236 million included net repayments for euro 753 million and
the deconsolidation of the financial debts pertaining to Snam
(more information is provided in note 26 - Long-term debt and
current maturities of long-term debt - Analysis of net
borrowings). Commercial papers of euro 1,481 million (euro 2,997
million at December 31, 2011) were issued by the Group’s
financial subsidiaries Eni Finance USA Inc (euro 1,357 million)
and Eni Finance International SA (euro 124 million).
The break-down by currency of short-term debt is provided below:
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Euro | 2,896 | 219 | ||
| US dollar | 1,430 | 1,815 | ||
| Other currencies | 133 | 189 | ||
| 4,459 | 2,223 |
In 2012, the weighted average interest
rate on short-term debt was 1.5% (1.1% in 2011).
At December 31, 2012, Eni had undrawn committed and uncommitted
borrowing facilities amounting to euro 1,241 million and euro
10,932 million, respectively (euro 2,551 million and euro 9,346
million at December 31, 2011). Those facilities bore interest
rates reflecting prevailing conditions on the marketplace.
Charges for unutilized facilities were immaterial.
Payables due to related parties are described in note 42 -
Transactions with related parties.
At December 31, 2012, Eni did not report any default on covenants
or other contractual provisions in relation to borrowing
facilities.
The fair value of short-term debts matched their respective
carrying amounts considering the short-term maturity.
22 Trade and other payables
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Trade payables | 13,436 | 14,993 | ||
| Advances | 2,313 | 2,247 | ||
| Other payables: | ||||
| - related to capital expenditures | 2,280 | 2,103 | ||
| - others | 4,883 | 4,238 | ||
| 7,163 | 6,341 | |||
| 22,912 | 23,581 |
Increased trade receivables amounting to
euro 1,557 million primarily related to the Gas & Power
segment (euro 1,252 million), Exploration & Production (euro
374 million), Refining & Marketing (euro 306 million) and, as
decrease, to the change in the scope of consolidation following
the deconsolidation of Snam (euro 446 million).
Advances of euro 2,247 million (euro 2,313 million at December
31, 2011) related to prepayments and advances on contract work in
progress for euro 865 million and for euro 814 million,
respectively, (euro 795 million and euro 1,037 million at
December 31, 2011, respectively) and other advances for euro 568
million (euro 481 million at December 31, 2011). Advances on
contract work in progress were in respect of the Engineering
& Construction segment.
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Eni Annual Report / Notes to the Consolidated Financial Statements |
Other payables were as follows:
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Payables related to capital expenditures due to: | ||||
| - suppliers in relation to investing activities | 1,544 | 1,626 | ||
| - joint venture operators in exploration and production activities | 468 | 440 | ||
| - other | 268 | 37 | ||
| 2,280 | 2,103 | |||
| Other payables due to: | ||||
| - joint venture operators in exploration and production activities | 2,356 | 2,375 | ||
| - employees | 589 | 372 | ||
| - social security entities | 269 | 223 | ||
| - non-financial government entities | 137 | 243 | ||
| - other | 1,532 | 1,025 | ||
| 4,883 | 4,238 | |||
| 7,163 | 6,341 |
Other payables decreased of euro 822
million following the deconsolidation of Snam (euro 638 million).
Other payables due to others of euro 1,025 million (euro 1,532
million at December 31, 2011) included payables due to gas
suppliers for euro 542 million (euro 719 million at December 31,
2011) relating to the triggering of the take-or-pay clause, net
of the amounts paid by Eni for the year. Payments to gas
suppliers decreased by euro 177 million reflecting the economic
benefits associated with the renegotiations of certain
take-or-pay contracts which were finalized in 2012 which effects
were retroactive to the beginning of 2011 and provided for a
reduction in the contractual minimum take. The decrease was
partially offset by increased receivables due to the take-or-pay
volumes accrued in 2012, net of amounts paid in the course of the
year. For further information see note 20 - Other non-current
receivables.
Payables to related parties are described in note 42 -
Transactions with related parties.
The fair value of trade and other payables matched their
respective carrying amounts considering the short-term maturity
of trade payables.
23 Income taxes payable
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Italian subsidiaries | 390 | 156 | ||
| Foreign subsidiaries | 1,702 | 1,466 | ||
| 2,092 | 1,622 |
Income taxes are described in note 39 - Income tax expense.
24 Other taxes payable
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Excise and customs duties | 1,049 | 1,286 | ||
| Other taxes and duties | 847 | 876 | ||
| 1,896 | 2,162 |
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Eni Annual Report / Notes to the Consolidated Financial Statements |
25 Other current liabilities
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Fair value of non-hedging and trading derivatives | 1,668 | 888 | ||
| Fair value of cash flow hedge derivatives | 121 | 32 | ||
| Fair value of fair value hedge derivatives | 5 | |||
| Other liabilities | 448 | 512 | ||
| 2,237 | 1,437 |
The fair value of non-hedging derivative contracts and derivatives contracts held for trading is presented below:
Dec. 31, 2011 |
Dec. 31, 2012 |
|||
| (euro million) | Fair value |
|
Purchase |
|
Sale |
|
Fair value |
|
Purchase |
|
Sale |
| Derivatives on exchange rate | ||||||||||||
| Currency swap | 448 | 3,979 | 8,076 | 180 | 7,531 | 1,291 | ||||||
| Interest currency swap | 6 | 116 | ||||||||||
| Other | 1 | 23 | 1 | 102 | ||||||||
| 455 | 4,095 | 8,099 | 181 | 7,633 | 1,291 | |||||||
| Derivatives on interest rate | ||||||||||||
| Interest rate swap | 3 | 735 | 1 | 88 | ||||||||
| 3 | 735 | 1 | 88 | |||||||||
| Derivatives on commodities | ||||||||||||
| Over the counter | 1,066 | 3,829 | 4,620 | 684 | 8,311 | 2,969 | ||||||
| Future | 63 | 418 | 173 | 11 | 382 | 43 | ||||||
| Other | 81 | 548 | 11 | 2 | ||||||||
| 1,210 | 4,247 | 5,341 | 706 | 8,693 | 3,014 | |||||||
| 1,668 | 8,342 | 14,175 | 888 | 16,326 | 4,393 |
Derivative fair values were estimated on
the basis of market quotations provided by primary info-provider,
or in the absence of market information, appropriate valuation
techniques commonly used on the marketplace.
Fair values of non-hedging and trading derivatives of euro 888
million (euro 1,668 million at December 31, 2011) consisted of:
(i) euro 538 million (euro 1,587 million at December 31, 2011) 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 movements in foreign currencies,
interest rates or commodity prices. Therefore, such derivatives
were not related to specific trade or financing transactions;
(ii) euro 349 million (euro 80 million at December 31, 2011), of
commodity and trading derivatives entered by the Gas & Power
segment in order to optimize the economic margin and by Eni
Trading & Shipping SpA for trading purposes; (iii) euro 1
million (same amount as of December 31, 2011), of derivatives
embedded in the pricing formulas of certain long-term supply
contracts of gas in the Exploration & Production segment.
The fair value of cash flow hedge derivatives amounted to euro 32
million (euro 121 million at December 31, 2011) and essentially
pertained to the Gas & Power segment. Those derivatives were
designated to hedge exchange rate and commodity risk exposures as
described in note 13 - Other current assets. Fair value of
contracts expiring by end of 2013 is disclosed in note 13 - Other
current assets; fair value of contracts expiring beyond 2013 is
disclosed in note 30 - Other non-current liabilities and in note
20 - Other non-current receivables. The effects of the evaluation
at fair value of cash flow hedge derivatives are disclosed in
note 32 - Shareholders’ equity and in note 36 - Operating
expenses.
The nominal value of cash flow hedge derivatives referred to
purchase and sale commitments for euro 341 million and euro 271
million, respectively (euro 3,409 million and euro 452 million at
December 31, 2011, respectively).
The fair value of fair value hedge derivatives amounted to euro 5
million and pertained to derivatives entered into during the 2012
in order to hedge certain contracts for the sale and purchase of
oil products.
The nominal value of fair value hedge derivatives referred to
purchase and sale commitments for euro 24 million while sale
commitments were not recorded.
Information on hedged risks and hedging policies is disclosed in
note 34 - Guarantees, commitments and risks - Risk factors.
Other current liabilities of euro 512 million (euro 448 million
at December 31, 2011) included advances cashed in from gas
customers (euro 142 million) who off-took lower volumes than the
contractual minimum take provided by the relevant long-term
supply contract with the Company. The classification reflects the
Company’s belief that the underlying volumes will be
off-taken the next year.
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Eni Annual Report / Notes to the Consolidated Financial Statements |
Non-current liabilities
26 Long-term debt and current maturities of long-term debt
(euro million) |
At December 31, | Long-term maturity | ||||
Maturity range |
2011 |
2012 |
Current maturity 2013 |
2014 |
2015 |
2016 |
2017 |
After |
Total |
| Banks | 2013-2027 | 9,654 | 4,016 | 913 | 694 | 621 | 622 | 227 | 939 | 3,103 | ||||||||||
| Ordinary bonds | 2013-2040 | 15,049 | 16,824 | 2,006 | 1,331 | 2,222 | 1,494 | 2,650 | 7,121 | 14,818 | ||||||||||
| Convertible bonds | 2015 | 990 | 990 | 990 | ||||||||||||||||
| Other financial institutions | 2013-2025 | 435 | 410 | 42 | 53 | 47 | 50 | 50 | 168 | 368 | ||||||||||
| 25,138 | 22,240 | 2,961 | 2,078 | 3,880 | 2,166 | 2,927 | 8,228 | 19,279 |
The decrease in long-term debt,
including the current portion of long-term debt, of euro 2,898
million included new issuances for euro 10,484 million and
repayments for euro 3,784 million and the deconsolidation of Snam
as described in the following paragraph "Analysis of net
borrowings".
Debt due to banks of euro 4,016 million (euro 9,654 million at
December 31, 2011) included amounts against committed borrowing
facilities for euro 5 million.
Debt due to other financial institutions of euro 410 million
(euro 435 million at December 31, 2011) comprised euro 31 million
of finance lease transactions (euro 15 million at December 31,
2011).
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, 2012 and 2011, debts
subjected to restrictive covenants amounted to euro 1,994 million
and euro 2,316 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.
Bonds of euro 16,824 million (euro 15,049 million at December 31,
2011) consisted of bonds issued within the Euro Medium Term Notes
Program for a total of euro 12,579 million and other bonds for a
total of euro 4,245 million.
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The following table provides a break-down of bonds by issuing entity, maturity date, interest rate and currency as of December 31, 2012:
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 | 63 | 1,563 | EUR | 2016 | 5.000 | |||||||||||
| Eni SpA | 1,500 | 46 | 1,546 | EUR | 2013 | 4.625 | |||||||||||
| Eni SpA | 1,500 | 10 | 1,510 | EUR | 2019 | 4.125 | |||||||||||
| Eni SpA | 1,250 | 69 | 1,319 | EUR | 2014 | 5.875 | |||||||||||
| Eni SpA | 1,250 | 1,250 | EUR | 2017 | 4.750 | ||||||||||||
| Eni SpA | 1,000 | 33 | 1,033 | EUR | 2020 | 4.250 | |||||||||||
| Eni SpA | 1,000 | 28 | 1,028 | EUR | 2018 | 3.500 | |||||||||||
| Eni SpA | 1,000 | 18 | 1,018 | EUR | 2020 | 4.000 | |||||||||||
| Eni SpA | 750 | 10 | 760 | EUR | 2019 | 3.750 | |||||||||||
| Eni Finance International SA | 551 | 12 | 563 | GBP | 2018 | 2021 | 4.750 | 6.125 | |||||||||
| Eni Finance International SA | 370 | 9 | 379 | EUR | 2017 | 2032 | 3.750 | 5.600 | |||||||||
| Eni Finance International SA | 361 | 2 | 363 | YEN | 2013 | 2037 | 1.150 | 2.810 | |||||||||
| Eni Finance International SA | 193 | 4 | 197 | USD | 2013 | 2015 | 4.450 | 4.800 | |||||||||
| Eni Finance International SA | 34 | 34 | USD | 2013 | variable | ||||||||||||
| Eni Finance International SA | 16 | 16 | EUR | 2015 | variable | ||||||||||||
| 12,275 | 304 | 12,579 | |||||||||||||||
| Other bonds | |||||||||||||||||
| Eni SpA | 1,109 | (2 | ) | 1,107 | EUR | 2017 | 4.875 | ||||||||||
| Eni SpA | 1,000 | 13 | 1,013 | EUR | 2015 | 4.000 | |||||||||||
| Eni SpA | 1,000 | 3 | 1,003 | EUR | 2015 | variable | |||||||||||
| Eni SpA | 341 | 2 | 343 | USD | 2020 | 4.150 | |||||||||||
| Eni SpA | 265 | 265 | USD | 2040 | 5.700 | ||||||||||||
| Eni SpA | 215 | (1 | ) | 214 | EUR | 2017 | variable | ||||||||||
| Eni USA Inc | 303 | (3 | ) | 300 | USD | 2027 | 7.300 | ||||||||||
| 4,233 | 12 | 4,245 | |||||||||||||||
| 16,508 | 316 | 16,824 |
As of December 31, 2012, ordinary bonds
maturing within 18 months (euro 3,051 million) were issued by Eni
SpA (euro 2,865), Eni Finance International SA (euro 186
million). During 2012, new bonds of euro 1,864 million were
issued by Eni SpA and Eni Finance International (euro 1,793
million and euro 71 million, respectively).
Convertible bonds of euro 990 million comprised unsecured bonds
exchangeable into ordinary Galp Energia SGPS SA shares for euro
1,028 million. The bonds have maturity of 3 years and pay a
coupon of 0.25 per cent per annum. Underlying the exchangeable
bonds are approximately 66.3 million ordinary shares of Galp,
corresponding to approximately 8% of the current outstanding
share capital of Galp. The bonds will be exchangeable into Galp
ordinary shares 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. The 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 (for more information see note 17 - Investments).
The following table provides a break-down by currency of long-term debt and its current portion and the related weighted average interest rates.
December 31, 2011 |
Average rate |
December 31, 2012 |
Average rate |
| Euro | 22,196 | 3.2 | 19,413 | 3.6 | ||||
| US dollar | 1,926 | 5.0 | 1,899 | 5.3 | ||||
| British pound | 551 | 5.3 | 564 | 5.3 | ||||
| Japanese yen | 462 | 2.0 | 363 | 2.1 | ||||
| Other currencies | 3 | 6.3 | 1 | 6.7 | ||||
| 25,138 | 22,240 |
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As of December 31, 2012,
Eni had undrawn long-term committed borrowing facilities of euro
6,928 million (euro 3,201 at December 31, 2011). 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 about euro 12.3 billion
were drawn as of December 31, 2012. 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.
Fair value of long-term debt, including the current portion of
long-term debt amounted to euro 24,937 million (euro 27,103
million at December 31, 2011):
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Ordinary bonds | 16,895 | 19,239 | ||
| Banks | 9,727 | 4,171 | ||
| Convertible bonds | 1,059 | |||
| Other financial institutions | 481 | 468 | ||
| 27,103 | 24,937 |
Fair value was calculated by discounting
the expected future cash flows at discount rates ranging from
0.4% to 3.3% (0.7% and 3.1% at December 31, 2011). The fair value
of convertible bonds was determined on the basis of the market
quotation.
At December 31, 2012, 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, 2011 |
|
December 31, 2012 |
|
Current |
Non-current |
Total |
Current |
Non-current |
Total |
|||||||
| A. | Cash and cash equivalents | 1,500 | 1,500 | 7,765 | 7,765 | ||||||||
| B. | Available-for-sale securities | 37 | 37 | 34 | 34 | ||||||||
| C. | Liquidity (A+B) | 1,537 | 1,537 | 7,799 | 7,799 | ||||||||
| D. | Financing receivables | 28 | 28 | 1,153 | 1,153 | ||||||||
| E. | Short-term debt towards banks | 786 | 786 | 253 | 253 | ||||||||
| F. | Long-term debt towards banks | 1,601 | 8,053 | 9,654 | 913 | 3,103 | 4,016 | ||||||
| G. | Bonds | 397 | 14,652 | 15,049 | 2,006 | 15,808 | 17,814 | ||||||
| H. | Short-term debt towards related parties | 503 | 503 | 403 | 403 | ||||||||
| I. | Other short-term debt | 3,170 | 3,170 | 1,567 | 1,567 | ||||||||
| L. | Other long-term debt | 38 | 397 | 435 | 42 | 368 | 410 | ||||||
| M. | Total borrowings (E+F+G+H+I+L) | 6,495 | 23,102 | 29,597 | 5,184 | 19,279 | 24,463 | ||||||
| N. | Net borrowings (M-C-D) | 4,930 | 23,102 | 28,032 | (3,768) | 19,279 | 15,511 |
The decrease in consolidated net
borrowings of euro 12,521 comprised the effects of the
deconsolidation of the finance debt held by Snam amounting to
euro 12,448 million, following Eni’s loss of control on the
investee. Snam arranged financing with third-party lenders in
order to reimburse intercompany loans.
Available-for-sale securities of euro 34 million (euro 37 million
at December 31, 2011) 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 270 million (euro 287 million at
December 31, 2011), of which euro 196 million (euro 220 million
at December 31, 2011) were held to hedge the loss reserve of Eni
Insurance Ltd. Those securities are excluded from the calculation
above.
Financing receivables of euro 1,153 million (euro 28 million at
December 31, 2011) were held for non-operating purposes and
comprised euro 883 million of Cassa Depositi e Prestiti of which
euro 879 relating to the residual amount of the total
consideration (euro 3,517 million) for the transaction covering
1,013.6 million ordinary shares of Snam and euro 4 million of
relevant accrued interests. The Company held at the reporting
date certain financing receivables which were destined for
operating purposes amounting to euro 668 million (euro 630
million at December 31, 2011), of which euro 351 million (euro
345 million at December 31, 2011) were in respect of financing
granted to unconsolidated entities which executed capital
projects and investments on behalf of Eni’s Group companies
and a euro 280 million cash deposit (euro 250 million at December
31, 2011) to hedge the loss reserve of Eni Insurance Ltd. Those
financing receivables are excluded from the calculation above.
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27 Provisions for contingencies
| (euro million) | Carrying amount at December 31, 2011 |
New or increased provisions |
Initial recognition and
changes |
Accretion discount |
Reversal of utilized provisions |
Reversal of unutilized provisions |
Currency translation differences |
Changes in the scope of consolidation |
Other changes |
Carrying amount at December 31, 2012 |
| Provision for site restoration, abandonment and social projects | 6,780 | 1,451 | 263 | (300 | ) | (4 | ) | (14 | ) | (378 | ) | (391 | ) | 7,407 | ||||||||||||||||
| Provision for environmental risks | 3,084 | 91 | 22 | (195 | ) | (24 | ) | (140 | ) | 90 | 2,928 | |||||||||||||||||||
| Provision for legal and other proceedings | 1,074 | 669 | (247 | ) | (173 | ) | (1 | ) | (72 | ) | (9 | ) | 1,241 | |||||||||||||||||
| Provision for taxes | 344 | 91 | (33 | ) | (5 | ) | (2 | ) | 395 | |||||||||||||||||||||
| Loss adjustments and actuarial provisions for Eni’s insurance companies | 343 | 136 | (142 | ) | 6 | 343 | ||||||||||||||||||||||||
| Provision for redundancy incentives | 163 | 24 | 22 | (5 | ) | (1 | ) | (1 | ) | 202 | ||||||||||||||||||||
| Provision for losses on investments | 172 | 30 | (18 | ) | (1 | ) | 11 | 194 | ||||||||||||||||||||||
| Provision for sale price revisions | 22 | 195 | (29 | ) | (3 | ) | (1 | ) | (6 | ) | 178 | |||||||||||||||||||
| Provision for OIL insurance cover | 98 | 10 | (1 | ) | (1 | ) | 106 | |||||||||||||||||||||||
| Provision for onerous contracts | 125 | 1 | (71 | ) | (1 | ) | 54 | |||||||||||||||||||||||
| Provision for long-term construction contracts | 60 | 27 | (33 | ) | (2 | ) | 52 | |||||||||||||||||||||||
| Provision for the supply of goods | 28 | 24 | (27 | ) | (1 | ) | 24 | |||||||||||||||||||||||
| Provision for coverage of unaccounted-for gas | 54 | (54 | ) | |||||||||||||||||||||||||||
| Other (*) | 388 | 256 | 1 | (117 | ) | (28 | ) | (1 | ) | (28 | ) | 8 | 479 | |||||||||||||||||
| 12,735 | 1,554 | 1,451 | 308 | (1,199 | ) | (255 | ) | (23 | ) | (673 | ) | (295 | ) | 13,603 |
(*) Each individual amount included herein was lower than euro 50 million.
Provisions for site restoration,
abandonment and social projects amounted to euro 7,407 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
7,026 million). Initial recognition and changes in estimates
amounted to euro 1,451 million and were primarily due to
estimates revisions of decommissioning costs in the Exploration
& Production segment for euro 1,381 million and costs
associated with certain social projects agreed with the
Basilicata Italian region as part of the oil development plans in
that region for euro 3 million. Changes in the scope of
consolidation of euro 378 million related to the deconsolidation
of Snam. Other changes of euro 391 million comprised the
reclassification to liabilities directly associated with assets
held for sale of provisions for decommissioning relating to
Exploration & Production assets (euro 361 million). An amount
of euro 263 million was recognized through profit and loss as
unwinding of discount of the year. The discount rates adopted
ranged from 0.7% to 9.4% (from 1.4% to 9.3% at December 31,
2011). 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 2,928
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 reliable cost estimation is available.
At December 31, 2012, provisions for environmental risks
primarily related to Syndial SpA (euro 2,423 million) and the
Refining & Marketing segment (euro 373 million). Additions of
euro 91 million primarily related to Syndial SpA (euro 41
million) and the Refining & Marketing segment (euro 38
million). Reversal of utilized provisions of euro 195 million
primarily related to Syndial SpA (euro 109 million) and the
Refining & Marketing segment (euro 67 million). Changes in
the scope of consolidation of euro 140 million related to the
deconsolidation of Snam. Other changes of euro 90 million
comprised the economic effects relating to discontinued
operations (euro 69 million).
Provisions for legal and other proceedings of euro 1,241 million
comprised the expected liabilities due to failure to perform
certain contractual obligations and estimated future losses on
pending litigation including legal, antitrust, administrative
matters and arbitration proceedings. These provisions represented
the Company’s best estimate of the expected probable
liabilities associated with pending litigation and primarily
related to the Gas & Power segment (euro 661 million) and
Syndial SpA (euro 294 million). Additions and reversal of
utilized provisions of euro 669 million and euro 247 million,
respectively, mainly related to the Gas & Power segment and
were recognized to take account of gas price revisions at both
purchase and sale contracts, also including the settlement of few
arbitrations. Reversals of unutilized provision of euro 173
million were primarily made by the Gas & Power segment due to
lower than anticipated charges for price revisions at certain
long-term gas purchase contracts. Changes in the scope of
consolidation of euro 72 million related to the deconsolidation
of Snam.
Provisions for taxes of euro 395 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 322 million) and the
Engineering & Construction segment (euro 44 million).
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Loss adjustments and actuarial
provisions of Eni’s insurance company Eni Insurance Ltd of
euro 343 million represented the expected liabilities accrued on
the basis for third parties claims. Against such liability was
recorded a receivable of euro 124 million recognized towards
insurance companies for reinsurance contracts.
Provisions for redundancy incentives of euro 202 million were
recognized due to a restructuring program involving the Italian
personnel for the period 2010-2011 in compliance with Law No.
223/1991 and further provisions provided for by Law No. 228/2012
which provided a scheme for early retirement.
Provisions for losses on investments of euro 194 million were
made with respect to certain investees for which expected or
incurred losses exceeded carrying amounts.
Provisions for the OIL mutual insurance scheme of euro 106
million included the estimated future increase of insurance
charges, as a result of accidents that occurred in past periods
that will be recognized to the mutual insures over the next 5
years by Eni.
Provisions for onerous contracts of euro 54 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.
Provisions for long-term construction contracts of euro 52
million related to the Engineering & Construction segment.
Provisions for the supply of goods in the amount of euro 24
million included the estimated costs of supply contract revisions
made by Eni SpA.
28 Provisions for employee benefits
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| TFR | 394 | 294 | ||
| Foreign pension plans | 334 | 400 | ||
| Supplementary medical reserve for Eni managers (FISDE) and other foreign medical plans | 104 | 99 | ||
| Other benefits | 207 | 189 | ||
| 1,039 | 982 |
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 to retired managers.
Liability to these plans (FISDE and other foreign healthcare
plans) and the current cost are limited to the contributions made
by the Company.
Other benefits primarily consisted of monetary and long-term
incentive schemes to Group managers both of which normally vest
over a three-year period upon fulfillment of certain performance
conditions. 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 upon the same period. 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. 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:
| Foreign pension plans | ||
| (euro million) | TFR |
|
Gross liability |
|
Plan assets |
|
FISDE |
|
Other benefits |
|
Total |
| 2011 | ||||||||||||||||||
| Present value of benefit liabilities and plan assets at beginning of year | 433 | 1,109 | (468 | ) | 120 | 206 | 1,400 | |||||||||||
| Current cost | 41 | 2 | 53 | 96 | ||||||||||||||
| Interest cost | 20 | 39 | 6 | 4 | 69 | |||||||||||||
| Amendments | 6 | 6 | ||||||||||||||||
| Weighted average expected return on plan assets | (17 | ) | (17 | ) | ||||||||||||||
| Employee contributions | (36 | ) | (36 | ) | ||||||||||||||
| Actuarial gains/losses | (13 | ) | (24 | ) | (7 | ) | 3 | (41 | ) | |||||||||
| Benefits paid | (50 | ) | (26 | ) | 15 | (12 | ) | (55 | ) | (128 | ) | |||||||
| Currency translation differences and other changes | 1 | (35 | ) | (57 | ) | (1 | ) | (1 | ) | (93 | ) | |||||||
| Present value of benefit liabilities and plan assets at end of year | 391 | 1,110 | (570 | ) | 118 | 207 | 1,256 | |||||||||||
| 2012 | ||||||||||||||||||
| Present value of benefit liabilities and plan assets at beginning of year | 391 | 1,110 | (570 | ) | 118 | 207 | 1,256 | |||||||||||
| Current cost | 43 | 1 | 53 | 97 | ||||||||||||||
| Interest cost | 15 | 41 | 5 | 5 | 66 | |||||||||||||
| Weighted average expected return on plan assets | (22 | ) | (22 | ) | ||||||||||||||
| Employee contributions | (27 | ) | (27 | ) | ||||||||||||||
| Actuarial gains/losses | 63 | 63 | (2 | ) | 22 | (2 | ) | 144 | ||||||||||
| Benefits paid | (34 | ) | (35 | ) | 20 | (7 | ) | (47 | ) | (103 | ) | |||||||
| Curtailments and settlements | (3 | ) | (3 | ) | ||||||||||||||
| Currency translation differences and other changes | (81 | ) | 74 | (18 | ) | (4 | ) | (27 | ) | (56 | ) | |||||||
| Present value of benefit liabilities and plan assets at end of year | 354 | 1,293 | (619 | ) | 135 | 189 | 1,352 |
Negative currency translation
differences and other changes for euro 56 million included the
deconsolidation of Snam for euro 113 million.
Other benefits of euro 189 million (euro 207 million at December
31, 2011) primarily concerned the deferred monetary incentive
plan for euro 107 million (euro 118 million at December 31,
2011), Jubilee awards for euro 56 million (euro 61 million at
December 31, 2011) and the long-term incentive plan for euro 11
million (euro 7 million at December 31, 2011).
The reconciliation analysis of benefit obligations and plan
assets was as follows:
| TFR | Foreign pension plans | FISDE and other foreign medical plans | Other benefits | |||||
| (euro million) | December 31, 2011 |
December 31, 2012 |
December 31, 2011 |
December 31, 2012 |
December 31, 2011 |
December 31, 2012 |
December 31, 2011 |
December 31, 2012 |
| Present value of benefit obligations with plan assets | 877 | 1,009 | |||||||||||||||||||
| Present value of plan assets | (570 | ) | (619 | ) | |||||||||||||||||
| Net present value of benefit obligations with plan assets | 307 | 390 | |||||||||||||||||||
| Present value of benefit obligations without plan assets | 391 | 354 | 233 | 284 | 118 | 135 | 207 | 189 | |||||||||||||
| Actuarial gains (losses) not recognized | 3 | (60 | ) | (139 | ) | (212 | ) | (11 | ) | (34 | ) | ||||||||||
| Past service cost not recognized | (67 | ) | (62 | ) | (3 | ) | (2 | ) | |||||||||||||
| Net liabilities recognized in provisions for employee benefits | 394 | 294 | 334 | 400 | 104 | 99 | 207 | 189 |
The net liability for foreign employee pension plans of euro 400 million (euro 334 million at December 31, 2011) included the liabilities related to joint ventures operating in exploration and production activities for euro 149 million and euro 182 million at December 31, 2011 and 2012, respectively. A receivable of an amount equivalent to such liability was recorded.
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Costs charged to the profit and loss account net of discounted operations were as follows:
| (euro million) | TFR |
Foreign pension plans |
FISDE and other foreign medical plans |
Other benefits |
Total |
| 2011 | |||||||||||||||
| Current cost | 41 | 2 | 48 | 91 | |||||||||||
| Interest cost | 16 | 39 | 6 | 4 | 65 | ||||||||||
| Expected return on plan assets | (17 | ) | (17 | ) | |||||||||||
| Amortization of actuarial gains/losses | 8 | (1 | ) | 7 | |||||||||||
| Effect of curtailments and settlements | 2 | 2 | |||||||||||||
| 16 | 73 | 8 | 51 | 148 | |||||||||||
| 2012 | |||||||||||||||
| Current cost | 43 | 1 | 53 | 97 | |||||||||||
| Interest cost | 15 | 41 | 5 | 5 | 66 | ||||||||||
| Expected return on plan assets | (22 | ) | (22 | ) | |||||||||||
| Amortization of actuarial gains/losses | 11 | 1 | (2 | ) | 10 | ||||||||||
| Effect of curtailments and settlements | (3 | ) | (3 | ) | |||||||||||
| 15 | 70 | 7 | 56 | 148 |
The main actuarial assumptions used in the evaluation of post-retirement benefit obligations at year end and in the estimate of costs expected for 2013 were as follows:
| (%) | TFR |
Foreign pension plans |
FISDE and other foreign medical plans |
Other benefits |
| 2011 | ||||||||
| Discount rate | 4.8 | 2.6-15.5 | 4.8 | 3.6-4.8 | ||||
| Expected return rate on plan assets | 3.2-12.3 | |||||||
| Rate of compensation increase | 3.0 | 2.0-12.3 | ||||||
| Rate of price inflation | 2.0 | 0.1-13.8 | 2.0 | 2.0 | ||||
| 2012 | ||||||||
| Discount rate | 3.0 | 1.9-15.5 | 3.0 | 1.2-3.0 | ||||
| Expected return rate on plan assets | 2.9-10.6 | |||||||
| Rate of compensation increase | 3.0 | 2.0-14.0 | ||||||
| Rate of price inflation | 2.0 | 0.5-13.8 | 2.0 | 2.0 |
Italian plans were based on mortality
tables prepared by Ragioneria Generale dello Stato (RG48), with
the exception of the medical plan FISDE for which were adopted
mortality tables prepared by Istat (Istat Proiettate e
Selezionate - IPS55). Expected return rates by plan assets have
been determined by reference to quoted prices expressed in
regulated markets.
Plan assets consisted of the following:
| (%) | Plan assets |
Expected return |
| Securities | 11.3 | 4.5-13.0 | ||
| Bonds | 56.4 | 1.5-11.0 | ||
| Real estate | 4.7 | 5.2-5.7 | ||
| Other | 27.6 | 0.5-10.0 | ||
| Total | 100.0 |
The actual return of the plan assets amounted to euro 24 million (the same amount as of December 31, 2011).
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With reference to healthcare plans, the effects deriving from a 1% change of the actuarial assumptions of medical costs were as follows:
| (euro million) | 1% increase |
1% decrease |
| Impact on current costs and interest costs | 1 | (1 | ) | ||
| Impact on net benefit obligation | 19 | (16 | ) |
The amount expected to be accrued to
employee benefit plans for 2013 amounted to euro 114 million, of
which euro 66 million referred to defined benefit plans.
The break-down of changes in the actuarial estimates of the net
liability with respect to prior year amounts due to the
difference between actual data at the end of the reporting period
and the corresponding prior year actuarial assumptions is
provided below:
| (euro million) | TFR |
Foreign pension plans |
FISDE and other foreign medical plans |
Other benefits |
| 2008 | ||||||||||||
| Impact on net benefit obligation | 7 | 15 | 3 | 1 | ||||||||
| Impact on plan assets | (62 | ) | ||||||||||
| 2009 | ||||||||||||
| Impact on net benefit obligation | (7 | ) | 4 | 3 | 2 | |||||||
| Impact on plan assets | (16 | ) | ||||||||||
| 2010 | ||||||||||||
| Impact on net benefit obligation | (1 | ) | (31 | ) | 1 | 4 | ||||||
| Impact on plan assets | 3 | |||||||||||
| 2011 | ||||||||||||
| Impact on net benefit obligation | 3 | (21 | ) | 2 | ||||||||
| Impact on plan assets | 10 | |||||||||||
| 2012 | ||||||||||||
| Impact on net benefit obligation | 3 | 16 | (3 | ) | (5 | ) | ||||||
| Impact on plan assets | (2 | ) |
The present value of liabilities for employee benefit plans and the fair value of plan assets consisted of the following:
| (euro million) | December 31, 2008 |
December 31, 2009 |
December 31, 2010 |
December 31, 2011 |
December 31, 2012 |
| Present value of liabilities | |||||||||||||||
| TFR | 443 | 447 | 433 | 391 | 354 | ||||||||||
| Foreign pension plans | 802 | 1,146 | 1,109 | 1,110 | 1,293 | ||||||||||
| FISDE and other foreign medical plans | 94 | 115 | 120 | 118 | 135 | ||||||||||
| Other benefits | 168 | 188 | 206 | 207 | 189 | ||||||||||
| 1,507 | 1,896 | 1,868 | 1,826 | 1,971 | |||||||||||
| Fair value of plan assets | |||||||||||||||
| Foreign pension plans | (453 | ) | (500 | ) | (468 | ) | (570 | ) | (619 | ) | |||||
| (453 | ) | (500 | ) | (468 | ) | (570 | ) | (619 | ) | ||||||
| Present value of net liabilities | |||||||||||||||
| TFR | 443 | 447 | 433 | 391 | 354 | ||||||||||
| Foreign pension plans | 349 | 646 | 641 | 540 | 674 | ||||||||||
| FISDE and other foreign medical plans | 94 | 115 | 120 | 118 | 135 | ||||||||||
| Other benefits | 168 | 188 | 206 | 207 | 189 | ||||||||||
| 1,054 | 1,396 | 1,400 | 1,256 | 1,352 |
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29 Deferred tax liabilities
Deferred tax liabilities were recognized net of the amounts of deferred tax assets which can be offset for euro 3,630 million (euro 4,045 million at December 31, 2011).
| (euro million) | Amount |
Additions |
Deductions |
Changes in the scope of consolidation |
Currency translation differences |
Other changes |
Amount |
| 7,120 | 1,656 | (1,105) | (1,270) | (67) | 406 | 6,740 |
Deferred tax assets and liabilities consisted of the following:
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Deferred tax liabilities | 11,165 | 10,370 | ||||
| Deferred tax assets available for offset | (4,045 | ) | (3,630 | ) | ||
| 7,120 | 6,740 | |||||
| Deferred tax assets not available for offset | (5,514 | ) | (4,913 | ) | ||
| 1,606 | 1,827 |
Net deferred tax liabilities of euro
6,740 million (euro 7,120 million at December 31, 2011) comprised
the recognition of the deferred tax effect against equity on the
fair value evaluation of derivatives designated as cash flow
hedge amounting to euro 9 million of deferred tax assets.
The most significant temporary differences giving rise to net
deferred tax liabilities are disclosed below:
| (euro million) | Carrying amount at December 31, 2011 |
Additions |
Deductions |
Currency translation differences |
Changes in the scope of consolidation |
Other changes |
Carrying amount at December 31, 2012 |
| Deferred tax liabilities | |||||||||||||||||||||
| - accelerated tax depreciation | 7,225 | 1,116 | (172 | ) | (58 | ) | (668 | ) | (37 | ) | 7,406 | ||||||||||
| - difference between the fair value and the carrying amount of assets acquired following business combinations | 1,306 | 84 | (191 | ) | (21 | ) | (17 | ) | 1,161 | ||||||||||||
| - site restoration and abandonment (tangible assets) | 444 | 178 | (29 | ) | 11 | (18 | ) | (49 | ) | 537 | |||||||||||
| - application of the weighted average cost method in evaluation of inventories | 213 | 7 | (68 | ) | (66 | ) | 3 | 89 | |||||||||||||
| - capitalized interest expense | 158 | (11 | ) | (120 | ) | (3 | ) | 24 | |||||||||||||
| - other | 1,819 | 271 | (634 | ) | 1 | (381 | ) | 77 | 1,153 | ||||||||||||
| 11,165 | 1,656 | (1,105 | ) | (67 | ) | (1,270 | ) | (9 | ) | 10,370 | |||||||||||
| Deferred tax assets, gross | |||||||||||||||||||||
| - site restoration and abandonment (provisions for contingencies) | (1,979 | ) | (320 | ) | 67 | 4 | 106 | (31 | ) | (2,153 | ) | ||||||||||
| - depreciation and amortization | (2,033 | ) | (336 | ) | 27 | 36 | 66 | 222 | (2,018 | ) | |||||||||||
| - accruals for impairment losses and provisions for contingencies | (1,796 | ) | (714 | ) | 538 | 102 | (14 | ) | (1,884 | ) | |||||||||||
| - unrealized intercompany profits | (777 | ) | (135 | ) | 178 | 4 | 33 | 4 | (693 | ) | |||||||||||
| - assets revaluation as per Laws No. 342/2000 and No. 448/2001 | (621 | ) | 617 | 3 | (1 | ) | |||||||||||||||
| - carry-forward tax losses | (600 | ) | (799 | ) | 273 | 10 | 11 | (2 | ) | (1,107 | ) | ||||||||||
| - other | (2,286 | ) | (520 | ) | 262 | 15 | 284 | (69 | ) | (2,314 | ) | ||||||||||
| (10,092 | ) | (2,824 | ) | 1,345 | 69 | 1,219 | 113 | (10,170 | ) | ||||||||||||
| Impairments of deferred tax assets | 533 | 1,182 | (19 | ) | (11 | ) | (11 | ) | (47 | ) | 1,627 | ||||||||||
| Deferred tax assets, net | (9,559 | ) | (1,642 | ) | 1,326 | 58 | 1,208 | 66 | (8,543 | ) | |||||||||||
| Net deferred tax liabilities | 1,606 | 14 | 221 | (9 | ) | (62 | ) | 57 | 1,827 |
Italian taxation law, modified by
Article 23 of Law Decree No. 98/2011, allows the carry-forward of
tax losses indefinitely. Foreign taxation laws generally allow
the carry-forward of tax losses over a period longer than the
five subsequent years, and in many cases, indefinitely. The tax
rate applied to determine the portion of carry-forwards tax
losses to be utilized equaled to an average rate of 25.2% for
Italian companies, by considering the different taxation for
energy companies and companies included in the consolidation
statement for fiscal purposes, and an average rate of 34.2% for
foreign companies.
Carry-forward tax losses amounted to euro 3,222 million and can
be used indefinitely for euro 3,171 million. Carry-forward tax
losses regarded Italian
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companies for euro 1,596 million and foreign companies euro 1,626 million. Carry-forward tax losses amounted to euro 2,739 million which are likely to be utilized against future taxable profit and were in respect of Italian companies for euro 1,503 million and foreign subsidiaries for euro 1,236 million. Deferred tax assets recognized on these losses amounted to euro 379 million and euro 423 million, respectively.
30 Other non-current liabilities
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Fair value of non-hedging derivatives | 591 | 271 | ||
| Fair value of cash flow hedging derivatives | 37 | 13 | ||
| Other payables due to tax authorities | 1 | |||
| Other payables | 70 | 57 | ||
| Other liabilities | 2,202 | 1,635 | ||
| 2,900 | 1,977 |
Derivative fair values were estimated on
the basis of market quotations provided by primary info-provider,
or in the absence of market information, appropriate valuation
techniques commonly used on the marketplace.
The fair value of non-hedging derivative contracts and is
presented below:
December 31, 2011 |
December 31, 2012 |
|||
| (euro million) | Fair value |
|
Purchase commitments |
|
Sale commitments |
|
Fair value |
|
Purchase commitments |
|
Sale commitments |
| Derivatives on exchange rate | ||||||||||||
| Currency swap | 1 | 3 | 42 | 2,055 | 420 | |||||||
| Other | 1 | 3 | ||||||||||
| 1 | 3 | 43 | 2,058 | 420 | ||||||||
| Derivatives on interest rate | ||||||||||||
| Interest rate swap | 255 | 50 | 4,136 | 65 | 530 | |||||||
| 255 | 50 | 4,136 | 65 | 530 | ||||||||
| Derivatives on commodities | ||||||||||||
| Over the counter | 310 | 3,760 | 416 | 89 | 405 | 952 | ||||||
| Future | 3 | 14 | 1 | 66 | 9 | |||||||
| Other | 22 | 126 | 13 | 33 | ||||||||
| 335 | 3,774 | 542 | 103 | 471 | 994 | |||||||
| Options embedded in convertible bonds | 60 | |||||||||||
| 591 | 3,824 | 4,681 | 271 | 2,529 | 1,944 |
Fair values of non-hedging derivatives
of euro 271 million (euro 591 million at December 31, 2011)
consisted of: (i) euro 198 million (euro 577 million at December
31, 2011) 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 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 60 million related to the call option
embedded in the bonds exchangeable into Galp Energia SGPS SA
ordinary shares (further information is disclosed in note 26 -
Long-term debt and current portion of long-term debt); (iii) euro
13 million (euro 14 million at December 31, 2011) related to
derivatives embedded in the pricing formulas of long-term gas
supply contracts in the Exploration & Production segment.
Fair value of cash flow hedge derivatives amounted to euro 13
million (euro 37 million at December 31, 2011) and pertained to
the Gas & Power segment. Those derivatives were designated to
hedge exchange rate and commodity risk exposures as described in
note 13 - Other current assets. Fair value of contracts expiring
beyond 2013 is disclosed in note 20 - Other non-current
receivables; fair value of contracts expiring by 2013 is
disclosed in note 25 - Other current liabilities and in note 13 -
Other current assets. The effects of fair value evaluation of
cash flow hedge derivatives are disclosed in note 32 -
Shareholders’ equity and in note 36 - Operating expenses.
The nominal value of these derivatives referred to purchase and
sale commitments for euro 24 million and euro 223 million,
respectively (euro 340 million and euro 310 million at December
31, 2011, respectively).
Information on the hedged risks and the hedging policies is shown
in note 34 - Guarantees, commitments and risks - Risk factors.
Other liabilities of euro 1,635 million (euro 2,202 million at
December 31, 2011) comprised advances received from Suez
following a long-term agreement for supplying natural gas and
electricity of euro 968 million (euro 1,061 million at December
31, 2011) and advances relating to amounts of gas of euro 380
million (euro 299 million at December 31, 2011) which were
off-taken below 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 off-taken beyond the twelve-month
time horizon.
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31 Discontinued operations, assets held for sale and liabilities directly associated with assets held for sale
Discontinued operations
Snam
On October 15, 2012, after the occurrence of conditions
precedent, including in particular, the Antitrust Authority
approval, Eni finalized the sale to Cassa Depositi e Prestiti SpA
("CDP") of a stake of 30% less one share in the voting
share capital of Snam and as part of the transaction lost control
over the investee. The transaction implemented the provisions of
Law No. 27/2012, pursuant to which Eni was mandated to divest its
controlling shareholding in Snam in accordance with the model of
ownership unbundling and required to fully divest its residual
interests in Snam with no time limits. The transaction involved
1,013,619,522 ordinary shares of Snam at a price of euro 3.47 a
share yielding a capital gain through profit of euro 2,019
million. Total consideration of the sale amounted to euro 3,517
million. The exclusion of Snam from consolidation reduced
financial debt by euro 12,448 million. Prior to the divestment,
Snam had already reimbursed intercompany loans via third-party
financing. Including the sale of a further 5% interest in Snam
made to institutional investors in July, after the transaction
with CDP, the residual interest of Eni in Snam is equal to 20.23%
at the balance sheet date. The remaining interest was classified
as an available-for-sale financial instrument and measured at
fair value also considering the sterilization of the voting
rights as provided for by the Decree of the President of the
Council of Ministers issued on 25 May 2012 (further information
is disclosed in note 17 - Investments).
Snam through its wholly-owned subsidiaries Snam Rete Gas SpA, GNL
Italia SpA, Stoccaggi Gas Italia SpA and Italgas SpA, operates
the natural gas transport activity by means of large backbones,
the distribution of gas to residential and commercial users and
small enterprises located in urban areas through low-pressures
networks, re-gasification services of LNG and storage services
through depleted fields designed to support strategic storage of
gas and modulation needs of selling companies considering the
seasonality in gas demand. As the Company considers those
activities to be a major line of business, management recorded
results of operations of Snam and its subsidiaries as
discontinued operations.
As provided for by International Financial Reporting Standards
(IFRS 5), the Snam Group was excluded from the scope of
consolidation of Eni from the date of loss of control. Therefore,
the economic amounts represented as discontinued operations
included intragroup eliminations. In particular: (i) in the
profit and loss account, results relating to discontinued
operations including the gain on disposal and the fair value
revaluation of the residual interest at the date of loss of
control, net of tax effects, are presented in a specific line
item before net profit of the year; (ii) in the statement of cash
flows, net cash provided by operating activities relating to
discontinued operations are separately indicated.
The amounts relating to discontinued operations comprised in the
profit and loss account and the statement of cash flows present
the relevant comparisons.
The main line items of profit and loss and cash flow statement of
the discontinued operations net of intragroup transactions are
provided below.
| (euro million) | 2010 |
2011 |
2012 |
| Revenues | 1,895 | 1,906 | 1,886 | ||||||||
| Operating expenses | 1,266 | 1,274 | 998 | ||||||||
| Operating profit | 629 | 632 | 888 | ||||||||
| Finance income (expense) | 22 | 17 | (51 | ) | |||||||
| Income (expense) from investments | 44 | 48 | 3,508 | ||||||||
| Profit before income taxes | 695 | 697 | 4,345 | ||||||||
| Income taxes | (576 | ) | (771 | ) | (613 | ) | |||||
| Net profit | 119 | (74 | ) | 3,732 | |||||||
| - attributable to Eni | 66 | (42 | ) | 3,590 | |||||||
| - attributable to non-controlling interest | 53 | (32 | ) | 142 | |||||||
| Earnings per share | (euro per share) | 0.02 | (0.01 | ) | 0.99 | ||||||
| Net cash provided by operating activities | 554 | 619 | 15 | ||||||||
| Net cash flow from investing activities | (1,411 | ) | (1,516 | ) | (1,004 | ) | |||||
| Net cash used in financing activities | (356 | ) | (356 | ) | 11,172 | ||||||
| Capital expenditures | 1,420 | 1,529 | 756 |
Income (expense) from investments of
euro 3,508 million comprised the gain on divestment to Cassa
Depositi e Prestiti for euro 2,019 million and the fair value
revaluation of the residual interest at the date of loss of
control for euro 1,451 million.
Income taxes of euro 613 million comprised the tax effect on the
gain on divestment to Cassa Depositi e Prestiti for euro 27
million and on the fair value revaluation of the residual
interest at the date of loss of control for euro 18 million.
Profits earned by Snam as discontinued operations do not
represent Snam as if it was a standalone entity, since the
profits on transactions with Eni Group are included in continuing
operations as provided for by the guidelines of IFRS 5. For
further information about the transaction see the Information
Statement published in application of the Consob Regulation No.
17221/2010 and later additions and modifications and Article 71
of the Consob regulation on issuers (available at the Eni website
eni.com).
Assets held for sale and liabilities
directly associated
As of December 31, 2012, non-current assets held for sale and
liabilities directly associated with non-current assets held for
sale of euro 516 million and euro 361 million pertained to
marginal assets in the Exploration & Production segment (euro
434 million and euro 361 million, respectively) and to Super
Octanos SA in the Refining & Marketing segment (euro 52
million).
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32 Shareholders’ equity
Non-controlling interest
| (euro million) | Net profit |
Shareholders’ equity |
||
2011 |
2012 |
December 31, 2011 |
December 31, 2012 |
| Saipem SpA | 552 | 627 | 2,802 | 3,232 | ||||||
| Snam SpA | 385 | 356 | 1,730 | |||||||
| Hindustan Oil Exploration Co Ltd | (6 | ) | (55 | ) | 123 | 65 | ||||
| Tigáz Zrt | (47 | ) | 74 | 33 | ||||||
| Others | 12 | 4 | 192 | 184 | ||||||
| 943 | 885 | 4,921 | 3,514 |
Eni shareholders’ equity
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Share capital | 4,005 | 4,005 | ||||
| Legal reserve | 959 | 959 | ||||
| Reserve for treasury shares | 6,753 | 6,201 | ||||
| Reserve related to the fair value of cash flow hedging derivatives net of the tax effect | 49 | (16 | ) | |||
| Reserve related to the fair value of available-for-sale securities net of the tax effect | (8 | ) | 144 | |||
| Other reserves | 1,421 | 292 | ||||
| Cumulative currency translation differences | 1,539 | 943 | ||||
| Treasury shares | (6,753 | ) | (201 | ) | ||
| Retained earnings | 42,531 | 41,040 | ||||
| Interim dividend | (1,884 | ) | (1,956 | ) | ||
| Net profit for the year | 6,860 | 7,788 | ||||
| 55,472 | 59,199 |
Share capital
At December 31, 2012 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
(4,005,358,876 ordinary shares at December 31, 2011, nominal
value euro 1 each).
On May 8, 2012, Eni’s Shareholders’ Meeting declared a
dividend distribution of euro 0.52 a share, with the exclusion of
treasury shares held at the ex-dividend date, in full settlement
of the 2011 dividend of euro 1.04 a share, of which euro 0.52 a
share paid as interim dividend. The balance was payable on May
24, 2012, to shareholders on the register on May 21, 2012.
On July 16, 2012, the Extraordinary and Ordinary
Shareholders’ Meeting resolved: (i) to eliminate the par
value of all the ordinary shares representing the share capital;
(ii) to cancel 371,173,546 treasury shares without par value
without changing the amount of the share capital and reducing the
"Reserve for the purchase of treasury shares" by euro
6,551 million, equal to the book value of the cancelled shares;
(iii) to authorize the Board of Directors to purchase, within 18
months from the date of the resolution, up to a 363,000,000
ordinary Eni shares on the Mercato Telematico Azionario for a
total amount up to euro 6,000 million; (iv) to attribute the
total amount of euro 6,000 million to a specific reserve destined
to the purchase of own shares, formed by using equal amounts from
available reserves.
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
(euro 6,753 million at December 31, 2011) included treasury
shares purchased. Changes in the amount of the reserve reflected
the resolution adopted by Eni Shareholders’ Meeting as
described under the item Share Capital.
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Reserve for available-for-sale
financial instruments and cash flow hedging derivatives net of
the related tax effect
The valuation at fair value of available-for-sale financial
instruments and cash flow hedging derivatives, net of the related
tax effect, consisted of the following:
| Available-for-sale financial instruments | Cash flow hedge derivatives | Total | ||||
| (euro million) | 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, 2010 | (3 | ) | (3 | ) | (275 | ) | 101 | (174 | ) | (278 | ) | 101 | (177 | ) | |||||||||||||
| Changes of the year 2011 | (6 | ) | 1 | (5 | ) | 76 | (7 | ) | 69 | 70 | (6 | ) | 64 | ||||||||||||||
| Amount recognized in the profit and loss account | 276 | (122 | ) | 154 | 276 | (122 | ) | 154 | |||||||||||||||||||
| Reserve as of December 31, 2011 | (9 | ) | 1 | (8 | ) | 77 | (28 | ) | 49 | 68 | (27 | ) | 41 | ||||||||||||||
| Changes of the year 2012 | 157 | (5 | ) | 152 | (24 | ) | 9 | (15 | ) | 133 | 4 | 137 | |||||||||||||||
| Amount recognized in the profit and loss account | (78 | ) | 28 | (50 | ) | (78 | ) | 28 | (50 | ) | |||||||||||||||||
| Reserve as of December 31, 2012 | 148 | (4 | ) | 144 | (25 | ) | 9 | (16 | ) | 123 | 5 | 128 |
Reserve for available-for-sale financial instruments of euro 144 million, net of the related tax effect, comprised the fair value valuation of the investments for euro 138 million (Galp Energia SGPS SA for euro 130 million and Snam SpA for euro 8 million) and other securities for euro 6 million.
Other reserves
Other reserves amounted to euro 292 million (euro 1,421
million at December 31, 2011) and related to:
- a reserve of euro 247 million represented an 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 Project
SpA, both merged into Saipem SpA, at a price higher than the book
value of the interest transferred thus decreasing for an equal
amount the non-controlling interest (the same amount as of
December 31, 2011);
- a reserve of euro 157 million deriving from Eni SpA’s
equity (the same amount as of December 31, 2011);
- a reserve of euro 18 million related to the sale of treasury
shares to Saipem managers upon exercise of stock options (euro 11
million at December 31, 2011);
- 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 45.86% in the
subsidiary Altergaz SA, now Eni Gas & Power France SA (a
negative reserve of euro 119 million at December 31, 2011);
- a negative reserve of euro 7 million related to the share of
"Other comprehensive income" on equity-accounted
entities (negative for euro 15 million at December 31, 2011);
- others for euro 1 million.
As a consequence of the deconsolidation of Snam, the reserves
recognized following the sale of Italgas SpA and Stoccaggi Gas
Italia SpA to Snam SpA and the sale of treasury shares following
the exercise of stock options by Snam managers were reclassified
to retained earnings (euro 1,140 million).
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 (382,654,833
at December 31, 2011) were held in treasury for a total cost of
euro 201 million (euro 6,753 million at December 31, 2011). The
decrease of 371,266,546 in treasury shares reflected the
resolution by Eni Shareholders’ Meeting to cancel
371,173,546 shares as described in the item Share Capital. In
addition 93,000 treasury shares were sold to eligible Eni
managers who exercised stock options under stock-base
compensation scheme granted in previous years. Outstanding
treasury shares, amounting to euro 161 million (euro 240 million
at December 31, 2011) and represented by 8,259,520 ordinary
shares (11,873,205 ordinary shares at December 31, 2011), were
available for the 200518 and 2007-200819
stock option plans.
| (18) The vesting period for the 2002, 2003 and 2004 assignments expired on July 31, 2010, July 31, 2011 and July 29, 2012, respectively. |
| (19) The vesting period for the 2006 assignment expired on July 27, 2012. |
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The number of shares underlying those plans decreased by 3,613,685 shares as described below:
| (number) | Stock option |
| Number of shares as of December 31, 2011 | 11,873,205 | ||
| Rights exercised | (93,000 | ) | |
| Rights cancelled | (3,520,685 | ) | |
| (3,613,685 | ) | ||
| Number of shares as of December 31, 2012 | 8,259,520 |
More information about stock option plans is disclosed in note 36 - Operating expenses.
Interim dividend
The interim dividend for the year 2012 amounted to euro 1,956
million corresponding to euro 0.54 per share, as resolved by the
Board of Directors on September 20, 2012, in accordance with
Article 2433-bis, paragraph 5 of the Italian Civil Code; the
dividend was paid on September 27, 2012.
Distributable reserves
At December 31, 2012, Eni shareholders’ equity included
distributable reserves of approximately euro 48,200 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) | 2011 |
2012 |
|
December 31, 2011 |
December 31, 2012 |
| As recorded in Eni SpA’s Financial Statements | 4,213 | 9,078 | 35,255 | 40,577 | ||||||||
| Excess of net equity in individual accounts of consolidated subsidiaries over their corresponding carrying amounts in the statutory accounts of the parent company | 3,972 | 258 | 24,355 | 21,663 | ||||||||
| Consolidation adjustments: | ||||||||||||
| - difference between purchase cost and underlying carrying amounts of net equity | (320 | ) | (2,683 | ) | 4,400 | 1,503 | ||||||
| - elimination of tax adjustments and compliance with Group account policies | (248 | ) | 1,222 | (673 | ) | 739 | ||||||
| - elimination of unrealized intercompany profits | 115 | 638 | (4,291 | ) | (2,652 | ) | ||||||
| - deferred taxation | 71 | 160 | 1,337 | 873 | ||||||||
| - other adjustments | 10 | 10 | ||||||||||
| 7,803 | 8,673 | 60,393 | 62,713 | |||||||||
| Non-controlling interest | (943 | ) | (885 | ) | (4,921 | ) | (3,514 | ) | ||||
| As recorded in Consolidated Financial Statements | 6,860 | 7,788 | 55,472 | 59,199 |
33 Other information
Main
acquisitions
Nuon Belgium NV and Nuon Power Generation Walloon NV
In January 2012, Eni finalized the purchase of a 100%
interest in Nuon Belgium NV (now merged in Eni Gas & Power
NV) that provide gas and electricity to the Belgian retail and
business market and of a 100% interest in Nuon Power Generation
Walloon NV (now Eni Power Generation NV) that owns lands and all
the rights and permits for the construction of an electric power
plant. The allocation of the cost to assets and liabilities of
euro 214 million was made on a definitive basis.
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The final allocation of the purchase costs is disclosed below:
| (euro million) | Nuon Belgium NV |
|
Carrying value |
|
Fair value |
| Current assets | 206 | 206 | ||
| Property, plant and equipment | 7 | 7 | ||
| Intangible assets | 5 | 49 | ||
| Goodwill | 5 | 98 | ||
| Other non-current assets | 25 | 25 | ||
| Assets acquired | 248 | 385 | ||
| Current liabilities | 150 | 150 | ||
| Net deferred tax liabilities | 15 | |||
| Provisions for contingencies | 4 | 4 | ||
| Other non-current liabilities | 2 | 2 | ||
| Liabilities acquired | 156 | 171 | ||
| Eni’s shareholders equity | 92 | 214 |
Net sales from operations and the net profit for the 2011 were as follows:
| (euro million) | Nuon Belgium NV |
|
2011 |
| Net sales from operations | 741 | |
| Net profit | 11 |
Supplemental cash flow information
| (euro million) |
|
2010 |
2011 |
2012 |
| Effect of investment of companies included in consolidation and businesses | |||||||||
| Current assets | 409 | 108 | |||||||
| Non-current assets | 316 | 122 | 171 | ||||||
| Net borrowings | 13 | 46 | |||||||
| Current and non-current liabilities | (457 | ) | (4 | ) | (99 | ) | |||
| Net effect of investments | 281 | 118 | 226 | ||||||
| Non-controlling interests | (7 | ) | (3 | ) | |||||
| Fair value of investments held before the acquisition of control | (76 | ) | |||||||
| Purchase price | 198 | 115 | 226 | ||||||
| less: | |||||||||
| Cash and cash equivalents | (55 | ) | (48 | ) | |||||
| Cash flow on investments | 143 | 115 | 178 | ||||||
| Effect of disposal of consolidated subsidiaries and businesses | |||||||||
| Current assets | 82 | 618 | 2,112 | ||||||
| Non-current assets | 855 | 136 | 18,740 | ||||||
| Net borrowings | (267 | ) | 257 | (12,443 | ) | ||||
| Current and non-current liabilities | (302 | ) | (662 | ) | (4,123 | ) | |||
| Net effect of disposals | 368 | 349 | 4,286 | ||||||
| Fair value of share capital held after the sale of control | (149 | ) | (943 | ) | |||||
| Gain on disposal | 309 | 727 | 2,021 | ||||||
| Non-controlling interest | (46 | ) | (5 | ) | (1,840 | ) | |||
| Selling price | 482 | 1,071 | 3,524 | ||||||
| less: | |||||||||
| Cash and cash equivalents | (267 | ) | (65 | ) | (3 | ) | |||
| Cash flow on disposals | 215 | 1,006 | 3,521 |
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34 Guarantees, commitments and risks
Guarantees
December 31, 2011 |
December 31, 2012 |
|||
(euro million) |
Unsecured guarantees |
Other |
Total |
Unsecured guarantees |
Other |
Total |
| Consolidated subsidiaries | 10,953 | 10,953 | 11,350 | 11,350 | ||||||||
| Unconsolidated entities controlled by Eni | 164 | 164 | 161 | 161 | ||||||||
| Joint ventures and associates | 6,159 | 1,135 | 7,294 | 6,208 | 892 | 7,100 | ||||||
| Others | 1 | 269 | 270 | 2 | 289 | 291 | ||||||
| 6,160 | 12,521 | 18,681 | 6,210 | 12,692 | 18,902 |
Other guarantees issued on behalf of
consolidated subsidiaries of euro 11,350 million (euro 10,953
million at December 31, 2011) primarily consisted of: (i)
guarantees given to third parties relating to bid bonds and
performance bonds for euro 7,511 million (euro 7,396 million at
December 31, 2011), of which euro 5,491 million related to the
Engineering & Construction segment (euro 5,065 million at
December 31, 2011); (ii) VAT recoverable from tax authorities for
euro 1,370 million (euro 1,097 million at December 31, 2011); and
(iii) insurance risk for euro 298 million reinsured by Eni (euro
319 million at December 31, 2011). At December 31, 2012, the
underlying commitment covered by such guarantees was euro 11,266
million (euro 10,577 million at December 31, 2011).
Other guarantees issued on behalf of unconsolidated subsidiaries
of euro 161 million (euro 164 million at December 31, 2011)
consisted of letters of patronage and other guarantees issued to
commissioning entities relating to bid bonds and performance
bonds for euro 154 million (euro 157 million at December 31,
2011). At December 31, 2012, the underlying commitment covered by
such guarantees was euro 34 million (euro 45 million at December
31, 2011).
Unsecured guarantees and other guarantees issued on behalf of
joint ventures and associates of euro 7,100 million (euro 7,294
million at December 31, 2011) primarily consisted of: (i) an
unsecured guarantee of euro 6,122 million (euro 6,074 million at
December 31, 2011) 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, letters of patronage and other guarantees
given to banks in relation to loans and lines of credit received
for euro 828 million (euro 1,051 million at December 31, 2011),
of which euro 657 million related to a contract released by Eni
SpA on behalf of Blue Stream Pipeline Co BV (Eni 50%) to a
consortium of international financial institutions (euro 669
million at December 31, 2011); and (iii) unsecured guarantees and
other guarantees given to commissioning entities relating to bid
bonds and performance bonds for euro 91 million (euro 108 million
at December 31, 2011). At December 31, 2012, the underlying
commitment covered by such guarantees was euro 456 million (euro
810 million at December 31, 2011).
Unsecured and other guarantees given on behalf of third parties
of euro 291 million (euro 270 million at December 31, 2011)
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 227 million). The expected commitment has been
valued at euro 159 million (euro 224 million at December 31,
2011); 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 (euro 33 million at December 31, 2011). At December 31, 2012
the underlying commitment covered by such guarantees was euro 278
million (euro 252 million at December 31, 2011).
Commitments and risks
| (euro million) | December 31, 2011 |
|
December 31, 2012 |
| Commitments | 15,992 | 16,247 | ||
| Risks | 2,165 | 431 | ||
| 18,157 | 16,678 |
Other commitments of euro 16,247 million (euro 15,992 million at December 31, 2011) 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 11,260 million (euro 9,710 million at December 31, 2011). The increase of euro 1,550 million related to the closing of a settlement agreement approving the development and future capital expenditures in the Karachaganak project; (ii) a commitment entered into by Eni USA Gas Marketing Llc on behalf of Angola LNG Supply Service for the acquisition of re-gasified gas at the Pascagoula plant (USA). The expected commitment has been estimated at euro 2,613 million (euro 3,267 million at December 31, 2011) 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 (2011-2031). The expected commitment has been estimated at euro 1,167 million (euro 1,252 million at December 31, 2011) 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 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 946 million (euro 1,274 million at December 31, 2011) and it has been included in the off-balance sheet contractual commitments in the following paragraph "Liquidity risk"; (v) a memorandum of intent signed with the Basilicata Region, whereby Eni has agreed to invest euro 139 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 142 million at December 31, 2011). The commitment has been included in the off-balance sheet contractual commitments in the following paragraph "Liquidity risk"; and
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(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. The expected
commitment has been estimated at euro 100 million (euro 108
million at December 31, 2011) and it has been included in the
off-balance sheet contractual commitments in the following
paragraph "Liquidity risk".
Risks of euro 431 million (euro 2,165 million at December 31,
2011) primarily concerned potential risks associated with: (i)
the value of assets of third parties under the custody of Eni for
euro 123 million (euro 1,867 million at December 31, 2011). The
decrease of euro 1,744 related for euro 1,714 million to the
deconsolidation of Snam; (ii) contractual assurances given to
acquirers of certain investments and businesses of Eni for euro
308 million (euro 298 million at December 31, 2011).
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 reference for evaluating 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
Foreword
The main risks that the Company
is facing and actively monitoring and managing are: (i) financial
risks mainly related to market risk deriving from exposure to
fluctuations in commodity prices, interest rates, foreign
currency exchange rates and the credit risk deriving from the
possible default of a counterparty as well as the liquidity risk
deriving from the risk that suitable sources of funding for the
Group’s operations may not be available; (ii) the Country
risk in the upstream business; (iii) risks arising from any
possible development in the regulatory framework; (iv)
operational risks (un particular risks deriving from exploration
and production activities and those relating to HSE issues); (v)
the strategic risks, mainly those related to the exposure to a
set of market variables which the Company has opted to retain
based on strategic considerations, trends in the competitive
environment, particularly in the natural gas market, and
cyclicality of the oil and gas sector.
In 2012, Eni issued the Management System Guidelines
"Integrated Risk Management" (IRM) aimed at providing
the principles for the integrated risk management as well as for
regulating each phase of the RMI process, individuating roles and
responsibilities of the main actors involved (for further
information see the "Risk Management" paragraph"
below).
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 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
Eni Trading business unit, with Eni Trading & Shipping
executing the negotiation of commodity derivatives. 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 does not enter into derivative
transactions on interest rates or exchange rates on a speculative
basis.
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Eni Annual Report / Notes to the Consolidated Financial Statements |
The optimization in managing the
commodity risk involves a whole set of transactions in commodity
derivatives with the aim of:
a) hedging certain underlying commodity prices set in contractual
arrangements with third parties. Hedging derivatives can be
entered also to hedge highly probable future transactions;
b) effectively managing the economic margin (positioning). It
consists in entering purchase/sale commodity contracts in both
commodity and financial markets aiming at altering the risk
profile associated to a portfolio of physical assets of each
business unit in order to improve margins associated to those
assets in case of favorable trends in the commodity pricing
environment;
c) arbitrage. It consists in entering purchase/sale commodity
contracts in both commodity and financial markets, targeting the
possibility to earn a profit (or reducing the logistical costs
associated to owned assets) leveraging on price differences in
the marketplace;
d) proprietary trading. It consists in entering purchase/sale
commodity contracts in both commodity and financial markets,
targeting to earn an uncertain profit based on expected trends in
the commodity pricing environment;
e) Asset Backed Trading (ABT). It consists in entering
proprietary trading activities in commodity and financial
markets, in order to maximize the economic value of the
flexibilities associated with Eni’s assets and contracts.
Price risks related to asset backed trading activities are
mitigated by the natural hedge granted by the assets’
availability. Such risk management activity can be implemented
through strategies of dynamic forward trading where the
underlying items are represented by the Company’s assets.
Furthermore, the Company may enter derivative contracts on
commodities as part of origination activities. Under this scheme,
the Company acting as the originator may combine a number of
derivative contracts in order to manage a given risk exposure of
a third party or a business unit, normally in the wholesale
market of commodities. Such trading activities may be naturally
hedged by the existing assets of the originator, or, in case of
absence of a suitable asset, they are managed by either trading
the associated price or volume risk exposure or hedging each
price or volume component of the base contract.
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.
With regard to commodity risk, Eni’s policies and guidelines
define rules to manage this 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 Group companies requests for negotiating commodity
derivatives, ensuring execution services to the Trading Business
Unit. The three 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
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Eni Annual Report / Notes to the Consolidated Financial Statements |
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. Eni manages
exposure to commodity price risk arising in normal trading and
commercial activities in view of achieving stable margins. In
order to accomplish this, 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. 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 recognized as hedges in
accordance with IAS 39. 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.
The following table shows amounts in terms of value at risk, recorded in 2012 (compared with 2011) relating to interest rate and exchange rate risks in the first section, and commodity risk in the second section. VaR values are stated in euro as stated in the revision of "Eni Guidelines on Management and Control of Financial Risks" approved by the Board of Directors on December 15, 2011.
(Interest and exchange rate risk - Value at risk - parametric method variance/covariance; holding period: 20 days; confidence level: 99%)
| 2011 | 2012 | |||
| (euro million) | High | Low | Average | At year end | High | Low | Average | At year end |
| Interest rate | 5.34 | 1.07 | 2.65 | 2.92 | 8.69 | 1.41 | 3.13 | 1.88 | ||||||||
| Exchange rate | 0.85 | 0.15 | 0.44 | 0.34 | 1.31 | 0.12 | 0.44 | 0.19 |
(Commodity risk - Value at risk - Historic simulation method; holding period: 1 day; confidence level: 95%)
| 2011 | 2012 |
|||
| (US $ million) (1) | High |
Low |
Average |
At year end |
High |
Low |
Average |
At year end |
| Area oil, products (2) | 44.28 | 9.05 | 25.60 | 9.05 | 35.70 | 5.66 | 18.02 | 10.88 | ||||||||
| Area Gas & Power (3) | 77.83 | 24.57 | 44.77 | 51.41 | 67.41 | 30.89 | 44.39 | 31.35 |
(1) From January 2012, the
value at risk is expressed in euro terms, following a review of
"Eni Guidelines on Management and Control of Financial
Risks" approved by the Board of Directors on December 15,
2011. The value at risk, previously, has been expressed in
dollars. 2011 values have been restated accordingly and converted
at the average exchange rate published by ECB for the period.
(2) Area oil, products refers to the Eni SpA Trading Department
(risk exposure from Refining & Marketing Division), Versalis
SpA and Eni Trading & Shipping SpA.
(3) The Gas & Power area refers to the to the Eni SpA Trading
Department (risk exposure from Gas & Power Division) and
Tigáz Zrt.
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, 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 central 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 counterpart on a daily basis. Exceptional
market conditions have forced the Group to adopt contingency
plans and under certain circumstances to suspend eligibility to
be a Group financial counterparty. Actions implemented also have
been intended to limit concentrations of credit risk by
maximizing counterparty diversification and turnover.
Liquidity risk
Liquidity risk is the risk that
suitable sources of funding for he 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
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Eni Annual Report / Notes to the Consolidated Financial Statements |
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. The Group capital structure is set according to the
Company’s industrial targets and within the limits
established by the Company’s Board of Directors who are
responsible for prescribing the maximum ratio of debt to total
equity and minimum ratio of medium and long-term debt to total
debt as well as fixed rate medium and long-term debt to total
medium and long-term debt. In spite of ongoing tough credit
market conditions resulting in higher spreads to borrowers, the
Company has succeeded in maintaining access to a wide range of
funding at competitive rates through the capital markets and
banks.
The actions implemented as part of 2012 Eni’s financial
planning have enabled the Group to maintain access to the credit
market particularly via the issue of commercial paper also
targeting to increase the flexibility of funding facilities. The
minimization of liquidity risks is a strategic driver of the next
4-year Financial Plan. In particular in 2012, Eni issued three
bonds addressed to institutional investors for a total amount of
euro 1.82 billion, all at fixed rate with maturity of
approximately 8 years. In November, as part of the divestment
process of its interest in Galp, Eni also issued a convertible
bond with underlying Galp shares equal to 8% of the share capital
of the investee for a total amount of euro 1.028 billion at fixed
rate with a maturity of three years.
Eni’s financial policies are designed to achieve the
following targets: (i) ensuring adequate funds to cover
short-term obligations and reimbursement of long-term debt due;
(ii) maintaining an adequate level of financial flexibility to
support Eni’s development plans; (iii) attaining a balance
between duration and composition of the finance debt; (iv)
maintaining a cash reserve following the great flow of liquidity
achieved from the divestment of 2012, particularly the
disposition of Snam. The cash reserve will be commeasured in
order to: (i) reduce the refinancing with maturity of one year,
allowing the Company to be financially independent also in case
of negative trends in the trading environment; (ii) increase the
level of liquidity to face possible extraordinary needs; (iii)
increase the flexibility of the Company’s financial
structure considering lingering uncertainties in the credit
markets, in a similar way as the policies adopted by the peer
group companies and with a view of improving the Company’s
financial rating assessment. Cash stock will be available only
for short-term operations, with a very low risk profile.
At present, the Group believes it has access to sufficient
funding and has also both committed and uncommitted borrowing
facilities to meet currently foreseeable borrowing requirements.
At December 31, 2012, Eni maintained short-term committed and
uncommitted unused borrowing facilities of euro 12,173 million,
of which euro 1,241 million were committed, and long-term
committed borrowing facilities of euro 6,928 million which were
completely drawn at the balance sheet date. These facilities bore
interest rates that reflected prevailing market conditions. Fees
charged for unused facilities were immaterial.
Eni has in place a program for the issuance of Euro Medium Term
Notes up to euro 15 billion, of which about euro 12.3 billion
were drawn as of December 31, 2012. 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 ratings are potentially exposed to risk of further
downgrading of the sovereign credit rating of Italy in addition
to a possible deterioration in the global macroeconomic outlook,
particularly the risks of a break-up of the euro-zone. On the
basis of the methodologies used by Standard & Poor’s and
Moody’s, a potential downgrade of Italy’s credit rating
may have 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 implement the necessary actions to
mitigate such risks, coherently with company strategies.
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 |
|
2012 |
|
2013 |
|
2014 |
|
2015 |
|
2016 |
|
2017 and thereafter |
|
Total |
| December 31, 2011 | ||||||||||||||
| Non-current financial liabilities | 1,635 | 3,010 | 5,076 | 2,936 | 2,840 | 9,378 | 24,875 | |||||||
| Current financial liabilities | 4,459 | 4,459 | ||||||||||||
| Fair value of derivative instruments | 1,789 | 303 | 74 | 87 | 52 | 112 | 2,417 | |||||||
| 7,883 | 3,313 | 5,150 | 3,023 | 2,892 | 9,490 | 31,751 | ||||||||
| Interest on finance debt | 832 | 761 | 664 | 553 | 485 | 1,595 | 4,890 | |||||||
| Guarantees to banks | 576 | 576 |
| (euro million) | Maturity year |
|
2013 |
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 and thereafter |
|
Total |
| December 31, 2012 | ||||||||||||||
| Non-current financial 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 |
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Trade and other payables
The tables below summarize the
Group trade and other payables by maturity.
| (euro million) | Maturity year |
|
2012 |
|
2013-2016 |
|
2017 and thereafter |
|
Total |
| December 31, 2011 | ||||||||
| Trade payables | 13,436 | 13,436 | ||||||
| Advances, other payables | 9,476 | 32 | 38 | 9,546 | ||||
| 22,912 | 32 | 38 | 22,982 |
| (euro million) | Maturity year |
|
2013 |
|
2014-2017 |
|
2018 and thereafter |
|
Total |
| December 31, 2012 | ||||||||
| Trade payables | 14,993 | 14,993 | ||||||
| Advances, other payables | 8,588 | 19 | 38 | 8,645 | ||||
| 23,581 | 19 | 38 | 23,638 |
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 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 |
|
2013 |
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 and thereafter |
|
Total |
| Operating lease obligations (a) | 722 | 515 | 323 | 250 | 201 | 560 | 2,571 | |||||||
| Decommissioning liabilities (b) | 174 | 198 | 85 | 259 | 555 | 13,777 | 15,048 | |||||||
| Environmental liabilities (c) | 362 | 375 | 260 | 160 | 69 | 551 | 1,777 | |||||||
| Purchase obligations (d) | 20,761 | 19,486 | 19,394 | 17,815 | 16,482 | 169,815 | 263,753 | |||||||
| - Gas | ||||||||||||||
| Take-or-pay contracts | 18,463 | 17,763 | 17,840 | 16,377 | 15,094 | 161,787 | 247,324 | |||||||
| Ship-or-pay contracts | 1,746 | 1,303 | 1,263 | 1,159 | 1,119 | 5,515 | 12,105 | |||||||
| - Other take-or-pay or ship-or-pay obligations | 171 | 170 | 163 | 156 | 146 | 909 | 1,715 | |||||||
| - Other purchase obligations (e) | 381 | 250 | 128 | 123 | 123 | 1,604 | 2,609 | |||||||
| Other obligations | 4 | 3 | 3 | 3 | 3 | 123 | 139 | |||||||
| - Memorandum of intent relating Val d’Agri | 4 | 3 | 3 | 3 | 3 | 123 | 139 | |||||||
| 22,023 | 20,577 | 20,065 | 18,487 | 17,310 | 184,826 | 283,288 |
(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 2,113 million).
Capital expenditure commitments
In the next four years Eni plans
to make capital expenditures of euro 56.8 billion. The table
below summarizes Eni’s capital expenditure commitments for
property, plant and equipment and capital projects. At December
31, 2012, 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.
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The amounts shown in the table below include euro 600 million of committed expenditures to execute certain environmental projects.
Maturity year |
||
| (euro million) | 2013 |
|
2014 |
|
2015 |
|
2016 |
|
2017 and thereafter |
|
Total |
| Committed on major projects | 6,718 | 7,680 | 6,897 | 3,991 | 11,839 | 37,125 | ||||||
| Other committed projects | 6,940 | 3,782 | 1,584 | 1,100 | 8,496 | 21,902 | ||||||
| 13,658 | 11,462 | 8,481 | 5,091 | 20,335 | 59,027 |
Other information about financial
instruments
The carrying amount of financial
instruments and relevant economic effect as of and for the years
ended December 31, 2011 and 2012 consisted of the following:
2011 |
2012 |
|||
Finance income
(expense) |
Finance
income (expense) |
||||
| (euro million) | Carrying amount |
Profit and loss account |
Other comprehensive income |
Carrying amount |
Profit and loss account |
Other comprehensive income |
| Held-for-trading financial instruments | ||||||||||||||||||
| Non-hedging and trading derivatives (a) | 17 | 76 | 186 | (408 | ) | |||||||||||||
| Held-to-maturity financial instruments | ||||||||||||||||||
| Securities (b) | 62 | 1 | 69 | 1 | ||||||||||||||
| Available-for-sale financial instruments | ||||||||||||||||||
| Securities (b) | 262 | 8 | (6 | ) | 235 | 8 | 16 | |||||||||||
| Investments valued at fair value | ||||||||||||||||||
| Other non-current investments (c) | 4,782 | 4,717 | 141 | |||||||||||||||
| Receivables and payables and other assets/liabilities valued at amortized cost | ||||||||||||||||||
| Trade receivables and other (d) | 24,730 | (65 | ) | 27,913 | (54 | ) | ||||||||||||
| Financing receivables (b) | 2,174 | 112 | 2,981 | 70 | ||||||||||||||
| Trade payables and other (e) | 22,982 | (123 | ) | 23,638 | 104 | |||||||||||||
| Financing payables (b) | 29,597 | (851 | ) | 24,463 | (831 | ) | ||||||||||||
| Net assets (liabilities) for hedging derivatives (f) | 32 | (309 | ) | 76 | (17 | ) | (290 | ) |
(a) In the profit and loss
account, economic effects were recognized as loss within
"Other operating income (loss)" for euro 157 million
(income for euro 188 million in 2011) and as expense within
"Finance income (expense)" for euro 251 million
(expense for euro 112 million in 2011).
(b) Income or expense were recognized in the profit and loss
account within "Finance income (expense)".
(c) Income was recognized in the profit and loss account within
"Income (expense) from investments" for euro 1,247
million 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 25 million (expense for euro 138 million
in 2011) (impairments net of reversal) and as expense for euro 31
million within "Finance income (expense)" (income for
euro 77 million in 2011) (positive 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 289
million (expense for euro 292 million in 2011) and within
"Other operating income (loss)" as expense for euro 1
million (expense for euro 17 million in 2011) (time value
component).
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, 2012, were classified as follows: (i) level
1, "Other financial assets available for sale",
"Non-hedging derivatives - Future" and "Other
investments" valued at fair value; and (ii) level 2,
derivative instruments different from "Future" included
in "Other current assets", "Other non-current
assets", "Other current liabilities" and
"Other non-current liabilities". During the 2012, no
transfers were done between the different hierarchy levels of
fair value.
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The table below summarizes the amount of financial instruments valued at fair value:
| (euro million) | Note |
December 31, 2011 |
December 31, 2012 |
| Current assets | ||||||
| Other financial assets available for sale | (8) | 262 | 235 | |||
| Non-hedging derivatives - Future | (13) | 68 | 26 | |||
| Other non-hedging and trading derivatives | (13) | 1,494 | 890 | |||
| Cash flow hedge derivatives | (13) | 157 | 31 | |||
| Non-current assets | ||||||
| Other investments valued at fair value | (17) | 4,782 | ||||
| Non-hedging derivatives - Future | (20) | 2 | 5 | |||
| Other non-hedging derivatives | (20) | 712 | 424 | |||
| Cash flow hedge derivatives | (20) | 33 | 2 | |||
| Current liabilities | ||||||
| Non-hedging derivatives - Future | (25) | 63 | 11 | |||
| Other non-hedging and trading derivatives | (25) | 1,605 | 877 | |||
| Cash flow hedge derivatives | (25) | 121 | 32 | |||
| Fair value hedge derivatives | (25) | 5 | ||||
| Non-current liabilities | ||||||
| Non-hedging derivatives - Future | (30) | 3 | 1 | |||
| Other non-hedging derivatives | (30) | 588 | 270 | |||
| Cash flow hedge derivatives | (30) | 37 | 13 |
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
| (i) | Investigation of the quality of groundwater in the area of the Refinery of Gela. A criminal proceeding is pending before the Public Prosecutor of Gela relating to an alleged breach of environmental rules concerning the pollution of water and soil and illegal disposal of liquid and solid waste materials within the activity of the Gela Refinery. Both a first degree Court at Gela and a second degree court dismissed the case because the statute of limitations expired. | |
| (ii) | Alleged negligent fire (Priolo). The Public Prosecutor of Siracusa commenced an investigation relating to certain Eni managers who were in charge of conducting operations at the Refinery of Priolo prior to divesting the refinery to Erg Raffinerie Mediterranee SpA on July 31, 2002. The investigation aimed at ascertaining whether Eni managers acted with negligence in connection with a fire that occurred at the Priolo plants on April 30 and May 1-2, 2006. Upon conclusion of the preliminary investigations the Public Prosecutor requested the mentioned managers would stand trial for negligent behavior. The Ministry for the Environment has been acting as plaintiff. The proceeding is pending. | |
| (iii) | Groundwater at the Priolo site - Prosecuting body: Public Prosecutor of Siracusa. The Public Prosecutor of Siracusa (Sicily) has started an investigation in order to ascertain the level of contamination of the groundwater at the Priolo site. The Company has been notified that a number of its executive officers in charge at the time of the events subject to probe, including chief executive officers and plant general managers of the Company’s subsidiaries AgipPetroli SpA (now merged into the parent company Eni SpA in the Refining & Marketing Division), Syndial and Polimeri Europa (now Versalis SpA), are being investigated. According to the technical surveys the ground and the groundwater at the Priolo site should be considered polluted according to Legislative Decree No. 152/2006. This contamination was caused by a spill-over made in the period prior to 2001 and not subsequent to 2005; the equipment still operating on the site represent another source of risk, in particular the ones owned by ISAB Srl (ERG). According to the findings, the Public Prosecutor requested the dismissal of the proceeding. The decision of the Judge on the dismissal of the proceeding is still pending. | |
| (iv) | 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 |
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| 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 indictments are groundless. On July 3, 2012, the Public Prosecutor filed an appeal against this decision. | ||
| (v) | 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 cleanup 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 cleanup 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. A technical assessment of the circumstances is pending. |
| (vi) | 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. The proceeding is pending. |
| (vii) | 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 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. Thus the proceeding was returned before the Public Prosecutor. The proceeding is pending. | |
| (viii) | 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. | |
| (ix) | 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. | |
| (x) | 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. |
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1.2 Civil and administrative proceeding
| Syndial SpA (former EniChem SpA) |
| (i) | 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. This first degree proceeding was generated in January 2008, by the unification of two different actions, the first brought by Calabria Region in October 2004, the second one by the Council of Ministers, the Ministry for the Environment and the Delegated Commissioner for Environmental Emergency in the Calabria Region commenced in February 2006. The environmental claims and clean-up costs 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 element 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 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. Eni accrued an environmental risk provision that is progressively utilized for the clean-up activities. |
| (ii) | 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 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 (former EniChem) 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 liability charged to Eni and its subsidiary with respect to the volume of pollutants ascertained by the Italian Environmental Minister. 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 a technical appraisal of the matter which is due to be filed no later than November 15, 2013. Furthermore an administrative proceeding is ongoing regarding certain environmental works to clean-up and make safe the Pieve Vergonte site. Syndial filed an appeal against certain prescriptions of the Ministry of the Environment relating to the modes of executing the clean-up of soil and groundwater and extension of the scope of work to other nearby areas. The Administrative Court of the Piemonte Region rejected part of the Syndial appeal. A Syndial filed a counterclaim before a higher degree administrative court. | |
| (iii) | 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 form 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. | |
| (iv) | 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 sentenced in favor of the recourses filed by 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 |
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| 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. | ||
| (v) | 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 child 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 probatory evidences 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. | |
| (vi) | 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 to obtain a sentence condemning the Eni 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 sentenced the resumption of the proceeding and established a technical appraisal to verify the existence of the environmental damage. |
| (vii) | 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 sentence was filed on March 1, 2012. The commissioners filed a counterclaim against the first degree sentence. | |
| (viii) | 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. |
2. Other judicial or arbitration proceedings
| (i) | 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 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 awarded the consortium an amount of 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 February 2013, the Court of Rome rejected a recourse filed by RFI against the establishment of the relevant arbitration committees in charge of defining the new claims made by the consortium. |
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| (ii) | 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 proceeding to end the review of the issued by end of 2013 with a final arbitration as early as in 2014. |
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 Polimeri Europa (actually Versalis) 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. 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. The Court of Milan declared the appeal inadmissible. Eni appealed against the Court’s sentence. This appeal is still pending. 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. 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. | |
| (ii) | Inquiry in relation to gas transportation. In March 2012, the Italian Antitrust Authority started an inquiry targeting 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. On June 1, 2012, Eni filed a proposal of commitments pursuant to Article 14-ter of Law 287/1990, aiming at settling the proceeding without the ascertainment of any illicit behavior. On September 6, 2012, the Authority accepted Eni proposal and stated that the commitments were binding. | |
| (iii) | Consob
investigation - Saipem SpA. Following the issue by
Saipem SpA of its press release of January 29, 2013, in
which it revised its 2012 earnings guidance and its
outlook for 2013, Saipem received a communication from
Consob dated January 31, 2013 asking it to describe the
process of evaluation and the considerations that led to
the decision to issue the press release in question, to
describe the information and data used to arrive at the
revision of its guidance for 2012 profits and 2013
revenues and profits and of its forecasts for 2014, and
to provide a list of persons included in the register
maintained pursuant to Article 115-bis of the
Consolidated Finance Act who had access to the data and
information referred to in the press release.
Subsequently, in a letter dated February 1, 2013, Consob
announced the commencement of an inspection of Saipem
pursuant to Article 187-octies, paragraph 3 of
Legislative Decree No. 58 of February 24, 1998 with the
purpose of gathering documents and information regarding
the preparation of the press release, the management of
privileged information, and compliance with legislation
concerning transactions by relevant parties.
Subsequently, Consob requested additional information
from Saipem in communications of February 8 and 25, 2013,
including information concerning the variations between
the last business plan approved prior to January 29, 2013
and the new 2013-2016 business plan. Saipem promptly responded to the above communications supplying the documentation and information requested. |
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 |
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| 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 condemned 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 or 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 on December 19, 2011. The condemned parties filed an appeal against the above mentioned decision. | ||
| (ii) | Trading. An investigation is pending regarding two former Eni managers who were allegedly bribed by third parties in connection with entering into certain transactions with two oil product trading companies. Within such investigation, on March 10, 2005, the Public Prosecutor of Rome notified Eni of two judicial measures for the seizure of documentation concerning Eni’s transactions with the said companies. Eni is acting as plaintiff in this proceeding. The Judge for the Preliminary Hearings rejected most of the dismissal requests issued by the Public Prosecutor. Basing on the decision of the Judge for the Preliminary Hearings, the Public Prosecutor of Rome notified Eni, as injured part, the summon against two former managers of the company charged of aggravated fraud related to the relevant patrimonial damage caused to the injured part through the abuse of working relations and activities. The First Judge dismissed the accusation for all the other defendants as a result of the statute of limitations. | |
| (iii) | 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 proceeding is still
pending before Italian judicial Authorities. 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 a 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: beginning in 2004, the TSKJ matter has prompted investigations by the Public Prosecutor’s office of Milan against unknown persons. Since March 10, 2009, the Company has received requests of exhibition of documents from the Public Prosecutor’s office of Milan. The events under investigation cover the period since 1994 and also concern the period of time subsequent to the June 8, 2001, enactment of Italian Legislative Decree No. 231 concerning the liability of legal entities. On August 12, 2009, a decree issued by the Judge for the Preliminary Investigations at the Court of Milan was served on Eni (and on July 31, 2009 on Saipem SpA, as legal entity incorporating Snamprogetti SpA). The decree set a hearing in Court in relation to a proceeding ex Legislative Decree No. 231 of June 8, 2001 whereby the Public Prosecutor of Milan is investigating Eni SpA and Saipem SpA for liability of legal entities arising from offences involving international corruption charged to former 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. The events referred to the request of precautionary measures of the Public Prosecutor of Milan cover TSKJ Consortium practices during the period from 1995 to 2004. In this regard, 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. On November 17, 2009, the Judge for the Preliminary Investigations rejected the request of precautionary measures of disqualification filed by the Public Prosecutor of Milan against Eni and Saipem. The Public Prosecutor |
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| of Milan appealed the abovementioned decision before the Third Instance Court. The Court decided that the request of precautionary measures be admissible according to Legislative Decree No. 231/2001 even in the case of international corruption. The issue would be subsequently examined by the Re-examination Court of Milan. On February 18, 2011, 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 issued by the Judge for the Preliminary Hearings. In the hearing of February 22, 2011, the Appeal Court, taking note of the abovementioned renounce, declared inadmissible the appeal of the Public Prosecutor of Milan and closed the proceeding related to the request of precautionary measures of disqualification for Eni SpA and Saipem SpA. On November 3, 2010, the defense of Saipem was notified the conclusion of the investigations relating to the proceeding pending before the Court of Milan trough a deed by which the Court evidenced the alleged violations made by the five former Snamprogetti SpA (now Saipem SpA) and Saipem SpA being the parent company of Snamprogetti. The deed does not involve the Eni Group parent company Eni SpA. The charged crimes involve 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). On December 3, 2010, the defense of Saipem was notified the opening of a proceeding with the first hearing scheduled for December 20, 2010. In the hearing of January 26, 2011, 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 hearing scheduled for April 2011. In the hearing of February 2, 2012, although the term for the occurrence of the statute of limitations for the individuals who are acting as plaintiffs was expired, the Public Prosecutor raised an issue of constitutional legitimacy for the incompatibility between the internal and international legislation on the statute of limitation, in particular the OECD convention on the fight against the international corruption. 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 continues for Saipem SpA. In the hearing of July 12, 2012, the Judge reviewed the technical consultants of the defendant and the appraiser reports were filed. After a number of postponements at the final hearing held on February 5, 2013, Saipem defense raised an issue of constitutional legitimacy in relation to certain provisions of Legislative Decree No. 231/2001 relating to the alleged crimes under investigation. In the subsequent hearing of March 26, 2013, the Court of Milan rejected the issues of constitutional legitimacy raised by the Company as they were considered groundless. In the same hearing the Public Prosecutor required Saipem SpA to pay a fine amounting to euro 900,000 and the disgorgement of the guarantee payment of euro 24,530,580, made by Snamprogetti Netherlands BV to the Public Prosecutor of Milan in February 2011. The hearing was postponed to May 21, 2013 when the Company will present its defensive memorandum. It is worth mentioning that the Board of Directors of Eni and Saipem in 2009 and 2010, respectively approved new guidelines and anti-corruption policies regulating Eni and Saipem management of the business. The guidelines integrated anti-corruption policies of the Company, aligning them to the international best practices, optimizing the compliance system and granting the highest respect of Eni, Saipem and their workers of the Code of Ethics, 231 Model and national and international anti-corruption policies. | ||
| (iv) | Gas
metering. In May 2007, a seizure order (in respect to
certain documentation) was served upon Eni and other
Group companies as part of a proceeding brought by the
Public Prosecutor at the Court of Milan. The order was
also served upon five top managers of the Group companies
in addition to third party companies and their top
managers. The investigation alleges behavior which
breaches Italian Criminal Law, starting from 2003,
regarding the use of instruments for measuring gas, the
related 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. In
relation to this proceeding, the Public Prosecutor of
Milan requested the dismissal for certain people
indicted, including a top manager as the Prosecutor did
not find sufficient elements to support the indictment in
a possible trial. The request was preceded by a request
of dismissal from the principal proceeding of the
dismissed people. On January 24, 2012, the Judge for the
Preliminary Hearing disposed the dismissal of these
people. Croatian gas metering: this was a new proceeding part of the principal proceeding described above. On November 26, 2009, a notice of conclusion of the preliminary investigation was served to Eni’s Group companies whereby 12 Eni employees, also including former employees, are under investigation. The exceptions filed in the notice include: (i) violations pertaining to recognition and payment of the excise on natural gas amounting to euro 20.2 billion; (ii) violations or failure in submitting the annual statement of gas consumption and/or in the annual declarations to be filed with the Duty Authority or the Authority for Electricity and Gas; and (iii) a related obstacle which has been allegedly posed to the monitoring functions performed by the Authority for Electricity and Gas. In the subsequent hearing of January 24, 2012, the Judge resolved to dismiss the proceeding against all defendants. The Public Prosecutor filed an appeal against this decision before the Third Instance Court. The appeal did not refer to all the defendants but only to some of them. On February 11, 2013, the Court rejected the appeal referred to Eni and its subsidiaries positions in particular (i) declaring its inadmissibility in relation to one of the defendants and (ii) dismissing it for all the other alleged crimes. The decision filed by the Judge for Preliminary Hearing is therefore irrevocable. Gas metering excise: on December 20, 2010, as a result of a further dismissal of judicial position from the main proceeding, the Public Prosecutor of Milan notified to nine employees and former employees of Eni (in particular belonging to the Gas & Power Division) the conclusion of the investigation related to the crime under the provisions of Article 40 (violations pertaining to recognition and payment of the excise on mineral oils) of Legislative Decree No. 504 of October 26, 1995. The deed also disputed certain violations pertaining to subtraction of taxable amounts and missed payments of excise taxes on natural gas amounting to euro 0.47 billion and euro 1.3 billion, respectively. The Duty Authority of Milan, responsible for the collection of dodged taxes, considering the documentation filed by Eni, |
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| reduced the amount initially claimed by the Public Prosecutor to euro 114 million of dodged taxes. The Duty Authority also stated that it would reassess that amount considering further evidence arising from the criminal proceeding. The Judge resolved to dismiss the proceeding against all defendants because the fact did not constitute an offence. The Public Prosecutor filed an appeal against this decision before the Third Instance Court. | ||
| (v) | Algeria - Corruption investigation. Authorities in Italy and in other Countries are investigating allegations of corrupt payments that would have occurred in Algeria 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 notification was then forwarded to Eni’s subsidiary Saipem SpA since this matter is primarily in its area of responsibility. 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). 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. 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 E&P Division participates), 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 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. 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 231/2001 with respect to Eni, Eni’s CEO, Eni’s former CFO, and another senior manager. 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 and the former COO of the business unit Engineering & Construction of Saipem, as well as other Saipem employees and former employees are under investigation. Saipem has promptly undertaken management and administrative changes, irrespective of any liability that might result from the investigations. 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, Saipem has commenced a review aiming 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 is cooperating with the Italian judicial Authority. The evaluation is ongoing. Eni has commenced its own evaluation which is ongoing. The above mentioned proceeding has been unitized in Italy with another proceeding relating to certain Eni’s activities performed in Iraq and Kazakhstan (see below). Investigations are also ongoing in Algeria where the bank accounts of a Saipem’s subsidiary, Saipem Contracting Algérie, have been blocked by the Algerian Authorities. Currently two bank accounts with a balance equivalent to euro 79 million are blocked as of January 25, 2013. In September 2012, a notice of investigation was served to Saipem Contracting Algérie SpA. Saipem Contracting Algérie SpA 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. On January 30, 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 has lodged an appeal against this decision before the Supreme Court. On March 24, 2013, relevant authorities executed searches on Saipem Contracting Algérie headquarters. | |
| (vi) | 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. The subpoena is related 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. At the end of December 2011, Eni received a request for the collection of further documentation aiming at integrating the subpoena previously received. Documentation and information requested have been collected by the relevant company functions and then forwarded to the US SEC. Following a number of contacts with the US SEC, in a meeting on October 16, 2012, Eni legal team provided additional documentations and clarifications. | |
| (vii) | 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 |
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| 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 associated Eni Zubair, Eni and Saipem with the accusations as a result of the alleged illicit actions of their employees. 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 hearing of May 29, 2012, Eni legal team have filed a defensive memorandum; on August 1, 2012, the Public Prosecutor filed further documentation supporting the request of precautionary measures. After the hearing of November 14, 2012, the decision of the Judge for Preliminary Investigation is still pending. |
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 to have 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 Judge on the matters of the
proceeding. This commission requested an independent
consultant to assessing 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 to
Eni an appeal to the Supreme Degree Court for the
cancellation of the above mentioned sentence. 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
claim against this claim 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 130 million USD 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. |
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6. Settled proceedings
| (i) | Summon before the Court of Venice for environmental damages allegedly caused to the lagoon of Venice by the Porto Marghera plants. The proceeding was settled due to the transaction agreement incurred between Syndial and the Province of Venice. The amount paid for the settlement of the proceeding is immaterial. | |
| (ii) | Syndial SpA (former EniChem SpA). Alleged pollution caused by the activity of the Mantova plant. Following the transaction agreement incurred in July 2012, between The Ministry for the Environment and Syndial for the repayment of the environmental damage related to the contamination caused by the water discharges of the Mantova plant, the proceeding could be considered virtually settled. The amount paid for the settlement of the proceeding is immaterial. |
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 operation risks and costs
related to the exploration and development activities and it is
entitled to the productions realized. In Production Sharing
Agreement and in buy-back 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 Gruppo Snam 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
Legislative Decree No. 216 of April 4, 2006, implemented the
Emission Trading Directive 2003/87/EC concerning greenhouse gas
emissions and Directive 2004/101/EC concerning the use of carbon
credits deriving from projects for the reduction of emissions
based on the flexible mechanisms devised by the Kyoto Protocol.
This European emission trading scheme has been in force since
January 1, 2005, and on this matter, on November 27, 2008, the
National Committee for Emissions Trading Scheme (Ministry for the
Environment-Mse) published the Resolution 20/2008 defining
emission permits for the 2008-2012 period. Eni was assigned
permits corresponding to 122.9 million tonnes of carbon dioxide
(of which, 24.9 in 2008, 24.9 in 2009, 24.6 in 2010, 24.4 in
2011, 24.1 in 2012) and in addition to approximately 3.3 million
of permits expected to be assigned with respect to new plants in
the five-year period 2008-2012. Emission quotas of new plants
include only those physically assigned and recorded in the
emissions registry. Emissions of carbon dioxide from Eni’s
plants were lower than permits assigned in 2012. Against
emissions of carbon dioxide amounted to approximately 22.1
million tonnes, emission permits amounting to 25.0 million tonnes
were assigned (including the permits assigned with respect to new
plants), determining a 2.9 million tonnes surplus not recognized
as asset in the balance sheet.
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35 Revenues
Net sales from operations
| (euro million) | 2010 |
2011 |
2012 |
| Net sales from operations | 96,958 | 107,248 | 126,482 | ||||
| Change in contract work in progress | (341 | ) | 442 | 738 | |||
| 96,617 | 107,690 | 127,220 |
Net sales from operations were stated net of the following items:
| (euro million) | 2010 |
2011 |
2012 |
| Excise taxes | 11,785 | 11,863 | 13,308 | |||
| Exchanges of oil sales (excluding excise taxes) | 1,868 | 2,470 | 2,177 | |||
| Services billed to joint venture partners | 2,996 | 3,375 | 4,422 | |||
| Sales to service station managers for sales billed to holders of credit cards | 2,150 | 1,810 | 2,010 | |||
| Exchanges of other products | 79 | 9 | ||||
| 18,878 | 19,527 | 21,917 |
Net sales from operations of euro
126,482 million included revenues recognized in connection with
contract works in the Engineering & Construction segment for
euro 10,914 million (euro 8,779 million and euro 10,510 million
in 2010 and 2011, respectively).
Net sales from operations by industry segment and geographic area
of destination are disclosed in note 41 - Information by industry
segment and geographic financial information.
Net sales from operations with related parties are disclosed in
note 42 - Transactions with related parties.
Other income and revenues
| (euro million) | 2010 |
2011 |
2012 |
| Gains from sale of assets | 262 | 97 | 701 | |||
| Lease and rental income | 83 | 96 | 94 | |||
| Contract penalties and other trade revenues | 43 | 21 | 69 | |||
| Gains on price adjustments under overlifting/underlifting transactions | 50 | 99 | 67 | |||
| Compensation for damages | 46 | 66 | 56 | |||
| Other proceeds (*) | 483 | 547 | 559 | |||
| 967 | 926 | 1,546 |
(*) Each individual amount included herein was lower than euro 50 million.
Gains from the sale of assets of euro
701 million included euro 678 million of gains relating to the
Exploration & Production segment.
Other income and revenues with related parties are disclosed in
note 42 - Transactions with related parties.
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36 Operating expenses
Purchase, services and other
| (euro million) | 2010 |
2011 |
2012 |
| Production costs - raw, ancillary and consumable materials and goods | 48,407 | 60,826 | 74,767 | ||||||
| Production costs - services | 14,939 | 13,551 | 15,354 | ||||||
| Operating leases and other | 2,997 | 3,045 | 3,434 | ||||||
| Net provisions for contingencies | 1,401 | 527 | 871 | ||||||
| Other expenses | 1,252 | 1,140 | 1,342 | ||||||
| 68,996 | 79,089 | 95,768 | |||||||
| less: | |||||||||
| - capitalized direct costs associated with self-constructed assets - tangible assets | (159 | ) | (226 | ) | (326 | ) | |||
| - capitalized direct costs associated with self-constructed assets - intangible assets | (63 | ) | (68 | ) | (79 | ) | |||
| 68,774 | 78,795 | 95,363 |
Services included brokerage fees related
to the Engineering & Construction segment for euro 6 million
(euro 26 million and euro 12 million in 2010 and 2011,
respectively).
Costs incurred in connection with research and development
activity recognized in profit and loss amounted to euro 211
million (euro 218 million and euro 190 million in 2010 and 2011,
respectively) as they did not meet the requirements to be
recognized as long-lived assets.
Operating leases and other comprised operating leases for euro
1,432 million (euro 1,388 million and euro 1,295 million in 2010
and 2011, respectively) and royalties on the extraction of
hydrocarbons for euro 1,555 million (euro 1,214 million and euro
1,295 million in 2010 and 2011, respectively).
Other expenses of euro 1,342 million included losses on disposal
of tangible and intangible assets for euro 158 million.
Future minimum lease payments expected to be paid under
non-cancelable operating leases are provided below:
| (euro million) | 2010 |
2011 |
2012 |
| To be paid within 1 year | 1,022 | 838 | 722 | |||
| Between 2 and 5 years | 2,276 | 1,380 | 1,289 | |||
| Beyond 5 years | 751 | 254 | 560 | |||
| 4,049 | 2,472 | 2,571 |
Operating leases primarily regarded
drilling rigs, 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 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 871 million (euro 1,401 million and euro 527 million in 2010
and 2011, respectively) and mainly related to price revisions at
certain gas purchase and sale long-term contracts also subjected
to arbitration procedures of euro 496 million (net reversals of
euro 182 million in 2010 and net provisions of euro 144 million
in 2011) and environmental liabilities amounting to euro 67
million (net provisions of euro 1,344 million and euro 174
million in 2010 and 2011, respectively). More information is
provided in note 27 - Provisions for contingencies.
Payroll and related costs
| (euro million) | 2010 |
2011 |
2012 |
| Wages and salaries | 3,299 | 3,435 | 3,886 | ||||||
| Social security contributions | 631 | 675 | 674 | ||||||
| Cost related to employee benefits plans | 154 | 148 | 148 | ||||||
| Other costs | 557 | 334 | 187 | ||||||
| 4,641 | 4,592 | 4,895 | |||||||
| less: | |||||||||
| - capitalized direct costs associated with self-constructed assets - tangible assets | (168 | ) | (144 | ) | (182 | ) | |||
| - capitalized direct costs associated with self-constructed assets - intangible assets | (45 | ) | (44 | ) | (55 | ) | |||
| 4,428 | 4,404 | 4,658 |
Other costs of euro 187 million (euro
557 million and euro 334 million in 2010 and 2011, respectively)
comprised costs for defined contribution plans of euro 100
million (euro 95 million and euro 94 million in 2010 and 2011,
respectively) and provisions for redundancy incentives of euro 64
million (euro 400 million and euro 203 million in 2010 and 2011,
respectively).
Cost related to employee benefit plans are described in note 28 -
Provisions for employee benefits.
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Average number of employees
The Group average number and
break-down of employees by category is reported below:
| (number) | 2010 |
2011 |
2012 |
| Senior managers | 1,446 | 1,461 | 1,471 | |||
| Junior managers | 12,616 | 12,796 | 12,976 | |||
| Employees | 34,265 | 35,309 | 37,258 | |||
| Workers | 24,288 | 23,605 | 23,501 | |||
| 72,615 | 73,171 | 75,206 |
The average number of employees was calculated as 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 subsidiaries, whose responsibility and position are comparable to those of a senior manager.
Stock-based compensation
In 2009, Eni terminated any
stock-based incentive schemes. Information provided below is
about the residual activity of past stock incentive schemes.
Stock options plans outstanding as of December 31, 2012 entitled
Eni’s Group companies top managers and managers with
strategic responsibilities (excluding Group listed subsidiaries)
to no consideration 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, 2012, 8,259,520 options were outstanding for the
purchase of 8,259,520 Eni ordinary shares (no par value). The
break-down of outstanding options was the following:
Rights outstanding |
Weighted-average strike
price of rights outstanding |
| Stock option plan 2005 | 3,281,500 | 22.514 | ||
| Stock option plan 2007 | 1,707,720 | 27.451 | ||
| Stock option plan 2008 | 3,270,300 | 22.540 | ||
| 8,259,520 |
At December 31, 2012, the residual life
of the stock option plans were 7 months for the 2005 plan, 7
months for the 2007 plan and 1 year and 7 months for the 2008
plan.
The scheme evolution is provided below:
2010 |
2011 |
2012 |
||||
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 | 19,482,330 | 23.576 | 17.811 | 15,737,120 | 23.005 | 16.398 | 11,873,205 | 23.101 | 15.941 | ||||||||||||
| Rights exercised in the year | (88,500 | ) | 14.941 | 16.048 | (208,900 | ) | 14.333 | 16.623 | (93,000 | ) | 16.576 | 16.873 | |||||||||
| Rights cancelled in the year | (3,656,710 | ) | 26.242 | 16.918 | (3,655,015 | ) | 23.187 | 17.474 | (3,520,685 | ) | 22.233 | 16.637 | |||||||||
| Rights outstanding as of December 31 | 15,737,120 | 23.005 | 16.398 | 11,873,205 | 23.101 | 15.941 | 8,259,520 | 23.545 | 18.457 | ||||||||||||
| of which exercisable as of December 31 | 8,896,125 | 23.362 | 16.398 | 11,863,335 | 23.101 | 15.941 | 8,243,205 | 23.544 | 18.457 |
(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 fair value of stock options granted during the year 2005 was euro 3.33 per share. For 2007 and 2008 the average fair value weighted with the number of options granted was euro 2.98 and euro 2.60 per share, respectively.
The fair value was determined by applying the following assumptions:
2005 |
|
2007 |
|
2008 |
| Risk-free interest rate | (%) | 2.5 | 4.7 | 4.9 | |||
| Expected life | (years) | 8 | 6 | 6 | |||
| Expected volatility | (%) | 21.0 | 16.3 | 19.2 | |||
| Expected dividends | (%) | 4.0 | 4.9 | 6.1 |
Costs of the year related to stock option plans amounted to euro 12 million and euro 3 million in 2010 and 2011, respectively, and no costs in 2012.
Compensation of key management
personnel
Compensation of personnel
holding key positions in planning, directing and controlling the
Eni Group subsidiaries, including executive and non-executive
officers, general managers and managers with strategic
responsibilities in office at end of each year amounted
(including contributions and ancillary costs) to euro 33 million,
euro 34 million and euro 33 million for 2010, 2011 and 2012,
respectively, and consisted of the following:
| (euro million) | 2010 |
2011 |
2012 |
| Wages and salaries | 20 | 21 | 21 | |||
| Post-employment benefits | 1 | 1 | 1 | |||
| Other long-term benefits | 10 | 10 | 11 | |||
| Indemnities upon termination of employment | 2 | |||||
| Stock option | 2 | |||||
| 33 | 34 | 33 |
Compensation of Directors and
Statutory Auditors
Compensation of Directors
amounted to euro 9.7 million, euro 8.4 million and euro 13.2
million for 2010, 2011 and 2012, respectively. Compensation of
Statutory Auditors amounted to euro 0.511 million, euro 0.513
million and euro 0.467 million in 2010, 2011 and 2012,
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)
| (euro million) | 2010 |
2011 |
2012 |
| Net gains (losses) on non-hedging and trading derivatives | 118 | 188 | (153 | ) | |||||
| Net gains (losses) on fair value hedging derivatives | (4 | ) | |||||||
| Net gains (losses) on cash flow hedging derivatives | 13 | (17 | ) | (1 | ) | ||||
| 131 | 171 | (158 | ) |
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
by Eni Trading & Shipping SpA for trading activities (net
loss of euro 13 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 141
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 1 million).
Net losses on fair value hedging derivatives related to hedging
operations entered into during the 2012 for the pricing of future
oil purchase and sale contracts.
Net losses on cash flow hedging derivatives related to the
ineffective portion of the hedging relationship which was
recognized through profit and loss in the Gas & Power
segment.
Operating costs are disclosed in note 42 - Transactions with
related parties.
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Depreciation, depletion, amortization and impairments
| (euro million) | 2010 |
2011 |
2012 |
| Depreciation, depletion and amortization: | |||||||||
| - tangible assets | 6,775 | 6,178 | 7,335 | ||||||
| - intangible assets | 1,572 | 1,582 | 2,208 | ||||||
| 8,347 | 7,760 | 9,543 | |||||||
| Impairments: | |||||||||
| - tangible assets | 257 | 891 | 1,609 | ||||||
| - intangible assets | 431 | 154 | 2,417 | ||||||
| 688 | 1,045 | 4,026 | |||||||
| less: | |||||||||
| - reversal of impairments - tangible assets | (15 | ) | (3 | ) | |||||
| - capitalized direct costs associated with self-constructed assets - tangible assets | (2 | ) | (3 | ) | (1 | ) | |||
| - capitalized direct costs associated with self-constructed assets - intangible assets | (2 | ) | (2 | ) | (4 | ) | |||
| 9,031 | 8,785 | 13,561 |
Depreciation, depletion, amortization and impairments by industry segment are disclosed in note 41 - Information by industry segment and geographic information.
37 Finance income (expense)
| (euro million) | 2010 |
2011 |
2012 |
| Finance income (expense) | |||||||||
| Finance income | 6,109 | 6,376 | 7,218 | ||||||
| Finance expense | (6,727 | ) | (7,410 | ) | (8,274 | ) | |||
| (618 | ) | (1,034 | ) | (1,056 | ) | ||||
| Gain (loss) on derivative financial instruments | (131 | ) | (112 | ) | (251 | ) | |||
| (749 | ) | (1,146 | ) | (1,307 | ) |
The break-down by lenders or type of net finance gains or losses is provided below:
| (euro million) | 2010 |
2011 |
2012 |
| Finance income (expense) related to net borrowings | |||||||||
| Interest and other finance expense on ordinary bonds | (551 | ) | (610 | ) | (729 | ) | |||
| Interest due to banks and other financial institutions | (214 | ) | (312 | ) | (251 | ) | |||
| Interest from banks | 17 | 22 | 27 | ||||||
| Interest and other income on financing receivables and securities held for non-operating purposes | 18 | 19 | 24 | ||||||
| (730 | ) | (881 | ) | (929 | ) | ||||
| Exchange differences | |||||||||
| Positive exchange differences | 5,897 | 6,191 | 7,010 | ||||||
| Negative exchange differences | (5,805 | ) | (6,302 | ) | (6,879 | ) | |||
| 92 | (111 | ) | 131 | ||||||
| Other finance income (expense) | |||||||||
| Capitalized finance expense | 150 | 112 | 150 | ||||||
| Interest and other income on financing receivables and securities held for operating purposes | 73 | 75 | 69 | ||||||
| Finance expense due to passage of time (accretion discount) (a) | (236 | ) | (235 | ) | (308 | ) | |||
| Other finance income (expense), net | 33 | 6 | (169 | ) | |||||
| 20 | (42 | ) | (258 | ) | |||||
| (618 | ) | (1,034 | ) | (1,056 | ) |
(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) | 2010 |
2011 |
2012 |
| Derivatives on exchange rate | (111 | ) | 29 | (137 | ) | ||||
| Derivatives on interest rate | (39 | ) | (141 | ) | (88 | ) | |||
| Options | 19 | (26 | ) | ||||||
| (131 | ) | (112 | ) | (251 | ) |
Net losses from derivatives of euro 251
million (a net loss of euro 131 million and euro 112 million in
2010 and 2011, 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 26
million related to the measurement at fair value of the options
embedded in the bonds convertible into ordinary shares of Galp
Energia SGPS SA (more information is provided in note 26 -
Long-term debt and current maturities of long-term debt).
More information is provided in note 42 - Transactions with
related parties.
38 Income (expense) from investments
Share of profit (loss) of equity-accounted investments
| (euro million) | 2010 |
2011 |
2012 |
| Share of profit of equity-accounted investments | 673 | 634 | 526 | ||||||
| Share of loss of equity-accounted investments | (149 | ) | (106 | ) | (233 | ) | |||
| Decreases (increases) in the provision for losses on investments | (31 | ) | (28 | ) | (15 | ) | |||
| 493 | 500 | 278 |
More information is provided in note 17
- Equity-accounted investments.
Share of profit (loss) of equity accounted investments by
industry segment is disclosed in note 41 - Information by
industry segment and geographic information.
Other gain (loss) from investments
| (euro million) | 2010 |
2011 |
2012 |
| Dividends | 264 | 659 | 431 | ||||||
| Gains on disposals, net | 332 | 1,121 | 349 | ||||||
| Other income (expense), net | 23 | (157 | ) | 1,823 | |||||
| 619 | 1,623 | 2,603 |
Dividend income for euro 431 million
primarily related to the Nigeria LNG Ltd (euro 331 million).
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). Gains on disposals for 2010 of euro 332
million essentially pertained to the divestment of the 100%
interest in Società Padana Energia SpA (euro 169 million), the
25% stake in GreenStream BV (euro 93 million) and the 100%
interest in Distri RE SA (euro 47 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
(8%) which was underlying a convertible bond based on the fair
value option provided by IAS 39; (iii) the re-measurement at
market fair value at the balance sheet date of 288.7 million
shares of Snam SpA underlying a convertible bond issued on
January 15, 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).
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39 Income taxes
| (euro million) | 2010 |
2011 |
2012 |
| Current taxes: | |||||||||
| - Italian subsidiaries | 696 | 620 | 755 | ||||||
| - foreign subsidiaries of the Exploration & Production segment | 7,893 | 8,286 | 10,214 | ||||||
| - foreign subsidiaries | 521 | 635 | 455 | ||||||
| 9,110 | 9,541 | 11,424 | |||||||
| Net deferred taxes: | |||||||||
| - Italian subsidiaries | (431 | ) | (418 | ) | 376 | ||||
| - foreign subsidiaries of the Exploration & Production segment | (97 | ) | 936 | 127 | |||||
| - foreign subsidiaries | (1 | ) | (156 | ) | (268 | ) | |||
| (529 | ) | 362 | 235 | ||||||
| 8,581 | 9,903 | 11,659 |
Income taxes currently payable by
Italian subsidiaries amounted to euro 755 million and were in
respect of the Italian corporate taxation (IRES for euro 525
million and IRAP for euro 142 million) and foreign taxes on the
share of profit earned outside Italy for euro 88 million.
The effective tax rate was 70.2% (54.2% and 55.7% in 2010 and
2011, respectively) compared with a statutory tax rate of 43.9%
(39.6% and 43.1% in 2010 and 2011, respectively). This was
calculated by applying the Italian statutory tax rate on
corporate profit of 38.0%20 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:
| (%) | 2010 |
2011 |
2012 |
| Statutory tax rate | 39.6 | 43.1 | 43.9 | ||||||
| Items increasing (decreasing) statutory tax rate: | |||||||||
| - higher foreign subsidiaries tax rate | 15.6 | 12.7 | 16.9 | ||||||
| - impact pursuant to the write down of deferred tax assets of Italian subsidiaries | 7.7 | ||||||||
| - impact pursuant to the Italian Windfall Corporate tax as per Law No. 7/2009 | 1.5 | 1.0 | 1.5 | ||||||
| - permanent differences and other adjustments | (2.5 | ) | (1.1 | ) | 0.2 | ||||
| 14.6 | 12.6 | 26.3 | |||||||
| 54.2 | 55.7 | 70.2 |
The increased tax rate at foreign
subsidiaries primarily related to 17.8 percentage points increase
in the Exploration & Production segment (16.8 and 17.2
percentage points in 2010 and 2011, respectively).
A write down of deferred tax assets impacted the Group tax rate
by 7.7 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, and as Eni has lost the
availability of Snam taxable profit against which Italian tax
assets can be utilized following the deconsolidation of Snam.
In 2012, the increase in permanent differences and other
adjustments of 0.2 percentage points comprised a 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). In 2010, the decrease for
permanent differences and other adjustments of 2.5 percentage
points was due to a gain which was excluded from taxable profit
relating a favorable outcome of an antitrust proceeding of 0.7
percentage points.
(20) 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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Income tax expense related to discontinued operations, included in the item "Net profit (loss)" of the profit and loss account, consisted of the following:
| (euro million) | 2010 |
2011 |
2012 |
| Current taxes: | |||||||||
| - Italian subsidiaries | 619 | 788 | 489 | ||||||
| 619 | 788 | 489 | |||||||
| Net deferred taxes: | |||||||||
| - Italian subsidiaries | (43 | ) | (17 | ) | 124 | ||||
| (43 | ) | (17 | ) | 124 | |||||
| 576 | 771 | 613 |
Discontinued operations are disclosed in note 31 - Discontinued operations, assets held for sale and liabilities directly associated with assets held for sale.
40 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, 2010,
2011 and 2012, was 3,622,454,738, 3,622,616,182 and
3,622,764,007, 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.
At December 31, 2010, 2011 and 2012 the number of potential
shares outstanding related to stock options plans. The average
number of fully-diluted shares used in the calculation of diluted
earnings was 3,622,469,713, 3,622,616,182 and 3,622,764,007 for
the years ending December 31, 2010, 2011 and 2012, respectively.
Reconciliation of the average number of shares used for the
calculation for both basic and diluted earning per share was as
follows:
2010 |
2011 |
2012 |
| Average number of shares used for the calculation of the basic earnings per share | 3,622,454,738 | 3,622,616,182 | 3,622,764,007 | ||||||
| Number of potential shares following stock options plans | 14,975 | ||||||||
| Average number of shares used for the calculation of the diluted earnings per share | 3,622,469,713 | 3,622,616,182 | 3,622,764,007 | ||||||
| Eni’s net profit | (euro million) | 6,318 | 6,860 | 7,788 | |||||
| Basic earning per share | (euro per share) | 1.74 | 1.89 | 2.15 | |||||
| Diluted earning per share | (euro per share) | 1.74 | 1.89 | 2.15 | |||||
| Eni’s net profit - Continuing operations | (euro million) | 6,252 | 6,902 | 4,198 | |||||
| Basic earning per share | (euro per share) | 1.72 | 1.90 | 1.16 | |||||
| Diluted earning per share | (euro per share) | 1.72 | 1.90 | 1.16 | |||||
| Eni’s net profit - Discontinued operations | (euro million) | 66 | (42 | ) | 3,590 | ||||
| Basic earning per share | (euro per share) | 0.02 | (0.01 | ) | 0.99 | ||||
| Diluted earning per share | (euro per share) | 0.02 | (0.01 | ) | 0.99 |
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41 Information by industry segment and geographic financial information
Information by industry segment
Other activities (d) |
Discontinued operations (d) |
|||||
| (euro million) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2010 | |||||||||||||||||||||||||||||||||||||||
| Net sales from operations (a) | 29,497 | 27,806 | 43,190 | 6,141 | 10,581 | 1,386 | 3,526 | 105 | 100 | ||||||||||||||||||||||||||||||
| Less: intersegment sales | (16,550 | ) | (969 | ) | (1,345 | ) | (243 | ) | (1,802 | ) | (1,255 | ) | (1,620 | ) | (25 | ) | |||||||||||||||||||||||
| Net sales to customers | 12,947 | 26,837 | 41,845 | 5,898 | 8,779 | 131 | 1,906 | 80 | 100 | 98,523 | (1,906 | ) | 96,617 | ||||||||||||||||||||||||||
| Operating profit | 13,866 | 896 | 149 | (86 | ) | 1,302 | (361 | ) | 2,000 | (1,384 | ) | (271 | ) | 16,111 | (2,000 | ) | 1,371 | 15,482 | |||||||||||||||||||||
| Net provisions for contingencies | 33 | (64 | ) | 199 | 2 | 35 | 50 | 6 | 1,146 | 1,407 | (6 | ) | 1,401 | ||||||||||||||||||||||||||
| Depreciation, depletion, amortization and impairments | 7,051 | 851 | 409 | 135 | 516 | 79 | 548 | 10 | (20 | ) | 9,579 | (548 | ) | 9,031 | |||||||||||||||||||||||||
| Share of profit (loss) of equity-accounted investments | 92 | 344 | 68 | 1 | (10 | ) | 44 | (2 | ) | 537 | (44 | ) | 493 | ||||||||||||||||||||||||||
| Identifiable assets (b) | 49,573 | 18,300 | 14,356 | 3,076 | 12,715 | 754 | 16,643 | 362 | (917 | ) | 114,862 | ||||||||||||||||||||||||||||
| Unallocated assets | 16,998 | ||||||||||||||||||||||||||||||||||||||
| Equity-accounted investments | 1,974 | 1,988 | 1,058 | 30 | 174 | 8 | 382 | 54 | 5,668 | ||||||||||||||||||||||||||||||
| Identifiable liabilities (c) | 12,330 | 7,593 | 6,197 | 874 | 5,760 | 1,307 | 2,455 | 2,898 | (101 | ) | 39,313 | ||||||||||||||||||||||||||||
| Unallocated liabilities | 36,819 | ||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 9,690 | 265 | 711 | 251 | 1,552 | 109 | 1,420 | 22 | (150 | ) | 13,870 | ||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||
| Net provisions for contingencies | 53 | 113 | 57 | 11 | 79 | 13 | 24 | 201 | 551 | (24 | ) | 527 | |||||||||||||||||||||||||||
| Depreciation, depletion, 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 |
(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 the "Other activities"
segment and presented in the discontinued operations.
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Other activities (d) |
Discontinued operations (d) |
|||||
| (euro million) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 | 18,451 | (3,221 | ) | (1,303 | ) | (683 | ) | 1,433 | (345 | ) | 1,676 | (302 | ) | 208 | 15,914 | (1,676 | ) | 788 | 15,026 | ||||||||||||||||||||
| Net provisions for contingencies | 41 | 471 | 93 | 22 | 36 | 140 | 72 | 68 | 943 | (72 | ) | 871 | |||||||||||||||||||||||||||
| Depreciation, depletion, 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) | 59,128 | 19,736 | 14,818 | 3,151 | 14,430 | 966 | 474 | (776 | ) | 111,927 | |||||||||||||||||||||||||||||
| Unallocated assets | 27,714 | ||||||||||||||||||||||||||||||||||||||
| Equity-accounted investments | 2,162 | 1,550 | 274 | 50 | 187 | 6 | 36 | 4,265 | |||||||||||||||||||||||||||||||
| Identifiable liabilities (c) | 15,921 | 10,195 | 6,203 | 733 | 5,169 | 1,161 | 2,946 | 21 | 42,349 | ||||||||||||||||||||||||||||||
| 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 the "Other activities"
segment and presented in the discontinued operations.
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 arm’s length basis.
Geographic financial information
Identifiable assets and
investments by geographic area of origin
| (euro million) | Italy |
Other European Union |
Rest of Europe |
Americas |
Asia |
Africa |
Other areas |
Total |
| 2010 | ||||||||||||||||
| Identifiable assets (a) | 45,342 | 16,322 | 5,091 | 6,837 | 12,459 | 27,322 | 1,489 | 114,862 | ||||||||
| Capital expenditures | 3,044 | 1,710 | 724 | 1,156 | 1,941 | 5,083 | 212 | 13,870 | ||||||||
| 2011 | ||||||||||||||||
| Identifiable assets (a) | 47,908 | 16,196 | 6,763 | 7,465 | 14,077 | 29,942 | 1,891 | 124,242 | ||||||||
| Capital expenditures | 3,587 | 1,337 | 1,174 | 978 | 1,608 | 4,369 | 385 | 13,438 | ||||||||
| 2012 | ||||||||||||||||
| Identifiable assets (a) | 31,406 | 15,013 | 10,479 | 7,167 | 14,828 | 31,224 | 1,810 | 111,927 | ||||||||
| Capital expenditures | 2,886 | 1,255 | 1,630 | 1,184 | 1,663 | 4,725 | 174 | 13,517 |
(a) Includes assets directly associated with the generation of operating profit.
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Sales from operations by geographic area destination
| (euro million) | 2010 |
2011 |
2012 |
| Italy | 45,896 | 31,906 | 33,998 | |||
| Other European Union | 21,125 | 35,536 | 35,578 | |||
| Rest of Europe | 4,172 | 7,537 | 9,940 | |||
| Americas | 6,282 | 9,612 | 15,282 | |||
| Asia | 5,785 | 10,258 | 16,394 | |||
| Africa | 13,068 | 11,333 | 14,681 | |||
| Other areas | 289 | 1,508 | 1,347 | |||
| 96,617 | 107,690 | 127,220 |
42 Transactions with related parties
In the course of 2012, Eni finalized a
single transaction of major importance with related parties, as
defined by Eni’s internal procedure and in application of
the Consob Regulation No. 17221 of March 12, 2010, later modified
by decision No. 17389 of June, 2010. Such transaction referred to
the sale of 30% less one share of the outstanding shares of Snam
SpA to Cassa Depositi e Prestiti SpA formalized on October 15,
2012. Complete information about the transaction is disclosed in
the Information Statement, published on June 6, 2012 (and
available at the Eni website eni.com) in application of the
Consob Regulation No. 11971 of May 14, 1999 and later additions
and modifications. More information is disclosed in note 17 -
Investments.
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 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 Enrico Mattei Foundation were not material.
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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Eni Annual Report / Notes to the Consolidated Financial Statements |
Related-party trade and other
transactions
Trade and other transactions with
joint ventures, associates and non-consolidated subsidiaries as
well as with entities controlled by the Italian Government in the
2010, 2011 and 2012, respectively, consisted of the following:
| 2010 (euro million) |
December 31, 2010 |
2010 |
||
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 | 1 | 5 | 56 | |||||||||||||||
| Agiba Petroleum Co | 2 | 5 | 95 | |||||||||||||||||
| Azienda Energia e Servizi Torino SpA | 1 | 65 | 78 | |||||||||||||||||
| Bayernoil Raffineriegesellschaft mbH | 32 | 1 | 19 | 51 | 2 | |||||||||||||||
| Blue Stream Pipeline Co BV | 13 | 14 | 37 | 152 | 2 | |||||||||||||||
| Bronberger & Kessler und Gilg & Schweiger GmbH & Co KG | 20 | 121 | ||||||||||||||||||
| CEPAV (Consorzio Eni per l’Alta Velocità) Uno | 28 | 12 | 6,054 | 5 | 37 | |||||||||||||||
| CEPAV (Consorzio Eni per l’Alta Velocità) Due | 6 | 3 | 76 | 3 | 6 | |||||||||||||||
| Eni Gas & Power France SA (former Altergaz SA) | 262 | |||||||||||||||||||
| GasVersorgung Süddeutschland GmbH | 3 | 62 | ||||||||||||||||||
| GreenStream BV | 4 | 13 | 95 | 1 | 2 | |||||||||||||||
| Karachaganak Petroleum Operating BV | 39 | 253 | 821 | 346 | 28 | 8 | 7 | |||||||||||||
| KWANDA - Suporte Logistico Lda | 51 | 1 | 17 | |||||||||||||||||
| Mellitah Oil & Gas BV | 30 | 137 | 225 | 33 | ||||||||||||||||
| Petrobel Belayim Petroleum Co | 8 | 34 | 714 | 3 | 2 | |||||||||||||||
| Raffineria di Milazzo ScpA | 21 | 20 | 266 | 157 | 7 | 1 | ||||||||||||||
| Rosa GmbH | 7 | 50 | ||||||||||||||||||
| Saipon Snc | 2 | 53 | 29 | |||||||||||||||||
| Super Octanos CA | 23 | 58 | 2 | |||||||||||||||||
| Supermetanol CA | 13 | 57 | 1 | |||||||||||||||||
| Trans Austria Gasleitung GmbH | 8 | 69 | 32 | 149 | 1 | 37 | ||||||||||||||
| Transitgas AG | 8 | 70 | ||||||||||||||||||
| Unión Fenosa Gas SA | 11 | 58 | 60 | 1 | ||||||||||||||||
| Other (*) | 138 | 51 | 11 | 27 | 232 | 50 | 35 | 86 | 11 | |||||||||||
| 406 | 755 | 6,290 | 1,015 | 2,486 | 78 | 817 | 266 | 16 | ||||||||||||
| Unconsolidated entities controlled by Eni | ||||||||||||||||||||
| Agip Kazakhstan North Caspian Operating Co NV | 177 | 285 | 2 | 894 | 5 | 917 | 7 | |||||||||||||
| Eni BTC Ltd | 152 | |||||||||||||||||||
| Other (*) | 22 | 22 | 3 | 4 | 48 | 2 | 5 | 23 | 4 | |||||||||||
| 199 | 307 | 155 | 6 | 942 | 7 | 5 | 940 | 11 | ||||||||||||
| 605 | 1,062 | 6,445 | 1,021 | 3,428 | 85 | 822 | 1,206 | 27 | ||||||||||||
| Entities controlled by the Government | ||||||||||||||||||||
| Gruppo Enel | 83 | 44 | 20 | 316 | 1 | 124 | 114 | |||||||||||||
| Gruppo Finmeccanica | 44 | 44 | 50 | 36 | 22 | 9 | ||||||||||||||
| GSE - Gestore Servizi Energetici | 94 | 104 | 466 | 81 | 462 | 16 | 3 | |||||||||||||
| Gruppo Terna | 35 | 41 | 115 | 71 | 31 | 55 | 28 | 9 | 38 | |||||||||||
| Other (*) | 62 | 44 | 74 | 2 | 44 | 3 | 21 | |||||||||||||
| 318 | 277 | 651 | 497 | 115 | 707 | 170 | 30 | 41 | ||||||||||||
| 923 | 1,339 | 6,445 | 1,672 | 3,925 | 200 | 1,529 | 1,376 | 57 | 41 |
| Discontinued operations | ||||||||||||||||||||
| Joint ventures and associates | ||||||||||||||||||||
| Azienda Energia e Servizi Torino SpA | 1 | |||||||||||||||||||
| Other (*) | 5 | 1 | ||||||||||||||||||
| 6 | 1 | |||||||||||||||||||
| Entities controlled by the Government | ||||||||||||||||||||
| Gruppo Enel | 2 | 4 | 357 | |||||||||||||||||
| Gruppo Finmeccanica | 1 | |||||||||||||||||||
| Other (*) | 2 | 2 | ||||||||||||||||||
| 3 | 2 | 4 | 359 | |||||||||||||||||
| 3 | 2 | 4 | 365 | 1 | ||||||||||||||||
| 923 | 1,339 | 6,445 | 1,672 | 3,928 | 202 | 1,533 | 1,741 | 58 | 41 |
(*) Each individual amount included herein was lower than euro 50 million.
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Eni Annual Report / Notes to the Consolidated Financial Statements |
| 2011 (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) Uno | 42 | 10 | 6,074 | 4 | 21 | |||||||||||||||
| CEPAV (Consorzio Eni per l’Alta Velocità) Due | 24 | 91 | 84 | 38 | ||||||||||||||||
| 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 entities controlled by Eni | ||||||||||||||||||||
| 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 | ||||||||||||||||||||
| Gruppo Enel | 83 | 48 | 5 | 429 | 1 | 33 | 85 | |||||||||||||
| Gruppo Finmeccanica | 48 | 51 | 14 | 53 | 22 | 12 | ||||||||||||||
| GSE - Gestore Servizi Energetici | 149 | 158 | 615 | 54 | 607 | 10 | ||||||||||||||
| Gruppo Terna | 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 | ||||||||||||||||||||
| Gruppo Enel | 1 | 397 | 1 | |||||||||||||||||
| Gruppo Finmeccanica | 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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| 2012 (euro million) |
Dec. 31, 2012 |
2012 |
||
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) Uno | 66 | 19 | 6,122 | 5 | 16 | ||||||||||||||||
| CEPAV (Consorzio Eni per l’Alta Velocità) Due | 51 | 51 | 51 | 85 | |||||||||||||||||
| 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 entities controlled by Eni | |||||||||||||||||||||
| 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 | 7 | 7 | |||||||||||||||||
| Other (*) | 14 | 59 | 6 | 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 | |||||||||||||||||||||
| Gruppo Enel | 16 | 8 | 4 | 554 | 55 | 90 | 1 | (7 | ) | ||||||||||||
| Gruppo Finmeccanica | 30 | 50 | 14 | 70 | 17 | 1 | |||||||||||||||
| Gruppo Snam | 182 | 482 | 46 | 13 | 558 | 2 | 102 | 26 | 1 | ||||||||||||
| GSE - Gestore Servizi Energetici | 86 | 66 | 627 | 58 | 777 | 18 | 12 | ||||||||||||||
| Gruppo Terna | 47 | 61 | 166 | 126 | 12 | 95 | 67 | 14 | 17 | ||||||||||||
| Other (*) | 42 | 29 | 59 | 24 | 57 | 1 | |||||||||||||||
| 403 | 696 | 46 | 824 | 1,367 | 96 | 1,103 | 203 | 28 | 10 | ||||||||||||
| 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 | |||||||||||||||||||||
| Gruppo Enel | 87 | 295 | |||||||||||||||||||
| Other (*) | 1 | 3 | 1 | ||||||||||||||||||
| 87 | 1 | 298 | 1 | ||||||||||||||||||
| 87 | 1 | 301 | 2 | ||||||||||||||||||
| 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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Most significant transactions with joint
ventures, associates and non-consolidated subsidiaries concerned:
- sale of natural gas and electricity to ACAM Clienti SpA;
- sale of natural gas to EnBW Eni Verwaltungsgesellschaft mbH and
Gaz de Bordeaux SAS;
- 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 for Karachaganak
Petroleum Operating BV, purchase of oil products and to 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;
- gas and electricity transportation and distribution services
from Azienda Energia e Servizi Torino SpA and Toscana Energia
SpA;
- payments of refining services to Bayernoil
Raffineriegesellschaft mbH and Raffineria di Milazzo ScpA in
relation to incurred costs;
- acquisition of natural gas transport services outside Italy
from Blue Stream Pipeline Co BV and GreenStream BV;
- supply of oil products to Bronberger & Kessler und Gilg
& Schweiger GmbH & Co KG and Raffineria di Milazzo ScpA
on the basis of prices referred to the quotations on
international markets of the main oil products, 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;
- guarantees issued on behalf Saipon Snc in relation to
contractual commitments related to the execution of project
planning and realization;
- planning, construction and technical assistance to support by
KWANDA - Suporte Logistico Lda;
- acquisition of petrochemical products from Supermetanol CA on
the basis of prices referred to the quotations on international
markets of the main products;
- 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:
- sales and transportation services of natural gas, the sale of
fuel oil and the sale and purchase of electricity, the
acquisition of electricity transmission service and the fair
value of derivative financial instruments with Gruppo Enel;
- a long-term contract for the maintenance at the Group’s
combined-cycle power plants with Gruppo Finmeccanica;
- acquisition of natural gas transportation, distribution and
storage services from Gruppo Snam on the basis of tariffs set by
the Authority for Electricity and Gas;
- gas transportation and distribution services from Gruppo Snam
on the basis of tariffs set by the Authority for Electricity and
Gas;
- supply of natural gas to Gruppo Snam 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 prices of electricity related
to sale/purchase transactions with Gruppo Terna.
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Related-party financing
transactions
Financing transactions with joint
ventures, associates and non-consolidated subsidiaries as well as
with entities controlled by the Government in the 2010, 2011 and
2012, respectively, consisted of the following:
| 2010 (euro million) |
December 31, 2010 |
2010 |
||
| Name | Receivables |
|
Payables |
|
Guarantees |
|
Charges |
|
Gains |
|
Income from equity instruments |
| Joint ventures and associates | ||||||||||||
| Artic Russia BV | 104 | 3 | 1 | |||||||||
| Bayernoil Raffineriegesellschaft mbH | 119 | |||||||||||
| Blue Stream Pipeline Co BV | 8 | 648 | 9 | |||||||||
| GreenStream BV | 459 | 2 | 19 | |||||||||
| Raffineria di Milazzo ScpA | 120 | |||||||||||
| Trans Austria Gasleitung GmbH | 144 | 6 | ||||||||||
| Transmediterranean Pipeline Co Ltd | 141 | 5 | ||||||||||
| Other (*) | 105 | 75 | 24 | |||||||||
| 1,072 | 88 | 792 | 40 | |||||||||
| Unconsolidated entities controlled by Eni | ||||||||||||
| Other (*) | 53 | 39 | 1 | 1 | ||||||||
| 53 | 39 | 1 | 1 | |||||||||
| 1,125 | 127 | 793 | 41 |
(*) Each individual amount included herein was lower than euro 50 million.
| 2011 (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 entities controlled by Eni | ||||||||||||
| Other (*) | 57 | 59 | 1 | 3 | ||||||||
| 57 | 59 | 1 | 3 | |||||||||
| Entities controlled by the Government | ||||||||||||
| Gruppo Cassa Depositi e Prestiti | 338 | |||||||||||
| 338 | ||||||||||||
| 1,039 | 503 | 1,052 | 1 | 49 | 338 |
(*) Each individual amount included herein was lower than euro 50 million.
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| 2012 (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 | |||||||||||
| Transmediterranean Pipeline Co Ltd | 82 | 6 | ||||||||||
| Other (*) | 94 | 63 | 12 | 1 | 2 | |||||||
| 935 | 354 | 828 | 3 | 46 | ||||||||
| Unconsolidated entities controlled by Eni | ||||||||||||
| Other (*) | 58 | 49 | 1 | 1 | ||||||||
| 58 | 49 | 1 | 1 | |||||||||
| Entities controlled by the Government | ||||||||||||
| Gruppo Cassa Depositi e Prestiti | 883 | 6 | ||||||||||
| Gruppo Snam | 141 | 1 | ||||||||||
| 1,024 | 7 | |||||||||||
| 2,017 | 403 | 829 | 4 | 53 | ||||||||
| Discontinued operations | ||||||||||||
| Entities controlled by the Government | ||||||||||||
| Gruppo Cassa Depositi e Prestiti | 2,019 | |||||||||||
| 2,019 | ||||||||||||
| 2,017 | 403 | 829 | 4 | 53 | 2,019 |
(*) Each individual amount included herein was lower than euro 50 million.
Most significant transactions with joint
ventures, associates and non-consolidated subsidiaries concerned:
- bank debt guarantee issued on behalf of Blue Stream Pipeline Co
BV, 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 an oil field and to
Société Centrale du Congo SA for the construction of an
electric plant in Congo;
- the financing of the construction of natural gas transmission
facilities and transport services with GreenStream BV and
Transmediterranean Pipeline Co Ltd;
- a cash deposit at Eni’s financial companies on behalf of
Blue Stream Pipeline Co BV.
Financing receivables and income from investments with Gruppo
Cassa Depositi e Prestiti related to the sale of Snam SpA
(divestment of a 30% stake) (more information is provided in note
17 - Investments). Financial receivables with Gruppo Snam related
to the settlement of financial derivative transactions.
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Impact of transactions and positions
with related parties on the balance sheet, profit and loss
account and statement of cash flow
The impact of transactions and
positions with related parties on the balance sheet consisted of
the following:
December 31, 2010 |
December 31, 2011 |
December 31, 2012 |
||||
| (euro million) | Total |
Related parties |
Impact (%) |
Total |
Related parties |
Impact (%) |
Total |
Related parties |
Impact (%) |
| Trade and other receivables | 23,636 | 1,356 | 5.74 | 24,595 | 1,496 | 6.08 | 28,621 | 2,714 | 9.48 | |||||||||
| Other current assets | 1,350 | 9 | 0.67 | 2,326 | 2 | 0.09 | 1,624 | 8 | 0.49 | |||||||||
| Other non-current financial assets | 1,523 | 668 | 43.86 | 1,578 | 704 | 44.61 | 1,229 | 642 | 52.24 | |||||||||
| Other non-current assets | 3,355 | 16 | 0.48 | 4,225 | 3 | 0.07 | 4,400 | 43 | 0.98 | |||||||||
| Current financial liabilities | 6,515 | 127 | 1.95 | 4,459 | 503 | 11.28 | 2,223 | 403 | 18.13 | |||||||||
| Trade and other payables | 22,575 | 1,297 | 5.75 | 22,912 | 1,446 | 6.31 | 23,581 | 1,616 | 6.85 | |||||||||
| Other current liabilities | 1,620 | 5 | 0.31 | 2,237 | 1,437 | 6 | 0.42 | |||||||||||
| Other non-current liabilities | 2,194 | 45 | 2.05 | 2,900 | 1,977 | 16 | 0.81 |
The impact of transactions with related parties on the profit and loss accounts consisted of the following:
2010 |
2011 |
2012 |
||||
| (euro million) | Total |
Related parties |
Impact (%) |
Total |
Related parties |
Impact (%) |
Total |
Related parties |
Impact (%) |
| Continuing operations | ||||||||||||||||||||||||
| Net sales from operations | 96,617 | 2,905 | 3.01 | 107,690 | 3,477 | 3.23 | 127,220 | 3,783 | 2.97 | |||||||||||||||
| Other income and revenues | 967 | 57 | 5.89 | 926 | 41 | 4.43 | 1,546 | 56 | 3.62 | |||||||||||||||
| Purchases, services and other | 68,774 | 5,820 | 8.46 | 78,795 | 5,880 | 7.46 | 95,363 | 6,604 | 6.93 | |||||||||||||||
| Payroll and related costs | 4,428 | 28 | 0.63 | 4,404 | 33 | 0.75 | 4,658 | 21 | 0.45 | |||||||||||||||
| Other operating income (expense) | 131 | 41 | 31.30 | 171 | 32 | 18.71 | (158 | ) | 10 | .. | ||||||||||||||
| Financial income | 6,109 | 41 | 0.67 | 6,376 | 49 | 0.77 | 7,218 | 53 | 0.73 | |||||||||||||||
| Financial expense | (6,727 | ) | (7,410 | ) | (1 | ) | 0.01 | (8,274 | ) | (4 | ) | 0.05 | ||||||||||||
| Other gain (loss) from investments | 619 | 1,623 | 338 | 20.83 | 2,603 | |||||||||||||||||||
| Discontinued operations | ||||||||||||||||||||||||
| Net sales from operations | 1,895 | 370 | 19.53 | 1,906 | 407 | 21.35 | 1,886 | 303 | 16.07 | |||||||||||||||
| Operating expenses | 1,266 | 5 | 0.39 | 1,274 | 7 | 0.55 | 998 | 88 | 8.82 | |||||||||||||||
| Income (expense) from investments | 44 | 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 arm’s length basis.
Main cash flows with related parties are provided below:
| (euro million) | 2010 |
2011 |
2012 |
| Revenues and other income | 2,962 | 3,518 | 3,839 | ||||||
| Costs and other expenses | (5,820 | ) | (4,497 | ) | (5,375 | ) | |||
| Other operating income (expense) | 41 | 32 | 10 | ||||||
| Net change in trade and other receivables and liabilities | 182 | (140 | ) | (280 | ) | ||||
| Net interests | 41 | 48 | 49 | ||||||
| Net cash provided from operating activities - Continuing operations | (2,594 | ) | (1,039 | ) | (1,757 | ) | |||
| Net cash provided from operating activities - Discontinued operations | 365 | 400 | 215 | ||||||
| Net cash provided from operating activities | (2,229 | ) | (639 | ) | (1,542 | ) | |||
| Capital expenditures in tangible and intangible assets | (1,764 | ) | (1,416 | ) | (1,250 | ) | |||
| Disposal of investments | 533 | 3,517 | |||||||
| Change in accounts payable and receivables in relation to investments | 10 | (21 | ) | 261 | |||||
| Change in financial receivables | 128 | 104 | (993 | ) | |||||
| Net cash used in investing activities | (1,626 | ) | (800 | ) | 1,535 | ||||
| Change in financial liabilities | (23 | ) | 348 | (94 | ) | ||||
| Net cash used in financing activities | (23 | ) | 348 | (94 | ) | ||||
| Total financial flows to related parties | (3,878 | ) | (1,091 | ) | (101 | ) |
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The impact of cash flows with related parties consisted of the following:
2010 |
2011 |
2012 |
||||
| (euro million) | Total |
Related parties |
Impact (%) |
Total |
Related parties |
Impact (%) |
Total |
Related parties |
Impact (%) |
| Net cash provided from operating activities | 14,694 | (2,229 | ) | .. | 14,382 | (639 | ) | .. | 12,371 | (1,542 | ) | .. | ||||||||||||
| Net cash used in investing activities | (12,965 | ) | (1,626 | ) | 12.54 | (11,218 | ) | (800 | ) | 7.13 | (8,291 | ) | 1,535 | .. | ||||||||||
| Net cash used in financing activities | (1,827 | ) | (23 | ) | 1.26 | (3,223 | ) | 348 | .. | 2,201 | (94 | ) | .. |
43 Significant non-recurring events and operations
| (euro million) | 2010 |
2011 |
2012 |
| Estimate of the charge from the possible resolution of the TSKJ matter | 24 | ||||||
| Fines sanctioned by Antitrust Authorities | (270 | ) | 69 | ||||
| (246 | ) | 69 |
In 2012, no non-recurring events and
operations were reported.
In 2011, a non-recurring provision was made amounting to euro 69
million 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.
In 2010, a non-recurring gain amounting to euro 270 million
related to the favorable settlement of an antitrust proceedings
concerning alleged anticompetitive behavior charged to Eni
regarding third party access to the import pipeline from Algeria
in 2003. This resulted in a significantly lower fine imposed on
the Company than the one sanctioned by the Antitrust Authority in
2003 and then accrued to profit and loss. Also in 2010 a charge
of euro 24 million related to a fine of $30 million for the TSKJ
matter following the agreement with the Federal Government of
Nigeria for the settling of the legal proceeding.
44 Positions or transactions deriving from atypical and/or unusual operations
In 2010, 2011 and 2012 no transactions deriving from atypical and/or unusual operations were reported.
45 Subsequent events
In January 2013, Eni continued the
divestment of part of its interest in Snam with the placement of
euro 1,250 million aggregate principal amount of senior,
unsecured bonds, exchangeable into ordinary shares of Snam. The
bonds have maturity of 3 years and pay a coupon of 0.625% per
annum. The bonds will be exchangeable into Snam ordinary shares
at an exchange price of euro 4.33 per Snam ordinary share,
representing approximately a 20% premium to the Snam current
reference price. Underlying the bonds are approximately 288.7
million ordinary shares of Snam, corresponding to approximately
8.54% of the currently outstanding share capital of Snam. Changes
in fair value of those shares will be reported through profit as
opposed to equity based on the fair value option provided by IAS
39 from inception, i.e. the transaction date with CDP. Those
changes were immaterial at the balance sheet date. At the
maturity date, if the strike price is lower than the exercise
price, Eni will be enabled to reimburse the bond holders with
Snam ordinary shares at the current market price recognized at
the date of the reimbursement.
On March 13, 2013, Eni signed an agreement with CNPC/Petrochina
to sell 28.57% of the share capital of the subsidiary Eni East
Africa SpA, which currently owns 70% interest in Area 4 for an
agreed price equal to $4,210 million. The deal is subject to
approval by relevant authorities. Once finalized, CNPC indirectly
acquires, through its 28.57% equity investment in Eni East Africa
SpA, a 20% interest in Area 4, while Eni will retain the 50%
interest through the remaining controlling stake in Eni East
Africa SpA.
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Eni Annual Report / Supplemental oil and gas information |
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 |
America |
Australia and Oceania |
Total |
| December 31, 2011 | |||||||||||||||||||||||||||
| Consolidated subsidiaries | |||||||||||||||||||||||||||
| Proved mineral interests | 11,356 | 11,481 | 15,519 | 19,539 | 2,523 | 6,136 | 8,976 | 1,889 | 77,419 | ||||||||||||||||||
| Unproved mineral interests | 31 | 325 | 582 | 2,893 | 40 | 1,543 | 1,409 | 204 | 7,027 | ||||||||||||||||||
| Support equipment and facilities | 285 | 34 | 1,442 | 923 | 85 | 41 | 61 | 13 | 2,884 | ||||||||||||||||||
| Incomplete wells and other | 956 | 1,778 | 2,755 | 898 | 5,333 | 136 | 1,029 | 12,885 | |||||||||||||||||||
| Gross capitalized costs | 12,628 | 13,618 | 20,298 | 24,253 | 7,981 | 7,856 | 11,475 | 2,106 | 100,215 | ||||||||||||||||||
| Accumulated depreciation, depletion and amortization | (8,633 | ) | (8,582 | ) | (9,750 | ) | (13,069 | ) | (906 | ) | (5,411 | ) | (6,806 | ) | (650 | ) | (53,807 | ) | |||||||||
| Net capitalized costs consolidated subsidiaries (a) (b) | 3,995 | 5,036 | 10,548 | 11,184 | 7,075 | 2,445 | 4,669 | 1,456 | 46,408 | ||||||||||||||||||
| Equity-accounted entities | |||||||||||||||||||||||||||
| Proved mineral interests | 2 | 80 | 240 | 698 | 330 | 1,350 | |||||||||||||||||||||
| Unproved mineral interests | 44 | 271 | 315 | ||||||||||||||||||||||||
| Support equipment and facilities | 8 | 6 | 3 | 17 | |||||||||||||||||||||||
| Incomplete wells and other | 2 | 1 | 1,011 | 185 | 223 | 1,422 | |||||||||||||||||||||
| Gross capitalized costs | 48 | 89 | 1,251 | 1,160 | 556 | 3,104 | |||||||||||||||||||||
| Accumulated depreciation, depletion and amortization | (2 | ) | (74 | ) | (131 | ) | (388 | ) | (89 | ) | (684 | ) | |||||||||||||||
| Net capitalized costs equity-accounted entities (a) (b) | 46 | 15 | 1,120 | 772 | 467 | 2,420 | |||||||||||||||||||||
| December 31, 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 |
(a) The amounts include net
capitalized financial charges totaling euro 614 million in 2011
and euro 672 million in 2012 for the consolidated subsidiaries
and euro 11 million in 2011 and euro 24 million in 2012 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 3,608 million in
2011 e euro 4,071 million in 2012 for the consolidated
subsidiaries and of euro 101 million in 2011 and euro 74 million
in 2012 for equity-accounted entities.
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Eni Annual Report / Supplemental oil and gas information |
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 |
America |
Australia and Oceania |
Total |
| 2010 | |||||||||||||||||||||||||||
| Consolidated subsidiaries | |||||||||||||||||||||||||||
| Proved property acquisitions | |||||||||||||||||||||||||||
| Unproved property acquisitions | |||||||||||||||||||||||||||
| Exploration | 34 | 114 | 84 | 406 | 6 | 223 | 119 | 26 | 1,012 | ||||||||||||||||||
| Development (a) | 579 | 890 | 2,674 | 1,909 | 1,031 | 359 | 1,309 | 160 | 8,911 | ||||||||||||||||||
| Total costs incurred consolidated subsidiaries | 613 | 1,004 | 2,758 | 2,315 | 1,037 | 582 | 1,428 | 186 | 9,923 | ||||||||||||||||||
| Equity-accounted entities | |||||||||||||||||||||||||||
| Proved property acquisitions | |||||||||||||||||||||||||||
| Unproved property acquisitions | |||||||||||||||||||||||||||
| Exploration | 4 | 2 | 4 | 35 | 45 | ||||||||||||||||||||||
| Development (b) | 7 | 200 | 46 | 114 | 367 | ||||||||||||||||||||||
| Total costs incurred equity-accounted entities | 11 | 202 | 50 | 149 | 412 | ||||||||||||||||||||||
| 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 |
(a) Includes the abandonment
costs of the assets for euro 269 million in 2010, euro 918
million in 2011 and euro 1,381 million in 2012.
(b) Includes the abandonment costs of the assets for euro -3
million in 2010, euro 15 million in 2011 and euro 63 million in
2012.
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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 (PSAs), whereby a portion of Eni’s share of oil and gas production is withheld and sold by its joint venture partners which are state owned entities, with proceeds being remitted to the state 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 |
America |
Australia and Oceania |
Total |
| 2010 | |||||||||||||||||||||||||||
| Consolidated subsidiaries | |||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||
| - sales to consolidated entities | 2,725 | 3,006 | 2,094 | 5,314 | 324 | 34 | 1,139 | 69 | 14,705 | ||||||||||||||||||
| - sales to third parties | 263 | 6,604 | 1,696 | 890 | 1,429 | 562 | 289 | 11,733 | |||||||||||||||||||
| Total revenues | 2,725 | 3,269 | 8,698 | 7,010 | 1,214 | 1,463 | 1,701 | 358 | 26,438 | ||||||||||||||||||
| Operations costs | (278 | ) | (555 | ) | (593 | ) | (902 | ) | (184 | ) | (150 | ) | (292 | ) | (69 | ) | (3,023 | ) | |||||||||
| Production taxes | (184 | ) | (300 | ) | (700 | ) | (37 | ) | (1,221 | ) | |||||||||||||||||
| Exploration expenses | (35 | ) | (116 | ) | (85 | ) | (465 | ) | (6 | ) | (263 | ) | (204 | ) | (25 | ) | (1,199 | ) | |||||||||
| D.D. & A. and provision for abandonment (a) | (621 | ) | (615 | ) | (1,063 | ) | (1,739 | ) | (84 | ) | (696 | ) | (872 | ) | (84 | ) | (5,774 | ) | |||||||||
| Other income (expenses) | (560 | ) | 254 | (392 | ) | (219 | ) | (161 | ) | (138 | ) | (45 | ) | (25 | ) | (1,286 | ) | ||||||||||
| Pretax income from producing activities | 1,047 | 2,237 | 6,265 | 2,985 | 779 | 179 | 288 | 155 | 13,935 | ||||||||||||||||||
| Income taxes | (382 | ) | (1,296 | ) | (4,037 | ) | (1,962 | ) | (291 | ) | (119 | ) | (154 | ) | (36 | ) | (8,277 | ) | |||||||||
| Results of operations from E&P activities of consolidated subsidiaries (b) | 665 | 941 | 2,228 | 1,023 | 488 | 60 | 134 | 119 | 5,658 | ||||||||||||||||||
| Equity-accounted entities | |||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||
| - sales to consolidated entities | |||||||||||||||||||||||||||
| - sales to third parties | 16 | 65 | 69 | 206 | 356 | ||||||||||||||||||||||
| Total revenues | 16 | 65 | 69 | 206 | 356 | ||||||||||||||||||||||
| Operations costs | (16 | ) | (9 | ) | (7 | ) | (9 | ) | (41 | ) | |||||||||||||||||
| Production taxes | (3 | ) | (69 | ) | (72 | ) | |||||||||||||||||||||
| Exploration expenses | (4 | ) | (2 | ) | (4 | ) | (35 | ) | (45 | ) | |||||||||||||||||
| D.D. & A. and provision for abandonment | (4 | ) | (26 | ) | (25 | ) | (17 | ) | (72 | ) | |||||||||||||||||
| Other income (expenses) | 6 | 12 | (10 | ) | (67 | ) | (59 | ) | |||||||||||||||||||
| Pretax income from producing activities | (5 | ) | 40 | 23 | 9 | 67 | |||||||||||||||||||||
| Income taxes | 4 | (20 | ) | (17 | ) | (33 | ) | (66 | ) | ||||||||||||||||||
| Results of operations from E&P activities of equity-accounted entities (b) | (1 | ) | 20 | 6 | (24 | ) | 1 |
(a) Includes asset impairments
amounting to euro 123 million in 2010.
(b) The "Successful Effort Method" application would
have led to a decrease of result of operations of euro 385
million in 2010 for the consolidated subsidiaries and a decrease
of euro 5 million in 2010 for equity-accounted entities.
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| (euro million) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
America |
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 (expenses) | (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 (expenses) | (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 result of operations 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 |
America |
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) | (202 | ) | (120 | ) | (937 | ) | (447 | ) | 206 | (151 | ) | 74 | (42 | ) | (1,619 | ) | |||||||||||
| Pretax income from producing activities | 2,140 | 2,280 | 8,244 | 3,362 | 1,722 | 459 | 30 | 292 | 18,529 | ||||||||||||||||||
| Income taxes | (918 | ) | (1,524 | ) | (5,194 | ) | (2,508 | ) | (736 | ) | (176 | ) | (14 | ) | (164 | ) | (11,234 | ) | |||||||||
| Results of operations from E&P activities of consolidated subsidiaries (b) | 1,222 | 756 | 3,050 | 854 | 986 | 283 | 16 | 128 | 7,295 | ||||||||||||||||||
| 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 a decrease of result of operations 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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Eni Annual Report / Supplemental oil and gas information |
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 U.S. 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 geosciences 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 2012, the average price for the marker
Brent crude oil was $111 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 evaluation21
of part of its proved reserves on a rotational basis. The
description of qualifications of the person primarily responsible
of the reserve audit is included in the third party audit report.
In the preparation of their reports, independent evaluators rely,
without independent verification, upon data furnished by Eni with
respect to property interest, production, current cost 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 2012, Ryder Scott Company
and DeGolyer and MacNaughton22 provided an independent
evaluation of almost 33% of Eni’s total proved reserves as
of December 31, 201223, confirming, as in previous
years, the reasonableness of Eni’s internal evaluations. In
the three year period from 2010 to 2012, 92% of Eni’s total
proved reserves were subject to independent evaluation. As of
December 31, 2012, the principal properties not subjected to
independent evaluation in the last three years are Bouri and Bu
Attifel (Libya) and M’Boundi (Congo).
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 55%, 49% and 47% of total proved
reserves as of December 31, 2010, 2011 and 2012, respectively, on
an oil-equivalent basis. Similar effects as PSAs apply to service
and "buy-back" contracts; proved reserves associated
with such contracts represented 3%, 1% and 2% of total proved
reserves on an oil-equivalent basis as of December 31, 2010, 2011
and 2012, respectively.
Oil and gas reserve 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.
Reserve volumes associated with oil and gas deriving from such
obligation represent 0.6%, 0.8% and 1.1% of total proved reserves
as of December 31, 2010, 2011 and 2012, 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.
(21) From 1991 to 2002 DeGolyer and
MacNaughton, from 2003 also Ryder Scott.
(22) The reports of independent engineers are available on Eni
website eni.com, section Publications/Annual Report 2011.
(23) Including reserves of equity-accounted entities.
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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, 2010, 2011 and 2012.
Crude oil (including condensate and natural gas liquids)
| (million barrels) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
America |
Australia and Oceania |
Total |
| 2010 | |||||||||||||||||||||||||||
| Reserves of consolidated subsidiaries at December 31, 2009 |
233 | 351 | 895 | 770 | 849 | 94 | 153 | 32 | 3,377 | ||||||||||||||||||
| of which: developed | 141 | 218 | 659 | 544 | 291 | 45 | 80 | 23 | 2,001 | ||||||||||||||||||
| of which: undeveloped | 92 | 133 | 236 | 226 | 558 | 49 | 73 | 9 | 1,376 | ||||||||||||||||||
| Purchase of minerals in place | |||||||||||||||||||||||||||
| Revisions of previous estimates | 38 | 17 | 178 | 75 | (37 | ) | 62 | 2 | 335 | ||||||||||||||||||
| Improved recovery | 1 | 1 | 2 | ||||||||||||||||||||||||
| Extensions and discoveries | 25 | 13 | 22 | 1 | 61 | ||||||||||||||||||||||
| Production | (23 | ) | (44 | ) | (108 | ) | (116 | ) | (24 | ) | (17 | ) | (22 | ) | (3 | ) | (357 | ) | |||||||||
| Sales of minerals in place | (1 | ) | (2 | ) | (3 | ) | |||||||||||||||||||||
| Reserves
of consolidated subsidiaries at December 31, 2010 |
248 | 349 | 978 | 750 | 788 | 139 | 134 | 29 | 3,415 | ||||||||||||||||||
| Reserves of equity-accounted entities at December 31, 2009 |
13 | 7 | 50 | 16 | 86 | ||||||||||||||||||||||
| of which: developed | 10 | 4 | 7 | 13 | 34 | ||||||||||||||||||||||
| of which: undeveloped | 3 | 3 | 43 | 3 | 52 | ||||||||||||||||||||||
| Purchase of minerals in place | |||||||||||||||||||||||||||
| Revisions of previous estimates | 8 | (6 | ) | (2 | ) | ||||||||||||||||||||||
| Improved recovery | 12 | 12 | |||||||||||||||||||||||||
| Extensions and discoveries | 117 | 117 | |||||||||||||||||||||||||
| Production | (2 | ) | (1 | ) | (4 | ) | (7 | ) | |||||||||||||||||||
| Sales of minerals in place | |||||||||||||||||||||||||||
| Reserves
of equity-accounted entities at December 31, 2010 |
19 | 6 | 44 | 139 | 208 | ||||||||||||||||||||||
| Reserves at December 31, 2010 | 248 | 349 | 997 | 756 | 788 | 183 | 273 | 29 | 3,623 | ||||||||||||||||||
| Developed | 183 | 207 | 674 | 537 | 251 | 44 | 87 | 20 | 2,003 | ||||||||||||||||||
| consolidated subsidiaries | 183 | 207 | 656 | 533 | 251 | 39 | 62 | 20 | 1,951 | ||||||||||||||||||
| equity-accounted entities | 18 | 4 | 5 | 25 | 52 | ||||||||||||||||||||||
| Undeveloped | 65 | 142 | 323 | 219 | 537 | 139 | 186 | 9 | 1,620 | ||||||||||||||||||
| consolidated subsidiaries | 65 | 142 | 322 | 217 | 537 | 100 | 72 | 9 | 1,464 | ||||||||||||||||||
| equity-accounted entities | 1 | 2 | 39 | 114 | 156 |
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| (million barrels) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
America |
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 |
America |
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, 2010 |
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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Natural Gas (a)
| (billion cubic feet) | Italy (b) |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
America |
Australia and Oceania |
Total |
| 2010 | |||||||||||||||||||||||||||
| Reserves of consolidated subsidiaries at December 31, 2009 |
2,704 | 1,380 | 5,894 | 2,127 | 2,139 | 814 | 629 | 575 | 16,262 | ||||||||||||||||||
| of which: developed | 2,001 | 1,231 | 3,486 | 1,463 | 1,859 | 539 | 506 | 565 | 11,650 | ||||||||||||||||||
| of which: undeveloped | 703 | 149 | 2,408 | 664 | 280 | 275 | 123 | 10 | 4,612 | ||||||||||||||||||
| Purchase of minerals in place | |||||||||||||||||||||||||||
| Revisions of previous estimates | 234 | 48 | 778 | 161 | (179 | ) | 211 | 41 | (18 | ) | 1,276 | ||||||||||||||||
| Improved recovery | |||||||||||||||||||||||||||
| Extensions and discoveries | 177 | 146 | 4 | 5 | 22 | 354 | |||||||||||||||||||||
| Production | (246 | ) | (204 | ) | (609 | ) | (161 | ) | (86 | ) | (158 | ) | (145 | ) | (35 | ) | (1,644 | ) | |||||||||
| Sales of minerals in place | (48 | ) | (2 | ) | (50 | ) | |||||||||||||||||||||
| Reserves
of consolidated subsidiaries at December 31, 2010 |
2,644 | 1,401 | 6,207 | 2,127 | 1,874 | 871 | 530 | 544 | 16,198 | ||||||||||||||||||
| Reserves of equity-accounted entities at December 31, 2009 |
14 | 85 | 1,487 | 2 | 1,588 | ||||||||||||||||||||||
| of which: developed | 12 | 5 | 217 | 234 | |||||||||||||||||||||||
| of which: undeveloped | 2 | 80 | 1,270 | 2 | 1,354 | ||||||||||||||||||||||
| Purchase of minerals in place | |||||||||||||||||||||||||||
| Revisions of previous estimates | 6 | (1 | ) | 44 | 2 | 51 | |||||||||||||||||||||
| Improved recovery | |||||||||||||||||||||||||||
| Extensions and discoveries | 6 | 34 | 18 | 58 | |||||||||||||||||||||||
| Production | (2 | ) | (11 | ) | (13 | ) | |||||||||||||||||||||
| Sales of minerals in place | |||||||||||||||||||||||||||
| Reserves
of equity-accounted entities at December 31, 2010 |
24 | 118 | 1,520 | 22 | 1,684 | ||||||||||||||||||||||
| Reserves at December 31, 2010 | 2,644 | 1,401 | 6,231 | 2,245 | 1,874 | 2,391 | 552 | 544 | 17,882 | ||||||||||||||||||
| Developed | 2,061 | 1,103 | 3,122 | 1,554 | 1,621 | 774 | 437 | 539 | 11,211 | ||||||||||||||||||
| consolidated subsidiaries | 2,061 | 1,103 | 3,100 | 1,550 | 1,621 | 560 | 431 | 539 | 10,965 | ||||||||||||||||||
| equity-accounted entities | 22 | 4 | 214 | 6 | 246 | ||||||||||||||||||||||
| Undeveloped | 583 | 298 | 3,109 | 691 | 253 | 1,617 | 115 | 5 | 6,671 | ||||||||||||||||||
| consolidated subsidiaries | 583 | 298 | 3,107 | 577 | 253 | 311 | 99 | 5 | 5,233 | ||||||||||||||||||
| equity-accounted entities | 2 | 114 | 1,306 | 16 | 1,438 |
(a) Values lower
than 1 BCF are not disclosed.
(b) Including, approximately, 769 and 767 BCF of natural gas held
in storage at December 31, 2009 and 2010, respectively.
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| (billion cubic feet) | Italy (b) |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
America |
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 |
(b) Including, approximately, 767 and 767 BCF of natural gas held in storage at December 31, 2010 and 2011, respectively.
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| (billion cubic feet) | Italy (b) |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
America |
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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Eni Annual Report / Supplemental oil and gas information |
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 year-end the 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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Eni Annual Report / Supplemental oil and gas information |
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 |
America |
Australia and Oceania |
Total |
| December 31, 2010 | |||||||||||||||||||||||||||
| Consolidated subsidiaries | |||||||||||||||||||||||||||
| Future cash inflows | 30,047 | 27,973 | 86,728 | 45,790 | 41,053 | 9,701 | 8,546 | 3,846 | 253,684 | ||||||||||||||||||
| Future production costs | (4,865 | ) | (7,201 | ) | (12,896 | ) | (13,605 | ) | (6,686 | ) | (3,201 | ) | (2,250 | ) | (611 | ) | (51,315 | ) | |||||||||
| Future development and abandonment costs | (4,499 | ) | (6,491 | ) | (8,827 | ) | (5,310 | ) | (5,192 | ) | (3,489 | ) | (1,713 | ) | (221 | ) | (35,742 | ) | |||||||||
| Future net inflow before income tax | 20,683 | 14,281 | 65,005 | 26,875 | 29,175 | 3,011 | 4,583 | 3,014 | 166,627 | ||||||||||||||||||
| Future income tax | (6,289 | ) | (9,562 | ) | (37,108 | ) | (14,468 | ) | (7,213 | ) | (872 | ) | (910 | ) | (805 | ) | (77,227 | ) | |||||||||
| Future net cash flows | 14,394 | 4,719 | 27,897 | 12,407 | 21,962 | 2,139 | 3,673 | 2,209 | 89,400 | ||||||||||||||||||
| 10% discount factor | (7,224 | ) | (1,608 | ) | (13,117 | ) | (3,884 | ) | (14,829 | ) | (419 | ) | (1,392 | ) | (850 | ) | (43,323 | ) | |||||||||
| Standardized
measure of discounted future net cash flows of consolidated subsidiaries at December 31, 2010 |
7,170 | 3,111 | 14,780 | 8,523 | 7,133 | 1,720 | 2,281 | 1,359 | 46,077 | ||||||||||||||||||
| Equity-accounted entities | |||||||||||||||||||||||||||
| Future cash inflows | 498 | 750 | 2,893 | 7,363 | 11,504 | ||||||||||||||||||||||
| Future production costs | (251 | ) | (98 | ) | (972 | ) | (2,676 | ) | (3,997 | ) | |||||||||||||||||
| Future development and abandonment costs | (35 | ) | (128 | ) | (879 | ) | (1,188 | ) | (2,230 | ) | |||||||||||||||||
| Future net inflow before income tax | 212 | 524 | 1,042 | 3,499 | 5,277 | ||||||||||||||||||||||
| Future income tax | (2 | ) | (69 | ) | (338 | ) | (2,145 | ) | (2,554 | ) | |||||||||||||||||
| Future net cash flows | 210 | 455 | 704 | 1,354 | 2,723 | ||||||||||||||||||||||
| 10% discount factor | (113 | ) | (160 | ) | (515 | ) | (852 | ) | (1,640 | ) | |||||||||||||||||
| Standardized
measure of discounted future net cash flows of equity-accounted entities at December 31, 2010 |
97 | 295 | 189 | 502 | 1,083 | ||||||||||||||||||||||
| Total consolidated subsidiaries and equity-accounted entities at December 31, 2010 | 7,170 | 3,111 | 14,877 | 8,818 | 7,133 | 1,909 | 2,783 | 1,359 | 47,160 |
| 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 |
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| (euro million) | Italy |
Rest of Europe |
North Africa |
Sub-Saharan Africa |
Kazakhstan |
Rest of Asia |
America |
Australia and Oceania |
Total |
| 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 |
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, 2010, 2011 and 2012, are as follows:
| (euro million) | Consolidated subsidiaries |
Equity-accounted entities |
Total |
| Standardized measure of discounted future net cash flows at December 31, 2009 | 31,500 | 257 | 31,757 | ||||||
| Increase (decrease): | |||||||||
| - sales, net of production costs | (22,194 | ) | (243 | ) | (22,437 | ) | |||
| - net changes in sales and transfer prices, net of production costs | 24,415 | 406 | 24,821 | ||||||
| - extensions, discoveries and improved recovery, net of future production and development costs | 1,926 | 1,409 | 3,335 | ||||||
| - changes in estimated future development and abandonment costs | (6,464 | ) | (386 | ) | (6,850 | ) | |||
| - development costs incurred during the period that reduced future development costs | 8,520 | 368 | 8,888 | ||||||
| - revisions of quantity estimates | 12,600 | 143 | 12,743 | ||||||
| - accretion of discount | 6,519 | 53 | 6,572 | ||||||
| - net change in income taxes | (11,802 | ) | (1,115 | ) | (12,917 | ) | |||
| - purchase of reserves in-place | |||||||||
| - sale of reserves in-place | (177 | ) | (177 | ) | |||||
| - changes in production rates (timing) and other | 1,234 | 191 | 1,425 | ||||||
| Net increase (decrease) | 14,577 | 826 | 15,403 | ||||||
| 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 |
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Eni Annual Report / List of Eni's subsidiaries |
List of Eni’s subsidiaries for year 2012
| Subsidiary | Country of Incorporation |
Eni’s share |
| Exploration & Production | ||||
| Eni Angola SpA | Italy | 100.00 | ||
| Eni East Africa SpA | Italy | 100.00 | ||
| Eni Mediterranea Idrocarburi SpA | Italy | 100.00 | ||
| Eni Timor Leste SpA | Italy | 100.00 | ||
| Eni West Africa SpA | Italy | 100.00 | ||
| Eni Zubair 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 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 Energy (Services) Ltd | 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 | Republic of the Congo | 100.00 | ||
| Eni Croatia BV | Netherlands | 100.00 | ||
| Eni Dación BV | Netherlands | 100.00 | ||
| Eni Denmark BV | Netherlands | 100.00 | ||
| Eni East Sepinggan Ltd | United Kingdom | 100.00 | ||
| Eni Elgin/Franklin Ltd | United Kingdom | 100.00 | ||
| Eni Energy Russia BV | Netherlands | 100.00 |
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Eni Annual Report / List of Eni's subsidiaries |
| Subsidiary | Country of Incorporation |
Eni’s share |
| Exploration & Production | ||||
| 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 Krueng Mane Ltd | United Kingdom | 100.00 | ||
| Eni Lasmo Plc | United Kingdom | 100.00 | ||
| Eni Liberia BV | Netherlands | 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 Algeria Ltd | United Kingdom | 100.00 | ||
| Eni Oil & Gas Inc | United States of America | 100.00 | ||
| Eni Oil Holdings BV | Netherlands | 100.00 | ||
| Eni Pakistan Ltd | United Kingdom | 100.00 | ||
| Eni Pakistan (M) Ltd Sàrl | Luxembourg | 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 SPRL | Democratic Republic of the 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 Transportation Ltd | United Kingdom | 100.00 | ||
| Eni Trinidad and Tobago Ltd | Trinidad & Tobago | 100.00 | ||
| Eni Tunisia BV | Netherlands | 100.00 | ||
| Eni UHL Ltd | United Kingdom | 100.00 | ||
| Eni UKCS Ltd | United Kingdom | 100.00 | ||
| Eni UK Holding Plc | 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 UK 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 USA Gas Marketing Llc | United States of America | 100.00 | ||
| Eni USA Inc | United States of America | 100.00 | ||
| Eni US Operating Co Inc | United States of America | 100.00 | ||
| Eni Venezuela 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 | ||||
| EniPower Mantova SpA | Italy | 86.50 | ||
| EniPower SpA | Italy | 100.00 | ||
| LNG Shipping SpA | Italy | 100.00 | ||
| Società EniPower Ferrara Srl | Italy | 51.00 | ||
| Trans Tunisian Pipeline Co SpA (former Trans Tunisian Pipeline Co Ltd) | Italy | 100.00 | ||
| Adriaplin Podjetje za distribucijo zemeljskega plina doo Ljubljana | Slovenia | 51.00 | ||
| Distribuidora de Gas Cuyana SA | Argentina | 45.60 | ||
| 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 (former Altergaz SA) | France | 99.74 | ||
| Eni Gas & Power GmbH | Germany | 100.00 | ||
| Eni Gas & Power NV (former Distrigas NV) | Belgium | 100.00 | ||
| Eni Gas Transport Services SA | Switzerland | 100.00 | ||
| Eni Power Generation NV | Belgium | 100.00 | ||
| Eni Wind Belgium NV | Belgium | 100.00 | ||
| Finpipe GIE | Belgium | 63.33 | ||
| Inversora de Gas Cuyana SA | Argentina | 76.00 | ||
| 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 | 52.77 | ||
| Tigáz-Dso Földgázelosztó kft | Hungary | 52.77 |
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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 |
| Chemicals | ||||
| Versalis SpA (former Polimeri Europa SpA) | Italy | 100.00 | ||
| Dunastyr Polisztirolgyártó Zártkoruen Mukodo 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 Ibérica SA | Spain | 100.00 | ||
| Polimeri Europa UK Ltd | United Kingdom | 100.00 | ||
| Versalis International SA (former Polimeri Europa Benelux SA) | Belgium | 100.00 | ||
| Versalis Pacific Trading (Shanghai) Co Ltd | China | 100.00 | ||
| Engineering & Construction | ||||
| Saipem SpA | Italy | 43.12 | ||
| Denuke Scarl | Italy | 23.72 | ||
| Servizi Energia Italia SpA | Italy | 43.12 | ||
| SnamprogettiChiyoda SAS di Saipem SpA | Italy | 43.08 | ||
| Andromeda Consultoria Tecnica e Representações Ltda | Brazil | 43.12 | ||
| Boscongo SA | Republic of the Congo | 43.12 | ||
| Construction Saipem Canada Inc | Canada | 43.12 | ||
| ER SAI Caspian Contractor Llc | Kazakhstan | 21.56 | ||
| ERS - Equipment Rental & Services BV | Netherlands | 43.12 | ||
| ERSAI Marine Llc | Kazakhstan | 21.56 | ||
| Global Petroprojects Services AG | Switzerland | 43.12 |
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Eni Annual Report / List of Eni's subsidiaries |
| Subsidiary | Country of Incorporation |
Eni’s share |
| Engineering & Construction | ||||
| Moss Maritime AS | Norway | 43.12 | ||
| Moss Maritime Inc | United States of America | 43.12 | ||
| North Caspian Service Co | Kazakhstan | 43.12 | ||
| Petrex SA | Peru | 43.12 | ||
| Professional Training Center Llc | Kazakhstan | 21.56 | ||
| PT Saipem Indonesia | Indonesia | 43.12 | ||
| Saigut SA de Cv | Mexico | 43.12 | ||
| Saimexicana SA de Cv | Mexico | 43.12 | ||
| Saipem (Beijing) Technical Services Co Ltd | China | 43.12 | ||
| Saipem (Malaysia) Sdn Bhd | Malaysia | 17.84 | ||
| Saipem (Nigeria) Ltd | Nigeria | 38.55 | ||
| Saipem (Portugal) Comércio Marítimo, Sociedade Unipessoal Lda | Portugal | 43.12 | ||
| Saipem America Inc | United States of America | 43.12 | ||
| Saipem Asia Sdn Bhd | Malaysia | 43.12 | ||
| Saipem Australia Pty Ltd | Australia | 43.12 | ||
| Saipem Contracting (Nigeria) Ltd | Nigeria | 42.23 | ||
| Saipem Contracting Algérie SpA | Algeria | 43.12 | ||
| Saipem Contracting Netherlands BV | Netherlands | 43.12 | ||
| Saipem do Brasil Serviçõs de Petroleo Ltda | Brazil | 43.12 | ||
| Saipem Drilling Co Private Ltd | India | 43.12 | ||
| Saipem Drilling Norway AS | Norway | 43.12 | ||
| Saipem India Projects Ltd | India | 43.12 | ||
| Saipem International BV | Netherlands | 43.12 | ||
| Saipem Libya Llc - SA.LI.CO. Llc | Libya | 43.12 | ||
| Saipem Ltd | United Kingdom | 43.12 | ||
| Saipem Luxembourg SA | Luxembourg | 43.12 | ||
| Saipem Maritime Asset Management Luxembourg Sàrl | Luxembourg | 43.12 | ||
| Saipem Mediteran Usluge doo (in liquidation) | Croatia | 43.12 | ||
| Saipem Misr for Petroleum Services SAE | Egypt | 43.12 | ||
| Saipem Norge AS | Norway | 43.12 | ||
| Saipem Offshore Norway AS | Norway | 43.12 | ||
| Saipem SA | France | 43.12 | ||
| Saipem Services México SA de Cv | Mexico | 43.12 | ||
| Saipem Services SA | Belgium | 43.12 | ||
| Saipem Singapore Pte Ltd | Singapore | 43.12 |
| Saipem UK Ltd (in liquidation) | United Kingdom | 43.12 | ||
| Saipem Ukraine Llc | Ukraine | 43.12 | ||
| 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 | 43.12 | ||
| Snamprogetti Canada Inc | Canada | 43.12 | ||
| Snamprogetti Engineering BV | Netherlands | 43.12 | ||
| Snamprogetti Ltd (in liquidation) | United Kingdom | 43.12 | ||
| Snamprogetti Lummus Gas Ltd | Malta | 42.69 | ||
| Snamprogetti Netherlands BV | Netherlands | 43.12 | ||
| Snamprogetti Romania Srl | Romania | 43.12 | ||
| Snamprogetti Saudi Arabia Co Ltd Llc | Saudi Arabia | 43.12 | ||
| Sofresid Engineering SA | France | 43.12 | ||
| Sofresid SA | France | 43.12 | ||
| Sonsub International Pty Ltd | Australia | 43.12 | ||
| Varisal - Serviços de Consultadoria e Marketing Unipessoal Lda | Portugal | 43.12 |
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Eni Annual Report / List of Eni's subsidiaries |
| Subsidiary | Country of Incorporation |
Eni’s share |
| Other activities | ||||
| Syndial SpA - Attività Diversificate | Italy | 100.00 | ||
| Ing. Luigi Conti Vecchi SpA | Italy | 100.00 | ||
| Corporate and financial companies | ||||
| Agenzia Giornalistica Italia SpA | Italy | 100.00 | ||
| Eni Adfin SpA (former Eni Administration & Financial Service 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 |
226
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227
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Eni Annual Report / Consolidated Sustainability Statements |
Notes on the Consolidated Sustainability Statements
n Preparation criteria
2012 was Eni’s second year of
adhesion to the Pilot Program launched by the International
Integrated Reporting Council (IIRC) to pilot the Integrated
Report. In line with the "Prototype of the International
Framework" published by the IIRC, Eni has continued
integrating financial and sustainability information, showing the
relationship between elements of the scenario and competitive
context, performance and strategic direction within the Operating
and Financial Review section of the 2012 Annual Report. In
addition, this year’s integrated report has been enhanced
with examples of application of the business model as well as a
description of the integrated risk management model. The section
entitled "2012 Consolidated Sustainability Statements"
(hereafter Consolidated Sustainability Statements) contains the
key performance indicators monitored on an annual basis.
The 2012 sustainability report and the performance indicators for
the 2010-2012 three year period included in this section have
been prepared in accordance with the "Sustainability
Reporting Guidelines, version 3.1" issued by the GRI (Global
Reporting Initiative) and the related "Oil and Gas Sector
Supplement", with particular reference to the principles of
materiality, completeness, stakeholder inclusiveness and
sustainability context.
Materiality and stakeholder
inclusiveness
In order to define the priority sustainability issues both in
terms of relevance to external stakeholders of reference and of
internal significance to the Company, in 2012 an analysis of
materiality was conducted. Its result are the sustainability
themes reported in this document.
The level of external interest in sustainability issues is found
through an analysis that considers the following factors: the
political, economic, social and energy 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 aspects, the capital market and ethical rating
agencies demands, the analysis of the press and the web, requests
that the main stakeholders have done to Eni with different
communication procedures and channels. In addition to the
financial community, 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 paragraph "Stakeholder
engagement").
The internal significance level of sustainability issues is
determined on the basis of the analysis of the strategy and of
short and long term objectives, combined with the evaluation of
the results and of the sustainability performance of 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
interested Company units 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 2010-2012 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 2012 Consolidated Financial Statements, with the exception of
certain data specifically indicated in the text. This year, the
data are shown net of Snam’s contribution for the entire
three-year period, due to the sale of Snam ordinary shares, equal
to 30% less one share of the voting capital of the company, to
Cassa Depositi e Prestiti. This disposal was completed in October
2012.
With regard to data on health, safety and the environment, the
consolidation score is defined on the basis of the operational
criterion (control of operations). For example, under this
approach, 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 the allocation of data 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. In addition, this year, given the change in
consolidation perimeter due to the disposal of Snam, the data
have been recalculated net of Snam’s contribution in order
to ensure comparability over a three-year period. Therefore, any
changes in the data for 2010 and 2011 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, 2012.
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Calculation methods
The methods used to calculate value added, 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.
Value added 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, 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); 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
absence (including fatalities) divided by millions of worked
hours; the severity rate is defined as the ratio between the days
of absence24 due to accident (excluding fatalities)
and thousands of worked hours. The calculation of the injury
frequency rate and severity rate does not take into account
accidents while traveling.
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, 2005 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 net 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 CO2eq using a Global Warming Potential
(GWP) of 21.
The new method for assessing the value generated from research
allows the benefits of R&D to be calculated in terms of both
tangible value and intangible value. The tangible benefits
measure the value created for the Company through the application
of innovative product/process technologies. This value is
calculated using the operating data of the division/company or
official models used to assess the value of industrial projects
as a starting point. 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 benefits may be identified based on actual results
or expected value (net present value - NPV). In particular,
benefits of E&P projects are entirely taken into account,
including the shares of partners. 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
The creation of sustainable value is pursued through a
business model focused on assets and strategic guidelines
distributed along the entire value chain. The model is
characterized by activities conducted within a framework of clear
and rigorous governance rules complying with the highest ethical
standards, with an integrated corporate risk management system,
sustained by continuous interaction with all stakeholders and by
an operating procedure guided by six drivers which are applied in
all operating contexts. The combination of these six drivers
– integration, cooperation, innovation, excellence,
inclusiveness and responsibility – guides investment choices
and allows strategic targets to be pursued.
The Eni model is governed by a regulatory system covering all the
processes of the Group. The organizational model also requires
the Sustainability Unit to perform functions of coordination,
guidance, reporting, and management of relations with
stakeholders and with the territory. Through analysis of the
international scenario, stakeholders needs, Company commitments
and Company performance, Eni defines its priorities in terms of
targets and sustainability areas for improvement, as embodied in
the long-term sustainability plan.
Goals, performance, monitoring and
follow-up
The Company’s industrial plan identifies priority
sustainability goals and develops them into concrete projects.
Implementation of projects relating to priority goals is
supported by economic incentives. Each sustainability goal is
pursued with projects and initiatives defined by Eni’s
divisions and subsidiaries and included in specific short and
medium-term action plans. Project progress status and achievement
of targets are monitored by the Sustainability function. In order
to manage its impacts in a responsible and systematic manner and
to accurately monitor its performance, Eni has built a system of
sustainability reporting which periodically assesses set targets
and results achieved. The set of indicators is updated annually
based on analysis of: (1) the sustainability aspects most
relevant and important for the energy sector (2) the main
international standards, sector guidelines and sustainability
indexes (3) common practices and best practices used by
Eni’s main competitors in the field of sustainability
communication.
(24) The term “days of absence” refers to absence from work of at least one calendar day, excluding the day of the accident.
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Regulatory system
Sustainability management is governed by the Eni regulatory
system, which identifies specific roles and responsibilities for
ensuring its functionality and effective operation in compliance
with the general reference framework composed of: legal
provisions, Eni By-laws, Code of Ethics, the Self Discipline Code
and the CoSO Report. The system is made 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’s policies are "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".
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
2012, Eni had issued twenty-six process MSGs and seven
compliance/governance MSGs, thereby almost completing the
redesign of its processes, redefinition of the
governance/compliance guidelines and simplification of the
regulatory framework.
Training and awareness
Eni has planned the development of training and awareness on
the various aspects linked to sustainability and corporate
ethics, aimed at various Company population targets. The
different courses provide for both strengthening of the process
of cultural, professional and managerial growth and in-depth
exploration of specialist topics with a direct impact on the
business (respect for human rights, health, safety and the
environment, anti-corruption, security etc.). 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.
Additional information
Economic performance
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.
Environment
Environmental management is based on prevention, protection,
information and participation criteria and its goals are:
identification of the 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; the adoption of site-specific methods
for protecting biodiversity. Eni has defined and constantly
updated an integrated health, safety, and environmental (HSE)
management system, which constitutes the reference basis for all
production units and requires the systematic performance of
integrated audits. The companies and divisions are committed to
contributing, with their respective technological capacities and
professional competences, to the well-being and improvement of
the quality of life of the communities in which they operate.
Work on HSE topics is coordinated by an HSE Coordination
Committee, chaired by Eni’s Safety, Health and Environment
Manager and is composed of Managers of the business unit HSE
functions.
Eni has defined a carbon management strategy for the reduction of
climate-altering emissions and manages participation in the
Emissions Trading system through complex management procedures
including physical accounting, reporting and auditing of
emissions, as well as the related operations for administering
quotas and the relevant movements.
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 the
equal opportunities to all based on shared, merit-based criteria,
without discrimination. Eni bases its management of these
aspects, as required by the regulatory system, on the ILO
Fundamental Conventions, the Agreement on Transnational
Industrial Relations and Corporate Social Responsibility with the
ICEM (the International Federation of Chemical and Energy Mining
and General Workers’ Union), the Agreement with the European
Works Council (EWC) and the OECD Guidelines for Multinational
Enterprises.
The health and safety of Eni’s people, the community and
Eni’s partners are a priority for Eni in pursuing its
business activities. Accordingly, Eni manages people’s
health and safety according to the principles of precaution,
prevention, protection and continuous improvement, making all
Company levels responsible for achieving this.
Human Rights
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 regulate the protection and promotion
of Human Rights in all the Company’s actions. Following the
issue of this guideline the Human Rights Compliance Assessment
project was started and in 2011 a Working Group on Human Rights
was established to develop due diligence and other indications
given in the United Nations Guiding Principles.
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Society
Eni identifies and assesses the environmental, social,
economic and cultural impacts generated by its activities,
including those on the local communities, ensuring their
mitigation and implementing improvement processes. Since 2008 a
standard dedicated to Environmental and Social Impact Assessment
(ESIA) has been added to the HSE management system. The
application of this to all new projects allows the socioeconomic
and cultural component to be explored within the impact analysis.
With regard to combating corruption in Eni, an Anti-Corruption
Legal Support Unit (ACLSU) has been created which provides
anti-corruption consulting and specialist assistance for
Eni’s people and Eni’s non listed subsidiaries. Since
January 1, 2012 the new Eni Anti-Corruption Management System
Guideline (MSG) accompanied by Anti-Corruption Regulatory Tools
has been in force, replacing the Ancillary Procedures used until
then. With regard to transparency of payments to producer
Countries, Eni has adhered to the Extractive Industries
Transparency Initiative (EITI) since 2005. The initiative
promotes the publication of the financial flows generated by
extraction activities in order to use these for the long-term
development of producer Countries.
Product Responsibility
For Eni the management of aspects linked to product
responsibility (health and safety, information and labeling,
marketing and privacy) mainly relates to electricity and gas
supply services and the sale of oil, gas, petrochemicals and
their derivatives. Eni’s commercial policies are aimed at
ensuring the quality of goods and services, safety and privacy
protection. In addition to these aspects, Eni is committed to
consolidating the system of relations with Consumer Associations
in order to ensure ongoing and immediate dialogue. In managing
its relations with customers and consumers, Eni is committed to
providing accurate and exhaustive information on its products and
services and to truthfulness in its advertising and other
communications. With regard to the sale of oil and gas,
petrochemicals and their derivatives, Eni implements actions to
meet its ongoing commitment to the safety of its products. The
production processes and product formulations are continuously
reviewed with a view to improving safety, also taking into
account the needs of the end users. Eni supplies all the
information on the conformity of materials both to particular
product regulations and their final application. Each product
sold has a safety data sheet conforming to the European standard
set by the REACH Regulation.
n Stakeholder engagement
Eni promotes transparency and ongoing dialogue with stakeholders and carries out periodic surveys to identify how its operations are perceived through internal climate analyses and reputational researches targeted at the general population, opinion leaders and journalists. Methods of interaction differ according to the category of stakeholder involved, each managed by a specific unit, and have been defined in a management system which allows all the demands of the main stakeholders to be considered and assessed in an integrated manner at the planning and communication stage.
The financial community, institutions
and international organizations
Eni makes quarterly presentations of its results and annual
presentations of its strategy to the financial community, in
addition to meetings and conference calls with financial analysts
and portfolio managers, including Socially Responsible Investors
(SRI). In particular, during 2012, consultation took place with
some SRI investors on Eni’s first integrated report,
"The upstream seminar" and the first presentation
dedicated to SRI investors ("Eni’s strategy and
sustainable growth"). The meetings and conference calls with
the SRI mainly related to HSE performance for the period
2009-2011 and the main HSE plan targets, risk management,
activities in Nigeria and the Arctic.
As part of its relations with the Italian government and local
authorities, Eni takes part in inter-institutional working groups
and conference on services. The main issues covered relate to the
environment, health, safety, the territory and technological
innovation. In 2012 issues related to regulatory simplification,
environmental restoration and return of reclaimed areas through
the promotion of environmental agreements were addressed under
"reclamation of industrial sites". Eni played an active
role in the Cooperation Forum, promoted by the Italian Ministry
for International Cooperation and Integration, held in Milan in
October 2012, and participated in the work of the
Inter-institutional Round Table on Cooperation for Development,
which saw the involvement of all the other central government
departments, local bodies, the private sector, NGOs, unions and
universities.
With the business associations and Confindustria (the main
organization representing Italian manufacturing and services
companies), Eni takes part in Technical Committees and Working
Groups on sustainability topics (Energy Technical Committee;
Sustainability Working Group); holds dialogue and works with
Assomineraria (the Italian Petroleum and Mining Industry
Association) and Federchimica (the Italian Federation of the
chemical industry) and arranges guided visits to oil and gas
sites to inform/train local enterprises and the local
Confindustria body on environmental and safety topics. In
particular, an awareness raising initiative was organized for
young Confindustria entrepreneurs in Basilicata and a
sustainability workshop for entrepreneurs associated with
Confindustria Venezia.
Eni promotes bilateral meetings with the European Commission. In
2012 Eni took part in a consultation process organized by the
European Commission for the preparation of a document which
supports enterprises in the Oil&Gas sector in implementing
the UN’s Guiding Principles on Business and Human Rights.
As part of its relations with the United Nations, Eni has since
2010 been included in the Global Compact LEAD program and sits on
the related Steering Committee. Regarding the issue of access to
energy, Eni supports the United Nations initiative Sustainable
Energy for All. In 2012, Eni took an active part in the main
business events during the United Nations Conference on
Sustainable Development (Rio+20). On this occasion it publicly
recorded its commitment to the reduction of gas flaring and
climate-altering emissions, its contribution to access to
sustainable
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energy, to green chemistry and combating
corruption. In addition, Eni participates in the Proteus 2012
initiative promoted by UNEP and has also contributed, within the
Global Compact, to the preparation of a collection of sustainable
energy practices and experience developed within the Oil&Gas
sector, with the aim of stimulating other players to adopt best
practices in line with the goals of the Sustainable Energy for
All initiative.
CEO Paolo Scaroni has been invited to take part in the Leadership
Council of the United Nations Sustainable Development Solutions
Network. As part of the Network, Eni has been asked to lead the
"Energy for All in Sub-Saharan Africa" initiative to
identify concrete and repeatable solutions in the area of access
to energy and to propose them to governments and international
organizations.
In addition to the Global Compact, Eni is active:
- in the international organizations World Economic Forum, World
Business Council for Sustainable Development, Global Reporting
Initiative and the IIRC, Business for Social Responsibility, GGFR
(Global Gas Flaring Reduction initiative), EITI (Extractive
Industry Transparency Initiative) and IPIECA (the global oil and
gas industry association for environmental and social issues);
- in the Italian associations Sodalitas and Anima, which aim in
particular at the promotion and creation of partnerships with the
third sector.
Local communities, NGOs, universities
and research bodies
Eni informs and involves local communities, promoting free
and informed prior consultation in order to consider their
demands, in new projects, impact assessments and development
initiatives. In 2012 Eni promoted public meetings and took part
in prior consultation with local communities in order to inform
them about its activities and new business projects, for example
in Kazakhstan, Ghana, Poland and Italy (Val d’Agri). In
addition, Eni takes part in consultation processes for the
definition of policies to support local development in the
regions in which it is present, as for example for the
initiatives conducted in Ecuador, the Congo and Nigeria. These
regional consultation processes are promoted and implemented with
the direct involvement of the parties concerned, often through
the establishment of multi-stakeholder bodies composed of
representatives from Eni and the local communities, with the
participation of local institutions and civil society.
Eni holds dialogue with the main non-governmental organizations
working on nature conservation, quality of the environment,
transparency, local development and respect for human rights at a
national and international level. The dialogue includes various
forms of involvement including formation of partnerships such as
the EnergyThink project, developed with Legambiente Italia and
aimed at discussion with students and researchers from the main
Italian universities on energy topics.
With the universities and research centers Eni has built a
network of alliances and partnerships at a global level to
develop "virtual" workshops, particularly on renewable
energy. Priority is given to centers of excellence which are able
to combine different branches of learning and place them at the
service of a single target. With regard to this, Framework
Agreements have been signed with the Politecnico di Milano and
the Politecnico di Torino as well as the National Research
Council (CNR), which address the Intellectual Property issues
generated by partnerships and are focused on the start-up of new
projects on Eni’s core business and long term strategic
issues. As part of the alliance formed in 2008 with the
Massachusetts Institute of Technology in Boston (USA), Eni has
recently renewed its joint research program with the MIT Energy
Initiative (MITEI). In addition, the strategic alliance formed in
2011 by Eni and the Stanford University with regard to core
technologies for the oil and gas business remains in place.
Eni’s people
Each year, as part of the Cascade program, meetings are held to
communicate the Company’s strategies to all Eni’s
people. Thanks to this program, the intranet channel and a
bulletin distributed throughout the Company, during 2012 the
results of the climate analysis "Eni secondo te 2011"
were shared with Eni’s people. Twenty-five post climate
analysis workshops were held involving about 350 employees in the
companies where the most critical results emerged, with the aim
of collecting concrete proposals to define action plans.
Eni’s Industrial Relations, regulated at a national level by
the 2001 Industrial Relations Protocol and by the agreement on
development and competitiveness and a new industrial relations
model signed in 2011, are characterized by ongoing activities
involving communication, consultation and negotiation with the
trade unions, as well as support for Eni divisions/companies to
encourage both Company reorganization and efficiency processes
and processes essential to improve productivity. These principles
are clearly reflected, in particular, in agreements relating to
the refineries of Venice and Gela, signed with the trade unions
in 2012 with the aim of developing solutions which are
economically compatible with the Company’s needs for
efficiency and competitiveness while safeguarding professional
roles, as well as agreements on piloting teleworking aimed at
encouraging productivity and improving work life balance. Key
industrial relations activities of note at an international level
include liaison with the European Works Council on the progress
of Eni policies within the European framework and with the
representatives of the European Risk Observatory of the European
Agency for Safety and Health at Work.
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Board of Directors
| 2010 | 2011 | 2012 | ||||||
| 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 | |||||
| Members of the Board of Directors subject to peer review | - | 9 | 9 | |||||
| Board of Directors Annual Meetings | 18 | 18 | 16 | |||||
| Average attendance at Board meetings | (%) | 95 | 97 | 97 | ||||
| Annual board induction sessions | (number) | 0 | 6 | 3 | ||||
| Presence of women on the Boards of Directors of Eni Group companies (a) | (%) | 4.8 | 5.8 | 8.1 | ||||
| Presence of women on the Boards of Statutory Auditors of Eni Group companies (a) | 6.5 | 7.0 | 14.4 |
(a) Excluding Eni SpA.
The Board of Directors is composed of 9
directors, including 8 non-executive directors and 7 who meet the
requirements of independence 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 newly
appointed board members and statutory auditors continued
throughout 2012. This is also open to confirmed members. The
program explored business topics, with visits to some operating
sites. The induction program also covered sustainability and
corporate ethics.
In addition to the annual Board Review, in 2012 the Eni Board
continued – for the second year running – with the peer
review process for Board Members, which consists of an assessment
of the contribution to board activities made by each board member
by the other directors. The composition of the boards of non
listed subsidiaries and the definition of the relevant
designation criteria were the subject of initiatives aimed at
promoting the principles underlying the recent Gender Equality
Act (Legge sulle quota rosa). In particular, the Board of
Directors has decided to anticipate the implementation of the
Gender Equality Law to Eni’s Italian subsidiaries, requiring
that with effect from the 2012 renewal, at least 1/3 of
appointments to Company bodies for which Eni is responsible will
be women, thus obtaining a significant increase in the female
presence on Company boards or equivalent bodies.
Shareholders
Shareholders breakdown on the basis of nominative claims of the receivers of Eni’s dividends in advance for the year 2012 (ex-dividend date September 24, 2012 - payment date September 27, 2012)
| Number of shares | % | |||
| Controlling shareholders | 1,151,986,865 | 31.70 | ||
| Institutional investors | 2,158,269,356 | 59.39 | ||
| Retail investors | 309,274,444 | 8.51 | ||
| Own shares at the dividend payment date (treasury shares) | 11,388,287 | 0.31 | ||
| Others (shares for which no nominative claims were received) | 3,266,378 | 0.09 | ||
| Share capital | 3,634,185,330 | 100.00 |
Following payment of the interim
dividend for the 2012 financial year, Cassa Depositi e Prestiti
SpA (CDP SpA), the Italian Deposits and Loans Fund, sold
58,255,250 Eni shares, equivalent to 1.6% of Eni’s share
capital. Therefore, as of December 31, 2012 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% CDP SpA).
As of December 31, 2012 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.
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Internal Control and Risk Management System
| 2010 | 2011 | 2012 | ||||||
| Integrated audit actions: | (number) | 61 | 64 | 83 | ||||
| - scheduled audits | 39 | 40 | 59 | |||||
| - spot audits | 5 | 7 | 8 | |||||
| - follow-ups | 17 | 17 | 16 | |||||
| Number of recommendations (corrective actions) | 1,071 | 1,088 | 1,150 | |||||
| Number of Risk Assessment actions | 72 | 78 | 98 | |||||
| Average time of completion of corrective actions | (day) | - | 80 | 83 | ||||
| Participants in training sessions on the Internal Control and Risk Management System by typology: | (number) | - | - | 284 | ||||
| - e-learning | - | - | 64 | |||||
| - workshop | - | - | 220 |
The internal control and risk management
system (ICRMS), the main aspects of which are described in the
"Other information" section of this 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 Legislative Decree No. 231/2001) 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 Legislative Decree No. 231/2001, 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 2012 showed an
increase compared to the previous years, also taking into account
the overall improvement in the time taken to carry out the
audits;
- 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;
- the 2012 risk assessment activities, completed as part of
integrated audit planning, involved updating of the previous
results for the processes and structures of Eni and its main
subsidiaries, subject to organizational change or process
reengineering.
In 2012, the Internal Audit department
started a training initiative on ICRMS aimed at the management of
Eni SpA and its main subsidiaries in Italy and abroad. This
initiative aimed to provide an organic and integrated vision of
the ICRMS and to develop awareness of the role of management in
the implementation and operation of an effective and efficient
ICRMS.
Within the September 2012-July 2014 two-year period "on
site" workshops are planned in about 25 Countries in
addition to Italy.
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Management of reports
| (number) | 2010 | 2011 | 2012 | |||
| Internal control system reports sent to Internal Audit by area reported: | 75 | 86 | 86 | |||
| - procurement | 18 | 25 | 31 | |||
| - human resources | 11 | 7 | 9 | |||
| - legal affairs | 1 | 0 | 0 | |||
| - commercial | 13 | 18 | 9 | |||
| - administration and finance | 0 | 2 | 7 | |||
| - assets acquisition | 0 | 0 | 0 | |||
| - contractual management | 16 | 8 | 9 | |||
| - logistics | 6 | 9 | 6 | |||
| - other corporate areas (security, HSE, etc.) | 10 | 17 | 15 | |||
| Internal control system reports closed in the year owing to completion of investigations: | 89 | 88 | 86 | |||
| - grounded for which corrective actions were taken on the Internal Audit system | 3 | 3 | 7 | |||
| - 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.) | 16 | 9 | 14 | |||
| - ungrounded with actions | 25 | 26 | 23 | |||
| - generic | 6 | 14 | 5 | |||
| - ungrounded | 39 | 34 | 37 | |||
| Reports on Other matters sent to Internal Audit by area reported: | 78 | 68 | 87 | |||
| - human resources | 25 | 18 | 33 | |||
| - Code of Ethics | 44 | 42 | 43 | |||
| - relations with third parties | 4 | 8 | 5 | |||
| - others | 5 | 0 | 6 | |||
| Reports on Other matters closed in the year owing to completion of investigations: | 63 | 90 | 77 | |||
| - grounded for which improvement actions were taken | 0 | 0 | 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.) | 4 | 13 | 12 | |||
| - ungrounded with actions | 13 | 19 | 12 | |||
| - generic | 7 | 2 | 7 | |||
| - ungrounded | 39 | 56 | 44 |
From January 1 to December 31, 2012, 263
reports were received, grouped together in 173 files, 86 (50%) of
which concern topics relevant to the "Internal control
system" and 87 of which relate to "Other matters"
(50%). In the same period, 163 files were archived in total, 86
of which concerned the "Internal control system" (53%)
and 77 of which concerned "Other matters" (47%).
The audits carried out on the 163 files archived in 2012 had the
following results:
- for 35 files (21%) the audits confirmed, at least in part, the
content of the notification and the appropriate corrective
actions were taken;
- for 128 files the audits did not find any evidence to confirm
the facts reported, nevertheless for 35 files (21%) improvement
actions were taken in any case by the Company structures
involved. In conclusion, improvement actions were adopted in 42%
of cases.
The constant growth in 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) | 2010 | 2011 | 2012 | |||
| Distributed net overall added valued (a): | 21,251 | 23,294 | 22,475 | |||
| - of which to human resources | 4,641 | 4,592 | 4,895 | |||
| - of which to shareholders | 3,791 | 3,978 | 4,139 | |||
| - of which to States and Public Administrations | 8,581 | 9,903 | 11,659 | |||
| - of which to financial backers | 765 | 922 | 980 | |||
| - of which to Company system | 3,473 | 3,899 | 802 |
(a) The added value for the 2010-2012 period has been recalculated on the basis of a "continuing operations" criterium, according to the data representation in the Consolidated Financial Statements.
The net added value distributed in 2012
was euro 22,475 million, a reduction compared to the previous
period due to the reduction in net profits compared to 2011,
caused by the write down of tangible and intangible assets
(mainly in the gas marketing and refining business) and deferred
tax assets for the Italian operations, partially offset by the
growth in operating profit of the E&P Division.
Value added in 2012 was divided as follows:
- 52% to the State and Public Administrations through taxes on
the income of both Italian and overseas businesses;
- 22% to human resources remunerated through wages, salaries and
welfare contributions;
- 18% to shareholders remunerated through the distribution of
dividends;
- 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);
- 4% to financial backers, remunerated through financial charges.
Relations with customers and consumers
| Eni call center performances | 2010 (a) | 2011 (a) | 2012 | AEEG (b) standard | ||||||
| Percentage of telephone calls of customers that spoke to an operator | (%) | 94.6 | 97.7 | 97.1 | 80.0 | |||||
| Average waiting time at call center | (seconds) | 112 | 102 | 105 | 240 | |||||
| First Call Resolution (FCR) | (%) | 86 | 88 | 88 | - | |||||
| Self Care (operations carried out autonomously by customers out of total operations requested) | 21 | 32 | 43 | - |
(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 800.900.700 has been configured to be the only phone
access channel to respond to all requests for service and
information relating to gas, electricity and fuel for Italian
retail client.
This has resulted in three important improvements to the service:
the creation of a single point of contact with Eni, a uniform
customer experience and improvements in terms of service,
including the extension of call centre opening times (access is
free 24 hours a day, seven days a week).
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, response
performance has been kept almost at the same level. In
particular, the percentage of calls from customers who spoke with
an operator, which has improved over the years, stayed at 97.1%,
in line with 2011. The number of requests resolved on the first
call (First Call Resolution - FCR) also remained stable (88%). In
this area, the number of operations carried out independently by
gas and electricity customers (self care) increased from 32% in
2011 to 43% in 2012. 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 | 2010 | 2011 | 2012 | |||||
| Eni customer satisfaction score | (%) | 87.4 | 88.6 | 89.8 (b) | ||||
| Panel Average (G&P) (a) | 87.4 | 90.8 | 90.6 |
(a) The panel analyzed refers
to companies representing more than 50% of the market with more
than 50,000 customers (Source: survey of the Regulatory Authority
for Electricity and Gas (AEEG) on the quality of telephone
services of electricity and gas sellers).
(b) Since the survey’s result on the quality of telephone
services was not yet published by the AEEG at the date of the
Annual Report’s publication, the figure is calculated as the
average of the customer satisfaction score (SCC) detected by the
AEEG in the first half of 2012 and the result detected by the Eni
satisfaction survey in the second half of 2012.
In the Gas & Power sector there was further progress on the program of initiatives aimed at increasing the level of customer satisfaction and the quality of the gas and electricity service (approx. euro 20 million investment). Against this background the customer satisfaction score (CSS) increased from 88.6 in 2011 to 89.8 in 2012.
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2012 saw the enrichment of the portfolio
on offer with three new gas and electricity packages for
residential customers ("relax scacciaPensieri",
"young gas e luce" and "eni3") and a new
package for the business segment of the retail market.
Customer care activities, contract transparency and assistance
for retail gas and electricity customers have been strengthened.
In particular, the selection process for commercial partners was
strengthened by integrating contractual tools aimed at
preventing, deterring and sanctioning potential misconduct by the
indirect sales force (commercial agents and home shopping
vendors). In addition, an e-learning system was established to
train vendors.
During 2012, the range of supply management services available to
customers was also strengthened with IT services but also and
above all with devices to allow customers to perform operations
on their own contracts with complete autonomy and transparency.
The data on brand awareness of Eni as an electricity and gas
supplier shows an increase compared to 2011 (spontaneous
awareness increased from 42.6% to 44.9% and total awareness from
77.7% to 79.6%), with a huge leap ahead in the last part of 2012
(49.8% and 82.6%, respectively). This coincided with the new
"street art" advertising campaign, run in Belgium and
France as well as in Italy.
R&M segment
| R&M customer satisfaction | 2010 | 2011 | 2012 | |||||
| R&M customer satisfaction index | (likert scale) | 7.84 | 7.74 | 7.90 | ||||
| Customers involved in the satisfaction survey (R&M) | (number) | 30,618 | 30,524 | 30,438 |
In the Refining & Marketing sector
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. In addition,
to improve service efficiency, a dedicated telephone line was
established for the management of any reports of problems in the
gas stations.
To meet the needs of consumers in Italy during the summer period,
Eni launched the "riparti con eni" initiative, which
provided for a heavy discount during the 12 summer weekends. This
initiative had great success in terms of sales and positive
impact on the retail market share.
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 customer.
Particular attention is devoted to training employees of
operators dealing with customer care, with direct on the job
training given in each of the over 4,400 sales points spread
across the national network.
People safety
| 2010 | 2011 | 2012 | ||||||
| Injury frequency rate | (number of injuries/million of worked hours) | 0.75 | 0.60 | 0.49 | ||||
| - employees | 0.80 | 0.65 | 0.57 | |||||
| - contractors | 0.71 | 0.57 | 0.45 | |||||
| Injury severity rate | (days of absence/thousand of worked hours) | 0.025 | 0.021 | 0.021 | ||||
| - employees | 0.027 | 0.025 | 0.026 | |||||
| - contractors | 0.023 | 0.018 | 0.017 | |||||
| Total recordable injury rate (TRIR) | (total recordable incidents/million of worked hours) | 2.15 | 1.51 | 1.17 | ||||
| - employees | 2.69 | 1.75 | 1.45 | |||||
| - contractors | 1.81 | 1.36 | 1.01 | |||||
| Fatality index | (fatal injuries/one hundred millions of worked hours) | 4.77 | 1.94 | 1.10 | ||||
| - employees | 6.66 | 1.19 | 0.87 | |||||
| - contractors | 3.55 | 2.38 | 1.23 | |||||
| Near misses | (number) | 3,013 | 2,723 | 2,861 | ||||
| Training hours on safety | (hours) | 1,508,239 | 1,354,705 | 1,259,228 | ||||
| - to senior managers | 32,155 | 8,244 | 5,046 | |||||
| - to managers/supervisors | 195,160 | 131,541 | 69,890 | |||||
| - to employees | 703,196 | 474,568 | 312,817 | |||||
| - to workers | 577,728 | 740,352 | 871,475 | |||||
| Audits on Health and Safety | (number) | 545 | 1,503 | 3,702 | ||||
| Safety expenditures | (euro thousand) | 260,434 | 320,117 | 370,559 | ||||
| - operating expenditures | 187,966 | 193,227 | 260,029 | |||||
| - capital expenditures | 72,468 | 126,891 | 110,530 |
The injury frequency rate for 2012 shows an improvement compared to the previous year for both employees and contractors, continuing, for the seventh year running, its positive trend.
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In detail, compared to 2011, the
improvement for employees was 12.3% and for contractors was
21.1%. The injury frequency rate for the total Eni workforce
(equal to 0.49) has decreased by 18.3% compared to 2011.
In 2012 there were 2 fatal accidents involving employees (in 2011
there were 3 and in 2010 there were 17) and 5 involving
contractors (in 2011 there were 10 and in 2010 there were 14).
2010 data was affected by the air crash in Pakistan which caused
the death of 21 people. Eni’s target remains zero
fatalities. Numerous initiatives are being undertaken to achieve
this. 2012 saw the continuation of the "eni in safety"
communication and training program, with "one day
event" workshops being held in all business sectors, and the
start-up of the safety "road show", an initiative aimed
at raising awareness and involving employees and third party
firms, through field visits by top management.
The number of health and safety audits continues to grow significantly, in particular due to the control activities put in place in the Exploration & Production, Gas & Power and Refining & Marketing sectors. In the Gas & Power sector the increase in audit and control activity can be traced to the "Safety at work improvement plan" adopted by the Tigáz Group following a serious accident which occurred in 2011.
Total safety costs increased by 16% following a significant increase in running costs (up 35%) for plant and equipment (rising in all sectors) due to specific safety studies, procedures and standards (Exploration & Production and Engineering & Construction sectors) and research projects (Exploration & Production sector); the investments recorded, while showing a fall overall (down 13%), indicate a growing financial commitment with regard to firefighting systems and equipment, and plant modifications.
People health
| 2010 | 2011 | 2012 | ||||||
| Health Impact Assessments carried out (a) | (number) | 23 | 20 | 28 | ||||
| Environmental surveys | 7,007 | 6,655 | 7,713 | |||||
| OHSAS 18001 certifications | 61 | 74 | 97 | |||||
| Employees included in health surveillance programs | 63,166 | 65,396 | 71,186 | |||||
| Professional illnesses reported | 184 | 135 | 71 | |||||
| Diagnostic examinations | 316,046 | 342,058 | 341,995 | |||||
| Services provided by Company health structures: | 410,787 | 509,838 | 537,444 | |||||
| - to employees | 294,244 | 413,306 | 442,663 | |||||
| - to other subjects | 116,543 | 96,532 | 94,781 | |||||
| Vaccinations provided by Company structures: | 33,550 | 31,397 | 23,700 | |||||
| - to employees | 21,459 | 20,917 | 18,635 | |||||
| - to other subjects | 12,091 | 10,480 | 5,065 | |||||
| Per capita health expenditures | (euro) | 747 | 1,088 | 619 | ||||
| Health and hygiene expenditures: | (euro thousand) | 55,070 | 78,950 | 48,156 | ||||
| - operating expenditures | 53,622 | 78,006 | 47,262 | |||||
| - capital expenditures | 1,448 | 944 | 894 |
(a) HIA figures for 2010 and 2011 has been reviewed using a uniform way of calculating data, with regard to the whole reporting area.
In 2012 the implementation program for
the health and safety management system went ahead in all Eni
companies with the aim of obtaining OHSAS 18001 certification for
all the relevant operating sites. In particular:
- in the Exploration & Production sector, with the
certification of Eni UK and Eni Angola, the number of associates
covered by certification has risen to 28, more than 60%;
- in the Gas & Power sector, the division has completed
coverage of all the EniPower and Scogat production sites and
obtained certification for the subsidiaries (Servizio Fondo
Bombole Metano and Eni G&P GmbH; Trans Tunisian Pipeline Co
has obtained company certification);
- in the Refining & Marketing sector, certification of the
industrial, logistic and commercial areas has gone ahead, with
coverage of the refineries in Sannazzaro, Venice and Taranto, the
EST Site, the Robassomero Plant, the Research Centers in Milazzo
and San Donato Milanese, the South-West Hub, the North-West Sales
Area and the Rome Office;
- in the Chemical sector, with the certification of the
Oberhausen site, certification has been completed for all the
Italian and overseas plants and in the Engineering &
Construction sector all the certifications already obtained in
previous years have been confirmed.
The significant levels of health protection achieved in recent
years have been maintained through periodic environmental
monitoring campaigns, monitoring of exposure and the supply of
health services. In 2012 vaccinations provided by Company
structures are decreasing mainly in the E&P sector (down
4,767 vaccinations delivered in 2012 compared to 2011) due to the
conclusion, in 2011, of a preventive polio campaign started in
Congo in late 2010 as a result of the reactivation of polio
outbreaks in the Country.
Eni’s consolidated figure for recognized occupational
disease and illness has approximately halved compared to previous
years. The number of health risk assessments and health surveys
carried out to assess the health service structures of Countries
in which Eni operates and to analyze health risks for both
employees and the community has increased.
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Total spending on health shows a growing financial commitment in relation to the construction, extension and modification of buildings and plants (Gas & Power sector), safety equipment (Exploration & Production and Gas & Power sectors), training and awareness (Exploration & Production, corporate and finance company sectors).
Employment
| (number) | 2010 | 2011 | 2012 | |||
| Employees as of December 31 | 73,768 | 72,574 | 77,838 | |||
| - men | 61,607 | 60,032 | 64,978 | |||
| - women | 12,161 | 12,542 | 12,860 | |||
| - Italy | 27,801 | 27,058 | 26,804 | |||
| - Abroad | 45,967 | 45,516 | 51,034 | |||
| Employees abroad by type | 45,967 | 45,516 | 51,034 | |||
| - locals | 35,835 | 34,801 | 39,668 | |||
| - Italian expatriates | 3,123 | 3,208 | 3,867 | |||
| - International expatriates (including TCN) | 7,009 | 7,507 | 7,499 | |||
| Employees by type of contract | 73,768 | 72,574 | 77,838 | |||
| - temporary | 31,069 | 30,664 | 35,896 | |||
| - permanent | 42,699 | 41,910 | 41,942 | |||
| - part time | 704 | 1,044 | 1,132 | |||
| - full time | - | 71,530 | 76,706 | |||
| Senior Managers employed | 1,454 | 1,468 | 1,474 | |||
| - of which women | 147 | 152 | 159 | |||
| Managers/Supervisors employed | 12,837 | 12,754 | 13,199 | |||
| - of which women | 2,421 | 2,477 | 2,615 | |||
| Employees | 34,599 | 36,019 | 38,497 | |||
| - of which women | 9,040 | 9,394 | 9,777 | |||
| Workers employed | 24,878 | 22,333 | 24,668 | |||
| - of which women | 553 | 519 | 309 | |||
| Employees age group 18-24 | 4,079 | 3,587 | 4,203 | |||
| - of which women | 614 | 668 | 669 | |||
| Employees age group 25-39 | 32,202 | 31,859 | 35,161 | |||
| - of which women | 5,463 | 5,738 | 6,079 | |||
| Employees age group 40-54 | 29,707 | 29,190 | 29,998 | |||
| - of which women | 5,247 | 5,209 | 5,089 | |||
| Employees age group over 55 | 7,780 | 7,938 | 8,476 | |||
| - of which women | 837 | 927 | 1,023 | |||
| Employees by educational qualification | 73,768 | 72,574 | 77,838 | |||
| - less than secondary school diploma | 17,687 | 17,677 | 15,535 | |||
| - secondary school diploma | 33,974 | 32,631 | 35,154 | |||
| - degree | 21,206 | 19,446 | 23,565 | |||
| - post-graduate education | 901 | 2,820 | 3,584 | |||
| Number of hiring | 4,207 | 5,592 | 6,372 | |||
| - of which women | 729 | 1,157 | 950 | |||
| Number of resolutions | 4,247 | 5,163 | 5,242 | |||
| - of which women | 833 | 833 | 693 |
In 2012, net of Snam following its
disposal, a rise of 5,264 in the number of workers compared to
2011 was recorded, an increase of 7.3%. This strong growth is due
to the increase of 5,518 in the number of workers employed abroad
(51,034 as of today, 65.56% of total employment). The number of
people employed in Italy has, however, declined by 254 (26,804
people as of today, 34.44% of total employment).
In Italy, 1,601 persons were recruited, 605 of whom were given a
permanent contract. The majority of fixed-term contracts and
apprenticeships (996 in total) involved graduates (697) recruited
mainly into operating positions. The average age of people
working for Eni is 43.2 in Italy and 38.6 abroad, in line with
the average age in 2011.
In Italy, 1,599 work contracts were terminated, 662 of which were
fixed-term contracts and 937 of which were permanent contracts.
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International development
| (number) | 2010 | 2011 | 2012 | |||
| Employees in Africa | 15,251 | 13,501 | 11,882 | |||
| - of which women | 1,110 | 1,021 | 1,069 | |||
| Employees in Americas | 6,943 | 8,194 | 9,403 | |||
| - of which women | 843 | 1,270 | 1,244 | |||
| Employees in Asia | 12,849 | 13,545 | 17,495 | |||
| - of which women | 1,186 | 1,334 | 1,448 | |||
| Employees in Australia and Oceania | 177 | 402 | 1,119 | |||
| - of which women | 58 | 97 | 172 | |||
| Employees in Italy | 27,801 | 27,058 | 26,804 | |||
| - of which women | 6,206 | 6,022 | 6,114 | |||
| Employees in the Rest of Europe | 10,747 | 9,874 | 11,135 | |||
| - of which women | 2,758 | 2,798 | 2,813 | |||
| Local employees abroad by professional category | 35,835 | 34,801 | 39,668 | |||
| - of which senior managers | 228 | 228 | 223 | |||
| - of which managers/supervisors | 3,461 | 3,476 | 3,798 | |||
| - of which employees | 16,269 | 17,529 | 19,683 | |||
| - of which workers | 15,877 | 13,568 | 15,964 | |||
| Employees in non-OECD Countries | 34,929 | 34,313 | 37,659 |
The majority of new recruits abroad in
2012 were for the Engineering & Construction sector (approx.
4,800 full time equivalents), arising mainly: from the
recruitment of resources to engineering centers for the start-up
or completion of activities (Canada, Angola); the recruitment of
resources for construction yards (Indonesia, Brazil); and the
development of the main overseas projects (Australia, Arabian
Peninsula). The Exploration & Production sector also recorded
an increase of 711 full time equivalents due principally to the
expansion of some operating units (about 420) including those in
Iraq, Norway, Indonesia and Angola, "in-sourcing" of
contract personnel (about 250) in particular in Tunisia,
Turkmenistan, Nigeria and the United States and acquisition of
control of Eni International Resources (up 45 resources in the
London office). With regard to the Gas & Power sector, it is
important to note the consolidation of Nuon Belgium (147
resources), a company subsequently merged into Distrigas (NewCo:
Eni G&P NV). In the Refining & Marketing there has been a
decrease (approx. 180 full time equivalents) to be attributed to
the deconsolidation of Eni Austria Tankstellenbetrieb (118 full
time equivalents) and optimization of operations and management
for the remaining part.
In total, there are 3,867 Italian expatriates working abroad in
the consolidated companies. The number of local overseas
employees has increased significantly compared to 2011 (up 14%).
The main category involved is workers (up 17.6%); there has also
been an increase in the number of employees (up 12.2%) and
managers/supervisors (up 9.3%); the number of directors and
senior managers has slightly decreased.
Equal opportunities
| 2010 | 2011 | 2012 | ||||||
| Women employees in service | (%) | 16.49 | 17.28 | 16.52 | ||||
| Women hired | 17.33 | 20.71 | 14.91 | |||||
| Women in managerial position (senior and middle managers) | 17.97 | 18.49 | 18.91 | |||||
| Women senior managers | 10.11 | 10.35 | 10.79 | |||||
| Replacement rate by gender | 0.99 | 1.08 | 1.22 | |||||
| - men | 1.02 | 1.02 | 1.19 | |||||
| - women | 0.88 | 1.39 | 1.37 | |||||
| Employees who took parental leave | (number) | - | 567 | 522 | ||||
| - of which women | - | 458 | 409 | |||||
| Employees returning from parental leave | - | 539 | 477 | |||||
| - of which women | - | 427 | 352 | |||||
| Pay gap senior managers (women vs. men) | (%) | - | 96 | 97 | ||||
| Pay gap middle managers and senior staff (women vs. men) | - | 97 | 96 | |||||
| Pay gap employees (women vs. men) | - | 96 | 97 | |||||
| Pay gap workers (women vs. men) | - | 101 | 104 | |||||
| Total pay gap (women vs. men) | - | 98 | 100 |
In 2012, there were 12,860 women in Eni (16.52% of the total workforce), 6,114 in Italy (22.8% of the Italian workforce) and 6,746 abroad (13.2% of the overseas workforce). In Italy, 24% of the 996 persons recruited on permanent contracts or apprenticeships during 2012, were women. It is to be noted that in 2012 the rate of replacement for women (permanent recruitment divided by termination of permanent contracts) increased compared to 2011 in Italy, and remained in line with the previous year at an international level.
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The percentage of women occupying
managerial positions (women directors and managers) rose slightly
from 18.49% in 2011 to 18.91% in 2012.
In 2012 the survey of the gender pay gap was updated, using the
same method as in 2011 which neutralized, in the pay comparison,
any effects deriving from differences in role and seniority. This
survey was conducted at a world-wide level on a sample of more
than 80% of the Eni workforce (about 67,000 resources in more
than 50 Countries). 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
| (%) | 2010 | 2011 | 2012 | |||
| Employees covered by management review (senior managers) | 100 | 100 | 100 | |||
| Employees covered by performance assessment tools (senior managers, managers/supervisors and young graduates) | 51 | 53 | 55 | |||
| Employees covered by potential assessment (young graduates and experts) | 35 | 41 | 33 |
During 2012, 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".
Eni’s commitment to performance assessment is ongoing, with
total coverage of 96% for directors and senior managers and 52%
for managerial staff and young graduates, with an overall total
of 55%. The performance feedback process was also implemented in
2012; 2013 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 extend the feedback targets.
In 2012 further progress was made on implementation of the
"Feedback 360°" process, aimed at increasing
participants’ awareness of their own behavior, seeing it
from the viewpoint of managers, peers/colleagues and partners.
During 2012, thanks to the availability of multilingual material
and support systems, personnel working abroad were also involved,
with the aim of further extending the use of "Feedback
360°" in 2013.
The process for assessing potential was implemented for the
second year with a new methodology and new formats, which came
into force formally with the issue of the professional operating
instruction "Potential assessment" dated December 19,
2012 (multilingual version). The percentage is calculated by
recording the assessments made for the set of resources with 3-5
years experience within the Company (including resources which
may also be subject to assessment of potential in the following
year). The trend in the percentage is mainly affected by the size
of the reference group which is linked to the number of recruits
taken on in the three previous years.
In 2012, as part of the work on mapping and development of
competencies, roles of strategic interest or critical roles were
defined for each business, and a plan for the implementation of
professional models which include them. This will allow a
broadening of the application of professional skills management
in Italy and abroad, with special emphasis on the more strategic
skills in 2013.
Training
| 2010 | 2011 | 2012 | ||||||
| Training hours by type: | (hours) | 2,949,349 | 3,126,935 | 3,132,350 | ||||
| - HSE and quality | 1,597,112 | 1,594,357 | 1,547,274 | |||||
| - Languages and ICT | 312,471 | 297,012 | 311,142 | |||||
| - Conduct/Communication/Institutional | 166,962 | 198,073 | 213,779 | |||||
| - Professional - transversal | 346,120 | 320,211 | 251,668 | |||||
| - Professional - technical/commercial | 526,684 | 717,282 | 808,487 | |||||
| Training expenditures | (euro million) | 44.26 | 49.98 | 55.67 |
During 2012, the number of hours of
training recorded was in line with the previous year. The total
cost of training increased by about 17%, with an increase in
activities performed abroad.
Eni continued its partnerships with the academic world,
developing the 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, the initiatives
already in place in the top universities were renewed: the
specialized master in "Petroleum Engineering" and the
master of science in "Petroleum Engineering" with the
Poltecnico di Torino, the specialized master in "Design of
Oil & Gas Plants" with the University of Bologna and the
master of science "Energy Orientation - Hydrocarbons"
with the Polytechnic of Milan.
Other partnerships have been added to these well-established
initiatives; for example the fourth edition of the first level
master’s course in Management of Health, Safety, Environment
& Quality System" organized in partnership with the
University of Pisa and with the cooperation of the QUINN
consortium. The course, which has involved 19 resources of 10
different nationalities, lasted about 10 months, divided between
classroom and project work. In addition, in collaboration with
the University of Perugia, the "Integrated petroleum
geoscience" course was run,
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involving, in two editions, 33 graduates
in geology or geophysics from Egypt (20), Mozambique (5), Togo
(2), Nigeria (4) and the Democratic Republic of the Congo (2).
The length of the project was 7 months per edition.
In total, in 2012, 163 participants were managed and monitored
including specialized master’s students, master’s
degree students and students with scholarships, with 87 recruited
among the companies/divisions of the group, a very significant
result given the fact that, in the last 8 years, it is lower only
than the data achieved in 2010.
In order to raise awareness on Eni’s partnerships with the
academic world and research centers available and easily
accessible, in 2012 the fourth census of initiatives started by
Eni’s corporate departments, divisions and companies was
conducted. The survey covered 404 initiatives including 270 in
Italy and 134 abroad, for a total investment of about euro 44
million (25 in Italy and 19 abroad).
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, 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)
available in Italian, English and, from 2012, also in French, and
workshop training events carried out directly by the
anti-corruption legal office (ACLSU). Between 2010 and 2012 the
first e-learning cycle was delivered to Eni’s people and a
new cycle prepared, which will be delivered in 2013. This new
e-learning, and its launch has the aim of updating training for
people at risk, also taking into account the changes which have
occurred in international regulations and, as a result, in
internal regulations.The resources trained over the 2010-2012
three-year period numbered about 6,370. Sixty-two workshops were
delivered in total.
The hours of workshop training delivered over the three-year
period numbered 6,750, taking into account a duration of 2.5
hours per event.
E-learning provided 22,044 hours of training.
At the end of 2012, two further training initiatives were
activated which will also continue during 2013:
- Institutional Manager Training, in collaboration with ECU and
covering the typical role and responsibilities of the Manager.
Various Company units took part in the project (ACLSU, Internal
Audit, HSE and employment disputes). Between October and December
training was given to 95 resources.
- "Roadshow on safety in Eni operating sites" carried
out by the ACLSU to employees and contractors on the main
operating sites. The lines of business, Human Resources,
procurement and HSEQ and anti-corruption functions also took part
in the project. Between October and December 2012, 9 meetings
were held at the main Italian operating sites (refineries, power
stations, plants and platforms) in which 679 employees and 448
firms took part. In total, more than 1,100 people were involved.
Involving people
| 2010 | 2011 | 2012 | ||||||
| Users with access to the MyEni portal | (number) | 24,314 | 25,746 | 23,578 | ||||
| People involved in the Cascade Program | 31,387 | 29,086 | 28,700 | |||||
| - Countries involved | 39 | 40 | 44 | |||||
| - Meetings organized | 600 | 565 | 569 | |||||
| - Participants satisfaction (positive feedback on the initiative) | (%) | 84 | 87 | 88 |
During 2012 the MyEni intranet was
confirmed as the main tool for entry into the world of Eni,
communication, and support for daily activity. The Italian
version is visible to 23,578 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 sixth time in 2012. The level of general satisfaction
with the initiative was high and growing compared to 2011 (up
1%). In addition to Italy, the Cascade has involved 43 Countries
totaling 569 meetings.
Also in 2012, reconfirmation was given for the priority action
areas for the Welfare Project, such as those linked to the themes
of "Family and sons",
"Health and Well-being" and "Time & money
saving".
2012 saw a strengthening and expansion of the services offered to
families through the summer initiatives designed to support them
during the school holidays, and services to help with work life
balance, such as the Company nursery which currently caters for
60 children in the crèche and 108 in the infants’ school.
During 2012 the summer city campuses, aimed at children aged
between 4 and 16, registered 390 participants. The summer holiday
camps, aimed at children of Eni’s people aged between 6 and
14, were attended by 1,119 children at the Cesenatico facility
(including 180 children from Kazakhstan and Siberia, following a
no-profit initiative by Eni E&P) and 728 at the facility in
Piani di Luzza. Three hundred children aged between 15 and 16
took part in theme stays, an initiative focused on learning
English. The level of satisfaction revealed by participants in
the summer holidays and theme courses was very high (with a
rating of good or excellent in 98% of cases).
After the great success recorded in 2011, in 2012 the
"eninsieme" (eni together) initiative involved 6 towns,
including 24 local offices and saw the participation of over
4,000 people who were given the opportunity both to have their
children visit their workplace and to bridge the gap between
family and working lives.
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In the "Health and Well-being"
area, the initiatives activated in previous years were maintained
in 2012. In particular, with regard to Primary Prevention,
the new communication campaign "Eni wellness program"
was launched. This aims to introduce healthier life styles,
monitoring daily habits in the 4 areas of prevention (diet,
physical activity, smoking and alcohol consumption). The myto (my
trainer on-line) program has been extended to the Eni workforce
in Italy, aimed at encouraging all employees to regularly engage
in more physical activity and a pilot phase of myto has been
started in two foreign sites (Pakistan and Abuja in Nigeria).
Under Secondary prevention, in 2012 the "Early
Diagnosis Plan" continued. This involves cancer screening
offered by Eni, in cooperation with the LILT (Lega Italiana per
la Lotta ai Tumori, the Italian league for the fight against
cancer) and similar health facilities working in partnership with
Eni. In April, in addition, a new health facility was inaugurated
in Priolo for the "Sicily Health Project" where, in
collaboration with the Syracuse Provincial Health Company, cancer
screening is carried out, always on a voluntary basis, not only
for all Eni’s people but also for all users on the
territory.
Under Tertiary prevention, the partnership between Eni,
the Ministry of Health and AIMAC (Associazione Italiana Malati di
Cancro, the Italian association representing cancer patients)
went ahead in 2012, with the launch of a project to promote
accurate information for employees on cancer. To this end an
interactive on-line booklet was published on the Company intranet
which provides details on the legislation to support people of
working age affected by tumors.
Under "Time & money saving", in order to support
the spending power of Eni’s people, various types of
agreements were renewed and implemented regarding the most
significant product categories which weigh most on the family
budget (travel and leisure, cars, clothing and medical expenses).
In particular, a new agreement was activated with the Università
Campus Biomedico in Rome which allows Eni’s people and their
family members to access health services at reduced rates.
Agreements in the leisure field were also renewed for the
purchase of goods and services at privileged rates: from the
acquisition of package holidays (which include agreements with
tour operators, the major and most renowned national and
international hotel chains and airport car parks, to clothing
purchases (thanks to agreements with clothing chains and outlets)
and the purchase of cars from the Company car fleet.
Industrial relations
| (number) | 2010 | 2011 | 2012 | |||
| Employees covered by collective contracting (Italy) | 31,217 | 30,506 | 30,480 | |||
| Consultations, negotiations with trade unions on organizational changes (Italy) (a) | 385 | 437 | 359 |
(a) Minimum notice period regarding operational changes is compliant with the local regulation and the collective agreements signed in the Countries where Eni operates.
Based on the overall economic scenario, and consistently with the agreement for development and competitiveness and for a new industrial relations model signed on May 26, 2011, a number of initiatives were started during 2012 to find solutions consistent with the problems of the business. With regard to this, in September an agreement was signed with the trade unions on the launch of the "Green Refinery" project, aimed at reconverting the current operating capacity of the Venice Refinery in favor of green cycles and, in April, a trade union agreement was signed which provides for a series of actions at the Gela Refinery, such as shutdowns of production, redundancy benefits and other social welfare measures and the establishment of specially defined training courses in order to develop solutions economically compatible with the company’s need for efficiency and competitiveness as well as protection of people’s professional status. In May and December, in addition, agreements were signed with the trade unions for the start up of pilot projects of teleworking in some organizational structures of Eni Adfin, the Refining & Marketing Division and Versalis. At the international level, in June work was carried out in Vienna (Austria) for the European Risk Observatory on workplace health and safety and the annual meeting with the European Works Council (EWC) was held.
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Employment disputes
| 2010 | 2011 | 2012 | ||||||
| Employment disputes | (number) | 1,051 | 1,170 | 1,383 | ||||
| Prevention/disputes ratio | 801/1,051 | 952/1,170 | 864/1,383 | |||||
| Disputes/employees ratio | (%) | 3.02 | 1.39 | 1.80 |
In 2012, the commitment to preventing
and managing employment 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 is low, taking into account the size of the Company and
the complex structure of employment legislation, particularly in
Italy.
The number of cases reaching 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, remain at an extremely
low level (0.24% of employees in service in December 2012). 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 (30% of the total), however, relate to
claims following outsourcing by Eni such as transfers of Company
branches and service contracts.
Claims for occupational disease (24% of the total) represent, at
this time, a typical feature of Italian employment disputes and
are due to claims for alleged exposure to potentially damaging
agents, often linked to industrial sites acquired by Eni.
As regards to disputes abroad, particular importance, in addition
to the pay claims already referred to, is assumed by requests for
profit sharing.
Spending for the territory
| (euro million) | 2010 | 2011 | 2012 | |||
| Total spending for the territory: | 107.224 | 100.885 | 90.568 | |||
| - of which project investments in favor of local communities | 75.394 | 69.279 | 63.052 | |||
| - of which short-term investments and donations | 4.382 | 0.865 | 3.377 | |||
| - of which association memberships fees | 1.642 | 1.624 | 1.803 | |||
| - of which contributions to the Eni Foundation (a) | 5.000 | 3.000 | - | |||
| - of which sponsorships for the territory | 17.088 | 22.399 | 18.618 | |||
| - of which contributions to Eni Enrico Mattei Foundation | 3.718 | 3.718 | 3.718 |
(a) According to the financial needs related to the projects implementation, in 2012 Eni Foundation did not require the contribution.
In 2012, the overall cost for the territory amounted to over euro 90 million and included investments for local communities, donations, membership fees for associations, sponsorships and contributions to the Eni Enrico Mattei Foundation (FEEM). Over euro 63 million (about 70% of the total) were invested in social projects, established through agreements or conventions with local stakeholders, to encourage and promote community development in the Countries in which Eni works.
Planning investments to benefit local communities
| (euro million) | 2010 | 2011 | 2012 | |||
| Project investments in favor of local communities by intervention sector: | 75.394 | 69.279 | 63.052 | |||
| - training/professional coaching | 5.302 | 4.570 | 9.886 | |||
| - environment | 14.351 | 15.899 | 9.698 | |||
| - culture | 3.912 | 1.938 | 1.300 | |||
| - instruction and education | 3.967 | 3.207 | 3.789 | |||
| - health | 7.036 | 2.035 | 3.886 | |||
| - infrastructure development | 13.231 | 18.334 | 20.344 | |||
| - socio-economic development | 8.732 | 6.794 | 6.357 | |||
| - relationships with communities | 5.916 | 7.134 | 7.077 | |||
| - access to energy | 12.947 | 9.368 | 0.715 |
The cost of community projects deriving from local agreements and conventions amounts to more than euro 63 million, more than 94% of which is spent in the area of exploration and production activities. With regard to E&P data, the final total for 2012 was euro 59.5 million, a slight reduction compared to the final figure for 2011 of euro 62.1 million. This decrease is due to lower expenditures mainly in Kazakhstan and Italy, compensated for by a recovery in expenditure in Egypt, and an increased commitment in numerous Countries including mainly Mozambique and Gabon. The
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positive trend in expenditure in the African continent since 2010 is to be emphasized: in 2012 more than euro 26 million were spent, including more than euro 22 million in the Sub-Saharan region of Africa, which is representative of the growth in Eni’s activities in the Region. In addition, there has been a significant growth in the area of training and professional development. The costs incurred in this sector exceeded the cost for 2011 by more than euro 5 million due to the increase in interventions in Mozambique, Kazakhstan, Gabon and Egypt. Health related expenditure in 2012 exceeded 2011 expenditure by almost euro 2 million due to the increase in commitments in Libya, Angola, Congo, Ecuador and Togo. The decrease in relation to energy access projects is due to the conclusion of an important project in Kazakhstan.
Local sponsorship
| (euro thousand) | 2010 | 2011 | 2012 | |||
| Sponsorships for the territory by intervention sector: | 17,088 | 22,399 | 18,619 | |||
| - health | 28 | 168 | 40 | |||
| - training | 1,235 | 71 | 185 | |||
| - education | 560 | 436 | 862 | |||
| - environment | 4,249 | 233 | 69 | |||
| - culture | 10,524 | 15,771 | 13,678 | |||
| - social infrastructures | 24 | 162 | 37 | |||
| - social interventions | 468 | 5,559 | 3,748 |
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 2012, local sponsorship amounted to euro 18.6 million, almost all in Italy; more than 70% was dedicated to the promotion of cultural activities in Regions where Eni is present.
Local content
Ratio between Eni minimum wage policy and market minimum wage (1st decile) - (middle managers - senior staff)
| Ratio | Countries | |
| 100 - 115 | Countries around Gulf Area, Belgium, France, Germany, Italy, Norway, Netherlands, United Kingdom, Romania, Australia, United States, Hungary, Venezuela | |
| 116 - 130 | Algeria, Angola | |
| 131 - 150 | China, Libya, Peru | |
| 151 - 180 | Indonesia, Kazakhstan, Brazil | |
| > 180 | Egypt, Russia, India | |
| 130 | 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.
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 2012 | Africa | Americas | Asia | Italy | Rest of Europe | Oceania | ||||||||
| Number of suppliers used | (number) | 6,920 | 4,541 | 4,436 | 11,092 | 8,573 | 428 | |||||||
| Total procurement | (euro million) | 7,099 | 2,463 | 5,542 | 12,328 | 3,635 | 745 | |||||||
| - of which in goods | (%) | 11.7 | 29.1 | 11.9 | 20.0 | 17.3 | 18.9 | |||||||
| - of which in works | 7.3 | 21.1 | 55.5 | 16.3 | 21.8 | 15.4 | ||||||||
| - of which in services | 49.5 | 44.3 | 28.8 | 56.0 | 48.7 | 56.1 | ||||||||
| - of which unidentifiable | 31.5 | 5.5 | 3.8 | 7.7 | 12.2 | 9.6 |
In 2012, more than 32 thousand suppliers worked for Eni worldwide, some of whom worked in more than one continent; in particular, more than 20% in Africa. Eni promotes initiatives and partnerships to maximize the participation of local enterprises in the pursuit of its activities, contributing
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to the growth of local supply chains in developing and emerging Countries. In 2012, the share of procurement from local markets was higher than 50% in Countries such as Congo (50%), Saudi Arabia (71%), Egypt (70%), Tunisia (72%), Gabon (62%) and Pakistan (72%), with peaks of over 75% in various Countries including Nigeria, India and Indonesia (90%, 82% and 83% procurement on local market respectively in 2012).
Local procurement 2012 by Country
| % procurement on local market | Countries | |
| 0 - 25% | Algeria, Croatia, Iraq, Libya, Mozambique, Luxembourg, Peru, Poland, Portugal, Venezuela | |
| 25 - 50% | Angola, France, Germany, Ghana, Iran, Kazakhstan, Switzerland | |
| 50 - 75% | Saudi Arabia, Australia, Brazil, Republic of Congo, Ecuador, Egypt, Gabon, United Kingdom, Norway, Pakistan, Tunisia | |
| 75 - 100% | Argentina, Canada, India, Indonesia, Italy, Mexico, Nigeria, Netherlands, Romania, Russia, Singapore, United States, Hungary |
Relations with suppliers
| 2010 | 2011 | 2012 | ||||||
| Procurement by macro-class (a): | (euro million) | 31,187 | 32,586 | 31,811 | ||||
| - works | 6,332 | 6,782 | 7,024 | |||||
| - services | 14,460 | 15,990 | 15,283 | |||||
| - goods | 5,977 | 6,743 | 5,449 | |||||
| - unidentifiable | 4,418 | 3,071 | 4,055 | |||||
| Supplier concentration top 20 | (%) | 18 | 20 | 15 | ||||
| Suppliers used | (number) | 32,601 | 31,878 | 32,621 | ||||
| Qualification cycles carried out during the year | 32,962 | 26,936 | 31,991 | |||||
| - of which with negative results | (%) | 9 | 13 | 6 | ||||
| Checks carried out following negative feedback and consequent actions taken: | (number) | 237 | 365 | 381 | ||||
| - suspensions | 35 | 73 | 69 | |||||
| - revocations | 3 | 56 | 53 | |||||
| - states of attention | 199 | 236 | 259 | |||||
| Total invoices accounted for: | 3,431,418 | 2,962,212 | 2,571,172 | |||||
| - of which automatic | 2,860,840 | 2,421,083 | 2,080,762 | |||||
| - of which manual | 570,578 | 541,129 | 490,410 | |||||
| Automations achieved | - | 7,479 | 69,000 | |||||
| Commercial debts paid within the due date | (%) | - | - | 93.17 | ||||
| - within 10 days of the due date | - | - | 4.40 | |||||
| - over 10 days of the due date | - | - | 2.43 |
(a) The figure includes intragroup procurement equal to euro 2,027 million in 2012.
In 2012, Eni’s total procurement
valued at almost euro 32 billion. The process of extending vendor
management models (systems and training) to 2 foreign Countries
has continued (in Libya and the USA). Suppliers are subjected to
qualification and audit, inspection and expediting as well as
performance assessment processes 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 2012,
monitoring activities related in particular to four foreign
enterprises: Eni US operating, Eni Tunisia, Eni Australia and Eni
Indonesia. Communication initiatives were carried out to spread
good practices and awareness of procurement issues overseas (in
Nigeria, Ghana, Venezuela and Australia) 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 supply chain management has been maintained. These
include participation in the Carbon Disclosure Project Supply
Chain involving significant Eni suppliers and the related
extension of questions on CO2 emissions and water
consumption in qualification questionnaires; participation in 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.
Eni Adfin, which manages the administrative activities of the
Italian companies in the Eni Group, continued to pursue
continuous improvement during 2012 with work on organizational
efficiency and the standardization of administrative systems and
processes, with particular reference to the accounting and
creditors systems. These activities have enabled the Company to
achieve significant results in terms of automated document
processing: about 69,000 documents have been automated and the
number of documents managed manually has been further reduced
compared to last year. This is also expected to diminish further
next year thanks to the work completed at the end of 2012. With
regard to observance of payment times for commercial debts, the
work on efficiency and optimization has enabled the organization
to achieve good results in 2012 with about 93% of trade payables
paid within the due date and about 97% within 10 days of the due
date. Less than 1% of trade payables were paid more than 60 days
after the due date. The optimization and standardization work
will continue in the next few years, following the planned path
to organizational and managerial excellence.
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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 | 2011 | NOK | 9,406,804 | - | 1,680,133 | |||||
| Profit Taxes (b) | 9,309,843 | 1,890 | 1,662,815 | |||||||
| Fees (c) | 88,200 | 4,725 | 15,753 | |||||||
| Other significant benefits to government agreed by MSWG | 8,761 | 1,565 | ||||||||
| 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 | 1,258,822 | |||||
| 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) | 2011 | CFA | 7,017,103 | 96,625 | 111,515 | |||||
| Profit Taxes (b) | 7,005,503 | 14,866 | ||||||||
| Other significant benefits to government agreed by MSWG | 11,600 | 96,625 | 96,649 | |||||||
| Mozambique | 2010 | MZN | 55,325 | 450 | 2,129 | |||||
| Profit Taxes (b) | 50,117 | 1,521 | ||||||||
| Other significant benefits to government agreed by MSWG | 5,209 | 450 | 608 | |||||||
| 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 disclosure
has been made.
(b) Corporate tax-other tax on income/profit or production e.g.
petroleum revenue tax.
(c) On license, rental and any consideration for license and or
concessions.
(d) Signature, discovery and production bonus.
(e) In addition to the amount shown in the table, some of the
transfers made by Eni to the Congo government is in
"kind" for a total of 16,860 kboe that refer to the
profit oil share and to royalties attributable to the Republic of
Congo as well as marketing agreements existing between Eni, the
Republic of Congo and SNPC (Sociéte Nationale du Petrole du
Congo).
In 2012, Eni continued to participate in
reconciliation and publication of payments made to producer
Countries adhering to the Extractive Industries Transparency
Initiative (EITI).
The table above shows the data on payments made by Eni and
included in the latest EITI Report published in the respective
Countries.
For the Republic of the Congo, the EITI Report records non
material variances between the values declared by the Country and
those declared by Eni. The table shows the value declared by Eni.
For Iraq, the 2010 EITI Report also includes purchases of crude
oil made by Eni Trading and Shipping SpA. For these purchases,
Eni Trading and Shipping paid an amount equal to 1,610,480,285.13
USD in 2010.
Eni also takes an active part in the local multi-stakeholder EITI
working groups, either directly or through participation in trade
associations. Again in 2012 Eni contributed financially to the
functioning of the EITI Secretariat.
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Royalties paid by Eni in Italy in the 2010-2012 period
| (euro thousand) | 2010 | 2011 | 2012 | |||
| Royalties paid (a): | 142,228 | 203,886 | 237,517 | |||
| - of which to State | 64,465 | 97,682 | 96,948 | |||
| - of which to Regions | 62,052 | 83,730 | 109,949 | |||
| - of which to Basilicata | 35,440 | 53,516 | 77,255 | |||
| - of which to Municipalities | 15,711 | 22,474 | 30,619 |
(a) The data include EniMed, Società Adriatica Idrocarburi and Società Ionica Gas.
Human rights
| 2010 | 2011 | 2012 | ||||||
| Hours of training on human rights | (number) | - | 518 | 576 | ||||
| Reports received on eventual human rights violations | - | 39 | 39 | |||||
| Reports on human rights violations closed in the year: | - | 32 | 48 | |||||
| - groundless reports or only partially grounded reports with corrective and/or improvement actions taken | - | 13 | 15 | |||||
| - groundless reports | - | 19 | 33 | |||||
| Suppliers subjected to qualification procedures including screening on human rights | 10.096 | 11,471 | 12,471 | |||||
| % procurement from suppliers subjected to qualification procedures including screening on human rights | (%) | 85 | 90 | 88 | ||||
| SA 8000 audits carried out | (number) | 10 | 16 | 16 | ||||
| - of which follow-ups | 2 | 8 | 8 | |||||
| Security contracts containing clauses on human rights | (%) | 20 ( a) | 50 | 65 | ||||
| Security personnel trained on human rights | (number) | 106 (b) | 169 | 1,008 | ||||
| Critical sites covered by assessments | - | 30 | 11 | |||||
| Sites verified by means of check list | - | 147 | 121 | |||||
| Countries with armed guards protecting sites | - | 12 | 10 | |||||
| Training hours of specific nature to security managers | - | 672 | 1,476 |
(a) Referred to contracts
signed by Companies/Divisions belonging to the Eni Group in Italy
and abroad. From the survey regarding clauses on human rights, it
emerged that 196 sites have surveillance contracts. Of these, 39
have clauses on human rights in the surveillance contracts.
(b) 79 in Nigeria (Police and Military Forces) and 27 in Egypt.
With reference to the management of
whistleblowing concerning human rights topics, it is noted that
during 2012:
- 39 files were opened, mainly relating to alleged abuses of
workers’ rights and suspected discrimination against the
surrounding communities, as well as potential problems in the
management of safety;
- 48 files were closed and for 15 of these, corrective and/or
improvement actions were adopted. Of these 15 files, 7 were found
to be justified at least in part and related to violations of
employment standards and of work safety standards by suppliers.
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 2012,
SA 8000 audits were performed on 8 suppliers/sub-suppliers in
Australia/East Timor and in Ecuador, and follow-up SA 8000 audits
were performed in 2012 on 8 suppliers (in Nigeria and Pakistan).
With regard to the involvement of personnel in this area, SA 8000
auditor training was given to 5 personnel in the procurement
area, 2 of which at the head office in Italy and 3 at overseas
associates (in Libya and in Australia); training was also given
to two SA 8000 Lead Auditors at head offices.
Once again in 2012 the Security function continued its work on
the promotion and development of training projects on "Human
Rights & Security" for Security Forces (public and
private) performing their activities at Eni sites in the Republic
of the Congo (Brazzaville, Pointe-Noire and M’Boundi) and in
Angola (Luanda). The number of members of Private Security Forces
trained through these courses was 846, compared to 169 in 2011.
In addition, Eni Pakistan, following the "Human Rights &
Security" project run in 2011, implemented a further
initiative aimed at promoting awareness and respect for human
rights among security operators. The courses were held at the
sites in Karachi, Bhit Field and Kadanwari Field, for a total of
162 participants.
During 2012, 10 training courses on topics of special interest
for Security were held, providing a total of 1,476 hours of
training.
Eni confirms its commitment to include conduct clauses, aimed at
ensuring respect for human rights, within the contracts with
suppliers of Security Services. On December 31, 2012 the clauses
ware inserted in 65% of contracts concluded with suppliers of
Security Services, compared to 50% in 2011.
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Technological innovation
| 2010 | 2011 | 2012 | ||||||
| R&D expenditures | (euro million) | 275 | 246 | 263 | ||||
| - R&D expenditures net of general and administrative costs | 218 | 190 | 211 | |||||
| Tangible value generated by R&D activities (a) | 540 | 730 | 1,006 | |||||
| Personnel employed in R&D activities (full time equivalent) | (number) | 1,019 | 925 | 975 | ||||
| First patent filing applications | 88 | 79 | 74 | |||||
| Existing patents | 7,998 | 8,884 | 8,931 | |||||
| Patents average life | (years) | 9.14 | 8.84 | 8.86 |
(a) Figures refer to E&P, R&M and Versalis activities and had been measured since 2009, when the measurement process started.
Eni’s economic commitment in the
field of scientific research and technological development
amounted to euro 211 million in 2012 (or euro 263 million if the
general overheads attributable to research activities and
amortization and depreciation are included, and if the
contributions resulting from tax credits are excluded - as per
Legislative Decree 70/2011, converted into Act No. 106 of July
12, 2011).
The share of R&D spending dedicated to partnerships with
universities and research centers worldwide was about euro 30
million in 2012, more than 50% of which was directed to Italy.
In 2011, the method for measuring the tangible and intangible
benefits created by Eni R&D activities (for Corporate
Departments, the Divisions and Versalis) was completed with the
issue of a specific manual, based on Key Performance Indicators
(KPI) which take into account the special features of the various
Eni businesses. Based on this methodology, the value created in
2012 by the innovative technologies of E&P, R&M and
Versalis amounted overall at euro 1,006 million. The total final
benefits recorded in 2011 amounted to euro 730 million (euro 492
million, net of the value of reserves). Compared to the cost
incurred by Eni over the same years for R&D activities, the
value created gives rise to a benefit/cost ratio equal to 5.7 in
2012 (4.3 and 3.1, respectively in 2011 and 2010).
The persons involved in R&D activities as at December 31,
2012 was equal to 975 full time equivalents, an increase compared
to 2011 due to the reallocation of resources within the chemicals
business.
In 2012, 74 patent applications were filed (compared to 79 filed
in 2011), 44 by the Eni Divisions, 17 by Versalis and 13 by
Engineering & Construction.
The size of the total patent portfolio at the end of 2012 is
similar to that for the year before, with a marginal increase
(0.5%). The balance of the data derives from the net effect of
patents which have expired or been abandoned following portfolio
review and new patents deriving from overseas protection of
inventions. The average age of patents is similar to that
recorded in 2011.
Knowledge management
| (number) | 2010 | 2011 | 2012 | |||
| Knowledge community/network by application sector | 53 | 58 | 63 | |||
| - business | 48 | 53 | 53 | |||
| - transversal | 5 | 5 | 10 | |||
| Participants in knowledge community/network by application sector | 2,624 | 3,634 | 4,732 | |||
| - business | 2,385 | 3,376 | 4,098 | |||
| - transversal | 239 | 258 | 634 | |||
| Knowledge owners | 179 | 187 | 177 |
In 2012, 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. The new initiatives
realized in 2012 focused on the cross-cutting areas, where 5 new
communities were set up: two in the professional HSE area
("Management of water resources" and "HSE analysis
and reporting"), and the others on very important topics
such as "Research & Innovation", "Contract
Administration" and "Industrial Risk Management".
On December 31, 2012 Eni’s knowledge management system was
composed of a total of 63 active communities, a 9% increase over
the previous year, involving a total of 4,732 members. The number
of participants increased by 1,098, a rise of 30% compared to the
previous year.
The increase in participation in 2012 is due both to the start up
of 5 new cross-cutting communities, which saw the involvement of
373 new members, and the constant increase in membership of the
business communities, up by 21%. Of particular importance was the
increase in participation in both business and cross-cutting
knowledge management processes by overseas staff: at the end of
2012 the number of members working abroad was 1,413, 79% more
than the previous year.
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The environmental management system
| 2010 | 2011 | 2012 | ||||||
| ISO 14001 certifications | (number) | 93 | 102 | 106 | ||||
| ISO 50001 certifications | 1 | 3 | 6 | |||||
| EMAS registrations | 9 | 9 | 10 | |||||
| Environmental audits | 549 | 851 | 1,253 | |||||
| Integrated HSE audits | 2,893 | 914 | 670 | |||||
| Integrated HSEQ audits | 164 | 764 | 1,255 | |||||
| Environmental expenditures: | (euro thousand) | 916,201 | 893,421 | 743,183 | ||||
| - operating expenditures | 523,791 | 551,799 | 468,047 | |||||
| - capital expenditures | 392,410 | 341,622 | 275,136 |
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. On the next 4 years all associates
and important plants are expected to be covered by ISO 14001.
In 2012 the total number of ISO 14001 registrations and EMAS
registrations increased. In particular:
- in the E&P sector all the certifications previously
obtained were maintained, covering all the operating sites of 30
associates, equal to 70% of the total;
- in the G&P sector, where ISO 14001 certification had
already been completed in 2011 for all the production plants,
EMAS registration was obtained for the EniPower site in Ferrara
and ISO 14001 certification was obtained by the 3 foreign gas
transport companies (Sergaz, Scogat and Trans Tunisian Pipeline
& Co) and the company Servizio Fondo Bombole Metano;
- the Engineering & Construction sector (as already achieved
some time ago in the chemicals and refining sectors) confirmed
all the ISO 14001 certifications obtained in previous periods and
acquired the certification for the Columbian base of the Petrex
operating company.
In 2012 Eni obtained 3 new ISO 50001 energy management system
certifications (in the refineries of Livorno, Sannazzaro and
Taranto), which add to those already obtained previously (in the
refineries of Venice, the Szazhalombatta petrochemical plant and
the offices of Eni Corporate).
Climate change
| 2010 | 2011 | 2012 | ||||||
| Direct GHG emissions | (tons CO2 eq) | 58,259,157 | 49,121,224 | 52,493,340 | ||||
| - of which CO2 from combustion and process | (tons) | 37,948,625 | 35,319,845 | 36,365,220 | ||||
| - of which CO2 equivalent from flaring | (tons CO2 eq) | 13,834,988 | 9,553,894 | 9,461,518 | ||||
| - of which CO2 equivalent from unburnt methane and fugitive emissions | 4,135,523 | 3,214,469 | 4,470,307 | |||||
| - of which CO2 equivalents from venting | 2,340,021 | 1,033,017 | 2,196,295 | |||||
| CO2 emissions from Eni plants subject to EU ETS | 25,168,852 | 23,615,602 | 22,106,175 | |||||
| Quotas allocated to Eni plants subject to EU ETS | 25,970,870 | 25,373,975 | 24,978,257 | |||||
| Eni plants subject to EU ETS | (number) | 39 | 39 | 39 | ||||
| Indirect GHG emissions from purchases from other companies (Scope 2) | (tons CO2 eq) | 1,039,049 | 1,190,860 | 834,197 | ||||
| Indirect CO2 emissions from sales of products and activities contracted out to third parties (Scope 3) (a) | (mln tons CO2 eq) | 304.346 | 299.921 | 288.515 | ||||
| CO2 eq emissions/100% operated hydrocarbon gross production | (tons CO2 eq/toe) | 0.235 | 0.206 | 0.225 | ||||
| CO2 eq emissions/kWh eq (EniPower) | (g CO2 eq/kWh eq) | 407.456 | 409.656 | 399.204 | ||||
| CO2 eq emissions/uEDC (R&M) | (tons CO2 eq/kbbl/SD) | 1,284 | 1,229 | 1,141 | ||||
| Volume of gas sent to flaring | (MSm3) | 6,226 | 4,433 | 4,506 | ||||
| Volume of gas sent to venting | 30.69 | 26.32 | 25.92 |
(a) The figures include the CO2 emissions from sales of oil products and natural gas as well as from drilling activities contracted out to third from E&P sector.
With regard to greenhouse gas emissions, it is important to note that the production units in Libya have an overall effect on the global performance of the Exploration & Production sector and therefore of Eni. Due to the limited production in Libya in 2011, caused by the political situation of the Country, a more representative picture is given by comparing 2012 and 2010, years in which the Country’s production was similar (variance of about 15%). This comparison shows up clearly the progress on GHG performance obtained with flaring down projects in the other Countries where Eni operates. In particular in the 2010-2012 period there was a reduction of about 28% in gas sent to flaring which has allowed a reduction of 51% to be achieved compared to volumes burnt in 2007 thanks to the completion of various flaring down projects. The volume of gas sent to flaring has in fact showed consistent reductions in Congo (down 21%) where the flaring down project "M’Boundi Gas Development" is underway and in Nigeria (down 11%) where the "Ogbainbiri Flow Station Upgrading" and "Idu Phase 2 Works Completion & Flaring Down" projects are ongoing. Further important initiatives to reduce flaring are underway in Algeria and Libya. Emissions of CO2 eq from venting in 2012 returned to 2010 volumes, being determined essentially by the Libyan contribution from the Mellitah Complex oilfield, rich in associated CO2.
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Similarly the overall reduction in GHG
emissions compared to 2010 is 4.9% on an annual basis and is
evidenced by the good progress on all the emission indexes per
unit of product. In the downstream sector there was a general
decrease of GHG emissions, caused not only by lower production
levels, but also by the implementation of specific strategies for
reducing greenhouse gas emissions and improvement actions
designed to increase energy efficiency, as demonstrated by the
improvement in the sector emission indexes for electricity
generation and refining.
In Europe, within the framework of the Emissions Trading Scheme
(ETS), in 2012 Eni’s consolidated greenhouse gas emissions
were 6.4% less than those for 2011, but only some sectors
recorded a decreasing trend:
- in G&P, emissions, which account for 52% of the total,
despite a general reduction in the majority of power stations,
increased overall by 0.7% due to the coming on stream of the
Ferrara power station;
- in R&M, emissions, which account for 27% of the total, were
reduced by 16.5% as a consequence of a general reduction in the
amount of processing carried out (-13%) and the suspension of
some of the activities at the Gela refinery;
- in Versalis, emissions, which account for 16% of the total,
diminished by 10.3%, principally due to the shutdown of some
plants due to the industrial reconversion of the Porto Torres
site.
Indirect emissions of GHG from acquisitions from other companies
decreased by more than 30%. This trend is mainly attributable to
the G&P sectors (where purchases of electricity from third
parties by the EniPower power station in Ferrara are reduced) and
Engineering & Construction (where there has been a fall in
electricity consumption in Qatar).
Energy efficiency
| 2010 | 2011 | 2012 | ||||||
| Electricity produced by type of source (EniPower): | (TWh) | 25.75 | 25.40 | 26.01 | ||||
| - of which natural gas | 23.33 | 23.52 | 24.44 | |||||
| - of which oil products | 2.42 | 1.88 | 1.57 | |||||
| Energy used/100% operated hydrocarbon gross production (E&P) | (GJ/toe) | 1.855 | 1.958 | 2.049 | ||||
| Energy sold to other companies by type: | (toe) | 9,188,199 | 9,199,387 | 8,716,482 | ||||
| - electricity | 8,961,938 | 9,020,515 | 8,565,069 | |||||
| - primary resources | 52,523 | 26,622 | 27,355 | |||||
| - steam | 172,136 | 152,250 | 124,058 | |||||
| - hydrogen | 1,602 | 0 | 0 | |||||
| Gross energy consumption | 18,617,034 | 18,498,490 | 18,708,182 | |||||
| Net energy consumption | 9,428,835 | 9,299,103 | 9,991,700 | |||||
| Net consumption of primary resources: | 15,092,072 | 14,304,869 | 14,632,660 | |||||
| - natural gas | 9,740,028 | 9,202,030 | 10,126,614 | |||||
| - oil products | 5,126,536 | 4,896,890 | 4,289,943 | |||||
| - other fuels | 225,508 | 205,949 | 216,103 | |||||
| Primary energy purchased from other companies by type: | (GJ) | 214,317,476 | 239,084,683 | 228,648,094 | ||||
| - electricity | 141,479,934 | 170,157,405 | 160,384,392 | |||||
| - primary resources | 66,734,377 | 63,506,165 | 63,387,463 | |||||
| - steam | 6,046,928 | 5,362,328 | 4,822,549 | |||||
| - direct heat process | 56,237 | 58,785 | 53,507 | |||||
| Energy efficiency and climate change expenditures (a): | (euro thousand) | 196,040 | 120,212 | 72,042 | ||||
| - operating expenditures | 497 | 1,175 | 822 | |||||
| - capital expenditures | 195,543 | 119,037 | 71,220 |
(a) The figure is part of the environmental expenditures reported in the table "The environmental management system".
The 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).
In the G&P sector, implementation of energy efficiency has
continued with the issue of White Certificates and EniPower has
continued its program of investment in renewable energy and
alternative energy sources through the development of
photovoltaic systems for the production of electricity and a
development project involving a biomass plant at Porto Torres.
In the Refining & Marketing and Chemicals sector energy
saving programs went ahead throughout 2012. The energy efficiency
initiatives which came into operation in 2012 are capable of
producing savings of about 100 ktoe/year when fully operational;
this is added to by a saving of primary sources of about 25
ktoe/year under normal conditions, resulting from the
optimization of self production of electricity at the Porto
Torres petrochemical site. The energy saving projects completed
over the 2010-2012 three-year period allow, under normal running
conditions, a saving of 218 ktoe/year with an estimated
equivalent value of more than euro 100 million.
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Other emissions into the atmosphere
| 2010 | 2011 | 2012 | ||||||
| NOx (nitrogen oxide) emissions | (tons NO2 eq) | 106,040 | 97,114 | 115,571 | ||||
| NOx emissions/100% operated hydrocarbon gross production (E&P) | (tons NO2 eq/ktoe) | 0.483 | 0.486 | 0.571 | ||||
| NOx emissions/kWheq (EniPower) | (g NO2 eq/kWh eq) | 0.195 | 0.165 | 0.155 | ||||
| NOx emissions/crude and semi-finished products processing (R&M refineries) | (tons NO2 eq/kton) | 0.29 | 0.27 | 0.26 | ||||
| SOx (sulphur oxide) emissions | (tons SO2 eq) | 50,085 | 37,943 | 30,137 | ||||
| SOx emissions/100% operated hydrocarbon gross production (E&P) | (tons SO2 eq/ktoe) | 0.099 | 0.055 | 0.044 | ||||
| SOx emissions/kWheq (EniPower) | (g SO2 eq/kWh eq) | 0.050 | 0.037 | 0.027 | ||||
| SOx emissions/crude and semi-finished products processing (R&M refineries) | (tons SO2 eq/kton) | 1.03 | 0.91 | 0.77 | ||||
| NMVOC (Non-Methane Volatile Organic Compounds) emissions | (tons) | 68,490 | 46,228 | 48,702 | ||||
| TSP (Total Suspended Particulate) emissions | 3,783 | 3,297 | 3,548 | |||||
| Air protection expenditures (a) | (euro thousand) | 71,715 | 46,736 | 56,882 | ||||
| - operating expenditures | 19,680 | 16,608 | 15,795 | |||||
| - capital expenditures | 52,035 | 30,128 | 41,087 |
(a) The figure is part of the environmental expenditures reported in the table "The environmental management system".
The trend in NOx emissions is
determined by the level of combustion activities and the fuel mix
used. The refining and electricity generation sectors recorded
decreased emissions indexes, while the E&P sector recorded an
increase as a result of increased consumption of fuel gas in
Nigeria, Kazakhstan and Congo. This increase, added to the
performance of the Engineering and Construction sector, (start of
new onshore projects including the "Jeddah Airport
Project", "Etihad Railway Project" and "Shah
Gas Development Project") led to an increase in NOx
emissions of 19%. While the performance of the E&C and
E&P sectors is often determined by temporary conditions or
ones linked to the management of the reservoir, the general
reduction in emission indexes of the remaining sectors shows the
improvement in the technology and fuels used. In the G&P
sector, with the setting up of a new catalytic CO system,
emissions of NOx are forecast to fall by about 11
t/year. In the refining sector, projects are underway to reduce
NOx emissions at the Sannazzaro refinery, where a
reduction under normal running conditions of about 110 t/year in
NOx emissions is forecast.
Total emissions of SOx (sulphur oxide) have fallen by
20.6% compared to 2011. This trend is determined principally by
the contribution of the refining, chemicals and E&P sectors.
In the refining sector, which contributes about 56% of the
consolidated Eni total, the change (down 26.4% compared to 2011,
equal to 6,000 tons of SO2 eq) is to be attributed
both to reduced processing in the refineries, and to a change in
the mix of fuels used (increased use of natural gas in the
refineries and consequently reduced use of fuel oil and coke) as
well as energy saving initiatives. In the refining sector,
projects are underway to reduce SOx emissions at the
Gela and Sannazzaro refineries; for the latter a reduction of
about 740 t/year in SOx emissions under normal
operating conditions is forecast. The fall of about 11% compared
to the 2011 financial year in the E&P sector is traceable
essentially to the resumption of Libyan activities at lower than
normal operating levels.
In the Chemicals sector the survey and initial monitoring of
emissions into the atmosphere of volatile organic compounds (VOC)
has been completed at all the Versalis plants.
Reclamation and landscape protection
| 2010 | 2011 | 2012 | ||||||
| Waste from reclamation activities to be disposed of or recovered/recycled: | (tons) | 11,020,439 | 13,869,509 | 16,294,882 | ||||
| - of which hazardous | 3,032,213 | 5,416,581 | 9,170,637 | |||||
| - of which non-hazardous | 7,988,226 | 8,452,928 | 7,124,245 | |||||
| Soil and groundwater reclamation expenditures (a): | (euro thousand) | 296,655 | 336,525 | 197,468 | ||||
| - operating expenditures | 257,749 | 271,582 | 182,112 | |||||
| - capital expenditures | 38,906 | 64,943 | 15,356 |
(a) The figure is part of the environmental expenditures reported in the table "The environmental management system".
Reclamation activities in Italy have
mainly been carried out through Syndial, a company dedicated to
the reclamation and remediation of contaminated sites following
decommissioning (47% of total expenditure in 2012), followed by
R&M (32%) and the Chemicals sector with 12%.
Total spending on this area (about euro 200 million) has clearly
reduced this year compared to the previous two years (around euro
300 million). The drop is due to delays in the granting of
certain preliminary authorizations by the Public Administration,
which had a substantial impact on the
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activities of Syndial, while refining
and chemicals maintained their levels of spending.
As a result, in 2012, the process of environmental restoration
mainly took the form of maintenance, by Syndial, Versalis and
R&M, of the remediation projects in course at the major
Italian sites (Gela, Priolo, Assemini, Porto Marghera etc.)
without a decisive contribution from the new projects approved.
Maintenance activities, above all for hydraulic barriers, have
led to the production of about 10.1 million tons of waste,
showing a slight downward trend in contrast to the slight
increase in previous years.
Syndial has concluded the Green Remediation project, with the
implementation of "Sustainable Assessment Framework"
software in the strategic context of Porto Torres, in order to
make its operational choices compatible with the overall
environmental, social and economic reference framework.
This tool will be used in the future to encourage the
implementation of sustainable solutions in managing contaminated
sites.
The R&M sector also pursued sustainability targets with the
design, installation and implementation of low impact
technologies such as the "Groundwater Circulation
Well", "Thermopile" applied in certain Sales
Points (Voghera) and the COR process (authorized at the Petra
depot in Ravenna) which exploits the biodegradability of organic
substances.
Eni’s attention to sustainable reclamation and remediation
has been strengthened as a result of its active role within the
Sustainable Remediation Forum (SuRF) Italy project, based on the
international experience of SuRF UK and SuRF US.
Reclamation and remediation activities abroad have been conducted
principally by the E&P Division, particularly in Nigeria, and
work has continued on the characterization and remediation of
sites contaminated by oil spills. At the same time a pilot test
for the application of thermal desorption in the Ob-Ob area has
been planned as an alternative approach to RENA (Remediation by
Enhanced Natural Attenuation).
In E&P research projects have also been started aimed at
preventing the risks due to oil spills intruding into operating
areas. These relate to "Remote Monitoring" of pipelines
and "Anti-intrusion innovative technologies
deployment".
Protection of water resources
| 2010 | 2011 | 2012 | ||||||
| Total water withdrawals: | (Mm3) | 2,786.78 | 2,577.22 | 2,357.56 | ||||
| - of which sea water | 2,580.28 | 2,375.82 | 2,142.82 | |||||
| - of which fresh water | 182.96 | 186.85 | 190.15 | |||||
| - of which salt water taken from underground or surface sources | 23.54 | 14.55 | 24.59 | |||||
| Water withdrawals/kWheq produced (EniPower) | (m3/kWh eq) | 0.0127 | 0.0138 | 0.0119 | ||||
| Water withdrawals/crude and semi-finished products processing (R&M) | (m3/ton) | 28.36 | 30.98 | 25.33 | ||||
| Total production and/or process water extracted: | (Mm3) | 61.15 | 58.16 | 61.17 (a) | ||||
| - of which re-injected | 27.11 | 25.18 | 20.82 | |||||
| - of which discharged into surface water body or into sea | 31.12 | 30.47 | 26.94 | |||||
| - of which sent to evaporation ponds | 2.92 | 2.51 | 3.97 | |||||
| Concentration of oil in production water | (mg/l) | 13.06 | 13.50 | 9.61 | ||||
| Total recycled and/or reused water | (Mm3) | 544.63 | 521.76 | 521.46 | ||||
| Percentage of fresh water reused | (%) | 74.9 | 73.6 | 73.3 | ||||
| Fresh water discharged | (Mm3) | 130.54 | 131.60 | 133.58 | ||||
| Sea water discharged | 1,476.15 | 1,866.96 | 1,931.74 | |||||
| Water resources and drains expenditures (b): | (euro thousand) | 83,903 | 76,298 | 83,415 | ||||
| - operating expenditures | 56,382 | 46,167 | 39,808 | |||||
| - capital expenditures | 27,520 | 30,131 | 43,607 |
(a) In 2012 the figure include
also the amount of produced water injected into deep wells to
disposal purpose, equal to 9.43 Mm3.
(b) The figure is part of the environmental expenditures reported
in the table "The environmental management system".
In 2012, there was a reduction in total
water extraction compared to 2011 of 8.5%. Fresh water
extraction, which represents only 8% of the total water resources
used, and the percentage of reuse have remained substantially
stable. Over the four-year period a reduction of about 22 million
cubic m is expected thanks to projects to reduce extraction in
the refining and Chemicals sectors.
In the E&P sector, water injection projects have gone ahead
with the target of 65% of process water being reinjected by 2016;
in 2012 the value measured (49%) showed an increase in comparison
to 2011 (up 14.2%) and is in line with the target set for 2016
(65%). The concentration of oil in production water discharged
into the surface environment has decreased compared to 2011 (down
28.8%) and remains significantly below the limits (9.6 mg/l).
In the refining sector, consistent reductions have been recorded
both in extraction of sea water (down 28.2%) and of fresh water
(down 24.4%). For fresh water the significant reduction is due to
normal running or start-up of new water reuse facilities at the
refineries (Sannazzaro and Livorno respectively).
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Oil spills
| 2010 | 2011 | 2012 | ||||||
| Total number of oil spills (a) | (number) | 330 | 418 | 771 | ||||
| Total volume of oil spills (a): | (barrels) | 22,964 | 14,952 | 12,472 | ||||
| - of which from sabotage and terrorism | 18,695 | 7,657 | 8,616 | |||||
| - of which from accidents | 4,269 | 7,295 | 3,856 | |||||
| Volume of oil spill from accident to water body | 408 | 199 | 98 | |||||
| Volume of oil spill from accident to land | 22,556 | 14,753 | 12,375 | |||||
| Spill prevention expenditures (b): | (euro thousand) | 13,665 | 40,530 | 63,771 | ||||
| - operating expenditures | 5,699 | 4,252 | 8,354 | |||||
| - capital expenditures | 7,956 | 36,278 | 55,417 |
(a) In the 2010-2011 period
only oil spills of more than one barrel are considered for the
E&P sector; in 2012 the figure also includes oil spills of
less than one barrel (equal to 453, corresponding to 3,684
barrels).
(b) The figure is part of the environmental expenditures reported
in the table "The environmental management system".
Performance in 2012 on oil spills must
be viewed in the light of the anomalous data for 2011,
characterized by a spill in the Engineering & Construction
sector of over 4,000 barrels in Algeria; apart from this event
the performance of this sector is generally insignificant
compared to that of the E&P sector which, while recording an
increase in the volume of oil spills (up 5.6%) shows an
improvement in the index for the volume of spills per million boe
produced (down 4.4% compared to 2011). In the four-year period a
further improvement in performance is expected (from the current
level of 3.3 to 2.4 boe/mmboe produced) thanks to preventive
work. Total spending on oil spill prevention increased in 2012,
exceeding euro 60 million.
The volume of oil spills following acts of sabotage (more than
97% attributable to activities in Nigeria in the E&P sector)
has increased (up 12.5%).
Waste from production activities
| 2010 | 2011 | 2012 | ||||||
| Waste from production activities | (tons) | 1,400,488 | 1,309,135 | 1,378,351 | ||||
| - of which from drilling activities | 496,508 | 388,539 | 342,026 | |||||
| Hazardous waste from production activities | 489,108 | 476,552 | 365,668 | |||||
| Non-hazardous waste from production activities | 911,380 | 832,582 | 1,012,683 | |||||
| Waste from production activities to be disposed of or recovered/recycled (a): | 1,898,707 | 1,828,441 | 1,991,485 | |||||
| - of which hazardous | 945,723 | 958,873 | 924,871 | |||||
| - of which non-hazardous | 952,985 | 869,568 | 1,066,614 | |||||
| Waste from production activities recovered and/or recycled: | 249,090 | 232,884 | 315,880 | |||||
| - of which hazardous | 95,100 | 73,174 | 67,203 | |||||
| - of which non-hazardous | 153,990 | 159,710 | 248,677 | |||||
| Waste from production activities disposed of: | 1,126,611 | 982,423 | 1,038,709 | |||||
| - of which hazardous | 367,799 | 326,495 | 278,812 | |||||
| - of which non-hazardous | 758,812 | 655,927 | 759,897 | |||||
| Waste from drilling activities / drilled meters | (tons/m) | 0.623 | 0.340 | 0.512 | ||||
| Waste management expenditures (b): | (euro thousand) | 106,419 | 96,263 | 92,113 | ||||
| - operating expenditures | 102,703 | 83,403 | 91,341 | |||||
| - capital expenditures | 3,716 | 12,860 | 772 |
(a) The figure includes volumes
remaining from previous years.
(b) The figure is part of the environmental expenditures reported
in the table "The environmental management system".
Waste from production activities in 2012
(about 1.38 million tons) increased by 5.3% compared to the
previous year, essentially due to the contribution of the E&P
sectors (up 5% equivalent to more than 40,000 tons) and
Engineering & Construction (up 29% equivalent to more than
57,000 tons) whilst all the other sectors recorded a reduction.
Overall, non hazardous waste increased by 21.6%, while hazardous
waste diminished by 23.3%.
The volumes sent for recovery in 2012 increased by 35.6% compared
to 2011. The trend consolidated a slight reduction for hazardous
waste (down 8.2%) while there was a significant increase for non
hazardous waste (up 55.7%).
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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, 2012 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 2012 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. | |
| 3. | The undersigned officers also certify that: | |
| 3.1 | This 2012 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 14, 2013
| /s/ Paolo Scaroni ————————— Paolo Scaroni Chief Executive Officer |
/s/Massimo Mondazzi ————————— Massimo Mondazzi Chief Financial Officer |
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Report of Independent Auditors
256
Contents
257
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Independent Assurance Report
258
Contents
259
Contents
260
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Contents
Table of Contents
ANNUAL REPORT ON FORM 20-F 2012
Rome, April 9, 2013 - Eni informs that today the Annual Report on Form 20-F for the year ended December 31, 2012, has been filed with the U.S. Securities and Exchange Commission (SEC).
The Annual Report on Form 20-F 2012 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 2012, 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): +39. 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 successfully completes the Area 4 appraisal plan in Mozambique
San Donato Milanese (Milan), April 24, 2013 - Eni
successfully finalized the appraisal campaign of the discoveries
in Area 4 in Mozambique with the drilling and testing of Mamba
South 3, which is the ninth well drilled in the exploration
permit.
The well results have exceeded expectations and Eni has updated
the estimate of the Mamba Complex and Coral discoveries to 80
Trillion cubic feet (Tcf) of gas in place.
Mamba South 3 was drilled in water depth of 1,571 meters and
reached a total depth of 4,948 meters. The well is located
approximately 6 kilometers North of Mamba South 1, 12 kilometers
north west of Mamba South 2 and approximately 50 kilometers off
the Cabo Delgado coast.
The well encountered 214 meters of gas pay in high quality
Oligocene and Eocene reservoirs. The discovery proved
the existence of hydraulic communication with the same reservoirs
of Mamba South 1 and Mamba South 2, Mamba North East 1 and Mamba
North East 2 wells.
Eni is now finalizing the development plans of this huge
resource base.
The plan is now to drill an exploration prospect (Agulha 1) in
the southern part of Area 4, in order to assess the hydrocarbon
potential of untested deeper plays in Area 4.
Eni is the operator of Area 4 with a 70% participating interest. The other partners of the joint venture are Galp Energia (10%), KOGAS (10%) and ENH (10%, carried through the exploration phase).
Company Contacts:
Press Office: Tel. +39.0252031875 -
+39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +39. 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 announces results for the first quarter of 2013
Rome, April 24, 2013 - Eni, the international oil and gas company, today announces its group results for the first quarter of 20131 (unaudited).
Financial Highlights2
| • | Adjusted operating profit: euro 3.79 billion, down 36% excluding Snam contribution to the first quarter of 20123; | |
| • | Adjusted net profit: euro 1.43 billion, down 39% excluding Snam contribution to the first quarter of 20123; | |
| • | Cash flow: euro 2.80 billion; | |
| • | Leverage: down to 0.24. |
Operational Highlights
| • | Oil and natural gas production: down 4.9% to 1.6 mmboe/d affected by one-offs in Nigeria, Libya and the UK; | |
| • | Natural gas sales: down 1.3% to 30.2 billion cubic meters due to the disposal of Galp; | |
| • | Signed an agreement with CNPC to sell 28.57% of the share capital of Eni East Africa, which currently owns a 70% interest in Area 4 in Mozambique, at the agreed price of $4.21 billion in cash; access to a promising shale gas block in China; | |
| • | Acquired exploration licenses in areas of high potential in Timor Leste, Cyprus, Egypt and the Gulf of Mexico; | |
| • | Versalis entered partnership agreements with Genomatica, Pirelli and Yulex targeting continuing expansion in the bio-technologies and the bio-rubber segment. |
Paolo Scaroni, Chief Executive Officer, commented:
"We confirm our growth and profitability targets for the full year 2013, in spite of a slower first quarter. This was negatively impacted by lower oil&gas production due to contingencies as well as to the current downturn in the gas market. Our E&P Division confirms its production growth targets for 2013 driven by continuing progress in developing ongoing projects. The G&P Division will benefit from the renegotiation of supply contracts which will mitigate the impact of a still very negative market. The R&M Division and Versalis, which both delivered strong improvements over the same period a year ago, will continue with their respective programs to drive a recovery in profitability".
(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) Throughout this press release, changes in the Group results
for the first quarter 2013 are calculated with respect to results
earned by the Group continuing operations in the first quarter
2012 considering that at the time Snam was consolidated in the
Group accounts and reported as discontinued operations based on
IFRS 5.
(3) The Snam contribution excluded is the result of Snam
transactions with Eni included in the continuing operations
results of the first quarter 2012 according to IFRS 5. Adjusted
operating profit and adjusted net profit are not provided by
IFRS.
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Financial Highlights
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | ||||
| SUMMARY GROUP RESULTS (a) | (euro million) | |||||||||||||
| 4,970 | Adjusted operating profit - continuing operations (b) | 6,237 | 3,792 | (39.2 | ) | |||||||||
| 4,970 | Adjusted operating profit - continuing operations excluding Snam contribution | 5,965 | 3,792 | (36.4 | ) | |||||||||
| 1,518 | Adjusted net profit - continuing operations | 2,465 | 1,434 | (41.8 | ) | |||||||||
| 0.42 | - per share (euro) (c) | 0.68 | 0.40 | (41.2 | ) | |||||||||
| 1.09 | - per ADR ($) (c) (d) | 1.78 | 1.06 | (40.4 | ) | |||||||||
| 1,518 | Adjusted net profit - continuing operations excluding Snam contribution | 2,360 | 1,434 | (39.2 | ) | |||||||||
| (1,964 | ) | Net profit - continuing operations | 3,544 | 1,543 | (56.5 | ) | ||||||||
| (0.54 | ) | - per share (euro) (c) | 0.98 | 0.43 | (56.1 | ) | ||||||||
| (1.40 | ) | - per ADR ($) (c) (d) | 2.57 | 1.14 | (55.6 | ) | ||||||||
| 3,425 | Net profit - discontinued operations | 73 | .. | |||||||||||
| 1,461 | Net profit | 3,617 | 1,543 | (57.3 | ) | |||||||||
(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 2013 Eni
reported adjusted operating profit of euro 3.79 billion, down by
39.2% from the first quarter of 2012, mainly driven by the
Exploration & Production and the Gas & Power Divisions.
Excluding Snam's contribution to the results earned by continuing
operations in the first quarter of 2012, the decline in the first
quarter of 2013 operating profit was 36.4%. Results of the
Exploration & Production Division were affected by lower
crude oil prices (Brent benchmark down 5% from the same quarter
in 2012) and lower hydrocarbon production (down 4.9%) due to
one-offs (adjusted operating profit down 21.5%).
The Gas & Power Division reported an adjusted operating loss
of euro 148 million, representing a decline from the year-ago
profit of euro 1,019 million which was boosted by the economic
benefit associated with contract renegotiations, certain of which
had retroactive effects. The loss in the first quarter 2013 was
driven by decreasing selling prices against the backdrop of an
ongoing downturn in demand and strong competitive pressure, while
the Company is expecting developments in the renegotiation of its
supply contracts. The Engineering & Construction segment
reported weak results (down 46%) which were adversely affected by
falling demand for oilfield services and lower margins at certain
works.
In contrast, the performance improved markedly both in the
Refining & Marketing Division (up 32.1%) and of Versalis (up
62.7%) driven by cost efficiencies and optimization measures, as
well as a slight recovery in the pricing environment.
Adjusted net profit
Adjusted net profit of the first
quarter of 2013 amounted to euro 1.43 billion, down by 41.8% from
the first quarter of 2012. Excluding Snam's contribution to the
results earned by continuing operations in the first quarter of
2012, the decline in the first quarter of 2013 net profit was
39.2% driven by a weakening operating performance and an
increased consolidated tax rate (up 5 percentage points) mainly
reflecting a growing share of taxable income earned by the
Exploration & Production subsidiaries which are subject to a
higher tax rate than the Italian statutory tax rate for corporate
profits.
Capital expenditure
Capital expenditure amounting to
euro 3.12 billion mainly related to continuing development of oil
and gas reserves and exploration projects. The Group also
incurred expenditures of euro 0.11 billion to finance
joint-venture projects and equity investees.
Balance sheet and Cash flow
Net borrowings4 as of
March 31, 2013 amounted to euro 15.99 billion, representing a
small increase from December 31, 2012 (up euro 0.47 billion). Net
cash provided by operating activities (euro 2.80 billion) funded
most of the cash requirements for the capital expenditure
incurred in the period.
The ratio of net borrowings to shareholders’ equity
including non-controlling interest – leverage5
– decreased to 0.24 at March 31, 2013 (0.43 as of March 31,
2012 and 0.25 at December 31, 2012). This improvement was due to
an increased Group total equity which was mainly driven by
foreign currency translation differences for approximately euro
1.2 billion at foreign subsidiaries as the US dollar strengthened
against the euro (up by 3% from 1.32 as of December 31, 2012 to
1.28 dollars per euro as of March 31, 2013).
(4) Information on net borrowings composition
is furnished on page 28.
(5) 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 28 for leverage.
- 2 -
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Operational Highlights and Trading Environment
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | ||||
| KEY STATISTICS | ||||||||||||||
| 1,747 | Production of oil and natural gas (a) | (kboe/d) | 1,683 | 1,600 | (4.9 | ) | ||||||||
| 912 | - liquids | (kbbl/d) | 867 | 818 | (5.7 | ) | ||||||||
| 4,584 | - natural gas | (mmcf/d) | 4,480 | 4,290 | (4.7 | ) | ||||||||
| 25.08 | Worldwide gas sales | (bcm) | 30.61 | 30.22 | (1.3 | ) | ||||||||
| 10.13 | Electricity sales | (TWh) | 12.29 | 9.16 | (25.5 | ) | ||||||||
| 2.55 | Retail sales of refined products in Europe | (mmtonnes) | 2.53 | 2.33 | (7.9 | ) | ||||||||
(a) Production of oil and natural gas of the first quarter of 2012 has been expressed on the basis of the updated natural gas conversion factor of 5,492 cubic feet of gas per barrel of oil equivalent.
Exploration & Production
In the first quarter of 2013,
Eni’s liquids and gas production was 1.6 million boe/d, down
4.9% from the same quarter of 2012. Performance was affected by
force majeure events in Nigeria and Libya and by the shutdown of
the non-operated Elgin/Franklin field (Eni’s interest
21.87%) in the UK, that restarted in March 2013 after almost one
year of stop. Production was also impacted by the disposals made
in 2012 relating to the divestment of a 10% interest in the
Karachaganak field and the reduction of the stake in the
Portuguese company Galp. New production start-ups and ramp-ups,
particularly in Russia, Egypt and Angola, offset mature fields
decline.
Gas & Power
In the first quarter of 2013,
natural gas sales of 30.22 bcm declined by 1.3% from the first
quarter of 2012. When excluding the impact on volumes of the loss
of significant influence on Galp, gas sales were broadly in line
with the same quarter of the previous year. Against the backdrop
of the ongoing downturn in demand and intensified competitive
pressure, Eni’s sales in Italy (12.53 bcm) performed fairly
well with a 3.1% gain. The drivers were the wholesale segment
where the Company expanded the number of clients and higher sales
at Italian spot markets. On the negative side, sales were
negatively impacted by declines in the industrial and residential
segments and a drop in consumption due to the economic recession.
Sales in Europe decreased by 10.4% (down by 6.9% when excluding
Galp) mainly in Turkey, Hungary and Benelux, partly offset by
higher volumes sold in the UK, mainly at hubs. Sales to importers
in Italy grew (up by 0.44 bcm) due to improved availability of
Libyan gas. Sales on markets outside Europe were another bright
spot (up by 0.39 bcm) due to strong LNG sales in the Far East
markets, mainly in South Korea.
Refining & Marketing
In the first quarter of 2013,
the refining margin in the Mediterranean area partially recovered
from the depressed levels registered in the same period a year
ago (the benchmark margin on Brent crude in the Mediterranean
area averaged $3.97 per barrel in the first quarter of 2013, up
by 36% from the first quarter of 2012). However, the absolute
margin level remained in unprofitable territory due to falling
demand, unsustainable high costs for oil feedstock and excess
capacity, partly offset by improved price differentials between
light and heavy refined products to which Eni's complex
refineries are leveraged.
In the first quarter of 2013, Eni marketed lower volumes at its
Italian retail outlets, down by 8.8% due to a steep decline in
consumption and growing competitive pressure. This trend was
reflected in the market share (29.1%) declining by 1.3 percentage
points compared to the same period of the previous year (30.4%).
Retail sales in the European market declined by 5.6% mainly in
Western Europe.
Business developments
Mozambique
In March 2013, Eni signed a
preliminary agreement with CNPC to sell 28.57% of the share
capital of its subsidiary Eni East Africa, which currently owns a
70% interest in Area 4 in Mozambique, for an agreed price equal
to $4,210 million. The deal is subject to approval by relevant
authorities. Once finalized, CNPC indirectly acquires, through
its 28.57% equity investment in Eni East Africa, a 20% interest
in Area 4, while Eni will retain a 50% interest through the
remaining controlling stake in Eni East Africa. In addition, Eni
and CNPC signed a joint study agreement for the development of
the Rongchang block with shale gas resources, over an area of
approximately 2,000 square kilometers, located in the Sichuan
Basin, in China near the consumer markets of the Country.
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Timor Sea
Eni was awarded a new
exploration Production Sharing Contract (PSC) covering an area of
662 square kilometers lying within the Joint Petroleum
Development Area (JPDA), which is administered by both Australia
and Timor-Leste. The PSC foresees the commitment to drill two
exploration wells during the first two years and separate options
for the drilling of two contingent wells.
Eni has identified a number of oil prospects in this area which
could be exploited in conjunction with the nearby producing Kitan
field, if there are any discoveries.
Venezuela
In March 2013, production
started up (Accelerated Early Production) at the giant Junin 5
field (Eni’s interest 40%), located in the Orinoco oil belt.
Early production of the first phase is expected at plateau of 75
kbbl/d in 2015, targeting a long-term production plateau of 240
kbbl/d to be reached by 2018.
United States
Eni was awarded the exploration
license of five offshore blocks. In the Central Gulf of Mexico
Lease Sale 227 international bidding round, located in the high
potential areas of the Mississippi Canyon and the Desoto Canyon,
which consolidate Eni’s position in the Gulf of Mexico.
Algeria
In January 2013, production
started at the MLE field (Eni’s interest 75%) as part of the
MLE-CAFC integrated project. A natural gas treatment plant
started operations with 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.
Cyprus
Eni signed Exploration and
Production Sharing Contracts with the relevant authorities of the
Republic of Cyprus, for Blocks 2, 3 and 9 located in the Cypriot
deep offshore portion of the Levantine basin over an area of
around 12,530 square kilometers, thus marking Eni's entry into
the Country.
Egypt
Eni was awarded a deepwater
exploration block (Block 9) in the EGAS 2012 international
bidding round, located in the Eastern Mediterranean offshore
Egypt.
| Versalis As regards expansion in bio-plastic sectors and diversification in basic chemicals, Eni’s subsidiary Versalis entered into a number of partnerships with primary operators in bio technologies and rubbers: |
| - | with Genomatica for the establishment of a technological joint venture aimed at developing a new technology for the production of butadiene from non-food crops. This joint venture will also hold exclusive rights for the industrial application of the above mentioned technology in Europe, Asia and Africa. Versalis will invest over $20 million in Genomatica to support development of the integrated end-to-end process. It will also aim to be the first to license the process and build commercial plants; | |
| - | with Pirelli, with the signing of a Memorandum of Understanding to kick off a joint research project for the use of natural rubber from Guayule in tire production; | |
| - | with Yulex, an agricultural-based biomaterials company, for the start-up of a project aimed at the manufacture of bio-rubber in a production complex in Southern Europe. The partnership will cover the entire manufacturing chain. Versalis will manufacture products for different applications aiming at optimizing the entire production process for the tire industry. |
Russia
Eni signed an agreement with the
Russian upstream company Rosneft to develop a trading and
logistics business with the aim of developing synergies between
the companies’ respective logistics infrastructure networks,
extracting additional value from their own equity crude
portfolios and refined products production. The agreement
strengthened the partnership between Eni and Rosneft, part of
strategy for the development of Eni's activities in the Russian
upstream.
Vietnam
Eni signed an agreement with
Vietnamese National oil company Vietnam Oil and Gas Group
(Petrovietnam), for the joint evaluation of non conventional
resources in the Country.
- 4 -
Table of Contents
| Exploration
activity Exploration activities yielded positive results in: |
| - | Mozambique, with two new natural gas offshore discoveries within the Mamba Complex, in Area 4, at the Coral 3 and Mamba Sud 3 delineation wells, that increased the potential of Area 4 operated by Eni at 80 trillion cubic feet of gas in place; | |
| - | Angola, with the oil discovery Vandumbu 1 ST located in the offshore 15/06 block (Eni's interest operator with a 35% interest) with a production capacity in excess of 5 kbbl/d of oil; | |
| - | Pakistan, with the gas discovery of Lundali 1 in the onshore Sukhpur Concession (Eni's interest operator with a 45% interest) with a production capacity in excess of 3 kboe/d. |
Outlook
The 2013 outlook features risks and uncertainties that weigh down the global economic recovery, mainly due to continuing weak fundamentals in the Eurozone. A number of factors will contribute to support the price of oil including ongoing geopolitical risk as well as improved balance between world demand and supplies of crude oil and oil products. Management expects continuing weak conditions in the European gas, refining and marketing of fuels and chemical sectors. Demand for energy commodities is anticipated to remain sluggish due to the economic stagnation and unit margins are exposed to competitive pressure in an extremely volatile environment. In this scenario, the recovery of profitability in the Gas & Power and Refining & Marketing Divisions and Versalis will depend mainly on management actions to optimize operations and improve the cost position.
| Management expects the key production and sales trends of Eni businesses to be as follows: |
| - | production of liquids and natural gas: yearly average production is expected to grow compared to 2012. The start-up of major projects, as the ones in Algeria and Angola, and ramp-up of the fields started in 2012 more than offset the decline in mature production fields, the effect of 2012 asset disposals, and the impact of first quarter one-offs, which are largely solved; | |
| - | gas sales: natural gas sales are expected to be in line with 2012, excluding the impact of the Galp divestment (94.19 bcm in 2012, including consolidated sales and Eni's share of joint ventures). In a scenario of continuing weak demand and strong competition, management plans to retain the Company’s market share and sales volumes in the industrial wholesale by leveraging innovative commercial offers, synergies between commercial and trading activities and expansion and retention of the retail customer portfolio. International expansion in the LNG business is expected to continue by boosting the Company’s presence in the more lucrative Far East markets; | |
| - | refining throughputs on Eni’s account: in a scenario of stagnant consumption, volumes are expected to be substantially in line with those processed in 2012 (30.01 million tonnes in 2012). This projection assumes the restart of the Gela plant in June 2013 and the start-up of the new EST technology conversion plant at Sannazzaro, as well as the shut down of the Venice plant to start the Green Refinery project; | |
| - | retail sales of refined products in Italy and the Rest of Europe: retail sales are expected to be in line with those of 2012 (10.87 million tonnes, 2012 total), net of the effect of the "riparti con eni" marketing campaign which was executed in the summer of 2012. Management expects a modest fall in domestic retail volumes due to an anticipated contraction in domestic demand, the effect of which will be absorbed by the expected increase in sales in the Rest of Europe. In this intensely competitive context, management intends to preserve the Company’s market share in Italy by leveraging marketing initiatives to build customers loyalty, the strength of the Eni brand with the completion of network rebranding, service excellence and development of the oil and non-oil offer; | |
| - | Engineering & Construction: the profitability prospects of this business are expected to be adversely affected by the conclusion of highly-profitable projects, an anticipated slowdown in order acquisitions and the start of lower margin projects in the Onshore and Offshore Engineering and Construction businesses. |
In 2013, management expects a capital budget in line with 2012 (euro 12.76 billion in capital expenditure and euro 0.57 billion in financial investments in 2012, excluding Snam investments). In 2013, the company will be focused on the development of hydrocarbon reserves in Sub-Saharan and North Africa, Norway, the United States, Iraq, Kazakhstan and Venezuela, the exploration projects in Sub-Saharan Africa, Norway, Egypt, the United States and emerging areas, as well as optimization and selective growth initiatives in other sectors, the start-up of the Green Refinery works in Venice, and elastomers and bio-technologies in the Chemical sector. Assuming a Brent price of $90 a barrel on average for the full year 2013, the ratio of net borrowings to total equity – leverage – is projected to be almost in line with the level achieved at the end of 2012, due to cash flows from operations and portfolio management.
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Table of Contents
This press release for the
first quarter of 2013 (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 2013 and for the
first quarter and the fourth quarter of 2012. Information on
liquidity and capital resources relates to end of the period as
of March 31, 2013 and December 31, 2012. 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
are disclosed in our annual report for the year ended December
31, 2012, as updated with new IFRS provisions effective January
1, 2013, which are summarized below. With Commission Regulation
(EU) No. 475/2012 of June 5, 2012, the revised IAS 19
"Employee Benefits" (hereinafter "IAS 19")
has been endorsed. The document requires interalia: (i) to
recognize actuarial gains and losses in other comprehensive
income, eliminating the possibility to adopt the corridor
approach. Actuarial gains and losses recognized in other
comprehensive income will not be recycled through profit and loss
account in subsequent periods; and (ii) to replace the separate
presentation of the expected return on plan assets and the
interest cost, with a single "net interest expense or
income". This aggregate is determined by applying the
discount rate used to measure the defined benefit obligation to
the net defined benefit liability. The new provisions require,
interalia, additional disclosures with reference to defined
benefit plans. IAS 19 is effective for annual periods beginning
on or after January 1, 2013. Under the transition requirements of
IAS 19, the new provisions are applied retrospectively by
adjusting the opening balance as of January 1, 2012 and the 2012
profit and loss account. In the Group consolidated accounts for
the first quarter 2013, the enactment of the new provisions of
IAS 19 determined a pre-tax and post-tax effect amounting to,
respectively: (i) a decrease of equity as of January 1, 2012 of
euro 123 million and euro 61 million; (ii) a decrease of equity
as of December 31, 2012 of euro 269 million and euro 155 million,
of which euro 149 million and euro 96 million related to the 2012
actuarial gains and losses recognized in other comprehensive
income. The effect on net profit for the first quarter 2012 was
immaterial. In addition, the Company has reclassified interest
expense on employee benefit plans as an interest expense in lieu
of operating expenses (payroll costs) correspondingly changing
operating profit by euro 12 million.
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 pursuant to rule 154-bis paragraph 2 of Legislative Decree No. 58/1998, that data and information disclosed in this press release correspond to the Company’s evidence and accounting books and records.
Disclaimer
This press release, in particular the statements under the
section "Outlook", contains certain forward-looking
statements particularly those regarding capital expenditures,
development and management of oil and gas resources, dividends,
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 first quarter of
the year cannot be extrapolated on an annual basis.
Contacts
E-mail: segreteriasocietaria.azionisti@eni.com
Investor Relations
E-mail: investor.relations@eni.com
Tel.: +39 0252051651 - Fax: +39 0252031929
Eni Press Office
E-mail: ufficio.stampa@eni.com
Tel.: +39 0252031287 - +39 0659822040
* * *
Eni
Società per Azioni Rome, 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 of 2013 (unaudited) is also available on the Eni web site eni.com.
- 6 -
Table of Contents
| Quarterly consolidated
report Summary results for the first quarter of 2013 |
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | ||||
| 32,523 | Net sales from operations - continuing operations | 33,140 | 31,165 | (6.0 | ) | |||||||
| 1,650 | Operating profit - continuing operations | 6,549 | 3,834 | (41.5 | ) | |||||||
| 560 | Exclusion of inventory holding (gains) losses | (412 | ) | 10 | ||||||||
| 2,760 | Exclusion of special items | 100 | (52 | ) | ||||||||
| 4,970 | Adjusted operating profit - continuing operations | 6,237 | 3,792 | (39.2 | ) | |||||||
| Breakdown by Division: | ||||||||||||
| 4,867 | Exploration & Production | 5,095 | 3,999 | (21.5 | ) | |||||||
| 42 | Gas & Power | 1,019 | (148 | ) | .. | |||||||
| (7 | ) | Refining & Marketing | (224 | ) | (152 | ) | 32.1 | |||||
| (116 | ) | Versalis | (169 | ) | (63 | ) | 62.7 | |||||
| 320 | Engineering & Construction | 378 | 204 | (46.0 | ) | |||||||
| (80 | ) | Other activities | (45 | ) | (55 | ) | (22.2 | ) | ||||
| (82 | ) | Corporate and financial companies | (80 | ) | (82 | ) | (2.5 | ) | ||||
| 26 | Impact of unrealized intragroup profit elimination and other consolidation adjustments (a) | 263 | 89 | |||||||||
| 4,970 | Adjusted operating profit - continuing operations excluding Snam contribution | 5,965 | 3,792 | (36.4 | ) | |||||||
| (202 | ) | Net finance (expense) income (b) | (282 | ) | (203 | ) | ||||||
| 82 | Net income from investments (b) | 172 | 141 | |||||||||
| (3,267 | ) | Income taxes (b) | (3,412 | ) | (2,275 | ) | ||||||
| 67.4 | Tax rate (%) | 55.7 | 61.0 | |||||||||
| 1,583 | Adjusted net profit - continuing operations | 2,715 | 1,455 | (46.4 | ) | |||||||
| (1,964 | ) | Net profit attributable to Eni’s shareholders - continuing operations | 3,544 | 1,543 | (56.5 | ) | ||||||
| 340 | Exclusion of inventory holding (gains) losses | (279 | ) | 7 | ||||||||
| 3,142 | Exclusion of special items | (800 | ) | (116 | ) | |||||||
| 1,518 | Adjusted net profit attributable to Eni’s shareholders - continuing operations | 2,465 | 1,434 | (41.8 | ) | |||||||
| Adjusted net profit - discontinued operations | 74 | .. | ||||||||||
| 1,518 | Adjusted net profit attributable to Eni’s shareholders | 2,539 | 1,434 | (43.5 | ) | |||||||
| 1,518 | Adjusted net profit - continuing operations excluding Snam contribution | 2,360 | 1,434 | (39.2 | ) | |||||||
| Net profit attributable to Eni’s shareholders - continuing operations | ||||||||||||
| (0.54 | ) | per share (euro) | 0.98 | 0.43 | (56.1 | ) | ||||||
| (1.40 | ) | per ADR ($) | 2.57 | 1.14 | (55.6 | ) | ||||||
| Adjusted net profit attributable to Eni’s shareholders - continuing operations | ||||||||||||
| 0.42 | per share (euro) | 0.68 | 0.40 | (41.2 | ) | |||||||
| 1.09 | per ADR ($) | 1.78 | 1.06 | (40.4 | ) | |||||||
| 3,622.8 | Weighted average number of outstanding shares (c) | 3,622.7 | 3,622.8 | |||||||||
| 2,107 | Net cash provided by operating activities - continuing operations | 4,121 | 2,798 | (32.1 | ) | |||||||
| Net cash provided by operating activities - discontinued operations | 74 | .. | ||||||||||
| 2,107 | Net cash provided by operating activities | 4,195 | 2,798 | (33.3 | ) | |||||||
| 3,890 | Capital expenditure - continuing operations | 2,632 | 3,119 | 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).
- 7 -
Table of Contents
Trading environment indicators
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | ||||
| 110.02 | Average price of Brent dated crude oil (a) | 118.49 | 112.60 | (5.0 | ) | |||||||
| 1.297 | Average EUR/USD exchange rate (b) | 1.311 | 1.321 | 0.8 | ||||||||
| 84.83 | Average price in euro of Brent dated crude oil | 90.38 | 85.24 | (5.7 | ) | |||||||
| 2.54 | Average European refining margin (c) | 2.92 | 3.97 | 36.0 | ||||||||
| 2.83 | Average European refining margin Brent/Ural (c) | 3.26 | 4.30 | 31.9 | ||||||||
| 1.96 | Average European refining margin in euro | 2.23 | 3.01 | 35.0 | ||||||||
| 10.49 | Price of NBP gas (d) | 9.34 | 11.46 | 22.7 | ||||||||
| 0.2 | Euribor - three-month euro rate (%) | 1.0 | 0.2 | (80.0 | ) | |||||||
| 0.3 | Libor - three-month dollar rate (%) | 0.5 | 0.3 | (40.0 | ) | |||||||
(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.
Group results
In the first quarter of 2013, net
profit pertaining to Eni’s shareholders amounted to euro
1,543 million, with a reduction of euro 2,001 million (down by
56.5%) from the first quarter of 2012. This decline was driven by
lower operating profit (down 41.5%) mainly recorded by the
Exploration & Production Division due to a weaker pricing
environment and lower production volumes, and the Gas & Power
Division dragged down by falling sale prices and the circumstance
that the same quarter of the previous year benefited from the
economic benefit associated with the contract renegotiations,
certain of which had retroactive effects.
Net profit was also affected by: (i) lower income from
investments, as in the first quarter of 2012 a substantial,
extraordinary gain was recorded on Eni’s shareholding in
Galp due to an equity transaction made by a Galp subsidiary which
was reported in profit (euro 835 million). In the first quarter
of 2013, an overall gain of euro 42 million was recognized in
profit on fair value evaluation at market prices of Eni's
financial assets Galp and Snam relating to the portion of both
interests which served as underlying shares of convertible bonds;
(ii) an increased consolidated tax rate (up by eleven percentage
points) mainly reflecting lower profit on equity-accounted
investments which are non-taxable items and a growing share of
taxable income earned by the Exploration & Production
subsidiaries which are subject to a higher tax rate than the
Italian statutory tax rate for corporate profits.
Net finance expense declined by euro 139 million due to lower
finance charges driven by a decreased level of net borrowings and
lower costs of borrowings driven by movements in key market
benchmarks.
Adjusted operating profit
amounted to euro 3,792 million, down by 39.2% from the first
quarter of 2012. When excluding the contribution of Snam to the
continuing operations of the first quarter 2012, adjusted
operating profit was down by 36.4%.
Adjusted net profit pertaining to Eni’s shareholders
was euro 1,434 million, a decline of euro 1,031 million (or
41.8%) from the first quarter of 2012. When excluding the
contribution of Snam to the continuing operations of the first
quarter 2012, adjusted net profit decline reduced to 39.2%.
Adjusted net profit was calculated by excluding an inventory
holding loss amounting to euro 7 million and special gains of
euro 116 million stated net of exchange rate differences and
exchange rate derivative instruments reclassified in operating
profit (a gain of euro 56 million) as they mainly related to
derivative transactions entered into to manage exposure to the
exchange rate risk implicit in commodity pricing formulas.
Special gains in operating profit (euro 52 million, net of the above mentioned exchange rate gains) mainly related to: (i) the reversal of unutilized provisions for euro 102 million accounted in the 2012 financial statements reflecting price revisions at certain supply contracts due to the settlement of an arbitration proceeding, which outcome was better than management's expectations; (ii) net gains on the disposal of certain non strategic upstream assets in the Exploration & Production Division (euro 50 million); (iii) impairment of capital expenditure on assets impaired in previous reporting periods (euro 16 million); (iv) exchange rate differences and exchange rate derivative instruments reclassified as operating items (a gain of euro 56 million); (v) provisions for environmental issues and redundancy incentives (euro 7 million and euro 4 million, respectively).
Results by Division
The Group’s adjusted net
profit was determined by lower adjusted operating profit reported
by the Exploration & Production, Gas & Power and
Engineering & Construction Divisions, offset by a recovery in
the Refining & Marketing Division and Versalis performances.
- 8 -
Table of Contents
Exploration & Production
In the first quarter of 2013,
the Exploration & Production Division reported a 21.5%
decrease in adjusted operating profit to euro 3,999 million, down
by euro 1,096 million, driven by weaker realizations in dollar
terms (on average down by 7.7%) and lower production volumes
(down by 4.9%). Adjusted net profit amounted to euro 1,670
million, down by 16.2% benefiting from the reduction of the
adjusted tax rate (down by 3 percentage points) due to a lower
share of taxable profit reported in Countries with higher
taxation.
Gas & Power
The Gas & Power Division
reported an adjusted operating loss of euro 148 million, compared
to a profit of euro 1,019 million in the first quarter of 2012,
with the latter benefiting from gains on contract renegotiations,
certain of which had retroactive effects. The operating loss
reported in the first quarter of 2013 was due to the Marketing
activity, which was adversely affected by weak gas demand and
falling gas sale prices in Italy. Also the International
transport activity reduced its operating profit (down by 15.4%).
Adjusted net loss of the Gas & Power Division worsened by
euro 827 million, from a profit of euro 736 million to a loss of
euro 91 million in the first quarter of 2013 also impacted by
lower results at equity-accounted entities.
Engineering &
Construction
The Engineering &
Construction segment reported a lower adjusted operating profit,
which was down by 46% to euro 204 million (down euro 174 million
from the first quarter of 2012). The decline was driven by a
slowdown in activities and lower profitability of certain
contracts as a number of high-margin contracts were completed in
2012. Adjusted net profit (euro 130 million) decreased by 52%
compared to the first quarter of 2012.
Refining & Marketing
The Refining & Marketing
Division reported an appreciable improvement in operating losses
to euro 152 million, which were reduced by 32.1%, down by euro 72
million, from the first quarter of 2012. This positive trend was
driven by cost efficiencies and better refinery performance. The
trading environment was characterized by a recovery in refining
margins supported by higher prices for premium distillates and
higher price differentials between light and heavy products;
however fuel demand continued to decline. Adjusted net loss
amounted to euro 50 million, with a reduction of euro 93 million
from the first quarter of 2012, reflecting the better operating
performance and higher results from equity-accounted entities.
Versalis
Versalis significantly reduced
its adjusted operating losses, down to euro 63 million in the
first quarter of 2013 from a loss of euro 169 million in the same
quarter last year. The improved performance was mainly due to
cost efficiencies and a slight recovery in the pricing
environment. These positives were partly offset by the impact of
weak commodity demand on the back of the economic downturn.
Adjusted net loss improved by euro 61 million, from a loss of
euro 119 million in the first quarter of 2012, to euro 58 million
in the first quarter of 2013.
- 9 -
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Summarized Group Balance Sheet6
| (euro million) | ||||||
| Dec. 31, 2012 (a) | Mar. 31, 2013 | Change | ||||
| Fixed assets | |||||||||
| Property, plant and equipment | 63,466 | 65,442 | 1,976 | ||||||
| Inventories - Compulsory stock | 2,538 | 2,583 | 45 | ||||||
| Intangible assets | 4,487 | 4,564 | 77 | ||||||
| Equity-accounted investments and other investments | 9,347 | 9,640 | 293 | ||||||
| Receivables and securities held for operating purposes | 1,457 | 1,510 | 53 | ||||||
| Net payables related to capital expenditure | (1,142 | ) | (1,064 | ) | 78 | ||||
| 80,153 | 82,675 | 2,522 | |||||||
| Net working capital | |||||||||
| Inventories | 8,496 | 8,275 | (221 | ) | |||||
| Trade receivables | 19,966 | 23,937 | 3,971 | ||||||
| Trade payables | (14,993 | ) | (16,857 | ) | (1,864 | ) | |||
| Tax payables and provisions for net deferred tax liabilities | (3,204 | ) | (4,477 | ) | (1,273 | ) | |||
| Provisions | (13,603 | ) | (13,275 | ) | 328 | ||||
| Other current assets and liabilities | 2,473 | 2,182 | (291 | ) | |||||
| (865 | ) | (215 | ) | 650 | |||||
| Provisions for employee post-retirement benefits | (1,374 | ) | (1,395 | ) | (21 | ) | |||
| Assets held for sale including related liabilities | 155 | 177 | 22 | ||||||
| CAPITAL EMPLOYED, NET | 78,069 | 81,242 | 3,173 | ||||||
| Eni shareholders’ equity | 59,060 | 61,774 | 2,714 | ||||||
| Non-controlling interest | 3,498 | 3,483 | (15 | ) | |||||
| Shareholders’ equity | 62,558 | 65,257 | 2,699 | ||||||
| Net borrowings | 15,511 | 15,985 | 474 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 78,069 | 81,242 | 3,173 | ||||||
| Leverage | 0.25 | 0.24 | (0.01 | ) | |||||
(a) For a description of the application of IAS 19, see methodology on page 6.
The depreciation of the euro versus the US dollar recorded at March 31, 2013 from December 31, 2012 (the EUR/USD exchange rate was 1.28 as of March 31, 2013, as compared to 1.32 as of December 31, 2012, down by 3%) increased net capital employed and net equity by euro 1,158 million, as a result of exchange rate translation differences.
Fixed assets amounted to euro 82,675 million, representing an increase of euro 2,522 million from December 31, 2012, reflecting capital expenditure incurred in the period (euro 3,119 million) and higher exchange rate translation differences, partly offset by depreciation, depletion, amortization and impairment charges (euro 2,138 million).
Net working capital amounted to a negative euro 215 million, representing an increase of euro 650 million mainly due to higher trade receivables net of higher trade payables (up by euro 2,107 million) reflecting seasonal gas sales, and the utilization of accrued provisions (down by euro 328 million) reflecting the settlement of a price revision in the gas segment. Those increases were partly offset by increased tax payables and provisions for net deferred tax liabilities accrued in the quarter (up by euro 1,273 million) mainly reflecting the fact that Italian excise taxes due on fuels and gas consumed in the second half of December 2012, were paid in advance within the end of the same month. Additionally gas inventories decreased in the quarter.
Net assets held for sale including related liabilities (euro 177 million) related to non-strategic assets in the Exploration & Production and Refining & Marketing Divisions.
Shareholders’ equity including non-controlling interest was euro 65,257 million, representing an increase of euro 2,699 million from December 31, 2012. This was due to comprehensive income for the period (euro 2,775 million) as a result of net profit (euro 1,564 million) and foreign currency translation differences (euro 1,158 million). Fair value evaluation at market price of the Snam and Galp financial instruments resulted in gains through equity of euro 14 million and euro 61 million, respectively.
(6) 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.
- 10 -
Table of Contents
Summarized Group Cash Flow Statement7
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | Change | ||||
| (1,899 | ) | Net profit - continuing operations | 3,794 | 1,564 | (2,230 | ) | ||||||
| Adjustments to reconcile net profit to cash provided by operating activities: | ||||||||||||
| 5,274 | - depreciation, depletion and amortization and other non monetary items | 1,142 | 2,055 | 913 | ||||||||
| (136 | ) | - net gains on disposal of assets | (23 | ) | (51 | ) | (28 | ) | ||||
| 3,350 | - dividends, interest, taxes and other changes | 3,697 | 2,364 | (1,333 | ) | |||||||
| (1,372 | ) | Changes in working capital related to operations | (1,645 | ) | (471 | ) | 1,174 | |||||
| (3,110 | ) | Dividends received, taxes paid, interest (paid) received | (2,844 | ) | (2,663 | ) | 181 | |||||
| 2,107 | Net cash provided by operating activities - continuing operations | 4,121 | 2,798 | (1,323 | ) | |||||||
| Net cash provided by operating activities - discontinued operations | 74 | (74 | ) | |||||||||
| 2,107 | Net cash provided by operating activities | 4,195 | 2,798 | (1,397 | ) | |||||||
| (3,890 | ) | Capital expenditure - continuing operations | (2,632 | ) | (3,119 | ) | (487 | ) | ||||
| Capital expenditure - discontinued operations | (239 | ) | 239 | |||||||||
| (3,890 | ) | Capital expenditure | (2,871 | ) | (3,119 | ) | (248 | ) | ||||
| (56 | ) | Investments and purchase of consolidated subsidiaries and businesses | (245 | ) | (113 | ) | 132 | |||||
| 4,338 | Disposals | 52 | 75 | 23 | ||||||||
| 458 | Other cash flow related to capital expenditure, investments and disposals | (262 | ) | (23 | ) | 239 | ||||||
| 2,957 | Free cash flow | 869 | (382 | ) | (1,251 | ) | ||||||
| (46 | ) | Borrowings (repayment) of debt related to financing activities | (2 | ) | 936 | 938 | ||||||
| (903 | ) | Changes in short and long-term financial debt | (362 | ) | 1,829 | 2,191 | ||||||
| (102 | ) | Dividends paid and changes in non-controlling interest and reserves | (6 | ) | (63 | ) | (57 | ) | ||||
| (8 | ) | Effect of changes in consolidation and exchange differences | (9 | ) | 11 | 20 | ||||||
| 1,898 | NET CASH FLOW | 490 | 2,331 | 1,841 | ||||||||
Change in net borrowings
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | Change | ||||
| 2,957 | Free cash flow | 869 | (382 | ) | (1,251 | ) | ||||||
| Net borrowings of acquired companies | (2 | ) | (6 | ) | (4 | ) | ||||||
| 12,449 | Net borrowings of divested companies | |||||||||||
| (11,198 | ) | Exchange differences on net borrowings and other changes | (255 | ) | (23 | ) | 232 | |||||
| (102 | ) | Dividends paid and changes in non-controlling interest and reserves | (6 | ) | (63 | ) | (57 | ) | ||||
| 4,106 | CHANGE IN NET BORROWINGS | 606 | (474 | ) | (1,080 | ) | ||||||
Net cash provided by operating activities (euro 2,798 million) funded almost completely the cash outflows relating to capital expenditure totaling euro 3,119 million and investments (euro 113 million), determining a small increase in net borrowings (euro 474 million).
(7) 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 flow 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.
- 11 -
Table of Contents
Other information
Continuing listing standards provided by Article 36 of Italian exchanges regulation about issuers that control subsidiaries incorporated or regulated in accordance with laws of extra-EU Countries
Certain provisions 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, 2013, the provision of Article 36 of Italian exchanges regulation in accordance with Italian continuing listing standards apply to 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. Eni has already adopted adequate procedures to ensure full compliance with the regulation.
Financial and operating information by Division for the first quarter of 2013 is provided in the following pages.
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Table of Contents
Exploration & Production
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | ||||
| RESULTS | (euro million) | |||||||||||||
| 9,249 | Net sales from operations | 9,343 | 7,783 | (16.7 | ) | |||||||||
| 4,552 | Operating profit | 5,094 | 4,053 | (20.4 | ) | |||||||||
| 315 | Exclusion of special items: | 1 | (54 | ) | ||||||||||
| 458 | - asset impairments | |||||||||||||
| (129 | ) | - gains on disposal of assets | (12 | ) | (51 | ) | ||||||||
| 7 | - risk provisions | |||||||||||||
| (2 | ) | - provision for redundancy incentives | 1 | 1 | ||||||||||
| (1 | ) | - re-measurement gains/losses on commodity derivatives | 21 | 2 | ||||||||||
| 4 | - exchange differences and derivatives | (9 | ) | (7 | ) | |||||||||
| (22 | ) | - other | 1 | |||||||||||
| 4,867 | Adjusted operating profit | 5,095 | 3,999 | (21.5 | ) | |||||||||
| (63 | ) | Net financial income (expense) (a) | (67 | ) | (63 | ) | ||||||||
| (40 | ) | Net income (expense) from investments (a) | 43 | 20 | ||||||||||
| (2,971 | ) | Income taxes (a) | (3,079 | ) | (2,286 | ) | ||||||||
| 62.4 | Tax rate (%) | 60.7 | 57.8 | |||||||||||
| 1,793 | Adjusted net profit | 1,992 | 1,670 | (16.2 | ) | |||||||||
| Results also include: | ||||||||||||||
| 2,495 | - amortization and depreciation | 1,817 | 1,754 | (3.5 | ) | |||||||||
| of which: | ||||||||||||||
| 459 | exploration expenditure | 398 | 390 | (2.0 | ) | |||||||||
| 336 | - amortization of exploratory drilling expenditures and other | 283 | 330 | 16.6 | ||||||||||
| 123 | - amortization of geological and geophysical exploration expenses | 115 | 60 | (47.8 | ) | |||||||||
| 3,142 | Capital expenditure | 2,018 | 2,330 | 15.5 | ||||||||||
| of which: | ||||||||||||||
| 403 | - exploratory expenditure (b) | 358 | 466 | 30.2 | ||||||||||
| Production (c) (d) | ||||||||||||||
| 912 | Liquids (e) | (kbbl/d) | 867 | 818 | (5.7 | ) | ||||||||
| 4,584 | Natural gas | (mmcf/d) | 4,480 | 4,290 | (4.7 | ) | ||||||||
| 1,747 | Total hydrocarbons | (kboe/d) | 1,683 | 1,600 | (4.9 | ) | ||||||||
| Average realizations | ||||||||||||||
| 101.38 | Liquids (e) | ($/bbl) | 111.54 | 102.32 | (8.3 | ) | ||||||||
| 7.48 | Natural gas | ($/mmcf) | 7.33 | 7.18 | (2.0 | ) | ||||||||
| 74.04 | Total hydrocarbons | ($/boe) | 78.14 | 72.10 | (7.7 | ) | ||||||||
| Average oil market prices | ||||||||||||||
| 110.02 | Brent dated | ($/bbl) | 118.49 | 112.60 | (5.0 | ) | ||||||||
| 84.83 | Brent dated | (euro/bbl) | 90.38 | 85.24 | (5.7 | ) | ||||||||
| 88.23 | West Texas Intermediate | ($/bbl) | 102.99 | 94.30 | (8.4 | ) | ||||||||
| 3.39 | Gas Henry Hub | ($/mmbtu) | 2.45 | 3.49 | 45.6 | |||||||||
(a) Excluding special items.
(b) Includes exploration licenses acquisition costs and
exploration bonuses.
(c) Supplementary operating data is provided on page 36.
(d) Includes Eni’s share of production of equity-accounted
entities.
(e) Includes condensates.
Results
In the first quarter 2013, the Exploration & Production Division reported an adjusted operating profit amounting to euro 3,999 million, representing a decrease of euro 1,096 million from the first quarter 2012, down by 21.5%, driven by lower oil prices for market benchmarks (Brent crude price of 112.6 $/barrel in the first quarter 2013, down by 5% compared to the same period of the previous year) and lower production sold.
Special items excluded from adjusted operating profit amounted to a net gain of euro 54 million and mainly related to the disposal of non-strategic assets and exchange rate differences and derivatives instruments reclassified as operating items (a gain of euro 7 million).
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Adjusted net profit declined by euro 322 million to euro 1,670 million (down 16.2%) from the first quarter of 2012 due to a decreased operating result partly offset by a lower adjusted tax rate (down 3 percentage points) due to a lower share of taxable profit reported in Countries with higher taxation.
Operating review
In the first quarter of 2013, Eni’s liquids and gas production was 1.6 million boe/d, down 4.9% from the same quarter of 2012. Performance was affected by force majeure events in Nigeria and Libya and by the shutdown of the non-operated Elgin/Franklin field (Eni’s interest 21.87%) in the UK, that restarted in March 2013 after almost one year of stop. Production was also impacted by the disposals made in 2012 relating to the divestment of a 10% interest in the Karachaganak field and the reduction of the stake in the Portuguese company Galp. New production start-ups and ramp-ups, particularly in Russia, Egypt and Angola, offset mature fields decline. The share of oil and natural gas produced outside Italy was 89%.
Liquids production (818 kbbl/d) decreased by 49 kbbl/d, or 5.7%, due to lower production in Nigeria, Libya and the UK. These negatives were partly offset by the start ups/ramp-ups of new fields mainly in Egypt and Russia, as well as higher production in Iraq and Algeria.
Natural gas production (4,290 mmcf/d) declined by 190 mmcf/d (down 4.7%) due to lower production in Nigeria, Libya and the UK. These negatives were partially offset by the start-ups/ramp-ups mainly in Russia and Egypt.
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Gas & Power
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | ||||
| RESULTS (*) | (euro million) | |||||||||||||
| 8,931 | Net sales from operations | 12,128 | 10,842 | (10.6 | ) | |||||||||
| (1,814 | ) | Operating profit | 916 | (105 | ) | .. | ||||||||
| 350 | Exclusion of inventory holding (gains) losses | 13 | (37 | ) | ||||||||||
| 1,506 | Exclusion of special items: | 90 | (6 | ) | ||||||||||
| 1 | - environmental charges | |||||||||||||
| 1,645 | - asset impairments | |||||||||||||
| 1 | - gains on disposal of assets | (1 | ) | |||||||||||
| (155 | ) | - risk provisions | 97 | (102 | ) | |||||||||
| 1 | - provision for redundancy incentives | 1 | ||||||||||||
| (118 | ) | - exchange differences and derivatives | (10 | ) | 82 | |||||||||
| 131 | - other | 4 | 13 | |||||||||||
| 42 | Adjusted operating profit | 1,019 | (148 | ) | .. | |||||||||
| (33 | ) | Marketing | 928 | (225 | ) | .. | ||||||||
| 75 | International transport | 91 | 77 | (15.4 | ) | |||||||||
| 5 | Net finance income (expense) (a) | 7 | 7 | |||||||||||
| 23 | Net income from investments (a) | 106 | 30 | |||||||||||
| (156 | ) | Income taxes (a) | (396 | ) | 20 | |||||||||
| .. | Tax rate (%) | 35.0 | .. | |||||||||||
| (86 | ) | Adjusted net profit | 736 | (91 | ) | .. | ||||||||
| 97 | Capital expenditure | 32 | 28 | (12.5 | ) | |||||||||
| Natural gas sales | (bcm) | |||||||||||||
| 10.15 | Italy | 12.15 | 12.53 | 3.1 | ||||||||||
| 14.93 | International sales | 18.46 | 17.69 | (4.2 | ) | |||||||||
| 12.85 | - Rest of Europe | 16.31 | 15.14 | (7.2 | ) | |||||||||
| 1.36 | - Extra European markets | 1.45 | 1.84 | 26.9 | ||||||||||
| 0.72 | - E&P sales in Europe and in the Gulf of Mexico | 0.70 | 0.71 | 1.4 | ||||||||||
| 25.08 | WORLDWIDE GAS SALES | 30.61 | 30.22 | (1.3 | ) | |||||||||
| of which: | ||||||||||||||
| 22.70 | - Sales of consolidated subsidiaries | 27.19 | 27.77 | 2.1 | ||||||||||
| 1.66 | - Eni’s share of sales of natural gas of affiliates | 2.72 | 1.74 | (36.0 | ) | |||||||||
| 0.72 | - E&P sales in Europe and in the Gulf of Mexico | 0.70 | 0.71 | 1.4 | ||||||||||
| 10.13 | Electricity sales | (TWh) | 12.29 | 9.16 | (25.5 | ) | ||||||||
(*) G&P results include
Marketing and International transport activities.
(a) Excluding special items.
Results
In the first quarter of 2013 the Gas & Power Division reported an adjusted operating loss of euro 148 million, down euro 1,167 million from the first quarter of 2012 when operating profit of euro 1,019 million was reported. This decline was due to the Marketing business which reported a loss of euro 225 million driven by falling gas prices particularly in the Italian market against the backdrop of ongoing oversupplies, strong competition and weak demand. In the first quarter of 2012 the Marketing business reported a big profit which was boosted by the economic benefits associated with the renegotiation of gas supply contracts, some of which were retroactive to the beginning of 2011. Results for the International transport business were down by 15.4%.
Special items excluded from operating profit amounted to euro 6 million for the first quarter and mainly related to the utilization of unused risk provisions accrued for the price revision at certain supply contracts (euro 102 million) offset in part by the reporting under operating income of exchange rate differences and derivatives entered into to hedge exchange rate risks in commodity pricing formulas (a gain of euro 82 million).
Adjusted net loss for the first quarter of 2013 of euro 91 million decreased by euro 827 million from the first quarter of 2012 due to the same drivers affecting the operating income and lower results reported by equity accounted entities, mainly in Spain and the impact of the Galp disposal.
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Operating review
NATURAL GAS SALES BY MARKET
| (bcm) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | |||||
| 10.15 | ITALY | 12.15 | 12.53 | 3.1 | ||||||||
| 1.75 | - Wholesalers | 1.88 | 2.40 | 27.7 | ||||||||
| 2.23 | - Italian exchange for gas and spot markets | 2.46 | 2.78 | 13.0 | ||||||||
| 1.89 | - Industries | 1.87 | 1.70 | (9.1 | ) | |||||||
| 0.27 | - Medium-sized enterprises and services | 0.41 | 0.45 | 9.8 | ||||||||
| 0.58 | - Power generation | 0.75 | 0.75 | |||||||||
| 1.92 | - Residential | 3.01 | 2.89 | (4.0 | ) | |||||||
| 1.51 | - Own consumption | 1.77 | 1.56 | (11.9 | ) | |||||||
| 14.93 | INTERNATIONAL SALES | 18.46 | 17.69 | (4.2 | ) | |||||||
| 12.85 | Rest of Europe | 16.31 | 15.14 | (7.2 | ) | |||||||
| 0.87 | - Importers in Italy | 0.78 | 1.22 | 56.4 | ||||||||
| 11.98 | - European markets | 15.53 | 13.92 | (10.4 | ) | |||||||
| 1.20 | Iberian Peninsula | 1.93 | 1.24 | (35.8 | ) | |||||||
| 2.19 | Germany/Austria | 2.81 | 2.83 | 0.7 | ||||||||
| 2.44 | Benelux | 3.25 | 2.86 | (12.0 | ) | |||||||
| 0.63 | Hungary | 0.99 | 0.86 | (13.1 | ) | |||||||
| 0.87 | United Kingdom | 1.05 | 1.27 | 21.0 | ||||||||
| 1.84 | Turkey | 2.13 | 1.79 | (16.0 | ) | |||||||
| 2.44 | France | 2.80 | 2.76 | (1.4 | ) | |||||||
| 0.37 | Other | 0.57 | 0.31 | (45.6 | ) | |||||||
| 1.36 | Extra European markets | 1.45 | 1.84 | 26.9 | ||||||||
| 0.72 | E&P sales in Europe and in the Gulf of Mexico | 0.70 | 0.71 | 1.4 | ||||||||
| 25.08 | WORLDWIDE GAS SALES | 30.61 | 30.22 | (1.3 | ) | |||||||
Sales of natural gas for the first quarter of 2013 were 30.22 bcm, a decrease of 0.39 bcm from the first quarter of 2012, down 1.3%, due to an ongoing demand downturn and growing competitive pressure. Sales included 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. Excluding the loss of significant influence on Galp whereby the Company ceased reporting its share of sales, the first quarter 2013 performance was barely unchanged.
Sales volumes in the Italian market amounted to 12.53 bcm, an increase of 0.38 bcm or 3.1% from the same quarter a year ago, due to higher sales to wholesalers (up 0.52 bcm) related to new client gains and higher sales at Italian spot markets (up 0.32 bcm). These increases more than offset lower volumes sold to industrial and residential users (down 0.17 bcm and down 0.12 bcm, respectively) due to the economic downturn.
Sales to importers in Italy posted a big increase (0.44 bcm or 56.4%) related to a recovery in Libyan supplies.
Sales in Europe (13.92 bcm) decreased by 1.61 bcm, down 10.4%, in particular in the Iberian Peninsula (down 0.69 bcm) due to the exclusion of Galp sales related to the end of affiliation of the company. Net of this effect, sales in Europe decreased by 7% due to declining volumes sold in Benelux (down 0.39 bcm) and Hungary (down 0.13 bcm) affected by strong competitive pressure and Turkey (down 0.34 bcm) due to declining withdrawals by Botas. The opposite trend was recorded in sales in UK (up 0.22 bcm) driven by lively sales at local hubs.
Sales on markets outside Europe followed a positive trend (up 0.39 bcm) due to positive LNG sales in the Far East, in particular in South Korea.
Electricity sales were 9.16 TWh in the first quarter of 2013, decreasing by 25.5%, from a year earlier due to lower volumes traded on the Italian power exchange (down 1.86 TWh) and lower sales to wholesalers and large clients (down 1.59 and down 1.12 TWh, respectively) due to sluggish demand in Italy, partly offset by higher sales to the residential segment (up 0.81 TWh).
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Other performance indicators
Follows a breakdown of the pro-forma adjusted
EBITDA by business:
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | |||||
| 238 | Pro-forma adjusted EBITDA | 1,318 | 18 | (98.6 | ) | |||||||
| 127 | Marketing | 1,184 | (94 | ) | .. | |||||||
| 111 | International transport | 134 | 112 | (16.4 | ) | |||||||
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 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.
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Refining & Marketing
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | |||||
| RESULTS | (euro million) | |||||||||||||
| 16,042 | Net sales from operations | 14,206 | 13,889 | (2.2 | ) | |||||||||
| (1,077 | ) | Operating profit | 113 | (48 | ) | .. | ||||||||
| 293 | Exclusion of inventory holding (gains) losses | (358 | ) | (97 | ) | |||||||||
| 777 | Exclusion of special items | 21 | (7 | ) | ||||||||||
| 26 | - environmental charges | 4 | 7 | |||||||||||
| 645 | - asset impairments | 11 | 16 | |||||||||||
| 4 | - gains on disposal of assets | |||||||||||||
| 62 | - risk provisions | |||||||||||||
| (7 | ) | - provision for redundancy incentives | 1 | 1 | ||||||||||
| 5 | - exchange differences and derivatives | 2 | (21 | ) | ||||||||||
| 42 | - other | 3 | (10 | ) | ||||||||||
| (7 | ) | Adjusted operating profit | (224 | ) | (152 | ) | 32.1 | |||||||
| (4 | ) | Net finance income (expense) (a) | (1 | ) | 1 | |||||||||
| 8 | Net income (expense) from investments (a) | 22 | 49 | |||||||||||
| 26 | Income taxes (a) | 60 | 52 | |||||||||||
| .. | Tax rate (%) | .. | .. | |||||||||||
| 23 | Adjusted net profit | (143 | ) | (50 | ) | 65.0 | ||||||||
| 360 | Capital expenditure | 124 | 84 | (32.3 | ) | |||||||||
| Global indicator refining margin | ||||||||||||||
| 2.54 | Brent dated | ($/bbl) | 2.92 | 3.97 | 36.0 | |||||||||
| 1.96 | Brent dated | (euro/bbl) | 2.23 | 3.01 | 35.0 | |||||||||
| 2.83 | Brent/Ural | ($/bbl) | 3.26 | 4.30 | 31.9 | |||||||||
| REFINING THROUGHPUTS AND SALES | (mmtonnes) | |||||||||||||
| 5.35 | Refining throughputs of wholly-owned refineries | 4.74 | 4.91 | 3.6 | ||||||||||
| 7.56 | Refining throughputs on own account | 7.17 | 6.96 | (2.9 | ) | |||||||||
| 6.28 | - Italy | 5.98 | 5.83 | (2.5 | ) | |||||||||
| 1.28 | - Rest of Europe | 1.19 | 1.13 | (5.0 | ) | |||||||||
| 2.55 | Retail sales | 2.53 | 2.33 | (7.9 | ) | |||||||||
| 1.80 | - Italy | 1.81 | 1.65 | (8.8 | ) | |||||||||
| 0.75 | - Rest of Europe | 0.72 | 0.68 | (5.6 | ) | |||||||||
| 3.17 | Wholesale sales | 2.95 | 2.80 | (5.1 | ) | |||||||||
| 2.18 | - Italy | 2.06 | 1.86 | (9.7 | ) | |||||||||
| 0.99 | - Rest of Europe | 0.89 | 0.94 | 5.6 | ||||||||||
| 0.11 | Wholesale sales outside Europe | 0.10 | 0.10 | |||||||||||
(a) Excluding special items.
Results
In the first quarter of 2013 the Refining & Marketing Division reported an improved adjusted operating loss amounting to euro 152 million, better by euro 72 million or 32.1% than in the first quarter of 2012. This trend was driven by cost efficiencies and improved refinery performance. The scenario was characterized by a recovery in refining margins in the Mediterranean area (the benchmark margin on Brent crude averaged $3.97 per barrel, up 36% from the first quarter of 2012) which was helped by the appreciation in gasoline and an upward trend in price differentials between light and heavy refined products which boosted profitability at Eni's complex refineries. In spite of a reduction in refined products demand, the performance of the Marketing business fared better due to the positive performance registered on the domestic market, in particular in the wholesale business reflecting reduced availability of certain products due to refinery shutdowns by certain competitors.
In the first quarter of 2013, adjusted net loss was euro 50 million (up euro 93 million from the first quarter of 2012) mainly due to a better operating performance and higher profit of equity-accounted entities.
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Operating review
Eni’s refining throughputs for the first quarter of 2013 were 6.96 mmtonnes, with a 2.9% decline from the first quarter of 2012. In Italy processed volumes were barely unchanged from the first quarter of 2012. Lower volumes processed at the Gela (partial shutdown as a result of depressed refining margins) and Milazzo (asset optimization to better leverage operated refineries) refineries were offset by higher capacity utilization at the Venice, Sannazzaro and Taranto plants. Outside Italy, Eni’s refining throughputs decreased by 5% to 1.13 mmtonnes mainly due to the shutdowns of Bayernoil and Ceska Refinerska.
Retail sales in Italy (1.65 mmtonnes) decreased by approximately 160 ktonnes, down 8.8%, driven by lower consumption of gasoil and gasoline. LPG consumption increased slightly. Eni’s retail market share of 29.1% decreased by 1.3 percentage point from the first quarter 2012 (30.4%).
Wholesale sales in Italy (1.86 mmtonnes) declined by approximately 200 ktonnes, down 9.7% from the same quarter of 2012. Declines were recorded in gasoil and fuel oil due to decreasing demand in the industrial segment, as well as in sales of jet fuel due to lower demand from aviation operators. Average market share in the first quarter of 2013 was 27.6% (28.3% in the first quarter of 2012).
Retail sales in the rest of Europe (approximately 682 ktonnes) declined by 5.6% from the first quarter of 2012 reflecting lower marketed volumes in Germany, the Czech Republic, Hungary and France due to weak demand for fuels.
Wholesale sales in the rest of Europe (approximately 939 ktonnes) increased by 5.6% from the first quarter of 2012, mainly in Germany, Czech Republic and Slovenia. Lower sales were reported mainly in Austria.
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Summarized Group profit and loss account
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | |||||
| 32,523 | Net sales from operations | 33,140 | 31,165 | (6.0 | ) | |||||||
| 567 | Other income and revenues | 236 | 231 | (2.1 | ) | |||||||
| (26,177 | ) | Operating expenses | (24,527 | ) | (25,465 | ) | (3.8 | ) | ||||
| 24 | Other operating income (expense) | (92 | ) | 41 | ||||||||
| (5,287 | ) | Depreciation, depletion, amortization and impairments | (2,208 | ) | (2,138 | ) | 3.2 | |||||
| 1,650 | Operating profit | 6,549 | 3,834 | (41.5 | ) | |||||||
| (293 | ) | Finance income (expense) | (306 | ) | (167 | ) | 45.4 | |||||
| (51 | ) | Net income from investments | 1,088 | 148 | 86.4 | |||||||
| 1,306 | Profit before income taxes | 7,331 | 3,815 | (48.0 | ) | |||||||
| (3,205 | ) | Income taxes | (3,537 | ) | (2,251 | ) | 36.4 | |||||
| .. | Tax rate (%) | 48.2 | 59.0 | |||||||||
| (1,899 | ) | Net profit - continuing operations | 3,794 | 1,564 | (58.8 | ) | ||||||
| 3,425 | Net profit - discontinued operations | 131 | .. | |||||||||
| 1,526 | Net profit | 3,925 | 1,564 | (60.2 | ) | |||||||
| 1,461 | Net profit attributable to Eni’s shareholders | 3,617 | 1,543 | (57.3 | ) | |||||||
| (1,964 | ) | - continuing operations | 3,544 | 1,543 | (56.5 | ) | ||||||
| 3,425 | - discontinued operations | 73 | .. | |||||||||
| 65 | Net profit attributable to non-controlling interest | 308 | 21 | (93.2 | ) | |||||||
| 65 | - continuing operations | 250 | 21 | (91.6 | ) | |||||||
| - discontinued operations | 58 | .. | ||||||||||
| (1,964 | ) | Net profit attributable to Eni’s shareholders - continuing operations | 3,544 | 1,543 | (56.5 | ) | ||||||
| 340 | Exclusion of inventory holding (gains) losses | (279 | ) | 7 | ||||||||
| 3,142 | Exclusion of special items | (800 | ) | (116 | ) | |||||||
| 1,518 | Adjusted net profit attributable to Eni’s shareholders - continuing operations (a) | 2,465 | 1,434 | (41.8 | ) | |||||||
(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 measure
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 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.
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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| (euro million) |
| First Quarter 2013 | Exploration & Production | Gas & Power | Refining & Marketing | Versalis | Engineering & Construction |
Other activities | Corporate and financial companies | Impact of unrealized intragroup profit elimination | GROUP | |||||||||
| Reported operating profit | 4,053 | (105 | ) | (48 | ) | (94 | ) | 203 | (77 | ) | (72 | ) | (26 | ) | 3,834 | ||||||||||||
| 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 | ) | |||||||||||||||||||||||
| provision for redundancy incentives | 1 | 1 | 1 | 1 | 4 | ||||||||||||||||||||||
| re-measurement gains/losses on commodity derivatives | 2 | 2 | |||||||||||||||||||||||||
| exchange differences and derivatives | (7 | ) | 82 | (21 | ) | 2 | 56 | ||||||||||||||||||||
| other | 1 | 13 | (10 | ) | (6 | ) | 16 | 14 | |||||||||||||||||||
| Special items of operating profit | (54 | ) | (6 | ) | (7 | ) | 2 | 1 | (5 | ) | 17 | (52 | ) | ||||||||||||||
| Adjusted operating profit | 3,999 | (148 | ) | (152 | ) | (63 | ) | 204 | (82 | ) | (55 | ) | 89 | 3,792 | |||||||||||||
| Net finance (expense) income (a) | (63 | ) | 7 | 1 | (1 | ) | (1 | ) | (146 | ) | (203 | ) | |||||||||||||||
| Net income from investments (a) | 20 | 30 | 49 | 42 | 141 | ||||||||||||||||||||||
| Income taxes (a) | (2,286 | ) | 20 | 52 | 6 | (73 | ) | 37 | (31 | ) | (2,275 | ) | |||||||||||||||
| Tax rate (%) | 57.8 | .. | .. | 36.0 | 61.0 | ||||||||||||||||||||||
| Adjusted net profit | 1,670 | (91 | ) | (50 | ) | (58 | ) | 130 | (149 | ) | (55 | ) | 58 | 1,455 | |||||||||||||
| of which: | |||||||||||||||||||||||||||
| - Adjusted net profit of non-controlling interest | 21 | ||||||||||||||||||||||||||
| - Adjusted net profit attributable to Eni’s shareholders | 1,434 | ||||||||||||||||||||||||||
| Reported net profit attributable to Eni’s shareholders | 1,543 | ||||||||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | 7 | ||||||||||||||||||||||||||
| Exclusion of special items | (116 | ) | |||||||||||||||||||||||||
| Adjusted net profit attributable to Eni’s shareholders | 1,434 | ||||||||||||||||||||||||||
(a) Excluding special items.
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| (euro million) | |||||
| First Quarter 2012 | |||||
OTHER ACTIVITIES (a) |
DISCONTINUED
OPERATIONS |
||||
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 |
|||||||||||||||
| Reported operating profit | 5,094 | 916 | 113 | (96 | ) | 380 | (83 | ) | 570 | (38 | ) | (9 | ) | 6,847 | (570 | ) | 272 | (298 | ) | 6,549 | ||||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | 13 | (358 | ) | (67 | ) | (412 | ) | (412 | ) | |||||||||||||||||||||||||||||||||
| Exclusion of special items: | ||||||||||||||||||||||||||||||||||||||||||
| environmental charges | 4 | 2 | 6 | (2 | ) | (2 | ) | 4 | ||||||||||||||||||||||||||||||||||
| asset impairments | 11 | 11 | 11 | |||||||||||||||||||||||||||||||||||||||
| gains on disposal of assets | (12 | ) | (1 | ) | 1 | (3 | ) | (11 | ) | (26 | ) | 3 | 3 | (23 | ) | |||||||||||||||||||||||||||
| risk provisions | 97 | 97 | 97 | |||||||||||||||||||||||||||||||||||||||
| provision for redundancy incentives |
1 | 1 | 1 | 3 | 4 | 10 | (4 | ) | (4 | ) | 6 | |||||||||||||||||||||||||||||||
| re-measurement gains/losses on commodity derivatives |
21 | (3 | ) | 18 | 18 | |||||||||||||||||||||||||||||||||||||
| exchange differences and derivatives |
(9 | ) | (10 | ) | 2 | (7 | ) | (24 | ) | (24 | ) | |||||||||||||||||||||||||||||||
| other | 4 | 3 | 4 | 11 | 11 | |||||||||||||||||||||||||||||||||||||
| Special items of operating profit | 1 | 90 | 21 | (6 | ) | (2 | ) | 3 | 3 | (7 | ) | 103 | (3 | ) | (3 | ) | 100 | |||||||||||||||||||||||||
| Adjusted operating profit | 5,095 | 1,019 | (224 | ) | (169 | ) | 378 | (80 | ) | 573 | (45 | ) | (9 | ) | 6,538 | (573 | ) | 272 | (301 | ) | 6,237 | |||||||||||||||||||||
| Net finance (expense) income (b) | (67 | ) | 7 | (1 | ) | (3 | ) | (217 | ) | 4 | (1 | ) | (278 | ) | (4 | ) | (4 | ) | (282 | ) | ||||||||||||||||||||||
| Net income from investments (b) | 43 | 106 | 22 | 1 | 12 | 184 | (12 | ) | (12 | ) | 172 | |||||||||||||||||||||||||||||||
| Income taxes (b) | (3,079 | ) | (396 | ) | 60 | 50 | (105 | ) | 102 | (231 | ) | 2 | (3,597 | ) | 231 | (46 | ) | 185 | (3,412 | ) | ||||||||||||||||||||||
| Tax rate (%) | 60.7 | 35.0 | .. | 27.9 | 39.2 | 55.8 | 55.7 | |||||||||||||||||||||||||||||||||||
| Adjusted net profit | 1,992 | 736 | (143 | ) | (119 | ) | 271 | (195 | ) | 358 | (46 | ) | (7 | ) | 2,847 | (358 | ) | 226 | (132 | ) | 2,715 | |||||||||||||||||||||
| of which: | ||||||||||||||||||||||||||||||||||||||||||
| - Adjusted net profit of non-controlling interest | 308 | (58 | ) | 250 | ||||||||||||||||||||||||||||||||||||||
| - Adjusted net profit attributable to Eni’s shareholders | 2,539 | (74 | ) | 2,465 | ||||||||||||||||||||||||||||||||||||||
| Reported net profit attributable to Eni’s shareholders | 3,617 | (73 | ) | 3,544 | ||||||||||||||||||||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | (279 | ) | (279 | ) | ||||||||||||||||||||||||||||||||||||||
| Exclusion of special items | (799 | ) | (1 | ) | (800 | ) | ||||||||||||||||||||||||||||||||||||
| Adjusted net profit attributable to Eni’s shareholders | 2,539 | (74 | ) | 2,465 | ||||||||||||||||||||||||||||||||||||||
(a) Following the
announced divestment plan, Snam results are reclassified from
"Gas & Power" sector to "Other
activities" and accounted as discontinued operations.
(b) Excluding special items
- 23 -
Table of Contents
| (euro million) | |||||
| Fourth Quarter 2012 | |||||
OTHER ACTIVITIES (a) |
DISCONTINUED
OPERATIONS |
||||
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 |
|||||||||||||||
| Reported operating profit | 4,552 | (1,814 | ) | (1,077 | ) | (322 | ) | 309 | (88 | ) | (108 | ) | 198 | 1,650 | 1,650 | |||||||||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | 350 | 293 | 89 | (172 | ) | 560 | 560 | |||||||||||||||||||||||||||||||||||
| Exclusion of special items: | ||||||||||||||||||||||||||||||||||||||||||
| environmental charges | 1 | 26 | (1 | ) | (9 | ) | 17 | 17 | ||||||||||||||||||||||||||||||||||
| asset impairments | 458 | 1,645 | 645 | 104 | 4 | 2,856 | 2,856 | |||||||||||||||||||||||||||||||||||
| gains on disposal of assets | (129 | ) | 1 | 4 | 1 | 3 | (120 | ) | (120 | ) | ||||||||||||||||||||||||||||||||
| risk provisions | 7 | (155 | ) | 62 | 18 | 2 | 31 | (35 | ) | (35 | ) | |||||||||||||||||||||||||||||||
| provision
for redundancy incentives |
(2 | ) | 1 | (7 | ) | 5 | 2 | 1 | ||||||||||||||||||||||||||||||||||
| re-measurement
gains/losses on commodity derivatives |
(1 | ) | 1 | (1 | ) | (1 | ) | (1 | ) | |||||||||||||||||||||||||||||||||
| exchange
differences and derivatives |
4 | (118 | ) | 5 | (6 | ) | (115 | ) | (115 | ) | ||||||||||||||||||||||||||||||||
| other | (22 | ) | 131 | 42 | 2 | 5 | 158 | 158 | ||||||||||||||||||||||||||||||||||
| Special items of operating profit | 315 | 1,506 | 777 | 117 | 11 | 6 | 28 | 2,760 | 2,760 | |||||||||||||||||||||||||||||||||
| Adjusted operating profit | 4,867 | 42 | (7 | ) | (116 | ) | 320 | (82 | ) | (80 | ) | 26 | 4,970 | 4,970 | ||||||||||||||||||||||||||||
| Net finance (expense) income (b) | (63 | ) | 5 | (4 | ) | (1 | ) | (3 | ) | (134 | ) | (2 | ) | (202 | ) | (202 | ) | |||||||||||||||||||||||||
| Net income from investments (b) | (40 | ) | 23 | 8 | 1 | 21 | 70 | (1 | ) | 82 | 82 | |||||||||||||||||||||||||||||||
| Income taxes (b) | (2,971 | ) | (156 | ) | 26 | (12 | ) | (84 | ) | (61 | ) | (9 | ) | (3,267 | ) | (3,267 | ) | |||||||||||||||||||||||||
| Tax rate (%) | 62.4 | .. | .. | 24.9 | 67.4 | 67.4 | ||||||||||||||||||||||||||||||||||||
| Adjusted net profit | 1,793 | (86 | ) | 23 | (128 | ) | 254 | (207 | ) | (83 | ) | 17 | 1,583 | 1,583 | ||||||||||||||||||||||||||||
| of which: | ||||||||||||||||||||||||||||||||||||||||||
| - Adjusted net profit of non-controlling interest | 65 | 65 | ||||||||||||||||||||||||||||||||||||||||
| - Adjusted net profit attributable to Eni’s shareholders | 1,518 | 1,518 | ||||||||||||||||||||||||||||||||||||||||
| Reported net profit attributable to Eni’s shareholders | 1,461 | (3,425 | ) | (1,964 | ) | |||||||||||||||||||||||||||||||||||||
| Exclusion of inventory holding (gains) losses | 340 | 340 | ||||||||||||||||||||||||||||||||||||||||
| Exclusion of special items | (283 | ) | 3,425 | 3,142 | ||||||||||||||||||||||||||||||||||||||
| Adjusted net profit attributable to Eni’s shareholders | 1,518 | 1,518 | ||||||||||||||||||||||||||||||||||||||||
(a) Following the announced
divestment plan, Snam results are reclassified from "Gas
& Power" sector to "Other activities " and
accounted as discontinued operations.
(b) Excluding special items.
- 24 -
Table of Contents
Breakdown of special items
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | ||||
| 17 | environmental charges | 6 | 7 | ||||||
| 2,856 | asset impairments | 11 | 17 | ||||||
| (120 | ) | gains on disposal of assets | (26 | ) | (50 | ) | |||
| (35 | ) | risk provisions | 97 | (102 | ) | ||||
| provisions for redundancy incentives | 10 | 4 | |||||||
| (1 | ) | re-measurement gains/losses on commodity derivatives | 18 | 2 | |||||
| (115 | ) | exchange differences and derivatives | (24 | ) | 56 | ||||
| 158 | other | 11 | 14 | ||||||
| 2,760 | Special items of operating profit | 103 | (52 | ) | |||||
| 91 | Net finance (income) expense | 24 | (36 | ) | |||||
| of which: | |||||||||
| 115 | exchange rate differences and derivatives | 24 | (56 | ) | |||||
| (3,337 | ) | Net income from investments | (887 | ) | (7 | ) | |||
| of which: | |||||||||
| (2,042 | ) | - gains on disposal of assets | |||||||
| of which: | |||||||||
| (23 | ) | Galp | |||||||
| (2,019 | ) | Snam | |||||||
| (1,451 | ) | - revaluation gains | (835 | ) | |||||
| of which: | |||||||||
| Galp | (835 | ) | |||||||
| (1,451 | ) | Snam | |||||||
| 156 | - impairments of equity investments | ||||||||
| 203 | Income taxes | (39 | ) | (21 | ) | ||||
| of which: | |||||||||
| 803 | impairment of deferred tax assets of Italian subsidiaries | ||||||||
| 40 | re-allocation of tax impact on intercompany dividends and other special items | 16 | |||||||
| (640 | ) | taxes on special items of operating profit | (55 | ) | (21 | ) | |||
| (283 | ) | Total special items of net profit | (799 | ) | (116 | ) | |||
- 25 -
Table of Contents
Net sales from operations
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | |||||
| 9,249 | Exploration & Production | 9,343 | 7,783 | (16.7 | ) | |||||||
| 8,931 | Gas & Power | 12,128 | 10,842 | (10.6 | ) | |||||||
| 16,042 | Refining & Marketing | 14,206 | 13,889 | (2.2 | ) | |||||||
| 1,533 | Versalis | 1,643 | 1,543 | (6.1 | ) | |||||||
| 3,291 | Engineering & Construction | 2,960 | 2,988 | 0.9 | ||||||||
| 42 | Other activities | 29 | 22 | (24.1 | ) | |||||||
| 360 | Corporate and financial companies | 310 | 326 | 5.2 | ||||||||
| 88 | Impact of unrealized intragroup profit elimination | (97 | ) | (229 | ) | .. | ||||||
| (7,013 | ) | Consolidation adjustment | (7,382 | ) | (5,999 | ) | ||||||
| 32,523 | 33,140 | 31,165 | (6.0 | ) | ||||||||
Operating expenses
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | |||||
| 24,985 | Purchases, services and other | 23,409 | 24,238 | 3.5 | ||||||||
| of which: | ||||||||||||
| (12 | ) | - other special items | 103 | (95 | ) | |||||||
| 1,192 | Payroll and related costs | 1,118 | 1,227 | 9.7 | ||||||||
| of which: | ||||||||||||
| - provision for redundancy incentives | 10 | 4 | ||||||||||
| 26,177 | 24,527 | 25,465 | 3.8 | |||||||||
Depreciation, depletion, amortization and impairments
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | |||||
| 2,040 | Exploration & Production | 1,817 | 1,754 | (3.5 | ) | |||||||
| 96 | Gas & Power | 99 | 91 | (8.1 | ) | |||||||
| 85 | Refining & Marketing | 82 | 72 | (12.2 | ) | |||||||
| 25 | Versalis | 22 | 21 | (4.5 | ) | |||||||
| 181 | Engineering & Construction | 166 | 175 | 5.4 | ||||||||
| 1 | Other activities | 1 | .. | |||||||||
| 15 | Corporate and financial companies | 16 | 14 | (12.5 | ) | |||||||
| (6 | ) | Impact of unrealized intragroup profit elimination | (6 | ) | (6 | ) | ||||||
| 2,437 | Total depreciation, depletion and amortization | 2,197 | 2,121 | (3.5 | ) | |||||||
| 2,850 | Impairments | 11 | 17 | 54.5 | ||||||||
| 5,287 | 2,208 | 2,138 | (3.2 | ) | ||||||||
- 26 -
Table of Contents
Net income from investments
| (euro million) | |||||||||
| First Quarter 2013 | Exploration & Production | Gas &Power | Refining & Marketing | Other activities | Group | ||||
| Share of gains (losses) from equity-accounted investments | 19 | 30 | 16 | 6 | 71 | |||||
| Dividends | 2 | 33 | 35 | |||||||
| Net gains on disposal | 1 | 1 | ||||||||
| Other income (expense), net | (1 | ) | 42 | 41 | ||||||
| 20 | 30 | 49 | 49 | 148 | ||||||
Income taxes
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | Change | |||||
| Profit before income taxes | ||||||||||||
| (1,783 | ) | Italy | 2,271 | 105 | (2,166 | ) | ||||||
| 3,089 | Outside Italy | 5,060 | 3,710 | (1,350 | ) | |||||||
| 1,306 | 7,331 | 3,815 | (3,516 | ) | ||||||||
| Income taxes | ||||||||||||
| 837 | Italy | 534 | 99 | (435 | ) | |||||||
| 2,368 | Outside Italy | 3,003 | 2,152 | (851 | ) | |||||||
| 3,205 | 3,537 | 2,251 | (1,286 | ) | ||||||||
| Tax rate (%) | ||||||||||||
| .. | Italy | 23.5 | .. | .. | ||||||||
| 76.7 | Outside Italy | 59.3 | 58.0 | (1.3 | ) | |||||||
| .. | 48.2 | 59.0 | 10.8 | |||||||||
Adjusted net profit
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | |||||
| 1,793 | Exploration & Production | 1,992 | 1,670 | (16.2 | ) | |||||||
| (86 | ) | Gas & Power | 736 | (91 | ) | .. | ||||||
| 23 | Refining & Marketing | (143 | ) | (50 | ) | 65.0 | ||||||
| (128 | ) | Versalis | (119 | ) | (58 | ) | 51.3 | |||||
| 254 | Engineering & Construction | 271 | 130 | (52.0 | ) | |||||||
| (83 | ) | Other activities | (46 | ) | (55 | ) | (19.6 | ) | ||||
| (207 | ) | Corporate and financial companies | (195 | ) | (149 | ) | 23.6 | |||||
| 17 | Impact of unrealized intragroup profit elimination (a) | 219 | 58 | |||||||||
| 1,583 | 2,715 | 1,455 | (46.4 | ) | ||||||||
| Attributable to: | ||||||||||||
| 1,518 | - Eni’s shareholders | 2,465 | 1,434 | (41.8 | ) | |||||||
| 65 | - Non-controlling interest | 250 | 21 | (91.6 | ) | |||||||
(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.
- 27 -
Table of Contents
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 benchmark analysis with industry standards.
| (euro million) |
Dec. 31, 2012 |
March 31, 2013 |
Change |
||||
| Total debt | 24,463 | 26,332 | 1,869 | ||||||
| Short-term debt | 5,184 | 7,177 | 1,993 | ||||||
| Long-term debt | 19,279 | 19,155 | (124 | ) | |||||
| Cash and cash equivalents | (7,765 | ) | (10,096 | ) | (2,331 | ) | |||
| Securities held for non-operating purposes | (34 | ) | (20 | ) | 14 | ||||
| Financing receivables for non-operating purposes | (1,153 | ) | (231 | ) | 922 | ||||
| Net borrowings | 15,511 | 15,985 | 474 | ||||||
| Shareholders’ equity including non-controlling interest | 62,558 | 65,257 | 2,699 | ||||||
| Leverage | 0.25 | 0.24 | (0.01 | ) | |||||
Bonds maturing in the 18-month period starting on March 31, 2013
| (euro
million) |
| Issuing entity | Amount at March 31, 2013 (a) |
| Eni Finance International SA | 116 |
| Eni SpA | 2,827 |
| 2,943 | |
(a) Amounts include interest
accrued and discount on issue.
Bonds issued in the First Quarter of 2013 (guarantee by Eni SpA)
| Issuing entity | Nominal amount |
Currency |
Amounts at March 31, 2013 (a) |
Maturity |
Rate |
% |
||||||
| Eni SpA | 1,250 | EUR | 1,223 | 2016 | fixed | 0.625 | ||||||
| 1,223 | ||||||||||||
(a) Amounts include interest accrued and discount on issue.
- 28 -
Table of Contents
Consolidated financial statements
GROUP BALANCE SHEET
| (euro million) | ||||
Dec. 31, 2012 |
March 31, 2013 |
|||
| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | 7,765 | 10,096 | ||||
| Other financial assets available for sale | 235 | 222 | ||||
| Trade and other receivables | 28,747 | 32,609 | ||||
| Inventories | 8,496 | 8,275 | ||||
| Current tax assets | 771 | 838 | ||||
| Other current tax assets | 1,230 | 1,099 | ||||
| Other current assets | 1,624 | 1,547 | ||||
| 48,868 | 54,686 | |||||
| Non-current assets | ||||||
| Property, plant and equipment | 63,466 | 65,442 | ||||
| Inventory - compulsory stock | 2,538 | 2,583 | ||||
| Intangible assets | 4,487 | 4,564 | ||||
| Equity-accounted investments | 4,262 | 4,411 | ||||
| Other investments | 5,085 | 5,229 | ||||
| Other financial assets | 1,229 | 1,170 | ||||
| Deferred tax assets | 5,027 | 4,196 | ||||
| Other non-current receivables | 4,400 | 4,606 | ||||
| 90,494 | 92,201 | |||||
| Assets held for sale | 516 | 528 | ||||
| TOTAL ASSETS | 139,878 | 147,415 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Current liabilities | ||||||
| Short-term debt | 2,223 | 3,040 | ||||
| Current portion of long-term debt | 2,961 | 4,137 | ||||
| Trade and other payables | 23,581 | 26,203 | ||||
| Income taxes payable | 1,622 | 1,608 | ||||
| Other taxes payable | 2,162 | 3,515 | ||||
| Other current liabilities | 1,437 | 1,523 | ||||
| 33,986 | 40,026 | |||||
| Non-current liabilities | ||||||
| Long-term debt | 19,279 | 19,155 | ||||
| Provisions for contingencies | 13,603 | 13,275 | ||||
| Provisions for employee benefits | 1,374 | 1,395 | ||||
| Deferred tax liabilities | 6,740 | 5,992 | ||||
| Other non-current liabilities | 1,977 | 1,964 | ||||
| 42,973 | 41,781 | |||||
| Liabilities directly associated with assets held for sale | 361 | 351 | ||||
| TOTAL LIABILITIES | 77,320 | 82,158 | ||||
| SHAREHOLDERS’ EQUITY | ||||||
| Non-controlling interest | 3,498 | 3,483 | ||||
| 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 | ) | (37 | ) | ||
| Other reserves | 49,438 | 56,464 | ||||
| Treasury shares | (201 | ) | (201 | ) | ||
| Interim dividend | (1,956 | ) | ||||
| Net profit | 7,790 | 1,543 | ||||
| Total Eni shareholders’ equity | 59,060 | 61,774 | ||||
| TOTAL SHAREHOLDERS’ EQUITY | 62,558 | 65,257 | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 139,878 | 147,415 | ||||
- 29 -
Table of Contents
GROUP PROFIT AND LOSS ACCOUNT
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | ||||
| REVENUES | |||||||||
| 32,523 | Net sales from operations | 33,140 | 31,165 | ||||||
| 567 | Other income and revenues | 236 | 231 | ||||||
| 33,090 | Total revenues | 33,376 | 31,396 | ||||||
| OPERATING EXPENSES | |||||||||
| 24,985 | Purchases, services and other | 23,409 | 24,238 | ||||||
| 1,192 | Payroll and related costs | 1,118 | 1,227 | ||||||
| 24 | OTHER OPERATING (CHARGE) INCOME | (92 | ) | 41 | |||||
| 5,287 | DEPRECIATION, DEPLETION, AMORTIZATION AND IMPAIRMENTS | 2,208 | 2,138 | ||||||
| 1,650 | OPERATING PROFIT | 6,549 | 3,834 | ||||||
| FINANCE INCOME (EXPENSE) | |||||||||
| 1,137 | Finance income | 2,337 | 1,947 | ||||||
| (1,412 | ) | Finance expense | (2,604 | ) | (2,143 | ) | |||
| (18 | ) | Derivative financial instruments | (39 | ) | 29 | ||||
| (293 | ) | (306 | ) | (167 | ) | ||||
| INCOME (EXPENSE) FROM INVESTMENTS | |||||||||
| (156 | ) | Share of profit (loss) of equity-accounted investments | 177 | 71 | |||||
| 105 | Other gain (loss) from investments | 911 | 77 | ||||||
| (51 | ) | 1,088 | 148 | ||||||
| 1,306 | PROFIT BEFORE INCOME TAXES | 7,331 | 3,815 | ||||||
| (3,205 | ) | Income taxes | (3,537 | ) | (2,251 | ) | |||
| (1,899 | ) | Net profit - continuing operations | 3,794 | 1,564 | |||||
| 3,425 | Net profit - discontinued operations | 131 | |||||||
| 1,526 | Net profit | 3,925 | 1,564 | ||||||
| Eni’s shareholders | |||||||||
| (1,964 | ) | - continuing operations | 3,544 | 1,543 | |||||
| 3,425 | - discontinued operations | 73 | |||||||
| 1,461 | 3,617 | 1,543 | |||||||
| Non-controlling interest | |||||||||
| 65 | - continuing operations | 250 | 21 | ||||||
| - discontinued operations | 58 | ||||||||
| 65 | 308 | 21 | |||||||
| Net profit per share (euro per share) | |||||||||
| 0.40 | - basic | 1.00 | 0.43 | ||||||
| 0.40 | - diluted | 1.00 | 0.43 | ||||||
| Net profit from continuing operations per share (euro per share) | |||||||||
| (0.54 | ) | - basic | 0.98 | 0.43 | |||||
| (0.54 | ) | - diluted | 0.98 | 0.43 | |||||
- 30 -
Table of Contents
COMPREHENSIVE INCOME
| (euro million) |
| First Quarter 2012 | First Quarter 2013 | ||
| Net profit | 3,925 | 1,564 | ||||
| Other items of comprehensive income | ||||||
| Gains and losses to be brought through profit | ||||||
| - foreign currency translation differences | (1,041 | ) | 1,158 | |||
| - fair value evaluation of Eni’s interest in Galp | 61 | |||||
| - fair value evaluation of Eni’s interest in Snam | 14 | |||||
| - change in the fair value of cash flow hedging derivatives | 32 | (33 | ) | |||
| - change in the fair value of available-for-sale securities | 5 | |||||
| - share of "Other comprehensive income" on equity-accounted entities | 15 | (1 | ) | |||
| - taxation | (13 | ) | 12 | |||
| Total other items | (1,002 | ) | 1,211 | |||
| Total comprehensive income | 2,923 | 2,775 | ||||
| Attributable to: | ||||||
| - Eni’s shareholders | 2,640 | 2,722 | ||||
| - Non-controlling interest | 283 | 53 | ||||
CHANGES IN SHAREHOLDERS’ EQUITY
| (euro million) |
| Shareholders’ equity at December 31, 2012 | 62,558 | |||||
| Total comprehensive income | 2,775 | |||||
| Dividends distributed by consolidated subsidiaries | (38 | ) | ||||
| Acquisition of Tigáz minorities | (26 | ) | ||||
| Other changes | (12 | ) | ||||
| Total changes | 2,699 | |||||
| Shareholders’ equity at March 31, 2013 | 65,257 | |||||
| Attributable to: | ||||||
| - Eni’s shareholders | 61,774 | |||||
| - Non-controlling interest | 3,483 | |||||
- 31 -
Table of Contents
GROUP CASH FLOW STATEMENT
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | ||||
| (1,899 | ) | Net profit - continuing operations | 3,794 | 1,564 | |||||
| Adjustments to reconcile net profit to net cash provided by operating activities: | |||||||||
| 2,437 | Depreciation, depletion and amortization | 2,197 | 2,121 | ||||||
| 2,850 | Impairments of tangible and intangible assets, net | 11 | 17 | ||||||
| 156 | Share of loss of equity-accounted investments | (177 | ) | (71 | ) | ||||
| (136 | ) | Gain on disposal of assets, net | (23 | ) | (51 | ) | |||
| Dividend income | (24 | ) | (35 | ) | |||||
| (18 | ) | Interest income | (37 | ) | (36 | ) | |||
| 163 | Interest expense | 221 | 184 | ||||||
| 3,205 | Income taxes | 3,537 | 2,251 | ||||||
| (156 | ) | Other changes | (885 | ) | (19 | ) | |||
| Changes in working capital: | |||||||||
| 874 | - inventories | (346 | ) | 235 | |||||
| (2,745 | ) | - trade receivables | (2,882 | ) | (3,599 | ) | |||
| 1,833 | - trade payables | (252 | ) | 1,564 | |||||
| (338 | ) | - provisions for contingencies | 84 | (442 | ) | ||||
| (996 | ) | - other assets and liabilities | 1,751 | 1,771 | |||||
| (1,372 | ) | Cash flow from changes in working capital | (1,645 | ) | (471 | ) | |||
| (13 | ) | Net change in the provisions for employee benefits | (4 | ) | 7 | ||||
| 328 | Dividends received | 179 | 34 | ||||||
| 38 | Interest received | 12 | 21 | ||||||
| (198 | ) | Interest paid | (290 | ) | (439 | ) | |||
| (3,278 | ) | Income taxes paid, net of tax receivables received | (2,745 | ) | (2,279 | ) | |||
| 2,107 | Net cash provided from operating activities - continuing operations | 4,121 | 2,798 | ||||||
| Net cash provided from operating activities - discontinued operations | 74 | ||||||||
| 2,107 | Net cash provided from operating activities | 4,195 | 2,798 | ||||||
| Investing activities: | |||||||||
| (3,385 | ) | - tangible assets | (2,412 | ) | (2,617 | ) | |||
| (505 | ) | - intangible assets | (459 | ) | (502 | ) | |||
| - consolidated subsidiaries and businesses | (178 | ) | (28 | ) | |||||
| (56 | ) | - investments | (67 | ) | (85 | ) | |||
| (15 | ) | - securities | 7 | (9 | ) | ||||
| (1,269 | ) | - financing receivables | (224 | ) | (381 | ) | |||
| 446 | - change in payables and receivables in relation to investments and capitalized depreciation | (334 | ) | (82 | ) | ||||
| (4,784 | ) | Cash flow from investments | (3,667 | ) | (3,704 | ) | |||
| Disposals: | |||||||||
| 390 | - tangible assets | 23 | 52 | ||||||
| - intangible assets | 29 | ||||||||
| 3,523 | - consolidated subsidiaries and businesses | ||||||||
| 425 | - investments | 23 | |||||||
| 20 | - securities | 16 | 20 | ||||||
| 1,190 | - financing receivables | 253 | 1,343 | ||||||
| 40 | - change in payables and receivables in relation to disposals | 18 | 22 | ||||||
| 5,588 | Cash flow from disposals | 339 | 1,460 | ||||||
| 804 | Net cash used in investing activities (*) | (3,328 | ) | (2,244 | ) | ||||
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GROUP CASH FLOW STATEMENT (continued)
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | ||||
| (5 | ) | Proceeds from long-term debt | 643 | 988 | |||||
| (81 | ) | Repayments of long-term debt | (542 | ) | (33 | ) | |||
| (817 | ) | Increase (decrease) in short-term debt | (463 | ) | 874 | ||||
| (903 | ) | (362 | ) | 1,829 | |||||
| Net acquisition of treasury shares made by consolidated subsidiaries other than the parent company | 22 | ||||||||
| (1 | ) | Disposal (acquisition) of interests in consolidated subsidiaries | (5 | ) | (25 | ) | |||
| (101 | ) | Dividends paid to non-controlling interests | (23 | ) | (38 | ) | |||
| (1,005 | ) | Net cash used in financing activities | (368 | ) | 1,766 | ||||
| (8 | ) | Effect of exchange rate changes on cash and cash equivalents and other changes | (9 | ) | 11 | ||||
| 1,898 | Net cash flow for the period | 490 | 2,331 | ||||||
| 5,867 | Cash and cash equivalents - beginning of the period | 1,500 | 7,765 | ||||||
| 7,765 | Cash and cash equivalents - end of the period | 1,990 | 10,096 | ||||||
(*) 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) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | ||||
| Financing investments: | |||||||||
| 2 | - securities | 7 | |||||||
| (1,074 | ) | - financing receivables | (12 | ) | (168 | ) | |||
| (1,072 | ) | (5 | ) | (168 | ) | ||||
| Disposal of financing investments: | |||||||||
| (12 | ) | - securities | 15 | ||||||
| 1,038 | - financing receivables | 3 | 1,089 | ||||||
| 1,026 | 3 | 1,104 | |||||||
| (46 | ) | Net cash flows from financing activities | (2 | ) | 936 | ||||
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SUPPLEMENTAL INFORMATION
(euro million)
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | ||||
| Effect of investment of companies included in consolidation and businesses | |||||||||
| Current assets | 108 | 26 | |||||||
| Non-current assets | 156 | 27 | |||||||
| Net borrowings | 46 | (5 | ) | ||||||
| Current and non-current liabilities | (84 | ) | (19 | ) | |||||
| Net effect of investments | 226 | 29 | |||||||
| Non-controlling interest | |||||||||
| Fair value of investments held before the acquisition of control | |||||||||
| Sale of unconsolidated entities controlled by Eni | |||||||||
| Purchase price | 226 | 29 | |||||||
| less: | |||||||||
| Cash and cash equivalents | (48 | ) | (1 | ) | |||||
| Cash flow on investments | 178 | 28 | |||||||
| Effect of disposal of consolidated subsidiaries and businesses | |||||||||
| 2,111 | Current assets | ||||||||
| 18,739 | Non-current assets | ||||||||
| (12,448 | ) | Net borrowings | |||||||
| (4,115 | ) | Current and non-current liabilities | |||||||
| 4,287 | Net effect of disposals | ||||||||
| (943 | ) | Fair value of non-controlling interest retained after disposals | |||||||
| 2,019 | Gains on disposal | ||||||||
| (1,839 | ) | Non-controlling interest | |||||||
| 3,524 | Selling price | ||||||||
| less: | |||||||||
| (1 | ) | Cash and cash equivalents | |||||||
| 3,523 | Cash flow on disposals | ||||||||
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CAPITAL EXPENDITURE
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | |||||
| 3,142 | Exploration & Production | 2,018 | 2,330 | 15.5 | ||||||||
| 15 | - acquisition of proved and unproved properties | |||||||||||
| 403 | - exploration | 358 | 466 | 30.2 | ||||||||
| 2,677 | - development | 1,647 | 1,844 | 12.0 | ||||||||
| 47 | - other expenditure | 13 | 20 | 53.8 | ||||||||
| 97 | Gas & Power | 32 | 28 | (12.5 | ) | |||||||
| 92 | - Marketing | 31 | 27 | (12.9 | ) | |||||||
| 5 | - International transport | 1 | 1 | |||||||||
| 360 | Refining & Marketing | 124 | 84 | (32.3 | ) | |||||||
| 233 | - Refinery, supply and logistics | 110 | 70 | (36.4 | ) | |||||||
| 127 | - Marketing | 14 | 14 | |||||||||
| 71 | Versalis | 29 | 53 | 82.8 | ||||||||
| 236 | Engineering & Construction | 315 | 339 | 7.6 | ||||||||
| 4 | Other activities | 5 | 1 | (80.0 | ) | |||||||
| 69 | Corporate and financial companies | 23 | 62 | .. | ||||||||
| (89 | ) | Impact of unrealized intragroup profit elimination | 86 | 222 | ||||||||
| 3,890 | 2,632 | 3,119 | 18.5 | |||||||||
| In the first quarter of 2013, capital expenditure amounting to euro 3,119 million (euro 2,632 million in the fist quarter 2012) related mainly to: |
| - | development activities deployed mainly in Norway, United States, Italy, Angola, Kazakhstan, Congo and Nigeria and exploratory activities of which 97% was spent outside Italy, primarily in Mozambique, Togo, Nigeria, Angola and Congo as well as the acquisition of new licenses in the Republic of Cyprus; | |
| - | upgrading of the fleet used in the Engineering & Construction Division (euro 339 million); | |
| - | refining, supply and logistics with projects designed to improve the conversion rate and flexibility of refineries (euro 70 million) as well as upgrading and activities related to compliance to relevant legislation on the refined product retail network (euro 14 million); | |
| - | initiatives to improve flexibility of the combined cycle power plants (euro 15 million). |
EXPLORATION & PRODUCTION CAPITAL EXPENDITURE BY REGION
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | % Ch. | |||||
| 244 | Italy | 160 | 197 | 23.1 | ||||||||
| 639 | Rest of Europe | 466 | 583 | 25.1 | ||||||||
| 552 | North Africa | 272 | 192 | (29.4 | ) | |||||||
| 886 | Sub-Saharan Africa | 573 | 731 | 27.6 | ||||||||
| 204 | Kazakhstan | 164 | 160 | (2.4 | ) | |||||||
| 272 | Rest of Asia | 104 | 209 | .. | ||||||||
| 289 | America | 273 | 251 | (8.1 | ) | |||||||
| 56 | Australia and Oceania | 6 | 7 | 16.7 | ||||||||
| 3,142 | 2,018 | 2,330 | 15.5 | |||||||||
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Exploration & Production
PRODUCTION OF OIL AND NATURAL GAS BY REGION
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | ||||
| 1,747 | Production of oil and natural gas (a) (b) | (kboe/d) | 1,683 | 1,600 | ||||
| 195 | Italy | 188 | 180 | |||||
| 172 | Rest of Europe | 206 | 158 | |||||
| 610 | North Africa | 570 | 554 | |||||
| 324 | Sub-Saharan Africa | 335 | 313 | |||||
| 99 | Kazakhstan | 111 | 103 | |||||
| 149 | Rest of Asia | 111 | 141 | |||||
| 166 | America | 119 | 119 | |||||
| 32 | Australia and Oceania | 43 | 32 | |||||
| 154.4 | Production sold (a) | (mmboe) | 149.2 | 135.8 | ||||
PRODUCTION OF LIQUIDS BY REGION
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | ||||
| 912 | Production of liquids (a) | (kbbl/d) | 867 | 818 | ||||
| 61 | Italy | 67 | 63 | |||||
| 90 | Rest of Europe | 112 | 79 | |||||
| 291 | North Africa | 258 | 254 | |||||
| 234 | Sub-Saharan Africa | 243 | 237 | |||||
| 60 | Kazakhstan | 65 | 60 | |||||
| 52 | Rest of Asia | 34 | 44 | |||||
| 113 | America | 65 | 69 | |||||
| 11 | Australia and Oceania | 23 | 12 | |||||
PRODUCTION OF NATURAL GAS BY REGION
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | ||||
| 4,584 | Production of natural gas (a) (b) | (mmcf/d) | 4,480 | 4,290 | ||||
| 733 | Italy | 667 | 646 | |||||
| 451 | Rest of Europe | 520 | 434 | |||||
| 1,753 | North Africa | 1,711 | 1,647 | |||||
| 495 | Sub-Saharan Africa | 500 | 415 | |||||
| 216 | Kazakhstan | 254 | 233 | |||||
| 530 | Rest of Asia | 423 | 528 | |||||
| 293 | America | 297 | 275 | |||||
| 113 | Australia and Oceania | 108 | 112 | |||||
(a) Includes
Eni’s share of production of equity-accounted entities.
(b) Includes volumes of gas consumed in operation (377 and 347
mmcf/d in the first quarter 2013 and 2012, respectively, 415
mmcf/d in the fourth quarter 2012).
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Versalis
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | ||||
| Sales of petrochemical products | (euro million) | |||||||
| 777 | Intermediates | 733 | 683 | |||||
| 708 | Polymers | 860 | 807 | |||||
| 48 | Other revenues | 50 | 53 | |||||
| 1,533 | 1,643 | 1,543 | ||||||
| Production | (ktonnes) | |||||||
| 896 | Intermediates | 849 | 894 | |||||
| 596 | Polymers | 641 | 603 | |||||
| 1,492 | 1,490 | 1,497 | ||||||
Engineering & Construction
| (euro million) |
| Fourth Quarter 2012 | First Quarter 2012 | First Quarter 2013 | ||||
| Orders acquired | ||||||
| 1,816 | Engineering & Construction Offshore | 2,606 | 1,005 | |||
| 1,516 | Engineering & Construction Onshore | 275 | 913 | |||
| 494 | Offshore drilling | 148 | 905 | |||
| 425 | Onshore drilling | 87 | 60 | |||
| 4,251 | 3,116 | 2,883 | ||||
| (euro million) |
Dec. 31, 2012 |
March 31, 2013 |
||
| Order backlog | 19,739 |
19,533 |
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