Growth Strategy

Key medium-term targets announced to investors  

Maintain strong profitable production growth Ensure medium to long-term sustainability focusing on reserve replacement Develop new projects to fuel future growth Consolidate the industry-leading position on costs

In the Exploration & Production division Eni boasts strong competitive positions in a number of strategic oil and gas basins in the world, namely the Caspian Region, North and West Africa and Venezuela. The Company can count on a robust pipeline of giant fields which grant competitive costs and access to conventional resources, increasing operatorship as well as long-standing partnerships with key host producing countries.
Our existing asset base provides a strong platform for growth, and we intend to increase production with improving returns. Management targets a production growth rate higher than 2.5% on average over the next four-year period, resulting in a production level in excess of 2 mmboe/d in 2013 based on the Company’s long-term Brent price assumptions of 65$/barrel.

Management plans to achieve 75% of that production target by continuing production ramp-up at our existing fields by applying the Company’s advanced recovery technologies and a further 25% by starting production at 41 new fields, particularly the Zubair project in Iraq, Kashagan in the Caspian area, Algeria with the fields acquired from First Calgary, the Goliat field offshore Norway and the Block 15 development area in Angola. Overall, new start-ups are expected to add approximately 560 kboe/d by 2013.
Most of our projects are in the final investment decision stage or have already been sanctioned.

Management intends to consolidate its industry-leading position on costs leveraging on economies of scale associated with giant projects development, a focused presence in core legacy areas providing low lifting costs and increasing operatorship  that ensures a better control on project schedules and costs.

Management will continue focusing on reserve replacement in order to sustain the long-term growth prospects of the business. Over the last five years we have grown our resource base by some 10 billion barrels, to 30 billion barrels or 46 years of production, thanks to successful exploration and continuing development activities.

To strengthen leadership on European natural gas markets To implement effective marketing initiatives To improve operating efficiency

In the Gas & Power division Eni is leader in the European gas market leveraging is fully-integrated presence along the gas value chain: supply, transport, distribution, storage and marketing of natural gas, as well as power generation and sales of electricity.

Flexibility granted by our long-term and diverse supply sources portfolio, a large customer base, market knowledge, long-term relationships with key producing countries and integration with upstream activities are our competitive advantages.

In the context of a changed demand outlook and stronger competitive pressures both on the European and Italian markets, Eni’s strategy in its Gas & Power segment is to preserve the profitability of the business by strengthening its leadership in the European market.
By 2013 we expect to grow our gas sales at an average annual rate higher than 3%, or an overall increase of 14 bcm from 2009 (104 bcm) targeting a global sales volume of 118 bcm. Our growth plans will be directed to the European markets, mainly France, Benelux and Germany, where the Company plans to achieve sales volumes of approximately 59 bcm by 2013, from sales of 47 bcm in 2009. Our efforts will be supported by synergies deriving from the integration of Distrigas activities.

In Italy, management intends to maintain the Company’s market share and preserve the profitability of the business. To achieve those targets, the Company will pursue effective marketing initiatives and increasing levels of efficiency mainly by reducing the cost of service and cost associated with business supporting activities. Stable returns are expected from regulated businesses in Italy, which will benefit from the pre-set, regulatory returns on new capital expenditures and cost savings from integrating the whole chain of transport, storage and distribution activities.

Keep tight control on capital expenditures, particularly in refining through strong financial discipline in selecting capital projects Strongly focus on cost reductions and energy efficiency improvements Improve profitability of marketing activities by increasing the quality and range of its retail offer

In the Refining & Marketing division Eni is leader in the retail marketing of refined products in Italy with a market share of 31.5 as of the end of 2009.
Operations are conducted also in Central-Eastern Europe. Eni operations are effectively fully integrated through refining, supply, trading, logistics and distribution, so as to maximize cost efficencies and business effectiveness.

The medium-term outlook for the refining industry is challenging as weak industry fundamentals are expected to persist for some time as to regard to excess capacity, high inventory levels, increasing feedstock costs and weak demand. Against this backdrop, Eni plans to selectively upgrade its refining system by increasing complexity and flexibility of its best refineries, leveraging on its know-how and the proprietary EST technology. Recovery in profitability will be achieved through cost efficiencies and energy measures.

In marketing operations, Eni plans to achieve higher returns by improving quality and range of offered services, including non-oil activities, leveraging on marketing initiatives to retain customers’ loyalty and re-branding to the “eni‘ brand our service stations. By 2013, Eni expects to increase market share in Italy by 2.5 percentage points to 34% (31.5% in 2009).
Eni’s strategy in the rest of Europe is focused on selectively growing its presence by leveraging on synergies ensured by the proximity of these markets to Eni’s production and logistic facilities.

Over the next four years, Eni plans to execute a capital expenditure program amounting to €52.8 billion to support organic growth in its businesses. Approximately €37 billion (or 71%) of planned capital expenditures will be invested to explore for and grow high-quality oil and gas resources. Planned projects have been assessed against our long-term scenario for Brent prices at 65$/barrel. Eni expect to fund its capital expenditure plans with the expected cash flows form operations.

Additional resources (free cash flow) will be used to support our dividend policy and progressively reduce the ratio of net borrowings to total equity (leverage) to below 0.40.
In the next four year period, management intends to pursue a progressive dividend policy, paying a dividend of €1 per share for 2010, in line with the 2009 the dividend, and thereafter growing it in line with OECD inflation. This dividend policy is based on management’s planning assumptions for oil prices at 65$/barrel flat in the next four years.