In the table below, Eni’s top risks are presented with regard to the Company’s targets. For a detailed description of these risks, or, in addition, for further less relevant uncertainties factors, see the section “Risk factors and uncertainties”.
|Country||Country/Counterparty - Upstream||Country/Counterparty - Mid-downstream||Evolution in G&P legislation|
|Main risk events||Political and social instability in the countries of operations may lead to acts of internal conflicts, civil unrests, violence, sabotage and attacks, with consequent production interruptions and losses as well as interruptions in gas supplies via pipe and people and assets damages.||Upstream Credit and Financing risk partner related to the credit proceeds delay or cost recovery.||Mid-downstream business credit risk.||Potential deteriorating legislative/regulatory, national and international environment, in the Gas & Power segment with impacts to corporate profitability.|
|Treatment measures||- Geographic diversification of portfolio assets since the exploration phase and business diversification;
- Reduction of the exposure through the Dual Exploration Model;
- Keeping efficient and long-lasting relationships with producing countries and local stakeholders even throughout local social development and sustainability projects;
- Implementation of the security management system with the analysis of the preventive measures specific for site.
|- Finalization of specific agreements on repayment plans of third parties receivables;
- Securitization package with in-kind withdrawals negotiating and/or utilization of dedicated escrow account;
- Mitigation collaterals (sovereign guarantees, parent company guarantees, credit letters);
- Carry agreement negotiations.
|- Stricter selection for Retail and Business customers (credit line with a minimal rating threshold in the acquisition of customers);
- Mitigation collaterals (advance payment, credit letters, bank guarantees and/or Parent Company Guarantees);
- Receivables sold to financing institutions;
- Time to bill reduction and captive insurance.
|- Institutional actions on regulatory initiatives and potentially critical policies (i.e. further advocacy of Eni to European strategy to climate/ energy 2030 and 2050, also following the adoption of National Energy Strategy - NES);
- Constant dialogue with institutions and regulatory Authorities, also by category associations;
- Possibility of appeal against legislative and regulatory initiatives of Authorities in order to protect Eni's interests.
|Rif.||Integrated Annual Report 2018, Risk factors and uncertainties section pages 94-96||Integrated Annual Report 2018, Risk factors and uncertainties section pages 94-96||Integrated Annual Report 2018, Risk factors and uncertainties section pages 94-96||Integrated Annual Report 2018, Risk factors and uncertainties section pages 97-98|
|Climate change||Commodity Price||Stakeholder||Gas contract|
|Main risk events||Climate change referred to the possibility of change in scenario/climatic conditions which may generate phisical risks and connected to energy transition (legislative, market, technological and reputational risks) on Eni’s businesses in the short, medium and long term.||Oil global demand and supply imbalance risk.||Relationships with local and international stakeholders on oil&gas industry activities, with impacts also in the media.||Potential differences between the cost of supply and the minimum off take obligations in take-or-pay long-term gas supply contracts compared to current market conditions and management of arbitrations/negotiations with gas suppliers.|
|Treatment measures||- Decarbonization strategy integrated in Eni’s business model based on: carbon footprint reduction, resilient Oil & Gas portfolio, development of renewables and green energy businesses, commitment in R&D and climate partnership;
- Structured governance on climate with a central role of the Board in managing main issues connected with climate change; presence of specific committees to support the Board; establishment of the Advisory Board and Eni’s programs focused on climate change issues;
- Inclusion of targets related to “climate strategy” in incentive plan for managers, consistent with guidelines of Eni’s Strategic Plan;
- Leadership on climate-related financial disclosures and other initiatives: joining in the Task Force on Climate-related Financial Disclosures (TCFD) of Financial Stability Board and in “TCFD European Oil & Gas Preparers’ Forum” for drawing up industry guidelines to support the implementation of the Recommendations issued by TCFD and participation in different initiatives at international level.
|- Reduction of new projects break-even price; widespread efficiency initiatives and disposal plan.||- Integration of targets and sustainability projects (i.e. Community Investment) within the Strategic Plan and incentive program;
- Targeted communication plan and communication initiatives aimed at spreading Eni's strategy and activities, also through social media with a mainly institutional target;
- Meeting and dialogue with stakeholders initiatives and strengthening of presence in the critical areas in order to intensify the relationship management with local authorities;
- Development of measurement instruments and monitoring of corporate reputation (RepLab) for all stakeholders categories.
|- Prolonged supply portfolio restructuring process through the renegotiation of price-volume conditions;
- Portfolio balancing by the sale of volumes not intended to commercial segments to the financial markets (physical and liquid financial hub) both in Italy and in Northern Europe;
- Continuous control of management of arbitrations and negotiations by dedicated units.
|Rif.||Integrated Annual Report 2018, Risk factors and uncertainties section pages 99-100||Integrated Annual Report 2018, Risk factors and uncertainties section page 88||Integrated Annual Report 2018, Risk factors and uncertainties section pages 94-96||Integrated Annual Report 2018, Risk factors and uncertainties section pages 96-97|
|Accidents||Investigations and proceedings||Cyber security|
|Main risk events||Blow-out risks and other relevant accidents affecting the upstream assets, refineries and petrochemical plants, as well as the transportation of hydrocarbons by sea and land (i.e. fires/ explosions, etc.) with impact on people and assets damages, company profitability and reputation.||Environmental and health proceedings as well as evolution in HSE legislation may trigger contingent liabilities, impact on company profitability (costs for remediation activities and/or plant implementation), operating activities and corporate reputation. Involvement in anti-corruption investigations and proceedings.||Cyber Security and industrial Espionage.|
|Treatment measures||Upgrading methodology to classify complex wells (Well Complexity & Economic Index) and geologic “Real time monitoring” of well drilling phases;
- Asset Integrity Management, Maintenance Management;
- BART (Baseline Assessment Risk Tool) implementation, Simultaneous Operations Operating Plans;
- Process Safety Reinforcement Plan, Emergency Preparedness and Response Plans;
- Identification of Safety Critical Equipment and use of the “risk based inspection” methodology (API 581 standard) and Fitness for Service (API 579 standard) for the definition of the optimum inspection programmes and the identification of the intervention priorities of preventive maintenance on the basis of identified defects and of the plant components executability;
- Development of innovative digital tools and big data analystics to improve operational performance and asset integrity. Particularly, the implementation of the Digital Lighthouse project from Val d’Agri to other upstream and downstream top value assets (e.g. centralized room for real time monitoring of productive assets, smart operators, integrated operating centres, strategic equipment modelling and integrated competence centre);
- Specific technological development and emergency management plans; specific HSE audit and plants monitoring;
- Involvement of First Parties to strengthen the culture of security in joint-control JV;
- Management and continuous monitoring of shipping operation through third operators, vetting activities.
|- Continuous monitoring of regulatory developments and constant evaluation of the adequacy of existing presidium and control models;
- Internal training activities at all levels on the topics of interest;
- Monitoring of relations with the Public Administration and definition of routes for the management of relevant problems and for the development of the territory;
- Continuous monitoring of the efficacy and efficiency of reclamation activities;
- Focused communication initiatives;
- Specialized assistance supporting Eni SpA and Italian and foreign subsidiaries;
- Audit activities on compliance with anti-corruption regulations and 231 Legislative Decree.
| - Centralized governance model of Cyber Security, with units dedicated to cyber intelligence and prevention, monitoring and management of cyber attacks;
- Rules dedicated to IT security management and information protection;
- Operating plans aimed at increasing security of industrial sites, training and awareness initiatives dedicated to Eni's employees;
- Developing a methodology aimed at quantitative evaluation of residual Cyber Security risk.
|Rif.||Integrated Annual Report 2018, Risk factors and uncertainties section pages 89-94||Integrated Annual Report 2018, Risk factors and uncertainties section page 100||Integrated Annual Report 2018, Risk factors and uncertainties section pages 101-102|