----

| **UNITED        STATES        SECURITIES AND EXCHANGE COMMISSION**Washington, DC        20549 |
|-----------------------------------------------------------------------------------------------|
|                                                                                          | **Form 20-F** |   |

|   (Mark One) |
|-------------------|

|      |   | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)        or (g) OF THE SECURITIES EXCHANGE ACT OF 1934                                                              |
|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| OR   |
| **** |   | **ANNUAL REPORT        PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES        EXCHANGE ACT OF 1934         For the fiscal year ended December 31, 200****6**     |
| OR   |
|      |   | TRANSITION REPORT PURSUANT        TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF        1934        For the transition period from _____ to _____        |
| OR   |
|      |   | SHELL COMPANY REPORT        PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES        EXCHANGE ACT OF 1934        Date of event requiring this shell company report |

**Commission file number:1-14090**

**EniSpA***(Exact name ofRegistrant as specified in its charter)*

**Republicof Italy***(Jurisdiction ofIncorporation or Organization)*

**PiazzaleEnrico Mattei 1, 00144 Rome, Italy***(Address of principal executive offices)*

----

Securitiesregistered or to be registered pursuant to Section 12(b) of theAct.

| Title of each class                                                                                  |   | Name of each exchange on which registered                   |
|------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|
| **Shares        American Depositary Shares**(Which represent the right to        receive two Shares) |   | **New York Stock Exchange*        New York Stock Exchange** |

Securitiesregistered or to be registered pursuant to Section 12(g) of theAct.**None.**Securities for which thereis a reporting obligation pursuant to Section 15(d) of the Act.**None.**Indicate the number of outstanding shares of eachof the issuer’s classes of capital or common stock as of theclose of the period covered by the annual report.

| **Ordinary shares        of euro 1 each** | **4,005,358,876** |
|-------------------------------------------|-------------------|

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of theSecurities Act.

| Yes  |  |     |  No  |  |
|-----------|--|--------------------|----------------|--|

If this report is an annual or transitionreport, indicate by check mark if the registrant is not requiredto file reports pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934.

| Yes  |  |     |  No  |  |
|-----------|--|--------------------|----------------|--|

Note - Checking the box above will not relieveany registrant required to the file reports pursuant to Section13 or 15(d) of the Securities Exchange Act of 1934 from theirobligations under those Sections.Indicate by check mark whether the registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filingrequirements for the past 90 days.

| Yes  |  |     |  No  |  |
|-----------|--|--------------------|----------------|--|

Indicate by check mark if the registrant is alarge accelerated filer, an accelerated filer, or a nonaccelerated filer. See definition of "Accelerated filer andlarge accelerated filer" in Rule 12b-2 of the Exchange Act.(Check one):

| Large accelerated filer |  | Accelerated filer |  | Non-accelerated filer |  |
|-------------------------|--|-------------------|--|-----------------------|--|

Indicate by check mark which financialstatement Item the registrant has elected to follow.

| Item 17 |  |     |  Item 18 |  |
|---------|--|--------------------|---------------|--|

If this is an annual report, indicate by checkmark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act).

| Yes  |  |     |  No  |  |
|-----------|--|--------------------|----------------|--|

----

* Not for trading, but only inconnection with the registration of American Depositary Shares,pursuant to the requirements of the Securities and ExchangeCommission.

----

##### **TABLE OF CONTENTS**

|                                                   |   | **Page** |
|--------------------------------------------------------|--------|----------|
|                                                   |   |     |
| Certain        Defined Terms                           |   | iii      |
| Presentation        of Financial and Other Information |   | iii      |
| Statements        Regarding Competitive Position       |   | iv       |
| Glossary                                               |   | v        |
| Abbreviations        and Conversion Table              |   | viii     |

|       |   |                                                                 |   |   |
|------------|--------|----------------------------------------------------------------------|--------|--------|
| **PART I** |   |                                                                 |   |   |
| Item 1.    |   | IDENTITY OF DIRECTORS,        SENIOR MANAGEMENT AND ADVISORS (*)     |   | 1      |
| Item 2.    |   | OFFER STATISTICS AND        EXPECTED TIMETABLE (*)                   |   | 1      |
| Item 3.    |   | KEY INFORMATION                                                      |   | 1      |
|       |   | Selected Financial        Information                                |   | 1      |
|       |   | Selected Operating        Information                                |   | 3      |
|       |   | Exchange Rates                                                       |   | 4      |
|       |   | Risk Factors                                                         |   | 4      |
| Item 4.    |   | INFORMATION ON THE        COMPANY                                    |   | 13     |
|       |   | History and Development        of the Company                        |   | 13     |
|       |   | Business Overview                                                    |   | 16     |
|       |   | Exploration &        Production                                  |   | 16     |
|       |   | Gas & Power                                                      |   | 35     |
|       |   | Refining & Marketing                                             |   | 45     |
|       |   | Petrochemicals                                                       |   | 52     |
|       |   | Engineering &        Construction                                |   | 54     |
|       |   | Other activities                                                     |   | 56     |
|       |   | Research and Development                                             |   | 56     |
|       |   | Insurance                                                            |   | 59     |
|       |   | Environmental Matters                                                |   | 59     |
|       |   | Regulation of Eni’s        Businesses                           |   | 63     |
|       |   | Property, Plant and        Equipment                                 |   | 75     |
|       |   | Organizational Structure                                             |   | 75     |
| Item 4A.   |   | UNRESOLVED STAFF COMMENTS                                            |   | 76     |
| Item 5.    |   | OPERATING AND FINANCIAL        REVIEW AND PROSPECTS                  |   | 76     |
|       |   | Executive Summary                                                    |   | 76     |
|       |   | Basis of Presentation                                                |   | 79     |
|       |   | Critical Accounting        Estimates                                 |   | 79     |
|       |   | Results of Operations                                                |   | 83     |
|       |   | Liquidity and Capital        Resources                               |   | 93     |
|       |   | Financial Condition                                                  |   | 95     |
|       |   | Recent Developments                                                  |   | 99     |
|       |   | Management Expectations        of Operations                         |   | 100    |
|       |   | Summary of Significant        Differences between IFRS and U.S. GAAP |   | 104    |
| Item 6.    |   | DIRECTORS, SENIOR        MANAGEMENT AND EMPLOYEES                    |   | 105    |
|       |   | Directors and Senior        Management                               |   | 105    |
|       |   | Board Practices                                                      |   | 109    |
|       |   | Compensation                                                         |   | 119    |
|       |   | Employees                                                            |   | 127    |
|       |   | Share Ownership                                                      |   | 129    |
| Item 7.    |   | MAJOR SHAREHOLDERS AND        RELATED PARTY TRANSACTIONS             |   | 129    |
|       |   | Major Shareholders                                                   |   | 129    |
|       |   | Related Party        Transactions                                    |   | 129    |
| Item 8.    |   | FINANCIAL INFORMATION                                                |   | 130    |
|       |   | Consolidated Statements        and Other Financial Information       |   | 130    |
|       |   | Significant Changes                                                  |   | 139    |
| Item 9.    |   | THE OFFER AND THE LISTING                                            |   | 139    |
|       |   | Offer and Listing Details                                            |   | 139    |
|       |   | Markets                                                              |   | 141    |
| Item 10.   |   | ADDITIONAL INFORMATION                                               |   | 141    |
|       |   | Memorandum and Articles        of Association                        |   | 141    |
|       |   | Material Contracts                                                   |   | 149    |
|       |   | Documents on Display                                                 |   | 149    |
|       |   | Exchange Controls                                                    |   | 149    |
|       |   | Taxation                                                             |   | 150    |

i

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##### Table of Contents

 

| Item 11.     |   | QUALITATIVE AND        QUANTITATIVE DISCLOSURES ABOUT MARKET RISK             |   | 153    |
|--------------|--------|-------------------------------------------------------------------------------|--------|--------|
| Item 12.     |   | DESCRIPTION OF SECURITIES        OTHER THAN EQUITY SECURITIES                 |   | 156    |
|         |   |                                                                          |   |   |
| **PART II**  |   |                                                                          |   |   |
| Item 13.     |   | DEFAULTS, DIVIDEND        ARREARAGES AND DELINQUENCIES                        |   | 157    |
| Item 14.     |   | MATERIAL MODIFICATIONS TO        THE RIGHTS OF SECURITY HOLDERS               |   | 157    |
|         |   | AND USE OF PROCEEDS                                                           |   |   |
| Item 15.     |   | CONTROLS AND PROCEDURES                                                       |   | 157    |
| Item 16.     |   |                                                                          |   |   |
| 16A.         |   | Board of Statutory        Auditors Financial Expert                           |   | 158    |
| 16B.         |   | Code of Ethics                                                                |   | 158    |
| 16C.         |   | Principal Accountant Fees        and Services                                 |   | 158    |
| 16D.         |   | Exemptions from the        Listing Standards for Audit Committees             |   | 159    |
| 16E.         |   | Purchases of Equity        Securities by the Issuer and Affiliated Purchasers |   | 159    |
|         |   |                                                                          |   |   |
| **PART III** |   |                                                                          |   |   |
| Item 17.     |   | FINANCIAL STATEMENTS (*)                                                      |   | 161    |
| Item 18.     |   | FINANCIAL STATEMENTS (**)                                                     |   | 161    |
| Item 19.     |   | EXHIBITS                                                                      |   | 161    |

 

 

 

 

 

 

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| (*)  |   | Omitted        pursuant to General Instructions for Form 20-F.                          |
|------|--------|-----------------------------------------------------------------------------------------|
| (**) |   | The        Registrant has responded to Item 18 in lieu of responding        to Item 17. |

 

ii

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##### Table of Contents

*Certain disclosures contained herein including, withoutlimitation, information appearing in "Item 4 –Information on the Company", and in particular "Item 4– Exploration & Production", "Item 5 –Operating and Financial Review and Prospects" and "Item11 – Qualitative and Quantitative Disclosures about MarketRisk" contain forward-looking statements regarding futureevents and the future results of Eni that are based on currentexpectations, estimates, forecasts, and projections about theindustries in which Eni operates and the beliefs and assumptionsof the management of Eni. Eni may also make forward-lookingstatements in other written materials, including other documentsfiled with or furnished to the U.S. Securities and ExchangeCommission (the "SEC"). In addition, Eni’s seniormanagement may make forward-looking statements orally toanalysts, investors, representatives of the media and others. Inparticular, among other statements, certain statements withregard to management objectives, trends in results of operations,margins, costs, return on capital, risk management andcompetition are forward looking in nature. Words such as‘expects’, ‘anticipates’,‘targets’, ‘goals’, ‘projects’,‘intends’, ‘plans’, ‘believes’,’seeks’, ‘estimates’, variations of suchwords, and similar expressions are intended to identify suchforward-looking statements. These forward-looking statements areonly predictions and are subject to risks, uncertainties, andassumptions that are difficult to predict because they relate toevents and depend on circumstances that will occur in the future.Therefore, Eni’s actual results may differ materially andadversely from those expressed or implied in any forward-lookingstatements. Factors that might cause or contribute to suchdifferences include, but are not limited to, those discussed inthis Report under the section entitled "Risk Factors"and elsewhere. Any forward-looking statements made by or onbehalf of Eni speak only as of the date they are made. Eni doesnot undertake to update forward-looking statements to reflect anychanges in Eni’s expectations with regard thereto or anychanges in events, conditions or circumstances on which any suchstatement is based. The reader should, however, consult anyfurther disclosures Eni may make in documents it files with theSEC.*

 

**CERTAIN DEFINED TERMS**

In this Form 20-F, the term "Eni", the"Group", or the "Company" refers to theparent company Eni SpA and its consolidated subsidiaries and,unless the context otherwise requires, their respectivepredecessor companies. All references to "Italy" or the"State" are references to the Republic of Italy, allreferences to the "Government" are references to thegovernment of the Republic of Italy. For definitions of certainoil and gas terms used herein and certain conversions, see"Glossary" and "Conversion Table".

 

**PRESENTATION OF FINANCIAL AND OTHERINFORMATION**

The Consolidated Financial Statements of Eni, included in thisannual report, have been prepared in accordance with IFRS issuedby the International Accounting Standards Board (IASB) andadopted by the European Commission following the procedurecontained in Article 6 of the EC Regulation No. 1606/2002 of theEuropean Parliament and Council of July 19, 2002. Until December31, 2004, Eni prepared its Consolidated Financial Statements andother interim financial information (including quarterly andsemi-annual data) in accordance with Italian GAAP. IFRS requireadopting companies to restate only one year of past financialstatements. Accordingly this annual report includes financial informationsprepared in accordance with IFRS as of and for the three yearsended December 31, 2004, 2005 and 2006.

IFRS, under which Eni’s Consolidated Financial Statementshave been prepared, differ in certain significant respects fromU.S. GAAP. For information on the differences between IFRS andU.S. GAAP as they relate to Eni, see Notes 36, 37 and 38 toEni’s Consolidated Financial Statements included herein.

Unless otherwise indicated, any reference herein to"Consolidated Financial Statements" is to theConsolidated Financial Statements of Eni (including the Notesthereto) included herein.

Unless otherwise specified or the context otherwise requires,references herein to "dollars", "$","U.S. dollars", "USD" and "U.S. $"are to the currency of the United States and references to"euro", "EUR" and "€" are tothe currency of the European Monetary Union.

iii

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##### Table of Contents

 

**STATEMENTS REGARDINGCOMPETITIVE POSITION**

Statements made in "Item 4 – Information on theCompany", referring to Eni’s competitive position arebased on the company’s belief, and in some cases rely on arange of sources, including investment analysts’ reports,independent market studies and Eni’s internal assessment ofmarket share based on publicly available information about thefinancial results and performance of market participants. Marketshare estimates contained in this document are based onmanagement estimates unless otherwise indicated.

 

 

 

 

 

 

 

 

 

 

 

 

 

iv

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##### Table of Contents

****GLOSSARY****

A glossary of oil and gas terms is available on Eni’s webpage at the address www.eni.it. Below is a selection of the mostfrequently used terms.

 

| ***Financial        terms*** |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| *Leverage*                   |   | It is a non-GAAP measure of        a company’s financial condition, calculated as the        ratio between net borrowings and shareholders’        equity, including minority interest. For a discussion of        management’s view of the usefulness of this measure        and its reconciliation with the most directly comparable        GAAP measure, see "Item 5 – Financial        Condition".                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| *Net borrowings*             |   | Eni evaluates its financial        condition by reference to "net borrowings",        which is a non-GAAP measure. Eni calculates net        borrowings as total finance debt less: cash, cash        equivalents and certain very liquid investments not        related to operations, including among others        non-operating financing receivables and securities not        related to operations. Non-operating financing        receivables consist of amounts due to Eni’s        financing subsidiaries from banks and other financing        institutions and deposits in escrow. Securities not        related to operations consist primarily of government        bonds and financing institutions securities. For a        discussion of management’s view of the usefulness of        this measure and its reconciliation with the most        directly comparable GAAP measure, see "Item 5 –        Financial Condition". |
|                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ***Business        terms***  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| *Associated gas*             |   | Natural gas, occurring in        the form of a gas cap, overlying an oil zone, contained        in the reservoir’s crude oil gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| *Barrel/BBL*                 |   | Volume unit corresponding to        159 liters. A barrel of oil corresponds to about 0.137        metric tons.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| *BOE*                        |   | Barrel of Oil Equivalent. It        is used as a standard unit measure for oil and natural        gas. The latter is converted from standard cubic meters        into barrels of oil equivalent using a certain        coefficient (see "Conversion Table").                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| *Concession contracts*       |   | Contracts currently applied        mainly in Western countries regulating relationships        between states and oil companies with regards to        hydrocarbon exploration and production. The company        holding the mining concession has an exclusive on        exploration, development and production activities and        for this reason it acquires a right to hydrocarbons        extracted against the payment of royalties on production        and taxes on oil revenues to the state.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| *Condensates*                |   | These are light hydrocarbons        produced along with gas that condense to a liquid state        at surface temperature and pressure.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| *Conversion capacity*        |   | Maximum amount of feedstock        that can be processed in certain dedicated facilities of        a refinery to obtain finished products. Conversion        facilities include catalytic crackers, hydrocrackers,        visbreaking units, and coking units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| *Conversion index*           |   | Ratio of capacity of        conversion facilities to primary distillation capacity.        The higher the ratio, the higher is the capacity of a        refinery to obtain high value products from the heavy        residue of primary distillation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| *Deep waters*                |   | Waters deeper than 200        meters.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                         |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| *Development*                |   | Drilling and other        post-exploration activities aimed at the production of        oil and gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

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##### Table of Contents

 

| *Enhanced recovery*                                     |   | Techniques used to increase        or stretch over time the production of wells.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|---------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *EPC*                                                   |   | Engineering, Procurement and        Construction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *EPIC*                                                  |   | Engineering, Procurement,        Installation and Construction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *Exploration*                                           |   | Oil and natural gas        exploration that includes land surveys, geological and        geophysical studies, seismic data gathering and analysis        and well drilling.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *FPSO*                                                  |   | Floating Production Storage        and Offloading System.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *FSO*                                                   |   | Floating Storage and        Offloading System.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *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 back into its natural gaseous        state and consumed. One tonne 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *Margin*                                                |   | The difference between the        average selling price and direct acquisition cost of a        finished product or raw material excluding other        production costs (e.g. refining margin, margin on        distribution of natural gas and petroleum products or        margin of petrochemicals products). Margin trends reflect        the trading environment and are, to a certain extent, a        gauge of industry profitability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *Mineral Storage*                                       |   | According to Legislative        Decree No. 164/2000, these are volumes required for        allowing optimal operation of natural gas fields in Italy        for technical and economic reasons. The purpose is to        ensure production flexibility as required by long-term        purchase contracts as well as to cover technical risks        associated with production.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *Modulation Storage*                                    |   | According to Legislative        Decree No. 164/2000, these are volumes required for        meeting hourly, daily and seasonal swings in demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *Natural gas liquids (NGL)*                             |   | 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 were previously defined as natural        gasoline, are natural gas liquids.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *Network Code*                                          |   | A code containing norms and        regulations for access to, management and operation of        natural gas pipelines.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *Over/Under lifting*                                    |   | Agreements stipulated        between partners which regulate the right of each to its        share in the production for a set period of time. Amounts        lifted by a partner different from the agreed amounts        determine temporary Over/Under lifting situations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *Primary balanced refining        capacity*             |   | Maximum amount of feedstock        that can be processed in a refinery to obtain finished        products measured in BBL/d.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *Production Sharing        Agreement ("PSA")* |   | Contract in use in African,        Middle Eastern, Far Eastern and Latin American countries,        among others, 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 that has an exclusive right to        perform exploration, development and production        activities and can enter into 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 and "profit oil" is divided        between the contractor and the national company according        to variable schemes and represents the profit deriving        from exploration and production. Further terms and        conditions of these contracts may vary from country to        country. |

 

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| *Proved reserves*           |   | Proved oil and gas reserves        are the estimated quantities of crude oil, natural gas,        and natural gas liquids which geological and engineering        data demonstrate with reasonable certainty to be        recoverable in future years from known reservoirs under        existing economic and operating conditions, i.e., prices        and costs as of the date the estimate is made. Prices        include consideration of the impact of changes on        existing prices on existing contractual arrangements, but        not on escalations based upon future conditions. Proved        reserves include: (i) proved developed reserves: amounts        of hydrocarbons that are expected to be retrieved through        existing wells, facilities and operating methods; and        (ii) non-developed proved reserves: amounts of        hydrocarbons that are expected to be retrieved following        new drilling, facilities and operating methods. Based on        these amounts the company has already defined a clear        development expenditure program which is an expression of        the company’s determination to develop existing        reserves. |
|-----------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Reserve life index*        |   | Ratio between the amount of        proved reserves at the end of the year and total        production for the year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Reserve replacement ratio* |   | Measure of the reserves        produced replaced by additions to 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Ship-or-pay*               |   | Clause included in natural        gas transportation contracts according to which the        customer is requested to pay for the transportation of        gas whether or not the gas is actually transported.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Strategic Storage*         |   | According to Legislative        Decree No. 164/2000, these are volumes required for        covering lack or reduction of supplies from        extra-European sources or crises in the natural gas        system.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Take-or-pay*               |   | Clause included in natural        gas supply contracts according to which the purchaser is        bound to pay the contractual price or a fraction of such        price for a minimum quantity of gas set in the contract        whether or not the gas is collected by the purchaser. The        purchaser has the option of collecting the gas paid for        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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

 

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**ABBREVIATIONS**

| mmCF   | =      | million cubic feet                       |   | ktonnes  | =      | thousand tonnes                                 |
|--------|--------|------------------------------------------|--------|----------|--------|-------------------------------------------------|
|   |   |                                     |   |     |   |                                            |
| BCF    | =      | billion cubic feet                       |   | mmtonnes | =      | million tonnes                                  |
|   |   |                                     |   |     |   |                                            |
| mmCM   | =      | million cubic meters                     |   | MW       | =      | megawatt                                        |
|   |   |                                     |   |     |   |                                            |
| BCM    | =      | billion cubic meters                     |   | GWh      | =      | gigawatthour                                    |
|   |   |                                     |   |     |   |                                            |
| BOE    | =      | barrel of oil equivalent                 |   | TWh      | =      | terawatthour                                    |
|   |   |                                     |   |     |   |                                            |
| KBOE   | =      | thousand barrel of oil        equivalent |   | /d       | =      | per day                                         |
|   |   |                                     |   |     |   |                                            |
| mmBOE  | =      | million barrel of oil        equivalent  |   | /y       | =      | per year                                        |
|   |   |                                     |   |     |   |                                            |
| BBOE   | =      | billion barrel of oil        equivalent  |   | E&P  | =      | the Exploration &        Production segment |
|   |   |                                     |   |     |   |                                            |
| BBL    | =      | barrels                                  |   | G&P  | =      | the Gas & Power segment                     |
|   |   |                                     |   |     |   |                                            |
| KBBL   | =      | thousand barrels                         |   | R&M  | =      | the Refinng & Marketing        segment      |
|   |   |                                     |   |     |   |                                            |
| mmBBL  | =      | million barrels                          |   |     |   |                                            |
|   |   |                                     |   |     |   |                                            |
| BBBL   | =      | billion barrels                          |   |     |   |                                            |

 

**CONVERSION TABLE**

| 1 acre                               | =      | 0.405 hectares                                            |   |                                                                                  |
|--------------------------------------|--------|-----------------------------------------------------------|--------|---------------------------------------------------------------------------------------|
|                                 |   |                                                      |   |                                                                                  |
| 1 barrel                             | =      | 42 U.S. gallons                                           |   |                                                                                  |
|                                 |   |                                                      |   |                                                                                  |
| 1 BOE                                | =      | 1 barrel of crude oil                                     | =      | 5,742 cubic feet of natural        gas(1)                                             |
|                                 |   |                                                      |   |                                                                                  |
| 1 barrel of crude oil per        day | =      | approximately 50 tonnes of        crude oil per year      |   |                                                                                  |
|                                 |   |                                                      |   |                                                                                  |
| 1 cubic meter of natural gas         | =      | 35.3147 cubic feet of        natural gas                  |   |                                                                                  |
|                                 |   |                                                      |   |                                                                                  |
| 1 cubic meter of natural gas         | =      | approximately 0.00615        barrels of oil equivalent(1) |   |                                                                                  |
|                                 |   |                                                      |   |                                                                                  |
| 1 kilometer                          | =      | approximately 0.62 miles                                  |   |                                                                                  |
|                                 |   |                                                      |   |                                                                                  |
| 1 short ton                          | =      | 0.907 tonnes                                              | =      | 2,000 pounds                                                                          |
|                                 |   |                                                      |   |                                                                                  |
| 1 long ton                           | =      | 1.016 tonnes                                              | =      | 2,240 pounds                                                                          |
|                                 |   |                                                      |   |                                                                                  |
| 1 tonne                              | =      | 1 metric ton                                              | =      | 1,000 kilograms                                                                       |
|                                 |   |                                                      | =      | approximately 2,205 pounds                                                            |
|                                 |   |                                                      |   |                                                                                  |
| 1 tonne of crude oil                 | =      | 1 metric ton of crude oil                                 | =      | approximately 7.3 barrels of        crude oil (assuming an API gravity of 34 degrees) |

----

| (1) |     | From January        1, 2004 in order to conform to the practice of other        international oil companies, Eni unified the conversion        rate of natural gas from cubic meters to BOE. The new        rate adopted is 1 barrel of oil equals 5,742 cubic feet        of natural gas. This conversion rate has been determined        by management based on a number of factors. Other oil        companies may use a different conversion rate. The change        introduced had a negligible impact on production        expressed in BOE. |
|-----|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**PART I**

**Item 1. IDENTITY OF DIRECTORS, SENIORMANAGEMENT AND ADVISORS**

NOT APPLICABLE

 

 

**Item 2. OFFER STATISTICS AND EXPECTEDTIMETABLE**

NOT APPLICABLE

 

 

**Item 3. KEY INFORMATION**

**Selected Financial Information**

The Consolidated Financial Statements of Eni have beenprepared in accordance with IFRS issued by the InternationalAccounting Standards Board (IASB) and adopted by the EuropeanCommission following the procedure contained in Article 6 of theEC Regulation No. 1606/2002 of the European Parliament andCouncil of July 19, 2002. Until December 31, 2004, Eni preparedits Consolidated Financial Statements and other interim financialinformation (including quarterly and semi-annual data) inaccordance with Italian GAAP. IFRS required adopting companies torestate only one year of financial statements prepared underprevious GAAP. Pursuant to SEC Release 33-8567, "First-timeApplication of International Financial Reporting Standards",Eni is not required to include in this annual report IFRSselected financial information for any earlier periods.Accordingly the tables below show Eni selected historicalfinancial data prepared in accordance with IFRS as of and for theyears ended December 31, 2004, 2005 and 2006 and in accordancewith U.S. GAAP for the five-year period ended December 31, 2006.The selected historical financial data for the years endedDecember 31, 2004, 2005 and 2006 are derived from Eni’sConsolidated Financial Statements included herein. IFRS, underwhich Eni’s Consolidated Financial Statements have beenprepared, differ in certain significant respects from U.S. GAAP.For information on the differences between IFRS and U.S. GAAP asthey relate to the Eni, see Notes 36, 37 and 38 to the Eni’sConsolidated Financial Statements.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

|   | **(million        euro except data per share and per ADR)** |
|--------|-------------------------------------------------------------|

| **CONSOLIDATED PROFIT STATEMENT DATA**                                               |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| **Amounts        in accordance with IFRS**                                           |   |   |   |   |   |   |   |   |   |
| Net sales from operations                                                            |   | 57,545 |   |   | 73,728 |   |   | 86,105 |   |
| Operating        profit                                                              |   |   |   |   |   |   |   |   |   |
|      Exploration &        Production                    |   | 8,185  |   |   | 12,592 |   |   | 15,580 |   |
|      Gas        & Power                                 |   | 3,428  |   |   | 3,321  |   |   | 3,802  |   |
|      Refining &        Marketing                        |   | 1,080  |   |   | 1,857  |   |   | 319    |   |
|      Petrochemicals                                         |   | 320    |   |   | 202    |   |   | 172    |   |
|      Engineering &        Construction                  |   | 203    |   |   | 307    |   |   | 505    |   |
|      Other        activities                                |   | (395   | )      |   | (934   | )      |   | (622   | )      |
|      Corporate and        financial companies               |   | (363   | )      |   | (377   | )      |   | (296   | )      |
|      Impact        of inter-segment profits elimination (1) |   | (59    | )      |   | (141   | )      |   | (133   | )      |
| Operating profit                                                                     |   | 12,399 |   |   | 16,827 |   |   | 19,327 |   |
| Net profit        pertaining to Eni                                                  |   | 7,059  |   |   | 8,788  |   |   | 9,217  |   |
| **Data per ordinary share**(euro)(2)                                                 |   |   |   |   |   |   |   |   |   |
| Operating        profit:                                                             |   |   |   |   |   |   |   |   |   |
| - basic                                                                              |   | 3.29   |   |   | 4.48   |   |   | 5.23   |   |
| - diluted                                                                            |   | 3.28   |   |   | 4.47   |   |   | 5.22   |   |
| Net profit pertaining to Eni basic and diluted                                       |   | 1.87   |   |   | 2.34   |   |   | 2.49   |   |
| **Data        per ADR******($)(2) (3)                                                |   |   |   |   |   |   |   |   |   |
| Operating profit:                                                                    |   |   |   |   |   |   |   |   |   |
| - basic                                                                              |   | 8.18   |   |   | 11.14  |   |   | 13.13  |   |
| - diluted                                                                            |   | 8.17   |   |   | 11.12  |   |   | 13.12  |   |
| Net profit        basic and diluted                                                  |   | 4.66   |   |   | 5.82   |   |   | 6.26   |   |

1 

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##### Table of Contents

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

|   | **(million        euro except data per share and per ADR)** |
|--------|-------------------------------------------------------------|

| **CONSOLIDATED PROFIT STATEMENT DATA**                                                    |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| **Amounts in        accordance with U.S. GAAP**                                           |   |   |   |   |   |   |   |   |   |   |
| Net sales from operations                                                                 |   | 43,632 |   | 48,018 |   | 54,698 |   | 70,331 |   | 80,011 |
| Operating        profit (4)                                                               |   | 7,861  |   | 9,215  |   | 11,739 |   | 15,528 |   | 19,345 |
| Profit before cumulative effect of change in        accounting principle and income taxes |   | 8,350  |   | 9,274  |   | 12,324 |   | 16,281 |   | 20,784 |
| Net profit        before cumulative effect of change in accounting        principle       |   |   |   | 6,098  |   |   |   |   |   |   |
| Effect of adoption of SFAS No. 143                                                        |   |   |   | 198    |   |   |   |   |   |   |
| Net profit                                                                                |   | 5,292  |   | 6,296  |   | 6,401  |   | 7,583  |   | 10,005 |
| **Data per ordinary share**(euro)(2)                                                      |   |   |   |   |   |   |   |   |   |   |
| Operating        profit                                                                   |   | 2.05   |   | 2.44   |   | 3.11   |   | 4.13   |   | 5.23   |
| Net profit:                                                                               |   |   |   |   |   |   |   |   |   |   |
| - basic                                                                                   |   | 1.38   |   | 1.67   |   | 1.70   |   | 2.02   |   | 2.71   |
| - diluted                                                                                 |   | 1.38   |   | 1.67   |   | 1.70   |   | 2.01   |   | 2.70   |
| **Data per        ADR******($) (2) (3)                                                    |   |   |   |   |   |   |   |   |   |   |
| Operating profit                                                                          |   | 3.89   |   | 5.52   |   | 7.74   |   | 10.28  |   | 13.14  |
| Net profit:                                                                               |   |   |   |   |   |   |   |   |   |   |
| - basic                                                                                   |   | 2.62   |   | 3.77   |   | 4.22   |   | 5.02   |   | 6.80   |
| - diluted                                                                                 |   | 2.62   |   | 3.77   |   | 4.22   |   | 5.01   |   | 6.79   |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

 

|   | **As of December 31,** |
|--------|------------------------|
|   |                        |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

|   | **(million euro except number of shares and        dividend information)** |
|--------|----------------------------------------------------------------------------|

| **CONSOLIDATED BALANCE SHEET DATA**                                                                   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| **Amounts        in accordance with IFRS**                                                            |   |   |   |   |   |   |   |   |   |   |
| Total assets                                                                                          |   |   |   |   |   | 72,853 |   | 83,850 |   | 88,312 |
| Short-term        and long-term debt                                                                  |   |   |   |   |   | 12,684 |   | 12,998 |   | 11,699 |
| Share capital                                                                                         |   |   |   |   |   | 4,004  |   | 4,005  |   | 4,005  |
| Minority        interest                                                                              |   |   |   |   |   | 3,166  |   | 2,349  |   | 2,170  |
| Shareholders’ equity                                                                             |   |   |   |   |   | 32,374 |   | 36,868 |   | 39,029 |
| **Amounts        in accordance with U.S. GAAP**                                                       |   |   |   |   |   |   |   |   |   |   |
| Total assets                                                                                          |   | 66,122 |   | 71,995 |   | 72,354 |   | 82,977 |   | 85,806 |
| Short-term        and long-term debt                                                                  |   | 15,320 |   | 16,144 |   | 12,697 |   | 12,954 |   | 11,568 |
| Share capital                                                                                         |   | 4,002  |   | 4,003  |   | 4,004  |   | 4,005  |   | 4,005  |
| Minority        interest                                                                              |   | 1,433  |   | 1,822  |   | 2,305  |   | 1,463  |   | 1,321  |
| Shareholders’ equity                                                                             |   | 27,736 |   | 28,948 |   | 31,649 |   | 35,125 |   | 37,656 |
| **Other        financial information in accordance with IFRS**                                        |   |   |   |   |   |   |   |   |   |   |
| Capital expenditure                                                                                   |   |   |   |   |   | 7,499  |   | 7,414  |   | 7,833  |
| Weighted        average number of ordinary shares outstanding (fully        diluted - shares million) |   | 3,827  |   | 3,778  |   | 3,775  |   | 3,763  |   | 3,701  |
| Dividend per share (euro)                                                                             |   | 0.75   |   | 0.75   |   | 0.90   |   | 1.10   |   | 1.25   |
| Dividend        per ADR ($) (3)                                                                       |   | 1.71   |   | 1.83   |   | 2.17   |   | 2.73   |   | 3.24   |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

----

| (1) |   | This item        concerned mainly intra-group sales of goods, services and        capital assets recorded at period end in the equity of        the purchasing business segment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Euro per        Share or dollars per American Depositary Receipt (ADR),        as the case may be. Starting from 2006 one ADR represents        two Eni shares. Previously one ADR was equivalent to five        Eni shares. Data per ADR for prior periods have been        recalculated accordingly.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (3) |   | The financial        statements are stated in euro. The translations of        certain euro amounts into U.S. dollars are included        solely for the convenience of the reader. The convenient        translations should not be construed as representations        that the amounts in euros have been, could have been, or        could in the future be, converted into U.S. dollars at        this or any other rate of exchange. Data per ADR, with        the exception of dividends, were translated at the        EUR/USD average exchange rate for each year presented        (see the table on page 4). Dividends per ADR for the        years 2002 through 2005 have been translated into U.S.        dollars for each year presented using the Noon Buying        Rate on the payment date, which occurs in the months of        June and October for the payment of the balance dividend        and the interim dividend, respectively. Eni started to        pay an interim dividend in 2005. The dividend for 2006        was converted at the Noon Buying Rate of the interim        dividend (euro 0.60 per share) payment date, occurred on        October 26, 2006. The balance of euro 0.65 per share        payable on June 21, 2007 was translated at the Noon        Buying Rate of December 31, 2006. On May 31, 2007, the        Noon Buying Rate was $1.35 per euro 1.00. |
| (4) |   | See Note 37        to the Consolidated Financial Statements for details of        operating profit under U.S. GAAP by business segment for        the last three years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

2 

----

##### Table of Contents

**Selected Operating Information**

The table below sets forth selected operating information withrespect to Eni’s proved reserves, developed and undeveloped,of crude oil (including condensates and natural gas liquids) andnatural gas, as well as other data as of and for the years endedDecember 31, 2002, 2003, 2004, 2005, 2006. Data on provedreserves, production of oil and natural gas and hydrocarbonproduction sold includes Eni’s share of reserves andproduction of affiliates and joint ventures accounted for underthe equity or cost method of accounting.

 

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

| Proved reserves of oil at period end (mmBBL)                                             |   | 3,783  |   | 4,138  |   | 4,008  |   | 3,773  |   | 3,481  |
|------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Proved        reserves of natural gas at period end (BCF)                                |   | 18,629 |   | 18,008 |   | 18,435 |   | 17,591 |   | 16,965 |
| Proved reserves of hydrocarbons in mmBOE at        period end (1)                        |   | 7,030  |   | 7,272  |   | 7,218  |   | 6,837  |   | 6,436  |
| Reserve        replacement ratio (2) (three year average)                                |   | 202    |   | 179    |   | 117    |   | 89     |   | 55     |
| Reserve life index (3)                                                                   |   | 13.2   |   | 12.7   |   | 12.1   |   | 10.8   |   | 10.0   |
| Average        daily production of oil (KBBL/d)                                          |   | 921    |   | 981    |   | 1,034  |   | 1,111  |   | 1,079  |
| Average daily production of natural gas        available for sale (mmCF/d) (4)           |   | 3,015  |   | 3,174  |   | 3,171  |   | 3,344  |   | 3,679  |
| Average        daily production of hydrocarbons available for sale (KBOE/d) (4)          |   | 1,449  |   | 1,536  |   | 1,586  |   | 1,693  |   | 1,720  |
| Hydrocarbon production sold (mmBOE)                                                      |   | 523.3  |   | 556.2  |   | 576.5  |   | 614.9  |   | 625.1  |
| Oil and        gas production costs per BOE (5)                                          |   | 3.83   |   | 4.16   |   | 4.92   |   | 5.59   |   | 5.79   |
| Profit per barrel of oil equivalent (6)                                                  |   | 5.08   |   | 5.95   |   | 8.87   |   | 12.20  |   | 14.97  |
| Sales of        natural gas to third parties (7)                                         |   | 64.12  |   | 69.49  |   | 72.79  |   | 77.08  |   | 79.63  |
| Natural gas consumed by Eni (7)                                                          |   | 2.02   |   | 1.90   |   | 3.70   |   | 5.54   |   | 6.13   |
| Sales of        natural gas of affiliates (Eni’s share) (7)                         |   | 2.40   |   | 6.94   |   | 5.84   |   | 7.08   |   | 7.65   |
| Total sales and own consumption of natural gas        of the Gas & Power segment (7) |   | 68.54  |   | 78.33  |   | 82.33  |   | 89.70  |   | 93.41  |
| Upstream        natural gas sales in Europe (7)                                          |   | 4.49   |   | 5.03   |   | 4.70   |   | 4.51   |   | 4.07   |
| Worldwide natural gas sales (7)                                                          |   | 73.03  |   | 83.36  |   | 87.03  |   | 94.21  |   | 97.48  |
| Transport        of natural gas for third parties in Italy (7)                           |   | 19.84  |   | 24.63  |   | 28.26  |   | 30.22  |   | 30.90  |
| Length of natural gas transport network in Italy        at period end (8)                |   | 29.8   |   | 30.1   |   | 30.2   |   | 30.7   |   | 30.9   |
| Electricity        production sold (9)                                                   |   | 5.00   |   | 5.55   |   | 13.85  |   | 22.77  |   | 24.82  |
| Refined products production (10)                                                         |   | 35.55  |   | 33.52  |   | 35.75  |   | 36.68  |   | 36.27  |
| Balanced        capacity of wholly-owned refineries (11)                                 |   | 504    |   | 504    |   | 504    |   | 524    |   | 534    |
| Capacity utilization of wholly-owned refineries (12)                                     |   | 99     |   | 100    |   | 100    |   | 100    |   | 100    |
| Number of        service stations at period end (in Italy and outside        Italy)      |   | 10,762 |   | 10,647 |   | 9,140  |   | 6,282  |   | 6,294  |
| Average throughput per service station (in Italy        and outside Italy) (13)          |   | 1,858  |   | 2,109  |   | 2,488  |   | 2,479  |   | 2,470  |
| Petrochemicals        production (10)                                                    |   | 7.12   |   | 6.91   |   | 7.12   |   | 7.28   |   | 7.07   |
| Engineering & Construction order backlog at        period end (14)                   |   | 10,065 |   | 9,405  |   | 8,521  |   | 10,122 |   | 13,191 |
| Employees        at period end (units)                                                   |   | 80,655 |   | 75,421 |   | 70,348 |   | 72,258 |   | 73,572 |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

----

| (1)  |   | Includes        approximately 779, 747, 737, 760 and 754 BCF of natural        gas held in storage in Italy at December 31, 2002, 2003,        2004, 2005 and 2006, respectively. See "Item 4        – Information on the Company – Exploration        & Production – Storage".                                                                                                                                                                                                                                                                  |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  |   | Consists of:        (i) the increase in proved reserves attributable to: (a)        purchases of minerals in place; (b) revisions of previous        estimates; (c) improved recovery; and (d) extensions and        discoveries, less sales of minerals in place; divided by        (ii) production during the year as set forth in the        reserve tables, in each case prepared in accordance with        SFAS 69. See the unaudited supplemental oil and gas        information in Note 38 to the Consolidated Financial        Statements. Expressed as a percentage. |
| (3)  |   | Consists of        proved reserves at year end divided by production during        the year as set forth in the reserve tables, in each case        presented in accordance with SFAS 69. See the unaudited        supplemental oil and gas information in Note 38 to the        Consolidated Financial Statements. Expressed on a yearly        basis.                                                                                                                                                                                                                       |
| (4)  |   | Natural gas        production volumes exclude gas consumed in operations        (132, 151, 220, 250 and 286 mmCF/d in 2002, 2003, 2004,        2005 and 2006, respectively).                                                                                                                                                                                                                                                                                                                                                                                                  |
| (5)  |   | Consists of        production costs (costs incurred to operate and maintain        wells and field equipment including also royalties)        prepared under U.S. GAAP divided by actual production net        of production volumes of natural gas consumed in        operations. See the unaudited supplemental oil and gas        information in Note 38 to the Consolidated Financial        Statements. Expressed in dollars.                                                                                                                                            |
| (6)  |   | Results of        operations from oil and gas producing activities, divided        by actual sold production, in each case prepared in        accordance with SFAS 69. See the unaudited supplemental        oil and gas information in Note 38 to the Consolidated        Financial Statements for a calculation of results of        operations from oil and gas producing activities.        Expressed in dollars.                                                                                                                                                         |
| (7)  |   | Expressed in        BCM.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (8)  |   | Expressed in        thousand kilometers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (9)  |   | Expressed in        TWh.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (10) |   | Expressed in        mmtonnes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (11) |   | Expressed in        KBBL/d.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (12) |   | Expressed in        production as a percentage of capacity taking into        account scheduled plant shutdowns.                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (13) |   | Expressed in        thousand liters per day. Referred to the Agip branded        network.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (14) |   | The sum of        the order backlog of Saipem SpA and Snamprogetti SpA,        expressed in million euro.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

3

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##### Table of Contents

**Exchange Rates**

The following table sets forth, for the periods indicated,certain information regarding the Noon Buying Rate in U.S.dollars per euro, rounded to the second decimal (Source: TheFederal Reserve Board).

|   | **High** |   | **Low** |   | **Average**(1) |   | **At period end** |
|--------|----------|--------|---------|--------|----------------|--------|-------------------|
|   |          |   |         |   |                |   |                   |

|   | **(U.S.        dollars per euro)** |
|--------|------------------------------------|

| Year ended December 31, |   |   |   |   |   |   |   |   |
|-------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| 2002                    |   | 1.05   |   | 0.86   |   | 0.95   |   | 1.05   |
| 2003                    |   | 1.26   |   | 1.04   |   | 1.13   |   | 1.26   |
| 2004                    |   | 1.36   |   | 1.18   |   | 1.24   |   | 1.35   |
| 2005                    |   | 1.35   |   | 1.17   |   | 1.24   |   | 1.18   |
| 2006                    |   | 1.33   |   | 1.19   |   | 1.26   |   | 1.32   |

|   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|

----

| (1) |   | Average of        the Noon Buying Rates for the last business day of each        month in the period. |
|-----|--------|-------------------------------------------------------------------------------------------------------|

 

|   | **High** |   | **Low** |   | **At period end** |
|--------|----------|--------|---------|--------|-------------------|
|   |          |   |         |   |                   |

|   | **(U.S.        dollars per euro)** |
|--------|------------------------------------|

| December 2006                     |   | 1.33 |   | 1.31 |   | 1.32 |
|-----------------------------------|--------|------|--------|------|--------|------|
| January        2007               |   | 1.33 |   | 1.29 |   | 1.30 |
| February 2007                     |   | 1.32 |   | 1.30 |   | 1.32 |
| March 2007                        |   | 1.34 |   | 1.31 |   | 1.34 |
| April 2007                        |   | 1.37 |   | 1.34 |   | 1.37 |
| May 2007                          |   | 1.36 |   | 1.34 |   | 1.35 |
| June 2007 (through June 12, 2007) |   | 1.35 |   | 1.33 |   | 1.33 |

|   |  |   |  |   |  |
|--------|--|--------|--|--------|--|

Fluctuations in the exchange rate between the euro and thedollar affect the dollar equivalent of the euro price of theShares on the Telematico and the dollar price of the ADRs on theNYSE. Exchange rate fluctuations also affect the dollar amountsreceived by owners of ADRs upon conversion by the Depository ofcash dividends paid in euro on the underlying Shares. The NoonBuying Rate on June 12, 2007 was $1.33 per euro 1.00.

 

**Risk Factors**

> 
***Competition***

There is strong competition worldwide, both within the oilindustry and with other industries, to supply energy to theindustrial, commercial and residential energy markets.

Eni encounters competition from other oil and natural gascompanies in all areas of its operations:

| • |   | In the Exploration &        Production business for obtaining exploration and        development rights, particularly outside of Italy. The        current trend of the industry towards a reduction of the        number of operators through takeovers or mergers might        lead to stronger competition from operators with greater        financial resources and a wider portfolio of development        projects.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | In its domestic natural gas        business, strong competition derives from both national        and international natural gas suppliers, also following        the impact of the liberalization of the Italian natural        gas market introduced by Legislative Decree No. 164/2000        which provides for, among other things, the opening of        the Italian market to competition, limitations to the        size of gas companies relative to the market and third        party access to transport infrastructure. In addition,        Legislative Decree No. 164/2000 grants the Italian        Authority for Electricity and Gas certain regulatory        powers in the matters of natural gas pricing and access        to infrastructure. Outside of Italy, particularly in        Europe, Eni faces competition from large well-established        players and other international oil and gas companies in        growing its market share and acquiring new clients or        retaining clients. |
| • |   | In its domestic electricity        business, Eni competes with other producers from Italy or        outside of Italy who sell electricity on the Italian        market.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

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| • |   | In retail marketing both in        and outside Italy, Eni competes with third parties        (including international oil companies and local        operators such as supermarket chains) to obtain        concessions to establish and operate service stations.        Once established, Eni’s service stations compete        primarily on the basis of pricing, services and        availability of non-petroleum products. In Italy        political and institutional forces are urging that the        level of competition should be enhanced in the sector of        retail marketing of fuels. Eni expects developments on        this issue to further increase pressure on margins from        the retail marketing of fuels. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | Competition in the oilfield        services, construction and engineering industries is        primarily on the basis of technical expertise, quality        and number of services and availability of        technologically advanced facilities (for example, vessels        for offshore construction). |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

> 
 

***Risks associated with the exploration and production    of oil and natural gas***

The exploration and production of oil and natural gas requireshigh levels of capital expenditure and entails particulareconomic risks. It is subject to natural hazards and otheruncertainties including those relating to the physicalcharacteristics of oil or natural gas fields. The production ofoil and natural gas is highly regulated and is subject toconditions imposed by governments throughout the world in matterssuch as the award of exploration and production interests, theimposition of specific drilling and other work obligations,environmental protection measures, control over the developmentand abandonment of fields and installations, and restrictions onproduction. The oil and gas industry is subject to the payment ofroyalties and income taxes, which tend to be higher than thosepayable in respect of many other commercial activities.

> 
*Exploratory drilling efforts may not be successful*

Drilling for oil and gas involves numerous risks including therisk of dry holes or failure to find commercial quantities ofhydrocarbons. The costs of drilling, completing and operatingwells are often uncertain, and drilling operations may beunsuccessful as a result of a variety of factors, includingunexpected drilling conditions, pressure or irregularities informations, equipment failures or fires, blow-outs and variousforms of accidents, marine risks such as collisions and otheradverse weather conditions and shortages or delays in thedelivery of equipment. Exploring or drilling in offshore areas,in particular in deep water, is generally more complex andriskier than in onshore areas; so it is exploratory activity inremote areas or in challenging environmental conditions such asthose in the Caspian Region or Alaska.Failures in the exploration for oil and natural gas could have anadverse impact on Eni’s future results of operations andfinancial condition. Because of the percentage of Eni’scapital plans devoted to higher risk exploratory projects, it islikely that Eni will continue to experience significantexploration and dry hole expenses. In particular Eni plans toexplore for oil and gas offshore, often in deep water or at deepdrilling depths, where operations are more difficult and costlythan on land or at shallower depths and in shallower waters. Deepwater operations generally require a significant amount of timebetween a discovery and the time that Eni can produce and marketthe oil or gas, increasing both the operational and financialrisks associated with these activities. In addition, lack ofessential equipment such as a shortage of deep water rigs couldfurther delay operations, thus increasing both operational andfinancial risks.In addition, failure in finding additional commercial reservescould dampen future production of oil and natural gas which ishighly dependent on the rate of success of exploratory activity.

> 
*Development projects bear significant operational risks    which may adversely affect actual returns on such projects*

Eni is involved in numerous development projects for theproduction of hydrocarbon reserves, principally offshore.Eni’s future results of operations rely upon its ability todevelop and operate major projects as planned. Key factors thatmay affect the economics of those projects include:

| • |   | the outcome of negotiations        with co-venturers, governments, suppliers, customers or        others (including, for example, Eni’s ability to        negotiate favorable long-term contracts with customers,        the development of reliable spot markets that may be        necessary to support the development of particular        production projects, or commercial arrangements for        pipelines and related equipment to transport and market        hydrocarbons); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | timely issuance of permits        and licenses by government agencies;                                                                                                                                                                                                                                                                                                                                                                                                                       |
| • |   | the ability to design        development projects as to prevent the occurrence of        technical inconvenience;                                                                                                                                                                                                                                                                                                                                                                            |
| • |   | delays in manufacturing and        delivery of critical equipment, or shortages in the        availability of such equipment;                                                                                                                                                                                                                                                                                                                                                                |
| • |   | risks associated with the        use of new technologies and the inability to develop        advanced technologies to maximize the recoverability rate        of hydrocarbons or gain access to previously inaccessible        reservoirs;                                                                                                                                                                                                                                                   |
| • |   | changes in operating        conditions and costs, including costs of third party        equipment or services such as drilling rigs and shipping;                                                                                                                                                                                                                                                                                                                                            |
| • |   | the actual performance of        the reservoir and natural field decline; and                                                                                                                                                                                                                                                                                                                                                                                                                |
| • |   | the ability and time        necessary to build suitable transport infrastructures to        export production towards final markets.                                                                                                                                                                                                                                                                                                                                                         |

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Furthermore, deep water and other hostile environments, wherethe majority of Eni’s planned and existing developmentprojects are located, can exacerbate these problems. Delays anddifferences between estimated and actual timing of criticalevents may adversely affect the completion and start up ofproduction from such projects and, consequently, the actualreturns on such projects. Finally, developing and markethydrocarbons reserves typically requires several years after adiscovery is made. This is because a development project involvesan array of complex and lengthy activities, including appraisinga discovery in order to evaluate its commerciality, sanctioning adevelopment project and building and commissioning relatedfacilities. As a consequence, rates of return of suchlong-lead-time projects are exposed to the volatility of oil andgas prices which may be substantially lower with respect toprices assumed when the investment decision was actually made,leading to lower rates of return.

> 
*Inability in replacing oil and natural gas reserves    could adversely impact results of operations and financial    condition*

Eni’s results of operations and financial condition aresubstantially dependent on its ability to develop and sell oiland natural gas. Unless the Company is able to replace producedoil and natural gas, its reserves will decline. Future oil andgas production are dependent on the company’s ability toaccess new reserves through new discoveries, application ofimproved techniques, success in development activity, negotiationwith countries and other owners of known reserves andacquisitions. An inability to replace reserves could adverselyimpact future production and hence future results of operationsand financial condition.

> 
*Lifting and development costs are trending up and this    could reduce profit per BOE in the Exploration    & Production segment*

Profits per BOE in the Exploration & Production segmentare being affected by a steady rising trend in lifting anddevelopment costs as a result of industry-wide operating factors:(i) the increasingly high percentage of complex developmentprojects (such as those in deep and ultra deep waters and inharsh environments) which bear higher lifting and developmentcosts as compared to development projects in traditionalenvironments; (ii) continuing increases in the purchase prices ofraw materials and services in connection with sector-specificinflation and a global economic recovery; and (iii) anincreasingly severe shortage of specialized resources (such asengineers and other valuable technicians) and critical equipment(such as drilling rigs) especially in remote areas. Eni’smanagement expects this rising trend in lifting and developmentcosts to continue, in the medium-term leading to a reduction inour profit margins per BOE. If the Company is not able tocompensate for lower unit profits with increased productionvolumes, its results of operations and financial condition willbe negatively impacted.

> 
*Changes in crude oil and natural gas prices may    adversely affect Eni’s results of operations*

The exploration and production of oil and gas is a commoditybusiness with a history of price volatility. The single largestvariable that affects the company’s results of operationsand financial condition is crude oil prices. Except with respectto single transactions, Eni does not hedge its exposure to pricechanges. As a consequence, Eni’s profitability dependsheavily on crude oil and natural gas prices.Crude oil and natural gas prices are subject to internationalsupply and demand and other factors that are beyond Eni’scontrol, including among other things:

| (i)   |   | the control on production        exerted by OPEC member countries which cover a        significant portion of the worldwide supply of oil and        can exercise substantial influence on price levels;                                                 |
|-------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | global geopolitical and        economic developments, including sanctions imposed on        certain oil-producing countries on the basis of        resolutions of the United Nations or bilateral sanctions;                                             |
| (iii) |   | global and regional dynamics        of demand and supply of oil and gas;                                                                                                                                                                                 |
| (iv)  |   | prices and availability of        alternative sources of energy;                                                                                                                                                                                         |
| (v)   |   | governmental and        intergovernmental regulations, including the        implementation of national or international laws or        regulations intended to limit greenhouse gas emissions,        which could impact the prices of hydrocarbons; and |
| (vi)  |   | success in developing new        technology.                                                                                                                                                                                                             |

All these factors can affect world supply and prices of oil.Such factors can also affect the prices of natural gas becausenatural gas prices are typically tied to the prices of certaincrude and refined petroleum products. Lower crude oil prices havean adverse impact on Eni’s results of operations andfinancial condition. Furthermore, lower oil and gas prices overprolonged periods may also reduce the rates of return ofdevelopment projects either planned or being implemented, leadingthe Company to reschedule, postpone or cancel developmentprojects. In addition, lower prices also affect liquidity,entailing lower resources to finance expansion projects, furtherdampening our ability to grow future production and revenues.

6

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> 
***Uncertainties in Estimates of Oil and Natural Gas    Reserves***

Numerous uncertainties are inherent in estimating quantitiesof proved reserves and in projecting future rates of productionand timing of development expenditures. The accuracy of provedreserve estimates depends on a number of factors, assumptions andvariables, among which the most important are the following:

| • |   | the quality of available        geological, technical and economic data and their        interpretation and judgment;                                                                                                                                                                                                                                                                                                                                 |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | whether the prevailing tax        rules, other government regulations and contractual        conditions will remain the same as on the date estimates        are made;                                                                                                                                                                                                                                                                                |
| • |   | results of drilling, testing        and production after the date of the estimates which may        require substantial upward or downward revisions;                                                                                                                                                                                                                                                                                                 |
| • |   | changes in oil and natural        gas prices which could have an effect on the quantities        of Eni’s proved reserves because the estimates of        reserves are based on prices and costs at the date when        such estimates are made. In particular the reserves        estimates are subject to revision as prices fluctuate due        to the cost recovery feature under certain Production        Sharing Agreements (PSAs); and |
| • |   | the actual production        performance of Eni’s reservoirs.                                                                                                                                                                                                                                                                                                                                                                                    |

Many of these factors, assumptions and variables involved inestimating proved reserves are beyond Eni’s control and mayprove to be incorrect over time. Accordingly, the estimatedreserves could be materially different from the quantities of oiland natural gas that ultimately will be recovered. Additionally,any downward revision in Eni’s estimated quantities ofproved reserves would indicate lower future production volumeswhich could adversely impact Eni’s results of operations andfinancial condition.

> 
*Oil and gas activity may be subject to increasingly    high levels of income taxes, production taxes and royalties*

Eni operates in different countries in the world and any ofthese countries could modify their tax laws, regarding bothincome taxes and other kind of taxes, in ways that wouldadversely affect Eni’s results of operations and itsfinancial condition.Adverse changes in tax regimes of each jurisdiction in which Enioperates may occur anytime, regardless of the level of stabilityof the political and legislative framework in each of ourcountries of operations. In addition, in the long-term, themarginal tax rate in the oil and gas industry tends to change incorrelation with the price of crude oil which could make itdifficult for Eni to translate higher oil prices into increasednet profit.

> 
 

***Political Considerations***

*A substantial portion of our oil and gas reserves and    gas supplies are located in politically, socially and    economically unstable countries where we are exposed to    material disruptions to our operations*

Substantial portions of Eni’s hydrocarbon reserves arelocated in countries outside the EU and North America, some ofwhich may be politically or economically less stable than EU orNorth American countries. At December 31, 2006, approximately 70%of Eni’s proved hydrocarbon reserves were located in suchcountries. Similarly, a substantial portion of Eni’s naturalgas supply comes from countries outside the EU and North America.In 2006, approximately 60% of Eni’s supplies of natural gascame from such countries. See "Item 4 – Gas & Power– Natural Gas Supplies". Adverse political, social andeconomic developments in any such producing country may affectEni’s ability to continue operating in that country, eithertemporarily or permanently, and affect Eni’s ability toaccess oil and gas reserves. Particularly Eni faces risks inconnection with the following: (i) lack of well-established andreliable legal systems and uncertainties surrounding enforcementof contractual rights; (ii) unfavorable developments in laws andregulations leading for example to expropriation or forceddivestiture of assets and unilateral cancellation or modificationof contractual terms. A case in point is the expropriation ofEni’s titles and mineral assets relating to an important oilfield in Venezuela which occurred in 2006, following theunilateral cancellation of the contract regulating oil activitiesin this field by the Venezuelan state oil company;(iii) restrictions on exploration, production, imports andexports; (iv) tax or royalty increases (including retroactiveclaims); and (v) civil and social unrest leading to sabotages,acts of violence and incidents, for example, in the 2006 episodesof social unrest in Nigeria which caused disruptions at certainEni oil producing facilities, reducing our production in thisCountry by approximately 1.7% from the previous year. Theseepisodes have been recurring in the first months of 2007. See"Item 4 – Exploration & Production – Oil andNatural Gas Reserves"; and "Item 5 – RecentDevelopments". While the occurrence of these events isunpredictable, it is possible that they can have a materialadverse impact on Eni’s results of operations and financialcondition.

> 
*Our activities in Iran could lead to sanctions under    relevant U.S. legislation*

In August 1996, the United States adopted the Iran and LibyaSanctions Act (the "Sanctions Act") with the objectiveof denying Iran and Libya the ability to support acts ofinternational terrorism and fund the development or acquisitionof weapons of mass destruction. In September 2006, the SanctionsAct was amended and extended until December 2011. 

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This Act now applies only to Iran and authorizes the Presidentof the United States to impose sanctions from a six-sanction menuunder certain circumstances against any person, including anyforeign company, making investments in Iran, thus contributingdirectly and significantly to the enhancement of Iran’sability to develop its hydrocarbons resources, or against anypersons that knowingly contribute to certain military programs ofIran. Eni cannot predict interpretations of, or theimplementation policy of the U.S. Government under, ISA withrespect to Eni’s current or future activities in Iran orother areas. It is possible that in future years Eni’sactivities in Iran may be sanctioned under relevant U.S.legislation. Adding to Eni’s risks arising from this matter,a bill to amend and extend the extra-territorial reach of theeconomic sanctions imposed by the United States with respect toIran has been passed by the U.S. House of Representatives and maylead to the passage of new laws in this area. Iran continues tobe designated by the U.S. State Department as a State sponsoringterrorism. For a description of Eni’s operations in Iran see"Item 4 – Information on the Company – Exploration& Production – North Africa and Rest ofWorld".

 

> 
***Cyclicality of the Petrochemical Industry***

The petrochemical industry is subject to cyclical fluctuationsin demand, with consequent effects on prices and profitabilityexacerbated by the highly competitive environment of theindustry. Eni’s petrochemicals operations, which are locatedmainly in Italy, have been in the past and may be adverselyaffected in the future by worldwide excess installed productioncapacity, as well as by economic slowdowns in many industrializedcountries. The dislocation of petrochemical activities togeographic areas like the Far East and oil producing countrieswhich provide long-term competitive advantages has weakened thecompetitiveness of petrochemicals operations in industrializedcountries, including Eni’s petrochemical operations.Petrochemical operations in industrialized countries are alsoless competitive than those located in the above-mentioned areasdue to stricter regulatory frameworks and growing environmentalconcerns which prevail in industrialized countries.

 

> 
***Liberalization of the Italian Natural Gas Market***

Legislative Decree No. 164/2000 opened to competition theItalian natural gas selling market starting on January 1, 2003.This means that all customers in Italy are free to choose theirsupplier of natural gas. The decree, among other things,introduced rules which have a significant impact on Eni’sactivity, as the company is present in all the phases of thenatural gas chain, in particular:

| • |   | until December 31, 2010,        antitrust thresholds are in place for gas operators as        follows: (i) effective January 1, 2002, no single        operator can input into the national transport network        imported or domestically produced gas volumes higher than        75% of final consumption, decreasing by 2 percentage        points per year until it reaches 61% in 2009; and        (ii) effective January 1, 2003, no single operator        can market more than 50% of volumes sold to final        customers.        Compliance with these ceilings is verified on a yearly        base by comparing the allowed average percentage on a        three year basis for volumes input or sold to the average        percentage obtained by each operator in the same        three-year period. Allowed percentages are calculated net        of losses (in the case of sales) and volumes of natural        gas consumed in own operations. Based on a bill passed by        the Italian upper house, Eni expects these antitrust        thresholds to be renewed once they have expired in 2010; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | transport of natural gas by        means of high pressure trunklines, storage of natural        gas, LNG facilities and distribution of natural gas in        urban centers by means of low pressure networks are        activities of public relevance and criteria for        determining tariffs of those activities are set by the        Authority for Electricity and Gas; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| • |   | third parties are allowed to        access natural gas infrastructure – which comprises,        among other things, high pressure trunklines, low        pressure networks and storage sites – according to        certain conditions set by the Authority for Electricity        and Gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

The new regulatory regime has the effect of limiting the sizeand profitability of Eni’s natural gas business in Italy.

> 
*Eni has been experiencing significant pressure on its    natural gas margins*1*since the inception of    the liberalization process in Italy. In addition, unfavorable    trends in Italian demand and supply of gas could add further    pressure.*

Since the inception of the liberalization process in theItalian natural gas market, Eni has been experiencing risingcompetition in its natural gas business entailing lower sellingmargins on gas due to the entry of new competitors into themarket. Certain competitors of Eni’s are supplied by theCompany itself, generally on the basis of long-term contracts. Infact in order to comply with the above mentioned regulatorythresholds relating to volumes input into the national transportnetwork and sales volumes in Italy, Eni sold part of its gasavailability under its take-or-pay supply contracts to thirdparties importing said volumes to and marketing them on theItalian market. For more information on Eni’s take-or-paycontracts, see "Item 4 – Gas & Power – Naturalgas purchases".

_______________

| (1) |   | For a        definition of margin see "Glossary". |
|-----|--------|-------------------------------------------------------------|

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Over both the medium and the long-term, management expects Eniselling margins on gas in Italy to remain under pressure due tothe impact of the build-up of Eni’s supplies to the abovementioned competitors and possibly new competitors entering theItalian market also in light of ongoing or planned upgrading ofimport infrastructure to Italy. In fact, Eni is currentlyimplementing its plans to upgrade its natural gas importinfrastructure from Algeria and Russia to Italy to achieve anincrease of 13 BCM per year in transport capacity, with expectedstart up in 2008 reaching full operation in 2009. Further 3 BCMper year of new import capacity will be achieved by upgrading theGreenStream gasline from Libya with expected start up in 2010,reaching full operation in 2011. A large portion of this expectedadditional capacity has been or is planned to be awarded to thirdparties. In addition, certain operators in the Italian naturalgas market have publicly announced plans to develop new importinfrastructure to Italy. In particular, Eni expects that a newLNG terminal with an 8 BCM per year capacity will commenceoperations by 2009 thus adding new import capacity to the Italianmarket. Over the long-term, management believes that should thepace of demand growth not match the expected increase in suppliesto the Italian natural gas market, Eni’s selling margins ongas could face a further increase in competitive pressure whichwould negatively affect Eni’s results of operations andfinancial conditions.

> 
*Eni growth prospects in Italy are limited by regulation*

Due to the antitrust threshold on direct sales in Italy,management expects Eni’s natural gas sales in Italy toincrease at a rate that cannot exceed the growth rate of naturalgas demand in Italy.

*If Eni fails to grow natural gas sales in Europe asplanned, Eni may be unable to fulfill its minimum takeobligations under take-or-pay purchase contracts and this couldadversely impact results of operations and financial condition.*

Over the medium-term, Eni plans to increase its natural gassales in Europe also to absorb its natural gas availability undertake-or-pay contracts. Should Eni fail to increase natural gassales in Europe as planned, some volumes of natural gas purchasedunder take-or-pay contracts might remain unsold, and this couldadversely impact Eni’s results of operations and financialcondition.

*Due to the regulated access to natural gas transportinfrastructure in Italy, Eni may not be able to sell in Italy allthe natural gas volumes it planned to import and, as aconsequence, it may be unable to sell all the natural gas volumeswhich Eni is committed to purchase under take-or-pay contractobligations.*

Over the next few years, Eni plans to import certain volumesof natural gas using the highest purchase flexibility as providedfor by its take-or-pay purchase contracts. Eni also assumes thatit will be entitled to the necessary transport capacity on theItalian transport infrastructure. However, Eni planningassumptions are inconsistent with current rules regulating theaccess to Italian transport infrastructure as provided for by theNetwork Code drafted under Decision No. 137 of July 17, 2002 ofthe Authority for Electricity and Gas. Such rules establishedcertain priority criteria for the entitlement to transportcapacity of natural gas at points where the Italian transportinfrastructure connects with international transport networks(the so-called entry points to the Italian transport system). Inparticular current rules establish that take-or-pay contractsentered into before 1998, as in the case of Eni, have the rightto a priority in the entitlement to available transport capacityequal to average daily contractual volumes. There is therefore noguaranteed access priority for Eni’s contracted volumesexceeding average daily contractual volumes. In fact, take-or-paycontracts entered into by Eni before 1998 envisage Eni’sright to off take daily volumes larger than the average dailycontractual volume; this contractual flexibility provided by thedifference between the maximum daily volume Eni is allowed topurchase and the average daily contractual volume is used whendemand peaks, usually during the winter. In the event ofcongestion at entry points, natural gas volumes not receivingpriority are entitled to available transport capacity inproportion with requests from operators. Eni considers DecisionNo. 137/2002 to be inconsistent with the overall rationale of theEuropean natural gas legislative framework, especially withreference to Directive 98/30/CE and Legislative Decree No.164/2000, and is challenging Decision No. 137/2002 before thecompetent administrative courts. See "Item 4 –Regulation of the Italian Hydrocarbons Industry – Gas &Power". However, Eni cannot rule out a negative outcome inthis matter. Accordingly, management believes that Eni’sresults of operations could be adversely affected should marketconditions and/or regulatory constraints prevent Eni from sellingits whole availability of natural gas purchased to fulfilltake-or pay contract obligations (e.g. in case a congestionoccurs at the entry points of the Italian transportinfrastructure. Eni would be forced to off take a smaller volumeof gas than the minimum contractual off take). See "Item 5– Management Expectations of Operations".

> 
*The Italian Government, Parliament and regulatory    authorities in Italy and in Europe may take further steps to    boost competition in the Italian natural gas market and such    regulatory developments may adversely affect Eni’s    results of operations.*

Institutional and political forces are urging a higher degreeof competition in the Italian natural gas market and this mayproduce significant developments on this matter. A briefdescription follows of certain recently enacted laws and certainproceedings before the Authority for Electricity and Gas and theItalian Antitrust Authority in order to allow investors to gainsome insight of the complexity of this matter. For a fulldiscussion of laws and procedures described herein see "Item4 – Regulation of the Italian Hydrocarbons Industry –Gas & Power".

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In 2003, Law No. 290 was enacted which prohibits Eni fromholding an interest higher than 20% in undertakings owningnatural gas transport infrastructure in Italy (Eni currentlyholds a 50.04% interest in Snam Rete Gas, which owns and managesapproximately 97% of the Italian natural gas transportinfrastructure). The Italian Budget Law for 2007 establishes thatthe provisions to implement Law No. 290/2003 will be enactedthrough a decree from the Italian Prime Minister. The term forthe disposal envisaged by Law No. 290/2003, which was initiallyfixed at December 31, 2008, will be redetermined in 24 monthsafter the effective date of said decree from the Italian PrimeMinister. Currently, Eni is unable to predict that date.

On the basis of the findings of a joint inquiry conducted from2003 through June 2004 on the Italian natural gas market, theAuthority for Electricity and Gas and the Italian AntitrustAuthority (the "Antitrust Authority") acknowledged thatthe overall level of competition of the Italian natural gasmarket is unsatisfactory due to the dominant position held by Eniin many phases of the natural gas chain. According to both theAuthority for Electricity and Gas and the Antitrust Authority,the vertical integration of Eni in the supply, transport andstorage of gas has restricted the development of competition inItaly notwithstanding the antitrust ceilings introduced byLegislative Decree No. 164/2000. It was further stated that theprice of natural gas in Italy (in particular for the industrialsector) is higher than in other European countries.

In November 2006, the Authority for Electricity and Gasconcluded an inquiry concerning the competitive behavior ofoperators selling natural gas to residential and commercialcustomers with the aim of defining measures to improvecompetition. The outcomes of this inquiry was that the retailingmarket for natural gas in Italy lacks a sufficient degree ofcompetition due to current commercial practices and the existenceof both entry and exit barriers. The Authority plans to implementmeasures to improve competition in this market.

In May 2007, the European Commission commenced anti-trustproceedings against Eni based on information obtained duringinspections carried out in 2006 at the headquarters of Eni and ofcertain Eni subsidiaries. These proceedings against Eni areintended to verify the possible existence of any businessconducts breaching European competition rules and preventingaccess to the Italian natural gas wholesale market by booking amajority share of transport capacity of certain international gaslines, thus limiting third party access to those infrastructures,and delaying or annulling certain plans for the upgrading of theinternational transport infrastructure.

Management believes the institutional debate on the degree ofcompetition in the Italian natural gas market and the regulatoryactivity to be areas of attention and cannot exclude negativeimpacts deriving from developments on these matters on Eni’sfinancial condition and results of operations in future years.

> 
*Decisions of the Authority for Electricity and Gas in    the matter of natural gas tariffs may diminish Eni’s    ability to determine the price at which it sells natural gas    to customers*

On the basis of certain legislative provisions, the Authorityfor Electricity and Gas ("the Authority") holds ageneral monitoring power on pricing in the natural gas market inItaly and the power to establish selling tariffs for supply ofnatural gas to residential and commercial users taking intoaccount, among other things, the public interest goal ofcontaining the inflationary pressure due to a rise in energycosts. The decisions of the Authority on these matters may limitthe ability of Eni to pass an increase in the cost of theimported gas on to the final consumers of natural gas. Inparticular following numerous decisions and a lengthyadministrative procedure started in 2004 and finalized in March2007, the Authority finally established a new indexationmechanism for updating the raw material cost component insupplies to residential and commercial users consuming less than200,000 CM/y, establishing, among other things: (i) that anincrease in the international price of Brent crude oil is onlypartially transferred on to residential and commercial users ofnatural gas in case international prices of Brent crude oilexceed the 35 dollars per barrel threshold; and (ii) that Italiannatural gas importers – including Eni – mustrenegotiate supply contracts to wholesalers in order to takeaccount of the reduction of the price of natural gas sold toresidential and commercial users. While the final outcome of theAuthority’s decision on Eni’s accounts was lighter thanthe initial setup proposed by the Authority of this newindexation mechanism, in future years management cannot excludethe possibility that the Authority could implement similarmeasures that may negatively affect Eni results of operations andfinancial condition. For more information on this issue(particularly the Authority’s Decisions No. 248/2004,134/2006 and 79/2007) see "Item 4 – Regulation –Gas & Power".

 

> 
***Environmental, Health and Safety Regulation***

*Eni may incur material operating costs and liabilities    in relation to compliance with applicable environmental,    health and safety regulations*

Eni is subject to numerous EU, international, national,regional and local environmental, health and safety laws andregulations concerning its oil and gas operations, products andother activities. In particular, these laws and regulationsrequire the acquisition of a permit before drilling forhydrocarbons may commence, restrict the types, quantities andconcentration of various substances that can be released into theenvironment in connection with exploration, drilling andproduction activities, limit or prohibit drilling activities incertain protected areas, provide for measures to be taken toprotect the safety of the workplace and health of communitiesinvolved by the company’s activities, and impose criminal orcivil liabilities for pollution resulting from oil, natural gas,refining and petrochemical operations. 

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These laws and regulations may also restrict emissions anddischarges to surface and subsurface water resulting from theoperation of natural gas processing plants, petrochemicalsplants, refineries, pipeline systems and other facilities thatEni owns. In addition, Eni’s operations are subject to lawsand regulations relating to the production, handling,transportation, storage, disposal and treatment of wastematerials. Environmental, health and safety laws and regulationshave a substantial impact on Eni’s operations. Risks ofenvironmental, health and safety costs and liabilities areinherent in many of Eni’s operations and products, and thereare risks that material expenses and liabilities may be incurredin relation to compliance with environmental, health and safetylaws and regulations.

> 
*Eni’s results of operations and financial    condition are exposed to risks deriving from future    contaminations or the ascertain of as yet unknown    contaminations, enactment of stricter environmental rules and    regulations in the many jurisdictions in which Eni operates,    or the arising of litigation with third parties.*

Although management, considering remedial actions alreadyperformed the existing insurance policies to cover environmentalrisks and the provision for risks accrued, does not currentlyexpect any material adverse effect on Eni’s consolidatedfinancial statements as a result of the environmental impact ofits operations and compliance with applicable environmental lawsand regulations, there are risks that Eni may incur significantcosts and liabilities in future years due to: (i) the chance ofas yet unknown contamination; (ii) future developments inenvironmental, health and safety regulation, particularlyimplementation of measures decided at both international andcountry level to reduce or limit greenhouse gas emissions; (iii)the results of on-going surveys or surveys to be carried out onthe environmental status of Eni’s industrial sites asrequired by the applicable regulations on contamined site; and(iv) the possibility of litigation and the difficulty ofdetermining Eni’s liability, if any, as against otherpotentially responsible parties with respect to such litigationand the possible insurance recoveries.

 

> 
***Legal Proceedings***

Eni is party to a number of civil actions and administrativeproceedings arising in the ordinary course of business. AlthoughEni’s management does not currently expect a materialadverse effect on Eni’s financial condition and results ofoperations on the basis of information available to date andtaking account of existing provisions, Eni’s managementcannot rule out that in future years Eni may incur materiallosses in connection with pending legal proceedings due to: (i)uncertainty regarding the outcome of each proceeding; (ii) theoccurrence of new developments that management could not takeinto consideration when evaluating the likely outcome of eachproceeding in order to accrue the risk provisions as of the dateof the latest financial statements; (iii) the emergence of newevidence and information; and (iv) errors in the estimate ofprobable future losses.

 

> 
***Risks related to Changes in the Price of Oil,    Natural Gas, Refined Products and Chemicals***

Operating results in certain Eni’s businesses,particularly the Exploration & Production, Refining &Marketing, and Petrochemicals segments are affected by changes inthe price of oil and by their impact on prices and margins ofrefined and petrochemical products.

> 
*Eni’s results of operations are affected by    changes in international oil prices*

Overall, lower oil prices have a net adverse impact onEni’s results of operations. The effect of lower oil priceson Eni’s average realizations of oil prices is generallyimmediate. However Eni’s average realization for oil differsfrom the price of marker crude Brent due primarily to thecircumstance that Eni’s production slate, which alsoincludes heavy crudes, has a lower API gravity compared withBrent crude (when processed the latter allows for higher yieldsof valuable products compared to heavy crudes, hence highermarket price).

> 
*The favorable impact of higher oil prices on Eni’s    results of operations may be offset by the different trends    of margins in Eni’s downstream businesses*

The impact of changes in crude oil prices on Eni’sdownstream businesses, including the Gas & Power, theRefining & Marketing and the Petrochemicals businesses,depends upon the speed at which the prices of gas and productsadjust to reflect these changes. Wholesale margins in the Gas& Power business are substantially independent fromfluctuations in crude oil prices as purchase and selling pricesof natural gas are contractually indexed to prices of crude oiland certain refined products according to similar pricingschemes. On the contrary, in the Refining & Marketing andPetrochemicals businesses a time lag exists between movements inoil prices and movements in the prices of finished products.

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> 
*Eni’s results of operations are affected by    changes in European refining margins*

The results of operations of Eni’s Refining &Marketing segment are substantially affected by changes inEuropean refining margins which reflect changes in relativeprices of crude oil and refined products as outlined above. 

> 
*Eni’s results of operations are affected by    changes in petrochemical margins*

Eni’s petrochemical products margins are affected bytrends in demand and changes in oil prices which influencechanges in cost of petroleum-based feedstock. Generally, anincrease in oil price determines a decrease in petrochemicalproducts margins in the near term.

 

> 
***Risks from Acquisitions***

In addition to its plans for organic growth, Eni constantlymonitors the oil and gas market in search of opportunities toacquire individual assets or corporations as a way to grow.Acquisitions normally entail an execution risk – the riskthat the acquirer will not be able to effectively integrate thepurchased assets so as to achieve expected synergies. Inaddition, in the current high oil price environment, acquisitionscan entail a financial risk – the risk of not being able torecover the purchase costs of acquired assets, in case aprolonged decline in the market prices of oil and natural gasoccurs and no hedging transaction is put in place. We also incurunanticipated costs or assume unexpected liabilities and lossesin connection with companies or assets we acquire. If theintegration and financial risks connected to acquisitionsmaterialize our financial performance may be adversely affected.

 

> 
***Exchange Rates***

Movements in the exchange rate of the euro against the U.S.dollar can have a material impact on Eni’s results ofoperations. Prices of oil, natural gas and refined productsgenerally are denominated in, or linked to, U.S. dollars, while asignificant portion of Eni’s expenses are denominated ineuros. Similarly, prices of Eni’s petrochemical products aregenerally denominated in, or linked to, the euro, whereasexpenses in the Petrochemicals segment are denominated both ineuros and U.S. dollars. Accordingly a depreciation of the U.S.dollar against the euro generally has an adverse impact on Eniresults of operations and financial condition because it reducesbooked revenues by an amount greater than the decrease indollar-denominated expenses.

 

> 
***Risks deriving from Eni’s Exposure to Weather    Conditions and Seasonality Factors***

Significant changes in weather conditions in Italy and in therest of Europe from year to year may cause variations in demandfor natural gas and some refined products; in colder years,demand is higher. Accordingly, the results of operations of theGas & Power segment and, to a lesser extent, the Refining& Marketing segment, may be affected by such variations inweather conditions. In addition, Eni’s results of operationsreflect the seasonality in demand for natural gas and certainrefined products used in residential space heating, the demandfor which is typically highest in the first quarter of the year,which includes the coldest months and lowest in the thirdquarter, which includes the warmest months. Furthermore, extremeweather phenomena can result in material disruption to ouroperations, particularly to offshore production of oil andnatural gas.

 

> 
***Interest Rates***

Interest on Eni’s financial debt is primarily indexed ata spread to benchmark rates such as the Europe Interbank OfferedRate, "Euribor", and the London Interbank Offered Rate,"Libor". As a consequence, movements in interest ratescan have a material impact on Eni’s financial expense inrespect to its finance debt.

 

> 
***Critical Accounting Estimates***

The preparation of financial statements entails accountingestimates that are characterized by a high degree of uncertainty,complexity and judgment. Although these critical accountingestimates are thoroughly applied and underlying amounts arefairly determined, management cannot rule out that actualoutcomes may differ from such estimates, due to, among otherthings, the following factors: uncertainty, lack or limitedavailability of information; the availability of new informativeelements, variations in economic conditions such as prices,significant factors (e.g. removal technologies and costs) and thefinal outcome of legal, environmental or regulatory proceedings.See "Item 5 – Critical Accounting Estimates".

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**Item 4. INFORMATION ON THE COMPANY**

**History and Development of the Company**

Eni SpA with its consolidated subsidiaries is engaged in theoil and gas, electricity generation, petrochemicals, oilfieldservices and engineering industries. Eni has operations in about70 countries and 73,572 employees as of December 31, 2006.

Eni, the former Ente Nazionale Idrocarburi, a public lawagency, established by Law No. 136 of February 10, 1953, wastransformed into a joint stock company by Law Decree No. 333published in the Official Gazette of the Republic of Italy No.162 of July 11, 1992 (converted into law on August 8, 1992, byLaw No. 359, published in the Official Gazette of the Republic ofItaly No. 190 of August 13, 1992). The Shareholders’ Meetingof August 7, 1992 resolved that the company be called Eni SpA.Eni is registered at the Companies Register of Rome, register taxidentification number 00484960588, R.E.A. Rome No. 756453. Eni isexpected to remain in existence until December 31, 2100; itsduration can however be extended by resolution of theshareholders.

Eni’s registered head office is located at PiazzaleEnrico Mattei 1, Rome, Italy (telephone number: +39-0659821). Enibranches are located in:

| • |   | San Donato Milanese (Milan),        Via Emilia, 1; and     |
|--------|--------|------------------------------------------------------------|
|   |   |                                                       |
| • |   | San Donato Milanese (Milan),        Piazza Ezio Vanoni, 1. |

Internet address: www.eni.it.

The name of the agent of Eni in the United States is ViscusiEnzo, 666 Fifth Ave., New York, NY 10103.

Eni’s principal segments of operations and subsidiariesare described below.

Eni conducts its exploration and production activities throughits Exploration & Production Division and certain operatingsubsidiaries. Eni’s exploration, development and productionactivities commenced in 1926, when Agip SpA was established bythe Italian Government with a mandate to explore for and developoil and natural gas. Agip SpA was merged into Eni SpA effectiveas of January 1, 1997 to become Eni’s Exploration &Production Division.Eni is engaged in exploration and production of hydrocarbons inItaly, North Africa, West Africa, the North Sea, the Gulf ofMexico, Australia, South America and areas with great developmentpotential such as the Caspian Sea, the Middle and Far East, Indiaand Alaska. In 2006, Eni’s hydrocarbon production availablefor sale averaged 1,720 KBOE/d and, at December 31, 2006,Eni’s estimated proved reserves totaled 6,436 mmBOE with alife index of 10.0 years. In 2006, Eni’s Exploration &Production segment reported net sales from operations (includinginter-segment sales) of euro 27,173 million and operating profitof euro 15,580 million.

Eni conducts its natural gas and electricity generationactivities through its Gas & Power Division and certainoperating subsidiaries. Eni’s natural gas supply,transmission and distribution activities commenced in the 1940swith the commercial sale of natural gas to industrial users inNorthern Italy. In past years, Eni conducted its natural gasoperations through the subsidiary Snam SpA. Snam SpA was mergedinto Eni SpA effective as of February 1, 2002 to becomeEni’s Gas & Power Division. In 2006, Eni’s sales ofnatural gas to third parties totaled 50.94 BCM in Italy and 27.93BCM in the rest of Europe; Eni’s share of natural gasvolumes sold by its affiliates totaled 7.65 BCM (of which 6.88BCM was sold in the rest of Europe). Natural gas volumes consumedin operations by Eni and Eni’s subsidiaries – mainly inelectricity generation, refining and petrochemicals operations– totaled 6.13 BCM. Natural gas sales in Italy include: (i)sales to wholesalers, mainly local companies selling natural gasto residential and commercial customers, and to large industrialand thermoelectric customers who are supplied by a high andmedium pressure pipeline network; and (ii) sales to residentialand commercial customers which are supplied by a low pressurepipeline network. Eni’s high and medium pressure gaspipeline network for natural gas transport is about30,890-kilometer long in Italy, while outside Italy Eni holdstransmission rights on approximately 5,000 kilometers of highpressure pipelines. Eni’s natural gas transport network inItaly is owned and managed by Snam Rete Gas SpA. Snam Rete Gas islisted on the Italian Stock Exchange, Eni’s share being50.04%. Snam Rete Gas transports natural gas on behalf of Eni andthird parties ("shippers"); in 2006 its transportedvolumes were 87.99 BCM, of which 30.9 BCM were on behalf of thirdparties. Eni, through its 100% subsidiary Italgas and othersubsidiaries, is engaged in natural gas distribution activity inItaly serving 1,317 municipalities through a low pressure networkconsisting of approximately 48,700 kilometers of pipelines as ofDecember 31, 2006.Eni conducts its electricity generation activities through itswholly-owned subsidiary EniPower SpA, which owns and managesEni’s power stations in Livorno, Taranto, Mantova, Ravenna,Brindisi, Ferrera Erbognone and Ferrara with a total installedcapacity of approximately 4.9 GW as of December 31, 2006. In2006, sold production of electricity totaled 24.82 TWh. Eni ownsother minor power stations located in Eni’s petrochemicalplants and refineries whose production is mainly for internalconsumption. The accounts of these power stations are reportedwithin Eni’s Refining & Marketing and Petrochemicalssegments.

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In 2006, Eni’s Gas & Power segment reported net salesfrom operations (including inter-segment sales) of euro 28,368million and operating profit of euro 3,802 million.

Eni conducts its refining and marketing activities through theRefining & Marketing Division and certain operatingsubsidiaries. Activities commenced in the 1930s, when Eniinitiated the development of the industrial and retail marketsfor refined products in Italy. In past years, Eni conducted itsrefining and marketing operations through the subsidiaryAgipPetroli SpA. AgipPetroli SpA was merged into Eni SpAeffective December 31, 2002 to become Eni’s Refining &Marketing Division. Eni’s refining and marketing activitiesare located primarily in Italy and in the rest of Europe. In2006, Eni’s retailing market share for refined products inItaly through its Agip-branded network of service stations was29.3%. In 2006, sales of refined products totaled 51.13 mmtonnes,of which 29.90 mmtonnes were in Italy. The balanced refiningcapacity of Eni’s wholly-owned refineries totaled 534 KBBL/das of December 31, 2006. In 2006, Eni’s Refining &Marketing segment reported net sales from operations (includinginter-segment sales) of euro 38,210 million and operating profitof euro 319 million.

Eni’s petrochemicals activities commenced in the 1950s,when it began production of basic petrochemicals at its Ravennaindustrial complex. Through Polimeri Europa SpA and itssubsidiaries, Eni operates in olefins and aromatics, basicintermediate products, polyethylene, polystyrenes, andelastomers. Eni’s petrochemical operations are concentratedin Italy and in Western Europe. In 2006, Eni sold 5.3 mmtonnes ofpetrochemical products. In 2006, Eni’s Petrochemicalssegment reported net sales from operations (includinginter-segment sales) of euro 6,823 million and an operatingprofit of euro 172 million.

Eni’s oilfield services, construction and engineeringactivities commenced in the late 1950s. In 2006 Eni SpA divestedits 100% stake in Snamprogetti to Saipem SpA (a 43% ownedsubsidiary). Through Saipem and its subsidiaries, includingSnamprogetti, Eni operates in offshore construction, inparticular fixed platform installation, subsea pipe laying andfloating production systems and onshore construction. ThroughSaipem and its subsidiaries Eni also provides offshore andonshore drilling services and engineering and project managementservices to the oil and gas, refining and petrochemicalindustries. In 2006, Eni’s Engineering & Constructionsegment reported net sales from operations (includingintersegment sales) of euro 6,979 million and operating profit ofeuro 505 million.

A list of subsidiaries of Eni is included as an exhibit tothis Annual Report on Form 20-F.

 

> 
***Strategy***

Eni plans to deploy a strategy of profitable growth over boththe medium and the long-term, which is intended to createlong-term shareholder’s value particularly throughsignificant dividend distributions. In pursuing this strategy Eniplans a capital expenditure program amounting to euro 44.6billion over the next four years. Eni plans to finance thiscapital expenditure program by using the cash flows provided byoperating activities. Over the next four-year period, the Companyexpects to distribute to its shareholders an amount of dividendsin line with the current level in real terms (See "Item 8– Dividends"). Eni aims to allocate cash flow in excessof capital expenditure and dividend requirements to continue itsprogramme of share buy-back while at the same time maintaining astrong balance sheet. See "Item 5 – ManagementExpectations of Operations".

In its Exploration & Production activities, Eni plans togrow production of oil and natural gas through organic growth andby leveraging on the contribution of recently acquired assets inthe Gulf of Mexico and onshore Congo, targeting a compoundaverage production growth rate of approximately 4% over the2007-2010 period, subject to certain market assumptions (See"Item 5 – Management Expectations of Operations").Organic production growth will be driven mainly by thedevelopment of new projects located in the key producing basinsof North and West Africa and the Caspian region, and thecontribution of long-life fields located mainly in Kazakhstan,Libya, Algeria, Norway, Italy and Egypt. Management will continueto evaluate opportunities to increase production throughacquisitions. In addition, Eni intends to pay special attentionto reserve replacement in order to secure the medium to long-termsustainability of its business. In the next four-year period,management expects additions to reserves to fully replaceproduced reserves, assuming a Brent crude oil price of 40 U.S.dollar per barrel in 2010.

In its Gas & Power activities, Eni plans to grow naturalgas sales in the rest of Europe and safeguard its leadingposition in Italy, effectively manage regulated business and thepower generation business, and expand LNG sales. In Europe, Eniintends to strengthen its presence in markets where its presenceis already established – such as the Iberian Peninsula,Germany and Turkey – and to increase sales in markets withsignificant growth and profitability prospects (in particular,France and the United Kingdom). To achieve its growth strategy,Eni will leverage on its assets, including gas availability– both equity and purchased under long-term supply contracts– access to infrastructure, its important regasificationcapacity, long-standing relationships with natural gas producingcountries, a large customer base, and market knowledge.

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In Italy, Eni plans to implement a more attractive commercialoffer than Eni’s competitors on the basis of the quality ofservices, pricing formulas including different indexation schemesto suit various customers’ purchasing profiles, and theintegration of supply of gas and electricity ("dualoffer"), targeting mainly the middle and retail markets.Management expects that the dual offer will achieve importantsynergies from the integration of processes of client developmentand management.By 2010, Eni plans to sell some 105 BCM worldwide, withinternational sales expected to grow by 10% per year on average.

In its Refining & Marketing activities, Eni intends toimprove profitability. In its refining activities, Eni plans: (i)to increase the conversion capacity of its refineries in order toobtain a higher yield of middle distillates; (ii) to enhance theflexibility of its refineries in order to process low-qualitycrude that is typically discounted in the market-place; and (iii)to reduce operating costs. In marketing, Eni intends tostrengthen its leadership position in the Italian retail marketby improving the qualitative standards of the Italian network andimplementing customer-focused marketing initiatives and effectivedifferentiation of pricing, and to increase sales in selectedneighboring countries in the rest of Europe.

In its oilfield services construction and engineeringactivities, Eni aims at capturing opportunities arising from agrowing market, acquiring large projects in complex areas andsupporting expenditure plans of the other Eni’s businesssegments. In order to achieve this, management plans to implementan important expenditure program intended to upgrade its fleet ofvessels and rigs.

In technological research and innovation activities, Eni plansto implement an important capital expenditure program to developsuch technologies that management believes may ensure competitiveadvantages in the long-term. Eni plans to continue developingexisting programmes on reducing costs to find and recoverhydrocarbons, developing clean fuels, upgrading heavy crudes (inparticular the EST project), monetizing natural gas throughprojects such as the high pressure gas transmission (TAP) and Gasto Liquids (GTL) projects, and protecting the environment.

 

> 
***Results and Portfolio Developments***

The most significant events that occurred during 2006 and todate in 2007 were the following:

| • |   | In 2006, hydrocarbon        production available for sale averaged 1,720 mmBOE/d, a        1.6% increase compared to 2005. Eni’s net proved        reserves of oil and natural gas were 6.44 BBOE (54% crude        and condensates), down 401 mmBOE from 2005. The        unilateral cancellation of the service contract for the        Dación oilfield by the Venezuelan state oil company        PDVSA effective April 1, 2006 resulted in a decrease in        Eni’s proved reserves of 170 mmBBL. In 2006        Eni’s proved reserves replacement ratio was 38%; as        of December 31, 2006, the reserves life index stood at        10.0 years (10.8 as at December 31, 2005).           |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | In 2006, natural gas sales        (97.48 BCM) were up 3.5% due to increased demand for        power generation in Italy and to the addition of new        customers combined with growth in markets in the rest of        Europe as a result of the expansion strategy pursued by        Eni.                                                                                                                                                                                                                                                                                                                                                                                                                            |
| • |   | In 2006, Eni invested euro        1,348 million in exploratory activities, up 106% from        2005, carrying out a large exploration campaign leading        to the completion of 68 exploratory wells (35.9% net to        Eni) with a commercial rate of success of 43% (49% net to        Eni). A further 26 wells were in progress as of the        year-end. Eni enhanced its exploration portfolio by        acquiring assets in core areas such as North Africa, West        Africa, Brazil, Norway and the United States, and in new        high-potential basins such as Mali, Mozambique and East        Timor. New acreage covers 152,000 square kilometers (99%        operated by Eni).                    |
| • |   | In November 2006, Eni and        Gazprom signed a broad strategic agreement which        strengthens a long-term partnership between the two        companies. Key features of this deal are the extension of        the duration of Gazprom gas supply contracts to Eni until        2035, further strengthening Eni’s supply portfolio,        and the intention of the two partners to pursue joint        initiatives in the upstream sector in and outside Russia.                                                                                                                                                                                                                                             |
| • |   | In April 2007, Eni agreed to        acquire interests in exploration and production        activities owned by Dominion Resources in the Gulf of        Mexico for a total cash consideration of U.S. $4,757        million. Following this deal, Eni expects a 75,000 BOE/d        additional oil and gas production in the period 2007-2010        on average, starting from July 1, 2007. Eni will retain        operatorship of most of the exploration and production        assets acquired.                                                                                                                                                                                                                       |
| • |   | In April 2007, as part of        the liquidation procedure of the Russian company Yukos,        Eni in partnership with Enel (60% Eni, 40% Enel) was        awarded 100% of OAO Arctic Gas Co, ZAO Urengoil Inc and        OAO Neftegaztechnologia which own large hydrocarbon        reserves, mostly gas reserves. Eni also acquired 20% of        OAO Gazprom Neft. Cash consideration for this transaction        amounted to U.S. $5 billion net to Eni. Gazprom has an        option to acquire a 51% interest in these three acquired        companies and the entire 20% interest in OAO Gazprom        Neft, as this deal is part of Eni’s strategic        alliance with Gazprom signed in November 2006. |

| • |   | In February 2007, Eni agreed        to acquire interests in exploration and production        onshore activities operated by Maurel & Prom in Congo        for a cash consideration of U.S. $1,434 million.        Additional hydrocarbon production of approximately 28,000        BOE/d is expected in 2010. This transaction was finalized        at the end of May 2007. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| • |   | In April 2007, Eni agreed to        purchase 102 retail fuel stations from ExxonMobil Central        Europe located in Czechia, Slovakia and Hungary and        related additional marketing activities.                                                                                                                                         |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | In April 2007, Eni acquired        an additional interest in the Nikaitchuq field in Alaska        thus achieving a 100% interest.                                                                                                                                                                                                               |
| • |   | In April 2007, Eni signed a        Memorandum of Understanding with Sonangol for the        acquisition of a 13.6% interest in the Angola LNG Ltd        Consortium (A-LNG) committed to build an LNG plant with a        capacity of 5 mmtonnes.                                                                                                |
| • |   | In May 2007, Eni agreed to        purchase a 16.11% interest held by ConocoPhillips Central        and Eastern Europe Holdings BV in the Ceska Rafinerska        Co. When this transaction is finalized, Eni will increase        its stake in this refinery from 16.3% to 32.4%,        corresponding to a refinery capacity of 2.6 mmtonnes/y. |

In 2006, capital expenditure amounted to euro 7.8 billion, ofwhich 89.6% related to the Exploration & Production, Gas& Power and Refining & Marketing segments, and wasprimarily related to: (i) the development of oil and gas reserves(euro 3,629 million) in particular in Kazakhstan, Angola, Egyptand Italy, exploration projects (euro 1,348 million) particularlyin Angola, Egypt, Norway, Nigeria, the Gulf of Mexico and Italy,including the acquisition of 152,000 square kilometers of newacreage (99% operated by Eni); (ii) upgrading of Eni’snatural gas transport and distribution networks in Italy (euro785 million); (iii) the ongoing construction of combined cyclepower plants (euro 229 million); (iv) projects aimed at improvingflexibility and yields of refineries (euro 376 million),including the start up of construction of a new hydrocrackingunit at the Sannazzaro refinery, and upgrading the refinedproduct distribution network in Italy and in the rest of Europe(euro 223 million); and (v) the construction of a new FPSO unitand upgrading of the fleet and logistic centers in theEngineering & Construction Division (euro 591 million).

In 2005, capital expenditure amounted to euro 7.4 billion, ofwhich 91% related to the Exploration & Production, Gas &Power and Refining & Marketing segments, and was primarilyrelated to: (i) the development of oil and gas reserves (euro3,952 million) in particular in Kazakhstan, Libya, Angola, Italyand Egypt, exploration projects (euro 656 million) and thepurchase of proved and unproved property (euro 301 million); (ii)upgrading Eni’s natural gas transport and distributionnetworks in Italy (euro 825 million); (iii) the continuation ofconstruction of combined cycle power plants (euro 239 million);(iv) actions for improving flexibility and yields of refineries,including the completion of construction of the tar gasificationplant at the Sannazzaro refinery, and the upgrade of the refinedproduct distribution network in Italy and in the rest of Europe(overall euro 656 million); and (v) upgrading vessels and otherequipment and facilities in Kazakhstan and West Africa in theOilfield services and construction business (euro 346 million).

In 2004, capital expenditure amounted to euro 7.5 billion (ofwhich 94% related to the Exploration & Production, Gas &Power and Refining & Marketing segments) and concerned: (i)development of hydrocarbon fields (euro 4,369 million) inparticular in Libya, Iran, Angola, Italy, Kazakhstan, Egypt,Nigeria and Norway, and exploration (euro 499 million); (ii)upgrading of Eni’s natural gas transmission and distributionnetwork in Italy (euro 721 million); (iii) the construction ofthe tar gasification plant at the Sannazzaro refinery, actions onrefineries for the adjustment of automotive fuel characteristicsto new European specifications and the upgrade of the refinedproduct distribution network in Italy and in the rest of Europe(for a total of euro 669 million); and (iv) the continuation ofconstruction of electricity generation plants (euro 451 million)and the completion of the GreenStream underwater pipeline project(euro 159 million).

 

**BUSINESS OVERVIEW**

**Exploration & Production**

Eni operates in the exploration and production of hydrocarbonsin Italy, North Africa, West Africa, the North Sea, the Gulf ofMexico, Australia and South America. It also operates in areassuch as the Caspian Sea, the Middle and Far East, India andAlaska where management believes a great mineral potentialexists. In 2006, Eni produced 1,720 KBOE/d; as of December 31,2006, Eni’s proved reserves totaled 6,436 mmBOE. Eni plansto grow production of oil and natural gas through organic growthand leveraging the contribution of recently acquired assets inthe Gulf of Mexico and onshore Congo, targeting a compoundaverage production growth rate of approximately 4% over the2007-2010 period, under certain trading environment assumptions(See "Item 5 – Management Expectations ofOperations"). Organic growth will be driven by thedevelopment of new projects located mainly in the key producingbasins of North and West Africa and the Caspian region, and thecontribution of long-life fields, including Kazakhstan, Libya,Algeria, Norway, Italy and Egypt. Management will continue toevaluate opportunities to increase production through thepurchase of corporations or individual assets. Eni intends to payspecial attention to reserve replacement in order to guaranteethe medium-to long-term sustainability of its business.Management expects additions to reserve to fully replace producedreserves under certain trading environment assumptions (See"Item 5 – Management Expectations of Operations").Eni intends to optimize its portfolio of development propertiesby focusing on areas where its presence is established, seekingnew opportunities and divesting marginal assets. Eni also intendsto develop its LNG business through the purchase of interests inliquefaction plants in order to better exploit its natural gasreserves in North and West Africa.

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In exploration activities Eni intends to concentrate resourcesin such core areas where availability of production facilitiesand existing competencies will enable Eni to readily put inproduction the reserves that are eventually discovered, reducingthe time to market and achieving synergies. Approximately 70% ofplanned capital expenditure will be directed to such core areas(located mainly in Egypt, Nigeria, the United States, Libya,Italy and Angola). Further resources will be deployed toascertain reserves in recently acquired areas (in particularMozambique, East Timor and Mali). Eni expects to purchase newexploration permits and to divest or exit marginal or nonstrategic ones.

Eni plans to improve its performance by searching foroperating solutions with lower operating costs and synergies.

In order to carry out these strategies, Eni intends to investapproximately euro 30.6 billion on exploration initiatives andreserve development over the next four-year period.

 

> 
***Oil and Natural Gas Reserves***

Eni has always exercised rigorous control over the booking ofproved reserves. The Reserve Department of the Exploration &Production segment, reporting directly to the General Manager, isentrusted with the task of continuously updating theCompany’s guidelines concerning reserve evaluations andmonitoring the periodic quantification process. Companyguidelines follow Regulation S-X Rule 4-10 of the Securities andExchange Commission (SEC) as well as, on specific issues notregulated by rules, the consolidated practice recognized byqualified reference institutions. Company guidelines have beenreviewed by DeGolyer and MacNaughton (D&M), an independentpetroleum engineers company, which has certified their compliancewith applicable SEC rules. D&M has also stated that thecompany guidelines regulate situations for which the SEC rulesare less precise, providing a reasonable interpretation in linewith the generally accepted practices in international markets.When participating in exploration and production activitiesoperated by other entities Eni also estimates its proved reserveson the basis of the above guidelines.

The process for evaluating reserves involves: (i) businessunit managers (geographic units) and Local Reserve Evaluators(LRE), who perform the evaluation and classification of reservesincluding estimates of production profiles, capital expenditure,operating costs and costs related to asset retirementobligations; (ii) geographic area managers at head officeschecking evaluations carried out by business unit managers; and(iii) the Reserve Department, which provides independent reviewsof the fairness and correctness of classifications carried out bybusiness units and aggregates worldwide reserve data andcalculates equity volumes. Moreover, the Reserve Department hasthe responsibilities to ensure the periodic certification processof reserves, to perform economic evaluation of reserves and tocontinuously update the Company guidelines on reserves evaluationand classification. All personnel involved in the process ofreserve evaluation are knowledgeable on SEC rules and guidelinesfor proved reserves classification and have professionalabilities adequate to the complexity of the task, express theirjudgment independently and are respectful of professional ethics.

Beginning in 1991 Eni has retained qualified independentpetroleum engineering companies to carry out an independentevaluation2 of its proved reserves on a rotatingbasis. In particular, in 2006 a total of 1.4 BBOE of provedreserves, or about 21% of Eni’s total proved reserves atDecember 31, 2006, have been evaluated. The results of thisindependent evaluation confirmed Eni’s evaluations, as theydid in past years. In the 2004-2006 three-year period independentevaluations concerned 76% of Eni’s total proved reserves; inparticular evaluations concerned all the new developmentprojects, including Kashagan, and most large-sized mature fields.

Eni’s proved reserves of oil and natural gas at December31, 2006 totaled 6,436 mmBOE (oil and condensates 3,481 mmBBL;natural gas 16,965 BCF) representing a decrease of 401 mmBOE, or5.9%, from December 31, 2005. The reserve replacement ratio was38% in 2006; the average reserve replacement ratio for the lastthree years was 55%. The average reserve life index is 10.0 yearsat December 31, 2006 (10.8 at December 31, 2005). The reservereplacement ratio was calculated dividing additions to provedreserves by total production, each as derived from the tables ofchanges in proved reserves prepared in accordance with SFAS No.69 presented in Note 38 to the Consolidated Financial Statements.The Reserve Replacement Ratio is a measure used by management toindicate the extent to which production is replaced by proved oiland gas reserves booked according with the Securities ExchangeCommission (SEC) criteria under Rule 4-10 of Regulation S-X.Management considers the reserve replacement ratio to be animportant measure of the ability of the company to sustain itsgrowth prospects. However, this ratio measures past performancesand is not an indicator of future production because the ultimatedevelopment and production of reserves is subject to a number ofrisks and uncertainties. These include the risks associated withthe successful completion of large-scale projects, includingaddressing ongoing regulatory issues and completion ofinfrastructure, as well as changes in oil and gas prices,political risks and geological and other environmental risks.

_______________

| (2) |   | From 1991 to        2002 DeGolyer and MacNaughton, from 2003 also Ryder        Scott. |
|-----|--------|---------------------------------------------------------------------------------------|

17

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Additions to proved reserves booked in 2006 were 417 mmBOEderived from: (i) extensions and discoveries (161 mmBOE), inparticular in Kazakhstan, Algeria, Egypt, Trinidad & Tobagoand Libya; (ii) improved recovery (105 mmBOE), in particular inEgypt, Angola, Algeria, Kazakhstan and Nigeria; (iii) revisionsof previous estimates (up 151 mmBOE) related to upward revisionsregistered in Kazakhstan, Libya and Egypt, offset in part bydownward revisions in Nigeria and Ecuador. The increase offset inpart the decline related to production for the year (646 mmBOE)and the unilateral cancellation of the service contract for theDación oilfield by the Venezuelan state oil company PDVSA (170mmBBL). Due to risks inherent in the exploration and productionbusiness, a degree of uncertainty still exists as to whetherthese additions will actually be produced. See "Item 3– Risks associated with exploration and production of oiland natural gas" and – "Uncertainties in estimatesof oil and natural gas reserves".

Proved developed reserves at December 31, 2006 amounted to4,059 mmBOE (2,144 mmBBL of oil and condensates and 10,997 BCF ofnatural gas), representing 63% of total estimated proved reserves(63% and 60% at December 31, 2005 and 2004, respectively).

Volumes of oil and natural gas applicable to long-term supplyagreements with foreign governments in mineral assets where Eniis operator totaled 583 mmBOE as of December 31, 2006 (604 mmBOEas of December 31, 2005). Said volumes are not included inreserves volumes shown in the table herein.

The table below sets forth a geographical breakdown ofEni’s proved reserves and proved developed reserves ofhydrocarbons, on a barrel of oil equivalent basis, for theperiods indicated.

 

**Proved reserves**

Eni’s proved reserves of hydrocarbons by geographic area

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

|   | **(mmBOE)** |
|--------|-------------|

| Italy                                  |   | 1,199     |   | 996       |   | 890       |   | 868       |   | 805       |
|----------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|
| North        Africa                    |   | 2,033     |   | 2,024     |   | 2,117     |   | 2,026     |   | 2,018     |
| West Africa                            |   | 1,287     |   | 1,324     |   | 1,357     |   | 1,279     |   | 1,122     |
| North Sea                              |   | 825       |   | 912       |   | 807       |   | 758       |   | 682       |
| Rest of the World                      |   | 1,686     |   | 2,016     |   | 2,047     |   | 1,865     |   | 1,773     |
| Total        consolidated subsidiaries |   | 7,030     |   | 7,272     |   | 7,218     |   | 6,796     |   | 6,400     |
| Unconsolidated entities                |   |      |   |      |   |      |   | 41        |   | 36        |
|                                   |   | **7,030** |   | **7,272** |   | **7,218** |   | **6,837** |   | **6,436** |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

Eni’s proved reserves of oil by geographic area

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

|   | **(mmBBL)** |
|--------|-------------|

| Italy                                  |   | 255       |   | 252       |   | 225       |   | 228       |   | 215       |
|----------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|
| North        Africa                    |   | 1,072     |   | 1,080     |   | 993       |   | 961       |   | 982       |
| West Africa                            |   | 1,022     |   | 1,038     |   | 1,056     |   | 936       |   | 786       |
| North Sea                              |   | 498       |   | 529       |   | 450       |   | 433       |   | 386       |
| Rest of the World                      |   | 936       |   | 1,239     |   | 1,284     |   | 1,190     |   | 1,088     |
| Total        consolidated subsidiaries |   | 3,783     |   | 4,138     |   | 4,008     |   | 3,748     |   | 3,457     |
| Unconsolidated entities                |   |      |   |      |   |      |   | 25        |   | 24        |
|                                   |   | **3,783** |   | **4,138** |   | **4,008** |   | **3,773** |   | **3,481** |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

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Eni’s proved reserves of natural gas by geographic area

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

|   | **(BCF)** |
|--------|-----------|

| Italy                                  |   | 5,295      |   | 4,166      |   | 3,818      |   | 3,676      |   | 3,391      |
|----------------------------------------|--------|------------|--------|------------|--------|------------|--------|------------|--------|------------|
| North        Africa                    |   | 5,563      |   | 5,467      |   | 6,453      |   | 6,117      |   | 5,946      |
| West Africa                            |   | 1,533      |   | 1,656      |   | 1,729      |   | 1,965      |   | 1,927      |
| North Sea                              |   | 1,899      |   | 2,223      |   | 2,051      |   | 1,864      |   | 1,697      |
| Rest of the World                      |   | 4,339      |   | 4,496      |   | 4,384      |   | 3,879      |   | 3,936      |
| Total        consolidated subsidiaries |   | 18,629     |   | 18,008     |   | 18,435     |   | 17,501     |   | 16,897     |
| Unconsolidated entities                |   |       |   |       |   |       |   | 90         |   | 68         |
|                                   |   | **18,629** |   | **18,008** |   | **18,435** |   | **17,591** |   | **16,965** |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

Eni’s proved developed reserves of hydrocarbons bygeographic area

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

|   | **(mmBOE)** |
|--------|-------------|

| Italy                                  |   | 774       |   | 702       |   | 671       |   | 620       |   | 562       |
|----------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|
| North        Africa                    |   | 797       |   | 806       |   | 961       |   | 1,230     |   | 1,242     |
| West Africa                            |   | 703       |   | 710       |   | 749       |   | 793       |   | 798       |
| North Sea                              |   | 724       |   | 822       |   | 707       |   | 611       |   | 571       |
| Rest of the World                      |   | 705       |   | 1,190     |   | 1,212     |   | 1,021     |   | 859       |
| Total        consolidated subsidiaries |   | 3,703     |   | 4,230     |   | 4,300     |   | 4,275     |   | 4,032     |
| Unconsolidated entities                |   |      |   |      |   |      |   | 31        |   | 27        |
|                                   |   | **3,703** |   | **4,230** |   | **4,300** |   | **4,306** |   | **4,059** |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

Eni’s proved developed reserves of oil by geographic area

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

|   | **(mmBBL)** |
|--------|-------------|

| Italy                                  |   | 168       |   | 173       |   | 174       |   | 149       |   | 136       |
|----------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|
| North        Africa                    |   | 610       |   | 640       |   | 655       |   | 697       |   | 713       |
| West Africa                            |   | 554       |   | 560       |   | 588       |   | 568       |   | 546       |
| North Sea                              |   | 426       |   | 464       |   | 386       |   | 353       |   | 329       |
| Rest of the World                      |   | 483       |   | 610       |   | 668       |   | 564       |   | 402       |
| Total        consolidated subsidiaries |   | 2,241     |   | 2,447     |   | 2,471     |   | 2,331     |   | 2,126     |
| Unconsolidated entities                |   |      |   |      |   |      |   | 19        |   | 18        |
|                                   |   | **2,241** |   | **2,447** |   | **2,471** |   | **2,350** |   | **2,144** |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

Eni’s proved developed reserves of natural gas bygeographic area

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

|   | **(BCF)** |
|--------|-----------|

| Italy                                  |   | 3,397     |   | 2,966      |   | 2,850      |   | 2,704      |   | 2,449      |
|----------------------------------------|--------|-----------|--------|------------|--------|------------|--------|------------|--------|------------|
| North        Africa                    |   | 1,084     |   | 962        |   | 1,760      |   | 3,060      |   | 3,042      |
| West Africa                            |   | 863       |   | 866        |   | 924        |   | 1,289      |   | 1,447      |
| North Sea                              |   | 1,727     |   | 2,075      |   | 1,845      |   | 1,484      |   | 1,395      |
| Rest of the World                      |   | 1,283     |   | 3,355      |   | 3,122      |   | 2,622      |   | 2,616      |
| Total        consolidated subsidiaries |   | 8,354     |   | 10,224     |   | 10,501     |   | 11,159     |   | 10,949     |
| Unconsolidated entities                |   |      |   |       |   |       |   | 70         |   | 48         |
|                                   |   | **8,354** |   | **10,224** |   | **10,501** |   | **11,229** |   | **10,997** |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

19

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> 
***Mineral Right Portfolio and Exploration Activity***

As of December 31, 2006, Eni’s portfolio of mineralrights consisted of 1,029 exclusive or shared rights forexploration and development in 36 countries on five continents,for a total net acreage of 385,219 square kilometers (266,002 atDecember 31, 2005). Of these, 48,273 square kilometers concernedproduction and development (55,098 at December 31, 2005). OutsideItaly net acreage increased by 120,775 square kilometers due tothe acquisition of assets after international bid procedures inAngola, Australia, Brazil, Congo, Egypt, Morocco, Nigeria,Norway, Pakistan and the United States, as well as in the newcountries/areas of Mali, Mozambique and East Timor. In Italy, netacreage declined by 1,557 square kilometers due to releases.

A total of 68 new exploratory wells were drilled (35.9 ofwhich represented Eni’s share on the basis of its workinginterest in relevant properties), as compared to 52 exploratorywells completed in 2005 (21.8 of which represented Eni’sshare). Overall success rate was 43% in 2006, as compared to39.3% in 2005; the success rate of Eni’s share ofexploratory wells was 49% in 2006, as compared to 47.4% in 2005.In 2004, 66 exploratory wells were completed (29.5 of whichrepresented Eni’s share), with an overall success rate of52.1% (the success rate of Eni’s share of exploratory wellswas 57.3%).

 

> 
***Production***

*The matters regarding future production, additions toreserves and related production costs and estimated reservesdiscussed below and elsewhere herein are forward-lookingstatements that involve risks and uncertainties that could causethe actual results to differ materially from those in suchforward-looking statements. Such risks and uncertainties relatingto future production and additions to reserves include politicaldevelopments affecting the award of exploration or productioninterests or world supply and prices for oil and natural gas, orchanges in the underlying economics of certain of Eni’simportant hydrocarbons projects. Such risks and uncertaintiesrelating to future production costs include delays or unexpectedcosts incurred in Eni’s production operations.*

In 2006 oil and natural gas production available for saleaveraged 1,720 KBOE/d (oil and condensates 1,079 KBBL/d; naturalgas 3,679 mmCF/d) increasing by 27 KBOE/d compared to 2005, up1.6%, despite the impact of the production loss in the Daciónoil field in Venezuela (down 46 KBOE/d) and of adverseentitlement effects (down 21 KBOE/d) in PSAs and buy-backcontracts due to higher oil prices. Libya, Egypt, Nigeria,Australia and Croatia were the main growth areas in natural gas,while oil production increased in Angola and Libya. Declines inproduction were attributable to mature field declines anddisruptions in Nigeria due to social unrest. Production outsideItaly covered 87% of the total (85% in 2005).

Production of oil and condensates (1,079 KBBL/d) increasedmainly in: (i) Angola due to the production ramp-up at theKissanje and Dikanza fields in Phase B of the development ofKizomba in Block 15 (Eni’s interest 20%) and NorthSanha/Bomboco in Block 0 (Eni’s interest 9.8%), as well asthe start up of the Benguela/Belize/Lobito/Tomboco fields inBlock 14 (Eni’s interest 20%); and (ii) Libya, due to theramp-up of the Bahr Essalam offshore field (Eni’s interest50%) as part of the Western Libyan Gas Project and the el Feelfield (Eni’s interest 23.3%). Production decreased inVenezuela, Nigeria, despite obtaining full production at theBonga field in OML 118 permit (Eni’s interest 12.5%) andItaly due to technical problems occurred at the FPSO unit in theAquila field and to production declines of mature fields.

Production of natural gas available for sale (3,679 mmCF/d)increased mainly in: (i) Libya, due to the reaching of fullproduction at the Bahr Essalam offshore field (Eni’sinterest 50%); (ii) Egypt, for full production/start up of theBarboni, Baltim North and Anshuga fields and the increase in thenumber of production wells at the el Temsah 4 platform in theoffshore of the Nile Delta and increased supplies to the Damiettaliquefaction plant (Eni’s interest 40%); (iii) Nigeria, dueto increased supplies to the Bonny LNG plant (Eni’s interest10.4%) related to the start up of trains 4 and 5; (iv) Australia,due to the start up of supplies to the Darwin liquefaction plantlinked to the Bayu Undan liquid and gas field (Eni’sinterest 12.04%); and (v) Croatia, due to the start up of theIka, Ida and Ivana C-K fields (Eni’s interest 50%) in theAdriatic offshore. These increases were offset in part by adecline registered in Italy resulting from the production declineof mature fields.

Hydrocarbon production sold amounted to 625.1 mmBOE.Approximately 68% of oil and condensate production sold (391.1mmBBL) was ultimately sold to Eni’s Refining & Marketingsegment; 40% of natural gas production sold (1,343 BCF) wasultimately sold to Eni’s Gas & Power segment.

20

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The tables below set forth Eni’s production of oil andcondensates and natural gas for the periods indicated.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

|   | **(KBBL/d)** |
|--------|--------------|

| **Production of oil and condensates**(1) |   |    |   |    |   |      |   |      |   |      |
|------------------------------------------|--------|---------|--------|---------|--------|-----------|--------|-----------|--------|-----------|
| Italy                                    |   | 86      |   | 84      |   | 80        |   | 86        |   | 79        |
| North Africa                             |   | 252     |   | 250     |   | 261       |   | 308       |   | 329       |
| West        Africa                       |   | 222     |   | 236     |   | 285       |   | 310       |   | 322       |
| North Sea                                |   | 213     |   | 235     |   | 203       |   | 179       |   | 178       |
| Rest of        the World                 |   | 148     |   | 176     |   | 205       |   | 228       |   | 171       |
| **Total**                                |   | **921** |   | **981** |   | **1,034** |   | **1,111** |   | **1,079** |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

----

| (1) |   | Data includes        Eni’s share of production of affiliates and joint        ventures accounted for under the equity method of        accounting. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

|   | **(mmCF/d)** |
|--------|--------------|

| **Natural gas production available for sale**(1)(2) |   |      |   |      |   |      |   |      |   |      |
|-----------------------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|
| Italy                                               |   | 1,260     |   | 1,181     |   | 1,067     |   | 972       |   | 883       |
| North Africa                                        |   | 560       |   | 559       |   | 619       |   | 900       |   | 1,187     |
| West        Africa                                  |   | 87        |   | 128       |   | 143       |   | 151       |   | 232       |
| North Sea                                           |   | 516       |   | 596       |   | 560       |   | 563       |   | 557       |
| Rest of        the World                            |   | 592       |   | 710       |   | 782       |   | 758       |   | 820       |
| **Total**                                           |   | **3,015** |   | **3,174** |   | **3,171** |   | **3,344** |   | **3,679** |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

----

| (1) |   | Data includes        Eni’s share of production of affiliates and joint        ventures accounted for under the equity method of        accounting.                                          |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | It excludes        production volumes of natural gas consumed in operations.        Said volumes were 132, 151, 220, 250 and 286 mmCF/d in        2002, 2003, 2004, 2005 and 2006, respectively. |

Volumes of oil and natural gas purchased under long-termsupply contracts with foreign governments or similar entities inproperties where Eni acts as producer totaled 57 KBOE/d and 20.5KBOE/d in 2006 and 2005, respectively.

 

> 
***Portfolio Developments***

In February 2007, Eni acquired certain onshore exploration andproduction assets operated by Maurel & Prom, entailing a cashconsideration of U.S. $1,434 million. This transaction includesthe producing fields of M’Boundi (48.6%) and Kouakouala A(66.7%), and the exploration permit Le Kouilou (50%). Such assetswere subject to a pre-emption right in favor of Burren Energy,partner of Maurel & Prom. Subsequently, Eni and Burren Energyreached an agreement providing for Burren Energy’s waiver ofthe exercise of its pre-emption right and Eni’s sale toBurren Energy of a 5.5% interest in the M’Boundi concessionand a 2% stake in the Le Kouilou exploration permit under thesame economic terms as the acquisition from Maurel & Prom,entailing cash proceeds of $154 million. Eni retains theoperatorship and participating interests of 43.1% and 48% in theM’Boundi concession and Le Kouilou exploration permit,respectively. This operation was finalized at the end of May 2007following approval by the relevant Congolese authorities. Eniexpects an additional production of approximately 28 KBOE/d in2010.

On April 2, 2007, Eni and Sonangol signed a Memorandum ofUnderstanding for the acquisition of a 13.6% stake in Angola LNGLtd Consortium (A-LNG). This company is responsible for theconstruction of an LNG plant in Soyo, 300 km North of Luanda,with a yearly capacity of 5 mmtonnes. The project has beenapproved by the Angolan Government and Parliament. The LNG willbe directed to the United States market and will be delivered tothe re-gasification plant of Pascagoula, in the Gulf of Mexico,in which Eni, following this agreement, will acquirere-gasification capacity of 5 BCM/y.

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On April 4, 2007, Eni, through the partnership in EniNeftegaz(60% Eni, 40% Enel SpA) acquired Lot 2 in the Yukos liquidationprocedure for a total price of U.S. $5.83 billion (Eni’sshare being $5 billion). Lot 2 includes: 100% of OAO Arctic GasCo, 100% of ZAO Urengoil Inc and 100% of OAO Neftegaztechnologia.These three companies own 5 gas and condensate fields and partsof other fields in the Yamal Nenets (YNAO) region, a large gasproducing region. Management believes these three companies tohave significant oil and gas resources. Eni and Enel have offeredGazprom an option to acquire a 51% interest in these companieswithin two years. In the event that Gazprom exercises its calloption, the assets will be operated through a joint venturebetween Eni and Gazprom, which will have access to Eni’stechnologies. Lot 2 also includes various minor assets that willbe sold or liquidated and 20% of OAO Gazprom Neft which will bewholly owned by Eni. Eni offered Gazprom an option to acquirethis 20% interest in OAO Gazprom Neft within two years, at atotal price of $3.7 billion, in addition to financial expensesrelated to the acquisition. These agreements are an additionalstep in implementing the strategic partnership between Eni andGazprom signed in November 2006, under which the two companiesestablished an alliance to develop upstream, midstream anddownstream energy projects inside and outside of Russia.

On April 11, 2007, Eni acquired 70% and the operatorship ofthe Nikaitchuq field, located on-offshore in the North Slope ofAlaska. Eni, which already owned a 30% stake in the field, nowretains the 100% working interest. Nikaitchuq would be the firstdevelopment project operated by Eni in Alaska. Successfulappraisal drilling has been completed. Plans for a phaseddevelopment are currently being evaluated with the target ofsanctioning the project by year end, and first oil by the end of2009. The Nikaitchuq project comprises the drilling ofapproximately 80 wells, out of which 32 are located onshore andthe remaining from an offshore artificial island. All wells willthen be tied back to a production facility located at OliktokPoint, which is expected to reach an output of 40 KBOE/d.

On April 30, 2007 Eni agreed to acquire the Gulf of Mexicoupstream activity of Dominion Resources at the price of U.S.$4,757 million including exploration assets for U.S. $680million. The transaction includes production, development andexploration assets located in deepwater Gulf of Mexico. Startingfrom the second half of 2007 until 2010, production from theacquired assets is expected to average approximately 75 KBOE/d.In addition, Eni will enhance its portfolio in the Gulf of Mexicothanks to new leases with significant exploration potential;approximately 60% of these leases are operated. The transactionis subject to government approvals, expiration of certainpreferential purchase rights which apply to a small portion ofthe acquired assets (less than 5% of total reserves), and toother customary conditions precedent. Closing is expected on July2, 2007.

 

 

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##### Table of Contents

The table below sets forth certain information and operatingdata regarding Eni’s principal oil and natural gas interestsas of December 31, 2006.

 

**Principal oil and natural gas interests at December 31,2006**

|   |   | **Commencement of operations** |   | **Number of interests** |   | **Gross exploration        and development acreage**(1) |   | **Net exploration        and development acreage**(1) |   | **Net development acreage**(1) |   | **Type of fields** |   | **Number of producing fields** |   | **Number of other fields** |
|--------|--------|--------------------------------|--------|-------------------------|--------|---------------------------------------------------------|--------|-------------------------------------------------------|--------|--------------------------------|--------|--------------------|--------|--------------------------------|--------|----------------------------|
|   |   |                                |   |                         |   |                                                         |   |                                                       |   |                                |   |                    |   |                                |   |                            |

| **Italy**                                             |   | 1926   |   | **171**   |   | **28,508**  |   | **22,496**  |   | **12,743** |   | Onshore/Offshore |   | **90**  |   | **89**  |
|-------------------------------------------------------|--------|--------|--------|-----------|--------|-------------|--------|-------------|--------|------------|--------|------------------|--------|---------|--------|---------|
|                                                  |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| **North Africa**                                      |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| Algeria                                               |   | 1981   |   | 36        |   | 12,739      |   | 3,456       |   | 861        |   | Onshore          |   | 26      |   | 12      |
| Egypt                                                 |   | 1954   |   | 53        |   | 23,214      |   | 13,901      |   | 2,401      |   | Onshore/Offshore |   | 37      |   | 30      |
| Libya                                                 |   | 1959   |   | 17        |   | 39,569      |   | 34,113      |   | 12,783     |   | Onshore/Offshore |   | 11      |   | 15      |
| Tunisia                                               |   | 1961   |   | 14        |   | 6,464       |   | 2,274       |   | 1,223      |   | Onshore/Offshore |   | 13      |   | 4       |
|                                                  |   |   |   | **120**   |   | **81,986**  |   | **53,744**  |   | **17,268** |   |             |   | **87**  |   | **61**  |
|                                                  |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| **West Africa**                                       |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| Angola                                                |   | 1980   |   | 49        |   | 18,776      |   | 3,275       |   | 1,099      |   | Offshore         |   | 39      |   | 30      |
| Congo                                                 |   | 1968   |   | 20        |   | 9,797       |   | 4,169       |   | 880        |   | Offshore         |   | 17      |   | 7       |
| Nigeria                                               |   | 1962   |   | 49        |   | 43,215      |   | 7,356       |   | 5,715      |   | Onshore/Offshore |   | 122     |   | 23      |
|                                                  |   |   |   | **118**   |   | **71,788**  |   | **14,800**  |   | **7,694**  |   |             |   | **178** |   | **60**  |
|                                                  |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| **North Sea**                                         |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| Norway                                                |   | 1965   |   | 47        |   | 18,851      |   | 7,077       |   | 123        |   | Offshore         |   | 9       |   | 6       |
| The United Kingdom                                    |   | 1964   |   | 75        |   | 5,860       |   | 1,328       |   | 688        |   | Offshore         |   | 33      |   | 13      |
|                                                  |   |   |   | **122**   |   | **24,711**  |   | **8,405**   |   | **811**    |   |             |   | **42**  |   | **19**  |
|                                                  |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| **Rest of world**                                     |   |   |   |      |   |        |   |        |   |       |   |             |   |    |   |    |
| Australia                                             |   | 2001   |   | 13        |   | 24,143      |   | 19,910      |   | 2,279      |   | Offshore         |   | 2       |   | 1       |
| Brazil                                                |   | 1999   |   | 3         |   | 2,948       |   | 2,802       |   |       |   | Offshore         |   |    |   |    |
| China                                                 |   | 1983   |   | 4         |   | 866         |   | 181         |   | 103        |   | Offshore         |   | 9       |   | 4       |
| Croatia                                               |   | 1996   |   | 3         |   | 6,056       |   | 3,028       |   | 987        |   | Offshore         |   | 5       |   | 5       |
| Ecuador                                               |   | 1988   |   | 1         |   | 2,000       |   | 2,000       |   | 2,000      |   | Onshore          |   | 1       |   | 1       |
| East Timor                                            |   | 2006   |   | 5         |   | 12,224      |   | 12,224      |   |       |   | Offshore         |   |    |   |    |
| India                                                 |   | 2005   |   | 2         |   | 14,445      |   | 5,698       |   |       |   | Onshore/Offshore |   |    |   |    |
| Indonesia                                             |   | 2001   |   | 13        |   | 28,438      |   | 16,301      |   | 656        |   | Onshore/Offshore |   | 7       |   | 8       |
| Iran                                                  |   | 1957   |   | 4         |   | 1,456       |   | 820         |   | 820        |   | Onshore/Offshore |   | 4       |   |    |
| Kazakhstan                                            |   | 1995   |   | 6         |   | 4,934       |   | 960         |   | 489        |   | Onshore/Offshore |   | 1       |   | 5       |
| Pakistan                                              |   | 2000   |   | 18        |   | 29,790      |   | 20,965      |   | 615        |   | Onshore/Offshore |   | 6       |   | 1       |
| Saudi Arabia                                          |   | 2004   |   | 1         |   | 51,687      |   | 25,844      |   |       |   | Onshore          |   |    |   |    |
| Trinidad & Tobago                                 |   | 1970   |   | 1         |   | 382         |   | 66          |   | 66         |   | Offshore         |   | 3       |   | 2       |
| United States                                         |   | 1968   |   | 391       |   | 7,803       |   | 3,758       |   | 560        |   | Onshore/Offshore |   | 20      |   | 5       |
| Venezuela                                             |   | 1998   |   | 4         |   | 1,958       |   | 790         |   | 66         |   | Offshore         |   |    |   | 1       |
|                                                  |   |   |   | **469**   |   | **189,130** |   | **115,347** |   | **8,641**  |   |             |   | **58**  |   | **33**  |
| Other                                                 |   |   |   | **9**     |   | **6,311**   |   | **1,240**   |   | **1,116**  |   | Offshore         |   |    |   | **1**   |
| Other countries with        only exploration activity |   |   |   | **20**    |   | **299,705** |   | **169,187** |   |       |   | Onshore/Offshore |   |    |   |    |
| Outside Italy                                         |   |   |   | 858       |   | 673,631     |   | 362,723     |   | 35,530     |   |             |   | 365     |   | 174     |
| **Total**                                             |   |   |   | **1,029** |   | **702,139** |   | **385,219** |   | **48,273** |   |             |   | **455** |   | **263** |

|   |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

----

| (1) |   | Square        kilometers. |
|-----|--------|---------------------------|

Eni’s principal regions of operations are describedbelow. In the discussion that follows references to hydrocarbonproduction are to be intended to hydrocarbon production availablefor sale.

> 
*Italy*

Eni has been operating in Italy since 1926. In 2006 Eni’soil and gas production amounted to 233 KBOE/d. Eni’sactivities in Italy are concentrated in the Adriatic Sea, theCentral Southern Apennines, mainland and offshore Sicily and thePo Valley. Eni’s exploration and development activities inItaly are regulated by concession contracts.

The Adriatic Sea represents Eni’s main production area inItaly, accounting for 49% of Eni’s domestic production in2006. Production is composed mainly of natural gas. Main operatedfields are Barbara (177 mmCF/d net to Eni), Angela-Angelina (71mmCF/d), Porto Garibaldi (71 mmCF/d) and Cervia (57 mmCF/d).

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Eni is operator of the Val d’Agri concession (Eni’sinterest 60.77%) in Basilicata Region, Southern Italy, resultingfrom the unitization of the Volturino and Grumento Novaconcessions made in late 2005. Production is supplied from theMonte Alpi, Monte Enoc and Cerro Falcone fields through 22production wells of the 36 foreseen by the sanctioned developmentplan and is supported by the Viggiano oil center, containing 6trains with a treatment capacity of 104 KBBL/d of oil and 99mmCF/d of natural gas. Oil produced is delivered to Eni’srefinery in Taranto via a 136-kilometer long pipeline. In 2006the Val d’Agri concession produced 104 KBOE/d (68 net toEni), corresponding to 29% of Eni’s production in Italy.

Eni is operator of 13 production concessions onshore andoffshore Sicily. Its main fields are Gela, Ragusa, Giaurone,Fiumetto and Prezioso, which in 2006 accounted for 6% ofEni’s production in Italy. In the second half of 2006, theSamperi well was started up with full production of approximately2,871 CF/d to be reached in 2007.

In 2006 development activities concerned in particular: (i)optimization of production from mature fields by means ofsidetracking and infilling operations (Barbara A/H, Daria, Basiland Anemone for gas and Rospo for oil); and (ii) continuation ofdrilling and upgrading of producing facilities in the Vald’Agri.

The main ongoing development project is Miglianico, locatedonshore in the Abruzzi Region, Central Italy. Production isexpected to start in the second half of 2008. This projectprovides for the construction of facilities intended to treatproduction volumes of oil, to be delivered to logistic structuresof the Refining & Marketing Division, and to desulfurizeproduction volumes of gas to be input into the Italian naturalgas transportation network.

Development of gas fields is nearing completion at: (i) Tea,Arnica, Lavanda in the Adriatic offshore where start up ofproduction is expected in 2007 after a production platform andlinkage facilities were installed in 2006; (ii) Candela, wherestart up is expected in 2007; and (iii) certain gas fields inSicily: Pizzo Tamburino, scheduled for the second half of 2007with expected production of 1,000 BOE/d, and recovery ofadditional reserves of Fiumetto concession, where start up isexpected in the first half of 2007 peaking at 600 BOE/d.

The main gas discoveries for the year were made in: (a) theonshore San Potito concession, in Emilia the Longanesi 1 well, ata depth of 2,540 meters; (b) the offshore of Sicily (GR.13.AGpermit, Argo 1 well, Eni’s interest 60%) at a depth between1,350 and 1,520 meters; (c) the Adriatic Sea (AR.95.EA permit,Benedetta 1 well) at a depth of 2,090 meters which yielded 145KCM/d of gas in test production; and (d) the onshore of Sicily(San Teodoro permit, Borgo Giuliano 1 well) at a depth of about2,000 meters.

> 
*North Africa*

Eni’s operations in North Africa are conducted inAlgeria, Egypt, Libya and Tunisia. In 2006, North Africaaccounted for 31% of Eni’s total worldwide production ofhydrocarbons.

*Algeria* Eni has been present in Algeria since 1981. In2006, Eni’s oil production averaged 88 KBBL/d. Operatingactivities accounting for 53% of Eni’s production in Algeriaare located in the Bir Rebaa area in the South-Eastern desert andinclude the following exploration and production blocks: (a)Blocks 403 a/d (Eni’s interest 100%); (b) Blocks 401a/402a(Eni’s interest 55%); (c) Block 403 (Eni’s interest50%); (d) Blocks 212 (Eni’s interest 22.38%) and 208(Eni’s interest 12.25%); and (e) exploration Blocks 404a(Eni’s interest 25%) and 403 c/e (Eni’s interest33.33%). Exploration and production activities in Algeria areregulated by Production Sharing Agreements (PSA) and concessioncontracts.

Production in the Block 403 a/d is supplied mainly by the HBNand ROM and satellite fields. Blocks 403 a/d accounted forapproximately 41% of Eni’s production in Algeria in 2006.The main project underway is ROM/ZEA Integrated Development forthe production of reserves ascertained by the recent appraisalactivity conducted in the area, leading to a revaluation of theresources of this area. Current production is collected atROM’s Central Production Facility and delivered to thetreatment center in Bir Rebaa North in Block 403. The projectprovides for the upgrade of production facilities and theinjection into the field of water and gas currently flared at theROM satellite center. As a result, flared gas is expected to bereduced by approximately 90%, as required by applicable Algerianlaws. Production is expected to peak at 21 KBBL/d (12 net to Eni)in 2010.

Daily production from the Blocks 401a/402a is supplied mainlyby the ROD and satellite fields and accounted for approximately27% of Eni’s production in Algeria in 2006. Infillingactivities are being performed on producing fields in order tomaintain the current production plateau. The drilling of afurther 6 wells (4 production and 2 water injection wells) isplanned for the recovery of recently ascertained reserves.

The main fields in Block 403 are BRN, BRW and BRSW and theblock accounted for approximately 13% of Eni’s production inAlgeria in 2006. In June 2007, the BRN field permit expired. Thefield was producing 3 KBOE/d.

Block 208 is located South of Bir Rebaa. The el Merk Synergyplan for the development of this block in conjunction with thedevelopment of adjoining blocks (212 and 405a and 404, operatedby other companies) is the main project underway in Algeria. InBlock 208 the EKT, EMK, EMN and EME oil and gas fields,discovered between 1993 and 1998, are expected to be developed. 

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The working plan provides for the drilling of 145 wells thatare expected to be linked to a Central Production Facility with atreatment capacity of 150 KBBL/d of oil and approximately 1 BCF/dof associated wet gas for the extraction of liquids(approximately 50 KBBL/d) and the subsequent gas cycling(reinjection in the field). Marketing of associated gas isenvisaged 8 years after the production start up. Production isexpected to start in 2010, peaking at 141 KBOE/d (18 net to Eni)in the same year. About 85% of basic engineering was completed in2006.

The main discoveries for the year were: (a) in onshore Block403a the appraisal wells ROM N2 and N3 found oil at a depth ofabout 3,300 meters; and (b) in onshore Block 404a, the BBKS-1discovery well showed the presence of oil at a depth of 3,160meters which yielded 700 BBL/d in test production; the appraisalwell BBKSE-1 showed the presence of oil at a depth of about 3,200meters and confirmed the eastward extension of the BBKSstructure.

Algeria is currently reviewing the fiscal regime applicable toforeign oil companies. With regard to the legislative textalready enacted, fiscal terms applicable to existing PSAs towhich foreign oil companies are parties have not been modified.Nevertheless, Sonatrach, the state oil company, is currentlybearing higher taxation on behalf of foreign oil companies. Onthis basis, Sonatrach intends to renegotiate the economic termsof certain PSAs to which Eni or other Eni co-venture partners areparty. According to Sonatrach, renegotiation of contractual termsis necessary in order to restore the initial economics of suchcontracts. At present, management is not able to foresee thefinal outcome of such renegotiations. In addition, the Algerianparliament with the Decree No. 06-440 of December 2, 2006 enactedthe procedure, the application framework and the calculationmethodology of a windfall tax levied to foreign oil companies asapproved by the Government. Effective August 1, 2006, saidwindfall tax applies to the extent that oil prices exceed $30 perbarrel and foresees rates ranging from 5 to 50% depending on theshare of production to which a foreign company is entitled andthe contractual scheme in force with Sonatrach. In 2006, theapplication of such tax entailed higher current taxation and adeferred tax charge for a total impact on Eni of euro 328million.

In the medium-term, management expects production in Algeriato increase reflecting ongoing development activities, targetinga 100 KBOE/d level by 2010.

*Egypt* Eni has been present in Egypt since 1954. In2006, Eni’s share of production in this country amounting to221 KBOE/d accounted for 13% of Eni’s total annualhydrocarbon production. Eni’s main producing activities arelocated in the Belayim concession (Eni’s interest 100%)located in the Gulf of Suez which contains oil and condensatesand in the North Port Said (former Port Fouad, Eni’sinterest 100%), Baltim (Eni operator with a 50% interest), Ras elBarr (Eni’s interest 50%) and el Temsah (Eni operator with a50% interest), predominantly gas concessions located offshore inthe Nile Delta. In 2006 production from these concessionsaccounted for 90% of Eni’s production in Egypt. Explorationand production activities in Egypt are regulated by concessioncontracts and PSAs.

Development activities are underway in the offshore area ofthe Nile Delta: (i) in the North Port Said concession (Eni’sinterest 100%), the Anshuga gas field was linked to theproduction facilities of the nearby Nouras field by means of asea line, starting production in October 2006. Production isexpected to peak at 17.3 mmCF/d net to Eni. This and otherongoing development activities aim at maintaining the current gasproduction level of 406 mmCF/d net to Eni; (ii) in the Ras elBarr concession (Eni’s interest 50%), engineering activitiesare underway for the development of gas reserves in the offshoreTaurt field. This project provides for the drilling of sevenwells which are expected to be linked to existing onshoretreatment facilities. Production is expected to start in 2008. Asecond development step of the Ha’py field was completed.Ongoing development activities aim at maintaining the current gasproduction level of 168 mmCF/d net to Eni; and (iii) in the elTemsah concession (Eni operator with a 50% interest), gas andcondensates production started at the Temsah NW 2 platform. Mainprojects include the development of reserves at the Denise fieldand its satellites through existing facilities at Denise Ainstalled on the TNW 2 platform. Ongoing development activitiesaim at reaching a peak production of 137 KBOE/d (41 net to Eni)in 2008.

As part of the expansion plan of the Damietta LNG plant, Eniand its partners signed a framework agreement in June 2006 fordoubling the capacity of the Damietta liquefaction plant by meansof the construction of a second train with a treatment capacityof 268 BCF/y of gas corresponding to approximately 5 mmtonnes/yof LNG for a twenty-year period starting in 2010. This project isexpected to support the ramp-up of Eni’s natural gasproduction in the Nile Delta, targeting supplies of 88 BCF/y. Eniis currently supplying 53 BCF/y to the first train for atwenty-year period.

Main discoveries for the year were in: (a) offshore Abu Rudeispermit (Eni’s interest 100%) the Abu Rudeis Marine 4discovery well showing the presence of liquids at a depth of over3,000 meters; the well was linked to existing productionfacilities; (b) onshore West Razzak permit (Eni’s interest80%), the Aghar SW-1X discovery well showed the presence of highquality liquids at various levels at a depth between 1,800 and2,300 meters; (c) offshore West Baltim permit (Eni’sinterest 100%), the Meret 1 and 2 discovery wells showed thepresence of natural gas and condensates at various levels atdepth between 1,500 and over 3,000 meters; (d) offshore Thekahpermit (Eni’s interest 50%), the Thekah North 1 discoverywell showed the presence of natural gas at a depth between 1,350and 1,650 meters; the well was linked to existing productionfacilities; and (e) onshore Meleiha permit (Eni’s interest56%) the Lotus North 1-X discovery well showed the presence ofoil at a depth of over 2,000 meters and has started to produce.The Nada Ne 1-X discovery well showed the presence of oil andnatural gas at a depth of 1,900 meters in the same area and hasstarted to produce.

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In the medium-term, management expects to increase Eni’sproduction in Egypt to approximately 250 KBOE/d reflectingongoing development of gas reserves, despite expected productiondecline of mature oil fields.

*Libya* Eni started operations in Libya in 1959. In 2006Eni’s oil and gas production averaged 213 KBOE/d, theportion of liquids was 65%. Production activity is carried out inthe Mediterranean offshore facing Tripoli and in the LibyanDesert. The main production blocks in which Eni holds interestsare: (i) Block NC169A onshore (Eni’s interest 50%) and BlockNC41 offshore (Eni’s interest 30% for oil and 50% for gas);(ii) Block NC174 onshore (Eni’s interest 33.3%, fordevelopment phase); and (iii) onshore concessions 82 and 100(Eni’s interest 50%). Eni also holds a 50% interest fordevelopment phase, in the Block NC118 where, after a declarationof commercial discovery, it is developing the A-NC118 field. Inthe exploration phase, Eni is operator of four onshore blocks inthe Muzurk basin (161/1, 161/2 & 4, 176/3) and in the Kufraarea (186/1, 2, 3 & 4). Eni’s exploration and productionactivities in Libya are regulated by concessions and PSAs.

Block NC169 located onshore in the Western Libyan Desert nearthe Algerian borderline includes the liquids and gas Wafa field;Block NC41 located off Libya's Northern Mediterranean coastlineincludes the liquids and gas Bahr Essalam field. These two fieldshave been developed as part of the upstream-midstream integratedWestern Libyan Gas Project (WLGP) aimed also at exporting naturalgas to Europe through the underwater GreenStream pipeline. In2006 volumes delivered through this pipeline were 240 BCF and areexpected to target 283 BCF (equal approximately to an average of777 mmCF/d) when operations are fully on line. Said volumes aresupplied to third parties on the Italian natural gas market underlong-term contracts. Further 71 BCF of gas will be delivered tothe Libyan market. Production from these two fields is supportedby the Mellitah plant on the Libyan coast, made up of threetrains for the treatment of gas volumes from Bahr Essalam. Gasvolumes produced at Wafa are treated at Wafa facilities. Mellitahalso includes facilities for the compression of natural gas thatis delivered to Sicily, as well as facilities for the storage andloading of oil and LPG. Block NC41 also includes the Bouri oilfield. As part of development activities in the Bouri Est Area,four producing subsea wells were successfully drilled and linkedto the existing facilities. In 2006 the field yielded 55 KBBL/d(16 net to Eni).

Block NC174 is located in the Southwestern Libyan desert about800 kilometers from of Tripoli. Daily production is provided bythe el Feel field. In 2006 the field yielded 124 KBBL/d (24 netto Eni) treated at the field’s facilities and then deliveredvia pipeline to the Mellitah plant for storage and loading. Thisfield has already reached the planned production peak of 150KBBL/d (35 net to Eni).

Concessions 82 and 100 are located in the Eastern CentralLibyan desert. Oil production is provided by the Bu Attifel oilfield as well as by minor fields in concession 82. In 2006 theyyielded 58 KBBL/d net to Eni. Development activities concernedthe drilling of some infilling wells.

Main discoveries for the year were in: (a) offshore Block NC41, the T1 discovery well showed the presence of oil at a depthof 2,800 meters; and (b) onshore concession 82-10 (Eni’sinterest 50%), the KK4-82/ST3 discovery well showed the presenceof oil at a depth of 5,000 meters.

In the medium-term, management expects to increase Eni’sproduction in Libya owing to the expected ramp up of newstructures near the Western Libyan Gas Project fields, despitemature field production declines.

*Mali* In November 2006, Eni purchased five onshoreexploration licenses (Eni operator with a 50% interest) fromBaraka Mali Operations Ltd and Baraka Mali Ventures Ltd, coveringa gross acreage of approximately 193,200 square kilometers(96,600 net to Eni). Blocks are located in the central part ofthe Taodueni Basin at the border with Algeria, a completelyunexplored and high potential basin according to recent studies.The life span of this exploration license was fixed at fouryears. In March 2007, this operation was approved by the MalianAuthorities.

*Tunisia* Eni has been present in Tunisia since 1961. Itsmain producing interests are in the el Borma oil field and in theoil and gas Hammouda and Oued Zar fields, operated by Eni with a50% interest. In 2006 Eni produced 14 KBOE/day.

Main discoveries for the year were in: (a) Larish concession(Eni’s interest 50%), the Larish SE-1 well found oil at adepth of about 3,000 meters and was linked to existing productionfacilities; (b) Adam concession (Eni operator with a 25%interest), the Karma-1 well showed an oil formation at a depth of3,617 meters, which confirmed it as a high potential basin; and(c) in Bordj el Kadra concession (Eni operator with a 50%interest), the Nakhil-1 discovery well showed the presence ofhigh quality oil at a depth of approximately 4,000 meters.

In the medium-term production is expected to increase above 20KBOE/d with the start up of the offshore fields Maamoura andBaraka.

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> 
*West Africa*

Eni’s operations in West Africa are conducted in Angola,Congo and Nigeria. In 2006, West Africa accounted for 21% ofEni’s total worldwide production of hydrocarbons.

*Angola* Eni has been present in Angola since 1980. In2006 Eni’s oil production averaged 151 KBOE/d. Eni’sactivities are concentrated in the conventional and deepoffshore.

The main blocks in which Eni holds an interest are: (i) Block0 in Cabinda (Eni’s interest 9.8%) West of the Angolancoast; (ii) Block 14 (Eni’s interest 20%) in the deepoffshore West of Block 0; and (iii) Block 15 (Eni’s interest20%) in the deep offshore of the Congo basin. Eni also holdsinterests in other minor concessions, in particular in some areasof Block 3 (with interests varying from 12 to 15%). In theexploration phase, Eni holds interests in the 14K/A IMI Unit Areaand in Block 3/05-A with an 11.5% and a 12% interest,respectively. In May 2006, following an international bidprocedure, Eni was awarded the role of operator in theexploration license of offshore Block 15/06 (Eni’s interest35%). This Block covers a gross acreage of approximately 3,000square kilometers. The exploration plan envisages drilling ofeight wells during a five-year period and an option for extendingthe license period over a further three-year period and thedrilling of three additional wells. In November 2006, Eni signedthe relevant Production Sharing Contract (PSC) with the State oilcompany Sonangol. Exploration and production activities in Angolaare regulated by concessions and PSAs.

On April 2, 2007 Eni and Sonangol signed a Memorandum ofUnderstanding for the acquisition of a 13.6% stake in Angola LNGLtd Consortium (A-LNG). This company is responsible for theconstruction of an LNG plant in Soyo, 300 km North Luanda, with ayearly capacity of 5 mmtonnes. This project has been approved bythe Angolan Government and Parliament. It envisages thedevelopment of 7,770 BCF of gas, the production of 128 mmtonnesof LNG, 104 mmBBL of condensate and 257 mmBBL of LPG along a28-year period. The LNG is planned to be re-gasified at thePascagoula plant on the coast of the Gulf of Mexico for deliveryto the United States market. Following this agreement, Eni plansto acquire a share of the re-gasification capacity of this plantcorresponding to 177 BCF/y.

In 2006, production started at Benguela/Belize andLobito/Tomboco fields in Block 14 (Eni’s interest 20%), inJanuary and June, respectively. Joint development of these fieldswas carried out by installing a compliant piled tower providedwith treatment facilities for Benguela/Belize and an underwaterconnection to this tower for Lobito/Tomboco. Production isexpected to peak at 158 KBBL/d (20 net to Eni) in 2009 uponcompletion of the drilling program.

Development of the Banzala oil field in Block 0 in Cabinda(Eni’s interest 9.8%) moved forward with the installation ofa production platform and drilling of producing and waterinjection wells. Production is expected to start in the firstquarter of 2007 and to peak at 27 KBBL/d (3 net to Eni) in 2009.

An intense campaign to develop reserves in Block 15(Eni’s interest 20%) is underway: (i) in March 2006,development of the Mondo and Saxi/Batuque oil fields started aspart of Phase C of the development of reserves in the Kizombadeep offshore area. A common development strategy is expected tobe deployed in both projects, envisaging the installation of anFPSO vessel. Production is expected to start in the first quarterand in second quarter of 2008, respectively. Peak production at100 KBBL/d (18 net to Eni) is expected in both projects in 2009;and (ii) in December 2006, development of the Marimba oil fieldstarted with the drilling of producing wells which will beconnected to existing facilities in Kizomba A. Peak production isexpected in 2008 at 39 KBOE/d (7 net to Eni).

Development activities at the Landana and Tombua oil fields inBlock 14 offshore (Eni’s interest 20%) progressed with thedrilling of producing wells, one of which has already beenstarted up in June 2006. A few production wells, one of which wasstarted up in June 2006 shall be linked to existing facilities atBenguele/Belize-Lobito/Tomboco. Peak production at 130 KBBL/d (22net to Eni) is expected in 2010.

Main discoveries for the year were: (a) the developmentconcessions deriving from former Block 15 (Eni’s interest20%), the Tchihumba 2 appraisal well confirmed the presence ofoil at a depth of about 3,000 meters; (b) Block 14K/A IMIunit (Eni’s interest 11.5%), where the Lianzi discovery wasmade, appraisal activities conducted in the area confirmed thepresence of hydrocarbon layers at a depth over 3,000 meters; and(c) offshore Block 14 (Eni’s interest 20%), the Lucapa 1discovery well found oil and natural gas at a depth of about1,200 meters.

In the medium-term, management expects to increase Eni’sproduction to approximately 160 KBBL/d reflecting contributionsfrom ongoing development projects, despite the production declineof mature fields.

*Congo* Eni has been present in Congo since 1968 and itsactivities are concentrated in the conventional and deep offshorefacing Pointe Noire. In 2006 production averaged 65 KBOE/d net toEni, mainly comprised of oil production. Exploration andproduction activities in Congo are regulated by PSA.

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Eni’s principal oil producing interests operated in Congoare the Zatchi (Eni’s interest 65%) and Loango (Eni’sinterest 50%) fields and Blocks Marine VI (Eni’s interest65%) and VII (Eni’s interest 35.75%). Eni holds a 35%interest in the Pointe Noire Grand Fonde and Pex permits. Enialso holds interests in the two deep offshore blocks Mer TrèsProfonde Nord (Eni operator with a 40% interest) and Mer TrèsProfonde Sud (Eni’s interest 30%), and in the Block Marine X(Eni operator with a 90% interest).

In May 2006 Eni signed a Protocole d’accord aimed atexploiting the gas mineral potential of the Marine XII permit forfeeding a high yield power station. In April 2007 the AssignmentAgreement for the exploration license Marine XII has attributedEni the role of operator with a 90% interest.

In February 2007 Eni concluded an agreement with the Indiancompany ONGC Videsh whereby exploration interests in India andCongo were exchanged. Following this transaction Eni acquired a34% interest in block MN-DWN-2002/1 with high mineral potentialin the Indian offshore at a water depth of 2,000 meters with atotal acreage of 10,000 square kilometers and will give to itspartner a 20% interest in the Mer Très Profonde Nord permit (Enioperator with a 40% interest) offshore Congo.

In June 2006, the offshore Litanzi field in the Pex permitstarted production, peaking at 4 KBOE/d (1.4 net to Eni).Development activities at the Awa Palouku and Ikalou-Ikalou Sudfield are underway. Production is expected to start in 2008peaking at 12 KBOE/d net to Eni in 2009.

Exploration yielded positive results in the Mer Très ProfondeSud permit with the Aurige Nord Marine discovery that yieldedapproximately 5 KBOE/d in test production.

In the medium-term, management expects to increase Eni’sproduction to approximately 100 KBBL/d due to the contributionfrom recently acquired assets.

*Nigeria* Eni has been present in Nigeria since 1962 andits activities are concentrated in the onshore and offshore ofthe Niger Delta. In 2006, Eni’s oil and gas productionaveraged 147 KBOE/d. In the development/production phase Eni isoperator in 4 onshore Oil Mining Leases (OMLs) 60, 61, 62 and 63(Eni’s interest 20%) and in OML 125 (Eni’s interest50.19%), OMLs 120-121 (Eni’s interest 40%) and OML 118(Eni’s interest 12.5%) offshore. It also holds a servicecontract for the offshore OMLs 119 and 116. Through the SPDC oiljoint venture, Eni holds a 5% interest in 31 onshore blocks and a12.86% interest in 5 conventional offshore blocks. In theexploration phase Eni is operator of the offshore Oil ProspectingLicense (OPL) 244 (Eni’s interest 60%), OML 134 (former OPL211 - Eni’s interest 50.19%) and OML 135 (former OPL 219 -Eni’s interest 12.5%) and the onshore OPL 282 (Eni’sinterest 90%).

In March 2007, Eni obtained the role of operator with a 48%interest in the onshore OPL 135. The exploration plan envisagesresearch for and development of oil and natural gas reserves inthe proximity of existing facilities at the Kwale/Okpai powerstation where Eni is operator.

Exploration and production activities in Nigeria are regulatedby service contracts and PSCs.

The Forcados/Yokri oil and gas fields (Eni’s interest 5%)are currently under development offshore and onshore in the NigerDelta. Development is expected to be completed in 2007 as a partof an integrated project aiming at providing natural gas suppliesto the Bonny liquefaction plant. Offshore production facilitieshave been installed. The onshore project provides for theupgrading of the Okri and North/South Bank flowstations and theconstruction of a gas compressor plant.

Eni holds a 10.4% interest in Nigeria LNG Ltd which managesthe liquefaction plant located on Bonny Island, in the Easternpart of the Niger Delta, with a treatment capacity ofapproximately 812 BCF/y of feed gas corresponding to a productionof 17 mmtonnes/y of LNG on 5 trains. A sixth train is underconstruction with a treatment capacity of 4.1 mmtonnes/y,expected to start operations by the end 2007. Engineeringactivities of a seventh train are underway. When fullyoperational, this plant is expected to have a capacity of 30mmtonnes/y of LNG corresponding to about 1,448 BCF/y of feed gas.Natural gas supplies to the plant (first six trains) will beprovided under a gas supply agreement with a 20 year term.Production volumes will come from the SPDC joint venture and OMLs60, 61, 62 and 63. When fully operational, supplies will totalapproximately 3,461 mmCF/d (268 net to Eni, corresponding toapproximately 46 KBOE). LNG production is sold under long-termcontracts and exported by the Bonny Gas transport fleet, whollyowned by the Nigeria LNG Co. This fleet is composed of 18 tankerships and will be upgraded with 5 new units for the transport ofproduction from train 6.

Front end engineering activities to build a new LNG plant atBrass, with liquefaction capacity of 10 mmtonnes/y on two trains,are underway. Project sanction is expected in 2008, with start upexpected in 2011. Approximately 50% of feed gas to this plant isexpected to be secured from developing certain nearby fields.

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Several successful appraisal wells were drilled in the year:(a) in OML 118 offshore block (Eni’s interest 12.5%) withthe Bonga North 2 well, drilled at a depth of 3,560 meters; (b)in OML 120 offshore block (Eni’s interest 40%) with the Oyo2 Dir well, drilled at a depth of 1,700 meters; (c) in OPL 219block (Eni’s interest 12.5%), with the Bolia 4 well drilledat a depth of 3,600 meters; and (d) in the OML 28 (Eni’sinterest 5%) with the Kolo Creek 39 well.

In the medium-term, management expects to increase Eni’sproduction in Nigeria to approximately 200 KBOE/d reflectingparticularly the development of gas reserves.

> 
*North Sea*

Eni’s operations in the North Sea area are conducted inNorway and the United Kingdom. In 2006, the North Sea accountedfor 16% of Eni’s total worldwide production of hydrocarbons.

*Norway* Eni has been operating in Norway since 1965.Eni’s activities are conducted in the Norwegian Sea, in theNorwegian section of the North Sea and in the Barents Sea.Eni’s production in Norway amounted to 138 KBOE/d in 2006.

Eni holds interests in 4 production licenses in the Norwegiansection of the North Sea. The main producing field is Ekofisk(Eni’s interest 12.39%) in PL018 containing mainly oil,which in 2006 accounted for 37% of Eni’s production inNorway. In 2006 initiatives were executed to support and optimizeproduction, in particular two further stretches of pipes werelaid that will start operations in 2007.

Eni holds interests in 6 production areas in the NorwegianSea. The main producing fields are Aasgard (Eni’s interest14.82%), Kristin (Eni’s interest 8.25%), Heidrun (Eni’sinterest 5.12%), Mikkel (Eni’s interest 14.9%) and Norne(Eni’s interest 6.9%) which accounted for 63% of Eni’sproduction in Norway. Drilling program of Kristin field isongoing and, after this intervention, production is expected toreach 218 KBOE/d (18 net to Eni) in 2007.

Currently Eni is only performing exploration activities in theBarents Sea. Operations in this area are focused on the appraisalof the mineral potential of the large Goliath discovery made in2000 at a water depth of 370 meters in PL 229 aimed at itscommercial development.

In February 2006, following an international bid procedure,Eni was awarded offshore Block 6607/11-122D (Eni’s interest20%) in the Halten Terrace basin, near the Marulk discovery whichis operated by Eni with 20% interest.

In March 2006, following an international bid procedure, Eniwas awarded offshore Blocks 7124/6, 7125/4 and 7125/5 in theProspecting License 393 (Eni’s interest 30%), covering agross acreage of 525 square kilometers, in the Barents Sea.Exploration plans envisage the drilling of a well in the firstthree years of the license.

In September 2006, Eni purchased further interests in twoexploration licenses off the coast of Norway: (i) in theProspecting License 221 (Eni’s interest 30%) where theVictoria gas discovery is located, representing a technologicalchallenge due to the high pressure and high temperatureconditions of the reservoir; and (ii) in the Prospecting License264 (Eni’s interest 40%) where the Hvitveis gas discovery islocated.

In January 2007, following an international bid procedure, Eniwas awarded offshore Block 6506/9-6507/7 (Eni’s interest30%).

Ongoing development activities are focused primarily onhydrocarbon bearing structures located near the Kristin field(Eni’s interest 8.25%). Development of the Tyrihans field(Eni’s interest 6.23%) is expected to be profitable throughsynergies with the Kristin production facilities. In July, thedevelopment plan was sanctioned; relevant contracts for buildinginfrastructure and production facilities are being awarded.Production is expected to start in 2009, in coincidence with theexpected production decline of Kristin which will make sparecapacity available to process production from Tyrihans.

Main discoveries for the year were: (a) in the ProspectingLicense 229 (Eni operator with a 65% interest), three appraisalwells of the Goliath discovery confirmed the presence ofhydrocarbons at a depth between 1,000 and 1,850 meters; (b) inthe Prospecting License 128 (Eni’s interest 11.5%), a gasformation was discovered at a depth of 3,000 meters; and (c) inthe Prospecting License 134 (Eni’s interest 30%), anappraisal well of the Morvin discovery confirmed the presence ofoil at a depth between 4,600 and 4,900 meters.

*The United Kingdom* Eni has been present in the UnitedKingdom since 1964. Eni’s activities are carried out in theBritish section of the North Sea, in the Irish Sea and in someareas East and West of the Shetland Islands. In 2006 Eni’snet production of hydrocarbons averaged 137 KBOE/d. Explorationand production activities in the United Kingdom are regulated byconcession contracts.

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Eni holds interests in 12 production areas in the Britishsection of the North Sea. The main fields are Elgin/Franklin(21.87%), the J-Block (33%), the Flotta Catchment Area (20%),Andrew (16.2%) and Farragon (30%) which in 2006 accounted for 57%of Eni’s production in the United Kingdom. In March 2006,production started at the offshore gas and condensate Glenelgfield (Eni’s interest 8%), developed by means of thefacilities of the nearby Elgin/Franklin production platform.Glenelg 2006 production has been 12 KBOE/d (1 net to Eni). Otheractions in the year concerned optimization of producing fields,in particular MacCulloch, Elgin/Franklin and J-Block through thedrilling of additional wells and work over actions for supportingproduction levels.

Eni holds interests in 5 production blocks in the LiverpoolBay area (Eni’s interest 53.9%) in the Eastern section ofthe Irish Sea. Main fields are Douglas, Hamilton and Lennox,which in 2006 accounted for 25% of Eni’s production in thiscountry.

Eni holds interests in 6 production permits located East ofthe Shetland Islands. Main fields are Ninian (Eni’s interest12.94%) and Magnus (Eni’s interest 5%) which in 2006accounted for 4% of Eni’s production in the United Kingdom.In 2006 maintenance and optimization actions were performed withthe upgrade of the Ninian facility and the drilling of additionalwells on Magnus.

The main project underway concerns the development of thereserves in the Blane field in Block 30/3a (Eni’s interest18%). This project contemplates the drilling of 3 sub sea wells(2 production and 1 water injection) and a linkage to existingtreatment facilities. Associated gas will be reinjected in thenearby Ula field reservoir. Start up is expected in the thirdquarter of 2007 with an initial flow of 12 KBOE/d (2.2 net toEni).

Main discoveries for the year were in: (a) the P/011 permit inBlock 30/06a (Eni’s interest 33%) in the central section ofthe North Sea, where an appraisal well was drilled at a depthbetween 4,500 and 5,100 meters confirming the presence ofhydrocarbons; and (b) the P/672 permit in Block 30/02c(Eni’s interest 7%) in the central section of the North Sea,where a discovery of a natural gas and condensate bearing layerwas made at a depth of 5,000 meters; this well has been linked tothe production facilities of the nearby Jade field (Eni’sinterest 7%).

> 
*Rest of the World*

In 2006, Eni’s operations in the rest of the worldaccounted for 18% of its total worldwide production ofhydrocarbons.

*Australia* Eni has been present in Australia since 2001.In 2006 Eni’s net production of oil and natural gas averaged26 KBOE/d. Activities are focused on fields located inconventional offshore. The main production blocks in which Eniholds interests are WA-25-L (Eni operator with a 65% interest)and JPDA 03-13 (Eni’s interest 12.04%), after unitizationwith JPDA/02-12. Eni is operator with a 100% interest in permitsWA-279 P and WA-313-P in the offshore Bonaparte basin, where theBlacktip and Penguin fields are located. In the exploration phaseEni is operator with a 67% interest of BlockWA-328-P and with a100% interest of blocks TP-22, WA-280-P and WA-326-P. Explorationand production activities in Australia are regulated byconcessions, while in the cooperation zone between East Timor andAustralia (JPDA) they are regulated by PSAs.

In June 2006, development started at the offshore Blacktip gasand liquids field (Eni’s interest 100%) located in theWA-279-P Block at a water depth of 50 meters in the Bonapartebasin, South of the Australian coast. This project envisages theinstallation of a production platform approximately 100kilometers from the mainland and construction of an onshoretreatment plant with a capacity of 46 BCF/y. Start up is expectedin January 2009. Under a 25-year agreement signed with the DarwinPower & Water Utility Co, a total amount of 706 BCF ofnatural gas is expected to be supplied with an option for furthervolume increases.

In February 2006, the first shipment of LNG was delivered totwo Japanese operators from the Darwin liquefaction plant with acapacity of 3.5 mmtonnes/y of LNG (equivalent to approximately173 BCF/y of natural gas). This plant is linked by means of a500-kilometer long pipeline to the Bayu Undan gas and condensatesfield located at a water depth of 80 meters in permits JPDA 03-12and JPDA 03-13 within the cooperation zone between Australia andEast Timor (Eni’s interest 12.04%).

Exploration yielded positive results in the offshore BlockWA-25-L with the Woollybutt-5 appraisal well confirmed thepresence of oil at a depth of 2,865 meters.

In the medium-term, management expects to increase Eni’sproduction through ongoing development activities.

*Brazil* In January 2006, following an international bidprocedure, Eni was awarded a six-year exploration license inBlock BM Cal-14, acting as operator. Gross acreage extends overapproximately 700 square kilometers in the deep waters of theCamamu-Almada basin.

In November 2006, following an international bid, Eni wasawarded offshore Block S-M-857 (Eni’s interest 100%),covering a gross acreage of 700 square kilometers, in the deepwaters of the Santos basin. Formal assignation of this block hasnot yet been completed.

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*Croatia*Eni has been present in Croatia since 1999. In2006 Eni’s net production of natural gas averaged 64 mmCF/d.Activities are deployed in the Adriatic offshore facing the cityof Pula. Exploration and production activities in Croatia areregulated by PSA.

Ivana C/K platforms and Ika and Ida fields started productionas part of the development of the natural gas reserves of theIvana concession (Eni’s interest 50%). Production from thesefields is gathered at the Ivana K platform from which is sent tothe Garibaldi K platform to be sold on the Italian market,through a 67-kilometer long pipeline. Production from these fourfields is currently flowing at 152 mmCF/d (49 net to Eni). At theend of 2006, production at the Katarina field started by means oftwo platforms linked to existing transport facilities.

In the offshore Ivana concession the Ana 1 and Vesna 1discovery wells identified the presence of natural gas at a depthbetween 650 and 1,200 meters.

*East Timor* In May 2006 following an international bidprocedure Eni was awarded the operatorship of five explorationlicenses (Eni’s interest 100%) covering contract areas A, B,C, E and H with a gross acreage of about 12,224 square kilometerslocated in the deep offshore between the Timor island and theinternational cooperation zone between East Timor and Australia.Relevant Production Sharing contracts were signed.

*India*Following an international bid procedure Eniobtained an exploration license as operator in BlockRJ-ONN-2003/1 (Eni’s interest 34%) and Block AN-DWN-2003/2(Eni’s interest 40%) located in onshore in Rajasthan in theNorth-West of India and in the Indian Ocean, near the AndamanIslands, respectively. The exploration program for BlockRJ-ONN-2003/1 provides for the drilling of 4 wells in the first 4years of the license. Any hydrocarbons discovered will be soldlocally. The exploration program for Block AN-DWN-2003/2 providesfor the drilling of 3 wells in the first 4 years of the license.The development of any reserves found provides for theinstallation of an FPSO unit for liquid production and offacilities for gas treatment.

In February 2007 Eni concluded an agreement with a partnerwhereby interests in India and Congo were exchanged. Followingthis transaction Eni acquired a 34% interest in blockMN-DWN-2002/1 with high mineral potential in the Indian offshoreat a water depth of 2,000 meters with a total acreage of 10,000square kilometers and will give to its partner a 20% interest inthe Mer Très Profonde Nord permit (Eni operator with a 40%interest) offshore Congo.

*Indonesia*Eni has been present in Indonesia since 2000.Eni’s production in 2006 amounted to 19 KBOE/d. Productionis concentrated in the Western offshore and onshore of Borneo andoffshore Sumatra. Exploration and production activities inIndonesia are regulated by PSA.

Production consists mainly of gas and derives from the SangaSanga permit (Eni’s interest 37.81%). This gas is treated atthe Bontang liquefaction plant, the largest in the world, and isexported to the Japanese, South Korean and Taiwanese markets.Activities are underway for mitigating the natural decline ofproduction by means of infilling wells.

Eni holds interest in 11 exploration blocks, 6 as operatorwith interests ranging from 20% to 100%. An exploration campaignis underway in the Tarakan basin offshore Borneo. In May 2007,Eni successfully completed drilling of the Tulip 1 explorativewell (Eni’s interest 100%), located in water depths of up to800 meters Northeast of Kalimantan Island. This well revealed thepresence of significant oil and gas deposits.

In the same area, Eni (operator with a 66.25% interest) and apartner have also successfully completed an appraisal test of theAster field, previously discovered by the two companies. The testhas shown oil flowing at a maximum rate of over 5 KBBL/d. Eniplans to submit a development plan for the Aster field and startappraising the Tulip discovery. Eni will also assess potentialsynergies that might support a joint development of the twodiscoveries.

*Iran*Eni has been present in Iran since 1957. In 2006production net to Eni averaged 29 KBOE/d. Eni’s activitiesare concentrated in the offshore of the Persian Gulf and onshore.Exploration and production activities in Iran are regulated bybuy-back contracts.

The main producing fields operated by Eni are South Parsphases 4 and 5 (Eni’s interest 60%) in the offshore of thePersian Gulf and Darquain (Eni’s interest 60%) locatedonshore which accounted for 89% of Eni’s production in Iranin 2006. In 2006 the onshore gas treatment plant of South Parswas completed with a current production of 609 BCF/y of naturalgas, 1 mmtonnes/y of LPG and 30 mmBBL/y of condensates.Production platforms are linked to the Assaluyeh treatment centerby means of two 105-kilometer long pipelines. Eni also holdsinterests in the Dorood (45%) and Balal (45%) oil fields.

The development activities in 2006 concerned the seconddevelopment phase of the Darquain field mainly related to thedrilling of additional wells, the increase of the existingtreatment capacity and the injection of gas in the field. Theseactions aim at increasing production from the present 50 KBBL/dto over 160 KBBL/d (14 net to Eni).

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*Kazakhstan* Eni has been present in Kazakhstan since1992. Eni is the single operator of the North Caspian Sea PSAwith a participating interest equal to 18.52%. Such contractregulates activity in the relevant contractual area where theKashagan field was discovered in year 2000. Management believesthis field to contain large amount of hydrocarbons. Thedevelopment plan of this field was sanctioned in February 2004,entailing a three-phase development scheme which includes partialgas re-injection in the reservoir to support the recovery factorof the oil.

The first development phase is progressing and is leveragingon the use of the most advanced techniques in order to cope withhigh pressures in the reservoir, high concentrations of hydrogensulfide in the hydrocarbons and harsh environmental conditions inthe offshore of the Caspian Sea. By the end of 2006, the totalamount of contracts awarded stood at $10.6 billion. Drilling andcompletion activities of development wells have been progressingfrom the two artificial islands already built and where threerigs, two of which being of the most advanced class, areinstalled. Three development wells were completed in 2006yielding high productivity rates during the test phase.

Production start up is currently scheduled for the thirdquarter of 2010, as compared to the previous forecast indicatinga start up in 2008. This re-scheduling is also due to studiesperformed by the Operator aimed at identifying measures toenhance operability and safety standards of the facilities. Thesestudies, which were completed by year-end, have confirmed theoriginal development concept and identified scope for enhancementto the design of the offshore facilities. These enhancements willbe included in the development plan and implemented. The capitalexpenditures necessary to arrive at the 300 KBBL/d productiontarget for this phase of the project, are estimated to be $19billion. The increase over the approved budget of $10.3 billion(real terms 2007) is driven by: (i) the cost pressure theoil industry is facing worldwide (i.e. the cost escalation ofmaterials and service and the negative impact of changes to theexchange rate); (ii) an original underestimation of the costs toconduct offshore operations in the North Caspian Sea due to theabsence of a reliable benchmark for a frontier project having thecomplexity, the technical challenges and the environmentalconstraints of Kashagan; and (iii) the enhancements to theoriginal layout of the offshore facilities. The high productivitytested on the first three development wells, as well as otherdata gathered since the beginning of the project, justifyexpectations for a full field production plateau of 1.5 mmBBL/d,representing a 25% increase above the original plateau aspresented in the sanctioned development plan.

The capital expenditures indicated above do not include thecosts related to the infrastructures needed for exporting theproduction to international markets, for which various optionsare under scrutiny by the consortium. These include: (i) the useof existing infrastructure, such as the Caspian PipelineConsortium pipeline (Eni’s interest 2%) and theAtyrau-Samara pipeline; and (ii) the construction of a newtransportation system. In this respect, it is worth mentioningthe project aimed at building a line connecting the onshoreBolashak production center with the Baku-Tbilisi-Cehyan pipeline(where Eni’s holds an interest of 5% corresponding to theright to transport 50 KBBL/d) and the construction of a pipelineto bypass the Turkish Straits of the Bosphorus and Dardanelles,enabling the delivery of the oil produced in the Caspian regioninto the Ceyhan commercial hub on the Mediterranean coast (seeTurkey below).

Evaluation activities of the discoveries made in the contractarea of the North Caspian Sea PSA made some good progress. Afirst appraisal well on the Kairan discovery was successfullydrilled. Drilling of a second appraisal well on the Kalamkasdiscovery yielded results that underline the good productivity ofthe reservoir and indicate that the size of the discovery islarger than previously estimated.

At the Karachaganak field (Eni co-operator with a 32.5%participating interest), the good well productivity and the highplant performance allowed to produce an average of 64 KBBL/d ofliquids (of which some 44.3 KBBL/d were transported to theWestern markets via the CPC pipeline and the Atyrau-Samara) andsell approximately 78 BCF/y of natural gas, net to Eni, for atotal of 103 KBOE/d, net to Eni.

The main activities carried out in 2006 were: (i) the sanctionof an expansion in the processing capacity (a fourth train) whichwill enable to increase the volumes of stabilized liquidsexported to Western markets; and (ii) the continuation of thoseactivities (mainly drilling of additional wells) which arenecessary to maintain the production plateau.

Studies are ongoing to implement a further development phaseof the Karachaganak field, Phase 3, aimed at producing additionalvolumes of gas and associated liquids. In this context, on June1, 2007, the Karachaganak Petroleum Operating BV (KPO) andKazRosGaz, a joint company established by KazMunaiGaz andGazprom, signed a gas sale contract. According to the terms ofthis agreement, which is subject to approvals of the KarachaganakShareholders, the consortium will deliver, from 2012, about 16BCM/y (565 BCF/y) of raw gas to the Orenburg plant, in Russia,where it will be further processed and sweetened. This agreementcreates the conditions for the start up of Phase 3 of theproject.

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In the medium-term, Eni’s production in Kazakhstan isexpected to increase due to the contribution of the incrementalgas volumes produced at Karachaganak and the start up ofKashagan.

*Mozambique* In March 2006, following an internationalbid tender, Eni obtained the exploration license for Area 4,located in the deep offshore of the Rovum Basin 2,000 kilometersNorth of Maputo. The block covers an area of 17,646 squarekilometers in an unexplored geological basin which we believe hassignificant mineral potential, according to surveys performed.

*Pakistan* Eni has been present in Pakistan since 2000.In 2006 production net to Eni averaged 50 KBOE/d. Eni’s mainpermits are Bhit (Eni operator wit a 40% interest), Sawan(23.68%) and Zamzama (17.75%), which in 2006 accounted for 86% ofEni’s production in Pakistan.

In February 2006 following an international bid procedure, Eniwas awarded the operatorship of four exploration licensesrelating to Block Rjar/Mithi - zone I and Thar/Umarkot - zoneIII. These blocks are located in the East Sindh near the borderwith India and cover a gross area of about 9,900 squarekilometers.

In March 2006, an expansion plan of the Bhit and Badhraoperated permits was sanctioned, envisaging the construction of athird train for increasing treatment capacity of the Bhit plantalso enabling to process Badhra field gas production. In theZamzama field construction of a new treatment plant is underway.

Up to June 2007, three gas discoveries were made in: (i) theexploration permit Gambat (Eni’s interest 30%) with theTajial 1 exploration well, at a depth of 3,845 meters; (ii) theproduction permit Kadanwari (Eni operator with a 18.42% interest)with the Kadanwari 18 well, at a depth of 3,400 meters in a rockformation independent from the main field; and (iii) the Latiffield (Eni’s interst 33.3%) with the Latif 1 explorationwell, at a depth of 3,520 meters. Eni plans to develop thesediscoveries leveraging on the existing facilities in place.

*Saudi Arabia* Eni has been present in Saudi Arabia since2004. Ongoing activities concern exploration of the C area inorder to discover and develop gas reserves. This license covering51,687 square kilometers (25,844 net to Eni) is located in theRub al Khali basin at the border with Qatar and the United ArabEmirates. The exploration plan provides for the drilling of 4wells in five years. In case of a commercial discovery, thecontract will last 25 years with a possible extension to amaximum of 40 years. Any gas discovered will be sold locally forpower generation and as feedstock for petrochemical plants.Condensates and NGL will be sold on international markets.Drilling of the first commitment well is underway.

*Turkey* The construction license for the Samsun-Ceyhanpipeline was granted to the Turkish company Çalik Enerji,partner of Eni in this initiative with a 50% stake in June 2006.The pipeline, the engineering activities of which started insecond half of 2006, will allow to bypass the Turkish Straits ofBosphorus and Dardanelles, thus enabling the oil produced in theCaspian region to be delivered to the Ceyhan commercial hub,located on the Mediterranean coast, in a more efficient andenvironmentally friendly fashion. This new infrastructure, with alength of 550 kilometers, will have an initial transportationcapacity equal to 1 mmBBL/d of oil, expandable up to 1.5 mmBBL/d.

*United States* Eni has been present in the United Statessince 1966. In 2006 Eni’s oil production averaged 32 KBOE/d.Activities are performed in the conventional and deep offshore inthe Gulf of Mexico and onshore and offshore Alaska. Explorationand production activities in the United States are regulated byconcessions.

Eni holds interests in 24 production blocks in the Gulf ofMexico. The main fields are Allegheny (Eni operator with an 86%interest), Medusa (Eni’s interest 22%), Europa (Eni’sinterest 28%), King Kong (Eni operator with a 49% interest), EastBreaks (Eni operator with an 84% interest) and Morphet (Enioperator with an 84% interest). These fields accounted for 81% ofEni’s 2006 production in the country. In 2006 the AlleghenySouth (Eni’s interest 100%) and North Black Widow(Eni’s interest 25.19%) fields have been started-up.

Eni’s activities in Alaska are currently in theexploration and development phase. In November 2006, Eni startedan exploration campaign in the onshore Rock Flour area(Eni’s interest 100%). The approved plan provides for thedrilling of three wells.

In March 2006, following an international bid procedure, Eniwas awarded 11 exploration blocks near Rock Flour.

Eni signed an agreement with a partner for a swap of interestsin 64 exploration blocks (Eni’s interest 60%) located in theBeaufort Sea, offshore North Alaska. Based on this agreement, Eniis entitled to 140 exploration blocks (50% of which operated).Exploration plans provide for 3D seismic surveys and drilling ofan exploration well by 2010.

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In January 2006, the development plan of the offshore Ooogurukfield in the Beaufort Sea started. Production is expected tostart at the end of 2007 with production peaking at 17 KBOE/d(over 5 net to Eni) in 2010. Drilling activities are underway inNikaitchuq field (Eni’s interest 100%), located in theBeaufort Sea.

Main discoveries for the year were: (a) in Mississippi CanyonBlock 546 (Eni’s interest 50%), the Longhorn appraisal wellconfirmed the presence of natural gas at a depth of about 3,900meters; and (b) in Mississippi Canyon Block 502 (Eni’sinterest 100%), the Longhorn North discovery well showed thepresence of natural gas at a depth of 3,400 meters. A feasibilitystudy to develop this discovery is underway.

Management expects production in the United States to growsignificantly from current levels due to the contribution ofrecently acquired assets in the Gulf of Mexico and Alaska andongoing development activities.

*Venezuela* Eni has been present in Venezuela since 1998.In January 2006, following an international bid procedure, Eniwas awarded a thirty year long exploration license for the CardonIV Block (Eni’s interest 50%) in joint venture with aninternational oil company. This Block is part of the RafaelUrdaneta project for the development of natural gas reserves inan area of about 30,000 square kilometers in the Gulf ofVenezuela.

With effective date April 1, 2006, the Venezuelan State oilcompany Petróleos de Venezuela SA (PDVSA) unilaterallyterminated the Operating Service Agreement (OSA) governingactivities at the Dación oil field where Eni acted as acontractor, holding a 100% working interest. As a consequence,starting on the same day, operations at the Dación oil field areconducted by PDVSA. Eni proposed to PDVSA to agree on terms inorder to recover the fair value of its Dación assets. In thelack of any agreement between the parties, in November 2006, Enicommenced an arbitration proceeding before an InternationalCentre for Settlement of Investment Disputes (ICSID) Tribunal(i.e. a tribunal acting under the auspices of the ICSIDConvention and being competent pursuant to theNetherlands-Venezuela bilateral investments treaty) to claim itsrights. Despite this action, Eni would continue to consider anegotiated solution with PDVSA to obtain a fair compensation forits assets. Based on the opinion of its legal consultants, Enibelieves to be entitled to a compensation for such expropriationin an amount equal to the market value of the OSA before theexpropriation took place. The market value of the OSA dependsupon its expected profits. In accordance with establishedinternational practice, Eni has calculated the OSA’s marketvalue using the discounted cash flow method, based on Eni’sinterest in the expected future hydrocarbon production andassociated capital expenditures and operating costs, and applyingto the projected cash flow a discount rate reflecting Eni’scost of capital as well as the specific risk of concernedactivities. Independent evaluations carried out by a primarypetroleum consulting firm fully support Eni’s internalevaluation. The estimated net present value of Eni’sinterest in the Dación field, as calculated by Eni, would not belower than the net book value of the Dación assets whichconsequently have not been impaired. In accordance with the ICSIDConvention, a judgment by the ICSID Tribunal awardingcompensation to Eni would be binding upon the parties andimmediately enforceable as if it were a final judgment of a courtof each of the States that have ratified the ICSID Convention.The ICSID Convention was ratified in 143 States. Accordingly, ifVenezuela fails to comply with the award and to pay thecompensation, Eni could take steps to enforce the award againstcommercial assets of the Venezuelan Government almost anywherethose may be located (subject to national law provisions onsovereign immunity). In 2005 and in the first quarter of 2006,oil production from the Dación field averaged approximately 60KBBL/d and booked reserves at December 31, 2005 amounted to 175mmBBL.

On February 26, 2007, the President of Venezuela enacted adecree providing for the transformation of certain strategicpartnerships operating in the petroleum region of Orinoco (Faja)and certain agreements to conduct risk shared explorationactivities into a regime of "empresa mixta" within sixmonths from publication of said decree. Under the new regime, acompany incorporated under the law of Venezuela is expected to beentitled to relevant mineral rights and to conduct petroleumoperations. A stake of at least 60% in the capital of suchcompany is expected to be held by an affiliate of PDVSA,preferably Corporación Venezuelana de Petróleo. Such decreecould impact Eni’s activities in Venezuela, as Eni’ssubsidiary Eni Venezuela BV holds a 26% stake in a joint venturein the Gulf of Paria West Block, located in the Orinoco delta.This joint venture is currently developing the Corocoro fieldwith expected start up in 2007.

 

> 
***Capital Expenditure***

See "Item 5 – Liquidity and Capital Resources –Capital Expenditure by Segment".

 

> 
***Storage***

Natural gas storage activities are performed by Stoccaggi GasItalia SpA (Stogit) to which such activity was conferred onOctober 31, 2001 by Eni SpA and Snam SpA, in compliance withArticle 21 of Legislative Decree No. 164 of May 23, 2000, whichprovided for the separation of storage from other activities inthe field of natural gas.

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Storage services are provided by Stogit through eight storagefields located in Italy, based on ten storage concessions3vested by the Ministry of Productive Activities.

In 2006, the share of storage capacity used by third partieswas 46%. From the beginning of its operations, Stogit markedlyincreased the number of customers served and the share ofrevenues from third parties; the latter, from an insignificantvalue, passed to 42%.

| **Storage** | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|-------------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|        |          |   |          |   |          |   |          |   |          |

| Available capacity:                                |   |   |   |   |   |   |   |   |   |   |   |   |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| -        modulation and mineral                    |   | (BCM)  |   | 7.1    |   | 7.1    |   | 7.5    |   | 7.5    |   | 8.4    |
|   . share utilized by Eni                |   | (%)    |   | 66     |   | 53     |   | 47     |   | 44     |   | 54     |
| -        strategic                                 |   | (BCM)  |   | 5.1    |   | 5.1    |   | 5.1    |   | 5.1    |   | 5.1    |
| Total customers                                    |   | (No.)  |   | 20     |   | 30     |   | 39     |   | 44     |   | 38     |
| .        modulation and upstream storage customers |   | (No.)  |   | 14     |   | 24     |   | 29     |   | 35     |   | 38     |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

 

**Gas & Power**

Eni Gas & Power segment is engaged in all phases of thegas business: supply, transport, distribution and marketing,resulting in a fully integrated business model. A significantinstalled power generation capacity enables Eni to extractfurther value from gas, diversifying its commercial outlets.

Eni’s strategy in its Gas & Power segment is toincrease natural gas sales in the main European markets,safeguard its domestic natural gas business, and effectivelymanage regulated businesses (transport and distributionactivities in Italy).

Management expects European natural gas demand to increasesteadily in the future, resulting in a cumulative increase ofaround 45% by 2020 (2.4% per annum). This trend, coupled with anexpected decline in Europe’s gas production due to maturefield declines, will make Europe increasingly reliant on gasimports to fulfil its gas needs. Against this backdrop,management plans to grow natural gas sales leveraging onEni’s gas availability under long-term supply contracts andequity gas, access to infrastructure, long-term relationshipswith key producing countries, market knowledge and a wideportfolio of clients. Eni intends to strengthen its presence inmarkets where its presence is already established – such asthe Iberian Peninsula, Germany and Turkey – and to developsales in markets with significant growth and profitabilityprospects (in particular France and the United Kingdom).

In Italy, in an increasingly competitive market, Eni intendsto safeguard selling margins and sales volumes by leveraging onthe expected growth of gas demand, maximizing the value of thegas chain by focusing in particular on the most profitableclients, deploying a commercial offer tailored on client needs interms of pricing and quality of services, and boosted by theexpected development of the combined offer of gas and electricity("dual offer").

In the medium-term, Eni plans to increase worldwide salestargeting a volume of 105 BCM by 2010, corresponding to a 2.5%average growth rate over the 2007-2010 four-year period.

Eni also intends to increase efficiency and effectiveness ofits operations, particularly in the regulated business and todevelop marketing of LNG aiming also at monetizing equityreserves.

*The matters regarding future natural gas demand and salestarget discussed in this section and elsewhere here in areforward-looking statements that involve risks and uncertaintiesthat could cause the actual results to differ materially fromthose in such forward-looking statements. Such risks anduncertainties relating to future natural gas demand includechanges in underlying economic factors, changes in regulation,population growth or shrinkage, changes in the relative mix ofdemand for natural gas and its principal competing fuels, andunexpected developments in the markets for natural gas and itsprincipal competing fuels.*

 

> 
***Demand for Natural Gas in Italy***

In 2006 natural gas demand in Italy totaled 84.4 BCM (down 2.2% from 2005). In 2006, about 13% of natural gas requirements weremet through domestic production, while imports covered 87%. Eniexpects natural gas consumption in Italy to increase with acompound average growth rate of about 2.5% over the next tenyears, hitting approximately 106 BCM in 2015, mainly driven by anincreased use in power generation, the demand growth of which isexpected to outpace demand growth in other sectors, such as largeindustrial users, residential space heating in households andservices, commercial and small businesses needs. Expectedincreased consumption in the electricity generation sectorderives from the significant advantages of the use of natural gasin firing combined cycle plants as compared to other fuels, dueto its lower investment cost, higher yields and reduced pollutingemissions.

_______________

| (3) |   | Two of these        are not yet operational. |
|-----|--------|----------------------------------------------|

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> 
**Supply of natural gas**

In 2006 Eni’s Gas & Power segment purchased 89.27 BCMof natural gas, with a 6.71 BCM increase over 2005, or 8.1%.Natural gas volumes purchased outside Italy (79.06 BCM)represented 89% of total purchases made by fully consolidatedsubsidiaries (87% in 2005) with a 7.23 BCM increase from 2005 (up10.1%).

Major increases in purchased volumes regarded: (i) Libya,reflecting higher volumes of gas from Libyan fields delivered toItaly via the GreenStream gasline (up 2.79 BCM); (ii) theNetherlands (up 1.99 BCM); (iii) volumes purchased in Russia tobe sold on the Turkish market (up 1.21 BCM); and (iv) purchasesof LNG (up 1.01 BCM). In addition, supplies from Croatiaincreased (up 0.43 BCM) due to the ramp-up of new production fromEni-operated natural gas fields in the Adriatic offshore.

Main declines concerned purchases from Algeria (down 0.74 BCM)and extra Europe supplies. Volumes purchased in Italy from bothEni’s Exploration & Production segment and third parties(10.21 BCM) declined by 0.52 BCM, down 4.8%, from 2005 due to aproduction decline of Eni’s natural gas fields.

In 2006, natural gas volumes input to the storage depositsowned by Stoccaggi Gas in Italy and Gaz de France in the Frenchterritory and in Austria were 3.01 BCM, compared to net offtakesof 0.84 BCM in 2005.

The table below sets forth Eni’s purchases of natural gasby source for the periods indicated.

| **Natural        gas supplies** | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|---------------------------------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|                            |          |   |          |   |          |   |          |   |          |

|   |   | **(BCM)** |
|--------|--------|-----------|

| ***Italy***                                               |   | **12.67** |   |   | **12.16** |   |   | **11.30** |   |   | **10.73** |   |   | **10.21** |   |
|-----------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Russia for        Italy                                   |   | 18.62     |   |   | 18.92     |   |   | 20.62     |   |   | 21.03     |   |   | 21.30     |   |
| Russia for Turkey                                         |   |      |   |   | 0.63      |   |   | 1.60      |   |   | 2.47      |   |   | 3.68      |   |
| Algeria                                                   |   | 16.35     |   |   | 16.53     |   |   | 18.86     |   |   | 19.58     |   |   | 18.84     |   |
| the Netherlands                                           |   | 7.55      |   |   | 7.41      |   |   | 8.45      |   |   | 8.29      |   |   | 10.28     |   |
| Norway                                                    |   | 4.83      |   |   | 5.44      |   |   | 5.74      |   |   | 5.78      |   |   | 5.92      |   |
| Hungary                                                   |   | 3.05      |   |   | 3.56      |   |   | 3.56      |   |   | 3.63      |   |   | 3.28      |   |
| Libya                                                     |   |      |   |   |      |   |   | 0.55      |   |   | 3.84      |   |   | 6.63      |   |
| Croatia                                                   |   | 0.31      |   |   | 0.65      |   |   | 0.35      |   |   | 0.43      |   |   | 0.86      |   |
| the United        Kingdom                                 |   | 1.48      |   |   | 1.98      |   |   | 1.76      |   |   | 2.28      |   |   | 2.50      |   |
| Algeria (LNG)                                             |   | 1.92      |   |   | 1.98      |   |   | 1.27      |   |   | 1.45      |   |   | 1.58      |   |
| Others        (LNG)                                       |   | 0.3       |   |   | 0.72      |   |   | 0.70      |   |   | 0.69      |   |   | 1.57      |   |
| Other supplies Europe                                     |   | 0.03      |   |   | 0.04      |   |   | 0.12      |   |   | 1.18      |   |   | 1.85      |   |
| Outside        Europe                                     |   | 0.96      |   |   | 1.14      |   |   | 1.21      |   |   | 1.18      |   |   | 0.77      |   |
| ***Outside Italy***                                       |   | **55.40** |   |   | **59.00** |   |   | **64.79** |   |   | **71.83** |   |   | **79.06** |   |
| **Total        supplies**                                 |   | **68.07** |   |   | **71.16** |   |   | **76.09** |   |   | **82.56** |   |   | **89.27** |   |
| Withdrawals from (input to) storage                       |   | (1.43     | )      |   | 0.84      |   |   | 0.93      |   |   | 0.84      |   |   | (3.01     | )      |
| Network        losses and measurement differences         |   | (0.50     | )      |   | (0.61     | )      |   | (0.53     | )      |   | (0.78     | )      |   | (0.50     | )      |
| **Available for sale of Eni’s own        companies** |   | **66.14** |   |   | **71.39** |   |   | **76.49** |   |   | **82.62** |   |   | **85.76** |   |
| **Available        for sale of Eni’s affiliates**    |   | **2.40**  |   |   | **6.94**  |   |   | **5.84**  |   |   | **7.08**  |   |   | **7.65**  |   |
| **Total available for sale**                              |   | **68.54** |   |   | **78.33** |   |   | **82.33** |   |   | **89.70** |   |   | **93.41** |   |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

In order to meet the medium and long-term demand for naturalgas, in particular in the Italian market, Eni entered intolong-term purchase contracts with producing countries. Followingthe strategic agreement with Gazprom signed on November 14, 2006,effective from February 1, 2007 (see below), Eni extended theduration of its gas supply contracts with Gazprom until 2035,bringing the residual average life of its supply portfolio toapproximately 23 years. Existing contracts, which in generalcontain take-or-pay clauses, will ensure a total of approximately62.4 BCM/y (Russia 23.5, Algeria 21.5, the Netherlands 9.8,Norway 6 and Nigeria LNG 1.6) of natural gas by 2010. Despite thefact that an increasing portion of natural gas volumes purchasedunder said contracts will be sold outside Italy, managementbelieves that in the long-term unfavorable trends in the Italiandemand and supply for natural gas, also due to the possibleimplementation of all publicly announced plans for theconstruction of new supply infrastructure, and the evolution ofthe Italian regulations for the natural gas sector, representrisk factors to the fulfillment of Eni’s obligations inconnection with its take-or-pay supply contracts. See "Item3 – Risk Factors" and "Item 5 – ContractualObligations".

In 2006 Eni purchases under its take-or-pay contracts wereabout 8 BCM more than its minimum off-take obligation, thisfigure refers to off-take in respect of contractual year (Octoberto end of September, rather than January to end of December, fora sizeable part of Eni Gas & Power long-term supplycontracts).

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> 
*Agreement between Eni and Gazprom*

On November 14, 2006, Eni and Gazprom signed a broad strategicagreement. This agreement sets up an international allianceenabling the two companies to launch joint projects in the midand downstream gas, in the upstream and technologicalcooperation. This agreement is a major step towards the securityof energy supply to Italy.

| (i) |   | *Midstream and downstream        gas* The duration of Russian gas supply contracts to        Eni is extended until 2035, confirming that Eni is        presently the world’s single largest customer of        Gazprom. Through this agreement, starting from 2007,        Gazprom is expected to sell increasing volumes of gas        directly in the Italian market, building up to some 3 BCM        in 2010 and to maintain such level in subsequent years        for the duration of said long-term supply contract.        Volumes expected to be sold by Gazprom will be subtracted        from volumes supplied to Eni under the fourth long-term        supply contract. In 2007, Eni expects to reduce its        supplies from Gazprom by 1 BCM, and Gazprom to sell        approximately 1 BCM under this scheme. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)  |   | *Upstream* Eni and        Gazprom have identified major projects (companies and        assets) in Russia and outside Russia that will be jointly        pursued by the two partners.        Eni and Gazprom have agreed to work with each other on an        exclusive basis on these projects, which are expected to        be finalized by the end of 2007. |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (iii) |   | *Technological cooperation        and development* Eni and Gazprom will sign specific        agreements in the following areas:                                                                                                                                                                                                                               |

|   |   | - |   | long-distance gas        transportation. In this sector Eni and Snam Rete Gas will        provide their know-how and expertise, including        proprietary transport technology TAP (high pressure        transmission) for the development of Russia’s gas        transportation system; |
|--------|--------|---|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | - |   | evelopment of LNG projects        for the global gas market.                                                                                                                                                                                                                                     |

 

> 
**Marketing**

> 
***Natural Gas Sales for the Year***

In 2006 Eni’s worldwide gas sales (97.48 BCM, includingown consumption, Eni’s share of sales of affiliates andupstream sales) were up 3.27 BCM from 2005, or approximately 4%,mainly reflecting higher sales in the rest of Europe (up 4.9 BCM,up approximately 16%), higher supplies of natural gas (up 0.59BCM, or 10.6%) to Eni’s wholly-owned subsidiary EniPower forpower generation, offset in part by lower sales by fullyconsolidated subsidiaries in Italy (down 1.53 BCM, or 2.9%).

In an increasingly competitive market, natural gas sales offully consolidated subsidiaries in Italy (50.94 BCM) declined by1.53 BCM from 2005, due mainly to lower sales in the fourthquarter in connection with mild weather conditions.

The Italian market includes three groups of clients:industrial, residential and power generation users; they arefurther grouped as follows: (i) large industrial clients andpower generation utilities directly linked to the national andthe regional natural gas transport networks; (ii) the retailmarket which is composed of residential and commercial clients(households, commercial users, hospital, schools, etc.), andsmall businesses located in urban centers supplied by wholesalersthrough low pressure distribution networks; and (iii)wholesalers, mainly local selling companies and distributors ofnatural gas for automotive use purchasing natural gas to sell itto final clients.

In 2006, major declines were registered in the powergeneration segment (down 0.93 BCM), in sales to wholesalers (down0.51 BCM) and residential and commercial users (down 0.4 BCM).These declines were offset in part by higher sales to theindustrial sector (up 0.26 BCM).

Own consumption4 was 6.13 BCM, up 0.59 BCM or10.6%, reflecting primarily higher supplies to EniPower due tothe coming onstream of new generation capacity.

In 2006 natural gas sales of fully consolidated subsidiariesin the rest of Europe increased by 4.49 BCM to 27.93, or 19.2%,reflecting a growth in: (i) sales under long-term supplycontracts to Italian importers (up 2.57 BCM) for the progressivereaching of full supplies from the Libyan fields operated by Eni;(ii) sales to the Turkish market (up 1.22 BCM); (iii) sales toGermany and Austria (up 0.84 BCM), mainly due to higher volumesto industrial operators and wholesalers; and (iv) sales to France(up 0.42 BCM) relating to higher volumes to industrial operators.These increases were partly offset by a decrease in sales toHungary (down 0.29 BCM) and Northern Europe (down 0.1 BCM).

______________

| (4) |   | In accordance        with Article 19, paragraph 4 of Legislative Decree No.        164/2000, the volumes of natural gas consumed in        operations by a company or its subsidiaries are excluded        from the calculation of ceilings for sales to end        customers and from volumes input into the Italian network        to be sold in Italy. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

37

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##### Table of Contents

Sales of natural gas by Eni’s affiliates in the rest ofEurope, net to Eni and net of Eni’s supplies, amounted to6.88 BCM, up 0.4 BCM, with Unión Fenosa Gas posting the majorincrease, and concerned: (i) GVS (Eni’s interest 50%) with2.94 BCM; (ii) Unión Fenosa Gas (Eni’s interest 50%) with2.17 BCM; and (iii) Galp Energia (Eni’s interest 33.34%)with 1.65 BCM.

Unión Fenosa Gas sold also 0.45 BCM on international markets,in particular Japan (0.27 BCM) and South Korea (0.09 BCM), as newmarket opportunities were captured.

The table below sets forth Eni’s sales of natural gas byprincipal market for the periods indicated.

| **Natural        gas sales** | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|------------------------------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|                         |          |   |          |   |          |   |          |   |          |

|   |   | **(BCM)** |
|--------|--------|-----------|

| ***Italy***(*)                                                       |   | **50.43** |   | **50.86** |   | **50.08** |   | **52.47** |   | **50.94** |
|----------------------------------------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|
| Wholesalers        (distribution companies)                          |   | 17.02     |   | 15.36     |   | 13.87     |   | 12.05     |   | 11.54     |
| Gas release                                                          |   |      |   |      |   | 0.54      |   | 1.95      |   | 2.00      |
| End        customers                                                 |   | 33.41     |   | 35.50     |   | 35.67     |   | 38.47     |   | 37.40     |
| Industries                                                           |   | 14.43     |   | 13.17     |   | 12.39     |   | 13.07     |   | 13.33     |
| Power        generation                                              |   | 12.48     |   | 15.03     |   | 15.92     |   | 17.6      |   | 16.67     |
| Residential                                                          |   | 6.50      |   | 7.30      |   | 7.36      |   | 7.80      |   | 7.40      |
| **Own        consumption**(*)                                        |   | **2.02**  |   | **1.90**  |   | **3.70**  |   | **5.54**  |   | **6.13**  |
| ***Rest of Europe***(*)                                              |   | **12.77** |   | **17.54** |   | **21.54** |   | **23.44** |   | **27.93** |
| ***Outside        Europe***                                          |   | **0.92**  |   | **1.09**  |   | **1.17**  |   | **1.17**  |   | **0.76**  |
| **Total sales to third parties and own        consumption**          |   | **66.14** |   | **71.39** |   | **76.49** |   | **82.62** |   | **85.76** |
| **Sales        of natural gas of Eni’s affiliates**(net to Eni) |   | **2.40**  |   | **6.94**  |   | **5.84**  |   | **7.08**  |   | **7.65**  |
| Italy (*)                                                            |   |      |   |      |   |      |   | 0.07      |   | 0.02      |
| Rest of        Europe (*)                                            |   | 1.93      |   | 6.23      |   | 5.30      |   | 6.47      |   | 6.88      |
| Outside Europe                                                       |   | 0.47      |   | 0.71      |   | 0.54      |   | 0.54      |   | 0.75      |
| **Total        sales and own consumption of G&P**                |   | **68.54** |   | **78.33** |   | **82.33** |   | **89.70** |   | **93.41** |
| Upstream in Europe (a)                                               |   | 4.49      |   | 5.03      |   | 4.70      |   | 4.51      |   | 4.07      |
| **Worldwide        natural gas sales**                               |   | **73.03** |   | **83.36** |   | **87.03** |   | **94.21** |   | **97.48** |
| **Natural gas sales in Europe**                                      |   | **71.64** |   | **81.56** |   | **85.32** |   | **92.50** |   | **95.97** |
| G&P in        Europe (*)                                         |   | 67.15     |   | 76.53     |   | 80.62     |   | 87.99     |   | 91.90     |
| Upstream in Europe (a)                                               |   | 4.49      |   | 5.03      |   | 4.70      |   | 4.51      |   | 4.07      |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

----

| (*) |   | Market        sectors denoted with an asterisk are included within        "G&P in Europe".                                                                                          |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a) |   | Does not        include Eni’s share of sales made by Nigeria LNG        (Eni’s share 10.4%) in Europe amounting to 1.30,        1.31 and 1.55 BCM in 2004, 2005 and 2006, respectively. |

> 
 

***Planned Actions and Sales Target***

In the medium-term Eni plans to grow its sales volumes ofnatural gas in European markets in order to compensate for lowergrowth opportunities on its domestic market due tosector-specific regulation imposing limits to the size of Italiangas operators. In order to achieve its growth targets, Eni willleverage on its strengths represented by gas availability both asequity gas and under long-term purchase contracts, operationalflexibility ensured by the access to a wide-reaching transportnetwork, regasification terminals and logistic assets, a largeportfolio of clients and market knowledge.

 

> 
***(i) Italy***

In the medium-term management will attain compliance withmarket limits imposed by sector-specific regulation, in terms ofboth volumes intake into the national network and sales volumes,through an optimal allocation of Eni’s gas availabilitybetween sales in Italy and in the rest of Europe, and the use ofgas in Eni’s power generation plants, leveraging also on theexpected increase in domestic demand. Eni targets sales volumesof at least 50 BCM in 2010. This target takes account of theexpected increase in competitive pressure due to new suppliescoming on stream on the Italian gas market in view of theimplementation of ongoing upgrading plans of the importinfrastructure to Italy.

In order to support sales in Italy, Eni intends to implement amarketing policy more focused on value creation for its clientsthan in previous years, leveraging on its established know-how onpricing, personalization of services, and brand awareness. Infuture years, Eni’s marketing effort will be supported bydeveloping an integrated offer of gas and electricity ("dualoffer"), targeting mainly the middle and retail markets. Thedual offer is expected to achieve significant synergies from theintegration of processes to acquire and manage clients.

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##### Table of Contents

Eni will devote particular attention to retain clients andincrease their number in the retail market. At the end of 2006Eni had 6.5 million of retailing clients, mainly located in themost important urban centers in Italy. Eni intends to strengthencustomer loyalty in this market segment through value creation interms of excellence of the service offered and the development ofthe dual offer. At the same time, Eni expects to preserve itsselling margins by means of reducing the cost to serve leveragingon the rationalization of its contact channels, streamliningadministrative processes and exploiting economies of scale.

In addition Eni plans to support sales to the Italian retailmarket leveraging on the development of regional alliances withlocal partners as in the case of the project described below.

> 
*Toscana project*

On January 24, 2006, Eni, Italgas (Eni’s interest 100%)and the local authorities partners of Fiorentina Gas SpA(Eni’s interest 51.03%) and Toscana Gas SpA (Eni’sinterest 46.1%) signed a framework agreement for developing analliance in the field of natural gas distribution and sale in theToscana Region.

As a part of the agreement, Toscana Energia SpA (Eni’sinterest 48.72%) was established upon contribution in-kind of thepartners’ stakes in the distribution companies FiorentinaGas and Toscana Gas. The local authorities partners of ToscanaEnergia SpA hold the responsibility for strategic decisions andcontrol, while Eni maintains operating and managementresponsibilities, being the industrial partner of the initiative.In addition, this agreement provides for Fiorentina Gas ClientiSpA (Eni’s interest 100%) to be merged into Toscana GasClienti SpA (Eni’s interest 46.1%, Tuscan municipalities53.9%), resulting in the establishment of a regional sellingcompany under Eni’s control (79.22%), re-named ToscanaEnergia Clienti and boasting 600,000 clients and sale volumes of1.1 BCM/y in 147 Tuscan municipalities. The Italian AntitrustAuthority authorized this transaction on July 20, 2006. Themerger deed was defined on February 22, 2007, effective fromMarch 1, 2007.

 

> 
***(ii) European Markets***

*France* Eni sells natural gas to industrial clients andwholesalers. In 2006, Eni started direct sales of natural gas inthe French market with a new branch in Paris. New industrial andwholesaler clients were acquired; sales for the year hit the 1BCM level. Supplies to the French company EDF ramped up, inexecution of the long-term supply contract signed in July 2005.

Eni is pursuing an aggressive marketing policy to gain marketshare, in particular in the segment of small businesses whichpresents good profitability and development perspectives. In themedium-term, Eni expects to increase its current 1.1 BCM saleslevel at a 47% annual average growth rate, compared to anexpected 3% average growth rate of market consumption, targetingvolumes of approximately 5 BCM in 2010, equal to a 9% marketshare.

*Germany* Eni is present on the German natural gas marketthrough its affiliate GVS (Gasversorgung Süddeutschland GmbH -Eni 50%) which sold approximately 6.4 BCM in 2006, and with adirect commercial structure. In the medium-term, Eni plans tosignificantly increase its sales to the business segment,leveraging on the pursuit of new opportunities arising from theongoing liberalization process and new marketing initiatives. In2006, Eni began to supply the German company Wingas under along-term contract, envisaging 1.2 BCM/y of natural gas. The gasis delivered at Eynatten at the German-Belgian border. Themedium-term objective is to sell more than 7.5 BCM in 2010, equalto a 7% market share.

> 
*Iberian Peninsula*

Management expects gas demand growth in the Iberian Peninsulato outpace the average European demand growth.

*Portugal* Eni operates on the Portuguese market throughits affiliate Galp Energia (Eni’s interest 33.34%) whichsold approximately 5 BCM in 2006 (1.65 BCM being Eni’sshare). In the medium-term, Galp’s sales are expected togrow at an 8% average rate, targeting 6.3 BCM (2.1 Eni’sshare) in 2010.

On March 29, 2006, an eight-year agreement among Galp partnersbecame effective addressing the joint management of the company.Galp partners include Eni, Amorim Energia (a privately heldPortuguese company in which Sonangol, the national oil company ofAngola, holds a minority stake), Rede Electrica Nacional (REN),and Caixa Geral de Depositos (a primary Portuguese financialinstitution). On September 26, 2006, in accordance with theagreement, Galp’s regulated activities comprising a highpressure network, storage sites and a regasification terminallocated in Sines were spun off and divested to REN. REN divestedits shareholding in Galp to Amorim Energia, effective on October18, 2006. On October 24, 2006, the Portuguese State divested partof its stake in Galp through an IPO. At the same time, Galpshares were registered on the national Portuguese stock exchange.The shareholders of Galp post-IPO are: Eni (33.34%), AmorimEnergia (33.34%), the Portuguese State (7.00%), Iberdrola (4%),Caixa (1%) and Setgas (0.04%); floating shares represent 21.28%of the share capital.

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*Spain* Eni operates in the Spanish gas market throughUnión Fenosa Gas (Eni’s interest 50%) engaged in naturalgas supply and sale to final users and to power generationutilities. In 2006 gas sales of Unión Fenosa Gas in Europeamounted to 4.34 BCM (2.17 BCM Eni’s share). Unión FenosaGas is engaged in LNG through an 80% interest in the Damiettaliquefaction plant, on the Egyptian coast (see below), andthrough a 7.36% interest in a liquefaction plant in Oman,completed in 2005; in addition, it holds interests in the Sagunto(Valencia) and el Ferrol (Galicia) regasification plants, with a42.5% (21.25% Eni’s interest) and 18.9% interest (9.45%Eni’s interest), respectively.

Eni targets to increase its sales in the Iberian Peninsulafrom the current 5.2 BCM level to approximately 8.5 BCM by 2010(13% average growth rate), as a result of an increase in bothsales of Unión Fenosa Gas and in direct sales, in particular tothe Spanish power generation segment supplied mainly by LNG fromNigeria.

*UK/Northern Europe* Eni through North Sea Gas &Power unit of its subsidiary Eni UK Ltd sells equity gas producedat Eni’s fields in the North Sea and operates in the maincontinental natural gas hubs (NBP, Zeebrugge, TTF). Eni plans togrow volumes sold on the UK/North European markets from thecurrent 2.64 BCM level to approximately 8 BCM by 2010, with a 32%average annual growth rate. In particular, a significant increaseis expected in spot sales on the Zeebrugge hub (from 0.2 BCM in2006 to 4.2 BCM in 2010). In the UK, gas sales through North SeaGas &Power are expected to grow from 2.5 BCM in 2006 to 3.8BCM in 2010, equal to a 3% market share.

*Turkey* Eni and Gazprom market jointly natural gas tothe Turkish company Botas under a long-term contract. Volumes ofnatural gas are supplied via the Blue Stream transport system(see below), that links the Russian coast (Dzhubga) to theTurkish coast (Samsun) crossing the Black Sea. In 2006 Eni’sshare of sales volumes amounted to 3.68 BCM. Leveraging on theexpected demand growth in Turkey and existing spare capacity inthis pipeline, Eni plans to increase sales up to 6.4 BCM by 2010,equal to an 18% market share. The full transport capacity of thispipeline of 16 BCM/y is expected to be saturated in 2010.

 

> 
**Infrastructure**

Eni owns a wide, integrated network of infrastructures fortransporting, delivering and storing natural gas in Europe whichenables Eni to connect major natural gas producing areas (NorthAfrica, Russia and the North Sea) to European markets. In Italy,Eni owns almost all the national transport network and asignificant portion of local distribution networks for thedelivery of natural gas to residential and commercial users.Availability of regasification capacity in Italy and the IberianPeninsula and storage sites guarantees a high level of operatingflexibility. In order to increase the diversification andreliability of supplies and to cope with expected European demandgrowth, Eni defined an important plan for upgrading its importinfrastructure from Russia, Algeria and Libya, its regasificationcapacity and its national transport and distribution networks.This plan envisages a capital expenditure of approximately euro5.8 billion to be deployed in the next four-year period.

 

> 
***International Transport Activities***

In order to import natural gas to Italy, Eni ownstransportation rights on an international high pressure networkof pipelines extending for approximately 4,300 kilometers. Theselines are connected with Eni’s natural gas transport systemin Italy. A description of the main pipelines is provided below:

| • |   | The TAG pipeline importing        natural gas from Russia is 1,140-kilometer long and is        composed of three lines, each about 380-kilometer long,        with a transport of 31 BCM/y following completion of an        upgrading project started a few years ago to enable the        build-up of Eni’s fourth import contract from        Russia. This pipeline has three compression stations and        transports natural gas from Russia across Austria from        Baumgarten, the delivery point at the border of Austria        and Slovakia, to Tarvisio, entry point into the Italian        natural gas transport system. This pipeline is currently        undergoing an upgrading plan to boost transport capacity        by an additional 6.5 BCM/y to 44 BCM/y, starting        operations in October 2008. Capital expenditure is        estimated at about euro 253 million (94% covered by Eni).        A 3.2 BCM portion of this upgrade has been assigned to        third parties importing natural gas into Italy in        February 2006. Procedures have been started for the        assignment of this upgrade to third parties. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | The TTPC pipeline importing        natural gas from Algeria is 742-kilometer long and is        composed of two lines, each 371-kilometer long, with a        transport capacity of 27 BCM/y and three compression        stations. This pipeline transports natural gas from        Algeria across Tunisia from Oued Saf Saf at the Algerian        border to Cap Bon on the Mediterranean coast where it        links with the TMPC pipeline. This pipeline is currently        undergoing an upgrading plan to boost transport capacity        by an additional 6.5 BCM/y to 33.5 BCM/y, of these 3.2        BCM are expected to entry operations in April 2008 and        3.3 BCM in October 2008. Capital expenditure is estimated        at euro 450 million. The first portion of this transport        upgrade (3.3 BCM) has been assigned to third parties        importing natural gas to Italy. The procedure for the        assignation of the second portion of this upgrading has        finalized in February 2007. The transport capacity of the        downstream TMPC pipeline is already adequate to handle        the upgrade of the TTPC.       |

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| • |   | The TMPC pipeline importing        natural gas from Algeria is 775-kilometer long and is        composed of five lines each 155-kilometer long with a        transport capacity of 33.5 BCM/y. This pipeline crosses        underwater the Sicily Channel from Cap Bon to Mazara del        Vallo in Sicily, the entry point into the Italian natural        gas transport system.    |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | The TENP pipeline importing        natural gas from the Netherlands is 1,000-kilometer long        (two 500-kilometer long lines) with a transport capacity        of 15.5 BCM/y and four compression stations. It        transports natural gas from the Netherlands through        Germany, from the German-Dutch border of Bocholtz to        Wallbach at the German-Swiss border. |

| • |   | The Transitgas pipeline        importing natural gas from the Netherlands and Norway is        291-kilometer long, with one compression station. It        transports natural gas from the Netherlands and from        Norway crossing Switzerland with its 165-kilometer long        main line and a 71-kilometer long doubling line, from        Wallbach where it joins the TENP pipeline to Passo Gries        at the Italian border. It has a transport capacity of        20 BCM/y. A 55-kilometer long line from Rodersdorf        at the French-Swiss border to Lostorf, an interconnection        point with the line coming from Wallbach was built for        the transport of the Norwegian gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | The GreenStream pipeline        importing natural gas from Libya is 550-kilometer long on        a single line. This pipeline has a transport capacity of        8 BCM/y and crosses underwater the Mediterranean Sea from        Mellitah to Gela in Sicily, the entry point into the        Italian natural gas transport system. The pipeline        started operations in October 2004 and transports gas        volumes produced by the Libyan fields of Wafa and Bahr        Essalam operated by Eni (with a 50% interest). In 2006        this pipeline transported 7.7 BCM (Eni share’s is        50%), of which 6.6 BCM is sold to Italian importers under        long-term supply contracts with a 24-year term, targeting        full supplies of 8 BCM/y. The delivery point is Gela in        Sicily the Gas & Power segment purchased a 50% share        of this volumes from Eni’s Exploration &        Production segment and the remaining 50% share from the        Libyan partner National Oil Company under a long-term        supply contract with a 24 year-term. The remaining 1.1        BCM of natural gas were purchased by the Gas & Power        segment on a spot basis. Said volumes available from the        Libyan field production could not be absorbed by the        local market. Production plateau volumes are expected in        2007 at 10 BCM/y, of which 8 BCM/y will be sold to those        Italian third party importers under long-term supply        contracts and remaining 2 BCM/y are expected to be sold        on the Libyan market by the two partners.        An upgrade of the pipeline’s transport capacity from        8 to 11 BCM is planned with an estimated expenditure of        approximately euro 80 million. This new capacity will be        available from 2011 and will enable Eni to monetize        further volumes of natural gas reserves located in Libya        through the sale on the Italian market. |

Eni holds a 50% interest in the Blue Stream underwaterpipeline linking the Russian coast to the Turkish coast of theBlack Sea. Through this pipeline, Eni transports gas volumespurchased in Russia to be sold on the Turkish market. Thispipeline is totally 774-kilometer long with two lines and has atransport capacity of 16 BCM/y. Eni expects to reach full volumessupplies to the Turkish market by 2010. The pipeline includes acompression station at Dzhubga on the Russian coast of the BlackSea, made up of six turbocompressors and six measurement lines aswell as an internally fired power plant.

 

> 
***Italian Transport Network***

Eni, through Snam Rete Gas, a company listed on the ItalianStock Exchange, in which Eni holds a 50.04% interest, owns themajor part of the Italian natural gas transport network as wellas the only regasification terminal operating in Italy. UnderLegislative Decree No. 164/2000 concerning the opening up of thenatural gas market in Italy, transport activities are regulatedby the Authority for Electricity and Gas which determines themethods for calculating tariffs and fixing the return on capitalemployed.

Eni’s Italian natural gas transport system is made up ofa national pipeline network and a regional pipeline network for atotal length of 30,889 kilometers as follows:

| (i)  |   | the national transport        network portion extends for approximately 8,497        kilometers and consists of high pressure trunklines        mainly with a large diameter, which carry natural gas        from the entry points to the system – import lines,        storage sites and main Italian natural gas fields –        to the linking points with the regional transport        network. The national network also includes some        interregional lines reaching important markets; and |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii) |   | the regional transport        network portion extends for approximately 22,410        kilometers and consists of smaller lines enabling the        delivery of natural gas to large industrial complexes,        power stations and local distribution companies of the        various local areas served.                                                                                                                                                                                                        |

In 2006 Eni’s network increased by 177 kilometers due tosome changes to existing lines of national network (87kilometers) and extensions of the regional network (90kilometers).

41

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##### Table of Contents

The major pipelines interconnected with import trunklines thatare part of Eni’s national network are:

| • |   | for natural gas imported        from Algeria: |
|--------|--------|-----------------------------------------------|

|   |   | - |   | two lines with 48/42-inch        diameter, each approximately 1,500-kilometer long,        including the smaller pipe that crosses underwater the        Messina Strait, which links Mazara del Vallo (on the        Southern coast of Sicily) to Minerbio (near Bologna).        This pipeline is undergoing an upgrade with the laying of        a third line with 48 inch diameter that is 328-kilometer        long (of these 272 are already operating). Transport        capacity at the Mazara del Vallo entry point is        approximately 86 mmCM/d; |
|--------|--------|---|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | for natural gas imported        from Libya: |
|--------|--------|---------------------------------------------|

|   |   | - |   | a 36-inch line, 67-kilometer        long linking Gela, the entry point of the GreenStream        underwater pipeline into the national network near Enna        along the import pipeline from Algeria. Transport        capacity at the Gela entry point is approximately 30        mmCM/d; |
|--------|--------|---|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | for natural gas imported        from Russia: |
|--------|--------|----------------------------------------------|

|   |   | - |   | two lines with 42/36/34-inch        diameters extending for a total length of approximately        900 kilometers that are linked to the Austrian network in        Tarvisio and cross the Po Valley reaching Sergnano (near        Cremona) and Minerbio. The pipeline is being upgraded by        the laying of a third 264-kilometer long line with        diameter from 48 to 56 inches; 232 kilometers were        already operating at the end of 2006, from Tarvisio to        Zimella (Verona). The pipeline transport capacity at the        Tarvisio entry point amounts to approximately 101 mmCM/d        plus the transport capacity available at the Gorizia        entry point of approximately 5 mmCM/d; |
|--------|--------|---|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | for natural gas imported        from the Netherlands and Norway: |
|--------|--------|------------------------------------------------------------------|

|   |   | - |   | a 48-inch diameter,        177-kilometer long extending from the Italian border at        Passo Gries (Verbania), point of connection with the        Swiss network, to the node of Mortara, in the Po Valley.        The pipeline transport capacity amounts to 63 mmCM/d; |
|--------|--------|---|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | for natural gas coming from        the Panigaglia LNG terminal: |
|--------|--------|-----------------------------------------------------------------|

|   |   | - |   | one line, with a 30-inch        diameter, 170-kilometer long linking the Panigaglia        terminal to the national network near Parma. The pipeline        transport capacity at the Panigaglia entry point amounts        to 13 mmCM/d. |
|--------|--------|---|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Eni’s system is completed by: (i) 10 compressor stationswith a total power of 758 MW; (ii) 5 marine terminals linkingunderwater pipelines with the on-land network at Mazara delVallo, Messina and Gela in Sicily and Favazzina and Palmi inCalabria for the GreenStream pipeline; and (iii) a control roomof the dispatching system located in San Donato Milanese, whichoversees and monitors the whole network in cooperation withperipheral units. In 2006 the ISO 9001-2000 certification wasconfirmed. Peripheral units are represented by eight districtsmonitoring the network through 55 centers that guaranteeoperation, maintenance and control of the whole system. Each unitis responsible for operations in accordance with technicalspecifications and applicable laws and regulations.

In the next four years Eni plans to carry out capitalexpenditure of approximately euro 4.2 billion aimed at theupgrade of its transport network in view of the expected increasein import capacity (in particular from Russia and Algeria).

In 2006 a total of 87.99 BCM of natural gas were input intothe national network, 65% of which was owned by Eni.

| **Gas        volumes transported**(a) | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|---------------------------------------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|                                  |          |   |          |   |          |   |          |   |          |

|   |   | **(BCM)** |
|--------|--------|-----------|

| **Eni**                               |   | **54.56** |   | **51.74** |   | **52.15** |   | **54.88** |   | **57.09** |
|---------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|
| **On        behalf of third parties** |   | **19.84** |   | **24.63** |   | **28.26** |   | **30.22** |   | **30.90** |
| Enel                                  |   | 8.28      |   | 9.18      |   | 9.25      |   | 9.90      |   | 9.67      |
| Edison Gas                            |   | 5.34      |   | 7.49      |   | 8.00      |   | 7.78      |   | 8.80      |
| Others                                |   | 6.22      |   | 7.96      |   | 11.01     |   | 12.54     |   | 12.43     |
| **Total**                             |   | **74.40** |   | **76.37** |   | **80.41** |   | **85.1**  |   | **87.99** |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

----

| (a) |   | Include        amounts destined to domestic storage. |
|-----|--------|------------------------------------------------------|

 

> 
***Distribution Activity***

Distribution involves the delivery of natural gas toresidential and commercial consumers in urban centers through lowpressure networks. Eni, through its 100% subsidiary Italgas andother subsidiaries, is engaged in the distribution activity inItaly serving 1,317 municipalities through a low pressure networkconsisting of approximately 49,000 kilometers of pipelinessupplying 5.6 million customers.

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Under Legislative Decree No. 164/2000 concerning the openingup of the natural gas market in Italy, distribution activitiesare regulated by the Authority for Electricity and Gas whichdetermines the methods for calculating tariffs and fixing thereturn on capital employed. This makes distribution a low riskbusiness capable of delivering stable performance in the longperiod. The management of networks is entrusted to natural gascompanies by local Authorities exclusively under bid procedures.Concessions existing at the coming into force of LegislativeDecree No. 164/2000 and awarded with a bid procedure expire onDecember 31, 2012; all other concession expire on December 31,2007 (with an optional three-year extension under certainconditions). Eni intends to optimize its concession portfoliomaintaining its current size in terms of end users served byfocusing on development initiatives in core areas and promotinglocal alliances aimed at supporting sale activities on retailmarkets.

 

> 
**Regasification - LNG**

Eni intends to strengthen its integrated LNG business on aglobal scale, aiming at further diversifying its supply sources,improving operational flexibility, and monetizing its largeequity gas reserves. In particular, the development ofregasification capacity is aimed at reinforcing and diversifyingEni natural gas supply portfolio. Eni’s main assets in LNGare:

*Italy* Eni owns the only regasification terminaloperating in Italy at Panigaglia (Liguria). At full capacity,this terminal can input 3.5 BCM/y into the Italian transportnetwork. In 2006 a total of 3.13 BCM of natural gas were input inthe national network, of these 48% were owned by Eni. Eni plansto build a new regasification terminal located off the Adriaticcoast (with a 50% interest) and to increase the capacity of thePanigaglia plant. These two projects are expected to upgrade theimport capacity to Italy by 8 and 4.5 BCM/y, respectively, whenfully operational. The planned start up is expected by 2013 and2014, respectively. The capital expenditure earmarked for theoffshore regasification projects amounts to approximately euro800 million (of these euro 400 million for the 50% interest inthe offshore regasification plant and euro 359 million forPanigaglia).

*Egypt* Eni, through its interest in Unión Fenosa Gas,owns a 40% stake in the Damietta liquefaction plant producingapproximately 5 mmtonnes/y of LNG equal to a feedstock of 7.6BCM/y of natural gas. In June 2006, the partners of the projectagreed on terms and conditions for doubling the plant capacity bymeans of building another treatment train. Expected capitalexpenditure amounts to approximately $1.5 billion with start upexpected between 2010 and 2011. In order to market its share ofnatural gas, Eni intends also to build two gas tanker ships witha capacity of 155 KCM each.

*Spain* In April 2006, the Sagunto regasification plantwith a capacity of 6.7 BCM/y started operations near Valencia.Eni through Unión Fenosa Gas holds a 21.25% interest in thisplant. At present, Eni’s share of regasification capacityamounts to 1.6 BCM/y of gas. An upgrading plan has beensanctioned targeting a 0.8 BCM/y capacity increase by 2009.Relevant works started in the second half of 2006. Eni throughUnión Fenosa Gas also holds a 9.5% interest in the el Ferrolregasification plant, located in Galicia, under construction andexpected to be completed by the first half of 2007, targeting atreatment capacity of approximately 3.6 BCM/y, 0.4 BCM/y beingEni’s share.

*USA* Eni is entitled to a share of the initial plannedcapacity of the Cameron regasification terminal underconstruction in Louisiana, and expected to start operations by2008-2009. The 6 BCM/y capacity represents approximately 40% ofthe initial capacity of the plant (15.5 BCM/y). This transactionwill enable Eni to sell part of its gas reserves in the UnitedStates.In order to provide supplies to this plant, in February 2007 Enisigned an agreement with Nigeria LNG Ltd, which operates theBonny LNG plant in Nigeria, to purchase, over a twenty-yearperiod, 1.375 mmtonnes/y of LNG, equivalent to 2 BCM/y of gas,deriving from the upgrade of the Bonny liquefaction plant (7trains) expected for 2012. Negotiations are also progressing withBrass LNG Ltd for the purchase of 1.42 mmtonnes/y of LNGequivalent to 1.96 BCM/y of gas. Eni signed a Memorandum ofUnderstanding with Sonangol to acquire a 13.6% participation inthe Angola LNG project and 5 BCM/y of capacity in the Pascagoularegasification terminal to be constructed in Mississippi.

Eni will also have the right to have its equity gas in Angolaliquefied, shipped and regasified at Pascagoula by Angola LNG fora quantity equivalent to 0.94 BCM/y.

 

> 
**Electricity Generation**

Eni, through EniPower, is one of the major operators inelectricity generation on the Italian market. Operating since2000, EniPower owns power stations located at Eni’s sites inBrindisi, Ferrera Erbognone, Livorno, Mantova, Ravenna, Ferraraand Taranto with installed capacity in operation of approximately4.9 GW at December 31, 2006 (4.5 GW in 2005).

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Starting in 2007, the marketing of electricity conducted byEniPower until 2006 is being conducted by the departmentresponsible for natural gas marketing. Under this project, theGas & Power Division is expected to conduct directly theelectricity marketing activity previously conducted by EniPower,starting in 2007. This scheme will allow the integratedmanagement of marketing activities of gas and electricity and thedevelopment of a joint-offer of natural gas and electricity tocustomers. Plans for developing the dual offer will leverage onthe opening of the Italian electricity market effective on July1, 2007.

In 2006, Eni sold 31.03 TWh of electricity, of which about24.82 TWh were produced by EniPower, corresponding to over 9.2%of the Italian market, and 10.287 mmtonnes of steam.Approximately 55% of sales were directed to end users, 28% to theElectricity Exchange, 8% to GRTN/Terna (under CIP 6/92 contractsand imbalances in input) and 9% to wholesalers. All the steamproduced was sold to end users.

Eni is completing a plan for expanding its electricitygeneration capacity, targeting in 2010 an installed capacity of5.5 GW with production amounting to 31 TWh when fullyoperational, corresponding approximately to 8.4% of electricitygenerated in Italy at that date. Planned expenditure amounts toeuro 2.4 billion, of which euro 2 billion is already expensed.

High efficiency, low environmental impact, reduced expenditureand construction times are the main features of these plants,which show interesting profitability prospects due to theexpected increase in demand for electricity and the ability tooperate in co-generation (combined electricity and steamgeneration). The co-generation mode has been acknowledged by theAuthority for Electricity and Gas as a production mode thatentails priority on the national dispatching network and theexemption from the purchase of "green certificates"5.

New installed generation capacity uses the combined cycle gasturbine fired technology (CCGT), ensuring a high level ofefficiency and low environmental impact. In particular,management estimates that for a given amount of energy(electricity and heat) produced, the use of the CCGT technologyon a production of 31 TWh reduces emissions of carbon dioxide byapproximately 11 mmtonnes, as compared to emissions usingconventional power generation technology.

EniPower intends to become a cost leader in the Italianelectricity industry thanks to the high technology content andoptimal size of the plants it is building. When fully operationalin 2010, consumption of natural gas of Eni’s plants isexpected to reach over 6 BCM/y, supplied by Eni.

| **Power        Generation** | **2003** |   | **2004** |   | **2005** |   | **2006** |
|-----------------------------|----------|--------|----------|--------|----------|--------|----------|
|                        |          |   |          |   |          |   |          |

| **Purchases**                      |   |      |   |   |   |   |   |   |   |   |
|------------------------------------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|
| Natural        gas                 |   | (mmCM)    |   | 940    |   | 2,617  |   | 4,384  |   | 4,775  |
| Other fuels                        |   | (KTOE)    |   | 847    |   | 784    |   | 659    |   | 616    |
| -        including cracking steam  |   |      |   |   |   | 89     |   | 96     |   | 136    |
| **Sales**                          |   |      |   |   |   |   |   |   |   |   |
| Electricity        production sold |   | (TWh)     |   | 5.55   |   | 13.85  |   | 22.77  |   | 24.82  |
| Electricity trading                |   | (TWh)     |   | 3.10   |   | 3.10   |   | 4.79   |   | 6.21   |
| Steam                              |   | (ktonnes) |   | 9,303  |   | 10,040 |   | 10,660 |   | 10,287 |

|   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|

 

The development plan has been completed at all sites exceptfor Ferrara (Eni’s interest 51%), where in partnership withSwiss company EGL AG, construction of two new 390 MW combinedcycle units is underway. These new units will increase installedcapacity to 840 MW with start up expected in the first quarter of2008. Moreover, Eni plans the installation of a new 240 MWcombined cycle unit located in Taranto (current capacity 75 MW)with expected start up in 2010.

**Ferrera Erbognone** On May 14, 2004 the combined cyclepower station was inaugurated, the first one in Italy after theopening up of the electric market. This power station has aninstalled capacity of approximately 1,030 MW articulated in threecombined cycle units, two of them with an approximately 390 MWcapacity are fired with natural gas, the third one withapproximately 250 MW capacity is fired in part with natural gasand complemented with refinery gas obtained from the gasificationof tar from visbreaking from Eni’s nearby Sannazzarode’ Burgondi refinery.

**Ravenna** Two new combined cycle 390 MW units startedoperations in 2004. Added to the existing 190 MW, the powerstation’s installed capacity reached approximately 970 MW.

_______________

| (5) |   | Article 11 of        Legislative Decree No. 79/1999 concerning the opening up        of the Italian electricity market obliges importers and        producers of electricity from non renewable sources to        input into the national electricity system a share of        electricity produced from renewable sources set at 2% of        electricity imported or produced from non renewable        sources exceeding 100 GW. Calculations are made on total        amounts net of co-generation and own consumption. This        obligation can be met also by purchasing volumes or        rights from other producers employing renewable sources        (the so-called green certificates) to cover all or part        of such 2% share. Legislative Decree No. 387/2003        established that from 2004 to 2006 the minimum amount of        electricity from renewable sources to be input in the        grid in the following year be increased by 0.35% per        year. The Minister of Productive Activities, with decrees        issued in consent with the Minister of the Environment,        will define further increases for the 2007-2009 and        2010-2012 periods. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Brindisi** Three new combined cycle 390 MW units, two ofwhich started operations in 2005, the last started operation inthe second half of 2006. When fully operational the power stationwill have a total capacity of approximately 1,320 MW, includingalready existing amounts.

**Mantova** Two new combined cycle 390 MW units startedoperations in 2005 with full operation in early 2006. The powerstation will have a total installed capacity approximately 840MW. This power station will provide steam for heating purposesdelivered to Mantova’s urban network through a heatexchanger.

 

> 
***Capital Expenditure***

See "Item 5 – Liquidity and Capital Resources –Capital Expenditure by Segment".

 

 

**Refining & Marketing**

Eni is leader in the refining business and in the marketing ofrefined products in Italy and holds important market shares insome European countries. Eni’s refining and marketingoperations are efficiently integrated so as to achieve costefficiencies and deliver good returns on capital employed. Theintegration with upstream operations represents a furthercompetitive advantage. Eni’s key medium-term objective inits downstream oil business is to enhance profitability. Thestrategic guidelines to attain this objective are the following:

| • |   | to enhance Eni’s        refining system by means of a focused investment program;   |
|--------|--------|------------------------------------------------------------------------------------------|
| • |   | to improve profitability and        qualitative standards of the Italian retail network; |
| • |   | to grow retail sales in        selected markets in the rest of Europe; and               |
| • |   | to pursue higher levels of        operational efficiency.                                |

In the next four years, management plans to implement thesestrategies by deploying a capital expenditure program ofapproximately euro 4.3 billion. This capital expenditure isexpected to be focused mainly on refinery upgrading. Plannedactions are intended to boost refinery conversion rate andflexibility in order to produce higher-value products and toprocess low-quality crude that is typically discounted in themarket-place, and to lower operating costs. Management expects tostrengthen integration with Eni’s upstream operations. Animportant portion of this capital expenditure will be directed toretail networks upgrading in Italy and in the rest of Europe. Inaddition, in order to increase profitability of retailoperations, Eni plans to implement customer-focused marketinginitiatives, including effective pricing differentiation and animproved premium-products offer, and to pursue operatingefficiencies. In retail activities in the rest of Europe, Eniplans to selectively develop its presence in target Europeanmarkets, leveraging on synergies deriving from proximity toEni’s production and logistic facilities.

*The matters regarding future plans discussed in thissection and elsewhere herein are forward-looking statements thatinvolve risks and uncertainties that could cause the actualresults to differ materially from those in such forward-lookingstatements. Such risks and uncertainties include difficulties inobtaining approvals from relevant Antitrust Authorities anddevelopments in the relevant market.*

 

> 
**Supply and Trading**

In 2006, a total of 65.70 mmtonnes of oil were purchased(66.48 mmtonnes in 2005), of which 36.81 mmtonnes were purchasedfrom Eni’s Exploration & Production segment, 18.16mmtonnes were purchased under long-term contracts with producingcountries and 10.73 mmtonnes were purchased on the spot market.Some 21% of oil purchased came from West Africa, 21% from NorthAfrica, 18% from countries of the former Soviet Union, 14% fromthe Middle East, 14% from the North Sea, 7% from Italy and 5%from other areas. Some 30.66 mmtonnes were traded, down 1.3% from2005. In addition, 3.18 mmtonnes of intermediate products werepurchased (3.58 mmtonnes in 2005) to be used as feedstock inconversion plants and 16 mmtonnes of refined products (16.21mmtonnes in 2005) were purchased to be sold on markets outsideItaly (11.48 mmtonnes) and on the Italian market (4.52 mmtonnes)as a complement to our own production.

 

> 
**Refining**

Eni owns five refineries in Italy and interests in refinerieslocated in Italy, Germany and the Czech Republic with a totalrefining capacity (balanced with conversion capacity) ofapproximately 35.5 mmtonnes (equal to 710 KBBL/d) and aconversion index of 57%. Eni’s wholly owned refineries inItaly have a balanced capacity of 26.7 mmtonnes (equal to 534KBBL/d), with a 58.9% conversion rate.

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Eni’s refining system in Italy is made up of five whollyowned refineries and a 50% interest in the Milazzo refinery inSicily. Eni plans to upgrade its refining system with a capitalexpenditure for the next four years amounting to approximatelyeuro 2.4 billion (including logistics activities).

In the medium-term, management expects the refiningenvironment to be featured by the following trends:(i) global imbalances in the availability of products amongmacro geographic areas; (ii) a low adequacy of existing refiningassets to process heavy and non conventional feedstock against abackdrop of persisting high spreads between light/sweet andheavy/sour crude qualities; (iii) an imbalance of existingrefining assets towards higher yields in gasoline and fuel oil incontrast with rising demand for middle distillates; and (iv)increasingly tight environmental and product quality regulationswhich make the upgrading of existing refining assets a criticalissue.

Against this backdrop, Eni plans to enhance the profitabilityof its refining business, capturing opportunities arising fromcurrent market trends by implementing a large investment programof approximately euro 3 billion in the next four years. The mainplanned actions are: (i) to increase primary and conversioncapacity, targeting a complexity index6 higher than57%, in view of boosting middle distillate yields, includingpetrochemical feedstock, and extracting value from equity crude,the availability of which is expected to increase in theMediterranean basin over the medium-term; (ii) to improverefinery flexibility in order to optimize processed feedstock andcapture market opportunities arising from an expected increasingavailability of heavy/sour crude which can be purchased at adiscount in the marketplace; (iii) to achieve high-qualityproducts responsive to expected demand trends and the evolutionof product specifications provided for by increasingly tightEuropean standards in term of emissions and environmentalpreservation; (iv) to strengthen integration with upstream andpetrochemical operations; and (v) to enhance operationalefficiency of refineries, targeting in particular a higher levelof energy efficiency.

The table below sets forth certain statistics regardingEni’s refineries at December 31, 2006.

|                            |   | **Location** |   | **Ownership interest** |   | **Conversion equivalent**(1) |   | **Balanced primary distillation capacity**(2) |
|---------------------------------|--------|--------------|--------|------------------------|--------|------------------------------|--------|-----------------------------------------------|
|                            |   |              |   |                        |   |                              |   |                                               |
| Wholly-owned refineries:        |   |         |   |                   |   |                         |   |                                          |
| Sannazzaro                      |   | Lombardy     |   | 100%                   |   | 46.2                         |   | 170,000                                       |
| Gela                            |   | Sicily       |   | 100%                   |   | 143.5                        |   | 100,000                                       |
| Taranto                         |   | Apulia       |   | 100%                   |   | 61.1                         |   | 110,000                                       |
| Livorno                         |   | Tuscany      |   | 100%                   |   | 11.4                         |   | 84,000                                        |
| Porto        Marghera           |   | Veneto       |   | 100%                   |   | 22.8                         |   | 70,000                                        |
|                            |   |         |   |                   |   |                              |   |                                               |
|                            |   |         |   |                   |   | **58.9**                     |   | **534,000**                                   |
| Partly-owned        refineries: |   |         |   |                   |   |                         |   |                                          |
| Milazzo                         |   | Sicily       |   | 50%                    |   | 72.3                         |   | 80,000                                        |
| Ingolstadt/Vohburg/Neustadt     |   | Germany      |   | 20%                    |   | 32.6                         |   | 52,000                                        |
| Schwedt                         |   | Germany      |   | 8.3%                   |   | 41.8                         |   | 19,000                                        |
| Kralupy/Litvinov                |   | Czech Rep.   |   | 16.33%                 |   | 28.8                         |   | 26,000                                        |
|                            |   |         |   |                   |   |                              |   |                                               |
|                            |   |         |   |                   |   | **50.9**                     |   | **177,000**                                   |
|                            |   |         |   |                   |   |                              |   |                                               |
| **Total Eni**                   |   |         |   |                   |   | **57.0**                     |   | **711,000**                                   |

|   |   |   |   |   |   |  |   |  |
|--------|--------|--------|--------|--------|--------|--|--------|--|

----

| (1) |   | Stated in        fluid catalytic cracking equivalent/topping (% by        weight), based on 100% of balanced primary distillation        capacity.                                 |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Barrels per        calendar day. Based on percentage equity interest        ownership in the refinery, not on actual utilization of        balanced primary distillation capacity. |

Each of Eni’s Italian refineries has an operational andstrategic setup adequate to maximizing return on assets andmonetizing its geographic location with respect to end marketsand integration with other Eni business segments.

 

> 
***Italy***

Eni’s refining system in Italy is composed of five whollyowned refineries and a 50% interest in the Milazzo refinery inSicily. Each of Eni’s refineries in Italy has operating andstrategic features that aim at maximizing the value associated tothe asset structure, the geographic positioning with respect tomarkets and the integration with Eni’s other activities.

**Sannazzaro**, with a balanced primary refining capacityof 170 KBBL/d and an equivalent conversion index of 46.2% is oneof the most efficient refineries in Europe. Located in the PoValley, it supplies mainly markets in North-Western Italy andSwitzerland. The high degree of flexibility of this refineryallows it to process a wide range of oils, such as CPC Blendcrude oil from the Caspian Sea carried through the CPC pipeline,the Bonga crude from Nigeria and oil from Eni’s Villafortunafield. From a logistical standpoint this refinery is locatedalong the route of the Central Europe Pipeline, which links theGenova terminal with French-speaking Switzerland.

_______________

| (6) |   | For a        definition, see "Glossary". |
|-----|--------|----------------------------------------------------|

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This refinery contains two primary distillation plants and avacuum unit. Conversion is obtained through a fluid catalyticcracker (FCC7), an HDCK middle distillate conversionunit and a visbreaking thermal conversion unit. Two catalyticreforming plants, an isomerization plant, an alkylation plant, anMTBE plant and three desulfurization plants for middledistillates and one for naphtha from cracking complete theproduction cycle. In 2006, Eni completed a gasification facilityusing the heavy residue from visbreaking (tar) to produce syngasto feed the nearby EniPower power station at Ferrera Erbognone.

Eni plans to upgrade this refinery. In particular, in the nextfour years, Eni plans to build: (i) a high pressure hydrocrackingunit with a capacity of 28 KBBL/d, able to produce over 1mmtonnes/y of high quality middle distillates, in particulardiesel fuel with low sulfur content and kerosene. Start up isplanned at 2008 end; and (ii) a PDA deasphalting unit with a 28KBBL/d capacity for the production of deasphalted oil (withoutasphaltene and metals) from visbreaking and vacuum unit residuesto be used as feedstock for the FCC unit. Further residues willbe used as feedstock for the tar gasification plant. Thedeasphalting plant will enable Eni to increase therefinery’s flexibility thanks to the processing of a higheramount of high sulfur content crude, thus increasing the yield ofvaluable products (diesel fuel). Start up is planned in 2008.

Eni is currently evaluating the building of a plant employingEni Slurry Technology (see "Innovative technologies",below) with a 23 KBBL/d capacity for the processing of extraheavy crudes and tar sands producing higher quality products, inparticular diesel fuel, and reducing the yield of fuel oil tozero.

**Gela**, with a balanced primary refining capacity of 100KBBL/d and an equivalent conversion index of 143.5% represents anupstream integrated pole with the production of heavy crudesobtained from nearby Eni fields offshore and onshore Sicily,while downstream it is integrated with Eni’s nearbypetrochemical plants. Located on the Southern coast of Sicily, itmanufactures fuels for automotive use and residential heatingpurposes, as well as petrochemical feedstocks. Its highconversion level allows it to minimize the yield of fuel oil andsemi-finished products.

Besides its primary distillation plants, this refinerycontains the following plants: an FCC unit with go-finer for theupgrading of feedstocks and two coking plants for the vacuumconversion of heavy residues. All these plants are integrated inorder to process heavy residues and feedstocks and manufacturevaluable products. It also contains two reforming units, analkilation unit, an MTBE unit and plants for desulfurization ofgas oil and naphtha from cracking. The power plant of thisrefinery also contains modern residue and exhaust fume treatmentplants which allow the complex to comply with the most exactingenvironmental standards.

An upgrade of the Gela refinery will be implemented by meansof an upgrade of topping capacity to enable higher intakes(approximately 1 mmtonnes/y) and of feedstock flexibility.

In addition, actions to improve energy efficiency, renewal offacilities for gasoline production, and the upgrade of utilitiesand the logistic reorganization of the site are planned.

**Taranto**, with a balanced primary refining capacity of110 KBBL/d and an equivalent conversion index of 61.1%, canprocess a wide range of crudes and semi-finished products withgreat operational flexibility.

It mainly produces fuels for automotive use and residentialheating purposes for the Southern Italian markets. Besides itsprimary distillation plants, this refinery contains a flashvacuum unit, two plants for the desulfurization of middledistillates, a reforming unit, an isomerization unit andconversion plants such as: a two-stage thermal conversion plant(visbreaking/thermal cracking) and an RHU conversion plant, thatallows to convert high sulfur content residues into valuableproducts and cracking feedstocks. It processes most of the oilproduced in Eni’s Val d’Agri fields carried to Tarantothrough the Monte Alpi pipeline (in 2006 a total of 3.157mmtonnes of this oil were processed).

Eni plans to develop and upgrade this refinery as well. Inparticular, two projects are planned: (i) the building of a newhigh pressure hydrocracking unit with a 17 KBBL/d capacity andthe revamping of the hydrogen production unit; these assets willallow to produce approximately 0.6 mmtonnes/y of high qualitygasoil when fully operational in 2008; and (ii) the building of anew topping unit with a 4 mmtonnes/y capacity and an associatedvacuum unit with a 2.5 mmtonnes/y capacity. Eni also plans tobuild a new unit for the desulfurization of middle distillateswith a 2.3 mmtonnes/y capacity, in addition to utilities andlogistic facilities (see "Logistics", below), inparticular a pipeline for transporting virgin naphtha to Enipetrochemical plant at Brindisi. The objective is to expand theconsumption area covered by the refinery to Campania. Start up isexpected in 2009-2010.

_______________

| (7) |   | Conversion        plant where vacuum feedstock undergoes cracking at high        pressure and moderate temperature thus producing mostly        high quality gasoline. This kind of plant guarantees high        operating flexibility to the refinery. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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This development and upgrading plan will enable Eni to betteremploy national and Caspian equity crude and give moreflexibility to this refinery, optimizing the use of theconversion plants and increasing throughput from 6 to 10mmtonnes/y (100-180 KBBL/d).

**Livorno**, with a balanced primary refining capacity of84 KBBL/d and an equivalent conversion index of 11.4%,manufactures mainly gasolines, fuel oil for bunkering, specialtyproducts and lubricant bases. Besides its primary distillationplants, this refinery contains a vacuum unit, a reformer unit, anisomerization plant, two desulfurization units for middledistillates and two lubricant manufacturing lines. Its pipelinelinks with the local harbor and with the Florence storage sitesby means of two pipelines optimizing intake, handling anddistribution of products.

**Porto Marghera**, with a balanced primary refiningcapacity of 70 KBBL/d and an equivalent conversion index of22.8%, supplies mainly markets in North-eastern Italy, Austria,Slovenia and, to a lesser extent, Croatia. Besides its primarydistillation plants with vacuum plants, this refinery contains areformer plant, an isomerization plant, two gasoildesulfurization units and a two-stage thermal conversion plants(visbreaking/thermal cracking) for increasing yields of valuableproducts.

The plant upgrading project, subject to the extension of therefining license, concerns the construction of a new hydrocrackerwith a 24 KBBL/d capacity and upgrades of utilities. Theobjective is to increase intake (up 1.4 mmtonnes/y, toapproximately 5.5 mmtonnes when fully operational), theimprovement of flexibility in processed feedstocks, the increasein middle distillates produced (up 0.7 mmtonnes) in an areacharacterized by structural diesel fuel deficit, and higherenergy efficiency.

 

> 
***Rest of Europe***

In Germany Eni holds an 8.3% interest in the **Schwedt**refinery and a 20% interest in **Bayernoil**, an integratedpole that includes the Ingolstadt, Vohburg and Neustadtrefineries. Eni’s refining capacity in Germany amounts toapproximately 70 KBBL/d. Eni’s share of the production ofthe three integrated refineries and of the Schwedt refinery ismainly used to supply Eni’s distribution network in Bavariaand Eastern Germany. Eni plans to restructure the **Bayernoil**refining pole, by building a new hydrocracker with a capacity ofapproximately 2 mmtonnes/y, revamping other assets (in particulara reformer and a hydrofiner) and shutting-down a topping unit.

Eni holds a 16.33% interest in **Ceska Rafinerska** whichowns and manages two refineries, Kralupy and Litvinov, in theCzech Republic. Eni’s share of refining capacity amounts to27 KBBL/d (corresponding to approximately 1.3 mmtonnes/y). In May2007, Eni agreed to purchase a 16.11% interest held byConocoPhillips Central and Eastern Europe Holdings BV in theCeska Rafinerska Co. When this transaction is finalized, Eni willincrease its stake in this refinery from 16.3% to 32.4%,corresponding to a refinery capacity of 2.6 mmtonnes/y.

The table below sets forth Eni’s petroleum productsavailability figures for the periods indicated.

| **Petroleum        products availability** | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------------------------------------------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|                                       |          |   |          |   |          |   |          |   |          |

|   |   | **(mmtonnes)** |
|--------|--------|----------------|

| **Italy**                                                       |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |
|-----------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Refinery throughputs at wholly-owned refineries                 |   | 30.09     |   |   | 25.09     |   |   | 26.75     |   |   | 27.34     |   |   | 27.17     |   |
| Refinery        throughputs on account of third parties         |   | (1.88     | )      |   | (1.72     | )      |   | (1.50     | )      |   | (1.70     | )      |   | (1.53     | )      |
| Refinery throughputs at third party refineries                  |   | 6.27      |   |   | 8.43      |   |   | 8.10      |   |   | 8.58      |   |   | 7.71      |   |
| Products        consumed and lost                               |   | (1.91     | )      |   | (1.64     | )      |   | (1.64     | )      |   | (1.87     | )      |   | (1.45     | )      |
| ***Products available***                                        |   | **32.57** |   |   | **30.16** |   |   | **31.71** |   |   | **32.35** |   |   | **31.90** |   |
| Purchases        of finished products and change in inventories |   | 6.27      |   |   | 5.86      |   |   | 5.07      |   |   | 4.85      |   |   | 4.45      |   |
| Finished products transferred to foreign cycle                  |   | (5.56     | )      |   | (5.19     | )      |   | (5.03     | )      |   | (5.82     | )      |   | (5.35     | )      |
| Consumption        for power production                         |   | (1.74     | )      |   | (1.07     | )      |   | (1.06     | )      |   | (1.09     | )      |   | (1.10     | )      |
| ***Sales*******                                                 |   | **31.54** |   |   | **29.76** |   |   | **30.69** |   |   | **30.29** |   |   | **29.90** |   |
| **Outside        Italy**                                        |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |
| Products available                                              |   | 2.98      |   |   | 3.36      |   |   | 4.04      |   |   | 4.33      |   |   | 4.37      |   |
| Purchases        and change in inventories                      |   | 12.16     |   |   | 12.12     |   |   | 13.78     |   |   | 11.19     |   |   | 11.51     |   |
| Finished products transferred from Italian cycle                |   | 5.56      |   |   | 5.19      |   |   | 5.03      |   |   | 5.82      |   |   | 5.35      |   |
| ***Sales***                                                     |   | **20.70** |   |   | **20.67** |   |   | **22.85** |   |   | **21.34** |   |   | **21.23** |   |
| ***Sales in Italy and outside Italy***                          |   | **52.24** |   |   | **50.43** |   |   | **53.54** |   |   | **51.63** |   |   | **51.13** |   |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

In 2006, refinery throughputs on own account in Italy andoutside Italy were 38.04 mmtonnes, down 0.75 mmtonnes from 2005,or 1.9%, owing to lower throughputs on third party refineries asa consequence of an accident that occurred at the Priolo (thirdparty) refinery and a maintenance standstill at the Milazzorefinery (Eni’s interest 50%).

48

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Refining throughputs on own account were stable. Inparticular, refining throughputs increased at the Venice, Gelaand Taranto refineries and decreased at the Sannazzaro refinerydue to a maintenance standstill of the catalytic cracking unitand the visbreaking unit, and at the Livorno refinery due togeneral maintenance activity. In April, a new unit for heavyresidue gasification started operating at the Sannazzarorefinery.

Total throughputs on wholly-owned refineries (27.17 mmtonnes)decreased 0.17 mmtonnes from 2005, down 0.6%; balanced capacityof refineries was fully utilized. Approximately 35.9% of volumesof processed oil were supplied by Eni’s Exploration &Production segment (32.3% in 2005), representing a threepercentage point increase from 2005. Incremental volumes of some1.1 mmtonnes of equity oil processed related to higher suppliesof heavy oil from Nigeria (due to the start up of the Bongafield) and from Sicily, against a reduction of supplies of theLibyan Bu-Attifel oil processed at Priolo.

 

> 
**Logistics**

Eni is engaged in storage and transport of petroleum productsin Italy. Its integrated logistics infrastructure consists of 12directly managed storage sites and a network of petroleum productpipelines.

Eni holds interests in five joint entities established bypartnering the major Italian operators. These are located in VadoLigure - Genova (Petrolig), Arquata Scrivia (Sigemi), Venice(Petroven), Ravenna (Petra) and Trieste (DCT) and aim at reducinglogistic costs and increasing efficiency.

Eni operates in the transport of oil and refined products: (i)on land through a pipeline network of leased and owned pipelinesextending over 3,210 kilometers (1,513 kilometers are whollyowned by Eni); and (ii) by sea through spot and long-term leasecontracts of tanker ships. For the distribution of refinedproducts to retail and wholesale markets, Eni owns a fleet oftanker trucks and manages third-party owned vehicles.

In the medium-term, management plans to enhance therelationship between its logistic and refining operations byimplementing an integrated logistic model ("hub" model)designed to centralize handling of product flows on a singleplatform enabling real time monitoring. This new setup isexpected to deliver significant cost savings and efficiencyimprovements. In the next four years, Eni plans to investapproximately euro 0.6 billion directed in particular to theimplementation of the Taranto logistic project intended tosupport the refinery’s development plan: a new diesel fueland gasoline storage site will be built in Campania and threepipelines will be laid, two of which will link the refinery tothe storage site and the other one will transport virgin naphthato Eni’s petrochemical complex in Brindisi. The objective ofthis plan is to eliminate the transport of refined products bysea to Naples.

 

> 
**Marketing**

Eni markets a wide range of refined petroleum products,primarily in Italy, through an extensive direct sales network,franchises and other distribution systems. The table below setsforth Eni’s sales of refined products by distributionchannel for the periods indicated.

 

| **Oil        products sales in Italy and outside Italy** | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|----------------------------------------------------------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|                                                     |          |   |          |   |          |   |          |   |          |

|   |   | **(mmtonnes)** |
|--------|--------|----------------|

| **Italy**                             |   |      |   |      |   |      |   |      |   |      |
|---------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|
| Retail        sales                   |   | 11.14     |   | 10.99     |   | 10.93     |   | 10.05     |   | 8.66      |
| Wholesale sales                       |   | 10.64     |   | 10.35     |   | 10.70     |   | 10.48     |   | 10.06     |
|                                  |   | **21.78** |   | **21.34** |   | **21.63** |   | **20.53** |   | **18.72** |
| Petrochemicals                        |   | 3.82      |   | 2.79      |   | 3.05      |   | 3.07      |   | 2.61      |
| Other        sales (1)                |   | 5.94      |   | 5.63      |   | 6.01      |   | 6.69      |   | 8.57      |
| **Sales in Italy**                    |   | **31.54** |   | **29.76** |   | **30.69** |   | **30.29** |   | **29.90** |
| **Outside        Italy**              |   |      |   |      |   |      |   |      |   |      |
| Retail sales rest of Europe           |   | 2.57      |   | 3.02      |   | 3.47      |   | 3.67      |   | 3.82      |
| Retail        sales Africa and Brazil |   | 1.44      |   | 1.18      |   | 0.57      |   |      |   |      |
|                                  |   | **4.01**  |   | **4.20**  |   | **4.04**  |   | **3.67**  |   | **3.82**  |
| Wholesale        sales                |   | 5.65      |   | 6.01      |   | 5.30      |   | 4.50      |   | 4.60      |
|                                  |   | **9.66**  |   | **10.21** |   | **9.34**  |   | **8.17**  |   | **8.42**  |
| Other        sales (1)                |   | 11.04     |   | 10.46     |   | 13.51     |   | 13.17     |   | 12.81     |
| **Sales outside Italy**               |   | **20.70** |   | **20.67** |   | **22.85** |   | **21.34** |   | **21.23** |
|                                  |   | **52.24** |   | **50.43** |   | **53.54** |   | **51.63** |   | **51.13** |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

----

| (1) |   | Includes        bunkering, consumption for power production (until 2001)        and sales to oil companies. From 2002, also includes        sales of MTBE. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

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In 2006, sales volumes of refined products (51.13 mmtonnes)were down 500 ktonnes from 2005, or 1%, mainly due to lowerwholesale volumes (down 320 ktonnes) as a consequence of mildweather conditions in the last part of the year adverselyaffecting heating products sales. In addition, lower volumes weresupplied to the petrochemical sector (down 460 ktonnes) owing tothe technical accident that occurred at the Priolo refinery.These declines were offset in part by higher sales to oilcompanies and traders and by a growth in retail sales on the Agipbranded network in Italy and outside Italy (up 60 ktonnes).

The impact of the Italiana Petroli (IP) divestment, effectiveSeptember 1, 2005 (1.3 mmtonnes), was partly offset by supply offuels to the same company under a five-year contract signedconcurrently with the divestment.

In retail distribution Eni intends to enhance its leadershipin the Italian retail market, improving outlets and servicequality standards and targeting a strong product differentiationand customer-oriented promotional initiatives.

In the rest of Europe, Eni will selectively grow its marketshare, targeting a strengthening of its competitive position inselected markets, leveraging on synergies achievable thanks tothe geographic location of its production and logistic assets andon strong brand awareness.

 

> 
***Retail Sales in Italy***

Retail volumes of refined products marketed on the Italiannetwork (8.66 mmtonnes) were down 1.39 mmtonnes from 2005, or13.8% mainly due to the IP divestment as outlined above. Retailvolumes marketed on the Agip branded network (8.66 mmtonnes)decreased of some 90 ktonnes, down 1%, due to a highercompetitive pressure. This decline essentially concerned gasolineand BluDiesel, following a pattern aligned with nationalconsumption trends. Market share of the Agip branded network wasdown 0.4 percentage points from 29.7% to 29.3% in 2006; averagethroughput in terms of gasoline and diesel fuel was 2,463kliters, down 1.8% from 2005.

At December 31, 2006, Eni’s retail distribution networkin Italy consisted of 4,356 service stations, seven more than atDecember 31, 2005 (4,349 units), resulting from the opening ofnew service stations (20 units) and the positive balance ofacquisitions/releases of lease concessions (11 units), offset inpart by the closing of service stations with low throughput (21units) and the release of 3 service stations under highwayconcessions.

Retail volumes of BluDiesel – a high performance and lowenvironmental impact diesel fuel – amounted to about 726ktonnes (840 mmliters), down 14.8% from 2005, mainly due to anincreasingly high sensitivity of consumers to retail prices offuels in light of their escalation that pushed prices tohistorical peaks. At year-end, virtually all Agip branded servicestations marketed BluDiesel (about 4,061 equal to 93%).

Retail volumes of BluSuper – a high performance and lowenvironmental impact gasoline – amounted to about 98 ktonnes(114 mmliters), down 9% from 2005, showing a trend similar to theone of BluDiesel. At year-end, service stations marketingBluSuper totaled 2,316 (1,719 at December 31, 2005) correspondingto approximately 53% of Eni’s network.

In 2006, Eni continued its Do-It-Yourself campaign whichallows participating customers to obtain discounts or gifts(under agreements with Vodafone and Coop) in proportion tovolumes of fuel purchased at self-service outlets, charged on anelectronic card. Further bonuses are offered to the most faithfulcustomers. At year-end, the number of active cards wasapproximately 3.9 million; turnover on cards increased by 3% from2005. Volumes of fuel marketed under this initiative representedsome 39% of total volumes marketed on the Agip branded outletsjoining the campaign, and some 31% of overall volumes marketed onthe Agip network. In March 2007, Eni launched its newYou&Agip promotional initiative designed to boost customerloyalty to the Agip brand. The main features of this initiativeare: (i) its time span which is longer than usual initiatives ofthis kind (until December 31, 2009); and (ii) the freedom ofcustomers on how to accumulate points and when to spend them.Furthermore, the list of prizes will be kept constantly updatedthanks to the high numbers of partners joining the initiative.Points can be accumulated not only by buying fuels, but also bybuying all the other services and wares sold at Eni’soutlets.

Eni intends to strengthen its competitive positioning in Italyby introducing new outlet formats in line with European standardsof quality and services, increasing premium products sales anddifferentiating promotional offers in order to retain the varioussegments of clients. Management expects also to boost theprofitability of its retail operations in Italy by developing theoffer on non-oil products by means of building conveniencestores, cafés and fast food outlets and other innovativecommercial outlets. A strong focus will be devoted to pursue highlevels of operating efficiency. In the next four years, Eni plansto invest approximately euro 0.75 billion in the upgrading of itsnetwork, targeting to build and acquire new service stations,upgrade/restructure existing ones, and to adequate them toapplicable environmental standards and regulations. By 2010, Eniexpects to have a retail network composed of approximately 4,360service stations with an average throughput of approximately 2.7Bliters per station. Marketed volumes are expected to grow by anapproximately 1.8% on average over the next four years.

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##### Table of Contents

> 
***Retail Sales in the Rest of Europe***

In recent years, Eni’s strategy in the rest of Europefocused on selectively growing its market share, by means ofacquisition of assets in European areas with interestingprofitability perspectives, mainly in Central-Eastern Europe (inparticular Southern Germany, Austria, the Czech Republic andHungary) in South-Eastern France and the Iberian Peninsula. Inpursuing such growth, Eni has been able to reap synergies inthese areas facilitated by their proximity to Eni’sproduction and logistic facilities.

Over the last five years, retail volumes of refined productsmarketed in the rest of Europe have grown more than 50% (equal toa compound average growth rate of 9%). In 2006, retail sales were3.82 mmtonnes, up 150 ktonnes from 2005, or 4.1%, particularly inGermany, Spain and Austria due to the ramp-up of new stationspurchased or built with higher throughput than the average levelof Eni’s network, while a few less efficient outlets weredismissed. Volume growth was driven primarily by increased salesof diesel fuel and LPG, while gasoline volumes declined.

At December 31, 2006, Eni’s retail distribution networkin the rest of Europe consisted of 1,938 units, an increase offive units from December 31, 2005. The network’s evolutionwas as follows: (i) 31 service stations were acquired in Austriaand France; (ii) 24 new outlets were opened in Spain and Austria;(iii) 46 low throughput service stations were closed in Spain andFrance; and (iv) a negative balance of acquisitions/releases oflease concessions (down four units) was recorded, with negativechanges in Portugal and Germany, positive ones in France andSpain. Average throughput (2,486 kliters) was up 2.4%.

In the next four-year period, Eni expects to increase marketedvolumes by approximately 3.9% per year on average. Growth inmarketed volumes will be achieved through acquisitions, leasingand construction of new service stations with high qualitystandards, automation and throughput, also leveraging onmarketing campaigns aimed at enhancing the Agip brand perceptionon markets. By 2010 Eni plans to have a network of approximately2,180 service stations with an average throughput of 2.6 Bliters.

 

> 
***Wholesale Marketing and Other Sales***

Eni markets gasoline and other fuels on wholesale markets,including diesel fuel for automotive use and for heatingpurposes, for agricultural vehicles and for vessels, gasoline andfuel oil. Major customers are wholesalers, agricultural users,manufacturing industries, public utilities and transports.

Eni provides its customers with its expertise in the area offuels with a wide range of products that cover all marketrequirements. Along with traditional products provided with thehigh quality Eni standard, there is also an innovative lowenvironmental impact line, which includes AdvanceDieselespecially targeted for heavy duty public and private transports.

Customer care and product distribution is supported by awidespread commercial and logistical organization present allover Italy and articulated in local marketing offices and anetwork of agents and concessionaires.

In 2006, volumes marketed on wholesale markets in Italy, whichexcludes the Avio and Bunker businesses, were 8.22 mmtonnes down610 ktonnes from 2005, or 7%, due mainly to a decline in domesticconsumption related to mild weather conditions in the fourthquarter of the year.

Sales volumes on wholesale markets outside Italy were 4.27mmtonnes, up approximately 100 ktonnes from 2005, or 2.6%,reflecting mainly higher sales in Germany and Spain.

Eni also markets jet fuel directly at 38 airports, of which 27are in Italy. In 2006, these sales amounted to 2.18 mmtonnes (ofwhich 1.84 mmtonnes were sold in Italy) up approximately 200ktonnes. Eni is active also in the international market ofbunkering, marketing marine fuel in 38 ports, of which 23 are inItaly. In 2006 marine fuel sales were 1.9 mmtonnes (1.24 inItaly) increasing 100 ktonnes.

Other sales were 22.09 mmtonnes of which 19.48 mmtonnesreferred to sales to oil companies and traders, and 2.61 mmtonnessupplies to the petrochemical sector.

> 
*LPG*

In Italy Eni is the market leader in LPG production, marketingand sale with 589 ktonnes sold for heating and automotive use(under the Agip brand and wholesale) equal to an 18% marketshare. Additional 350 ktonnes of LPG were marketed through otherchannels mainly to oil companies and traders.

LPG activities in Italy are supported by direct production,availability from 11 bottling plants and a number of ownedstorage sites in addition to products imported at coastal storagesites located in Livorno, Naples and Ravenna.

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> 
*Lubricants*

Eni operates 8 (owned and co-owned) blending plants, in Italy,Europe, North and South America, Africa and the Far East whichmanufacture finished and fatty lubricants. With a wide range ofproducts composed of over 650 different blends, Eni mastersinternational state-of-the-art know-how for the formulation ofproducts for vehicles (engine oil, special fluids andtransmission oils) and industries (lubricants for hydraulicsystems, industrial machinery and metal processing).

In Italy Eni is a leader in the manufacture and sale oflubricant bases. Base oils are manufactured primarily at itsrefinery in Livorno. Eni also owns one facility for theproduction of additives and solvents in Robassomero.

In 2006, retail and wholesale sales in Italy amounted to 136ktonnes with a 24.9% market share. Eni also sold approximately 4ktonnes of special products (white oils, transformer oil andanti-freeze fluids). Outside Italy sales amounted toapproximately 102 ktonnes, of these about 50% were registered inEurope (mainly Germany, the Netherlands and Spain).

> 
*Oxygenates*

Eni, through its subsidiary Ecofuel (Eni’s interest100%), sells about 2 mmtonnes/y of oxygenates, mainly MTBE (9% ofworld demand) and methanol. About 67% of products aremanufactured in Eni’s plants in Ravenna, Venezuela (in jointventure with Pequiven) and Saudi Arabia (in joint venture withSabic), while the remaining 33% is bought from third parties. InVenezuela, Eni plans to convert its MTBE plants to themanufacture of isoethane, due to the environmental problems posedby MTBE.

 

> 
***Capital Expenditure***

See "Item 5 – Liquidity and Capital Resources –Capital Expenditure by Segment".

 

 

**Petrochemicals**

Eni operates in the businesses of olefins and aromatics, basicand intermediate products, polystyrene, elastomers andpolyethylene. Its major production sites are located in Italy andWestern Europe.

In 2006, sales of petrochemical products (5,276 ktonnes)decreased by 100 ktonnes from 2005, down 1.9%. The main factorsfor the decline concerned: (i) basic petrochemicals (down 4.6%),due to lower product availability as a consequence of the outageof the Priolo cracker due to an accident occurred at the nearbyrefinery; (ii) elastomers (down 2.3%), due to a slowrecovery of the Ferrara and Ravenna plant performance aftermaintenance activities carried out in the first half of the year;and (iii) intermediates (down 10.4%), due to weak demand. Thesenegatives were offset in part by increased sales of polyethylene(up 3.2%) and aromatics (in particular, xylenes up 4.8%),reflecting good market conditions.

Production (7,072 ktonnes) declined by 209 ktonnes from 2005,down 2.9%, in particular in elastomers, polyethylene and basicpetrochemicals, where lower production due to the standstill ofthe Priolo cracker was offset in part by higher production at thePorto Marghera, Sarroch and Dunkerque plants. Styrene productionalso increased, reflecting poor performance in 2005 from plantoutages and technical issues.

Nominal production capacity was in line with 2005. Risingnominal capacity in a few crackers was offset in part by theoutage of the Priolo cracker and related plants. Average plantutilization rate calculated on nominal capacity declined by 2percentage points from 78.4% to 76.4%, mainly due to lowerproduction volumes.

Approximately 35.2% of total production was directed toEni’s own productions cycle (35.8% in 2005). Oil-basedfeedstock supplied by Eni’s Refining & MarketingDivision covered 10% of requirements (23% in 2005).

Prices of Eni’s main petrochemical products increased onaverage by 12%; all business areas posted increases. The mostrelevant increases were registered in: (i) olefins (up 16.5%), inparticular ethylene and propylene; (ii) aromatics (up19.6%), in particular xylenes; (iii) polyethylene (up 12%) withincreases in all products; (iv) styrenes (up 8.2%), inparticular styrene and polystyrenes; and (v) elastomers (up4.2%), in particular BR and TPR rubbers.

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##### Table of Contents

The table below sets forth Eni’s main petrochemicalproducts availability for the periods indicated.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

|   | **(ktonnes)** |
|--------|---------------|

| Basic petrochemicals                       |   | 4,304     |   |   | 4,013     |   |   | 4,236     |   |   | 4,450     |   |   | 4,275     |   |
|--------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Styrene        and elastomers              |   | 1,538     |   |   | 1,635     |   |   | 1,606     |   |   | 1,523     |   |   | 1,545     |   |
| Polyethylene                               |   | 1,274     |   |   | 1,259     |   |   | 1,276     |   |   | 1,309     |   |   | 1,252     |   |
|                                       |   |           |        |   |           |        |   |           |        |   |           |        |   |           |        |
|                                       |   | **7,116** |   |   | **6,907** |   |   | **7,118** |   |   | **7,282** |   |   | **7,072** |   |
|                                       |   |           |        |   |           |        |   |           |        |   |           |        |   |           |        |
| Internal consumption                       |   | (2,607    | )      |   | (2,651    | )      |   | (2,616    | )      |   | (2,606    | )      |   | (2,488    | )      |
| Purchases        and change in inventories |   | 984       |   |   | 1,010     |   |   | 685       |   |   | 700       |   |   | 692       |   |
|                                       |   |           |        |   |           |        |   |           |        |   |           |        |   |           |        |
| **Total products**                         |   | **5,493** |   |   | **5,266** |   |   | **5,187** |   |   | **5,376** |   |   | **5,276** |   |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

The table below sets forth Eni’s sales of mainpetrochemical products by volume for the periods indicated.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |          |   |          |   |          |   |          |   |          |

|   | **(ktonnes)** |
|--------|---------------|

| Basic petrochemicals          |   | 2,894     |   | 2,704     |   | 2,766     |   | 3,022     |   | 2,882     |
|-------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|
| Styrene        and elastomers |   | 1,151     |   | 1,171     |   | 1,038     |   | 1,003     |   | 1,000     |
| Polyethylene                  |   | 1,448     |   | 1,391     |   | 1,383     |   | 1,351     |   | 1,394     |
|                          |   |           |   |           |   |           |   |           |   |           |
| **Total sales**               |   | **5,493** |   | **5,266** |   | **5,187** |   | **5,376** |   | **5,276** |
|                          |   |           |   |           |   |           |   |           |   |           |

 

> 
*Basic petrochemicals*

Sales of basic petrochemicals of 2,882 ktonnes declined by 256ktonnes from 2005, down 4.6%, mainly due to the outage of thePriolo cracker. Declines were registered in olefins (down 1.5%),intermediates (down 10.4%) and benzene (down 23%). Increasingsales in xylene (up 4.8%) and ethylene (up 3.2%) reflected higherproduct availability at other plants.

Basic petrochemical production (4,275 ktonnes) decreased by175 ktonnes, down 3.9%. Lower production resulting from thePriolo cracker outage was offset in part by higher production atthe Porto Marghera and Dunkerque.

> 
*Styrene and elastomers*

Styrene sales (587 ktonnes) were slightly higher from 2005 (up1.1%). Increasing sales in styrene reflected higher productionavailability. Declines were registered in compact polystyrene(down 1.5%) due to a lack of feedstock owing to the outage of thePriolo cracker and in ABS/SAN due to the outage of the EniPowerpower station with a negative impact on the Mantova plant.

Elastomers sales (413 ktonnes) increased by 1.2% from 2005excluding the impact of the shutdown of the Champagnier plant inthe second half of 2005. Increases concerned all products, withthe exception of BR rubbers (down 8%) due to a maintenancestandstill of the Ravenna Neocis plant.

Styrene production (1,088 ktonnes) increased by 3.8%reflecting mainly technical issues and a maintenance standstillthat occurred at the Mantova plant in 2005.

Elastomer production (457 ktonnes) decreased by 1.3% excludingthe impact of the shutdown of the Champagnier plant, due to aweak demand in BR (down 8.5%) and SBR (down 3.6%) rubbers.Production volumes of other rubbers increased in line with trendsin demand.

> 
*Polyethylene*

Polyethylene sales (1,394 ktonnes) were up 43 ktonnes or 3.2%,from 2005, reflecting positive market conditions for LLPDE (up9.3%) and HPDE (up 1.5%). These increases were offset by adecline in EVA (down 3.7%) due to certain technical issues at theOberhausen plant.

53

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##### Table of Contents

Production (1,252 ktonnes) declined by 57 ktonnes, or 4.4%,mainly due to the standstill of the Priolo cracker and relatedplants.

 

> 
***Capital Expenditure***

See "Item 5 – Liquidity and Capital Resources –Capital Expenditure by Segment".

 

**Engineering & Construction**

Eni operates in engineering, oilfield services andconstruction both offshore and onshore through Saipem, a companylisted on the Italian Stock Exchange (Eni’s interest 43%).Saipem boasts solid competitive positions in the relevant marketsthanks to technological and operational skills, engineering andproject management capabilities and ability to operate in complexenvironments, owing also to the integration with Snamprogetti.Leveraging on these strengths and rising demand for drillingequipment and oilfield services, Saipem intends to carry out thefollowing fundamental strategies: (i) gain market share in thefield of large offshore and onshore projects for the developmentof hydrocarbon fields; (ii) develop its presence in the strategicfield of gas monetization and heavy crude upgrading, includingexpansion in floating LNG treatment systems for liquefaction andregasification of LNG; (iii) intensify efficiency improvementactions in all its activities, in particular by reducing supplyand execution costs while maintaining a high utilization rate ofequipment and improving its flexible structure in order to reducethe impact of possible negative cycles; and (iv) supportEni’s investment plans.

Orders acquired in 2006 amounted to euro 11,172 million.Approximately 91% of new orders acquired were represented by workto be performed outside Italy, and 24% by work originated by Enicompanies. Order backlog was euro 13,191 million at December 31,2006 (euro 10,122 million at December 31, 2005). Projects to becarried out outside Italy represented 90% of the total orderbacklog, while orders from Eni companies amounted to 20% of thetotal.

|   |   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|--------|----------|--------|----------|--------|----------|
|   |   |   |          |   |          |   |          |

| **Orders acquired**                    |   | (million        euro) |   | **5,784** |   | **8,395**  |   | **11,172** |
|----------------------------------------|--------|-----------------------|--------|-----------|--------|------------|--------|------------|
| Offshore        construction           |   |                  |   | 2,867     |   | 3,096      |   | 3,681      |
| Onshore construction                   |   |                  |   | 2,535     |   | 4,720      |   | 4,923      |
| Offshore        drilling               |   |                  |   | 107       |   | 367        |   | 2,230      |
| Onshore drilling                       |   |                  |   | 275       |   | 212        |   | 338        |
| Originated        by Eni companies     |   | (%)                   |   | 14        |   | 11         |   | 24         |
| To be carried out outside Italy        |   | (%)                   |   | 90        |   | 90         |   | 91         |
| **Order        backlog**               |   | (million euro)        |   | **8,521** |   | **10,122** |   | **13,191** |
| Offshore construction                  |   |                  |   | 3,420     |   | 3,721      |   | 4,283      |
| Onshore        construction            |   |                  |   | 4,488     |   | 5,721      |   | 6,285      |
| Offshore drilling                      |   |                  |   | 317       |   | 382        |   | 2,247      |
| Onshore        drilling                |   |                  |   | 296       |   | 298        |   | 376        |
| Originated by Eni companies            |   | (%)                   |   | 8         |   | 7          |   | 20         |
| To be        carried out outside Italy |   | (%)                   |   | 84        |   | 88         |   | 90         |

|   |   |   |  |   |  |   |  |
|--------|--------|--------|--|--------|--|--------|--|

 

> 
***Business areas***

*Offshore construction*

Saipem is well positioned in the market of large, complexprojects for the development of offshore hydrocarbon fieldsleveraging on its technical and operational skills, supported bya world-class fleet, the ability to operate in complexenvironments, and engineering and project management capabilitiesacquired on the market over recent years. Saipem intends toenhance its market share by means of strengthening its EPICoriented business model and its relationships with major oilcompanies and NOCs. Higher levels of profitability are expectedto be achieved through outsourcing certain engineering andbuilding activities to low cost centers. Investments will befocused on constantly upgrading and improving technicalcharacteristics and capabilities of Saipem’s world-classfleet, and to build local construction centers.

Its offshore construction fleet is made up of 25 vessels and45 robotized vehicles able to perform advanced subsea operations.Among its major vessels are: (i) Saipem 7000, a semi-submersiblevessel with dynamic positioning system, with 14 ktonnes of liftcapacity (the highest of this kind in the world), capable to laypipelines using the J-lay technique to the maximum depth of 3,000meters. 

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This vessel has been used to lay the Blue Stream pipeline inthe waters of the Black Sea at the record depth of 2,150 meters;(ii) the Saibos FDS for the development of underwater fields indynamic positioning, provided with cranes lifting up to 600tonnes and a system for J-lay pipe laying to a depth of 2,000meters; (iii) the Castoro 6 semi-submersible vessel, capable oflaying pipes in waters up to 1,000 meters deep; (iv) the Saipem3000 multifunction vessel for the development of hydrocarbonfields, derived from the transformation of the Maxita that canlay rigid and flexible pipes and is provided with cranes capableof lifting over 2 ktonnes; and (v) the Semac semi-submersiblevessel used for large diameter underwater pipe laying. The fleetalso includes remotely operated vehicles (ROV), highlysophisticated and advanced underwater robots capable ofperforming complex interventions in deep waters.

In February 2007, a contract for the construction of a newpipe layer has been signed. The unit, with a carrying capacity of25 ktonnes and a lifting capacity of 600 tonnes by means ofcrane, will be manufactured in China.

The most significant orders won in 2006 in Offshoreconstruction were: (i) a contract for the conversion of an oiltanker into an FPSO unit with production capacity of 1.8 mmBBLfor the development of the offshore Gimboa field in Angola forSonangol P&P; an EPIC contract for Burullus Gas Co for theconstruction of underwater systems for the development of eightnew wells within the expansion plan of the Scarab/Saffron andSimian fields offshore in the Nile Delta; an EPIC contract forCNR International Ltd for the construction of three wellheadtowers, a support platform, and interconnecting pipelines andumbilicals within the development of the offshore Olowi field inGabon.

> 
*Onshore construction*

Saipem operates in the construction of plants for hydrocarbonproduction (separation, stabilization, collection ofhydrocarbons, pumping stations, water injection) and treatment(removal and recovery of sulfur dioxide and carbon dioxide,fractioning of gaseous liquids, recovery of condensates) and inthe installation of large onshore transport systems (pipelines,compression stations, terminals). Saipem intends to captureopportunities arising from expected increasing demand from oilmajors, by leveraging on its solid competitive position andintegration with Snamprogetti engineering capabilities.

The main operation areas are Africa and the Middle East.Saipem also boasts an established presence in remote areas suchas the Caspian Sea and Far East Russia, leveraging on its abilityto operate in hostile environments, managing complex projects andenhancing local content, in addition to providing on landservices complementing offshore activities (key factor inprojects in areas such as the Caspian Sea).

The most significant orders won in 2006 in Onshoreconstruction were: (i) an EPC contract for Saudi Aramco for theconstruction of four trains for gas and crude separation with atotal capacity of 1.2 mmBBL/d and production facilities withinthe development of the onshore Khursaniyah field in Saudi Arabia;(ii) an EPC contract for Shell Petroleum Development Co ofNigeria for the laying of pipelines, flowlines and compositefiber optic and high voltage electrical cables within thedevelopment Gbaran project. The contract was won in consortiumwith Desicon Engineering Ltd; and (iii) an EPC contract forCanaport LNG for the construction of a regasification terminal,inclusive of auxiliary facilities for gas offloading, pumping,vaporization and transmission, in addition to two storage tanks.The contract was won in consortium with the Canadian company SNC- Lavalin.

> 
*Offshore drilling*

Saipem provides offshore drilling services to oil companiesmainly in West Africa, the North Sea and the Mediterranean Sea.It boasts significant market positions in the most complexsegments of deep and ultra-deep offshore leveraging on theoutstanding technical features of its drilling platforms andvessels, capable of drilling holes at a maximum depth of 9,200meters. Demand for drilling services is expected to increase infuture years reflecting exploratory and development plans of oilmajors, leading to a substantial rise in tariffs due to currentequipment shortage. In view of this, Saipem is planning to builda new drilling rig capable of reaching a 10,000 meter drillingdepth.

Its offshore drilling fleet consists of 10 vessels properlyequipped for its primary operations and some drilling plantsinstalled on board of fixed offshore platforms. One of its mostimportant offshore drilling vessels is the Saipem 10000, designedto explore and develop hydrocarbon reservoirs operating in excessof 3,000 meters water depth in full dynamic positioning. The shiphas a storage capacity of 140,000 BBL and can maintain a steadyoperating position without anchor moorings by means of 6computerized azimuth thrusters, which offset and correct theeffect of wind, waves and current in real time. The vessel isoperating in ultra deep waters (over 1,000 meters) in WestAfrica. Other relevant vessels are Scarabeo 5 and 7, third andfourth generation semi-submersible rigs able to operate at depthsof 1,900 and 1,200 meters of water, respectively.

The most significant contracts awarded in Offshore drillingduring the period include: (i) a 16-month long contract for theuse of the semi-submersible drilling platform Scarabeo 7 inNigeria for ExxonMobil; (ii) a 49-month long contract for the useof the semi-submersible drilling platform Scarabeo 5 in Norwayfor Statoil; and (iii) a 27-month long contract for the use ofthe semi-submersible drilling platform Scarabeo 3 in Nigeria forAddax Petroleum.

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> 
*Onshore drilling*

Saipem operates in this area as main contractor for the majorinternational oil companies executing its activity mainly inSaudi Arabia, North Africa and Peru, where it can leverage on itsknowledge of markets, long-term relations with customers andintegration with other business areas. Onshore drilling isconducted through 23 drilling platforms and 15 workover plantsthat can drill to 10,000-meter depths in high pressure and hightemperature environments.

The most significant orders won in 2006 in Onshore drillingwere: (i) the first one for PDVSA the charter of a rig inVenezuela for five years; and (ii) the second one for EniRepsa,the charter of a rig in Saudi Arabia, due to perform the drillingof four wells, plus the option of a further two wells. Theduration of this contract is estimated at approximately twoyears.

 

> 
***Capital Expenditure***

See "Item 5 – Liquidity and Capital Resources –Capital Expenditure by Segment".

 

**Other activities**

Eni’s other activities are organized as follows:

| • |   | "Other activities"        include only Syndial SpA (former EniChem) which runs        minor petrochemical activities and reclamation and        decommissioning activities pertaining to certain        businesses which Eni divested in past years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | "Corporate and        financial companies", including Eni Corporate and        some of Eni’s subsidiaries engaged in treasury and        other services. Eni Corporate is the department of parent        company Eni SpA performing Group strategic planning,        human resources management, finance, administration,        information technology, legal affairs, international        affairs and corporate research and development functions.        Through Enifin SpA, Società Finanziamenti Idrocarburi -        Sofid SpA, Eni International BV and Eni Insurance Ltd,        Eni carries out lending, factoring, leasing and insurance        activities, principally on an intercompany basis. It also        encompasses Eni Corporate University, AGI and other        subsidiaries engaged in diversified activities (mainly        services to Eni business segments, such as real estate        services, general purposes services, corporate research        and training). Enifin was incorporated into the parent        company Eni SpA effective January 1, 2007. |

Management does not consider Eni’s activities in theseareas to be material to its overall operations.

 

> 
***Seasonality***

Eni’s results of operations reflect the seasonality indemand for natural gas and certain refined products used inresidential space heating, the demand for which is typicallyhighest in the first quarter of the year, which includes thecoldest months, and lowest in the third quarter, which includesthe warmest months.

 

**Research and Development**

Eni’s commitment to technological research and innovationunderscores a fundamental belief that technology is key toincrease our competitive advantage over the long-term and topromote sustainable growth. Future global challenges requireingenuity and commitment: from the environmental and climateissues to the increasingly difficult access to hydrocarbonreserves large, but mainly controlled by producing countries;from the identification of relevant discontinuities in theproduction of energy from renewable sources to the optimizationof production processes up to the resolution of problems existingin countries where Eni has been present for a long time or whereit recently entered.

Eni is conducting research aimed primarily at reducing thecosts of finding and recovering hydrocarbons, upgrading heavyoils, monetizing stranded gas and protecting the environment.Over the next four years Eni intends to invest euro 1.5 billionto support its research and development (R&D) strategy. Morespecifically, Eni’s main R&D fields regard:

| • |   | reserve replacement and        reduction of mineral risk;                                                                                                                                       |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | production and monetization        of non-conventional hydrocarbon reserves and optimal        management of reserves with high hydrogen sulfide and        sulfur content;                     |
| • |   | delivering more gas to        market, monetizing associated gas and stranded gas;                                                                                                               |
| • |   | improvement of fuel quality        and performance in light of the evolution of engines to        increasingly perfected and efficient systems with lower        impact on the environment; and |

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| • |   | efficient use of fossil        fuels through an improvement in refining yields and an        optimal use of each fuel entailing a lower environmental        impact. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

With regard to environmental protection, Eni intends todevelop the "Along with Petroleum" program aimed atidentifying and developing research projects on the most advancedaspects of large scale use of renewable energy sources and energyefficiency. In particular, Eni expects to focus on the fields ofgreenhouse effect mitigation through bio-fuels, photovoltaics,solar energy, hydrogen production from renewable sources as wellas carbon dioxide capture and geological sequestration.

In 2006 Eni invested euro 222 million (euro 204 million in2005), of these 39% were directed to the Exploration& Production segment, 32% to the Refining &Marketing segment, 22% to the Petrochemicals segment and 7% tothe Engineering & Construction segment.

At December 31, 2006, a total of 1,160 persons were employedin research and development activities. In 2006 a total of 39applications for patents were filed.

A description of the main technologies under development orcurrently applied is provided below.

ADVANCED DRILLING SYSTEMS AND WELL TESTINGEni developed significant industrial applications of innovativetechnologies enabling to drill highly complex wells with greateroperating efficiency.

The "Geosteering" project developed by Eni in jointventure with Shell aims at the development of technologiescapable of providing geological information on not yet drilledlayers (around the scalpel up to the surface) while drilling.

In 2006, various downhole prototypes have been made and in thesecond half of the year the technology was tested in a well.Testing is expected to continue until the first half of 2007.

Referring to drilling activities, some new technologies havebeen tested:

| • |   | Extreme Lean Profile,        development of "slim" well techniques        applicable to narrow wells;                                                                                                    |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | Eni Circulation Device,        avoids the danger of "keep of the bars" during        the drilling activity;                                                                                              |
| • |   | Light Drill Pipe, based on        the use of aluminum bars in strongly deviated wells; and                                                                                                                         |
| • |   | Zero Emission Well Testing,        a field evaluation methodology by fluid injection (with        no emissions) based on know-how and Eni’s software,        as opposed to conventional pre-production tests. |

NUMERIC AND HIGH RESOLUTION GEOPHYSICAL PROSPECTING TECHNIQUESDevelopment of the "Steam 3D" oil system simulator,able to represent the evolution of complex geological structuresover time, has been completed. Development continues on theproprietary CRS technology (3D Common Reflection Surface Stack)which aims to allow prospecting in areas characterized by lowseismic response.

First application of the following technologies has been done:

| • |   | CSEM (Controlled Source        ElectroMagnetic), which enables Eni to collect data prior        to drilling with regard to the presence of hydrocarbons,        reducing exploration risk and increasing the reliability        of reservoir measurements through electric resistivity of        the seabed; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | "Multipoint        Statistic" and "Process Oriented Modeling"        which help identify and locate producible reserves in a        specific reservoir;                                                                                                                                  |
| • |   | "Integrated Asset        Modeling", which optimizes the development and the        production of a field through the integration of oilfield        models and onshore facilities;                                                                                                                 |
| • |   | First application of a        proprietary technology specifically aimed at "tight        reservoirs" which assists in foreseeing the        productivity increase achievable through operations on        induced fractures.                                                                       |

SULFUR MANAGEMENTIn 2006 the integrated research program Sulfur and H2Smanagement in E&P operations related to the handling of gaswith high H2S content has been completed. Aninnovative proprietary system called Concrete Wall for themassive storage of sulfur and a bulk removal technology of H2S have beendeveloped. In 2007 demonstration facilities for the handling andstorage of sulfur are expected to be developed along with a studyregarding the behavior of materials in very acidic environmentsand under extreme pressure and temperature conditions.

GAS TO LIQUIDS (GTL)The conversion of gas to liquids is a key technology for the useof natural gas on a large scale for the production of highquality fuels, in particular diesel fuel, and therefore itreceives special attention by all oil majors due to its strategicvalue.

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In 2006 in cooperation with IFP/Axens, Eni completed thetechnology handbook for this proprietary technology for theconversion of gas to liquids via Fischer-Tropsch synthesis andthe basic engineering of a 37 KBBL/d industrial unit.

In 2007 some issues will be addressed regarding the risks ofthe transition to the subsequent industrial scale:

| • |   | mechanic validation on the        maximum industrial scale of the catalyst for the FT        synthesis;                                 |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
| • |   | validation by qualified        builders of the mechanic design of the reactor to be        applied to the maximum industrial scale; and |
| • |   | tweak of a water treatment        scheme produced in the synthesis process.                                                             |

CONVERSION OF HEAVY CRUDE AND FRACTIONS INTO LIGHT PRODUCTSTesting continued at the Taranto demonstration plant ofEni’s proprietary technology EST, a process of catalytichydroconversion in the slurry phase of non conventional crude,extra heavy crude and refining residues that allows the refineryto convert asphaltenes (the hard fraction of heavy crude) totallyinto naphtha, kerosene, diesel fuel. In particular, a four-monthtest period has been carried out using a residue from a Canadiantar sand, confirming expected conversion yields and performancestability. In 2007 Eni plans to complete the collection ofinformation for designing and building its first industrialplant.

SCT-CPO PROJECT (SHORT CONTACT TIME - CATALYTIC PARTIALOXIDATION)At the Milazzo research center the SCT-CPO (partial catalyticoxidation with short contact time of liquid and gaseoushydrocarbons) technology has been validated on the pilot scalefor producing hydrogen at competitive costs, also in medium tosmall sized plants with higher flexibility as compared torefinery feedstocks. In 2007 Eni plans to complete the collectionof information for designing and building its first industrialplant.

NATURAL GAS HIGH PRESSURE TRANSPORT (TAP)The goal of the TAP project is to develop Long Distance - HighCapacity - High Pressure - High Grade technology with thefollowing features:

| • |   | transportation on distances        greater than 3,000 kilometers; |
|--------|--------|-------------------------------------------------------------------|
| • |   | 20-30 BCM of natural gas        conveyable per year;              |
| • |   | pressure equal to or greater        than 15 MPa; and              |
| • |   | use of high and very high        grade steel.                     |

This technology allows Eni to greatly reduce natural gasconsumption for the operation of compressor stations. In 2006testing continued on two existing infrastructures:

| • |   | a 10-km (6-mile) long,        high-resistance X80, steel line integrated in the Snam        Rete Gas system; and                                                  |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | two pilot high-resistance        X100 steel lines (a total length of 750 meters) able to        support fluctuating pressure in a range of 135 to 150        bar. |

After completing the pressure test on these two pilot lines, acrack propagation test has been scheduled for one of the two.

In 2006 the first version of the Technology Handbook has beenpublished and a hypothetical 3,400-kilometer long gas pipeline inX100 steel has been designed connecting Karachaganak oilfield(Western Kazakhstan) with Central Europe.

ENVIRONMENTAL PROTECTIONDevelopment of technological solutions aimed at minimizing theenvironmental impact of exploration, refining and utilization ofhydrocarbons continued throughout 2006.

The opportunity to test the conversion of CO2 inenergy vectors via biofixation on a demonstrative scale will beevaluated in 2007.

Main activities carried out or undertaken in 2006 include thefollowing:

| • |   | Green Diesel - the project        aims at the production of biodiesel in refineries by        means of a new process of hydrocracking of vegetable oils        developed in collaboration with an international partner; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | Ensolvex - the project is        aimed at the further industrial application of the        process for reclaiming soils polluted by organic        substances; and                                                       |
| • |   | EWMS (Early Warning        Monitoring System) - the activity consist in the        application of research findings of an advanced control        and remote monitoring project.                                         |

GHG PROJECT (GREENHOUSE GASES)Work continued on the integrated Greenhouse Gases researchprogram, aimed at verifying the industrial feasibility of thegeological sequestration of CO2 in depleted fields andsalty aquifers. The technical feasibility study of the geologicalsequestration of CO2 has been completed and in 2007,Eni expects to start testing in the field.

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REFORMULATION OF FUELS AND LUBRICANTSEni continued its program to improve its "Blue" fuelline of products (BluDiesel and BluSuper). It also started a newphase of its clean diesel fuel program aiming at identifying theoptimal formula for a diesel fuel with high performance and lowparticulate emissions using as benchmark GTL Fischer-Tropschdiesel oil (obtained from the conversion of natural gas intoliquids - GTL project). Research activities will be conducted onthe design of refining facilities for producing this product.

A process of hydro-dearomatization of certain refiningfeedstock with a high content of aromatics (e.g. the light cycleoil produced by fluid catalytic crackers) is being developed. Adouble-function, proprietary catalyst has been developed able toreduce hydrogen consumption and certain by-products. The projectis progressing on a pilot scale.

Monitoring on the mock-up distribution of the"ADBlue" in the Agip corner sale, at Assago Ovest(Milan) continued. The ADBlue (water solution with urea at 32.5%)can be used to remove nitrogen oxide (NOx) fromexhaust gas of Diesel commercial motors with catalytic disposalfor the selective reduction of NOx (SelectiveCatalytic Reactor).

BIO FUEL AND HEAVY CRUDE CONVERSION: DEAL WITH PETROBRASAs part of the development of technologies for fuel qualityenhancement and the conversion of heavy crude and fractions intolight products, in March 2007 Eni signed an agreement withPetrobras, the world’s leading company in the large-scaleproduction of bio-ethanol. The two partners will combine theirproprietary technologies to jointly develop projects for theproduction of bio-fuels in other countries.

In addition, they will study joint projects to assess theapplication of the Eni Slurry Technology (EST) in Brazil in theframework of a broader partnership involving both upstream anddownstream joint initiatives.

 

**Insurance**

Eni constantly assesses its exposure for the Italian andforeign activities that are mainly covered through the OilInsurance Limited ("OIL"), a mutual insurance andreinsurance company that provides its members a broad coveragetailored to the specific requirements of oil and energycompanies. Eni makes use of a captive insurance company thatcovers the risks and implements Eni’s Worldwide InsuranceProgram re-insured with high quality securities in order tointegrate the terms and conditions of the OIL coverage.

An insurance risk manager works in close contact with managersdirectly involved in core business activities in order toevaluate potential risks and their financial impact on the Group.This process allows Eni to define a constant level of riskretention and, conversely, the amount of risk to be transferredto the market.

The level of insurance maintained by Eni is generallyappropriate for the risks of its businesses.

 

**Environmental Matters**

> 
***Environmental Regulation***

Eni is subject to numerous EU, international, national,regional and local environmental, health and safety laws andregulations concerning its oil and gas operations, products andother activities, including legislation that implementsinternational conventions or protocols. In particular, these lawsand regulations require the acquisition of a permit beforedrilling for hydrocarbons may commence, restrict the types,quantities and concentration of various substances that can bereleased into the environment in connection with exploration,drilling and production activities, limit or prohibit drillingactivities on certain protected areas, provide for measures to betaken to protect the safety of the workplace and health ofcommunities affected by the company’s activities, and imposecriminal or civil liabilities for pollution resulting from oil,natural gas, refining and petrochemical operations. These lawsand regulations may also restrict emissions and discharges tosurface and subsurface water resulting from the operation ofnatural gas processing plants, petrochemicals plants, refineries,pipeline systems and other facilities that Eni owns. In addition,Eni’s operations are subject to laws and regulationsrelating to the production, handling, transportation, storage,disposal and treatment of waste materials. Environmental laws andregulations have a substantial impact on Eni’s operations.Some risk of environmental costs and liabilities is inherent incertain operations and products of Eni, and there can be noassurance that material costs and liabilities will not beincurred.

A brief description of major environmental laws impacting onEni’s activity follows.

Decree No. 152/2006 "Environmental legislation"based on the Law No. 308/2004 "Government Delegated law forthe reorganization, coordination and integration of legislationon the environment and measures of direct application" waspublished in Gazzetta Ufficiale No. 88 of April 14, 2006 and cameinto force on April 29, 2006. 

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The Decree No. 152/2006 has reformulated the whole Italianenvironmental law with the major focus on the environmentalimpact assessment, strategic environmental assessment, soilprotection, water protection, waste management and remediationfor contaminated sites, air protection and reduction of emissionsinto the atmosphere and environmental liability. ThisConsolidated Act on the Environment introduces important changesand revisions of the previous environmental laws in the field.The most important revisions for Eni’s activities concernwaste management, remediation for polluted sites, waterprotection and environmental liability.

The fourth part of Decree No. 152/2006 relating wastemanagement and remediation of polluted sites introduces a newwaste, by products and safety measures (for operational sites)definition, modifies the notion of discharge, soil and rockexcavations, responsibility range of willful owner, temporarydeposit (for hazardous and non hazardous products, with orwithout quantitative limits). Also a new approach to sitecontaminations is implemented based on risk analysis determiningthe need for remediation and defining specific site objectivesand their extent.

These provisions are under review following a proposed decreealready approved by the State-Regions Conference, providing forthe limits approach for the sites where reclamation andremediation activities have begun under the previous regulatoryframework (Decree No. 471/1999). This modification backed by theState-Regions Conference could result in an increase in futureenvironmental expenses that Eni expects to incur for siteremediation and reclamation.

The third part of the Decree No. 152/2006 regulates waterprotection, modifying the previous legislation and implementingthe Water Framework Directive (2000/60/CE, so called WFD). Theobjective of this section of the Decree No. 152/2006 is to enactthe requirements of the WFD and to guarantee the achievement ofcertain water quality objectives by 2015 as foreseen by the WFD.In order to achieve this target, all the water bodies must complywith specified fixed quality standards by December 31, 2008ensuring the achievement on an intermediate water qualityobjective in view of the 2015 deadline. The legislator introducesa new definition of the discharge according to which every directdischarge to soil, subsoil and groundwater containing pollutantsis prohibited. All discharges of industrial waste water tosuperficial waters must comply with defined limits and must bepreviously authorized. The authorization must be renovated everyfour years and requested one year in advance.

However, there can be no assurance that there will not be amaterial adverse impact on Eni’s operations due to measuresadopted by local authorities whenever the quality of a certainwater source does not comply with set standards due to theindustrial activity of all plants located above that watersource. Moreover, there is the risk of mandatory closure forindustrial plants, in case a request for the authorization ofdischarge of dangerous substances is filed with a publicadministration with no response within a set deadline (up to sixmonths).

The sixth part of the Decree No. 152/2006 concerns the overallregulation of the environmental liability and implements theDirective 2004/35/CE. The Decree introduces a new definition ofenvironmental damage and indicates specified cases of itsapplication. According to the legislation the environmentaldamage is any significant and measurable deterioration, direct orindirect, of the natural resources or of its utility. Theprincipal objective is prevention and remediation ofenvironmental damage and restoration to the previous condition.The eventual impact on Eni’s activities might be significantin the case of the recognized responsibility for environmentaldamage. In this situation, Eni could be obliged to remediate tothe previous condition or provide compensation.

Directive 96/61/CE: the purpose of the Integrated PollutionPrevention and Control (IPPC) is to ensure a high level ofprotection of the environment taken as a whole, coveringemissions into air, water and land, generation of waste, use ofraw materials, energy efficiency, noise, prevention of accidents,and restoration of the site upon closure. According to thisDirective, operators of industrial installations, covered byAnnex I of the IPPC Directive, are required to obtain anauthorization (environmental permit) from the authorities in theEU countries. New installations, and existing installations whichare subject to "substantial changes", have beenrequired to meet the requirements of the IPPC Directive sinceOctober 30, 1999. Other existing installations must be broughtinto compliance by October 30, 2007. This is the key deadline forthe full implementation of the Directive.

On May 7, 2005, Italian Legislative Decree No. 59/2005(Gazzetta Ufficiale No. 93 - April 22, 2005) entered into forcein complete accordance with the European Directive (IPPC),abrogating definitively the Legislative Decree No. 372/1999. Incompliance with the calendars published by the competentauthority, local and/or National, all Eni installations under theIPPC Directive, have presented the requested authorizations inaccordance with the format and criteria published in the DECFebruary 7, 2007.

According to the IPPC Directive, the Member States of the EUhad to communicate their national values of emissions into theatmosphere, wastes produced and managed and, finally, dischargesinto water of certain compounds specified in the annexes of thedirective related to EPER (European Pollutant Emission Register).Eni plants under the Directive have reported their data to theauthority in charge of preparing the Italian nationalcommunication.

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Regulation No. CE/166: in January 2006 the EC was issued thePollutant Releases and Transfers Register (PRTR), which is anextension of the previous EPER registers and deals with all theemissions and transfers of 91 pollutants to air, water, soil andtransfer off-site of hazardous and non hazardous wastes. Recentlythe European Commission has been published in GUEE May 16, 2007(2007/C 110/01) the definitive replacement of the EPER Registerby the European Pollutant Release and Transfer Register (E-PRTR).

The PRTR registers will be operational in the year 2009, withrespect to 2007 environmental data. To comply with theobligations, Eni is implementing a Group wide IntegratedEnvironmental Information System, able to gather, manage andreport all the pollutants requested by PRTR Regulations.

 

> 
***HSE Activity for the Year***

Eni is committed to continuously improve its model for HSEIntegrated Management System and its HSE culture to challenge thebest in class among the competitors, to meet the evolvingsustainability requirements for the energy industry and tominimize the risk associated with all its activities. Thiscommitment produced a significant renewal of the HSE Corporateorganization in 2005 and consequently the related processes havebeen subjected to a campaign of assessment and improvement; thishas led first to the reengineering of the Company guidelines onhealth, safety, environment and public safety.

In 2006 Eni’s business units continued to obtaincertifications of their management systems and operating unitsaccording to the most stringent international standards. As ofDecember 31, 2006, the total number of certifications obtainedwas 185 (155 in 2005), of which 90 certifications according tothe ISO 14001 standard and 6 certifications according to the EMASstandard. EMAS is the Environmental Management and Audit Schemerecognized by the European Union.

*Environment*In 2006, Eni incurred a total expenditureof euro 1,160 million for the protection of environment, up 7%from 2005. Current environmental expenditure representedapproximately 66% of the whole expenditure and related mainly tocosts incurred with respect to remediation and reclamation ofcertain industrial sites divested in the past, mainly in Italy.Capitalized environmental expenditure related mainly to soil andsubsoil protection, water management and air emissions.

*Safety* Eni considers of capital importance the safetyof its workers and contractors, of the people living in the areawhere its industrial activities are located and of its assets,whether producing now or in the future. Its strategy has beenbased on:

| • |   | the dissemination of a        safety culture within its organization; and |
|--------|--------|---------------------------------------------------------------------------|
| • |   | minimization of exposure to        risk in all production activities.     |

The most important instruments for implementing this strategyare: the close contact with the Eni organizations in the field bydedicated assessments and the continuous upgrade of the safetysystem, technical guidelines and procedures, to meet the evolvinginternational standards.

As of December 2006 a total of forty-eight internationalsubsidiaries have been assessed in twenty-one countries, thirteenof them twice in a three year cycle. These assessments in thefield are one of the most important sources for all theimprovement of the safety system.

From both the field assessments and the safety data analysisand benchmarking the most important safety technical guideline inyear 2006 has been generated; it is the technical guideline onvehicles driving in non-EU countries, where for the first timeinstruments like risk assessments and dedicated management systemhave been used in this field.

In 2006, safety indicators improved from 2005. The injuryfrequency rate was 3.07, down 3%, and the injury severity ratewas 0.09, down 10% from 2005. Costs incurred to boost the safetylevels of operations and to comply with applicable rules andregulations were euro 394 million.

*Health*Activities for the protection of health aim atimproving general work conditions and are developed according tothree main principles:

| • |   | protection of        employees’ health;                           |
|--------|--------|------------------------------------------------------------------------|
| • |   | prevention of accidents and        professional diseases; and          |
| • |   | promotion of healthier        behaviors and life styles in workplaces. |

Eni has a network of 307 health care centers located in itsmain operating areas, of these 217 centers are outside Italy andare managed by expatriate and local staff (415 doctors and 442paramedics). A set of international agreements with the bestlocal and international health centers guarantees efficientservice and timely reactions to emergencies.

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In 2006, Eni boosted its E-medicine program aimed atincreasing the quality of health care provided to employees andto health operators within and outside Italy, that integratescomputerized technologies and advanced telecommunication systems.

Eni started a program of prevention for its employees, boththrough information campaigns and by means of screeningprocedures and direct actions accessed on a voluntary basis. Inthe area of prevention of infective diseases, Eni continued itscampaign for vaccination against flu that is widely followed byemployees.

Outside Italy, Eni promoted specific information campaigns forthe protection of its employees, their families and localcommunities, such as those for the prevention of malaria (inNigeria) and the prevention of HIV transmission (in Nigeria andCongo).

For employees hired in Italy and working outside Italy, Enihas a specific program that includes training on the specifichealth risks they might encounter in each country and informationon how to cope with them.

Eni also entered an agreement with International SOS thatprovides qualified health services throughout the world, as wellas repatriation in case of serious emergency situations.

In 2006 Eni incurred a total expense of euro 48 million toprotect the health of its employees.

 

> 
***Implementation of the Kyoto Protocol***

On February 16, 2005 the Kyoto Protocol entered into force andwith it the commitments of the Annex I Parties which haveratified the Protocol, including the EU and Italy. According toLaw No. 120/2002, Italy committed itself to reduce greenhouse gas(GHG) emissions by 6.5% in the period 2008-2012, as compared to1990 values. Reductions can be achieved both through internalmeasures and through a series of instruments supplementary tointernal measures. These are the so-called flexible mechanisms,which allow a Party to carry out projects in developing countries(CDM - Clean Development Mechanism) and in industrial countrieswith transition economies (JI - Joint Implementation) in order toobtain emissions credits and to purchase Assigned Amount Units(AAUs) from other Annex I countries, that have a surplus of theseKyoto units (IET - International Emission Trading).

Italy, as an EU Member State, is participating in the EUEmission Trading Scheme, regulated up by the Directive2003/87/EC, which established on January 1, 2005 the largestcarbon market in the world, setting up a system for emissiontrading targeted to industrial installations with high carbondioxide emissions.

As foreseen by the Directive, Italy has issued two NationalAllocation Plans covering the periods 2005-2007 and 2008-2012,which set out the allowances assigned to each sector andinstallation. Eni has cooperated with the Italian authoritiesresponsible for the preparation of the National Allocation Planand is also active in the utilization of the Kyoto FlexibleMechanisms. In fact, due to its presence in about 70 countries,Eni is an elective partner for carrying out CDM and JI projectsthus contributing to the Italian program of greenhouse gasemissions reduction. In December 2003 during the Conference ofParties to the Kyoto Protocol – COP9 – Eni and theMinistry of the Environment signed a Voluntary Agreement forusing flexible mechanisms, promoting CDM and JI and contributingto the sustainable development of host countries.

Law No. 216 of April 4, 2006 has implemented at national levelthe European directive 2003/87/EC. In the first period ofcommitment (2005-2007), emissions not covered by correspondingallowances are subject to a fine amounting to euro 40/tonne ofcarbon dioxide. All companies are expected to identify and carryout projects for emission reductions. Eni participates in the ETSscheme with 58 plants in Italy and 2 outside Italy, whichcollectively represent about a third of all greenhouse gasemissions generated by Eni’s plants worldwide. Eni wasassigned, for the existing installations, allowances equal to65.6 mmtonnes of carbon dioxide (of which 22.4 for 2005, 22.4 for2006 and 20.8 for 2007). Moreover, further allowances will beissued for new entrants during the period 2005-2007 (12.8mmtonnes of carbon dioxide). Following the implementation ofprojects for the reduction of emissions, in particular related tothe cogeneration of electricity and steam through high efficiencycombined cycles in refineries and petrochemical sites, emissionsof carbon dioxide from Eni’s plants were lower than permitsentitled in both 2006 and 2005.

In order to play an active role in the ETS Eni:

| (i)   |   | prepared a methodological        and organizational protocol for the accounting of        greenhouse gases emissions;                                             |
|-------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | implemented a database for a        precise evaluation of emissions;                                                                                              |
| (iii) |   | evaluated the compliance of        existing monitoring and reporting systems in plants in        order to identify improvement requirements; and                  |
| (iv)  |   | defined a system for        balancing emissions from individual plants and business        units in order to guarantee the payback of emission        rights due. |

Eni is also upgrading its ongoing program for the reduction ofenergy consumption and related CO2 emissions.

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A significant reduction potential can be derived fromproduction activities outside Italy, that in some cases, giventhe lack of local market outlets, require the flaring of naturalgas associated to oil production. The elimination of flaring andthe use of associated gas for the development of local economiesallow sustainable development while reducing greenhouse gasemissions. The validation of such projects as CDM and JI willprovide emission credits and facilitate the achievement of theItalian reduction target, as set by the Kyoto Protocol. Enialready carried out Zero Gas Flaring projects in Nigeria andCongo while others are underway. In November 2006 the NigerianKwale-Okpai project has been registered as a CDM project. Itregarded the construction of a combined cycle power station,which utilizes the associated gas to oil production formerlyflared. Moreover, Eni endorsed the Global Gas Flaring ReductionInitiative of the World Bank, in order to fight for theelimination of obstacles to the completion of gas flaringreduction projects.

The best solutions for compliance with the Kyoto Protocol arethe use of low emission energy sources and the adoption of highlyefficient technologies. To address the greenhouse gas challenge,Eni performed a detailed analysis for defining its strategy torespond to climate change and to participate in the Europeanemissions trading system, identifying a number of projects forenergy saving and emission reductions from its plants.

To ensure comprehensive, transparent and accurate accountingfor GHG emissions, which is consistent over time, Eni introduceda protocol for the accounting and reporting of greenhouse gasemissions (GHG Accounting and Reporting Protocol), which is anessential requirement for emission certification. Indeed,accurate reporting will support the strategic management of risksand opportunities related to greenhouse gases, the definition ofobjectives and the evaluation of progress.

For safer and more accurate management of GHG emissions andwith a view to supporting accounting, Eni provided all itsdivisions and business units with a dedicated database, in orderto gather and report GHG emissions according to the Protocol andto ensure completeness, accuracy, transparency and consistency ofGHG accounting as required by certification needs.

As a support to its general strategy for a sustainablemanagement of greenhouse gases, Eni continued its programs forthe development of natural gas in Italy and outside Italy, bymeans of technologically advanced projects such as the BlueStream gas pipeline from Russia to Turkey and the GreenStreampipeline from Libya to Sicily. Increased gas availability inItaly will lead to a further expansion of the gas-powerintegration, through high efficiency combined cycles with muchlower carbon dioxide emissions than coal and liquid fuels.

In the medium-term, work is underway on the separation ofcarbon dioxide and its permanent storage in geologic reservoirs,a part of the CO2 Capture Project, an internationalR&D program carried out in conjunction with other oilcompanies. In the long-term, Eni is actively engaged in thepolitical process regarding future emission reductionregulations. In particular, Eni is involved in bioenergy andbiofuels.

 

 

**Regulation of Eni’s Businesses**

> 
***Overview***

*The matters regarding the effects of recent or proposedchanges in Italian legislation and regulations or EU directivesdiscussed below and elsewhere herein are forward-lookingstatements and involve risks and uncertainties that could causethe actual results to differ materially from those in suchforward-looking statements. Such risks and uncertainties includethe precise manner of the interpretation or implementation ofsuch legal and regulatory changes or proposals, which may beaffected by political and other developments.*

 

> 
***Regulation of Exploration and Production Activities***

Eni’s exploration and production activities are conductedin many countries and are therefore subject to a broad range oflegislation and regulations. These cover virtually all aspects ofexploration and production activities, including matters such aslicense acquisition, production rates, royalties, pricing,environmental protection, export, taxes and foreign exchange. Theterms and conditions of the leases, licenses and contracts underwhich these oil and gas interests are held vary from country tocountry. These leases, licenses and contracts are generallygranted by or entered into with a government entity or statecompany and are sometimes entered into with private propertyowners. These arrangements usually take the form of licenses orproduction sharing agreements. See "Regulation of theItalian Hydrocarbons Industry" and "EnvironmentalMatters" for a description of the specific aspects of theItalian regulation and of environmental regulation concerningEni’s exploration and production activities.

Licenses (or concessions) give the holder the right to explorefor and exploit a commercial discovery. Under a license, theholder bears the risk of exploration, development and productionactivities and provides the financing for these operations. 

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In principle, the license holder is entitled to all productionminus any royalties that are payable in kind. A license holder isgenerally required to pay production taxes or royalties, whichmay be in cash or in kind. Both exploration and productionlicenses are generally for a specified period of time (except forproduction licenses in the United States which remain in effectuntil production ceases). The term of Eni’s licenses and theextent to which these licenses may be renewed vary by area.

In Product Sharing Agreement (PSAs), entitlements toproduction volumes are defined on the basis of contractualagreements drawn up with state oil companies which hold theconcessions. Such contractual agreements regulate the recover ofcosts incurred for the exploration, development and operatingactivities (cost oil) and give entitlement to a portion of theproduction volumes exceeding volumes destined to cover costsincurred (profit oil).

A similar scheme to PSAs applies to Service and"Buy-Back" contracts.

In general, Eni is required to pay income tax on incomegenerated from production activities (whether under a license orproduction sharing agreement). The taxes imposed upon oil and gasproduction profits and activities may be substantially higherthan those imposed on other businesses.

 

> 
***Regulation of the Italian Hydrocarbons Industry***

*The matters regarding the effects of recent or proposedchanges in Italian legislation and regulations or EU directivesdiscussed below and elsewhere herein are forward-lookingstatements and involve risks and uncertainties that could causethe actual results to differ materially from those in suchforward-looking statements. Such risks and uncertainties includethe precise manner of the interpretation or implementation ofsuch legal and regulatory changes or proposals, which may beaffected by political and other developments.*

 

> 
***Exploration & Production***

The Italian hydrocarbons industry is regulated by acombination of constitutional provisions, statutes, governmentaldecrees and other regulations that have been enacted and modifiedfrom time to time, including legislation enacted to implement EUrequirements (collectively, the "Hydrocarbons Laws").

*Exploration permits and production concessions* Pursuantto the Hydrocarbons Laws, all hydrocarbons existing in theirnatural condition in strata in Italy or beneath its territorialwaters (including its continental shelf) are the property of theState. Exploration activities require an exploration permit,while production activities require a production concession, ineach case granted by the Ministry of Productive Activitiesthrough competitive auctions. The initial duration of anexploration permit is six years, with the possibility ofobtaining two three-year extensions and an additional one-yearextension to complete activities underway. Upon each of the threeyear extensions, 25% of the area under exploration must berelinquished to the State. The initial duration of a productionconcession is 20 years, with the possibility of obtaining aten-year extension and an additional five-year extension untilthe field depletes.

*Royalties* The Hydrocarbons Laws require the payment ofroyalties for hydrocarbon production. Royalties are equal to 7%and 4%, respectively, for onshore and offshore production of oiland 7% for both onshore and offshore production of natural gas.

> 
*Storage of natural gas*

The right to store natural gas in depleted fields in Italy isexercised pursuant to concessions granted by the Ministry ofProductive Activities. The duration of a concession is 20 years,with the possibility for operators of obtaining at most twoten-year extensions if they complied with the storage programsand other obligations deriving from said concession as per LawNo. 239/2004. After the expiration of a concession, new storageconcessions on the same field may be granted through competitiveauctions. Pursuant to Decree No. 625/1996, unused storagecapacity can be made available to third parties, subject to theapproval of the Ministry, on a negotiated basis. Until December31, 1996, Eni had the exclusive right to store natural gas indepleted fields located in a predetermined area (the so calledExclusive Area). Decree No. 625 eliminated this exclusive right,while granting Eni the right to obtain upon application thestorage concessions effective from January 1, 1997 that wouldpreserve the rights vested with Eni during the regime ofexclusivity (based on current storage activities or certainstatutory conditions). Eni obtained the ten storage concessionswhich it had applied for.

Legislative Decree No. 164/2000 ("Decree No. 164"),which enacted the European Directive on Natural Gas 98/30/CE intoItalian legislation, regulates the Italian natural gas market.Prior to the implementation of Decree No. 164, the Italiannatural gas market lacked a legislative framework.

The most important aspects of Decree No. 164 concerningproduction and storage activities performed by Eni are thefollowing: (i) in vertically integrated enterprises, storage isto be carried out by a separate company not operating in othergas activities (such as Stoccaggi Gas Italia SpA) or by companiesengaged only in transport and dispatching activities, providedthe accounts of these two activities are clearly separated fromthe accounts of storage. 

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Existing storage concessions are subject to the Decree. Theiroriginal term was confirmed and includes relevant productionconcessions; (ii) the need for strategic storage in Italy isdefined explicitly; the burden of strategic storage is imposedupon companies importing from non-EU countries, which have toprovide a strategic storage capacity in Italy corresponding to10% of the amount of natural gas imported each year; (iii)holders of storage concessions are required to provide storagecapacity for domestic production, for strategic use and formodulation to eligible users without discriminations, wheretechnically and economically viable; (iv) modulation storagecosts are charged to shippers which have to provide modulationservices adequate to the requirements of their final customers;(v) storage tariffs criteria are determined by the Authority forElectricity and Gas in order to ensure a preset return on capitalemployed, taking into account the typical risk inherent in thisactivity, as well as volumes stored for ensuring peak suppliesand the need to incentive capital expenditure for upgrading thestorage system; and (vi) the Authority for Electricity and Gasestablishes the criteria and priority of access storage operatorshave to include in their own storage codes.

In compliance with the provisions of Article 21 of Decree No.164/2000, on October 21, 2001 all storage activities carried outwithin the Eni Group were conferred to Stoccaggi Gas Italia SpA("Stogit"), which holds ten storage concessions.

In implementation of Decree No. 164, the Decree of theMinister of Productive Activities of September 26, 2001 definedthe criteria for the determination and use of strategic storage.The utilization of natural gas volumes held under strategicstorage becomes mandatory in case of interruption or reduction ofimports from non-EU countries due to technical and unpredictablecauses, in case of emergency on the national gas network, in caseof winters colder than those expected by the Authority forElectricity and Gas in its periodic statements concerning thedetermination of modulation obligations for seasonal consumptionpeaks.

On March 3, 2006, the Authority for Electricity and Gas withResolution No. 50/2006 published the criteria for determiningstorage tariffs for a regulated period starting from April 1,2006 and ending on March 31, 2010.

According to this Resolution, the storage company calculatesrevenues for the determination of unit tariffs for storageservices by adding the following cost elements:

| (i)   |   | a return on the capital        employed by the storage company equal to 7.1% (8.33% in        the first regulated period); |
|-------|--------|----------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | depreciation and        amortization charges; and                                                                          |
| (iii) |   | operating costs.                                                                                                           |

In the years following the first year of the newly regulatedperiod, reference revenues are updated to take account ofvariations of capital employed and the impact of the indexationof depreciation charges and operating costs to consumer priceinflation lowered by a preset rate of productivity recovery.

Storage tariffs are articulated as follows:

| (i)   |   | a unit fee for the use of        space;                                                                                         |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | a unit fee for the use of        injection capacity;                                                                            |
| (iii) |   | a unit fee for the use of        off-take capacity;                                                                             |
| (iv)  |   | a unit fee for gas volumes        handling; and                                                                                 |
| (v)   |   | a unit fee to remunerate gas        availability to enable gas operators to fulfill their        strategic storage obligations. |

Applicable regulation provides for incentives to capitalexpenditure intended to develop and upgrade storage capacity byrecognizing an additional rate of return of 4% on the basic rateto capital expenditure projects aiming at developing new storagedeposits and increasing existing capacity. Such incentives areapplicable for a sixteen-year period and an eight-year period,respectively.

With Resolution No. 220/2006, the Italian Authority forElectricity and Gas approved the storage code proposed byStoccaggi Gas Italia on the basis of the framework and criteriaestablished by Resolution No. 119/2005 ("Adoption ofguarantees for free access to natural gas storage services,duties of subjects operating storage activities and rules for thepreparation of a storage code").

This code disciplines access to and provision of storageservices during normal operational conditions, regulatesprocedures for conferring storage capacities, fulfillment ofobligations concerning operating programming and fees to becharged to customers. The code has been in force since November1, 2006.

The storage company offers services according to an accesspriority established by the Italian Authority for Electricity andGas as follows:

| (i)  |   | mandatory services,        including modulation storage, mineral storage, and        strategic storage services; and |
|------|--------|----------------------------------------------------------------------------------------------------------------------|
| (ii) |   | services for operating needs        of transport companies, including hourly modulation.                             |

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The modulation storage service is finalized to satisfymodulation needs of natural gas users in terms of peakconsumption and daily or seasonal trends in consumption. Finalclients consuming less than 200,000 CM on an annual basis areentitled to a priority when satisfying their modulationrequirements. To that end, the storage company makes availableits capacity for space, injection and off-take on an annual basisin accordance with its storage code.

The mineral storage service is finalized to allow natural gasproducers to perform their activity under optimal operatingconditions, according to criteria determined by the Ministry ofEconomic Development.

The strategic storage service is destined to satisfy certainobligations of natural gas importers from countries not belongingto the EU in accordance with Article 3 of Legislative Decree No.164/2000. The relevant storage capacity dedicated to this serviceis determined by the Ministry of Economic Development.

Storage capacity is assigned by the storage company forperiods no longer than a thermal year by April 1, of each year.The first requests to be met are those for strategic storage andfor the operating balancing of the system. The residual capacityavailable and the maximum daily off-take capacity is assignedaccording to the following order of priority to: (i) holders ofproduction concessions requesting mineral storage services; (ii)entities deploying natural gas sale activities who are obliged toprovide a modulation service of their supply to their customersaccording to Article 18, paragraphs 2 and 3 of Legislative DecreeNo. 164/2000, for maximum volumes corresponding to a seasonaldemand peak with average temperatures, on the terms andconditions established by a procedure to be issued by theAuthority for Electricity and Gas; (iii) to the entitiesmentioned in (ii) above only for those additional maximum volumesrelated to a seasonal demand peak in case of certain lowtemperatures measured on a 20-year period, under the terms andconditions of the procedure mentioned in (ii) above; and (iv) theentities requesting access for services different from the onesmentioned above. A procedure to be issued by the Authority forElectricity and Gas will establish the criteria for assigningcapacity when the requests mentioned in (iv) above exceedavailability.

During the storage thermal year, the company makes newassignations when new capacity becomes available. Users areallowed to sell to each other volumes of gas injected or capacityassigned. Users are requested to transmit to the storage companyone week in advance of the next, programs for injection oroff-take, within the limit of assigned capacity, confirming eachday the bookings for the following day.

Fees deriving from balancing activities and restoration ofstrategic volumes off-taken are regulated by certainprescriptions from the Italian Authority for Electricity and Gasproviding for repartition of such fees among customers of storageservices until the 2005-2006 thermal year. Resolution No. 50/2006changed such regime by establishing that such fees cover revenuesderiving from new investment.

If the volumes input to storage are higher than the capacityassigned or the input capacity utilized is higher than thatconferred than and the user does not purchase additional capacityor sell excess natural gas volumes within 15 days from receivinginformation on its position, the storage company shall: (i) applyto the maximum exceeding volume or the maximum input capacityutilized in a month a balancing charge depending on the length ofthe infringing period or the month in which the capacity overusehas occurred; and (ii) sell, on behalf of the user that has notyet done it, the volume of gas injected exceeding the assignedcapacity in the day or days of the thermal year of storage inwhich working gas reached its maximum amount, if the transportcompany reduced the volumes planned by users of transport at oneor more interconnection points at the border and the sametransport users also hold storage capacity.

If the user employs an off-take capacity higher than theassigned capacity, the storage company applies, for each month tothe maximum difference between peak daily capacity actually usedand peak daily capacity entitled, a charge depending on thenumber of days of exceeding use.

If the volumes of gas off-taken by a user are higher thanthose held in storage and the user fails to replenish by means ofa purchase, charges are applied that relate to replenishment ofoff-take from strategic storage, including payment of a chargeapplied to the maximum accumulated volumes of off-taken gas, netof an income proportional to volumes replenished, according todifferent amounts based on the circumstance that the off-take wasauthorized or not by the Ministry of Productive Activities.

On the basis of these provisions, Eni may incur materialcharges for storage services in case of unauthorized off-takesfrom the strategic reserve. Eni appealed against this decision.

With Resolution No. 266/2005 the Authority for Electricity andGas started an inquiry leading to a possible administrativesanction (fine under Law No. 481/1995) alleging thatStogit’s behavior does not conform with the disciplinecontained in Resolution No. 119/2005 concerning access to andprovision of storage services.

Eni also held natural gas for strategic reserve purposes inits storage business, as established by Decree No. 164. Thestrategic reserves of gas are defined as "stock destined tomeet situations of deficit/decrease of supply or crisis of thegas system". The Ministry of the Economic Developmentdetermines quantities and usage criteria of such reserves. As ofDecember 31, 2006 Eni held approximately 180 BCF of strategicreserves of natural gas (180 BCF at year end 2005).

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> 
***Gas & Power***

> 
*Natural gas market in Italy*

The European Directive on Natural Gas was implemented intoItalian legislation through Legislative Decree No. 164 of May 23,2000 ("Decree No. 164"), effective from June 21, 2000.As concerns natural gas activities carried out by Eni the mostrelevant aspects of the decree are as follows: (i) starting in2003 all customers are eligible customers (with access to thenatural gas system and free to choose their supplier of naturalgas); (ii) from January 1, 2003 to December 31, 2010 no singleoperator is allowed to hold a market share higher than 50% ofdomestic sales to final customers. In addition, no singleoperator is allowed to supply more than 75% of all natural gasvolumes introduced in the domestic transmission network by 2002,decreasing by 2 percentage points per year until it reaches 61%.Compliance with these ceilings is verified annually by comparingthe allowed average percentage on a three-year basis for volumesinput or sold to the average percentage obtained by each operatorin the same three-year period. Allowed percentages are calculatednet of losses (in the case of sales) and volumes of natural gasconsumed in own operations. In accordance with Article 19,paragraph 4 of Legislative Decree No. 164/2000 the volumes ofnatural gas consumed in own operations by a company or itssubsidiaries are excluded from the calculation of ceilings forsales to end customers and for volumes input into the Italiannetwork to be sold in Italy; (iii) imports from the EuropeanUnion are free, while natural gas imported from outside theEuropean Union is subject to an authorization of the Ministry ofProductive Activities. Subjects importing from countries outsidethe EU must secure a certain availability of strategic storage.Such constraints apply also to the import contracts entered intobefore the coming into effect of Decree No. 164, these contractsare automatically considered authorized since this date; (iv)natural gas transport and dispatching activities have to becarried out by a separate company that is not allowed to carryout any other activity in the natural gas field, with the onlyexception of storage, for which, however, accounting andoperating separation is envisaged. Also distribution, whichincludes the transport of natural gas by means of local gaspipeline networks for delivery to customers, has to be carriedout by a separate company which may not perform other gas relatedactivities. Sale activity to final customers is compatible onlywith import, export and production activities and is subject toan authorization from the Ministry of Productive Activities.Concessions for the distribution of natural gas will be assignedonly through an auction procedure; and (v) tariff criteria andreturn on capital employed for transport, dispatching, storage,use of LNG terminals and distribution are determined by theAuthority for Electricity and Gas. Third parties are allowed toaccess transport infrastructure, storage sites, LNG terminals anddistribution networks on a regulated basis. As provided for bythe decree, a Network Code containing norms and regulations forthe operation of and access to infrastructure was prepared byoperators on the basis of criteria set by the Authority forElectricity and Gas.

In particular 2006 closes the third three-year regulatedperiod for natural gas volumes input in the domestic transmissionnetwork (for which the allowed average percentage is 69% ofdomestic consumption of natural gas) and the second three-yearregulated period for sales volumes (for which the allowed averagepercentage is 50% of gas sales). Eni’s presence on theItalian market complied with said limits.

> 
*Law No. 239 of August 23, 2004 on the restructuring of    the energy sector in Italy*

This law provides for:

| • |   | a derogation to third party        access granted to companies that make direct or indirect        investments for the construction of new infrastructure or        the upgrading of existing ones such as: (i)        interconnections between EU Member States and national        networks; (ii) interconnections between non-EU States and        national networks for importing natural gas to Italy;        (iii) LNG terminals in Italy; and (iv) underground        storage facilities in Italy. Investing companies can        obtain priority on the conferral of new capacity for a        portion of not less than 80% of the new capacity        installed and for a period of at least 20 years;                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | paragraph 34 prohibits        undertakings active in the field of natural gas and        electricity with a concession for local public services        or for the management of networks (excluding all sale        activities) from operating in a competitive market for        post-counter services, in the areas where they hold the        concession for the duration of the concession, including        through subsidiaries or affiliates;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| • |   | paragraph 51 cancels        paragraph 5 of Article 16 of Legislative Decree No.        164/2000, which obliged distribution companies to        ascertain the safety of plants which do not only supply        gas to productive units and safety of post-counter        services; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| • |   | paragraph 69 provides the        authentic interpretation of the rule introduced by        Legislative Decree No. 164/2000 concerning the        transitional regime of concessions for natural gas        distribution activities in urban centers existing at June        21, 2000, which allows for an anticipated repayment of        the distribution service, despite being provided through        a bid procedure rather than direct entitlements. This law        changes the provisions defined by Legislative Decree No.        164/2000 by: (i) extending to December 31, 2007, the        transitional period for the continuation of existing        concessions, with a possible extension of one further        year when public interest is considered important by        local authorities; and (ii) canceling the adding up of        possible extensions, as provided for by Legislative        Decree No. 164/2000, in case of certain conditions        (business restructuring, size parameters, shareholding        composition). The end of concessions awarded on the basis        of a bid procedure remains set at December 31, 2012. |

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> 
*Law Decree No. 239/2003 and Budget Laws for 2006 and    2007*

Law Decree No. 239/2003, converted with amendments into LawNo. 290/2003, prohibits companies operating in the natural gasand electricity industries to hold stakes higher than 20% in theshare capital of companies owning and managing national networksfor the transmission of natural gas and electricity. The term bywhich companies must comply with this provision is December 31,2008 as established by the Budget Law for 2006. The ItalianBudget Law for 2007 establishes that the provisions to implementLaw No. 290/2003 will be enacted through a decree from theItalian Prime Minister. The term for the disposal envisaged byLaw No. 290/2003, which was initially fixed at December 31, 2008,will be redetermined in 24 months after the effective date ofsaid decree from the Italian Prime Minister. Currently, Eni isunable to predict that date.

In addition, on March 23, 2006 a Presidential Decree definedcriteria and methods for the divestment of the interest held byEni in Snam Rete Gas SpA, introducing the special powers of theMinistry of Economy and Finance provided for by the regulationson the divestment of interests held by the Italian Government("golden share") in the By-laws of this company.

> 
*Natural gas prices*

Prices of natural gas sold to industrial and thermoelectriccustomers as well as to wholesalers are freely established amongbuyers and sellers following the liberalization of the naturalgas sector introduced by Decree No. 164. Notwithstanding this,the Authority for Electricity and Gas holds a power ofsurveillance on this matter (see below) under Law No. 481/1995(establishing the Authority for Electricity and Gas) andLegislative Decree No. 164/2000. See below for a discussion ofnatural gas prices of sales of natural gas to residential andcommercial customers which were not eligible customers untilDecember 31, 2002.

The Presidential Decree dated October 31, 2002 conferred tothe Authority for Electricity and Gas, also after the opening upof markets set at January 1, 2003 for customers who werenot-eligible customers until December 31, 2002, the powers to:(i) define, calculate and update and gas selling prices alsoafter the opening up of markets set at January 1, 2003 forcustomers who were not-eligible customers until December 31,2002; (ii) define methods for updating selling prices withreference to variable costs that minimize the impact ofinflation; and (iii) define criteria for allocating the costsderiving from social support measures, in order to reduce theaggregate net cost of interventions as much as possible and toensure neutrality in the application of selling prices to thevarious groups of users. Consistently with this decree, theAuthority for Electricity and Gas: (i) with Decision No. 195 ofNovember 29, 2002 changed the methods for periodically updatingselling prices for natural gas in connection with changes ininternational prices of crude oil and refined products. Suchchanges concern the schedules update process (from every twomonths to every three), and the duration of the reference periodfor the calculation of changes in average international prices ascompared to the application quarter (from the preceding sixmonths to the preceding nine months). The invariance threshold,beyond which tariffs are updated, remained at 5%; and (ii) withResolution No. 207 of December 12, 2002, it decided thatcompanies selling natural gas through local networks have tomaintain the conditions applied to non-eligible customers untilDecember 31, 2002 until the customer accepts a new contractoffer. In addition, the Authority for Electricity and Gas decidedthat these companies can propose their own new contract offersand the tariffs determined according to the criteria establishedby the Authority for Electricity and Gas, adequately advertisingthem before March 31, 2003 (such offers must be published on thecompanies web page, on at least one newspaper of generalcirculation and on the Gazzetta Ufficiale of their region orautonomous province).

> 
*Changes introduced to the indexation mechanism of the    raw material component in supplies to residential customers    by the Authority for Electricity and Gas: Resolutions No.    248/2004; 134/2006 and 79/2007*

With Resolution No. 79/2007 the Italian Authority forElectricity and Gas, after concluding a consultation procedurewith gas operators also taking account of the annulment of itsResolution No. 248/2004 due to formal flaws by the Administrativejustice bodies, redefined the tariffs for the period January 1,2005-March 31, 2007 and established a new indexation mechanismfor the raw material cost component in natural gas supplies tocustomers consuming less than 200,000 CM/y (mainly residentialand commercial customers located in urban centers), organizing ina single measure all its resolutions on this matter. Inparticular with this Resolution the Authority: (i) confirmed theindexation mechanism for the raw material cost componentcontained in Resolution No. 248/2004 and the changes introducedto this mechanism by Resolution No. 134/2006 starting on July 1,2006 (see below for a full description of said resolutions); (ii)waiving this provision, it reviewed the updating of the rawmaterial cost component for 2005 reaching incremental valuesequal to those deriving from the application of the indexationcriteria of Resolution No. 195/2002; this cancels the negativeimpact of Resolution No. 248/2004 on Eni’s 2005 accounts;and (iii) decided that selling companies, only for wholesalepurchase/sale contracts entered after January 1, 2005 and validin the January, 1 2006-June 30, 2006 period, offer theircustomers new contractual conditions consistent with the newindexation mechanism before June 4, 2007, and inform theAuthority, before June 29, 2007, together with their wholesalerthat they have complied with this requirement. 

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Selling companies complying with this requirement will beentitled to 50% of the difference between the updating of the rawmaterial cost component under the new mechanism and the morefavorable one under Resolution No. 195/2002 applied to volumesconsumed by customers under the 200,000 CM/y threshold. On thebasis of this Resolution in the first quarter of 2007, Enireversed part of the reserves accrued in Eni’s accounts for2005 and 2006 with respect to the estimated impact of ResolutionNo. 248/2004. See "Item 5 – Recent Developments".

The mechanism initially implemented by the Authority forElectricity and Gas with Resolution No. 248 of December 29, 2004,had changed the indexing mechanism concerning the raw materialcomponent in tariffs paid by end customers consuming less than200,000 CM/y, who were non-eligible customers until December 31,2002 according to Resolution No. 195/2002. The decisionintroduced the following changes: (i) establishment of a cap setat 75% for the changes in the raw material component if Brentprices fall outside the 20-35 $/BBL range; (ii) change of therelative weight of the three products making up the referenceindex of energy prices whose variations – when higher orlower than 5% as compared to the same index in the precedingperiod – determine the adjustment of raw material costs;(iii) substitution of one of the three products included in theindex (a pool of crudes) with Brent crude; and (iv) reduction inthe value of the variable wholesale component of the sellingprice by 0.26 euro /CM. Eni accrued provisions in its 2005financial statements and in the accounts of the first half of2006 with respect to the estimated impact of Resolution No. 248.

Resolution No. 248 was opposed by several Italian natural gasoperators, among which Eni, who claimed its legitimacy againstthe administrative tribunal. In the meantime the administrativeproceeding on Resolution No. 248/2004 was running its course,effective July 1, 2006 the Authority implemented Resolution No.134/2006, which modified Resolution No. 248/2004 as follows: (i)it established a cap set at 75% for the changes in the rawmaterial component if Brent crude prices fall below 20 $/BBL orinside the 35-60 $/BBL range and at 95% if Brent crude prices arehigher than 60 $/BBL (in Resolution No. 248/2004 the price capwas set at 75% for the change in the raw material component ifBrent crude prices fell below 20 $/BBL or exceeded 35 $/BBL); and(ii) it changed from 5% to 2.5% the limit to variations in theindex of energy prices which trigger the adjustment of rawmaterial costs. In addition, it confirmed the obligation alreadyenvisaged by Resolution No. 248/2004 on charge of Italiansuppliers to wholesalers to renegotiate supply contracts in lightof the price revision introduced by same decision in supplycontracts between wholesalers and end users. The changesintroduced by Resolution No. 134/2006 apply for a two-year periodwith the option of a one year extension following a decision ofthe Authority.

According to Resolution No. 134/2006, starting on October 1,2006, natural gas selling companies shall offer pricing termsconsistent with the determination and updating mechanismsestablished by the Authority for Electricity and Gas only tohousehold customers consuming less than 200,000 CM/y.

Eni started applying the indexation mechanism provided for byResolution No. 134/2006 in its accounts from the second half of2006 onwards. In addition, Eni began to renegotiate the terms ofsupply contracts with its wholesale customers as provided for byResolution No. 134/2006. On the basis of Resolution No. 134/2006,management assessed that the provision accrued in 2005 financialstatements, with respect to the estimated impact of ResolutionNo. 248/2004 for that year, was partially redundant, and as aresult such provision was partially reversed in 2006 accounts.

Finally the Council of State annulled Resolution No. 248/2004for formal flaws, acknowledging at the same time that theAuthority was legitimate in changing pricing mechanisms in thenatural gas sector. On this basis, the Authority enactedResolution No. 79/2007 as discussed above.

> 
*Inquiry of the Authority for Electricity and Gas on    import purchase prices*

With Resolution No. 107/2005 the Authority for Electricity andGas started a formal inquiry under Law No. 481/1995 against Eniand other gas importers alleging their failure to comply with theAuthority information requirements contained in its ResolutionNo. 188/2004 of October 27, 2004, by which it required naturalgas importers, among which Eni, to give information concerning:(i) dates and supplier for each supply contract for the import ofnatural gas; (ii) FOB purchase prices; (iii) price updatingformulas; and (iv) volumes supplied and FOB purchase averageprices on a monthly basis for each supplying contract relating tothe period October 2002-September 2004. Under Law No. 481/1995,the Authority for Electricity and Gas can impose a fine on Eni.Eni appealed this decision with the Regional Administrative Courtof Lombardy that on March 22, 2005 cancelled the obligation forEni to communicate dates and supplier for each contract and FOBpurchase prices. Accordingly, Eni initially gave the Authorityfor Electricity and Gas only part of the information required. OnApril 6, 2006 a final hearing was held in front of the AuthorityEni confirmed its position that it has provided adequateinformation, but with the intention of full collaboration itprovided the data concerning average monthly FOB prices for theOctober 2002-September 2004 period.

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With Resolution No. 226/2006 of October 21, 2006, the ItalianAuthority for Electricity and Gas closed a formal inquiry againstEni that commenced with Resolution No. 107/2005, stating that Eniallegedly failed to comply with an obligation to deliver certainpieces of information regarding Eni’s natural gas importcontracts to the Authority. As a result, the Authority fined Enieuro 10 million. In spite of the circumstance that Enispontaneously delivered the requested pieces of information, theAuthority objected to the fact that Eni delayed the fulfillmentof its obligation to deliver said information, resulting in abehavior which breaches the rules requiring the establishment ofinformation flows intended to allow the Authority to perform itstasks. Eni filed a claim against the Authority’s decisionbefore the Regional Administrative Court of Lombardy. Enirecorded a provision for this proceeding in its 2006 accounts.

> 
*Inquiry of the Authority for Electricity and Gas on    behaviors of operators selling natural gas to end customers*

With Resolution No. 235/2006 of November 6, 2006, the ItalianAuthority for Electricity and Gas closed the inquiry that startedin October 2005 (with Resolution No. 225) on the commercialbehavior of companies selling natural gas to end customerslocated in urban centers (residential, services, commercialactivities and small enterprises) aiming at acquiring newcustomers or re-acquiring customers transferred to other sellers.The inquiry was conducted with particular reference to hurdlesposed by companies to customers wishing to leave one distributoror to the entry of competitors on the market from January 1, 2005to October 20, 2006. In its final report, enclosed to theResolution No. 235/2006 the Authority confirmed the existence ofcertain critical points about the real level of competitionwithin this market segment and proposed different options tocomplete and adjust the regulatory framework in order to overcomeacknowledged deficiencies.

> 
*Inquiry of the European Commission*

On May 11, 2007 the European Commission has decided to openanti-trust proceedings against Eni based on information obtainedduring inspections carried out in 2006 at the headquarters of Eniand in certain Eni’s subsidiaries. These proceedings againstEni intend to verify the possible existence of any businessconducts breaching European competition rules in the form ofpreventing access to the Italian natural gas wholesale market andto subdivide the market among few operators in the activity ofsupply and transport of natural gas.Particularly, the European Commission alleged that Eni mighthave: (i) adopted commercial practices that constitute barriersto access to the Italian market for the wholesale supply ofnatural gas by way of its long-term purchase contracts and bysubdividing the market among few operators; and (ii) engaged amajority share of the transport capacity of certain internationalgas lines, preventing third parties from accessing saidinfrastructures. Furthermore, the European Commission allegedthat Eni might have delayed or annulled certain plans for theupgrading of the international transport infrastructure, despitethe significant demand for access by third parties. Thesesuspected practices constitute possible infringements of Article82 of the EC Treaty. The initiation of proceedings does not implythat the Commission has conclusive proof of an infringement. TheCommission will conduct an in-depth investigation of the case asa matter of priority. There is no strict deadline to completeinquiries into anticompetitive conduct.If the existence of the alleged anti-competitive practices willbe confirmed, the European Commission could fine Eni. At present,management is not able to assess the impact on Eni’s resultsof operations and financial condition that may arise from anunfavorable outcome of this matter.

> 
*Transport*

*Transport tariffs*With Resolution No. 120 of May 30,2001, the Authority for Electricity and Gas published thecriteria transport companies have to apply in determining naturalgas transport and dispatching tariffs on national and regionaltransportation networks, for the first regulatory period made upof four thermal years (each thermal year begins on October 1 ofeach calendar year and ends on September 30), as provided for byDecree No. 164/2000. Tariffs are subject to approval by the sameAuthority, which ensures their compliance with preset criteria.This tariff system substituted previous agreements between Eniand customers of all categories. Within the first quarter of eachcalendar year, transport companies submit the tariff proposal tothe Authority for Electricity and Gas who grants approval.

Criteria established by the Authority for Electricity and Gasset a cap on revenues from transport and dispatching activity("allowed revenues") which is adjusted annually; thecriteria also define a separate treatment of revenues on existingassets and on new capital expenditure on expansions and extensionof infrastructure. In the first thermal year allowed revenues arecalculated as the sum of: (i) operating costs including storageand modulation costs; (ii) amortization and depreciation oftransport assets; and (iii) return on net capital employed. Netcapital employed is calculated by reevaluating historic costs oftransport infrastructure (pipelines, compressor stations andother support equipment) on the basis of certain inflationaryindexes; resulting amounts are adjusted to take into account theresidual useful life of assets (pipelines are estimated to have auseful life of 40 years) and also subtracting State grants. Theapplication of this methodology implies an estimated value ofEni’s transport assets of approximately euro 9.6 billion.This, however, is a valuation for regulatory purposes and shouldnot be read as an indication of the market value of Snam ReteGas. The rate of return on capital employed set by the Authorityfor Electricity and Gas was 7.94% (pre-tax), for the firstregulatory period. Once established, allowed revenues for thefirst year are divided into two components: (i) capacity revenuesequal to 70% of allowed revenues which are the maximum amount ofrevenues collectable from the sale of transport capacity tocustomers; and (ii) commodity revenues equal to 30% of allowedrevenues which are the maximum amount of revenues collectablefrom transported volumes. 

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Starting from the second year these two components areadjusted on a yearly basis to take into account inflation andcertain reduction factors (set at 2% and 4.5% for capacityrevenues and commodity revenues, respectively); commodityrevenues are also adjusted to transported volumes of the currentregulatory period. The 2% reduction factor on capacity revenuesprovides scope for improving results of operations of thetransport company if cost reductions exceed the set amount,whereas the 4.5% reduction factor on commodity revenues providesscope for improving results of operations of the transportcompany if transported volumes grow more than the reductionfactor. New capital expenditure in extension and expansion enabletransport companies to increase the capacity revenue by a statedpercentage in the regulatory period following the period in whichnew capital expenditure is incurred. In addition, those capitalexpenditures give rise to a six year fixed increase in allowedcommodity revenues. At the end of the first regulatory period,all transport cost components were recalculated and 50% of highercost reductions with respect to established efficiencyimprovements were recognized to transport companies and 50% weretransferred to customers. Once the allowed revenues areestablished, transport companies define individual tariffs toclients which are based on a charge for the capacity used at theentry location (border, fields, storage sites) and the capacityused at interconnection nodes with regional networks (dividedinto 17 zones) and on a charge for the capacity used at regionallevel, providing for discounts to those outgoing the network atless than 15 kilometers from the interconnection point betweenregional and national networks. A further charge (commoditycharge) is related to the amounts of gas transported plus anannual fixed charge varying according to the delivery points.This tariff system regulated the four-thermal year periodstarting October 1, 2001 and ending on September 30, 2005.

With Resolution No. 166/2005, the Authority for Electricityand Gas revised the outlined tariff regime for the secondregulatory period (October 1, 2005-September 30, 2008). The newtariff structure confirms the breakdown of the tariff into twocomponents: capacity and commodity in a ratio of 70 to 30 and theentry-exit model for the determination of the capacity componenton the national pipeline network, already present in the previoustariff regime established by Resolution No. 120/2001. The majornew elements of the new regime are the following: (i) a reductionof the rate of return of capital employed in transport activitiesfrom 7.94% to 6.7% (pre-tax); (ii) a new set of incentives fornew capital expenditure. In the previous regime, the return onupgrade and capacity expansion expenditure was 7.47% for one yearonly included in the calculation of the capacity component of thetransport tariff and 4.98% for 6 years in the calculation of thecommodity component. The new tariff structure provides anadditional rate of return depending on the type of expenditure onthe return rate recognized for capital employed: from a minimumof 1% for safety measures that do not increase transportcapacity, applied for 5 years, to a maximum of 3% for expenditurethat increases capacity at entry points into the nationalnetwork, applied for 15 years. The additional return is part ofthe determination of the maximum allowed revenues in thecalculation of the capacity component of the tariff and thereforeis not influenced by changes in volumes transported; (iii) theupdating by means of a price cap mechanism of the allowedrevenues the transport undertaking is entitled to and the annualrecalculation of the portion of allowed revenues relating tocosts incurred for capital expenditure. This price cap mechanismapplies to operating costs and amortization charges (previouslyit applied to all the allowed revenues). The annual rate ofrecovery of productivity was confirmed at 2%; this is used toreduce the effect of changes in the consumer price index on theupdating of the preceding year’s allowed revenues; insteadthe preset annual rate of change of productivity recovery for theupdating of the commodity component of the tariff was reducedfrom 4.5% to 3.5% of; and (iv) confirmation of the tariffreduction for start ups (construction/upgrade of combined cycleplants for electricity generation) and for off take in low seasonperiods (from May 1 to October 31) already contained in DecisionsNo. 5/2005 and 6/2005 which updated the previous tariff regime.The companies active in the field of gas transport submit theirtariff proposals to the Authority who grants approval, within thefirst quarter of each calendar year.

*Network code* With Resolution No. 75 of July 1, 2003,the Authority for Electricity and Gas approved Snam Rete GasNetwork Code, which defines rules and regulations for theoperation and management of the transmission network. The NetworkCode, in accordance with Legislative Decree No. 164/2000, isbased on the criteria set by the Authority for Electricity andGas with Resolution No. 137/2002, aimed at guaranteeing equalaccess to all customers, maximum impartiality and neutrality intransport and dispatching activities. The Network Code regulatesentitlement of transport capacity, obligations of transporter andcustomer and the procedures through which customers can sellcapacity to other users. Transport capacity at entry points inthe national gasline network (point of interconnection withimport gas lines) is assigned on an annual basis and can last upto five thermal years. Entities eligible to be assigned transportcapacity on a multi-year basis are those having multi-year importcontracts within the limit of their daily average contractvolumes. Priority criteria envisage that available capacity isassigned first to parties in multi-year import contractscontaining take-or-pay clauses signed before August 10, 1998(date of coming in force of European Directive 98/30/CE). Ifrequests for capacity in a given thermal year are higher thanavailable capacity, a pro-rata mechanism is applied in compliancewith the aforementioned priority.

Parties in annual or shorter import contracts and parties inmulti-year import contracts are entitled to annual capacityconferrals corresponding to maximum daily contract volumes andthe difference between maximum daily contract volumes and averagedaily contract volumes, respectively. Available transportcapacity is assigned first to parties in annual import contractsand parties in multi-year import contracts. If requests forcapacity in a given thermal are higher than available capacity, apro-rata mechanism is applied in compliance with theaforementioned priority.

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Eni filed a claim against this decision with the RegionalAdministrative Court of Lombardy, which was partially acceptedwith a decision of December 2004. The Authority filed a claimagainst this decision with the Council of State and informed Enion February 19, 2005. This proceeding is still pending.

*Tax criteria for the determination of amortizations forcompanies operating in transport and distribution of natural gas*The criteria for the determination of the annual share ofamortizations of natural gas transport and distribution assetsdeductible in the determination of income taxes have been changedstarting in 2005 onwards by Law Decree No. 203 of September 30,2005, converted into Law No. 248 of December 2, 2005 and Law No.266 of December 23, 2005 (budget law for 2006). Due to thesechanges, the share of amortizations that was previouslycalculated based on rates set by a Decree of the Minister ofFinance of December 31, 1988, is now determined by dividing therelevant asset gross book value in accordance with the usefullives determined by the Authority for Electricity and Gas andreducing the amount obtained after tax by 20%. The alignment ofthe fiscal lives of natural gas transport and distribution assetsto their useful lives entails the anticipation of the payment ofincome taxes given the postponement of the deductibility ofamortization without impacting on net profit of companiesinvolved (mainly Snam Rete Gas and Italgas), except for thefinancial charges related to this cash anticipation.

*Regulation (EC) No. 1775/2005* On November 3, 2005Regulation (EC) No. 1775/2005 concerning conditions for accessinginternational natural gas transport networks was published. TheRegulation establishes non discriminatory access rules and willbe effective starting on July 1, 2006. The Regulation will bedirectly applicable in each Member State and national regulatoryauthorities will be responsible for its enactment.

*Preliminary investigation on the management and operationof the Panigaglia LNG regasification terminal*The Authorityfor Electricity and Gas with Decision No. 204 of November 18,2004, started a preliminary investigation on the management andoperation of Eni’s Panigaglia LNG regasification terminaland on LNG supplies to the Italian market in the thermal yearsfrom 2001 to 2004 in order to ascertain any behavior infringingthe rules of equal access and equal conditions and neutrality inproviding the regasification services.

*Adoption of guarantees for free access to LNGregasification services and rules for the regasification code*WithResolution No. 167 of August 1, 2005, the Authority forElectricity and Gas published the criteria for access to LNGregasification services. The Decision also defines criteria forthe allocation of regasification capacity. In particular itestablishes that take-or-pay contracts entered into before 1998,as in the case of Eni, are assigned a priority access limited tothe minimum amount of volumes that have been regasified in theperiod starting from thermal year 2001-2002. Eni filed a claimagainst this decision with the Regional Administrative Court ofLombardy.

*Regasification tariffs* Tariffs for both the continuousand spot regasification services are based on treated volumes ofLNG, number of discharges carried out and energy associated tovolumes input in the national transport network. Tariffs for thespot service are 30% lower than those for continuous service.

> 
*Distribution*

Distribution is the activity of delivering natural gas toresidential and commercial customers of urban centers through lowpressure networks. Distribution is considered a public serviceoperated in concession and is regulated on the basis of LawDecree No. 164/2000.

*Distribution tariffs* With Resolution No. 237 datedDecember 28, 2000 as amended, the Authority for Electricity andGas determined tariff criteria for natural gas distributionactivity for the first regulated period ending on September 30,2004. Tariffs are determined so that annual revenues from naturalgas distribution activity cover operating costs and theremuneration of capital employed and are adjusted yearlyaccording to the price cap method based on parameters andformulas determined by the Authority for Electricity and Gas.Capital employed is determined by applying a parameter-basedmethod or, alternatively, a method of revalued historical costfor those companies that published audited financial statementsstarting with the fiscal year ended before January 1, 1991 (whichinclude Italgas). With Resolution No. 170 of September 29, 2004the Authority for Electricity and Gas defined gas distributiontariffs for the second regulated period from October 1, 2004 toSeptember 20, 2008, setting at 7.5% the rate of return on capitalemployed of distribution companies, as compared to the 8.8% rateset for the preceding regulated period. The rate of productivityrecovery – one of the components of the annual adjustmentmechanism of tariffs – was set at 5% of operating expensesand amortization charges (as compared to the 3% rate applied tototal expenses and charges in the preceding regulated period).With Resolution No. 122 of June 21, 2005, the Authorityintegrated and changed Resolution No. 170/2004, defining a newdetermination mechanism for distribution tariffs that takesaccount of capital expenditure incurred by distributingcompanies.

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*Distribution network code* With Resolution No. 138/2004the Authority for Electricity and Gas defined a set of rules toensure free access to the distribution networks and neutrality ofthe distribution service, as well as criteria for the definitionof distribution network codes.

With Resolution No. 108/2006 the Authority for Electricity andGas approved the Gas Distribution Master Code which will be usedas a standard contract between distribution companies andshippers (natural gas selling companies). Within three monthsfrom its publication, distribution companies are due to issuetheir own gas distribution code adopting either the GasDistribution Master Code or the scheme provided for by theResolution No. 138/2004.

 

> 
***Refining and Marketing of Petroleum Products***

*Refining* Under Decree No. 112, companies that seek toestablish refining operations in Italy or to expand the capacityof existing refining operations must obtain an operatingconcession from the relevant Region, while companies that seek tobuild or operate new plants that do not increase refiningcapacity must obtain an authorization from the relevant Region.Management expects no material delays in obtaining relevantconcessions for the upgrading of the Sannazzaro and Tarantorefineries as planned in the medium-term.

*Service stations* Decree No. 32 of February 11, 1998, asamended by Legislative Decree No. 348 of September 8, 1999 andLaw Decree No. 383 of October 29, 1999, significantly changedItalian regulation of service stations. The decree replaces thesystem of concessions granted by the Ministry of Industry,regional and local authorities with an authorization granted bycity authorities. Legislative Decree No. 112/1998 confers thepower to grant concessions for the construction and operation ofservice stations on highways to Regions. Decree No. 32 alsorequires that contracts between license holders and servicestation operators have a duration of not less than six years andbe drafted in accordance with arrangements agreed by the relevanttrade group of license holders and the union representatives forthe service station operators. Decree No. 32 also provides for:(i) the testing of compatibility of existing service stationswith local planning and environmental regulations and with thoseconcerning traffic safety to be performed by city authorities;(ii) upon the closure of at least 7,000 service stations, theoption to extend by 50% the opening hours (currently 52 hours perweek) and a generally increased flexibility in scheduling openinghours; (iii) simplification of regulations concerning the sale ofnon-oil products and the permission to perform simple maintenanceand repair operations at service stations; (iv) establishment ofa fund for the restructuring of the sales network, in partfinanced through a contribution, in the 1998-2000 period. In 2002the fund received new financings: the decree of the Minister ofProductive Activities of August 7, 2003, implementing Law No. 237of December 12, 2002, defined the amount of euro 0.0003 and euro0.0001 for each liter of automotive fuel (gasoline, diesel fueland LPG) sold in 2002 in the ordinary distribution network to bepaid by authorization holders and service station managers,respectively. The latest payment date was set at December 31,2003; (v) the opening up of the logistics segment by permittingthird party access to unused storage capacity for petroleumproducts; and (vi) measures designed to increase competition onthe market for LPG for residential, industrial and agriculturalusers. With the goal of renewing the Italian distributionnetwork, Law No. 57/2001 provides that the Ministry of ProductiveActivities is to prepare guidelines for the modernization of thenetwork, and the Regions shall follow those guidelines in thepreparation of regional plans. The decree was issued on October31, 2001 and established the criteria for the closing down ofincompatible stations, the approval of the plan, the renewal ofthe network, the opening up of new stations and the regulationsof the operations of service stations on matters such asautomation, working hours and non oil activities.

*Petroleum product prices* Petroleum product prices werecompletely deregulated in May 1994 and are now freely establishedby operators. Oil and gas companies periodically report theirrecommended prices to the Ministry of Productive Activities andservice station operators, and such recommendations areconsidered by service station operators in establishing retailprices for petroleum products. With Ministerial Decree datedFebruary 16, 2000, an entity was established that supports theMinistry of Productive Activities in monitoring trends indomestic and international prices of oil and oil products.Furthermore, in order to avoid initiatives inhibitingcompetition, Law No. 57/2001 provides the compliance with EURegulation No. 2790/1999 concerning "verticalagreements" on economic relations between operators in thisarea. To date, this regulation has had no significant impact onEni’s operations.

With Decision of January 18, 2007, the Italian AntitrustAuthority opened an inquiry to ascertain the existence of apossible agreement limit competition in the field of pricing ofautomotive fuels distributed on the retail market in Italy inviolation of Article 81 of the EC Treaty. This inquiry concernseight oil companies, among which Eni. According to the Authority,said companies would have been putting in place collusivemechanisms intended to influence the pricing of automotive fuelsdistributed on the retail market by way of a continuing exchangeof informative flows since 2004.

With a recommendation approved at its meeting of January 18,2007 and submitted to the Government and the Regions, the ItalianAntitrust Authority requested the elimination of localconstraints to the opening up of the fuel distribution outletsaimed at increasing competition and reducing retail prices. 

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Specifically, the Authority urged the following measures inorder to enhance the level of competition in the sector of retailmarketing of fuels: (i) the development of the marketing of fuelsby large retailers (supermarkets, large chain-stores, etc.); (ii)the elimination of administrative constraints to the opening ofnew service stations; (iii) a liberalization of opening hours;and (iv) transparency for consumers, identifying any useful toolsfor proper information on actual prices imposed by operators ineach outlet. Currently, Eni is unable to forecast a time framefor this matter. Implementation of any of these suggestedmeasures could enhance the level of competition in the retailmarketing of fuels, leading to a reduction in retail margins forall operators.

*Compulsory stocks* According to Legislative Decree ofJanuary 31, 2001, No. 22 ("Decree 22/2001") enactingEuropean Directive No. 98/1993 (which regulates the obligation ofmember states to keep a minimum amount of stocks of crude oiland/or petroleum products) compulsory stocks, must be at leastequal to the quantities required by 90 days of consumption of theItalian market (net of oil products obtained by domesticallyproduced oil). In order to satisfy the agreement with theInternational Energy Agency (Law No. 883/1977), Decree 22/2001increased the level of compulsory stocks to reach at least 90days of net import, including a 10% deduction for minimumoperational requirements. Decree 22/2001 states that compulsorystocks are determined each year by a decree of the Minister ofProductive Activities based on domestic consumption data of theprevious year, defining also the amounts to be held by each oilcompany on a site-by-site basis.

Decree No. 32 of February 11, 1998 established an entityresponsible for the maintenance and management of this compulsorystock whose main tasks are to: (i) distribute stocks on thenational territory according to available storage sites andconsumption levels; (ii) meet the demand for refined products incase of crisis; (iii) guarantee storage volumes to operators; and(iv) record demand for refined products in the various areas ofItaly. The Agency has been created on June 14, 2001; its By-lawshad been approved with a Ministerial Decree of January 29, 2001and its operating regulation has been approved on May 20, 2003 bythe general meeting of the Agency’s members.

At December 31, 2006 Eni owned 8.6 mmtonnes of oil productsinventories, of which 5.4 mmtonnes as "compulsorystocks", 1 mmtonnes related to operating inventories inrefineries and depots (including 0.2 mmtonnes of oil productscontained in facilities and pipelines), 0.7 mmtonnes related tooil products contained in ships and 0.3 mmtonnes related tospecialty products.

Eni’s compulsory stocks (at December 31, 2006) were heldin term of crude oil (31%), light and medium distillates (45%),fuel oil (19%) and other products (5%) and they were locatedthroughout the Italian territory both in refineries (73%) and instorage sites (27%).

 

> 
***Competition***

Like all Italian companies, Eni is subject to Italian and EUcompetition rules. EU competition rules are set forth in Articles81 and 82 of the Treaty of Rome as amended by the Treaty ofAmsterdam dated October 2, 1997 and entered into force on May 1,1999 ("Article 81" and "Article 82",respectively being the result of the new denomination of formerArticles 85 and 86) and EU Merger Control Regulation No. 4064 of1989 ("EU Regulation 4064"). Article 81 prohibitscollusion among competitors that may affect trade among memberstates and that has 70 the object or effect of restrictingcompetition within the EU. Article 82 prohibits any abuse of adominant position within a substantial part of the EU that mayaffect trade among member states. EU Regulation 4064 sets certainlimits for cross-border transactions, above which enforcementauthority rests with the European Commission and below whichenforcement is carried out by national competition authorities,such as the Antitrust Authority in the case of Italy. On May 1,2004, a new regulation of the European Council came into force(No. 1/2003) which substitutes Regulation No. 17/1962 on theimplementation of the rules on competition laid down in Articles81 and 82 of the Treaty. In order to simplify the proceduresrequired of undertakings in case of concentration, the newregulation substitutes the obligation to inform the Commissionwith a declaration that such concentration does not infringe theTreaty. In addition, the burden of proving an infringement ofArticle 81(1) or of Article 82 of the Treaty shall rest on theparty or the authority alleging the infringement. The undertakingor association of undertakings claiming the benefit of Article81(3) of the Treaty shall bear the burden of proving that theconditions of that paragraph are fulfilled. The regulationdefines the functions of Authorities guaranteeing competition inMember States and the powers of the Commission and of nationalcourts. The competition authorities of the Member States shallhave the power to apply Articles 81 and 82 of the Treaty inindividual cases. For this purpose, acting on their owninitiative or on a complaint, they may take the followingdecisions:

| • |   | requiring that an        infringement be brought to an end;                                                      |
|--------|--------|------------------------------------------------------------------------------------------------------------------|
| • |   | ordering interim measures;                                                                                       |
| • |   | accepting commitments; and                                                                                       |
| • |   | imposing fines, periodic        penalty payments or any other penalty provided for in        their national law. |

National courts shall have the power to apply Articles 81 and82 of the Treaty. Where the Commission, acting on a complaint oron its own initiative, finds that there is an infringement ofArticle 81 or of Article 82 of the Treaty, it may: (i) requirethe undertakings and associations of undertakings concerned tobring such infringement to an end; (ii) order interim measures;(iii) make commitments offered by undertakings to meet theconcerns expressed to them by the Commission binding on theundertakings; and (iv) find that Articles 81 and 82 of the Treatyare not applicable to an agreement for reasons of Communitypublic interest.

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Eni is also subject to the competition rules established bythe Agreement on the European Economic Area (the "EEAAgreement"), which are analogous to the competition rules ofthe Treaty of Rome and apply to competition in the EuropeanEconomic Area (which consists of the EU and Norway, Iceland andLiechtenstein). These competition rules are enforced by theEuropean Commission and the European Free Trade Area SurveillanceAuthority.

In addition, Eni’s activities are subject to Law No. 287of October 10, 1990 (the "Antitrust Law"). Inaccordance with the EU competition rules, the Antitrust Lawprohibits collusion among competitors that restricts competitionwithin Italy and prohibits any abuse of a dominant positionwithin the Italian market or a significant part thereof. However,the Antitrust Authority may exempt for a limited periodagreements among companies that otherwise would be prohibited bythe Antitrust Law if such agreements have the effect of improvingmarket conditions and ultimately result in a benefit forconsumers. The Antitrust Authority has intervened on the basis ofthe Antitrust Law in several instances, particularly in order toprohibit the imposition of discriminatory tariffs in thetelecommunications, railway and air transport sectors, amongothers.

 

**Property, Plant and Equipment**

Eni has freehold and leasehold interests in real estate innumerous countries throughout the world, but no one individualproperty is material to Eni as a whole. See "Exploration& Production" above for a description of Eni’sreserves and sources of crude oil and natural gas.

 

**Organizational Structure**

Eni SpA is the parent company of the Eni Group companies. Asof December 31, 2006, there were 257 fully consolidatedsubsidiaries, 94 subsidiaries accounted for under either theequity method or the cost method and 176 affiliates accounted forunder either the equity method or the cost method. Thesignificant subsidiaries, associated undertakings and jointventures of the Eni Group controlled directly or indirectly byEni at December 31, 2006 and included in the scope ofconsolidation, as well as Eni’s percentage of equity capitalor joint venture interest (rounded to the nearest whole number)are set forth in the table below. The principal country ofoperation is generally indicated by the company’s country ofincorporation or by its name.

| **Company/Undertaking**                    |   | **Country of        Incorporation** |   | **%**  |
|--------------------------------------------|--------|-------------------------------------|--------|--------|
| *Exploration &        Production*      |   |                                |   |   |
| Stoccaggi Gas Italia SpA                   |   | Italy                               |   | 100    |
| Eni Oil Algeria Ltd                        |   | the United Kingdom                  |   | 100    |
| Eni Angola Exploration BV                  |   | the Netherlands                     |   | 100    |
| Agip Caspian Sea BV                        |   | the Netherlands                     |   | 100    |
| Eni Congo SA                               |   | the Netherlands                     |   | 100    |
| Eni Dación BV                         |   | the Netherlands                     |   | 100    |
| Lasmo Sanga Sanga Ltd                      |   | Bermuda                             |   | 100    |
| Eni Iran BV                                |   | the Netherlands                     |   | 100    |
| Agip Karachaganak BV                       |   | the Netherlands                     |   | 100    |
| Eni Lasmo Plc                              |   | the United Kingdom                  |   | 100    |
| Eni LNS Ltd                                |   | the United Kingdom                  |   | 100    |
| Eni North Africa BV                        |   | the Netherlands                     |   | 100    |
| Agip Oil Ecuador BV                        |   | the Netherlands                     |   | 100    |
| Eni Petroleum Co Inc                       |   | USA                                 |   | 100    |
| Eni UK Ltd                                 |   | the United Kingdom                  |   | 100    |
| Ieoc Production BV                         |   | the Netherlands                     |   | 100    |
| NAOC Nigerian Agip Oil Co        Ltd       |   | Nigeria                             |   | 100    |
| Eni Norge A/S                              |   | Norway                              |   | 100    |
|                                       |   |                                |   |   |
| *Gas & Power*                          |   |                                |   |   |
| Snam Rete Gas SpA                          |   | Italy                               |   | 50     |
| Società Italiana per il        Gas pA |   | Italy                               |   | 100    |
| Distribuidora de Gas        Cuyana SA      |   | Argentina                           |   | 46     |
| Gas Brasiliano        Distribuidora SA     |   | Brazil                              |   | 100    |
| Greenstream BV                             |   | the Netherlands                     |   | 75     |
| Inversora de Gas Cuyana        SA          |   | Argentina                           |   | 76     |

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| **Company/Undertaking**                                                                                           |   | **Country of        Incorporation** |   | **%**  |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|--------|
| Tigáz Rt Tiszántúli        Gázszolgáltátó Részvénytársaság |   | Hungary                             |   | 50     |
| EniPower SpA                                                                                                      |   | Italy                               |   | 100    |
|                                                                                                              |   |                                |   |   |
| *Refining &        Marketing*                                                                                 |   |                                |   |   |
| AgipFuel SpA                                                                                                      |   | Italy                               |   | 100    |
| Ecofuel SpA                                                                                                       |   | Italy                               |   | 100    |
| Eni Portugal Investment        SpA                                                                                |   | Italy                               |   | 100    |
| Agip Deutschland GmbH                                                                                             |   | Germany                             |   | 100    |
| Agip España SA                                                                                               |   | Spain                               |   | 100    |
| Agip France Sarl                                                                                                  |   | France                              |   | 100    |
| American Agip Co Inc                                                                                              |   | USA                                 |   | 100    |
|                                                                                                              |   |                                |   |   |
| *Petrochemicals*                                                                                                  |   |                                |   |   |
| Polimeri Europa SpA                                                                                               |   | Italy                               |   | 100    |
| Dunastyr Polystyrene        Manufacturing Co Ltd                                                                  |   | Hungary                             |   | 100    |
| Polimeri Europa Benelux        SA                                                                                 |   | Belgium                             |   | 100    |
| Polimeri Europa        Elastomères France SA                                                                 |   | France                              |   | 100    |
| Polimeri Europa UK Ltd                                                                                            |   | the United Kingdom                  |   | 100    |
|                                                                                                              |   |                                |   |   |
| *Engineering &        Construction*                                                                           |   |                                |   |   |
| Saipem SpA                                                                                                        |   | Italy                               |   | 43     |
| Snamprogetti SpA                                                                                                  |   | Italy                               |   | 100    |
| CEPAV (Consorzio Eni per        l’Alta Velocità) Uno                                                    |   | Italy                               |   | 50     |
| Saipem SA                                                                                                         |   | France                              |   | 43     |
|                                                                                                              |   |                                |   |   |
| *Other activities*                                                                                                |   |                                |   |   |
| Syndial SpA - Attività        Diversificate                                                                  |   | Italy                               |   | 100    |
|                                                                                                              |   |                                |   |   |
| *Corporate and        financial companies*                                                                        |   |                                |   |   |
| Eni International BV                                                                                              |   | the Netherlands                     |   | 100    |
| Eni Coordination Center        SA                                                                                 |   | Belgium                             |   | 100    |
| Società Finanziaria Eni        SpA - Enifin                                                                  |   | Italy                               |   | 100    |
| Società Finanziamenti        Idrocarburi - Sofid SpA                                                         |   | Italy                               |   | 100    |
| EniServizi SpA                                                                                                    |   | Italy                               |   | 100    |

 

**Item 4A. UNRESOLVED STAFF COMMENTS**

None.

 

**Item 5. OPERATING AND FINANCIAL REVIEW ANDPROSPECTS**

*The information in this item should be read together withthe Key Information presented in Item 3 and the ConsolidatedFinancial Statements and related Notes thereto included in Item18.*

 

**Executive Summary**

Eni reported net profit of euro 9.2 billion in 2006, thehighest in the Company’s history, representing an increaseof 4.9% from 2005. Operating profit in 2006 amounted to euro 19.3billion, up 14.9% from 2005 reflecting higher operating profitreported by the Exploration & Production, the Gas & Powerand the Engineering & Construction segments due to volumegrowth combined with a favorable trading environmentcharacterized by higher crude oil and natural gas prices andincreased natural gas selling margins. In addition, lowerrestructuring charges were recorded in the Other activitiessegment. These gains were partly offset by a reduced operatingprofit recorded by the Refining & Marketing segment due to adecline in refining margins and the impact of lower year-endprices on the evaluation of inventories of refined products underthe weighted-average cost method of accounting. This method ofaccounting for inventories of oil, gas and products implies ahigh degree of volatility in Eni’s results of operation inparticular for the Refining & Marketing segment as inventoryevaluation is based on current market prices.

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On the basis of the results achieved, Eni’s managementproposed at the Annual General Shareholder Meeting to distributea dividend of euro 1.25 per share, of which euro 0.60 was alreadypaid as interim dividend in October 2006. This dividend is 13.6%higher than in 2005 (euro 1.10 per share) and was approved by theAnnual General Shareholder Meeting on May 24, 2007.

In Exploration & Production, Eni continued to implementits strategy of growing oil and natural gas production leveragingon the development of existing assets. Eni’s production forthe year (on an available for sale basis) increased by 1.6% from2005 to 1,720 KBOE/d. This result was affected by:

| (i)   |   | a sizeable loss of        production at the Venezuelan Dación oilfield (down 46        KBBL/d) due to the unilateral cancellation of the service        contract relating to activities at this field by the        Venezuelan state oil company PDVSA effective April 1,        2006;                                                                                                                                                                                        |
|-------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | lower entitlements in        certain Production Sharing Agreements (PSAs) and buy-back        contracts (down 21 KBOE/d) due to higher oil and gas        prices. Under such contracts, Eni is entitled to fixed        monetary amounts to recover the expenses incurred for the        development of the relevant properties and as a        consequence of higher oil prices, the volumes entitled        necessary to cover the same amount of expenses are lower;        and |
| (iii) |   | disruptions in Nigeria due        to social unrest.                                                                                                                                                                                                                                                                                                                                                                                                                                |

Exploration & Production’s results for 2006 werebosted also by increased realized prices for oil and gas, partlyoffset by higher operating costs and higher depreciation andamortization charges.

Net proved reserves of oil and natural gas were 6,436 mmBOE atyear end 2006 (54% crude and condensates), down 401 mmBOE from2005. The unilateral cancellation of the service contract for theDación oilfield by the Venezuelan state oil company PDVSAdetermined a decrease in Eni’s proved reserves of 170 mmBBL.In 2006 Eni’s proved reserves replacement ratio was 38% (40%in 2005); as of year-end the reserves life index was 10 years ofremaining production at the current rate (10.8 as at December 31,2005).

Production start up of the Kashagan oilfield project (Eni isthe operator and has a 18.52% interest) is currently scheduledfor the third quarter of 2010 as compared to an initial forecastindicating a start up in 2008, due to the need to execute certainmeasures intended to enhance the overall level of safety andoperability of offshore facilities. These enhancements coupledwith sector-specific inflation and underestimation of costs toconduct offshore operations in shallow/ultra shallow waters wherethe Kashagan field is located resulted in a significant increasein the expected expenditures to implement phase one of theKashagan project. At present, the estimated expenditures to reachthe 300 KBBL/d production target envisaged by phase one stand at$19 billion, as compared to a budget of $10.3 billion in realterms 2007 as approved by the consortium partners and therelevant Kazakh authorities in 2004. Based on the high level ofproductivity yielded by the first three development wells drilledto date, management currently expects a full field productionplateau of 1.5 mmBBL/d, representing a 25% increase from theoriginal target envisaged by the approved development plan.

In 2006, Eni invested euro 1,348 million in exploratoryactivities, up 106% from 2005, conducting a very extensiveexploration campaign leading to the completion of 68 exploratorywells (35.9 net to Eni) with a commercial rate of success of 43%(49% net to Eni). A further 26 wells were in progress as of theyear-end. Eni enhanced its exploration portfolio by acquiringassets in core areas such as Angola, Alaska, Brazil, Congo,Egypt, Nigeria, Norway, Pakistan, the Gulf of Mexico, and in newhigh-potential basins such as Mali, Mozambique and East Timor.

In Gas & Power, Eni continued to leverage on itsconsolidated and integrated position in Europe based on access toinfrastructure, availability of gas – both from itshydrocarbon production and from long-term purchase contracts– and large customer base, to increase natural gas sales inEuropean gas markets. Overall gas sales in 2006 totaled 97.48BCM, up approximately 4% from 2005. This growth was driven mainlyby:

| • |   | a growth in sales in a        number of target European markets (up approximately 16%        in particular in Turkey, Germany/Austria and France); and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the build-up of supplies        from Libyan-operated gas fields.                                                                                       |

These positives were partly offset by a 3% decrease in salesin Italy due to the effect of competition and the mild weatherconditions which characterized the fourth quarter of the year.The Gas & Power results for the year were also boosted by:(i) a favorable trading environment for gas selling margins; and(ii) a favorable development in the Italian regulatory framework,deriving from a softer impact of the tariff regime implemented bythe Authority for Electricity and Gas with Resolution No.248/2004 as modified by Resolution No. 134/2006 enacted on July1, 2006.

Electricity sales volumes (24.82 TWh) increased by 9% from2005 as a result of the ramp-up of new production capacity at theBrindisi and the Mantova plants, which increases were offset inpart by the shut-down of the Ravenna power plant due to ordinarymaintenance activity.

In Refining & Marketing, Eni is seeking to increase returnfrom its assets by upgrading its refineries in order to achievehigher yields of higher-value products, meet future productquality requirements, process low-quality crude and reduceoperating costs. Eni is also pursuing the strengthening of itsretail network of service stations in Italy and in selectedEuropean countries. 

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The Refining & Marketing results for the year wereaffected by a weak refining margin environment, higher downtimeof Eni’s refineries due to planned maintenance activity, theimpact of lower year-end prices for oil and products on inventoryevaluation, and the appreciation of the euro against the dollar.Overall retail sales in Europe in 2006 amounted to 12.48mmtonnes, of which 8.66 mmtonnes were in Italy, substantially inline with 2005.

Engineering & Construction segment reported higheroperating profit against the backdrop of favorable trends in thedemand for oilfield services.

Capital expenditure totaled euro 7.8 billion in 2006, up 5.7%from 2005; approximately 90% of capital expenditure was carriedout in oil and gas activities. The principal projects for theyear were:

| • |   | the development of oil and        gas reserves (euro 3,629 million) in particular in        Kazakhstan, Angola, Egypt and Italy and exploration        activities (euro 1,348 million) particularly in Angola,        Egypt, Norway, Nigeria, the Gulf of Mexico and Italy,        including also the acquisition of 152,000 square        kilometers of new acreage (99% operated by Eni); |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the upgrades of Eni’s        natural gas transport and distribution networks in Italy        (euro 785 million);                                                                                                                                                                                                                                                                       |
| • |   | the construction of a new        FPSO unit and upgrades of the fleet and logistic centers        in the Engineering & Construction segment (euro        591 million);                                                                                                                                                                                                              |
| • |   | projects aimed at improving        flexibility and yields of refineries (euro 376 million),        including the start up of construction of a new        hydrocracking unit at the Sannazzaro refinery, and        upgrades of the refined product distribution network in        Italy and in the rest of Europe (euro 223 million);                                                      |
| • |   | ongoing construction of        combined cycle power plants (euro 229 million); and                                                                                                                                                                                                                                                                                                          |
| • |   | actions for environmental        protection and for complying with safety and        environmental regulations in the Petrochemical segment        (euro 99 million).                                                                                                                                                                                                                       |

 

> 
***Margin***8

Margin: the difference between the average selling price anddirect acquisition cost of a finished product or raw materialexcluding other production costs (e.g. refining margin, margin ondistribution of natural gas and petroleum products or margin ofpetrochemicals products). Margin trends reflect the tradingenvironment and are, to a certain extent, a gauge of industryprofitability.

 

> 
***Trading Environment***

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| Average        price of Brent dated crude oil in U.S. dollars (1) |   | 38.22 |   | 54.38 |   | 65.14 |
|-------------------------------------------------------------------|--------|-------|--------|-------|--------|-------|
| Average price of Brent        dated crude oil in euro (2)         |   | 30.72 |   | 43.71 |   | 51.86 |
| Average        EUR/USD exchange rate (3)                          |   | 1.244 |   | 1.244 |   | 1.256 |
| Average European refining        margin in U.S. dollars (4)       |   | 4.35  |   | 5.78  |   | 3.79  |
| Euribor        - three month euro rate % (3)                      |   | 2.1   |   | 2.2   |   | 3.1   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

----

| (1) |   | Price per        barrel. Source: Platt’s Oilgram.                                                                                                                                                       |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Price per        barrel. Source: Eni’s calculations based on        Platt’s Oilgram data for Brent prices and the        EUR/USD exchange rate reported by the European Central        Bank (ECB). |
| (3) |   | Source: ECB.                                                                                                                                                                                                 |
| (4) |   | Price per        barrel. FOB Mediterranean Brent dated crude oil. Source:        Eni calculations based on Platt’s Oilgram data.                                                                        |

Eni’s results of operations and the year to yearcomparability of its financial results are affected by a numberof external factors which exist in the industry environment,including changes in oil, natural gas and refined productsprices, industry-wide movements in refining and petrochemicalmargins and fluctuations in exchange rates and interest rates.Changes in weather conditions from year to year can influencedemand for natural gas and some petroleum products, thusaffecting results of operations of the natural gas business and,to a lesser extent, of the refining and marketing business. See"Item 3 – Risk Factors".

In 2006 the trading environment was characterized by higheraverage Brent crude oil prices (up 19.8% from 2005) and higherselling margins on natural gas and on petrochemical products.These positives were partially offset by a decline in refiningmargins (margin on Brent was down 34.4%) which was mitigated byEni’s refinery capacity to process heavy crudes which arediscounted as compared to the Brent crude market benchmark, thusresulting in a higher profitability of the heavy barrel. 

_______________

| (8) |   | This        definition applies to the term margin whenever used in        Item 5. |
|-----|--------|-----------------------------------------------------------------------------------|

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Natural gas demand in Italy decreased by approximately twopercentage points from 2005: in fact 2006 was a normal year basedon average temperatures recorded in the coldest months of theyear (first and fourth quarters) as compared to lower thanaverage temperatures in the same months of 2005, resulting inlower consumption of heating gas in 2006.

 

> 
***Key Consolidated Financial Data***

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(million        euro)** |
|--------|---------------------------|

| Net        sales from operations                                                                                  |   |             |   | 57,545 |   | 73,728 |   | 86,105 |
|-------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|--------|--------|--------|--------|--------|
| Operating profit                                                                                                  |   |             |   | 12,399 |   | 16,827 |   | 19,327 |
| Net        profit pertaining to Eni                                                                               |   |             |   | 7,059  |   | 8,788  |   | 9,217  |
| Net cash provided by        operating activities                                                                  |   |             |   | 12,500 |   | 14,936 |   | 17,001 |
| Capital        expenditure                                                                                        |   |             |   | 7,499  |   | 7,414  |   | 7,833  |
| Shareholders’ equity        including minority interest at year end                                          |   |             |   | 35,540 |   | 39,217 |   | 41,199 |
| Net        borrowings at year end (1)                                                                             |   |             |   | 10,443 |   | 10,475 |   | 6,767  |
| Net profit pertaining to        Eni per share                                                                     |   | (euro per share) |   | 1.87   |   | 2.34   |   | 2.49   |
| Dividend        per share                                                                                         |   | (euro per share) |   | 0.90   |   | 1.10   |   | 1.25   |
| Net borrowings to total        shareholders’ equity ratio including minority        interests (leverage) (1) |   |             |   | 0.29   |   | 0.27   |   | 0.16   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

----

| (1) |   | For a        discussion of the usefulness of and a reconciliation of        these non-GAAP financial measures with the most directly        comparable GAAP financial measures see "Liquidity        and Capital Resources - Financial Conditions" below. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

**Basis of Presentation**

The Consolidated Financial Statements of Eni have beenprepared in accordance with IFRS issued by the InternationalAccounting Standards Board (IASB) and adopted by the EuropeanCommission following the procedure contained in Article 6 of theEC Regulation No. 1606/2002 of the European Parliament andCouncil of July 19, 2002. For hydrocarbon exploration andproduction, accounting policies generally applied by the oilindustry have been adopted, with particular reference toamortization according to the Unit Of Production (UOP) method,buy-back contracts and Production Sharing Agreements. TheConsolidated Financial Statements have been prepared by applyingthe cost method except for items that under IFRS must berecognized at fair value as described in the Notes to theConsolidated Financial Statements under the heading"Evaluation Criteria".

In adopting IFRS, Eni elected to rely upon the followingexemptions as permitted under IFRS 1 "First-time Adoption ofInternational Financial Reporting Standards" (IFRS 1):

| • |   | no retroactive restatement        of business combinations that occurred before January 1,        2004. As a result of this exemption, goodwill was not        restated to take into account amortization charges        recorded in previous periods before the adoption of IFRS;        and                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the election of January 1,        2005 as the transition date for the first application of        IAS 32 and IAS 39, related to the evaluation of financial        instruments at fair value, including derivatives. As        permitted under IFRS 1, Eni has not restated information        for the year 2004 which consequently are not comparable        with 2005 and 2006 with respect to this matter. In the        Consolidated Financial Statements for the year ended        December 31, 2005 and 2006, the impact of recording        certain derivative financial instruments at fair value        was a euro 386 million charge and a euro 383 million gain        recognized in the profit and loss account, respectively. |

**Critical Accounting Estimates**

The preparation of these Consolidated Financial Statements inaccordance with IFRS requires management to make estimates thatare based on complex or subjective judgments which rely upon pastexperience and assumptions determined to be reasonable andrealistic considering the information available at the date ofthe estimate. The application of these estimates and assumptionsaffects the reported amounts of assets and liabilities and thedisclosure of contingent assets and liabilities at the balancesheet date and the reported amounts of income and expenses duringthe reporting period. The main areas affected by estimatesinclude the determination of oil and gas proved reserves andproved developed reserves, accounting for exploratory drillingcosts under U.S. GAAP, impairment of fixed assets, intangibleassets and goodwill, asset retirement obligations, businesscombinations, recognition of environmental liabilities andrecognition of revenues in the oilfield services construction andengineering businesses. Actual results may differ from theseestimates given the uncertainty surrounding the assumptions andconditions upon which the estimates are based. 

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Summarized below are the critical accounting estimates thatrequire the more subjective judgment of our management. Suchassumptions or estimates regard the effects of matters that areinherently uncertain and for which changes in conditions maysignificantly affect future results.

 

> 
***Oil and Gas Activities***

Engineering estimates of the Company’s oil and gasreserves are inherently uncertain. Proved reserves are theestimated volumes of crude oil, natural gas and gas condensates,liquids and associated substances which geological andengineering data demonstrate with reasonable certainty to berecoverable in future years from known reservoirs under existingeconomic and operating conditions. Although there areauthoritative guidelines regarding the engineering criteria thatmust be met before estimated oil and gas reserves can bedesignated as "proved", the accuracy of any reserveestimate is a function of the quality of available data andengineering and geological interpretation and judgment.

Field reserves will only be categorized as proved when all thecriteria for attribution of proved status have been met. At thisstage, all booked reserves will be categorized as provedundeveloped. Volumes will subsequently be recategorized fromproved undeveloped to proved developed as a consequence ofdevelopment activity. The first proved developed bookings willoccur at the point of first oil or gas production. Majordevelopment projects typically take one to four years from thetime of initial booking to the start of production. Enireassesses its estimate of proved reserves periodically. Theestimated proved reserves of oil and natural gas may be subjectto future revision and upward and downward revision may be madeto the initial booking of reserves due to production, reservoirperformance, commercial factors, acquisition and divestmentactivity and additional reservoir development activity. Inparticular, changes in oil and natural gas prices could impactthe amount of Eni’s proved reserves as regards the initialestimate and, in the case of Production Sharing Agreements andbuy-back contracts, the share of production and reserves to whichEni is entitled. Accordingly, the estimated reserves could bematerially different from the quantities of oil and natural gasthat ultimately will be recovered.

Oil and natural gas reserves have a direct impact on certainamounts reported in the Financial Statements. Estimated provedreserves are used in determining depreciation and depletionexpenses and impairment expense. Depreciation rates on oil andgas assets using the UOP basis are determined based on the ratiobetween the amount of hydrocarbons extracted in the quarter andproved developed reserves existing at the end of the quarterincreased by the amounts extracted during the quarter. Assumingall other variables are held constant, an increase in estimatedproved developed reserves decreases depreciation, depletion andamortization expense. Conversely, a decrease in estimated proveddeveloped reserves increases depreciation, depletion andamortization expense. In addition, estimated proved reserves areused to calculate future cash flows from oil and gas properties,which serve as an indicator in determining whether an impairmentof a property is to be carried out or not. The larger the volumeof estimated reserves, the lower is the likelihood that theproperty is to be impaired.

 

> 
***Accounting for Suspended Well Costs under U.S. GAAP***

Under U.S. GAAP costs for exploratory wells are initiallycapitalized pending the determination of whether the well hasfound proved reserves. If proved reserves are found, thecapitalized costs of drilling the well are reclassified totangible assets and amortized on a UOP basis. If proved reservesare not found, the capitalized costs of drilling the well arecharged to expense. However, successful exploratory efforts are,in many cases, not declared to be proved until after an extensiveand lengthy evaluation period has been completed. These issueswere addressed by the FASB staff in its FSP FAS 19-1, publishedin April 2005, amending FAS 19, "Financial Accounting andReporting by Oil and Gas Producing Companies". Under theprovisions of FSP FAS 19-1, companies in the oil and gas industryare allowed to continue capitalization of an exploratory wellafter the completion of drilling when: (a) the well hasfound a sufficient quantity of reserves to justify completion asa producing well; and (b) the enterprise is making sufficientprogress assessing the reserves and the economic and operatingviability of the project. If either condition is not met or if anenterprise obtains information that raises substantial doubtabout the economic or operational viability of the project, theexploratory well would be assumed to be impaired, and its costs,net of any salvage value, would be charged to expense.Determination of whether an exploratory well should remaincapitalized after completion of drilling requires a high degreeof judgment on the part of management in assessing whether theCompany is making sufficient progress assessing the reserves andthe economic and operating viability of a given project. Thecompany evaluates the progress made on the basis of regularproject reviews which take account of the following factors: (i)costs are being incurred to assess the reserves and theirpotential development; (ii) existence (or active negotiations) ofsales contracts with customers for oil and natural gas; and(iii) existence of firm plans, established timetables orcontractual commitments, which may include seismic testing anddrilling of additional exploratory wells. As of December 31,2006, an amount of euro 392 million remain capitalized relatingto approximately 25 exploratory wells for which drillingactivities have been completed for more than one year, of thiscapitalized amount euro 85 million (or 10 wells) relates toprojects progressing towards completion of developmentactivities, and the remaining euro 307 million (or 15 wells)relates to projects for which additional exploratory activity isunderway or firmly planned. See Note 38 to the ConsolidatedFinancial Statements.

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> 
***Impairment of Assets***

Eni assesses its tangible assets and intangible assets,including goodwill, for possible impairment if there are eventsor changes in circumstances that indicate that the carryingvalues of the assets are not recoverable. Such indicators includechanges in the Group’s business plans, changes in commodityprices leading to unprofitable performance and, for oil and gasproperties, significant downward revisions of estimated provedreserve quantities. Determination as to whether and how much anasset is impaired involves management estimates on highlyuncertain matters such as future commodity prices, the effects ofinflation and technology improvements on operating expenses,production profiles and the outlook for global or regional marketsupply and demand conditions for crude oil, natural gas,commodity chemicals and refined products.

The amount of an impairment loss is determined by comparingthe book value of an asset with its recoverable amount. Therecoverable amount is the greater of fair value net of disposalcosts and value in use. The estimated value in use is based onthe present values of expected future cash flows net of disposalcosts. The expected future cash flows used for impairment reviewsare based on judgmental assessments of future production volumes,prices and costs, considering available information at the dateof review and are discounted by using a rate related to theactivity involved.

For oil and natural gas properties, the expected future cashflows are estimated based on developed and non-developed provedreserves including, among other elements, production taxes andthe costs to be incurred for the reserves yet to be developed.The estimated future level of production is based on assumptionson: future commodity prices, lifting and development costs, fielddecline rates, market demand and supply, economic regulatoryclimates and other factors.

Goodwill and other intangible assets with indefinite usefullife are not amortized but are reviewed at least annually todetermine whether their carrying amount is recoverable and in anycase, when trigger events arise that would lead the Company toassume the value of an asset is impaired. In particular, goodwillimpairment is based on the determination of the fair value ofeach cash generating unit to which goodwill can be attributed ona reasonable and consistent basis. A cash generating unit is thesmallest aggregate on which the Company, directly or indirectly,evaluates the return on capital expenditures. If the fair valueof a cash generating unit is lower than the carrying amount,goodwill attributed to that cash generating unit is impaired upto that difference; if the carrying amount of goodwill is lessthan the amount of impairment, assets of the cash generating unitare impaired on a pro-rata basis for the residual difference.

 

> 
***Asset Retirement Obligations***

Obligations related to the removal of tangible equipment andthe restoration of land or seabeds require significant estimatesin calculating the amount of the obligation and determining theamount required to be recorded in the consolidated financialstatements. Estimating future asset removal costs is difficultand requires management to make estimates and judgments due tothe fact that most removal obligations will come to term manyyears into the future and contracts and regulations are oftenunclear as to what constitutes removal. Asset removaltechnologies and costs are constantly changing, as well aspolitical, environmental, safety and public relationsconsiderations. The subjectivity of these estimates is alsoincreased by the accounting method used that requires entities torecord the fair value of a liability for an asset retirementobligations in the period when it is incurred (typically, at thetime, the asset is installed at the production location).Whenliabilities are initially recorded, the related fixed assets areincreased by an equal corresponding amount. The liabilities areincreased with the passage of time (interest accretion) and anychange of the estimates following the modification of future cashflows and discount rate is adopted. The recognized assetretirement obligations are based upon future retirement costestimates and incorporate many assumptions such as: expectedrecoverable quantities of crude oil and natural gas, abandonmenttime, future inflation rates and the risk-free rate of interestadjusted for the Company’s credit costs.

 

> 
***Business Combinations***

Accounting for the acquisition of a business requires theallocation of the purchase price to most assets and liabilitiesacquired based on their fair value. Any positive residualdifference between the allocated amount and the purchase price isrecognized as "Goodwill". Negative residual differencesare charged against the profit and loss account. Management usesall available information to make these fair value determinationsand, for major business acquisitions, typically engages anindependent appraisal firm to assist in the fair valuedetermination of the acquired assets and liabilities.

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> 
***Environmental Liabilities***

Together with other companies in the industries in which itoperates, Eni is subject to numerous EU, national, regional andlocal environmental laws and regulations concerning its oil andgas operations, productions and other activities, includinglegislation that implements international conventions orprotocols. Environmental costs are recognized when it becomesprobable that a liability has been incurred and the amount can bereasonably estimated.

Although management, considering the actions alreadyperformed, the existing insurance policies to cover environmentalrisks and provision for risks accrued, does not expect anymaterial adverse impact on Eni’s consolidated results ofoperations and financial position as a result of such laws andregulations, there can be no assurance that there will not be amaterial adverse impact on Eni’s consolidated results ofoperations and financial position due to:

| • |   | the possibility of a yet        unknown contamination;                                                                                                                                                                                            |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the results of the ongoing        surveys and other possible effects of statements as        required by the applicable regulations concerning the        remediation of contaminated sites;                                                      |
| • |   | the possible effect of        future environmental legislation and rules;                                                                                                                                                                         |
| • |   | the effect of possible        technological changes relating to future remediation; and                                                                                                                                                           |
| • |   | 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. |

 

> 
***Employees Post Retirement Benefits***

Defined benefit plans and other long-term benefits areevaluated with reference to uncertain events and based uponactuarial assumptions including among others discount rates,expected rates of return on plan assets, expected rates of salaryincreases, medical cost trend rates, estimated retirement dates,mortality rates.

The significant assumptions used to account for pensions andother post-retirement benefits are determined as follows:

| • |   | discount and inflation rates        reflect the rates at which benefits could be effectively        settled, taking into account the duration of the        obligation. Indications used in selecting the discount        rate include rates of annuity contracts and rates of        return on high quality fixed-income investments (such as        government bonds). The inflation rates reflect market        conditions observed country by country;                            |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the future salary levels of        the individual employees are determined including an        estimate of future changes attributed to general price        levels (consistent with inflation rate assumptions),        productivity, seniority and promotion;                                                                                                                                                                                                                       |
| • |   | healthcare cost trend        assumptions reflect an estimate of the actual future        changes in the cost of the healthcare related benefits        provided to the plan participants and are based on past        and current healthcare cost trends including healthcare        inflation, changes in healthcare utilization and changes        in health status of the participants;                                                                                            |
| • |   | demographic assumptions such        as mortality, disability and turnover reflect the best        estimate of these future events for the individual        employees involved, based principally on available        actuarial data; and                                                                                                                                                                                                                                             |
| • |   | determination of expected        rates of return on assets is made through compound        averaging. For each plan, the distribution of investments        among bonds, equities and cash and their specific average        expected rate of return is taken into account.        Differences between expected and actual costs and between        the expected return and the actual return on plan assets        routinely occur and are called actuarial gains and        losses. |

Eni applies the corridor method to amortize its actuariallosses and gains. This method amortizes on a pro-rata basis thenet cumulative actuarial gains and losses, unrecognized at theend of the previous reporting period, that exceed 10% of thegreater of the present value of the defined benefit obligationand the fair value of plan assets, over the average expectedremaining working lives of the employees participating in theplan.

Additionally, obligations for other long-term benefits aredetermined by adopting actuarial assumptions; the effect ofchanges in actuarial assumptions or a change in thecharacteristics of the benefit are taken to profit or loss intheir entirety.

 

> 
***Contingencies***

In addition to accruing the estimated costs for environmentalliabilities, asset retirement obligations, and employee benefits,Eni accrues for all contingencies that are both probable andestimable. These other contingencies are primarily related tolitigation and tax issues. Determining appropriate amounts foraccrual is a complex estimation process that includes subjectivejudgments.

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> 
***Revenue Recognition in the Engineering &    Construction Segment***

Revenue recognition in the Engineering & Constructionbusiness segment is based on the stage of completion of acontract as measured on the cost-to-cost basis applied tocontractual revenues. Use of the stage of completion methodrequires estimates of future gross profit on a contract bycontract basis. The future gross profit represents the profitremaining after deducting costs attributable to the contract fromrevenues provided for in the contract. The estimate of futuregross profit is based on a complex estimation process thatincludes identification of risks related to geographical region,market conditions in that region and any assessment that it isnecessary to estimate with sufficient precision the total futurecosts as well as the expected timetable. Requests for additionalpayments, deriving from a change in the scope of the work, areincluded in the total amount of revenues when it is probable thatthe customer will approve the variation and the related amount;claims deriving for instance from additional costs incurred forreasons attributable to the client are included in the totalamount of revenues when it is probable that the counterpart willaccept them.

 

**Results of Operations**

> 
***Overview of the Profit and Loss Account for Three    Years Ended December 31, 2004, 2005 and 2006***

The table below sets forth a summary of Eni’s profit andloss account for the periods indicated. All line items includedin the table below are derived from the Consolidated FinancialStatements prepared in accordance with IFRS.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(million        euro)** |
|--------|---------------------------|

| Net sales from operations                  |   | 57,545     |   |   | 73,728     |   |   | 86,105     |   |
|--------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Other        income and revenues (1)       |   | 1,377      |   |   | 798        |   |   | 783        |   |
|                                       |   |            |        |   |            |        |   |            |        |
| Total revenues                             |   | 58,922     |   |   | 74,526     |   |   | 86,888     |   |
| Operating        expenses                  |   | (41,592    | )      |   | (51,918    | )      |   | (61,140    | )      |
| Depreciation, amortization and impairments |   | (4,931     | )      |   | (5,781     | )      |   | (6,421     | )      |
|                                       |   |            |        |   |            |        |   |            |        |
| **OPERATING        PROFIT**                |   | **12,399** |   |   | **16,827** |   |   | **19,327** |   |
| Financial income (expense)                 |   | (156       | )      |   | (366       | )      |   | 161        |   |
| Income        (expense) from investments   |   | 820        |   |   | 914        |   |   | 903        |   |
|                                       |   |            |        |   |            |        |   |            |        |
| **PROFIT BEFORE INCOME TAXES**             |   | **13,063** |   |   | **17,375** |   |   | **20,391** |   |
| Income        taxes                        |   | (5,522     | )      |   | (8,128     | )      |   | (10,568    | )      |
|                                       |   |            |        |   |            |        |   |            |        |
| NET PROFIT                                 |   | 7,541      |   |   | 9,247      |   |   | 9,823      |   |
| Pertaining        to:                      |   |       |   |   |       |   |   |       |   |
| **- Eni**                                  |   | **7,059**  |   |   | **8,788**  |   |   | **9,217**  |   |
| - minority        interest                 |   | 482        |   |   | 459        |   |   | 606        |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

----

| (1) |   | Includes,        among other things, contract penalties, income from        contract cancellations, gains on disposal of mineral        rights and other fixed assets, compensation for damages        and indemnities and other income. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

The table below sets forth certain income statement items as apercentage of net sales from operations for the periodsindicated.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(%)** |
|--------|---------|

| Operating expenses                                |   | 72.3     |   | 70.4     |   | 71.0     |
|---------------------------------------------------|--------|----------|--------|----------|--------|----------|
| Depreciation,        amortization and impairments |   | 8.6      |   | 7.8      |   | 7.5      |
| **OPERATING PROFIT**                              |   | **21.5** |   | **22.8** |   | **22.4** |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

*2006 compared to 2005.* Net profit pertaining to Eni in2006 was euro 9,217 million with a euro 429 million increase from2005 (up 4.9%) reflecting an increase in operating profit (upeuro 2,500 million) recorded in particular in the Exploration& Production segment, in respect to higher realizedhydrocarbon prices in dollars (oil up 22.4% and natural gas up17.8%) combined with increased production volumes sold (up 10.2mmBOE), which were offset in part by higher operating costs andamortization charges, and increased exploration expenses.Operating profit increased also in the Gas & Power andEngineering & Construction segments (up euro 481 and euro 198million, respectively) and lower restructuring charges wererecognized in the Other activities segment (up euro 312 million).

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These increases were offset in part by a decrease in theoperating profit of the Refining & Marketing segment (downeuro 1,538 million) due to the circumstance that in 2005 aninventory holding gain of euro 1,064 million was recorded inconnection with the impact of rising international prices of oiland refined products on the inventory evaluation according to theweighted-average cost method of inventory accounting, as comparedto a euro 215 million inventory holding loss reported in 2006 asa result of a reversal in the trend of refined product and oilprices. Inventory holding gains or losses represent thedifference between the cost of sales of the volumes sold duringthe period calculated using the cost of supplies incurred duringthe same period and the cost of sales calculated using theweighted-average cost method.

The effect of the increase in operating profit on net profitwas offset in part by higher income taxes (up euro 2,440 million)reflecting the increase in Group tax rate, which rose from 46.8%to 51.8% mainly in the Exploration & Production segmentdue to:

| • |   | the circumstance that a        windfall tax on upstream earnings was enacted in Algeria        effective as from August 1, 2006 (with a negative impact        of euro 328 million); and                                                                                                        |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the circumstance that an        increase in the supplemental tax rate applicable to        profit before taxes earned by operations in the North Sea        was enacted by the British Government effective as from        January 1, 2006 (with a negative impact of euro 198        million). |

*2005 compared to 2004.* Net profit pertaining to Eni in2005 was euro 8,788 million with a euro 1,729 million increaseover 2004 (up 24.5%) reflecting primarily an increase inoperating profit (up euro 4,428 million) recorded particularly inthe Exploration & Production segment, in respect to higheroil and natural gas prices in dollars (Brent up 42.3%) and highersales volumes of oil and natural gas (up 38.3 mmBOE, or 6.7%).These positives were offset in part by higher environmentalprovisions (euro 532 million), a provision to the risk reserveconcerning the fine imposed on February 15, 2006 by the AntitrustAuthority and the estimated impact of the application of DecisionNo. 248/2004 of the Authority for Electricity and Gas affectingnatural gas prices to residential customers and wholesalers (euro225 million) in force from January 1, 2005 and the recording in2004 of net gains on the sale of assets by the Exploration &Production segment (euro 320 million).

The effect of the increase in operating profit on net profitwas offset in part by higher income taxes (up euro 2,606million).

 

> 
***Discontinued Operations***

Discontinued operations under both IFRS and U.S. GAAP in 2006,2005 and 2004 were immaterial.

 

> 
***Analysis of the Line Items of the Profit and Loss    Account***

*Revenue recognition*

Revenues from sales of products and services rendered arerecognized upon transfer of risks and advantages associated withthe property or upon settlement of the transaction. Inparticular, revenues are recognized:

| • |   | for crude oil, generally        upon shipment;                                                                                                                                                         |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | for natural gas, when the        natural gas is delivered to the customer;                                                                                                                             |
| • |   | for petroleum products sold        to retail distribution networks, generally upon delivery        to the service stations, whereas all other sales are        generally recognized upon shipment; and |
| • |   | for petrochemical products        and other products, generally upon shipment.                                                                                                                         |

Revenues are recognized upon shipment when, at that date, therisks of loss are transferred to the acquirer.

Revenues from the sale of crude oil and natural gas producedin properties in which Eni has an interest together with otherproducers are recognized on the basis of Eni’s workinginterest in those properties (entitlement method). Differencesbetween Eni’s net working interest volume and actualproduction volumes are recognized at current prices atperiod-end.

Income related to partially rendered services is recognizedwith respect to the accrued revenues, if it is possible toreasonably determine the state of completion and there are norelevant uncertainties concerning the amounts and the existenceof the revenue and related costs; otherwise it is recognizedwithin the limits of the recoverable costs incurred.

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The revenues accrued in the period related to constructioncontracts are recognized on the basis of contractual revenues byreference to the stage of completion of a contract measured onthe cost-to-cost basis. Additional revenues, deriving from achange in the scope of the work, are included in the total amountof revenues when it is probable that the customer will approvethe variation and the relevant amount; claims deriving forinstance from additional costs incurred for reasons attributableto the client are included in the total amount of revenues whenit is probable that the counterparts will accept them.

Revenues are stated net of returns, discounts, rebates andbonuses, as well as directly related taxation. Exchanges of goodsand services with similar nature and value do not give rise torevenues and costs as they do not represent sale transactions.

 

> 
***a) Total Revenues***

Eni’s total revenues were euro 86,888, euro 74,526 andeuro 58,922 million in 2006, 2005 and 2004, respectively. Totalrevenues consist of net sales from operations and other incomeand revenues. Eni’s net sales from operations amounted toeuro 86,105, euro 73,728 and euro 57,545 million in 2006, 2005and 2004, respectively, and its other income and revenues totaledeuro 783, euro 798 and euro 1,377 million, respectively, in theseperiods.

> 
*Net sales from operations*

The table below sets forth, for the periods indicated, the netsales from operations generated by each of Eni’s businesssegments including inter-segment sales, together withconsolidated net sales from operations.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(million        euro)** |
|--------|---------------------------|

| Exploration & Production        |   | 15,346     |   |   | 22,531     |   |   | 27,173     |   |
|-------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Gas &        Power              |   | 17,302     |   |   | 22,969     |   |   | 28,368     |   |
| Refining & Marketing            |   | 26,089     |   |   | 33,732     |   |   | 38,210     |   |
| Petrochemicals                      |   | 5,331      |   |   | 6,255      |   |   | 6,823      |   |
| Engineering & Construction      |   | 5,696      |   |   | 5,733      |   |   | 6,979      |   |
| Other        activities             |   | 1,279      |   |   | 863        |   |   | 823        |   |
| Corporate and financial companies   |   | 851        |   |   | 1,239      |   |   | 1,174      |   |
| Consolidation        adjustment (1) |   | (14,349    | )      |   | (19,594    | )      |   | (23,445    | )      |
|                                |   |            |        |   |            |        |   |            |        |
|                                |   | **57,545** |   |   | **73,728** |   |   | **86,105** |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

----

| (1)    |   | Inter-segment        sales are included in net sales from operations in order        to give a more meaningful indication as to the volume of        the activities to which sales from operations by segment        may be related. The most substantial inter-segment sales        are recorded by the Exploration & Production segment.        See Note 32 to the Consolidated Financial Statements for        a breakdown of inter-segment sales by segment for the        reported years.                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |   | From January        1, 2006 Eni’s subsidiaries operating in diversified        sectors (such as real estate services, R&D and        training services) are reported within "Corporate        and financial companies" with the exception of        Tecnomare which is reported in the Exploration &        Production segment (previously all these diversified        activities were reported within "Other        activities"). The "Other activities" item        includes only Syndial SpA, a subsidiary which runs minor        petrochemical activities and reclamation and        decommissioning activities pertaining to certain        businesses which Eni exited in past years. In order to        allow for comparison, 2005 data has been reclassified        accordingly; 2004 data has not been reclassified because        the effect of this regrouping is immaterial. |

 

*2006 compared to 2005*. Eni’s net sales fromoperations for 2006 were euro 86,105 million, up euro 12,377million from 2005, or 16.8%, primarily reflecting higher productprices in all of Eni’s main operating segments, highervolumes sold of hydrocarbons and natural gas and higher activitylevels in the Engineering & Construction segment, offset inpart by the negative impact of the appreciation of the euroversus the dollar (up 1%).

Revenues generated by the Exploration & Production segmentwere euro 27,173 million, up euro 4,642 million, or 20.6%,primarily reflecting higher realizations in dollars (oil up22.4%, natural gas up 17.8%) and higher oil and gas productionsold (up 10.2 mmBOE). These positives were partially offset bythe appreciation of the euro over the dollar.

Revenues generated by the Gas & Power segment were euro28,368 million, up euro 5,399 million, or 23.5%, primarilyreflecting increased natural gas prices related in particular toa favorable trading environment, higher natural gas volumes sold(up 3.14 BCM, or 3.8%) and higher electricity production sold (up2.05 TWh, or 9%).

Revenues generated by the Refining & Marketing segmentwere euro 38,210 million, up euro 4,478 million, or 13.3%,primarily reflecting higher international prices for oil andrefined products.

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Revenues generated by the Petrochemicals segment were euro6,823 million, up euro 568 million, or 9.1%, primarily reflectingan increase in average selling prices.

Revenues generated by the Engineering & Constructionsegment were euro 6,979 million, up euro 1,246 million, or 21.7%,primarily reflecting higher activity levels in the Offshore andOnshore construction businesses and a higher utilization rate ofvessels and higher tariffs in the Offshore Drilling area.

*2005 compared to 2004.*Eni’s net sales fromoperations for 2005 totaled euro 73,728 million, with an increaseof euro 16,183 million over 2004, up 28.1%, due principally tohigher oil prices (denominated in dollars), higher refinedproduct and petrochemical prices and higher volumes sold inEni’s main operating segments.

Revenues generated by the Exploration & Production segment(euro 22,531 million) increased by euro 7,185 million in 2005, up46.8%, due principally to higher oil prices realized (oil up41.3%, natural gas up 15.5%) combined with increased hydrocarbonproduction volumes sold (38.4 mmBOE, or 6.7%).

Revenues generated by the Gas & Power segment (euro 22,969million) increased by euro 5,667 million in 2005, up 32.8%, dueprincipally to higher natural gas prices and the increase ofvolumes sold of natural gas (4.29 BCM, or 5.9%), and electricity(up 8.92 TWh, or 64.4%).

Revenues generated by the Refining & Marketing segment(euro 33,732 million) increased by euro 7,643 million in 2005, up29.3%, principally due to higher international prices for oil andrefined products, the effects of which were offset in part bylower volumes sold on Italian retail and wholesale markets (down1.1 mmtonnes), the effect of the sale of LPG and refined productdistribution activities in Brazil in August 2004 and lowertrading activities (down 1.3 mmtonnes).

Revenues generated by the Petrochemical segment (euro 6,255million) increased by euro 924 million in 2005, up 17.3%, duemainly to a 12% increase in the average selling prices ofproducts and a 3.6% increase in sales volumes.

Revenues from the Engineering & Construction segment (euro5,733 million) increased by euro 37 million in 2005, up 0.6%,reflecting mainly higher utilization rates of vessels anddrilling rigs and a higher volume of orders fulfilled.

Revenues of Corporate and financial companies (euro 1,239million) increased by euro 388 million in 2005, up 45.6%, whichessentially consists of invoices for services provided to othergroup segments. In 2005, Corporate started supplying certaincentral services amounting to euro 76 million to a mergedsubsidiary, Italgas Più belonging to the Gas & Powersegment. Other increases in revenues were essentially related toIT services (euro 27 million) and general services such asactivities related to real estate rentals and maintenance, fleetof cars, company’s aircrafts, and other activities (euro 21million).

> 
*Other income and revenues*

*2006 compared to 2005*. Other income and revenues (euro783 million) were substantially stable compared to 2005 (down ofeuro 15 million).

*2005 compared to 2004.* Other income and revenues (euro798 million) declined by euro 579 million in 2005, down 42%, duemainly to lower gains on asset divestment in relation to the factthat in 2004 gains on the sale of mineral assets were recorded bythe Exploration & Production segment for euro 373 million,and the fact that starting in 2005 derivative contracts oncommodities were accounted for under IFRS No. 32 and 39, underwhich gains or losses on derivative financial contracts used tomanage exposure to fluctuations in commodity prices are accountedfor as financial income.

 

> 
***b) Operating Expenses***

The table below sets forth the components of Eni’soperating expenses for the periods indicated.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(million        euro)** |
|--------|---------------------------|

| Purchases, services and other    |   | 38,347     |   | 48,567     |   | 57,490     |
|----------------------------------|--------|------------|--------|------------|--------|------------|
| Payroll        and related costs |   | 3,245      |   | 3,351      |   | 3,650      |
| **Operating expenses**           |   | **41,592** |   | **51,918** |   | **61,140** |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

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*2006 compared to 2005.* Operating expenses for 2006(euro 61,140 million) were up euro 9,222 million from 2005, or17.8%, reflecting primarily: (i) higher prices for oil-based andpetrochemical feed-stocks and for natural gas, affected also byhigher charges related to the climatic emergency of the firstquarter of 2006; (ii) higher operating costs in the Exploration& Production segment, reflecting mainly the higher share ofdevelopment projects in complex environments and sector-specificinflation; (iii) higher costs for refinery maintenance; and (iv)a risk provision of euro 239 million related mainly to finesimposed by certain antitrust and regulatory authorities. Thesenegative factors were offset in part by the impact of theappreciation of the euro over the dollar.

Payroll and related costs (euro 3,650 million) were up euro299 million, or 8.9%, reflecting primarily higher redundancyincentives (up euro 99 million), ordinary wage trends and higheraverage workforce outside Italy, in particular in the Engineering& Construction segment, partly offset by a reduction inaverage workforce in Italy.

*2005 compared to 2004.*Operating expenses (euro 51,918million) increased by euro 10,326 million in 2005 compared to2004, up 24.8%, due mainly to: (i) higher prices for oil-basedand petrochemical feed stocks and for natural gas; (ii) higherenvironmental provisions (euro 532 million), recorded inparticular in the Other activities and the Refining& Marketing segment in connection with reclamation andremediation activities of certain industrial plants related tobusinesses exited by Eni in past years and environmentalliabilities relating to refineries and the distribution networkin Italy; (iii) an increase in provisions relating to the fineimposed on February 15, 2006 by the Antitrust Authority and theestimated impact of the application of Decision No. 248/2004 ofthe Authority for Electricity and Gas from January 1, 2005 (euro515 million); (iv) a euro 87 million increase in insurancecharges deriving from the extra premium due for 2005 and for thenext five years (assuming normal accident rates) related to theinterest of Eni in Oil Insurance Ltd. These higher insurancecharges reflect the exceptionally high rate of accidents in thetwo-year period 2004-2005; and (v) increases in provisionsrelating to certain legal proceedings and contractual obligations(euro 58 million). These increases were partially offset by thesale of activities in Brazil in August 2004.

Payroll and related costs (euro 3,351 million) were up euro106 million in 2005, or 3.3%, reflecting primarily an increase inunit labor cost in Italy, offset in part by a decline in theaverage number of employees in Italy and the effect of the saleof refined product distribution activities in Brazil.

 

> 
***c) Depreciation, Amortization and Impairments***

The table below sets forth a breakdown of depreciation,amortization and impairments by business segment for the periodsindicated.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(million        euro)** |
|--------|---------------------------|

| Exploration & Production (1)                       |   | 3,047     |   |   | 3,945     |   |   | 4,646     |   |
|--------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Gas &        Power                                 |   | 637       |   |   | 684       |   |   | 687       |   |
| Refining & Marketing                               |   | 465       |   |   | 462       |   |   | 434       |   |
| Petrochemicals                                         |   | 114       |   |   | 118       |   |   | 124       |   |
| Engineering & Construction                         |   | 184       |   |   | 176       |   |   | 195       |   |
| Other        activities                                |   | 45        |   |   | 16        |   |   | 6         |   |
| Corporate and financial companies                      |   | 106       |   |   | 112       |   |   | 70        |   |
| Impact of        inter-segment profits elimination (2) |   |      |   |   | (4        | )      |   | (9        | )      |
|                                                   |   |           |        |   |           |        |   |           |        |
| **Total depreciation and amortization**                |   | **4,598** |   |   | **5,509** |   |   | **6,153** |   |
| Impairments                                            |   | 333       |   |   | 272       |   |   | 268       |   |
|                                                   |   |           |        |   |           |        |   |           |        |
|                                                   |   | **4,931** |   |   | **5,781** |   |   | **6,421** |   |
|                                                   |   |           |        |   |           |        |   |           |        |

----

| (1) |   | Exploration        expenditures of euro 1,075, euro 618 and euro 564 million        are included in these amounts relative to the years 2006,        2005 and 2004, respectively. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | This item        concerned mainly intra-group sales of goods, services and        capital assets recorded at period end in the equity of        the purchasing business segment.  |

 

*2006 compared to 2005.* In 2006 depreciation andamortization charges (euro 6,153 million) increased by euro 644million, or 11.7%, from 2005 mainly in the Exploration &Production segment (euro 701 million) reflecting primarily higherexploration expenditure and increased development costs incurredfor developing new fields and maintaining production levels inmature fields combined with the effects of higher productionlevels.

Impairments (euro 268 million) concerned mainly mineral assetsin the Exploration & Production segment (euro 129 million),intangible assets in the Gas & Power segment and tangibleassets in the Petrochemical segment. No impairments wererecognized in connection with the unilateral cancellation by theVenezuelan state oil company PDVSA of the service contractregulating mineral activities at the Dación oilfield inVenezuela as management expects to fully recover the book valueof Eni’s assets relating to this field. For a fulldescription of this matter see "Item 4 – Exploration& Production – Venezuela".

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##### Table of Contents

*2005 compared to 2004.* Depreciation, amortization andimpairment charges (euro 5,781 million) increased by euro 850million in 2005 compared to 2004, up 17.2%. Depreciation andamortization charges (euro 5,509 million) were up euro 911million, or 19.8%, from 2004 to 2005 mainly in the Exploration& Production segment (up euro 898 million) reflectingprimarily: (i) higher development costs for new fields andincreased costs incurred to maintain production levels in certainmature fields; (ii) the impact on amortization charges of therevision of previous estimates of asset retirement and removalcosts relating to certain fields located in the UK, Norway,Kazakhstan; (iii) the impact of oil prices on amortization inPSAs and buy-back contracts; (iv) higher production; and (v)higher exploration costs (up euro 54 million). In the Gas &Power segment amortization charges increased by euro 47 milliondue to the coming on stream of the GreenStream pipeline and newpower generation capacity.

Impairments (euro 272 million) concerned mainly Exploration& Production (euro 156 million), Other activities (euro 75million) and Petrochemicals (euro 29 million) segments.

 

> 
***d) Operating Profit by Segment***

The table below sets forth Eni’s operating profit bybusiness segment for the periods indicated.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(million        euro)** |
|--------|---------------------------|

| Exploration & Production                           |   | 8,185 |   |   | 12,592 |   |   | 15,580 |   |
|--------------------------------------------------------|--------|-------|--------|--------|--------|--------|--------|--------|--------|
| Gas &        Power                                 |   | 3,428 |   |   | 3,321  |   |   | 3,802  |   |
| Refining & Marketing                               |   | 1,080 |   |   | 1,857  |   |   | 319    |   |
| Petrochemicals                                         |   | 320   |   |   | 202    |   |   | 172    |   |
| Engineering & Construction                         |   | 203   |   |   | 307    |   |   | 505    |   |
| Other        activities                                |   | (395  | )      |   | (934   | )      |   | (622   | )      |
| Corporate and financial companies                      |   | (363  | )      |   | (377   | )      |   | (296   | )      |
| Impact of        inter-segment profits elimination (1) |   | (59   | )      |   | (141   | )      |   | (133   | )      |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

| **Operating profit** |   | **12,399** |   |   | **16,827** |   |   | **19,327** |   |
|----------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

----

| (1) |   | This item        concerned mainly intra-group sales of goods, services and        capital assets recorded at period end in the equity of        the purchasing business segment. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

The table below sets forth, for each of Eni’s principalbusiness segments, operating profit as a percentage of suchsegment’s net sales from operations (including inter-segmentsales) for the periods indicated.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(%)** |
|--------|---------|

| Exploration & Production   |   | 53.3 |   | 55.9 |   | 57.3 |
|--------------------------------|--------|------|--------|------|--------|------|
| Gas &        Power         |   | 19.8 |   | 14.5 |   | 13.4 |
| Refining & Marketing       |   | 4.1  |   | 5.5  |   | 0.8  |
| Petrochemicals                 |   | 6.0  |   | 3.2  |   | 2.5  |
| Engineering & Construction |   | 3.6  |   | 5.4  |   | 7.2  |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

| **Group** |   | **21.5** |   | **22.8** |   | **22.4** |
|-----------|--------|----------|--------|----------|--------|----------|

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

***Exploration & Production.*** Operating profitin 2006 amounted to euro 15,580 million, up euro 2,988 millionfrom 2005, or 23.7%, reflecting higher realizations in dollars(oil up 22.4%, natural gas up 17.8%) combined with higherproduction volumes sold (up 10.2 mmBOE or 1.7%), partly offsetby: (i) increased production costs and amortization chargesrelated in particular to higher cost incurred in developing newfields and maintaining production levels at mature fields andsector-specific inflation; (ii) increased exploration expenses(euro 457 million, including exchange rate differences); and(iii) the negative net impact of the appreciation of the euroover the dollar (approximately euro 155 million), as a decreasein revenues due to exchange rate differences was only partlyoffset by a decrease in operating costs and amortization charges.

Operating profit in 2005 amounted to euro 12,592 million, aeuro 4,407 million increase compared to 2004, up 53.8%, due to:(i) higher oil and gas prices (oil prices up 41.3% in dollars,natural gas prices up 15.6% in dollars); (ii) higherproduction volumes sold (up 38.4 mmBOE, or 6.7%); and (iii) lowerasset impairment charges (euro 40 million). These positivefactors were offset in part by: (i) higher operating costs andamortization charges; (ii) net gains on divestments recorded in2004 (euro 320 million); and (iii) higher insurance charges.

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***Gas & Power.*** Operating profit in 2006amounted to euro 3,802 million, a euro 481 million increasecompared to 2005, up 14.5%, reflecting: (i) higher sellingmargins on natural gas against the backdrop of a favorabletrading environment; (ii) a lower impact of the tariff regimeimplemented by the Authority for Electricity and Gas withResolution No. 248/2004 as modified by Resolution No. 134/2006enacted on July 1, 2006. Resolution No. 134/2006 mitigatedthe impact of the indexation mechanism provided for by ResolutionNo. 248/2004, and, additionally, established that the impact ofResolution No. 248 on 2005 be split among gas supplier andwholesaler in case the former renegotiated gas supply contractsbased on the terms of Resolution No. 248/2004. As a consequenceof this, Eni partly reversed a provision accrued in 2005financial statements with respect to Resolution No. 248 havingfulfilled the renegotiation obligation set forth by ResolutionNo. 134/2006 (see Item 4 – Regulation of Natural Gas); and(iii) a growth in natural gas sales by consolidated subsidiaries(up 3.14 BCM, or 3.8%), in volumes transported outside Italy dueto the coming on line of volumes transported through theGreenStream pipeline from Libya, and in electricity productionsold (up 2.05 TWh, or 9%). Furthermore, the comparison of theoperating result for the year to last year’s result benefitsfrom the circumstance that in 2005 a provision pertaining to afine imposed by the Italian Antitrust Authority was accrued foreuro 290 million, partly offset by the circumstance that in 2006a provision to the risk reserve regarding mainly certain finesimposed by the Authority for Electricity and Gas, and higherasset impairments environmental charges and provisions forredundancy incentives were recorded (for a cumulative amount euro147 million).

These positives were partly offset by: (i) a lower operatingresult from transportation activities in Italy due to the tariffregime enacted by the Authority for Electricity and Gas withResolution No. 166/2005 resulting in lower transport tariff and alower operating result from retail distribution activities due tolower volumes; and (ii) higher purchase costs incurred in thefirst quarter of the year, owing to a climatic emergency.

Operating profit in 2005 amounted to euro 3,321 million, aeuro 107 million decrease compared to 2004, down 3.1%, due mainlyto: (i) a provision increase relating to the fine imposed onFebruary 15, 2006 by the Antitrust Authority (euro 290 million)and the estimated impact of the application of Decision No.248/2004 of the Authority for Electricity and Gas from January 1,2005 affecting natural gas prices to residential customer andwholesalers (euro 225 million); (ii) weaker realized margins onnatural gas sales related to competitive pressure offset in partby favorable trends in prices of certain refined products towhich natural gas sale and purchase prices are contractuallyindexed resulting in a higher increase of selling prices ascompared to supply costs when comparing 2005 to 2004; and (iii)other provision increases (euro 46 million). These negativefactors were offset in part by: (i) increased natural gas salesvolumes (up 6.13 BCM including own consumption, or 8%) and highernatural gas volumes distributed; (ii) a higher operating profitin natural gas transport activities outside Italy; and (iii) ahigher operating profit of power generation activities whichalmost doubled to euro 138 million in 2005, up euro 77 million,reflecting primarily an increase in sold production ofelectricity (8.92 TWh, up 64.4%), offset in part by a decline inrealized margins related to unfavorable trends in prices ofcertain refined products to which electricity selling prices andpurchase prices of fuels (in particular natural gas) arecontractually indexed resulting in a higher increase of supplycosts as compared to selling prices when comparing 2005 to 2004.

***Refining & Marketing.*** Operating profit in2006 amounted to euro 319 million, a euro 1,538 million decreasecompared to 2005, down 82.8%, due essentially to: (i) thecircumstance that in 2005 an inventory holding gain of euro 1,064million was recorded in connection with the impact of risinginternational prices of oil and refined products on the inventoryevaluation according to the weighted-average cost method ofinventory accounting, as compared to a euro 215 million inventoryholding loss reported in 2006 as a result of a reversal in thetrend of refined product and oil prices. Inventory holding gainsor losses represent the difference between the cost of sales ofthe volumes sold during the period calculated using the cost ofsupplies incurred during the same period and the cost of salescalculated using the weighted-average cost method; (ii) lowerrealized refining margins reflecting an unfavorable tradingenvironment and the appreciation of the euro versus the dollar,combined with the impact of longer refinery standstills due toplanned maintenance, partly offset by the higher profitability ofprocessed crude; (iii) a decline in the operating performance ofItalian marketing activities due to lower volumes sold which werenegatively affected by the mild weather conditions registered inthe fourth quarter and the divestment of Italiana Petroli carriedout in September 2005; (iv) environmental provisions (euro111 million); (v) a fine imposed by the Italian AntitrustAuthority (euro 109 million); and (vi) provisions for redundancyincentives (euro 47 million).

On the positive side, marketing activities in the rest ofEurope recorded improved results reflecting higher retail marginsand higher volumes sold.

Operating profit in 2005 amounted to euro 1,857 million, aeuro 777 million increase compared to 2004, up 71.9%, dueessentially to: (i) an inventory holding gain of euro 1,064million (euro 393 million in 2004); (ii) higher realized marginsin refining (the margin on Brent was up 1.43 $/BBL, or 32.9%)combined with higher volumes processed and an improvement in themix of refined products obtained, the effect of which was offsetin part by the impact of the standstill of the Gela refinery inthe first part of 2005 owing to the damage caused by a sea stormin December 2004; (iii) higher operating profit in distributionactivities in Italy; and (iv) an increase in operating results ofrefining and marketing activities in the rest of Europe relatedto a favorable trend of the trading environment for refining andto increased retailing sales in particular in Germany, Spain andthe Czech Republic, due to the purchase/construction of servicestations. These positive factors were offset in part by a euro185 million increase in operating expenses related in particularto higher environmental provisions and higher insurance costs andthe effect of the sale of Agip do Brasil (euro 28 million) inAugust 2004.

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***Petrochemicals.***Operating profit in 2006amounted to euro 172 million, a euro 30 million decrease comparedto 2005, down 14.9%, due to: (i) lower selling margins recordedmainly in the first half of the year. This decline affected allbusinesses with the exception of polyethylene, owing to increasesin the cost of oil-based feed-stocks not transferred to sellingprices; and (ii) higher asset impairments (euro 21 million),higher redundancy incentives (euro 15 million) and a riskprovisions related to a fine imposed by the European AntitrustAuthority (euro 13 million). Results for the year were alsonegatively impacted by the accident occurred at the Priolorefinery in April resulting in lower product availability.

Operating profit in 2005 amounted to euro 202 million, a euro118 million decrease compared to 2004, down 36.9%, due mainly to:(i) higher operating expenses (euro 92 million) recorded inconnection with the restructuring of the Champagnier plant inview of its shutdown, provisions for litigation and higherinsurance costs; and (ii) lower product margins in basicpetrochemicals reflecting higher oil-based feedstock purchasecosts not fully recovered in selling prices, partly offset byhigher margins in elastomers and polyethylene. These negativefactors were offset in part by higher sales volumes (up 3.6%) andlower operating costs related to efficiency actions.

***Engineering & Construction.***Operating profitin 2006 amounted to euro 505 million, a euro 198 million increasecompared to 2005, up 64.5%. This increase was recorded inparticular in the following business areas: (i) Offshore, due toa higher activity level in the Caspian region and Nigeria; (ii)Offshore Drilling, due to higher tariffs for the Scarabeo 3 andScarabeo 5 semi-submersible platforms and higher activity levelsof the Perro Negro 5 jack-up and Scarabeo 4 semi-submersibleplatform; and (iii) Onshore due to higher activity relatedessentially to the start up of some large projects acquired in2005.

Operating profit in 2005 amounted to euro 307 million, a euro104 million increase compared to 2004, up 51.2%. The oilfieldservices and construction business reported an operating profitof euro 306 million, up euro 37 million, or 13.8%, achieved inthe following areas: (i) offshore construction area, reflectinghigher profitability of certain projects completed in NorthAfrica; (ii) onshore drilling area, reflecting higher activitylevels; and (iii) offshore drilling area, reflecting tariffincreases for the submersible platform Scarabeo 6, higherutilization of the submersible platform Scarabeo 4 and of thejack-up Perro Negro 5. Such gains were partially offset by highercosts on projects in progress in the LNG area and the fact thatfor 2004 the Leased FPSO area recorded income relatingessentially to a contract for the recovery of oil spilled fromthe Prestige tanker not recorded in 2005.

The engineering business reported an operating profit of euro1 million, an increase of euro 67 million over 2004, arising fromthe higher profitability of certain contracts in addition to theshare of earnings from certain projects acquired in early 2005.

***Other activities.*** In 2006 and 2005 thisreporting segment included only the results of operations ofEni’s subsidiary Syndial which runs minor petrochemicalactivities and reclamation and decommissioning activitiespertaining to certain businesses which Eni exited in past years.In 2004, this reporting segment also included the results ofoperations of certain diversified subsidiaries running generalservices to Eni’s businesses. Starting in 2006, saidsubsidiaries have been reallocated in Eni’s other reportingsegments. Data for the year 2005 have been restated; previousyear data have not been restated due to the circumstance thatoperating results of these subsidiaries were immaterial.

The Other activities reported an operating loss of euro 622million for 2006, improving by euro 312 million, or 33.4%compared to the loss recorded in 2005 (euro 934 million), duemainly to lower environmental charges, lower provisions for risksand lower asset impairments (for a cumulative positive effect ofeuro 395 million). This was partly offset by the recording of acharge related to a fine imposed by the European AntitrustAuthority (euro 62 million).

The Other activities reported an operating loss of euro 934million for 2005, higher by euro 539 million, or 136.5% comparedto the loss recorded in 2004, due essentially to a euro 504million increase in Syndial’s operating loss relating to:(i) higher provisions for environmental liabilities of euro 328million reflecting primarily to the clean up of the PortoMarghera site and the settlement agreed with certain Italianauthorities for the environmental damages and remediation of thesame site, the reclamation of areas belonging to the Mantovaplant and the dismantling of inactive plants and tanks in thePorto Torres site; (ii) provisions for contractual risks (euro 71million) essentially related to the inability to fulfill certaincontractual obligations in connection with product supply andlitigations (euro 40 million); and (iii) higher asset impairments(up euro 56 million from euro 19 million to euro 75 million);impairments in 2005 related in particular to the Scarlino andPorto Torres plants, up euro 44 million and euro 19 million,respectively.

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***Corporate and financial companies.*****Theseactivities include results of operation of the headquarter of theparent company Eni SpA, of Eni’s subsidiaries engaged intreasury services and of other Eni’s subsidiaries, such as,among others, EniServizi, Eni Corporate University and AGI.

The aggregate Corporate and financial companies reported anoperating loss of euro 296 million, lower by euro 81 million, or21.5% compared to the loss recorded in 2005 (euro 377 million),due essentially to lower operating costs and lower riskprovisions.

The aggregate Corporate and financial companies reported anoperating loss of euro 377 million for 2005, down euro 14million, or 3.9% from 2004, due essentially to an increase in ITcosts, up euro 48 million, arising from higher activity levels,and institutional communication costs, up euro 7 million. Thesenegative factors were partly offset by lower risk provisions.

 

> 
***e) Net Financial Income***

The table below sets forth a breakdown of Eni’s netfinancial expense for the periods indicated:

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(million        euro)** |
|--------|---------------------------|

| Income (expense) on derivatives                      |   | 34       |   |   | (386     | )      |   | 383     |   |
|------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|---------|--------|
| Exchange        differences, net                     |   |     |   |   | 169      |   |   | (152    | )      |
| Interest income from banks                           |   | 59       |   |   | 60       |   |   | 194     |   |
| Financial        expense on short and long-term debt |   | (413     | )      |   | (420     | )      |   | (462    | )      |
| Financial expense due to the passage of time         |   | (109     | )      |   | (109     | )      |   | (116    | )      |
| Other        financial income and expense, net       |   | 71       |   |   | 161      |   |   | 198     |   |
|                                                 |   | **(358** | **)**  |   | **(525** | **)**  |   | **45**  |   |
| Financial        expense capitalized                 |   | 202      |   |   | 159      |   |   | 116     |   |
|                                                 |   |          |        |   |          |        |   |         |        |
|                                                 |   | **(156** | **)**  |   | **(366** | **)**  |   | **161** |   |
|                                                 |   |          |        |   |          |        |   |         |        |

*2006 compared to 2005.* Net financial income (euro 161million) was up euro 527 million from 2005 when net financialexpenses of euro 366 million were recorded. The increasereflected: (i) gains arising from the fair value evaluation offinancial derivative instruments recorded in the profit and lossaccount instead of being recognized on the balance sheet inconnection with related assets, liabilities and commitmentsbecause Eni’s financial derivative instruments do not meetthe formal criteria to be assessed as hedging instruments underIFRS. These gains were partially offset by the impact of exchangerates differences which were recorded in connection with certainassets or liabilities (said exchange rate differences reversedfrom a net gain of euro 169 million in 2005 to a net loss of euro152 million in 2006); and (ii) higher interest income derivingfrom a higher average availability of cash and cash equivalentsoffset in part by the impact of higher interest rates on dollarloans (Libor up 1.7 percentage points) and on euro loans (Euriborup 0.9 percentage points).

*2005 compared to 2004.* Net financial expense (euro 366million) was up euro 210 million from 2004, or 135%, due tocharges pertaining to changes in the fair value of derivativefinancial contracts and to higher interest rate charges on dollarloans (relating to an increase in Libor of 2 percentage points),the effects of which were offset in part by a decrease in averagenet borrowings9 and the fact that in 2004 a euro 62million increase in the risk reserve provision was recorded inconnection with assignment of a financing receivable to theacquirer of a divested affiliate of Eni which is expected to beunable to repay such receivable on the basis of managementestimates.

 

> 
***f) Net Income from Investments***

*2006 compared to 2005.* Net income from investments in2006 was euro 903 million and concerned primarily:(i) Eni’s share of profit of affiliates accounted forunder the equity method (euro 795 million), in particularaffiliates in the Gas & Power and Refining & Marketingsegments. The equity result recorded by Eni on its affiliate GalpEnergia SGPS SA reflected a gain recorded by Galp in itsstatutory accounts on the sale of certain regulated assets in thenatural gas business to Rede Eléctrica Nacional in Portugal.Eni’s share of the gain was euro 73 million;(ii) dividends received by affiliates accounted for at cost(euro 98 million, of which euro 56 million related to NigeriaLNG); and (iii) net gains on disposal (euro 18 million).

_______________

| (9) |   | Excluding        loans directed to specific capital expenditure projects        in the Exploration & Production and Gas & Power        segments, whose financial charges are recognized as an        increase of the relevant capital goods. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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The euro 11 million decrease in net income from investmentsfrom 2005 was due essentially to lower gains related inparticular to the recording in 2005 of the gain on the divestmentof Italiana Petroli SpA (euro 132 million), whose effects wereoffset in part by improved results of operations of affiliates inthe Gas & Power segment, in particular Unión Fenosa Gas SAand Blue Stream Pipeline Co BV and higher dividends distributedby Nigeria LNG.

*2005 compared to 2004.* In 2005 net income frominvestment was euro 914 million and concerned primarily:(i) Eni’s share of income of affiliates accounted forunder the equity method (euro 737 million), in particularaffiliates in the Gas & Power (euro 358 million) and Refining& Marketing (euro 221 million) segments; (ii) gains ondisposal (euro 179 million) relating in particular to the sale of100% of IP (euro 132 million) and a 2.33% stake in Nuovo PignoneHolding SpA (euro 24 million); and (iii) dividends received byaffiliates accounted for under the cost method (euro 33 million).

The euro 94 million increase in net income from investmentswas due essentially to improved results of operations ofaffiliates in the Gas & Power segment, in particular GalpEnergia SGPS SA (Eni’s interest 33.34%), Unión Fenosa GasSA (Eni’s interest 50%) and Blue Stream Pipeline Co BV(Eni’s interest 50%) as well as the fact that in 2004 a euro41 million impairment was recorded in connection with thedivestment of Eni’s 35% interest in Albacom. These increaseswere offset in part by lower gains on disposal (euro 257 million)related to the fact that in 2004 the gain on the sale of 9.054%of the share capital of Snam Rete Gas, 100% of Agip do Brasil SAand other minor assets were recorded for a total of euro 437million, as compared to the euro 179 million gain recorded in2005.

 

> 
***g) Taxes***

*2006 compared to 2005.* Income taxes were euro 10,568million, up euro 2,440 million from 2005, or 30%, and reflectedprimarily higher profit before taxes (euro 3,016 million) and a 5percentage point increase (from 46.8 to 51.8%) in the Groupeffective tax rate, calculated as the ratio of income taxes tonet profit before taxes. This increase in the Group tax ratereflected mainly: (i) the enactment of a windfall tax on upstreamearnings in Algeria effective as from August 1, 2006 (with anoverall impact of euro 328 million, of which euro 149 millionpertaining to taxation for the period and euro 179 millionpertaining to the deferred tax impact); (ii) an increase in thesupplemental tax rate implemented by the British Government,applicable to profit before taxes earned by operations in theNorth Sea, effective as from the beginning of the year, affectingboth current taxation and deferred tax (with an overall impact ofeuro 198 million, of which euro 107 million pertaining totaxation for the period and euro 91 million pertaining to thedeferred tax impact); and (iii) a provision for the settlement ofa tax claim in Venezuela (with an overall impact of euro 77million).

*2005 compared to 2004.* Income taxes were euro 8,128million, up euro 2,606 million from 2004, or 47.2%, and reflectedprimarily higher profit before taxes (euro 4,312 million). TheGroup’s effective tax rate increased 4.5 percentage pointsto 46.8% (42.3% in 2004). There were three factors behind thisincrease. First, the higher share of profit before income taxesearned by subsidiaries in the Exploration & Productionsegment operating in countries where the statutory tax rate ishigher than the Group tax rate. Second, profit for the year wasadversely impacted by higher non-deductible charges pertaining toincreases in risk reserve provision, relating mainly to a fineimposed by the Italian Antitrust Authority. The third factor wasa lower share of non-taxable income pertaining in particular tolower gains on disposals of shareholdings in consolidatedsubsidiaries and of investments recorded under the item "NetIncome from Investments" (see above).

 

> 
***h) Minority Interest***

*2006 compared to 2005.* Minority interest was euro 606million, up euro 147 million from 2005, or 32.0%, and concernedprimarily Snam Rete Gas SpA (euro 287 million) and Saipem SpA(euro 303 million). This increase in minority interest mainlyreflected the improvement in Saipem’s results of operations.

*2005 compared to 2004.* Minority interest was euro 459million and concerned primarily Eni’s interest in Snam ReteGas SpA (euro 321 million) and Saipem SpA (euro 115 million).

92

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**Liquidity and Capital Resources**

The table below sets forth the principal components ofEni’s change in cash and cash equivalent for the periodsindicated.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(million        euro)** |
|--------|---------------------------|

| **Net profit**                                                                                                                                                     |   | **7,541**  |   |   | **9,247**  |   |   | **9,823**  |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| *Adjustments        to reconcile to cash generated from operating profit        before changes in working capital:*                                                |   |       |   |   |       |   |   |       |   |
| - amortization and depreciation and other non        monetary items                                                                                                |   | 5,092      |   |   | 6,518      |   |   | 5,753      |   |
| - net        gains on disposal of assets                                                                                                                           |   | (793       | )      |   | (220       | )      |   | (59        | )      |
| - dividends, interest, income taxes and other        changes                                                                                                       |   | 5,740      |   |   | 8,471      |   |   | 10,435     |   |
|                                                                                                                                                               |   |            |        |   |            |        |   |            |        |
| **Net cash generated from operating profit        before changes in working capital**                                                                              |   | **17,580** |   |   | **24,016** |   |   | **25,952** |   |
| Changes in        working capital related to operations                                                                                                            |   | (909       | )      |   | (2,422     | )      |   | (1,024     | )      |
| Dividends received, taxes paid, interest (paid)        received during the year                                                                                    |   | (4,171     | )      |   | (6,658     | )      |   | (7,927     | )      |
|                                                                                                                                                               |   |            |        |   |            |        |   |            |        |
| **Net cash provided by operating activities**                                                                                                                      |   | **12,500** |   |   | **14,936** |   |   | **17,001** |   |
| Capital        expenditure                                                                                                                                         |   | (7,499     | )      |   | (7,414     | )      |   | (7,833     | )      |
| Investments (1)                                                                                                                                                    |   | (316       | )      |   | (127       | )      |   | (95        | )      |
| Disposals                                                                                                                                                          |   | 1,547      |   |   | 542        |   |   | 328        |   |
| Other cash flow related to capital expenditure,        investments and divestments including securities and        financing receivables not related to operations |   | 308        |   |   | 184        |   |   | 577        |   |
| Changes in        short and long-term financial debt                                                                                                               |   | (3,743     | )      |   | (540       | )      |   | (682       | )      |
| Dividends paid and changes in minority interests        and reserves                                                                                               |   | (3,175     | )      |   | (7,284     | )      |   | (6,443     | )      |
| Effect of        changes in consolidation and exchange differences                                                                                                 |   | (55        | )      |   | 33         |   |   | (201       | )      |
|                                                                                                                                                               |   |            |        |   |            |        |   |            |        |
| **Change in cash and cash equivalent for the        year**                                                                                                         |   | **(433**   | **)**  |   | **330**    |   |   | **2,652**  |   |
|                                                                                                                                                               |   |            |        |   |            |        |   |            |        |
| Cash and        cash equivalent at the beginning of the year                                                                                                       |   | 1,436      |   |   | 1,003      |   |   | 1,333      |   |
| Cash and cash equivalent at year end                                                                                                                               |   | 1,003      |   |   | 1,333      |   |   | 3,985      |   |
|                                                                                                                                                               |   |            |        |   |            |        |   |            |        |

----

| (1) |   | This item        refers mainly to the acquisition of equity of other        companies. |
|-----|--------|----------------------------------------------------------------------------------------|

The table below sets forth the principal components ofEni’s change in net borrowings (2) for theperiods indicated.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(million        euro)** |
|--------|---------------------------|

| **Net cash provided by operating activities**                                      |   | **12,500** |   |   | **14,936** |   |   | **17,001** |   |
|------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Capital        expenditure                                                         |   | (7,499     | )      |   | (7,414     | )      |   | (7,833     | )      |
| Investments                                                                        |   | (316       | )      |   | (127       | )      |   | (95        | )      |
| Disposals                                                                          |   | 1,547      |   |   | 542        |   |   | 328        |   |
| Other cash flow related to capital expenditure,        investments and divestments |   | 97         |   |   | 293        |   |   | 361        |   |
| Net        borrowings (2) of acquired companies                                    |   |       |   |   | (19        | )      |   |       |   |
| Net borrowings (2) of divested        companies                                    |   | 190        |   |   | 21         |   |   | 1          |   |
| Exchange        differences on net borrowings and other changes                    |   | (64        | )      |   | (980       | )      |   | 388        |   |
| Dividends paid and changes in minority interests        and reserves               |   | (3,175     | )      |   | (7,284     | )      |   | (6,443     | )      |
|                                                                               |   |            |        |   |            |        |   |            |        |
| **Change in net borrowings**(2)                                                    |   | **3,280**  |   |   | **(32**    | **)**  |   | **3,708**  |   |
|                                                                               |   |            |        |   |            |        |   |            |        |
| Net        borrowings (2) at the beginning of the year                             |   | 13,723     |   |   | 10,443     |   |   | 10,475     |   |
| Net borrowings (2) at year end                                                     |   | 10,443     |   |   | 10,475     |   |   | 6,767      |   |
|                                                                               |   |            |        |   |            |        |   |            |        |

----

| (2) |   | Net        borrowings is a non-GAAP financial measure. For a        discussion of the usefulness of net borrowings and its        reconciliation with the most directly comparable GAAP        financial measures see "Financial Condition"        below. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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> 
***Analysis of Certain Components of Eni’s Change    in Net Borrowings:***

***a) Net Cash generated from Operating Profit before    Changes in Working Capital***

Net cash generated from operating profit before changes inworking capital totaled euro 25,952 million in 2006 and euro24,016 million in 2005. The euro 1,936 million increase from 2005reflected primarily increased results of operations.

Net profit for 2006 was adjusted to take into accountamortization and depreciation and other non-monetary items (euro5,753 million), which concerned primarily depreciation andamortization of tangible and intangible assets (euro 6,153million), non-monetary charges relating to environmental and riskprovisions, impairments of fixed assets and investments (euro 268million) primarily resulting from the impairment of proved andunproved property in the Exploration & Production segment(euro 129 million). Adjustments to net profit also includedincome taxes and interest expense (euro 10,435 million).

In 2005, net profit was adjusted to take into accountamortization and depreciation and other non-monetary items (euro6,518 million), which concerned primarily depreciation andamortization of tangible and intangible assets (euro 5,509million), impairments of fixed assets and investments (euro 272million) primarily resulting from the impairment of proved andunproved property in the Exploration & Production segment(euro 156 million) and a euro 75 million impairment charge in theOther activities segment. Adjustments to net profit also includedincome taxes and interest expense (euro 8,471 million).

 

> 
***b) Changes in Working Capital related to Operations***

In 2006, the increase in net workingcapital (euro 1,024 million) was mainly due to: (i) a euro 1,952million increase in trade accounts receivable essentially relatedto a growth in sales volumes of oil and natural gas; and (ii) anincrease of inventories (euro 953 million) in connection with theevaluation of inventories of refined products under theweighted-average cost method of accounting. This increase waspartly offset by an increase in trade accounts payable (euro2,146 million).

In 2005, the increase in net working capital (euro 2,422million) was mainly due to a euro 4,413 million increase in tradeaccounts receivable due essentially to the impact of increasedinternational oil and refined product prices, growth in salesvolumes of oil and natural gas and currency translation effects.This increase was partly offset by an increase in the euro valueof trade accounts payable (euro 3,030 million) resulting from thesame reasons as the increase in trade accounts receivable.

 

> 
***c) Dividends received, Taxes paid, Interest (paid)    received during the Year***

Dividends, interest and taxes paid (which is net of amountsreceived) totaled euro 7,927 million in 2006 and euro 6,658million in 2005 and concerned primarily the payment of incometaxes (euro 8,876 million in 2006 and euro 6,619 million in2005).

 

> 
***d) Capital Expenditure and Investing Activities***

Capital expenditure totaled euro 7,833 million in 2006 andeuro 7,414 million in 2005.

In 2006, 90% of capital expenditure related to the Exploration& Production (euro 5,203 million), Gas & Power (euro1,174 million) and Refining & Marketing (euro 645 million)segments.

In 2005, 91% of capital expenditure related to the Exploration& Production (euro 4,965 million), Gas & Power (euro1,152 million) and Refining & Marketing (euro 656 million)segments.

For a discussion of capital expenditure by business segmentand a description of changes from one year to another see below"Capital Expenditure by Segment".

Investments (including net borrowings acquired) totaled euro95 million in 2006 and euro 146 million in 2005.

 

> 
***e) Disposals***

Disposals (including net debt discharged) totaled euro 329million in 2006 and euro 563 million in 2005.

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In 2006, disposals (euro 329 million, including net borrowing)concerned primarily: (i) the Exploration & Productionsegment (euro 229 million) related in particular to disposal ofmineral assets and other minor assets; (ii) the Gas &Power segment, related to the divestment of 13.5% of the sharecapital of EniPower Mantova (euro 17 million) and other minorassets; and (iii) the Refining & Marketing segment related tothe divestment of minor assets (euro 25 million).

In 2005, disposals (euro 563 million, including net borrowing)concerned primarily: (i) the Gas & Power segment, related tothe divestment of Eni’s majority interest (67.05%) inSocietà Azionaria per la Condotta di Acque Potabili (euro 85million) and 100% of the share capital of in Acquedotto VesuvianoSpA (euro 20 million); and (ii) the Refining & Marketingsegment related to the divestment of 100% of the share capital ofIP (euro 190 million) and 28% of the share capital of ErgRaffinerie Mediterranee Srl (euro 97 million).

 

> 
***f) Dividends paid and Changes in Minority Interests    and Reserves***

In 2006, dividends paid and changes in minority interests andreserves (euro 6,443 million) related mainly to the dividenddistribution to Eni shareholders for euro 4,610 million (of whicheuro 2,400 million related to the balance for the fiscal year200510 and euro 2,210 million11 as aninterim dividend for fiscal year 2006) and the distribution ofdividend to minority interest by Snam Rete Gas SpA and Saipem SpA(euro 207 million) and other consolidated subsidiaries (euro 15million) and the buy-back program (for euro 1,241 million by EniSpA and for euro 477 million by Snam Rete Gas SpA and SaipemSpA).

In 2005, dividends paid and changes in minority interests andreserves (euro 7,284 million) related mainly to the dividenddistribution for fiscal year 2004 of euro 3,384 million12and the payment of an interim dividend of euro 1,686 millioncarried out by Eni SpA, the payment of dividends by Snam Rete GasSpA (euro 1,171 million13 of which euro 976 millionwas paid as an extraordinary dividend) and other consolidatedsubsidiaries (euro 9 million) and the buy-back program (euro1,034 million).

 

 

**Financial Condition**

Eni evaluates its financial condition by reference to"net borrowings", which is a non-GAAP financialmeasure. Eni calculates net borrowings as total finance debt(short-term and long-term debt) derived from its ConsolidatedFinancial Statements prepared in accordance with IFRS less: cash,cash equivalents and certain very liquid investments not relatedto operations including, among others, non-operating financingreceivables and securities not related to operations.Non-operating financing receivables consist mainly of amounts dueto Eni from banks and other financing institutions and depositsin escrow. Securities not related to operations consist primarilyof government bonds and securities from financing institutions.

Management believes that net borrowings is a useful measure ofEni’s financial condition as it provides an indication ofthe soundness of Eni’s capital structure and of howEni’s operating assets are financed. In addition, managementutilizes the ratio of net borrowings to total shareholders’equity including minority interest (leverage) to evaluateEni’s financial structure, to analyze whether the ratiobetween finance debt and shareholders’ equity is wellbalanced according to industry standards and to trackmanagement’s short-term and medium-term targets. Managementconstantly monitors trends in net borrowings and trends inleverage in order to optimize the use of internally-generatedfunds vs. funds from third parties. The measure calculated inaccordance with IFRS that is most directly comparable to netborrowings is total debt (short-term and long-term debt). Themost directly comparable measure, derived from IFRS reportedamounts, to leverage is the ratio of total debt toshareholders’ equity (including minority interest).Eni’s presentation and calculation of net borrowings andleverage may not be comparable to that of other companies.

 

 

 

_______________

| (10) |   | The unit        dividend resolved by the Shareholders’ Meeting for        fiscal year 2005 was euro 1.10 per share of which euro        0.65 per share was paid as balance in June 2006 and euro        0.45 as an interim dividend in October 2005. The balance        per ADR was $1.64 as converted at the Noon Buying Rate of        1 euro = 1.2582 U.S. dollars at the payment date of June        22, 2006. |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (11) |   | Corresponding        to euro 0.60 per share, or $1.52 per ADR converted at the        Noon Buying Rate of 1 euro = 1.2669 U.S. dollars as at        the payment date of October 26, 2006.                                                                                                                                                                                                                               |
| (12) |   | Corresponding        to euro 0.90 per share, or $2.17 per ADR converted at the        Noon Buying Rate of 1 euro = 1.2054 U.S. dollars as at        the payment date of June 23, 2005.                                                                                                                                                                                                                                  |
| (13) |   | Corresponding        to euro 0.45 per share, or $1.09 per ADR converted at the        Noon Buying Rate of 1 euro = 1.2148 U.S. dollars as at        the payment date of October 27, 2005.                                                                                                                                                                                                                               |

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The tables below set forth the calculations of net borrowingsand leverage for the periods indicated and their reconciliationto the most directly comparable GAAP measure.

|   | **As of December 31,** |
|--------|------------------------|
|   |                        |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **Short-term** |   | **Long-term** |   | **Total** |   | **Short-term** |   | **Long-term** |   | **Total** |   | **Short-term** |   | **Long-term** |   | **Total** |
|--------|--------|----------------|--------|---------------|--------|-----------|--------|----------------|--------|---------------|--------|-----------|--------|----------------|--------|---------------|--------|-----------|
|   |   |                |   |               |   |           |   |                |   |               |   |           |   |                |   |               |   |           |

|   | **(million        euro)** |
|--------|---------------------------|

| **Total debt (short-term and long-term debt)** |   | **5,077** |   |   | **7,607** |   |   | **12,684** |   |   | **5,345** |   |   | **7,653** |   |   | **12,998** |   |   | **4,290** |   |   | **7,409** |   |   | **11,699** |   |
|------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|
| Cash and        cash equivalent                |   | (1,003    | )      |   |      |   |   | (1,003     | )      |   | (1,333    | )      |   |      |   |   | (1,333     | )      |   | (3,985    | )      |   |      |   |   | (3,985     | )      |
| Securities not related to operations           |   | (792      | )      |   | (1        | )      |   | (793       | )      |   | (903      | )      |   | (28       | )      |   | (931       | )      |   | (552      | )      |   |      |   |   | (552       | )      |
| Non        operating financing receivables     |   | (11       | )      |   | (240      | )      |   | (251       | )      |   | (12       | )      |   | (247      | )      |   | (259       | )      |   | (143      | )      |   | (252      | )      |   | (395       | )      |
| Other, net                                     |   | (194      | )      |   |      |   |   | (194       | )      |   |      |   |   |      |   |   |       |   |   |      |   |   |      |   |   |       |   |
|                                           |   |           |        |   |           |        |   |            |        |   |           |        |   |           |        |   |            |        |   |           |        |   |           |        |   |            |        |
| **Net borrowings**                             |   | **3,077** |   |   | **7,366** |   |   | **10,443** |   |   | **3,097** |   |   | **7,378** |   |   | **10,475** |   |   | **(390**  | **)**  |   | **7,157** |   |   | **6,767**  |   |
|                                           |   |           |        |   |           |        |   |            |        |   |           |        |   |           |        |   |            |        |   |           |        |   |           |        |   |            |        |

 

|   | **As of December 31,** |
|--------|------------------------|
|   |                        |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| Shareholders’ equity including minority        interests as per Eni’s Consolidated Financial        Statements prepared in accordance with IFRS                            |   | (million        euro) |   | 35,540  |   |   | 39,217  |   |   | 41,199  |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| *Ratio        of total debt to total shareholders’ equity        including minority interests*                                                                                  |   |                  |   | *0.36*  |   |   | *0.33*  |   |   | *0.28*  |   |
| *Less: ratio of cash, cash equivalent and        certain liquid investments not related to operations to        total shareholders’ equity including minority        interests* |   |                  |   | *(0.07* | *)*    |   | *(0.06* | *)*    |   | *(0.12* | *)*    |
| *Ratio        of net borrowing to total shareholders’ equity        including minority interests (leverage)*                                                                    |   |                  |   | *0.29*  |   |   | *0.27*  |   |   | *0.16*  |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

 

In 2006, net borrowings amounted to euro 6,767 million, a euro3,708 million decrease over 2005. Total debt of euro 11,699million consisted of euro 4,290 million short-term debt(including the portion of long-term debt due within twelve monthsequal to euro 890 million) and euro 7,409 million of long-termdebt.

Total debt included bonds for euro 5,097 million (includingaccrued interest and discount on issuance). Bonds maturing in thenext 18 months amounted to euro 787 million (including accruedinterest and discount). Bonds issued in 2006 amounted to euro 219million (including accrued interest and discount). Total debt wasdenominated in the following currencies: euro (74%), U.S. dollar(12%), pound sterling (11%) and 3% in other currencies.

In 2005, net borrowings amounted to euro 10,475 million, aeuro 32 million increase over 2004. Total debt of euro 12,998million consisted of euro 5,345 million short-term debt(including the portion of long-term debt due within twelve monthsequal to euro 733 million) and euro 7,653 million of long-termdebt.

Total debt included bonds for euro 5,339 million (includingaccrued interest and discount on issuance). Bonds maturing in thenext 18 months amounted to euro 436 million (including accruedinterest and discount). Bonds issued in 2005 amounted to euro 441million (including accrued interest and discount). Total debt wasdenominated in the following currencies: euro (72%), U.S. dollar(16%), pound sterling (8%) and 4% in other currencies.

 

***Short-term Debt***

As of December 31, 2006, short-term debt of euro 3,400 million(excluding the portion of long-term debt due within twelvemonths) decreased by euro 1,212 million over 2005. The weightedaverage interest rate of Eni’s short-term debt was 2.8% and3.9% for the years ended December 31, 2005 and 2006,respectively.

As of December 31, 2006, Eni maintained committed anduncommitted unused lines of credit for euro 5,896 and euro 6,523million, respectively (euro 5,855 million and euro 4,783 million,respectively, at December 31, 2005 and euro 5,304 million andeuro 7,771 million, respectively, at December 31, 2004). Theseagreements provide for interest charges based on prevailingmarket conditions. Commission fees on unused lines of credit arenot significant.

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As of December 31, 2005, short-term debt of euro 4,612 million(excluding the portion of long-term debt due within twelvemonths) increased by euro 462 million over 2004. The weightedaverage interest rate of Eni’s short-term debt was 2.5% and2.8% for the years ended December 31, 2004 and 2005,respectively.

 

> 
***Long-term Debt***

As of December 31, 2006, long-term debt of euro 8,299 milliondecreased by euro 87 million over 2005.

Eni entered into financing arrangements with the EuropeanInvestment Bank, relating to a bank debt that requires it tomaintain certain financial ratios generally based on Eni’sconsolidated financial statements or of a rating not inferior toA- (S&P) and A3 (Moodys). At December 31, 2005 and December31, 2006, the amount of short and long-term debt subject torestrictive covenants was euro 1,258 million and euro 1,131million, respectively (euro 1,104 million as of December 31,2004). In addition, Saipem SpA entered into financingarrangements with banks for euro 75 million (euro 275 million andeuro 300 million at December 31, 2005 and 2004, respectively),that require it to maintain certain financial ratios generallybased on Saipem’s Consolidated Financial Statements. Eni andSaipem are in compliance with the covenants contained in thesefinancing arrangements. Bonds for euro 5,097 million concernbonds issued within the Euro Medium Term Notes Program for atotal of euro 4,424 million and other bonds for a total of euro673 million.

As of December 31, 2005, long-term debt of euro 8,386 milliondecreased by euro 148 million over 2004. As of December 31, 2005,bonds of euro 5,339 million included bonds issued under theMedium Term Notes Program for a total of euro 4,365 million andother bonds for a total of euro 974 million.

The weighted average interest rate on Eni’s long-termdebt (including current maturities) at December 31, 2006 wasapproximately 4.8% (4.5% at December 31, 2005).

 

> 
***Capital Expenditure by Segment***

The table below sets forth a breakdown, by segment, of capitalexpenditure.

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(million        euro)** |
|--------|---------------------------|

| Exploration & Production                       |   | 4,853     |   |   | 4,965     |   |   | 5,203     |   |
|----------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Gas &        Power                             |   | 1,451     |   |   | 1,152     |   |   | 1,174     |   |
| Refining & Marketing                           |   | 693       |   |   | 656       |   |   | 645       |   |
| Petrochemicals                                     |   | 148       |   |   | 112       |   |   | 99        |   |
| Engineering & Construction                     |   | 186       |   |   | 349       |   |   | 591       |   |
| Other        activities                            |   | 49        |   |   | 48        |   |   | 72        |   |
| Corporate and financial companies                  |   | 119       |   |   | 132       |   |   | 88        |   |
| Impact of        inter-segment profits elimination |   |      |   |   |      |   |   | (39       | )      |
|                                               |   |           |        |   |           |        |   |           |        |
|                                               |   | **7,499** |   |   | **7,414** |   |   | **7,833** |   |
|                                               |   |           |        |   |           |        |   |           |        |

***Exploration & Production.*** In 2006, capitalexpenditure of the Exploration & Production segment amountedto euro5,203 million, representing an increase of euro238million, or 4.8%, from 2005 due to the increase in explorationexpenditure in particular in Egypt and Nigeria. These effectswere offset in part by lower development expenditure resultingessentially from the completion of relevant projects in Libya,Nigeria and the circumstance that in 2005 an additional 1.85%interest in the Kashagan project was purchased with an outlay ofeuro169 million. Capital expenditure for 2006 concerned mainlydevelopment expenditure (euro3,629 million, compared to euro3,952million in 2005) directed mainly outside Italy (euro3,226million), in particular in Kazakhstan, Angola and Egypt.Development expenditure in Italy (euro403 million) concerned inparticular the continuation of drilling development wells, thecompletion of work for plant and infrastructure in Vald’Agri and sidetrack and infilling actions in mature areas.Exploration expenditure amounted to euro1,348 million (euro656million in 2005), of which about 90% was directed outside Italy.Outside Italy exploration concerned in particular the followingcountries: Angola, Egypt, Norway, Nigeria and the Gulf of Mexico.In Italy exploration concerned essentially the offshore Sicily,the Po Valley and the Adriatic Sea.

In 2005, capital expenditure of the Exploration &Production segment amounted to euro 4,965 million, representingan increase of euro 112 million, or 2.3%, from 2004 due primarilyto higher unit development costs in connection with a higher rateof development activity for new fields in complex environmentsand in mature areas, and higher costs of certain productivefactors (e.g. tariffs of drilling rigs). Capital expenditure for2005 concerned mainly development expenditure (euro 3,952million, compared to euro 4,310 million in 2004) directed mainlyoutside Italy (euro 3,541 million), in particular in Kazakhstan,Libya, Angola and Egypt. 

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Development expenditure in Italy (euro 411 million) concernedin particular the completion of work for plant and infrastructurein Val d’Agri and sidetrack and infilling actions in matureareas. Exploration expenditure amounted to euro 656 million (euro499 million in 2004), of which about 94% was directed outsideItaly. Outside Italy exploration concerned in particular thefollowing countries: Norway, Egypt, the United States, Brazil andIndonesia. In Italy exploration concerned essentially NorthernItaly. Expenditure for the purchase of proved and unprovedproperty amounted to euro 301 million and concerned theacquisition of: (i) a further 1.85% stake in the Kashagan projectfor dollar 200 million; (ii) 104 exploration blocks and twofields in pre-development phase in Northern Alaska; (iii) a 40%stake in the OML 120 and OML 121 concessions under development inthe Nigerian offshore; and (iv) a 50% interest in WA-313-P and a53.8% interest in WA-280-P permits in Australia.

 

***Gas & Power.*** In 2006, capital expenditure inthe Gas & Power segment totaled euro 1,174 million andrelated essentially to: (i) development and upgrades ofEni’s transport network in Italy (euro 627 million); (ii)the continuation of the construction of combined cycle powerplants (euro 229 million), in particular Ferrara and Brindisisites; and (iii) development and upgrades of Eni’s naturalgas distribution network in Italy (euro 158 million).

In 2005, capital expenditure in the Gas & Power segmenttotaled euro 1,152 million and related in particular to:(i) development and upgrades of Eni’s transport networkin Italy (euro 643 million); (ii) the continuation of theconstruction of combined cycle power plants (euro 239 million);(iii) development and upgrades of Eni’s distribution networkin Italy (euro 182 million); and (iv) development of Eni’stransport network outside Italy (euro 48 million). As compared to2004, capital expenditure declined by euro 299 million, down20.6%, due essentially to the completion of the GreenStreampipeline in 2004 and of the power generation development plan.

 

***Refining & Marketing.*** In 2006, capitalexpenditure in the Refining & Marketing segment amounted toeuro 645 million and concerned: (i) refining, supply andlogistics (euro 376 million) in Italy, aiming at improvingflexibility and yields for refineries, in particular the start upof construction of a new hydrocracking unit at the Sannazzarorefinery; (ii) upgrades and restructuring of the retail networkin Italy (euro 125 million), including construction of newoutlets; and (iii) upgrades of the retail network in therest of Europe (euro 98 million), including purchase andrealization of new outlets, and, to a lesser extent,restructuring of existing ones.

In 2005, capital expenditure in the Refining & Marketingsegment amounted to euro 656 million and concerned:(i) refining and logistics (euro 349 million), in particularplant efficiency and flexibility improvement actions includingthe completion of the tar gasification plant at the Sannazzarorefinery; (ii) the upgrade of the distribution network and theconstruction of new service stations in Italy (euro 154 million);and (iii) the upgrade of the distribution network and to a lesserextent the purchase of service stations in the rest of Europe(euro 71 million). As compared to 2004, capital expendituredeclined by euro 37 million, or 5.3%, due essentially to thecompletion of the plant in Sannazzaro.

 

***Petrochemicals.***In 2006, capital expenditure inthe Petrochemicals segment amounted to euro 99 million andconcerned in particular efforts in upkeep (euro 32 million),improving plant efficiency and streamlining (euro 32 million),environmental protection, safety and environmental regulationcompliance (euro 23 million) and extraordinary and periodicmaintenance (euro 12 million).

In 2005, capital expenditure in the Petrochemicals segmentamounted to euro 112 million and concerned in particular actionsfor extraordinary (euro 37 million) and periodical (euro 27million) improvement, actions for environmental protection andfor complying with safety and environmental regulations (euro 25million) and improving the efficiency of plants (euro 23million).

 

***Engineering & Construction.*** In 2006, capitalexpenditure in the Engineering & Construction segment (euro591 million) concerned: (i) the conversion of the Margaux tankership into an FPSO vessel that will operate in Brazil on theGolfinho 2 field; (ii) development and upgrading of equipment;and (iii) construction and installation of facilities in theonshore phase of the Kashagan project in Kazakhstan.

In 2005, capital expenditure in the Engineering &Construction segment amounted to euro 349 million, up 87.6% from2004, in particular: (i) improvement and upgrade of equipment;(ii) vessels and logistical support means for specific contracts,in particular Kashagan; (iii) upgrade of operating structures inKazakhstan and West Africa; and (iv) the purchase of the Margauxtanker ship and the beginning of its conversion into an FPSO unitthat will operate in Brazil on the Golfinho field.

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**Recent Developments**

The table below sets forth certain indicators of the tradingenvironment for the periods indicated:

|   |   | **Three months        ended March 31,** |   | **Two months        April-May,** |
|--------|--------|-----------------------------------------|--------|----------------------------------|
|   |   |                                         |   |                                  |

|   |   | **2006** |   | **2007** |   | **2006** |   | **2007** |
|--------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |   |          |

| Average price of Brent dated crude oil in U.S.        dollars (1) |   | 61.75 |   | 57.75 |   | 70.09 |   | 67.37 |
|-------------------------------------------------------------------|--------|-------|--------|-------|--------|-------|--------|-------|
| Average        price of Brent dated crude oil in euro (2)         |   | 51.37 |   | 44.08 |   | 55.98 |   | 49.87 |
| Average EUR/USD exchange rate (3)                                 |   | 1.202 |   | 1.310 |   | 1.252 |   | 1.351 |
| Average        European refining margin in U.S. dollars (4)       |   | 2.95  |   | 3.06  |   | 5.11  |   | 7.57  |
| Euribor - three month euro rate % (3)                             |   | 2.6   |   | 3.8   |   | 2.8   |   | 4.0   |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

----

| (1) |    | Price per        barrel. Source: Platt’s Oilgram.                                                                                                                                                       |
|-----|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |    | Price per        barrel. Source: Eni’s calculations based on        Platt’s Oilgram data for Brent prices and the        EUR/USD exchange rate reported by the European Central        Bank (ECB). |
| (3) |    | Source: ECB.                                                                                                                                                                                                 |
| (4) |    | Price per        barrel. FOB Mediterranean Brent dated crude oil. Source:        Eni calculations based on Platt’s Oilgram data.                                                                        |

 

> 
***Eni’s Results of Operations for the First    Quarter 2007***

Net profit for the first quarter of 2007 was down 13.0% overthe first quarter of 2006, essentially due to a decline inoperating profit (down 8.8%), as result of a decline in theoperating profit of the Exploration & Production segment,partially offset by a positive performance delivered byEni’s downstream and the Engineering & Constructionbusinesses. This reduction in net profit was also due to highernet financial expenses mainly owing to losses on the fair valueevaluation of certain financial derivative instruments.

Eni’s results were affected by a negative tradingenvironment with a lower Brent crude oil price (down 6.5%) and anappreciation of the euro versus the dollar (up 9.0%). Thesefactors were partially offset by favorable trends in energy andexchange rate parameters used in determining purchase and sellingprices of natural gas, an increase in refining margins on theBrent crude marker (up 3.7%), and higher sales margins onpetrochemical products.

The decline in Eni’s operating profit for the firstquarter 2007 was largely attributable to a reduced operatingprofit reported by the Exploration & Production segment (down27.3%) due to the negative impact of the appreciation of the euroagainst the U.S. dollar, lower production volumes sold (down5.9%), lower oil prices in dollars (oil down 3.3%, natural gas up1.3%), and higher exploration expenses.

This decline was partly offset by a higher operating profitin:

| • |   | the Gas & Power segment        (up 36.9%) due primarily to an increase in natural gas        selling margins mainly owing to a favorable trading        environment reflecting in particular the effect of the        appreciation of euro versus dollar exchange rate and a        favorable evolution of the regulatory framework in Italy.        This reflected the enactment of Resolution No. 79/2007 by        the Authority for Electricity and Gas implementing a new        setup of the indexation mechanism of the raw material        cost component in supplies to residential and commercial        users related to the period from January 1, 2005 to June        30, 2006. Following this, Eni has partially or totally        reversed provisions accrued in the accounts for 2005 and        the first half of 2006. See "Item 4 –        Regulation – Gas & Power – Natural gas        prices". These positives were partly offset by lower        natural gas sales (down 2.87 BCM, or 10.4%), impacted by        lower European gas demand due to the unusually mild        weather conditions registered in the first quarter 2007.        Lower gas demand negatively affected the operating        performance of transport activities in Italy and volumes        distributed on low pressure networks. Sales volumes of        electricity decreased by 0.12 TWh, or 1.6%; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the Petrochemicals segment        (up 195%) due mainly to higher selling margins,        principally the cracker margin and to a lower extent the        aromatics business; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

| • |   | the Engineering &        Construction segment (up 126%) reflecting a better        operating performance in all business areas, in        particular in the Offshore and Onshore construction areas        due to higher activity levels and margins. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Eni’s net sales from operations (revenues) for the firstquarter of 2007 were down 7.1% from the first quarter of 2006,primarily reflecting the impact of the appreciation of the euroversus the dollar and the decline in oil prices, as well as lowersold production of hydrocarbons and natural gas sales. Thesenegative factors were offset in part by higher activity levels inthe Engineering & Construction segment and higher gas prices.

The appreciation of the euro over other currencies, inparticular the U.S. dollar (at March 31, 2007 the EUR/USDexchange rate was up 1.1% over December 31, 2006) resulted indecrease in the book value of total assets, Enishareholders’ equity and net borrowings as compared with2006 year end.

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Net borrowings at March 31, 2007 declined by 43.1% fromDecember 31, 2006, due to cash inflow provided by operatingactivities, offset in part by financial requirements for capitalexpenditure and investments and the repurchase of own shares.

Shareholders’ equity including minority interest at March31, 2007 increased as compared with December 31, 2006 reflectingnet profit for the period which was partly offset by exchangerate differences and a loss taken to reserve arising from thefair value evaluation of certain financial derivative instrumentshedging commodity risks (cash flow hedges). The Group enteredinto such transactions in order to hedge cash flow expected inthe 2008-2011 period from the sale of approximately 2% ofEni’s proved hydrocarbon reserves as of 2006 year-end inconnection with its purchase of proved and unproved oil and gasproperty onshore in Congo and in the Gulf of Mexico (see"Portfolio Developments" below). In light of this, Eniput in place certain forward sale contracts at a fixed price andcall and put options with the same date of exercise. Theseoptions can be exercised if crude oil market prices are higher orlower compared with contractual prices. This treatment did notapply to the time value component arising from market pricefluctuations within the range provided by these call and putoptions which was recognized in the profit and loss account underthe item net financial expenses resulting in a significant lossfor the quarter.

In the first quarter of 2007 hydrocarbon production decreasedby 5.1% as compared to the first quarter of 2006. This reductionwas due primarily to the unilateral cancellation of the Daciónfield service contract by the Venezuelan state company PDVSA witheffect from April 1, 2006 (down 60 KBOE/d) and social unrest inNigeria. Factoring in these effects, oil and natural gasproduction level was in line with the first quarter 2006.Production increases were achieved mainly in Libya, Kazakhstanand the Gulf of Mexico offsetting mature field declines in Italyand facility shutdowns.

Natural gas sales were down 9.8% as compared to the firstquarter of 2006. This decline was impacted by lower seasonal gassales due to an unusually mild winter.

 

> 
***Portfolio Developments***

In February 2007, Eni acquired certain onshore exploration andproduction assets in Congo operated by the French company Maurel& Prom, for a cash consideration of $1,434 million. Thistransaction was finalized at the end of May 2007. For furtherdetails on this transaction see "Item 4 – Exploration& Production".

On April 4, 2007 Eni, through the partnership in EniNeftegaz(60% Eni, 40% Enel SpA) acquired Lot 2 in the Yukos liquidationprocedure. Total cash consideration for this transaction amountedto $5.83 billion (Eni’s share being $5 billion). This lotalso included a 20% stake in OAO GazpromNeft which was purchasedonly by Eni. For further details on this transaction see"Item 4 – Exploration & Production".

On April 30, 2007 Eni agreed to acquire certain upstreamproperties of Dominion Resources located in the Gulf of Mexico atthe agreed price of $4,757 million including exploration assetsfor $680 million. Closing is expected on July 2, 2007. Forfurther details on this transaction see "Item 4 –Exploration & Production".

 

 

**Management Expectations of Operations**

The following are the forecasts for Eni’s main productionand sales metrics in 2007.

Eni’s management expects:

| • |   | production of oil and        natural gas to remain at the same level as 2006 (in 2006        oil and gas production averaged 1.72 mmBOE/d). Additional        production expected in the second half of the year from        acquired properties in the Gulf of Mexico and Congo, and        the expected build-up in gas production in Libya are        expected to enable Eni to recover the first quarter        decline in production due to escalating social unrest in        Nigeria and the loss of the Dación oilfield in        Venezuela. Management believes the acquisitions in the        Gulf of Mexico, Congo and Alaska to increase Eni’s        planned average growth rate from 3% to 4% for its oil and        natural gas production in the four-year period 2007-2010        (for further details on these acquisitions, see        "Item 4 – Exploration & Production –        Portfolio Developments"); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | sales volumes of natural gas        to increase by 1% over 2006 (actual sales volumes in 2006        were 97.48 BCM), recovering from an approximately 10%        decline in the first quarter of 2007 as a result of        unusually mild weather conditions. This sales forecast is        based on the assumption of normal temperatures in the        fourth quarter of the year in Italy and other European        markets. Management plans to increase natural gas sales        volumes in certain target markets in the Rest of Europe,        mainly in the Iberian Peninsula, the North of Europe,        France and Germany/Austria markets. In Italy management        expects Eni’s sales volumes to recover part of the        decline registered in the first quarter due to expected        moderate growth in Italian demand particularly in the        thermoelectric sector in the remaining part of the year;                           |
| • |   | sales volumes of electricity        to increase slightly from 2006 (actual volumes in 2006        were 31.03 TWh);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

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| • |   | refining throughputs on        Eni’s account to decrease slightly from 2006 (actual        throughputs in 2006 were 38.04 mmtonnes) due to the        expiration of a processing contract at the Priolo        refinery owned by a third party late in 2006, to be        offset by higher throughputs expected at the Gela,        Livorno and Taranto refineries; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | retail sales of refined        products to increase slightly from 2006 (actual volumes        sold in 2006 were 12.48 mmtonnes). Increases are expected        on both the Italian and European markets due to the entry        into service of new outlets, also following the        acquisition of service stations in target markets.                                    |

In 2007, capital expenditure on exploration and capitalprojects is expected to amount to approximately euro 10.5billion, representing a 34% increase over 2006. Approximately 86%of this capital expenditure programme is expected to be deployedin the Exploration & Production, Gas & Power and Refining& Marketing segments. Furthermore, acquisitions of assets andinterests amounting to euro 9.4 billion are forecast in the year,mainly related to: (i) the already closed transactions for thepurchase of ex-Yukos assets and oil assets in Congo; and (ii) theother transactions whose closing is expected by the end of theyear, including the purchase of upstream assets in the Gulf ofMexico, and refining and marketing assets in the Central-EasternEurope. Should Gazprom exercise its call options to purchase a20% interest in OAO Gazprom Neft and a 51% interest in ex-Yukosgas assets from Eni, net cash outflows used in investingactivities will decrease to euro 16.4 billion. On the basis ofthe expected cash outflows for this capital expenditure andacquisition program, and shareholders’ remuneration, alsoassuming a 55 $/BBL scenario for the Brent crude oil, Eniforesees a leverage ranging from 0.3 to 0.4 by the end of theyear, depending on the exercise of the above mentioned calloptions by Gazprom.

Overall, in the next four-year period management plans toinvest approximately euro 44.6 billion on exploration and capitalprojects; approximately 66%, 15% and 10% of this new capitalexpenditure is planned to be deployed in the Exploration &Production, Gas & Power and Refining & Marketingsegments, respectively. The main planned projects are as follows:(i) development of reserves of hydrocarbons mainly in Kazakhstan,Egypt, Angola, Nigeria, Italy and Norway; (ii) explorationprojects mainly in Egypt, Nigeria, United States, Libya andItaly; (iii) increase of import capacity of natural gas fromAlgeria and Russia to Italy and upgrading of the Italian naturalgas transport and distribution networks; (iv) capital projectsaimed at upgrading primary distillation capacity and conversioncapacity and the degree of flexibility of Eni’s refiningsystem; (v) upgrading and development of Eni’s Italian andEuropean networks of service stations for the marketing ofpetroleum products; and (vi) upgrading of the fleet and logisticcenters in the Engineering & Construction segment.

In order to evaluate the profitability of individual capitalexpenditure projects, management uses a long-term reference oilprice of 40 $/BBL in real term. The internal rate of return ofeach project is compared to the relevant hurdle rate,differentiated by business segment and country of operation.These hurdle rates are calculated taking into account: (i)Eni’s weighted average cost of capital which isdifferentiated for each business segment; (ii) a countryrisk premium which reflects the riskiness of each country ofoperation in terms of macroeconomic, business and socio-politicalcurrent conditions and outlook; and (iii) a premium for thebusiness risk.

In the next four-year period management plans to pay toshareholders yearly dividends on the same level as in 2006 inreal terms. For fiscal year 2006, Eni will pay a dividend pershare of euro 1.25, of which euro 0.60 per share was paid inOctober 2006 as an interim dividend with the balance of euro 0.65per share to be paid late in June 2007. Total cash outlay for the2006 dividend is expected at euro 4.6 billion (including the euro2.21 billion already paid in October 2006). In future years,management expects to continue paying interim dividends for eachfiscal year, with the balance for the full year dividend paid inthe following year. See "Item 8 – Dividend Policy"for more details on Eni’s dividend policy and theuncertainties and constraints to which it is subject.

Management plans to cover financial needs for capitalexpenditure and dividends by means of cash flows provided byoperating activities. Management expects crude oil prices toremain high and volatile in the next two years. For the purposeof planning investments and liquidity management, managementassumes a level of 55 $/BBL for 2007 and 2008; then in thefollowing years management assumes crude oil prices to stabilizeuntil settling on the long-term level of 40 $/BBL in real terms.Management’s target to achieve an average production growthrate of 4% in the 2007-2010 four-year period is based on theassumption of a Brent crude oil price of 40 $/BBL in 2010, whichforms the basis for management’s estimate of productionentitlements under certain PSAs and buy-back contracts. Forplanning the 2007-2010 four-year period management assumes anaverage exchange rate of approximately 1.27 U.S. dollars pereuro.

Management expects to maintain a stable financial structure.Within said limit, management also expects to allocate cash inexcess of financial needs for capital expenditure and dividendsto its program of share repurchase. See the paragraph"Financial condition" above, for a discussion of howEni’s management assesses Eni’s financial structure.

In the next four years, Eni expects its core natural gasbusiness in Italy to face increasing competitive pressure as aresult of: (i) an expected increase in gas supplies to theItalian market following based on ongoing plans to upgrade importinfrastructures; and (ii) the need on the part of Eni to complywith the mandatory ceilings provided for by the Italianregulation by selling natural gas volumes available undertake-or-pay purchase contracts to certain Italian natural gasimporters who resell those volumes on the Italian natural gasmarket (see "Item 4 – Regulation of the Italian NaturalGas Market" and "Item 3 – Risk Factors"). Asa result of this competitive pressure, management expectsEni’s sales volumes in Italy to decline from the 57 BCMlevel achieved in 2006 to approximately 50 BCM in 2010 and lowerwholesale selling margins.

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However, management expects to implement actions to offsetthese negative factors by: (i) preserving its selling margins inthe retail and middle markets in Italy leveraging onclient-retention through an improved commercial offer and costefficiencies in terms of a reduction in costs to serve clients.In particular, the expected ramp-up of the dual offer of gas andelectricity will enable Eni to reap economies of scale andsynergies by rationalizing marketing-related processes (e.g.administrative processes, including billing); (ii) increasingsales in European natural gas markets where Eni’s presenceis established, as a result of supply contracts already signed,expected demand growth and marketing efforts directed atexpanding Eni’s market shares in relevant areas, anddeveloping sales on spot markets; and (iii) developing thebusiness of LNG.

For a discussion of certain risks relating to the impact ofthe evolution of Italian regulation of the natural gas sector onEni’s take-or-pay contracts see "Item 3 – RiskFactors – Liberalization of the Italian Natural GasMarket".

In 2007 management expects the Group effective tax-rate todecline slightly from the 51.8% level recorded in 2006 toapproximately 50%. This expected change in the Group effectivetax-rate will be driven principally by an expected increase inthe Gas & Power share of the Group profit before incometaxes, in light of the fact that the Gas & Power segment hasa tax-rate close to the Group statutory tax-rate for Italian taxpurposes of approximately 37%. The tax-rate in the Exploration& Production segment is expected to remain above the 50%level due also to the full-year adoption of the Algerian windfalltax on upstream earnings effective August 1, 2006.

The expectations described above are subject to risks,uncertainties and assumptions associated with the oil and gasindustry, and economic, monetary and political developments inItaly and globally that are difficult to predict. There are anumber of factors that could cause actual results anddevelopments to differ materially, including, but not limited to,crude oil and natural gas prices; demand for oil and gas in Italyand other markets; developments in electricity generation; pricefluctuations; drilling and production results; refining marginsand marketing margins; currency exchange rates; general economicconditions; political and economic policies and climates incountries and regions where Eni operates; regulatorydevelopments; the risk of doing business in developing countries;governmental approvals; global political events and actions,including war, terrorism and sanctions; project delays; materialdifferences from reserves estimates; inability to find anddevelop reserves; technological development; technicaldifficulties; market competition; the actions of field partners,including the inability of joint venture partners to fund theirshare of operating or developments activities; industrial actionsby workers; environmental risks, including adverse weather andnatural disasters; and other changes to business conditions.

 

> 
***Off-Balance Sheet Arrangements***

Eni has entered into certain off-balance sheet arrangements,including guarantees, commitments and risks, as described in Note25 to the Consolidated Financial Statements. Eni’s principalfinancial obligations, including commitments under take-or-pay orship-or-pay clauses, are described under "ContractualObligations" below. See the Glossary for a definition oftake-or-pay or ship-or-pay clauses.

Off-balance sheet arrangements comprise those arrangementsthat may potentially impact Eni’s liquidity, capitalresources and results of operations, even though sucharrangements are not recorded as liabilities under generallyaccepted accounting principles. Although off-balance sheetarrangements serve a variety of Eni’s business purposes, Eniis not dependent on these arrangements to maintain its liquidityand capital resources; nor is management aware of anycircumstances that are reasonably likely to cause the off-balancesheet arrangements to have a material adverse effect on thecompany’s financial condition, results of operations,liquidity or capital resources.

Eni has provided various forms of guarantees on behalf ofunconsolidated subsidiaries and affiliated companies, mainlyrelating to guarantees for loans, lines of credit and performanceunder contracts. In addition, Eni has provided guarantees on thebehalf of consolidated companies, primarily relating toperformance under contracts. These arrangements are described inNote 25 to the Consolidated Financial Statements.

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> 
***Contractual Obligations***

The following table summarizes the principal financialobligations which are described in "Item 18 – FinancialStatements – Notes 19, 20, 25 and 27".

| **Expected        payments by period under contractual obligations         and commercial commitments** | **Total** |   | **2007** |   | **2008** |   | **2009** |   | **2010** |   | **2011** |   | **Thereafter** |
|---------------------------------------------------------------------------------------------------------|-----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------------|
|                                                                                                    |           |   |          |   |          |   |          |   |          |   |          |   |                |

|   | **(million        euro)** |
|--------|---------------------------|

| **Total debt**                                                                         |   | **11,699**  |   | **4,290**  |   | **1,191**  |   | **603**    |   | **1,325**  |   | **397**   |   | **3,893**   |
|----------------------------------------------------------------------------------------|--------|-------------|--------|------------|--------|------------|--------|------------|--------|------------|--------|-----------|--------|-------------|
|      Long-term        debt                                    |   | 8,299       |   | 890        |   | 1,191      |   | 603        |   | 1,325      |   | 397       |   | 3,893       |
|      Short-term debt                                          |   | 3,400       |   | 3,400      |   |       |   |       |   |       |   |      |   |        |
| **Interest        payments on debt**                                                   |   | **2,511**   |   | **521**    |   | **346**    |   | **310**    |   | **254**    |   | **194**   |   | **886**     |
| **Noncancelable operating lease obligations**(1)                                       |   | **2,830**   |   | **594**    |   | **501**    |   | **411**    |   | **330**    |   | **232**   |   | **762**     |
| **Asset        retirement obligations**(2)                                             |   | **7,866**   |   | **49**     |   | **44**     |   | **36**     |   | **89**     |   | **73**    |   | **7,575**   |
| **Purchase obligations**                                                               |   | **174,390** |   | **11,770** |   | **10,802** |   | **9,717**  |   | **8,917**  |   | **8,523** |   | **124,661** |
|      Take-or-pay        (3)                                   |   | 169,524     |   | 11,406     |   | 10,428     |   | 9,341      |   | 8,543      |   | 8,148     |   | 121,658     |
|      Ship-or-pay (3)                                          |   | 4,866       |   | 364        |   | 374        |   | 376        |   | 374        |   | 375       |   | 3,003       |
| **Other        commitments**                                                           |   | **181**     |   | **13**     |   | **13**     |   | **13**     |   | **13**     |   | **13**    |   | **116**     |
|      *of which:*                                              |   |        |   |       |   |       |   |       |   |       |   |      |   |        |
|      *-        Memorandum of intent relating Val d’Agri* |   | *181*       |   | *13*       |   | *13*       |   | *13*       |   | *13*       |   | *13*      |   | *116*       |
| **TOTAL**                                                                              |   | **199,447** |   | **17,237** |   | **12,897** |   | **11,090** |   | **10,928** |   | **9,432** |   | **137,893** |

|   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

----

| (1) |   | Minimum        commitments for operating leases, shown on an        undiscounted basis, regard mainly time charter and        long-term rentals, drilling and storage equipment and        vessels, lands, service stations and office buildings.        Such leases do not include renewal options. There are no        significant restrictions following operating leases        imposed to Eni for dividend distribution, availability of        assets and possibility to get into additional debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | The estimated        costs of upstream asset retirement obligations, primarily        asset removal costs at the completion date, shown on an        undiscounted basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (3) |   | Take-or-pay        and ship-or-pay obligations are noncancelable, long-term        contractual obligations to secure access to supply and        transport of natural gas, shown on an undiscounted        basis.These obligations were calculated by applying the        forecasted prices of energy or services included in the        long-term and medium-term market scenarios used by Eni        for planning purposes to minimum take and minimum ship        quantities. Management expects amounts due under Eni        take-or-pay and ship-or-pay contractual obligations in        years subsequent to year 2011 will be roughly in line        with the average amounts expected to be paid in the        2007-2011 period. See "Item 4 – Gas & Power        – Natural Gas Purchases" and "Item 3        – Risk Factors – Liberalization of the Italian        Natural Gas Market" for a discussion of the nature        and importance of Eni's take-or-pay contracts and the        related risks from the evolving regulatory environment        that could negatively impact Eni’s results. |

 

> 
***Liquidity Risk***

Liquidity risk is the risk that suitable sources of fundingfor the Group’s business activities may not be available.The Group has long-term debt ratings of AA and Aa2, assignedrespectively by Standard & Poor’s and Moody’s. TheGroup has access to a wide range of funding at competitive ratesthrough capital markets and banks and coordinates relationshipswith banks, borrowing requirements, foreign exchange requirementsand cash management centrally.

At present, the Group believes it has access to sufficientfunding and has also both committed and uncommitted borrowingfacilities to meet currently foreseeable borrowing requirements.

Effective management of the liquidity risk has the objectiveof ensuring the availability of adequate funding to meetshort-term requirements and due obligations as well as theobjective of ensuring a sufficient level of flexibility in orderto fund the development plans of the Group’s businesses.This implies the adoption of a strategy to pursue an adequatestructure of borrowing facilities (particularly the availabilityof committed borrowings facilities) and the maintenance of cashreserves.

 

> 
***Working Capital***

Management believes that, taking into account unutilizedcredit facilities, Eni’s credit rating and access to capitalmarkets, Eni has sufficient working capital for its foreseeablerequirements.

 

> 
***Credit Risk***

Credit risk is the potential exposure of the Group to loss inthe event of non-performance by a counterparty. The credit riskarising from the Group’s normal commercial operations iscontrolled by individual operating units within Group-approvedguidelines. The monitoring activity of credit risk exposure isperformed at the Group level according to set guidelines andmeasurement techniques. In particular credit risk exposure tolarge clients and multi-business clients is monitored at theGroup level on the basis of score cards quantifying risk levels.Eni’s guidelines define the characteristics of personseligible to be counterparty of Eni in derivative contracts andcash management transactions. Eni constantly updates a list ofeligible persons that includes highly credit-rated institutions.Eni has not experienced material non-performance by anycounterparty. As of December 31, 2005 and December 31, 2006, Enihas no significant concentrations at credit risk.

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> 
***Market Risk***

In the normal course of its operations, Eni is exposed tomarket risks deriving from fluctuations in commodity prices andchanges in the euro vs. other currencies exchange rates,particularly the U.S. dollar, and in interest rates. For anin-depth analysis of market risks exposure and policies used byEni to manage its exposure to market risk see "Item 11– Qualitative and Quantitative Disclosures About MarketRisk".

 

> 
***Research and Development***

For a description of Eni’s research and developmentoperations in 2006, see "Item 4 – Research andDevelopment".

 

 

**Summary of Significant Differences between IFRS and U.S.GAAP**

Eni’s Consolidated Financial Statements have beenprepared in accordance with IFRS issued by the IASB as adopted bythe EU, which differs in certain respects from U.S. GAAP. Thesignificant differences between IFRS and U.S. GAAP, as applied toEni’s Consolidated Financial Statements, are: A)consolidation policy; B) exploration & productionactivities; C) asset impairment and subsequent asset write-up; D)deferred tax assets and liabilities; and E) accounting forinventory evaluation. See Note 36 to the Consolidated FinancialStatements for a more detailed discussion of the significantdifferences between IFRS and U.S. GAAP that affect Eni’sConsolidated Financial Statements, and Note 37 to theConsolidated Financial Statements for a reconciliation of netprofit and shareholders’ equity between IFRS and U.S. GAAP.

Consolidated operating profit under U.S. GAAP was euro 19,345million, euro 15,528 million and euro 11,739 million in 2006,2005 and 2004, respectively, compared with consolidated operatingprofit under IFRS of euro 19,327 million, euro 16,827 million andeuro 12,399 million for the same years. The significantreconciling items are as follows: (i) Saipem SpA, includingits subsidiaries, accounted for under the equity method for U.S.GAAP purposes, but fully consolidated under IFRS; (ii) thecapitalization of certain oil and natural gas exploration anddevelopment costs that were fully or differently amortized in thesame period under IFRS; and (iii) the impact of the differentaccounting method for determining the cost of inventory on hand(last-in-first-out method of accounting under U.S. GAAP versusaverage cost method of accounting under IFRS). See Note 37 to theConsolidated Financial Statements for a breakdown of operatingprofit by segment under U.S. GAAP for the years 2006, 2005 and2004.

Consolidated net profit under U.S. GAAP was euro 10,005million, euro 7,583 million and euro 6,401 million in 2006, 2005and 2004, respectively, compared with consolidated net profitunder IFRS of euro 9,217 million, euro 8,788 million and euro7,059 million for the same years. In addition to the effectsdiscussed above, the reconciliation of consolidated net profit toU.S. GAAP was affected in all years presented by the tax effectof reconciling items and the differences in deferred income taxtreatment of distributable reserves.

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**Item 6. DIRECTORS, SENIOR MANAGEMENT ANDEMPLOYEES**

**Directors and Senior Management**

The Board of Directors of Eni SpA currently in office consistsof nine members. The table below sets forth the names of the ninemembers of the Board of Directors, their positions, the year wheneach was initially appointed as a Director and their ages. ThisBoard of Directors was appointed by the OrdinaryShareholders’ Meeting held on May 27, 2005 for a three yearperiod; it will therefore expire at the date of the GeneralShareholders’ Meeting approving Eni’s financialstatements for fiscal year 2007.

| **Name**           |   | **Position** |   | **Year first appointed to Board of Directors** |   | **Age** |
|--------------------|--------|--------------|--------|------------------------------------------------|--------|---------|
|                    |   |              |   |                                                |   |         |
| Roberto Poli       |   | Chairman     |   | 2002                                           |   | 69      |
| Paolo Scaroni      |   | CEO          |   | 2005                                           |   | 61      |
| Alberto Clô   |   | Director     |   | 1999                                           |   | 60      |
| Renzo Costi        |   | Director     |   | 1996                                           |   | 70      |
| Dario Fruscio      |   | Director     |   | 2002                                           |   | 70      |
| Marco Pinto        |   | Director     |   | 2005                                           |   | 45      |
| Marco Reboa        |   | Director     |   | 2005                                           |   | 52      |
| Mario Resca        |   | Director     |   | 2002                                           |   | 62      |
| Pierluigi Scibetta |   | Director     |   | 2005                                           |   | 46      |

|  |   |  |   |  |   |  |
|--|--------|--|--------|--|--------|--|

While it remains a significant shareholder, the Ministry ofEconomy and Finance intends to continue to participate in thenomination and election of Eni’s Board of Directors in orderto protect its investment as a shareholder. During whateverperiod the Ministry of Economy and Finance remains a controllingshareholder, according to Italian law, as confirmed by DecisionNo. 466/1993 of the Corte Costituzionale (Constitutional Court),the Corte dei conti (Court of Accounts) has the right and duty toexercise a role as financial controller of Eni’s operationsin order to protect the interest of the State as a shareholder.In order for the Court of Accounts to exercise such control, arepresentative of the Court of Accounts attends the meetings ofthe Board of Directors and the Board of Statutory Auditors of Eniwithout the right to vote and Eni has the obligation to send tothe Court of Accounts its financial statements together with thereports of the Board of Directors, the Board of StatutoryAuditors and its external auditors. The representative of theCourt of Accounts who attends the meetings of the Board ofDirectors and Board of Statutory Auditors of Eni is Lucio TodaroMarescotti (alternate Angelo Antonio Parente).

On the basis of Eni’s By-laws as amended on April 13,2005, the Minister of Economy and Finance in agreement with theMinister of Economic Development may appoint another member ofthe Board of Directors, with no voting rights.

The table below sets forth the composition of Eni’ssenior management, including the CEO who is also General Managerof the parent company Eni SpA, the General Managers of Eni’sthree divisions, and those senior managers who attended on apermanent basis the meetings of Eni’s steering committee.This table indicates their positions within Eni, the year theywere appointed to such positions, their total years of service atEni and their ages. General Managers are appointed by the Boardof Directors, upon proposal of the CEO in agreement with theChairman. The other members of Eni’s senior management areappointed by the CEO of Eni and may be removed without cause.

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| **Name** |   | **Management        position** |   | **Year first appointed         to current position** |   | **Total number        of year of service at Eni** |   | **Age** |
|----------|--------|--------------------------------|--------|------------------------------------------------------|--------|---------------------------------------------------|--------|---------|
|          |   |                                |   |                                                      |   |                                                   |   |         |

| Paolo Scaroni       |   | CEO and General Manager        of Eni                                                     |   | 2005   |   | 2      |   | 61     |
|---------------------|--------|-------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                |   |                                                                                      |   |   |   |   |   |   |
| Stefano Cao         |   | General Manager of the        Exploration & Production Division                       |   | 2000   |   | 31     |   | 56     |
|                |   |                                                                                      |   |   |   |   |   |   |
| Domenico Dispenza   |   | General Manager of the        Gas & Power Division                                    |   | 2005   |   | 33     |   | 61     |
|                |   |                                                                                      |   |   |   |   |   |   |
| Angelo Taraborrelli |   | General Manager of the        Refining & Marketing Division                           |   | 2004   |   | 34     |   | 59     |
|                |   |                                                                                      |   |   |   |   |   |   |
| Marco Mangiagalli   |   | Chief Financial Officer                                                                   |   | 2006   |   | 28     |   | 57     |
|                |   |                                                                                      |   |   |   |   |   |   |
| Massimo Mantovani   |   | The Group Senior Vice        President for Legal Affairs                                  |   | 2006   |   | 14     |   | 44     |
|                |   |                                                                                      |   |   |   |   |   |   |
| Stefano Lucchini    |   | The Group Senior Vice        President         for Public Affairs and Communication       |   | 2005   |   | 2      |   | 45     |
|                |   |                                                                                      |   |   |   |   |   |   |
| Leonardo Maugeri    |   | The Group Senior Vice        President         for Strategies and Development             |   | 2000   |   | 12     |   | 42     |
|                |   |                                                                                      |   |   |   |   |   |   |
| Salvatore Sardo     |   | The Group Senior Vice        President        for Human Resources & Business Services |   | 2005   |   | 2      |   | 55     |
|                |   |                                                                                      |   |   |   |   |   |   |
| Roberto Ulissi      |   | The Group Senior Vice        President        for Corporate Affairs and Governance        |   | 2006   |   | 1      |   | 45     |
|                |   |                                                                                      |   |   |   |   |   |   |
| Raffaella Leone     |   | Executive Assistant to        the CEO                                                     |   | 2005   |   | 2      |   | 45     |

|  |   |  |   |  |   |  |   |  |
|--|--------|--|--------|--|--------|--|--------|--|

The biographies of Eni’s directors and senior managersare set out below.

Roberto Poli was appointed Chairman of Eni SpA in May 2002. Heis currently President of Poli e Associati SpA, a consulting firmfor corporate finance, mergers, acquisitions and reorganizations.From 1966 to 1998 he was Professor of Business Finance at theUniversità Cattolica of Milan. He is a partner of a leading firmfor corporate finance and legal affairs. He is a non-executivedirector in important companies such as Fininvest SpA, MondadoriSpA, Merloni Termosanitari SpA and G.D. SpA. He has been anadvisor for extraordinary finance operations for some of the mostimportant companies in Italy. He has also been Chairman ofRizzoli-Corriere della Sera SpA and Publitalia SpA.

Paolo Scaroni was appointed CEO of Eni SpA in June 2005. Heobtained an economics degree from Milan’s Bocconi Universityin 1969 and an MBA from Columbia Business School in 1973. For ayear following business school, he was an associate at McKinsey& Co. From 1973 until 1985, he held a series of positionswith Saint Gobain, culminating with his appointment as Presidentof the Saint Gobain flat glass division. In 1985, Paolo Scaronibecame CEO of Techint. During his time at Techint, he was alsoVice President of Falck and executive Vice President of SIV, ajoint venture between Techint and Pilkington Plc. He joinedPilkington in 1996 and was group CEO until May 2002. From May2002 to June 2005 he was CEO of Enel, Italy’s leadingelectricity utility. Paolo Scaroni is a member of the Board of"Il Sole 24 Ore", of Assicurazioni Generali SpA and ofTeatro alla Scala. He is a member of the Supervisory Board of ABNAMRO Bank NV (Amsterdam), member of the Board of Overseers ofColumbia Business School (New York) and member of the Board ofVeolia Environment (Paris). He was Chairman of Alliance UnichemPlc (UK) from 2005 to July 2006.

Alberto Clô graduated in Political Science. He is a professorof Industrial Economy at the University of Bologna and wasMinister of Industry and Minister of Foreign Trade ad interim in1995 and 1996. During the Italian presidency of the EuropeanUnion he was chairman of the Council of Ministers of Industry andEnergy of the European Union. In 1996 he was awarded the title ofCavaliere di Gran Croce al Merito of the Republic of Italy.Currently he is a non-executive director of ASM Brescia SpA, DeLonghi SpA, Italcementi SpA and Società Autostrade SpA. He hasbeen an independent director of Eni SpA since May 1999.

Renzo Costi is a lawyer and served as a magistrate from 1964to 1968. He is currently Professor of Company Law at theUniversity of Bologna. He was founder, and is currentlyco-editor, of the magazines "GiurisprudenzaCommerciale", "Banca Impresa e Società" and"Banca, Borsa e titoli di credito". He is a member ofthe Board of Directors of Editrice Il Mulino SpA. He has been anindependent director of Eni SpA since May 1996.

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Dario Fruscio is a chartered accountant, public auditor andconsultant; he is Professor of Economics and Management at theUniversity of Pavia and has taught at the Accademia Nazionaledella Guardia di Finanza of Bergamo. He has been Chairman ofItalia Turismo SpA since May 2004. He has been an independentdirector of Eni SpA since 2002.

Marco Pinto has a degree in law from the University LaSapienza, Rome. He is a magistrate and public notary. As amagistrate he has held various positions as a civil andadministrative judge. Since December 2004 he has been Professorof the Higher School of Economics and Finance. In 1994 he heldthe position of Legal Counsel and Head of Legislative Departmentof the Ministry of Foreign Trade and the Ministry of Economicsand Finance. From December 2004 to April 2005 he was head of thestaff of the Vice President of the Council of Ministers. SinceJune 2005 he has been Deputy Head of the staff of the Minister ofEconomics and Finance. He has been a non-executive director ofEni SpA since May 2005.

Marco Reboa has a degree in Business Administration from theBocconi University, Milan. He is a chartered accountant andpublic auditor. He is Professor of law at the Libero IstitutoUniversitario Carlo Cattaneo in Castellanza and author of essayson corporate governance, economic and legal issues. He is theeditor of "Rivista dei Dottori Commercialisti" and is aprofessional advisor in Milan. He is a member of the Board ofDirectors of Seat PG SpA, Interpump SpA, IMMSI SpA and IntesaPrivate Banking SpA. He is Chairman of the Board of StatutoryAuditors of Luxottica Group SpA. He has been an independentdirector of Eni SpA since May 2005.

Mario Resca has a degree in economics from the BocconiUniversity, Milan. He is Chairman of Italia Zuccheri SpA(formerly Eridania SpA), National Board member of U.P.A. (theItalian Advertisers’ Association) and Confimprese. He isnon-executive Director of Mondadori SpA. As a graduate he workedfor the Chase Manhattan Bank. In 1974 he was appointed directorof Biondi Finanziaria (Fiat Group) and from 1976 to 1991 he waspartner of Egon Zehnder. In this period the was appointeddirector of Lancôme Italia and of companies belonging to theRizzoli-Corriere della Sera Group and Versace Group. He alsoserved as Chairman of Sambonet SpA, Kenwood Italia SpA and was afounding partner of Eric Salmon & Partners. He has been anindependent director of Eni SpA since 2002.

Pierluigi Scibetta is a graduate in economics from theUniversity La Sapienza, Rome. He is a chartered accountant andauditor and has been appointed director and auditor of a numberof public bodies and companies. In 2003 he was appointed directorof the Istituto Superiore per la Previdenza e la Sicurezza sulLavoro - ISPESL (the State Agency for Employee Safety), of theGestore del Mercato Elettrico SpA and of the Ente per le NuoveTecnologie, l’Energia e l’Ambiente - ENEA (the StateAgency for Technologies, Energy and Environment). In 2004, he wasappointed director of Nucleco SpA. He is a professor ofEnvironmental Economics at the University of Perugia. He has beenan independent director of Eni SpA since May 2005.

Stefano Cao graduated in Mechanical Engineering. He joined the EniGroup in 1976 as a technical engineer active mainly in offshoreconstruction. He then became general manager, managing directorand chairman of Saipem SpA, and is at present General Manager ofEni’s Exploration & Production Division. In 2007 he hasbeen appointed independent director of Telecom SpA.

Domenico Dispenza graduated in Aeronautical Sciences andobtained a Master’s Degree in Advanced Technologies. Hejoined Snam’s study department in 1974. He served in variousmanaging positions in Eni Group companies engaged in natural gasactivities. In 2004 he was elected Chairman of Snam Rete Gas SpAand in 2006 he was appointed General Manager of Eni’s Gas& Power Division.

Angelo Taraborrelli graduated in law and joined the Eni Groupin 1973 as an expert in analysis evaluation and control ofinvestments in the oil market. After the merger of AgipPetroliwith Eni he was appointed Deputy Chief Operating Officer ofEni’s Refining & Marketing Division for MarketingOperations and on April 2004 he became General Manager ofEni’s Refining & Marketing Division.

Marco Mangiagalli worked for the Barclays Group and otherItalian merchant banks before joining the Eni Group in 1979. Heis a member of the Board of Directors of various Eni companies.He is responsible for Eni’s administration, financialreporting and accounting, planning and control, and treasuryoperations.

Massimo Mantovani is an attorney at law and worked as a legalcounsel for international activities before joining Snam’slegal office in 1993. He was responsible for legal affairs atEni’s Gas & Power Division until he was appointedEni’s Senior Vice President for legal affairs in 2005.

Stefano Lucchini graduated in economics and joined the studydepartment of Montedison. After a period in the United States,where he was assistant to the Chairman of the Energy and CommerceCommission of the U.S. Congress, he was head of communications atMontedison USA. In 1993 he returned to Italy and was head of theinvestor relations department for the Ferruzzi and MontedisonGroup. He was then Director for external relations at Enel andlater at Confindustria and Banca Intesa. He joined Eni as SeniorVice President for public affairs and communication in 2005. Heis also a professor at the School for Journalism of theUniversità Cattolica in Milan.

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Leonardo Maugeri, after extensive academic experience acquiredin Italy and abroad, joined the Eni Group in 1994, holdingvarious positions mainly as counsel for strategic decisions. Heis a member of the executive council of Censis and of theCommission on international relations at Confindustria.

Salvatore Sardo graduated in economics and started his careeras an auditor for Coopers & Lybrand. He later joined TelecomItalia where, after the privatization of the company, he wasresponsible for administration and control. He was Chairman ofPagine Gialle from 1998 to 2001 and returned to Telecom Italia asmanager of the group’s real estate and general services.From 2003 he was procurement and security manager at Enel until2005 when he joined Eni to become Senior Vice President for HumanResources & Business Services.

Roberto Ulissi is an attorney at law. After some years at theBanca d’Italia as a in-house legal counsel he becameDirector General of the Ministry of Economy and Finance, head ofthe legal affairs, banking and financial markets department. Hewas Director of State-owned companies, such as Telecom Italia,Ferrovie dello Stato, Alitalia, Fincantieri, and Governmentrepresentative in the Bank of Italy’s governing council. Hewas member of several national and European committees as arepresentative of the Italian Ministry of Economy. He wascontract Professor of banking law in Italian Universitiesdepartment. He was appointed Senior Vice President for corporateaffairs and governance of Eni on May 2006.

Raffaella Leone worked for Techint SpA, Pilkington Plc andEnel SpA before joining Eni in 2005. She is Vice President of EniFoundation and member of the Board of Fondazione Eni EnricoMattei, as well as member of the Board of other Eni companies.

 

> 
***Auditors***

*Statutory Auditors*

The Italian legislation requires Italian listed corporationsto have a board of statutory auditors composed of independentexperts in accounting matters and in matters specified in suchcorporations’ By-laws. Eni SpA’s Board of StatutoryAuditors were appointed by the shareholders meeting, who alsoappoints the Chairman of the Board. Eni SpA’s By-lawscurrently provide that the Board of Statutory Auditors consistsof five effective statutory auditors and two alternate auditors(each of them automatically substitutes an effective auditor whoresigns or is otherwise unable to serve as an auditor elected inthe same list).

The following table sets forth the names, positions and yearof appointment of the members of the Board of Statutory Auditorsof Eni. Each current member was appointed by the OrdinaryShareholders’ Meeting held on May 27, 2005 for a three yearperiod, which will expire at the date of the GeneralShareholders’ Meeting approving Eni’s financialstatements for fiscal year 2007. For a description of the dutiesof the Board of Statutory Auditors see below.

| **Name**             |   | **Position**      |   | **Year first appointed to Board        of Statutory Auditors** |
|----------------------|--------|-------------------|--------|----------------------------------------------------------------|
|                      |   |                   |   |                                                                |
| Paolo Andrea Colombo |   | Chairman          |   | 2002                                                           |
| Filippo Duodo        |   | Auditor           |   | 1998                                                           |
| Edoardo Grisolia     |   | Auditor           |   | 2005                                                           |
| Riccardo Perotta     |   | Auditor           |   | 1999                                                           |
| Giorgio Silva        |   | Auditor           |   | 1999                                                           |
| Francesco Bilotti    |   | Alternate Auditor |   | 2005                                                           |
| Massimo Gentile      |   | Alternate Auditor |   | 2005                                                           |
|                      |   |                   |   |                                                                |

> 
*External Auditors*

As provided for by Italian law, external auditors must be achartered company appointed by the Shareholders’ Meeting.Eni’s external auditors, PricewaterhouseCoopers SpA, wereappointed by the Ordinary Shareholders’ Meeting for twoconsecutive three-year terms, in 2001 and 2004 respectively, thelatter ending with the Shareholders’ Meeting approvingfinancial statements for 2006.

On May 24, 2007 Eni’s Shareholders’ Meetingconfirmed the extension of the audit engagement ofPricewaterhouseCoopers SpA for the three financial years endingDecember 31, 2007, 2008 and 2009 in accordance with Italian law.

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**Board Practices**

> 
***Appropriate Conduct***

Due to the diverse circumstances in which Eni operates, theBoard of Directors has deemed it appropriate to provide a cleardefinition of the value system that Eni recognizes, accepts andupholds and the responsibilities that Eni assumes within itsGroup and externally in order to ensure that all Group activitiesare conducted in compliance with laws, in a context of faircompetition, with honesty, integrity, correctness and in goodfaith, respecting the legitimate interests of shareholders,employees, suppliers, customers, commercial and financialpartners and the communities where Eni operates. All thoseworking for Eni, without exception or distinction, are committedto observing these principles within their function andresponsibility and to make others observe them. Behavior contraryto such principles cannot be justified by any advantages to Eni.These values are stated in a "Code of Conduct" whoseobservance by employees is evaluated by the Board of Directors,based on the annual report of the Guarantor for the Code ofConduct. The Code of Conduct is published on Eni’s internetsite (www.eni.it).

In its meeting of January 20, 2000, Eni’s Board ofDirectors resolved to adopt the Corporate Governance Code (the"Code") issued by Borsa Italiana (the Italian authorityfor the national stock exchange) Eni’s organizational modelis in line with the principles expounded in this Italian Code, aswell as with related recommendations issued by Consob, theItalian capital markets regulator.

In its meeting of December 13, 2006, the Board of Directorsdecided to conform to the Code of Conduct for Italian listedcompanies, as issued by Borsa Italiana in March 2006 ("BorsaItaliana Code") by implementing the Eni Code. The Eni Codeis based on the Borsa Italiana Code and adapts certainrecommendations of the Borsa Italiana Code to the specificcircumstances of Eni. Particularly, the Code takes intoconsideration the fact that Eni is a parent company, is notcontrolled by any other company and – in the light of therecent provisions of the companies law reform – is notsubject to direction and co-ordination by any Italian or foreignentity (company or body). Principles expounded in the BorsaItaliana Code have been adjusted to avoid misunderstanding amongEni’s shareholders and stakeholders.

Similarly, Eni’s By-laws currently in force foresee atraditional administration and control model (removing thepossibility to adopt a one-tier or a two-tier model of managementand control system as foreseen in the Borsa Italiana Code), theseparation of the positions held by the Chairman and the CEO(making the appointment of a lead independent directorunnecessary), and specific rules on the appointment andcomposition of the Board of Directors and of the Board ofStatutory Auditors.

Finally, the Eni Code establishes certain principles thatenhance the level of governance suggested by the Borsa ItalianaCode; in particular:

| • |   | the directors have adopted a        guideline which takes into consideration the interests of        all stakeholders when pursuing the objective of creating        value for the Company’s shareholders;                                                                                                                                         |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the minimum frequency of the        information to be supplied to the Board of Directors by        the directors to whom the Board of Directors has        delegated powers has been reduced to two months as        compared with the minimum three-month period envisaged by        the Borsa Italiana Code;                                          |
| • |   | the Board’s        self-evaluation can be performed with the support of a        specialized external consultant, to ensure its        objectiveness;                                                                                                                                                                                              |
| • |   | directors and auditors shall        hold their positions only as long as they are deemed to        be able to devote the necessary time to diligently        perform their duties;                                                                                                                                                                      |
| • |   | the number of members of        Board committees shall be lower than the majority of        Board members in order not to interfere with the        Board’s decision-making process;                                                                                                                                                               |
| • |   | the Internal Control        Committee’s opinion on corporate rules has been        introduced, ensuring that all transactions carried out        with related parties and those in which a director has an        interest, are performed in a transparent way and        according to the criteria of substantial and procedural        fairness; |
| • |   | the proposal of appointment        of the manager delegated to internal control to the Board        of Directors is drafted by the CEO, in agreement with the        Chairman; and                                                                                                                                                                      |
| • |   | at least two members of the        Internal Control Committee must have adequate experience        in accounting and finance (the Borsa Italiana Code        foresees only one member with these skills).                                                                                                                                               |

In accordance with the requirements of Borsa Italiana SpA, inparticular the Borsa Italiana Code of March 14, 2006, Eni’scorporate governance system is described below. In preparing thisreport, account has been taken also of the "Guide to thepreparation of the report on corporate governance" publishedby Assonime and Emittenti Titoli SpA in March 2004.

 

> 
***The Board of Directors: Competencies, Delegate    Powers and Composition***

Eni’s organizational structure follows the traditionalmodel of Italian companies in which management is exclusivelyentrusted to the Board of Directors, which is the central elementof Eni’s corporate governance system. 

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Monitoring functions are entrusted to the Board of StatutoryAuditors and the audit of the financial statements is entrustedto the external auditors appointed by the Shareholders’Meeting.

The Board of Directors delegated specific powers to theChairman and CEO, who are the representatives of the Company inaccordance with Article 25 of Eni’s By-laws. On June 1,2005, the Board of Directors entrusted the Chairman with powersto conduct strategic international relations, pursuant to Article23.1 of Eni’s By-laws. At the same meeting, the Boardappointed Mr. Paolo Scaroni as CEO and delegated all necessarypowers for the administration of the Company to him, with theexception of those powers that cannot be delegated in accordancewith current legislation (Article 2381 of the Italian Civil Code)and those retained by the Board of Directors (as describedbelow).

In accordance with internationally accepted principles ofcorporate governance, the Board of Directors establishedcommittees with consulting and proposing functions.

> 
*Competencies*

In its meetings on June 1, October 11, 2005 and December 13,2006 in addition to exclusive competencies entrusted to it byArticle 2381 of the Civil Code, the Board of Directors retainedthe following powers, in addition to those that cannot bedelegated under applicable laws:

| 1.     |   | establishes the Company and        Group Corporate Governance system and rules. In        particular, after consulting the Internal Control        Committee, the Board approves the rules that ensure the        substantial and procedural transparency and correctness        of the transactions carried out with related parties and        those in which a director holds an interest, on his        behalf or on behalf of third parties. The Board adopts a        procedure for the management and disclosure to third        parties of documents and information concerning the        Company, having special regard to price sensitive        information; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.     |   | establishes among its        members one or more committees with proposing and        consulting functions, appoints their members, establishes        their responsibilities, determines their compensation and        approves their regulations;                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.     |   | appoints and revokes the        powers of the Chief Executive Officer and the Chairman;        establishes the terms, limits and operating methods of        the exercise of such powers and determines the        compensation related to the powers, on the basis of        proposals from the Compensation Committee and after        consulting the Board of Statutory Auditors. The Board may        issue instructions to the Chief Executive Officer and the        Chairman and reserve to itself any operations that        pertain to its powers;                                                                                                              |
| 4.     |   | establishes the guidelines        of the organizational, administrative and accounting        structure of the Company, of the most important        controlled subsidiaries and of the Group; evaluates the        adequacy of the organizational, administrative and        accounting structure set up by the Chief Executive        Officer in particular with regard to the management of        conflicts of interest;                                                                                                                                                                                                                                             |
| 5.     |   | establishes, in particular,        based on the recommendations of the Internal Control        Committee, the guidelines of the internal control system,        in order to ensure the identification, measurement,        management and monitoring of the main risks faced by the        Company and its subsidiaries. Evaluates the adequacy,        effectiveness and effective functioning of the internal        control system managed by the Chief Executive Officer on        an annual basis;                                                                                                                                                                  |
| 6.     |   | establishes, based on the        recommendation of the Chief Executive Officer, Company        and Group strategies and objectives, including        sustainability policies. Examines and approves the        Company’s and Group’s strategic, operational        and financial plans and the strategic agreements to be        signed by the Company;                                                                                                                                                                                                                                                                                                        |
| 7.     |   | examines and approves annual        budgets for Eni’s Divisions and the Company, as well        as the Group’s consolidated budget;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 8.     |   | evaluates and approves        interim quarterly and half-yearly reports, as per current        regulations. Evaluates and approves the sustainability        report, submitted also to the Shareholders’ Meeting;                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 9.     |   | receives from Directors with        delegated powers, at every Board meeting or at least        every two months, reports informing the Board of        activities carried out in exercising the powers        attributed as well as updates on activities carried out        by the Group and on atypical or unusual transactions or        transactions with related parties that were not        previously submitted to the evaluation and approval of        the Board;                                                                                                                                                                                             |
| 10.    |   | receives half-year updates        on the Board Committees’ activities;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 11.    |   | evaluates the general        performance of the Company and the Group, on the basis of        information received from Board members with powers, with        particular attention to situations of conflicts of        interest and compares results achieved – as        contained in the annual report and interim financial        statements, as per current regulations – with the        budget;                                                                                                                                                                                                                                                       |
| 12.    |   | evaluates and approves any        transaction executed by the Company and its subsidiaries        that have a significant economic, patrimonial and/or        financial impact, with particular attention to situations        in which Board members hold an interest on their own        behalf or on behalf of third parties, and to related        parties transactions. The Board ensures the principle of        operational autonomy with specific regard to the listed        companies of the Eni Group.                                                                                                                                                        |
|   |   | Transactions with a        significant economic, patrimonial and/or financial impact        include the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

|   |   | a) |   | acquisition and sale of        shares, companies, branches of companies, and properties,        capital contributions in kind, mergers and de-mergers        exceeding euro 50 million, notwithstanding Article 23.2        of the By-laws; |
|--------|--------|----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   |   | b) |   | investments in fixed assets        exceeding euro 100 million, or less if of particular        strategic importance or particularly risky;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|--------|----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | c) |   | any exploration initiatives        and portfolio operations in the E&P sector in new        areas;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   | d) |   | sale and purchase of goods        and services other than investments, for an amount        exceeding euro 1 billion or a duration exceeding twenty        years;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   | e) |   | financing to non-controlled        companies: (i) for amounts exceeding euro 50 million or,        (ii) in any case, if the amount is not proportionate to        the interest held;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |   | f) |   | issuing by the Company of        personal and real guarantees to non-controlled companies:        (i) for amounts exceeding euro 200 million, if in the        interest of the Company or of Eni subsidiaries, or (ii)        in any case, if the guarantees are issued in the interest        of non-controlled companies and the amount is not        proportionate to the interest held. In order to issue the        guarantees indicated in section (i) of letter f), if the        amount is between euro 100 million and euro 200 million,        the Board confers powers to the Chief Executive Officer        and the Chairman, to be exercised jointly in case of        urgency; |

| 13. |   | appoints and revokes, on        recommendation of the Chief Executive Officer and in        agreement with the Chairman, the General Managers of        Divisions and attributes powers to them;                                                                                                                                                                                                                                                                                                   |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 14. |   | appoints and revokes, on        recommendation of the Chief Executive Officer and in        agreement with the Chairman, and with the approval of the        Board of Statutory Auditors, the Manager charged with        preparing the Company’s financial reports as per        Legislative Decree No. 58/1998 delegating to him adequate        powers and resources;                                                                                                                      |
| 15. |   | appoints and revokes, on        recommendation of the Chief Executive Officer and in        agreement with the Chairman, after consulting the        Internal Control Committee, the person in charge of        internal control and determines his/her compensation in        line with the Company’s remuneration policies;                                                                                                                                                                 |
| 16. |   | ensures a person is        identified as responsible for handling the relationships        with the Shareholders;                                                                                                                                                                                                                                                                                                                                                                                  |
| 17. |   | establishes, on the basis of        the proposals received from the Compensation Committee,        the criteria for top management compensation and        implements the stock incentive plans approved by the        Shareholders’ Meeting;                                                                                                                                                                                                                                                 |
| 18. |   | examines and decides on        proposals submitted by the Chief Executive Officer with        respect to voting powers and to the appointment of        members of the management and control bodies of the most        important controlled subsidiaries. With specific regard        to the shareholders’ meetings of listed companies of        the Eni Group, the Board ensures the observance of the        Corporate Governance Rules regarding the        shareholders’ meetings; |
| 19. |   | prepares the proposals to be        submitted to the Shareholders’ Meetings; and                                                                                                                                                                                                                                                                                                                                                                                                              |
| 20. |   | examines and resolves on        other matters that the Chief Executive Officer deems        appropriate to submit to the Board because of their        importance and sensitivity.                                                                                                                                                                                                                                                                                                                 |

Pursuant to Article 23.2 of the By-laws, the Board resolveson: mergers by incorporation and proportional demergers of atleast 90% directly owned subsidiaries; establishment and windingup of branches; amendments to the By-laws in order to comply withapplicable legislation.

In accordance with Article 27 of Eni’s By-laws, theChairman of the Board chairs Shareholders’ Meetings andoversees the implementation of decisions made by it.

In accordance with Article 23, paragraph 3 of Eni’sBy-laws, the Chairman and the CEO report timely to the Board ofStatutory Auditors, at least quarterly and at each Board meeting,on activities performed by and major transactions of Eni and itssubsidiaries.

> 
*Appointment*

In accordance with Article 17 of Eni’s By-laws, the Boardof Directors is composed of 3 to 9 members. The OrdinaryShareholders’ Meeting determines the number of Directorswithin said limits. As per Article 6, paragraph 2, letter d) ofEni’s By-laws the Minister for Economy and Finance, inagreement with the Minister of Economic Development, may appointone member of the Board without voting rights. The Minister forEconomy and Finance chose not to appoint such member.

According to Law No. 474 issued on July 30, 1994, Article 17of the by-laws states that shareholders representing at least 1%of voting shares, alone or together with other shareholders, andthe Board of Directors have the right to present lists for theappointment of directors. Each shareholder can present orparticipate in presenting only one list. Each shareholder canexpress its vote to only one list.

Companies controlling a shareholder and companies controlledby the same entity are forbidden from presenting or otherwiseconcurring to the presentation of additional lists and voting forthem. Lists are to be filed at Eni’s headquarters at leastten days before the date set for the Shareholders’ Meetingon first call (20 days in case of the Board of Directorspresenting a list) and published in national newspapers. Theindependent candidates shall be expressly indicated in each list.Lists must include statements in which each candidate attests thepossession of the honorability and independence requirements asprovided for by the applicable legislation and Eni’sBy-laws. A professional curriculum of each candidate isrecommended.

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> 
*Directors’ independence and duties*

Legislative Decree No. 58 of February 24, 1998 (TUF), asamended by Legislative Decree No. 303 of December 29, 2006 statesthat at least two members in a Board composed by more than sevenmembers must possess the independence requirements provided forStatutory Auditors of listed companies.

Article 17.3 of Eni’s By-laws states that at least threeBoard members shall have the independence requirement, in casethe Board is made up by more than five members. This ruleactually increases the number of independent directors inEni’s Board. Eni’s Code foresees further independencerequirements, in line with the ones provided by the BorsaItaliana Code.

On February 22, 2007, Eni’s Board of Directors, inaccordance with the provisions of Eni’s By-laws and Code,determined that six out of its nine members are independent,specifically: non-executive Directors Alberto Clô, Renzo Costi,Dario Fruscio, Marco Reboa, Mario Resca and Pierluigi Scibetta.Renzo Costi was confirmed to be independent notwithstanding hispermanence as board member for a period longer than nine years,due to the fact that he has been nominated by minorityshareholders (specifically institutional investors) and hasdemonstrated ethical and professional qualities and independencewhen expressing his opinion during this period.

The Board of Statutory Auditors verified the properapplication of criteria and procedures adopted by the Board toevaluate the independence of its members.

In accordance with the TUF, implemented in Article 17.3 ofEni’s By-laws, the Directors and General Managers of listedcompanies shall possess the honorability requirements prescribedfor statutory auditors.

On February 22, 2007, the Board of Directors verified that allits members possess the honorability requirements.

In accordance with Article 17.3 of Eni’s By-laws, shouldthe independence and honorability requirements be impaired orcease or if situations of ineligibility or incompatibility havearisen, the Board removes said members and provides for hissubstitution or invites him to remove the situation ofincompatibility within the terms set by the board itself, if thislast condition is not met, the Director will be removed fromoffice. The Directors shall communicate to the Company whetherthe above mentioned requirements have been impaired or haveceased or situations of ineligibility or incompatibility havearisen.

In its meeting of December 13, 2006, the Board of Directorsexpressed its opinion on the matter of the admissible number ofpositions held by Directors in other companies, as required byEni’s Self-discipline Code:

| • |   | an executive Director should        not hold: (i) the position of executive director in any        other Italian or foreign listed company, or in any        finance, banking or insurance company or any company with        a net equity exceeding euro 10 billion; and (ii) the        position of non-executive director or statutory auditor        (or member of any other advisory committee) in more than        three of said companies; and             |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | a non-executive Director,        should not hold further positions than the one held in        Eni, as: (i) executive director in more than one of the        companies mentioned above and non-executive director or        statutory auditor (or member of any other control body)        in more than three of the mentioned companies, or as        (ii) non-executive director or statutory auditor in        more than six of the mentioned companies. |

All the positions held in Eni’s subsidiaries are excludedfor the purposes described above.

In case a Director exceeds said limits in terms of positionsheld, he should timely inform the Board, who shall judge thesituation taking into account the interest of the Company andcall upon the interested director to make a decision on thematter.

On the basis of available information, Eni’s Directorscomply with these limits on the number of positions held in othercompanies.

In accordance with the TUF and with Article 23.3 of Eni’sBy-laws, the Directors shall timely inform the Board of StatutoryAuditors on transactions in which they have an interest.

In accordance with Article 2391 of the Italian Civil Code,Directors inform other Directors and the Board of StatutoryAuditors of any interest they may have, directly or on behalf ofthird parties, in any transaction of Eni.

During each Board of Directors’ meeting, the Chairmanexpressly asks the Directors to declare any of their potentialinterest in transactions on the agenda.

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The Eni Code, in accordance with the Borsa Italiana Code,foresees the adoption, by the Board of Directors, of measuresensuring that transactions in which a director has an interest,directly or on behalf of third parties, and all transactionscarried out with related parties, are performed in a transparentway and meet criteria of substantial and procedural fairness.

Preparation of a procedure regarding transactions with relatedparties is underway; however its finalization is stalling due tothe circumstance that Italian listed companies are awaiting theemission on part of Consob of certain guidelines as provided forby Article 2391-bis of the Civil Code. Pending the emission ofsuch guidelines transactions with related parties are submittedto the Board of Directors, even though their amounts are lowerthan the materiality threshold set for the transactions to beapproved by the Board.

> 
*Functioning*

In its meeting of June 1, 2005, the Board of Directors definedthe rules for the calling of its meetings; in particular, theChairman convenes Board meetings and, in agreement with the CEO,defines agenda items. Notice is sent to the Directors, StatutoryAuditors and the Magistrate of the Court of Accounts, by mail,fax, or e-mail within five days of the meeting’s date, atleast 24 hours in advance in case of urgency. Eni’s By-lawsallow meetings to be held by video or teleconference.

Board members, Statutory Auditors and the Magistrate of theCourt of Accounts receive in advance adequate and thoroughinformation on all issues subject to Board evaluation andresolutions, except when confidentiality is deemed necessary.

During meetings Directors can meet managers of Eni and itssubsidiaries in order to obtain information on specific mattersof the agenda items.

In 2006, the Board held 16 meetings with an average attendancerate of 85%. The agendas for these meetings included, amongothers, the followings issues:

| i)    |   | Group strategy and the        industrial plan for the four-year period 2007-2010;                                                                                                                                                                                                                 |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ii)   |   | 2006 budget;                                                                                                                                                                                                                                                                                      |
| iii)  |   | review of quarterly accounts        for the first, second and third quarter of 2006, and of        preliminary full year results for 2005;                                                                                                                                                        |
| iv)   |   | approval of 2005        consolidated financial statements and 2006 semi-annual        consolidated accounts;                                                                                                                                                                                      |
| v)    |   | approval of an interim        dividend pertaining to fiscal year 2006 and of the        full-year dividend proposal for 2005 to be submitted to        the Annual General Shareholders’ Meeting;                                                                                             |
| vi)   |   | evaluation of the        independence of the Directors and evaluation of Board        practices;                                                                                                                                                                                                  |
| vii)  |   | adoption of the Code of        Conduct for listed companies, as issued by Borsa Italiana        in March 2006 (Borsa Italiana Code) and implementation of        the necessary provisions to the Eni Code in order to        align it with the recommendations of the Borsa Italiana        Code; |
| viii) |   | approval of a new incentive        scheme for Group top managers and senior and middle        managers and approval of the stock-based incentive plan        for the three-year period 2006-2008; and                                                                                             |
| ix)   |   | approval of the most        significant transactions of the parent company and of        Group companies in the year.                                                                                                                                                                             |

 

> 
***Board Committees***

The Board has instituted three committees with proposal andadvisory functions. Their composition, tasks and functioning aredefined by the Board of Directors in respect of the criteriaestablished by the Eni Code. They are: a) the InternalControl Committee, b) the Compensation Committee and c) theInternational Oil Committee. These Committees are composed almostexclusively of independent Directors.

The composition of the Board’s Committees is as follows:

*Internal Control Committee:* Marco Reboa (Chairman,independent), Alberto Clô (independent), Renzo Costi(independent) and Pierluigi Scibetta (independent).

*Compensation Committee:* Mario Resca (Chairman,independent), Renzo Costi (independent), Marco Pinto(non-executive) and Pierluigi Scibetta (independent).

*International Oil Committee:* Alberto Clô (Chairman,independent), Paolo Scaroni (CEO), Dario Fruscio (independent)and Marco Reboa (independent).

The Code, in line with the Borsa Italiana Code, suggests thecreation of a "Nominating Committee". The Board ofDirectors has not formed this Committee due to the significantpresence of the Italian State in Eni’s shareholding (see"Item 7 – Major Shareholders").

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> 
*Internal Control Committee*

The Internal Control Committee is in charge of putting forwardproposals and providing advisory functions on general managementissues to the Board of Directors. The Committee consists of threeto four non-executive directors, the majority of whom must meetthe independence requirements set out in the By-laws. Where suchmembers are included in the Board of Directors, at least twomembers of the Committee shall be adequately experienced inaccounting and financial matters as per the assessment made bythe Board of Directors at the time of their appointment.

The Committee shall:

| a) |   | assess, jointly with the        head of the office in charge of drawing up corporate        accounting documents and the external auditors the        appropriate implementation of accounting principles and        their homogeneity with a view to drawing up the        consolidated financial statements;                                                                                                   |
|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | upon the CEO’s request,        issue opinions on specific matters related to the        identification of the main business risks as well as to        planning, implementing, and managing the internal control        system;                                                                                                                                                                             |
| c) |   | evaluate the audit plan        prepared by the Internal Audit Manager and the activity        reports that the latter shall draw up at least quarterly;                                                                                                                                                                                                                                                          |
| d) |   | carry out such additional        tasks as are committed to it by the Board of Directors,        and in particular issue opinions on the rules relating to        substantive and procedural transparency and fairness of        the operations with related parties as well as of the        operations in which a director has a vested interest        whether on his own or on behalf of third parties;       |
| e) |   | report to the Board, at        least every six months, on the occasion of approving the        financial statement and the half year report, on its        activities and the adequacy of the internal control        system;                                                                                                                                                                                    |
| f) |   | issue an opinion on the        proposals to the Board for appointment and removal of the        Internal Audit Manager as put forward by the Chief        Executive Officer in agreement with the Chairman as well        as on the proposals concerning the Internal Audit        Manager’s salary in line with corporate policies;        and                                                             |
| g) |   | assess the findings from the        internal audit reports, the communications from the Board        of Statutory Auditors and the individual members thereof,        the reports and management letters by external auditors,        the annual report by the Guarantor for the Code of        Practice, the reports of the Watch Structure, and the        enquiries and reviews carried out by third parties. |

Additionally, the Committee shall assist the Board ofDirectors with a view to:

| • |   | set out the main principles        for the internal control system so as to appropriately        identify and adequately evaluate, manage, and monitor the        main risks related to the Company and its subsidiaries,        by laying down the compatibility criteria between said        risks and sound corporate management; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | assess, at least annually,        the adequacy, effectiveness, and actual operations of the        internal control system.                                                                                                                                                                                                              |

In 2006, the Internal Control Committee held 15 meetings, withan average attendance rate of 80%, and reviewed the following:(i) the 2006 audit plan prepared by Eni, Saipem and Snam Rete Gasinternal audit functions and their progress; (ii) findings andresults from Eni’s internal auditing interventions; (iii)initiatives undertaken and effects of measures applied in orderto eliminate the weaknesses highlighted by Eni’s InternalAudit department; (iv) the essential features of the 2005financial statements, making suggestions intended to improve thelevel of disclosure through meetings with top levelrepresentatives of administrative functions of the main Enisubsidiaries, chairmen of boards of statutory auditors andresponsible partners from external audit companies;(v) Eni’s 2006 draft Half Year Report; (vi) the"Recommendations on the internal accounting controlsystem" presented on 2004 financial statements by theexternal audit company; (vii) the external audit company reportson "Facts and circumstances of interest in the governanceactivity"; (viii) the situation of appointments of externalauditors of main group companies, the recognition of costsincurred and the observations contained in the reports ofexternal auditors pertaining to the financial statements ofEni’s subsidiaries; (ix) the proposal to integrate the taskof Eni’s external auditors, to also include thecertification of Eni’s internal control system, underSection 404 of the Sarbanes-Oxley Act (SOA) for fiscal year 2006,and the proposal extending the task of the external auditorcurrently in charge to audit the financial statements of Groupcompanies and to certify the Group internal control system overfinancial reporting as well as all other admissible tasks for the2007-2009 period; (x) the report on the implementation of SOAactivities; (xi) the report presented by the Watch Structureestablished as required by Legislative Decree No. 231/2001; (xii)the general aspects of rules on recommendations received by Eni,which also include confidential or anonymous recommendations,issued also in respect of the Sarbanes-Oxley Act, and theperiodic reports concerning the received recommendations; (xiii)the new organizational structure and the tasks of Eni InternalAudit function; (xiv) the reorganization of the Group supplyactivities; (xv) issues on hydrocarbon reserves and relevantclassification criteria, also including accounting issues; (xvi)appointments of consultants and legal counselors supporting theCompany on legal matters for the 2005-2006 two year period;(xvii) antitrust procedures and the recognition of the relevantprovisions to the risk reserve; (xviii) the reports on additionalinformation submitted to the SEC and accounting treatment of themerger of Enifin with the parent company Eni; and (xix) thereport on Eni administrative and accounting organization to besubmitted to the Board of Directors.

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The Internal Audit Manager is the secretary of the Committee.In its meeting of March 16, 2007, the Board of Directors, asproposed by the CEO, in agreement with the Chairman and afterasking the Internal Control Committee for its opinion, entrustedthe Internal Audit Manager as manager delegated for the internalcontrol.

> 
*Compensation Committee*

The Compensation Committee, established by the Board ofDirectors in 1996, is entrusted with proposing tasks in respectof the Board:

| • |   | presenting proposals for the        remuneration of the Chairman and CEO, regarding the        various forms of compensation and benefits;                                                                                                                                                                                                                                                                                                                                                            |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | presenting proposals for        remuneration of members of the committees of Directors        established within the Board; and                                                                                                                                                                                                                                                                                                                                                                       |
| • |   | examining the indications of        the CEO and presenting proposals for: (i) annual and        long-term incentive plans, including equity-based plans;        (ii) general criteria for the compensation of the        managers with strategic responsibilities; and (iii)        company objectives and results of performance plans,        related to the determination of the variable part of the        remuneration of executive directors and the        implementation of incentive plans. |

The Committee is composed of four Directors, the majority ofthem being non-executive independent directors. The Committeereports to the Board of Directors on activities performed atleast twice a year. In 2006, the Compensation Committee held 9meetings, with an average attendance rate of 96%, andaccomplished the following: (i) verified functions and tasks ofthe Committee, defined by the new regulation approved by theBoard of Directors in June 2005 (available on Eni’swebsite), in accordance with the national and internationalcorporate governance principles, confirming their substantialalignment with international and national standards;(ii) examined the objectives of the 2006 performance andincentive plan and appraised 2005 results, to be submitted to theBoard of Directors for approval; (iii) examined the revisedlong-term incentive system for managers, and drafted a proposalbased on which the Board of Directors requested theShareholders’ Meeting’s approval of the 2006-2008 stockoption plan and the authorization to use treasury shares forservicing the stock option plan; (iv) examined the issue ofthe insurance against professional risks included in agreementsfor Eni managers, extended to Directors and Statutory Auditors,as approved by the Board of Directors in its meeting of March 30,2006, and the issue of the insurance against managerial risks, onwhich the Shareholders’ Meeting’s approval has beenrequested; (v) examined the Chairman variable compensation anddrafted a proposal for determining the variable part of theremuneration of the Chairman and CEO based on 2005 performance tobe submitted to the Board of Directors; (vi) examined thebenchmarks for top management remuneration, the criteria of theannual remuneration policy, as well as the implementation ofincentive plans for the year and in the long-term in order todraft a proposal to submit to the Board of Directors; (vii)examined the compensation to be attributed to the Directors,related to functions and activities performed in their role asmembers of the Committees established by the Board, in order todraft a proposal approved by the Board of Directors’ meetingof July 27, 2006; and (viii) examined the impact of the newstock-based incentive scheme on CEO compensation, and drafted anintegration proposal in order to maintain the incentive levelestablished in 2005, to be submitted to the Board of Directors(see "Stock options and other share-basedcompensation").

> 
*International Oil Committee*

The International Oil Committee established by the Board ofDirectors in 2002, is entrusted with the monitoring of trends inoil markets and the study of their aspects.

In 2006 the International Oil Committee met five times with a75% participation of its members.

The first meeting concerned trends and conditions of the oiland gas industry, as well as the key variables of the energyscenarios for Eni’s four-year strategic plan. The othermeetings concerned the analysis of worldwide energy marketprospects to 2020, to identify the main issues and challenges tobe addressed in Eni Master Plan – a key document in theplanning process defining Eni industrial strategies. Inparticular, the meetings dealt with: (i) worldwide energyconsumption trends to 2020 – discussed in two meetings– aimed at identifying fundamentals, underlying assumptionsand possible uncertainties in consumption trends in the mostimportant world areas; (ii) a survey of the supply of natural gasin the world; and (iii) a survey of the worldwide oil supply,highlighting hydrocarbons and infrastructure development trends,in relation to the industrial and market trends in the next 15years.

> 
*Board of Statutory Auditors*

The Board of Statutory Auditors, in accordance with Article149 of Legislative Decree No. 58/1998, monitors: (i) the respectof laws and of Eni’s memorandum of association; (ii) therespect of the principles of proper administration; (iii) theadequacy of the company’s organizational structure, for theparts covered by the Board’s responsibility, of its internalcontrol system and administration and accounting systems as wellas the reliability of the latter in fairly representing themanagement of the company; (iv) the adequacy of instructionsconveyed by the parent company to its subsidiaries according toArticle 114, paragraph 2 of the above mentioned decree; and (v)the actual implementation of corporate governance rules foreseenby the codes of conduct prepared by market regulators and theassociations the company belongs to, that the company publiclydeclares to respect.

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In accordance with the Eni Code, in line with the BorsaItaliana Code, the Board of Statutory Auditors monitors theindependence of the external auditing firm, verifying both thecompliance with the provisions of applicable laws and regulationsgoverning the matter, and the nature and extent of services otherthan the accounting control provided to Eni by the auditing firmand the entities belonging to its network. According to the TUF(as amended by Legislative Decree No. 303/2006), the Board ofStatutory Auditors drafts a proposal regarding the appointment ofthe external auditors and their fee to be submitted to theShareholders’ Meeting for approval.

The Board of Directors in its meeting of March 22, 2005, inaccordance with SEC Rule 10A-3(c)(3) for foreign companies listedon the New York Stock Exchange, elected the Board of StatutoryAuditors to fulfill the role of the audit committee in U.S.companies under the Sarbanes-Oxley Act and SEC rules, within thelimits set by Italian legislation from June 1, 2005. On June 15,2005, the Board of Statutory Auditors approved the regulation forcarrying out the functions attributed to the audit committeeunder U.S. laws. This regulation is published on Eni’swebsite.

The key functions performed by the Board of Statutory Auditorsacting as an audit committee as provided for by SEC rules are asfollows:

| • |   | evaluating the proposals        presented by the external auditors for their appointment        and making its recommendation to the Board of Directors        about the proposal for the appointment or the retention        of the external auditor to be submitted to the        Shareholders’ Meeting;                                                                                                                                                                                                                                                                                                            |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | performing the activities of        oversight of the work of the external auditor engaged for        the audit or performing other audit, review or attest        services;                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • |   | making recommendations to        the Board of Directors on the resolution of disagreements        between management and the auditor regarding financial        reporting;                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| • |   | approving the procedures        for: (a) the receipt, retention, and treatment of        complaints received by the Company regarding accounting,        internal accounting controls, or auditing matters; and        (b) the confidential, anonymous submission by employees        of the Company of concerns regarding questionable        accounting or auditing matters;                                                                                                                                                                                                                                             |
| • |   | approving the procedures for        the pre-approval of admissible non-audit services,        analytically identified, and examine the information on        the execution of the authorized services;                                                                                                                                                                                                                                                                                                                                                                                                                     |
| • |   | evaluating any request to        have recourse to the external auditor engaged for the        audit for admissible non audit services and expresses its        opinion to the Board of Directors;                                                                                                                                                                                                                                                                                                                                                                                                                          |
| • |   | examining the periodical        communications from the external auditor relating to: (a)        all critical accounting policies and practices to be        used; (b) all alternative treatments of financial        information within generally accepted accounting        principles that have been discussed with management        officials of the Company, ramifications of the use of        such alternative disclosures and treatments, and the        treatment preferred by the external auditor; and (c)        other material written communication between the external        auditor and the management; |
| • |   | examining complaints        received by the CEO and the CFO concerning any        significant deficiency in the design or operation of        internal controls which could adversely affect the        Company’s ability to record, process, summarize and        report financial data and any material weakness in        internal controls; and                                                                                                                                                                                                                                                                   |
| • |   | examining complaints        received by the CEO and the CFO concerning any fraud that        involves management or other employees who have a        significant role in the issuer’s internal controls.                                                                                                                                                                                                                                                                                                                                                                                                             |

The Board of Statutory Auditors is comprised of five auditorsand two alternate auditors, appointed by the Shareholders’Meeting for a three-year term.

On May 27, 2005, Eni’s Shareholders’ Meetingappointed the following statutory auditors for a three-yearperiod and however until the Shareholders’ Meeting approvingfinancial statements for fiscal year 2007: Paolo Andrea Colombo(Chairman), Filippo Duodo, Edoardo Grisolia, Riccardo Perotta andGiorgio Silva. Francesco Bilotti and Massimo Gentile arealternate auditors. A curriculum of these auditors is publishedon Eni’s website. The same Meeting also determined theyearly compensation of the Chairman of the Board of StatutoryAuditors and each Auditor amounting to euro 115,000 and euro80,000 respectively.

Paolo Andrea Colombo, Filippo Duodo, Edoardo Grisolia andFrancesco Bilotti were candidates in the list presented by theMinistry of Economy and Finance; Riccardo Perotta, Giorgio Silvaand Massimo Gentile were candidates in the list presented byinstitutional investors coordinated by Fineco Asset ManagementSpA.

Statutory Auditors are appointed in accordance with Eni’sBy-laws with a list vote; at least two auditors and onesubstitute are chosen from minority candidates. According toArticle 28.2 of Eni’s By-laws, as revised by theShareholders’ Meeting of May 25, 2006, to implement theprovision of Law No. 262 of December 28, 2005 (law on theprotection of savings), the Shareholders’ Meeting electsChairman of the Board of Statutory Auditors a member elected froma list other than the one obtaining the majority of votes. Thelists of candidates include declarations made by the candidateson the possession of independence and expertise requirementsprescribed by applicable regulation and a professional resume ofeach candidate, must be filed at the company’s headquartersat least 10 days before the date of the Shareholders’Meeting on first call and are published in national newspapers.

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In accordance with the TUF, Statutory Auditors have to possessthe specific requirements of independence and the professionaland honorability requirements as prescribed by a regulation ofthe Minister of Justice. As also reported in the Code, theStatutory Auditors shall act with autonomy and independence alsovis-à-vis the shareholders who elected them. As for professionalqualifications of the candidates, Article 28 of Eni’sBy-laws, in line with the said Decree of the Minister of Justice,foresees that the professional requirements can also be acquiredwith at least three years of professional experience or byteaching business law, business administration and finance, aswell as at least a three year experience in a managerial positionin geological or engineering businesses. Eni’s auditors areall chartered auditors.

Article 28 of Eni’s By-laws also prohibits theappointment of members of administration and control bodies inother companies within the limits set by Consob regulation. Ifsaid limits are violated, the relevant Statutory Auditor shallresign from one or more of his offices.

In its meeting of March 16, 2007, the Board of StatutoryAuditors verified that all its members comply with theindependence criteria prescribed by the rules of the Eni Codeintended to ensure the Statutory Auditors’ possession ofrequired independence after their appointment, also based on thecriteria defined by the Code for the members of the Board ofDirectors.

Statutory Auditors receive information on all issues on theagenda of the Board of Directors at the same time as theDirectors. In line with the provisions of the Eni Code, anAuditor who has an interest, either own or on behalf of thirdparties, in a certain transaction of the issuer, shall inform theBoard of Directors and the other Auditors.

In 2006, the Board met 20 times with an average participationof 88% of its members.

In 2006, Eni’s External Auditors met with Eni StatutoryAuditors in order to discuss: (i) critical accounting policiesand practices applied for the purpose of a proper representationof Eni’s results of operations and financial condition; (ii)alternative accounting treatments provided for by generallyaccepted accounting principles concerning material itemsdiscussed with management, including ramifications of the use of,the impact deriving from the application of said alternativedisclosures and treatments and relevant information, as well asthe treatments preferred by external auditors; and (iii) thecontents of any other material written communication betweenexternal auditors, and management.

For a description of the special powers of the State, see"Item 10 – Memorandum and Articles of Association– Limitations on Voting and Shareholdings – SpecialPowers of the State" below.

 

> 
***Significant Differences in Corporate Governance    Practices as per Section 303A.11 of the New York Stock    Exchange Listed Company Manual***

*Corporate governance* As discussed above, Eni’sorganizational structure follows the traditional Italian model ofcompanies which provides for two main separate corporate bodies,the Board of Directors and the Board of Statutory Auditors towhom management and monitoring duties are respectively entrusted.

This model differs from the U.S. unitary model which providesfor the Board of Directors as the sole corporate body responsiblefor management and for audit committee established within thesame Board for monitoring.

Below is a description of the most significant differencesbetween corporate governance practices followed by U.S. domesticcompanies under the NYSE standards and those followed by Eni.

INDEPENDENT DIRECTORS*NYSE standards*Under NYSE standards listed U.S.companies’ Boards must have a majority of independentdirectors. A director qualifies as independent when the Boardaffirmatively determines that such director does not have amaterial relationship with the listed company (and itssubsidiaries), either directly, or indirectly. In particular, adirector may not be deemed independent if he/she or an immediatefamily member has a certain specific relationship with theissuer, its auditors or companies that have material businessrelationships with the issuer (e.g. he/she is an employee of theissuer or a partner of the auditor). In addition, a directorcannot be considered independent in the three-year"cooling-off" period following the termination of anyrelationship that compromised a director’s independence.

*Eni standards* In Italy, the Borsa Italiana Coderecommends that the Board of Directors includes an adequatenumber of independent non-executive directors in the sense thatthey do not maintain, nor have recently maintained, directly orindirectly, any business relationships with the issuer or personslinked to the issuer, of such a significance as to influencetheir autonomous judgement.

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The directors’ independence shall be periodicallyassessed by the Board of Directors.

The results of the assessments of the Board shall becommunicated to the market.

The Board of Directors shall evaluate the independence of itsnon-executive members having regard more to the contents than tothe form and keeping in mind that a director usually does notappear independent in the following events, to be consideredmerely as an example and not limited to:

| a) |   | if he/she controls, directly        or indirectly, the issuer also through subsidiaries,        trustees or through a third party, or is able to exercise        over the issuer dominant influence, or participates in a        shareholders’ agreement through which one or more        persons may exercise a control or considerable influence        over the issuer;                                                         |
|----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | if he/she is, or has been in        the preceding three fiscal years, a relevant        representative of the issuer, of a subsidiary having        strategic relevance or of a company under common control        with the issuer, or of a company or entity controlling        the issuer or able to exercise over the same a        considerable influence, also jointly with others through        a shareholders’ agreement; |
| c) |   | if he/she has, or had in the        preceding fiscal year, directly or indirectly (e.g.        through subsidiaries or companies of which he/she is a        significant representative, or in the capacity of partner        of a professional firm or of a consulting company) a        significant commercial, financial or professional        relationship:                                                                        |

|   |   | - |   | with the issuer, one of its        subsidiaries, or any of its significant representatives;                                                                                                                                        |
|--------|--------|---|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | - |   | with a subject who, jointly        with others through a shareholders’ agreement,        controls the issuer, or – in case of a company or an        entity – with the relevant significant        representatives; |
|   |   | - |   | or is, or has been in the        preceding three fiscal years, an employee of the        above-mentioned subjects;                                                                                                                 |

| d) |   | if he/she receives, or has        received in the preceding three fiscal years, from the        issuer or a subsidiary or holding company of the issuer,        a significant additional remuneration compared to the        "fixed" remuneration of non-executive director        of the issuer, including the participation in incentive        plans linked to the company’s performance, including        stock option plans; |
|----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| e) |   | if he/she was a director of        the issuer for more than nine years in the last twelve        years;                                                                                                                                                                                                                                                                                                                                          |
| f) |   | if he/she is vested with the        office of executive director in another company in which        an executive director of the issuer holds the office of        director;                                                                                                                                                                                                                                                                     |
| g) |   | if he/she is shareholder or        quotaholder or director of a legal entity belonging to        the same network as the company appointed for the        accounting audit of the issuer; and                                                                                                                                                                                                                                                    |
| h) |   | if he/she is a close        relative of a person who is in any of the positions        listed in the above paragraphs.                                                                                                                                                                                                                                                                                                                           |

The Eni Code foresees further independence requirements, inline with the ones provided by the Borsa Italiana Code. In itsmeeting of February 22, 2007, Eni’s Board of Directorsjudged that six out of eight of its non-executive members complywith the independence standards, set by the Eni Code.Non-executive Director Marco Pinto is an employee of the Ministryof Economy and Finance.

MEETINGS OF NON EXECUTIVE DIRECTORS*NYSE standards*Non-executive directors, including thosewho are not independent, must meet at regularly scheduledexecutive sessions without management. In addition, if the groupof non-executive directors includes directors who are notindependent, independent directors should meet separately atleast once a year.

*Eni standards*Neither Eni’s non-executiveDirectors nor Eni’s independent Directors must meetseparately, under the Code’s corporate governance rules.

AUDIT COMMITTEE*NYSE standards*Listed U.S. companies must have an auditcommittee that satisfies the requirements of Rule 10A-3 under theSecurities Exchange Act of 1934 and that complies with thefurther provisions of the Sarbanes-Oxley Act and of Section303A.07 of the NYSE Listed Company Manual.

*Eni standards* In its meeting of March 22, 2005,Eni’s Board of Directors, making use of the exemptionprovided by Rule 10A-3 for non-U.S. private issuers, hasidentified the Board of Statutory Auditors as the body that,starting from June 1, 2005, is performing the functions requiredby the SEC rules and the Sarbanes-Oxley Act to be performed bythe audit committees of non-U.S. companies listed on the NYSE(see paragraph "Board of Statutory Auditors" earlier).Under Section 303A.07 of the NYSE listed Company Manual auditcommittees of U.S. companies have further functions andresponsibilities which are not mandatory for non-U.S. privateissuers and which therefore are not included in the list offunctions shown in the paragraph referenced above.

NOMINATING/CORPORATE GOVERNANCE COMMITTEE*NYSE standards*U.S. listed companies must have anominating/corporate governance committee (or equivalent body)composed entirely of independent directors that are entrusted,among others, with the responsibility to identify individualsqualified to become board members and to select or recommenddirector nominees for submission to the Shareholders’Meeting, as well as to develop and recommend to the Board ofDirectors a set of corporate governance guidelines.

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*Eni standards* This provision is not applicable tonon-U.S. private issuers. The Code allows listed companies tohave within the Board of Directors a committee fordirectors’ nominees proposals, above all when the Board ofDirectors detects difficulties in the shareholders’submission of nominees proposals, as could happen in publiclyowned companies. Eni has not set up a nominating committee,considering the nature of its shareholding as well as thecircumstance that, under Eni’s By-laws, directors areappointed by the Shareholders’ Meeting based on listspresented by shareholders or by the Board of Directors.

 

**Compensation**

Board members’ emoluments are determined by theShareholders’ Meeting, while the emoluments of the Chairmanand CEO, in relation to the powers entrusted to them, aredetermined by the Board of Directors, and based on proposals ofthe Compensation Committee and after consultation with the Boardof Statutory Auditors.

Main elements of the compensation of the Chairman, the CEO,other Board members and of Eni’s three General Managers areoutlined as follows.

CHAIRMANThe compensation of the Chairman of the Board of Directors hasbeen resolved by Eni’s Shareholders’ Meeting on May 27,2005 and it includes:

| a) |   | a fixed salary of euro        265,000 and reimbursement of out of pocket expenses; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | a variable emolument which        amount is determined in accordance with the performance        of Eni shares in the reference year as compared with the        performance of the seven largest international oil        companies for market capitalization, taking account of        the dividend paid. This emolument amounts to euro 80,000        or euro 40,000, depending on whether the performance of        Eni shares is rated first or second, or third or fourth        in the reference year, respectively. No bonus is paid in        case Eni scores a position lower than the fourth one. In        2006 Eni rated third and it was paid an emolument of euro        40,000. |

With respect to the powers delegated to the Chairman, theBoard of Directors determined further compensation, as follows:

| a) |   | a yearly fixed salary of        euro 500,000; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | a yearly performance bonus        based on the achievements of specific company’s        objectives determined in the same way as for the CEO (see        below). In 2006, based on 2005 Eni’s results, a        variable amount equal to 125% of the target level was        determined, within an interval ranging from 85% to 130%        of said target level. The target level of such variable        amount is 60% of the fixed amount under a) above and the        2006 bonus paid was euro 375,000. |

Compensation of the Chairman also includes an insuranceagainst death or permanent inability caused by injury or sicknessin the exercise of his duties or under certain othercircumstances as stipulated collectively for all managers ofItalian companies producing goods and services. In particular, aspecific insurance policy has been underwritten which guaranteeseuro 500,000 to survivors with an annual charge for Eni of euro15,000.

CEOCompensation for the CEO has been resolved by the Board ofDirectors of Eni in connection with his position both as CEO andas General Manager of the parent company Eni SpA. He wasappointed to both positions on June 1, 2005.

As General Manager of Eni SpA, his terms of employment areregulated by the "Contratto collettivo nazionale di lavoroper i dirigenti di aziende produttrici di beni e servizi"(the Italian national collective contract for managers ofmanufacturing companies), as well as by any internal agreementstipulated by the representatives of managers and Eni SpA. He maybe appointed as board member of Eni’s subsidiaries andaffiliates; compensation as provided for by Article No. 2389 ofthe Italian Civil Code deriving from such appointments is to berepaid to Eni as it is included in his remuneration under sectiona) below.

Compensation includes the following items:

| a) |   | a yearly fixed amount of        euro 1,430,000, including a salary of euro 1,000,000 for        the services as General Manager and an emolument of euro        430,000 for the services as CEO;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | a yearly performance bonus        based on the achievement of specific company objectives.        This bonus is determined based on the achievement of        Eni’s target as approved by the Board of Directors        on proposal of the Compensation Committee and defined        consistently with the targets of the strategic plan and        yearly budget. In 2005 said targets include a set level        of cash flow from operations (with a 40% weight),        profitability (30%) and divisional operating performance        (30%). Results achieved have been assessed assuming a        constant trading environment and have been verified by        the Compensation Committee and approved by the Board of        Directors. The maximum of such amount is 100% of the        fixed amount under a) above. In 2006 the bonus of        euro 834,000 was determined on the actual period of        office from June 1, 2005; |

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| c) |   | a long-term incentive plan        under a new incentive scheme as approved in March 2006,        by the Board of Directors as proposed by the Compensation        Committee. This new scheme provides for: (i) a deferred        monetary bonus, linked to the achievement of certain        Company's financial performance annual targets, replacing        a previous stock grant plan; and (ii) a stock option plan        focused on the achievement of certain targets in terms of        performance of the Eni share (see below for a description        of Eni’s long-term incentive schemes). Under this        plan the CEO receives: |
|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | i)  |   | a yearly assignment of a        deferred monetary bonus in the period 2006-2008, at        target level of 55% of the fixed amount under a) above.        In 2006 the basic deferred bonus that will be paid after        three years in connection with Eni EBITDA annual results        was euro 786,500; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ii) |   | a yearly assignment of stock        options in the period 2005-2007 for a face value        corresponding to 11 times the fixed amounts under section        a) above. In 2006, a total of 681,000 options were        assigned with a vesting period of three years and an        exercise price of euro 23.1 corresponding to the        arithmetic average of official prices registered on the        Mercato Telematico Azionario in the month preceding        award. The 2006 assignment also includes a deferred bonus        linked to the market performance of Eni shares and        corresponding to 96,000 options with a strike price of        euro 23.1 and a vesting period of three years; this bonus        was determined by the Board of Director on proposal of        the Compensation Committee in order to maintain the        incentive level established in 2005; |

| d) |   | severance payment as        regulated by Italian laws, which consists in yearly        accruals to the reserve for employee benefits that will        be paid by the company to the employee when employment        ceases. Each annual accrual corresponds to the yearly        remuneration received as General Manager (fixed and        variable amounts and stock grants assigned) divided by        13.5. These amounts are revaluated yearly at a fixed rate        of 1.5% plus the 75% of the yearly official consumer        price index increase;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| e) |   | as an integration to the        severance payment described above, should the employment        contract of Mr. Scaroni as General Manager of Eni SpA be        terminated upon expiry of the term of his office as CEO        or upon earlier termination of such office, he will be        entitled to receive a lump sum of euro 7 million, which        is also intended as waiver to any obligation related to        advance notice of termination. This integration will not        be paid if the termination of office meets the        requirement of due cause as per Article No. 2119 of the        Italian Civil Code, in case of death and in case of        resignation from office other than as the result of a        reduction in the powers currently attributed to the CEO.        Upon termination of employment Eni will also pay an        amount corresponding to the social security payments and        severance payment accruals as applied to the fixed amount        and to 50% of the variable part of the compensation        received as CEO. To this end Eni accrues a yearly        provision of euro 204,737.93;                          |
| f) |   | competition clause: the CEO        agrees not to be engaged, on his own account and        directly, in any business that may be in competition with        the businesses of Eni, as per its By-laws, in Italy,        Europe and North America for a year after termination of        office. In consideration for this agreement, Eni will pay        a fee corresponding to the yearly fixed amounts under a)        section above. As a consequence of any breach of this        clause, the CEO would loose the right to such fee or        should reimburse any amount already paid, and shall pay        to Eni damages in an amount agreed among the parties to        correspond to twice such non-competition fee;                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| g) |   | the pension scheme        corresponds to the scheme applied to Eni managers and        provided by INPS (the Italian state social security        entity) to all Italian workers. In addition, the CEO is        included in an additional pension scheme under the form        of an Eni Group pension fund agreed collectively by Eni        and Eni managers which provides an integration, in the        form of a lump sum payment or a perpetuity, to the        pension paid by the State. This integration is        proportional to contributions to the fund made by both        the manager and the Company in equal amounts. The        integration is assigned to the manager when eligible for        the payment of the pension from the State, provided that        a minimum time period has elapsed according to the Fund        by-laws. An agreement signed on March 20, 2006,        established that the Company’s and the        manager’s payment to this Fund amounts to 3.5% of        the total salary of the CEO as General Manager (i.e. the        aggregate of the fixed and variable amount up to a        maximum of euro 200,000); |
| h) |   | like all other Eni managers,        Mr. Scaroni is entitled to participate in a health        insurance fund financed by Eni managers and Eni which        provides reimbursement of certain medical expenses on the        basis of rules and parameters as provided for by the        Fund’s by-laws; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| i) |   | insurance against death or        permanent inability caused by injury or disease in the        exercise of his duties or under certain other        circumstances as stipulated collectively for all managers        of Italian manufacturing companies. In particular a        specific insurance policy has been underwritten on behalf        of Mr. Scaroni which guarantees euro 7.5 million to        survivors in case of death, however determined, with an        annual charge for Eni of euro 62,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

MEMBERS OF THE BOARD OF DIRECTORSThe compensation of members of the Board of Directors has beendetermined by Eni’s Shareholders’ Meeting of May 27,2005 and includes:

| a) |   | a fixed emolument of euro        115,000 and reimbursement of out of pocket expenses; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | a variable emolument        determined in accordance with the performance of Eni        shares in the reference year as compared with the        performance of the seven largest international oil        companies for market capitalization, taking account of        the dividend paid. Said emolument amounts euro 20,000 or        euro 10,000 depending on whether the performance of Eni        shares is rated first or second, or third or fourth in        the reference year, respectively. In 2006 Eni rated third        and it was paid an emolument of euro 10,000. |

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The Board of Directors in the meeting of July 27, 2006, asproposed by the Compensation Committee and advised by the Boardof Statutory Auditors, determined an additional element ofremuneration for the Board members holding positions inBoard’s committees, with the exclusion of the Chairman andCEO. Said fee amounts to euro 30,000, and euro 20,000 for theposition of chairman of a committee and of member of a committee,respectively. This amount decreases to euro 27,000 and euro18,000 in case a member holds positions in more than onecommittee.

GENERAL MANAGERSThe terms of employment of the General Managers of Eni’sDivisions are regulated by the "Contratto collettivonazionale di lavoro per i dirigenti di aziende produttrici dibeni e servizi" (the Italian national collective contractfor managers of companies producing goods and services), as wellas by any internal agreement stipulated by the representatives ofmanagers and Eni SpA. The General Managers of Divisions may beappointed as members of the Board of Directors of Enisubsidiaries and affiliates; compensation deriving from suchappointments as provided for by Article No. 2389 of the ItalianCivil Code is to be repaid to Eni as it is included in theirremuneration under section a) below.

Their remuneration includes:

| a) |   | a base salary, defined        considering the position held and their specific        responsibilities, taking into account the compensation        level adopted by domestic and worldwide companies (in oil        and gas, industrial and service sectors) and aligning it        on a yearly base considering individual performance and        career progression;                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | a performance bonus paid        yearly, based on the achievement of specific financial,        operational and strategic targets and of individual        performance goals pertaining to each business. The        variable part paid in 2006 was determined based on the        achievement of each business area’s targets for 2005        and defined consistently with the targets of the        strategic plan and yearly budget. The target level of        such variable amount is 60% of the base salary;                                                                                                                                                                                                                                                                                     |
| c) |   | a long-term incentive plan        under a new incentive scheme as approved in March 2006,        by the Board of Directors as proposed by the Compensation        Committee. This new scheme applies to the 2006-2008        three-year period and provides for: (i) a deferred        monetary bonus, linked to the achievement of certain        business growth and operating efficiency goals and        certain Company's financial performance annual targets,        replacing a previous stock grant plan; and (ii) a stock        option incentive focused on the achievement of certain        targets in terms of performance of the Eni share (see        below for a description of Eni’s long-term incentive        schemes). Under this plan the three General Managers        receive: |

|   |   | i)  |   | a yearly assignment of a        deferred monetary bonus at target level of 40% of the        base salary. In 2006, based on 2005 Eni results, the        basic deferred bonus awarded was equal to 130% of the        target level, within an interval ranging from 70% to        130%; and                                                                                             |
|--------|--------|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | ii) |   | a yearly assignment of stock        options for a face value corresponding to 4.5 times the        base salary. Options assigned in 2006 had a vesting        period of three years and an exercise price of euro 23.1        corresponding to the arithmetic average of official        prices registered on the Mercato Telematico Azionario in        the month preceding the award; |

| d) |   | severance payment as        regulated by Italian laws, which consists in yearly        accruals to the reserve for employee benefit that will be        paid by the company to the employee when employment        ceases. Each annual accrual corresponds to the yearly        remuneration received as general manager divided by 13.5.        These amounts are revaluated yearly at the rate of 1.5%        plus the 75% of the official yearly consumer price index        increase; |
|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| e) |   | the pension scheme        corresponds to the scheme applied to Eni managers and        provided by INPS to all Italian workers. In addition, the        General Managers are included in the additional pension        scheme of Eni managers which provides an integration to        the public pension. For further details see section g) of        the description of compensation of the CEO;                                                                                        |
| f) |   | like all other Eni managers,        they are entitled to participate in a health insurance        Fund financed by Eni managers and Eni which provides        reimbursement of certain medical expenses on the basis of        rules and parameters as provided for by the Fund’s        by-laws. For further details see section h) of the        description of compensation of the CEO; and                                                                                       |
| g) |   | insurance against death or        permanent inability caused by injury or disease in the        exercise of his duties or under certain other        circumstances as stipulated collectively for all managers        of Italian manufacturing companies.                                                                                                                                                                                                                                 |

With the exception of the CEO as described above, none of theDirectors of Eni has service contracts with the company or any ofits subsidiaries providing for benefits upon termination ofemployment.

Remuneration earned for 2006 by members of the Board ofDirectors, including the CEO and the Chairman, the three GeneralManagers and Eni’s senior managers attending on a permanentbasis the meetings of the Steering Committee of Eni (totalamount) is reported in the table below. Emoluments earned by theStatutory Auditors of Eni are also included.

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Follows a description of each column of the following table:

| • |   | "Emoluments for service        at Eni SpA" comprise fixed fees to non-executive and        executive Directors for their office as Board member, and        the Statutory Auditors, the amount of which is set by        shareholders. Fixed fees to the Chairman and the CEO for        the powers delegated to them by the Board are also        reported, the amount of which is set by the Board of        Directors, based on proposals of the Compensation        Committee and after consultation with the Board of        Statutory Auditors. Furthermore, fixed fees to Directors        attending the Committees formed by the Board of Directors        are included within this column;                                                                                                                                            |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | "Non cash        benefits" comprise amounts referring to all fringe        benefits, including insurance policies;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| • |   | "Bonuses and other        incentives" comprise: (i) the performance bonus        awarded in the year to Directors and the Chairman based        on the share performance of Eni; (ii) the performance        bonus awarded in the year to both the Chairman and the        CEO in connection with the power delegated to them by the        Board, based on the achievement of specific company        objectives; and (iii) the performance bonus awarded in        the year to the CEO, in his quality as General Managers        of the parent company, the three General Managers of        Eni’s divisions and Eni’s senior managers based        on the achievement of specific financial, operational and        strategic targets and of individual performance goals        pertaining to each business or functional unit; |
| • |   | "Salaries and other        elements" report base salaries paid to the CEO, the        General Mangers of Eni’s divisions and senior        managers, and indemnities paid upon termination of the        employment contract. Referring to the Statutory Auditors,        fees paid for positions held on the Board of Statutory        Auditors in Eni’s subsidiaries are also reported.                                                                                                                                                                                                                                                                                                                                                                                                                                            |

   

| **Name** |   | **Position** |   | **Term of office** |   | **Expiry date of the position**(1) |   | **Emoluments for service at Eni SpA** |   | **Non-cash benefits** |   | **Bonus and other incentives**(2) |   | **Salaries and other elements** |   | **Total** |
|----------|--------|--------------|--------|--------------------|--------|------------------------------------|--------|---------------------------------------|--------|-----------------------|--------|-----------------------------------|--------|---------------------------------|--------|-----------|
|          |   |              |   |                    |   |                                    |   |                                       |   |                       |   |                                   |   |                                 |   |           |

|   |   | **(euro thousand)** |
|--------|--------|---------------------|
|   |   |                     |

| **Board of Directors**          |   |         |   |        |   |     |   |   |   |   |   |   |      |   |   |      |   |   |
|---------------------------------|--------|--------------|--------|-------------|--------|----------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|-----------|--------|--------|
| Roberto        Poli             |   | Chairman     |   | 01.01-12.31 |   | 05.30.08 |   | 765    |   | 15     |   | 415    |      |   |   |      |   | 1,195  |
| Paolo Scaroni                   |   | CEO          |   | 01.01-12.31 |   | 05.30.08 |   | 430    |   | 62     |   | 834    |  (3) |   | 1,014  |      |   | 2,340  |
| Alberto        Clô         |   | Director     |   | 01.01-12.31 |   | 05.30.08 |   | 134    |   |   |   | 10     |      |   |   |      |   | 144    |
| Renzo Costi                     |   | Director     |   | 01.01-12.31 |   | 05.30.08 |   | 130    |   |   |   | 10     |      |   |   |      |   | 140    |
| Dario        Fruscio            |   | Director     |   | 01.01-12.31 |   | 05.30.08 |   | 124    |   |   |   | 10     |      |   |   |      |   | 134    |
| Marco Pinto                     |   | Director     |   | 01.01-12.31 |   | 05.30.08 |   | 130    |   |   |   | 10     |      |   |   |      |   | 140    |
| Mario        Resca              |   | Director     |   | 01.01-12.31 |   | 05.30.08 |   | 128    |   |   |   | 10     |      |   |   |      |   | 138    |
| Marco Reboa                     |   | Director     |   | 01.01-12.31 |   | 05.30.08 |   | 134    |   |   |   | 10     |      |   |   |      |   | 144    |
| Pierluigi        Scibetta       |   | Director     |   | 01.01-12.31 |   | 05.30.08 |   | 130    |   |   |   | 10     |      |   |   |      |   | 140    |
| **Board of Statutory Auditors** |   |         |   |        |   |     |   |   |   |   |   |   |      |   |   |      |   |   |
| Paolo        Andrea Colombo     |   | Chairman     |   | 01.01-12.31 |   | 05.30.08 |   | 115    |   |   |   |   |      |   | 89     |  (4) |   | 204    |
| Filippo Duodo                   |   | Auditor      |   | 01.01-12.31 |   | 05.30.08 |   | 80     |   |   |   |   |      |   | 55     |  (5) |   | 135    |
| Edoardo        Grisolia (6)     |   | Auditor      |   | 01.01-12.31 |   | 05.30.08 |   | 80     |   |   |   |   |      |   |   |      |   | 80     |
| Riccardo Perotta                |   | Auditor      |   | 01.01-12.31 |   | 05.30.08 |   | 80     |   |   |   |   |      |   | 63     |  (7) |   | 143    |
| Giorgio        Silva            |   | Auditor      |   | 01.01-12.31 |   | 05.30.08 |   | 80     |   |   |   |   |      |   | 44     |  (8) |   | 124    |
| **General Managers**            |   |         |   |        |   |     |   |   |   |   |   |   |      |   |   |      |   |   |
| Stefano        Cao              |   | E&P Div. |   | 01.01-12.31 |   |     |   |   |   |   |   | 643    |      |   | 966    |      |   | 1,609  |
| Domenico Dispenza               |   | G&P Div. |   | 01.01-12.31 |   |     |   |   |   |   |   | 386    |      |   | 669    |      |   | 1,055  |
| Angelo        Taraborrelli      |   | R&M Div. |   | 01.01-12.31 |   |     |   |   |   |   |   | 400    |      |   | 645    |      |   | 1,045  |

|   |   |   |   |   |   |   |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--------|--------|--------|--------|--------|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |   |   |   |   |   |   | **2,540** |   | **77** |   | **2,748** |   |   | **3,545** |   |   | **8,910** |
|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|

|   |   |   |   |   |   |   |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--------|--------|--------|--------|--------|--------|--|--------|--|--------|--|--------|--|--------|--|

| **Senior managers**(9) |   |   |   |   |   |   |   |   |   |   |   | **1,932** |   |   | **7,846** |  (10) |   | **9,778** |
|------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|-----------|------------|--------|-----------|

|   |   |   |   |   |   |   |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--------|--------|--------|--------|--------|--------|--|--------|--|--------|--|--------|--|--------|--|

----

| (1)  |   | The term of        position ends with the Meeting approving financial        statements for the year ending December 31, 2007.                                              |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  |   | Based on        performance achieved in 2005.                                                                                                                               |
| (3)  |   | Amount        accrued related to the period of duration of the task        from June 1 to December 31, 2005.                                                                |
| (4)  |   | Includes the        compensation obtained as Chairman of the Board of        Statutory Auditors of Saipem and EniServizi.                                                   |
| (5)  |   | Includes the        compensation obtained as Statutory Auditor in        Snamprogetti SpA, Chairman of the Board of Statutory        Auditors of CEPAV Uno and CEPAV Due.   |
| (6)  |   | Compensation        for the service is paid to the Ministry of Economy and        Finance.                                                                                  |
| (7)  |   | Includes the        compensation obtained as Chairman of the Board of        Statutory Auditors of Snam Rete Gas and as Statutory        Auditor in Enifin SpA.             |
| (8)  |   | Includes the        compensation obtained as Statutory Auditor in        Snamprogetti SpA and as Chairman of the Board of        Statutory Auditors of TSKJ Italia Srl.     |
| (9)  |   | Managers, who        during the year with the CEO and the General Managers of        Eni divisions, have been member of the Eni Directors        Committee (nine managers). |
| (10) |   | Also includes        indemnities paid upon termination of employment contract.                                                                                              |

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For the year ended December 31, 2006, the overall compensationof persons responsible of key positions in planning, directionand control functions of Eni Group companies, including executiveand non-executive directors, General Managers and Eni’ssenior managers amounted to euro 23 million for 2006. Thebreak-down is as follows:

|   | **2006**           |
|--------|--------------------|
|   |                    |
|   | **(million euro)** |

| Fees and salaries                      |   | 16     |
|----------------------------------------|--------|--------|
| Post        employment benefits        |   | 1      |
| Other long-term benefits               |   | 3      |
| Fair value        stock grants/options |   | 3      |
|                                   |   | **23** |

|   |  |
|--------|--|

The above amounts include salaries, fees for attendingmeetings, lump-sum amounts paid in lieu of expensereimbursements, stock options, stock grants and other deferredincentive bonuses, health and pension contributions and amountsaccrued to the reserve for employee termination indemnities,which is used to pay severance pay as required by Italian law toemployees upon termination of employment. The members of theBoard of Directors in their capacity as such are not entitled toreceive such severance pay. At December 31, 2006, the totalamount accrued to the reserve for employee terminationindemnities with respect to members of the Board of Directors whowere also employees of Eni, with respect to three generalmanagers and with respect to Eni’s senior managers was euro2,534 thousand. The break-down of this amount is presented in thetable below:

|     |                     |
|----------|---------------------|
| **Name** | **(thousand euro)** |

| Paolo Scaroni              |   | CEO and General Manager of Eni                 |   | 150   |
|----------------------------|--------|------------------------------------------------|--------|-------|
| Stefano        Cao         |   | General        Manager of the E&P Division |   | 618   |
| Domenico Dispenza          |   | General Manager of the G&P Division        |   | 386   |
| Angelo        Taraborrelli |   | General        Manager of the R&M Division |   | 372   |
| Senior Managers (1)        |   |                                           |   | 1,008 |

|   |  |
|--------|--|

----

| (1) |   | No. 7        managers. |
|-----|--------|------------------------|

 

> 
***Long-term Incentive Schemes***

In March 2006, the Board of Directors approved a new long-termincentive scheme for the managers of Eni and its subsidiaries(excluding listed subsidiaries), as proposed by the CompensationCommittee. This new scheme is intended to motivate moreeffectively and retain managers, linking incentives to targetsand performance achieved in a tighter way than previousincentives schemes. This new incentive scheme applies to the2006-2008 three year period and is composed of a deferred bonus,linked to the achievement of certain business growth andoperating efficiency goals, and stock option awards based on theachievement of certain targets of total shareholder return. Thisscheme has a structure intended to balance monetary andstock-based components of the remuneration, as well as to linkeconomic and operating performance to share performance in thelong-term.

> 
*Deferred bonus*

This leg of the long-term incentive scheme envisages a basicbonus paid after three years according to a variable amount equalto a percentage ranging from 0 to 170% of the amount establishedfor the target performance in relation to the performancesachieved in a three-year period as approved by the Board ofDirectors. Performances are measured in terms of achievement ofcertain Company's financial performance targets preset for the2006-2008 period, as assessed by comparing actual results withset targets under a constant trading environment for each year.

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The following table sets out the basic bonus awarded in theyear 2006 to the CEO and to the General Managers of Eni’sDivisions, and the total amount awarded to Eni’s seniormanagers.

| **Name** | **Deferred bonus awarded** |
|----------|----------------------------|
|     |                            |
|     | **(thousand euro)**        |

| Paolo Scaroni              |   | CEO and General Manager of Eni                 |   | 787   |
|----------------------------|--------|------------------------------------------------|--------|-------|
| Stefano        Cao         |   | General        Manager of the E&P Division |   | 468   |
| Domenico Dispenza          |   | General Manager of the G&P Division        |   | 328   |
| Angelo        Taraborrelli |   | General        Manager of the R&M Division |   | 307   |
| Senior managers (1)        |   |                                           |   | 1,293 |

|   |  |
|--------|--|

----

| (1) |   | No. 6        managers. |
|-----|--------|------------------------|

 

> 
***Stock Options***

Eni offers managers of Eni SpA and its subsidiaries as definedin the Article 2359 of the Civil Code holding positions ofsignificant responsibility in the achievement of profitability orstrategic targets, the opportunity to acquire a shareholding inthe company as an element of remuneration through the award ofoptions for purchasing Eni treasury shares.

On May 25, 2006, the Sharehoders’ Meeting approved the2006-2008 stock option plan and authorized the Board of Directorsto make available a maximum amount of 30 million treasury shares(equal to 0.749% of the share capital) for this stock optionplan. This stock option plan foresees three annual awards. Unlikeprevious schemes, the 2006-2008 stock option plan introduced aperformance condition upon which options can be exercised. At theend of each vesting period with a three-year duration, the Boardof Directors determines the number of exercisable options, in apercentage ranging from 0% to 100% of the total amount awardedfor each year of the plan, depending on the performance of Enishares as compared to that achieved by a panel of majorinternational oil companies in terms of capitalization. On July27, 2006, the Board of Directors approved: (i) the awardpertaining to 2006 within the three-year period covered by theplan; (ii) its regulation; and (iii) the criteria to be followedin the identification of managers eligible to options award. TheBoard of Directors delegated to the CEO the task to identifyeligible managers by the end of each year covered by the plan.Under this plan, 7,050,000 options were awarded pertaining to2006 with a strike price of euro 23.119. Stock option plansprovide the grantees the right to purchase treasury shares in a 1to 1 ratio after three years from the award, with a strike pricecalculated as the arithmetic average of official pricesregistered on the Mercato Telematico Azionario in the monthpreceding award or, if greater, as the average carrying cost oftreasury shares held by Eni as of the date preceding the award.

At December 31, 2006, a total of 15,290,400 options wereoutstanding for the purchase of an equal amount of ordinary Enishares nominal value euro 1, carrying an average strike price ofeuro 21.022.

The weighted-average remaining contractual life of optionsoutstanding at December 31, 2003, 2004, 2005 and 2006 was 4.6years, 5.6 years, 6.6 years and 5.6 years, respectively.

The following is a summary of stock option activity for theyears 2005 and 2006:

|   | **2005** |   | **2006** |
|--------|----------|--------|----------|
|   |          |   |          |

|   | **Number of shares** |   | **Weighted average        exercise price         (euro)** |   | **Market price**        (a)**(euro)** |   | **Number of shares** |   | **Weighted average        exercise price        (euro)** |   | **Market price**        (a)**(euro)** |
|--------|----------------------|--------|-----------------------------------------------------------|--------|---------------------------------------|--------|----------------------|--------|----------------------------------------------------------|--------|---------------------------------------|
|   |                      |   |                                                           |   |                                       |   |                      |   |                                                          |   |                                       |

| **Options as of January 1**                    |   | **11,789,000** |   |   | **15.111** |   |   | **18.461** |   |   | **13,379,600** |   |   | **17.705** |   |   | **23.460** |   |
|------------------------------------------------|--------|----------------|--------|--------|------------|--------|--------|------------|--------|--------|----------------|--------|--------|------------|--------|--------|------------|--------|
| New        options granted                     |   | 4,818,500      |   |   | 22.512     |   |   | 22.512     |   |   | 7,050,000      |   |   | 23.119     |   |   | 23.119     |   |
| Options exercised in the period                |   | (3,106,400     | )      |   | 15.364     |   |   | 22.485     |   |   | (4,943,200     | )      |   | 15.111     |   |   | 23.511     |   |
| Options        cancelled in the period         |   | (121,500       | )      |   | 16.530     |   |   | 23.100     |   |   | (196,000       | )      |   | 19.119     |   |   | 23.797     |   |
| **Options outstanding as of December 31**      |   | **13,379,600** |   |   | **17.705** |   |   | **23.460** |   |   | **15,290,400** |   |   | **21.022** |   |   | **25.520** |   |
| **of        which exercisable at December 31** |   | **1,540,600**  |   |   | **16.104** |   |   | **23.460** |   |   | **1,622,900**  |   |   | **16.190** |   |   | **25.520** |   |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

----

| (a) |   | Market price        relating to new rights assigned, 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 assignment; (ii) the        date of the recording in the securities account of the        managers to whom the options have been assigned; and        (iii) the date of the unilateral termination of        employment for rights canceled). Market price of shares        referring to options as of the beginning and the end of        the year, is the price recorded at December 31. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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The fair value of stock options granted during the years endedDecember 31, 2003, 2004, 2005 and 2006 of euro 1.50, euro 2.01,euro 3.33 and euro 2.89, respectively, was calculated applyingthe Black-Scholes method and using the following assumptions:

|   |   |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |   |   |          |   |          |   |          |   |          |

| Risk-free interest rate   |   | (%)    |   | 3.16 |   | 3.21 |   | 2.51 |   | 4.00 |
|---------------------------|--------|--------|--------|------|--------|------|--------|------|--------|------|
| Expected        life      |   | (year) |   | 8    |   | 8    |   | 8    |   | 6    |
| Expected volatility       |   | (%)    |   | 22.0 |   | 19.0 |   | 21.0 |   | 16.8 |
| Expected        dividends |   | (%)    |   | 5.35 |   | 4.5  |   | 3.98 |   | 5.26 |

|   |   |   |  |   |  |   |  |   |  |
|--------|--------|--------|--|--------|--|--------|--|--------|--|

The following table presents the amount of stock optionsawarded to Eni’s CEO, the three General Managers andEni’s senior managers attending on a permanent basis themeetings of the Eni steering committee.

|   | **CEO and General Manager        of** **Eni** |   | **General Manager        E&P Division** |   | **General Manager        G&P Division** |   | **General Manager R&M        Division** |   | **Senior managers**(1) |
|--------|----------------------------------------------------|--------|---------------------------------------------|--------|---------------------------------------------|--------|---------------------------------------------|--------|------------------------|
|   |                                                    |   |                                             |   |                                             |   |                                             |   |                        |
|   | Paolo Scaroni                                      |   | Stefano Cao                                 |   | Domenico Dispenza (2)                       |   | Angelo Taraborrelli                         |   |                   |
|   |                                                    |   |                                             |   |                                             |   |                                             |   |                        |

| Options outstanding at the beginning of the        period: |   |   |   |      |      |    |   |    |    |      |    |   |    |
|------------------------------------------------------------|--------|--------|--------|-----------|-----------|---------|--------|---------|---------|-----------|---------|--------|---------|
| - number        of options                                 |   |   |   | 699,000   |      | 201,500 |   | 43,000  | 269,500 |  (3) | 123,000 |   | 686,500 |
| - average exercise price                                   |   | (euro) |   | 22.509    |      | 17.920  |   | 14.171  | 3.988   |      | 18.308  |   | 18.208  |
| - average        maturity in months                        |   |   |   | 91        |      | 82      |   | 64      | 85      |      | 83      |   | 79      |
| Options granted during the period:                         |   |   |   |      |      |    |   |    |    |      |    |   |    |
| - number        of options                                 |   |   |   | 681,000   |  (4) | 175,500 |   | 122,500 | -       |      | 115,000 |   | 552,500 |
| - average exercise price                                   |   | (euro) |   | 23.100    |      | 23.100  |   | 23.100  | -       |      | 23.100  |   | 23.100  |
| - average        maturity in months                        |   |   |   | 72        |      | 72      |   | 72      | -       |      | 72      |   | 72      |
| Options exercised at the end of the period:                |   |   |   |      |      |    |   |    |    |      |    |   |    |
| - number        of options                                 |   |   |   | -         |      | 62,500  |   | 28,500  | -       |      | -       |   | 312,500 |
| - average exercise price                                   |   | (euro) |   | -         |      | 13.743  |   | 13.743  | -       |      | -       |   | 16.478  |
| - average        market price at date of exercise          |   | (euro) |   | -         |      | 23.341  |   | 24.095  | -       |      | -       |   | 23.256  |
| Options outstanding at the end of the period:              |   |   |   |      |      |    |   |    |    |      |    |   |    |
| - number        of options                                 |   |   |   | 1,380,000 |      | 314,500 |   | 137,000 | 269,500 |      | 238,000 |   | 926,500 |
| - average exercise price                                   |   | (euro) |   | 22.801    |      | 21.641  |   | 22.244  | 3.988   |      | 20.624  |   | 21.709  |
| - average        maturity in months                        |   |   |   | 73        |      | 70      |   | 65      | 73      |      | 68      |   | 69      |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

----

| (1) |   | No. 9        managers.                                                                                                                                                                                                                                                                                   |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Appointed on        January 1, 2006.                                                                                                                                                                                                                                                                     |
| (3) |   | Options on        Snam Rete Gas’ shares: assigned by the company to        Domenico Dispenza who held the position of Chairman of        Snam Rete Gas until December 23, 2005.                                                                                                                     |
| (4) |   | The        assignment to the CEO has been integrated by a monetary        incentive linked to the market performance of Eni share,        to be paid after a three-year period and corresponding to        96,000 options with a strike price of euro 23.100 and a        vesting period of three years. |

 

> 
***Stock Grants***

With the aim of improving motivation and loyalty of themanagers of Eni SpA and its subsidiaries as defined in Article2359 of the Civil Code through the linking of compensation to theattainment of preset individual and corporate objectives, makingmanagement participate in corporate risk and motivating themtowards the creation of shareholder value and increasing at thesame time their contribution to the management of the Company, in2003 Eni implemented a stock grant scheme envisaging the offeringof its own shares purchased under its buy back program (treasuryshares) for no consideration to those managers of Eni who achievecorporate and individual objectives. Said scheme applied to thethree-year period 2003-2005. Assignment vested within 45 daysafter the end of the third year from the date of the offer. Thisincentive scheme was dropped in 2006.

Under this stock grant plan, on December 31, 2006, a total of1,873,600 grants were outstanding for the assignment of an equalamount of treasury shares (equal to 0.05% of capital stock)pertaining to 2003, 2004 and 2005 assignments as follows: (i) atotal of 2,500 grants (fair value euro 11.20 per share) relatedto 2003; (ii) a total of 798,700 grants (fair value euro 14.57per share) related to 2004; and (iii) a total of 1,072,400 grants(fair value euro 20.08 per share) related to 2005.

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The following is a summary of stock grant activity for theyears 2005 and 2006:

|   |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|
|   |   |          |   |          |

|   |   | **Number of shares** |   | **Market price        in euro**(a) |   | **Number of shares** |   | **Market price        in euro**(a) |
|--------|--------|----------------------|--------|------------------------------------|--------|----------------------|--------|------------------------------------|
|   |   |                      |   |                                    |   |                      |   |                                    |

| **Stock grants as of January 1**               |   | **3,112,200** |   |   | **18.461** |   |   | **3,127,200** |   |   | **23.460** |   |
|------------------------------------------------|--------|---------------|--------|--------|------------|--------|--------|---------------|--------|--------|------------|--------|
| New rights        granted                      |   | 1,303,400     |   |   | 21.336     |   |   | -             |   |   | -          |   |
| Rights exercised in the period                 |   | (1,273,500    | )      |   | 23.097     |   |   | (1,236,400    | )      |   | 23.933     |   |
| Rights        cancelled in the period          |   | (14,900       | )      |   | 22.390     |   |   | (17,200       | )      |   | 23.338     |   |
| **Stock grants outstanding as of December 31** |   | **3,127,200** |   |   | **23.460** |   |   | **1,873,600** |   |   | **25.520** |   |
| **of        which exercisable at December 31** |   | **38,700**    |   |   | **23.460** |   |   | **156,700**   |   |   | **25.520** |   |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

----

| (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 resolution of the        Board of Directors regarding stock grants assignment;        (ii) the date of the recording in the grantee’s        securities account of the emission/transfer of the shares        granted; and (iii) the date of the unilateral        termination of employment for rights canceled). Market        price of stock grants at the beginning and the end of the        year, is the price recorded at December 31. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

The following table presents the amount of stock grantsawarded to Eni’s CEO, General Managers and Eni’s seniormanagers attending on a permanent basis the meetings of the Enisteering committee.

|   | **Grants outstanding         at beginning of the period** |   | **Grants exercised         during the period** |   | **Grants outstanding         at end of the period** |
|--------|-----------------------------------------------------------|--------|------------------------------------------------|--------|-----------------------------------------------------|
|   |                                                           |   |                                                |   |                                                     |

|   | **Number of grants** |   | **Average maturity in        months** |   | **Number of grants** |   | **Average market price at        date of exercise        (euro)** |   | **Number of grants** |   | **Average maturity in        months** |
|--------|----------------------|--------|---------------------------------------|--------|----------------------|--------|-------------------------------------------------------------------|--------|----------------------|--------|---------------------------------------|
|   |                      |   |                                       |   |                      |   |                                                                   |   |                      |   |                                       |

| Paolo Scaroni        CEO and General Manager of Eni                       |   | -       |      |   | -  |   | -      |   | -      |   | -      |      |   | -  |
|---------------------------------------------------------------------------|--------|---------|-----------|--------|----|--------|--------|--------|--------|--------|--------|-----------|--------|----|
| Stefano        Cao        General Manager of the E&P Division         |   | 43,700  |      |   | 21 |   | 14,700 |   | 24.117 |   | 29,000 |      |   | 15 |
| Domenico Dispenza (1)                                                     |   | 12,100  |      |   | 14 |   | 6,300  |   | 24.117 |   | 5,800  |      |   | 8  |
| General Manager of the G&P Division                                   |   | 53,900  |  (2) |   | 25 |   | -      |   |   |   | 53,900 |  (2) |   | 13 |
| Angelo        Taraborrelli        General Manager of the R&M Division |   | 28,100  |      |   | 24 |   | 6,300  |   | 24.117 |   | 21,800 |      |   | 17 |
| Senior managers (3)                                                       |   | 111,400 |      |   | 21 |   | 60,500 |   | 23.478 |   | 50,900 |      |   | 15 |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

----

| (1) |   | Appointed on        January 1, 2006.                                                                                                                                                              |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Snam Rete        Gas’ shares. These grants have been assigned by Snam        Rete Gas to Domenico Dispenza who held the Snam Rete        Gas’ Chairman position till December 23, 2005. |
| (3) |   | No. 5        managers.                                                                                                                                                                            |

> 
*Investor relations and information processing*

In concert with the launch of its privatization process, Eniadopted a communication policy, confirmed by the Code of Conduct,aimed at promoting an ongoing dialogue with institutionalinvestors, shareholders and the markets to ensure systematicdissemination of exhaustive complete, transparent, selective andprompt information on its activities, with the sole limitationimposed by the confidential nature of certain information.Information made available to investors, markets and the press isprovided in the form of press releases, regular meetings withinstitutional investors and the financial community and thepress, in addition to general documentation released andconstantly updated on Eni’s website. Relations withindividual investors, institutional investors, shareholders andthe press are handled by dedicated Eni departments.

Relations with investors and financial analysts are held bythe Investor Relations manager. Information is available onEni’s website and can be requested by sending an email toinvestor.relations@eni.it. Relations with the press are held bythe press manager. Relations with shareholders are held by theCorporate Secretary office. Information is available onEni’s website and can be requested by sending an email tosegreteriasocietaria.azionisti@eni.it or calling the toll-freenumber 800.940.924 (outside Italy 800.11.22.3456). Informationregarding periodic reports and major events/transactions arepromptly made available to the public, and are also published onEni’s website.

A specific section of Eni’s site contains all pressreleases, procedures concerning corporate governance,presentations provided in meetings with the press and financialanalysts, notices to shareholders and bond holders andinformation concerning shareholders’ and bond holders’meetings, including proceeds thereof. Documents available to thepublic are mailed on request free of charge.

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> 
*Handling of company information*

On February 28, 2006, Eni’s Board of Directors updatedthe "Procedure for the disclosure of information to themarket concerning Group activities" approved on December 18,2002 and published on Eni’s website. The procedureacknowledges Consob guidelines and the "Guidelines forinformation to the market" issued in June 2002 by the RefForum on company information and those included in the lawsimplementing the European directive on market abuse, defines therequirements for disclosure to the public of price sensitiveevents (materiality, clarity, homogeneity, information symmetry,consistency and timeliness) and the information flows foracquiring data from Group companies and providing adequate andtimely information to the Board and the market on price sensitiveevents. It also contains sanctions applied in case of violationof its rules in accordance with the crimes identified andsanctioned by the new law on the protection of savings.

Eni’s Code of Conduct defines confidentiality dutiesupheld by Group employees relating to the treatment of sensitiveinformation.

Directors and Auditors ensure the confidentiality of documentsand information acquired during their tasks and respect theprocedure defined by Eni for the treatment of information and forthe disclosure of information to the market.

> 
*Register of the persons having access to privileged    information*

On February 28, 2006, the Board of Directors approved aprocedure concerning the creation and updating of a register ofpersons with a right to access privileged information at Eni, asprovided for by Article 115-bis of Legislative Decree No. 58 ofFebruary 24, 1998. The procedure implementing Consob Decision onlisted issuing companies, states: (i) terms and procedures forthe recording and possible cancellation of the persons that, dueto their professional activity or functions performed on behalfof Eni, have access to privileged information; and(ii) terms and procedures of information of said persons oftheir recording or cancellation and relevant reasons. Theprocedure is in force from April 1, 2006 and was updated onSeptember 29, 2006 to take into account the Consob positionexpressed on March 28, 2006. The procedure is published onEni’s website.

> 
*Internal dealing*

On February 28, 2006, the Board of Directors approved the"Internal dealing procedure" for the identification ofrelevant persons and the communication of transactions involvingfinancial instruments issued by Eni SpA and its listedsubsidiaries made by these persons, which substitutes theInternal Dealing Code approved by the Board on December 18, 2002.

The procedure implements the provisions of Article 114,paragraph 7 of Legislative Decree No. 58 of February 24, 1998.Eni’s procedure, implementing Consob Decision on listedissuing companies: (i) identifies relevant persons; (ii) definesthe transactions involving financial instruments issued by EniSpA; and (iii) determines the terms and conditions for thedisclosure to the public of such information. The procedurestates that managers having regular access to privilegedinformation, during specific periods of the year (blockingperiods), are not allowed to buy or sell shares. The procedurewent into effect on April 1, 2006, and was updated on September29, 2006 to take into account the Consob position expressed onMarch 28, 2006. The procedure is published on Eni’s website.

 

**Employees**

At December 31, 2006, Eni’s employees numbered 73,572representing an increase of 1,314 employees from December 31,2005, or 1.8%, reflecting a 1,741 increase in employees hired andworking outside Italy and a 427 decline in employees hired inItaly. Eni seeks to maintain constructive relationships with thelabor unions.

Employees hired in Italy were 39,765 (54% of all Groupemployees). Of these, 36,881 were working in Italy, 2,697 outsideItaly and 187 on board of vessels, with a 427 unit decline from2005; of these 41 persons left the group due to changes inconsolidation.

The process of improvement in the quality mix of employeescontinued in 2006 with the hiring of 2,208 persons, of which 722with open-end contracts. A total of 1,486 persons were hired withthis type of contract and with apprenticeship contracts, most ofthem with university qualifications (824 persons of which 532 areengineers) and 632 persons with a high school diploma. During theyear 2,599 persons left their job at Eni, of these 1,960 had anopen-end contract and 639 a fixed-term contract.

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Employees hired and working outside Italy at December 31, 2005were 33,807 (46% of all Group employees), with a 1,741 personsincrease due to the positive balance of new hires with fixed-termcontracts and persons leaving their job in Saipem andSnamprogetti (1,853 employees) and the negative balance (112persons) of persons leaving the job and new hires with open-endcontracts in the rest of the Group.

| **Employees        at year end** |   | **2004** |   | **2005** |   | **2006** |
|----------------------------------|--------|----------|--------|----------|--------|----------|
|                             |   |          |   |          |   |          |

|   | **(units)** |
|--------|-------------|

| Exploration & Production      |   | 7,477      |   | 8,030      |   | 8,366      |
|-----------------------------------|--------|------------|--------|------------|--------|------------|
| Gas &        Power            |   | 12,843     |   | 12,324     |   | 12,074     |
| Refining & Marketing          |   | 9,224      |   | 8,894      |   | 9,437      |
| Petrochemicals                    |   | 6,565      |   | 6,462      |   | 6,025      |
| Engineering & Construction    |   | 25,819     |   | 28,684     |   | 30,902     |
| Other        activities           |   | 4,983      |   | 2,636      |   | 2,219      |
| Corporate and financial companies |   | 3,437      |   | 5,228      |   | 4,579      |
|                              |   | **70,348** |   | **72,258** |   | **73,572** |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

The table below sets forth Eni’s employees at December31, 2004, 2005 and 2006 in Italy and outside Italy:

| **Employees        at year end** |   | **2004** |   | **2005** |   | **2006** |
|----------------------------------|--------|----------|--------|----------|--------|----------|
|                             |   |          |   |          |   |          |

|   | **(units)** |
|--------|-------------|

| Exploration & Production      |   | Italy                |   | 4,539      |   | 5,027      |   | 5,273      |
|-----------------------------------|--------|----------------------|--------|------------|--------|------------|--------|------------|
|                              |   | Outside        Italy |   | 2,938      |   | 3,003      |   | 3,063      |
|                              |   |                 |   | 7,477      |   | 8,030      |   | 8,336      |
| Gas &        Power            |   | Italy                |   | 10,216     |   | 9,733      |   | 9,602      |
|                              |   | Outside Italy        |   | 2,627      |   | 2,591      |   | 2,472      |
|                              |   |                 |   | 12,843     |   | 12,324     |   | 12,074     |
| Refining & Marketing          |   | Italy                |   | 6,879      |   | 6,680      |   | 7,196      |
|                              |   | Outside        Italy |   | 2,345      |   | 2,214      |   | 2,241      |
|                              |   |                 |   | 9,224      |   | 8,894      |   | 9,437      |
| Petrochemicals                    |   | Italy                |   | 5,237      |   | 5,164      |   | 4,948      |
|                              |   | Outside Italy        |   | 1,328      |   | 1,298      |   | 1,077      |
|                              |   |                 |   | 6,565      |   | 6,462      |   | 6,025      |
| Engineering & Construction    |   | Italy                |   | 5,580      |   | 5,799      |   | 6,164      |
|                              |   | Outside        Italy |   | 20,239     |   | 22,885     |   | 24,738     |
|                              |   |                 |   | 25,819     |   | 28,684     |   | 30,902     |
| Other        activities           |   | Italy                |   | 4,959      |   | 2,636      |   | 2,219      |
|                              |   | Outside Italy        |   | 24         |   | 0          |   | 0          |
|                              |   |                 |   | 4,983      |   | 2,636      |   | 2,219      |
| Corporate and financial companies |   | Italy                |   | 3,351      |   | 5,153      |   | 4,363      |
|                              |   | Outside        Italy |   | 86         |   | 75         |   | 216        |
|                              |   |                 |   | 3,437      |   | 5,228      |   | 4,579      |
| **Total**                         |   | Italy                |   | 40,761     |   | 40,192     |   | 39,765     |
| **Total**                         |   | Outside Italy        |   | 29,587     |   | 32,066     |   | 33,807     |
|                              |   |                 |   | **70,348** |   | **72,258** |   | **73,572** |
| of which senior managers          |   |                 |   | 1,764      |   | 1,748      |   | 1,604      |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

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**Share Ownership**

As of April 30, 2007, the cumulative number of shares owned bythe Eni’s directors, statutory auditors and senior managers,including the three General Managers, was 327,465 equal toapproximately 0.0082% of Eni’s share capital outstanding asof the same data. In this time frame, no further options topurchase Eni shares were granted by the Company to those personsas compared to grants existing as of December 31, 2006 (seetables in the section "Stock Option Plans"). Eni issuesonly ordinary shares, each bearing one-vote right; thereforeshares held by those persons have no different voting rights. Thebreak-down of share ownership for each of those persons isprovided below.

| **Name** | **Position** | **Number of shares owned** |
|----------|--------------|----------------------------|
|     |         |                            |

| **Board of Directors**          |   |                                           |   |       |
|---------------------------------|--------|------------------------------------------------|--------|------------|
| Roberto        Poli             |   | Chairman                                       |   | -          |
| Paolo Scaroni                   |   | CEO and General Manager of Eni                 |   | 12,299     |
| Alberto        Clô         |   | Director                                       |   | -          |
| Renzo Costi                     |   | Director                                       |   | 1,116      |
| Dario        Fruscio            |   | Director                                       |   | 3,000      |
| Marco Pinto                     |   | Director                                       |   | -          |
| Marco        Reboa              |   | Director                                       |   | -          |
| Mario Resca                     |   | Director                                       |   | -          |
| Pierluigi        Scibetta       |   | Director                                       |   | -          |
| **General Managers**            |   |                                           |   |       |
| Stefano        Cao              |   | General        Manager of the E&P Division |   | 83,660     |
| Domenico Dispenza               |   | General Manager of the G&P Division        |   | 93,915     |
| Angelo        Taraborrelli      |   | General        Manager of the R&M Division |   | 35,800     |
| **Board of Statutory Auditors** |   |                                           |   | **3,850**  |
| **Senior        managers**      |   |                                           |   | **93,825** |

|   |   |  |
|--------|--------|--|

 

 

**Item 7. MAJOR SHAREHOLDERS AND RELATED PARTYTRANSACTIONS**

**Major Shareholders**

As of May 23, 2007, the Ministry of Economy and Finance andCassa Depositi e Prestiti SpA were the only persons known by Enito own more than 2% of any class of Eni SpA’s votingsecurities. At such date, the total amount of Eni SpA’svoting securities owned by these shareholders was:

 

| **Title        of class**        |   | **Number of shares owned** |   | **Percent of class** |
|----------------------------------|--------|----------------------------|--------|----------------------|
|                                  |   |                            |   |                      |
| Ministry of Economy and Finance  |   | 813,443,277                |   | 20.31%               |
| Cassa        Depositi e Prestiti |   | 400,288,338                |   | 10.00%               |
|                                  |   |                            |   |                      |

The Ministry of Economy and Finance, in agreement with theMinistry of Economic Development, retains certain special powersover Eni. See "Item 10 – Additional Information –Memorandum and Articles of Association – Limitations onVoting and Shareholdings – Special Powers of theState". For a discussion of the Eni share buy-back programsee "Item 16E – Purchases of Equity Securities by theIssuer and Affiliated Purchasers". As of May 31, 2007 therewere 51,346,859 ADRs, each representing two Eni ordinary sharesoutstanding corresponding to 2.56% of Eni’s share capital.See "Item 9 – The Offer and the Listing".

 

**Related Party Transactions**

In the ordinary course of its business, Eni enters intotransactions concerning the exchange of goods, provision ofservices and financing with non consolidated subsidiaries andaffiliates as well other companies owned or controlled by theItalian Government. All such transactions are conducted on anarm’s length basis and in the interest of Eni companies.

Amounts and types of trade and financial transactions withrelated parties and their impact on consolidated earnings andcash flow, and on the Group’s assets and financial conditionare reported in Note 33 to the Consolidated Financial Statements.

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**Item 8. FINANCIAL INFORMATION**

**Consolidated Statements and Other FinancialInformation**

See Item 18 – Financial Statements.

 

> 
***Legal Proceedings***

Eni is a party to a number of civil actions and administrativeproceedings arising in the ordinary course of business. Based oninformation available to date, and taking account of the existingrisk provisions, Eni believes that the foregoing will not have anadverse effect on Eni’s Consolidated Financial Statements.

Following is a description of the most significant proceedingscurrently pending; unless otherwise indicated below, noprovisions have been made for these legal proceedings as Enibelieves that negative outcomes are not probable or because theamount of the provision can not be estimated reliably.

 

> 
**Environment**

*Criminal proceedings*

ENI SPA*Subsidence.* In relation to the investigations concerning asubsidence phenomenon allegedly caused by hydrocarbon explorationand extraction activities, following the decision of the Court ofRovigo, the Nucleo Operativo Ecologico dei Carabinieri of Veniceplaced under preliminary seizure the Naomi/Pandora field andproducing platform in 2002 and the Dosso degli Angeli field in2004. Eni believes it has always acted in full compliance withexisting laws under the required authorizations. Taking intoaccount the observations of the consultants of the Court ofRovigo on which the public prosecutor based his case, Eniconstituted an independent and interdisciplinary scientificcommission, composed of prominent and highly qualifiedinternational experts of subsidence caused by hydrocarbonexploration and extraction activities, with the aim of verifyingthe size and effects and any appropriate actions to reduce or toneutralize any subsidence phenomenon in the Ravenna and NorthAdriatic area both on land and in the sea. This commissionproduced a study which denies the possibility for any risk forhuman health and for damage to the environment. It also statesthat no example is known anywhere in the world of accidents thatcaused harm to the public safety caused by subsidence induced byhydrocarbon production. The study also shows that Eni employs themost advanced techniques for the monitoring, measuring andcontrol of the soil. This proceeding is in the first levelhearing stage. The Veneto Region, the Ente Parco della Provinciadel Po, the Province of Ferrara, the Province of Venice, the Cityof Venice, the City of Comacchio, the Province of Rovigo and twoprivate entities have been acting as plaintiffs. Eni was acceptedas a defendant in order to claim its own civil responsibilitiesbefore the Court of Rovigo.

*Alleged damage.* In 2002, the public prosecutor of Gelastarted a criminal investigation in order to ascertain allegeddamage caused by emissions of the Gela plant, owned by PolimeriEuropa SpA, Syndial SpA (former EniChem SpA) and Raffineria diGela SpA.

*Negligent fire in the refinery of Gela*. In June 2002,in connection with a fire at the refinery of Gela, a criminalinvestigation began concerning negligent fire, environmentalcrimes and crimes against natural beauty. First degreeproceedings ended with an acquittal sentence.

*Investigation of the quality of ground water in the area ofthe refinery of Gela.*In 2002, the public prosecutor of Gelastarted a criminal investigation concerning the refinery of Gelato ascertain the quality of ground water in the area of therefinery. Eni is charged of having breached environmental rulesconcerning the pollution of water and soil and of illegaldisposal of liquid and solid waste materials.

*Intentional poisoning (Priolo).* In March 2002, thepublic prosecutor of Siracusa started an investigation concerningthe activity of the refinery of Priolo in order to ascertainwhether infiltrations of refinery products into the deepwater-bearing stratum used for human consumption purposes in thePriolo area had occurred. The Court entrusted a companyspecialized in such field with the task of verifying the cause,origin and extension of the alleged infiltration. For protectivepurposes, remedial actions have been taken in order to: (i)create safety measures and clean-up of the polluted area; (ii)reallocate wells for drinking water in an area farther from andhigher than the industrial site; and (iii) install a purificationsystem for drinkable water. These actions are moving towardscompletion.

*Negligent fire (Priolo).* The public prosecutor ofSiracusa started an investigation against certain Eni managerswho were previously in charge of conducting operations at Priolorefinery (Eni divested this asset in 2002) in order to ascertainwhether they acted with negligence in connection with a fire thatoccurred at the Priolo plants on April 30 and May 1-2, 2006.After preliminary investigations the public prosecutor requestedthe opening of a proceeding against the mentioned managers fornegligent behavior.

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ENIPOWER SPA*Unauthorized waste management activities.* In 2004 thepublic prosecutor of Rovigo started an investigation for allegedcrimes related to unauthorized waste management activities inLoreo relating to the samples of soil used during theconstruction of the new EniPower power station in Mantova.Following a preliminary hearing, the prosecutor requested the CEOof EniPower and the managing director of the Mantova plant at thetime of the alleged crime to stand trial.

*Air emissions.* The Prosecutor of Mantova started aninvestigation against two managers of the Mantova plant inconnection with air emissions by the new power plant.

POLIMERI EUROPA SPA*Violation of environmental regulations on waste management.*Before the Court of Gela a criminal action took place relating tothe alleged violation of environmental regulations on wastemanagement concerning the ACN plant and the disposal of FOKresidue deriving from the steam cracking process. Defendants werefound guilty and a damage payment in first instance to anenvironmental association acting as plaintiff was required to bemade. The amount of said damage payment is immaterial. Thesentence was passed to the Civil Court for the quantification ofany further damage and claim. Eni appealed the Court’ssentence.

RAFFINERIA DI GELA SPA*Soil and sea pollution.* In 1999, the public prosecutor ofGela started an investigation in order to ascertain alleged soiland sea pollution caused by the discharge of pollutants byEni’s Gela refinery. Three environmental organizations areacting as plaintiffs and have requested damage payment for euro551 million. With a Decision of February 20, 2007, the Court ofGela dismissed these allegations.

SYNDIAL SPA (FORMER ENICHEM SPA)*Criminal action started by the public prosecutor of Brindisi.*In 2000, the public prosecutor of Brindisi started a criminalaction against 68 persons who are employees or former employeesof companies that owned and managed plants for the manufacture ofdichloroethane, vinyl chloride monomer and vinyl polychloridefrom the early 1960s to date, some of which were managed byEniChem from 1983 to 1993. At the end of the preliminaryinvestigation, the public prosecutor asked for the dismissal ofthe case in respect of the employees and the managers of EniChem.Plaintiffs presented oppositions and the prosecutor confirmed hisrequest for dismissal of the case, rejecting such oppositions.

> 
*Civil and administrative proceedings*

*Pollution caused by the activity of the Mantova plant.*In 1992, the Ministry of Environment summoned EniChem SpA andMontecatini SpA before the Court of Brescia. The Ministryrequested, primarily, environmental remediation for the allegedpollution caused by the activity of the Mantova plant from 1976until 1990, and provisionally, in case there was no possibilityto remediate, the payment of environmental damages. EniChemacquired the Mantova plant in June 1989, as part of the Enimontdeal. Parties agreed upon that Edison SpA would hold Eni harmlessor pay compensatory damage for any damage caused to third partiesby plant operations before Montedison’s sale, even if damagewould manifests itself later. Parties agreed on a settlement bywhich Edison quantified the damage to be paid that also coversSyndial. The proceeding continues for the settlement of allegeddamage pertaining to the residual 1989-1990 period.

*Summon before the Court of Venice for environmental damagescaused to the lagoon of Venice by the Porto Marghera plants.*On December 13, 2002, EniChem SpA, jointly with Ambiente SpA (nowmerged into Syndial SpA) and European Vinyls Corporation ItaliaSpA, was summoned before the Court of Venice by the Province ofVenice. The province requested compensation for environmentaldamages that were not quantified, caused to the lagoon of Veniceby the Porto Marghera plants, which were already the subject oftwo previous criminal proceedings against employees and managersof the defendants. In a related action, European VinylsCorporation Italia presented an action for recourse againstEniChem and Ambiente. At the same time, Ineos Italia presented anaction for recourse against Syndial, as successor of Ambiente.Parties are waiting for the decision on the instances of thepreliminary investigation.

*Claim of environmental damages, caused by industrialactivities in the area of Crotone, commenced by the President ofthe Regional Council of Calabria.* On April 14, 2003, thePresident of the Regional Council of Calabria, as DelegatedCommissioner for Environmental Emergency in the Calabria Region,started an action against EniChem SpA related to environmentaldamages for approximately euro 129 million and damages for euro250 million (plus interest and compensation) in connection withloss of income and damage to property allegedly caused byPertusola Sud SpA activities (merged into EniChem) in the area ofCrotone. In addition, the Province of Crotone is acting asplaintiff, claiming environmental damages for euro 300 million.The judge has yet to decide on the legitimacy of the DelegatedCommissioner for Environmental Emergency in the Calabria Regionto act on behalf of the Calabria Region. 

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On October 21, 2004, Syndial was convened before the Court ofMilan by the Calabria Region which is seeking to obtain acondemnation of Syndial for a damage payment, should the officeof the Delegated Commissioner for Environmental Emergency in theCalabria Region cease during this proceeding. The Calabria Regionrequested damage payment amounting to euro 800 million as alreadyrequested by the Delegated Commissioner for environmentalemergency in the Calabria Region in the proceeding started in2003. This new proceeding is in the preliminary investigationstage.In 2006, the Council of Ministers, Ministry for the Environmentand Delegated Commissioner for Environmental Emergency in theCalabria Region represented by the State Lawyer requested Syndialto appear before the Court of Milan in order to obtain theascertainment, quantification and payment of damage (in the formof land, air and water pollution and therefore of the generalcondition of the population) caused by the operations ofPertusola Sud SpA in the Municipality of Crotone and insurrounding municipalities. The local authorities requested theascertainment of Syndial’s responsibility as concernsexpenses borne and to be borne for the cleanup and reclamation ofsites, currently quantified at euro 129 million. This proceedingconcerns the same matter and damage claim as the proceedingsstarted by the Delegated Commissioner for Environmental Emergencyin the Calabria Region and the Calabria Region against Syndial in2003 and 2004, respectively. The State Attorney quantified thedamage payment in a total of euro 1,920 million.

*Summon for environmental damage caused by DDT pollution inthe Lake Maggiore.* A proceeding is pending before the Courtof Turin by which the Minister of the Environment summonedSyndial SpA and requested environmental damage for euro 2,396million in relation to alleged DDT pollution at Lake Maggiorecaused by the Pieve Vergonte plant. On March 1, 2006, the StateLawyer in an attempt to settle the case proposed Syndial to pay10% of this claim corresponding to euro 239 million. Thissettlement attempt failed. The Italian Ministry enacted aministerial decree providing for the: (i) upgrading of ahydraulic barrier to protect the site; and (ii) presentation of aproject for the environmental remediation of Lake Maggiore.Syndial opposed this decree before an Administrative Court.

*Action started by the Municipality of Carrara for theremediation and reestablishment of previous environmentalconditions at the Avenza site and payment of the environmentaldamage.* The Municipality of Carrara started an action beforethe Court of Genova requesting Syndial SpA to remediate andreestablish previous environmental conditions at the Avenza siteand the payment of certain environmental damage which cannot becleaned up plus further damage of various types (i.e. damage tothe natural beauty of this site). This request is related to anaccident that occurred in 1984, as a consequence of which EniChemAgricoltura SpA (later merged into Syndial SpA), at the timeowner of the site, carried out safety and remediation works. TheMinistry of the Environment joined the action and requestedenvironmental damage payment – from a minimum of euro 53.5million to a maximum of euro 93.3 million – to be brokendown among the various companies that ran the plant in the past.In fact, Syndial summoned Rumianca SpA, Sir Finanziaria SpA andSogemo SpA, who ran the plant in previous years, in order to beguaranteed. A report made by an independent expert charged by theJudge was filed with the Court. The findings of this reportquantify the residual environmental damage at euro 15 million. Afinal decision on this proceeding is pending.

*Ministry for the Environment - Augusta harbor.*TheItalian Ministry for the Environment with various administrativeacts ordered companies running plants in the petrochemical siteof Priolo to perform safety and environmental remediation worksin the Augusta harbor. Companies involved include Enisubsidiaries Polimeri Europa and Syndial. Pollution has beendetected in this area primarily due to a high mercuryconcentration which is allegedly attributed to the industrialactivity of the Priolo petrochemical site. Polimeri Europaopposed said administrative acts, objecting in particular the wayby which remediation works have been designed and information onconcentration of pollutants has been gathered.

 

> 
**Other judicial or arbitration proceedings**

ENI SPAFintermica presented a claim towards Eni concerning themanagement of the Jacorossi joint venture with reference to analleged abuse of key roles played by Eni SpA in the joint venturethus damaging the other partner’s interest and the allegeddilatory behavior of Syndial in selling its interest in the jointventure to Fintermica. The parties decided to start anarbitration on the matter.

SYNDIAL SPA (FORMER ENICHEM SPA) - SERFACTORING SPA*Serfactoring: disposal of receivables.* In 1991,Agrifactoring SpA commenced proceedings against Serfactoring SpA,a company 49% owned by Sofid SpA which is controlled by Eni SpA.The claim relates to an amount receivable of euro 182 million forfertilizer sales (plus interest and compensation for inflation),originally owed by Federconsorzi to EniChem Agricoltura SpA(later Agricoltura SpA - in liquidation), and Terni IndustrieChimiche SpA (merged into Agricoltura SpA - in liquidation), thathas been merged into EniChem SpA (now Syndial SpA). Suchreceivables were transferred by Agricoltura and Terni IndustrieChimiche to Serfactoring, which appointed Agrifactoring as itsagent to collect payments. Agrifactoring guaranteed to pay theamount of such receivables to Serfactoring, regardless of whetheror not it received payment on the due date. Following payment byAgrifactoring to Serfactoring, Agrifactoring was placed inliquidation and the liquidator of Agrifactoring commencedproceedings in 1991 against Serfactoring to recover such payments(equal to euro 182 million) made to Serfactoring based on theclaim that the foregoing guarantee became invalid whenFederconsorzi was itself placed in liquidation. Agricoltura andTerni Industrie Chimiche brought counterclaims againstAgrifactoring (in liquidation) for damages amounting to euro 97million relating to acts carried out by Agrifactoring SpA asagent. 

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The amount of these counterclaims has subsequently beenreduced to euro 46 million following partial payment of theoriginal receivables by the liquidator of Federconsorzi andvarious setoffs. These proceedings, which have all been joined,were decided with a partial judgment, deposited on February 24,2004; the request of Agrifactoring has been rejected and thecompany has been ordered to pay the sum requested by Serfactoringand damages in favor of Agricoltura, to be determined followingthe decision. Agrifactoring appealed this partial decision,requesting in particular the annulment of the first stepjudgment, the reimbursement of euro 180 million from Serfactoringalong with the rejection of all its claims and the payment of allproceeding expenses. The pending appeal was sent to the JudgingCouncil for the filing of evidence. The judge of the Court ofRome, responsible for the determination of the amount of damagesto be paid to Serfactoring and Agricoltura decided on May 18,2005 to suspend this determination until the publication of thedecision of the Court of Appeals. On argument, Serfactoring andSyndial requested that the Court of Cassation cancel thesuspension and return the case to its original court.

*Breach of a preliminary agreement for the purchase of anindustrial area in Ravenna.* In 2002, EniChem SpA was summonedby ICR Intermedi Chimici di Ravenna Srl before the Court of Milanin relation to a breach of a preliminary agreement for thepurchase of an industrial area in Ravenna. ICR requested paymentof compensatory damage for approximately euro 46 million, ofwhich euro 3 million are compensatory damage and euro 43 millionare for loss of income. With a sentence of October 11, 2005, theCourt rejected ICR’s request and ordered that ICR pay allproceeding expenses. ICR filed a claim against this decision,reducing its original claim to euro 8 million. A final decisionis pending.

 

> 
**Antitrust, EU Proceedings, Actions of the Authority for    Electricity and Gas and of Other Regulatory Authorities**

*Antitrust*

ENI SPA*Abuse of dominant position of Snam verified by the ItalianAntitrust Authority.* In March 1999, the Italian AntitrustAuthority concluded its investigation started in 1997 and: (i)verified that Snam SpA (merged in Eni SpA in 2002) abused itsdominant position in the market for the transportation andprimary distribution of natural gas relating to thetransportation and distribution tariffs applied to third partiesand the access of third parties to infrastructure;(ii) fined Snam euro 2 million; and (iii) ordered a reviewof these practices relating to such abuses. Snam believes it hascomplied with existing legislation and appealed the decision withthe Regional Administrative Court of Lazio requesting itssuspension. On May 26, 1999, stating that these decisions areagainst Law No. 9/1991 and the European Directive 98/30/EC, thisCourt granted the suspension of the decision. The Authority didnot appeal this decision. The decision on the merit of thisdispute is still pending before the same Administrative Court.

*Inquiry of the Italian Antitrust Authority on jet fuel.*Witha Decision of December 9, 2004, the Italian Antitrust Authoritycommenced an inquiry on the distribution of jet fuel against sixoil companies operating in Italy, including Eni and certainentities jointly controlled by said oil companies engaged in thestoring and loading jet fuel in the Rome Fiumicino, Milan Linateand Milan Malpensa airports. The inquiry intends to ascertain theexistence of alleged restrictions to competition as said oilcompanies would agree to divide among themselves the supplies toairlines. On December 22, 2005, the Authority notified thepreliminary results of the inquiry concerning:(i) information flows to said oil companies related to thefunctioning of the jointly-controlled entities engaging in thestorage and uploading of jet fuel; (ii) barriers to the entranceof new competitors in the capital of such entities operating theactivities of storing and loading; and (iii) the price of jetfuel which is deemed to be higher than on other European markets.On June 20, 2006, the Authority notified the final decision ofthis proceeding to Eni and fined Eni by an amount of euro 117million. The Authority fined other oil companies involved in thismatter. Eni filed an opposition against this decision before anadministrative court and suspended the payment of this fine. OnJanuary 29, 2007, the Regional Administrative Court of Lazioaccepted only partially the opposition made by Eni and annulledpart of the decision of the Authority. In particular, a measureproviding for the involved oil companies to cease their jointparticipation in the capital of the entities operating theactivities of storing and loading jet fuel was annulled. Eniaccrued a provision with respect to this proceeding. As aconsequence of this decision, Eni paid a fine amounting to euro117 million. Eni decided to appoint independent directors in theboards of directors of joint ventures instead of Eni managers.

*Formal assessment started by the Commission of the EuropeanCommunities for the evaluation of alleged participation toactivities limiting competition in the field of paraffin.* OnApril 28, 2005, the Commission of the European Communitiesstarted a formal assessment to evaluate the alleged participationof Eni and its subsidiaries to activities limiting competition inthe field of paraffin. The alleged violation of competition wouldhave consisted in: (i) the determination of and increase inprices; (ii) the subdivision of customers; and (iii) exchange oftrade secrets, such as production capacity and sales volumes.After, the Commission requested information on Eni’sactivities in the field of paraffins and certain documentationacquired by the Commission during an inspection. Eni filed therequested information.

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*Notification to Eni Petroleum Co Inc of a subpoena by theDepartment of Justice of the United States of America - AntitrustDivision and request of information and documents relating toactivities in the field of wax and of a deposition.* On April28, 2005, the Department of Justice of the United States ofAmerica - Antitrust Division, notified Eni Petroleum Co Inc of asubpoena requesting information and documents relating toactivities in the field of wax to be filed before June 20, 2005and a deposition on the same date. The Company informed thedepartment that it does not produce nor import wax in the UnitedStates of America.

*Inquiry started by the Italian Antitrust Authorityconcerning an alleged abuse of dominant position in the use ofthe total continuous regasification capacity of GNL.*OnNovember 18, 2005, the Italian Antitrust Authority notified Eniand its subsidiary GNL Italia the opening of an inquiry, inaccordance with Article 14 of Law No. 287/1990, concerning analleged abuse of dominant position in the assignment and use ofthe total continuous regasification capacity of the Panigagliaterminal (owned by GNL Italia) during thermal years 2002-2003 and2003-2004, as already reported by an inquiry of the ItalianAuthority for Electricity and Gas on the same matter as theinquiry of the Antitrust Authority. The Authority for Electricityand Gas closed its inquiry by signaling the fact to the AntitrustAuthority. In a later communication Eni was informed that theinquiry has been extended also to thermal year 2004-2005 and toSnam Rete Gas which is the parent company of GNL Italia SpA. OnSeptember 25, 2006, the Antitrust Authority sent Eni the findingsof its inquiry. After, Eni presented the Antitrust Authoritycertain commitments based on Article 14-ter of Law No. 287/1990.On November 23, 2006, the Antitrust Authority resolved to publishsuch commitments effective the following day. On March 6, 2007,the Antitrust Authority resolved to accept Eni’s commitmentsand to close the inquiry without recognizing any charge to Eniand imposing any fine whatsoever. Eni is committed to perform agas release amounting to 4 BCM in a two-year period, starting onOctober 1, 2007. Eni is implementing its obligations under thegas release agreement, while providing timely information on itto the Antitrust Authority.

*Ascertainment by the European Commission of the level ofcompetition in the European natural gas market.*As part ofits activities to ascertain the level of competition in theEuropean natural gas market, with Decision No. C(2006)1920/1 ofMay 5, 2006, the European Commission informed Eni on May 16, 2006that Eni and its subsidiaries were subject to an inquiry underArticle 20, paragraph 4 of the European Regulation No. 1/2003 ofthe Council in order to verify the possible existence of anybusiness conducts breaching European rules in terms ofcompetition and intended to prevent access to the Italian naturalgas wholesale market and to subdivide the market among fewoperators in the activity of supply and transport of natural gas.Officials from the European Commission conducted inspections atheadquarters of Eni and of certain Eni subsidiaries and collecteddocuments. Similar actions have been performed by the Commissionalso against the main operators in natural gas in Germany,France, Austria and Belgium. In April 2007, the EuropeanCommission made known its decision to start a further stage ofinquiry, as elements collected so far induced the suspicion thatEni adopted behaviors leading to "capacity hoarding andstrategic underinvestment in the transmission system leading tothe foreclosure of competitors and harm for competition andcustomers in one or more supply markets in Italy". In thesame documents, the Commission states that "It is importantto note that the initiation of proceedings does not imply thatthe Commission has conclusive proof of an infringement. It onlysignifies that the Commission will conduct an in-depthinvestigation of the case as a matter of priority".

*TTPC.* In April 2006, Eni filed a claim before theRegional Administrative Court of Lazio against the decision ofthe Italian Antitrust Authority of February 15, 2006 stating thatEni’s behavior pertaining to implementations of plans forthe upgrading of the TTPC pipeline for importing natural gas fromAlgeria represented an abuse of dominant position under Article82 of the European Treaty and fined Eni. The initial fineamounted to euro 390 million and was reduced to euro 290 millionin consideration of Eni’s commitment to perform actionsfavoring competition among which the upgrading of said gasline.Eni accrued a provision with respect to this proceeding. With adecision filed on November 29, 2006, the Regional AdministrativeCourt of Lazio partially accepted Eni’s claim, annullingsuch part of the Authority’s decision where the fine wasquantified. Eni is waiting for the filing of the motivations ofthe Court decision to ascertain the impact of said decision.Pending this development, the payment of the fine has beenvoluntarily suspended. In 2007, the Regional Administrative Courtof Lazio accepted in part Eni’s claim and cancelled thequantification of the fine based on the AntitrustAuthority’s inadequate evaluation of the circumstancespresented by Eni. Eni intends to file an appeal with the Councilof State. Pending the final outcome, Eni awaits for thedetermination of the amount of the fine.

*Inquiry of the Italian Antitrust Authority in relation tocollusive mechanisms for the pricing of automotive fuelsdistributed on the retail market.* With Decision of January18, 2007, the Italian Antitrust Authority opened an inquiry toascertain the existence of a possible agreement limit competitionin the field of pricing of automotive fuels distributed on theretail market in Italy in violation of Article 81 of the ECTreaty. This inquiry concerns eight oil companies, among whichEni. According to the Authority, said companies would have beenputting in place collusive mechanisms intended to influence thepricing of automotive fuels distributed on the retail market byway of a continuing exchange of informative flows since 2004. InApril 2007, Eni filed with the Italian Antitrust Authority aproposal of initiatives, based on a decision of the sameAuthority that allows companies to reach the closure of aproceeding without sanctions or fines when they presentcounteractive measures.

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POLIMERI EUROPA SPA AND SYNDIAL SPA*Inquiries in relation to alleged anti-competitive agreementsin the area of elastomers.*In December 2002, inquiries werecommenced concerning alleged anti-competitive agreements in thearea of elastomers. These inquiries were commenced concurrentlyby European and U.S. authorities. The first product underscrutiny was EP(D)M: the European Commission submitted toinspection the manufacturing companies of that product, amongwhich Polimeri Europa SpA and Syndial and requested informationfrom those two companies and to their parent company, Eni SpA.After the inquiries the Commission decided to open a procedurefor violation of competition laws and notified Eni, PolimeriEuropa and Syndial the relevant charges to that effect on March8, 2005. At a hearing held on July 27, 2005 the two companiespresented memoranda and confirmed their position. Eni and itssubsidiaries are waiting for a decision on part of the EuropeanCommission. EP(D)M manufacture is also under scrutiny in theUnited States, where the Department of Justice of San Franciscorequested information and documents to Polimeri Europa AmericasInc, a U.S. subsidiary of Polimeri Europa and to its deputychairman and sales manager. Class actions were filed claimingdamages in relation to the alleged violation. On July 2005,Syndial signed a settlement agreement for the civil class actionwhich entails the payment of approximately $3.2 million, approvedby the federal court. The investigation was also extended to thefollowing products: NBR, CR, BR, SSBR and SBR. The EuropeanCommission started an investigation regarding BR, SBR, SSBR. OnJanuary 26, 2005, the European Commission dropped the charges inrelation to SSBR. Investigations regarding BR, SBR and EPDM ledto the notification of relevant charges. A hearing took placebefore the European Commission. On July 26, 2006, the EuropeanCommission notified the dismissal of the EPDM matter to Eni.Regarding the other two products BR and SBR, on November 29,2006, the Commission fined a number of European operators, amongwhich Eni, an amount of euro 519 million based on the charge ofhaving established a trust in the field of synthetic rubberproduction. Eni and its subsidiary Polimeri Europa were fined byan overall amount of euro 272.25 million. Eni and its subsidiaryhave prepared claims against this decision before the firstinstance European Court in February 2007. Pending the outcome,Polimeri Europa presented a bank guarantee for euro 200 millionand paid the residual amount of the fine.As concerns CR, Syndial and Polimeri Europa requested leniency,as provided for by EU laws, by providing information useful inthe investigation. This request has not yet been accepted by theEuropean Union. In March 2007, the Commission sent to Eni,Polimeri Europa and Syndial a statement of objections, thusopening the second phase of the proceeding for the allegedinfringements from 1993 to 2002. Eni responded with a memorandumthat repeated its request for leniency. A final hearing beforethe Commission is pending.With regard to NBR, an inquiry is underway in Europe and theU.S., where class actions have also been started. On the federallevel, the class action was abandoned by the plaintiffs. Thefederal judge has yet to acknowledge this abandonment. Withregard to CR, as part of an investigation carried out in theU.S., Syndial entered into a plea agreement with the Departmentof Justice pursuant to which Syndial would agree to pay a fine of$9 million, while the Department of Justice would agree that itwill not bring further criminal charges against Syndial oragainst its affiliated companies. On June 27, 2005 the pleaagreement was approved. As regards CR, the civil class action wasclosed with a settlement agreement approved by the federal judgeon July 8, 2005 whereby the company will pay $5 million.Eni recorded a provision for these matters.

 

> 
**Regulation**

*Inquiry of the Italian Authority for Electricity and Gasregarding the use of storage capacity conferred in years2004-2005 and 2005-2006.*With Decision No. 37 of February 23,2006, the Italian Authority for Electricity and Gas commenced aninquiry on a few natural gas selling companies, among which Eni,in order to possibly impose a fine or an administrative sanctionregarding the use of storage capacity conferred in years2004-2005 and 2005-2006. For the 2004-2005 thermal year and forthe period from October 1, 2005 to December 31, 2005, theAuthority for Electricity and Gas supposed that given the weatherof the period, the use of modulation storage capacity wasfeatured by a higher volume of off takes with respect to thevolume which would have been necessary to satisfy the commercialrequirements for which the storage company entitled Eni to apriority in the conferral of storage capacity. According to theAuthority for Electricity and Gas, such situation was in contrastwith applicable regulation. Eni presented an articulated anddocumented memoranda to claim the thesis of the Authority forElectricity and Gas regarding the alleged non compliance of Enibehavior with regulation in force, also taking account of thecircumstances under which excess off takes occurred and thesubsequent authorization of the Ministry for Economic Developmentto use the strategic storage for the thermal year 2004-2005. WithDecision No. 281/2006 of December 6, 2006, the Authority forElectricity and Gas closed said inquiry and fined Eni by euro 90million of which euro 45 million pertaining to the thermal year2004-2005 and euro 45 million to the thermal year 2005-2006 as aconsequence of Eni having violated regulation in force pertainingto the priorities in the conferral of storage capacity.

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Eni paid the amount of this fine pertaining to the thermalyear 2004-2005 in accordance to a reduced form as provided by LawNo. 689/1981 and filed an appeal against Decision No. 281/2006 ofthe Authority for Electricity and Gas before the RegionalAdministrative Court of Lombardy requesting the Tribunal: (i) forthe first thermal year, to ascertain whether Eni is legitimate topay in a reduced form or, in case Eni is not legitimate to do so,to annul the fine; and (ii) for the second thermal year, to annulthe fine. Eni accrued a provision for this proceeding.

DISTRIBUIDORA DE GAS CUYANA SA*Formal investigation of the agency entrusted with theregulations for the natural gas market in Argentina("Enargas").*The agency entrusted with theregulations for the natural gas market in Argentina("Enargas") started a formal investigation on someoperators, among these Distribuidora de Gas Cuyana SA, a companycontrolled by Eni. Enargas stated that the company improperlyapplied calculated conversion factors to volumes of natural gasinvoiced to customers and requested the company to apply theconversion factors imposed by local regulations from the date ofthe default notification (March 31, 2004) without prejudice toany damage payment and fines that may be decided after closingthe investigation. Expert evaluations are being performed.

 

> 
**Tax Proceedings**

ENI SPAWith a decree dated December 6, 2000, the Lombardy Region decidedthat natural gas used for electricity generation is subject to anadditional regional excise tax in relation to which Snam SpA(merged into Eni SpA in 2002) should substitute for the taxauthorities in its collection from customers. Given interpretiveuncertainties, the same decree provides the terms within whichdistributing companies are expected to pay this excise taxwithout paying any penalty. Snam SpA and the other distributingcompanies of Eni believe that natural gas used for electricitygeneration is not subject to this additional excise tax. For thisreason, an official interpretation was requested from theMinistry of Finance and Economy. With a Decision of May 29, 2001,the Ministry confirmed that this additional excise tax cannot beapplied. The Region decided not to revoke its decree and Snamtook appropriate legal action. On the basis of action carried outby Snam, the Council of State decided on March 18, 2002 that thejurisdiction of the Administrative Court did not apply to thiscase. In case the Region should request payment, Eni willchallenge this request in the relevant Court. The Lombardy Regiondecided with Regional Law No. 27/2001 that no additional tax isdue from January 1, 2002 onwards, but still requested the paymentof taxes due before that date. The action for the recognition ofsuch taxes bears a five-year term. Consequently, the exercise ofsuch action expires on July 16, 2007.

With a formal assessment presented by the Municipality ofPineto (Teramo), Eni SpA has been accused of not having paid amunicipal tax on real estate for the period from 1993 to 1998 onfour oil platforms located in the Adriatic Sea territorial watersin front of the coast of Pineto. Eni was requested to pay a totalof approximately euro 17 million including interest and a finefor lacking payment and tax declaration. Eni filed a claimagainst this request stating that the sea where the platforms arelocated is not part of the municipal territory and the taxapplication as requested by the municipality lacked objectivefundamentals. The claim has been accepted in the first twodegrees of judgment at the Provincial and Regional TaxCommissions. But the Court of Cassation cancelled both judgmentsdeclaring that a municipality can consider requesting a tax onreal estate also in the sea facing its territory and with aDecision of February 21, 2005 sent the proceeding to anothersection of the Regional Tax Commission in order to judge on theother reasons opposed by Eni. On December 28, 2005, theMunicipality of Pineto presented the same request for the sameplatforms for the years 1999 to 2004. The total amount requestedfrom Eni is euro 24 million. Eni filed a claim against thisrequest.

SNAM RETE GAS SPA*Environmental tax of Sicilia Region upon the owners of primarypipelines.*With Regional Law No. 2 of March 26, 2002, theSicilia Region introduced an environmental tax upon the owners ofprimary pipelines in Sicily (i.e. pipelines operating at amaximum pressure of over 24 bar). The tax was payable as of April2002. In order to protect its interests, Snam Rete Gas filed aclaim with the European Commission, aimed at opening a proceedingagainst the Italian Government and the Tax Commission of Palermo.The Authority for Electricity and Gas, although acknowledgingthat the tax burden is an operating cost for the transportactivity, subjected inclusion of the environment tax in tariffsto the final ruling on its legitimacy by relevant authorities.With the ruling of December 20, 2002, the Court judged the tax atvariance with European rules. In December 2002, Snam Rete Gassuspended payments based on the above Court ruling. Paymentseffected until November 2002 totaled euro 86.1 million. InJanuary 2003, the Sicilia Region filed an appeal with the Councilof State against the ruling of the Regional Administrative Courtof Lombardy for the part that states the variance of the regionallaw with European rules. On December 16, 2003, the EuropeanCommission judged the tax instituted by the Republic of Italy,through the Sicilia Region, to be contrary to European rules andto the cooperation agreement between the European EconomicCommunity and the Peoples’ Democratic Republic of Algeria;the European Commission also stated that such environmental taxis in contrast with the common customs tariff because it modifiesthe equality of customs expenses on commodities imported fromthird countries and could create a deviation in trade with suchcountries and a distortion in access and competition rules. TheCommission with its opinion presented on July 7, 2004 formallyrequested Italy to cancel the tax. 

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The Italian Government was ordered to conform within twomonths from receipt of the opinion. As it did not conform, onDecember 20, 2004 the European Commission passed the case to theCourt of Justice requesting a ruling. Should the European Courtof Justice rule in favor of Eni, this proceeding would come to anend and the Sicilia Region would be obliged to refund allinstallments paid. With a Decision dated January 5, 2004, andconfirmed on March 4, 2005 by the Regional Tax Commission, theProvincial Tax Commission of Palermo declared the environmentaltax of the Sicilia Region illegitimate because it is contrary toEuropean rules and therefore accepted Snam Rete Gas’s claimfor the repayment of the first installment of euro 10.8 million,already paid to the Sicilia Region in April 2002. On May 4, 2004,the Sicilia Region repaid the first installment. As for the sevenremaining installments paid after April 2002 (euro 75.3 million),the Provincial Tax Commission of Palermo with Decision of January5, 2005 confirmed the illegitimacy of the tax condemning theRegion to repay the cashed amounts and accrued interest to SnamRete Gas. Against the decision the Sicilia Region presentedrecourse to the Regional Tax Commission in 2005. In the firsthalf of 2007 the Regional Tax Commission confirmed theillegitimacy of the environmental tax.

AGIP KARACHAGANAK BV*Claims concerning unpaid taxes and relevant payment ofinterest and penalties.*In July 2004, relevant Kazakhauthorities informed Agip Karachaganak BV and Agip KarachaganakPetroleum Operating BV, shareholder and operator of theKarachaganak contract, respectively, on the final outcome of thetax audits performed for fiscal years 2000 to 2003. Claims by theKazakh authorities concern unpaid taxes for a total of $43million, net to Eni, and the anticipated offsetting of VATcredits for $140 million, net to Eni, as well as the payment ofinterest and penalties for a total of $128 million. Bothcompanies filed a counterclaim. With an agreement reached onNovember 18, 2004, the original amounts were reduced to $26million net to Eni that includes taxes, surcharges and interest.Meetings continue regarding residual matters. Eni recorded aprovision for this matter.

 

> 
***Settled Proceedings***

RAFFINERIA DI GELA SPAWith a sentence released in July 2006, the Court of Gelaascertained that certain alleged crimes pertaining to theemissions of the refinery had become extinct due to the statuteof limitations. In relation to such alleged crimes, the Court ofGela summoned the legal representatives of the company for eventsthat have occurred since 1997. The Municipality of Gela, theProvince of Caltanissetta and others acted as plaintiff in thisproceeding, requesting the payment of compensatory damages for atotal of euro 878 million.

SYNDIAL SPA*Personal cautionary measures against some employees of thePriolo plant issued by the Court of Siracusa concerning illicitmanagement relating to waste activities.* On January 16, 2003,the Court of Siracusa issued personal cautionary measures againstseveral employees of the Priolo plant owned by EniChem SpA andPolimeri Europa SpA, within judicial investigations pertaining toan illicit management relating to the production, disposal andtreatment of liquid and solid waste materials resulting in anillicit income from the savings arising from the non compliancewith rules regulating waste activities. Polimeri Europa andEniChem acted as plaintiffs. Findings of the preliminaryinvestigations were notified to involved persons, confirmingaccusations. During the preliminary investigations, traces ofmercury were found in the sea. The public prosecutor of Siracusastarted an inquiry for ascertaining the conditions of sedimentsand marine fauna in the bay of Augusta. According to theprosecutor, mercury was spilled into the sea and poisoned themarine fauna and therefore resulted in fetal malformations andabortions due to the consumption of contaminated seafood fishedin this area. The chlorine soda plant, built in the late 1950swas contributed in-kind to Syndial in 1989 when the Enimont jointventure was formed. It was therefore proved that Eni’semployees held no responsibility for the crimes of which theywere charged. On March 15, 2006, the judge for preliminaryinvestigations decided the dismissal of the case against Syndialemployees, accepting the request made by the prosecutor.

SYNDIAL SPA (FORMER ENICHEM SPA)In 1997, an action was commenced before the Court of Veniceconcerning the criminal charges brought by the Venice publicprosecutor for alleged mismanagement of the Porto Marghera plantstarting in the 1970s until 1995 and for the alleged pollutionand health damage resulting there from. Defendants includedcertain employees of Eni which have managed the Porto Margheraplant since the beginning of the eighties. On November 2, 2001,the Court of Venice acquitted all defendants. The appeal againstthe decision was presented by the public prosecutor, the stateattorney on behalf of the Ministry of Environment and the Councilof Ministers, five public entities, 12 associations and otherentities and 48 individual persons. On December 15, 2004 theVenice Court of Appeals confirmed the preceding judgment,changing only some marginal parts. As concerns some defendants,the Venice Court of Appeals decided not to proceed due to thestatute of limitations for some crimes, while it confirmed thepreceding judgment for the other matters. On May 19, 2006, theCourt of Final Instance, before which plaintiffs appealed thedecision of the Venice Court of Appeals, acquitted all defendantsstating that pollution and mismanagement of the plant occurredbefore the 1980s and consequently Eni and its employees could notbe deemed responsible. In January 2006, Eni settled this matterwith the Council of Ministers and the Ministry for theEnvironment paying an amount of euro 40 million. 

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Under terms of the settlement, the latter will abstain fromrecourse to the Court of Final Instance and will not act on anyother environmental damage concerning the management of PortoMarghera until the date of the settlement. Eni already recorded aprovision for this matter which was sufficient to cover theamount of the settlement.

ENI DACIÓN BVIn August 2005, the internal revenue service of Venezuela servedfour formal assessment on income taxes to Eni Dación BV for theyears 2001 to 2004 that, by excluding the deductibility ofcertain costs: (i) annul the losses recorded for the periodsamounting to a total of bolivar 910 billion (corresponding to$425 million); (ii) determine for the same periods a taxableincome amounting to a total of bolivar 115 billion (correspondingto $54 million); and (iii) request a tax amounting to bolivar 52billion (corresponding to $24 million) determined by applying a50% tax rate rather than the 34% rate applied to other companiesperforming activities analogous to those of Eni Dación BV. Inparticular, it excluded the deductibility of: (i) interestcharges due to other Eni Group companies that provided loansdenominated in U.S. dollars; and (ii) exchange rate lossesrecorded in the financial statements and related to such loansresulting from the devaluation of the Venezuelan currency. Theformal assessments served have a preliminary nature and do notrequest immediate payment nor do they specify the amount of afine (from 10 to 250%) and of interest (average rate for theperiod approximately 23%). Eni Dación filed a claim for thecancellation of the assessment. In the 2005 accounts, Enirecorded a specific provision for this matter. In April 2006, theappeal was rejected and the final tax assessment was issued. Thefinal tax assessment: (i) substantially confirmed the preliminaryassessments, although reducing the originally assessed income taxliability to bolivar 39 billion ($18 million); and (ii) imposedfines and late payment interests of bolivar 109 billion ($51million). Eni Dación BV presented a further administrativeappeal before the expiration of the time limit for filing ajudicial tax appeal, thereby obtaining a reduction of the overallamount from bolivar 148 billion ($69 million) to bolivar 52billion ($24 million) including taxes in the amount of bolivar12.5 billion ($6 million) and fines and late payment interest inthe amount of bolivar 39.5 billion ($18 million). In order toavoid further charges deriving from the increase of thecorresponding fines and late payment interest, Eni Dación BVpaid the newly assessed amount in May 2006, thereby reaching asettlement. Consistently, Eni Dación BV filed an integrativeincome tax return for year 2005, considering the new tax basesfor years 2001 to 2004, and paid accordingly bolivar 128 billion($60 million) of income taxes and bolivar 4.4 billion ($2million) of fines and late payment interest.

 

> 
***Court Inquiries***

The Milan Public Prosecutor is inquiring into contractsawarded by Eni’s subsidiary EniPower and on supplies fromother companies to EniPower. The media has widely covered theseinquiries. It emerged that illicit payments were made by EniPowersuppliers to a manager of EniPower who was immediately dismissed.The Court presented EniPower (commissioning entity) andSnamprogetti (contractor of engineering and procurement services)with notices of process in accordance with existing lawsregulating administrative responsibility of companies(Legislative Decree No. 231/2001). In its meeting of August 10,2004, Eni’s Board of Directors examined the above mentionedsituation and Eni’s CEO approved the creation of a taskforce in charge of verifying the compliance with Group proceduresregarding the terms and conditions for the signing of supplycontracts by EniPower and Snamprogetti and the subsequentexecution of works. The Board also advised divisions anddepartments of Eni to fully cooperate in every respect with theCourt. From the inquiries performed, no default in theorganization emerged, nor deficiencies in internal controlsystems. External experts have performed inquiries with regard tocertain specific aspects. In accordance with its transparency andfirmness guidelines, Eni will take the necessary steps in actingas plaintiff in the expected legal action in order to recover anydamage that could have been caused to Eni by the illicit behaviorof its suppliers and of their and Eni employees. In the meantime,preliminary investigations have found that both EniPower andSnamprogetti are not to be considered defendants in accordancewith existing laws regulating administrative responsibility ofcompanies (Legislative Decree No. 231/2001).

An investigation is pending regarding two former Eni managerswho were allegedly bribed by third parties in order to favor theclosing of certain transactions with two oil product tradingcompanies. Within such investigation, on March 10, 2005, thepublic prosecutor of Rome notified Eni two judicial measures forthe seizure of documentation concerning Eni’s transactionswith said companies. Eni is acting as plaintiff in thisproceeding. Due to lack of evidence supporting this charge in atrial, the Public Prosecutor filed a request for dismissing thisproceeding.

 

> 
***TSKJ Consortium - Investigations of SEC and other    Authorities***

The U.S. Securities and Exchange Commission (SEC) is currentlyinvestigating alleged improper payments made by the TSKJconsortium to certain public officials in relation to theconstruction of natural gas liquefaction facilities at BonnyIsland in Nigeria. The TSKJ consortium is formed by Eni’ssubsidiary Snamprogetti with a 25% interest and, for theremaining part, by subsidiaries of Halliburton/KBR, Technip andJGC. Eni and its subsidiary Snamprogetti adhered to a request forvoluntary collaboration notified by the SEC in June 2004. The SECrequest aimed at obtaining information regarding the TSKJconsortium. Eni and Snamprogetti also adhered to other requestsfor voluntary collaboration made by other authorities which arecurrently investigating this matter.

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> 
***Gas Metering***

On May 28, 2007, a seizure order (in respect to certaindocumentation) was served upon Eni and other Group companies aspart of a proceeding brought by the Public Prosecutor at theCourts of Milan. The order was also served upon five top managersof the Group companies in addition to third party companies andtheir top managers. The investigation alleges behavior whichbreaches Italian criminal law, starting from 2003, regarding theuse of instruments for measuring gas, the related payments ofexcise duties and the billing of clients as well as relationswith the Supervisory Authorities. The allegation regards, interalia, the offence contemplated by Legislative Decree of June 8,2001, No. 231, which establishes the liability of the legalentity for crimes committed by its employee in the interests ofsuch legal entity, or to its advantage. Accordingly, notice ofthe start of investigations was served upon Eni Group companies(Eni, Snam Rete Gas and Italgas) as well as third partycompanies. The Group companies are cooperating with theAuthorities in the investigations.

 

> 
***Dividends***

Eni’s dividend policy in future periods and thesustainability and the amount of future dividends over the nextfour-year period will depend upon a number of factors includingthe increase in earnings and in cash flow provided by operatingactivities, a sound balance sheet structure, capital expenditureand development plans, and the "Risk Factors" set outin Item 3. Eni SpA’s net profit and, therefore, the amountsavailable for payment of dividends therefore will also depend onthe level of dividends received from Eni’s subsidiaries.However, subject to such factors, in the next four-year periodmanagement plans to pay to shareholders yearly dividends on thesame level as in 2006 in real terms. On May 24, 2007, Eni’sgeneral shareholders’ meeting approved a dividend, forfiscal year 2006, of euro 1.25 per share, of which euro 0.60 pershare was paid in October 2006 as an interim dividend with thebalance of euro 0.65 per share to be paid late in June 2007.Total cash outlay for the 2006 dividend is expected at euro 4.6billion (including the euro 2.21 billion already paid in October2006). In future years, management expects to continue payinginterim dividends for each fiscal year, with the balance for thefull year dividend paid in the following year.

 

**Significant Changes**

See "Item 5 – Recent Developments" for adiscussion of Eni’s results of operations in the firstquarter of 2007 and other material developments that occurredafter December 31, 2006.

 

 

**Item 9. THE OFFER AND THE LISTING**

**Offer and Listing Details**

The ordinary shares of Eni SpA, nominal value euro 1.00 each(the "Shares"), are traded on the Blue Chip segment ofthe Mercato Telematico Azionario or MTA ("Telematico"),the Italian screen-based dealer market, which is the principaltrading market for shares in Italy. The Blue Chip segment ofTelematico includes shares of the companies whose marketcapitalization amounts to more than euro 1,000 million. AmericanDepositary Receipts ("ADRs"), each representing twoshares, are listed on the New York Stock Exchange. The ratio haschanged from one ADR per five Shares to one ADR per two Shares,effective January 10, 2006.

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The table below sets forth the reported high and low referenceprices of Shares on Telematico and of ADRs on the New York StockExchange, respectively. Due to the ratio change, the historicalprices of ADRs have been adjusted by an adjustment factor of 2.5.See "Item 3 – Key Information – ExchangeRates" regarding applicable exchange rates during theperiods indicated below.

|   | **Telematico** |   | **New York        Stock Exchange** |
|--------|----------------|--------|------------------------------------|
|   |                |   |                                    |

|   | **High** |   | **Low** |   | **High** |   | **Low** |
|--------|----------|--------|---------|--------|----------|--------|---------|
|   |          |   |         |   |          |   |         |

|   | **(euro per share)** |   | **(U.S. $ per ADR)** |
|--------|----------------------|--------|----------------------|

| 2001                  |   | 15.598 |   | 11.564 |   | 27.880 |   | 21.000 |
|-----------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| 2002                  |   | 17.145 |   | 12.938 |   | 32.844 |   | 24.360 |
| 2003                  |   | 15.746 |   | 11.881 |   | 37.992 |   | 26.460 |
| 2004                  |   | 18.748 |   | 14.723 |   | 50.580 |   | 36.940 |
| 2005                  |   | 24.960 |   | 17.930 |   | 60.540 |   | 47.400 |
| 2006                  |   | 25.730 |   | 21.820 |   | 67.690 |   | 54.650 |
|                  |   |   |   |   |   |   |   |   |
| **2005**              |   |   |   |   |   |   |   |   |
| First quarter         |   | 20.480 |   | 17.930 |   | 54.288 |   | 47.400 |
| Second        quarter |   | 22.070 |   | 19.270 |   | 54.084 |   | 49.004 |
| Third quarter         |   | 24.960 |   | 21.430 |   | 60.540 |   | 51.320 |
| Fourth        quarter |   | 24.770 |   | 21.640 |   | 59.020 |   | 51.628 |
|                  |   |   |   |   |   |   |   |   |
| **2006**              |   |   |   |   |   |   |   |   |
| First quarter         |   | 24.880 |   | 23.050 |   | 60.650 |   | 55.170 |
| Second        quarter |   | 24.810 |   | 21.820 |   | 62.630 |   | 54.650 |
| Third quarter         |   | 24.430 |   | 22.590 |   | 62.900 |   | 57.080 |
| Fourth        quarter |   | 25.730 |   | 23.050 |   | 67.690 |   | 58.400 |
|                  |   |   |   |   |   |   |   |   |
| **2007**              |   |   |   |   |   |   |   |   |
| First quarter         |   | 25.720 |   | 22.760 |   | 66.720 |   | 60.220 |
| January        2007   |   | 25.720 |   | 24.340 |   | 66.720 |   | 62.900 |
| February 2007         |   | 24.940 |   | 23.170 |   | 64.920 |   | 61.230 |
| March 2007            |   | 24.360 |   | 22.760 |   | 64.890 |   | 60.220 |
| April 2007            |   | 24.770 |   | 24.130 |   | 67.450 |   | 64.710 |
| May 2007              |   | 26.580 |   | 24.450 |   | 71.250 |   | 65.680 |

|   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|

JPMorgan Chase Bank, N.A. (the "Depositary")functions as depositary bank issuing ADRs pursuant to the DepositAgreement among Eni, the Depositary and the beneficial owners("Beneficial Owners") and registered holders from timeto time of ADRs issued thereunder.

At May 31, 2007 there were 51,346,859 ADRs outstanding,representing 102,693,718 ordinary shares, or 2.56% of allEni’s shares outstanding, held by 73 holders of record(including the Depository Trust Company) in the United States ofAmerica, 71 of which are U.S. residents. Since certain of suchADRs are held by nominees, the number of holders may not berepresentative of the number of Beneficial Owners in the UnitedStates or elsewhere.

The Shares are included in the S&P/MIB, the primaryItalian stock exchange index that measures the performance of the40 leading companies in leading industries listed on the marketsorganized and managed by Borsa Italiana SpA ("BorsaItaliana"). The constituents of the S&P/MIB are selectedaccording to the following criteria: sector representation,market capitalization of free-float shares and liquidity. SinceSeptember 20, 2004 S&P/MIB is the principal indicator used totrack the performance of the Italian stock market, and is thebasis for future and option contracts traded in the ItalianDerivatives Market ("IDEM") managed by Borsa Italiana.Eni’s Shares are the second largest component of theS&P/MIB, after the shares of Unicredito Italiano SpA, with aweighting of approximately 14.3%, as established by Standard& Poor’s and Borsa Italiana after reviewing thecomposition of the S&P/MIB on May 21, 2007. In addition,future and option contracts on the Shares are traded on IDEM andsecuritised derivatives based on the Shares are traded on theItalian Securitised Derivatives Market ("SeDeX"). IDEMfacilitates the trading of future and option contracts on indexand shares issued by companies that meet certain requiredcapitalization and liquidity thresholds. SeDeX is the BorsaItaliana electronic regulated market where it is possible totrade securitised derivatives (covered warrants andcertificates).

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Since January 14, 2002, the rule on the minimum lot of sharesfor transactions on the Telematico has been eliminated. OutsideTelematico, block trading is permitted for orders that meetcertain minimum size requirements and must be notified to Consoband Borsa Italiana. Starting from May 15, 2000, the Shares havebeen also trading on a special market, named After Hours tradingmarket or TAH ("After Hours"), after the closure of theday time of Telematico under special rules. Since March 28, 2000,a three-day rolling cash settlement has been applied to alltrades of equity securities in Italy, instead of the previousfive-day settlement.

 

**Markets**

Telematico is organized and administered by Borsa Italianasubject to the supervision and control of the CommissioneNazionale per le Società e la Borsa (the National Commission forCompanies and the Stock Exchange or "Consob"), thepublic authority charged, inter alia, with regulating investmentcompanies, securities markets and public offerings of securitiesin Italy to ensure the transparency and regularity of thedealings and protect investors. Borsa Italiana is a joint stockcompany (Società per Azioni) that was established to manage theItalian regulated financial markets (including Telematico) aspart of the implementation in Italy of the EU Investment ServicesDirective. Borsa Italiana has issued rules governing theorganization and the administration of the markets it regulates,which are Telematico (shares, convertible bonds, pre-emptiverights, warrants, ETFs and Funds), Mercato MTAX (high growthcompanies), After Hours, Mercato Expandi (small companies), IDEM(index and stock derivatives market), SeDeX (covered warrants andcertificates), MOT (bond market), as well as the admission tolisting on and trading on these markets.

If the opening price of a security (established each tradingday prior to the commencement of continuous trading based on bidsreceived) differs by more than 10% (or such other amountestablished by Borsa Italiana) from the previous day’sreference price, trading in that security will not be permitteduntil Borsa Italiana authorizes the trading. The reference priceis calculated for each security as a weighted average of the last10% of volumes traded in a single day. If in the course of atrading day the price of a security fluctuates by more than 5%from the last reported sale price (or 10% from the openingprice), trading in that security will be automatically suspendedfor a certain period of time. In the event of such a suspension,effect is not given to trades agreed but not confirmed before thesuspension.

Effective July 1, 1998, the Italian financial markets areprimarily regulated by Legislative Decree No. 58 of February 24,1998 ("Decree No. 58"), which consolidated the previousregulation primarily by restating the provisions of LegislativeDecree No. 415 of July 23, 1996.

Decree No. 58 provides that trading of equity securities, aswell as any other investment services, may now be carried out onbehalf of the public by società di intermediazione mobiliare(securities dealing firms or "SIMs"), which areauthorized intermediaries, authorized banks and certain types offinance companies. In addition, banks and investment firmsorganized in a member nation of the EU are permitted to operatein Italy provided that the intent of the bank or investment firmto operate in Italy is communicated to Consob and the Bank ofItaly by the competent authority of the member state. Pursuant toDecree No. 58 the Bank of Italy, in agreement with Consob, isresponsible for regulating clearance and settlement. Non-EU banksand non-EU investment firms may operate in Italy subject to thespecific authorization of Consob and the Bank of Italy. Theregulations and measures of general application adopted by theBank of Italy and Consob are published in the Gazzetta Ufficiale.

 

 

**Item 10. ADDITIONAL INFORMATION**

**Memorandum and Articles of Association**

The full text of the memorandum and articles of association ofEni as amended by Eni’s Extraordinary Shareholders’Meeting held on May 24, 2007, is attached as an exhibit to thisannual report. See "Exhibit 1".

Eni is incorporated under the name "Eni SpA"resulting from the transformation of Ente Nazionale Idrocarburi,a public law agency, established by Law No. 136 of February 10,1953. The company purpose is the direct and/or indirectmanagement, by way of shareholdings in companies, agencies orbusinesses, of activities in the field of hydrocarbons andnatural vapors, such as exploration and development ofhydrocarbon fields, construction and operation of pipelines fortransporting the same, processing, transformation, storage,utilization and trade of hydrocarbons and natural vapors, all incompliance with concessions required by law.

The Company also has the purpose of direct and/or indirectmanagement, by way of shareholdings in companies, agencies orbusinesses, of activities in the fields of chemicals, nuclearfuels, geothermy and renewable energy sources, in the sector ofengineering and construction of industrial plants, in the miningsector, in the metallurgy sector, in the textile machinerysector, in the water sector, including derivation, drinkingwater, purification, distribution and reuse of waters; in thesector of environmental protection and treatment and disposal ofwaste, as well as in every other business activity that isinstrumental, supplemental or complementary with theaforementioned activities.

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The Company also has the purpose of managing the technical andfinancial co-ordination of subsidiaries and affiliated companiesas well as providing financial assistance on their behalf.

The Company may perform any operations necessary or useful forthe achievement of its purpose; by way of example, it mayinitiate operations involving real estate, moveable goods, tradeand commerce, industry, finance and banking asset and liabilityoperations, as well as any action that is in any way connectedwith the company purpose with the exception of public fundraising and the performance of investment services as regulatedby Decree No. 58 of February 24, 1998.

The Company may take shareholdings and interests in othercompanies or businesses with objects similar, comparable orcomplementary to its own or those of companies in which it hasholdings, either in Italy or abroad, and it may provide real andor personal bonds for its own and others’ obligations,especially guarantees.

 

> 
***Directors***

The Board of Directors is invested with the fullest powers forordinary and extraordinary management of the company and, inparticular, the Board has the power to perform all acts it deemsadvisable for the implementation and achievement of the Companypurpose, except for the acts that the law or Eni’s By-lawsreserve to the Shareholders’ Meeting.

For a complete description of the powers of the Board, the CEOand the Chairman, appointments, role of the Board and rules andprocedures of the meetings of the Board see "Item 6 –Board Practices".

The Chairman and the members of the Board are remunerated inan amount established by the ordinary Shareholders’ Meeting.Said resolution, once taken, will remain valid for subsequentbusiness years until the Shareholders’ Meeting decidesotherwise.

There are no provisions as to retirement based on age-limitrequirements, or requirement of share ownership for adirector’s qualification in Eni’s By-laws.

 

> 
***Limitations on Voting and Shareholdings***

*General*

There are no limitations imposed by Italian law or by theBy-laws of Eni SpA on the rights of non-residents of Italy orforeign persons to hold or vote the shares other than thelimitations described below (which are equally applicable toresidents and non-residents of Italy).

According to Article 6.1 under Eni’s By-laws, no person,in any capacity, may own shares amounting to more than 3% of EniSpA’s voting share capital. Such maximum limit is calculatedtaking into account the aggregate shareholding of a controllingentity, whether an individual or a legal entity (each a"person"); its directly or indirectly controlledentities, as well as entities controlled by the same controllingentity; affiliated entities, as well as relatives within thesecond degree by blood or marriage (except for a legallyseparated spouse). Affiliation exists as set forth in applicableItalian legislation, as well as between entities that, directlyor indirectly, through controlled entities (other than thosemanaging investment funds) are bound, even with third parties, byagreements relating to the exercise of voting rights or thetransfer of shares or interests in third-party companies or otheragreements relating to third-party companies as specified byapplicable Italian legislation if such agreements relate to atleast 10% of the voting share capital of a listed company or 20%of the voting share capital of a non-listed company. For purposesof calculating the 3% limit, shares held through a fiduciarynominee or intermediary are taken into account.

Any voting rights attributable to shares held or controlled inexcess of such 3% limit cannot be exercised, and the votingrights of each entity to whom such limit on shareholding appliesare reduced proportionately, unless otherwise jointly disposed ofin advance by the parties involved. In the event that shares heldor controlled in excess of the maximum limit are voted, anyshareholders’ resolution adopted pursuant to such a vote maybe challenged if the majority required to approve such resolutionwould not have been reached without the vote of the sharesexceeding such maximum limit. Shares not entitled to be voted arenevertheless counted for the purpose of determining the quorum ata shareholders’ meeting.

Under the provisions of Law No. 602 of November 27, 1996, the3% limit does not apply to shareholdings in Eni SpA held by theMinistry of Economy and Finance, state-owned entities controlledby other entities or by the State. The 3% limit does not apply,in the event that such limit is exceeded as a result of theacquisitions of shares pursuant to a mandatory tender offer or apreventative tender offer, each as provided for by TUF,regardless of whether a majority of the voting rights is acquiredthereby. The approval of the Ministers as described below in"– Special Powers of the State" is howeverrequested for shares acquired pursuant to tender offers.

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For other limitations that may affect voting rights, see"– Reporting Requirements and Restrictions onAcquisitions of Shares".

> 
*Special Powers of the State*

Under Italian laws the State, acting through the Minister ofEconomy and Finance in agreement with the Minister of EconomicDevelopment (the "Ministers"), holds certain specialpowers in connection with any transfer of a controlling interestin certain State-owned companies operating in public servicesectors, including Eni SpA. The law places no limit on theduration of such special powers. Such powers are to be exercisedin accordance with EU principles. Specific guidelines have beenintroduced by the Decree of the President of the Council ofMinisters (DPCM), dated May 4, 1999, which sets forth theconditions in which the Ministers can exercise their special vetoover a company’s strategic decisions. According to Article66 of Law No. 488, dated December 23, 1999, such guidelines havebeen confirmed by the DPCM dated June 10, 2004.

Pursuant to the DPCM of April 1, 2005, on April 13, 2005,Eni’s Board of Directors modified the Eni’s By-laws inorder to apply the provisions of Law No. 350 of December 24, 2003(2004 budget law), which modified Article 2 of Law Decree No. 332of May 31, 1994, as modified and converted into Law No. 474 ofJuly 30, 1994, regarding the Special Powers of the State.Eni’s By-laws acknowledge in Article 6.2 that the SpecialPowers of the State are as follows:

| a) |   | opposition with respect to        the acquisition of material shareholdings by entities        affected by the shareholding limit as set forth in        Article 3 of Law Decree No. 332 of May 31, 1994,        converted with amendments into Law No. 474 of July 30,        1994, which – as per Decree issued by the Minister        of Treasury on October 16, 1995 – include those        representing at least 3% of share capital with the right        to vote at the ordinary Shareholders’ Meeting. Any        opposition is required to be expressed within ten days as        of the date of the notice to be filed by the Board of        Directors at the time a request is made for registration        in the Shareholders’ Register if the Minister        considers that such an acquisition may prejudice the        vital interests of the Italian State. Until the ten-day        period has expired, the voting rights or any rights other        than the economic rights connected with the shares        representing a material shareholding may not be        exercised. If the opposition power is exercised on the        basis that prejudice may be caused by the operation to        the vital interests of the Italian State, the transferee        may not exercise the voting rights or any rights other        than the economic rights connected with the shares        representing a material shareholding and must sell said        shares within one year. If the shareholder fails to        comply, the law court, upon request of the Minister of        Economy and Finance, will order the sale of the shares        representing a material shareholding according to the        procedures set forth in Article 2359-ter of the Civil        Code. The act through which the opposition power is        exercised may be appealed by the transferee before the        Regional Administrative Court of Lazio within sixty days        as of its issue; |
|----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | opposition with respect to        the subscription of shareholders’ pacts or        agreements as per Article 122 of Legislative Decree No.        58 of February 24, 1998, involving – as per Decree        issued by the Minister of Treasury on October 16, 1995        – at least 3% of the share capital with the right to        vote at ordinary Shareholders’ Meetings. In order to        allow the exercise of the above mentioned opposition        power, Consob notifies the Minister of Economy and        Finance of the relevant pacts or agreements communicated        to it pursuant to the aforementioned Article 122 of        Legislative Decree No. 58 of February 24, 1998. The        opposition power may be exercised within ten days as of        the date of the notice by Consob. Until the ten-day        period has expired, the voting rights or any rights other        than the economic rights connected with the shares held        by the shareholders who have subscribed the above        mentioned pacts or agreements may not be exercised. If        the opposition power is exercised on the basis that        prejudice may be caused by said pacts or agreements to        the vital interests of the Italian State, the        shareholders pacts or agreements shall be null and void.        If in the shareholders’ meetings the shareholders        who have signed shareholders’ pacts or agreements        behave as if those pacts or agreements disciplined by        Article 122 of Legislative Decree No. 58 of February 24,        1998 were still in effect, the resolutions approved with        their vote, if determining for the approval, may be sued.        The act through which the opposition power is exercised        may be sued by the shareholders who joined the above        mentioned pacts or agreements before the Regional        Administrative Court of Lazio within sixty days as of its        issue;     |
| c) |   | veto power with respect to        resolutions to dissolve the company, to transfer the        business, to merge, to demerge, to transfer the        company’s registered office abroad, to change the        company objects and to amend the By-laws canceling or        modifying the powers indicated in this Article. The act        through which the veto power is exercised shall be duly        motivated in consideration of the prejudice the related        resolution may cause to the vital interests of the        Italian State and may be sued by the dissenting        shareholders before the Regional Administrative Court of        Lazio within sixty days as of its issue; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| d) |   | appointment of one Board        member with no voting rights. Should such appointed        Director lapse, the Minister of Economy and Finance in        agreement with the Minister of Economic Development will        appoint his substitute.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

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With a decision published on May 23, 2000, the European Courtof Justice declared that Italy, in granting the Minister ofEconomy and Finance "special powers" and introducingthem in the By-laws of some privatized companies, violated theobligations imposed by Articles 43 (former Article 52, right ofestablishment), 49 (former 59, free provision of services) and 56(former 73b, free movement of capitals) of the European Treaty.

In accordance with past decisions, the Court analyzed Italianlegislation in force at the expiration of the terms defined inthe European Commission’s informed opinion, therefore it didnot take into account DPCM of May 4, 1999, Article 66 of Law No.488/1999 and DPCM of June 10, 2004 and Law No. 350 of December24, 2003 which included provisions limiting those "specialpowers" of the Minister of Economy and Finance and theMinister of the Economic Development. These are currently beinganalyzed by the European Commission.

Furthermore Law No. 266 of December 23, 2005 (the Budget Lawfor year 2006) in Article 1 paragraphs from 381 to 384, in orderto favor the process of privatization and the diffusion ofinvestments in companies also held by the State, introduced theoption to include in the By-laws of companies formerly owned bythe State, as in the case of Eni SpA, regulations againsttakeovers, which in particular provide for the issue of shares,also at nominal value, and similar shareholding certificatesbearing the right to vote at ordinary and extraordinaryShareholders’ Meetings in favor of one or more shareholdersidentified in terms of the number of shares held. Theintroduction of these norms, which are subject to approval by theEU, will cause the cancellation of the above mentioned 3% limitto shareholdings in the voting share capital of Eni SpA asprovided in Article 6.1 of Eni’s By-laws.

> 
*Minority protection provisions*

Under Italian laws, the By-laws of companies, such as Eni SpA,that impose a maximum limit on the number of shares that may beheld by any shareholder must provide for the election ofdirectors and statutory auditors through the voto di lista(voting list) system, to ensure that minority shareholders of acompany are represented on its board of directors and board ofstatutory auditors. Accordingly, Eni’s By-laws require thatthe members of the Board of Directors and the Board of StatutoryAuditors of Eni SpA not directly appointed by the Ministers (see"– Special Powers of the State") be elected on thebasis of candidate lists presented either by the Board ofDirectors or by one or more shareholders (including the Ministerof Economy and Finance) representing in the aggregate at least 1%of the share capital of Eni SpA having the right to vote atordinary shareholders’ meetings. Such candidate lists mustbe deposited at the registered office of Eni SpA and published inat least three Italian newspapers having general circulation inItaly (two of which must be business dailies). Publication of thecandidate list presented by the Board of Directors shall occur atleast 20 days before the first call (as defined below) of theShareholders’ Meeting. Such term is reduced to 10 days inthe case of candidate lists proposed by shareholders. Eachshareholder may present or participate in the presentation ofonly one candidate list and each candidate may appear on only onelist.

Under Eni’s By-laws, the election of the members of theBoard of Directors will proceed as follows:

According to Article 17.3 of the By-laws, as amended by theShareholders’ Meeting held on May 24, 2007, Board membersare elected in the following manner:

| a) |   | seven tenths of the members        to be elected will be drawn out from the candidate list        that receives the majority of votes expressed by the        Shareholders in the numerical order in which they appear        on the list, rounded off in the event of a fractional        number to the next lower number;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | the remaining Board members        will be drawn out from the other candidate lists; said        lists shall not be linked in any way, even indirectly, to        the shareholders who have presented or voted the list        that has obtained the highest number of votes; to this        purpose the votes obtained by each candidate list will be        divided by one or two depending on the number of the        members to be elected. The quotients thus obtained will        be assigned progressively to candidates of each said list        in the order given in the lists themselves. Quotients        thus assigned to candidates of said lists will be set in        one decreasing numerical order. Those who obtain the        highest quotients will be elected. In the event that more        than one candidate obtains the same quotient, the        candidate elected will be the one of the list that has        not hitherto had a Board member elected or that has        elected the least number of Board members. In the event        that none of the lists has yet elected a Board member or        that all of them have elected the same number of Board        members, the candidate from all such lists who has        obtained the largest number of votes will be elected. In        the event of equal list votes and equal quotient, a new        vote will be taken by the entire Shareholders’        Meeting and the candidate elected will be the one who        obtains a simple majority of the votes; |
| c) |   | if through the procedure        described above the minimum number of independent        Directors set by these By-laws is not elected, the        quotient is calculated according to letter b) above in        order to be assigned to the candidates present in each        list; the independent candidates not yet drawn from the        lists pursuant to letters a) and b) above, who have got        the highest quotients will be elected in order to meet        the provision of the By-laws on the number of the        independent Directors. The Directors so appointed will        replace the non independent Directors to whom the lowest        quotients have been assigned. If the number of        independent candidates is lower than the minimum limit        set by the By-laws, the shareholders’ meeting will        make a resolution with the majorities prescribed by the        law to substitute the not independent candidates who have        the lowest quotients; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

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| d) |   | to appoint Board members for        any reason not covered by the terms of the aforementioned        procedure, the Shareholders’ Meeting will make a        resolution with the majorities prescribed by the law in        order to assure that the Board composition complies with        the current legislation and the By-laws. |
|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

The vote by list procedure shall apply only in case ofappointment of the entire Board of Directors.

The Extraordinary Shareholders’ Meeting held on May 28,2004 approved an amendment to Article 17.3 of the By-lawsaccording to which companies that are controlling entities orunder common control, as defined by Article 2359, firstparagraph, of the Civil Code, or companies controlled by the sameentity of the company presenting a list shall not present nortake part in the presentation of another candidate list.

Several provisions of Italian legislation are intended toincrease the protection of minority shareholders. In particular:(i) shareholders’ meetings must be called also upon requestof holders of at least 10% of the outstanding Shares (the Boardof Directors, however, may refuse to call the meeting whenconflicting with the company’s interests) (Article 2367Civil Code); (ii) the attendance quorum required for a validshareholder meeting at an Extraordinary Meeting is more than 50%of the outstanding shares on first call, while on second call theattendance quorum is more than 1/3 of the Shares outstanding andon third call the attendance quorum is more than 1/5 of theshares outstanding. On first, second and third call, resolutionsmay be approved by a majority of 2/3 of the Shares represented atthe Shareholders’ Meeting (Articles 2368-2369 Civil Code);(iii) shareholders’ actions against the Board of Directorsand the Statutory Auditors may be initiated by shareholdersholding at least 2.5% of the outstanding shares (Articles2393-bis and 2407 Civil Code); (iv) a single shareholder may suethe directors for individual damages (Article 2395 Civil Code) orcomplain to the Board of Statutory Auditors about directors’misconduct; if the complaint is filed by shareholdersrepresenting at least 2% of the share capital of a listedcompany, the Statutory Auditors are required to investigate withno delay and report to the shareholders’ meeting (Article2408 Civil Code); and (v) shareholders holding at least 5% of theoutstanding share may report to the Court directors’ seriousmisconduct. The Court may order the inspection of the management,adopt interim measures and replace directors with a judicialCommissioner (Article 2409 Civil Code). The company’sBy-laws may further lower the thresholds in (iii), (iv) and (v)and increase the voting quorums under (ii).

Law of December 28, 2005, the so called "Legge sullatutela del Risparmio" (protection of savings), containsfurther protections to Italian minority shareholders of listedcompanies; in particular, said law:

| • |   | sets new independence and        honorability requirements for directors of listed        companies;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | introduces the list vote for        the election of directors. The law states that        shareholders may present lists of candidates to the        office of director if they hold a participation in the        share capital of the issuer not higher than one fortieth        of its share capital or the different entity set by        Consob, the Italian financial markets regulator, in        consideration of the market capitalization, the free        float and the shareholdings of the listed company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| • |   | delegates to Consob the        power to regulate the appointment of a statutory auditor        by minority shareholders. Consob states that shareholders        may present lists of candidates to the office of        Statutory Auditor if they hold a participation in the        share capital of the issuer not smaller than 0.5% and not        higher than 4.5% of its share capital; for each issuer        the entity of said shareholding shall be determined in        consideration of the entity of the free float and the        shareholdings of the listed company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| • |   | delegates to Consob the        determination of the limits to the number of memberships        of boards of directors and boards of statutory auditors        that statutory auditors of listed companies can hold in        other companies;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| • |   | states that the chairman of        the Board of Statutory Auditors must be elected among the        candidates presented by minority lists; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • |   | introduces the function of        the "Manager responsible for the preparation of        financial reporting documents" to be appointed in        accordance with rules set out in a company’s        by-laws, subject to a prior advice on part of the Board        of Statutory Auditors. The "Manager responsible for        the preparation of financial reporting documents":        (i) must possess the professional requirements set by the        By-laws; (ii) defines accounting and administrative        procedures and controls for the preparation of the        consolidated financial statements, the parent        company’s financial statements and any other        financial reporting information prepared and disclosed;        (iii) declares the coherence between accounting items,        accounting books and acts and financial information        disclosed to the financial market and investors; and (iv)        certificates the adequacy and the effective application        of accounting rules and procedures during the period of        preparation of the consolidated financial statements, the        parent company’s financial statements and the        semi-annual accounts. This certification is set forth in        a specific report attached to the annual and semi-annual        financial reports according to a format established by        Consob. |

Certain provisions of this law were already reflected intoEni’s By-laws or were incorporated into Eni’s By-lawsby Eni’s Extraordinary Shareholders Meeting on May 25, 2006.The provisions of this law regarding the presentation, depositand publication of list of candidates for the office of directoror statutory auditor do not apply to Eni as, for the Company, thematter is disciplined by the special legislation contained in LawNo. 474 issued on July 30, 1994, regarding the so called"privatized companies". 

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Legislative Decree No. 303/2006 introduced changes to this lawon protection of savings; in particular:

| • |   | at least one Board member,        if their number is not higher than seven, or two Board        members, if their number is higher than seven, shall have        the independence requirements set forth by the current        legislation and the By-laws. If these requirements elapse        the Board member will be removed (Article 147-ter); |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the professional        requirements of the "Manager responsible for the        preparation of financial reporting documents"        (Article 154-bis).                                                                                                                                                                                   |

Eni’s By-laws was already in compliance with the abovementioned provisions regarding the appointment of directors andstatutory auditors and the qualification of the directors. Inparticular, Eni By-laws sets at three the number of independentDirectors if the Directors are more than five.

On May 24, 2007 Eni’s Extraordinary Shareholders Meetingresolved to modify Eni’s By-laws to provide that the Managerresponsible for the preparation of financial reporting documentsbe knowledgeable in accounting and administration matters, inparticular this person be chosen among people who, for at leastthree years, have exercised:

| a) |   | administration or control        activities or managerial tasks in companies listed on        regulated stock exchanges in Italy or other European        Union countries or other countries member of OECD with a        share capital not less than two million euro, or |
|----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | audit activities in the        companies mentioned in letter a) above, or                                                                                                                                                                                                  |
| c) |   | professional activities or        teaching activities in universities in the financial or        accounting sectors, or                                                                                                                                                    |
| d) |   | managerial functions in        public or private bodies in the financial, accounting, or        control sectors.                                                                                                                                                           |

> 
*Reporting requirements and restrictions on acquisitions    of shares*

Under Consob Regulation, any direct or indirect participationin excess of 2%, 5%, 7.5%, 10% and subsequent multiples of 5% inthe voting shares of a listed company must be notified to suchcompany and to Consob, within five open market days from theeffectiveness of the transaction triggering such obligation tonotify.

The obligation to notify also applies to any direct orindirect participation owned through ADRs.

For listed companies, whose By-laws impose a maximum limit onthe number of shares that may be held by any shareholder, Consobis entitled to fix different relevant thresholds by decree.

Further, the reduction of the foregoing interest below therelevant thresholds must be notified within the same terms.

Shares held in excess of any such threshold cannot be voted inthe event the above notices have not been provided. Anyresolution in violation of such limitation can be voided ifchallenged in court by shareholders and Consob, if the resolutionwould have not been adopted without the consent of the shares inquestion.

The relevant thresholds noted above shall be calculatedincluding: (i) shares registered in the name of the relevantreporting person whose underlying voting rights are attributed tothird parties, and viceversa; and (ii) shares held through thirdparties and shares whose voting rights are attributable to suchthird parties, excluding shares registered in the name of, orendorsed to, fiduciaries, as well as shares whose voting rightsare attributed to intermediaries for purposes of the managementof mutual or individual savings.

Furthermore, calculation of 5%, 10%, 25%, 50% and 75%thresholds shall also take into account shares outstanding whichthe relevant reporting person is entitled to purchase or to selldirectly or through third parties. Shares to be purchased throughthe exercise of conversion rights or warrants shall be calculatedonly in the event the acquisition can take place within a sixtydays period.

In the event the same relevant participation is directly orindirectly held by two or more entities, then the obligation tonotify may be satisfied by one of such person, provided thatcompleteness of information is guaranteed.

Any participation exceeding 10% of the voting capital of anunlisted company, including any foreign company, owned by alisted company must be notified to such non-listed company withinseven days from reaching such threshold. Similarly, thenon-listed company must be notified about any subsequentreduction of such participation below the 10% threshold.

Listed companies are also required to notify Consob of theirparticipation exceeding 10% of the voting share capital ofnon-listed companies owned at the end of the first six months andof the full year. Such notification is due within 30 days fromthe date of approval of the Annual Report and the Report on theFirst Six Months, respectively.

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In the event the same relevant participation is directly orindirectly held by two or more entities, then the obligation tonotify may be satisfied by one of such entities, provided thatcompleteness of information is guaranteed.

The 10% threshold shall be calculated including: (i) sharesregistered in the name of the relevant listed company, even ifvoting rights are attributable to third parties; (ii) shareswhose voting rights are attributable to the relevant listedcompany, in the event such voting rights entitle such party toexercise a dominant or material influence at the ordinaryshareholder’s meeting; and (iii) shares registered in thename of third parties and shares whose voting rights areattributable to third parties.

In addition to the rules of Article 2359-bis of the Italiancivil code, governing the acquisition of shares of the parentcompany by a controlled subsidiary, Decree No. 58/1998 regulatesadditional cross-ownership matters as follows.

Cross-ownership between listed and non-listed companies maynot exceed 2% of the shares of the listed company or 10% of theshares of the non-listed company. For calculating these ownershipthresholds, the rules for calculations of interests in listed andnon-listed companies apply.

The company ultimately exceeding the 2% or 10% interest in alisted or unlisted company respectively may not exercise thevoting rights on the shares held in excess of such thresholds;such shares must be sold within 12 months.

If anyone holds an interest exceeding 2% of the share capitalof a listed company, such listed company or any entitycontrolling such listed company may not acquire an interestexceeding 2% of the share capital of a listed company controlledby said holder. If the foregoing limit is exceeded, the holderwho last exceeded the foregoing limit or both the holders, if itis not possible to ascertain which holder exceeded such limitlast, may not exercise the voting right related to the sharesexceeding the foregoing limit. Such limits are not applicable incase of a tender offer for acquiring at least 60% of the ordinaryshares of a listed company. For a description of the limitationon cross-ownership between a company and its subsidiaries, see"Purchase by Eni SpA of its Own Shares".

Under Decree No. 58, any agreement, in whatever form, intendedto regulate the exercise of voting rights in a listed company orin the companies controlling a listed company, together with anyof its subsequent amendments, renewal or termination, must be:(i) notified to Consob, within five days from its execution; (ii)disclosed to the public through the publication, in summary form,in one Italian newspaper having general circulation, within tendays from its execution; and (iii) deposited in theCompanies’ Register of the place where such listed companyhas its registered office within 15 days from its execution.

The same requirements also apply to agreements, in whateverform, that: (a) impose an obligation of prior consultation forthe exercise of voting rights in a listed company and in itscontrolling companies; (b) contain undertakings limiting thetransferability of shares and other securities granting rightsfor the acquisition or subscription of shares; (c) provide forthe acquisition of the shares and securities; and (d) contemplateor cause the exercise, also in association with other persons, ofdominant influence over the listed company that issued the sharesand its controlled entities.

In the event the obligations set out above are not completelysatisfied, then the agreement is ineffective and the votingrights connected to the relevant shares may not be exercised. Incase of violation of such limitation imposed on the votingrights, a resolution can be challenged if such resolution wouldhave not been approved without the vote of such shares.

If the parties have agreed upon the duration of the agreement,such duration cannot exceed three years. In absence of agreement,each party to the agreement can withdraw from such an agreementby giving a six month notice.

In accordance with Law No. 287 of October 10, 1990, anyacquisition of sole or joint control over a company that wouldcreate or strengthen a dominant position in the domestic marketin a manner that eliminates or significantly reduces competitionis prohibited. However, if the acquiring party and the company tobe acquired operate in more than one EU member state and togetherexceed certain revenue thresholds, the antitrust approval of theacquisition falls within the exclusive jurisdiction of theEuropean Commission.

> 
*Shareholders’ meetings*

Shareholders’ meetings are convened through a notice tobe published on the Italian Official Gazette or the followingnewspapers: "Il Sole 24 Ore", "Corriere dellaSera" and "Financial Times", according to theBy-laws and in compliance with the rules in force regulating theexercise of the vote by mail.

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Registered shareholders are entitled to attend and vote atordinary and extraordinary shareholders’ meetings. Eachholder is entitled to cast one vote for each share held. Votesmay be cast personally, by proxy or by mail, in accordance withapplicable regulations. Meetings are called by Eni SpA’sBoard of Directors when required or deemed necessary, or onrequest of shareholders representing at least 10% of outstandingshares, who must provide an agenda of the matters to be discussedto the Chairman of the Board of Directors. Meetings may also becalled, by the Board of Statutory Auditors or by two auditors,provided that such call has been notified in advance.Shareholders representing at least one fortieth of Eni sharecapital, both on an individual and a cumulative basis, may ask,within five days as of the date of publication of theshareholders’ meeting notice, to add other items in theagenda. The request shall contain the matters to be proposed tothe shareholders’ meeting. Said faculty may not be exercisedon the matters upon which, pursuant to the applicablelegislation, the shareholders’ meeting resolves on the basisof a proposal of the Board of Directors or on the basis of aproject or report of the Board. The integrations accepted by theBoard shall be published at least ten days before theshareholders’ meeting date, through a notice to be publishedas indicated above.

Ordinary Shareholders’ Meetings must be convened at leastonce a year within 180 days after the end of the fiscal year ofthe parent company Eni SpA. The notice convening the meeting isto be published at least 30 days before the date fixed for themeeting. At these ordinary meetings, shareholders approve thefinancial statements, resolve upon dividend distribution, if any,when necessary, may appoint Directors, Statutory Auditors and theexternal auditors, determine their remuneration and vote on theliability of Directors and Statutory Auditors and approveShareholders’ Meeting regulation. Under current legislation,the reports and proposals of the Board of Directors to theOrdinary Shareholders’ Meeting for any item on the agenda ofthe meeting and the financial statements to be submitted to theshareholders’ approval, shall be deposited at theshareholders’ disposal at the Company’s registeredoffice and at Borsa Italiana.

Extraordinary meetings of shareholders may be called to passupon proposed amendments to the By-laws, capital increases,mergers, consolidations, demerger, issuance of debentures,appointment of liquidators and similar extraordinary actions. Thenotice of a Shareholders’ Meeting generally specifies twomeeting dates ("calls") and because Eni SpA is listedsuch notice may specify three calls for ExtraordinaryShareholders’ Meetings.

The attendance quorum required for a valid shareholder actionat an ordinary meeting on first call is 50% or more of theoutstanding shares, while on second call there is no attendancequorum requirement. At a duly called ordinary meeting, in bothfirst and second calls, resolutions may be approved by a simplemajority of the shares represented at the meeting.

The attendance quorum required for a valid shareholder meetingat an Extraordinary Meeting is more than 50% of the outstandingshares on first call, while on second call the attendance quorumis more than 1/3 of the Shares outstanding and on third call theattendance quorum is more than 1/5 of the shares outstanding. Onfirst, second and third call, resolutions may be approved by amajority of 2/3 of the Shares represented at theShareholders’ Meeting.

Admission to the meeting is granted to shareholders whodeliver the communication issued by financial intermediariesunder applicable laws at least two business days prior to thedate of the meeting on first call. For a description of theprocedures to be followed by Beneficial Owners of ADRs to attendshareholders’ meetings and exercise voting rights withrespect to underlying Shares, see "Description of AmericanDepositary Receipts - Voting of Deposited Securities".Beneficial Owners of Shares held with Monte Titoli need only toinstruct the relevant banks associated with Monte Titoli whichholds their accounts to procure admission tickets and proxyforms.

The Extraordinary Shareholders’ Meeting held on May 28,2004, approved the amendment to Article 23 of the By-lawsaccording to which the Board of Director is allowed to resolve:(i) the merger and demerger of at least 90% directly ownedsubsidiaries; (ii) the establishment and winding up of branches;and (iii) the amendment to the By-laws to adequate its provisionsto the current legislation.

Pursuant to Legislative Decree No. 213 dated June 24, 1998,Eni SpA’s shares have been "dematerialized" (theshares are not longer incorporated in a certificate). Thereforefor the exercise of the rights connected to outstanding Sharesnot yet dematerialized, Shareholders must first deliver suchshares to a financial intermediary associated with Monte Titoli.

Shareholders may appoint proxies by completing the formattached to the admission ticket. Directors, Statutory Auditors,auditors and employees of Eni SpA or of controlled companies, andthe External Auditors of Eni SpA, banks and Monte Titoli may notbe appointed proxies. Any one proxy may not represent more than200 shareholders of Eni SpA. A proxy may be appointed for asingle meeting, including the first, second and third callthereof unless the proxy is general or given to a company,association, foundation, other entities or institutions to anemployee. The By-laws of Eni SpA provide for voting by mail.There are no limitations arising under Italian law or the By-lawsof Eni SpA on the right of non-resident or foreign persons tohold or vote the Shares other than limitations that applygenerally to all shareholders.

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Rules relating to proxies are established by Decree No. 58 andthe related Consob Regulation No. 11971 dated May 14, 1999.Accordingly whereby: (i) proxies may be solicited, collected orexercised by banks, investment firms and shareholders’associations; (ii) proxies may be granted only in respect ofshareholders’ meetings that have been called; and (iii)proxies may be limited to voting on particular proposals. DecreeNo. 58 also allows companies to implement vote by mailprocedures.

Meetings of Eni’s shareholders are conducted according tothe "Eni SpA’s Shareholders’ MeetingRegulation" as approved by the Ordinary Shareholders’Meeting of Eni on December 4, 1998 and amended by the OrdinaryShareholders’ Meeting held on May 28, 2004 in order toadequate the provisions to the new rules contained in the CivilCode for the participation to the Shareholders’ Meetings.

> 
*Subscription rights*

New shares may be issued pursuant to a resolution ofshareholders at an extraordinary meeting. Under the Italian law,shareholders have a preemptive right to subscribe for new issuesof shares and debentures convertible into shares in proportion totheir respective shareholdings. Subject to certain conditions,principally designated to prevent dilution of the rights ofshareholders, this right may be waived or limited by resolutiontaken by an extraordinary shareholders’ meeting by theaffirmative vote of more than 50% of the shares outstanding. Suchpercentage applies to all calls of the meeting.

> 
*Liquidation rights*

Under the Italian law, subject to the satisfaction of theclaims of all other creditors, shareholders are entitled to thedistribution of the remaining liquidated assets of Eni SpA inproportion to the nominal value of their shares. Holders ofsavings shares and preferred shares, if foreseen by the By-laws,in the event such shares are issued by Eni SpA, are entitled to apreferred right to distribution from liquidation up to theirnominal value. Thereafter, if there are surplus assets, ordinaryshareholders rank equally in the distribution of such assets.Shares rank pari passu among ordinary shareholders in aliquidation.

 

**Material Contracts**

None.

 

**Documents on Display**

It is possible to read and copy documents referred to in thisannual report on Form 20-F that have been filed with the SEC atthe SEC’s public reference room located at 100 F Street, NE,Room 1580, Washington, DC 20549 and at the SEC’s otherpublic reference rooms in New York City and Chicago. Please callthe SEC at 1-800-SEC-0330 for further information on the publicreference rooms and their copy charges. The SEC filings are alsoavailable to the public from commercial document retrievalservices and in the website maintained by the SEC at www.sec.gov.It is also possible to read and copy documents referred to inthis annual report on Form 20-F at the New York Stock Exchange,20 Broad Street, 17th floor, New York.

 

**Exchange Controls**

There are no exchange controls in Italy. Residents andnon-residents of Italy may effect any investments, divestmentsand other transactions that entail a transfer of assets to orfrom Italy, subject only to the reporting, record-keeping anddisclosure requirements described below. In particular, residentsof Italy may hold foreign currency and foreign securities of anykind, within and outside Italy, while non-residents may invest inItalian securities without restriction and may export from Italycash, instruments of credit or payment and securities, whether inforeign currency or euro, representing interest, dividends, otherasset distributions and the proceeds of dispositions.

Updated reporting and record-keeping requirements arecontained in the Italian legislation which implements an EUdirective regarding the free movement of capital. Suchlegislation requires that transfers into or out of Italy of cashor securities in excess of euro 12.5 thousand be reported inwriting to the Ufficio Italiano Cambi (the Italian ExchangeOffice) by residents or non-residents that effect such transfersdirectly, or by banks, securities dealers or Poste Italiane SpA(Italian Mail) that effect such transactions on their behalf. Inaddition, banks, securities dealers or Poste Italiane SpAeffecting such transactions on behalf of residents ornon-residents of Italy are required to maintain records of suchtransactions for five years, which records may be inspected atany time by Italian tax and judicial authorities. 

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Non-compliance with these reporting and record-keepingrequirements may result in administrative fines or, in the caseof false reporting and in certain cases of incomplete reporting,criminal penalties. The Ufficio Italiano Cambi will maintainreports for a period of ten years and may use them, directly orthrough other government offices, to police money laundering, taxevasion and any other crime or violation.

 

**Taxation**

*The information set forth below is a summary only, andItalian, the United States and other tax laws may change fromtime to time. Holders of shares and ADRs should consult withtheir professional advisors as to the tax consequences of theirownership and disposition of the shares and ADRs, including, inparticular, the effect of tax laws of any other jurisdiction.*

 

> 
***Italian Taxation***

The following is a summary of the material Italian taxconsequences of the ownership and disposition of shares or ADRsas at the date hereof and does not purport to be a completeanalysis of all potential tax effects relevant to the ownershipor disposition of shares or ADRs.

> 
*Income tax*

Dividends received by Italian resident individuals in relationto interest exceeding 2% of the voting rights or 5% of the sharecapital ("substantial interest") are included in thetaxable income subject to personal income tax to the extent of40% of their amount. Personal income tax applies at progressiverates ranging from 23% to 43% plus local surtaxes. Dividendsreceived by Italian resident individuals in relation tonon-substantial interest not related to the conduct of a businessare subject to a substitute tax of 12.5% withheld at the sourceby the dividend paying agent. This being the case, the dividendis not to be included in the individual’s tax return. If thenon-substantial interest is related to the conduct of a business,dividends received are included in the taxable business income tothe extent of 40% of their amount.

Dividends received by Italian pension funds are included inthe overall result of the pension funds subject to an 11%substitute tax. Dividends received by Italian collectiveinvestment funds are included in the overall result of thecollective investment funds subject to a 12.5% substitute tax.Dividends received by Italian real estate investment funds arenot subject to tax in the hands of the real estate investmentfunds. Entities exempt from IRES (company income tax) are subjectto the substitute tax at the rate of 27%.

Dividend paid to non-Italian residents are subject to the samesubstitute tax levied at source by the dividend paying agent atthe rate of 27%, provided that the interest is not connected toan Italian permanent establishment. Up to four-ninths of thesubstitute tax withheld might be recovered by the non-residentshareholder from the Italian Tax Authorities upon provision ofevidence of full payment of income tax on such dividend inhis/her country of residence in an amount at least equal to thetotal refund claimed.

The substitute tax may be reduced under the tax treaty inforce between Italy and the country of residence of theBeneficial Owner of the dividend. Italy has executed income taxtreaties with approximately 70 foreign countries, including allEU member states, Argentina, Australia, Brazil, Canada, Japan,New Zealand, Norway, Switzerland, the United States and somecountries in Africa, the Middle East and the Far East. Generallyspeaking, it should be noted that tax treaties are not applicablewhere the holder is a tax-exempt entity or, with few exceptions,a partnership or a trust.

In order to obtain the treaty benefit (reduced substitute taxrate) at the same time of payment, the Beneficial Owner must filean application to the dividend paying agent chosen by theDepositary stating the existence of the conditions for theapplicability of the treaty benefit, together with acertification issued by the foreign Tax Authorities stating thatthe shareholder is a resident of that country for treatypurposes.

Under the tax treaty between the United States and Italy,dividends derived and beneficially owned by a U.S. resident whoholds less than 10% of the Company’s shares are subject toan Italian withholding or substitute tax at a reduced rate of15%, provided that the interest is not effectively connected witha permanent establishment in Italy through which the U.S.resident carries on a business or a fixed establishment in Italythrough which such U.S. resident performs independent personalservices (for further details please refer to the relevantprovisions set forth in the Italy-U.S. Tax Treaty). In theabsence of such conditions, the dividend paying agent will deductfrom the gross amount of the dividend the substitute tax at thestatutory rate of 27%.

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Based on the certification procedure required by the ItalianTax Authorities, to benefit from the direct application of the15% substitute tax the U.S. shareholder must provide the dividendpaying agent with a certificate obtained from the U.S. InternalRevenue Service (the "IRS") with respect to eachdividend payment. The request for that certificate must include astatement, signed under penalties for perjury, to the effect thatthe shareholder is a U.S. resident individual or corporation, anddoes not maintain a permanent establishment in Italy, and mustset forth other required information. The normal time forprocessing requests for certification by the IRS is normallyabout six to eight weeks.

Where the Beneficial Owner has not provided the abovementioned documentation, the dividend paying agent will deductfrom the gross amount of the dividend the substitute tax at thestatutory rate of 27%. The U.S. recipient will then be entitledto claim from the Italian Tax Authorities the difference("treaty refund") between the domestic rate and thetreaty one by filing specific forms (certificate) with theItalian Tax Authorities.

According to the Italian tax law as reflected in the DepositAgreement, the Company is not involved: (i) in withholdingamounts due by holders of ADRs to relevant taxing authorities inconnection with any distributions relating to ADRs; or (ii) inthe procedures through which certain holders of ADRs may obtaintax rebates, credits, refunds or other similar benefits. Pursuantto the Deposit Agreement, the custodian and the Depositary haveundertaken to use reasonable efforts to make and maintainarrangements to enable persons that are considered the UnitedStates residents for purposes of applicable law to receive anyrebates or tax credits (pursuant to treaty or otherwise) relatingto distributions on the ADRs to which such persons are entitledin addition, the Depositary has agreed to establish procedures toenable all holders to take advantage of any rebates or taxcredits (pursuant to treaty of otherwise) relating todistributions on the ADRs to which such holders are entitled andto provide, at least annually, a written notice, in a formpreviously agreed to by the Company, to the holders of ADRs ofany necessary actions to be undertaken by such Holders.

> 
*Transfer tax*

In general terms, no Italian transfer tax is payable in thefollowing cases:

| • |   | contracts executed on        regulated financial markets;                                                                                                                                                    |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | contracts concerning shares        of non-listed companies, executed between non-resident        persons and banks or other authorized intermediaries        (provided that certain conditions are met); and |
| • |   | contracts concerning listed        shares even if not executed on regulated financial        markets, between non-resident persons and banks or other        authorized intermediaries or investment funds.  |

The mentioned exemption from transfer tax does not entail theapplication of stamp duty or registration tax.

To provide a more complete picture, transfer tax is currentlypayable at the following rates:

| • |   | euro 0.072 for euro 51.65        (or fraction thereof) of the price at which the Shares or        ADRs are transferred, when the transfer occurs directly        between the contracting parties or through intermediaries        other than those listed below;                                                                      |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | euro 0.025 for euro 51.65        (or fraction thereof) of the price at which the Shares or        ADRs are transferred, when the transfer occurs between        private individuals and a bank or between private        individuals through an intermediary, such as an exchange        agent, a bank, a stock broker, or a SIM; and |
| • |   | euro 0.0061 for euro 51.65        (or fraction thereof) of the price at which the Shares or        ADRs are transferred, when the transfer occurs between        banks, exchange agents or SIMs.                                                                                                                                      |

> 
*Capital gains tax*

This paragraph applies with respect to capital gains out ofthe scope of a business activity carried out in Italy.

Gains realized by Italian resident individuals upon the saleof substantial interest is included in the taxable base subjectto personal income tax to the extent of 40% of their amount,while gains realized upon the sale of non substantial interest issubject to a substitute tax at a 12.5% rate.

For gains deriving from the sale of non substantial interest,two different systems may be applied at the option of theshareholder as an alternative to the filing of the tax return:

| • |   | the so-called        "administered savings" tax regime (risparmio        amministrato), based on which intermediaries acting as        shares depositaries shall apply a substitute tax (12.5%)        on each gain, on a cash basis. If the sale of shares        generated a loss, said loss may be carried forward up to        the fourth following year; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | the so-called        "portfolio management" tax regime (risparmio        gestito) which is applicable when the shares form part of        a portfolio managed by an Italian asset management        company. The accrued net profit of the portfolio is        subject to a 12.5% substitute tax to be applied by the        portfolio.                           |

Gains realized by non-residents from non substantial interestin listed companies are deemed not to be realized in Italy andconsequently are not subject to the capital gains tax.

On the contrary, gains realized by non-residents fromsubstantial interest even in listed companies are deemed to berealized in Italy and consequently they are subject to thecapital gains tax.

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However double taxation treaties may eliminate the capitalgains tax. Under the income tax convention between the UnitedStates and Italy, a U.S. resident will not be subject to thecapital gains tax unless the shares or ADRs form part of thebusiness property of a permanent establishment of the holder inItaly or pertain to a fixed establishment available to ashareholder in Italy for the purposes of performing independentpersonal services. U.S. residents who sell shares may be requiredto produce appropriate documentation establishing that theabove-mentioned conditions of non-taxability pursuant to theconvention have been satisfied.

> 
*Inheritance and gift tax*

Pursuant to Law Decree No. 262 of October 3, 2006, convertedwith amendments by Law No. 286 of November 24, 2006 effectivefrom November 29, 2006, and Law No. 296 of December 27, 2006, thetransfers of any valuable assets (including shares) as a resultof death or donation (or other transfers for no consideration)and the creation of liens on such assets for a specific purposeare taxed as follows:

| a) |   | 4 per cent: if the transfer        is made to spouses and direct descendants or ancestors;        in this case, the transfer is subject to tax on the value        exceeding euro 1,000,000 (per beneficiary);        |
|----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| b) |   | 6 per cent: if the transfer        if made to brothers and sisters; in this case, the        transfer is subject to the tax on the value exceeding        euro 100,000 (per beneficiary);                             |
| c) |   | 6 per cent: if the transfer        is made to relatives up to the fourth degree, to persons        related by direct affinity as well as to persons related        by collateral affinity up to the third degree; and |
| d) |   | 8 per cent: in all other        cases.                                                                                                                                                                                |

If the transfer is made in favor of persons with severedisabilities, the tax applies on the value exceeding euro1,500,000. Moreover, an anti-avoidance rule is provided for byLaw No. 383 of October 18, 2001 for any gift of assets (includingshares) which, if sold for consideration, would give rise tocapital gains subject to a substitute tax (imposta sostitutiva)provided for by Decree No. 461 of November 21, 1997. Inparticular, if the donee sells the shares for considerationwithin five years from the receipt thereof as a gift, the doneeis required to pay a relevant substitute tax on capital gains asif the gift had never taken place.

 

> 
***United States Taxation***

The following is a summary of certain U.S. federal income taxconsequences to U.S. Holders (as defined below) of the ownershipand disposition of Shares or ADRs. This summary is addressed toU.S. Holders that hold Shares or ADRs as capital assets, and doesnot purport to address all material tax consequences of theownership of Shares or ADRs. The summary does not deal withspecial classes of investors, such as tax-exempt entities,dealers in securities, traders in securities that elect to markto market, certain insurance companies, broker-dealers, investorsliable for alternative minimum tax, investors that actually orconstructively own 10% or more of Eni SpA’s Shares,investors that hold Shares or ADRs as part of a straddle or ahedging or conversion transaction and investors whose"functional currency" is not the U.S. dollar.

This summary is based on the tax laws of the United States(including the Internal Revenue Code of 1986, as amended, (the"Code") its legislative history, existing and proposedregulations thereunder, published rulings and court decisions) asin effect on the date hereof, and which are subject to change (orchanges in interpretation), possibly with retroactive effect. Thesummary is based in part on representations of the Depositary andassumes that each obligation in the Deposit Agreement and anyrelated agreement will be performed in accordance with its terms.U.S. Holders should consult their own tax advisors to determinethe U.S. federal, state and local and foreign tax consequences tothem of the ownership and disposition of Shares or ADRs.

As used in this section, the term "U.S. Holder"means a beneficial owner of Shares or ADRs who or that is:(i) a citizen or resident of the United States; (ii) adomestic corporation; (iii) an estate the income of which issubject to the United States federal income tax without regard toits source; or (iv) a trust if a court within the United Statesis able to exercise primary supervision over the administrationof the trust and one or more United States persons have theauthority to control all substantial decisions of the trust.

The discussion does not address any aspects of the UnitedStates taxation other than federal income taxation. Inparticular, U.S. Holders are urged to confirm their eligibilityfor benefits under the income tax convention between the UnitedStates and Italy with their advisors and to discuss with theiradvisors any possible consequences of their failure to qualifyfor such benefits.

In general, and taking into account the earlier assumptions,for the United States federal income tax purposes, U.S. Holderswho own ADRs evidencing ADRs will be treated as owners of theunderlying Shares. Exchanges of Shares for ADRs and ADRs forshares generally will not be subject to the United States federalincome tax.

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> 
*Dividends*

Distributions paid on the shares generally will be treated asdividends for U.S. federal income tax purposes to the extent paidout of Eni SpA’s current or accumulated earnings and profitsas determined for U.S. federal income tax purposes, but will notbe eligible for the dividends received-deduction generallyallowed to corporations. To the extent that a distributionexceeds Eni SpA’s earnings and profits, it will be treated,first, as a non-taxable return of capital to the extent of theU.S. Holder’s tax basis in the shares or ADRs, andthereafter as capital gain. A U.S. Holder will be subject to U.S.federal taxation, on the date of actual or constructive receiptby the U.S. Holder (in the case of Shares) or by the Depositary(in the case of ADRs) with respect to the gross amount of anydividends, including any Italian tax withheld therefrom, withoutregard to whether any portion of such tax may be refunded to theU.S. Holder by the Italian tax authorities. If you are anon-corporate U.S. Holder, dividends paid to you in taxable yearsbeginning before January 1, 2011 that constitute qualifieddividend income will be taxable to you at a maximum tax rate of15% provided that you hold the Shares or ADRs for more than 60days during the 121-day period beginning 60 days before theex-dividend date and meet other holding period requirements.Dividends we pay with respect to the shares or ADRs generallywill be qualified dividend income. The amount of the dividenddistribution that you must include in your income as a U.S.Holder will be the U.S. dollar value of the euro payments made,determined at the spot euro/U.S. dollar rate on the date thedividend distribution is includible in your income, regardless ofwhether the payment is in fact converted into U.S. dollars.Generally, any gain or loss resulting from currency exchangefluctuations during the period from the date you include thedividend payment in income to the date you convert the paymentinto U.S. dollars will be treated as ordinary income or loss andwill not be eligible for the special tax rate applicable toqualified dividend income. The gain or loss generally will beincome or loss from sources within the United States for foreigntax credit limitation purposes.

Subject to certain conditions and limitations, Italian taxwithheld from dividends will be treated as a foreign income taxeligible for credit against the U.S. Holder’s U.S. federalincome tax liability. Special rules apply in determining theforeign tax credit limitation with respect to dividends that aresubject to the maximum 15% tax rate. To the extent a refund ofthe tax withheld is available to a U.S. Holder under Italian lawor under the income tax convention, the amount of tax withheldthat is refundable will not be eligible for credit against yourUnited States federal income tax liability. See "ItalianTaxation – Income Tax" above, for the procedures forobtaining a tax refund. Dividends paid on the Shares will betreated as income from sources outside the United States.Dividend paid in taxable years beginning before January 1, 2007generally will be of "passive" or "financialservices" income, and dividends paid in taxable yearsbeginning after December 31, 2006 will, depending on yourcircumstances, be "passive" or "general"income which, in either case, is treated separately from othertypes of income for purpose of computing the foreign tax creditallowable to you.

> 
*Sale or exchange of shares*

In general, a U.S. Holder will recognize gain or loss for U.S.federal income tax purposes on the sale or exchange of Shares orADRs equal to the difference between the U.S. Holder’sadjusted basis in the shares or ADRs (determined in U.S.dollars), as the case may be, and the amount realized on the saleor exchange (or if the amount realized is denominated in aforeign currency its U.S. dollar equivalent, determined at thespot rate on the date of disposition). Generally, such gain orloss will be treated as capital gain or loss if the Shares orADRs are held as capital assets and will be a long-term capitalgain or loss if the shares or ADRs have been held for more thanone year on the date of such sale or exchange. Long-term capitalgain of a non-corporate U.S. Holder that is recognized in taxableyears beginning before January 1, 2011 is generally subject to amaximum tax rate of 15%. In addition, any such gain or lossrealized by a U.S. Holder generally will be treated as U.S.source income or loss for U.S. foreign tax credit purposes.

 

 

**Item 11. QUALITATIVE AND QUANTITATIVEDISCLOSURES ABOUT MARKET RISK**

Market risk is the possibility that changes in currencyexchange rates, interest rates or oil, natural gas, petroleumproducts and electricity prices will adversely affect the valueof the group’s financial assets, liabilities or expectedfuture cash flows. Eni has developed policies aimed at managingthe market risk inherent in its activities and, in accordancewith these policies, the group enters into various transactionsusing derivative financial and commodity instruments(derivatives). In managing these risks, Eni follows a set ofguidelines and procedures based on a framework envisagingcentralization of Group treasury activities in two captivefinance companies operating in the Italian and internationalfinancial markets. In particular, the finance company operatingon the domestic market (Enifin) has historically managed all thetransactions concerning currencies and derivative financialcontracts. The commodity risk is managed at the business unitlevel, while Enifin has managed the negotiation of hedgingderivatives. From January 1, 2007, the tasks previouslyundertaken by Enifin have been performed by Eni SpA following theamalgamation of Enifin. The framework defined by Eni’sguidelines prescribes that measurement and control of the marketrisk are to be performed based on maximum acceptable levels ofrisk exposure defined in accordance with value-at-risktechniques. These techniques make a statistical assessment of themarket risk, i.e. potential gain or loss in fair values. 

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Calculation and measurement techniques for interest rate andforeign exchange risks followed by Eni are in accordance withestablished banking standards (such standards are established bythe Basel Committee). However, management believes that thetolerable level of risk adopted by Eni Group companies is moreconservative than that recommended by the Basel Committee forfinancial institutions.

As outlined above, Eni uses derivatives to minimize marketrisks related to changes in interest rates and exchange rates andto manage exposure to commodity price fluctuations. Derivativesare contracts whose value is derived from one or more underlyingfinancial instruments, indices or prices that are defined in thecontract. The group also trades derivatives in conjunction withthese risk management activities. Eni does not enter intoderivative transactions on a speculative basis.

According to International Accounting Standard No. 39"Financial instruments: recognition and measurement"(IAS 39), derivatives are classified as hedging instruments whenthe relationship between the derivative and the subject of thehedge is formally documented and the effectiveness of the hedgeis high and is checked periodically. When derivatives constitutea fair value hedge, the Group’s exposure to the market riskin the asset or liability is offset by the opposite exposurearising from the derivative. When derivatives are designated as apart of a cash flow hedge, changes in the fair value of thederivatives are initially stated in net equity and thenrecognized in the profit and loss account consistent witheconomic effects produced by the hedged transaction. Derivativesthat do not meet the conditions required by IAS 39 qualify asderivatives held for trading purposes and are accounted for atfair value, with change in fair value recorded in the profit andloss account.

Nature and classification of derivative financial instrumentsheld by Eni as of December 31, 2006 and related fair value at thesame date are set out in the table below.

|   |   | **Year ended December 31,        2006** |
|--------|--------|-----------------------------------------|
|   |   |                                         |

|   |   | **Fair value asset** |   | **Contractual or notional        amounts** |   | **Fair value liability** |   | **Contractual or notional        amounts** |
|--------|--------|----------------------|--------|--------------------------------------------|--------|--------------------------|--------|--------------------------------------------|
|   |   |                      |   |                                            |   |                          |   |                                            |

|   | **(million euro)** |
|--------|--------------------|

| **Fair value of non-hedging derivatives**(1)           |   |    |   |       |   |    |   |      |
|--------------------------------------------------------|--------|---------|--------|------------|--------|---------|--------|-----------|
| Exchange        rate                                   |   | 183     |   | 6,944      |   | 32      |   | 1,618     |
| Interest rate                                          |   | 66      |   | 3,393      |   | 30      |   | 2,122     |
| Commodities                                            |   | 320     |   | 1,113      |   | 333     |   | 1,565     |
|                                                   |   | **569** |   | **11,450** |   | **395** |   | **5,305** |
| **Fair        value of cash flow-hedging derivatives** |   |    |   |       |   |    |   |      |
| Exchange rate                                          |   |    |   |       |   |    |   |      |
| Interest        rate                                   |   |    |   |       |   |    |   |      |
| Commodities                                            |   | 37      |   | 418        |   | 40      |   | 406       |
|                                                   |   | **37**  |   | **418**    |   | **40**  |   | **406**   |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

----

| (1) |   | Non hedging        derivatives refer to derivate instruments which do not        meet the formal criteria to apply hedge accounting under        IFRS. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

 

> 
***Sensitivity Analysis***

The Company has estimated its market risk exposure usingsensitivity analysis. Market risk exposure has been defined asthe change in fair value of derivative financial and commodityinstruments and other financial instruments assuming ahypothetical 10 percent adverse change in market prices or rates.The interest rate used for periods shorter than one year isLibor/Euribor. The Company has applied the sensitivity analysisto derivative financial and commodity instruments and otherfinancial instruments that are exposed to interest rate, foreignexchange rate and commodities price risk. Actual changes inmarket prices or rates may differ from hypothetical changes.

The table below presents the potential impact on the fairvalue of the current financial instruments as of December 31,2006, of an increase or a decrease of 10% in the market interestrates in each of the relevant currencies.

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|   | **As of December 31, 2006** |
|--------|-----------------------------|
|   |                             |

| **Assets/Liabilities** | **Notional value/ Carrying amount assets** |   | **Notional value/ Carrying amount liabilities** |   | **Fair value assets** |   | **Fair value liabilities** |   | **Change in fair value with a 10% interest rate        increase** |   | **Change in fair value with a 10% interest rate        decrease** |
|------------------------|--------------------------------------------|--------|-------------------------------------------------|--------|-----------------------|--------|----------------------------|--------|-------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                   |                                            |   |                                                 |   |                       |   |                            |   |                                                                   |   |                                                                   |

|   | **(million euro)** |
|--------|--------------------|

| **Interest rate**                           |   |      |   |   |      |   |   |    |   |   |      |   |   |    |   |   |     |   |
|---------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|--------|---------|--------|--------|----------|--------|
| Financial        instruments                |   | 250       |   |   | 3,203     |   |   | 249     |   |   | 3,353     |   |   | 85      |   |   | (98      | )      |
| Derivative financial instruments            |   | 3,393     |   |   | 2,122     |   |   | 66      |   |   | 30        |   |   | 45      |   |   | (47      | )      |
| - of which        interest rate swap        |   | 3,393     |   |   | 2,122     |   |   | 66      |   |   | 30        |   |   | 45      |   |   | (47      | )      |
|                                        |   | **3,643** |   |   | **5,325** |   |   | **315** |   |   | **3,383** |   |   | **130** |   |   | **(145** | **)**  |
|                                        |   |      |   |   |      |   |   |    |   |   |      |   |   |    |   |   |     |   |
| **Exchange rate**                           |   |      |   |   |      |   |   |    |   |   |      |   |   |    |   |   |     |   |
| Financial        instruments                |   | 329       |   |   | 145       |   |   | 313     |   |   | 146       |   |   | 46      |   |   | (45      | )      |
| Derivative financial instruments            |   | 6,944     |   |   | 1,618     |   |   | 183     |   |   | 32        |   |   | 438     |   |   | (441     | )      |
| - of which        interest currency swap    |   | 1,400     |   |   | 1,291     |   |   | 137     |   |   | 11        |   |   | 128     |   |   | (132     | )      |
|      currency swap |   | 5,502     |   |   | 257       |   |   | 46      |   |   | 19        |   |   | 313     |   |   | (314     | )      |
|      others        |   | 42        |   |   | 70        |   |   |    |   |   | 2         |   |   | (3      | )      |   | 5        |   |
|                                        |   | **7,273** |   |   | **1,763** |   |   | **496** |   |   | **178**   |   |   | **484** |   |   | **(486** | **)**  |
|                                        |   |      |   |   |      |   |   |    |   |   |      |   |   |    |   |   |     |   |
| **Commodities**                             |   |      |   |   |      |   |   |    |   |   |      |   |   |    |   |   |     |   |
| Derivative        financial instruments     |   | 1,113     |   |   | 1,565     |   |   | 320     |   |   | 333       |   |   | 25      |   |   | (23      | )      |
| - of which over the counter                 |   | 262       |   |   | 635       |   |   | 35      |   |   | 35        |   |   | 30      |   |   | (30      | )      |
|      others        |   | 851       |   |   | 930       |   |   | 285     |   |   | 285       |   |   | (5      | )      |   | 7        |   |
|                                        |   | **1,113** |   |   | **1,565** |   |   | **320** |   |   | **333**   |   |   | **25**  |   |   | **(23**  | **)**  |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

 

|   | **As of December 31, 2005** |
|--------|-----------------------------|
|   |                             |

| **Assets/Liabilities** | **Notional value/ Carrying amount assets** |   | **Notional value/ Carrying amount liabilities** |   | **Fair value assets** |   | **Fair value liabilities** |   | **Change in fair value with a 10% interest rate        increase** |   | **Change in fair value with a 10% interest rate        decrease** |
|------------------------|--------------------------------------------|--------|-------------------------------------------------|--------|-----------------------|--------|----------------------------|--------|-------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                   |                                            |   |                                                 |   |                       |   |                            |   |                                                                   |   |                                                                   |

|   | **(million euro)** |
|--------|--------------------|

| **Interest rate**                           |   |      |   |   |      |   |   |    |   |   |      |   |   |    |   |   |     |   |
|---------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|--------|---------|--------|--------|----------|--------|
| Financial        instruments                |   | 233       |   |   | 1,499     |   |   | 236     |   |   | 1,698     |   |   | 38      |   |   | (54      | )      |
| Derivative financial instruments            |   | 1,281     |   |   | 5,145     |   |   | 14      |   |   | 101       |   |   | 47      |   |   | (48      | )      |
| - of which        interest rate swap        |   | 1,281     |   |   | 5,145     |   |   | 14      |   |   | 101       |   |   | 47      |   |   | (48      | )      |
|                                        |   | **1,514** |   |   | **6,644** |   |   | **250** |   |   | **1,799** |   |   | **85**  |   |   | **(102** | **)**  |
|                                        |   |      |   |   |      |   |   |    |   |   |      |   |   |    |   |   |     |   |
| **Exchange rate**                           |   |      |   |   |      |   |   |    |   |   |      |   |   |    |   |   |     |   |
| Financial        instruments                |   | 197       |   |   | 120       |   |   | 235     |   |   | 120       |   |   | 13      |   |   | (12      | )      |
| Derivative financial instruments            |   | 3,686     |   |   | 8,785     |   |   | 73      |   |   | 218       |   |   | 164     |   |   | (202     | )      |
| - of which        interest currency swap    |   | 1,277     |   |   | 2,316     |   |   | 58      |   |   | 73        |   |   | 170     |   |   | (175     | )      |
|      currency swap |   | 2,378     |   |   | 6,370     |   |   | 15      |   |   | 139       |   |   | (15     | )      |   | (15      | )      |
|      other         |   | 31        |   |   | 99        |   |   |    |   |   | 6         |   |   | 9       |   |   | (12      | )      |
|                                        |   | **3,883** |   |   | **8,905** |   |   | **308** |   |   | **338**   |   |   | **177** |   |   | **(214** | **)**  |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

In 2005, Eni’s exposure to commodity market risk arisingfrom derivative instruments was immaterial.

**Currency risk** Fluctuations in exchange rates can havesignificant effects on the Group’s reported profit. Theeffects of most exchange rate fluctuations are absorbed inbusiness operating results through changing cost-competitiveness,changes in the price of certain products via indexation tointernational parameters quoted in U.S. dollars, lags in marketadjustment to movements in rates and conversion differencesaccounted for on specific transactions (i.e. the time lagexisting between the recording of costs and revenues denominatedin currencies other than the functional currency and the actualtime of the relevant monetary transaction). For this reason, thetotal effect of exchange rate fluctuations is not identifiableseparately in the Group’s reported profit, nor is the wholeexchange rate risk entirely covered. In addition to the euro,which the currency adopted for financial reporting purposes, themain underlying economic currency of the Group’s cash flowsis the U.S. dollar. This is because Eni’s major products arepriced internationally in U.S. dollars or linked to certainproducts priced in U.S. dollars. Generally speaking, anappreciation of the U.S. dollar versus the euro generally has apositive impact on Eni’s results of operations, and viceversa. Eni’s foreign exchange management policy is tominimize economic and significant transactional exposures arisingfrom movements of the euro against the U.S. dollar. The Groupco-ordinates the handling of foreign exchange risks centrally, bynetting off naturally occurring opposite exposures whereverpossible to reduce the risks, and then hedging net positionsusing derivatives (such as currency swaps, forwards and options).

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Such derivatives are recognized at fair value on the basis ofmarket prices provided from specialized sources. Value-at-riskderiving from currency exposure is measured daily on the basis ofa variance/covariance model, with a 99% confidence level and a20-day holding period. The transaction currency risk on certainstrategic holdings is deemed to be immaterial.

**Interest rate risk** The Group is exposed to interestrate risk on short- and long-term floating rate instruments andas a result of the refinancing of fixed rate finance debt.Eni’s policy envisages the incurrence of long-term debt at afixed rate or a floating rate, depending on opportunities at thetime of issuance with regard to the level of interest rates, ineuros or in U.S. dollars according to general corporaterequirements (to optimize level of liquidity, to optimize revenuefrom investments considering existing interest yield curves, andto minimize the cost of borrowing).

The Group is exposed predominantly to Euribor (Euro InterbankOffered Rate) and U.S. dollar Libor (London Inter-Bank OfferRate) interest rates as borrowings are mainly denominated in euroor U.S. dollars. Variations in interest rates affect the marketvalue of financial assets and liabilities of the company and thelevel of finance charges. Eni uses interest rate derivatives suchas interest rate swaps and interest cross currency swaps toeffectively manage the balance between fixed and floating ratedebt. Such derivatives are recognized at fair value on the basisof market prices provided from specialized sources. Value-at-riskderiving from interest rate exposure is measured daily on thebasis of a variance/covariance model, with a 99% confidence leveland a 20-day holding period.

**Commodity risk** Eni’s results of operations areexposed to fluctuations in prices of crude oil, petroleum prices,natural gas and electricity. Changes in commodity prices areabsorbed by the Group’s business units. A decrease in oilprices generally has a negative impact on Eni’s results ofoperations and vice versa. Eni also bears commodity risks inconnection with certain trading activities. Eni’s guidelinesprescribe that the exposure to risk from fluctuations incommodity prices is to be managed in such a way as to support theeffectiveness of operations, and to pursue set objectives forindustrial margins. Risk exposure within trading activities isdefined within maximum levels of value-at-risk attributed to eachbusiness unit, with the central function managing hedgingrequests. Eni’s trading functions use financial andcommodity derivatives as part of the associated trading of crudeoil, refined products, electricity and related instruments tomanage certain of the Group’s exposures to pricefluctuations. For this purpose, Eni uses derivatives traded onthe organized markets of ICE and NYMEX (futures and options) andderivatives traded over-the-counter (swaps, forwards andcontracts for differences, with the underlying commodities beingcrude oil, refined products or electricity). Such derivatives arerecognized at fair value on the basis of market prices providedfrom specialized sources or, absent market prices, on the basisof estimates provided by brokers or other suitable evaluationtechniques. Value-at-risk deriving from commodity exposure ismeasured daily on the basis of a historical simulation technique,with a 99% confidence level and a one-day holding period.Strategic risk exposure – i.e. the impact on theGroup’s businesses resulting from changes in commoditiesprices – is monitored in terms of value-at-risk, albeit nothedged on a systematic basis. From time to time, the Group mayenter into hedging transactions based on existing assets tomitigate the Group’s overall exposure to commodity risk inview of potential acquisitions of new oil reserves as part of ourordinary asset portfolio management or other strategicinitiatives. For example, Eni hedged reserves in anticipation ofits acquisition of certain oil producing assets and proved andunproved property onshore in the Congo in February 2007 andoffshore Gulf of Mexico in April 2007 (see "Item 4 –Exploration & Production – Portfoliodevelopments"). Consistent with this policy, at thebeginning of 2007, Eni entered into certain financial derivativestransactions in order to hedge expected cash flow from a portionof its expected future oil production out of equity reserves,based on present trading environment conditions (for more detailson these transactions see "Item 5 – Operating andFinancial Review and Prospects – Recent Developments –Results for the first quarter 2007"). The production volumescovered by these hedging transactions are expected to be sold inthe 2008-2011 period and represent a cumulative amountcorresponding to approximately 2% of Eni’s provedhydrocarbon reserves as of 2006 year-end.

 

 

**Item 12. DESCRIPTION OF SECURITIES OTHERTHAN EQUITY SECURITIES**

Not applicable.

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**PART II**

**Item 13. DEFAULTS, DIVIDEND ARREARAGES ANDDELINQUENCIES**

None.

 

**Item 14. MATERIAL MODIFICATIONS TO THERIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS**

None.

 

**Item 15. CONTROLS AND PROCEDURES**

> 
*Disclosure controls and procedures*

In designing and evaluating the Company’s disclosurecontrols and procedures (as defined in Rules 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934 (the"Exchange Act")), the Company’s management,including the Chief Executive Officer and the Chief FinancialOfficer, recognized that any controls and procedures, no matterhow well designed and operated, can provide only reasonableassurance of achieving the desired control objectives, and theCompany’s management necessarily was required to apply itsjudgment in evaluating the cost benefit relationship of possiblecontrols and procedures. Because of the inherent limitations inall control systems, no evaluation of controls can provideabsolute assurance that all control issues and instances offraud, if any, within the Company have been detected.

It should be noted that the Company has investments in certainunconsolidated entities. As the Company does not control ormanage these entities, its disclosure controls and procedureswith respect to such entities are necessarily more limited thanthose it maintains with respect to its consolidated subsidiaries.

The Company’s management, with the participation of theprincipal executive officer and principal financial officer, hasevaluated the effectiveness of the design and operation of itsdisclosure controls and procedures pursuant to Rule 13a-14(c)under the Exchange Act as of the end of the period covered bythis Annual Report on Form 20-F. Based on that evaluation, theprincipal executive officer and principal financial officer haveconcluded that these disclosure controls and procedures areeffective.

> 
*Management’s Annual Report on Internal Control    over Financial Reporting*

The Company’s management is responsible for establishingand maintaining adequate internal control over financialreporting as defined in Exchange Act Rules 13a-15(f). Because ofits inherent limitations, internal control over financialreporting may not prevent or detect misstatements and even whendetermined to be effective can only provide reasonable assurancewith respect to financial statement preparation and presentation.Also, the effectiveness of an internal control system may changeover time.

The Internal Control Committee assists the Board of Directorsin setting out the main principles for the internal controlsystem so as to appropriately identify and adequately evaluate,manage, and monitor the main risks related to the Company and itssubsidiaries, by laying down the compatibility criteria betweensaid risks and sound corporate management. In addition thisCommittee assesses, at least annually, the adequacy,effectiveness, and actual operations of the internal controlsystem.

The Company’s management, including the Chief ExecutiveOfficer and the Chief Financial Officer, conducted an evaluationof the effectiveness of its internal control over financialreporting based on the Internal Control - Integrated Frameworkissued by the Committee of Sponsoring Organizations of theTreadway Commission ("COSO"). Based on the results ofthis evaluation, the Group’s management concluded that itsinternal control over financial reporting was effective as ofDecember 31, 2006.

The Company management’s assessment of the effectivenessof its internal control over financial reporting as of December31, 2006, has been audited by PricewaterhouseCoopers SpA, anindependent registered public accounting firm, as stated in itsreport that is included on page F-2 of this Annual Report on Form20-F.

> 
*Changes in Internal Control over Financial Reporting*

There have not been changes in the Company’s internalcontrol over financial reporting that occurred during the periodcovered by this Form 20-F that have materially affected, or arereasonably likely to materially affect, the Company’sinternal control over financial reporting.

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**Item 16A. Board of Statutory AuditorsFinancial Expert**

Eni’s Board of Statutory Auditors has determined thatfour members of Eni’s Board of Statutory Auditors, qualifyas "audit committee financial expert", as defined inItem 16A of Form 20-F. These four members are: Paolo AndreaColombo, who is the Chairman of the Board, and Filippo Duodo,Riccardo Perotta and Giorgio Silva. All members are independent.

 

 

**Item 16B. Code of Ethics**

Eni adopted a code of ethics that applies to all Eni’semployees including Eni’s principal executive officer,principal financial officer and principal accounting officer. Enipublished its code of ethics on Eni’s website. It isaccessible at www.eni.it, under the section Publications -Corporate Responsibility - Code of Practice. A copy of this codeof ethics is included as an exhibit to this annual report.

Eni’s code of ethic contains ethical guidelines,describes corporate values and required standards of businessconduct and moral integrity. The ethical guidelines are designedto deter wrongdoing and to promote honest and ethical conduct,compliance with applicable laws and regulations and internalreporting of violations of the guidelines. The code also affirmsthe principles of accounting transparency and internal control.

 

 

**Item 16C. Principal Accountant Fees andServices**

PricewaterhouseCoopers SpA has served as Eni principalindependent public auditor for fiscal years 2004, 2005 and 2006for which audited Consolidated Financial Statements appear inthis Annual Report on Form 20-F.

The following table shows total fees paid by Eni and oursubsidiaries for services provided by Eni public auditorPricewaterhouseCoopers and its member firms, with respect to theyears indicated:

|   | **Year ended December 31,** |
|--------|-----------------------------|
|   |                             |

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **(thousand euro)** |
|--------|---------------------|

| Audit fees                |   | 9,344     |   | 12,591     |   | 22,240     |
|---------------------------|--------|-----------|--------|------------|--------|------------|
| Audit-related        fees |   | 136       |   | 190        |   | 166        |
| Tax fees                  |   | 344       |   | 246        |   | 303        |
| All other        fees     |   | 54        |   | 38         |   | 6          |
| **Total**                 |   | **9,878** |   | **13,065** |   | **22,715** |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

Audit Fees include professional services rendered by theprincipal accountant for the audit of the registrant’sannual financial statements or services that are normallyprovided by the accountant in connection with statutory andregulatory filings or engagements.

Audit Related Fees include assurance and related services bythe principal accountant that are reasonably related to theperformance of the audit or review of the registrant’sfinancial statements and are not reported as Audit Fees in thisItem. The fees disclosed in this category mainly include auditsof pension and benefit plans, merger and acquisition duediligence, audit and consultancy services rendered in connectionwith acquisition deals, certification services not provided forby law and regulations and consultations concerning financialaccounting and reporting standards.

Tax Fees include professional services rendered by theprincipal accountant for tax compliance, tax advice, and taxplanning. The fees disclosed in this category mainly include feesbilled for the assistance with compliance and reporting of incomeand value added taxes, assistance with assessment of new orchanging tax regimes, tax consultancy in connection with mergerand acquisition deals, services rendered in connection with taxrefunds, assistance rendered on occasion of tax inspections andin connection with tax claims and recourses and assistance withassessing relevant rules, regulations and facts going into Enicorrespondence with tax authorities.

All Other Fees include products and services provided by theprincipal accountant, other than the services reported in AuditFees, Audit-Related Fees and Tax Fees of this Item and consistsprimarily of fees billed for consultancy services related to ITand secretarial services that are permissible under applicablerules and regulations.

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> 
*Pre-approval policies and procedures of the Internal    Control Committee*

The Board of Statutory Auditors has adopted a pre-approvalpolicy for audit and non-audit services that set forth theprocedures and the conditions pursuant to which services proposedto be performed by the principal auditors may be pre-approved.Such policy is applied to entities within the Eni Group which areeither controlled or jointly-controlled (directly or indirectly)by Eni SpA. According to this policy, permissible services withinthe other audit services category are pre-approved by the Boardof Statutory Auditors. The Board approval is required on a caseby case basis for those requests regarding: (i) audit-relatedservices; and (ii) non-audit services to be performed by theexternal auditors which are permissible under applicable rulesand regulations. In such cases, the Company’s internal auditdepartment is charged with performing an initial assessment ofeach request to be submitted to the Board of Statutory Auditorsfor approval. The internal audit department periodically reportsto Eni’s Board of Statutory Auditors on the status of bothpre-approved services and services approved on a case-by-casebasis rendered by the external auditors.

During 2006, no audit-related fees, tax fees or othernon-audit fees were approved by the Board of Statutory Auditorspursuant to the de minimis exception to the pre-approvalrequirement provided by paragraph (c)(7)(i) (c) of Rule 2-01 ofRegulation S-X.

 

 

**Item 16D. Exemptions from the ListingStandards for Audit Committees**

Making use of the exemption provided by Rule 10A-3(c)(3) fornon-U.S. private issuers, Eni has identified the Board ofStatutory Auditors as the body that, starting from June 1, 2005,is performing the functions required by the SEC rules and theSarbanes-Oxley Act to be performed by the audit committees ofnon-U.S. companies listed on the NYSE (see "Item 6 –Board of Statutory Auditors" above).

 

 

**Item 16E. Purchases of Equity Securities bythe Issuer and Affiliated Purchasers**

The following tables present purchases of own shares by Enifrom the beginning of the program through May 23, 2007 (1):

| **Period** |   | **Number of shares        (million)** |   | **Average price        (euro per share)** |   | **Total cost        (million euro)** |   | **Share         capital %** |
|------------|--------|---------------------------------------|--------|-------------------------------------------|--------|--------------------------------------|--------|-----------------------------|
|       |   |                                       |   |                                           |   |                                      |   |                             |

| 2000 (since September 1)                                                                          |   | 44.38      |   |   | 12.92     |   |   | 574       |   |   | 1.11     |   |
|---------------------------------------------------------------------------------------------------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|--------|----------|--------|
| 2001                                                                                              |   | 110.00     |   |   | 13.58     |   |   | 1,494     |   |   | 2.75     |   |
| 2002                                                                                              |   | 52.26      |   |   | 14.74     |   |   | 771       |   |   | 1.30     |   |
| 2003                                                                                              |   | 23.94      |   |   | 13.76     |   |   | 329       |   |   | 0.60     |   |
| 2004                                                                                              |   | 4.23       |   |   | 16.60     |   |   | 70        |   |   | 0.10     |   |
| 2005                                                                                              |   | 47.06      |   |   | 21.97     |   |   | 1,034     |   |   | 1.18     |   |
| 2006                                                                                              |   | 53.13      |   |   | 23.35     |   |   | 1,241     |   |   | 1.33     |   |
| 2007,        through May 23, 2007                                                                 |   | 11.18      |   |   | 24.06     |   |   | 269       |   |   | 0.28     |   |
| **Total purchased as of May 23, 2007**                                                            |   | **346.18** |   |   | **16.70** |   |   | **5,782** |   |   | **8.64** |   |
| minus:                                                                                            |   |       |   |   |      |   |   |      |   |   |     |   |
| - stock option exercised and shares granted        pursuant to stock option and stock grant plans |   | (11.08     | )      |   |      |   |   |      |   |   |     |   |
| **Total        shares held in treasury**                                                          |   | **335.10** |   |   |      |   |   |      |   |   | **8.37** |   |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

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|   | **Total number of shares        purchased** |   | **Average price paid per        share (euro)** |   | **Total number of shares        purchased, as part of publicly announced plans or        programs** |   | **Maximum number of shares        that may yet be purchased under the plans or programs**.(2) |
|--------|---------------------------------------------|--------|------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|
|   |                                             |   |                                                |   |                                                                                                     |   |                                                                                               |

| At December 31, 2005                   |   | 281,877,288 |   | 23.62 |   | 281,877,288 |   | 121,986,025 |
|----------------------------------------|--------|-------------|--------|-------|--------|-------------|--------|-------------|
| January        2006                    |   | 4,539,921   |   | 24.23 |   | 286,417,209 |   | 117,874,304 |
| February 2006                          |   | 2,449,000   |   | 24.17 |   | 288,866,209 |   | 115,478,004 |
| March 2006                             |   | 6,163,400   |   | 23.35 |   | 295,029,609 |   | 109,420,304 |
| April 2006                             |   | 3,629,000   |   | 24.17 |   | 298,658,609 |   | 106,045,904 |
| May 2006                               |   | 8,246,033   |   | 23.43 |   | 306,904,642 |   | 98,105,871  |
| June 2006                              |   | 16,942,000  |   | 22.64 |   | 323,846,642 |   | 81,356,171  |
| July 2006                              |   | 2,374,000   |   | 23.23 |   | 326,220,642 |   | 79,586,471  |
| August 2006                            |   | 0           |   | 0.00  |   | 326,220,642 |   | 80,019,221  |
| September        2006                  |   | 4,456,047   |   | 23.01 |   | 330,676,689 |   | 76,718,374  |
| October 2006                           |   | 1,605,500   |   | 23.67 |   | 332,282,189 |   | 77,104,624  |
| November        2006                   |   | 1,671,700   |   | 24.65 |   | 333,953,889 |   | 75,876,724  |
| December 2006                          |   | 1,048,890   |   | 24.96 |   | 335,002,779 |   | 75,040,134  |
| January        2007                    |   | 2,172,700   |   | 24.71 |   | 337,175,479 |   | 73,246,534  |
| February 2007                          |   | 2,241,350   |   | 24.08 |   | 339,416,829 |   | 71,090,284  |
| March 2007                             |   | 4,103,431   |   | 23.26 |   | 343,520,260 |   | 67,174,803  |
| April 2007                             |   | 1,739,600   |   | 24.43 |   | 345,259,860 |   | 65,528,803  |
| May 2007        (through May 23, 2007) |   | 926,650     |   | 25.32 |   | 346,186,510 |   | 64,905,753  |

|   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|

----

| (1) |   | Since May        2000, Eni’s Ordinary Shareholders’ Meeting        authorized Eni’s Board of Directors to carry out a        program for the repurchase of own shares within set        limits taking account also of Italian law restrictions        which relate to the obligation of the Company to purchase        its own shares paying for such shares only out of        distributable earnings and distributable reserves as        reflected in the most recent financial statements        approved by a shareholders’ meeting. In subsequent        years, Eni’s Ordinary Shareholders’ Meeting        re-authorized the Board to continue this program for the        repurchase of its own shares and increased the amount of        cash to be spent on it. The shares are to be purchased on        the Telematico at a price no lower than their nominal        value and no higher than 5% over the reference price        recorded on the business day preceding each purchase. The        nominal value of shares so purchased, including shares        held by subsidiaries, may not exceed 10% of such        company’s share capital. Shares purchased in excess        of such 10% limit must be resold within one year from the        date of their purchase. Identical limitations apply to        purchases of shares of a company by its subsidiaries. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | Based on the        authorized purchase ceiling, deducting the total number        of shares purchased and adding back the number of stock        options exercised by and shares granted to Eni’s        managers pursuant to stock option and stock grant plans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (3) |   | On May 24,        2007 Eni’s Ordinary Shareholders’ Meeting        authorized the continuation of the program for the        repurchase of own shares for a further 18 month period        and up to 400 million ordinary shares, nominal value euro        1 each, corresponding approximately to 10% of Eni’s        share capital, for an aggregate amount not exceeding euro        7.4 billion. The 400 million shares and the euro 7.4        billion thresholds take into account the number and        amount of Eni shares held in treasury of May 23, 2007. As        of May 23, 2007, Eni purchased approximately 346.2        million own shares for a total cost of euro 5,782 million        (at an average cost of euro 16.701 per share). At the        same date, and taking account of shares granted to        Eni’s managers pursuant to stock option and stock        grant plans, Eni held 335.1 million own shares        corresponding to 8.37% of Eni’s share capital.                                                                                                                                                                                                                                                                                                                                                                                              |

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**PART III**

**Item 17. FINANCIAL STATEMENTS**

Not applicable.

 

 

**Item 18. FINANCIAL STATEMENTS**

Index to Financial Statements:

|                                                                                                                  |   | **Page** |
|-----------------------------------------------------------------------------------------------------------------------|--------|----------|
|                                                                                                                  |   |     |
| Report of Independent        Registered Public Accounting Firm                                                        |   | F-1      |
|                                                                                                                  |   |     |
| Balance Sheets at December        31, 2006 and 2005                                                                   |   | F-3      |
|                                                                                                                  |   |     |
| Profit and loss account for        the years ended December 31, 2006, 2005 and 2004                                   |   | F-4      |
|                                                                                                                  |   |     |
| Statements of changes in        shareholder’s equity for the years ended December        31, 2006, 2005 and 2004 |   | F-5      |
|                                                                                                                  |   |     |
| Statements of cash flow for        the years ended December 31, 2006, 2005 and 2004                                   |   | F-8      |
|                                                                                                                  |   |     |
| Supplemental cash flow        information for the years ended December 31, 2006, 2005        and 2004                 |   | F-10     |
|                                                                                                                  |   |     |
| Notes to the Consolidated        Financial Statements                                                                 |   | F-24     |

 

 

**Item 19. EXHIBITS**

1. By-laws as amended as of May 24, 2007

8. List of subsidiaries

11. Code of Ethics

Certifications:

12.1. Certification pursuant to Rule13a-14(a) of the Securities Exchange Act

12.2. Certification pursuant to Rule13a-14(a) of the Securities Exchange Act

13.1. Certification furnished pursuant toRule 13a-14(b) of the Securities Exchange Act (such certificateis not deemed filed for purpose of Section 18 of the Exchange Actand not incorporated by reference with any filing under theSecurities Act)

13.2. Certification furnished pursuant toRule 13a-14(b) of the Securities Exchange Act (such certificateis not deemed filed for purpose of Section 18 of the Exchange Actand not incorporated by reference with any filing under theSecurities Act)

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**SIGNATURES**

The registrant certifies that it meets all of the requirementsfor filing on Form 20-F and has duly caused this annual report tobe signed on its behalf by the undersigned, thereunto dulyauthorized.

Date: June 20, 2007

 

 

 

 

 

 

 

| Eni SpA                         |
|---------------------------------|
|                            |
| /s/FABRIZIO COSCO               |
|                                 |
|                            |
| Fabrizio Cosco                  |
| Title: Deputy Company Secretary |

 

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**REPORT OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM**

To the Board of Directors and Shareholders ofEni SpA:

We have completed an integrated audit of EniSpA’s 2006 consolidated financial statements and of itsinternal control over financial reporting as of December 31, 2006and audits of its 2005 and 2004 consolidated financial statementsin accordance with the standards of the Public Company AccountingOversight Board (United States). Our opinions, based on ouraudits, are presented below.

**Consolidated financial statements**

In our opinion, the accompanying consolidatedbalance sheets and the related consolidated profit and lossaccounts, consolidated statements of changes inshareholders’ equity and consolidated statements of cashflows present fairly, in all material respects, the financialposition of Eni SpA and its subsidiaries at December 31, 2006,and December 31, 2005, and the results of their operations andtheir cash flows for each of the three years in the period endedDecember 31, 2006, in conformity with International FinancialReporting Standards as adopted by the European Union. Thesefinancial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on thesefinancial statements based on our audits. We conducted our auditsof these statements in accordance with the standards of thePublic Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements arefree of material misstatement. An audit of financial statementsincludes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements, assessingthe accounting principles used and significant estimates made bymanagement, and evaluating the overall financial statementpresentation. We believe that our audits provide a reasonablebasis for our opinion.

International Financial Reporting Standard asadopted by the European Union vary in certain significantrespects from accounting principles generally accepted in theUnited States of America. Information relating to the nature andeffect of such differences is presented in Notes 36, 37 and 38 ofthe financial statements.

**Internal control over financial reporting**

Also, in our opinion, management’sassessment, included in Management’s Annual Report onInternal Controls over Financial Reporting appearing in Item 15of this Form 20-F, that the Company maintained effective internalcontrol over financial reporting as of December 31, 2006, basedon criteria established in *Internal Control - IntegratedFramework* issued by the Committee of Sponsoring Organizationsof the Treadway Commission (COSO), is fairly stated, in allmaterial respects, based on those criteria. Furthermore, in ouropinion, the Company maintained, in all material respects,effective internal control over financial reporting as ofDecember 31, 2006, based on criteria established in *InternalControl - Integrated Framework* issued by the COSO.

The Company’s management is responsiblefor maintaining effective internal control over financialreporting and for its assessment of the effectiveness of internalcontrol over financial reporting. Our responsibility is toexpress opinions on management’s assessment and on theeffectiveness of the Company’s internal control overfinancial reporting based on our audit.

We conducted our audit of internal control overfinancial reporting in accordance with the standards of thePublic Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtainreasonable assurance about whether effective internal controlover financial reporting was maintained in all material respects.An audit of internal control over financial reporting includesobtaining an understanding of internal control over financialreporting, evaluating management’s assessment, testing andevaluating the design and operating effectiveness of internalcontrol, and performing such other procedures as we considernecessary in the circumstances. We believe that our auditprovides a reasonable basis for our opinion.

 

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A company’s internal control overfinancial reporting is a process designed to provide reasonableassurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes inaccordance with generally accepted accounting standards andprinciples. A company’s internal control over financialreporting includes those policies and procedures that (i) pertainto the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositionsof the assets of the company; (ii) provide reasonableassurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generallyaccepted accounting standards and principles, and that receiptsand expenditures of the company are being made only in accordancewith authorizations of management and directors of the company;and (iii) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or dispositionof the company’s assets that could have a material effect onthe financial statements.

Because of its inherent limitations, internalcontrol over financial reporting may not prevent or detectmisstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk thatcontrols may become inadequate because of changes in conditions,or that the degree of compliance with the policies or proceduresmay deteriorate.

 

**PricewaterhouseCoopers SpA**

June 20, 2007

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##### Table of Contents

**BALANCE SHEETS****(million euro)**

|   |   |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|--------|--------|--------|-------------------|--------|-------------------|
|   |   |   |                   |   |                   |

|   | **Note** |   | **Total amount** |   | ***of which with related        parties*** |   | **Total amount** |   | ***of which with related        parties*** |
|--------|----------|--------|------------------|--------|--------------------------------------------|--------|------------------|--------|--------------------------------------------|
|   |          |   |                  |   |                                            |   |                  |   |                                            |

| **ASSETS**                                                                                                                        |   |   |   |       |   |   |   |   |   |       |   |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|------------|--------|--------|--------|--------|--------|------------|--------|--------|--------|--------|
| **Current        assets**                                                                                                         |   |   |   |       |   |   |   |   |   |       |   |   |   |   |
| Cash and cash equivalent                                                                                                          |   | (1)    |   | 1,333      |   |   |   |   |   | 3,985      |   |   |   |   |
| Other        financial assets held for tradingor available for sale                                                               |   | (2)    |   | 1,368      |   |   |   |   |   | 972        |   |   |   |   |
| Trade and other receivables                                                                                                       |   | (3)    |   | 17,902     |   |   | 1,344  |   |   | 18,799     |   |   | 1,027  |   |
| Inventories                                                                                                                       |   | (4)    |   | 3,563      |   |   |   |   |   | 4,752      |   |   |   |   |
| Current tax assets                                                                                                                |   | (5)    |   | 697        |   |   |   |   |   | 658        |   |   |   |   |
| Other        current assets                                                                                                       |   | (6)    |   | 369        |   |   |   |   |   | 855        |   |   |   |   |
| **Total current assets**                                                                                                          |   |   |   | **25,232** |   |   |   |   |   | **30,021** |   |   |   |   |
| **Non-current        assets**                                                                                                     |   |   |   |       |   |   |   |   |   |       |   |   |   |   |
| Property, plant and equipment                                                                                                     |   | (7)    |   | 45,013     |   |   |   |   |   | 44,312     |   |   |   |   |
| Other        assets                                                                                                               |   | (8)    |   |       |   |   |   |   |   | 629        |   |   |   |   |
| Inventories - Compulsory stock                                                                                                    |   | (9)    |   | 2,194      |   |   |   |   |   | 1,827      |   |   |   |   |
| Intangible        assets                                                                                                          |   | (10)   |   | 3,194      |   |   |   |   |   | 3,753      |   |   |   |   |
| Investments accounted for using the equity        method                                                                          |   | (11)   |   | 3,890      |   |   |   |   |   | 3,886      |   |   |   |   |
| Other        investments                                                                                                          |   | (11)   |   | 421        |   |   |   |   |   | 360        |   |   |   |   |
| Other financial assets                                                                                                            |   | (12)   |   | 1,050      |   |   | 258    |   |   | 805        |   |   | 136    |   |
| Deferred        tax assets                                                                                                        |   | (13)   |   | 1,861      |   |   |   |   |   | 1,725      |   |   |   |   |
| Other non-current receivables                                                                                                     |   | (14)   |   | 995        |   |   |   |   |   | 994        |   |   |   |   |
| **Total        non-current assets**                                                                                               |   |   |   | **58,618** |   |   |   |   |   | **58,291** |   |   |   |   |
| **TOTAL ASSETS**                                                                                                                  |   |   |   | **83,850** |   |   |   |   |   | **88,312** |   |   |   |   |
| **LIABILITIES        AND SHAREHOLDERS’ EQUITY**                                                                              |   |   |   |       |   |   |   |   |   |       |   |   |   |   |
| **Current liabilities**                                                                                                           |   |   |   |       |   |   |   |   |   |       |   |   |   |   |
| Short-term        financial liabilities                                                                                           |   | (15)   |   | 4,612      |   |   | 152    |   |   | 3,400      |   |   | 92     |   |
| Current portion of long-term debt                                                                                                 |   | (19)   |   | 733        |   |   |   |   |   | 890        |   |   |   |   |
| Trade and        other payables                                                                                                   |   | (16)   |   | 13,095     |   |   | 1,164  |   |   | 15,995     |   |   | 961    |   |
| Taxes payable                                                                                                                     |   | (17)   |   | 3,430      |   |   |   |   |   | 2,830      |   |   |   |   |
| Other        current liabilities                                                                                                  |   | (18)   |   | 613        |   |   |   |   |   | 634        |   |   |   |   |
| **Total current liabilities**                                                                                                     |   |   |   | **22,483** |   |   |   |   |   | **23,749** |   |   |   |   |
| **Non-current        liabilities**                                                                                                |   |   |   |       |   |   |   |   |   |       |   |   |   |   |
| Long-term debt                                                                                                                    |   | (19)   |   | 7,653      |   |   |   |   |   | 7,409      |   |   |   |   |
| Provisions        for contingencies                                                                                               |   | (20)   |   | 7,679      |   |   |   |   |   | 8,614      |   |   |   |   |
| Provisions for employee benefits                                                                                                  |   | (21)   |   | 1,031      |   |   |   |   |   | 1,071      |   |   |   |   |
| Deferred        tax liabilities                                                                                                   |   | (22)   |   | 4,890      |   |   |   |   |   | 5,852      |   |   |   |   |
| Other non-current liabilities                                                                                                     |   | (23)   |   | 897        |   |   |   |   |   | 418        |   |   | 56     |   |
| **Total        non-current liabilities**                                                                                          |   |   |   | **22,150** |   |   |   |   |   | **23,364** |   |   |   |   |
| **TOTAL LIABILITIES**                                                                                                             |   |   |   | **44,633** |   |   |   |   |   | **47,113** |   |   |   |   |
| **SHAREHOLDERS’        EQUITY**                                                                                              |   | (24)   |   |       |   |   |   |   |   |       |   |   |   |   |
| **Minority interests**                                                                                                            |   |   |   | **2,349**  |   |   |   |   |   | **2,170**  |   |   |   |   |
| **Shareholders’        equity:**                                                                                             |   |   |   |       |   |   |   |   |   |       |   |   |   |   |
| Share capital: 4,005,358,876 fully paid shares        with nominal value euro 1 each (same amount as of        December 31, 2005) |   |   |   | 4,005      |   |   |   |   |   | 4,005      |   |   |   |   |
| Share        premium                                                                                                              |   |   |   |       |   |   |   |   |   |       |   |   |   |   |
| Other reserves                                                                                                                    |   |   |   | 10,910     |   |   |   |   |   | 6,013      |   |   |   |   |
| Retained        earnings                                                                                                          |   |   |   | 17,381     |   |   |   |   |   | 25,168     |   |   |   |   |
| Net profit                                                                                                                        |   |   |   | 8,788      |   |   |   |   |   | 9,217      |   |   |   |   |
| Treasury        shares                                                                                                            |   |   |   | (4,216     | )      |   |   |   |   | (5,374     | )      |   |   |   |
| **Total Eni shareholders’ equity**                                                                                           |   |   |   | **36,868** |   |   |   |   |   | **39,029** |   |   |   |   |
| **TOTAL        SHAREHOLDERS’ EQUITY**                                                                                        |   |   |   | **39,217** |   |   |   |   |   | **41,199** |   |   |   |   |
| **TOTAL LIABILITIES AND SHAREHOLDERS’        EQUITY**                                                                        |   |   |   | **83,850** |   |   |   |   |   | **88,312** |   |   |   |   |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

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##### Table of Contents

**PROFIT AND LOSS ACCOUNT****(million euro)**

|   |   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|--------|----------|--------|----------|--------|----------|
|   |   |   |          |   |          |   |          |

|   | **Note** |   | **Total amount** |   | **Total amount** |   | ***of which with related        parties*** |   | **Total amount** |   | ***of which with related        parties*** |
|--------|----------|--------|------------------|--------|------------------|--------|--------------------------------------------|--------|------------------|--------|--------------------------------------------|
|   |          |   |                  |   |                  |   |                                            |   |                  |   |                                            |

| **REVENUES**                                                            |   | (26)   |   |       |   |   |       |   |   |   |   |   |        |   |   |   |   |
|-------------------------------------------------------------------------|--------|--------|--------|------------|--------|--------|------------|--------|--------|--------|--------|--------|-------------|--------|--------|--------|--------|
| Net sales        from operations                                        |   |   |   | 57,545     |   |   | 73,728     |   |   | 4,535  |   |   | 86,105      |   |   | 3,974  |   |
| Other income and revenues                                               |   |   |   | 1,377      |   |   | 798        |   |   |   |   |   | 783         |   |   |   |   |
| **Total        revenues**                                               |   |   |   | **58,922** |   |   | **74,526** |   |   |   |   |   | **86,888**  |   |   |   |   |
| **OPERATING EXPENSES**                                                  |   | (27)   |   |       |   |   |       |   |   |   |   |   |        |   |   |   |   |
| Purchases,        services and other                                    |   |   |   | 38,347     |   |   | 48,567     |   |   | 3,429  |   |   | 57,490      |   |   | 2,720  |   |
| *- of which are significant non-recurring        events and operations* |   | (34)   |   | *5*        |   |   | *290*      |   |   |   |   |   | *239*       |   |   |   |   |
| Payroll        and related costs                                        |   |   |   | 3,245      |   |   | 3,351      |   |   |   |   |   | 3,650       |   |   |   |   |
| Depreciation, amortization and impairments                              |   |   |   | 4,931      |   |   | 5,781      |   |   |   |   |   | 6,421       |   |   |   |   |
| **OPERATING        PROFIT**                                             |   |   |   | **12,399** |   |   | **16,827** |   |   |   |   |   | **19,327**  |   |   |   |   |
| **FINANCIAL INCOME (EXPENSE)**                                          |   | (28)   |   |       |   |   |       |   |   |   |   |   |        |   |   |   |   |
| Financial        income                                                 |   |   |   | 2,589      |   |   | 3,131      |   |   | 72     |   |   | 4,132       |   |   | 58     |   |
| Financial expense                                                       |   |   |   | (2,745     | )      |   | (3,497     | )      |   |   |   |   | (3,971      | )      |   |   |   |
|                                                                    |   |   |   | **(156**   | **)**  |   | **(366**   | **)**  |   |   |   |   | **161**     |   |   |   |   |
| **Income (expense) from investments**                                   |   | (29)   |   |       |   |   |       |   |   |   |   |   |        |   |   |   |   |
| Effects of        investments accounted for using the equity method     |   |   |   | 332        |   |   | 737        |   |   |   |   |   | 795         |   |   |   |   |
| Other income (expense) from investments                                 |   |   |   | 488        |   |   | 177        |   |   |   |   |   | 108         |   |   |   |   |
|                                                                    |   |   |   | **820**    |   |   | **914**    |   |   |   |   |   | **903**     |   |   |   |   |
| **PROFIT BEFORE INCOME TAXES**                                          |   |   |   | **13,063** |   |   | **17,375** |   |   |   |   |   | **20,391**  |   |   |   |   |
| **Income        taxes**                                                 |   | (30)   |   | **(5,522** | **)**  |   | **(8,128** | **)**  |   |   |   |   | **(10,568** | **)**  |   |   |   |
| **Net profit**                                                          |   |   |   | **7,541**  |   |   | **9,247**  |   |   |   |   |   | **9,823**   |   |   |   |   |
| Pertaining        to:                                                   |   |   |   |       |   |   |       |   |   |   |   |   |        |   |   |   |   |
| - Eni                                                                   |   |   |   | 7,059      |   |   | 8,788      |   |   |   |   |   | 9,217       |   |   |   |   |
| - minority        interest                                              |   | (24)   |   | 482        |   |   | 459        |   |   |   |   |   | 606         |   |   |   |   |
|                                                                    |   |   |   | **7,541**  |   |   | **9,247**  |   |   |   |   |   | **9,823**   |   |   |   |   |
| **Earnings        per share pertaining to Eni** (euro per share)        |   | (31)   |   |       |   |   |       |   |   |   |   |   |        |   |   |   |   |
| - basic                                                                 |   |   |   | 1.87       |   |   | 2.34       |   |   |   |   |   | 2.49        |   |   |   |   |
| - diluted                                                               |   |   |   | 1.87       |   |   | 2.34       |   |   |   |   |   | 2.49        |   |   |   |   |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

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##### Table of Contents

**STATEMENT OF CHANGES INSHAREHOLDERS’ EQUITY****(million euro)**

|   |   | **Eni shareholders’ equity** |   |   |
|--------|--------|-----------------------------------|--------|--------|
|   |   |                                   |   |   |

|   |   | **Share capital** |   | **Legal reserve of Eni SpA** |   | **Reserve for treasury        shares** |   | **Other reserves** |   | **Cumulative translation        adjustment reserve** |   | **Treasury shares** |   | **Retained earnings** |   | **Interim dividend** |   | **Net profit for the        period** |   | **Total** |   | **Minority interests** |   | **Total shareholders’        equity** |
|--------|--------|-------------------|--------|------------------------------|--------|----------------------------------------|--------|--------------------|--------|------------------------------------------------------|--------|---------------------|--------|-----------------------|--------|----------------------|--------|--------------------------------------|--------|-----------|--------|------------------------|--------|--------------------------------------------|
|   |   |                   |   |                              |   |                                        |   |                    |   |                                                      |   |                     |   |                       |   |                      |   |                                      |   |           |   |                        |   |                                            |

| **Balance at January 1, 2004**                                                                                        |   | **4,003** |   |   | **959** |   |   | **5,397** |   |   | **3,200** |   |   |     |   |   | **(3,164** | **)**  |   | **12,950** |   |   |   |   |   | **5,585**  |   |   | **28,930** |   |   | **2,587** |   |   | **31,517** |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|--------|-----------|--------|--------|----------|--------|--------|------------|--------|--------|------------|--------|--------|--------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|
| **Net        profit for the year**                                                                                    |   |      |   |   |    |   |   |      |   |   |      |   |   |     |   |   |       |   |   |       |   |   |   |   |   | **7,059**  |   |   | **7,059**  |   |   | **482**   |   |   | **7,541**  |   |
| **Net income (expense) recognized directly in** **equity**                                                       |   |      |   |   |    |   |   |      |   |   |      |   |   |     |   |   |       |   |   |       |   |   |   |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Exchange        differences from translation of financial statements        denominated in currencies other than euro |   |      |   |   |    |   |   |      |   |   |      |   |   | (750     | )      |   |       |   |   |       |   |   |   |   |   |       |   |   | (750       | )      |   | 1         |   |   | (749       | )      |
|                                                                                                                  |   |      |   |   |    |   |   |      |   |   |      |   |   | **(750** | **)**  |   |       |   |   |       |   |   |   |   |   |       |   |   | **(750**   | **)**  |   | **1**     |   |   | **(749**   | **)**  |
| **Total        (expense) income for** **the period**                                                             |   |      |   |   |    |   |   |      |   |   |      |   |   | **(750** | **)**  |   |       |   |   |       |   |   |   |   |   | **7,059**  |   |   | **6,309**  |   |   | **483**   |   |   | **6,792**  |   |
| **Transactions with shareholders**                                                                                    |   |      |   |   |    |   |   |      |   |   |      |   |   |     |   |   |       |   |   |       |   |   |   |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Dividend        distribution of Eni SpA (euro 0.75 per share)                                                         |   |      |   |   |    |   |   |      |   |   |      |   |   |     |   |   |       |   |   |       |   |   |   |   |   | (2,828     | )      |   | (2,828     | )      |   |      |   |   | (2,828     | )      |
| Dividend distribution of other companies                                                                              |   |      |   |   |    |   |   |      |   |   |      |   |   |     |   |   |       |   |   |       |   |   |   |   |   |       |   |   |       |   |   | (248      | )      |   | (248       | )      |
| Allocation        of 2003 net profit                                                                                  |   |      |   |   |    |   |   |      |   |   | 22        |   |   |     |   |   |       |   |   | 2,735      |   |   |   |   |   | (2,757     | )      |   |       |   |   |      |   |   |       |   |
| Shares repurchased                                                                                                    |   |      |   |   |    |   |   |      |   |   |      |   |   |     |   |   | (70        | )      |   |       |   |   |   |   |   |       |   |   | (70        | )      |   |      |   |   | (70        | )      |
| Shares        issued under stock grant plans                                                                          |   | 1         |   |   |    |   |   |      |   |   | (1        | )      |   |     |   |   |       |   |   |       |   |   |   |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Treasury shares sold under incentive plans for        Eni managers                                                    |   |      |   |   |    |   |   | (5        | )      |   | 5         |   |   |     |   |   | 5          |   |   |       |   |   |   |   |   |       |   |   | 5          |   |   |      |   |   | 5          |   |
|                                                                                                                  |   | **1**     |   |   |    |   |   | **(5**    | **)**  |   | **26**    |   |   |     |   |   | **(65**    | **)**  |   | **2,735**  |   |   |   |   |   | **(5,585** | **)**  |   | **(2,893** | **)**  |   | **(248**  | **)**  |   | **(3,141** | **)**  |
| **Other changes in shareholders’ equity**                                                                        |   |      |   |   |    |   |   |      |   |   |      |   |   |     |   |   |       |   |   |       |   |   |   |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Cost of        stock option                                                                                           |   |      |   |   |    |   |   |      |   |   | 3         |   |   |     |   |   |       |   |   |       |   |   |   |   |   |       |   |   | 3          |   |   |      |   |   | 3          |   |
| Former Italgas SpA reserves reconstituted                                                                             |   |      |   |   |    |   |   |      |   |   | (43       | )      |   |     |   |   |       |   |   | 43         |   |   |   |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Reserves        from merger of EniData SpA                                                                            |   |      |   |   |    |   |   |      |   |   | 4         |   |   |     |   |   |       |   |   | (4         | )      |   |   |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Reclassification                                                                                                      |   |      |   |   |    |   |   |      |   |   | 775       |   |   |     |   |   |       |   |   | (775       | )      |   |   |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Sale of        9.054% of Snam Rete Gas SpA share capital                                                         |   |      |   |   |    |   |   |      |   |   |      |   |   |     |   |   |       |   |   |       |   |   |   |   |   |       |   |   |       |   |   | 326       |   |   | 326        |   |
| Exchange differences arising on the distribution        of dividends and other changes                                |   |      |   |   |    |   |   |      |   |   |      |   |   | 63       |   |   |       |   |   | (38        | )      |   |   |   |   |       |   |   | 25         |   |   | 18        |   |   | 43         |   |
|                                                                                                                  |   |      |   |   |    |   |   |      |   |   | **739**   |   |   | **63**   |   |   |       |   |   | **(774**   | **)**  |   |   |   |   |       |   |   | **28**     |   |   | **344**   |   |   | **372**    |   |
| **Balance at December 31, 2004**                                                                                      |   | **4,004** |   |   | **959** |   |   | **5,392** |   |   | **3,965** |   |   | **(687** | **)**  |   | **(3,229** | **)**  |   | **14,911** |   |   |   |   |   | **7,059**  |   |   | **32,374** |   |   | **3,166** |   |   | **35,540** |   |

|   |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

F-5

----

##### Table of Contents

**STATEMENT OF CHANGES INSHAREHOLDERS’ EQUITY***continued***(million euro)**

|   |   | **Eni shareholders’ equity** |   |   |
|--------|--------|-----------------------------------|--------|--------|
|   |   |                                   |   |   |

|   |   | **Share capital** |   | **Legal reserve of Eni SpA** |   | **Reserve for treasury        shares** |   | **Other reserves** |   | **Cumulative translation        adjustment reserve** |   | **Treasury shares** |   | **Retained earnings** |   | **Interim dividend** |   | **Net profit for the        period** |   | **Total** |   | **Minority interests** |   | **Total shareholders’        equity** |
|--------|--------|-------------------|--------|------------------------------|--------|----------------------------------------|--------|--------------------|--------|------------------------------------------------------|--------|---------------------|--------|-----------------------|--------|----------------------|--------|--------------------------------------|--------|-----------|--------|------------------------|--------|--------------------------------------------|
|   |   |                   |   |                              |   |                                        |   |                    |   |                                                      |   |                     |   |                       |   |                      |   |                                      |   |           |   |                        |   |                                            |

| **Balance at December 31, 2004**                                                                                      |   | **4,004** |   |   | **959** |   |   | **5,392** |   |   | **3,965** |   |   | **(687**  | **)**  |   | **(3,229** | **)**  |   | **14,911** |   |   |       |   |   | **7,059**  |   |   | **32,374** |   |   | **3,166**  |   |   | **35,540** |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Changes in        accounting principles (IAS 32 and 39)                                                               |   |      |   |   |    |   |   |      |   |   | 13        |   |   |      |   |   |       |   |   | (40        | )      |   |       |   |   |       |   |   | (27        | )      |   | 12         |   |   | (15        | )      |
| **Adjusted balanceat January 1, 2005**                                                                                |   | **4,004** |   |   | **959** |   |   | **5,392** |   |   | **3,978** |   |   | **(687**  | **)**  |   | **(3,229** | **)**  |   | **14,871** |   |   |       |   |   | **7,059**  |   |   | **32,347** |   |   | **3,178**  |   |   | **35,525** |   |
| **Net        profit for the year**(Note 24)                                                                           |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   | **8,788**  |   |   | **8,788**  |   |   | **459**    |   |   | **9,247**  |   |
| **Net income (expense) directly recognized in** **equity**                                                       |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |
| Change in        the fair value of financial assets held for sale (Note        24)                                    |   |      |   |   |    |   |   |      |   |   | 6         |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 6          |   |   |       |   |   | 6          |   |
| Change in the fair value of cash flow hedge        derivative (Note 24)                                          |   |      |   |   |    |   |   |      |   |   | 16        |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 16         |   |   |       |   |   | 16         |   |
| Exchange        differences from translation of financial statements        denominated in currencies other than euro |   |      |   |   |    |   |   |      |   |   |      |   |   | 1,497     |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 1,497      |   |   | 15         |   |   | 1,512      |   |
|                                                                                                                  |   |      |   |   |    |   |   |      |   |   | **22**    |   |   | **1,497** |   |   |       |   |   |       |   |   |       |   |   |       |   |   | **1,519**  |   |   | **15**     |   |   | **1,534**  |   |
| **Total        (expense) income of the year**                                                                         |   |      |   |   |    |   |   |      |   |   | **22**    |   |   | **1,497** |   |   |       |   |   |       |   |   |       |   |   | **8,788**  |   |   | **10,307** |   |   | **474**    |   |   | **10,781** |   |
| **Transactions with shareholders**                                                                                    |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |
| Dividend        distribution of Eni SpA (euro 0.90 per share)                                                         |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   | (3,384     | )      |   | (3,384     | )      |   |       |   |   | (3,384     | )      |
| Interim dividend (euro 0.45 per share)                                                                                |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   | (1,686     | )      |   |       |   |   | (1,686     | )      |   |       |   |   | (1,686     | )      |
| Dividend        distribution of other companies                                                                       |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (1,218     | )      |   | (1,218     | )      |
| Allocation of 2004 residual net profit                                                                                |   |      |   |   |    |   |   |      |   |   | 1,300     |   |   |      |   |   |       |   |   | 2,375      |   |   |       |   |   | (3,675     | )      |   |       |   |   |       |   |   |       |   |
| Shares        repurchased                                                                                             |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   | (1,034     | )      |   |       |   |   |       |   |   |       |   |   | (1,034     | )      |   |       |   |   | (1,034     | )      |
| Shares issued under stock grant plans                                                                                 |   | 1         |   |   |    |   |   |      |   |   | (1        | )      |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |
| Treasury        shares sold under incentive plans for Eni managers                                                    |   |      |   |   |    |   |   | (47       | )      |   | 47        |   |   |      |   |   | 47         |   |   |       |   |   |       |   |   |       |   |   | 47         |   |   |       |   |   | 47         |   |
|                                                                                                                  |   | **1**     |   |   |    |   |   | **(47**   | **)**  |   | **1,346** |   |   |      |   |   | **(987**   | **)**  |   | **2,375**  |   |   | **(1,686** | **)**  |   | **(7,059** | **)**  |   | **(6,057** | **)**  |   | **(1,218** | **)**  |   | **(7,275** | **)**  |
| **Other        changes in shareholders’ equity**                                                                 |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |
| Cost related to stock options                                                                                         |   |      |   |   |    |   |   |      |   |   | 5         |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 5          |   |   |       |   |   | 5          |   |
| Sale of        consolidated companies                                                                                 |   |      |   |   |    |   |   |      |   |   |      |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (40        | )      |   | (40        | )      |
| Exchange differences arising on the distribution        of dividends and other changes                                |   |      |   |   |    |   |   |      |   |   |      |   |   | 131       |   |   |       |   |   | 135        |   |   |       |   |   |       |   |   | 266        |   |   | (45        | )      |   | 221        |   |
|                                                                                                                  |   |      |   |   |    |   |   |      |   |   | **5**     |   |   | **131**   |   |   |       |   |   | **135**    |   |   |       |   |   |       |   |   | **271**    |   |   | **(85**    | **)**  |   | **186**    |   |
| **Balance at December 31, 2005** (Note 24)                                                                            |   | **4,005** |   |   | **959** |   |   | **5,345** |   |   | **5,351** |   |   | **941**   |   |   | **(4,216** | **)**  |   | **17,381** |   |   | **(1,686** | **)**  |   | **8,788**  |   |   | **36,868** |   |   | **2,349**  |   |   | **39,217** |   |

|   |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

F-6

----

##### Table of Contents

**STATEMENT OF CHANGES INSHAREHOLDERS’ EQUITY*****continued*****(million euro)**

|   |   | **Eni shareholders’ equity** |   |   |
|--------|--------|-----------------------------------|--------|--------|
|   |   |                                   |   |   |

|   |   | **Share capital** |   | **Legal reserve of Eni SpA** |   | **Reserve for treasury        shares** |   | **Other reserves** |   | **Cumulative translation        adjustment reserve** |   | **Treasury shares** |   | **Retained earnings** |   | **Interim dividend** |   | **Net profit for the        period** |   | **Total** |   | **Minority interests** |   | **Total shareholders’        equity** |
|--------|--------|-------------------|--------|------------------------------|--------|----------------------------------------|--------|--------------------|--------|------------------------------------------------------|--------|---------------------|--------|-----------------------|--------|----------------------|--------|--------------------------------------|--------|-----------|--------|------------------------|--------|--------------------------------------------|
|   |   |                   |   |                              |   |                                        |   |                    |   |                                                      |   |                     |   |                       |   |                      |   |                                      |   |           |   |                        |   |                                            |

| **Balance at December 31, 2005**(Note 24)                                                                                                            |   | **4,005** |   |   | **959** |   |   | **5,345** |   |   | **5,351**  |   |   | **941**    |   |   | **(4,216** | **)**  |   | **17,381** |   |   | **(1,686** | **)**  |   | **8,788**  |   |   | **36,868** |   |   | **2,349** |   |   | **39,217** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|
| **Net        profit of the year**(Note 24)                                                                                                           |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | **9,217**  |   |   | **9,217**  |   |   | **606**   |   |   | **9,823**  |   |
| **Net income (expense) directly recognized in        equity**                                                                                        |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Change in        the fair value of financial assets held for sale (Note        24)                                                                   |   |      |   |   |    |   |   |      |   |   | (13        | )      |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (13        | )      |   |      |   |   | (13        | )      |
| Change in the fair value of cash flow hedge        derivative (Note 24)                                                                              |   |      |   |   |    |   |   |      |   |   | (15        | )      |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (15        | )      |   |      |   |   | (15        | )      |
| Exchange        differences from translation of financial statements        denominated in currencies other than euro                                |   |      |   |   |    |   |   |      |   |   |       |   |   | (1,266     | )      |   |       |   |   |       |   |   |       |   |   |       |   |   | (1,266     | )      |   | (29       | )      |   | (1,295     | )      |
|                                                                                                                                                 |   |      |   |   |    |   |   |      |   |   | **(28**    | **)**  |   | **(1,266** | **)**  |   |       |   |   |       |   |   |       |   |   |       |   |   | **(1,294** | **)**  |   | **(29**   | **)**  |   | **(1,323** | **)**  |
| **Total        (expense) income of the year**                                                                                                        |   |      |   |   |    |   |   |      |   |   | **(28**    | **)**  |   | **(1,266** | **)**  |   |       |   |   |       |   |   |       |   |   | **9,217**  |   |   | **7,923**  |   |   | **577**   |   |   | **8,500**  |   |
| **Transactions with shareholders**                                                                                                                   |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Dividend        distribution of Eni SpA (euro 0.65 per share in        settlement of 2005) interim dividend of euro 0.45 per        share) (Note 24) |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 1,686      |   |   | (4,086     | )      |   | (2,400     | )      |   |      |   |   | (2,400     | )      |
| Dividend distribution of Eni SpA (euro 0.60 per        share) (Note 24)                                                                              |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (2,210     | )      |   |       |   |   | (2,210     | )      |   |      |   |   | (2,210     | )      |
| Dividend        distribution of other companies                                                                                                      |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (222      | )      |   | (222       | )      |
| Payments by minority shareholders                                                                                                                    |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 22        |   |   | 22         |   |
| Allocation        of 2005 net profit                                                                                                                 |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   | 4,702      |   |   |       |   |   | (4,702     | )      |   |       |   |   |      |   |   |       |   |
| Authorization to shares repurchase (Note 24)                                                                                                         |   |      |   |   |    |   |   | 2,000     |   |   |       |   |   |       |   |   |       |   |   | (2,000     | )      |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Shares        repurchased        (Note 24)                                                                                                           |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   | (1,241     | )      |   |       |   |   |       |   |   |       |   |   | (1,241     | )      |   |      |   |   | (1,241     | )      |
| Treasury shares sold under incentive plans for        Eni managers (Note 24)                                                                         |   |      |   |   |    |   |   | (85       | )      |   | 54         |   |   |       |   |   | 85         |   |   | 21         |   |   |       |   |   |       |   |   | 75         |   |   |      |   |   | 75         |   |
| Difference        between the book value and strike price of stock options        exercised by Eni managers                                          |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   | 7          |   |   |       |   |   |       |   |   | 7          |   |   |      |   |   | 7          |   |
|                                                                                                                                                 |   |      |   |   |    |   |   | **1,915** |   |   | **54**     |   |   |       |   |   | **(1,156** | **)**  |   | **2,730**  |   |   | **(524**   | **)**  |   | **(8,788** | **)**  |   | **(5,769** | **)**  |   | **(200**  | **)**  |   | **(5,969** | **)**  |
| **Other        changes in shareholders’ equity**                                                                                                |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Sale to Saipem Projects SpA of Snamprogetti SpA                                                                                                      |   |      |   |   |    |   |   |      |   |   | 247        |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | 247        |   |   | (247      | )      |   |       |   |
| Net effect        related to the purchase of treasury shares by Saipem SpA        and Snam Rete Gas SpA                                              |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (306      | )      |   | (306       | )      |
| Purchase and sale to third parties of        consolidated companies                                                                                  |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   | (5        | )      |   | (5         | )      |
| Cost        related to stock options                                                                                                                 |   |      |   |   |    |   |   |      |   |   |       |   |   |       |   |   |       |   |   | 14         |   |   |       |   |   |       |   |   | 14         |   |   |      |   |   | 14         |   |
| Reclassification of reserves of Eni SpA                                                                                                              |   |      |   |   |    |   |   | 2         |   |   | (5,224     | )      |   |       |   |   | (2         | )      |   | 5,224      |   |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |
| Exchange        differences arising on the distribution of dividends and        other changes                                                        |   |      |   |   |    |   |   |      |   |   |       |   |   | (73        | )      |   |       |   |   | (181       | )      |   |       |   |   |       |   |   | (254       | )      |   | 2         |   |   | (252       | )      |
|                                                                                                                                                 |   |      |   |   |    |   |   | **2**     |   |   | **(4,977** | **)**  |   | **(73**    | **)**  |   | **(2**     | **)**  |   | **5,057**  |   |   |       |   |   |       |   |   | **7**      |   |   | **(556**  | **)**  |   | **(549**   | **)**  |
| **Balance        at December 31, 2006**(Note 24)                                                                                                     |   | **4,005** |   |   | **959** |   |   | **7,262** |   |   | **400**    |   |   | **(398**   | **)**  |   | **(5,374** | **)**  |   | **25,168** |   |   | **(2,210** | **)**  |   | **9,217**  |   |   | **39,029** |   |   | **2,170** |   |   | **41,199** |   |

|   |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

F-7

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##### Table of Contents

**STATEMENT OF CASH FLOWS****(million euro)**

|   |   | **Note** |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |   |          |

| Net profit of the year                                                                              |   |   |   | 7,541      |   |   | 9,247      |   |   | 9,823      |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Depreciation        and amortization                                                                |   | (27)   |   | 4,598      |   |   | 5,509      |   |   | 6,153      |   |
| Revaluations, net                                                                                   |   |   |   | 27         |   |   | (288       | )      |   | (386       | )      |
| Net change        in provisions for contingencies                                                   |   |   |   | 418        |   |   | 1,279      |   |   | (86        | )      |
| Net change in the provisions for employee        benefits                                           |   |   |   | 49         |   |   | 18         |   |   | 72         |   |
| Gain on        disposal of assets, net                                                              |   |   |   | (793       | )      |   | (220       | )      |   | (59        | )      |
| Dividend income                                                                                     |   | (29)   |   | (72        | )      |   | (33        | )      |   | (98        | )      |
| Interest        income                                                                              |   |   |   | (198       | )      |   | (214       | )      |   | (387       | )      |
| Interest expense                                                                                    |   |   |   | 567        |   |   | 654        |   |   | 346        |   |
| Exchange        differences                                                                         |   |   |   | (79        | )      |   | (64        | )      |   | 6          |   |
| Income taxes                                                                                        |   | (30)   |   | 5,522      |   |   | 8,128      |   |   | 10,568     |   |
| *Cash        generated from operating profit before changes in working        capital*              |   |   |   | 17,580     |   |   | 24,016     |   |   | 25,952     |   |
| (Increase) decrease:                                                                                |   |   |   |       |   |   |       |   |   |       |   |
| -        inventories                                                                                |   |   |   | (355       | )      |   | (1,402     | )      |   | (953       | )      |
| - trade and other receivables                                                                       |   |   |   | (1,241     | )      |   | (4,413     | )      |   | (1,952     | )      |
| - other        assets                                                                               |   |   |   | 43         |   |   | 351        |   |   | (315       | )      |
| - trade and other payables                                                                          |   |   |   | 727        |   |   | 3,030      |   |   | 2,146      |   |
| - other        liabilities                                                                          |   |   |   | (83        | )      |   | 12         |   |   | 50         |   |
| *Cash from operations*                                                                              |   |   |   | 16,671     |   |   | 21,594     |   |   | 24,928     |   |
| Dividends        received                                                                           |   |   |   | 394        |   |   | 366        |   |   | 848        |   |
| Interest received                                                                                   |   |   |   | 167        |   |   | 214        |   |   | 395        |   |
| Interest        paid                                                                                |   |   |   | (533       | )      |   | (619       | )      |   | (294       | )      |
| Income taxes paid                                                                                   |   |   |   | (4,199     | )      |   | (6,619     | )      |   | (8,876     | )      |
| **Net        cash provided from operating activities**                                              |   |   |   | **12,500** |   |   | **14,936** |   |   | **17,001** |   |
| *- of which with related parties*                                                                   |   | (33)   |   |       |   |   | *1,230*    |   |   | *2,206*    |   |
| Investments:                                                                                        |   |   |   |       |   |   |       |   |   |       |   |
| - tangible assets                                                                                   |   | (7)    |   | (6,785     | )      |   | (6,558     | )      |   | (6,138     | )      |
| -        intangible assets                                                                          |   | (10)   |   | (714       | )      |   | (856       | )      |   | (1,695     | )      |
| - consolidated subsidiaries and businesses                                                          |   |   |   |       |   |   | (73        | )      |   | (46        | )      |
| -        investments                                                                                |   | (11)   |   | (316       | )      |   | (54        | )      |   | (42        | )      |
| - securities                                                                                        |   |   |   | (675       | )      |   | (464       | )      |   | (49        | )      |
| -        financing receivables                                                                      |   |   |   | (470       | )      |   | (683       | )      |   | (516       | )      |
| - change in payables and receivables in relation        to investments and capitalized depreciation |   |   |   | (13        | )      |   | 149        |   |   | (26        | )      |
| *Cash        flow from investments*                                                                 |   |   |   | (8,973     | )      |   | (8,539     | )      |   | (8,512     | )      |
| Disposals:                                                                                          |   |   |   |       |   |   |       |   |   |       |   |
| - tangible        assets                                                                            |   |   |   | 279        |   |   | 99         |   |   | 237        |   |
| - intangible assets                                                                                 |   |   |   | 13         |   |   | 13         |   |   | 12         |   |
| -        consolidated subsidiaries and businesses                                                   |   |   |   | 538        |   |   | 252        |   |   | 8          |   |
| - investments                                                                                       |   |   |   | 61         |   |   | 178        |   |   | 36         |   |
| -        securities                                                                                 |   |   |   | 659        |   |   | 369        |   |   | 382        |   |
| - financing receivables                                                                             |   |   |   | 808        |   |   | 804        |   |   | 794        |   |
| - change        in payables and receivables in relationto disposals                                 |   |   |   | (1         | )      |   | 9          |   |   | (8         | )      |
| *Cash flow from disposals*                                                                          |   |   |   | 2,357      |   |   | 1,724      |   |   | 1,461      |   |
| **Net        cash used in investing activities**                                                    |   |   |   | **(6,616** | **)**  |   | **(6,815** | **)**  |   | **(7,051** | **)**  |
| *- of which with related parties*                                                                   |   | (33)   |   |       |   |   | *(160*     | *)*    |   | *(686*     | *)*    |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

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##### Table of Contents

**STATEMENT OF CASH FLOWS*****continued*****(million euro)**

|   |   | **Note** |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |   |          |

| Proceeds from long-term debt                                                                                                              |   |   |   | 1,229      |   |   | 2,755      |   |   | 2,888      |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Payments        of long-term debt                                                                                                         |   |   |   | (797       | )      |   | (2,978     | )      |   | (2,621     | )      |
| Reductions of short-term debt                                                                                                             |   |   |   | (4,175     | )      |   | (317       | )      |   | (949       | )      |
|                                                                                                                                      |   |   |   | **(3,743** | **)**  |   | **(540**   | **)**  |   | **(682**   | **)**  |
| Net capital contributions by minority        shareholders                                                                                 |   |   |   | 1          |   |   | 24         |   |   | 22         |   |
| Net        acquisition of treasury shares different from Eni SpA                                                                          |   |   |   | (10        | )      |   | (30        | )      |   | (477       | )      |
| Acquisition of additional interests in        consolidated subsidiaries                                                                   |   |   |   | (25        | )      |   | (3         | )      |   | (7         | )      |
| Sale of        additional interests in consolidated subsidiaries                                                                          |   |   |   | 656        |   |   |       |   |   | 35         |   |
| **Dividends paid:**                                                                                                                       |   |   |   | **(3,076** | **)**  |   | **(6,288** | **)**  |   | **(4,832** | **)**  |
|      Eni’s        shareholders                                                                              |   |   |   | 2,828      |   |   | 5,070      |   |   | 4,610      |   |
|      Minority interests                                                                                          |   |   |   | 248        |   |   | 1,218      |   |   | 222        |   |
| Net        purchase of treasury shares                                                                                                    |   |   |   | (65        | )      |   | (987       | )      |   | (1,156     | )      |
| Net cash used in financing activities                                                                                                     |   |   |   | (6,262     | )      |   | (7,824     | )      |   | (7,097     | )      |
| *- of        which with related parties*                                                                                                  |   | (33)   |   |       |   |   | *23*       |   |   | *(57*      | *)*    |
| **Changes in cash and cash equivalents not        related to inflows/outflows from operating, investing or        financing activities:** |   |   |   |       |   |   |       |   |   |       |   |
| *Effect        of change in consolidation (inclusion/exclusion of        significant/insignificant subsidiaries)*                         |   |   |   | 12         |   |   | (38        | )      |   | (4         | )      |
| *Effect of exchange differences on cash and        cash equivalents*                                                                      |   |   |   | (67        | )      |   | 71         |   |   | (197       | )      |
| **Net        cash flow for the period**                                                                                                   |   | (1)    |   | **(433**   | **)**  |   | **330**    |   |   | **2,652**  |   |
| **Cash and cash equivalent at beginning of the        year**                                                                              |   | (1)    |   | **1,436**  |   |   | **1,003**  |   |   | **1,333**  |   |
| **Cash        and cash equivalent at end of the year**                                                                                    |   |   |   | **1,003**  |   |   | **1,333**  |   |   | **3,985**  |   |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

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##### Table of Contents

**SUPPLEMENTAL CASH FLOWINFORMATION****(million euro)**

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| **Effect of investment of companies included in        consolidation and businesses** |   |    |   |   |    |   |   |    |   |
|---------------------------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| Current        assets                                                                 |   |    |   |   |    |   |   | 68      |   |
| Non-current assets                                                                    |   |    |   |   | 122     |   |   | 130     |   |
| Net        borrowings                                                                 |   |    |   |   | (19     | )      |   | 53      |   |
| Current and non-current liabilities                                                   |   |    |   |   | (22     | )      |   | (92     | )      |
| **Net        effect of investments**                                                  |   |    |   |   | **81**  |   |   | **159** |   |
| Sale of unconsolidated subsidiaries                                                   |   |    |   |   |    |   |   | (60     | )      |
| Fair value        of the participations held before the acquisition of        control |   |    |   |   | (8      | )      |   |    |   |
| **Purchase price**                                                                    |   |    |   |   | **73**  |   |   | **99**  |   |
| less:                                                                                 |   |    |   |   |    |   |   |    |   |
| *Cash and cash equivalent*                                                            |   |    |   |   |    |   |   | (53     | )      |
| **Cash        flow on investments**                                                   |   |    |   |   | **73**  |   |   | **46**  |   |
| **Effect of disposal of consolidated        subsidiaries and businesses**             |   |    |   |   |    |   |   |    |   |
| Current        assets                                                                 |   | 261     |   |   | 204     |   |   | 9       |   |
| Non-current assets                                                                    |   | 285     |   |   | 189     |   |   | 1       |   |
| Net        borrowings                                                                 |   | (138    | )      |   | 42      |   |   | (1      | )      |
| Current and non-current liabilities                                                   |   | (167    | )      |   | (217    | )      |   | (4      | )      |
| Exchange        rate differences realized following disposal                          |   | 45      |   |   |    |   |   |    |   |
| **Net effect of disposals**                                                           |   | **286** |   |   | **218** |   |   | **5**   |   |
| Gain on        disposal                                                               |   | 304     |   |   | 140     |   |   | 3       |   |
| Minority interest                                                                     |   |    |   |   | (43     | )      |   |    |   |
| **Selling        price**                                                              |   | **590** |   |   | **315** |   |   | **8**   |   |
| less:                                                                                 |   |    |   |   |    |   |   |    |   |
| *Cash        and cash equivalent*                                                     |   | (52     | )      |   | (63     | )      |   |    |   |
| **Cash flow on disposals**                                                            |   | **538** |   |   | **252** |   |   | **8**   |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

**Transactions that did not produce cash flows**In 2006 the Group contributed assets and liabilities of abusiness with a carrying amount of euro 121 million in exchangefor equity investment in the companies to which those businesseswere contributed.

Acquisition of equity investments in exchangeof businesses contribution:

| (million        euro) |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|
|                  |   |          |   |          |

| **Effect of business contributions**   |   |   |   |   |    |   |
|----------------------------------------|--------|--------|--------|--------|---------|--------|
| Current        assets                  |   | 2      |   |   | 23      |   |
| Non-current assets                     |   | 17     |   |   | 213     |   |
| Net        borrowings                  |   |   |   |   | (44     | )      |
| Long-term and short-term liabilities   |   | (1     | )      |   | (53     | )      |
| **Net        effect of contributions** |   | **18** |   |   | **139** |   |
| Minority interest                      |   |   |   |   | (36     | )      |
| Gain on        contribution            |   |   |   |   | 18      |   |
| **Acquisition of investments**         |   | **18** |   |   | **121** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

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##### Table of Contents

The Consolidated Financial Statements wereapproved by Eni’s Board of Directors on March 31, 2007.

**Basis of presentation**

The Consolidated Financial Statements of Enihave been prepared in accordance with IFRS issued by theInternational Accounting Standards Board (IASB) and adopted bythe European Commission following the procedure contained inArticle 6 of the EC Regulation No. 1606/2002 of the EuropeanParliament and Council of July 19, 2002 and in accordance withArticle 9 of Legislative Decree No. 38/2005. For hydrocarbonexploration and production, accounting policies followed at aninternational level have been applied, with particular referenceto amortization according to the Unit-Of-Production method (UOP),buy-back contracts and Production Sharing Agreements.

The Consolidated Financial Statements have beenprepared by applying the cost method except for items that underIFRS must be recognized at fair value as described in theevaluation criteria.

The Consolidated Financial Statements includethe statutory accounts of Eni SpA and of all Italian and foreigncompanies in which Eni SpA holds the right to directly orindirectly exercise control, determine financial and managementdecisions and obtain economic and financial benefits.

Insignificant subsidiaries are not included inthe scope of consolidation. A subsidiary is consideredinsignificant when it does not exceed two of these limits: (i)total assets or liabilities: euro 3,125 thousand; (ii) totalrevenues: euro 6,250 thousand; and (iii) average number ofemployees: 50 units. Moreover, companies for which theconsolidation does not produce significant economic and financialeffects are not included in the scope of consolidation. Suchcompanies generally represent subsidiaries that work on accountof other companies as the sole operator in the management ofupstream oil contracts; these companies are financed on aproportional basis according to budgets approved, by thecompanies involved in the project, to which the companyperiodically reports costs and receipts deriving from thecontract. Costs and revenues and other operating data(production, reserves, etc.) of the project, as well as theobligations arising from the project, are recognizedproportionally in the Financial Statements of the companiesinvolved. The effects of these exclusions are not material1.

Subsidiaries excluded from consolidation, jointventures, associates and other interests are accounted for asdescribed below under item "Financial fixed assets".

Financial Statements of consolidated companiesare audited by auditing companies that examine and certify theinformation required to be disclosed when preparing theconsolidated financial statements.

Amounts in the notes to these financialstatements are stated in millions of euro.

**Principles of consolidation**

**Interests in companies included in the scopeof consolidation**Assets and liabilities, expense andincome related to fully consolidated companies are whollyincorporated into the Consolidated Financial Statements; the bookvalue of these interests is eliminated against the correspondingfraction of the shareholders’ equity of the companies owned,attributing to each item of the balance sheet the current valueat the date of acquisition of control. Any positive residualdifference as regards to the acquisition cost is recognized as"Goodwill". Negative residual differences are chargedagainst the profit and loss account.

Any positive residual difference between costfor the acquisition of the share that exceed the control(minorities acquisition) and corresponding fraction ofshareholders’ equity acquired is recognized as"Goodwill".

Gains or losses on the sale of shares inconsolidated subsidiaries are recorded in the profit and lossaccount for the amount corresponding to the difference betweenproceeds from the sale and divested portion of net equity sold.

Fractions of shareholders’ equity and netprofit of minority interest are recognized under specific itemsin the Financial Statements. Minority interest is determinedbased on the current value attributed to assets and liabilitiesat the date of the acquisition of control, excluding any relatedgoodwill.

_______________

| (1) |   | 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. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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##### Table of Contents

**Inter-company transactions**Income deriving from inter-companytransactions unrealized towards third parties is eliminated.Receivables, payables, revenues and costs, guarantees,commitments and risks among consolidated companies are eliminatedas well. Inter-company losses are not eliminated, since theyreflect an actual decrease in the value of divested assets.

**Foreign currency translation**Financial Statements of consolidatedcompanies denominated in currencies other than euro are convertedinto euro applying exchange rates prevailing at the year end toassets and liabilities, the historical exchange rates to equityaccounts and the average rates for the period to profit and lossaccount (source: Ufficio Italiano Cambi).

Exchange rate differences from the conversionderiving from the application of different exchange rates forassets and liabilities, shareholders’ equity and profit andloss account are recognized under the item "Otherreserves" within shareholders’ equity for the portionrelating to the Group and under the item "Minorityinterest" for the portion related to minority shareholders.The exchange rate differences reserve is charged to the profitand loss account when the investments are sold or the capitalemployed is repaid.

Financial Statements of foreign subsidiarieswhich are translated into euro are denominated in the functionalcurrencies of the country where the enterprise operates. The U.S.dollar is the prevalent functional currency for the enterprisesthat do not adopt euro.

**Evaluation criteria**

The most significant evaluation criteria usedfor the preparation of the Consolidated Financial Statements areshown below.

**Current assets**Financial assets held for trading andfinancial assets available for sale are stated at fair value;economic effects are charged to the profit and loss account item"Financial income (expense)" and undershareholders’ equity within "Other reserves". Inthe last case, changes in fair value recognized undershareholders’ equity are charged to the profit and lossaccount when they are impaired or realized.

The fair value of financial instruments isrepresented by market quotations or, in their absence, by thevalue resulting from the adoption of suitable financial valuationmodels which take into account all the factors adopted by themarket operators and the prices obtained in similar actualtransactions in the market.

When the conditions for the purchase or sale offinancial assets provide for the settlement of the transactionand the delivery of the assets within a given number of daysdetermined by entities controlling the market or by agreements(e.g. purchase of securities on regulated markets), thetransaction is entered at the date of settlement.

Receivables are stated at their amortized cost(see item "Financial fixed assets" below).

Transferred financial assets are eliminatedwhen the transaction, together with the cash flows deriving fromit, lead to the substantial transfer of all risks and benefitsassociated to the property.

Inventories, excluding contract work inprogress and including compulsory stocks, are stated at the lowerof purchase or production cost and net realizable valuerepresented by the proceeds the company expects to collect fromthe sale of the inventories in the normal course of business.

The cost for inventories of hydrocarbons (crudeoil, condensates and natural gas) and petroleum products isdetermined by applying the weighted-average cost method on athree-month basis; the cost for inventories of the Petrochemicalsegment is determined by applying the weighted-average cost on anannual basis.

Contract work in progress is recorded on thebasis of contractual considerations by reference to the stage ofcompletion of a contract measured on a cost-to-cost basis.Advances are deducted from inventories within the limits ofcontractual considerations; any excess of such advances over thevalue of the work performed is recorded as a liability. Lossesrelated to construction contracts are accrued for once thecompany becomes aware of such losses. Contract work in progressnot yet invoiced, whose payment is agreed in a foreign currency,is translated to euro using the current exchange rates at yearend and effects are reflected in the profit and loss account.

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##### Table of Contents

Hedging instruments are described in thesection "Derivative instruments".

**Non-current assets**

**Property, plant and equipment**2Tangible assets, including investment properties, arerecognized using the cost model and stated at their purchase orproduction cost including sundry costs which can be directlyattributed to them as required to make the asset available foruse. In addition, when a substantial amount of time is requiredto make the asset available for use, the purchase price orproduction cost includes the financial expenses incurred thatwould have theoretically been saved if the investment had notbeen made.

In the case of current obligations for thedismantling and removal of assets and the reclamation of sites,the carrying value includes, with a corresponding entry to aspecific provision, the estimated (discounted) costs to be borneat the moment the asset is retired. Revisions of estimates forthese provisions, for the passage of time and for changes in thediscount rate are recognized under "Provisions forcontingencies". The company recognizes material provisionsfor the retirement of assets in the Exploration & Productionbusiness. No significant asset retirement obligations associatedwith any legal obligations to retire refining, marketing andtransportation (downstream) and chemical long-lived assetsgenerally are recognized, as indeterminate settlement dates forthe asset retirements prevented estimation of the fair value ofthe associated retirement obligation. The company performsperiodic reviews of its downstream and chemical long-lived assetsfor any changes in facts and circumstances that might requirerecognition of a retirement obligation.

No revaluation is made even in application ofspecific laws.

Assets carried under financial leasing orconcerning arrangements that does not take the legal form of afinancial lease but produce a substantive transfer of risks andrewards of ownership, are recognized at fair value, net of taxesdue from the lessor or, if lower, at the amount of future minimumlease payments, and are included within the tangible assets, witha corresponding entry to the financial payable to the lessor, anddepreciated using the criteria detailed below. When the renewalis not reasonably certain, assets carried under financial leasingare depreciated over the period of the lease if shorter than theuseful life of the asset. Renewals, improvements andtransformations which extend asset lives are capitalized.

Tangible assets are depreciated systematicallyusing a straight-line method over their useful life from themoment they are recognized which coincides with the date whenthey begin or should begin to be used. When tangible assets arecomposed of more than one significant element with differentuseful lives, each component is depreciated separately. Thedepreciable amount is recognized as the carrying amount net ofany salvage value at the end of the assets useful life, if suchvalue is significant and can be reasonably determined. Land isnot depreciated, even when purchased in bulk with a building.Tangible assets held for sale are not depreciated but are valuedat the lower of book value and fair value less costs of disposal.

Assets that can be used free of charge aredepreciated over the shorter term of the duration of theconcession and the useful life of the asset.

The costs for the substitution of identifiablecomponents in complex assets are capitalized and depreciated overtheir useful life; the residual book value of the component thathas been substituted is charged to the profit and loss account.Ordinary maintenance and repair costs are expensed when incurred.

The carrying value of tangible assets isreviewed for impairment whenever events or changes incircumstances indicate that their carrying value may not berecoverable. The review consists in a comparison between the bookvalue and the estimated recoverable value. The recoverable amountof an asset is the greater of its fair value less costs to selland its value in use. In the absence of a binding salesagreement, fair value is estimated on the basis of market values,recent transactions, or the best available information that showsthe proceeds that the company could reasonably expect to collectfrom the disposal of the asset. Value in use is determined bydiscounting the expected cash flows deriving from the use of theasset and, if significant and reasonably determinable, the cashflows deriving from its disposal at the end of its useful life,net of disposal costs. Cash flows are determined on the basis ofreasonable and documented assumptions that represent the bestestimate of the future economic conditions during the residualuseful life of the asset, giving more importance to independentassumptions. Discounting is carried out at a rate that takes intoaccount the implicit risk in the sectors where the entityoperates. Valuation is carried out for each single asset or, ifthe realizable value of a single asset cannot be determined, forthe smallest identifiable group of assets that generatesindependent cash inflows from their continuous use, the so called"cash generating unit". 

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| (2) |   | Recognition        and evaluation criteria of exploration and production        activities are described in the section "Exploration        and production activities" below. |
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When the reasons for their impairment cease toexist, Eni reverses previously recorded impairment charges andrecords as income of an asset revaluation in the profit and lossaccount for the relevant year. This asset revaluation is thelower of the fair value and the book value increased by theamount of previously incurred impairments net of relatedamortization that would have been made if the impairment had notbeen made.

**Intangible assets**Intangible assets include assets which lack identifiablephysical qualities, controlled by the company and able to producefuture economic benefits, and goodwill acquired in businesscombinations. An asset is classified as intangible whenmanagement is able to distinguish it clearly from goodwill. Thiscondition is normally met when: (i) the intangible asset canbe traced back to a legal or contractual right, or (ii) the assetis separable, i.e. can be sold, transferred, licensed, rented orexchanged, either individually or as an integral part of otherassets. An entity controls an asset if it has the power to obtainthe future cash inflows generated by the underlying asset and torestrict the access of others to those cash flows.

Intangible assets are stated at cost asdetermined by the criteria used for tangible assets. Norevaluation is made even in application of specific laws.

Intangible assets with a defined useful lifeare amortized systematically over the duration of their usefullife estimated as the period over which the assets will be usedby the company; the recoverability of their book value isverified in accordance with the criteria described in the section"Tangible assets".

Goodwill and other intangible assets with anindefinite useful life are not amortized. The recoverability oftheir carrying value is checked at least annually and wheneverevents or changes in circumstances indicate that the carryingvalue may not be recoverable. Goodwill is reviewed for impairmentat the level of the smallest aggregate on which the company,directly or indirectly, evaluates the return on those capitalprojects to which goodwill relates. When the carrying amount ofthe cash generating unit, including goodwill attributed thereto,exceeds the cash generating unit’s recoverable amount, thedifference is recognized as impairment and it is primarilycharged against goodwill up to its amount; any amount in excessis charged on a pro-rata basis against the book value of theassets that form the cash generating unit. Impairment chargesagainst goodwill are not revalued. Negative goodwill isrecognized in the profit and loss account.

Costs of technological development activitiesare capitalized when: (i) the cost attributable to the intangibleasset can be reasonably determined; (ii) there is the intention,availability of funding and technical capacity to make the assetavailable for use or sale; and (iii) it can be demonstrated thatthe asset is able to generate future cash inflows.

**Exploration and production activities**3

*Acquisition of mineral rights*Costs associated with the acquisition of mineral rights arecapitalized in connection with the assets acquired (such asexploratory potential, probable and possible reserves and provedreserves). When the acquisition is related to a set ofexploratory potential and reserves, the cost is allocated to thedifferent assets acquired on the basis of the value of therelevant discounted cash flows.

Expenditure for the exploratory potential,represented by the costs for the acquisition of the explorationpermits and for the extension of existing permits, is recognizedunder "Intangible assets" and is amortized on astraight-line basis over the period of the exploration ascontractually established. If the exploration is abandoned, theresidual expenditure is charged to the profit and loss account.

Acquisition costs for proved reserves and forpossible and probable reserves are recognized in the balancesheet as assets. Costs associated with proved reserves areamortized on a UOP basis, as detailed in the section"Development", considering both developed andundeveloped reserves. Expenditures associated with possible andprobable reserves are not amortized until classified as provedreserves; in case of a negative result, the costs are charged tothe profit and loss account.

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| (3) |   | International        accounting principles do not establish specific criteria        for hydrocarbon exploration and production activities.        Eni continues to use existing accounting policies for        exploration and evaluation assets previously applied        before the introduction of IFRS 6 "Exploration for        and evaluation of mineral resources". |
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*Exploration*Costs associated with exploratory activities for oil and gasproducing properties incurred both before and after theacquisition of mineral rights (such as acquisition of seismicdata from third parties, test wells and geophysical surveys) arecapitalized, to reflect their nature of investment and amortizedin full when incurred.

*Development*Development costs are those costs incurred to obtain accessto proved reserves and to provide facilities for extracting,gathering and storing oil and gas. They are then capitalized andamortized generally on a UOP basis, as their useful life isclosely related to the availability of feasible reserves. Thismethod provides for residual costs at the end of each quarter tobe amortized through a rate representing the ratio between thevolumes extracted during the quarter and the proved developedreserves existing at the end of the quarter, increased by thevolumes extracted during the quarter. This method is applied withreference to the smallest aggregate representing a directcorrelation between investment and proved developed reserves.

Costs related to unsuccessful development wellsor damaged wells are expensed immediately as losses on disposal.

Impairments and reversal of impairments ofdevelopment costs are made on the same basis as those fortangible assets.

*Production*Production costs are those costs incurred to operate andmaintain wells and field equipment and are expensed as incurred.

*Production sharing agreements and buy-backcontracts*Revenues and oil and gas reserves related to ProductionSharing Agreements and buy-back contracts are settled on thebasis of contractual clauses related to the repayment of costsincurred following the exploration, development and operatingactivities (cost oil) and to the relevant amount of realizedproductions (profit oil).

*Retirement*Costs expected to be incurred with respect to the retirementof a well, including costs associated with removal of productionfacilities, dismantlement and site restoration, are capitalizedand amortized on a UOP basis, consistent with the policydescribed under "Tangible assets".

**Grants**Grants related to assets are recorded as a reduction ofpurchase price or production cost of the related assets whenthere is reasonable assurance that all the required conditionsattached to them, agreed upon with governmental entities, havebeen met. Grants not related to capital expenditure arerecognized in the profit and loss account.

**Financial fixed assets**

*Investments*Investments in subsidiaries excluded from consolidation,joint ventures and associates are accounted for using the equitymethod. If it does not result in a misrepresentation of thecompany’s financial condition and consolidated results,subsidiaries, joint ventures and associates excluded fromconsolidation may be accounted for at cost, adjusted forimpairment losses. When the reasons for their impairment cease toexist, investments accounted for at cost are revalued within thelimit of the impairment made and their effects are charged to theprofit and loss account item "Other income (expense) frominvestments".

Other investments are recognized at their fairvalue and their effects are included in shareholders’ equityunder "Other reserves"; this reserve is charged to theprofit and loss account when it is impaired or realized. Whenfair value cannot be reasonably ascertained, investments areaccounted for at cost, adjusted for impairment losses; impairmentlosses may not be revalued.

The risk deriving from losses exceedingshareholders’ equity is recognized in a specific provisionto the extent the parent company is required to fulfill legal orimplicit obligations towards the subsidiary or to cover itslosses.

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*Receivables and financial assets to be heldto maturity*Receivables and financial assets that must be held tomaturity are stated at cost represented by the fair value of theinitial exchanged amount adjusted to take into account directexternal costs related to the transaction (e.g. fees of agents orconsultants, etc.). The initial carrying value is then correctedto take into account capital repayments, devaluations andamortization of the difference between the reimbursement valueand the initial carrying value; amortization is carried out onthe basis of the effective internal rate of return represented bythe rate that equalizes, at the moment of the initialrevaluation, the current value of expected cash flows to theinitial carrying value (so-called amortized cost method). Anyimpairment is recognized by comparing the carrying value with thepresent value of the expected cash flows discounted at theeffective interest rate defined at the initial recognition. Theeconomic effects of the valuation according to the amortized costmethod are charged as "Financial income (expense)".

**Financial liabilities**Debt is carried at amortized cost (seeitem "Financial fixed assets" above).

**Provisions for contingencies**Provisions for contingencies concernrisks and charges of a definite nature and whose existence iscertain or probable but for which at year end the amount or dateof occurrence remains uncertain. Provisions are made when: (i)there is a current obligation, either legal or implicit, derivingfrom a past event; (ii) it is probable that the fulfillment ofthat obligation will result in an outflow of resources embodyingeconomic benefits; and (iii) the amount of the obligation can bereliably estimated. Provisions are stated at the value thatrepresents the best estimate of the amount that the company wouldreasonably pay to fulfil the obligation or to transfer it tothird parties at year end. When the financial effect of time issignificant and the payment date of the obligations can bereasonably estimated, the provisions are discounted back at thecompany’s average rate of indebtedness. The increase in theprovision due to the passing of time is charged to the profit andloss account in the item "Financial income (expense)".

When the liability regards a tangible asset(e.g. site restoration and abandonment), the provision is statedwith a corresponding entry to the asset to which it refers;profit and loss account charge is made with the amortizationprocess.

Costs that the company expects to bear in orderto carry out restructuring plans are recognized in the year inwhich the company formally defines the plan and the interestedparties have developed the reasonable expectation that therestructuring will happen.

Provisions are periodically updated to show thevariations of estimates of costs, production times and actuarialrates; the estimated revisions to the provisions are recognizedin the same profit and loss account item that had previously heldthe provision, or, when the liability regards tangible assets(i.e. site restoration and abandonment) with a correspondingentry to the assets to which they refer.

In the Notes to the Consolidated FinancialStatements the following potential liabilities are described:(i) possible, but not probable obligations deriving frompast events, whose existence will be confirmed only when one ormore future events beyond the company’s control occur; and(ii) current obligations deriving from past events whose amountcannot be reasonably estimated or whose fulfillment will probablynot result in an outflow of resources embodying economicbenefits.

**Employee benefits**Post-employment benefit plans aredefined on the basis of plans, including those unformalized, thatdue to their terms defined contributions or defined benefits. Inthe first case, the company’s obligation, which consists ofmaking payments to the State or a trust or a fund, is determinedon the basis of contributions due.

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The liabilities related to defined benefitplans4, net of any plan assets, are determined on thebasis of actuarial assumptions5 and charged on accrualbasis during the employment period required to obtain thebenefits; the evaluation of liabilities is made by independentactuaries.

The actuarial gains and losses of definedbenefit plans, deriving from a change in the actuarialassumptions used or from a change in the conditions of the plan,are charged to the profit and loss account, proportionallythrough the residual average working life of the employeesparticipating to the plan, in the limits of the share of thediscounted profit/loss not charged beforehand, that exceeds thegreater of 10% of the fair value of liabilities and 10% of thefair value of the plan assets (corridor method).

Obligations for long-term benefits aredetermined by adopting actuarial assumptions; the effect ofchanges in actuarial assumptions or a change in thecharacteristics of the benefit are taken to profit or loss intheir entirety.

**Treasury shares**Treasury shares are recorded at costand as a reduction of shareholders’ equity. Gains followingsubsequent sales are recorded as an increase inshareholders’ equity.

**Revenues and costs**Revenues from sales of products andservices rendered are recognized upon transfer of risks andrewards associated with the property or upon settlement of thetransaction. In particular, revenues are recognized:

| • |   | for crude        oil, generally upon shipment;                                                                                                                                                     |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | for natural        gas, when the natural gas is delivered to the customer;                                                                                                                         |
| • |   | for petroleum        products sold to retail distribution networks, generally        upon delivery to the service stations, whereas all other        sales are generally recognized upon shipment; |
| • |   | for        petrochemical products and other products, generally upon        shipment.                                                                                                              |

Revenues are recognized upon shipment when, atthat date, the risks of loss are transferred to the acquirer.Revenues from the sale of crude oil and natural gas produced inproperties in which Eni has an interest together with otherproducers are recognized on the basis of Eni’s workinginterest in those properties (entitlement method). Differencesbetween Eni’s net working interest volume and actualproduction volumes are recognized at current prices at periodend.

Income related to partially rendered servicesare recognized with respect to the accrued revenues, if it ispossible to reasonably determine the stage of completion andthere are no relevant uncertainties concerning the amounts andthe existence of the revenue and related costs; otherwise it isrecognized within the limits of the recoverable costs incurred.

Revenues accrued in the period related toconstruction contracts are recognized on the basis of contractualrevenues with reference to the stage of completion of a contractmeasured on the cost-to-cost basis. Requests of additionalrevenues, deriving from a change in the scope of the work, areincluded in the total amount of revenues when it is probable thatthe customer will approve the variation and the related amount;claims deriving for instance from additional costs incurred forreasons attributable to the client are included in the totalamount of revenues when it is probable that the counterpart willaccept them.

Revenues are stated net of returns, discounts,rebates and bonuses, as well as directly related taxation.Exchanges of goods and services with similar nature and value donot give rise to revenues and costs as they do not represent saletransactions.

Costs are recognized when the related goods andservices are sold, consumed or allocated, or when their futureuseful lives cannot be determined. Costs related to the amount ofemissions, determined on the basis of the average prices of themain European markets at the end of the period, are reported inrelation to the amount of the carbon dioxide emissions thatexceed the amount assigned; revenues related to the amount ofemissions are reported when are recognized following the sale.

Operating lease payments are recognized in theprofit and loss account based on the contract duration.

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| (4) |   | Given the        uncertainties related to their payment date, employee        termination indemnities are considered as a defined        benefit plan. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) |   | Actuarial        assumptions relate to, inter alia, the following        variables: (i) future salary levels; (ii) the mortality        rate of employees; (iii) personnel turnover; (iv) the        percentage of plan participants with dependents who are        eligible to receive benefits (e.g. spouses and dependent        children); (v) for medical plans, the frequency of claims        and future medical costs; and (vi) interest rates. |
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Labor costs include stock grants and stockoptions granted to managers, consistent with their actualremunerative nature. The cost is determined based on the fairvalue of the rights awarded to the employee at the date of theaward and it is not subject to subsequent adjustments; theportion on an accrual basis is calculated pro rata over theperiod to which the incentive refers (vesting period)6.The fair value of stock grants is represented by the currentvalue of the shares at the date of the award, reduced by thecurrent value of the expected dividends in the vesting period.The fair value of stock options is the value of the optioncalculated with appropriate valuation techniques that take intoaccount the exercise conditions, current price of the shares,expected volatility and the risk-free interest rate. The fairvalue of the stock grants and stock options is shown as acontra-entry to "Other reserves".

The costs for the acquisition of new knowledgeor discoveries, the study of products or alternative processes,new techniques or models, the planning and construction ofprototypes or, in any case, costs borne for other scientificresearch activities or technological development, which do notsatisfy conditions for the recognition in the balance sheet, aregenerally considered current costs and expensed as incurred.

**Accounting for buy/sell contracts**In January and February 2005, theSecurities and Exchange Commission ("SEC") issuedcomment letters to Eni and other companies in the oil and gasindustry requesting disclosure of information related to theaccounting for buy/sell contracts. Eni routinely enters intobuy/sell contracts, principally in the downstream business inItaly, associated mainly with refined products. For refinedproducts, buy/sell arrangements are used to support thecompany’s refined products marketing activity, whichincludes the production, purchase and sale of refined products inorder to fulfill the company’s marketing needs and supplyagreements to customer locations and specifications.

Eni accounts for buy/sell transactions in theconsolidated income statement on a net basis, regardless ofwhether terms of the buy/sell agreements were establishedjointly, in a single contract, or separately, in individualcontracts that are entered into concurrently or in contemplationof one another with a single counterparty. This accounting isconsistent with the most recent guidance of the SEC staff whoconsiders that the accounting for buy/sell contracts should beshown net on the income statement.

The topic was under deliberation by theEmerging Issues Task Force (EITF) of the FASB as Issue No. 04-13,"Accounting for Purchases and Sales Inventory with the SameCounterparty." At its September 2005 meeting, the EITFreached consensus that two or more legally separate exchangetransactions with the same counterparty, including buy/selltransactions, should be combined and considered as a singlearrangement when the transactions were entered into "incontemplation" of one another. EITF 04-13 was ratified bythe FASB in September 2005 and is effective for new arrangements,or modifications or renewals of existing arrangements, enteredinto beginning on or after April 1, 2006, which was the effectivedate for the company’s adoption of this standard. Uponadoption, the company reported the net effect of buy/selltransactions on its Consolidated Statement of Income as"Purchased crude oil and products" instead of reportingthe revenues associated with these arrangements as "Salesand other operating revenues" and the costs as"Purchased crude oil and products." While this issuewas under deliberation, the SEC staff directed Eni and other oilcompanies in a comment letter to disclose on the face of theincome statement the amounts associated with buy/sell contractsand to discuss in a footnote to the Financial Statements thebasis for the underlying accounting.

In Eni’s consolidated income statement,"Net sales from operations" and "Purchases,services and other" for the December 31, 2004, 2005 and 2006were netted of euro 1,821 million, euro 2,595 million, euro 2,877million respectively, for the above described buy/sell contracts.

**Exchange rate differences**Revenues and costs concerningtransactions in currencies other than functional currency arestated at the exchange rate on the date that the transaction iscompleted.

Monetary assets and liabilities in currenciesother than functional currency are converted by applying the yearend exchange rate and the effect is stated in the profit and lossaccount. Non-monetary assets and liabilities in currencies otherthan functional currency valued at cost are stated at the initialexchange rate; when they are evaluated at recoverable value orrealizable value, the exchange rate applied is that of the day ofrecognition.

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| (6) |   | For stock        grants, the period between the date of the award and the        date of assignation of stock; for stock options, period        between the date of the award and the date on which the        option can be exercised. |
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**Dividends**Dividends are recognized at the date ofthe general shareholders’ meeting in which they weredeclared, except when the sale of shares before the ex-dividenddate is certain.

**Income taxes**Current income taxes are determined onthe basis of estimated taxable income; the estimated liability isrecognized in the item "Income tax liabilities".Current tax assets and liabilities are measured at the amountexpected to be paid to (recovered from) the tax authorities,using the tax rates (and tax laws) that have been enacted orsubstantively enacted at the balance sheet date.

Deferred tax assets or liabilities are providedon temporary differences arising between the carrying amounts ofthe assets and liabilities in the Financial Statements and theirtax bases. Deferred tax assets are recognized when theirrealization is considered probable.

Deferred tax assets and liabilities arerecorded under non-current assets and liabilities and are offsetat a single entity level if related to offsettable taxes. Thebalance of the offset, if positive, is recognized in the item"Deferred tax assets"; if negative, in the item"Deferred tax liabilities". When the results oftransactions are recognized directly in the shareholders’equity, current taxes, deferred tax assets and liabilities arealso charged to the shareholders’ equity.

**Derivatives**Derivatives, including embeddedderivatives which are separated from the host contract, areassets and liabilities recognized at their fair value which isestimated by using the criteria described in the section"Current assets".

Derivatives are classified as hedginginstruments when the relationship between the derivative and thesubject of the hedge is formally documented and the effectivenessof the hedge is high and is checked periodically. When hedginginstruments cover the risk of variation of the fair value of thehedged item (fair value hedge, e.g. hedging of the variability onthe fair value of fixed interest rate assets/liabilities), thederivatives are stated at fair value and the effects charged tothe profit and loss account. Hedged items are consistentlyadjusted to reflect the variability of fair value associated withthe hedged risk. When derivatives hedge the cash flow variationrisk of the hedged item (cash flow hedge, e.g. hedging thevariability on the cash flows of assets/liabilities as a resultof the fluctuations of exchange rate), changes in the fair valueof the derivatives, considered effective, are initially stated innet equity and then recognized in the profit and loss accountconsistently with the economic effects produced by the hedgedtransaction. The changes in the fair value of derivatives that donot meet the conditions required to qualify as hedginginstruments are shown in the profit and loss account.

**Financial statements**Assets and liabilities of the balancesheet are classified as current and non-current. Items of theprofit and loss account are presented by nature.

Statements of changes in shareholders’equity present profit and loss for the year and other changes ofthe shareholders’ equity.

Statements of cash flows are presented usingthe indirect method, whereby net profit is adjusted for theeffects of transactions of a non-cash nature.

**Changes in accounting principles**

Since 2006, Eni applies: (i) the requirementsof IFRIC 4 "Determining whether an arrangement contains alease" that provides guidance for determining whetherarrangements that do not take the legal form of a lease but whichconvey rights to use assets in return for a payment or series ofpayments should be treated as a lease; (ii) the amendments to IAS39 "Financial instruments: recognition and measurement"that are related to: (a) the possibility to qualify as hedginginstruments, in relation to cash flow hedge operations onexchange rate risk relating to inter-company transactionsexpected and with a high probability, on condition that thesetransactions are denominated in a functional currency other thanthe currency of the entity that carries out the operation and theexposure to the exchange rate risk has a potential effect onconsolidated profit and loss account; 

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(b) the recognition and measurement offinancial guarantees that are recorded when they are issued as aliability valued at market value and then, in relation to theexecution risk, at the greater of the best estimate of the chargeto be sustained to fulfil the obligation and the initial amountreduced by premiums collected; and (iii) the requirements ofIFRIC 5 "Rights to interests arising from decommissioning,restoration and environmental funds" that provide guidancefor determining the recognition and measurement for thecontribution to funds established to finance decommissioning thathave the following features: (a) the assets are held andadministered by a separate legal entity; and (b)contributor’s right to access the assets of the fund isrestricted.

The contributor recognizes its obligation topay separately decommissioning costs as a liability and itsinterest in the fund. In the case that the interest means havingcontrol, having joint control or significant influence over thefund, the entity contributor must recognize the interest in thefund as an investment in a subsidiary, associate or jointventures.

The adoption of these principles did notgenerate a material effect.

**Use of accounting estimates**

The preparation of these consolidated financialstatements under IFRS requires management to make accountingestimates that are based on complex or subjective judgments,estimates based on past experience and assumptions determined tobe reasonable and realistic considering the information availableat the date of the estimate. The application of these estimatesand assumptions affects the reported amounts of assets andliabilities and the disclosure of contingent assets andliabilities at the balance sheet date and the reported amounts ofincome and expenses during the reporting period. The main areasaffected by estimates include the determination of oil and gasproved reserves and proved developed reserves, accounting forexploratory drilling costs under U.S. GAAP, impairment of fixedassets, intangible assets and goodwill, asset retirementobligations, business combinations, recognition of environmentalliabilities and recognition of revenues in the oilfield servicesconstruction and engineering businesses. Actual results maydiffer from these estimates given the uncertainty surrounding theassumptions and conditions upon which the estimates are based.Summarized below are the critical accounting estimates thatrequire the more subjective judgment of our management. Suchassumptions or estimates regard the effects of matters that areinherently uncertain and for which changes in conditions maysignificantly affect future results.

**Oil and gas activities**Engineering estimates of the Company’s oil and gasreserves are inherently uncertain. Proved reserves are theestimated volumes of crude oil, natural gas and gas condensates,liquids and associated substances which geological andengineering data demonstrate with reasonable certainty to berecoverable in future years from known reservoirs under existingeconomic and operating conditions. Although there areauthoritative guidelines regarding the engineering criteria thatmust be met before estimated oil and gas reserves can bedesignated as "proved", the accuracy of any reserveestimate is a function of the quality of available data andengineering and geological interpretation and judgment.

Field reserves will only be categorized asproved when all the criteria for attribution of proved statushave been met. At this stage, all booked reserves will becategorized as proved undeveloped. Volumes will subsequently berecategorized from proved undeveloped to proved developed as aconsequence of development activity. The first proved developedbookings will occur at the point of first oil or gas production.Major development projects typically take one to four years fromthe time of initial booking to the start of production. Enireassesses its estimate of proved reserves periodically. Theestimated proved reserves of oil and natural gas may be subjectto future initial revisions to the initial booking of reservesdue to production, reservoir performance, commercial factors,acquisition and divestment activity and additional reservoirdevelopment activity. In particular, changes in oil and naturalgas prices could impact the amount of Eni’s proved reservesas regards the initial estimate and, in the case of ProductionSharing Agreements and buy-back contracts, the share ofproduction and reserves to which Eni is entitled. Accordingly,the estimated reserves could be materially different from thequantities of oil and natural gas that ultimately will berecovered.

Oil and natural gas reserves have a directimpact on certain amounts reported in the Financial Statements.Estimated proved reserves are used in determining depreciationand depletion expenses and impairment expense. Depreciation rateson oil and gas assets using the UOP basis are determined from theratio between the amount of hydrocarbons extracted in the quarterand proved developed reserves existing at the end of the quarterincreased by the amounts extracted during the quarter. 

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Assuming all other variables are held constant,an increase in estimated proved developed reserves decreasesdepreciation, depletion and amortization expense. On thecontrary, a decrease in estimated proved developed reservesincreases depreciation, depletion and amortization expense. Inaddition, estimated proved reserves are used to calculate futurecash flows from oil and gas properties, which serve as anindicator in determining whether or not property impairment is tobe carried out. The larger the volumes of estimated reserves, theless likely the property is to be impaired.

**Accounting for suspended well costs underU.S. GAAP**Under U.S. GAAP costs for exploratory wells are initiallycapitalized pending the determination of whether the well hasfound proved reserves. If proved reserves are found, thecapitalized costs of drilling the well are reclassified totangible assets and amortized on a UOP basis. If proved reservesare not found, the capitalized costs of drilling the well arecharged to expense. However, successful exploratory efforts are,in many cases, not declared to be proved until after an extensiveand lengthy evaluation period has been completed. These issueswere addressed by the FASB staff in its FSP FAS 19-1, publishedin April 2005, amending FAS 19, "Financial Accounting andReporting by Oil and Gas Producing Companies". Under theprovisions of FSP FAS 19-1, companies in the oil and gas industryare allowed to continue capitalization of an exploratory wellafter the completion of drilling when: (a) the well hasfound a sufficient quantity of reserves to justify completion asa producing well; and (b) the enterprise is making sufficientprogress assessing the reserves and the economic and operatingviability of the project. If either condition is not met or if anenterprise obtains information that raises substantial doubtabout the economic or operational viability of the project, theexploratory well would be assumed to be impaired, and its costs,net of any salvage value, would be charged to expense.Determination of whether an exploratory well should remaincapitalized after completion of drilling requires a high degreeof judgment on the part of management in assessing whether theCompany is making sufficient progress assessing the reserves andthe economic and operating viability of a given project. TheCompany evaluates the progress made on the basis of regularproject reviews which take account of the following factors: (i)costs are being incurred to assess the reserves and theirpotential development; (ii) existence (or active negotiations) ofsales contracts with customers for oil and natural gas; and (iii)existence of firm plans, established timetables or contractualcommitments, which may include seismic testing and drilling ofadditional exploratory wells. As of December 31, 2006, an amountof euro 392 million remains capitalized relating to approximately25 exploratory wells for which drilling activities have beencompleted for more than one year, of this capitalized amount euro85 million (or 10 wells) relates to projects progressing towardscompletion of development activities, and the remaining euro 307million (or 10 wells) relates to projects for which additionalexploratory activity is underway or firmly planned. See Note 38to the Consolidated Financial Statements.

**Impairment of assets**Eni assesses its tangible assets and intangible assets,including goodwill, for possible impairment if there are eventsor changes in circumstances that indicate the carrying values ofthe assets are not recoverable. Such indicators include changesin the Group’s business plans, changes in commodity pricesleading to unprofitable performance and, for oil and gasproperties, significant downward revisions of estimated provedreserve quantities. Determination as to whether and how much anasset is impaired involves management estimates on highlyuncertain matters such as future commodity prices, the effects ofinflation and technology improvements on operating expenses,production profiles and the outlook for global or regional marketsupply and demand conditions for crude oil, natural gas,commodity chemicals and refined products.

The amount of an impairment loss is determinedby comparing the book value of an asset with its recoverableamount. The recoverable amount is the greater of fair value netof disposal costs and value in use. The estimated value in use isbased on the present values of expected future cash flows net ofdisposal costs. The expected future cash flows used forimpairment reviews are based on judgmental assessments of futureproduction volumes, prices and costs, considering availableinformation at the date of review and are discounted by using arate related to the activity involved.

For oil and natural gas properties, theexpected future cash flows are estimated based on developed andnon-developed proved reserves including, among other elements,production taxes and the costs to be incurred for the reservesyet to be developed. The estimated future level of production isbased on assumptions on: future commodity prices, lifting anddevelopment costs, field decline rates, market demand and supply,economic regulatory climates and other factors.

Goodwill and other intangible assets withindefinite useful life are not amortized but they are checked atleast annually to determine whether its carrying amount isrecoverable and in any case, when trigger events arise that wouldlead the entity to assume the value of an asset is impaired. Inparticular, goodwill impairment is based on the determination ofthe fair value of each cash generating unit to which goodwill canbe attributed on a reasonable and consistent basis. 

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A cash generating unit is the smallestaggregate on which the company, directly or indirectly, evaluatesthe return on the capital expenditure. If the fair value of acash generating unit is lower than the carrying amount, goodwillattributed to that cash generating unit is impaired up to thatdifference; if the carrying amount of goodwill is less than theamount of impairment, assets of the cash generating unit areimpaired on a pro-rata basis for the residual difference.

**Asset retirement obligations**Obligations related to the removal of tangible equipment andthe restoration of land or seabeds require significant estimatesin calculating the amount of the obligation and determining theamount required to be recorded in the Consolidated FinancialStatements. Estimating future asset removal costs is difficultand requires management to make estimates and judgments due tothe fact that most removal obligations will come to term manyyears into the future and contracts and regulations are oftenunclear as to what constitutes removal. Asset removaltechnologies and costs are constantly changing, as well aspolitical, environmental, safety and public relationsconsiderations. The subjectivity of these estimates is alsoincreased by the accounting method used that requires entities torecord the fair value of a liability for an asset retirementobligations in the period when it is incurred (typically, at thetime, the asset is installed at the production location). Whenliabilities are initially recorded, the related fixed assets areincreased by an equal corresponding amount. The liabilities areincreased with the passage of time (interest accretion) and anychange of the estimates following the modification of future cashflows and discount rate is adopted. The recognized assetretirement obligations are based upon future retirement costestimates and incorporate many assumptions such as: expectedrecoverable quantities of crude oil and natural gas, abandonmenttime, future inflation rates and the risk-free rate of interestadjusted for the Company’s credit costs.

**Business combinations**Accounting for the acquisition of a business requires theallocation of the purchase price to most assets and liabilitiesacquired at fair value. Any positive residual difference isrecognized as "Goodwill". Negative residual differencesare charged against the profit and loss account. Management usesall available information to make these fair value determinationsand, for major business acquisitions, typically engages anindependent appraisal firm to assist in the fair valuedetermination of the acquired assets and liabilities.

**Environmental liabilities**Together with other companies in the industries in which itoperates, Eni is subject to numerous EU, national, regional andlocal environmental laws and regulations concerning its oil andgas operations, productions and other activities, includinglegislation that implements international conventions orprotocols. Environmental costs are recognized when it becomesprobable that a liability has been incurred and the amount can bereasonably estimated.

Although management, considering the actionsalready taken, insurance policies to cover environmental risksand provision for risks accrued, does not expect any materialadverse effect on Eni’s consolidated results of operationsand financial position as a result of such laws and regulations,there can be no assurance that there will not be a materialadverse impact on Eni’s consolidated results of operationsand financial position due to: (i) the possibility of a yetunknown contamination; (ii) the results of the ongoing surveysand other possible effects of statements required by Decree No.471/1999 of the Ministry of Environment concerning theremediation of contaminated sites; (iii) the possible effect offuture environmental legislation and rules; (iv) the effect ofpossible technological changes relating to future remediation;and (v) the possibility of litigation and the difficulty ofdetermining Eni’s liability, if any, as against otherpotentially responsible parties with respect to such litigationand the possible insurance recoveries.

**Employee post-retirement benefits**Defined benefit plans and other long-term benefits areevaluated with reference to uncertain events and based uponactuarial assumptions including among others discount rates,expected rates of return on plan assets, expected rates of salaryincreases, medical cost trend rates, estimated retirement dates,mortality rates.

The significant assumptions used to account forpensions and other post-retirement benefits are determined asfollows: (i) discount and inflation rates reflect the rates atwhich benefits could be effectively settled, taking into accountthe duration of the obligation. Indications used in selecting thediscount rate include rates of annuity contracts and rates ofreturn on high quality fixed-income investments (such asgovernment bonds). 

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The inflation rates reflect market conditionsobserved country by country; (ii) the future salary levels of theindividual employees are determined including an estimate offuture changes attributed to general price levels (consistentwith inflation rate assumptions), productivity, seniority andpromotion; (iii) healthcare cost trend assumptions reflect anestimate of the actual future changes in the cost of thehealthcare related benefits provided to the plan participants andare based on past and current healthcare cost trends includinghealthcare inflation, changes in healthcare utilization andchanges in health status of the participants; (iv) demographicassumptions such as mortality, disability and turnover reflectthe best estimate of these future events for the individualemployees involved, based principally on available actuarialdata; and (v) determination of expected rates of return on assetsis made through compound averaging. For each plan, thedistribution of investments among bonds, equities and cash andtheir specific average expected rate of return is taken intoaccount. Differences between expected and actual costs andbetween the expected return and the actual return on plan assetsroutinely occur and are called actuarial gains and losses.

Eni applies the corridor method to amortize itsactuarial losses and gains. This method amortizes on a pro-ratabasis the net cumulative actuarial gains and losses, unrecognizedat the end of the previous reporting period, that exceed 10% ofthe greater of: (i) the present value of the defined benefitobligation; and (ii) the fair value of plan assets, over theaverage expected remaining working lives of the employeesparticipating in the plan.

Additionally, obligations for other long-termbenefits are determined by adopting actuarial assumptions; theeffect of changes in actuarial assumptions or a change in thecharacteristics of the benefit are taken to profit or loss intheir entirety.

**Contingencies**In addition to accruing the estimated costs for environmentalliabilities, asset retirement obligation and employees benefits,Eni accrues for all contingencies that are both probable andestimable. These other contingencies are primarily related tolitigation and tax issues. Determining appropriate amounts foraccrual is a complex estimation process that includes subjectivejudgments.

**Revenue recognition in the Engineering &Construction segment**Revenue recognition in the Engineering & Constructionbusiness segment is based on the stage of completion of acontract as measured on the cost-to-cost basis applied tocontractual revenues. Use of the stage of completion methodrequires estimates of future gross profit on a contract bycontract basis. The future gross profit represents the profitremaining after deducing costs attributable to the contract fromrevenues provided for in the contract. The estimate of futuregross profit is based on a complex estimation process, thatincludes identification of risks related to the geographicalregion, market condition in that region and any assessment thatit is necessary to estimate with sufficient precision the totalfuture costs as well as the expected timetable. Requests ofadditional incomes, deriving from a change in the scope of thework, are included in the total amount of revenues when it isprobable that the customer will approve the variation and therelated amount; claims deriving for instance from additionalcosts incurred for reasons attributable to the client areincluded in the total amount of revenues when it is probable thatthe counterpart will accept them.

**Recent accounting principles**

With Regulation No. 108/2006 issued on January11, 2006 the European Commission approved IFRS 7 "Financialinstruments: disclosures". IFRS 7 establishes thedisclosures to be given regarding financial instruments and theexposure and management of financial risks. The requirements ofIFRS 7 include some disclosures currently contained in IAS 32"Financial instruments: exposures and additionaldisclosures". IFRS 7 went into effect on January 1, 2007.

Eni is presently analyzing the statements and,at the moment, cannot determine if adoption of the standard willhave a significant effect on Eni’s Consolidated FinancialStatements.

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**Notes to the Consolidated FinancialStatements**

**Current activities**

 

**1 Cash and cash equivalent**

Cash and cash equivalent of euro 3,985 million(euro 1,333 million at December 31, 2005) include financingreceivables originally due within 90 days for euro 240 million(euro 122 million at December 31, 2005) and consist of depositswith financial institutions with a notice greater than 48 hours.

 

**2 Other financial assets held for trading or available forsale**

Other financial assets held for trading oravailable for sale of euro 972 million (euro 1,368 million atDecember 31, 2005) consist of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| **Securities held for operating purposes**                            |   |      |   |   |    |   |
|-----------------------------------------------------------------------|--------|-----------|--------|--------|---------|--------|
| Listed        Italian treasury bonds                                  |   | 361       |   |   | 329     |   |
| Listed securities issued by Italian and foreign        merchant banks |   | 92        |   |   | 80      |   |
| Non-quoted        securities                                          |   | 12        |   |   | 11      |   |
|                                                                  |   | **465**   |   |   | **420** |   |
| **Securities        held for non-operating purposes**                 |   |      |   |   |    |   |
| Listed Italian treasury bonds                                         |   | 727       |   |   | 508     |   |
| Listed        securities issued by Italian and foreign merchant banks |   | 151       |   |   | 40      |   |
| Non-quoted securities                                                 |   | 25        |   |   | 4       |   |
|                                                                  |   | **903**   |   |   | **552** |   |
|                                                                  |   | **1,368** |   |   | **972** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Securities of euro 972 million (euro 1,368million at December 31, 2005) are available for sale. Thedecrease of euro 396 million primarily concerns sales made by thefinancial company Enifin SpA (euro 303 million) and the effect ofthe sale of Sofid Sim SpA (euro 90 million). At December 31, 2005and December 31, 2006 Eni did not own financial assets held fortrading.

The effects of the valuation at fair value ofsecurities consist of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Increase** |   | **Realization to the        profit and loss account** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|--------------|--------|-------------------------------------------------------|--------|-------------------|
|                  |   |                   |   |              |   |                                                       |   |                   |

| Fair value                                  |   | 27 |   |   | 2      |   |   | (21 | ) |   | 8 |   |
|---------------------------------------------|--------|----|--------|--------|--------|--------|--------|-----|---|--------|---|--------|
| Deferred        tax liabilities             |   | 8  |   |   |   |   |   | (6  | ) |   | 2 |   |
| Other reserves of shareholders’ equity |   | 19 |   |   | 2      |   |   | (15 | ) |   | 6 |   |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

The realization of the fair value to the profitand loss account of euro 21 million and of the related deferredtax liabilities of euro 6 million concern the expiring ofsecurities of Padana Assicurazioni SpA. Securities held foroperating purposes of euro 420 million (euro 465 million atDecember 31, 2005) concern coverage securities of technicalreserves of Padana Assicurazioni SpA for euro 417 million (euro453 million at December 31, 2005).

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**3 Trade and other receivables**

Trade and other receivables of euro 18,799million (euro 17,902 million at December 31, 2005) consist of thefollowing:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Trade receivables                                                                 |   | 14,101     |   |   | 15,230     |   |
|-----------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|
| Financing        receivables:                                                     |   |       |   |   |       |   |
| - for operating purposes - short-term                                             |   | 480        |   |   | 242        |   |
| - for        operating purposes - current portion of long-term        receivables |   |       |   |   | 4          |   |
| - for non-operating purposes                                                      |   | 12         |   |   | 143        |   |
|                                                                              |   | **492**    |   |   | **389**    |   |
| Other receivables:                                                                |   |       |   |   |       |   |
| - from        disposals                                                           |   | 60         |   |   | 100        |   |
| - other                                                                           |   | 3,249      |   |   | 3,080      |   |
|                                                                              |   | **3,309**  |   |   | **3,180**  |   |
|                                                                              |   | **17,902** |   |   | **18,799** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Receivables are recorded net of the allowancefor impairment losses of euro 874 million (euro 891 million atDecember 31, 2005):

| (million        euro) |   | **Value at Dec. 31, 2005** |   | **Additions** |   | **Deductions** |   | **Other changes** |   | **Value at Dec. 31, 2006** |
|-----------------------|--------|----------------------------|--------|---------------|--------|----------------|--------|-------------------|--------|----------------------------|
|                  |   |                            |   |               |   |                |   |                   |   |                            |

| Trade receivables        |   | 643     |   |   | 129     |   |   | (77     | )     |   | (108     | )     |   | 587     |   |
|--------------------------|--------|---------|--------|--------|---------|--------|--------|---------|-------|--------|----------|-------|--------|---------|--------|
| Other        receivables |   | 248     |   |   | 78      |   |   | (7      | )     |   | (32      | )     |   | 287     |   |
|                     |   | **891** |   |   | **207** |   |   | **(84** | **)** |   | **(140** | **)** |   | **874** |   |

|   |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|

Trade receivables of euro 15,230 millionincreased by euro 1,129 million. This increase primarily relatesto the Exploration & Production segment (euro 1,391 million)and the Engineering & Construction segment (euro 832million); such increase was partially offset by the decrease ofthe Refining & Marketing segment (euro 302 million) and theGas & Power segment (euro 292 million) and includes theexchange rate differences due to the translation of financialstatements prepared in currencies other than euro for euro 263million. Trade receivables include advances paid as a guaranteeof contract work in progress for euro 70 million (euro 101million at December 31, 2005).

Financing receivables made for operatingpurposes of euro 246 million (euro 480 million at December 31,2005) concern concessions, primarily, to unconsolidatedsubsidiaries, joint ventures and affiliates. The decrease of euro234 million primarily concern the repayment of funding given toTrans Austria Gasleitung GmbH (euro 292 million).

Other receivables of euro 3,180 million (euro3,309 million at December 31, 2005) consist of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Accounts receivable from:                                      |   |      |   |   |      |   |
|----------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|
| - joint        venture operators in exploration and production |   | 1,123     |   |   | 1,376     |   |
| - Italian governmental entities                                |   | 228       |   |   | 266       |   |
| -        insurance companies                                   |   | 539       |   |   | 223       |   |
|                                                           |   | **1,890** |   |   | **1,865** |   |
| Receivables        relating to factoring operations            |   | 324       |   |   | 191       |   |
| Prepayments for services                                       |   | 259       |   |   | 440       |   |
| Other        receivables                                       |   | 836       |   |   | 684       |   |
|                                                           |   | **3,309** |   |   | **3,180** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Receivables relating to factoring operationsfor euro 191 million (euro 324 million at December 31, 2005)relate to Serfactoring SpA and essentially concern advances forfactoring operations with recourse and receivables for factoringoperations without recourse.

Receivables with related parties are describedin Note 33 - Transactions with related parties.

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**4 Inventories**

Inventories of euro 4,752 million (euro 3,563million at December 31, 2005) consist of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

|   | **Crude oil, gas and        petroleum products** |   | **Chemical products** |   | **Work in progress        long-term contracts** |   | **Other** |   | **Total** |   | **Crude oil, gas and        petroleum products** |   | **Chemical products** |   | **Work in progress        long-term contracts** |   | **Other** |   | **Total** |
|--------|--------------------------------------------------|--------|-----------------------|--------|-------------------------------------------------|--------|-----------|--------|-----------|--------|--------------------------------------------------|--------|-----------------------|--------|-------------------------------------------------|--------|-----------|--------|-----------|
|   |                                                  |   |                       |   |                                                 |   |           |   |           |   |                                                  |   |                       |   |                                                 |   |           |   |           |

| Raw and auxiliary materials and consumables                |   | 210       |   | 217     |   |    |   | 645     |   | 1,072     |   | 436       |   | 258     |   |    |   | 682     |   | 1,376     |
|------------------------------------------------------------|--------|-----------|--------|---------|--------|---------|--------|---------|--------|-----------|--------|-----------|--------|---------|--------|---------|--------|---------|--------|-----------|
| Products        being processed and semi finished products |   | 59        |   | 18      |   |    |   | 1       |   | 78        |   | 43        |   | 20      |   |    |   | 8       |   | 71        |
| Work in progress long-term contracts                       |   |      |   |    |   | 418     |   |    |   | 418       |   |      |   |    |   | 353     |   |    |   | 353       |
| Finished        products and goods                         |   | 1,222     |   | 572     |   |    |   | 20      |   | 1,814     |   | 2,063     |   | 536     |   |    |   | 62      |   | 2,661     |
| Advances                                                   |   |      |   |    |   | 181     |   |    |   | 181       |   | 1         |   |    |   | 287     |   | 3       |   | 291       |
|                                                       |   | **1,491** |   | **807** |   | **599** |   | **666** |   | **3,563** |   | **2,543** |   | **814** |   | **640** |   | **755** |   | **4,752** |

|   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Inventories are net of the valuation allowanceof euro 92 million (euro 93 million at December 31, 2005):

| (million        euro) |   | **Value at Dec. 31, 2005** |   | **Additions** |   | **Deductions** |   | **Other changes** |   | **Value at Dec. 31, 2006** |
|-----------------------|--------|----------------------------|--------|---------------|--------|----------------|--------|-------------------|--------|----------------------------|
|                  |   |                            |   |               |   |                |   |                   |   |                            |

|   |   | **93** |   |   | 19 |   |   | (14 | ) |   | (6 | ) |   | **92** |   |
|--------|--------|--------|--------|--------|----|--------|--------|-----|---|--------|----|---|--------|--------|--------|

|   |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|

Work in progress long-term contracts of euro353 million (euro 418 million at December 31, 2005) are net ofthe payments received corresponding to contractual amount of thework performed of euro 5,237 million (euro 5,180 million atDecember 31, 2005).

 

**5 Current tax assets**

Current tax assets of euro 658 million (euro697 million at December 31, 2005) consist of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Italian tax        |   | 422     |   |   | 394     |   |
|--------------------|--------|---------|--------|--------|---------|--------|
| Foreign        tax |   | 275     |   |   | 264     |   |
|               |   | **697** |   |   | **658** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Current tax assets of euro 658 million (euro697 million at December 31, 2005) concern value added tax creditsfor euro 303 million (euro 406 million at December 31, 2005),income tax receivables of euro 116 million (euro 127 million atDecember 31, 2005) and excise taxes customs duties natural gasand customs expenses for euro 86 million (euro 60 million atDecember 31, 2005).

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**6 Other assets**

Other assets of euro 855 million (euro 369million at December 31, 2005) consist of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Fair value of non-hedging derivatives            |   | 117     |   |   | 569     |   |
|--------------------------------------------------|--------|---------|--------|--------|---------|--------|
| Fair value        of cash flow hedge derivatives |   | 32      |   |   | 37      |   |
| Fair value of fair value hedge derivatives       |   |    |   |   | 1       |   |
| Other        assets                              |   | 220     |   |   | 248     |   |
|                                             |   | **369** |   |   | **855** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Fair value of non hedging derivative contractsof euro 569 million (euro 117 million at December 31, 2005)consists of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

|   |   | **Fair value** |   | **Commitments** |   | **Fair value** |   | **Commitments** |
|--------|--------|----------------|--------|-----------------|--------|----------------|--------|-----------------|
|   |   |                |   |                 |   |                |   |                 |

| **Non-hedging derivatives on exchange rate**        |   |    |   |      |   |    |   |       |   |
|-----------------------------------------------------|--------|---------|--------|-----------|--------|---------|--------|------------|--------|
| Interest        Currency Swap                       |   | 58      |   | 1,277     |   | 137     |   | 1,400      |   |
| Currency swap                                       |   | 15      |   | 2,378     |   | 46      |   | 5,502      |   |
| Other                                               |   |    |   | 26        |   |    |   | 42         |   |
|                                                |   | **73**  |   | **3,681** |   | **183** |   | **6,944**  |   |
| **Non-hedging        derivatives on interest rate** |   |    |   |      |   |    |   |       |   |
| Interest Rate Swap                                  |   | 14      |   | 1,281     |   | 66      |   | 3,393      |   |
|                                                |   | **14**  |   | **1,281** |   | **66**  |   | **3,393**  |   |
| **Non-hedging derivatives on commodities**          |   |    |   |      |   |    |   |       |   |
| Over the        counter                             |   | 21      |   | 394       |   | 35      |   | 262        |   |
| Other                                               |   | 9       |   | 11        |   | 285     |   | 851        |   |
|                                                |   | **30**  |   | **405**   |   | **320** |   | **1,113**  |   |
|                                                |   | **117** |   | **5,367** |   | **569** |   | **11,450** |   |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

Fair value of cash flow hedge derivativecontracts of euro 37 million concerns commitments for euro 421million and relates to future sales of crude oil of theExploration & Production segment.

Cash flow hedge derivative contracts atDecember 31, 2005 relating to the purchase of electricity expiredduring the 2006 with effect to the profit and loss account.

Information about the risk of hedged items andto the hedging policy is included in Note 25 - Guarantees,commitments and risks - Risk management.

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**Non-current activities**

**7 Property, plant and equipment**

Tangible assets of euro 44,312 million (euro45,013 million at December 31, 2005) consist of the following:

| (million        euro) |   | **Net value at the        beginning of the year** |   | **Investments** |   | **Depreciations** |   | **Impairments** |   | **Exchange rate        differences** |   | **Other changes** |   | **Net value at the end of        the year** |   | **Gross value at the end        of the year** |   | **Provisions for        amortization and impairments** |
|-----------------------|--------|---------------------------------------------------|--------|-----------------|--------|-------------------|--------|-----------------|--------|--------------------------------------|--------|-------------------|--------|---------------------------------------------|--------|-----------------------------------------------|--------|--------------------------------------------------------|
|                  |   |                                                   |   |                 |   |                   |   |                 |   |                                      |   |                   |   |                                             |   |                                               |   |                                                        |

| **Dec. 31, 2005**                        |   |       |   |   |      |   |   |       |   |   |     |   |   |       |   |   |    |   |   |       |   |   |       |   |   |       |   |
|------------------------------------------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|--------|----------|--------|--------|------------|--------|--------|---------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Land                                     |   | 197        |   |   | 5         |   |   |       |   |   | (4       | )      |   |       |   |   | 175     |   |   | 373        |   |   | 421        |   |   | 48         |   |
| Buildings                                |   | 1,578      |   |   | 41        |   |   | (108       | )      |   | (8       | )      |   | 12         |   |   | (62     | )      |   | 1,453      |   |   | 3,152      |   |   | 1,699      |   |
| Plant and        machinery               |   | 30,849     |   |   | 2,443     |   |   | (4,240     | )      |   | (192     | )      |   | 1,827      |   |   | 5,881   |   |   | 36,568     |   |   | 77,806     |   |   | 41,238     |   |
| Industrial and commercial equipment      |   | 422        |   |   | 113       |   |   | (126       | )      |   |     |   |   | 10         |   |   | (47     | )      |   | 372        |   |   | 1,623      |   |   | 1,251      |   |
| Other        assets                      |   | 329        |   |   | 65        |   |   | (102       | )      |   |     |   |   | 12         |   |   | 14      |   |   | 318        |   |   | 1,182      |   |   | 864        |   |
| Tangible assets in progress and advances |   | 7,211      |   |   | 3,891     |   |   |       |   |   | (60      | )      |   | 590        |   |   | (5,703  | )      |   | 5,929      |   |   | 6,526      |   |   | 597        |   |
|                                     |   | **40,586** |   |   | **6,558** |   |   | **(4,576** | **)**  |   | **(264** | **)**  |   | **2,451**  |   |   | **258** |   |   | **45,013** |   |   | **90,710** |   |   | **45,697** |   |
| **Dec. 31, 2006**                        |   |       |   |   |      |   |   |       |   |   |     |   |   |       |   |   |    |   |   |       |   |   |       |   |   |       |   |
| Land                                     |   | 373        |   |   | 16        |   |   |       |   |   | (3       | )      |   |       |   |   | 57      |   |   | 443        |   |   | 483        |   |   | 40         |   |
| Buildings                                |   | 1,453      |   |   | 81        |   |   | (113       | )      |   | (12      | )      |   | (5         | )      |   | 38      |   |   | 1,442      |   |   | 3,236      |   |   | 1,794      |   |
| Plant and        machinery               |   | 36,568     |   |   | 1,858     |   |   | (4,510     | )      |   | (197     | )      |   | (1,586     | )      |   | 3,240   |   |   | 35,373     |   |   | 79,873     |   |   | 44,500     |   |
| Industrial and commercial equipment      |   | 372        |   |   | 130       |   |   | (120       | )      |   |     |   |   | (6         | )      |   | 50      |   |   | 426        |   |   | 1,659      |   |   | 1,233      |   |
| Other        assets                      |   | 318        |   |   | 82        |   |   | (78        | )      |   | (1       | )      |   | (9         | )      |   | 16      |   |   | 328        |   |   | 1,382      |   |   | 1,054      |   |
| Tangible assets in progress and advances |   | 5,929      |   |   | 3,971     |   |   |       |   |   | (18      | )      |   | (364       | )      |   | (3,218  | )      |   | 6,300      |   |   | 6,822      |   |   | 522        |   |
|                                     |   | **45,013** |   |   | **6,138** |   |   | **(4,821** | **)**  |   | **(231** | **)**  |   | **(1,970** | **)**  |   | **183** |   |   | **44,312** |   |   | **93,455** |   |   | **49,143** |   |

|   |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Capital expenditures of euro 6,138 million(euro 6,558 million at December 31, 2005) primarily relate to theExploration & Production segment (euro 3,678 million), theGas & Power segment (euro 1,051 million), the Refining& Marketing segment (euro 632 million) and to theEngineering & Construction segment (euro 584 million).Capital expenditures include financial expenses for euro 116million (euro 159 million at December 31, 2005) and areessentially related to the Exploration & Production segment(euro 70 million), the Gas & Power segment (euro 24 million)and the Refining & Marketing segment (euro 19 million). Theinterest rate used for the capitalization of finance expense wasbetween 3.3% and 5.4% (2.2% and 6.1% at December 31, 2005).

The depreciation rates used are as follows:

| (%)                                        |   |   |   |   |
|--------------------------------------------|--------|--------|--------|--------|
| Buildings                                  |   | 2      | -      | 10     |
| Plant and machinery                        |   | 2      | -      | 10     |
| Industrial        and commercial equipment |   | 4      | -      | 33     |
| Other assets                               |   | 6      | -      | 33     |

Exchange rate differences due to thetranslation of financial statements prepared in currencies otherthan euro of euro 1,970 million relate to companies whosefunctional currency is the U.S. dollar (euro 1,913 million).

Impairments of euro 231 million concernprimarily mineral assets of the Exploration & Productionsegment (euro 129 million) and petrochemical assets of thePetrochemical segment (euro 65 million) and of Syndial SpA (euro22 million). The recoverable amount considered in determining theimpairment was calculated by discounting the future cash flowsusing discount rates included between 7.6% and 11.2%.

Other changes of euro 183 million primarilyconcern the initial recognition and reviews to the estimate ofdismantling and restoration of sites for euro 1,157 millionessentially related to the Exploration & Production segment(euro 1,153 million). This increase was partially offset by thereclassification to "Other assets" of tangible assetsrelated to the service contract governing mineral activities inthe Dación area and owned by the Venezuelan controlled branchEni Dación BV for euro 629 million, the sale of tangible assetsfor euro 197 million, of which euro 158 million relating tomineral assets of the Exploration & Production segment andthe change in scope of consolidation of euro 66 millionessentially following the sale of Fiorentina Gas SpA (euro 157million) and the acquisition of Siciliana Gas SpA (euro 91million).

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The gross carrying amount of fully depreciatedproperty, plant and equipment that is still in use amount to euro12,187 million and primarily concerns refineries and oil depositsof the Refining & Marketing segment (euro 4,507 million), thegas transportation network of Snam Rete Gas SpA (euro 3,486million), and petrochemical plants of the Petrochemical segment(euro 1,911 million) and Syndial SpA (euro 1,682 million).

At December 31, 2005, tangible assets werepledged for euro 54 million primarily as collateral on debtincurred by Eni (euro 475 million at December 31, 2005). Thedecrease of euro 421 million essentially concerns theextinguishment of the guarantees given (euro 418 million).

Government grants recorded as decrease ofproperty, plant and equipment amount to euro 1,067 million (euro965 million at December 31, 2005). Assets acquired underfinancial lease amount to euro 89 million and concern for euro 39million FPSO ships used by the Exploration & Productionsegment as support of oil production and treatment activities andfor euro 36 million a drilling platform of the Engineering &Construction segment.

**Property, plant and equipment by segment**

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Property, plant and equipment, gross:                         |   |       |   |   |       |   |
|---------------------------------------------------------------|--------|------------|--------|--------|------------|--------|
| -        Exploration & Production                         |   | 49,129     |   |   | 49,002     |   |
| - Gas & Power                                             |   | 21,517     |   |   | 22,277     |   |
| - Refining        & Marketing                             |   | 9,420      |   |   | 11,273     |   |
| - Petrochemicals                                              |   | 4,402      |   |   | 4,380      |   |
| -        Engineering & Construction                       |   | 3,878      |   |   | 4,363      |   |
| - Other activities                                            |   | 1,999      |   |   | 1,967      |   |
| -        Corporate and financial companies                    |   | 453        |   |   | 321        |   |
| - Elimination of intra-group profits                          |   | (88        | )      |   | (128       | )      |
|                                                          |   | **90,710** |   |   | **93,455** |   |
| Accumulated depreciation, amortization and        writedowns: |   |       |   |   |       |   |
| -        Exploration & Production                         |   | 24,644     |   |   | 26,000     |   |
| - Gas & Power                                             |   | 7,757      |   |   | 8,210      |   |
| - Refining        & Marketing                             |   | 5,864      |   |   | 7,482      |   |
| - Petrochemicals                                              |   | 3,263      |   |   | 3,308      |   |
| -        Engineering & Construction                       |   | 2,031      |   |   | 2,138      |   |
| - Other activities                                            |   | 1,882      |   |   | 1,874      |   |
| -        Corporate and financial companies                    |   | 260        |   |   | 145        |   |
| - Elimination of intra-group profits                          |   | (4         | )      |   | (14        | )      |
|                                                          |   | **45,697** |   |   | **49,143** |   |
| Property, plant and equipment, net:                           |   |       |   |   |       |   |
| -        Exploration & Production                         |   | 24,485     |   |   | 23,002     |   |
| - Gas & Power                                             |   | 13,760     |   |   | 14,067     |   |
| - Refining        & Marketing                             |   | 3,556      |   |   | 3,791      |   |
| - Petrochemicals                                              |   | 1,139      |   |   | 1,072      |   |
| -        Engineering & Construction                       |   | 1,847      |   |   | 2,225      |   |
| - Other activities                                            |   | 117        |   |   | 93         |   |
| -        Corporate and financial companies                    |   | 193        |   |   | 176        |   |
| - Elimination of intra-group profits                          |   | (84        | )      |   | (114       | )      |
|                                                          |   | **45,013** |   |   | **44,312** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

 

**8 Other assets**

Other assets of euro 629 million concern thetangible assets related to the service contract governing mineralactivities in the Dación area and owned by the Venezuelancontrolled branch Eni Dación BV. Additional information isincluded in Note 25 - Guarantees, commitments and risks - Otherrisks and commitments.

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**9 Inventories - compulsory stock**

Inventories - compulsory stocks of euro 1,827million (euro 2,194 million at December 31, 2005) consist of thefollowing:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Crude oil and petroleum products |   | 2,037     |   | 1,670     |
|----------------------------------|--------|-----------|--------|-----------|
| Natural        gas               |   | 157       |   | 157       |
|                             |   | **2,194** |   | **1,827** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Compulsory stocks are primarily held by Italiancompanies (euro 2,057 and euro 1,688 million at December 31, 2005and at December 31, 2006, respectively) and represent certainminimum quantities required by Italian law.

 

**10 Intangible assets**

Intangible assets of euro 3,753 million (euro3,194 million at December 31, 2005) consist of the following:

| (million        euro) | **Net value at the        beginning of the year** |   | **Investments** |   | **Amortization** |   | **Other changes** |   | **Net value at the end of        the year** |   | **Gross value at the end        of the year** |   | **Provisions for        amortization and writedowns** |
|-----------------------|---------------------------------------------------|--------|-----------------|--------|------------------|--------|-------------------|--------|---------------------------------------------|--------|-----------------------------------------------|--------|-------------------------------------------------------|
|                  |                                                   |   |                 |   |                  |   |                   |   |                                             |   |                                               |   |                                                       |

| **Dec. 31, 2005**                                                |   |      |   |   |      |   |   |       |   |   |    |   |   |      |   |   |      |   |   |      |   |
|------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|---------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| **Intangible        assets with a definite life**                |   |      |   |   |      |   |   |       |   |   |    |   |   |      |   |   |      |   |   |      |   |
| Costs for research of mineral resources                          |   | 107       |   |   | 699       |   |   | (683       | )      |   | 41      |   |   | 164       |   |   | 1,059     |   |   | 895       |   |
| Industrial        patent rights and intellectual property rights |   | 174       |   |   | 37        |   |   | (122       | )      |   | 48      |   |   | 137       |   |   | 1,056     |   |   | 919       |   |
| Concessions, licenses, trademarks and similar        items       |   | 816       |   |   | 31        |   |   | (101       | )      |   |    |   |   | 746       |   |   | 2,205     |   |   | 1,459     |   |
| Intangible        assets in progress and advances                |   | 59        |   |   | 74        |   |   |       |   |   | (57     | )      |   | 76        |   |   | 81        |   |   | 5         |   |
| Other intangible assets                                          |   | 224       |   |   | 13        |   |   | (30        | )      |   | (50     | )      |   | 157       |   |   | 470       |   |   | 313       |   |
|                                                             |   | **1,380** |   |   | **854**   |   |   | **(936**   | **)**  |   | **(18** | **)**  |   | **1,280** |   |   | **4,871** |   |   | **3,591** |   |
| **Intangible assets with a indefinite life**                     |   |      |   |   |      |   |   |       |   |   |    |   |   |      |   |   |      |   |   |      |   |
| Goodwill                                                         |   | 1,933     |   |   | 2         |   |   |       |   |   | (21     | )      |   | 1,914     |   |   |      |   |   |      |   |
|                                                             |   | **3,313** |   |   | **856**   |   |   | **(936**   | **)**  |   | **(39** | **)**  |   | **3,194** |   |   |      |   |   |      |   |
| **Dec.        31, 2006**                                         |   |      |   |   |      |   |   |       |   |   |    |   |   |      |   |   |      |   |   |      |   |
| **Intangible assets with a definite life**                       |   |      |   |   |      |   |   |       |   |   |    |   |   |      |   |   |      |   |   |      |   |
| Costs for research of mineral resources                          |   | 164       |   |   | 1,337     |   |   | (1,102     | )      |   | 10      |   |   | 409       |   |   | 1,290     |   |   | 881       |   |
| Industrial patent rights and intellectual        property rights |   | 137       |   |   | 31        |   |   | (97        | )      |   | 41      |   |   | 112       |   |   | 1,113     |   |   | 1,001     |   |
| Concessions,        licenses, trademarks and similar items       |   | 746       |   |   | 168       |   |   | (110       | )      |   | 52      |   |   | 856       |   |   | 2,417     |   |   | 1,561     |   |
| Intangible assets in progress and advances                       |   | 76        |   |   | 146       |   |   |       |   |   | (71     | )      |   | 151       |   |   | 156       |   |   | 5         |   |
| Other        intangible assets                                   |   | 157       |   |   | 13        |   |   | (26        | )      |   | (3      | )      |   | 141       |   |   | 457       |   |   | 316       |   |
|                                                             |   | **1,280** |   |   | **1,695** |   |   | **(1,335** | **)**  |   | **29**  |   |   | **1,669** |   |   | **5,433** |   |   | **3,764** |   |
| **Intangible        assets with a indefinite life**              |   |      |   |   |      |   |   |       |   |   |    |   |   |      |   |   |      |   |   |      |   |
| Goodwill                                                         |   | 1,914     |   |   |      |   |   |       |   |   | 170     |   |   | 2,084     |   |   |      |   |   |      |   |
|                                                             |   | **3,194** |   |   | **1,695** |   |   | **(1,335** | **)**  |   | **199** |   |   | **3,753** |   |   |      |   |   |      |   |

|   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Costs for research of mineral resources foreuro 409 million concern the purchase of mineral rights (euro 404million). This item also includes exploration expendituresamortized in full in the period incurred for euro 1,028 million(euro 565 million at December 31, 2005).

Concessions, licenses, trademarks and similaritems for euro 856 million primarily concern the transmissionrights for natural gas imported from Algeria (euro 572 million)and concessions for mineral exploration (euro 223 million).

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Other intangible assets with a definite life ofeuro 141 million include royalties for the use of licenses byPolimeri Europa SpA (euro 81 million) and the estimatedexpenditures for social projects to be incurred followingcontractual commitments with the Basilicata Region related tomineral development programs in Val d’Agri (euro 26million).

The depreciation rates used are as follows:

| (%)                                                              |   |   |   |   |
|------------------------------------------------------------------|--------|--------|--------|--------|
| Costs for        research of mineral resources                   |   | 10     | -      | 33     |
| Industrial patent rights and intellectual        property rights |   | 20     | -      | 33     |
| Concessions,        licenses, trademarks and similar items       |   | 7      | -      | 33     |
| Other intangible assets                                          |   | 4      | -      | 25     |

The gross carrying amount of fully depreciatedintangible assets still in use amounts to euro 767 million.

Other changes of intangible assets with adefinite life of euro 29 million include negative exchange ratedifferences due to the translation of financial statementsprepared in currencies other than euro of euro 28 million.

Goodwill for euro 2,084 million concernsessentially the Engineering & Construction segment (euro 828million, of which euro 805 million relates to the purchase ofBouygues Offshore SA, now Saipem SA), the Gas & Power segment(euro 982 million, of which euro 757 million relates to thepublic offering of Italgas SpA shares in 2003), the Exploration& Production segment (euro 225 million, of which euro220 million relates to the purchase of Lasmo Plc, now Eni LasmoPlc) and the Refining & Marketing segment (euro 46 million).

In order to determine the recoverable amount,goodwill related to the acquisition of Bouygues Offshore SA andItalgas SpA has been allocated to the following cash generatingunits:

| (million        euro) |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|
|                  |   |                   |

| **Bouygues Offshore SA**                     |   |    |
|----------------------------------------------|--------|---------|
| Offshore        constructions                |   | 403     |
| Onshore constructions                        |   | 165     |
| LNG                                          |   | 159     |
| MMO - Maintenance Modification and Operation |   | 78      |
|                                         |   | **805** |
| **Italgas SpA**                              |   |    |
| Domestic gas        market                   |   | 706     |
| Foreign gas market                           |   | 51      |
|                                         |   | **757** |

|   |   |  |
|--------|--------|--|

The recoverable amount of cash generating unitsis determined based on expected cash flows estimated using themarket assumptions of Eni’s 2007-2010 Strategic Plan anddiscounted at rates included between 4.7% and 14.3%. For theyears not included in the strategic market assumptions, Eni hasused an incremental rate included between 0% and 2%. Keyassumptions are based on past experience and take into accountthe current level of interest rates.

Other changes related to goodwill of euro 170million concern the allocation to goodwill of the differencebetween the price paid by Snam Rete Gas SpA and Saipem SpA forthe purchase of treasury shares and the corresponding portion ofshareholders’ equity acquired following the increase ofEni’s interest (euro 171 million) and the change in scope ofconsolidation related to the acquisition of 50% of Siciliana GasSpA (euro 23 million). Such increase was partially offset by thedecrease of the impairment of goodwill allocated to Tigáz Zrtfollowing the acquisition by Italgas SpA (euro 46 million). Theimpairment of goodwill allocated to Tigáz Zrt was made followingthe application of the new Hungarian tariff regime, in force from2006, and was determined on the basis of the new estimate offuture cash flows, discounted by using a rate of 6.3%.

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**11 Investments**

**Investments accounted for using the equitymethod**Investments accounted for using the equity method of euro3,886 million (euro 3,890 million at December 31, 2005) consistof the following:

| (million        euro) |   | **Value at the beginning        of the year** |   | **Acquisitions and        subscriptions** |   | **Gain from the valuation        of investments accounted for using the equity method** |   | **Loss from the valuation        of investments accounted for using the equity method** |   | **Deduction for dividends** |   | **Exchange rate        differences** |   | **Other changes** |   | **Value at the end of the        year** |
|-----------------------|--------|-----------------------------------------------|--------|-------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------------------------------------|--------|-------------------|--------|-----------------------------------------|
|                  |   |                                               |   |                                           |   |                                                                                         |   |                                                                                         |   |                             |   |                                      |   |                   |   |                                         |

| **Dec. 31, 2005**                                 |   |      |   |   |   |   |   |    |   |   |    |   |   |     |   |   |     |   |   |    |   |   |      |   |
|---------------------------------------------------|--------|-----------|--------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|----------|--------|--------|----------|--------|--------|---------|--------|--------|-----------|--------|
| Investments        in unconsolidated subsidiaries |   | 109       |   |   | 30     |   |   | 6       |   |   | (2      | )      |   | (3       | )      |   | 10       |   |   | (4      | )      |   | 146       |   |
| Investments in joint ventures                     |   | 1,946     |   |   | 12     |   |   | 375     |   |   | (27     | )      |   | (202     | )      |   | 98       |   |   | 182     |   |   | 2,384     |   |
| Investments        in affiliates                  |   | 1,101     |   |   | 6      |   |   | 389     |   |   | (4      | )      |   | (96      | )      |   | 34       |   |   | (70     | )      |   | 1,360     |   |
|                                              |   | **3,156** |   |   | **48** |   |   | **770** |   |   | **(33** | **)**  |   | **(301** | **)**  |   | **142**  |   |   | **108** |   |   | **3,890** |   |
| **Dec.        31, 2006**                          |   |      |   |   |   |   |   |    |   |   |    |   |   |     |   |   |     |   |   |    |   |   |      |   |
| Investments in unconsolidated subsidiaries        |   | 146       |   |   | 4      |   |   | 15      |   |   | (8      | )      |   | (8       | )      |   | (6       | )      |   | 1       |   |   | 144       |   |
| Investments        in joint ventures              |   | 2,322     |   |   | 33     |   |   | 516     |   |   | (26     | )      |   | (302     | )      |   | (79      | )      |   | 42      |   |   | 2,506     |   |
| Investments in affiliates                         |   | 1,422     |   |   | 1      |   |   | 356     |   |   | (2      | )      |   | (440     | )      |   | (31      | )      |   | (70     | )      |   | 1,236     |   |
|                                              |   | **3,890** |   |   | **38** |   |   | **887** |   |   | **(36** | **)**  |   | **(750** | **)**  |   | **(116** | **)**  |   | **(27** | **)**  |   | **3,886** |   |

|   |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Acquisitions and subscriptions for euro 38million concern mainly the subscriptions of capital increase ofEnirepsa Gas Ltd (euro 23 million) and Saipem Triune EngineeringPrivate Ltd (euro 8 million).

Gains from the valuation of investments usingthe equity method of euro 887 million primarily relate to GalpEnergia SGPS SA (euro 250 million), Unión Fenosa Gas SA (euro181 million), EnBW Eni Verwaltungsgesellschaft mbH (euro 64million), Blue Stream Pipeline Co BV (euro 44 million),Supermetanol CA (euro 43 million), United Gas Derivatives Co(euro 39 million), Trans Austria Gasleitung GmbH (euro 36million), Lipardiz - Construção de Estruturas Maritimas Lda(euro 31 million) and Gaztransport et Technigaz SAS (euro 28million).

Losses from the valuation of investments usingthe equity method of euro 36 million primarily relate to EnirepsaLtd (euro 21 million). Deduction following the distribution ofdividends of euro 750 million primarily relates to Galp EnergiaSGPS SA (euro 364 million), Unión Fenosa Gas SA (euro 128million), Trans Austria Gasleitung GmbH (euro 43 million), UnitedGas Derivatives Co (euro 33 million) and Supermetanol CA (euro 32million).

Other changes of euro 27 million concern theinclusion in the scope of consolidation of Siciliana Gas SpAfollowing the acquisition of the further 50% from ESPI - EnteSiciliano per la Promozione Industriale (in liquidation) (euro 60million) and, as an increase, the contribution of Fiorentina GasSpA in Toscana Energia SpA (euro 67 million).

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The net carrying value of euro 3,886 million(euro 3,890 million at December 31, 2005) consists of thefollowing companies:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

|   |   | **Net value** |   | **Eni’s interest %** |   | **Net value** |   | **Eni’s interest %** |
|--------|--------|---------------|--------|---------------------------|--------|---------------|--------|---------------------------|
|   |   |               |   |                           |   |               |   |                           |

| Unconsolidated subsidiaries:                                         |   |      |   |   |   |      |   |   |
|----------------------------------------------------------------------|--------|-----------|--------|--------|--------|-----------|--------|--------|
| - Eni Btc        Ltd                                                 |   | 55        |   | 100.00 |   | 46        |   | 100.00 |
| - Others (*)                                                         |   | 91        |   |   |   | 98        |   |   |
|                                                                 |   | **146**   |   |   |   | **144**   |   |   |
| Joint ventures:                                                      |   |      |   |   |   |      |   |   |
| - Unión        Fenosa Gas SA                                    |   | 459       |   | 50.00  |   | 503       |   | 50.00  |
| - Blue Stream Pipeline Co BV                                         |   | 280       |   | 50.00  |   | 293       |   | 50.00  |
| - EnBW -        Eni Verwaltungsgesellschaft mbH                      |   | 168       |   | 50.00  |   | 234       |   | 50.00  |
| - Raffineria di Milazzo ScpA                                         |   | 172       |   | 50.00  |   | 171       |   | 50.00  |
| - Azienda        Energia e Servizi Torino SpA                        |   | 165       |   | 49.00  |   | 165       |   | 49.00  |
| - Eteria Parohis Aeriou Thessalonikis AE                             |   | 152       |   | 49.00  |   | 157       |   | 49.00  |
| - Toscana        Energia SpA                                         |   |      |   |   |   | 111       |   | 48.72  |
| - Super Octanos CA                                                   |   | 113       |   | 49.00  |   | 97        |   | 49.00  |
| - Lipardiz        - Construção de Estruturas Maritimas Lda |   | 66        |   | 50.00  |   | 97        |   | 50.00  |
| - Supermetanol CA                                                    |   | 88        |   | 34.51  |   | 90        |   | 34.51  |
| - Trans        Austria Gasleitung GmbH                               |   | 88        |   | 89.00  |   | 81        |   | 89.00  |
| - Haldor Topsøe AS                                              |   | 62        |   | 50.00  |   | 71        |   | 50.00  |
| - Unimar        Llc                                                  |   | 84        |   | 50.00  |   | 70        |   | 50.00  |
| - FPSO Mystras - Produção de Petroleo Lda                  |   | 73        |   | 50.00  |   | 63        |   | 50.00  |
| -        Transmediterranean Pipeline Co Ltd                          |   | 63        |   | 50.00  |   | 50        |   | 50.00  |
| - Eteria Parohis Aeriou Thessalias AE                                |   | 39        |   | 49.00  |   | 46        |   | 49.00  |
| - Saibos        Akogep Snc                                           |   | 38        |   | 70.00  |   | 38        |   | 70.00  |
| - Transitgas AG                                                      |   | 32        |   | 46.00  |   | 31        |   | 46.00  |
| -        CMS&A Wll                                               |   | 31        |   | 20.00  |   | 27        |   | 20.00  |
| - Siciliana Gas SpA                                                  |   | 60        |   | 50.00  |   |      |   |   |
| - Toscana        Gas SpA                                             |   | 55        |   | 46.10  |   |      |   |   |
| - Others (*)                                                         |   | 96        |   |   |   | 111       |   |   |
|                                                                 |   | **2,384** |   |   |   | **2,506** |   |   |
| Affiliates:                                                          |   |      |   |   |   |      |   |   |
| - Galp        Energia SGPS SA                                        |   | 896       |   | 33.34  |   | 782       |   | 33.34  |
| - United Gas Derivatives Co                                          |   | 128       |   | 33.33  |   | 117       |   | 33.33  |
| -        Fertlizantes Nitrogenados de Oriente CEC                    |   | 92        |   | 20.00  |   | 88        |   | 20.00  |
| - ACAM Gas SpA                                                       |   | 45        |   | 49.00  |   | 45        |   | 49.00  |
| -        Distribuidora de Gas del Centro SA                          |   | 41        |   | 31.35  |   | 37        |   | 31.35  |
| - Gaztransport et Technigaz SAS                                      |   | 20        |   | 30.00  |   | 29        |   | 30.00  |
| - Others (*)                                                         |   | 138       |   |   |   | 138       |   |   |
|                                                                 |   | **1,360** |   |   |   | **1,236** |   |   |
|                                                                 |   | **3,890** |   |   |   | **3,886** |   |   |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 25        million. |

The net value of investments in unconsolidatedsubsidiaries, joint ventures and affiliates includes thedifferences between purchase price and Eni’s equity ininvestments of euro 576 million. Such differences relate toUnión Fenosa Gas SA (euro 195 million), EnBW EniVerwaltungsgesellschaft mbH (euro 178 million), Galp Energia SGPSSA (euro 107 million) and Azienda Energia e Servizi Torino SpA(euro 69 million).

Provisions for losses related to investmentsaccounted for using the equity method of euro 154 million,included in the provisions for contingencies, relate primarily toPolimeri Europa Elastomères France SA (euro 50 million),Charville - Consultores e Serviços Lda (euro 37 million),Industria Siciliana Acido Fosforico - ISAF (in liquidation) (euro31 million) and Geopromtrans Llc (euro 19 million).

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##### Table of Contents

**Other investments**Other investments of euro 360 million (euro 421 million atDecember 31, 2005) consist of the following:

| (million        euro) | **Net value at the        beginning of the year** |   | **Acquisition and        subscriptions** |   | **Exchange rate        differences** |   | **Other changes** |   | **Net value at the end of        the year** |   | **Gross value at the end        of the year** |   | **Accumulated impairment        charges** |
|-----------------------|---------------------------------------------------|--------|------------------------------------------|--------|--------------------------------------|--------|-------------------|--------|---------------------------------------------|--------|-----------------------------------------------|--------|-------------------------------------------|
|                  |                                                   |   |                                          |   |                                      |   |                   |   |                                             |   |                                               |   |                                           |

| **Dec. 31, 2005**                                 |   |    |   |   |   |   |   |    |   |   |     |   |   |    |   |   |    |   |   |   |   |
|---------------------------------------------------|--------|---------|--------|--------|--------|--------|--------|---------|--------|--------|----------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
| Investments        in unconsolidated subsidiaries |   | 78      |   |   | 1      |   |   |    |   |   | (38      | )      |   | 41      |   |   | 68      |   |   | 27     |   |
| Investments in affiliates                         |   | 107     |   |   |   |   |   |    |   |   | (98      | )      |   | 9       |   |   | 9       |   |   |   |   |
| Other        investments                          |   | 344     |   |   | 23     |   |   | 41      |   |   | (37      | )      |   | 371     |   |   | 375     |   |   | 4      |   |
|                                              |   | **529** |   |   | **24** |   |   | **41**  |   |   | **(173** | **)**  |   | **421** |   |   | **452** |   |   | **31** |   |
| **Dec.        31, 2006**                          |   |    |   |   |   |   |   |    |   |   |     |   |   |    |   |   |    |   |   |   |   |
| Investments in unconsolidated subsidiaries        |   | 41      |   |   |   |   |   |    |   |   | (20      | )      |   | 21      |   |   | 49      |   |   | 28     |   |
| Investments        in affiliates                  |   | 9       |   |   |   |   |   |    |   |   |     |   |   | 9       |   |   | 10      |   |   | 1      |   |
| Other investments                                 |   | 371     |   |   | 4      |   |   | (31     | )      |   | (14      | )      |   | 330     |   |   | 332     |   |   | 2      |   |
|                                              |   | **421** |   |   | **4**  |   |   | **(31** | **)**  |   | **(34**  | **)**  |   | **360** |   |   | **391** |   |   | **31** |   |

|   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Investments in unconsolidated subsidiaries andaffiliates are valued at cost net of impairment losses. Otherinvestments, for which fair value cannot be reliably determinedare recognized at cost and adjusted for impairment losses.

The net carrying amount of other investments ofeuro 360 million (euro 421 million at December 31, 2005) concernsthe following companies:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

|   |   | **Net value** |   | **Eni’s interest %** |   | **Net value** |   | **Eni’s interest %** |
|--------|--------|---------------|--------|---------------------------|--------|---------------|--------|---------------------------|
|   |   |               |   |                           |   |               |   |                           |

| Unconsolidated subsidiaries (*) |   | 41      |   |   |   | 21      |   |   |
|---------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|
| Affiliates                      |   | 9       |   |   |   | 9       |   |   |
| Other investments:              |   |    |   |   |   |    |   |   |
| - Darwin        LNG Pty Ltd     |   | 126     |   | 12.04  |   | 108     |   | 12.04  |
| - Nigeria LNG Ltd               |   | 100     |   | 10.40  |   | 90      |   | 10.40  |
| - Ceska        Rafinerska AS    |   | 35      |   | 16.33  |   | 31      |   | 16.33  |
| - Others (*)                    |   | 110     |   |   |   | 101     |   |   |
|                            |   | **371** |   |   |   | **330** |   |   |
|                            |   | **421** |   |   |   | **360** |   |   |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 25        million. |

Provisions for losses related to otherinvestments of euro 30 million (euro 64 million at December 31,2005), included in the provisions for contingencies, relateprimarily to Caspian Pipeline Consortium R - Closed Joint StockCo (euro 27 million) as follows:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Industria Siciliana Acido Fosforico - ISAF SpA        (in liquidation) (*) |   | 35     |   |   |
|----------------------------------------------------------------------------|--------|--------|--------|--------|
| Caspian        Pipeline Consortium R - Closed Joint Stock Co               |   | 21     |   | 27     |
| Other investments                                                          |   | 8      |   | 3      |
|                                                                       |   | **64** |   | **30** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

|   |   |                                                                                      |
|--------|--------|-------------------------------------------------------------------------------------------|
| (*)    |   | Starting from        2006 ISAF SpA has been accounted for using the equity        method. |

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**Other information about investments**The following are the amounts, according to Eni’sinterest, from the last available Financial Statements ofunconsolidated subsidiaries, joint ventures and affiliates:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

|   | **Unconsolidated        subsidiaries** |   | **Joint ventures** |   | **Affiliates** |   | **Unconsolidated        subsidiaries** |   | **Joint ventures** |   | **Affiliates** |
|--------|----------------------------------------|--------|--------------------|--------|----------------|--------|----------------------------------------|--------|--------------------|--------|----------------|
|   |                                        |   |                    |   |                |   |                                        |   |                    |   |                |

| Total assets              |   | 1,404 |   |   | 7,423 |   |   | 2,763 |   |   | 1,315 |   |   | 7,906 |   |   | 2,998 |   |
|---------------------------|--------|-------|--------|--------|-------|--------|--------|-------|--------|--------|-------|--------|--------|-------|--------|--------|-------|--------|
| Total        liabilities  |   | 1,263 |   |   | 5,161 |   |   | 1,295 |   |   | 1,182 |   |   | 5,466 |   |   | 1,753 |   |
| Net sales from operations |   | 63    |   |   | 4,617 |   |   | 1,560 |   |   | 71    |   |   | 5,536 |   |   | 4,905 |   |
| Operating        profit   |   | (1    | )      |   | 609   |   |   | 176   |   |   | (1    | )      |   | 790   |   |   | 454   |   |
| Net profit                |   | (2    | )      |   | 328   |   |   | 371   |   |   | 3     |   |   | 465   |   |   | 351   |   |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Total assets and total liabilities relating tounconsolidated companies of euro 1,315 and euro 1,182 million(euro 1,404 and euro 1,263 million at December 31, 2005) concernfor euro 900 and euro 900 million (euro 1,004 and euro 1,004million at December 31, 2005) companies for which theconsolidation does not produce significant effects.

 

**12 Other financial assets**

Other financial receivables of euro 805 million(euro 1,050 million at December 31, 2005) consist of thefollowing:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Financial receivables:          |   |      |   |    |
|---------------------------------|--------|-----------|--------|---------|
| - for        operating purposes |   | 754       |   | 532     |
| - for non-operating purposes    |   | 247       |   | 252     |
|                            |   | **1,001** |   | **784** |
| Securities:                     |   |      |   |    |
| - for        operating purposes |   | 21        |   | 21      |
| - for non-operating purposes    |   | 28        |   |    |
|                            |   | **49**    |   | **21**  |
|                            |   | **1,050** |   | **805** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Financial receivables are presented net of theallowance of impairment losses of euro 24 million (euro 25million at December 31, 2005).

Operating financial receivables of euro 532million (euro 754 million at December 31, 2005) primarily concernloans made by the Exploration & Production segment (euro 372million) and Gas & Power segment (euro 81 million). Thedecrease of euro 222 million concerns exchange rate differencesdue to the translation of financial statements prepared incurrencies other than euro for euro 61 million. Non-operatingfinancial receivables of euro 252 million (euro 247 million atDecember 31, 2005) concern a fixed deposit for euro 246 millionheld by Eni Lasmo Plc as a guarantee of a debt issue (euro 241million at December 31, 2005).

Receivables in currency other than euro amountto euro 693 million (euro 845 million at December 31, 2005).

Receivables due beyond five years amount toeuro 396 million (euro 625 million at December 31, 2005).

Securities of euro 21 million (euro 49 millionat December 31, 2005) are considered held-to-maturity investmentsand concern securities issued by the Italian Government (euro 22million at December 31, 2005).

Securities have a maturity within five years.

The valuation at the fair value of otherfinancial assets did not have any significant effect.

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**13 Deferred tax assets**

Deferred tax assets of euro 1,725 million (euro1,861 million at December 31, 2005) are presented net of deferredtax liabilities for which Eni possesses the legal right of offsetfor euro 4,028 million (euro 3,347 million at December 31, 2005).

| (million        euro) | **Value at Dec. 31, 2005** |   | **Additions** |   | **Deductions** |   | **Exchange rate        differences** |   | **Other changes** |   | **Value at Dec. 31, 2006** |
|-----------------------|----------------------------|--------|---------------|--------|----------------|--------|--------------------------------------|--------|-------------------|--------|----------------------------|
|                  |                            |   |               |   |                |   |                                      |   |                   |   |                            |

|   |   | **1,861** |   |   | 1,299 |   |   | (1,036 | ) |   | (169 | ) |   | (230 | **)** |   | **1,725** |   |
|--------|--------|-----------|--------|--------|-------|--------|--------|--------|---|--------|------|---|--------|------|-------|--------|-----------|--------|

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Other changes of euro 230 million primarilyconcern the offset, for each company, of deferred tax assets withdeferred tax liabilities (euro 318 million).

Deferred tax assets are described in Note 22 -Deferred tax liabilities.

 

**14 Other non-current receivables**

Other non-current receivables of euro 994million (euro 995 million at December 31, 2005) consist of thefollowing:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Tax receivables from:                        |   |    |   |    |
|----------------------------------------------|--------|---------|--------|---------|
| - Italian        tax authorities             |   |    |   |    |
|   . income tax credits             |   | 508     |   | 501     |
|   .        interest on tax credits |   | 309     |   | 322     |
|   . value added tax (VAT)          |   | 37      |   | 37      |
|   .        other                   |   | 7       |   | 13      |
|                                         |   | **861** |   | **873** |
| - foreign        tax authorities             |   | 44      |   | 30      |
|                                         |   | **905** |   | **903** |
| Other        receivables:                    |   |    |   |    |
| - in relation to disposals                   |   | 39      |   | 2       |
| - others                                     |   | 40      |   | 83      |
|                                         |   | **79**  |   | **85**  |
| Other        non-current receivables         |   | 11      |   | 6       |
|                                         |   | **995** |   | **994** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

 

**Current liabilities**

**15 Current financial liabilities**

Current financial liabilities of euro 3,400million (euro 4,612 million at December 31, 2005) consist of thefollowing:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Banks                                                         |   | 3,894     |   | 3,178     |
|---------------------------------------------------------------|--------|-----------|--------|-----------|
| Financial        liabilities represented by commercial papers |   | 60        |   |      |
| Other financial institutions                                  |   | 658       |   | 222       |
|                                                          |   | **4,612** |   | **3,400** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

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The decrease of current financial liabilitiesof euro 1,212 million is primarily due to the balance of paymentsand new proceeds of liabilities (euro 802 million) and to theexchange rate differences related to the translation of financialstatements prepared in currencies other than euro (euro 473million). Current financial liabilities by currency consist ofthe following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Euro               |   | 4,029     |   | 3,119     |
|--------------------|--------|-----------|--------|-----------|
| U.S.        dollar |   | 323       |   | 161       |
| Other currencies   |   | 260       |   | 120       |
|               |   | **4,612** |   | **3,400** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

In the fiscal year 2006, the weighted averageinterest rate of the short-term debts amounts to 3.9% (2.8% inthe fiscal year 2005).

At December 31, 2006 Eni has unused committedand uncommitted borrowing facilities amounting respectively toeuro 5,896 million and euro 6,523 million (euro 5,855 million andeuro 4,783 million at December 31, 2005). Interest rates underthese contracts reflect market conditions and the charges fornon-use are not material.

 

**16 Trade and other payables**

Trade and other payables of euro 15,995 million(euro 13,095 million at December 31, 2005) consist of thefollowing:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Trade payables                      |   | 8,170      |   | 10,528     |
|-------------------------------------|--------|------------|--------|------------|
| Advances                            |   | 1,184      |   | 1,362      |
| Other payables:                     |   |       |   |       |
| - in        relation to investments |   | 698        |   | 1,166      |
| - others                            |   | 3,043      |   | 2,939      |
|                                |   | **3,741**  |   | **4,105**  |
|                                |   | **13,095** |   | **15,995** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Trade payables of euro 10,528 million increasedby euro 2,358 million. Such increase primarily concerns theExploration & Production segment (euro 1,353 million), theEngineering & Construction segment (euro 424 million),Refining & Marketing segment (euro 262 million) and Gas &Power segment (euro 194 million) and includes exchange ratedifferences related to the translation of financial statementsprepared in currencies other than euro for euro 181 million.

Advances of euro 1,362 million (euro 1,184million at December 31, 2005) concern payments received in excessof the value of the work in progress performed for euro 884million (euro 550 million at December 31, 2005), advances oncontract work in progress for euro 197 million (euro 309 millionat December 31, 2005) and other advances for euro 281 million(euro 325 million at December 31, 2005). Advances on contractwork in progress concern the Engineering & Constructionsegment.

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Other payables of euro 4,105 million (euro3,741 million at December 31, 2005) consist of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Payables due to:                                                                 |   |      |   |      |
|----------------------------------------------------------------------------------|--------|-----------|--------|-----------|
| - joint        venture operators in exploration and production        activities |   | 1,264     |   | 1,146     |
| - suppliers in relation to investments                                           |   | 951       |   | 923       |
| - social        security entities                                                |   | 229       |   | 339       |
| - employees                                                                      |   | 314       |   | 336       |
| -        non-financial governmental entities                                     |   | 313       |   | 274       |
|                                                                             |   | **3,071** |   | **3,018** |
| Cautionary        deposit                                                        |   | 6         |   | 2         |
| Other payables                                                                   |   | 664       |   | 1,085     |
|                                                                             |   | **3,741** |   | **4,105** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Payables with related parties are described inNote 33 - Transactions with related parties.

 

**17 Taxes payable**

Taxes payable of euro 2,830 million (euro 3,430million at December 31, 2005) consist of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Income taxes payable             |   | 1,742     |   | 1,640     |
|----------------------------------|--------|-----------|--------|-----------|
| Customs        and excise duties |   | 896       |   | 683       |
| Other                            |   | 792       |   | 507       |
|                             |   | **3,430** |   | **2,830** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Taxes payable of euro 1,640 million (euro 1,742million at December 31, 2005) concern Italian companies for euro158 million and foreign companies for euro 1,482 million (euro234 million and euro 1,508 million at December 31, 2005,respectively). The decrease of euro 102 million includes exchangerate differences related to the translation of financialstatements prepared in currencies other than euro (euro 70million).

 

**18 Other current liabilities**

Other current liabilities of euro 634 million(euro 613 million at December 31, 2005) consist of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Fair value of non-hedging derivatives            |   | 378     |   | 395     |
|--------------------------------------------------|--------|---------|--------|---------|
| Fair value        of cash flow hedge derivatives |   | 5       |   | 40      |
| Other liabilities                                |   | 230     |   | 199     |
|                                             |   | **613** |   | **634** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

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##### Table of Contents

Fair value of non-hedging derivative contractsof euro 395 million (euro 378 million at December 31, 2005)consists of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

|   |   | **Fair value** |   | **Commitments** |   | **Fair value** |   | **Commitments** |
|--------|--------|----------------|--------|-----------------|--------|----------------|--------|-----------------|
|   |   |                |   |                 |   |                |   |                 |

| **Non-hedging derivatives on exchange rate**        |   |    |   |       |   |    |   |      |
|-----------------------------------------------------|--------|---------|--------|------------|--------|---------|--------|-----------|
| Currency        Swap                                |   | 139     |   | 6,370      |   | 11      |   | 1,291     |
| Interest Currency Swap                              |   | 73      |   | 2,316      |   | 19      |   | 257       |
| Other                                               |   | 2       |   | 57         |   | 2       |   | 70        |
|                                                |   | **214** |   | **8,743**  |   | **32**  |   | **1,618** |
| **Non-hedging        derivatives on interest rate** |   |    |   |       |   |    |   |      |
| Interest Rate Swap                                  |   | 101     |   | 5,145      |   | 30      |   | 2,122     |
|                                                |   | **101** |   | **5,145**  |   | **30**  |   | **2,122** |
| **Non-hedging derivatives on commodities**          |   |    |   |       |   |    |   |      |
| Over the        counter                             |   | 21      |   | 323        |   | 52      |   | 635       |
| Other                                               |   | 42      |   | 94         |   | 281     |   | 930       |
|                                                |   | **63**  |   | **417**    |   | **333** |   | **1,565** |
|                                                |   | **378** |   | **14,305** |   | **395** |   | **5,305** |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

Fair value of cash flow hedge derivatives ofeuro 40 million concerns commitments of euro 529 million relatedto future sales of crude oil by the Exploration & Productionsegment. Cash flow hedge derivatives on exchange rate at December31, 2005 were closed in 2006 with the effects charged to theprofit and loss account.

Information concerning the hedged risks and thehedging policies is shown at Note 25 - Guarantees, commitmentsand risks - Risk management.

 

**Non-current liabilities**

**19 Long-term debt and current portion of long-term debt**

Long-term debt and the current portion oflong-term debt, including the related expiration dates, are asfollows:

| (million euro) |   | **December 31,** |   |   |   | **Long-term maturity** |
|----------------|--------|------------------|--------|--------|--------|------------------------|
|           |   |                  |   |   |   |                        |

| **Type of debt instrument** |   | **Maturity range** |   | **2005** |   | **2006** |   | **Current maturity 2007** |   | **2008** |   | **2009** |   | **2010** |   | **2011** |   | **After** |   | **Total** |
|-----------------------------|--------|--------------------|--------|----------|--------|----------|--------|---------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|-----------|--------|-----------|
|                        |   |                    |   |          |   |          |   |                           |   |          |   |          |   |          |   |          |   |           |   |           |

| Banks:                           |   |          |   |      |   |      |   |    |   |      |   |    |   |      |   |    |   |      |   |      |
|----------------------------------|--------|---------------|--------|-----------|--------|-----------|--------|---------|--------|-----------|--------|---------|--------|-----------|--------|---------|--------|-----------|--------|-----------|
| - ordinary        loans          |   | **2007-2019** |   | 2,174     |   | 2,298     |   | 127     |   | 310       |   | 448     |   | 348       |   | 88      |   | 977       |   | 2,171     |
| - interested rate assigned loans |   | **2007-2013** |   | 45        |   | 13        |   | 4       |   | 3         |   | 2       |   | 2         |   | 1       |   | 1         |   | 9         |
| - other        financings        |   | **2006**      |   | 3         |   |      |   |    |   |      |   |    |   |      |   |    |   |      |   |      |
|                             |   |          |   | **2,222** |   | **2,311** |   | **131** |   | **313**   |   | **450** |   | **350**   |   | **89**  |   | **978**   |   | **2,180** |
| Ordinary        bonds            |   | **2007-2027** |   | 5,339     |   | 5,097     |   | 685     |   | 475       |   | 127     |   | 946       |   | 179     |   | 2,685     |   | 4,412     |
| Other financing institutions     |   | **2007-2019** |   | 825       |   | 891       |   | 74      |   | 403       |   | 26      |   | 29        |   | 129     |   | 230       |   | 817       |
|                             |   |          |   | **8,386** |   | **8,299** |   | **890** |   | **1,191** |   | **603** |   | **1,325** |   | **397** |   | **3,893** |   | **7,409** |

|   |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Long-term debt including the current portion oflong-term debt of euro 8,299 million (euro 8,386 million atDecember 31, 2005) decreased by euro 87 million. Such decrease isprimarily due to the balance of payments and new proceeds ofliabilities of euro 7 million and to the effect of exchange ratedifferences on the translation of financial statements preparedin currencies other than euro and exchange rate differences onthe alignment to the year end exchange rate of debts denominatedin currencies other than functional currency for a total of euro124 million.

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Other financing institutions of euro 891million included euro 56 million of finance lease transactions.The residual debt, represented by the sum of discounted futurelease payments applying the effective interest rate, interestsand the total of future lease payments, including the relatedexpiration dates, are as follows:

| (million        euro) |   | **Maturity range** |   |   |
|-----------------------|--------|--------------------|--------|--------|
|                  |   |                    |   |   |

|   |   | **Within 12 months** |   | **Between one and five        years** |   | **After five years** |   | **Total** |
|--------|--------|----------------------|--------|---------------------------------------|--------|----------------------|--------|-----------|
|   |   |                      |   |                                       |   |                      |   |           |

| Residual debt                               |   | 14 |   | 33 |   | 9  |   | 56 |
|---------------------------------------------|--------|----|--------|----|--------|----|--------|----|
| Interests                                   |   | 7  |   | 11 |   | 7  |   | 25 |
| Undiscounted value of future lease payments |   | 21 |   | 44 |   | 16 |   | 81 |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

Eni entered into financing arrangements withthe European Investment Bank, relating to bank debt that requiresmaintenance of certain financial ratios generally based onEni’s Consolidated Financial Statements or of a rating notinferior to A- (S&P) and A3 (Moody’s). At December 31,2005 and December 31, 2006, the amount of short and long-termdebt subject to restrictive covenants was euro 1,258 million andeuro 1,131 million, respectively. Furthermore, Saipem SpA enteredinto financing arrangements with banks for euro 75 million (euro275 million at December 31, 2005), that require maintenance ofcertain financial ratios generally based on Saipem’sConsolidated Financial Statements. Eni and Saipem are incompliance with the covenants contained in its financingarrangements.

Bonds of euro 5,097 million concern bondsissued within the Euro Medium Term Notes Program for a total ofeuro 4,424 million and other bonds for a total of euro 673million.

Bonds as of at December 31, 2006, including theissuing entity, the expiration dates and interest rates, bycurrency, are as follows:

|   | **Amount** |   | **Discount on bond issue and accrued expense** |   | **Total** |   | **Value** |   | **Maturity** |   | **% rate** |
|--------|------------|--------|------------------------------------------------|--------|-----------|--------|-----------|--------|--------------|--------|------------|
|   |            |   |                                                |   |           |   |           |   |              |   |            |

| (million        euro) |   |   |   |   |   |   |   |   | **from** |   | **to** |   | **from** |   | **to** |
|-----------------------|--------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
|                  |   |   |   |   |   |   |   |   |          |   |        |   |          |   |        |

| **Issuing entity**                  |   |      |   |   |   |   |      |   |                 |   |   |   |   |   |     |   |   |
|-------------------------------------|--------|-----------|--------|--------|--------|--------|-----------|--------|----------------------|--------|--------|--------|--------|--------|----------|--------|--------|
| *Euro        Medium Term Notes:*    |   |      |   |   |   |   |      |   |                 |   |   |   |   |   |     |   |   |
| - Eni SpA                           |   | 1,500     |   | 42     |   |   | 1,542     |   | Euro                 |   |   |   | 2013   |   |     |   | 4.625  |
| - Eni        Coordination Center SA |   | 1,027     |   | 19     |   |   | 1,046     |   | British        pound |   | 2007   |   | 2019   |   | 4.875    |   | 5.250  |
| - Eni Coordination Center SA        |   | 520       |   | 5      |   |   | 525       |   | Euro                 |   | 2007   |   | 2015   |   | variable |   |   |
| - Eni SpA                           |   | 500       |   | 16     |   |   | 516       |   | Euro                 |   |   |   | 2010   |   |     |   | 6.125  |
| - Eni Coordination Center SA        |   | 277       |   | 5      |   |   | 282       |   | Euro                 |   | 2008   |   | 2024   |   | 2.876    |   | 5.050  |
| - Eni        Coordination Center SA |   | 193       |   | 4      |   |   | 197       |   | U.S.        dollar   |   | 2013   |   | 2015   |   | 4.450    |   | 4.800  |
| - Eni Coordination Center SA        |   | 167       |   |   |   |   | 167       |   | Japanese yen         |   | 2008   |   | 2021   |   | 0.810    |   | 2.320  |
| - Eni        Coordination Center SA |   | 103       |   |   |   |   | 103       |   | U.S.        dollar   |   | 2007   |   | 2013   |   | variable |   |   |
| - Eni Coordination Center SA        |   | 32        |   |   |   |   | 32        |   | Swiss franc          |   |   |   | 2010   |   |     |   | 2.043  |
| - Eni        Coordination Center SA |   | 14        |   |   |   |   | 14        |   | Swiss        franc   |   |   |   | 2007   |   | variable |   |   |
|                                |   | **4,333** |   | **91** |   |   | **4,424** |   |                 |   |   |   |   |   |     |   |   |
| *Other        bonds:*               |   |      |   |   |   |   |      |   |                 |   |   |   |   |   |     |   |   |
| - Eni USA Inc                       |   | 304       |   | 3      |   |   | 307       |   | U.S. dollar          |   |   |   | 2027   |   |     |   | 7.300  |
| - Eni        Lasmo Plc (*)          |   | 224       |   | (11    | )      |   | 213       |   | British        pound |   |   |   | 2009   |   |     |   | 10.375 |
| - Eni USA Inc                       |   | 152       |   | 1      |   |   | 153       |   | U.S. dollar          |   |   |   | 2007   |   |     |   | 6.750  |
|                                |   | **680**   |   | **(7** | **)**  |   | **673**   |   |                 |   |   |   |   |   |     |   |   |
|                                |   | **5,013** |   | **84** |   |   | **5,097** |   |                 |   |   |   |   |   |     |   |   |

|   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                                                    |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|
| (*)    |   | The bond is        guaranteed by a fixed deposit recorded under non-current        financial assets (euro 246 million). |

Bonds due within 18 months amount to euro 787million and concern Eni Coordination Center SA (euro 634 million)and Eni USA Inc (euro 153 million). In 2006, Eni issued bonds foreuro 219 million through Eni Coordination Center SA.

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Long-term debt and the current portion oflong-term debt, including the weighted average interest rates, bycurrency, are as follows:

|   |   | **Dec. 31, 2005**(million euro) |   | **% Average rate** |   | **Dec. 31, 2006**(million euro) |   | **% Average rate** |
|--------|--------|---------------------------------|--------|--------------------|--------|---------------------------------|--------|--------------------|
|   |   |                                 |   |                    |   |                                 |   |                    |

| Euro                |   | 5,344     |   | 3.6    |   | 5,566     |   | 4.0    |
|---------------------|--------|-----------|--------|--------|--------|-----------|--------|--------|
| U.S.        dollar  |   | 1,709     |   | 7.0    |   | 1,261     |   | 7.8    |
| British pound       |   | 1,082     |   | 5.3    |   | 1,259     |   | 5.9    |
| Japanese        yen |   | 153       |   | 1.4    |   | 167       |   | 1.4    |
| Swiss franc         |   | 98        |   | 2.6    |   | 46        |   | 2.0    |
|                |   | **8,386** |   |   |   | **8,299** |   |   |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

At December 31, 2006 Eni has unused committedlong-term borrowing facilities amounting to euro 520 million(euro 1,070 million at December 31, 2005). Interest rates uponthese contracts are at market conditions and the charges fornon-use are not material.

Fair value of long-term debt, including thecurrent portion of long-term debt, amounts to euro 8,415 million(euro 8,732 million at December 31, 2005) and consists of thefollowing:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Ordinary bonds               |   | 5,633     |   | 5,239     |
|------------------------------|--------|-----------|--------|-----------|
| Banks                        |   | 2,222     |   | 2,311     |
| Other financing institutions |   | 877       |   | 865       |
|                         |   | **8,732** |   | **8,415** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Fair value was calculated by discounting thefuture cash flows using rates between 3.6% and 5.6% (2.8% and5.0% at December 31, 2005). Financial liabilities for euro 231million are guaranteed by mortgages and liens on tangible assetsof consolidated companies and by pledges on securities and fixeddeposits (euro 251 million at December 31, 2005).

Net borrowings, as defined in the"Financial Review" in the "Report of theDirectors", consist of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

|   | **Current** |   | **Non current** |   | **Total** |   | **Current** |   | **Non current** |   | **Total** |
|--------|-------------|--------|-----------------|--------|-----------|--------|-------------|--------|-----------------|--------|-----------|
|   |             |   |                 |   |           |   |             |   |                 |   |           |

| A. Cash                                                            |   | 1,211     |   |   |      |   |   | 1,211      |   |   | 3,745     |   |   |      |   |   | 3,745      |   |
|--------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|
| B. Cash        equivalent                                          |   | 122       |   |   |      |   |   | 122        |   |   | 240       |   |   |      |   |   | 240        |   |
| C. Securities held-to-maturity and available for        sale       |   | 903       |   |   | 28        |   |   | 931        |   |   | 552       |   |   |      |   |   | 552        |   |
| **D.        Liquidity (A+B+C)**                                    |   | **2,236** |   |   | **28**    |   |   | **2,264**  |   |   | **4,537** |   |   |      |   |   | **4,537**  |   |
| **E. Financial Receivables**                                       |   | **12**    |   |   | **247**   |   |   | **259**    |   |   | **143**   |   |   | **252**   |   |   | **395**    |   |
| F.        Short-term financial liabilities towards banks           |   | 3,894     |   |   |      |   |   | 3,894      |   |   | 3,178     |   |   |      |   |   | 3,178      |   |
| G. Long-term financial liabilities towards banks                   |   | 296       |   |   | 1,926     |   |   | 2,222      |   |   | 131       |   |   | 2,180     |   |   | 2,311      |   |
| H. Bonds                                                           |   | 391       |   |   | 4,948     |   |   | 5,339      |   |   | 685       |   |   | 4,412     |   |   | 5,097      |   |
| I. Short-term financial liabilities towards        related parties |   | 222       |   |   |      |   |   | 222        |   |   | 92        |   |   |      |   |   | 92         |   |
| L.        Long-term financial liabilities towards related parties  |   |      |   |   | 18        |   |   | 18         |   |   |      |   |   | 16        |   |   | 16         |   |
| M. Other short-term financial liabilities                          |   | 496       |   |   |      |   |   | 496        |   |   | 130       |   |   |      |   |   | 130        |   |
| N. Other        long-term financial liabilities                    |   | 46        |   |   | 761       |   |   | 807        |   |   | 74        |   |   | 801       |   |   | 875        |   |
| **O. Total borrowings (F+G+H+I+L+M+N)**                            |   | **5,345** |   |   | **7,653** |   |   | **12,998** |   |   | **4,290** |   |   | **7,409** |   |   | **11,699** |   |
| **P. Net        borrowings (O-D-E)**                               |   | **3,097** |   |   | **7,378** |   |   | **10,475** |   |   | **(390**  | **)**  |   | **7,157** |   |   | **6,767**  |   |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Securities held-to-maturity and available forsale of euro 552 million (euro 931 million at December 31, 2005)are held for non-operating purposes. The item does not includesecurities held-to-maturity and available for sale, held foroperating purposes, of euro 441 million (euro 486 million atDecember 31, 2005) which are primarily made up of securitiescovering the technical reserves of Padana Assicurazioni SpA foreuro 417 million (euro 453 million at December 31, 2005).

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Financial receivables of euro 395 million (euro259 million at December 31, 2005) are held for non-operatingpurposes. The item does not include financial receivables heldfor operating purposes of euro 246 million (euro 480 million atDecember 31, 2005), of which euro 241 million (euro 475 millionat December 31, 2005) granted to unconsolidated subsidiaries,joint ventures and affiliates primarily for the implementation ofcertain capital projects. Non current financial receivables ofeuro 252 million (euro 247 million at December 31, 2005) concernfor euro 246 million a fixed deposit held by Eni Lasmo Plc as aguarantee of a debt issue (euro 241 million at December 31,2005).

 

**20 Provisions for contingencies**

Provisions for contingencies of euro 8,614million (euro 7,679 million at December 31, 2005) consist of thefollowing:

| (million        euro) | **Value at Dec. 31, 2005** |   | **Additions** |   | **Deductions** |   | **Other changes** |   | **Value at Dec. 31, 2006** |
|-----------------------|----------------------------|--------|---------------|--------|----------------|--------|-------------------|--------|----------------------------|
|                  |                            |   |               |   |                |   |                   |   |                            |

| Provisions for site restoration and abandonment                                            |   | 2,648     |   |   | 1,345     |   |   | (188       | )     |   | (81      | )      |   | 3,724     |   |
|--------------------------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|------------|-------|--------|----------|--------|--------|-----------|--------|
| Provisions        for environmental risks                                                  |   | 2,103     |   |   | 272       |   |   | (430       | )     |   | (40      | )      |   | 1,905     |   |
| Provisions for contract penalties and disputes                                             |   | 534       |   |   | 174       |   |   | (62        | )     |   | 8        |   |   | 654       |   |
| Loss        adjustments and actuarial provisions for Eni’s        insurance companies |   | 707       |   |   | 8         |   |   | (127       | )     |   | (23      | )      |   | 565       |   |
| Provisions for taxes                                                                       |   | 309       |   |   | 48        |   |   | (98        | )     |   | (38      | )      |   | 221       |   |
| Provisions        for losses related to investments                                        |   | 85        |   |   | 65        |   |   | (9         | )     |   | 43       |   |   | 184       |   |
| Provisions for revision of selling prices                                                  |   | 321       |   |   | 104       |   |   | (253       | )     |   |     |   |   | 172       |   |
| Provisions        for restructuring or decommissioning                                     |   | 195       |   |   | 35        |   |   | (73        | )     |   |     |   |   | 157       |   |
| Provisions for OIL insurance                                                               |   | 127       |   |   |      |   |   | (19        | )     |   |     |   |   | 108       |   |
| Provisions        for onerous contracts                                                    |   | 80        |   |   | 55        |   |   | (35        | )     |   |     |   |   | 100       |   |
| Provisions for prize promotion                                                             |   | 52        |   |   | 44        |   |   | (46        | )     |   |     |   |   | 50        |   |
| Other (*)                                                                                  |   | 518       |   |   | 518       |   |   | (177       | )     |   | (85      | )      |   | 774       |   |
|                                                                                       |   | **7,679** |   |   | **2,668** |   |   | **(1,517** | **)** |   | **(216** | **)**  |   | **8,614** |   |

|   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

Provisions for site restoration and abandonmentof euro 3,724 million represent primarily the estimated costs forwell-plugging, abandonment and site restoration (euro 3,664million). The increase of euro 1,345 million includes amountsrecorded on initial recognition and changes to the estimates ofdismantling and restoration of sites recognized as a balancingentry to the asset to which they refer (euro 1,240 million) andfinancial expense due to the passage of time charged to theprofit and loss account (euro 105 million). The discount ratesused range between 4.0% and 5.9%. Other changes of euro 81million include exchange rate differences on the translation offinancial statements prepared in currencies other than euro foreuro 102 million. Provisions for environmental risks of euro1,905 million represent, primarily, the estimated costs ofremediation in accordance with existing laws and regulations, ofactive production facilities for Syndial SpA (euro 1,295million), the Refining & Marketing segment (euro 346million), the Corporate and financial companies segment, relatingto guarantees issued in relation to properties sold (euro 117million) and the Gas & Power segment (euro 78 million).Provisions in 2006 of euro 272 million primarily related toSyndial SpA (euro 125 million) and the Refining & Marketingsegment (euro 79 million) and include additions due to thepassage of time for euro 8 million. Deductions of euro 430million primarily concern Syndial SpA (euro 225 million) and theRefining & Marketing segment (euro 146 million) and includedeductions not corresponding to cash expenditures for euro 16million.

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Provisions for contract penalties and disputesof euro 654 million primarily include charges expected oncontract penalties and general disputes. These provisions arestated on the basis of Eni’s best estimate of the expectedprobable liability. Provisions in 2006 for euro 174 millionprimarily related to Syndial SpA (euro 80 million) and the Gas& Power segment (euro 63 million). Deductions of euro 62million include deductions not corresponding to cash expendituresfor euro 25 million.

Loss adjustments and actuarial provisions forEni’s insurance companies of euro 565 million represent theliabilities accrued for claims on insurance policies underwrittenby Padana Assicurazioni SpA. Deductions of euro 127 millionconcern deductions not corresponding to cash expenditures withregards to the reported accidents. Provisions for taxes of euro221 million primarily include charges for unsettled tax claims touncertain applications of the tax regulation for foreigncompanies of the Exploration & Production segment (euro 176million). The decrease of euro 98 million concerns deductions notcorresponding to cash expenditures for euro 32 million. Otherchanges of euro 38 million include the exchange rate differenceson the translation of financial statements prepared in currenciesother than euro for euro 25 million. Provisions for losses oninvestments of euro 184 million represent losses incurred to datein excess of the carrying value of investments (see Note 11 -Investments).

Provisions for the revision of selling pricesof euro 172 million primarily concern the provision for theestimated adverse impact of the application of Decision 248/2004by the Italian Authority for Electricity and Gas affecting theparameters for upgrading the raw material component in priceformulas for end users (euro 139 million). Deductions of euro 253million concern deductions not corresponding to cash expendituresfor euro 141 million primarily related to the adoption of the newtariffs’ regime introduced by Decision 134/2006 by theItalian Authority for Electricity and Gas (euro 139 million).

Provisions for restructuring or decommissioningof production facilities of euro 157 million mainly represent theestimated costs related to divestments and facilities closures ofthe Refining & Marketing segment (euro 124 million).Deductions of euro 73 million concern deductions notcorresponding to cash expenditures for euro 17 million.

Provisions for OIL insurance of euro 108million include the provisions related to the increase of chargesthat will be paid within the next 5 years, due by Eni forparticipation in the mutual insurance of Oil Insurance Ltd,following the increased number of accidents that occurred in 2004and 2005.

Provisions for onerous contracts of euro 100million essentially concern Syndial SpA and relate to contractsfor which the termination or execution costs exceed the relatedbenefits arising from that contract.

Provisions for prize promotion of euro 50million concern the provisions of the Refining & Marketingsegment in relation to promotions directed towards the attainmentof an increase on sales volumes on the Agip branded network andintended for station operators, for truckers and motorists thatperform the fuel fill-up at the "Isole Fai da Te".

Utilization of other provisions for euro 177million includes utilization of excess provisions for euro 85million, of which euro 20 million concern over estimatedprovisions for long-term construction contracts.

 

**21 Provisions for employee benefits**

Provisions for employee benefits of euro 1,071million (euro 1,031 million at December 31, 2005) consist of thefollowing:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| TFR                                                           |   | 577       |   | 608       |
|---------------------------------------------------------------|--------|-----------|--------|-----------|
| Pensions        plans                                         |   | 318       |   | 268       |
| Supplementary medical reserve for Eni managers        (FISDE) |   | 99        |   | 100       |
| Other        benefits                                         |   | 37        |   | 95        |
|                                                          |   | **1,031** |   | **1,071** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Provisions for indemnities upon termination ofemployment essentially concern the provisions accrued by Italiancompanies for employee termination indemnities ("TFR"),regulated by Article 2120 of the Italian Civil Code. Theindemnity is paid out as capital and is determined by the totalof the provisions set aside, calculated in consideration of theemployee’s compensation during the service period, andrevalued until retirement. Provisions to TFR, considered for thedetermination of liabilities and costs, are net of the amountspaid to pension funds.

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Effective from January 1, 2007 the Budget Lawfor 2007 and related decrees introduce material changes to theTFR regulation; these changes include the possibility foremployees to choose the allocation of their TFR entitlementbetween a pension fund or having it remain in the company (inwhich case the company will transfer the future TFR obligation toINPS, the Italian state social security entity). At present thereare uncertainties in interpretation regarding the recent changesin regulations. Furthermore, there is additional uncertaintyarising from the revised regulations in respect to actuarialcalculations on already accrued TFR provision since it iscurrently not possible to predict employees’ choicesregarding their allocation of the TFR entitlement(employees’ choice shall be made before June 30, 2007). As aresult, no changes have been made to the TFR obligation recordedat December 31, 2006 in light of new regulation.

Pension funds concern defined benefit plans offoreign companies located, primarily, in the United Kingdom,Nigeria and Germany. Benefits consist of a return on capitaldetermined on the basis of the length of service and thecompensation paid in the last year of service or an averageannual compensation paid in a determined period precedingretirement.

The supplementary medical reserve for Enimanagers (FISDE) is calculated on the basis of the contributionspaid by the company for retired managers.

Other benefits primarily concern Jubilee awardsand a deferred monetary incentive plan relating tomanagement’s future performances. Jubilee awards are aseriority bonus which, in the Italian companies, is paid out inkind after the attainment of a preset period of service at thecompany. The deferred monetary incentive plan for Eni managersenvisages a monetary amount to be paid in 2009 under variableproportions to those managers who attain individual targets. Theamount accrued in 2006 was determined based on the Company’sexpected future performance.

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The value of employee benefits, estimated byapplying actuarial techniques, consists of the following:

| (million        euro) | **Foreign pension plans** |   |   |
|-----------------------|---------------------------|--------|--------|
|                  |                           |   |   |

|   | **TFR** |   | **Gross liability** |   | **Plan assets** |   | **FISDE** |   | **Other benefits** |   | **Total** |
|--------|---------|--------|---------------------|--------|-----------------|--------|-----------|--------|--------------------|--------|-----------|
|   |         |   |                     |   |                 |   |           |   |                    |   |           |

| **2005**                                                                                    |   |    |   |   |    |   |   |     |   |   |    |   |   |   |   |   |      |   |
|---------------------------------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|----------|--------|--------|---------|--------|--------|--------|--------|--------|-----------|--------|
| **Current        value of benefit liabilities and plan assets at beginning        of year** |   | **577** |   |   | **576** |   |   | **(257** | **)**  |   | **106** |   |   | **32** |   |   | **1,034** |   |
| Current cost                                                                                |   | 59      |   |   | 18      |   |   |     |   |   | 2       |   |   | 3      |   |   | 82        |   |
| Interest        cost                                                                        |   | 25      |   |   | 30      |   |   |     |   |   | 5       |   |   | 1      |   |   | 61        |   |
| Expected return on plan assets                                                              |   |    |   |   |    |   |   | (16      | )      |   |    |   |   |   |   |   | (16       | )      |
| Employees        contributions                                                              |   |    |   |   | 1       |   |   | (46      | )      |   |    |   |   |   |   |   | (45       | )      |
| Actuarial gains/losses                                                                      |   | 47      |   |   | 66      |   |   | (24      | )      |   | (11     | )      |   | 5      |   |   | 83        |   |
| Benefits        paid                                                                        |   | (49     | )      |   | (19     | )      |   | 11       |   |   | (6      | )      |   | (4     | )      |   | (67       | )      |
| Amendments                                                                                  |   |    |   |   | 3       |   |   |     |   |   |    |   |   |   |   |   | 3         |   |
| Curtailments        or settlements                                                          |   | (6      | )      |   | (5      | )      |   |     |   |   |    |   |   |   |   |   | (11       | )      |
| Exchange rate differences and other changes                                                 |   | 87      |   |   | (27     | )      |   |     |   |   |    |   |   | 60     |   |   |      |   |
| **Current        value of benefit liabilities and plan assets at end of        year**       |   | **653** |   |   | **757** |   |   | **(359** | **)**  |   | **96**  |   |   | **37** |   |   | **1,184** |   |
| **2006**                                                                                    |   |    |   |   |    |   |   |     |   |   |    |   |   |   |   |   |      |   |
| **Current value of benefit liabilities and plan        assets at beginning of year**        |   | **653** |   |   | **757** |   |   | **(359** | **)**  |   | **96**  |   |   | **37** |   |   | **1,184** |   |
| Current cost                                                                                |   | 99      |   |   | 18      |   |   |     |   |   | 2       |   |   | 48     |   |   | 167       |   |
| Interest cost                                                                               |   | 22      |   |   | 28      |   |   |     |   |   | 3       |   |   | 6      |   |   | 59        |   |
| Expected return on plan assets                                                              |   |    |   |   |    |   |   | (24      | )      |   |    |   |   |   |   |   | (24       | )      |
| Employees contributions                                                                     |   |    |   |   | (3      | )      |   | (88      | )      |   |    |   |   |   |   |   | (91       | )      |
| Actuarial gains/losses                                                                      |   | (67     | )      |   | (2      | )      |   | (3       | )      |   | (5      | )      |   | 6      |   |   | (71       | )      |
| Benefits paid                                                                               |   | (94     | )      |   | (16     | )      |   | 12       |   |   | (5      | )      |   | (2     | )      |   | (105      | )      |
| Amendments                                                                                  |   |    |   |   | 2       |   |   |     |   |   |    |   |   |   |   |   | 2         |   |
| Curtailments and settlements                                                                |   |    |   |   | (7      | )      |   | 6        |   |   |    |   |   |   |   |   | (1        | )      |
| Exchange rate differences and other changes                                                 |   | 1       |   |   | (6      | )      |   | 16       |   |   |    |   |   |   |   |   | 11        |   |
| **Current value of benefit liabilities and plan        assets at end of year**              |   | **614** |   |   | **771** |   |   | **(440** | **)**  |   | **91**  |   |   | **95** |   |   | **1,131** |   |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Gross liability for employee benefits offoreign pension plans of euro 771 million (euro 757 million atDecember 31, 2005) includes liabilities of joint venturesoperating in exploration and production activities for euro 130million and euro 112 million at December 31, 2005 and 2006,respectively; a receivable was recorded against such liability.Funds for other benefits of euro 95 million (euro 37 million atDecember 31, 2005) concern primarily Jubilee awards for euro 44million (euro 29 million at December 31, 2005) and the deferredmonetary incentive plan for euro 37 million. Changes in planassets and benefit obligations related to provisions for employeebenefits consist of the following:

|   | **TFR** |   | **Foreign pension plans** |   | **FISDE** |   | **Other benefits** |
|--------|---------|--------|---------------------------|--------|-----------|--------|--------------------|
|   |         |   |                           |   |           |   |                    |

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|--------|-------------------|--------|-------------------|--------|-------------------|--------|-------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |   |                   |   |                   |   |                   |   |                   |   |                   |   |                   |

| Current value of benefit obligations with plan        assets at end of year               |   |    |   |   |    |   |   | 757     |   |   | 771     |   |   |   |   |   |    |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|
| Current        value of plan assets                                                       |   |    |   |   |    |   |   | (359    | )      |   | (440    | )      |   |   |   |   |    |   |   |   |   |   |   |   |
| **Net current value of benefit obligations with        plan assets**                      |   |    |   |   |    |   |   | **398** |   |   | **331** |   |   |   |   |   |    |   |   |   |   |   |   |   |
| **Current        value of benefit obligations without plan assets at end        of year** |   | **653** |   |   | **614** |   |   |    |   |   |    |   |   | **96** |   |   | **91**  |   |   | **37** |   |   | **95** |   |
| Actuarial gains/losses not recognized                                                     |   | (76     | )      |   | (6      | )      |   | (71     | )      |   | (63     | )      |   | 3      |   |   | 9       |   |   |   |   |   |   |   |
| Past        service cost not recognized                                                   |   |    |   |   |    |   |   | (9      | )      |   |    |   |   |   |   |   |    |   |   |   |   |   |   |   |
| **Net liabilities recognized in provisions for        employee benefits**                 |   | **577** |   |   | **608** |   |   | **318** |   |   | **268** |   |   | **99** |   |   | **100** |   |   | **37** |   |   | **95** |   |

|   |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

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##### Table of Contents

Costs for employee benefits recognized in theincome statement consist of the following:

| (million        euro) |   | **TFR** |   | **Foreign pension plans** |   | **FISDE** |   | **Other benefits** |   | **Total** |
|-----------------------|--------|---------|--------|---------------------------|--------|-----------|--------|--------------------|--------|-----------|
|                  |   |         |   |                           |   |           |   |                    |   |           |

| **2005**                                      |         |         |         |         |   |   |         |         |         |         |         |         |         |    |   |
|-----------------------------------------------|--------------|--------------|--------------|--------------|--------|--------|--------------|--------------|--------------|--------------|--------------|--------------|--------------|---------|--------|
| Current        cost                           |         | 59           |         |         | 18     |   |         | 2            |         |         | 3            |         |         | 82      |   |
| Interest cost                                 |         | 25           |         |         | 30     |   |         | 5            |         |         | 1            |         |         | 61      |   |
| Expected        return on plan assets         |         |         |         |         | (16    | )      |         |         |         |         |         |         |         | (16     | )      |
| Amortization of actuarial gains/losses        |         |         |         |         |   |   |         | 6            |         |         | 6            |         |         |    |   |
| Effect of        curtailments and settlements |         | (6           | )            |         | (5     | )      |         |         |         |         |         |         |         | (11     | )      |
| Other costs                                   |         |         |         |         | 3      |   |         |         |         |         | 1            |         |         | 4       |   |
|                                          |         | **78**       |         |         | **30** |   |         | **7**        |         |         | **11**       |         |         | **126** |   |
| **2006**                                      |         |         |         |         |   |   |         |         |         |         |         |         |         |    |   |
| Current        cost                           |         | 99           |         |         | 18     |   |         | 2            |         |         | 48           |         |         | 167     |   |
| Interest cost                                 |         | 22           |         |         | 28     |   |         | 3            |         |         | 6            |         |         | 59      |   |
| Expected        return on plan assets         |    |    |    |    | (24    | )      |         |         |         |         |         |         |         | (24     | )      |
| Amortization of actuarial gains/losses        |         | 2            |         |         | 21     |   |         |         |         |         | 5            |         |         | 28      |   |
| Effect of        curtailments and settlements |         |    |         |    | (1     | )      |    |    |    |    |    |    |    | (1      | )      |
| Other costs                                   |         | 1            |         |         |   |   |         |         |         |         |         |         |         | 1       |   |
|                                          |         | **124**      |         |         | **42** |   |         | **5**        |         |         | **59**       |         |         | **230** |   |

|   |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|

The main actuarial assumptions used in theevaluation of benefit obligations at end of year and in theestimate of costs for employee benefits expected for 2007 consistof the following:

| (%)    |   | **TFR** |   | **Foreign pension plans** |   | **FISDE** |   | **Other benefits** |
|--------|--------|---------|--------|---------------------------|--------|-----------|--------|--------------------|
|   |   |         |   |                           |   |           |   |                    |

| **2005**                                   |   |    |   |     |   |   |   |    |
|--------------------------------------------|--------|---------|--------|----------|--------|--------|--------|---------|
| Discount        rate                       |   | 4.0     |   | 4.5-7.3  |   | 4.3    |   | 4.5-4.7 |
| Expected return rate on plan assets        |   |    |   | 7.2      |   |   |   |    |
| Rate of        compensation increase       |   | 2.7-4.5 |   | 3.0-5.8  |   |   |   | 3.5     |
| Rate of price inflation                    |   | 2.0     |   | 2.0-4.9  |   | 2.0    |   | 2.3-2.4 |
| **2006**                                   |   |    |   |     |   |   |   |    |
| Discount rate                              |   | 4.3     |   | 3.0-13.0 |   | 4.5    |   | 4.0-4.3 |
| Expected        return rate on plan assets |   |    |   | 3.5-13.0 |   |   |   |    |
| Rate of compensation increase              |   | 2.7-4.0 |   | 2.0-12.0 |   |   |   | 2.7-4.5 |
| Rate of        price inflation             |   | 2.0     |   | 1.0-10.0 |   | 2.0    |   | 2.0-2.5 |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

With regards to Italian plans were useddemographic tables prepared by Ragioneria Generale dello Stato(RG48). Expected return rate by plan assets has been determinedby making reference to the ratings expressed in regulatedmarkets.

Foreign plan assets consist of the following:

| (%)    |   | **Plan assets** |   | **Expected return** |
|--------|--------|-----------------|--------|---------------------|
|   |   |                 |   |                     |

| **Dec. 31, 2006**  |   |      |   |    |
|--------------------|--------|-----------|--------|---------|
| Securities         |   | 18.6      |   | 5.4-7.6 |
| Bonds              |   | 60.3      |   | 2.6-9.4 |
| Real        estate |   | 0.9       |   | 5-13    |
| Other              |   | 20.2      |   | 2-13    |
|               |   | **100.0** |   |    |

|   |   |  |   |  |
|--------|--------|--|--------|--|

The effective return of the plan assets amountsto euro 27 million (euro 40 million at December 31, 2005).

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With reference to medical plans, the effectsderiving from a 1% change of the actuarial assumptions of medicalcosts consist of the following:

| (million        euro) |   | **1% Increase** |   | **1% Decrease** |
|-----------------------|--------|-----------------|--------|-----------------|
|                  |   |                 |   |                 |

| Impact on the current costs and interest costs |   | 6   |   | 4  |
|------------------------------------------------|--------|-----|--------|----|
| Impact on        net benefit obligation        |   | 103 |   | 83 |

|   |   |  |   |  |
|--------|--------|--|--------|--|

The amount of the contributions expected to bepaid to the defined contribution plans for 2007 amounts to euro68 million.

The analysis of changes of the net actuarialliability with regard to the previous fiscal year deriving fromthe non-correspondence of the actuarial assumptions adopted inthe previous fiscal year with the effective values recorded atthe closing of the current fiscal year consists of the following:

| (million        euro) |   | **TFR** |   | **Foreign pension plans** |   | **FISDE** |   | **Other benefits** |
|-----------------------|--------|---------|--------|---------------------------|--------|-----------|--------|--------------------|
|                  |   |         |   |                           |   |           |   |                    |

| **2005**                                |   |   |   |   |   |   |   |   |   |   |   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Impact on        net benefit obligation |   | 47     |   |   | 59     |   |   | (11    | )      |   |   |   |
| Impact on plan assets                   |   |   |   |   | 24     |   |   |   |   |   |   |   |
| **2006**                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Impact on net benefit obligation        |   | (19    | )      |   | 13     |   |   | (4     | )      |   | 4      |   |
| Impact on        plan assets            |   |   |   |   | 3      |   |   |   |   |   |   |   |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

 

**22 Deferred tax liabilities**

Deferred tax liabilities of euro 5,852 million(euro 4,890 million at December 31, 2005) are net of deferred taxassets for which Eni possesses the legal right of offset.

| (million        euro) | **Value at Dec. 31, 2005** |   | **Additions** |   | **Deductions** |   | **Exchange rate        differences** |   | **Other changes** |   | **Value at Dec. 31, 2006** |
|-----------------------|----------------------------|--------|---------------|--------|----------------|--------|--------------------------------------|--------|-------------------|--------|----------------------------|
|                  |                            |   |               |   |                |   |                                      |   |                   |   |                            |

|   |   | **4,890** |   |   | 2,231 |   |   | (676 | ) |   | (379 | ) |   | (214 | **)** |   | **5,852** |   |
|--------|--------|-----------|--------|--------|-------|--------|--------|------|---|--------|------|---|--------|------|-------|--------|-----------|--------|

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Other changes of euro 214 million include theset-off, for each company, of deferred tax assets and deferredtax liabilities for euro 318 million.

Deferred tax liabilities consist of thefollowing:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Deferred income taxes                                 |   | 8,237     |   |   | 9,880     |   |
|-------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|
| Deferred        income taxes available for offset     |   | (3,347    | )      |   | (4,028    | )      |
|                                                  |   | **4,890** |   |   | **5,852** |   |
| Deferred        income taxes not available for offset |   | (1,861    | )      |   | (1,725    | )      |
|                                                  |   | **3,029** |   |   | **4,127** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

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##### Table of Contents

The most significant temporary differencesgiving rise to net deferred tax liabilities are as follows:

| (million        euro) | **Value at Dec. 31, 2005** |   | **Additions** |   | **Deductions** |   | **Exchange rate        differences** |   | **Other changes** |   | **Value at Dec. 31, 2006** |
|-----------------------|----------------------------|--------|---------------|--------|----------------|--------|--------------------------------------|--------|-------------------|--------|----------------------------|
|                  |                            |   |               |   |                |   |                                      |   |                   |   |                            |

| Deferred tax liabilities:                                                             |   |       |   |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |
|---------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|----------|--------|--------|----------|--------|--------|------------|--------|
| -        accelerated tax depreciation                                                 |   | 5,855      |   |   | 1,412      |   |   | (414      | )      |   | (330     | )      |   | 328      |   |   | 6,851      |   |
| - application of the weighted average cost        method in evaluation of inventories |   | 649        |   |   | 28         |   |   | (108      | )      |   |     |   |   | 80       |   |   | 649        |   |
| - site        restoration and abandonment (tangible and intangible        assets)     |   | 349        |   |   | 130        |   |   | (36       | )      |   | (18      | )      |   | 258      |   |   | 683        |   |
| - capitalized interest expense                                                        |   | 245        |   |   | 2          |   |   | (20       | )      |   |     |   |   | 5        |   |   | 232        |   |
| - other                                                                               |   | 1,139      |   |   | 659        |   |   | (98       | )      |   | (40      | )      |   | (195     | )      |   | 1,465      |   |
|                                                                                  |   | **8,237**  |   |   | **2,231**  |   |   | **(676**  | **)**  |   | **(388** | **)**  |   | **476**  |   |   | **9,880**  |   |
| Deferred        tax assets:                                                           |   |       |   |   |       |   |   |      |   |   |     |   |   |     |   |   |       |   |
| - assets revaluation as per Law No. 342/2000 and        No. 448/2001                  |   | (1,096     | )      |   |       |   |   | 78        |   |   |     |   |   | 1        |   |   | (1,017     | )      |
| - site        restoration and abandonment (provisions for        contingencies)       |   | (1,038     | )      |   | (190       | )      |   | 38        |   |   | 41       |   |   | (347     | )      |   | (1,496     | )      |
| - depreciation and amortization                                                       |   | (868       | )      |   | (125       | )      |   | 201       |   |   | 85       |   |   | (37      | )      |   | (744       | )      |
| - accruals        for impairment losses and provisions for contingencies              |   | (839       | )      |   | (329       | )      |   | 244       |   |   | 1        |   |   | (77      | )      |   | (1,000     | )      |
| - tax loss carry forwards                                                             |   | (160       | )      |   | (10        | )      |   | 96        |   |   | 10       |   |   | (19      | )      |   | (83        | )      |
| - other                                                                               |   | (1,207     | )      |   | (645       | )      |   | 379       |   |   | 35       |   |   | 25       |   |   | (1,413     | )      |
|                                                                                  |   | **(5,208** | **)**  |   | **(1,299** | **)**  |   | **1,036** |   |   | **172**  |   |   | **(454** | **)**  |   | **(5,753** | **)**  |
| **Net        deferred tax liabilities**                                               |   | **3,029**  |   |   | **932**    |   |   | **360**   |   |   | **(216** | **)**  |   | **22**   |   |   | **4,127**  |   |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Deferred tax assets are recognized to theextent that expected future fiscal profits are consideredsufficient for the utilization of these assets.

Under Italian fiscal laws, tax losses can becarried forward in the five subsequent periods, excepting lossessuffered in the first three periods of life of the company thatthey can be carried forward without limit. Tax losses of foreigncompanies can be carried forward on average for more than fiveperiods and for a considerable part they can be carried forwardwithout limit. Tax recovery corresponds to a tax rate of 33% forItalian companies and to an average tax rate of 29.8% for foreigncompanies.

Tax losses amount to euro 1,579 million and canbe used in the following periods:

| (million        euro) |   | **Italian companies** |   | **Foreign companies** |
|-----------------------|--------|-----------------------|--------|-----------------------|
|                  |   |                       |   |                       |

| 2007          |   | 4      |   | 17        |
|---------------|--------|--------|--------|-----------|
| 2008          |   | 14     |   | 19        |
| 2009          |   | 13     |   | 13        |
| 2010          |   |   |   | 15        |
| 2011          |   |   |   | 37        |
| Over 2011     |   |   |   | 53        |
| Without limit |   | 13     |   | 1,381     |
|          |   | **44** |   | **1,535** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Tax losses for which is expected theutilization amount to euro 278 million and essentially concernforeign companies (euro 252 million); the related deferred taxassets amount to euro 83 million and concern for euro 75 millionforeign companies. No deferred tax liabilities have beenrecognized in relation to the reserves of consolidatedsubsidiaries because such reserves are not expected to bedistributed (euro 160 million).

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##### Table of Contents

**23 Other non-current liabilities**

Other non-current liabilities of euro 418million (euro 897 million at December 31, 2005) consist of thefollowing:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Payables related to capital expenditures |   | 597     |   | 26      |
|------------------------------------------|--------|---------|--------|---------|
| Other        payables                    |   | 170     |   | 207     |
| Other liabilities                        |   | 130     |   | 185     |
|                                     |   | **897** |   | **418** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

 

**24 Shareholders’ equity**

**Minority interest**Minority interest in net profit and shareholders’ equityrelate to the following consolidated subsidiaries:

| (million        euro) |   | **Net profit** |   | **Shareholders’        equity** |
|-----------------------|--------|----------------|--------|--------------------------------------|
|                  |   |                |   |                                      |

|   |   | **2005** |   | **2006** |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|--------|--------|----------|--------|----------|--------|-------------------|--------|-------------------|
|   |   |          |   |          |   |                   |   |                   |

| Snam Rete Gas SpA                                                                                         |   | 321     |   | 287     |   | 1,158     |   | 1,004     |
|-----------------------------------------------------------------------------------------------------------|--------|---------|--------|---------|--------|-----------|--------|-----------|
| Saipem SpA                                                                                                |   | 115     |   | 303     |   | 915       |   | 879       |
| Tigáz Tiszántúli Gázszolgáltató        Részvénytársaság |   | 6       |   |    |   | 82        |   | 79        |
| Others                                                                                                    |   | 17      |   | 16      |   | 194       |   | 208       |
|                                                                                                      |   | **459** |   | **606** |   | **2,349** |   | **2,170** |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

**Eni shareholders’ equity**

| (million        euro) |   | **Value at         Dec. 31, 2005** |   | **Value at         Dec. 31, 2006** |
|-----------------------|--------|------------------------------------|--------|------------------------------------|
|                  |   |                                    |   |                                    |

| Share capital                             |   | 4,005      |   |   | 4,005      |   |
|-------------------------------------------|--------|------------|--------|--------|------------|--------|
| Legal        reserve                      |   | 959        |   |   | 959        |   |
| Reserve for treasury shares               |   | 5,345      |   |   | 7,262      |   |
| Treasury        shares                    |   | (4,216     | )      |   | (5,374     | )      |
| Cumulative translation adjustment reserve |   | 941        |   |   | (398       | )      |
| Other        reserves                     |   | 5,351      |   |   | 400        |   |
| Retained earnings                         |   | 17,381     |   |   | 25,168     |   |
| Net profit        for the period          |   | 8,788      |   |   | 9,217      |   |
| Interim dividend                          |   | (1,686     | )      |   | (2,210     | )      |
|                                      |   | **36,868** |   |   | **39,029** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

**Share capital**At December 31, 2006 Eni SpA had 4,005,358,876 shares(nominal value euro 1 each) fully paid-up (the same amount as ofDecember 31, 2005).

On May 25, 2006 Eni’s Shareholders’Meeting decided a dividend distribution of euro 0.65 per share,with the exclusion of treasury shares held at the ex-dividenddate, in full settlement of the 2005 dividend of euro 0.45 pershare. The balance was made available for payment on June 22,2006 and the ex-dividend date was June 19, 2006.

**Legal reserve**The legal reserve of Eni SpA represents earnings restrictedfrom the payment of dividends pursuant to Article 2430 of theItalian Civil Code.

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**Cumulative translation exchange differencesreserve**The cumulative translation adjustment reserve representsexchange differences due to the translation of financialstatements prepared in currencies other than euro.

**Reserve for treasury shares**The reserve for treasury shares represents the reservedestined to purchase shares in accordance with the decisions ofEni’s Shareholders’ Meetings. The amount of euro 7,262million (euro 5,345 million at December 31, 2005) includestreasury shares purchased. The increase of euro 1,917 millionprimarily concerns reclassification of euro 2,000 millionfollowing Eni’s Shareholders Meeting decision on May 25,2006 and, as a decrease, the sale and grant of treasury shares toGroup managers following stock option and stock grants plan foreuro 85 million.

**Treasury shares purchased**Treasury shares purchased amount to euro 5,374 million (euro4,216 million at December 31, 2005) and consist of 324,959,866ordinary shares at a nominal value of euro 1 owned by Eni SpA(278,013,975 ordinary shares at a nominal value of euro 1 atDecember 31, 2005). Treasury shares of euro 839 million (euro 237million at December 31, 2005), are represented by 40,114,000shares (17,428,300 shares at December 31, 2005) and are destinedto the 2002-2005 and 2006-2008 stock option plans (38,240,400shares) and the 2003-2005 stock grant plan (1,873,600 shares).

The increase of 22,685,700 shares consists ofthe following:

| (million        euro) |   | **Stock option** |   | **Stock grant** |   | **Total** |
|-----------------------|--------|------------------|--------|-----------------|--------|-----------|
|                  |   |                  |   |                 |   |           |

| **Number of shares at December 31, 2005**                                                 |   | **14,004,500** |   |   | **3,423,800** |   |   | **17,428,300** |   |
|-------------------------------------------------------------------------------------------|--------|----------------|--------|--------|---------------|--------|--------|----------------|--------|
| Rights        granted for 2006-2008 stock option plan                                     |   | 30,000,000     |   |   |          |   |   | 30,000,000     |   |
| Rights not granted for 2003-2005 stock grant        plans and 2002-2005 stock option plan |   | (624,900       | )      |   | (296,600      | )      |   | (921,500       | )      |
| Rights        exercised                                                                   |   | (4,943,200     | )      |   | (1,236,400    | )      |   | (6,179,600     | )      |
| Rights cancelled                                                                          |   | (196,000       | )      |   | (17,200       | )      |   | (213,200       | )      |
| **Number        of shares at December 31, 2006**                                          |   | **38,240,400** |   |   | **1,873,600** |   |   | **40,114,000** |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

At December 31, 2006, options and grantsoutstanding were 15,290,400 shares and 1,873,600 shares,respectively. Options refer to the 2002 stock plan for 238,000shares with an exercise price of euro 15.216 per share, to the2003 stock plan for 779,900 shares with an exercise price of euro13.743 per share, to the 2004 stock plan for 3,108,500 shareswith an exercise price of euro 16.576 per share, to the 2005stock plan for 4,184,000 shares with an exercise price of euro22.512 per share and to the 2006 stock plan for 6,980,000 shareswith an weighted average exercise price of euro 23.119 per share.

Information about commitments related to stockgrant and stock option plans is included in Note 27 - Operatingexpenses.

**Other reserves**Other reserves of euro 400 million (euro 5,351 million atDecember 31, 2005) refer to a reserve constituted following thesale by Eni SpA of Snamprogetti SpA to Saipem Projects SpA foreuro 247 million, to Eni SpA’s equity reserve for euro 146million and for euro 7 million to the reserve for the valuationat fair value of securities available for sale and cash flowhedge derivatives. The decrease of other reserves essentiallyrefers to the reclassification of euro 4,951 million from Enidistributable reserve to retained earnings (euro 5,224 million).

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The valuation at fair value of securitiesavailable for sale and cash flow hedge derivatives consists ofthe following:

| (million        euro) |   | **Securities available for        sale** |   | **Cash flow hedge        derivatives** |   | **Total** |
|-----------------------|--------|------------------------------------------|--------|----------------------------------------|--------|-----------|
|                  |   |                                          |   |                                        |   |           |

|   |   | **Gross reserve** |   | **Deferred tax liabilities** |   | **Net reserve** |   | **Gross reserve** |   | **Deferred tax liabilities** |   | **Net reserve** |   | **Gross reserve** |   | **Deferred tax liabilities** |   | **Net reserve** |
|--------|--------|-------------------|--------|------------------------------|--------|-----------------|--------|-------------------|--------|------------------------------|--------|-----------------|--------|-------------------|--------|------------------------------|--------|-----------------|
|   |   |                   |   |                              |   |                 |   |                   |   |                              |   |                 |   |                   |   |                              |   |                 |

| Reserve as of January 1, 2005                    |   | 19     |   |   | (6     | )      |   | 13     |   |   |   |   |   |    |   |   |   |   |   | 19     |   |   | (6      | )      |   | 13     |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|
| Changes of        the year                       |   | 8      |   |   | (2     | )      |   | 6      |   |   | 27     |   |   | (11     | )      |   | 16     |   |   | 35     |   |   | (13     | )      |   | 22     |   |
| **Reserve as of December 1, 2005**               |   | **27** |   |   | **(8** | **)**  |   | **19** |   |   | **27** |   |   | **(11** | **)**  |   | **16** |   |   | **54** |   |   | **(19** | **)**  |   | **35** |   |
| Changes of        the year                       |   | 2      |   |   |   |   |   | 2      |   |   | 1      |   |   |    |   |   | 1      |   |   | 3      |   |   |    |   |   | 3      |   |
| Amount recognized in the profit and loss account |   | (21    | )      |   | 6      |   |   | (15    | )      |   | (27    | )      |   | 11      |   |   | (16    | )      |   | (48    | )      |   | 17      |   |   | (31    | )      |
| **Reserve        as of December 31, 2006**       |   | **8**  |   |   | **(2** | **)**  |   | **6**  |   |   | **1**  |   |   |    |   |   | **1**  |   |   | **9**  |   |   | **(2**  | **)**  |   | **7**  |   |

|   |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

**Interim dividend**Interim dividend of euro 2,210 million concerns the interimdividend for the year 2006 for euro 0.60 per share, as decided bythe Board of Directors in accordance with Article 2433-bis,paragraph 5 of the Italian Civil Code; the dividend was madeavailable for payment on October 26, 2006.

**Distributable reserves**At December 31, 2006 Eni shareholders’ equity includeddistributable reserves for approximately euro 32,000 million, aportion of which is subjected to taxation upon distribution.Deferred tax liabilities have been recorded in relation to thereserves expected to be distributed (euro 40 million).

**Reconciliation of net profit andshareholders’ equity of the parent company Eni SpA toconsolidated net profit and shareholders’ equity**

| (million        euro) |   | **Net profit** |   | **Shareholders’        equity** |
|-----------------------|--------|----------------|--------|--------------------------------------|
|                  |   |                |   |                                      |

|   |   | **2005** |   | **2006** |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|--------|--------|----------|--------|----------|--------|-------------------|--------|-------------------|
|   |   |          |   |          |   |                   |   |                   |

| **As recorded in Eni SpA’s Financial        Statements (Italian GAAP)**                                                                                                                                     |   | **6,042** |   |   | **5,821** |   |   | **26,872** |   |   | **26,935** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|
| Difference        between the equity value of individual accounts of        consolidated subsidiaries with respect to the        corresponding book value in the statutory accounts of the        parent company |   | 2,718     |   |   | 3,823     |   |   | 13,701     |   |   | 16,136     |   |
| Consolidation adjustments:                                                                                                                                                                                       |   |      |   |   |      |   |   |       |   |   |       |   |
| -        difference between purchase cost and underlying book        value of net equity                                                                                                                         |   | (44       | )      |   | (52       | )      |   | 1,902      |   |   | 1,138      |   |
| - elimination of tax adjustments and compliance        with group accounting policies                                                                                                                            |   | 863       |   |   | 627       |   |   | (1,528     | )      |   | (1,435     | )      |
| -        elimination of unrealized intercompany profits                                                                                                                                                          |   | (40       | )      |   | (237      | )      |   | (2,677     | )      |   | (2,907     | )      |
| - deferred taxation                                                                                                                                                                                              |   | (313      | )      |   | (195      | )      |   | 849        |   |   | 1,244      |   |
| - other        adjustments                                                                                                                                                                                       |   | 21        |   |   | 36        |   |   | 98         |   |   | 88         |   |
|                                                                                                                                                                                                             |   | **9,247** |   |   | **9,823** |   |   | **39,217** |   |   | **41,199** |   |
| Minority        interest                                                                                                                                                                                         |   | (459      | )      |   | (606      | )      |   | (2,349     | )      |   | (2,170     | )      |
| **As recorded in Consolidated Financial        Statements (IFRS)**                                                                                                                                               |   | **8,788** |   |   | **9,217** |   |   | **36,868** |   |   | **39,029** |   |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

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**25 Guarantees, commitments and risks**

**Guarantees**Guarantees of euro 14,384 million (euro 12,862 million atDecember 31, 2005) consisted of the following:

| (million        euro) |   | **Dec. 31, 2004** |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |   |                   |

|   |   | **Unsecured guarantees** |   | **Other guarantees** |   | **Secured guarantees** |   | **Total** |   | **Unsecured guarantees** |   | **Other guarantees** |   | **Secured guarantees** |   | **Total** |   | **Unsecured guarantees** |   | **Other guarantees** |   | **Secured guarantees** |   | **Total** |
|--------|--------|--------------------------|--------|----------------------|--------|------------------------|--------|-----------|--------|--------------------------|--------|----------------------|--------|------------------------|--------|-----------|--------|--------------------------|--------|----------------------|--------|------------------------|--------|-----------|
|   |   |                          |   |                      |   |                        |   |           |   |                          |   |                      |   |                        |   |           |   |                          |   |                      |   |                        |   |           |

| Consolidated companies                  |   |      |   | 5,026     |   |   |   | 5,026      |   |      |   | 5,839     |   |   |   | 5,839      |   |      |   | 6,539     |   |   |   | 6,539      |
|-----------------------------------------|--------|-----------|--------|-----------|--------|--------|--------|------------|--------|-----------|--------|-----------|--------|--------|--------|------------|--------|-----------|--------|-----------|--------|--------|--------|------------|
| Unconsolidated        subsidiaries      |   | 7         |   | 532       |   |   |   | 539        |   | 4         |   | 203       |   |   |   | 207        |   | 3         |   | 294       |   |   |   | 297        |
| Affiliated companies and joint ventures |   | 4,901     |   | 1,922     |   | 40     |   | 6,863      |   | 4,900     |   | 1,772     |   | 40     |   | 6,712      |   | 5,682     |   | 1,735     |   |   |   | 7,417      |
| Others                                  |   | 70        |   | 169       |   |   |   | 239        |   | 64        |   | 40        |   |   |   | 104        |   | 79        |   | 52        |   |   |   | 131        |
|                                    |   | **4,978** |   | **7,649** |   | **40** |   | **12,667** |   | **4,968** |   | **7,854** |   | **40** |   | **12,862** |   | **5,764** |   | **8,620** |   |   |   | **14,384** |

|   |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Guarantees given on behalf of consolidatedcompanies of euro 6,539 million (euro 5,839 million at December31, 2005) consist primarily of: (i) guarantees given to thirdparties relating to bid bonds and performance bonds for euro3,467 million (euro 3,057 million at December 31, 2005), of whicheuro 2,726 million related to the Engineering& Construction segment (euro 2,397 million at December31, 2005). The increase of euro 410 million primarily concernsthe raise of the order book and the start of new works of theEngineering & Construction segment; (ii) VAT recoverable fromtax authorities for euro 1,393 million (euro 1,386 million atDecember 31, 2005); and (iii) insurance risk for euro 246 millionreinsured by Eni (euro 298 million at December 31, 2005). AtDecember 31, 2006 the underlying commitment covered by suchguarantees was euro 6,160 million (euro 5,491 million at December31, 2005).

Unsecured guarantees and other guarantees givenon behalf of unconsolidated subsidiaries of euro 297 million(euro 207 million at December 31, 2005) consist of unsecuredguarantees, letters of patronage and other guarantees given tocommissioning entities relating to bid bonds and performancebonds for euro 288 million (euro 165 million at December 31,2005). At December 31, 2006, the underlying commitment covered bysuch guarantees was euro 204 million (euro 145 million atDecember 31, 2005).

Unsecured guarantees, other guarantees andsecured guarantees given on behalf of joint ventures andaffiliated companies of euro 7,417 million (euro 6,712 million atDecember 31, 2005) primarily concern: (i) a guarantee of euro5,654 million (euro 4,894 million at December 31, 2005) given byEni SpA to Treno Alta Velocità - TAV - SpA for the proper andtimely completion of a project relating to the Milan-Bolognatrain link by the Consorzio Eni per l’Alta Velocità - CEPAVUno; consortium members, excluding unconsolidated subsidiaries,gave Eni liability of surety letters and bank guaranteesamounting to 10% of their respective portion of the work; and(ii) unsecured guarantees, letters of patronage and otherguarantees given to banks in relation to loans and lines ofcredit received for euro 1,214 million (euro 1,360 million atDecember 31, 2005), of which euro 756 million related to acontract released by Snam SpA (now merged into Eni SpA) on behalfof Blue Stream Pipeline Co BV (Eni 50%) to a consortium ofinternational financing institutions (euro 844 million atDecember 31, 2005). At December 31, 2006, the underlyingcommitment covered by such guarantees was euro 2,470 million(euro 2,938 million at December 31, 2005).

Other guarantees given on behalf of thirdparties of euro 131 million (euro 104 million at December 31,2005) consist primarily of guarantees given by Eni SpA to banksand other financing institutions in relation to loans and linesof credit for euro 87 million on behalf of minor investments orcompanies sold (euro 92 million at December 31, 2005). AtDecember 31, 2006 the underlying commitment covered by suchguarantees was euro 121 million (euro 75 million at December 31,2005).

**Commitments and contingencies**Commitments and contingencies of euro 1,545 million (euro1,655 million at December 31, 2005) consist of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| **Commitments**           |   |      |   |      |
|---------------------------|--------|-----------|--------|-----------|
| Purchase        of assets |   | 219       |   | 9         |
| Other                     |   | 220       |   | 207       |
|                      |   | **439**   |   | **216**   |
| Risks                     |   | 1,216     |   | 1,329     |
|                      |   | **1,655** |   | **1,545** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

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Obligations for purchases and sales of assetsof euro 9 million decreased by euro 210 million. Such decreasewas due to: (i) the extinguishment of the placement on the marketof securities managed by Sofid Sim SpA. This company sold ItalianGovernment bonds to investors and simultaneously entered intointerest rate swaps with such investors wherein it received therate of interest on such Italian Government bonds and paid afloating rate of interest linked to Euribor. Such investors couldsell their securities back to Sofid Sim SpA at any time at parvalue plus related interest with the simultaneous cancellation ofthe related swaps (euro 116 million). The operation ended onJanuary 1, 2006 following the expiry of the government bonds; and(ii) to the acquisition from ESPI - Ente Siciliano per laPromozione Industriale (in liquidation) of 50% of the capitalshare of Siciliana Gas SpA and 1 share of Siciliana Gas VenditeSpA (euro 98 million).

Other commitments of euro 207 million (euro 220million at December 31, 2005) are essentially related to amemorandum of intent signed with the Basilicata Region, wherebyEni has agreed to invest, also on account of Shell Italia E&PSpA, euro 181 million in the future in connection with Eni’sdevelopment plan of oil fields in Val d’Agri (euro 193million at December 31, 2005).

Risks of euro 1,329 million (euro 1,216 millionat December 31, 2005) primarily concern potential risksassociated with the value of assets of third parties under thecustody of Eni for euro 918 million (euro 794 million at December31, 2005) and contractual assurances given to acquirers ofcertain investments and businesses of Eni for euro 393 million(euro 402 million at December 31, 2005).

**Risk management**

*Foreword*The main risks identified and managed by Eni are thefollowing:

| (i)   |   | market        risks deriving from the exposure to the fluctuations of        interest rates, exchange rates between the euro and the        U.S. dollar and other currencies used by the company, as        well as the volatility of commodity prices; |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  |   | the credit        risk deriving from the possible default of a        counterparty;                                                                                                                                                                     |
| (iii) |   | the        liquidity risk deriving from the risk that suitable        sources of funding for the Group’s business        activities may not be available;                                                                                          |
| (iv)  |   | country        risk in oil & gas activities;                                                                                                                                                                                                        |
| (v)   |   | the        operation risk deriving from the occurrence of accidents,        malfunctioning, failures with damage to persons and the        environment affecting operating and financial results.                                                       |

*Market risk*Market risk is the possibility that changes in currencyexchange rates, interest rates or oil, natural gas and powerprices will adversely affect the value of the group’sfinancial assets, liabilities or expected future cash flows.Their management follows a set of guidelines and procedures thatconcentrate the treasury function in two captive financecompanies operating in the Italian and international financialmarkets. In particular, the finance company operating on thedomestic market (Enifin) manages all the transactions concerningcurrencies and derivative financial contracts. Commodity risk ismanaged by each business unit while Enifin manages thenegotiation of hedging derivatives. Starting on January 1, 2007,this task is being performed by Eni SpA following theincorporation of Enifin.

In order to minimize market risks related tochanges in interest rates and exchange rates and to manageexposure to commodity prices fluctuations, Eni enters intovarious transactions using derivative financial instruments(derivatives). Derivatives are contracts whose value is derivedfrom one or more underlying financial instrument, index or pricethat are defined in the contract. The Group also tradesderivatives in conjunction with these risk management activities.Eni does not enter into derivative transactions on a speculativebasis.

The control framework defined by Eni’sguidelines prescribes that measurement and control of the marketrisk are to be performed on the basis of maximum acceptablelevels of risk exposure defined in accordance with value-at-risktechniques. These techniques make a statistical assessment of themarket risk, i.e. potential gain or loss in fair values.

Eni’s guidelines prescribe that Eni’ssubsidiaries use such market risk exposure policies as tominimize market risk. Tolerable market risk exposure is set atthe Group level within the central finance department which poolsall risk positions of the Group. Calculation and measurementtechniques followed by Eni are in accordance with establishedbanking standards (such standards are established by the BaselCommittee). However, the tolerable level of risk adopted by Eniis more conservative than the recommended one.

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Eni’s guidelines prescribe that theexposure to risk from fluctuations in commodity prices is to bemanaged in a way as to maximize the value of the Group oil andgas production and sales volumes and to pursue set objectives ofindustrial margins. Risk exposure within trading activities isdefined within maximum levels of value-at-risk attributed at eachbusiness unit, with the central function managing hedgingrequest. Strategic risk exposure is monitored in terms ofvalue-at-risk, albeit being not hedged in a systematic way.

*Exchange rate risk*Exchange rate risk derives from the fact that Eni’soperations are conducted in currencies other than euro (inparticular the U.S. dollar) and with the time lag existingbetween the recording of costs and revenues denominated incurrencies other than the functional currency and the actual timeof the relevant monetary transaction (transaction exchange raterisk). Generally speaking, an appreciation of the U.S. dollarversus the euro generally has a positive impact on Eni’sresults of operations, and vice versa. Effective management ofexchange rate risk is performed at the Group level, within thecentral finance department which matches contrarian positions ofthe Group operating subsidiaries and hedges net positions usingderivatives (such as currency swaps, forwards and options). Suchderivatives are recognized at fair value on the basis of marketprices provided from specialized sources. Value-at-risk derivingfrom currency exposure is measured daily on the basis of avariance/covariance model, with a 99% confidence level and a20-day holding period. The transaction currency risk on certainstrategic holdings is deemed to be immaterial.

*Interest rate risk*Variations in interest rates affect the market value offinancial assets and liabilities of the company and the level offinancial changes. Eni uses interest rate derivatives; suchinterest rate swaps and interest cross currency swaps are used toeffectively manage the balance between fixed and floating ratedebt. Such derivatives are recognized at fair value on the basisof market prices provided from specialized sources. Value-at-riskderiving from interest rate exposure is measured daily on thebasis of a variance/covariance model, with a 99% confidence leveland a 20-day holding period.

*Commodity risk*Eni’s results of operations are affected by changes inthe prices of commodities. A decrease in oil, gas and productprices generally has a negative impact on Eni’s results ofoperations, and vice versa. In order to hedge commodity risk, Eniuses derivatives traded on the organized markets of ICE and NYMEX(futures and options) and derivatives traded over-the-counter(swaps, forwards and contracts for differences, with theunderlying commodities being crude oil, refined products orelectricity). Such derivatives are recognized at fair value onthe basis of market prices provided from specialized sources orabsent market prices, on the basis of estimates provided bybrokers or suitable evaluation techniques. Value-at-risk derivingfrom commodity exposure is measured daily on the basis of ahistorical simulation technique, with a 95% confidence level anda one-day holding period.

*Credit risk*Credit risk is the potential exposure of the Group to loss inthe event of non-performance by a counterparty. The credit riskarising from the Group’s normal commercial operations iscontrolled by individual operating units within Group-approvedguidelines. The monitoring activity of credit risk exposure isperformed at the Group level according to set guidelines andmeasurement techniques. In particular credit risk exposure tolarge clients and multi-business clients is monitored at theGroup level on the basis of score cards quantifying risk levels.Eni’s guidelines define the characteristics of personseligible to be counterparty of Eni in derivative contracts andcash management transactions. Eni constantly updates a list ofeligible persons that includes highly credit-rated institutions.Eni has not experienced material non-performance by anycounterparty. As of December 31, 2005 and December 31, 2006, Enihas no significant concentrations at credit risk.

*Liquidity risk*Liquidity risk is the risk that suitable sources of fundingfor the Group’s business activities may not be available.The Group has long-term debt ratings of AA and Aa2, assignedrespectively by Standard & Poor’s and Moody’s. TheGroup has access to a wide range of funding at competitive ratesthrough capital markets and banks and coordinates relationshipswith banks, borrowing requirements, foreign exchange requirementsand cash management centrally.

At present, the Group believes it has access tosufficient funding and has also both committed and uncommittedborrowing facilities to meet currently foreseeable borrowingrequirements.

Effective management of the liquidity risk hasthe objective of ensuring the availability of adequate funding tomeet short-term requirements and due obligations as well as theobjective of ensuring a sufficient level of flexibility in orderto fund the development plans of the Group’s businesses.This implies the adoption of a strategy to pursue an adequatestructure of borrowing facilities (particularly the availabilityof committed borrowings facilities) and the maintenance of cashreserves.

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*Country risk*Substantial portions of Eni’s hydrocarbons reserves arelocated in countries outside the EU and North America, certain ofwhich may be politically or economically less stable than EU orNorth American countries. At December 31, 2006, approximately 70%of Eni’s proved hydrocarbons reserves were located in suchcountries. Similarly, a substantial portion of Eni’s naturalgas supplies comes from countries outside the EU and NorthAmerica. In 2006, approximately 60% of Eni’s domestic supplyof natural gas came from such countries. Negative developments inthe economic and political framework of these countries cantemporarily or permanently compromise Eni’s ability tooperate economically and to gain access to oil and natural gasreserves.

Eni constantly monitors the political, socialand economic risk of the approximately 60 countries where it hasinvested or intends to invest with special attention to theevaluation of upstream investments. Country risks are mitigatedby means of appropriate guidelines for risk management that Enidefined in its procedure for project risk assessment andmanagement.

*Operation risk*The broad scope of Eni’s activities involves a widerange of operational risks such as those of explosion, fire orleakage of toxic products, and production of non biodegradablewaste. All these events could possibly damage or even destroyplants, facilities, equipment and other property, cause injury oreven death to persons or cause environmental damage.

Eni adopted the most stringent guidelines forthe evaluation and management of health, safety and environmental(HSE) risks, with the objective of protecting Eni’semployees, contractors and clients, the populations involved inits activity, the environment and being in compliance with localand international rules and regulations. Eni’s guidelinesprescribe the adoption of international best practices in settinginternal principles, standards and solutions. An ongoing processfor identifying, evaluating and managing HSE risks is at theheart of HSE operations in each phase of the business activityand is performed through the adoption of procedures tailored tothe peculiarities of each business and industrial site.

HSE risks are effectively managed through anintegrated management system designed along the principles set inEni’s Model of HSE operations. This is a general procedureto be applied in all its operating sites, based on an annualcycle of planning, implementation, control, review of results anddefinition of new objectives. The model is directed towards theprevention of risks and a systematic monitoring and control ofHSE performance in a continuous improvement cycle that is alsosubject to audits by internal and independent experts. Anyenvironmental emergency is managed by business units locally withtheir own organization under preset reaction plans to foreseeableevents aimed at limiting damage and at activating adequateresponses.

Eni has two emergency rooms (in Milan and Rome)furnished with real time monitoring systems for the collection ofdata on georeferenced maps for all Eni sites and logisticsworldwide. Meteorological equipment is in place to assessdimension, temporal development and other consequences of certaincatastrophic events and to enable a real-time planning offirst-aid interventions to help mitigate consequences. Inaddition to its own emergency teams, Eni entered internationalagreements in order to maximize its ability to react in all itsoperating sites.

**Legal Proceedings**

Eni is a party to a number of civil actions andadministrative proceedings arising in the ordinary course ofbusiness. Based on information available to date, and taking theexisting risk provisions into account, Eni believes that theforegoing will not have a material effect on Eni’sConsolidated Financial Statements.

The following is a description of the mostsignificant proceedings currently pending; unless otherwiseindicated below, no provisions have been made for these legalproceedings as Eni believes that negative outcomes are notprobable or because the amount of the provision can not beestimated reliably.

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**1. Environment**

**1.1 Criminal proceedings**

**ENI SPA**

| **(i)**   |   | **Subsidence.**        In relation to the investigations concerning a subsidence        phenomenon allegedly caused by hydrocarbon exploration        and extraction activities, following the decision of the        Court of Rovigo, the Nucleo Operativo Ecologico dei        Carabinieri of Venice placed under preliminary seizure        the Naomi/Pandora field and producing platform in 2002        and the Dosso degli Angeli field in 2004. Eni believes it        has always acted in full compliance with existing laws        under the required authorizations. Taking into account        the observations of the consultants of the Court of        Rovigo on which the public prosecutor based his case, Eni        constituted an independent and interdisciplinary        scientific commission, composed of prominent and highly        qualified international experts of subsidence caused by        hydrocarbon exploration and extraction activities, with        the aim of verifying the size and effects and any        appropriate actions to reduce or to neutralize any        subsidence phenomenon in the Ravenna and North Adriatic        area both on land and in the sea. This commission        produced a study which denies the possibility of any risk        to human health or damage to the environment. It also        states that no example is known anywhere in the world of        accidents that caused harm to the public safety caused by        subsidence induced by hydrocarbon production. The study        also shows that Eni employs the most advanced techniques        for the monitoring, measuring and control of the soil.        This proceeding is in the first level hearing stage. The        Veneto Region, the Ente Parco della Provincia del Po, the        Province of Ferrara, the Province of Venice, the City of        Venice, the City of Comacchio, the Province of Rovigo and        two private entities have been acting as plaintiffs. Eni        was accepted as a defendant in order to claim its own        civil responsibilities before the Court of Rovigo. |
|-----------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(ii)**  |   | **Alleged        damage.** In 2002, the public prosecutor of Gela        started a criminal investigation in order to ascertain        alleged damage caused by emissions of the Gela plant,        owned by Polimeri Europa SpA, Syndial SpA (former EniChem        SpA) and Raffineria di Gela SpA.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **(iii)** |   | **Negligent        fire in the refinery of Gela.** In June 2002, in        connection with a fire at the refinery of Gela, a        criminal investigation began concerning negligent fire,        environmental crimes and crimes against natural beauty.        First degree proceedings ended with an acquittal        sentence.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **(iv)**  |   | **Investigation        of the quality of ground water in the area of the        refinery of Gela.** In 2002, the public prosecutor of        Gela started a criminal investigation concerning the        refinery of Gela to ascertain the quality of ground water        in the area of the refinery. Eni is charged with having        breached environmental rules concerning the pollution of        water and soil and of illegal disposal of liquid and        solid waste materials.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **(v)**   |   | **Intentional        poisoning (Priolo).** In March 2002, the public        prosecutor of Siracusa started an investigation        concerning the activity of the refinery of Priolo in        order to ascertain whether infiltrations of refinery        products into the deep water-bearing stratum used for        human consumption purposes in the Priolo area had        occurred. The Court entrusted a company specialized in        such field with the task of verifying the cause, origin        and extension of the alleged infiltration. For protective        purposes, remedial actions have been taken in order to:        (i) create safety measures and clean-up of the polluted        area; (ii) reallocate wells for drinking water in an        area farther from and higher than the industrial site;        and (iii) install a purification system for        drinkable water. These actions are moving towards        completion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **(vi)**  |   | **Negligent        fire (Priolo).**The public prosecutor of Siracusa        started an investigation against certain Eni managers who        were previously in charge of conducting operations at        Priolo refinery (Eni divested this asset in 2002) in        order to ascertain whether they acted with negligence in        connection with a fire that occurred at the Priolo plants        on April 30 and May 1-2, 2006. After preliminary        investigations the public prosecutor requested the        opening of a proceeding against the mentioned managers        for negligent behavior.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

**ENIPOWER SPA**

| **(i)**  |   | **Unauthorized        waste management activities.** In 2004 the public        prosecutor of Rovigo started an investigation for alleged        crimes related to unauthorized waste management        activities in Loreo relating to the samples of soil used        during the construction of the new EniPower power station        in Mantova. Following a preliminary hearing, the        prosecutor requested the CEO of EniPower and the managing        director of the Mantova plant at the time of the alleged        crime to stand trial. |
|----------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(ii)** |   | **Air        emissions.**The Prosecutor of Mantova started an        investigation against two managers of the Mantova plant        in connection with air emissions by the new power plant.                                                                                                                                                                                                                                                                                                                                                           |

**POLIMERI EUROPA SPA**

**Violation of environmental regulations onwaste management.** Before the Court of Gela a criminal actiontook place relating to the alleged violation of environmentalregulations on waste management concerning the ACN plant and thedisposal of FOK residue deriving from the steam cracking process.Eni and the other defendants were found guilty and a damagepayment was required to be made to the environmental associationacting as plaintiff was required to be made. The amount of saiddamage payment is immaterial. The sentence was passed to theCivil Court for the quantification of any further damage andclaim. Eni has appealed the Court’s sentence and the appealis ongoing.

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**RAFFINERIA DI GELA SPA**

**Soil and sea pollution.** In 1999, thepublic prosecutor of Gela started an investigation in order toascertain alleged soil and sea pollution caused by the dischargeof pollutants by Eni’s Gela refinery. Three environmentalorganizations are acting as plaintiffs and have requested damagepayment for euro 551 million. With a Decision of February 20,2007, the Court of Gela dismissed these allegations.

**SYNDIAL SPA (FORMER ENICHEM SPA)**

**Criminal action started by the publicprosecutor of Brindisi.** In 2000, the public prosecutor ofBrindisi started a criminal action against 68 persons who areemployees or former employees of companies that owned and managedplants for the manufacture of dichloroethane, vinyl chloridemonomer and vinyl polychloride from the early 1960s to date, someof which were managed by EniChem from 1983 to 1993. At the end ofthe preliminary investigation, the public prosecutor asked forthe dismissal of the case in respect of the employees and themanagers of EniChem. Plaintiffs presented oppositions and theprosecutor confirmed his request for dismissal of the case,rejecting such oppositions.

**1.2 Civil and administrative proceedings**

| **(i)**   |   | **Pollution        caused by the activity of the Mantova plant.** In 1992,        the Ministry of Environment summoned EniChem SpA and        Montecatini SpA before the Court of Brescia. The Ministry        requested, primarily, environmental remediation for the        alleged pollution caused by the activity of the Mantova        plant from 1976 until 1990, and provisionally, in case        there was no possibility to remediate, the payment of        environmental damages. EniChem acquired the Mantova plant        in June 1989, as part of the Enimont deal. The parties        agreed upon that Edison SpA would hold Eni harmless or        pay compensatory damage for any damage caused to third        parties by plant operations before Montedison’s        sale, even if damage would manifest itself later. Parties        agreed on a settlement by which Edison quantified the        damage to be paid that also covers Syndial. The        proceeding continues for the settlement of alleged damage        pertaining to the residual 1989-1990 period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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| **(ii)**  |   | **Summon        before the Court of Venice for environmental damages        caused to the lagoon of Venice by the Porto Marghera        plants.** On December 13, 2002, EniChem SpA, jointly        with Ambiente SpA (now merged into Syndial SpA) and        European Vinyls Corporation Italia SpA, was summoned        before the Court of Venice by the Province of Venice. The        province requested compensation for environmental damages        that were not quantified, caused to the lagoon of Venice        by the Porto Marghera plants, which were already the        subject of two previous criminal proceedings against        employees and managers of the defendants. In a related        action, European Vinyls Corporation Italia presented an        action for recourse against EniChem and Ambiente. At the        same time, Ineos Italia presented an action for recourse        against Syndial, as successor of Ambiente. Parties are        waiting for the decision on the instances of the        preliminary investigation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **(iii)** |   | **Claim of        environmental damages, caused by industrial activities in        the area of Crotone, commenced by the President of the        Regional Council of Calabria.** On April 14, 2003, the        President of the Regional Council of Calabria, as        Delegated Commissioner for Environmental Emergency in the        Calabria Region, started an action against EniChem SpA        related to environmental damages for approximately euro        129 million and damages for euro 250 million (plus        interest and compensation) in connection with loss of        income and damage to property allegedly caused by        Pertusola Sud SpA activities (merged into EniChem) in the        area of Crotone. In addition, the Province of Crotone is        acting as plaintiff, claiming environmental damages of        euro 300 million. The judge has yet to decide on the        legitimacy of the Delegated Commissioner for        Environmental Emergency in the Calabria Region to act on        behalf of the Calabria Region. On October 21, 2004,        Syndial was convened before the Court of Milan by the        Calabria Region which is seeking to obtain a condemnation        of Syndial for a damage payment, should the office of the        Delegated Commissioner for Environmental Emergency in the        Calabria Region cease during this proceeding. The        Calabria Region requested a damage payment amounting to        euro 800 million as already requested by the Delegated        Commissioner for environmental emergency in the Calabria        Region in the proceeding started in 2003. This new        proceeding is in the preliminary investigation stage, and        will only proceed if the above action ceases.
In 2006, the Council of Ministers, Ministry for        the Environment and Delegated Commissioner for        environmental emergency in the Calabria Region        represented by the State Lawyer requested Syndial to        appear before the Court of Milan in order to obtain the        ascertainment, quantification and payment of damage (in        the form of land, air and water pollution and therefore        of the general condition of the population) caused by the        operations of Pertusola Sud SpA in the Municipality of        Crotone and in surrounding municipalities. The local        authorities requested the ascertainment of Syndial’s        responsibility as concerns expenses borne and to be borne        for the cleanup and reclamation of sites, currently        quantified at euro 129 million. This proceeding concerns        the same matter and damage claim as the proceedings        started by the Delegated Commissioner for environmental        emergency in the Calabria Region and the Calabria Region        against Syndial in 2003 and 2004, respectively. The State        Attorney quantified the damage payment in a total of euro        1,920 million. |

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| **(iv)** |   | **Summon for        environmental damage caused by DDT pollution in the Lake        Maggiore.** A proceeding is pending before the Court of        Turin by which the Minister of the Environment summoned        Syndial SpA and requested environmental damage for euro        2,396 million in relation to alleged DDT pollution at        Lake Maggiore caused by the Pieve Vergonte plant. On        March 1, 2006, the State Lawyer in an attempt to settle        the case proposed that Syndial would pay 10% of this        claim corresponding to euro 239 million. This settlement        attempt failed.         The Italian Ministry enacted a ministerial decree        providing for the: (i) upgrading of a hydraulic barrier        to protect the site; and (ii) presentation of a project        for the environmental remediation of Lake Maggiore.        Syndial opposed this decree before an Administrative        Court.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|----------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(v)**  |   | **Action        started by the Municipality of Carrara for the        remediation and reestablishment of previous environmental        conditions at the Avenza site and payment of the        environmental damage.** The Municipality of Carrara        started an action before the Court of Genova requesting        Syndial SpA to remediate and reestablish previous        environmental conditions at the Avenza site and for        payment for certain environmental damage which cannot be        cleaned up plus further damage of various genre (i.e.        damage to the natural beauty of this site). 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 of        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. In fact, Syndial summoned        Rumianca SpA, Sir Finanziaria SpA and Sogemo SpA, who ran        the plant in previous years, in order to be guaranteed. A        report made by an independent expert charged by the Judge        was filed with the Court. The findings of this report        quantify the residual environmental damage at euro 15        million. A final decision on this proceeding is pending. |
| **(vi)** |   | **Ministry        for the Environment - Augusta harbor.** The Italian        Ministry for the Environment with various administrative        acts ordered 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 Polimeri        Europa and Syndial. 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. Polimeri Europa opposed said        administrative acts, objecting in particular to the way        in which remediation works have been designed and        information on concentration of pollutants has been        gathered.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

 

**2. Other judicial or arbitration proceedings**

**ENI SPA**

Fintermica presented a claim towards Eniconcerning the management of the Jacorossi joint venture withreference to an alleged abuse of key roles played by Eni SpA inthe joint venture thus damaging the other partner’s interestand the alleged dilatory behavior of Syndial in selling itsinterest in the joint venture to Fintermica. The parties decidedto start an arbitration on the matter.

**SYNDIAL SPA (FORMER ENICHEM SPA)**

| **(i)** |   | **Serfactoring:        disposal of receivables.**In 1991, Agrifactoring SpA        commenced proceedings against Serfactoring SpA, a company        49% owned by Sofid SpA which is controlled by Eni SpA.        The claim relates to an amount receivable of euro 182        million for fertilizer sales (plus interest and        compensation for inflation), originally owed by        Federconsorzi to EniChem Agricoltura SpA (later        Agricoltura SpA - in liquidation), and Terni Industrie        Chimiche SpA (merged into Agricoltura SpA - in        liquidation), that has been merged into EniChem SpA (now        Syndial SpA). Such receivables were transferred by        Agricoltura and Terni Industrie Chimiche to Serfactoring,        which appointed Agrifactoring as its agent to collect        payments. Agrifactoring guaranteed to pay the amount of        such receivables to Serfactoring, regardless of whether        or not it received payment on the due date. Following        payment by Agrifactoring to Serfactoring, Agrifactoring        was placed in liquidation and the liquidator of        Agrifactoring commenced proceedings in 1991 against        Serfactoring to recover such payments (equal to euro 182        million) made to Serfactoring based on the claim that the        foregoing guarantee became invalid when Federconsorzi was        itself placed in liquidation. Agricoltura and Terni        Industrie Chimiche brought counterclaims against        Agrifactoring (in liquidation) for damages amounting to        euro 97 million relating to acts carried out by        Agrifactoring SpA as agent. |
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|     |   | The amount of        these counterclaims has subsequently been reduced to euro        46 million following partial payment of the original        receivables by the liquidator of Federconsorzi and        various setoffs. These proceedings, which have all been        joined, were decided with a partial judgment, deposited        on February 24, 2004; the request of Agrifactoring has        been rejected and the company has been ordered to pay the        sum requested by Serfactoring and damages in favor of        Agricoltura, to be determined following the decision.        Agrifactoring appealed this partial decision, requesting        in particular the annulment of the first step judgment,        the reimbursement of euro 180 million from Serfactoring        along with the rejection of all its claims and the        payment of all proceeding expenses. The pending appeal        was sent to the Judging Council for the filing of        evidence. The judge of the Court of Rome, responsible for        the determination of the amount of damages to be paid to        Serfactoring and Agricoltura decided on May 18, 2005 to        suspend this determination until the publication of the        decision of the Court of Appeals. On argument,        Serfactoring and Syndial requested that the Court of        Cassation cancel the suspension and return the case to        its original court. |
|----------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(ii)** |   | **Breach of        a preliminary agreement for the purchase of an industrial        area in Ravenna.** In 2002, EniChem SpA was summoned by        ICR Intermedi Chimici di Ravenna Srl before the Court of        Milan in relation to a breach of a preliminary agreement        for the purchase of an industrial area in Ravenna. ICR        requested payment of compensatory damage for        approximately euro 46 million, of which euro 3 million        are compensatory damage and euro 43 million are for loss        of income. With a sentence of October 11, 2005, the Court        rejected ICR’s request and ordered that ICR pay all        proceeding expenses. ICR filed a claim against this        decision, reducing its original claim to euro 8 million.        A final decision is pending.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

**3. Antitrust, EU Proceedings, Actions of theItalian Authority for Electricity and Gas and of Other RegulatoryAuthorities**

**3.1 Antitrust**

**ENI SPA**

| **(i)**   |   | **Abuse of        dominant position of Snam verified by the Italian        Antitrust Authority.** In March 1999, the Italian        Antitrust Authority concluded its investigation started        in 1997 and: (i) verified that Snam SpA (merged in Eni        SpA in 2002) abused its dominant position in the market        for the transportation and primary distribution of        natural gas relating to the transportation and        distribution tariffs applied to third parties and the        access of third parties to infrastructure; (ii) fined        Snam euro 2 million; and (iii) ordered a review of these        practices relating to such abuses. Snam believes it has        complied with existing legislation and appealed the        decision with the Regional Administrative Court of Lazio        requesting its suspension. On May 26, 1999, stating that        these decisions are against Law No. 9/1991 and the        European Directive 98/30/EC, this Court granted the        suspension of the decision. The Authority did not appeal        this decision. The decision on the merit of this dispute        is still pending before the same Administrative Court.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-----------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(ii)**  |   | **Inquiry of        the Italian Antitrust Authority on jet fuel.** With a        decision of December 9, 2004, the Italian Antitrust        Authority commenced an inquiry on the distribution of jet        fuel against six oil companies operating in Italy,        including Eni and certain entities jointly controlled by        said oil companies engaged in the storing and loading jet        fuel in the Rome Fiumicino, Milan Linate and Milan        Malpensa airports. The inquiry intends to ascertain the        existence of alleged restrictions on competition as said        oil companies would agree to divide among themselves the        supplies to airlines. On December 22, 2005, the Authority        notified the preliminary results of the inquiry        concerning: (i) information flows to said oil companies        related to the functioning of the jointly-controlled        entities engaging in the storage and uploading of jet        fuel; (ii) barriers to the entrance of new        competitors in the capital of such entities operating the        activities of storing and loading; and (iii) the price of        jet fuel which is deemed to be higher than on other        European markets.        On June 20, 2006, the Authority notified the final        decision of this proceeding to Eni and fined Eni by an        amount of euro 117 million. The Authority fined other oil        companies involved in this matter. Eni filed an        opposition against this decision before an administrative        court and suspended the payment of this fine. On January        29, 2007, the Regional Administrative Court of Lazio        accepted in part the opposition made by Eni and annulled        part of the decision of the Authority. In particular, a        measure providing for the involved oil companies to cease        their joint participation in the capital of the entities        operating the activities of storing and loading jet fuel        was annulled. Eni accrued a provision with respect to        this proceeding. As a consequence of this decision, Eni        paid a fine amounting to euro 117 million. Eni decided to        appoint independent directors in the boards of directors        of joint ventures instead of Eni managers. |
| **(iii)** |   | **Formal        assessment started by the Commission of the European        Communities for the evaluation of alleged participation        to activities limiting competition in the field of        paraffin.** On April 28, 2005, the Commission of the        European Communities started a formal assessment to        evaluate the alleged participation of Eni and its        subsidiaries to activities limiting competition in the        field of paraffin. The alleged violation of competition        would have consisted in: (i) the determination of and        increase in prices; (ii) the subdivision of customers;        and (iii) exchange of trade secrets, such as production        capacity and sales volumes. The Commission has requested        information on Eni’s activities in the field of        paraffins and certain documentation acquired by the        Commission during an inspection. Eni filed the requested        information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

 

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| **(iv)**   |   | **Notification        to Eni Petroleum Co Inc of a subpoena by the Department        of Justice of the United States of America - Antitrust        Division and request of information and documents        relating to activities in the field of wax and of a        deposition.** On April 28, 2005, the Department of        Justice of the United States of America - Antitrust        Division, notified Eni Petroleum Co Inc of a subpoena        requesting information and documents relating to        activities in the field of wax to be filed before June        20, 2005 and a deposition on the same date. The Company        informed the department that it does not produce nor        import wax in the United States of America.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| **(v)**    |   | **Inquiry        started by the Italian Antitrust Authority concerning an        alleged abuse of dominant position in the use of the        total continuous regasification capacity of GNL.** On        November 18, 2005, the Italian Antitrust Authority        notified Eni and its subsidiary GNL Italia of the opening        of an inquiry, in accordance with Article 14 of Law No.        287/1990, concerning an alleged abuse of dominant        position in the assignment and use of the total        continuous regasification capacity of the Panigaglia        terminal (owned by GNL Italia) during thermal years        2002-2003 and 2003-2004, as already reported by an        inquiry of the Italian Authority for Electricity and Gas        on the same matter as the inquiry of the Antitrust        Authority. The Authority for Electricity and Gas closed        its inquiry by signaling the fact to the Antitrust        Authority. In a later communication Eni was informed that        the inquiry has been extended also to thermal year        2004-2005 and to Snam Rete Gas which is the parent        company of GNL Italia SpA. On September 25, 2006, the        Antitrust Authority sent Eni the findings of its inquiry.        After, Eni presented the Antitrust Authority certain        commitments based on Article 14-ter of Law No. 287/1990.        On November 23, 2006, the Antitrust Authority resolved to        publish such commitments effective the following day. On        March 6, 2007, the Antitrust Authority resolved to accept        Eni’s commitments and to close the inquiry without        recognizing any charge to Eni and imposing any fine        whatsoever. Eni is committed to perform a gas release        amounting to 4 billion cubic meters in a two-year period,        starting on October 1, 2007. Eni is implementing its        obligations under the gas release agreement, while        providing timely information on it to the Antitrust        Authority. |
| **(vi)**   |   | **Ascertainment        by the European Commission of the level of competition in        the European natural gas market.**As part of its        activities to ascertain the level of competition in the        European natural gas market, with Decision No.        C(2006)1920/1 of May 5, 2006, the European Commission        informed Eni on May 16, 2006 that Eni and its        subsidiaries were subject to an inquiry under Article 20,        paragraph 4 of the European Regulation No. 1/2003 of the        Council to verify the possible existence of any business        conduct breaching European rules in terms of competition        which was intended to prevent access to the Italian        natural gas wholesale market and to subdivide the market        among few operators in the activity of supply and        transport of natural gas.         Officials from the European Commission conducted        inspections at the headquarters of Eni and of certain Eni        subsidiaries and collected documents. Similar actions        have also been performed by the Commission against the        main operators in natural gas in Germany, France, Austria        and Belgium. In April 2007, the European Commission made        known its decision to start a further stage of inquiry,        as elements collected so far induced the suspicion that        Eni adopted behaviors leading to "capacity hoarding        and strategic underinvestment in the transmission system        leading to the foreclosure of competitors and harm for        competition and customers in one or more supply markets        in Italy". In the same documents, the Commission        states that "It is important to note that the        initiation of proceedings does not imply that the        Commission has conclusive proof of an infringement. It        only signifies that the Commission will conduct an        in-depth investigation of the case as a matter of        priority".               |
| **(vii)**  |   | **TTPC.**        In April 2006, Eni filed a claim before the Regional        Administrative Court of Lazio against the decision of the        Italian Antitrust Authority of February 15, 2006 which        stated that Eni’s behavior pertaining to        implementations of plans for the upgrading of the TTPC        pipeline for importing natural gas from Algeria        represented an abuse of dominant position under Article        82 of the European Treaty and fined Eni. The initial fine        amounted to euro 390 million and was reduced to euro 290        million in consideration of Eni’s commitment to        perform actions favoring competition including the        upgrading of said gasline. Eni accrued a provision with        respect to this proceeding. With a decision filed on        November 29, 2006, the Regional Administrative Court of        Lazio partially accepted Eni’s claim, annulling such        part of the Authority’s decision where the fine was        quantified. Eni is waiting for the filing of the        motivations of the Court decision to ascertain the impact        of said decision. Pending this development, the payment        of the fine has been voluntarily suspended. In 2007, the        Regional Administrative Court of Lazio accepted in part        Eni’s claim and cancelled the quantification of the        fine based on the Antitrust Authority’s inadequate        evaluation of the circumstances presented by Eni. Eni        intends to file an appeal with the Council of State.        Pending the final outcome, Eni awaits for the        determination of the amount of the fine.                                                                                                                                                                                                                                                                                                                                          |
| **(viii)** |   | **Inquiry of        the Italian Antitrust Authority in relation to collusive        mechanisms for the pricing of automotive fuels        distributed on the retail market.** With decision of        January 18, 2007, the Italian Antitrust Authority opened        an inquiry to ascertain the existence of a possible        agreement to limit competition in the field of pricing of        automotive fuels distributed on the retail market in        Italy in violation of Article 81 of the EC Treaty. This        inquiry concerns eight oil companies, including Eni.        According to the Authority, said companies would have        been putting in place collusive mechanisms intended to        influence the pricing of automotive fuels distributed on        the retail market by way of a continuing exchange of        informative flows since 2004. In April 2007, Eni filed        with the Italian Antitrust Authority a proposal of        initiatives, based on a decision of the same Authority        that allows companies to reach the closure of a        proceeding without sanctions or fines when they present        counteractive measures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

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**POLIMERI EUROPA SPA AND SYNDIAL SPA**

**Inquiries in relation to allegedanti-competitive agreements in the area of elastomers.** InDecember 2002, inquiries were commenced concerning allegedanti-competitive agreements in the area of elastomers. Theseinquiries were commenced concurrently by European and U.S.authorities. The first product under scrutiny was EP(D)M: theEuropean Commission submitted to inspection the manufacturingcompanies of that product, including Polimeri Europa SpA andSyndial, and requested information from those two companies andtheir parent company, Eni SpA. After the inquiries the Commissiondecided to open a procedure for violation of competition laws andnotified Eni, Polimeri Europa and Syndial the relevant charges onMarch 8, 2005. At a hearing held on July 27, 2005 the twocompanies presented memoranda and confirmed of their position.Eni and its subsidiaries are waiting for a decision on part ofthe European Commission.

EP(D)M manufacture is also under scrutiny inthe United States, where the Department of Justice of SanFrancisco requested information and documents from PolimeriEuropa Americas Inc, a U.S. subsidiary of Polimeri Europa, andits deputy chairman and sales manager. Class actions were filedclaiming damages in relation to the alleged violation. In July2005, Syndial signed a settlement agreement for the civil classaction which entails the payment of approximately $3.2 million,approved by the federal court. The investigation was alsoextended to the following products: NBR, CR, BR, SSBR and SBR.The European Commission started an investigation regarding BR,SBR, SSBR. On January 26, 2005, the European Commission droppedthe charges in relation to SSBR. Investigations regarding BR, SBRand EPDM led to the notification of relevant charges. A hearingtook place before the European Commission. On July 26, 2006, theEuropean Commission notified the dismissal of the EPDM matter toEni. Regarding the other two products BR and SBR, on November 29,2006, the Commission fined a number of European operators, amongwhich Eni, an amount of euro 519 million based on the charge ofhaving established a trust in the field of synthetic rubberproduction. Eni and its subsidiary Polimeri Europa were fined byan overall amount of euro 272.25 million. Eni and its subsidiaryhave prepared claims against this decision before the firstinstance European Court in February 2007. Pending the outcome,Polimeri Europa presented a bank guarantee for euro 200 millionand paid the residual amount of the fine.

As concerns CR, Syndial and Polimeri Europarequested leniency, as provided for by EU laws, by providinginformation useful in the investigation. This request has not yetbeen accepted by the European Union. In March 2007, theCommission sent to Eni, Polimeri Europa and Syndial a statementof objections, thus opening the second phase of the proceedingfor the alleged infringements from 1993 to 2002. Eni respondedwith a memorandum that repeated its request for leniency. A finalhearing before the Commission is pending.

With regard to NBR, an inquiry is underway inEurope and the U.S., where class actions have also been started.On the federal level, the class action was abandoned by theplaintiffs. The federal judge has yet to acknowledge thisabandonment. With regard to CR, as part of an investigationcarried out in the U.S., Syndial entered into a plea agreementwith the Department of Justice pursuant to which Syndial wouldagree to pay a fine of $9 million, while the Department ofJustice would agree that it will not bring further criminalcharges against Syndial or against its affiliated companies. OnJune 27, 2005 the plea agreement was approved. As regards CR, thecivil class action was closed with a settlement agreementapproved by the federal judge on July 8, 2005 whereby the companywill pay $5 million.

Eni recorded a provision for these matters.

**3.2 Regulation**

**Inquiry of the Italian Authority forElectricity and Gas regarding the use of storage capacityconferred in years 2004-2005 and 2005-2006.**With Decision No.37 of February 23, 2006, the Italian Authority for Electricityand Gas commenced an inquiry on a few natural gas sellingcompanies, among which Eni, in order to possibly impose a fine oran administrative sanction regarding the use of storage capacityconferred in years 2004-2005 and 2005-2006.

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For the 2004-2005 thermal year and for theperiod from October 1, 2005 to December 31, 2005, the Authorityfor Electricity and Gas supposed that given the weather of theperiod, the use of modulation storage capacity was featured by ahigher volume of off takes with respect to the volume which wouldhave been necessary to satisfy the commercial requirements forwhich the storage company entitled Eni to a priority in theconferral of storage capacity. According to the Authority forElectricity and Gas, such situation was in contrast with theapplicable regulation.

Eni presented memoranda to challenge the thesisof the Authority for Electricity and Gas regarding the allegednon compliance of Eni behavior with regulation in force, alsotaking account of the circumstances under which excess off takesoccurred and the subsequent authorization of the Ministry forEconomic Development to use the strategic storage for the thermalyear 2004-2005. With Decision No. 281/2006 of December 6, 2006,the Authority for Electricity and Gas closed said inquiry andfined Eni by euro 90 million of which euro 45 million pertainingto the thermal year 2004-2005 and euro 45 million to the thermalyear 2005-2006 as a consequence of Eni having violated regulationin force pertaining to the priorities in the conferral of storagecapacity.

Eni paid the amount of this fine pertaining tothe thermal year 2004-2005 in accordance to a reduced form asprovided by Law No. 689/1981 and filed an appeal against DecisionNo. 281/2006 of the Authority for Electricity and Gas before theRegional Administrative Court of Lombardia requesting theTribunal: (i) for the first thermal year, to ascertain whetherEni is legitimate to pay in a reduced form or, in case Eni is notlegitimate to do so, to annul the fine; and (ii) for the secondthermal year, to annul the fine. Eni accrued a provision for thisproceeding.

**DISTRIBUIDORA DE GAS CUYANA SA**

**Formal investigation of the agency entrustedwith the regulations for the natural gas market in Argentina("Enargas").**The agency entrusted with theregulation of the natural gas market in Argentina("Enargas") started a formal investigation on someoperators, among these Distribuidora de Gas Cuyana SA, a companycontrolled by Eni. Enargas stated that the company improperlyapplied calculated conversion factors to volumes of natural gasinvoiced to customers and requested the company to apply theconversion factors imposed by local regulations from the date ofthe default notification (March 31, 2004) without prejudice toany damage payment and fines that may be decided after closingthe investigation. Expert evaluations are being performed.

 

**4. Tax Proceedings**

**ENI SPA**

With a decree dated December 6, 2000, theLombardia Region decided that natural gas used for electricitygeneration is subject to an additional regional excise tax inrelation to which Snam SpA (merged into Eni SpA in 2002) shouldsubstitute for the tax authorities in its collection fromcustomers. Given interpretive uncertainties, the same decreeprovides the terms within which distributing companies areexpected to pay this excise tax without paying any penalty. SnamSpA and the other distributing companies of Eni believe thatnatural gas used for electricity generation is not subject tothis additional excise tax. For this reason, an officialinterpretation was requested from the Ministry of Finance andEconomy. With a decision of May 29, 2001, the Ministry confirmedthat this additional excise tax cannot be applied. The Regiondecided not to revoke its decree and Snam took appropriate legalaction. On the basis of action carried out by Snam, the Councilof State decided on March 18, 2002 that the jurisdiction of theAdministrative Court did not apply to this case. In case theRegion should request payment, Eni will challenge this request inthe relevant Court. The Lombardia Region decided with RegionalLaw No. 27/2001 that no additional tax is due from January 1,2002 onwards, but still requested the payment of taxes due beforethat date. The action for the recognition of such taxes bears afive-year term. Consequently, the exercise of such action expireson July 16, 2007.

With a formal assessment presented by theMunicipality of Pineto (Teramo), Eni SpA has been accused of nothaving paid a municipal tax on real estate for the period from1993 to 1998 on four oil platforms located in the Adriatic Seaterritorial waters in front of the coast of Pineto. Eni wasrequested to pay a total of approximately euro 17 millionincluding interest and a fine for lacking payment and taxdeclaration. Eni filed a claim against this request stating thatthe sea where the platforms are located is not part of themunicipal territory and the tax application as requested by themunicipality lacked objective fundamentals. The claim has beenaccepted in the first two degrees of judgment at the Provincialand Regional Tax Commissions. But the Court of Cassationcancelled both judgments declaring that a municipality canconsider requesting a tax on real estate in the sea facing itsterritory and with a decision of February 21, 2005 sent theproceeding to another section of the Regional Tax Commission inorder to judge on the other claims put forward by Eni. OnDecember 28, 2005, the Municipality of Pineto presented the samerequest for the same platforms for the years 1999 to 2004. Thetotal amount requested from Eni is euro 24 million. Eni filed aclaim against this request.

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**SNAM RETE GAS SPA**

**Environmental tax of Sicilia Region upon theowners of primary pipelines.** With Regional Law No. 2 of March26, 2002, the Sicilia Region introduced an environmental tax uponthe owners of primary pipelines in Sicily (i.e. pipelinesoperating at a maximum pressure of over 24 bar). The tax waspayable as of April 2002. In order to protect its interests, SnamRete Gas filed a claim with the European Commission, aimed atopening a proceeding against the Italian Government and the TaxCommission of Palermo. The Authority for Electricity and Gas,although acknowledging that the tax burden is an operating costfor the transport activity, subjected inclusion of theenvironment tax in tariffs to the final ruling on its legitimacyby relevant authorities. With the ruling of December 20, 2002,the Court judged the tax at variance with European rules. InDecember 2002, Snam Rete Gas suspended payments based on theabove Court ruling. Payments effected until November 2002 totaledeuro 86.1 million. In January 2003, the Sicilia Region filed anappeal with the Council of State against the ruling of theRegional Administrative Court of Lombardia for the part thatstates the variance of the regional law with European rules. OnDecember 16, 2003, the European Commission judged the taxinstituted by the Republic of Italy, through the Sicilia Region,to be contrary to European rules and to the cooperation agreementbetween the European Economic Community and the Peoples’Democratic Republic of Algeria; the European Commission alsostated that such environmental tax is in contrast with the commoncustoms tariff because it modifies the equality of customsexpenses on commodities imported from third countries and couldcreate a deviation in trade with such countries and a distortionin access and competition rules. The Commission with its opinionpresented on July 7, 2004 formally requested Italy to cancel thetax. The Italian Government was ordered to conform within twomonths from receipt of the opinion. As it did not conform, onDecember 20, 2004 the European Commission passed the case to theCourt of Justice requesting a ruling. Should the European Courtof Justice rule in favor of Eni, this proceeding would come to anend and the Sicilia Region would be obliged to refund allinstallments paid. With a decision dated January 5, 2004, andconfirmed on March 4, 2005 by the Regional Tax Commission, theProvincial Tax Commission of Palermo declared the environmentaltax of the Sicilia Region illegitimate because it is contrary toEuropean rules and therefore accepted Snam Rete Gas’s claimfor the repayment of the first installment of euro 10.8 million,already paid to the Sicilia Region in April 2002. On May 4, 2004,the Sicilia Region repaid the first installment. As for the sevenremaining installments paid after April 2002 (euro 75.3 million),the Provincial Tax Commission of Palermo with decision of January5, 2005 confirmed the illegitimacy of the tax condemning theRegion to repay the cashed amounts and accrued interest to SnamRete Gas. Against the decision the Sicilia Region presentedrecourse to the Regional Tax Commission in 2005. In the firsthalf of 2007 the Regional Tax Commission confirmed theillegitimacy of the environmental tax.

**AGIP KARACHAGANAK BV**

**Claims concerning unpaid taxes and relevantpayment of interest and penalties.**In July 2004, relevantKazakh authorities informed Agip Karachaganak BV and AgipKarachaganak Petroleum Operating BV, shareholder and operator ofthe Karachaganak contract, respectively, of the final outcome ofthe tax audits performed for fiscal years 2000 to 2003. Claims bythe Kazakh authorities concern unpaid taxes for a total of $43million, net to Eni, and the anticipated offsetting of VATcredits for $140 million, net to Eni, as well as the payment ofinterest and penalties for a total of $128 million. Bothcompanies filed a counterclaim. With an agreement reached onNovember 18, 2004, the original amounts were reduced to $26million net to Eni that includes taxes, surcharges and interest.Meetings continue regarding residual matters. Eni recorded aprovision for this matter.

 

**5. Settled Proceedings**

**RAFFINERIA DI GELA SPA**

With a sentence released in July 2006, theCourt of Gela ascertained that certain alleged crimes pertainingto the emissions of the refinery had become extinct due to thestatute of limitations. In relation to such alleged crimes, theCourt of Gela summoned the legal representatives of the companyfor events that have occurred since 1997. The Municipality ofGela, the Province of Caltanissetta and others acted as plaintiffin this proceeding, requesting the payment of compensatorydamages for a total of euro 878 million.

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**SYNDIAL SPA**

**Personal cautionary measures against someemployees of the Priolo plant issued by the Court of Siracusaconcerning illicit management relating to waste activities.**On January 16, 2003, the Court of Siracusa issued personalcautionary measures against several employees of the Priolo plantowned by EniChem SpA and Polimeri Europa SpA, within judicialinvestigations pertaining to an illicit management relating tothe production, disposal and treatment of liquid and solid wastematerials resulting in an illicit income from the savings arisingfrom the non compliance with rules regulating waste activities.Polimeri Europa and EniChem acted as plaintiffs. Findings of thepreliminary investigations were notified to involved persons,confirming accusations. During the preliminary investigations,traces of mercury were found in the sea. The public prosecutor ofSiracusa started an inquiry for ascertaining the conditions ofsediments and marine fauna in the bay of Augusta. According tothe prosecutor, mercury was spilled into the sea and poisoned themarine fauna and therefore resulted in fetal malformations andabortions due to the consumption of contaminated seafood fishedin this area. The chlorine soda plant, built in the late 1950swas contributed in-kind to Syndial in 1989 when the Enimont jointventure was formed. It was therefore proved that Eni’semployees held no responsibility for the crimes of which theywere charged. On March 15, 2006, the judge for preliminaryinvestigations decided the dismissal of the case against Syndialemployees, accepting the request made by the prosecutor.

**SYNDIAL SPA (FORMER ENICHEM SPA)**

In 1997, an action was commenced before theCourt of Venice concerning the criminal charges brought by theVenice public prosecutor for alleged mismanagement of the PortoMarghera plant starting in the 1970s until 1995 and for thealleged pollution and health damage resulting there from.Defendants included certain employees of Eni which have managedthe Porto Marghera plant since the beginning of the eighties. OnNovember 2, 2001, the Court of Venice acquitted all defendants.The appeal against the decision was presented by the publicprosecutor, the state attorney on behalf of the Ministry ofEnvironment and the Council of Ministers, five public entities,12 associations and other entities and 48 individual persons. OnDecember 15, 2004, the Venice Court of Appeals confirmed thepreceding judgment, changing only some marginal parts. Asconcerns some defendants, the Venice Court of Appeals decided notto proceed due to the statute of limitations for some crimes,while it confirmed the preceding judgment for the other matters.On May 19, 2006, the Court of Final Instance, before whichplaintiffs appealed the decision of the Venice Court of Appeals,acquitted all defendants stating that pollution and mismanagementof the plant occurred before the 1980s and consequently Eni andits employees could not be deemed responsible. In January 2006,Eni settled this matter with the Council of Ministers and theMinistry for the Environment, paying an amount of euro 40million. Under terms of the settlement, the latter will abstainfrom recourse to the Court of Final Instance and will not act onany other environmental damage concerning the management of PortoMarghera until the date of the settlement. Eni already recorded aprovision for this matter which was sufficient to cover theamount of the settlement.

**ENI DACIÓN BV**

In August 2005, the internal revenue service ofVenezuela served four formal assessments of income taxes to EniDación BV for the years 2001 to 2004 claiming, by excluding thedeductibility of certain costs: (i) to annul the losses recordedfor the periods amounting to a total of bolivar 910 billion(corresponding to $425 million); (ii) to determine for the sameperiods a taxable income amounting to a total of bolivar 115billion (corresponding to $54 million); and (iii) to request atax amounting to bolivar 52 billion (corresponding to $24million) determined by applying a 50% tax rate rather than the34% rate applied to other companies performing activitiesanalogous to those of Eni Dación BV. In particular, it excludedthe deductibility of: (i) interest charges due to other Eni Groupcompanies that provided loans denominated in U.S. dollars; and(ii) exchange rate losses recorded in the financial statementsand related to such loans resulting from the devaluation of theVenezuelan currency. The formal assessments served have apreliminary nature and do not request immediate payment nor dothey specify the amount of a fine (from 10 to 250%) and ofinterest (average rate for the period approximately 23%). EniDación filed a claim for the cancellation of the assessment. Inthe 2005 accounts, Eni recorded a specific provision for thismatter. In April 2006, the appeal was rejected and the final taxassessment was issued. The final tax assessment:(i) substantially confirmed the preliminary assessments,although reducing the originally assessed income tax liability tobolivar 39 billion ($18 million); and (ii) imposed fines and latepayment interests of bolivar 109 billion ($51 million). EniDación BV presented a further administrative appeal before theexpiration of the time limit for filing a judicial tax appeal,thereby obtaining a reduction of the overall amount from bolivar148 billion ($69 million) to bolivar 52 billion ($24million) including taxes in the amount of bolivar 12.5 billion($6 million) and fines and late payment interest in the amount ofbolivar 39.5 billion ($18 million). In order to avoid furthercharges deriving from the increase of the corresponding fines andlate payment interest, Eni Dación BV paid the newly assessedamount in May 2006, thereby reaching a settlement. Consistently,Eni Dación BV filed an integrative income tax return for year2005, considering the new tax bases for years 2001 to 2004, andpaid accordingly bolivar 128 billion ($60 million) of incometaxes and bolivar 4.4 billion ($2 million) of fines and latepayment interest.

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**Other risks and commitments**

*(i) Commitments to purchase natural gasunder take-or-pay contracts*In order to meet the medium and long-term demand of naturalgas, in particular in the Italian market, Eni entered intolong-term purchase contracts with producing countries.Specifically, following the strategic agreement with Gazpromsigned on November 14, 2006, effective from February 1, 2007, Eniextended the duration of its gas supply contracts with Gazpromuntil 2035, bringing the residual average life of its supplyportfolio to approximately 23 years. Existing contracts, which ingeneral contain take-or-pay clauses, will ensure a total ofapproximately 62.4 BCM/y of natural gas by 2010.

Despite the fact that an increasing portion ofnatural gas volumes purchased under such contracts has been soldoutside Italy, management believes that in the long-term,unfavorable trends in the Italian demand and supply for naturalgas, also due to the possible implementation of all publiclyannounced plans for the construction of new supplyinfrastructure, and the evolution of Italian regulations of thenatural gas sector, represent risk factors to the fulfillment ofEni’s obligations in connection with its take-or-pay supplycontracts.

Parent company guarantees given relating tocontractual commitments for hydrocarbon exploration andproduction activities, quantified on the basis of the capitalexpenditures to be made, amount to euro 4,911 million (euro 5,052million at December 31, 2005).

*(ii) Unilateral termination by PDVSA of theOperating Service Agreement regulating mineral activities at theDación oilfield in Venezuela*With effective date April 1, 2006, the Venezuelan State oilcompany Petróleos de Venezuela SA (PDVSA) unilaterallyterminated the Operating Service Agreement (OSA) governingactivities at the Dación oil field where Eni acted as acontractor, holding a 100% working interest. As a consequence,starting on the same day, operations at the Dación oil field areconducted by PDVSA. Eni proposed to PDVSA to agree on terms inorder to recover the fair value of its Dación assets. In thelack of any agreement between the parties, in November 2006, Enicommenced an arbitration proceeding before an InternationalCentre for Settlement of Investment Disputes (ICSID) Tribunal(i.e. a tribunal acting under the auspices of the ICSIDConvention and being competent pursuant to theNetherlands-Venezuela bilateral investments treaty) to claim itsrights. Despite this action, Eni would continue to consider anegotiated solution with PDVSA to obtain a fair compensation forits assets. Based on the opinion of its legal consultants, Enibelieves to be entitled to a compensation for such expropriationin an amount equal to the market value of the OSA before theexpropriation took place. The market value of the OSA dependsupon its expected profits. In accordance with establishedinternational practice, Eni has calculated the OSA’s marketvalue using the discounted cash flow method, based on Eni’sinterest in the expected future hydrocarbon production andassociated capital expenditures and operating costs, and applyingto the projected cash flow a discount rate reflecting Eni’scost of capital as well as the specific risk of concernedactivities. Independent evaluations carried out by a primarypetroleum consulting firm fully support Eni’s internalevaluation. The estimated net present value of Eni’sinterest in the Dación field, as calculated by Eni, would not belower than the net book value of the Dación assets amounting to$829 million (equal to euro 629 million based on the EUR/USDexchange rate as of December 31, 2006) which consequently havenot been impaired. In accordance with the ICSID Convention, ajudgment by the ICSID Tribunal awarding compensation to Eni wouldbe binding upon the parties and immediately enforceable as if itwere a final judgment of a court of each of the States that haveratified the ICSID Convention. The ICSID Convention was ratifiedin 143 States. Accordingly, if Venezuela fails to comply with theaward and to pay the compensation, Eni could take steps toenforce the award against commercial assets of the VenezuelanGovernment almost anywhere those may be located (subject tonational law provisions on sovereign immunity). In 2005 and 2006,oil production from the Dación field averaged approximately 60KBBL/d and booked reserves at December 31, 2005 amounted to 175mmBBL.

*(iii) Other risks and commitments*Under the convention signed on October 15, 1991 by TAV SpAand CEPAV Due, Eni committed to guarantee the execution of designand construction of the works assigned to the CEPAV Consortium(to which it is party) and guaranteed to TAV the correct andtimely execution of all obligations indicated in the conventionin a subsequent integration deed and in any further addendum orchange or integration to the same. The regulation of CEPAV Duecontains the same obligations and guarantees contained in theCEPAV Uno Agreement.

A guarantee for euro 253 million to Cameron LNGwas provided on behalf of Eni USA Gas Marketing Llc (EniPetroleum Co Inc’s interest 100%) for the regasificationcontract entered into on August 1, 2005. This guarantee issubject to a suspension clause and will come into force when theregasification service starts in a period included betweenOctober 1, 2008 and June 30, 2009.

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Non-quantifiable risks related to contractualassurances given to acquirers of investments against certainunforeseeable liabilities attributable to tax, state welfarecontributions and environmental matters applicable to periodsduring which such investments were owned by Eni. Eni believessuch matters will not have a material adverse effect on itsConsolidated Financial Statements.

**Assets under concession arrangements**Eni operates under concession arrangements mainly in theExploration & Production segment and in some activities ofthe Gas & Power segment and the Refining & Marketingsegment. In the Exploration & Production segment contractualclauses governing mineral concessions, licenses and explorationpermits regulate the access of Eni to hydrocarbon reserves. Suchclauses can differ in each country. In particular, mineralconcessions, licenses and permits are granted by the legal ownersand, generally, entered into with government entities, State oilcompanies and, in some legal contexts, private owners. As acompensation for mineral concessions, Eni pays royalties andtaxes in accordance with local tax legislation. Eni sustains allthe operation risks and costs related to the production anddevelopment activities and it is entitled to the productionsrealized. In Product Sharing Agreement and in buy-back contracts,realized productions are defined on the basis of contractualagreements drawn up with State oil companies which hold theconcessions. Such contractual agreements regulate the recover ofcosts incurred for the exploration, development and operatingactivities (cost oil) and give entitlement to the own portion ofthe realized productions (profit oil). With reference to naturalgas storage in Italy, the activity is conducted on the basis ofconcessions with a duration that not exceed a twenty years lengthand it is granted by the Ministry of Productive Activities tosubjects that are consistent with legislation requirements andthat can demonstrate to be able to conduct a storage program thatmeets the public interest in accordance with the laws. In the Gas& Power segment the gas distribution activity is primarilyconducted on the basis of concessions granted by local publicentities. At the expiry date of the concession, it is provided acompensation, defined by using criteria of business appraisal, tothe outgoing operator following the sale of its own gasdistribution network. Service tariffs for distribution aredefined on the basis of a method established by the Authority forElectricity and Gas. Legislative Decree No. 164/2000 provides thegrant of distribution service exclusively by tender, with amaximum length of 12 years. In the Refining & Marketingsegment several service stations and other auxiliary assets ofthe distribution service are located in the motorway areas andthey are granted by the motorway concession operators following apublic tender for the sub-concession of the supplying of oilproducts distribution service and other auxiliary services. Suchassets are amortized over the length of the concession(generally, 5 years for Italy). In exchange of the granting ofthe services described above, Eni provides to the motorwaycompanies fixed and variable royalties on the basis of quantitiessold. At the end of the concession period, it is generallyprovided the uncharged devolution of non-removable assets.

**Environmental regulations**Together with other companies in the industries in which itoperates, Eni is subject to numerous EU, national, regional andlocal environmental laws and regulations concerning its oil andgas operations, products and other activities, includinglegislation that implements international conventions orprotocols. In particular, these laws and regulations require theacquisition of a permit before drilling for hydrocarbons maycommence, restrict the types, quantities and concentration ofvarious substances that can be released into the environment inconnection with exploration, drilling and production activities,limit or prohibit drilling activities on certain protected areas,and impose criminal or civil liabilities for pollution resultingfrom oil, natural gas, refining and petrochemical operations.These laws and regulations may also restrict emissions anddischarges to surface and subsurface water resulting from theoperation of natural gas processing plants, petrochemicalsplants, refineries, pipeline systems and other facilities thatEni owns. In addition, Eni’s operations are subject to lawsand regulations relating to the generation, handling,transportation, storage, disposal and treatment of wastematerials. Environmental laws and regulations have a substantialimpact on Eni’s operations. Some risk of environmental costsand liabilities is inherent in particular operations and productsof Eni, as it is with other companies engaged in similarbusinesses, and there can be no assurance that material costs andliabilities will not be incurred. Although management,considering the actions already taken with the insurance policiesto cover environmental risks and the provision for risks accrued,does not currently expect any material adverse effect uponEni’s consolidated financial statements as a result of itscompliance with such laws and regulations, there can be noassurance that there will not be a material adverse impact onEni’s consolidated financial statements due to: (i) thepossibility of as yet unknown contamination; (ii) the results ofthe ongoing surveys and the other possible effects of statementsrequired by Decree No. 471/1999 of the Ministry of Environment;(iii) the possible effect of future environmental legislation andrules; (iv) the effect of possible technological changes relatingto future remediation; and (v) the possibility of litigation andthe difficulty of determining Eni’s liability, if any, asagainst other potentially responsible parties with respect tosuch litigation and the possible insurance recoveries.

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**Emission trading**Legislative Decree No. 216 of April 4, 2006 implemented theEmission Trading Directive 2003/87/EC concerning greenhouse gasemissions and Directive 2004/101/EC concerning the use of carboncredits deriving from projects for the reduction of emissionsbased on the flexible mechanisms devised by the Kyoto Protocol.This European emission trading scheme has been in force sinceJanuary 1, 2005, and on this matter, on February 24, 2006, theMinistry of the Environment published a decree defining emissionpermits for the 2005-2007 period. In particular, Eni was assignedpermits corresponding to 65.2 mmtonnes of carbon dioxide (ofwhich 22.4 for 2005, 21.4 for 2006 and 21.4 for 2007). Followingthe realization of projects for the reduction of emissions, inparticular related to the cogeneration of electricity and steamthrough high efficiency combined cycles in refineries andpetrochemical sites, emissions of carbon dioxide from Eni’splants were lower than permits assigned in 2006.

 

**26 Revenues**

The following is a summary of the maincomponents of "Revenues".

Net sales from operations are as follows:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Net sales from operations                  |   | 57,413     |   | 73,679     |   | 85,957     |
|--------------------------------------------|--------|------------|--------|------------|--------|------------|
| Change in        contract work in progress |   | 132        |   | 49         |   | 148        |
|                                       |   | **57,545** |   | **73,728** |   | **86,105** |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

Net sales from operations are net of thefollowing items:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Excise tax                                                                                 |   | 14,060     |   | 14,140     |   | 13,762     |
|--------------------------------------------------------------------------------------------|--------|------------|--------|------------|--------|------------|
| Exchanges        of oil sales (excluding excise tax)                                       |   | 1,735      |   | 2,487      |   | 2,750      |
| Exchanges of other products                                                                |   | 86         |   | 108        |   | 127        |
| Sales to        service station managers for sales billed to holders of        credit card |   | 1,175      |   | 1,326      |   | 1,453      |
| Services billed to joint venture partners                                                  |   | 1,122      |   | 1,331      |   | 1,385      |
|                                                                                       |   | **18,178** |   | **19,392** |   | **19,477** |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

Net sales from operations by industry segmentand geographic area of destination are presented in Note 32 -Information by industry segment and geographic financialinformation.

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**Other income and revenues**Other income and revenues are as follows:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Gains from sale of assets                   |   | 407       |   | 71      |   | 100     |
|---------------------------------------------|--------|-----------|--------|---------|--------|---------|
| Lease and        rental income              |   | 93        |   | 102     |   | 98      |
| Contract penalties and other trade revenues |   | 43        |   | 114     |   | 61      |
| Compensation        for damages             |   | 87        |   | 89      |   | 40      |
| Other proceeds (*)                          |   | 747       |   | 422     |   | 484     |
|                                        |   | **1,377** |   | **798** |   | **783** |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 25        million. |

 

**27 Operating expenses**

The following is a summary of the maincomponents of "Operating expenses".

**Purchases, services and other**Purchases, services and other include the following:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Production costs - raw, ancillary and consumable        materials and goods                        |   | 27,010     |   |   | 35,318     |   |   | 44,661     |   |
|----------------------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Production        costs - services                                                                 |   | 9,148      |   |   | 9,405      |   |   | 10,015     |   |
| Operating leases, royalties on hydrocarbon        production and other items                       |   | 1,609      |   |   | 1,929      |   |   | 1,903      |   |
| Net        provisions for contingencies                                                            |   | 553        |   |   | 1,643      |   |   | 767        |   |
| Other expenses                                                                                     |   | 1,066      |   |   | 1,100      |   |   | 1,089      |   |
|                                                                                               |   | **39,386** |   |   | **49,395** |   |   | **58,435** |   |
| less:                                                                                              |   |       |   |   |       |   |   |       |   |
| -        capitalized direct costs associated with self-constructed        assets - tangible assets |   | (901       | )      |   | (704       | )      |   | (809       | )      |
| - capitalized direct costs associated with        self-constructed assets - intangible assets      |   | (138       | )      |   | (12        | )      |   | (136       | )      |
|                                                                                               |   | **38,347** |   |   | **48,567** |   |   | **57,490** |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

Production costs - services brokerage includefees for euro 39 million (euro 24 million in 2005).

Costs for research and development that do notmeet the requirements to be capitalized amount to euro 219million (euro 202 million in 2005).

The item "Operating leases, royalties onhydrocarbons production and other" for euro 1,903 million(euro 1,929 million at December 31, 2005) include operatingleases for euro 860 million (euro 777 million at December 31,2005) and royalties on hydrocarbons extracted for euro 823million (euro 965 million in 2005). Future minimum lease paymentsexpected to be received under non-cancelable operating leases areas follows:

| (million        euro) |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|
|                  |   |          |   |          |

| **Payable within** |   |      |   |      |
|--------------------|--------|-----------|--------|-----------|
| 1 year             |   | 363       |   | 594       |
| 2 to 5 years       |   | 799       |   | 1,474     |
| Thereafter         |   | 418       |   | 762       |
|               |   | **1,580** |   | **2,830** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

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Operating leases at December 31, 2006 primarilyconcern time charter and long-term rentals, drilling and storageequipment and vessels, lands, non-cancelable service stations andoffice buildings. Such leases do not include renewal options.There are no significant restrictions following operating leasesimposed to Eni for dividend distribution, availability of assetsand possibility to get into additional debt.

Provisions for contingencies are net ofdeductions not corresponding to cash expenditures of euro 767million (euro 1,643 million at December 31, 2005) and concern inparticular provisions for environmental risks for euro 248million (euro 515 million in the 2005), provisions for contractpenalties and disputes for euro 149 million (euro 336 million inthe 2005), provisions for onerous contracts for euro 55 million(euro 71 million at December 31, 2005) and provisions for prizepromotion for euro 44 million (euro 50 million at December 31,2005). More information is included in Note 20 - Provisions forcontingencies.

**Payroll and related costs**Payroll and related costs are as follows:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Wages and salaries                                                                                   |   | 2,402     |   |   | 2,484     |   |   | 2,630     |   |
|------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Social        security contributions                                                                 |   | 658       |   |   | 662       |   |   | 691       |   |
| Cost related to defined benefits plans and        defined contributions plans                        |   | 118       |   |   | 126       |   |   | 230       |   |
| Other        costs                                                                                   |   | 218       |   |   | 255       |   |   | 305       |   |
|                                                                                                 |   | **3,396** |   |   | **3,527** |   |   | **3,856** |   |
| less:                                                                                                |   |      |   |   |      |   |   |      |   |
| - capitalized direct costs associated with        self-constructed assets - tangible assets          |   | (117      | )      |   | (143      | )      |   | (161      | )      |
| -        capitalized direct costs associated with self-constructed        assets - intangible assets |   | (34       | )      |   | (33       | )      |   | (45       | )      |
|                                                                                                 |   | **3,245** |   |   | **3,351** |   |   | **3,650** |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

Costs related to defined benefits plans aredescribed in Note 21 - Provisions for employee benefits.

The average number of employees of thecompanies included in the scope of consolidation by type was asfollows:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Senior managers        |   | 1,746      |   | 1,754      |   | 1,676      |
|------------------------|--------|------------|--------|------------|--------|------------|
| Junior        managers |   | 10,449     |   | 10,747     |   | 11,142     |
| Employees              |   | 35,393     |   | 34,457     |   | 34,671     |
| Workers                |   | 25,623     |   | 24,345     |   | 25,426     |
|                   |   | **73,211** |   | **71,303** |   | **72,915** |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

The average number of employees is calculatedas half of the total of the number of employees at the beginningand end of the period. The average number of senior managersincludes managers employed and operating in foreign countries,whose position is comparable to a senior manager status.

**Stock compensation**

*Stock grants*With the aim of improving motivation and loyalty of themanagers of Eni SpA and its subsidiaries as defined in Article2359 of the Civil Code7, linking compensation to theattainment of preset individual and corporate objectives, makingmanagement participate in corporate risk and motivating themtowards the creation of shareholder value and at the sameincreasing time their contribution to the management of theCompany, Eni offers its own shares for purchase through itsbuy-back program (treasury shares) for no consideration to thosemanagers of Eni who have achieved corporate and individualobjectives. Assignments vest within 45 days after the end of thethird year from the date of the offer.

_______________

| (7) |   | Does not        include listed subsidiaries, which have their own stock        grant plans. |
|-----|--------|---------------------------------------------------------------------------------------------|

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At December 31, 2006, 1,873,600 of ordinaryshares with a nominal value of euro 1 per share are outstandingand concern the 2003 stock grant plan for a total of 2,500 shareswith a fair value of euro 11.20 per share, the 2004 stock grantplan for a total of 798,700 shares with a fair value of euro14.57 per share and the 2005 stock grant plan for a total of1,072,400 shares with a fair value of euro 20.08 per share.

Changes in the 2003, 2004 and 2005 stock grantplans consist of the following (regarding stock grants, noexercise prices are provided for):

| (euro) |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **Number of shares** |   | **Market price**(a) |   | **Number of shares** |   | **Market price**(a) |   | **Number of shares** |   | **Market price**(a) |
|--------|----------------------|--------|---------------------|--------|----------------------|--------|---------------------|--------|----------------------|--------|---------------------|
|   |                      |   |                     |   |                      |   |                     |   |                      |   |                     |

| **Stock grants as of January 1**               |   | **3,635,050** |   |   | **15.101** |   |   | **3,112,200** |   |   | **18.461** |   |   | **3,127,200** |   |   | **23.460** |   |
|------------------------------------------------|--------|---------------|--------|--------|------------|--------|--------|---------------|--------|--------|------------|--------|--------|---------------|--------|--------|------------|--------|
| New rights        granted                      |   | 1,035,600     |   |   | 17.035     |   |   | 1,303,400     |   |   | 21.336     |   |   |          |   |   |       |   |
| Rights exercised in the period                 |   | (1,552,100    | )      |   | 16.766     |   |   | (1,273,500    | )      |   | 23.097     |   |   | (1,236,400    | )      |   | 23.933     |   |
| Rights        cancelled in the period          |   | (6,350        | )      |   | 16.618     |   |   | (14,900       | )      |   | 22.390     |   |   | (17,200       | )      |   | 23.338     |   |
| **Stock grants outstanding as of December 31** |   | **3,112,200** |   |   | **18.461** |   |   | **3,127,200** |   |   | **23.460** |   |   | **1,873,600** |   |   | **25.520** |   |
| **of        which exercisable at December 31** |   | **-**         |   |   | **-**      |   |   | **38,700**    |   |   | **23.460** |   |   | **156,700**   |   |   | **25.520** |   |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (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 grants 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 grants at the        beginning and end of the year is the price recorded at        December 31. |

*Stock options*With the aim of improving motivation and loyalty of themanagers of Eni SpA and its subsidiaries as defined in Article2359 of the Civil Code8 that hold significantpositions of managerial responsibility or that are consideredstrategic managers for the Group, Eni approved stock compensationplans that provide the assignment for no consideration ofpurchase rights of Eni treasury shares (options).

*2002-2004 and 2005 plans*Stock options provides the right for the purchase of treasuryshares with a 1 to 1 ratio after the end of the third year fromthe date of the grant (vesting period) and for a maximum periodof five years, with a price calculated as the arithmetic averageof official prices registered on the Mercato Telematico Azionarioin the month preceding assignment or (starting from 2003), ifgreater, as the average cost of treasury shares registered in theday preceding assignment strike price.

*2006-2008 plan*The 2006-2008 stock option plan introduces a performancecondition for the exercise of the options.

At the end of each three-year period (vestingperiod) from the assignment, the Board of Directors willdetermine a number of exercisable options, at a rate includedbetween 0 and 100, in relation to the Total Shareholders’Return (TSR) of Eni’s share compared to the TSR of the sixlargest international oil companies for capitalization. Optionscan be exercised after three years from the date of the grant(vesting period) and for a maximum period of three years, with aprice calculated as the arithmetic average of official pricesregistered on the Mercato Telematico Azionario in the monthpreceding assignment (strike price).

The arithmetic average of such prices, weightedwith the number of shares assigned, amounts to euro 23.119 pershare.

At December 31, 2006, 15,290,400 options wereoffered for the purchase of 15,290,400 ordinary shares at anominal value of euro 1 of Eni SpA. Options refer to the 2002stock plan for 238,000 shares with an exercise price of euro15.216 per share, to the 2003 stock plan for 779,900 shares withan exercise price of euro 13.743 per share, to the 2004 stockplan for 3,108,500 shares with an exercise price of euro 16.576per share, to the 2005 stock plan for 4,184,000 shares with anexercise price of euro 22.512 per share and to the 2006 stockplan for 6,980,000 shares with an exercise price of euro 23.119per share.

 

_______________

| (8) |   | Does not        include listed subsidiaries, which have their own stock        grant plans. |
|-----|--------|---------------------------------------------------------------------------------------------|

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At December 31, 2006 the weighted-averageremaining contractual life of the plans at December 2002, 2003,2004, 2005 and 2006 is 3 years and 7 months, 4 years and 7months, 5 years and 7 months, 6 years and 7 months and 5 yearsand 7 months, respectively.

Changes of stock option plans in 2005 and 2006consist of the following:

| (euro) |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   |   | **Number of shares** |   | **Weighted average** |   | **Market         price** (a) |   | **Number of shares** |   | **Weighted average** |   | **Market        price** (a) |   | **Number of shares** |   | **Weighted average** |   | **Market        price** (a) |
|--------|--------|----------------------|--------|----------------------|--------|------------------------------|--------|----------------------|--------|----------------------|--------|-----------------------------|--------|----------------------|--------|----------------------|--------|-----------------------------|
|   |   |                      |   |                      |   |                              |   |                      |   |                      |   |                             |   |                      |   |                      |   |                             |

| **Options as of January 1**                    |   | **8,162,000**  |   |   | **14.367** |   |   | **15.101** |   |   | **11,789,000** |   |   | **15.111** |   |   | **18.461** |   |   | **13,379,600** |   |   | **17.705** |   |   | **23.460** |   |
|------------------------------------------------|--------|----------------|--------|--------|------------|--------|--------|------------|--------|--------|----------------|--------|--------|------------|--------|--------|------------|--------|--------|----------------|--------|--------|------------|--------|--------|------------|--------|
| New        options granted                     |   | 3,993,500      |   |   | 16.576     |   |   | 16.576     |   |   | 4,818,500      |   |   | 22.512     |   |   | 22.512     |   |   | 7,050,000      |   |   | 23.119     |   |   | 23.119     |   |
| Options exercised in the period                |   | (354,000       | )      |   | 14.511     |   |   | 16.749     |   |   | (3,106,400     | )      |   | 15.364     |   |   | 22.485     |   |   | (4,943,200     | )      |   | 15.111     |   |   | 23.511     |   |
| Options        cancelled in the period         |   | (12,500        | )      |   | 14.450     |   |   | 16.745     |   |   | (121,500       | )      |   | 16.530     |   |   | 23.100     |   |   | (196,000       | )      |   | 19.119     |   |   | 23.797     |   |
| **Options outstanding as of December 31**      |   | **11,789,000** |   |   | **15.111** |   |   | **18.461** |   |   | **13,379,600** |   |   | **17.705** |   |   | **23.460** |   |   | **15,290,400** |   |   | **21.022** |   |   | **25.520** |   |
| **of        which exercisable at December 31** |   |           |   |   |       |   |   |       |   |   | **1,540,600**  |   |   | **16.104** |   |   | **23.460** |   |   | **1,622,900**  |   |   | **16.190** |   |   | **25.520** |   |

|   |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (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 grants assignment; (ii)        the date in which the emission/transfer of the shares        granted was recorded in the grantee’s securities        account; and (iii) the date in which the unilateral        termination of employment for rights was cancelled),        weighted with the number of shares. Market price of stock        grants at the beginning and end of the year is the price        recorded at December 31. |

The fair value of stock options granted duringthe years 2002, 2003, 2004, 2005 and 2006 was euro 5.39, euro1.50, euro 2.01, euro 3.33 respectively, and the weighted averageof euro 2.89 per share was calculated applying the followingassumptions:

|   |   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |   |          |   |          |

| Risk-free interest rate (%)   |   | 3.5 |   | 3.2 |   | 3.2 |   | 2.5 |   | 4.0 |
|-------------------------------|--------|-----|--------|-----|--------|-----|--------|-----|--------|-----|
| Expected        life (years)  |   | 8   |   | 8   |   | 8   |   | 8   |   | 6   |
| Expected volatility (%)       |   | 43  |   | 22  |   | 19  |   | 21  |   | 17  |
| Expected        dividends (%) |   | 4.5 |   | 5.4 |   | 4.5 |   | 4.0 |   | 5.3 |

|   |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|

Costs of the year related to stock grant andstock option plans amounted to euro 20 million (euro 35 millionat December 31, 2005, which includes also costs accrued withrespect to compensation of key managers related to certainEni’s group companies, i.e. Saipem SpA and Snam Rete GasSpA).

**Compensation of key management personnel**Compensation of persons responsible for key positions inplanning, direction and control functions of Eni Group companies,including executive and non-executive officers, general managersand manager with strategic responsibility (key managementpersonnel) amount to euro 15 million and euro 23 million for 2005and 2006, respectively, and consist of the following:

| (million        euro) |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|
|                  |   |          |   |          |

| Wages and salaries                                    |   | 11     |   | 16     |
|-------------------------------------------------------|--------|--------|--------|--------|
| Post-employment        benefits                       |   | 1      |   | 1      |
| Other long-term benefits                              |   |   |   | 3      |
| Indemnities        due upon termination of employment |   | 1      |   |   |
| Stock grant/option                                    |   | 2      |   | 3      |
|                                                  |   | **15** |   | **23** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

**Compensation of Directors, StatutoryAuditors and General Managers**Compensation of Directors, Statutory Auditors and GeneralManagers amount to euro 19.2 million and euro 8.7 million in 2005and 2006, respectively. Compensation of Statutory Auditors amountto euro 0.785 and euro 0.686 million in 2005 and 2006,respectively. Compensation of Directors, Statutory Auditors andGeneral Managers include emoluments and all other retributive andsocial security compensations due for the function of manager orstatutory auditor assumed by Eni SpA or other companies includedin the scope of consolidation, that are a cost for Eni.

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**Depreciation, amortization and impairments**Depreciation, amortization and impairments consist of thefollowing:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Depreciation and amortization:                                                                       |   |      |   |   |      |   |   |      |   |
|------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| - tangible        assets                                                                             |   | 3,670     |   |   | 4,576     |   |   | 4,821     |   |
| - intangible assets                                                                                  |   | 931       |   |   | 936       |   |   | 1,335     |   |
|                                                                                                 |   | **4,601** |   |   | **5,512** |   |   | **6,156** |   |
| Impairments:                                                                                         |   |      |   |   |      |   |   |      |   |
| - tangible        assets                                                                             |   | 329       |   |   | 264       |   |   | 231       |   |
| - intangible assets                                                                                  |   | 4         |   |   | 8         |   |   | 54        |   |
|                                                                                                 |   | **333**   |   |   | **272**   |   |   | **285**   |   |
| less:                                                                                                |   |      |   |   |      |   |   |      |   |
| - direct        costs associated with self-constructed assets                                        |   |      |   |   |      |   |   | (17       | )      |
| - capitalized direct costs associated with        self-constructed assets - tangible assets          |   | (2        | )      |   | (2        | )      |   | (2        | )      |
| -        capitalized direct costs associated with self-constructed        assets - intangible assets |   | (1        | )      |   | (1        | )      |   | (1        | )      |
|                                                                                                 |   | **4,931** |   |   | **5,781** |   |   | **6,421** |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

 

**28 Financial income (expense)**

Financial income (expense) consists of thefollowing:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Income (expense) on derivatives                               |   | 34       |   |   | (386     | )      |   | 383     |   |
|---------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|---------|--------|
| Net income        from financial receivables                  |   | 95       |   |   | 95       |   |   | 130     |   |
| Financial expense capitalized                                 |   | 202      |   |   | 159      |   |   | 116     |   |
| Net        interest due to banks                              |   | (110     | )      |   | (38      | )      |   | 79      |   |
| Net income from securities                                    |   | 31       |   |   | 36       |   |   | 51      |   |
| Interest        on tax credits                                |   | 17       |   |   | 17       |   |   | 17      |   |
| Financial expense due to passage of time (a)                  |   | (109     | )      |   | (109     | )      |   | (116    | )      |
| Exchange        differences, net                              |   |     |   |   | 169      |   |   | (152    | )      |
| Interest and other financial expense on ordinary        bonds |   | (247     | )      |   | (265     | )      |   | (247    | )      |
| Other        financial expense, net                           |   | (69      | )      |   | (44      | )      |   | (100    | )      |
|                                                          |   | **(156** | **)**  |   | **(366** | **)**  |   | **161** |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

|   |   |                                                                                                                                                      |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)    |   | The item        concerns the increase in provisions for contingencies        that are indicated at an actualized value in non-current        liabilities. |

Gains (losses) on derivatives consist of thefollowing:

| (million        euro) |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|
|                  |   |          |   |          |

| Derivatives on exchange rate        |   | (85      | )     |   | 313     |   |
|-------------------------------------|--------|----------|-------|--------|---------|--------|
| Derivatives        on interest rate |   | (138     | )     |   | 61      |   |
| Derivatives on commodities          |   | (163     | )     |   | 9       |   |
|                                |   | **(386** | **)** |   | **383** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

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The variation in gains (losses) fromderivatives of euro 769 million is primarily due to theapplication of IAS 39 which requires for Eni that derivatives bestated at fair value and the effects charged to the profit andloss account, instead of being connected with the economiceffects of the hedged transactions. Such derivatives, in fact, donot meet the conditions required by IFRS to be qualified ashedging instruments. In addition, the decrease in net exchangedifferences of euro 321 million is primarily due to theapplication of IAS 39, due to the fact that the effect of thetranslation at period end of assets and liabilities denominatedin currencies other than functional currency is not compensatedby the effect of the translation at period end of the commitmentsfor derivatives contracts.

No derivative disclosure is furnished for theyear 2004 as Eni elected January 1, 2005 as the transition datefor the application of IAS 32 and IAS 39.

 

**29 Income (expense) from investments**

**Effects of investments accounted for usingthe equity method**Effects of investments accounted for using the equity methodconsist of the following:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Gains from investments accounted for using the        equity method  |   | 401     |   |   | 770     |   |   | 887     |   |
|----------------------------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| Losses        from investments accounted for using the equity method |   | (69     | )      |   | (33     | )      |   | (36     | )      |
| Provisions for losses                                                |   |    |   |   |    |   |   | (56     | )      |
|                                                                 |   | **332** |   |   | **737** |   |   | **795** |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

More information about gains and losses frominvestments accounted for using the equity method is presented inNote 11 - Investments.

**Other income (expense) from investments**Other income (expense) from investments consist of thefollowing:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Dividends                          |   | 72      |   |   | 33      |   |   | 98      |   |
|------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
| Gains on        disposals          |   | 130     |   |   | 179     |   |   | 25      |   |
| Losses on disposals                |   | (1      | )      |   | (8      | )      |   | (7      | )      |
| Other        income (expense), net |   | 287     |   |   | (27     | )      |   | (8      | )      |
|                               |   | **488** |   |   | **177** |   |   | **108** |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

Dividends of euro 98 million primarily concernNigeria LNG Ltd (euro 56 million).

Gains on disposals of euro 25 million primarilyconcern the sale of Fiorentina Gas SpA and Toscana Gas SpA (euro16 million). Gains on disposals relating to the year 2005 of euro179 million concern the sale of 100% of the share capital ofItaliana Petroli SpA (euro 132 million).

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**30 Income tax expense**

Income tax expense consist of the following:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Current taxes:                                                                     |   |      |   |   |      |   |   |       |   |
|------------------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|
| - Italian        subsidiaries.                                                     |   | 1,098     |   |   | 1,872     |   |   | 2,007      |   |
| - foreign subsidiaries of the Exploration &        Production segment          |   | 3,116     |   |   | 5,116     |   |   | 6,740      |   |
| - foreign        subsidiaries.                                                     |   | 278       |   |   | 373       |   |   | 529        |   |
|                                                                               |   | **4,492** |   |   | **7,361** |   |   | **9,276**  |   |
| less:                                                                              |   |      |   |   |      |   |   |       |   |
| - tax credits on dividend distributions not        offset with current tax payment |   | (39       | )      |   | (34       | )      |   |       |   |
|                                                                               |   | **4,453** |   |   | **7,327** |   |   | **9,276**  |   |
| Net deferred taxes:                                                                |   |      |   |   |      |   |   |       |   |
| - Italian        subsidiaries                                                      |   | 843       |   |   | 334       |   |   | 230        |   |
| - foreign subsidiaries of the Exploration &        Production segment          |   | 215       |   |   | 464       |   |   | 1,095      |   |
| - foreign        subsidiaries                                                      |   | 11        |   |   | 3         |   |   | (33        | )      |
|                                                                               |   | **1,069** |   |   | **801**   |   |   | **1,292**  |   |
|                                                                               |   | **5,522** |   |   | **8,128** |   |   | **10,568** |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

Current taxes of the year relate to Italiancompanies for euro 2,007 million and concern Ires for euro 1,570and Irap for euro 374 million and foreign taxes for euro 63million.

The effective tax rate was 51.8% (46.8% in2005) compared with a statutory tax rate of 37.9% calculated byapplying a 33% tax rate (Ires) to profit before income taxes and4.25% tax rate (Irap) to the net value of production as providedfor by Italian laws.

The difference between the statutory andeffective tax rate is due to the following factors:

| (%)    |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

| **Statutory tax rate**                                   |   | **38.2** |   |   | **38.1** |   |   | **37.9** |   |
|----------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Items        increasing (decreasing) statutory tax rate: |   |     |   |   |     |   |   |     |   |
| - higher foreign subsidiaries tax rate                   |   | 5.2      |   |   | 8.8      |   |   | 13.6     |   |
| -        permanent differences                           |   | (0.7     | )      |   | 0.8      |   |   | 0.2      |   |
| - other                                                  |   | (0.4     | )      |   | (0.9     | )      |   | 0.1      |   |
|                                                     |   | **4.1**  |   |   | **8.7**  |   |   | **13.9** |   |
|                                                     |   | **42.3** |   |   | **46.8** |   |   | **51.8** |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

The increase of the tax rate for foreignsubsidiaries of 4.8% essentially concerns the Exploration &Production segment (4.5%) and includes the effects deriving fromthe application of the windfall tax introduced by the Algeriangovernment with effect starting from August 1, 2006 (1.6%), asupplemental tax rate introduced by the government of the UnitedKingdom relating to the North Sea productions with effectstarting from January 1, 2006 (1.0%) and the increase and thedifferent allocation by country of profit before income taxes(1.9%).

Permanent differences in 2006 mainly concernthe non-deductibility from taxable income of costs relating toactions of the Italian Antitrust Authority (0.4%).

Permanent differences in 2005 mainly concernthe non-deductibility from taxable income of the addition inprovisions for contingencies following the fine imposed onFebruary 15, 2006 by the Italian Antitrust Authority to Eni SpA(0.6%).

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**31 Earnings per share**

Basic earnings per share is calculated bydividing "Net profit" of the year by theweighted-average number of shares issued and outstanding duringthe year, excluding treasury shares.

The average number of shares used for thecalculation of the basic earnings per share was 3,758,519,603 and3,698,201,896 in 2005 and 2006, respectively.

Diluted earnings per share is calculated bydividing "Net profit" of the year by theweighted-average number of shares issued and outstanding duringthe year, excluding treasury shares, including shares that couldbe issued potentially.

At December 31, 2005 and December 31, 2006,shares that could be issued potentially concern essentiallyshares granted under stock grant and stock option plans. Theaverage number of shares used for the calculation of the dilutedearnings per share was 3,763,375,140 and 3,701,262,557 in 2005and 2006, respectively.

Reconciliation of the average number of sharesused for the calculation of the basic and diluted earning pershare is as follows:

|    |   | **2004** |   | **2005** |   | **2006** |
|--------------|--------|----------|--------|----------|--------|----------|
|         |   |          |   |          |   |          |

| **Average number of shares used for the        calculation of the basic earnings per share**          |   |             |   | **3,771,692,584** |   | **3,758,519,603** |   | **3,698,201,896** |
|-------------------------------------------------------------------------------------------------------|--------|------------------|--------|-------------------|--------|-------------------|--------|-------------------|
| Number of        potential shares following stock grant plans                                         |   |             |   | 1,953,518         |   | 2,268,265         |   | 1,070,676         |
| Number of potential shares following stock        options plans                                       |   |             |   | 1,307,608         |   | 2,587,272         |   | 1,989,985         |
| **Average        number of shares used for the calculation of the diluted        earnings per share** |   |             |   | **3,774,953,710** |   | **3,763,375,140** |   | **3,701,262,557** |
| **Eni’s net profit**                                                                             |   | (million euro)   |   | **7,059**         |   | **8,788**         |   | **9,217**         |
| **Basic        earning per share**                                                                    |   | (euro per share) |   | **1.87**          |   | **2.34**          |   | **2.49**          |
| **Diluted earning per share**                                                                         |   | (euro per share) |   | **1.87**          |   | **2.34**          |   | **2.49**          |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

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**32 Information by industry segment and geographic financialinformation**

**Information by industry segment**9****Intersegment sales are conducted on an arm’s lengthbasis.

| (million        euro) |   | **Exploration &        Production** |   | **Gas & Power** |   | **Refining & Marketing** |   | **Petrochemicals** |   | **Engineering &        Construction** |   | **Other activities** |   | **Corporate and financial        companies** |   | **Elimination** |   | **Total** |
|-----------------------|--------|-----------------------------------------|--------|---------------------|--------|------------------------------|--------|--------------------|--------|-------------------------------------------|--------|----------------------|--------|----------------------------------------------|--------|-----------------|--------|-----------|
|                  |   |                                         |   |                     |   |                              |   |                    |   |                                           |   |                      |   |                                              |   |                 |   |           |

| **2004**                                                            |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |       |   |
|---------------------------------------------------------------------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------------|--------|
| Net sales        from operations (a)                                |   | 15,346  |   |   | 17,302 |   |   | 26,089 |   |   | 5,331  |   |   | 5,696  |   |   | 1,279  |   |   | 851    |   |   |   |   |   |       |   |
| Less: intersegment sales                                            |   | (10,216 | )      |   | (493   | )      |   | (753   | )      |   | (499   | )      |   | (903   | )      |   | (754   | )      |   | (731   | )      |   |   |   |   |       |   |
| Net sales        to customers                                       |   | 5,130   |   |   | 16,809 |   |   | 25,336 |   |   | 4,832  |   |   | 4,793  |   |   | 525    |   |   | 120    |   |   |   |   |   | 57,545     |   |
| Operating profit                                                    |   | 8,185   |   |   | 3,428  |   |   | 1,080  |   |   | 320    |   |   | 203    |   |   | (395   | )      |   | (363   | )      |   | (59    | )      |   | 12,399     |   |
| Provisions        for contingencies                                 |   | 2       |   |   | 53     |   |   | 309    |   |   | 3      |   |   | 20     |   |   | 16     |   |   | 150    |   |   |   |   |   | 553        |   |
| Depreciation, amortization and writedowns                           |   | 3,335   |   |   | 644    |   |   | 476    |   |   | 116    |   |   | 184    |   |   | 70     |   |   | 106    |   |   |   |   |   | 4,931      |   |
| Effects of        investments accounted for using the equity method |   | 7       |   |   | 164    |   |   | 89     |   |   | (4     | )      |   | 117    |   |   |   |   |   | (41    | )      |   |   |   |   | 332        |   |
| Identifiable assets (b)                                             |   | 23,866  |   |   | 19,852 |   |   | 9,118  |   |   | 2,821  |   |   | 4,706  |   |   | 708    |   |   | 1,182  |   |   |   |   |   | 62,253     |   |
| **Unallocated        assets**                                       |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **10,600** |   |
| Investments accounted for using the equity        method            |   | 273     |   |   | 1,773  |   |   | 745    |   |   | 5      |   |   | 328    |   |   | 30     |   |   | 2      |   |   |   |   |   | 3,156      |   |
| Identifiable        liabilities (c)                                 |   | 4,798   |   |   | 3,394  |   |   | 3,848  |   |   | 621    |   |   | 2,825  |   |   | 1,976  |   |   | 1,589  |   |   |   |   |   | 19,051     |   |
| **Unallocated liabilities**                                         |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **18,262** |   |
| Capital        expenditures                                         |   | 4,853   |   |   | 1,451  |   |   | 693    |   |   | 148    |   |   | 186    |   |   | 49     |   |   | 119    |   |   |   |   |   | 7,499      |   |
| **2005**                                                            |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |       |   |
| Net sales        from operations (a)                                |   | 22,531  |   |   | 22,969 |   |   | 33,732 |   |   | 6,255  |   |   | 5,733  |   |   | 863    |   |   | 1,239  |   |   |   |   |   |       |   |
| Less: intersegment sales                                            |   | (14,761 | )      |   | (572   | )      |   | (1,092 | )      |   | (683   | )      |   | (925   | )      |   | (546   | )      |   | (1,015 | )      |   |   |   |   |       |   |
| Net sales        to customers                                       |   | 7,770   |   |   | 22,397 |   |   | 32,640 |   |   | 5,572  |   |   | 4,808  |   |   | 317    |   |   | 224    |   |   |   |   |   | 73,728     |   |
| Operating profit                                                    |   | 12,592  |   |   | 3,321  |   |   | 1,857  |   |   | 202    |   |   | 307    |   |   | (934   | )      |   | (377   | )      |   | (141   | )      |   | 16,827     |   |
| Provisions        for contingencies                                 |   | 50      |   |   | 703    |   |   | 420    |   |   | 47     |   |   | 32     |   |   | 284    |   |   | 107    |   |   |   |   |   | 1,643      |   |
| Depreciation, amortization and writedowns                           |   | 4,101   |   |   | 685    |   |   | 467    |   |   | 147    |   |   | 180    |   |   | 91     |   |   | 114    |   |   | (4     | )      |   | 5,781      |   |
| Effects of        investments accounted for using the equity method |   | 14      |   |   | 359    |   |   | 221    |   |   | 3      |   |   | 140    |   |   |   |   |   |   |   |   |   |   |   | 737        |   |
| Identifiable assets (b)                                             |   | 29,010  |   |   | 21,928 |   |   | 11,787 |   |   | 2,905  |   |   | 5,248  |   |   | 438    |   |   | 1,523  |   |   | (534   | )      |   | 72,305     |   |
| **Unallocated        assets**                                       |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **11,545** |   |
| Investments accounted for using the equity        method            |   | 292     |   |   | 2,155  |   |   | 936    |   |   | 19     |   |   | 457    |   |   | 31     |   |   |   |   |   |   |   |   | 3,890      |   |
| Identifiable        liabilities (c)                                 |   | 6,785   |   |   | 5,097  |   |   | 4,542  |   |   | 702    |   |   | 3,204  |   |   | 2,070  |   |   | 2,131  |   |   |   |   |   | 24,531     |   |
| **Unallocated liabilities**                                         |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **20,102** |   |
| Capital        expenditures                                         |   | 4,965   |   |   | 1,152  |   |   | 656    |   |   | 112    |   |   | 349    |   |   | 48     |   |   | 132    |   |   |   |   |   | 7,414      |   |
| **2006**                                                            |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |       |   |
| Net sales        from operations (a)                                |   | 27,173  |   |   | 28,368 |   |   | 38,210 |   |   | 6,823  |   |   | 6,979  |   |   | 823    |   |   | 1,174  |   |   |   |   |   |       |   |
| Less: intersegment sales                                            |   | (18,445 | )      |   | (751   | )      |   | (1,300 | )      |   | (667   | )      |   | (771   | )      |   | (520   | )      |   | (991   | )      |   |   |   |   |       |   |
| Net sales        to customers                                       |   | 8,728   |   |   | 27,617 |   |   | 36,910 |   |   | 6,156  |   |   | 6,208  |   |   | 303    |   |   | 183    |   |   |   |   |   | 86,105     |   |
| Operating profit                                                    |   | 15,580  |   |   | 3,802  |   |   | 319    |   |   | 172    |   |   | 505    |   |   | (622   | )      |   | (296   | )      |   | (133   | )      |   | 19,327     |   |
| Provisions        for contingencies                                 |   | 153     |   |   | 197    |   |   | 264    |   |   | 30     |   |   | (13    | )      |   | 236    |   |   | (100   | )      |   |   |   |   | 767        |   |
| Depreciation, amortization and writedowns                           |   | 4,776   |   |   | 738    |   |   | 447    |   |   | 174    |   |   | 196    |   |   | 28     |   |   | 71     |   |   | (9     | )      |   | 6,421      |   |
| Effects of        investments accounted for using the equity method |   | 28      |   |   | 509    |   |   | 194    |   |   | 2      |   |   | 66     |   |   | (4     | )      |   |   |   |   |   |   |   | 795        |   |
| Identifiable assets (b)                                             |   | 29,720  |   |   | 23,500 |   |   | 11,359 |   |   | 2,984  |   |   | 6,362  |   |   | 344    |   |   | 1,023  |   |   | (666   | )      |   | 74,626     |   |
| **Unallocated        assets**                                       |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **13,686** |   |
| Investments accounted for using the equity        method            |   | 258     |   |   | 2,214  |   |   | 874    |   |   | 11     |   |   | 483    |   |   | 46     |   |   |   |   |   |   |   |   | 3,886      |   |
| Identifiable        liabilities (c)                                 |   | 9,119   |   |   | 5,284  |   |   | 4,712  |   |   | 806    |   |   | 3,869  |   |   | 1,940  |   |   | 1,619  |   |   |   |   |   | 27,349     |   |
| **Unallocated liabilities**                                         |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **19,764** |   |
| Capital        expenditures                                         |   | 5,203   |   |   | 1,174  |   |   | 645    |   |   | 99     |   |   | 591    |   |   | 72     |   |   | 88     |   |   | (39    | )      |   | 7,833      |   |

|   |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                       |
|--------|--------|--------------------------------------------------------------------------------------------|
| (a)    |   | Before        elimination of intersegment sales.                                           |
| (b)    |   | Includes        assets directly related to the generation of operating        profit.      |
| (c)    |   | Includes        liabilities directly related to the generation of        operating profit. |

_______________

| (9) |   | Operating        profit (loss) by industry segment for 2005 have been        reclassified on the basis of the new subdivision within        segments. This reclassification concerns the Exploration        & Production, Other activities and Corporate and        financial companies segments. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Geographic financial information**

*Assets and investments by geographic area oforigin*

| (million        euro) |   | **Italy** |   | **Other EU** |   | **Rest of Europe** |   | **Americas** |   | **Asia** |   | **Africa** |   | **Other areas** |   | **Total** |
|-----------------------|--------|-----------|--------|--------------|--------|--------------------|--------|--------------|--------|----------|--------|------------|--------|-----------------|--------|-----------|
|                  |   |           |   |              |   |                    |   |              |   |          |   |            |   |                 |   |           |

| **2004**                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Identifiable        assets (a) |   | 33,812 |   | 9,096  |   | 2,598  |   | 2,011  |   | 4,499  |   | 9,942  |   | 295    |   | 62,253 |
| Capital expenditures           |   | 2,655  |   | 337    |   | 387    |   | 357    |   | 1,066  |   | 2,622  |   | 75     |   | 7,499  |
| **2005**                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Identifiable assets (a)        |   | 38,229 |   | 8,768  |   | 3,085  |   | 2,670  |   | 5,864  |   | 13,445 |   | 244    |   | 72,305 |
| Capital        expenditures    |   | 2,442  |   | 545    |   | 415    |   | 507    |   | 1,181  |   | 2,233  |   | 91     |   | 7,414  |
| **2006**                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Identifiable        assets (a) |   | 37,339 |   | 10,037 |   | 3,200  |   | 2,987  |   | 6,341  |   | 14,190 |   | 532    |   | 74,626 |
| Capital expenditures           |   | 2,529  |   | 713    |   | 436    |   | 572    |   | 1,032  |   | 2,419  |   | 132    |   | 7,833  |

|   |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (a)    |   | Includes        assets directly related to the generation of operating        profit. |

*Sales from operations by geographic area ofdestination*

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Italy                       |   | 27,100     |   | 32,846     |   | 36,343     |
|-----------------------------|--------|------------|--------|------------|--------|------------|
| Other        European Union |   | 13,095     |   | 19,601     |   | 23,949     |
| Rest of Europe              |   | 3,769      |   | 5,123      |   | 6,975      |
| Americas                    |   | 5,790      |   | 6,103      |   | 6,250      |
| Asia                        |   | 3,088      |   | 4,399      |   | 5,595      |
| Africa                      |   | 4,148      |   | 5,259      |   | 5,949      |
| Other areas                 |   | 555        |   | 397        |   | 1,044      |
|                        |   | **57,545** |   | **73,728** |   | **86,105** |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

 

**33 Transactions with related parties**

In the ordinary course of its business, Enienters into transactions concerning the exchange of goods,provision of services and financing with joint ventures,affiliated companies and non-consolidated subsidiaries as well aswith entities directly and indirectly owned or controlled by theGovernment. All such transactions are mainly conducted on anarm’s length basis in the interest of Eni companies.

The following is a description of trade andfinancing transactions with related parties.

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##### Table of Contents

**Trade and other transactions**Trade and other transactions in the 2004 consisted of thefollowing:

| (million        euro) |   | **Dec. 31, 2004** |   | **2004** |
|-----------------------|--------|-------------------|--------|----------|
|                  |   |                   |   |          |

|   | **Costs** |   | **Revenues** |
|--------|-----------|--------|--------------|
|   |           |   |              |

| **Name** |   | **Receivables** |   | **Payables** |   | **Guarantees** |   | **Commitments** |   | **Goods** |   | **Services** |   | **Goods** |   | **Services** |
|----------|--------|-----------------|--------|--------------|--------|----------------|--------|-----------------|--------|-----------|--------|--------------|--------|-----------|--------|--------------|
|          |   |                 |   |              |   |                |   |                 |   |           |   |              |   |           |   |              |

| **Joint ventures and affiliated companies**                    |   |    |   |    |   |      |   |    |   |      |   |      |   |      |   |      |
|----------------------------------------------------------------|--------|---------|--------|---------|--------|-----------|--------|---------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|
| Albacom        SpA                                             |   | 8       |   | 14      |   |      |   |    |   | 3         |   | 35        |   |      |   | 8         |
| ASG Scarl                                                      |   | 51      |   | 88      |   | 33        |   |    |   |      |   | 203       |   | 1         |   | 7         |
| Azienda        Energia e Servizi Torino SpA                    |   | 1       |   | 18      |   |      |   |    |   |      |   | 68        |   |      |   | 3         |
| Bayernoil Raffineriegesellschaft mbH                           |   |    |   | 39      |   |      |   |    |   | 2         |   | 791       |   | 1         |   |      |
| Bernhard        Rosa Inh. Ingeborg Plöchinger GmbH        |   | 10      |   |    |   |      |   |    |   |      |   |      |   | 108       |   |      |
| Blue Stream Pipeline Co BV                                     |   | 43      |   | 10      |   |      |   |    |   |      |   | 121       |   |      |   | 5         |
| Bronberger        & Kessler und Gilg & Schweiger GmbH  |   | 13      |   |    |   |      |   |    |   |      |   |      |   | 141       |   |      |
| Cam Petroli Srl                                                |   | 1       |   |    |   |      |   |    |   |      |   |      |   | 6         |   |      |
| CEPAV        (Consorzio Eni per l’Alta Velocità) Uno |   | 167     |   | 165     |   | 4,894     |   |    |   |      |   |      |   |      |   | 531       |
| Eni Oil Co Ltd                                                 |   | 4       |   | 163     |   |      |   |    |   |      |   | 53        |   |      |   |      |
| Erg        Raffinerie Mediterranee SpA                         |   | 30      |   | 30      |   |      |   | 100     |   | 1,043     |   | 10        |   | 412       |   | 9         |
| Gruppo Distribuzione Petroli Srl                               |   | 16      |   |    |   |      |   |    |   |      |   |      |   | 45        |   |      |
| Karachaganak        Petroleum Operating BV                     |   | 21      |   | 12      |   |      |   |    |   |      |   | 104       |   |      |   | 42        |
| Modena Scarl                                                   |   | 6       |   | 37      |   | 43        |   |    |   |      |   | 134       |   |      |   | 1         |
| Petrobel        Belayim Petroleum Co                           |   |    |   | 83      |   |      |   |    |   |      |   | 240       |   |      |   |      |
| Promgas SpA                                                    |   | 27      |   | 23      |   |      |   |    |   | 230       |   |      |   | 259       |   |      |
| Raffineria        di Milazzo ScpA                              |   | 6       |   | 4       |   |      |   |    |   |      |   | 245       |   | 62        |   |      |
| Rodano Consortile Scarl                                        |   | 3       |   | 22      |   | 1         |   |    |   |      |   | 79        |   |      |   | 1         |
| Siciliana        Gas Vendite SpA                               |   | 9       |   |    |   |      |   |    |   |      |   |      |   | 36        |   |      |
| Supermetanol CA                                                |   |    |   | 24      |   |      |   |    |   | 79        |   | 10        |   |      |   |      |
| Super        Octanos CA                                        |   |    |   | 55      |   |      |   |    |   | 212       |   | 11        |   |      |   | 1         |
| Trans Austria Gasleitung GmbH                                  |   |    |   | 15      |   |      |   |    |   |      |   | 167       |   |      |   | 3         |
| Trans        Europa Naturgas Pipeline GmbH                     |   |    |   | 9       |   |      |   |    |   |      |   | 51        |   |      |   |      |
| Transitgas AG                                                  |   |    |   | 2       |   |      |   |    |   |      |   | 59        |   |      |   |      |
| Unión        Fenosa Gas Comercializadora SA               |   |    |   |    |   |      |   |    |   |      |   |      |   | 7         |   |      |
| Unión Fenosa Gas SA                                       |   |    |   |    |   | 111       |   |    |   |      |   |      |   |      |   | 1         |
| Other (*)                                                      |   | 84      |   | 74      |   | 109       |   |    |   | 23        |   | 108       |   | 56        |   | 18        |
|                                                           |   | **500** |   | **887** |   | **5,191** |   | **100** |   | **1,592** |   | **2,489** |   | **1,134** |   | **630**   |
| **Unconsolidated        subsidiaries**                         |   |    |   |    |   |      |   |    |   |      |   |      |   |      |   |      |
| Agip Kazakhstan North                                          |   |    |   |    |   |      |   |    |   |      |   |      |   |      |   |      |
| Caspian        Operating Co NV                                 |   | 2       |   |    |   |      |   |    |   | 1         |   | 14        |   |      |   | 9         |
| Eni BTC Ltd                                                    |   |    |   |    |   | 143       |   |    |   |      |   |      |   |      |   |      |
| Eni Gas BV                                                     |   | 30      |   | 40      |   | 17        |   |    |   |      |   | 5         |   |      |   | 1         |
| Eni Middle East BV                                             |   |    |   |    |   | 367       |   |    |   |      |   |      |   |      |   |      |
| Transmediterranean        Pipeline Co Ltd                      |   | 1       |   | 1       |   |      |   |    |   |      |   | 90        |   |      |   |      |
| Other (*)                                                      |   | 30      |   | 4       |   | 10        |   |    |   | 4         |   | 8         |   | 2         |   | 11        |
|                                                           |   | **63**  |   | **45**  |   | **537**   |   |    |   | **5**     |   | **117**   |   | **2**     |   | **21**    |
|                                                           |   | **563** |   | **932** |   | **5,728** |   | **100** |   | **1,597** |   | **2,606** |   | **1,136** |   | **651**   |
| **Entities        owned or controlled by the Government**      |   |    |   |    |   |      |   |    |   |      |   |      |   |      |   |      |
| Enel                                                           |   | 234     |   | 3       |   |      |   |    |   | 2         |   | 20        |   | 1,287     |   | 350       |
|                                                           |   | **797** |   | **935** |   | **5,728** |   | **100** |   | **1,599** |   | **2,626** |   | **2,423** |   | **1,001** |

|  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

F-78

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##### Table of Contents

Trade and other transactions for the year 2005consisted of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **2005** |
|-----------------------|--------|-------------------|--------|----------|
|                  |   |                   |   |          |

|   | **Costs** |   | **Revenues** |
|--------|-----------|--------|--------------|
|   |           |   |              |

| **Name** |   | **Receivables** |   | **Payables** |   | **Guarantees** |   | **Goods** |   | **Services** |   | **Goods** |   | **Services** |
|----------|--------|-----------------|--------|--------------|--------|----------------|--------|-----------|--------|--------------|--------|-----------|--------|--------------|
|          |   |                 |   |              |   |                |   |           |   |              |   |           |   |              |

| **Joint ventures and affiliated companies**                    |   |    |   |      |   |      |   |          |   |      |   |      |   |    |
|----------------------------------------------------------------|--------|---------|--------|-----------|--------|-----------|--------|---------------|--------|-----------|--------|-----------|--------|---------|
| ASG Scarl                                                      |   | 13      |   | 66        |   | 72        |   |          |   | 173       |   |      |   | 6       |
| Azienda Energia e Servizi Torino SpA                           |   | 2       |   | 24        |   |      |   |          |   | 56        |   |      |   | 2       |
| Bayernoil        Raffineriegesellschaft mbH                    |   |    |   | 49        |   | 1         |   |          |   | 814       |   |      |   |    |
| Bernhard Rosa Inh. Ingeborg Plöchinger GmbH               |   | 10      |   |      |   |      |   |          |   |      |   | 172       |   |    |
| Blue        Stream Pipeline Co BV                              |   | 45      |   | 12        |   |      |   |          |   | 177       |   |      |   | 4       |
| Bronberger & Kessler und Gilg &        Schweiger GmbH  |   | 12      |   |      |   |      |   |          |   |      |   | 207       |   |    |
| Cam        Petroli Srl                                         |   | 85      |   |      |   |      |   |          |   |      |   | 593       |   |    |
| CEPAV (Consorzio Eni per l’Alta Velocità)        Uno |   | 105     |   | 107       |   | 4,894     |   |          |   |      |   |      |   | 411     |
| Eni Gas BV                                                     |   | 16      |   | 149       |   |      |   |          |   | 47        |   |      |   |    |
| Eni Oil Co Ltd                                                 |   |    |   | 84        |   |      |   |          |   | 50        |   |      |   |    |
| Fox Energy        Srl                                          |   | 22      |   |      |   |      |   | 4             |   |      |   | 240       |   |    |
| Gruppo Distribuzione Petroli Srl                               |   | 22      |   |      |   |      |   |          |   |      |   | 89        |   |    |
| Karachaganak        Petroleum Operating BV                     |   | 13      |   | 46        |   |      |   | 6             |   | 99        |   |      |   | 4       |
| Mangrove Gas Netherlands BV                                    |   |    |   |      |   | 55        |   |          |   |      |   |      |   |    |
| Modena        Scarl                                            |   | 2       |   | 12        |   | 61        |   |          |   | 56        |   | 1         |   | 1       |
| Petrobel Belayim Petroleum Co                                  |   |    |   | 138       |   |      |   |          |   | 248       |   |      |   |    |
| Promgas        SpA                                             |   | 44      |   | 45        |   |      |   | 307           |   |      |   | 355       |   |    |
| Raffineria di Milazzo ScpA                                     |   | 10      |   | 10        |   |      |   |          |   | 204       |   | 94        |   |    |
| Rodano        Consortile Scarl                                 |   | 2       |   | 20        |   |      |   |          |   | 80        |   |      |   | 2       |
| RPCO Enterprise Ltd                                            |   |    |   |      |   | 55        |   |          |   |      |   |      |   |    |
| Supermetanol        CA                                         |   |    |   | 8         |   |      |   | 65            |   |      |   |      |   |    |
| Super Octanos CA                                               |   | 1       |   | 14        |   |      |   | 265           |   |      |   |      |   |    |
| Toscana        Energia Clienti SpA                             |   | 46      |   |      |   |      |   |          |   |      |   | 118       |   |    |
| Trans Austria Gasleitung GmbH                                  |   | 43      |   | 55        |   |      |   | 43            |   | 143       |   |      |   | 47      |
| Transitgas        AG                                           |   |    |   | 7         |   |      |   |          |   | 64        |   |      |   |    |
| Transmediterranean Pipeline Co Ltd                             |   |    |   | 4         |   |      |   |          |   | 88        |   |      |   | 1       |
| Unión        Fenosa Gas SA                                |   | 4       |   | 4         |   | 62        |   | 79            |   |      |   | 16        |   | 2       |
| Other (*)                                                      |   | 101     |   | 86        |   | 112       |   | 69            |   | 157       |   | 147       |   | 67      |
|                                                           |   | **598** |   | **940**   |   | **5,312** |   | **838**       |   | **2,456** |   | **2,032** |   | **547** |
| **Unconsolidated subsidiaries**                                |   |    |   |      |   |      |   |          |   |      |   |      |   |    |
| Agip        Kazakhstan North Caspian Operating Co NV           |   | 4       |   | 152       |   |      |   | 5             |   | 19        |   |      |   | 28      |
| Eni BTC Ltd                                                    |   |    |   |      |   | 165       |   |          |   |      |   |      |   |    |
| Other (*)                                                      |   | 44      |   | 48        |   | 8         |   | 1             |   | 31        |   | 15        |   | 9       |
|                                                           |   | **48**  |   | **200**   |   | **173**   |   | **6**         |   | **50**    |   | **15**    |   | **37**  |
|                                                           |   | **646** |   | **1,140** |   | **5,485** |   | **844**       |   | **2,506** |   | **2,047** |   | **584** |
| **Entities owned or controlled by the        Government**      |   |    |   |      |   |      |   |          |   |      |   |      |   |    |
| Alitalia                                                       |   | 20      |   |      |   |      |   |          |   |      |   | 276       |   |    |
| Enel                                                           |   | 187     |   | 5         |   |      |   | 12            |   | 10        |   | 1,180     |   | 333     |
| Other        (*)                                               |   | 20      |   | 19        |   |      |   |          |   | 57        |   | 103       |   | 12      |
|                                                           |   | **227** |   | **24**    |   |      |   | **12**        |   | **67**    |   | **1,559** |   | **345** |
|                                                           |   | **873** |   | **1,164** |   | **5,485** |   | ** 856** |   | **2,573** |   | **3,606** |   | **929** |

|  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

F-79

----

##### Table of Contents

Trade and other transactions in 2006 consistedof the following:

| (million        euro) |   | **Dec. 31, 2006** |   | **2006** |
|-----------------------|--------|-------------------|--------|----------|
|                  |   |                   |   |          |

|   | **Costs** |   | **Revenues** |
|--------|-----------|--------|--------------|
|   |           |   |              |

| **Name** |   | **Receivables** |   | **Payables** |   | **Guarantees** |   | **Goods** |   | **Services** |   | **Goods** |   | **Services** |
|----------|--------|-----------------|--------|--------------|--------|----------------|--------|-----------|--------|--------------|--------|-----------|--------|--------------|
|          |   |                 |   |              |   |                |   |           |   |              |   |           |   |              |

| **Joint ventures and affiliated companies**                    |   |    |   |      |   |      |   |      |   |      |   |      |   |    |
|----------------------------------------------------------------|--------|---------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|-----------|--------|---------|
| ASG Scarl                                                      |   | 7       |   | 40        |   | 80        |   |      |   | 88        |   | 1         |   | 1       |
| Azienda Energia e Servizi Torino SpA                           |   | 1       |   | 22        |   |      |   |      |   | 64        |   | 1         |   | 1       |
| Bernhard        Rosa Inh. Ingeborg Plöchinger GmbH        |   | 10      |   |      |   |      |   |      |   |      |   | 96        |   |    |
| Blue Stream Pipeline Co BV                                     |   | 34      |   | 19        |   |      |   |      |   | 193       |   |      |   | 1       |
| Bronberger        & Kessler und Gilg & Schweiger GmbH  |   | 11      |   |      |   |      |   |      |   |      |   | 113       |   |    |
| Cam Petroli Srl                                                |   | 103     |   |      |   |      |   |      |   |      |   | 310       |   |    |
| CEPAV        (Consorzio Eni per l’Alta Velocità) Uno |   | 87      |   | 87        |   | 5,654     |   | 16        |   | 2         |   |      |   | 304     |
| Charville - Consultores e Serviços Lda                    |   | 7       |   |      |   | 85        |   |      |   |      |   | 4         |   | 11      |
| Eni Gas BV                                                     |   | 28      |   | 90        |   |      |   | 7         |   | 72        |   | 8         |   | 2       |
| Eni Oil Co Ltd                                                 |   | 5       |   | 96        |   |      |   |      |   | 59        |   |      |   |    |
| Fox Energy        SpA                                          |   | 35      |   |      |   |      |   |      |   |      |   | 125       |   |    |
| Gasversorgung Süddeutschland GmbH                         |   | 14      |   |      |   |      |   |      |   | 1         |   | 123       |   | 19      |
| Gruppo        Distribuzione Petroli Srl                        |   | 19      |   |      |   |      |   |      |   |      |   | 54        |   |    |
| Karachaganak Petroleum Operating BV                            |   | 23      |   | 70        |   |      |   | 29        |   | 129       |   |      |   | 7       |
| Mangrove        Gas Netherlands BV                             |   |    |   | 1         |   | 52        |   |      |   |      |   |      |   |    |
| Petrobel Belayim Petroleum Co                                  |   |    |   | 3         |   |      |   |      |   | 181       |   |      |   |    |
| Promgas        SpA                                             |   | 44      |   | 39        |   |      |   | 375       |   |      |   | 419       |   |    |
| Raffineria di Milazzo ScpA                                     |   | 9       |   | 12        |   |      |   |      |   | 237       |   | 109       |   |    |
| Rodano        Consortile Scarl                                 |   | 3       |   | 14        |   |      |   |      |   | 54        |   |      |   | 1       |
| RPCO Enterprises Ltd                                           |   | 13      |   |      |   | 104       |   |      |   |      |   |      |   | 12      |
| Supermetanol        CA                                         |   |    |   | 13        |   |      |   | 91        |   |      |   |      |   |    |
| Super Octanos CA                                               |   |    |   | 13        |   |      |   | 257       |   |      |   |      |   |    |
| Trans        Austria Gasleitung GmbH                           |   | 7       |   | 78        |   |      |   | 53        |   | 138       |   |      |   | 56      |
| Transitgas AG                                                  |   |    |   | 8         |   |      |   |      |   | 64        |   |      |   |    |
| Transmediterranean        Pipeline Co Ltd                      |   |    |   | 7         |   |      |   |      |   | 80        |   |      |   |    |
| Unión Fenosa Gas SA                                       |   | 1       |   | 7         |   | 61        |   | 93        |   | 7         |   |      |   |    |
| Other (*)                                                      |   | 72      |   | 169       |   | 168       |   | 75        |   | 188       |   | 119       |   | 66      |
|                                                           |   | **533** |   | **788**   |   | **6,204** |   | **996**   |   | **1,557** |   | **1,482** |   | **481** |
| **Unconsolidated        subsidiaries**                         |   |    |   |      |   |      |   |      |   |      |   |      |   |    |
| Agip Kazakhstan North Caspian Operating Co NV                  |   | 27      |   | 132       |   |      |   | 18        |   | 16        |   |      |   | 57      |
| Eni BTC        Ltd                                             |   |    |   |      |   | 185       |   |      |   |      |   |      |   |    |
| Eni Timor Leste SpA                                            |   |    |   |      |   | 102       |   |      |   |      |   |      |   |    |
| Other (*)                                                      |   | 20      |   | 30        |   | 8         |   | 1         |   | 4         |   | 8         |   | 4       |
|                                                           |   | **47**  |   | **162**   |   | **295**   |   | **19**    |   | **20**    |   | **8**     |   | **61**  |
|                                                           |   | **580** |   | **950**   |   | **6,499** |   | **1,015** |   | **1,577** |   | **1,490** |   | **542** |
| **Entities owned or controlled by the        Government**      |   |    |   |      |   |      |   |      |   |      |   |      |   |    |
| Alitalia                                                       |   | 12      |   |      |   |      |   |      |   |      |   | 354       |   |    |
| Enel                                                           |   | 162     |   | 42        |   |      |   | 47        |   | 33        |   | 1,068     |   | 383     |
| Other (*)                                                      |   | 42      |   | 29        |   |      |   | 4         |   | 44        |   | 136       |   | 1       |
|                                                           |   | **216** |   | **71**    |   |      |   | **51**    |   | **77**    |   | **1,558** |   | **384** |
|                                                           |   | **796** |   | **1,021** |   | **6,499** |   | **1,066** |   | **1,654** |   | **3,048** |   | **926** |

|  |   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

Engineering, construction and maintenanceservices are acquired on an arm’s length basis from theCosmi Holding Group, related to Eni through a member of the Boardof Directors, for a total of approximately euro 18 million andeuro 13 million in 2005 and 2006, respectively.

Most significant transactions concern:

| • |   | provision of        specialized services in upstream activities and payables        for investment activities from Agip Kazakhstan North        Caspian Operating Co NV, Eni Gas BV, Eni Oil Co Ltd,        Karachaganak Petroleum Operating BV and Petrobel Belayim        Petroleum Co; services are invoiced on the basis of        incurred costs;                                                                                               |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | transactions        related to the planning and the construction of the        tracks for high speed/high capacity trains from Milan to        Bologna with ASG Scarl, CEPAV (Consorzio Eni per        l’Alta Velocità) Uno, Modena Scarl and Rodano        Consortile Scarl, and relevant guarantees;                                                                                                                                     |
| • |   | transportation        and distribution activities with Azienda Energia e        Servizi Torino SpA;                                                                                                                                                                                                                                                                                                                                                  |
| • |   | supply of oil        products to Bernhard Rosa Inh. Ingeborg Plöchinger GmbH,        Bronberger & Kessler und Gilg & Schweiger GmbH,        Cam Petroli Srl, Fox Energy SpA, Gruppo Distribuzione        Petroli Srl 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; |

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| • |   | acquisition        of petrochemical products from Supermetanol CA and Super        Octanos CA on the basis of prices referred to the        quotations on international markets of the main oil        products;                                           |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | acquisition        of natural gas transport services outside Italy from Blue        Stream Pipeline Co BV, Trans Austria Gasleitung GmbH and        Transitgas AG;                                                                                         |
| • |   | guarantees        given in relation to the construction of an oil pipeline        on behalf of Eni BTC Ltd;                                                                                                                                                |
| • |   | sale of        natural gas with Gasversorgung Süddeutschland GmbH e        Toscana Gas Clienti SpA;                                                                                                                                                   |
| • |   | guarantees        given on behalf of Mangrove Gas Netherlands BV, RPCO        Enterprises Ltd, Charville - Consultores e Serviços Lda        and Eni Timor Leste SpA relating to bid bonds and        performance bonds;                              |
| • |   | sale and        acquisition of natural gas outside Italy with Promgas        SpA;                                                                                                                                                                          |
| • |   | acquisition        of refining services from Raffineria di Milazzo ScpA on        the basis of compensations related to incurred costs;                                                                                                                    |
| • |   | acquisition        of natural gas transport services outside Italy from        Transmediterranean Pipeline Co Ltd; transactions are        regulated on the basis of tariffs, which permit the        recovery of operating expenses and capital employed; |
| • |   | sale and        acquisition of natural gas and performance guarantees        given on behalf of Unión Fenosa Gas SA in relation to        contractual commitments related to the results of        operations;                                        |
| • |   | sale of oil        products with Alitalia;                                                                                                                                                                                                                 |
| • |   | sale and        transportation of natural gas, the sale of fuel oil and        the sale and purchase of electricity with Enel.                                                                                                                             |

**Financing transactions**Financing transactions in 2004 were as follows:

| (million        euro) |   | **Dec. 31, 2004** |   | **2004** |
|-----------------------|--------|-------------------|--------|----------|
|                  |   |                   |   |          |

| **Name** |   | **Receivables** |   | **Payables** |   | **Guarantees** |   | **Charges** |   | **Gains** |
|----------|--------|-----------------|--------|--------------|--------|----------------|--------|-------------|--------|-----------|
|          |   |                 |   |              |   |                |   |             |   |           |

| **Joint ventures and affiliated companies**   |   |    |   |    |   |      |   |   |   |   |
|-----------------------------------------------|--------|---------|--------|---------|--------|-----------|--------|--------|--------|--------|
| Albacom        SpA                            |   | 22      |   |    |   | 88        |   |   |   |   |
| Blue Stream Pipeline Co BV                    |   |    |   | 2       |   | 768       |   |   |   | 29     |
| EnBW - Eni        Verwaltungsgesellschaft mbH |   |    |   |    |   | 250       |   |   |   |   |
| Raffineria di Milazzo ScpA                    |   |    |   |    |   | 107       |   |   |   |   |
| Spanish        Egyptian Gas Co SAE            |   |    |   |    |   | 404       |   |   |   | 9      |
| Trans Austria Gasleitung GmbH                 |   | 389     |   |    |   |      |   |   |   | 9      |
| Transmediterranean        Pipeline Co Ltd     |   | 197     |   |    |   |      |   |   |   | 9      |
| Other (*)                                     |   | 52      |   | 91      |   | 55        |   | 9      |   | 11     |
|                                          |   | **660** |   | **93**  |   | **1,672** |   | **9**  |   | **67** |
| **Unconsolidated subsidiaries**               |   |    |   |    |   |      |   |   |   |   |
| Other (*)                                     |   | 71      |   | 54      |   | 2         |   | 4      |   | 2      |
|                                          |   | **71**  |   | **54**  |   | **2**     |   | **4**  |   | **2**  |
|                                          |   | **731** |   | **147** |   | **1,674** |   | **13** |   | **69** |

|  |   |  |   |  |   |  |   |  |   |  |
|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

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Financing transactions in 2005 were as follows:

| (million        euro) |   | **Dec. 31, 2005** |   | **2005** |
|-----------------------|--------|-------------------|--------|----------|
|                  |   |                   |   |          |

| **Name** |   | **Receivables** |   | **Payables** |   | **Guarantees** |   | **Charges** |   | **Gains** |
|----------|--------|-----------------|--------|--------------|--------|----------------|--------|-------------|--------|-----------|
|          |   |                 |   |              |   |                |   |             |   |           |

| **Joint ventures and affiliated companies** |   |    |   |    |   |      |   |   |   |   |
|---------------------------------------------|--------|---------|--------|---------|--------|-----------|--------|--------|--------|--------|
| Blue        Stream Pipeline Co BV           |   |    |   | 15      |   | 887       |   |   |   |   |
| Raffineria di Milazzo ScpA                  |   |    |   |    |   | 72        |   |   |   |   |
| Spanish        Egyptian Gas Co SAE          |   |    |   |    |   | 360       |   |   |   |   |
| Trans Austria Gasleitung GmbH               |   | 386     |   |    |   |      |   |   |   | 12     |
| Transmediterranean        Pipeline Co Ltd   |   | 190     |   |    |   |      |   |   |   | 11     |
| Other (*)                                   |   | 74      |   | 125     |   | 81        |   | 27     |   | 47     |
|                                        |   | **650** |   | **140** |   | **1,400** |   | **27** |   | **70** |
| **Unconsolidated subsidiaries**             |   |    |   |    |   |      |   |   |   |   |
| Other (*)                                   |   | 79      |   | 30      |   | 34        |   | 1      |   | 2      |
|                                        |   | **79**  |   | **30**  |   | **34**    |   | **1**  |   | **2**  |
|                                        |   | **729** |   | **170** |   | **1,434** |   | **28** |   | **72** |

|  |   |  |   |  |   |  |   |  |   |  |
|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

Financing transactions in 2006 are as follows:

| (million        euro) |   | **Dec. 31, 2006** |   | **2006** |
|-----------------------|--------|-------------------|--------|----------|
|                  |   |                   |   |          |

| **Name** |   | **Receivables** |   | **Payables** |   | **Guarantees** |   | **Charges** |   | **Gains** |
|----------|--------|-----------------|--------|--------------|--------|----------------|--------|-------------|--------|-----------|

|  |   |  |   |  |   |  |   |  |   |  |
|--|--------|--|--------|--|--------|--|--------|--|--------|--|

| **Joint ventures and affiliated companies** |   |    |   |    |   |      |   |   |   |   |
|---------------------------------------------|--------|---------|--------|---------|--------|-----------|--------|--------|--------|--------|
| Blue        Stream Pipeline Co BV           |   |    |   | 3       |   | 794       |   | 4      |   | 26     |
| Raffineria di Milazzo ScpA                  |   |    |   |    |   | 57        |   |   |   |   |
| Spanish        Egyptian Gas Co SAE          |   |    |   |    |   | 323       |   |   |   |   |
| Trans Austria Gasleitung GmbH               |   | 41      |   |    |   |      |   |   |   | 6      |
| Transmediterranean        Pipeline Co Ltd   |   | 147     |   |    |   |      |   |   |   | 11     |
| Other (*)                                   |   | 88      |   | 81      |   | 39        |   | 13     |   | 11     |
|                                        |   | **276** |   | **84**  |   | **1,213** |   | **17** |   | **54** |
| **Unconsolidated subsidiaries**             |   |    |   |    |   |      |   |   |   |   |
| Other (*)                                   |   | 95      |   | 25      |   | 2         |   | 1      |   | 4      |
|                                        |   | **95**  |   | **25**  |   | **2**     |   | **1**  |   | **4**  |
|                                        |   | **371** |   | **109** |   | **1,215** |   | **18** |   | **58** |

|  |   |  |   |  |   |  |   |  |   |  |
|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                  |
|--------|--------|---------------------------------------------------------------------------------------|
| (*)    |   | Each        individual amount included herein does not exceed euro 50        million. |

Most significant transactions in 2006 included:

| • |   | bank debt        guarantee given on behalf of Blue Stream Pipeline Co BV        and cash deposit at Eni’s financial companies;                                                                                                                                                        |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | bank debt        guarantee given on behalf of Raffineria di Milazzo ScpA        and Spanish Egyptian Gas Co SAE;                                                                                                                                                                           |
| • |   | the financing        of the Austrian section of the gasline from the Russian        Federation to Italy and the construction of natural gas        transmission facilities and transport services with Trans        Austria Gasleitung GmbH and Transmediterranean Pipeline        Co Ltd. |

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**Impact of transactions and positions withrelated parties on the balance sheet, net profit and cash flows**The impact of transactions and positions with related partieson the balance sheet, net profit and financial flows consists ofthe following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

|   | **Total** |   | **Related parties** |   | **Impact %** |   | **Total** |   | **Related parties** |   | **Impact %** |
|--------|-----------|--------|---------------------|--------|--------------|--------|-----------|--------|---------------------|--------|--------------|
|   |           |   |                     |   |              |   |           |   |                     |   |              |

| Trade and other receivables                                 |   | 17,902 |   | 1,344  |   | 7.51   |   | 18,799 |   | 1,027 |   | 5.46  |
|-------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------|--------|-------|
| Other        current assets                                 |   | 369    |   |   |   |   |   | 855    |   | 4     |   | 0.47  |
| Other non-current financial assets                          |   | 1,050  |   | 258    |   | 24.57  |   | 805    |   | 136   |   | 16.89 |
| Current        financial liabilities                        |   | 4,612  |   | 152    |   | 3.30   |   | 3,400  |   | 92    |   | 2.71  |
| Trade and other payables                                    |   | 13,095 |   | 1,164  |   | 8.89   |   | 15,995 |   | 961   |   | 6.01  |
| Other        liabilities                                    |   | 613    |   |   |   |   |   | 634    |   | 4     |   | 0.63  |
| Long-term debt and current portion of long-term        debt |   | 8,386  |   | 18     |   | 0.21   |   | 8,299  |   | 17    |   | 0.20  |
| Other        non-current liabilities                        |   | 897    |   |   |   |   |   | 418    |   | 56    |   | 13.40 |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

The impact of transactions with related partieson the profit and loss accounts consists of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

|   | **Total** |   | **Related parties** |   | **Impact %** |   | **Total** |   | **Related parties** |   | **Impact %** |
|--------|-----------|--------|---------------------|--------|--------------|--------|-----------|--------|---------------------|--------|--------------|
|   |           |   |                     |   |              |   |           |   |                     |   |              |

| Net sales from operations            |   | 73,728 |   | 4,535 |   | 6.15 |   | 86,105 |   | 3,974 |   | 4.62 |
|--------------------------------------|--------|--------|--------|-------|--------|------|--------|--------|--------|-------|--------|------|
| Purchases,        services and other |   | 48,567 |   | 3,429 |   | 7.06 |   | 57,490 |   | 2,720 |   | 4.73 |
| Financial income                     |   | 3,131  |   | 72    |   | 2.30 |   | 4,132  |   | 58    |   | 1.40 |
| Financial        expense             |   | 3,497  |   | 28    |   | 0.80 |   | 3,971  |   | 18    |   | 0.45 |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

Transactions with related parties concern theordinary course of Eni’s business and are mainly conductedon an arm’s length basis.

Main cash flows with related parties are asfollows:

| (million        euro) |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|
|                  |   |          |   |          |

| Revenues and other income                                        |   | 4,535     |   |   | 3,974     |   |
|------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|
| Costs and        other expenses                                  |   | (3,429    | )      |   | (2,720    | )      |
| Net change in trade and other receivables and        liabilities |   | (221      | )      |   | 162       |   |
| Dividends        and net interests                               |   | 345       |   |   | 790       |   |
| **Net cash provided from operating activities**                  |   | **1,230** |   |   | **2,206** |   |
| Capital        expenditures in tangible and intangible assets    |   | (474      | )      |   | (733      | )      |
| Investments                                                      |   | (30       | )      |   | (20       | )      |
| Change in        accounts payable in relation to investments     |   | 342       |   |   | (276      | )      |
| Change in financial receivables                                  |   | 2         |   |   | 343       |   |
| **Net        cash used in investing activities**                 |   | **(160**  | **)**  |   | **(686**  | **)**  |
| Change in financial liabilities                                  |   | 23        |   |   | (57       | )      |
| **Net        cash used in financing activities**                 |   | **23**    |   |   | **(57**   | **)**  |
| **Total financial flows to related parties**                     |   | **1,093** |   |   | **1,463** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

The impact of cash flows with related partiesconsists of the following:

| (million        euro) |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|
|                  |   |          |   |          |

|   | **Total** |   | **Related parties** |   | **Impact %** |   | **Total** |   | **Related parties** |   | **Impact %** |
|--------|-----------|--------|---------------------|--------|--------------|--------|-----------|--------|---------------------|--------|--------------|
|   |           |   |                     |   |              |   |           |   |                     |   |              |

| Cash provided from operating activities  |   | 14,936 |   |   | 1,230 |   |   | 8.24 |   |   | 17,001 |   |   | 2,206 |   |   | 12.98 |   |
|------------------------------------------|--------|--------|--------|--------|-------|--------|--------|------|--------|--------|--------|--------|--------|-------|--------|--------|-------|--------|
| Cash used in        investing activities |   | (6,815 | )      |   | (160  | )      |   | 2.35 |   |   | (7,051 | )      |   | (686  | )      |   | 9.73  |   |
| Cash used in financing activities        |   | (7,824 | )      |   | 23    |   |   | ..   |   |   | (7,097 | )      |   | (57   | )      |   | 0.80  |   |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

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**34 Significant non recurring events and operations**

Non recurring charges consist of the following:

| (million        euro) |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|
|                  |   |          |   |          |

| Italian Antitrust fine                                |   | (290     | )      |   | (184     | )     |
|-------------------------------------------------------|--------|----------|--------|--------|----------|-------|
| Italian        Authority for Electricity and Gas fine |   |     |   |   | (55      | )     |
|                                                  |   | **(290** | **)**  |   | **(239** | **)** |

|   |   |  |   |  |
|--------|--------|--|--------|--|

The Italian Antitrust fine of 2006 consists of:(i) a fine imposed by the Italian Antitrust Authority followingthe proceeding on supplies of jet fuel (euro 109 million); and(ii) inquiries concerning alleged anti-competitive agreements inthe area of elastomers (euro 75 million). The fine imposed by theAuthority for Electricity and Gas concerns an inquiry relating tothe use of storage capacity in thermal year 2005-2006 (euro 45million) and an inquiry relating to an information requirement onnatural gas supplying prices (euro 10 million). The antitrustfine for 2005 concerns a fine imposed by the Italian AntitrustAuthority on February 15, 2006 relating to an abuse of dominantposition following the behaviors of Trans Tunisian Pipeline CoLtd (TTPC). More information is included in Note 25 - Guarantees,commitments and risks - Legal Proceedings - Antitrust - TTPC.

Non recurring items were immaterial in 2004.

 

**35 Positions or transactions deriving from atypical and/orunusual operations**

In 2004, 2005 and in 2006 no positions ortransactions deriving from atypical and/or unusual operationswere reported.

 

**36 Adjustment of the Consolidated Financial Statements toU.S. GAAP**

As its shares are listed on the New York StockExchange, Eni files an Annual Report (Form 20-F) with theSecurities and Exchange Commission (SEC). The Annual Report (Form20-F) includes the adjustment of the Consolidated FinancialStatements to U.S. GAAP. The following information is necessaryto reconcile the Italian consolidated annual report for 2006 togenerally accepted accounting principles in the United States(U.S. GAAP).

**Summary of significant differences betweenIFRS and U.S. GAAP**Eni’s Financial Statements at December 31, 2006 havebeen prepared in accordance with International FinancialReporting Standards (IFRS) adopted by the European Commission,which differ in certain aspects from U.S. GAAP. A description ofthe significant differences and their effects on net profit andshareholders’ equity is set forth in the following notes.

*A) Consolidation policy*Eni’s consolidation policy is described under"Principles of consolidation" of the Notes to theConsolidated Financial Statements. In particular, under IFRS, theconsolidated financial statements include also companies in whichEni holds less than 50% of the voting rights, but over which itexercises control in shareholders’ meetings.

Under U.S. GAAP, investments of less than 50%are accounted for by applying the equity method. Under U.S. GAAP,Saipem SpA and its subsidiaries are excluded from consolidationand are accounted for under the equity method. Under IFRS, Eniexercises control of Saipem SpA also without holding the majorityof voting rights (43.54%) exercisable in shareholders’meetings. During 2006 Saipem Projects SpA (100% Saipem SpA)acquired from Eni SpA 100% of Snamprogetti SpA that, as a result,has been excluded from consolidation; for U.S. GAAP purposes thegain on this sale was recognized in profit and loss account.

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*B) Exploration & production activities*

*Exploration*Consistent with IFRS, the international specific criteriahave been applied for hydrocarbons exploration and productionactivities. In particular, exploration costs, includingsuccessful exploratory wells, are recorded as intangible assetsand are amortized in full in the period incurred (i.e. expensedas incurred for financial reporting purposes). Costs for theacquisition of exploration permits and for the extension ofexisting permits, are capitalized and amortized over the expectedperiod of benefit.

Under U.S. GAAP, costs relating to exploratorywells are initially capitalized as "incomplete wells andother" until it is determined if commercial quantities ofreserves have been discovered ("successful effortsmethod"). After completion of drilling and evaluation of thewell, the capitalized costs are either charged to expense orreclassified as part of Eni’s proved mineral interests.Costs of exploratory wells that have found commerciallyproducible quantities of reserves that cannot be classified asproved remain capitalized after the completion of drilling if:(i) such wells have found a sufficient quantity of reservesto justify completion as a producing wells; and (ii) theenterprise is making sufficient progress assessing the reservesand the economic and operating viability of the project. Ifeither condition is not met or if an enterprise obtainsinformation that raises substantial doubt about the economic oroperational viability of the project, the exploratory well isassumed to be impaired, and its costs, net of any salvage value,are charged to expense. Capitalized well costs related to provedproperties are amortized over proved developed reserves on thebasis of units of production. Other exploration costs, includinggeological and geophysical surveys, are expensed when incurred.

*Development*Development costs are those costs incurred to obtain accessto proved reserves and to provide facilities for extracting,treating, gathering and storing oil and gas. Costs to operate andmaintain wells and field equipment are expensed as incurred.

Under IFRS, costs of unsuccessful developmentwells are expensed immediately as loss on disposal. Costs ofsuccessful development wells are capitalized and amortized usingUOP.

Under U.S. GAAP, costs of productive wells anddevelopment dry holes, both tangible and intangible, arecapitalized and amortized using the UOP method.

*C) Valuation of assets and subsequentrevaluation*Both IFRS and U.S. GAAP require that recoverability ofcarrying value of tangible and intangible assets with a definiteuseful life is checked using similar criteria, with the exceptionof the following aspects.

Under IFRS, in order to determine whether animpairment exists, the book value of an asset is compared withits recoverable amount which is represented by the greater offair value, net of disposal costs and value in use which iscalculated by discounting estimated cash flows arising from theuse of the asset and its sale at the end of its useful life.Impairment losses of assets different from goodwill are reversedwhen the situation giving rise to an impairment ceases to exist.

Under U.S. GAAP, the recoverability of thevalue of an asset used in the production process is first checkedby comparing the carrying amount with the sum of undiscountedcash flows expected from use of the asset and its disposal at theend of its useful life. Only if the result of this first check isnegative does the entity write the asset down using discountedfuture cash flows. Under U.S. GAAP reversals of impairment lossesare not permitted.

*D) Deferred tax assets and liabilities*Under IFRS, taxes payable relating to certain potentialdistributions from retained profits and other reserves or uponliquidation of a company are accrued only to the extent suchdistributions are planned.

Under U.S. GAAP, deferred tax liabilities arerecognized regardless of expected distribution of dividends orthe disposal of investments. However, U.S. GAAP does not requirethe accrual of deferred taxes when the investment is a foreignsubsidiary and there is sufficient evidence that profits willremain permanently invested in the entity.

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The adjustment included in Note 37 -Reconciliation of net profit and shareholders’ equitydetermined under IFRS to U.S. GAAP, concerns the recognition ofdeferred taxes on retained profits and other reserves regardlessof their expected distribution and are measured taking intoaccount the exception provided for foreign subsidiaries. Taxadjustments include also deferred tax assets and liabilitiesrecognized on other adjustments to U.S. GAAP.

*E) Intangible assets*Under U.S. GAAP, intangible assets include the recording,separately from goodwill, of assets acquired in or followingbusiness combinations arising from legal or contractual rightsregardless of their ability to be transferred and of other assetsowned by the entity that can be transferred individually ortogether with other assets and liabilities. If such intangibleassets have definite lives they are amortized by the straightline method over their useful lives.

IFRS are consistent with U.S. GAAP. However,considering that in the first application of IFRS, Eni hasdecided not to restate business combinations, the value of theintangible assets described is recorded in the item"Goodwill".

Both under U.S. GAAP and IFRS, goodwill andintangible assets with an indefinite useful life are notamortized; the carrying amount of these assets is reviewedannually for impairment. Such accounting principles have beenadopted starting from January 1, 2002 for U.S. GAAP and January1, 2004 for IFRS. The adjustments for the reconciliation of theshareholders’ equity included in Note 37 - Reconciliation ofnet profit and shareholders’ equity determined under IFRS toU.S. GAAP, concern the reversal of the amortization of goodwillfor the years 2002 and 2003.

*F) Inventories*Under U.S. GAAP, crude oil, petroleum products and naturalgas inventories are calculated using the LIFO method.

Under IFRS the LIFO method is not permitted.

*G) Provisions for employee benefits*Both under U.S. GAAP and IFRS liabilities related to definedbenefit plans and long-term employee benefits are determined byadopting actuarial assumptions. The application of the corridorapproach is allowed. Under the corridor approach the actuarialgains and losses of defined benefit plans, deriving from a changein the actuarial assumptions used or from a change in theconditions of the plan, are charged to the profit and lossaccount, proportionally through the residual average working lifeof the employees participating to the plan, in the limits of theshare of the discounted profit/loss not charged beforehand, thatexceeds the greater of 10% of liabilities and 10% of the fairvalue of the plan assets.

Under IFRS, following the application of thecorridor approach, the liability for employee benefits isrecognized in the caption "Provisions for employeebenefits" and excludes actuarial incomes and losses notcharged to the profit and loss account. Plan assets are measuredon the basis of their expected return.

Under U.S. GAAP plan assets are measured on thebasis of their effective return. The actuarial liabilityrecognized in the balance sheet includes the total amount ofincomes and losses deriving from changes in actuarialassumptions; changes of liabilities relating to actuarial incomesand losses not accounted in the profit and loss account arerecognized, net of the related deferred tax effect with acorresponding entry to the item of the shareholders’ equity"Other comprehensive income"10. In thefollowing periods, the actuarial incomes and losses"suspended" in other comprehensive income arerecognized in the profit and loss account according to thecorridor method.

_______________

| (10) |   | The        difference between IFRS and U.S. GAAP takes into        consideration the adoption of SFAS 158        "Employers’ Accounting for Defined Benefit        Pension and Other Postretirement Plans - an amendment of        FASB Statements No. 87, 88, 106 and 132(R)" (SFAS);        the effects of the adoption of SFAS 158 are described in        the paragraph "Changes in accounting        principles". |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**37 Reconciliation of net profit and shareholders’equity determined under IFRS to U.S. GAAP**

The following is a summary of the significantadjustments to net profit of 2004, 2005 and 2006 and toshareholders’ equity as of December 31, 2005 and as ofDecember 31, 2006 that would be required if U.S. GAAP had beenapplied instead of IFRS in the Consolidated Financial Statements.

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| **Net profit pertaining to Eni according to the        Financial Statements prepared under IFRS**                                    |   | **7,059** |   |   | **8,788**  |   |   | **9,217**  |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|
| Items        increasing (decreasing) reported net profit:                                                                            |   |      |   |   |       |   |   |       |   |
| A. effect of the differences related to        companies consolidated under IFRS but carried at equity        method under U.S. GAAP |   | (1        | )      |   |       |   |   | (1         | )      |
| B.        successful-efforts accounting                                                                                              |   | (82       | )      |   | 47         |   |   | 359        |   |
| C. elimination of asset impairments and        revaluations                                                                          |   | 5         |   |   |       |   |   | 36         |   |
| D.        deferred income taxes                                                                                                      |   | (21       | )      |   | (279       | )      |   | (120       | )      |
| E. assets associated to the acquisition of a        company (portfolio of clients)                                                   |   | (5        | )      |   | (5         | )      |   | (5         | )      |
| F.        valuation of inventories                                                                                                   |   | (316      | )      |   | (956       | )      |   | 267        |   |
| Gain on disposal of Snamprogetti SpA to Saipem        Projects SpA (*)                                                               |   |      |   |   |       |   |   | 252        |   |
| Effect of        the difference between IFRS and U.S. GAAP on investments        accounted for using the equity method               |   | 34        |   |   | 12         |   |   | 1          |   |
| Other adjustments                                                                                                                    |   | (280      | )      |   | (3         | )      |   | (4         | )      |
| Effect of        U.S. GAAP adjustments on minority interest (a)                                                                      |   | 8         |   |   | (21        | )      |   | 3          |   |
| **Net adjustment**                                                                                                                   |   | **(658**  | **)**  |   | **(1,205** | **)**  |   | **788**    |   |
| **Net        profit in accordance with U.S. GAAP**                                                                                   |   | **6,401** |   |   | **7,583**  |   |   | **10,005** |   |
| Basic profit per share (b)                                                                                                           |   | 1.70      |   |   | 2.02       |   |   | 2.71       |   |
| Diluted        profit per share (b)                                                                                                  |   | 1.70      |   |   | 2.01       |   |   | 2.70       |   |
| Basic profit per ADR (based on two shares per        ADR) (b)                                                                        |   | 3.39      |   |   | 4.03       |   |   | 5.41       |   |
| Diluted        profit per ADR (based on two shares per ADR) (b)                                                                      |   | 3.39      |   |   | 4.03       |   |   | 5.41       |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (*)    |   | For U.S. GAAP        purposes Eni SpA’s investment in Saipem SpA is        accounted for under the equity method. During the year        Eni SpA sold Snamprogetti SpA to Saipem SpA which        resulted in a gain on sale. A portion of this gain was        recognized in net profit in accordance with U.S. GAAP        equal to the portion of the gain derived from interests        held in Saipem SpA by parties external to the Eni Group.        Under IFRS Saipem SpA is fully consolidated and,        therefore, no gain was recognized. An adjustment was made        under IFRS within equity to reflect the change in        minority interests resulting from this transaction. |
| (a)    |   | Adjustment to        account for minority interest portion of differences A        through F, which includes 100% of differences between        IFRS and U.S. GAAP on less than wholly-owned        subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (b)    |   | Amounts in        euro.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

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In 2004, other adjustments relate to otherreconciling items between IFRS and U.S. GAAP mainly in respect ofthe accounting of the derivative financial instruments, which in2004 were not accounted for under fair value accounting method aspermitted under IFRS first application exemption.

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| **Shareholders’ equity pertaining to Eni        according to the Financial Statements prepared under IFRS**                     |   | **36,868** |   |   | **39,029** |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|
| Items        increasing (decreasing) reported shareholders’        equity (a)                                                   |   |       |   |   |       |   |
| A. effect of the differences related to        companies consolidated under IFRS but carried at equity        method under U.S. GAAP |   | 37         |   |   | 33         |   |
| B.        successful-efforts accounting                                                                                              |   | 2,504      |   |   | 2,672      |   |
| C. elimination of assets impairments and        revaluations                                                                         |   | 230        |   |   | 311        |   |
| D.        deferred income taxes                                                                                                      |   | (3,415     | )      |   | (3,495     | )      |
| E. goodwill                                                                                                                          |   | 811        |   |   | 786        |   |
| E. assets        associated with the acquisition of a company (portfolio        of clients)                                          |   | (16        | )      |   | (22        | )      |
| F. valuation of inventories                                                                                                          |   | (2,036     | )      |   | (1,769     | )      |
| G.        provisions for employees benefits                                                                                          |   |       |   |   | (32        | )      |
| Effect of the difference between IFRS and U.S.        GAAP on investments accounted for using the equity method                      |   | 173        |   |   | 169        |   |
| Other        adjustments                                                                                                             |   |       |   |   | 2          |   |
| Effect of U.S. GAAP adjustments on minority        interest (b)                                                                      |   | (31        | )      |   | (28        | )      |
| **Net        adjustment**                                                                                                            |   | **(1,743** | **)**  |   | **(1,373** | **)**  |
| **Shareholders’ equity in accordance with        U.S. GAAP**                                                                    |   | **35,125** |   |   | **37,656** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

|   |   |                                                                                                                                                                                                      |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)    |   | Items        increasing (decreasing) reported shareholders’        equity of foreign companies are translated into euro at        the exchange rate prevailing at the end of each period.            |
| (b)    |   | Adjustment to        account for minority interest portion of differences A        through G, which include 100% of differences between IFRS        and U.S. GAAP on less than wholly-owned subsidiaries. |

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##### Table of Contents

The consolidated balance sheets, if determinedunder U.S. GAAP would have been as follows:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| **ASSETS**                                                                                                                       |   |       |   |   |       |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|
| **Current        asset**                                                                                                         |   |       |   |   |       |   |
| Cash and cash equivalent                                                                                                         |   | 1,121      |   |   | 3,685      |   |
| Other        financial assets for trading or available for sale                                                                  |   | 1,484      |   |   | 970        |   |
| Trade and other receivables                                                                                                      |   | 17,971     |   |   | 18,568     |   |
| Inventories                                                                                                                      |   | 1,929      |   |   | 2,721      |   |
| Current tax assets                                                                                                               |   | 575        |   |   | 447        |   |
| Other        current assets                                                                                                      |   | 387        |   |   | 877        |   |
| **Total current assets**                                                                                                         |   | **23,467** |   |   | **27,268** |   |
| **Non-current        assets**                                                                                                    |   |       |   |   |       |   |
| Property, plant and equipment                                                                                                    |   | 43,868     |   |   | 42,924     |   |
| Other        assets                                                                                                              |   |       |   |   | 629        |   |
| Inventories - compulsory stock                                                                                                   |   | 1,462      |   |   | 1,273      |   |
| Intangible        assets                                                                                                         |   | 5,244      |   |   | 6,057      |   |
| Investments accounted for using the equity        method                                                                         |   | 4,589      |   |   | 4,305      |   |
| Other        investments                                                                                                         |   | 416        |   |   | 353        |   |
| Other financial assets                                                                                                           |   | 1,105      |   |   | 860        |   |
| Deferred        tax assets                                                                                                       |   | 1,847      |   |   | 1,145      |   |
| Other non-current receivables                                                                                                    |   | 979        |   |   | 992        |   |
| **Total        non-current assets**                                                                                              |   | **59,510** |   |   | **58,538** |   |
| **TOTAL ASSETS**                                                                                                                 |   | **82,977** |   |   | **85,806** |   |
| **LIABILITIES        AND SHAREHOLDERS’ EQUITY**                                                                             |   |       |   |   |       |   |
| **Current liabilities**                                                                                                          |   |       |   |   |       |   |
| Current        financial liabilities                                                                                             |   | 4,916      |   |   | 4,032      |   |
| Current portion of long-term debt                                                                                                |   | 809        |   |   | 890        |   |
| Trade and        other payables                                                                                                  |   | 11,552     |   |   | 13,201     |   |
| Taxes payable                                                                                                                    |   | 3,296      |   |   | 2,671      |   |
| Other        current liabilities                                                                                                 |   | 648        |   |   | 720        |   |
| **Total current liabilities**                                                                                                    |   | **21,221** |   |   | **21,514** |   |
| **Non-current        liabilities**                                                                                               |   |       |   |   |       |   |
| Long-term debt                                                                                                                   |   | 7,229      |   |   | 6,646      |   |
| Provisions        for contingencies                                                                                              |   | 7,615      |   |   | 8,553      |   |
| Provisions for employee benefits                                                                                                 |   | 939        |   |   | 937        |   |
| Deferred        tax liabilities                                                                                                  |   | 8,370      |   |   | 8,762      |   |
| Other non-current liabilities                                                                                                    |   | 1,015      |   |   | 417        |   |
| **Total        non-current liabilities**                                                                                         |   | **25,168** |   |   | **25,315** |   |
| **TOTAL LIABILITIES**                                                                                                            |   | **46,389** |   |   | **46,829** |   |
| **SHAREHOLDERS’        EQUITY**                                                                                             |   |       |   |   |       |   |
| **Minority interests**                                                                                                           |   | **1,463**  |   |   | **1,321**  |   |
| **Eni        shareholders’ equity:**                                                                                        |   |       |   |   |       |   |
| Share capital: 4,005,358,876 fully paid shares        nominal value euro 1 each (the same amount as of December        31, 2005) |   | 4,005      |   |   | 4,005      |   |
| Other        reserves                                                                                                            |   | 27,753     |   |   | 29,020     |   |
| Net profit                                                                                                                       |   | 7,583      |   |   | 10,005     |   |
| Treasury        shares                                                                                                           |   | (4,216     | )      |   | (5,374     | )      |
| ***Eni shareholders’ equity***                                                                                              |   | **35,125** |   |   | **37,656** |   |
| **Total        shareholders’ equity**                                                                                       |   | **36,588** |   |   | **38,977** |   |
| **TOTAL LIABILITIES AND SHAREHOLDERS’        EQUITY**                                                                       |   | **82,977** |   |   | **85,806** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

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##### Table of Contents

Property, plant and equipment determined underU.S. GAAP consist of the following:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Property, plant and equipment, gross:      |   |       |   |   |       |   |
|--------------------------------------------|--------|------------|--------|--------|------------|--------|
| -        Exploration & Production      |   | 47,891     |   |   | 47,852     |   |
| - Gas & Power                          |   | 21,514     |   |   | 22,304     |   |
| - Refining        & Marketing          |   | 9,059      |   |   | 10,939     |   |
| - Petrochemicals                           |   | 3,923      |   |   | 3,940      |   |
| -        Engineering & Construction    |   | 72         |   |   |       |   |
| - Other activities                         |   | 1,175      |   |   | 1,105      |   |
| -        Corporate and financial companies |   | 441        |   |   | 321        |   |
| - Elimination of intra-group profits       |   | (88        | )      |   | (56        | )      |
|                                       |   | **83,987** |   |   | **86,405** |   |
| Accumulated depreciation and amortization: |   |       |   |   |       |   |
| -        Exploration & Production      |   | 22,790     |   |   | 24,265     |   |
| - Gas & Power                          |   | 7,754      |   |   | 8,204      |   |
| - Refining        & Marketing          |   | 5,503      |   |   | 7,111      |   |
| - Petrochemicals                           |   | 2,715      |   |   | 2,751      |   |
| -        Engineering & Construction    |   | 56         |   |   |       |   |
| - Other activities                         |   | 1,060      |   |   | 1,012      |   |
| -        Corporate and financial companies |   | 245        |   |   | 144        |   |
| - Elimination of intra-group profits       |   | (4         | )      |   | (6         | )      |
|                                       |   | **40,119** |   |   | **43,481** |   |
| Property, plant and equipment, net:        |   |       |   |   |       |   |
| -        Exploration & Production      |   | 25,101     |   |   | 23,587     |   |
| - Gas & Power                          |   | 13,760     |   |   | 14,100     |   |
| - Refining        & Marketing          |   | 3,556      |   |   | 3,828      |   |
| - Petrochemicals                           |   | 1,208      |   |   | 1,189      |   |
| -        Engineering & Construction    |   | 16         |   |   |       |   |
| - Other activities                         |   | 115        |   |   | 93         |   |
| -        Corporate and financial companies |   | 196        |   |   | 177        |   |
| - Elimination of intra-group profits       |   | (84        | )      |   | (50        | )      |
|                                       |   | **43,868** |   |   | **42,924** |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

Property, plant and equipment by segment as atDecember 31, 2005 have been reclassified on the basis of the newsubdivision within segments. These reclassification concernExploration & Production, Other activities and Corporate andfinancial companies.

Operating profit (loss) by industry segment andprofit before income taxes, as determined under U.S. GAAP, wouldhave been as follows:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| **Operating profit (loss) by industry segment** |   |       |   |   |       |   |   |       |   |
|-------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Exploration        & Production             |   | 7,963      |   |   | 12,690     |   |   | 15,784     |   |
| Gas & Power                                 |   | 3,371      |   |   | 3,237      |   |   | 3,681      |   |
| Refining        & Marketing                 |   | 811        |   |   | 881        |   |   | 605        |   |
| Petrochemicals                                  |   | 281        |   |   | 202        |   |   | 216        |   |
| Engineering        & Construction           |   | (52        | )      |   | 1          |   |   |       |   |
| Other activities                                |   | (406       | )      |   | (967       | )      |   | (622       | )      |
| Corporate        and financial companies        |   | (229       | )      |   | (375       | )      |   | (296       | )      |
| Elimination of intra-group profits              |   |       |   |   | (141       | )      |   | (23        | )      |
|                                            |   | **11,739** |   |   | **15,528** |   |   | **19,345** |   |
| **Net        profit before income taxes**       |   | **12,324** |   |   | **16,281** |   |   | **20,784** |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

Operating profit (loss) by industry segment forthe periods 2004 and 2005 have been reclassified on the basis ofthe new subdivision within segments. These reclassificationconcern Exploration & Production, Other activities andCorporate and financial companies.

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##### Table of Contents

**38 Additional financial statement disclosures required byU.S. GAAP and the SEC**

**Charges related to asset retirementobligations (SFAS 143)**Changes in provisions for asset retirement obligations duringthe year were:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| **Provision for asset retirement obligations as        of January 1**   |   | **1,950** |   |   | **1,959** |   |   | **2,646** |   |
|-------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| New        obligations incurred during the year                         |   | 193       |   |   | 311       |   |   | 12        |   |
| Accretion discount                                                      |   | 80        |   |   | 106       |   |   | 112       |   |
| Revisions        of previous estimates                                  |   | 40        |   |   | 277       |   |   | 1,229     |   |
| Spending on existing obligations                                        |   | (32       | )      |   | (107      | )      |   | (112      | )      |
| Property        dispositions                                            |   | (234      | )      |   |      |   |   |      |   |
| Foreign currency translation                                            |   | (36       | )      |   | 110       |   |   | (101      | )      |
| Other        adjustments                                                |   | (2        | )      |   | (10       | )      |   | (16       | )      |
| **Provision for asset retirement obligations as        of December 31** |   | **1,959** |   |   | **2,646** |   |   | **3,770** |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

Revisions of previous estimates were made inconnection with higher estimated costs for the retirement andremoval of assets pertaining to certain fields located mainly inItaly, Libya and Norway.

In March 2005, the FASB issued FASBinterpretation No. 47, "Accounting for Conditional AssetRetirement Obligations - An interpretation of FASB Statement No.143" (FIN 47),**which was effective for the company onDecember 31, 2005. In adopting FIN 47, the company did notrecognize any additional liabilities for conditional retirementobligations.

**Income taxes in accordance with U.S. GAAP**The following information is presented according to Statementof Financial Accounting Standards No. 109 "Accounting forIncome Taxes". Domestic and foreign components of pre-taxincome were as follows:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Domestic |   | 5,468      |   | 4,727      |   | 6,190      |
|----------|--------|------------|--------|------------|--------|------------|
| Foreign  |   | 6,856      |   | 11,554     |   | 14,594     |
|     |   | **12,324** |   | **16,281** |   | **20,784** |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

The provisions for income taxes were asfollows:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Current  |   | 4,470     |   | 7,217     |   | 9,130      |
|----------|--------|-----------|--------|-----------|--------|------------|
| Deferred |   | 1,112     |   | 1,116     |   | 1,354      |
|     |   | **5,582** |   | **8,333** |   | **10,484** |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

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##### Table of Contents

The reconciliation of income taxes calculatedunder Italian tax regulation by applying a 33% rate (Ires -national corporate income tax) to pre-tax income and a 4.25% rate(Irap - regional income tax) to net value of production asprovided for by Italian laws, to the income taxes recorded on aU.S. GAAP basis is as follows:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| **Income before tax in accordance with U.S.        GAAP**                                           |   | **12,324** |   |   | **16,281** |   |   | **20,784** |   |
|-----------------------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Italian        statutory tax rate (state and local) (%)                                             |   | 38.3       |   |   | 37.9       |   |   | 37.6       |   |
| **Expected income tax provision in accordance        with U.S. GAAP at Italian statutory tax rate** |   | **4,714**  |   |   | **6,176**  |   |   | **7,812**  |   |
| Effect of        items increasing (decreasing) the Italian statutory tax        rate:               |   |       |   |   |       |   |   |       |   |
| - increase (decrease) in tax effect of foreign        operations                                    |   | 835        |   |   | 1,946      |   |   | 2,770      |   |
| - taxes on        distributable reserves                                                            |   | 446        |   |   | 252        |   |   | 11         |   |
| - permanent differences                                                                             |   | (143       | )      |   | 131        |   |   | (75        | )      |
| -        revaluation of deferred tax assets                                                         |   | (218       | )      |   | (52        | )      |   | (20        | )      |
| - benefits deriving from the application of        favorable tax laws                               |   | (8         | )      |   | (11        | )      |   | (14        | )      |
| - other                                                                                             |   | (44        | )      |   | (109       | )      |   |       |   |
|                                                                                                |   | **5,582**  |   |   | **8,333**  |   |   | **10,484** |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

*Net deferred tax liabilities*The most significant temporary differences giving rise to netdeferred tax liabilities were as follows:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Deferred tax liabilities:                                                           |   |       |   |   |       |   |
|-------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|
| -        accelerated depreciation                                                   |   | 6,006      |   |   | 6,932      |   |
| - distributable reserves subject to taxes in        case of distribution            |   | 3,212      |   |   | 3,223      |   |
| - asset        retirement costs                                                     |   | 376        |   |   | 724        |   |
| - successful efforts method accounting                                              |   | 690        |   |   | 522        |   |
| - excess        cost paid for the acquisition of consolidated investments           |   | 485        |   |   | 431        |   |
| - capitalization of interest expense                                                |   | 245        |   |   | 232        |   |
| -        provisions for uncollectible receivables                                   |   | 84         |   |   | 85         |   |
| - provisions for contingencies                                                      |   | 50         |   |   | 47         |   |
| - gains        taxable in the future                                                |   | 34         |   |   | 23         |   |
| - other                                                                             |   | 775        |   |   | 805        |   |
|                                                                                |   | **11,957** |   |   | **13,024** |   |
| Deferred tax assets:                                                                |   |       |   |   |       |   |
| - accruals        for impairment losses on receivables and contingencies            |   | (1,949     | )      |   | (2,555     | )      |
| - revaluation of assets in accordance with Law        No. 342/2000 and No. 448/2001 |   | (1,186     | )      |   | (1,028     | )      |
| -        depreciation and amortization of assets                                    |   | (904       | )      |   | (749       | )      |
| - tax losses carryforwards                                                          |   | (510       | )      |   | (337       | )      |
| -        impairment losses on assets and inventories                                |   | (135       | )      |   | (120       | )      |
| - expense on investments                                                            |   | (237       | )      |   | (67        | )      |
| - other                                                                             |   | (1,062     | )      |   | (927       | )      |
|                                                                                |   | **(5,983** | **)**  |   | **(5,783** | **)**  |
| Less:                                                                               |   |       |   |   |       |   |
| - valuation allowance                                                               |   | 549        |   |   | 376        |   |
|                                                                                |   | **(5,434** | **)**  |   | **(5,407** | **)**  |
| **Net deferred tax liabilities**                                                    |   | **6,523**  |   |   | **7,617**  |   |

|   |   |  |   |  |
|--------|--------|--|--------|--|

The valuation allowance relates to deferred taxassets of euro 376 million (euro 549 million at December 31,2005) of consolidated companies whose expected future fiscalprofits are not considered sufficient for the utilization ofthese assets.

*Tax loss carryforwards*The difference in tax loss carryforwards between IFRS andU.S. GAAP relates to the companies which are consolidated underIFRS (see Note 22 - Deferred tax liabilities), but excluded fromconsolidation according to U.S. GAAP.

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**Investments**At December 31, 2005 and 2006, investments accounted forunder the equity method of euro 4,589 million and euro 4,305million, respectively, included shares of Saipem SpA, which islisted on the Italian stock exchange. The following informationincludes its fair value:

|   |   | **Number of Eni shares** |   | **Equity ratio**(%) |   | **Share price**(euro) |   | **Market value**(million        euro) |
|--------|--------|--------------------------|--------|---------------------|--------|-----------------------|--------|---------------------------------------|
|   |   |                          |   |                     |   |                       |   |                                       |

| **December 31, 2005** |   |        |   |   |   |   |   |   |
|-----------------------|--------|-------------|--------|--------|--------|--------|--------|--------|
| Saipem SpA            |   | 189,423,307 |   | 43.26  |   | 13.79  |   | 2,613  |
| **December 31, 2006** |   |        |   |   |   |   |   |   |
| Saipem SpA            |   | 189,423,307 |   | 43.54  |   | 19.71  |   | 3,734  |

|   |   |  |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|--------|--|

In 2004, 2005 and 2006, Saipem SpA was includedin the consolidation under IFRS, while, under U.S. GAAP, it isvalued under the equity method. Information about Saipem SpA andits subsidiaries (as indicated in Saipem consolidated financialstatements), that include Snamprogetti SpA acquired by Saipem in2006 (see Note 36 - Reconciliation of net profit andshareholders’ equity determined under IFRS to U.S. GAAP -A), representing a 100% share of the companies, is as follows:

| (million        euro) |   | **Dec. 31, 2005** |   | **Dec. 31, 2006** |
|-----------------------|--------|-------------------|--------|-------------------|
|                  |   |                   |   |                   |

| Total assets:             |   | 5,968 |   | 9,531 |
|---------------------------|--------|-------|--------|-------|
| - current                 |   | 3,101 |   | 6,087 |
| - non current             |   | 2,867 |   | 3,444 |
| Total        liabilities: |   | 4,325 |   | 7,946 |
| - current                 |   | 3,633 |   | 6,664 |
| - non        current      |   | 692   |   | 1,282 |

|   |   |  |   |  |
|--------|--------|--|--------|--|

 

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Net sales from operations |   | 4,306 |   | 4,528 |   | 7,517 |
|---------------------------|--------|-------|--------|-------|--------|-------|
| Operating        profit   |   | 328   |   | 365   |   | 599   |
| Net profit                |   | 235   |   | 255   |   | 384   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

**Concentrations and certain significantestimates**The following information is presented according to Statementof Position 94-6 "Disclosures of Certain Significant Risksand Uncertainties".

*Nature of operations*Eni is an integrated energy company operating in the oil andgas, electricity generation, petrochemicals and oilfield servicesand engineering industries.

EXPLORATION & PRODUCTION: through itsExploration & Production Division and subsidiaries, Eniengages in hydrocarbon exploration and production in Italy, NorthAfrica (Algeria, Egypt, Libya and Tunisia), West Africa (Angola,Congo and Nigeria), the North Sea (Norway and the UnitedKingdom), Latin America (Venezuela), the former Soviet Unioncountries (mainly Kazakhstan), the United States (Gulf of Mexicoand Alaska) and Asia (mainly Saudi Arabia, China, India,Indonesia, Iran and Pakistan). In 2005 approximately 68% of oilproduction sold was supplied to Eni’s Refining &Marketing segment and approximately 40% of natural gas productionsold was supplied to Eni’s Gas & Power segment.

Eni owns a storage system, made up by eightdepleted fields, which is used for the modulation of supply inaccordance with seasonal swings in demand (natural gas is storedin the summer and used in the winter), as strategic reserve toensure supply and to support domestic production through mineralstorage. Storage assets are owned by Stoccaggi Gas Italia (Eni100%), a company constituted in accordance with Law Decree No.164/2000 that introduced laws for the liberalization of theItalian natural gas market.

GAS & POWER: Eni is engaged in the supply,transmission and sale of natural gas in Italy and outside Italythrough its Gas & Power Division, which was constituted bythe incorporation of Snam SpA into Eni SpA in 2002, and throughcertain subsidiaries. Approximately 92% of total purchases arepurchased from foreign sources (primarily Algeria, Russia, theNetherlands and Norway) under long-term contracts, which containtake-or-pay provisions, and transported to Italy through anetwork of over 4,300 kilometers of international pipelines ofwhich Eni owns the transmission rights. 

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The remaining purchases in Italy are obtainedprincipally from domestic gas produced by Eni’s Exploration& Production segment. Through an approximately30,800-kilometer long network (corresponding approximately to 96%of the Italian domestic natural gas network), Eni suppliesnatural gas to residential and commercial users (civil market),industrial users and the power generation segment. Snam Rete Gas(Eni 53.39%), that was constituted in accordance with Law DecreeNo. 164/2000, owns the pipelines network used by Eni. Snam ReteGas, a company listed on the Italian Stock Exchange, engages innatural gas transportation activities also for other operators ofthe segment. Following the merging of Italgas Più, Eni suppliesnatural gas directly to approximately five million customers inthe residential and commercial segment. Through Italgas (Eni100%), Eni is engaged in domestic distribution of natural gas inItaly through an approximately 48,000-kilometer long network.

Eni is engaged in distribution and sale ofnatural gas to residential and commercial customers outsideItaly, in Argentina through Distribuidora de Gas Cuyana, inHungary through Tigáz and in Slovenia through Adriaplin.

Legislative Decree No. 164/2000 introduced lawsfor the liberalization of the Italian natural gas market withgreat impact on Eni’s activities, as the company is presentin all the phases of the natural gas chain. The most importantaspects of the decree are the following:

| • |   | total free        market after 2003;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | until        December 31, 2010 the imposition of thresholds to        operators in relation to a percentage share of domestic        consumption set as follows: (i) 75%, by January 1, 2002,        for imported or domestically produced natural gas volumes        introduced in the domestic transmission network in order        to sell it. This percentage decreases by two percentage        points per year until it reaches 61% in 2009; and (ii)        50% from January 1, 2003 for sales to final customers.        These ceilings are calculated net of own consumption and,        in case of sales, also net of losses. In 2006 Eni’s        presence in the Italian natural gas market was in        accordance with the above limitations; |
| • |   | tariffs for        transport infrastructure, storage, use of LNG terminals        and distribution networks are set by the Authority for        Electricity and Gas;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| • |   | third parties        are allowed to access natural gas infrastructure        according to set conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

Eni through EniPower SpA (Eni 100%) andsubsidiaries is engaged in managing Eni’s electricitybusiness at the power plants located in the Ferrera Erbognone,Ravenna, Livorno, Taranto, Mantova, Brindisi and Ferraraindustrial sites with installed capacity of 4.5 gigawatts and aproduction sold of 24.82 terawatthours. The demand for gas andfuel oils of EniPower’s stations is met by Eni supplies.

REFINING & MARKETING: Eni, through itsRefining & Marketing Division, which was constituted by theincorporation of AgipPetroli SpA in Eni SpA in 2002 and certainsubsidiaries, engages in petroleum refining and marketingactivities primarily in Italy and Europe. Eni is the largestrefiner of petroleum products in Italy in terms of overallrefining capacity. Approximately 56% of crude oil sold ispurchased from Eni’s Exploration & Production segment,the rest is purchased from producing countries pursuant topurchase contracts (28%) and in spot markets (16%). Approximately58% of the purchased crude oil is refined. 35.9% of oil refinedderives from the production of Eni’s Exploration &Production segment.

PETROCHEMICALS: through Polimeri Europa SpA andsubsidiaries (Eni 100%), Eni engages in manufacturing of olefins,aromatics, intermediate products, styrene and elastomers.Eni’s petrochemicals production is concentrated in Italy,the other operations being primarily in Western Europe.Approximately 23% of the oil-based feedstock requirements used bypetrochemical plants are supplied by Eni’s Refining &Marketing segment.

ENGINEERING & CONSTRUCTION: through SaipemSpA (Eni 43%), a company listed on the Italian Stock Exchange,and its subsidiaries, Eni is engaged in construction and drillingservices to customers in the oil and gas industries and is aprovider of engineering and project management services tocustomers in the oil and gas and petrochemical industries. AtDecember 31, 2006, 20% of the order backlog related to ordersfrom Eni Group companies.

**Disclosure in accordance with SFAS No. 107**In accordance with SFAS No. 107, fair value of Eni’slong-term debt (including the current portion) amounted to euro7,652 million and euro 8,384 million at December 31, 2006 and2005, respectively.

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**Accounting for suspended well costs**Effective January 1, 2005 Eni adopted Position FAS 19-1 (FSP19-1), "Accounting for Suspended Well Costs". FSP 19-1amended Statement of Financial Accounting Standards No. 19 (FAS19) "Financial Accounting and Reporting by Oil and GasProducing Companies". Following adoption of FSP 19-1, Enitemporarily capitalized exploratory drilling costs pendingdetermination of whether the well has found proved reserves ifboth of the following conditions are met: (a) the well has founda sufficient quantity of reserves to justify, if appropriate, itscompletion as a producing well; and (b) the enterprise is makingsufficient progress assessing the reserves and the economic andoperating viability of the project. If either condition is notmet or if an enterprise obtains information that raisessubstantial doubt about the economic or operational viability ofthe project, the exploratory well would be assumed to beimpaired, and its costs, net of any salvage value, would becharged to expense. FSP 19-1 provided a number of indicatorsneeding to be present to demonstrate sufficient progress wasbeing made in assessing the reserves and economic viability ofthe project. Among these indicators are: (i) costs are beingincurred to assess the reserves and their potential development;(ii) existence (or active negotiations) of sales contracts withcustomers for oil and natural gas; and (iii) existence of firmplans, established timetables or contractual commitments, whichmay include seismic testing and drilling of additionalexploratory wells. The disclosures and discussion below addressthose suggested in FSP 19-1.

The following table reflects the net changes incapitalized exploratory well costs during 2006, 2005 and 2004:

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| Capitalized exploratory well costs as at January        1                                                       |   | 570 |   |   | 513 |   |   | 551 |   |
|-----------------------------------------------------------------------------------------------------------------|--------|-----|--------|--------|-----|--------|--------|-----|--------|
| Addition        pending determination of proved reserves                                                        |   | 185 |   |   | 128 |   |   | 384 |   |
| Amount previously capitalized expended during        the year                                                   |   | (54 | )      |   | (96 | )      |   | (64 | )      |
| Reclassification        to wells, facilities and equipment based on the        determination of proved reserves |   | (72 | )      |   | (67 | )      |   | (45 | )      |
| Property dispositions                                                                                           |   | (79 | )      |   | (1  | )      |   | (3  | )      |
| Foreign        exchange changes                                                                                 |   | (37 | )      |   | 74  |   |   | (71 | )      |
| Capitalized exploratory well costs as at        December 31                                                     |   | 513 |   |   | 551 |   |   | 752 |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

The following table provides an analysis ofcapitalized exploratory well costs based on the date the drillingwas completed:

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **euro million** |   | **No. of Eni’s net        wells**(*)**** |   | **euro million** |   | **No. of Eni’s net        wells**(*)**** |   | **euro million** |   | **No. of Eni’s net        wells**(*)**** |
|--------|------------------|--------|-----------------------------------------------|--------|------------------|--------|-----------------------------------------------|--------|------------------|--------|-----------------------------------------------|
|   |                  |   |                                               |   |                  |   |                                               |   |                  |   |                                               |

| < 1 year         |   | 156     |   | 11.14     |   | 148     |   | 9.35      |   | 360     |   | 15.54     |
|---------------------|--------|---------|--------|-----------|--------|---------|--------|-----------|--------|---------|--------|-----------|
| 1 to 3        years |   | 318     |   | 27.55     |   | 323     |   | 24.09     |   | 272     |   | 13.71     |
| 3 to 8 years        |   | 39      |   | 3.80      |   | 80      |   | 5.53      |   | 120     |   | 11.27     |
|                |   | **513** |   | **42.49** |   | **551** |   | **38.97** |   | **752** |   | **40.52** |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                       |
|--------|--------|--------------------------------------------------------------------------------------------|
| (*)    |   | Net well is        the sum of the fractional working interest owned in gross        wells. |

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The following table provides, based on the datethe drilling was completed, the capitalized costs and the relatednet well number at year end 2006, 2005 and 2004 divided bycategory of projects of exploratory activity:

|   |   | **2004** |   | **2005** |   | **2006** |
|--------|--------|----------|--------|----------|--------|----------|
|   |   |          |   |          |   |          |

|   | **euro million** |   | **No. of Eni’s net        wells**(*)**** |   | **euro million** |   | **No. of Eni’s net        wells**(*)**** |   | **euro million** |   | **No. of Eni’s net        wells**(*)**** |
|--------|------------------|--------|-----------------------------------------------|--------|------------------|--------|-----------------------------------------------|--------|------------------|--------|-----------------------------------------------|
|   |                  |   |                                               |   |                  |   |                                               |   |                  |   |                                               |

| **Project with wells drilled in the past 12        months**                    |   | **156** |   | **11.14** |   | **148** |   | **9.35**  |   | **360** |   | **15.54** |
|--------------------------------------------------------------------------------|--------|---------|--------|-----------|--------|---------|--------|-----------|--------|---------|--------|-----------|
| **Project        with recent or planned exploratory activity**                 |   | **283** |   | **21.94** |   | **344** |   | **21.21** |   | **307** |   | **15.18** |
| Project with exploration activities already        underway or firmly planned: |   |    |   |      |   |    |   |      |   |    |   |      |
| *-        future exploration drilling*                                         |   | 147     |   | 10.29     |   | 159     |   | 9.37      |   | 186     |   | 9.79      |
| *- other exploratory activities*                                               |   | 135     |   | 11.65     |   | 185     |   | 11.84     |   | 121     |   | 5.39      |
| **Project        with completed exploratory activity**                         |   | **75**  |   | **9.41**  |   | **59**  |   | **8.41**  |   | **85**  |   | **9.80**  |
| Project progressing towards        commercialization/sanctioning               |   | 61      |   | 8.32      |   | 45      |   | 6.22      |   | 63      |   | 7.00      |
| Project        waiting finalization of development facilities                  |   | 14      |   | 1.09      |   | 14      |   | 2.19      |   | 22      |   | 2.80      |
| **Total/Number of wells at the year end**                                      |   | **513** |   | **42.49** |   | **551** |   | **38.97** |   | **752** |   | **40.52** |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                       |
|--------|--------|--------------------------------------------------------------------------------------------|
| (*)    |   | Net well is        the sum of the fractional working interest owned in gross        wells. |

At the end of 2006 of the euro 752 million ofexploratory suspended costs, approximately euro 360 millionrelated to the 15.54 Eni’s net wells for which the drillingwas completed in one year or less. Of the remaining euro 392million, related to the 24.98 Eni’s net wells suspended formore than one year since the completion of drilling, 78% wasassociated with projects for which exploration activity is stillongoing.

**Changes in accounting principles**In September 2005, the Emerging Issues Task Force("EITF") issued Issue No. 04-13 ("EITF04-13"), "Accounting for Purchases and Sales ofInventory with the Same Counterparty". The EITF concludedthat inventory purchases and sales transactions with the samecounterparty should be combined for accounting purposes if theywere entered into in contemplation of each other. The EITFprovided indicators to be considered for purposes of determiningwhether such transactions are entered into in contemplation ofeach other. Guidance was also provided on the circumstances underwhich non-monetary exchanges of inventory within the same line ofbusiness should be recognized at fair value. EITF 04-13 becameeffective in reporting periods beginning after March 15, 2006.Eni adopted EITF 04-13 starting from April 1, 2006. The adoptionof EITF 04-13 did not have material effect on Eni’sConsolidated Financial Statements according to U.S. GAAP.

Effective January 1, 2006, the Company adoptedSFAS No. 123-R, "Share-Based Payment" ("SFAS123R"), using the modified prospective method. SFAS 123Restablishes the accounting for equity instruments exchanged foremployee services. Under SFAS 123R, share-based compensation costis measured at the grant date based on the calculated fair valueof the award. The expense is recognized over the employees’requisite service period, generally the vesting period of theaward. SFAS 123R also requires the related excess tax benefitreceived upon exercise of stock options or vesting of restrictedstock, if any, to be reflected in the statement of cash flows asa financing activity rather than an operating activity. Theadoption of this standard did not have material effect onEni’s Consolidated Financial Statements according to U.S.GAAP.

As of December 31, 2006, Eni applies SFAS 158which requires that the provision for employees benefits equalsthe total actuarial liability and therefore includes the totalamount of income and loss resulting from changes in actuarialassumptions. Actuarial income and loss not accounted in theprofit and loss account are recognized, net of the related fiscaleffect, with a corresponding entry to the item of theshareholders’ equity "Other comprehensive income".In the following periods, the actuarial profits and losses"suspended" in other comprehensive income arerecognized in the profit and loss account according to thecorridor method.

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The effect of the adoption of SFAS 158 consistin the following:

(million euro)

| Net actuarial losses at December 31, 2005                                     |   | 128 |   |
|-------------------------------------------------------------------------------|--------|-----|--------|
| Net        actuarial losses recognized in 2006 profit and loss        account |   | (28 | )      |
| Change in net actuarial losses                                                |   | (65 | )      |
| Change in        consolidation                                                |   | (3  | )      |
| Net actuarial losses at December 31, 2006                                     |   | 32  |   |

Actuarial losses expected to be recognized inprofit and loss account during 2007 amount to euro 3 million.

**Recent accounting principles**In June 2006, FASB issued Interpretation No. 48"Accounting for uncertainty in income taxes" (FIN 48)that prescribes criteria for recognition and measurement ofentity’s tax benefits ("tax positions") whichpresent uncertainty regards of being realized. The requirementsof FIN 48 prescribe that an entity shall recognize in financialstatements defined tax positions only when is considered"more likely than not" that their positive effects willbe realized. The value of the tax position that shall berecognized in financial statements is measured at the largestamount of benefit that is greater than 50% likely of beingrealized.

Eventual differences between tax positionstaken in a tax return and amounts recognized in the financialstatements represent liabilities to be recognized in balancesheet. FIN 48 is effective starting from January 1, 2007.

In September 2006, FASB issued Statement ofFinancial Accounting Standard No. 157 "Fair valuemeasurement" (SFAS 157). SFAS 157 establishes a frameworkthat applies when U.S. GAAP require fair value measurements ofasset and liabilities. According to SFAS 157, fair value ismeasured mainly on the assumptions used by market participantsrather than entity internal assumptions. The use of entityinternal assumptions is allowed only for situations in whichthere are no information readily available on the market;therefore, in this circumstance, the entity adapts its internalassumptions to those used by market participants. SFAS 157establishes a fair value "hierarchy" articulated onthree level according to the different quality of input used inthe measurement. SFAS 157 is effective starting from January 1,2008.

In February 2007, FASB issued Statement ofFinancial Accounting Standard No. 159 "The Fair Value optionfor Financial Assets and Financial Liabilities - Including anAmendment of FASB Statement No. 115" (SFAS 159). SFAS 159,in order to permit consistent measurement of assets andliabilities connected, reducing volatility of financial results,provides the option to evaluate certain financial and nonfinancial asset and liabilities at fair value (fair valueoption). The decision of apply fair value option is irrevocable.SFAS 159 is effective starting from January 1, 2008.

Eni presently is analyzing the recentaccounting principles and, at the moment, is not able todetermine if their adoption will have a significant effect onEni’s Consolidated Financial Statements according to U.S.GAAP.

**Subsequent events**Under IFRS the subsequent event period is between the balancesheet date and the date the financial statements are authorizedfor issue. The financial statements were authorized for issue byEni’s Board of Directors on March 29, 2007. Following theU.S. approach, the subsequent events period for the financialstatements contained within Form 20-F extends, in practice, tothe date Form 20-F is filed with the SEC. The followingsubsequent event information is provided following the U.Sapproach.

On February 22, 2007 Eni agreed to acquirecertain onshore exploration and production assets operated byMaurel & Prom, entailing a cash consideration of $1,434million. This transaction includes the producing fields ofM’Boundi (48.6%) and Kouakouala A (66.7%) and most of theinterests in permit Le Kouilou (50%). Such assets were subject toa pre-emption right in favor of Burren Energy, partner of Maurel& Prom. Subsequently, Eni and Burren Energy reached anagreement providing for Burren Energy’s waiver of theexercise of its pre-emption right and Eni’s sale to thiscompany of a 5.5% interest in the M’Boundi concession and a2% stake in the Le Kouilou exploration permit under the sameeconomic terms as the acquisition from Maurel & Prom,entailing cash proceeds of $154 million. Eni retains theoperatorship and participating interests of 43.1% and 48% in theM’Boundi concession and Le Kouilou exploration permit,respectively. This transaction was finalized at the end of May2007.

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On April 4, 2007 Eni, through the partnershipin EniNeftegaz (60% Eni, 40% Enel SpA) acquired Lot 2 in theYukos liquidation procedure for a total price of $5.83 billion(Eni’s share being U.S. $5 billion). Lot 2 includes: 100% ofOAO Arctic Gas Co, 100% of ZAO Urengoil Inc and 100% of OAONeftegaztechnologia. These three companies own 5 gas andcondensate fields and parts of other fields in the Yamal Nenets(YNAO) region, large gas producing region. Management believesthese three companies to have significant oil and gas resource.Eni and Enel have offered Gazprom an option to acquire a 51%interest in these companies within two years. In the event thatGazprom exercises its call option, the assets will be operatedthrough a joint venture between Eni and Gazprom which will haveaccess to Eni’s technologies. Lot 2 includes also variousminor assets that will be sold or liquidated and 20% of OAOGazprom Neft which will be wholly owned by Eni. Eni offeredGazprom an option to acquire a 20% interest in OAO Gazprom Neftwithin two years, at a total price of $3.7 billion, in additionto financial expenses related to the acquisition. Theseagreements are an additional step in implementing the strategicpartnership between Eni and Gazprom signed in November 2006,under which the two companies established an alliance to developupstream, midstream and downstream energy projects inside andoutside of Russia.

On April 30, 2007 Eni agreed to acquire theGulf of Mexico upstream activity of Dominion Resources at theagreed price of $4,757 million including exploration assets for$680 million. The transaction includes production, developmentand exploration assets located in deepwater Gulf of Mexico.Starting from the second half of 2007 up to 2010, production fromthe acquired assets is expected to average approximately 75KBOE/d. In addition, Eni will enhance its portfolio in the Gulfof Mexico thanks to new leases with significant explorationpotential; approximately 60% of these leases are operated. Thetransaction is subject to government approvals, expiration ofcertain preferential purchase rights which apply to a smallportion of the acquired assets and to other customary conditionsprecedent. Closing is expected on July 2, 2007.

On May 11, 2007 the European Commission hasdecided to open anti-trust proceedings against Eni based oninformation obtained during inspections carried out in 2006 atheadquarters of Eni and of certain Eni subsidiaries. Theseproceedings against Eni intend to verify the possible existenceof any business conducts breaching European competition rules inthe form of preventing access to the Italian natural gaswholesale market and to subdivide the market among few operatorsin the activity of supply and transport of natural gas.

Particularly, the European Commission allegedthat Eni might have: (i) adopted commercial practices thatconstitute barriers to access to the Italian market for thewholesale supply of natural gas, taking account Eni long-termpurchase contracts, also by subdividing the market among fewoperators; and (ii) engaged a majority share of the transportcapacity of certain international gaslines, preventing thirdparties from accessing said infrastructures. Furthermore, theEuropean Commission alleged that Eni might have delayed orannulled certain plans for the upgrading of the internationaltransport infrastructure, despite the significant demand foraccess by third parties. These suspected practices constitutepossible infringements of Article 82 of the EC Treaty. Theinitiation of proceedings does not imply that the Commission hasconclusive proof of an infringement. The Commission will conductan in-depth investigation of the case as a matter of priority.There is no strict deadline to complete inquiries intoanticompetitive conduct. If the existence of the allegedanti-competitive practices is confirmed, the European Commissioncould fine Eni. At present, management is not able to assess thepotential impact on Eni’s results of operations andfinancial condition deriving from an unfavorable outcome of thismatter.

On May 28, 2007, a seizure order (in respect tocertain documentation) was served upon Eni and other Groupcompanies as part of a proceeding brought by the PublicProsecutor at the Courts of Milan. The order was also served uponfive top managers of the Group companies in addition to thirdparty companies and their top managers. The investigation allegesbehavior which breaches Italian criminal law,starting from 2003,regarding the use of instruments for measuring gas, the relatedpayments of excise duties and the billing of clients as well asrelations with the Supervisory Authorities. The allegationregard, inter alia, the offence contemplated by LegislativeDecree of June 8, 2001, No. 231, which establishes the liabilityof the legal entity for crimes committed by its employee in theinterests of such legal entity, or to its advantage. Accordingly,notice of the start of investigations was served upon Eni Groupcompanies (Eni, Snam Rete Gas and Italgas) as well as third partycompanies. The Group companies are cooperating with theAuthorities in the investigations. At present, management is notable to assess the potential impact on Eni’s results ofoperations and financial condition deriving from an unfavorableoutcome of this matter.

**Supplemental oil and gas information(unaudited)**The following information is presented in accordance withStatement of Financial Accounting Standards No. 69,"Disclosures about Oil & Gas Producing Activities".Amounts related to minority interests are not significant. Theamounts disclosed thereof are prepared in accordance with U.S.GAAP.

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*Capitalized costs*Capitalized costs represent the total expenditures for provedand unproved mineral interests and related support equipment andfacilities utilized in oil and gas exploration and productionactivities, together with related accumulated depreciation,depletion and amortization. Capitalized costs by geographicalarea consist of the following:

| (million        euro) | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Rest of World** |   | **Total consolidated        subsidiaries** |   | **Total joint venture and        affiliates**(a) |
|-----------------------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|-------------------|--------|--------------------------------------------|--------|--------------------------------------------------|
|                  |           |   |                  |   |                 |   |               |   |                   |   |                                            |   |                                                  |

| **Dec. 31, 2004**                                           |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |   |       |   |   |    |   |
|-------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|---------|--------|
| Proved        mineral interests (b)                         |   | 9,056      |   |   | 7,192      |   |   | 6,288      |   |   | 7,198     |   |   | 7,698      |   |   | 37,432     |   |   |    |   |
| Unproved mineral interests                                  |   |       |   |   | 272        |   |   | 70         |   |   | 561       |   |   | 1,103      |   |   | 2,006      |   |   |    |   |
| Support        equipment and facilities                     |   | 252        |   |   | 1,056      |   |   | 209        |   |   | 33        |   |   | 75         |   |   | 1,625      |   |   |    |   |
| Incomplete wells and other                                  |   | 662        |   |   | 468        |   |   | 1,038      |   |   | 397       |   |   | 882        |   |   | 3,447      |   |   |    |   |
| **Gross        capitalized costs**                          |   | **9,970**  |   |   | **8,988**  |   |   | **7,605**  |   |   | **8,189** |   |   | **9,758**  |   |   | **44,510** |   |   |    |   |
| Accumulated depreciation, depletion and        amortization |   | (6,416     | )      |   | (3,887     | )      |   | (3,907     | )      |   | (3,733    | )      |   | (3,252     | )      |   | (21,195    | )      |   |    |   |
| **Net        capitalized costs**                            |   | **3,554**  |   |   | **5,101**  |   |   | **3,698**  |   |   | **4,456** |   |   | **6,506**  |   |   | **23,315** |   |   |    |   |
| **Dec. 31, 2005**                                           |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |   |       |   |   |    |   |
| Proved        mineral interests (b)                         |   | 9,756      |   |   | 9,321      |   |   | 8,733      |   |   | 8,350     |   |   | 9,463      |   |   | 45,623     |   |   | 435     |   |
| Unproved mineral interests                                  |   | 33         |   |   | 197        |   |   | 134        |   |   | 413       |   |   | 1,265      |   |   | 2,042      |   |   | 55      |   |
| Support        equipment and facilities                     |   | 253        |   |   | 1,385      |   |   | 272        |   |   | 33        |   |   | 93         |   |   | 2,036      |   |   | 9       |   |
| Incomplete wells and other                                  |   | 657        |   |   | 638        |   |   | 728        |   |   | 221       |   |   | 1,895      |   |   | 4,139      |   |   | 53      |   |
| **Gross        capitalized costs**                          |   | **10,699** |   |   | **11,541** |   |   | **9,867**  |   |   | **9,017** |   |   | **12,716** |   |   | **53,840** |   |   | **552** |   |
| Accumulated depreciation, depletion and        amortization |   | (6,888     | )      |   | (5,113     | )      |   | (5,193     | )      |   | (4,619    | )      |   | (4,697     | )      |   | (26,510    | )      |   | (316    | )      |
| **Net        capitalized costs**                            |   | **3,811**  |   |   | **6,428**  |   |   | **4,674**  |   |   | **4,398** |   |   | **8,019**  |   |   | **27,330** |   |   | **236** |   |
| **Dec. 31, 2006**                                           |   |       |   |   |       |   |   |       |   |   |      |   |   |       |   |   |       |   |   |    |   |
| Proved        mineral interests (b)                         |   | 10,780     |   |   | 9,335      |   |   | 8,476      |   |   | 8,790     |   |   | 9,424      |   |   | 46,805     |   |   | 436     |   |
| Unproved mineral interests                                  |   | 33         |   |   | 132        |   |   | 385        |   |   | 460       |   |   | 1,106      |   |   | 2,116      |   |   | 35      |   |
| Support        equipment and facilities                     |   | 287        |   |   | 1,238      |   |   | 451        |   |   | 33        |   |   | 98         |   |   | 2,107      |   |   | 8       |   |
| Incomplete wells and other                                  |   | 655        |   |   | 599        |   |   | 812        |   |   | 300       |   |   | 2,248      |   |   | 4,614      |   |   | 51      |   |
| **Gross        capitalized costs**                          |   | **11,755** |   |   | **11,304** |   |   | **10,124** |   |   | **9,583** |   |   | **12,876** |   |   | **55,642** |   |   | **530** |   |
| Accumulated depreciation, depletion and        amortization |   | (7,184     | )      |   | (5,403     | )      |   | (5,402     | )      |   | (5,345    | )      |   | (5,187     | )      |   | (28,521    | )      |   | (311    | )      |
| **Net        capitalized costs**                            |   | **4,571**  |   |   | **5,901**  |   |   | **4,722**  |   |   | **4,238** |   |   | **7,689**  |   |   | **27,121** |   |   | **219** |   |

|   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

| (a) |   | Starting from        2005 includes data related to joint venture and        affiliates accounted under the equity method. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------|
| (b) |   | Includes        capitalized costs for wells and facilities related to        proved reserves.                             |

*Costs incurred*Costs incurred represent amounts both capitalized andexpensed in connection with oil and gas producing activities.Costs incurred by geographical area consist of the following:

| (million        euro) | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Rest of World** |   | **Total consolidated        subsidiaries** |   | **Total joint venture and        affiliates**(a) |
|-----------------------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|-------------------|--------|--------------------------------------------|--------|--------------------------------------------------|
|                  |           |   |                  |   |                 |   |               |   |                   |   |                                            |   |                                                  |

| **2004**                            |   |      |   |      |   |      |   |    |   |      |   |      |   |   |
|-------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|---------|--------|-----------|--------|-----------|--------|--------|
| Exploration                         |   | 64        |   | 104       |   | 71        |   | 66      |   | 194       |   | 499       |   |   |
| Development (b)                     |   | 431       |   | 965       |   | 881       |   | 391     |   | 1,407     |   | 4,075     |   |   |
| **Total        costs incurred**     |   | **495**   |   | **1,069** |   | **952**   |   | **457** |   | **1,601** |   | **4,574** |   |   |
| **2005**                            |   |      |   |      |   |      |   |    |   |      |   |      |   |   |
| Proved        property acquisitions |   | 19        |   |      |   | 16        |   |    |   | 99        |   | 134       |   |   |
| Unproved property acquisitions      |   | 13        |   |      |   | 44        |   |    |   | 99        |   | 156       |   |   |
| Exploration                         |   | 45        |   | 153       |   | 75        |   | 127     |   | 264       |   | 664       |   | 18     |
| Development (b)                     |   | 644       |   | 960       |   | 909       |   | 528     |   | 1,396     |   | 4,437     |   | 31     |
| **Total        costs incurred**     |   | **721**   |   | **1,113** |   | **1,044** |   | **655** |   | **1,858** |   | **5,391** |   | **49** |
| **2006**                            |   |      |   |      |   |      |   |    |   |      |   |      |   |   |
| Proved        property acquisitions |   | 139       |   | 10        |   |      |   |    |   |      |   | 149       |   |   |
| Unproved property acquisitions      |   |      |   |      |   |      |   |    |   | 3         |   | 3         |   |   |
| Exploration                         |   | 128       |   | 270       |   | 471       |   | 174     |   | 305       |   | 1,348     |   | 26     |
| Development (b)                     |   | 1,120     |   | 893       |   | 963       |   | 538     |   | 1,365     |   | 4,879     |   | 31     |
| **Total        costs incurred**     |   | **1,387** |   | **1,173** |   | **1,434** |   | **712** |   | **1,673** |   | **6,379** |   | **57** |

|   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

| (a) |   | Starting from        2005 includes data related to joint venture and        affiliates accounted under the equity method.                                                                                                                                         |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | Includes for        assets retirement obligations pursuant to SFAS 143        "Accounting for asset retirement obligations"        euro 233 million of costs capitalized during 2004, euro        588 million for 2005 and euro 1,241 million for 2006. |

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*Results of operations from oil and gasproducing activities*Results of operations from oil and gas producing activities,including gas storage services used to modulate the seasonalvariation of demand, represent only those revenues and expensesdirectly associated to such activities including operatingoverheads. These amounts do not include any allocation ofinterest expense or general corporate overhead and, therefore,are not necessarily indicative of the contributions toconsolidated net earnings of Eni. Related income taxes arecomputed by applying the local income tax rates to the pre-taxincome from producing activities. Eni is a party to certainProduction Sharing Agreements (PSAs) whereby a portion ofEni’s share of oil and gas production is withheld and soldby its joint venture partners which are state-owned entities,with proceeds being remitted to the state in satisfaction ofEni’s PSA-related tax liabilities. Revenue and income taxesinclude such taxes owed by Eni but paid by state-owned entitiesout of Eni’s share of oil and gas production. Results ofoperations from oil and gas producing activities by geographicalarea consist of the following:

| (million        euro) | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Rest of World** |   | **Total consolidated        subsidiaries** |   | **Total joint venture and        affiliates**(a) |
|-----------------------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|-------------------|--------|--------------------------------------------|--------|--------------------------------------------------|
|                  |           |   |                  |   |                 |   |               |   |                   |   |                                            |   |                                                  |

| **2004**                                                       |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |    |   |
|----------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|---------|--------|
| **Revenues**                                                   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |    |   |
| Sales to consolidated entities                                 |   | 2,633     |   |   | 1,868     |   |   | 2,762     |   |   | 2,083     |   |   | 508       |   |   | 9,854      |   |   |    |   |
| Sales to        third parties                                  |   | 148       |   |   | 1,364     |   |   | 306       |   |   | 709       |   |   | 2,086     |   |   | 4,613      |   |   |    |   |
| **Total revenues**                                             |   | **2,781** |   |   | **3,232** |   |   | **3,068** |   |   | **2,792** |   |   | **2,594** |   |   | **14,467** |   |   |    |   |
| Production        costs                                        |   | (223      | )      |   | (292      | )      |   | (322      | )      |   | (405      | )      |   | (289      | )      |   | (1,531     | )      |   |    |   |
| Production taxes                                               |   | (118      | )      |   | (91       | )      |   | (379      | )      |   | (13       | )      |   | (163      | )      |   | (764       | )      |   |    |   |
| Exploration        expenses                                    |   | (57       | )      |   | (47       | )      |   | (71       | )      |   | (93       | )      |   | (155      | )      |   | (423       | )      |   |    |   |
| D.D. & A. and provision for abandonment (b)                |   | (489      | )      |   | (437      | )      |   | (482      | )      |   | (687      | )      |   | (849      | )      |   | (2,944     | )      |   |    |   |
| Other        income and (expenses)                             |   | (98       | )      |   | (368      | )      |   | (216      | )      |   | 97        |   |   | (208      | )      |   | (793       | )      |   |    |   |
| Accretion discount (SFAS 143)                                  |   | (37       | )      |   | (5        | )      |   | (17       | )      |   | (15       | )      |   | (6        | )      |   | (80        | )      |   |    |   |
| **Pretax        income from producing activities**             |   | **1,759** |   |   | **1,992** |   |   | **1,581** |   |   | **1,676** |   |   | **924**   |   |   | **7,932**  |   |   |    |   |
| Income taxes                                                   |   | (632      | )      |   | (994      | )      |   | (945      | )      |   | (948      | )      |   | (305      | )      |   | (3,824     | )      |   |    |   |
| **Results        of operations from E&P activities**       |   | **1,127** |   |   | **998**   |   |   | **636**   |   |   | **728**   |   |   | **619**   |   |   | **4,108**  |   |   |    |   |
| **2005**                                                       |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |    |   |
| **Revenues**                                                   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |    |   |
| Sales to consolidated entities                                 |   | 3,133     |   |   | 2,813     |   |   | 4,252     |   |   | 2,707     |   |   | 828       |   |   | 13,733     |   |   |    |   |
| Sales to        third parties                                  |   | 161       |   |   | 2,579     |   |   | 394       |   |   | 889       |   |   | 2,883     |   |   | 6,906      |   |   | 106     |   |
| **Total revenues**                                             |   | **3,294** |   |   | **5,392** |   |   | **4,646** |   |   | **3,596** |   |   | **3,711** |   |   | **20,639** |   |   | **106** |   |
| Production        costs                                        |   | (261      | )      |   | (390      | )      |   | (363      | )      |   | (417      | )      |   | (338      | )      |   | (1,769     | )      |   | (16     | )      |
| Production taxes                                               |   | (157      | )      |   | (98       | )      |   | (513      | )      |   | (15       | )      |   | (207      | )      |   | (990       | )      |   | (3      | )      |
| Exploration        expenses                                    |   | (32       | )      |   | (59       | )      |   | (38       | )      |   | (125      | )      |   | (181      | )      |   | (435       | )      |   | (30     | )      |
| D.D. & A. and provision for abandonment (b)                |   | (512      | )      |   | (711      | )      |   | (632      | )      |   | (710      | )      |   | (1,007    | )      |   | (3,572     | )      |   | (58     | )      |
| Other        income and (expenses)                             |   | (205      | )      |   | (400      | )      |   | (176      | )      |   | 55        |   |   | (251      | )      |   | (977       | )      |   | 7       |   |
| Accretion discount (SFAS 143)                                  |   | (45       | )      |   | (9        | )      |   | (15       | )      |   | (31       | )      |   | (6        | )      |   | (106       | )      |   |    |   |
| **Pretax        income from producing activities**             |   | **2,082** |   |   | **3,725** |   |   | **2,909** |   |   | **2,353** |   |   | **1,721** |   |   | **12,790** |   |   | **6**   |   |
| Income taxes                                                   |   | (762      | )      |   | (2,197    | )      |   | (1,818    | )      |   | (1,386    | )      |   | (580      | )      |   | (6,743     | )      |   | (19     | )      |
| **Total        results of operations from E&P activities** |   | **1,320** |   |   | **1,528** |   |   | **1,091** |   |   | **967**   |   |   | **1,141** |   |   | **6,047**  |   |   | **(13** | **)**  |
| **2006**                                                       |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |    |   |
| **Revenues**                                                   |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |    |   |
| Sales to consolidated entities                                 |   | 3,601     |   |   | 4,185     |   |   | 4,817     |   |   | 3,295     |   |   | 973       |   |   | 16,871     |   |   |    |   |
| Sales to        third parties                                  |   | 184       |   |   | 3,012     |   |   | 967       |   |   | 983       |   |   | 2,594     |   |   | 7,740      |   |   | 120     |   |
| **Total revenues**                                             |   | **3,785** |   |   | **7,197** |   |   | **5,784** |   |   | **4,278** |   |   | **3,567** |   |   | **24,611** |   |   | **120** |   |
| Production        costs                                        |   | (249      | )      |   | (496      | )      |   | (475      | )      |   | (481      | )      |   | (338      | )      |   | (2,039     | )      |   | (18     | )      |
| Production taxes                                               |   | (181      | )      |   | (95       | )      |   | (475      | )      |   |      |   |   | (82       | )      |   | (833       | )      |   | (3      | )      |
| Exploration        expenses                                    |   | (70       | )      |   | (101      | )      |   | (90       | )      |   | (100      | )      |   | (193      | )      |   | (554       | )      |   | (9      | )      |
| D.D. & A. and provision for abandonment (b)                |   | (454      | )      |   | (869      | )      |   | (778      | )      |   | (755      | )      |   | (1,015    | )      |   | (3,871     | )      |   | (42     | )      |
| Other        income and (expenses)                             |   | (287      | )      |   | (569      | )      |   | (195      | )      |   | 44        |   |   | (343      | )      |   | (1,350     | )      |   | 7       |   |
| Accretion discount (SFAS 143)                                  |   | (34       | )      |   | (12       | )      |   | (12       | )      |   | (40       | )      |   | (14       | )      |   | (112       | )      |   |    |   |
| **Pretax        income from producing activities**             |   | **2,510** |   |   | **5,055** |   |   | **3,759** |   |   | **2,946** |   |   | **1,582** |   |   | **15,852** |   |   | **55**  |   |
| Income taxes                                                   |   | (928      | )      |   | (2,979    | )      |   | (2,094    | )      |   | (1,821    | )      |   | (600      | )      |   | (8,422     | )      |   | (31     | )      |
| **Results        of operations from E&P activities**       |   | **1,582** |   |   | **2,076** |   |   | **1,665** |   |   | **1,125** |   |   | **982**   |   |   | **7,430**  |   |   | **24**  |   |

|   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                                                                               |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)    |   | Starting from        2005 includes data related to joint venture and        affiliates accounted under the equity method.                          |
| (b)    |   | Includes        assets impairments amounting for euro 300 million for        2004, euro 147 million for 2005 and euro 134 million for        2006. |

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##### Table of Contents

*Average sale prices and production costs perunit of production*

| (million        euro) | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Rest of World** |   | **Total** |
|-----------------------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|-------------------|--------|-----------|
|                  |           |   |                  |   |                 |   |               |   |                   |   |           |

| **2004**                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Average        sales prices                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil and condensates, per BBL                 |   | ($)    |   | 30.98  |   | 35.66  |   | 36.32  |   | 36.92  |   | 30.79  |   | 34.76  |
| Natural        gas, per KCF                  |   |   |   | 5.33   |   | 2.92   |   | 0.6    |   | 3.87   |   | 3.29   |   | 3.89   |
| Average production costs, per BOE (1)        |   |   |   | 4.35   |   | 3.53   |   | 7.70   |   | 4.73   |   | 4.50   |   | 4.92   |
| **2005**                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average sales prices                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil and        condensates, per BBL          |   | ($)    |   | 45.46  |   | 50.26  |   | 51.58  |   | 51.96  |   | 44.39  |   | 49.32  |
| Natural gas, per KCF                         |   |   |   | 6.29   |   | 3.35   |   | 0.79   |   | 5.27   |   | 3.71   |   | 4.49   |
| Average        production costs, per BOE (1) |   |   |   | 5.58   |   | 3.66   |   | 8.90   |   | 5.32   |   | 5.21   |   | 5.59   |
| **2006**                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average        sales prices                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil and condensates, per BBL                 |   | ($)    |   | 55.22  |   | 60.88  |   | 61.50  |   | 61.34  |   | 55.60  |   | 59.90  |
| Natural        gas, per KCF                  |   |   |   | 8.23   |   | 4.16   |   | 1.02   |   | 6.87   |   | 3.85   |   | 5.29   |
| Average production costs, per BOE (1)        |   |   |   | 6.36   |   | 3.87   |   | 9.02   |   | 6.03   |   | 4.68   |   | 5.79   |

|   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

*Oil and natural gas reserves*Proved oil and gas reserves are the estimated quantities ofcrude oil, natural gas and natural gas liquids which geologicaland engineering data demonstrate with reasonable certainty to berecoverable in future years from known reservoirs undertechnical, contractual, economic and operating conditionsexisting at the time. Prices include consideration of changes inexisting prices provided only by contractual arrangements, butnot on escalations based upon future conditions.

Net proved reserves exclude royalties andinterests owned by others.

Proved developed oil and gas reserves areproved reserves that can be estimated to be recovered throughexisting wells with existing equipment and operating methods.

Proved undeveloped oil and gas reserves arereserves that are expected to be recovered from new wells onundrilled acreage, or from existing wells where a relativelymajor expenditure is required for completion.

Additional oil and gas reserves expected to beobtained through the application of fluid injection or otherimproved recovery techniques for supplementing natural forces andmechanisms of primary recovery are included as proved developedreserves only after testing by a pilot project or after theoperation of an installed program has confirmed, throughproduction response, that increased recovery will be achieved.

Eni’s proved reserves have been estimatedon the basis of the applicable U.S. Securities & ExchangeCommission Regulation, Rule 4-10 of Regulation S-X and itsinterpretations and have been disclosed in accordance withStatement of Financial Accounting Standard No. 69. The estimatesof proved reserves, developed and undeveloped for years endedDecember 31, 2003, 2004, 2005 and 2006 are based on data preparedby Eni. Since 1991, Eni has requested qualified independent oilengineering companies carry out an independent evaluation11of its proved reserves on a rotational basis. In particular atotal of 1.4 BBOE of proved reserves, or about 21% of Eni’stotal proved reserves at December 31, 2006, have been evaluated.The results of this independent evaluation confirmed Eni’sevaluations, as in previous years. In the 2004-2006 three-yearperiod, 76% of Eni’s total proved reserves were subject toindependent evaluations.

Eni operates under Production SharingAgreements (PSAs), in several of the foreign jurisdictions whereit has oil and gas exploration and production activities.Reserves of oil and natural gas to which Eni is entitled underPSA arrangements are shown in accordance with Eni’s economicinterest in the volumes of oil and natural gas estimated to berecoverable in future years. Such reserves include estimatedquantities allocated to Eni for recovery of costs, income taxesowed by Eni but settled by its joint venture partners (which arestate-owned entities) out of Eni’s share of production andEni’s net equity share after cost recovery.

Proved oil and gas reserves associated withPSAs represented 51%, 48% and 53% of total proved reserves as ofyear-end 2004, 2005 and 2006, respectively, on an oil-equivalentbasis.

_______________

| (11) |   | From 1991 to        2002, DeGolyer and MacNaughton; from 2003, also Ryder        Scott. |
|------|--------|-----------------------------------------------------------------------------------------|

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##### Table of Contents

A similar scheme to PSAs applies to Service and"Buy-Back" contracts; proved reserves associated withsuch contracts represented 3%, 2% and 2% of total proved reserveson an oil-equivalent basis as of year-end 2004, 2005 and 2006,respectively.

Oil and gas reserve quantities include: (i) oiland natural gas quantities in excess to cost recovery which thecompany has an obligation to purchase under certain PSAs withgovernments or authorities whereby the company serves as producerof reserves. In accordance with SFAS No. 69, paragraph 13,reserve volumes associated with such oil and gas quantitiesrepresented 1.4%, 1.7% and 1.1% of total proved reserves as ofyear-end 2004, 2005 and 2006 respectively, on an oil-equivalentbasis; (ii) natural gas volumes of natural gas used for ownconsumption; and (iii) volumes of natural gas held in certain Enistorage fields in Italy. Proved reserves attributable to thesefields include: (a) the residual natural gas volumes of thereservoirs; and (b) natural gas volumes from other Eni fieldsinput into these reservoirs in subsequent periods. Provedreserves do not include volumes owned by or acquired from thirdparties. Gas withdrawn from storage is produced and therebydetracted from proved reserves when sold.

Numerous uncertainties are inherent inestimating quantities of proved reserves and in projecting futurerates of production and timing of development expenditures. Theaccuracy of any reserve estimate is a function of the quality ofavailable data and engineering and geological interpretation andjudgment. Results of drilling, testing and production after thedate of the estimate may require substantial upward or downwardrevision. In addition, changes in oil and natural gas prices havean effect on the quantities of Eni’s proved reserves sinceestimates of reserves are based on prices and costs relative tothe date when such estimates are made. Reserve estimates are alsosubject to revision as prices fluctuate due to the cost recoveryfeature under certain PSAs.

The following table presents yearly changes bygeographical area in estimated proved reserves, developed andundeveloped, of crude oil (including condensate and natural gasliquids) and natural gas for the years 2004, 2005 and 2006.

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##### Table of Contents

*Crude oil (including condensates and naturalgas liquids)*

| (mmBBL) | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Rest of World** |   | **Total consolidated        subsidiaries** |   | **Total joint venture and        affiliates**(a) |
|---------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|-------------------|--------|--------------------------------------------|--------|--------------------------------------------------|
|    |           |   |                  |   |                 |   |               |   |                   |   |                                            |   |                                                  |

| **Proved Oil Reserves**                                    |   |    |   |   |      |   |   |      |   |   |    |   |   |      |   |   |      |   |   |   |   |
|------------------------------------------------------------|--------|---------|--------|--------|-----------|--------|--------|-----------|--------|--------|---------|--------|--------|-----------|--------|--------|-----------|--------|--------|--------|--------|
| **Reserves        at December 31, 2003**                   |   | **252** |   |   | **1,080** |   |   | **1,038** |   |   | **529** |   |   | **1,239** |   |   | **4,138** |   |   |   |   |
| Revisions of previous estimates                            |   | (1      | )      |   | (22       | )      |   | 44        |   |   | 12      |   |   | (18       | )      |   | 15        |   |   |   |   |
| Improved        recovery                                   |   |    |   |   | 11        |   |   | 48        |   |   | 4       |   |   |      |   |   | 63        |   |   |   |   |
| Extensions and discoveries                                 |   | 4       |   |   | 20        |   |   | 34        |   |   | 4       |   |   | 144       |   |   | 206       |   |   |   |   |
| Production                                                 |   | (30     | )      |   | (94       | )      |   | (104      | )      |   | (74     | )      |   | (75       | )      |   | (377      | )      |   |   |   |
| Sales of minerals in place                                 |   |    |   |   | (2        | )      |   | (4        | )      |   | (25     | )      |   | (6        | )      |   | (37       | )      |   |   |   |
| Reclassification        2004 joint ventures and affiliates |   |    |   |   | (26       | )      |   | (9        | )      |   |    |   |   | (1        | )      |   | (36       | )      |   | 36     |   |
| **Reserves at December 31, 2004**                          |   | **225** |   |   | **967**   |   |   | **1,047** |   |   | **450** |   |   | **1,283** |   |   | **3,972** |   |   | **36** |   |
| Purchase        of minerals in place                       |   | 2       |   |   |      |   |   | 6         |   |   |    |   |   | 47        |   |   | 55        |   |   |   |   |
| Revisions of previous estimates                            |   | 33      |   |   | 36        |   |   | (47       | )      |   | 27      |   |   | (88       | )      |   | (39       | )      |   | (9     | )      |
| Improved        recovery                                   |   |    |   |   | 43        |   |   | 29        |   |   |    |   |   | 15        |   |   | 87        |   |   |   |   |
| Extensions and discoveries                                 |   |    |   |   | 26        |   |   | 14        |   |   | 21      |   |   | 16        |   |   | 77        |   |   |   |   |
| Production                                                 |   | (32     | )      |   | (111      | )      |   | (113      | )      |   | (65     | )      |   | (83       | )      |   | (404      | )      |   | (2     | )      |
| Sales of minerals in place                                 |   |    |   |   |      |   |   |      |   |   |    |   |   |      |   |   |      |   |   |   |   |
| **Reserves        at December 31, 2005**                   |   | **228** |   |   | **961**   |   |   | **936**   |   |   | **433** |   |   | **1,190** |   |   | **3,748** |   |   | **25** |   |
| Revisions of previous estimates (b)                        |   | 15      |   |   | 61        |   |   | (85       | )      |   | 20      |   |   | 53        |   |   | 64        |   |   | 1      |   |
| Improved        recovery                                   |   |    |   |   | 49        |   |   | 41        |   |   |    |   |   | 14        |   |   | 104       |   |   | 1      |   |
| Extensions and discoveries                                 |   |    |   |   | 30        |   |   | 11        |   |   |    |   |   | 62        |   |   | 103       |   |   |   |   |
| Production                                                 |   | (28     | )      |   | (119      | )      |   | (117      | )      |   | (65     | )      |   | (61       | )      |   | (390      | )      |   | (3     | )      |
| Sales of minerals in place (c)                             |   |    |   |   |      |   |   |      |   |   | (2      | )      |   | (170      | )      |   | (172      | )      |   |   |   |
| **Reserves        at December 31, 2006**                   |   | **215** |   |   | **982**   |   |   | **786**   |   |   | **386** |   |   | **1,088** |   |   | **3,457** |   |   | **24** |   |

|   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

| (mmBBL) | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Rest of World** |   | **Total consolidated        subsidiaries** |   | **Total joint venture and        affiliates**(a) |
|---------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|-------------------|--------|--------------------------------------------|--------|--------------------------------------------------|
|    |           |   |                  |   |                 |   |               |   |                   |   |                                            |   |                                                  |

| **Proved Developed Oil Reserves**    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Reserves        at December 31, 2003 |   | 173    |   | 640    |   | 560    |   | 464    |   | 610    |   | 2,447  |   |   |
| Reserves at December 31, 2004        |   | 174    |   | 655    |   | 588    |   | 386    |   | 668    |   | 2,471  |   |   |
| Reserves        at December 31, 2005 |   | 149    |   | 697    |   | 568    |   | 353    |   | 564    |   | 2,331  |   | 19     |
| Reserves at December 31, 2006        |   | 136    |   | 713    |   | 546    |   | 329    |   | 402    |   | 2,126  |   | 18     |

|   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                                                      |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|
| (a)    |   | Starting from        2005 includes data related to joint venture and        affiliates accounted under the equity method. |
| (b)    |   | Includes the        effect of Eni share redetermination in the Val        d’Agri concession in Italy.                |
| (c)    |   | Includes 170        mmBBL related to unilateral termination of OSA by PDVSA        for Dación field.                 |

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##### Table of Contents

*Natural gas*

| (BCF)  | **Italy**(a) |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Rest of World** |   | **Total consolidated        subsidiaries** |   | **Total joint venture and        affiliates**(b) |
|--------|--------------|--------|------------------|--------|-----------------|--------|---------------|--------|-------------------|--------|--------------------------------------------|--------|--------------------------------------------------|
|   |              |   |                  |   |                 |   |               |   |                   |   |                                            |   |                                                  |

| **Proved Natural Gas Reserves**                            |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |    |   |
|------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|--------|---------|--------|
| **Reserves        at December 31, 2003**                   |   | **4,166** |   |   | **5,467** |   |   | **1,656** |   |   | **2,223** |   |   | **4,496** |   |   | **18,008** |   |   |    |   |
| Revisions of previous estimates                            |   | 105       |   |   | 814       |   |   | 129       |   |   | 75        |   |   | 84        |   |   | 1,207      |   |   |    |   |
| Improved        recovery                                   |   |      |   |   |      |   |   | 10        |   |   |      |   |   |      |   |   | 10         |   |   |    |   |
| Extensions and discoveries                                 |   | 29        |   |   | 420       |   |   |      |   |   | 38        |   |   | 222       |   |   | 709        |   |   |    |   |
| Production                                                 |   | (409      | )      |   | (247      | )      |   | (66       | )      |   | (220      | )      |   | (303      | )      |   | (1,245     | )      |   |    |   |
| Sales of minerals in place                                 |   | (73       | )      |   | (1        | )      |   |      |   |   | (65       | )      |   | (115      | )      |   | (254       | )      |   |    |   |
| Reclassification        2004 joint ventures and affiliates |   |      |   |   | (21       | )      |   | (2        | )      |   |      |   |   | (134      | )      |   | (157       | )      |   | 157     |   |
| **Reserves at December 31, 2004**                          |   | **3,818** |   |   | **6,432** |   |   | **1,727** |   |   | **2,051** |   |   | **4,250** |   |   | **18,278** |   |   | **157** |   |
| Purchase        of minerals in place                       |   | 63        |   |   |      |   |   | 8         |   |   |      |   |   | 222       |   |   | 293        |   |   |    |   |
| Revisions of previous estimates                            |   | 159       |   |   | (6        | )      |   | (9        | )      |   | (18       | )      |   | (368      | )      |   | (242       | )      |   | (47     | )      |
| Improved        recovery                                   |   |      |   |   | 11        |   |   |      |   |   |      |   |   |      |   |   | 11         |   |   |    |   |
| Extensions and discoveries                                 |   | 1         |   |   | 37        |   |   | 309       |   |   | 50        |   |   | 56        |   |   | 453        |   |   | (20     | )      |
| Production                                                 |   | (365      | )      |   | (357      | )      |   | (70       | )      |   | (219      | )      |   | (281      | )      |   | (1,292     | )      |   |    |   |
| Sales of minerals in place                                 |   |      |   |   |      |   |   |      |   |   |      |   |   |      |   |   |       |   |   |    |   |
| **Reserves        at December 31, 2005**                   |   | **3,676** |   |   | **6,117** |   |   | **1,965** |   |   | **1,864** |   |   | **3,879** |   |   | **17,501** |   |   | **90**  |   |
| Purchase of minerals in place                              |   |      |   |   |      |   |   |      |   |   | 4         |   |   |      |   |   | 4          |   |   |    |   |
| Revisions        of previous estimates                     |   | 36        |   |   | 154       |   |   | 31        |   |   | 53        |   |   | 230       |   |   | 504        |   |   | (7      | )      |
| Extensions and discoveries                                 |   | 19        |   |   | 146       |   |   | 34        |   |   | 1         |   |   | 132       |   |   | 332        |   |   |    |   |
| Production                                                 |   | (340      | )      |   | (471      | )      |   | (103      | )      |   | (218      | )      |   | (305      | )      |   | (1,437     | )      |   | (15     | )      |
| Sales of minerals in place                                 |   |      |   |   |      |   |   |      |   |   | (7        | )      |   |      |   |   | (7         | )      |   |    |   |
| **Reserves        at December 31, 2006**                   |   | **3,391** |   |   | **5,946** |   |   | **1,927** |   |   | **1,697** |   |   | **3,936** |   |   | **16,897** |   |   | **68**  |   |

|   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

| (BCF)  | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Rest of World** |   | **Total consolidated        subsidiaries** |   | **Total joint venture and        affiliates**(b) |
|--------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|-------------------|--------|--------------------------------------------|--------|--------------------------------------------------|
|   |           |   |                  |   |                 |   |               |   |                   |   |                                            |   |                                                  |

| **Proved Developed Natural Gas Reserves** |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Reserves        at December 31, 2003      |   | 2,966  |   | 962    |   | 866    |   | 2,075  |   | 3,355  |   | 10,224 |   |   |
| Reserves at December 31, 2004             |   | 2,850  |   | 1,760  |   | 924    |   | 1,845  |   | 3,122  |   | 10,501 |   |   |
| Reserves        at December 31, 2005      |   | 2,704  |   | 3,060  |   | 1,289  |   | 1,484  |   | 2,622  |   | 11,159 |   | 70     |
| Reserves at December 31, 2006             |   | 2,449  |   | 3,042  |   | 1,447  |   | 1,395  |   | 2,616  |   | 10,949 |   | 48     |

|   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                                                                                          |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)    |   | Including        approximately 747, 737, 760 and 754 BCF of natural gas        held in storage at December 31, 2003, 2004, 2005 and 2006        respectively. |
| (b)    |   | Starting from        2005 includes data related to joint venture and        affiliates accounted under the equity method.                                     |

*Standardized measure of discounted futurenet cash flows*Estimated future cash inflows from proved reserves aredetermined by applying year-end prices of oil and gas to theyear-end quantities of those reserves. Future price changes areconsidered only to the extent provided by contractualarrangements. Estimated future development and production costsare determined by estimating the expenditures to be incurred indeveloping and producing the proved reserves at the end of theyear. Neither the effects of price and cost escalations norexpected future changes in technology and operating practiceshave been considered.

The standardized measure is calculated as theexcess of future cash inflows from proved reserves less futurecosts of producing and developing the reserves, future incometaxes and a yearly 10% discount factor.

Future cash flows as of December 31, 2004, 2005and 2006 include amounts that Eni’s Gas & Power segmentand other gas companies correspond for storages services,required to support market demand flexibility needs.

Future production costs include the estimatedexpenditures related to the production of proved reserves plusany production taxes without consideration of future inflation.Future development costs include the estimated costs of drillingdevelopment wells and installation of production facilities, plusthe net costs associated with dismantlement and abandonment ofwells and facilities, under the assumption that year-end costscontinue without considering future inflation. Future incometaxes were calculated in accordance with the tax laws of thecountries in which Eni operates.

The standardized measure of discounted futurenet cash flows, related to the preceding proved oil and gasreserves, is calculated in accordance with the requirements ofStatement of Financial Accounting Standard No. 69. Thestandardized measure does not purport to reflect realizablevalues or fair market value of Eni’s proved reserves. Anestimate of fair value would also take into account, among otherthings, the expected recovery of reserves in excess of provedreserves, anticipated changes in future prices and costs and adiscount factor representative of the risks inherent in producingoil and gas.

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##### Table of Contents

Standardized measure of discounted future netcash flows by geographical area consist of the following:

| (million        euro) | **Italy** |   | **North Africa** |   | **West Africa** |   | **North Sea** |   | **Rest of World** |   | **Total consolidated        subsidiaries** |   | **Total joint venture and        affiliates**(a) |
|-----------------------|-----------|--------|------------------|--------|-----------------|--------|---------------|--------|-------------------|--------|--------------------------------------------|--------|--------------------------------------------------|
|                  |           |   |                  |   |                 |   |               |   |                   |   |                                            |   |                                                  |

| **At December 31, 2004**                                            |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |        |   |   |    |   |
|---------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|-------------|--------|--------|---------|--------|
| Future        cash inflows                                          |   | 28,582     |   |   | 40,373     |   |   | 28,395     |   |   | 20,435     |   |   | 32,619     |   |   | 150,404     |   |   |    |   |
| Future production costs                                             |   | (3,635     | )      |   | (7,237     | )      |   | (6,664     | )      |   | (5,082     | )      |   | (4,858     | )      |   | (27,476     | )      |   |    |   |
| Future        development and abandonment costs                     |   | (2,210     | )      |   | (4,073     | )      |   | (1,873     | )      |   | (1,419     | )      |   | (2,873     | )      |   | (12,448     | )      |   |    |   |
| **Future net inflow before income tax**                             |   | **22,737** |   |   | **29,063** |   |   | **19,858** |   |   | **13,934** |   |   | **24,888** |   |   | **110,480** |   |   |    |   |
| Future        income tax                                            |   | (7,599     | )      |   | (11,487    | )      |   | (10,949    | )      |   | (8,824     | )      |   | (6,736     | )      |   | (45,595     | )      |   |    |   |
| **Future net cash flows**                                           |   | **15,138** |   |   | **17,576** |   |   | **8,909**  |   |   | **5,110**  |   |   | **18,152** |   |   | **64,885**  |   |   |    |   |
| 10 %        discount factor                                         |   | (6,006     | )      |   | (7,592     | )      |   | (3,267     | )      |   | (1,350     | )      |   | (9,412     | )      |   | (27,627     | )      |   |    |   |
| **Standardized measure of discounted future net        cash flows** |   | **9,132**  |   |   | **9,984**  |   |   | **5,642**  |   |   | **3,760**  |   |   | **8,740**  |   |   | **37,258**  |   |   |    |   |
| **At        December 31, 2005**                                     |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |        |   |   |    |   |
| Future cash inflows                                                 |   | 36,203     |   |   | 66,100     |   |   | 45,952     |   |   | 30,835     |   |   | 50,590     |   |   | 229,680     |   |   | 1,055   |   |
| Future        production costs                                      |   | (4,609     | )      |   | (10,030    | )      |   | (9,604     | )      |   | (5,632     | )      |   | (6,399     | )      |   | (36,274     | )      |   | (226    | )      |
| Future development and abandonment costs                            |   | (2,936     | )      |   | (3,960     | )      |   | (2,594     | )      |   | (1,774     | )      |   | (4,059     | )      |   | (15,323     | )      |   | (89     | )      |
| **Future        net inflow before income tax**                      |   | **28,658** |   |   | **52,110** |   |   | **33,754** |   |   | **23,429** |   |   | **40,132** |   |   | **178,083** |   |   | **740** |   |
| Future income tax                                                   |   | (9,890     | )      |   | (22,744    | )      |   | (21,056    | )      |   | (15,225    | )      |   | (12,097    | )      |   | (81,012     | )      |   | (187    | )      |
| **Future        net cash flows**                                    |   | **18,768** |   |   | **29,366** |   |   | **12,698** |   |   | **8,204**  |   |   | **28,035** |   |   | **97,071**  |   |   | **553** |   |
| 10 % discount factor                                                |   | (7,643     | )      |   | (12,095    | )      |   | (4,122     | )      |   | (2,155     | )      |   | (15,705    | )      |   | (41,720     | )      |   | (182    | )      |
| **Standardized        measure of discounted future net cash flows** |   | **11,125** |   |   | **17,271** |   |   | **8,576**  |   |   | **6,049**  |   |   | **12,330** |   |   | **55,351**  |   |   | **371** |   |
| **At December 31, 2006**                                            |   |       |   |   |       |   |   |       |   |   |       |   |   |       |   |   |        |   |   |    |   |
| Future        cash inflows                                          |   | 43,495     |   |   | 64,381     |   |   | 34,935     |   |   | 24,821     |   |   | 48,591     |   |   | 216,223     |   |   | 1,038   |   |
| Future production costs                                             |   | (6,086     | )      |   | (9,707     | )      |   | (8,028     | )      |   | (6,426     | )      |   | (5,915     | )      |   | (36,162     | )      |   | (224    | )      |
| Future        development and abandonment costs                     |   | (6,739     | )      |   | (5,383     | )      |   | (2,865     | )      |   | (2,265     | )      |   | (4,576     | )      |   | (21,828     | )      |   | (79     | )      |
| **Future net inflow before income tax**                             |   | **30,670** |   |   | **49,291** |   |   | **24,042** |   |   | **16,130** |   |   | **38,100** |   |   | **158,233** |   |   | **735** |   |
| Future        income tax                                            |   | (10,838    | )      |   | (24,639    | )      |   | (14,141    | )      |   | (10,901    | )      |   | (11,473    | )      |   | (71,992     | )      |   | (227    | )      |
| **Future net cash flows**                                           |   | **19,832** |   |   | **24,652** |   |   | **9,901**  |   |   | **5,229**  |   |   | **26,627** |   |   | **86,241**  |   |   | **508** |   |
| 10 %        discount factor                                         |   | (11,493    | )      |   | (10,631    | )      |   | (2,994     | )      |   | (1,392     | )      |   | (16,504    | )      |   | (43,014     | )      |   | (154    | )      |
| **Standardized measure of discounted future net        cash flows** |   | **8,339**  |   |   | **14,021** |   |   | **6,907**  |   |   | **3,837**  |   |   | **10,123** |   |   | **43,227**  |   |   | **354** |   |

|   |  |   |  |   |  |   |  |   |  |   |  |   |  |
|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|--------|--|

|   |   |                                                                                                                          |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|
| (a)    |   | Starting from        2005 are included data related to joint venture and        affiliates accounted under the equity method. |

F-105

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##### Table of Contents

*Changes in standardized measure ofdiscounted future net cash flows*Changes in standardized measure of discounted future net cashflows for the years 2004, 2005 and 2006.

| (million        euro) |   | **2004** |   | **2005** |   | **2006** |
|-----------------------|--------|----------|--------|----------|--------|----------|
|                  |   |          |   |          |   |          |

| **Beginning of year consolidated**                                                                     |   | **31,264** |   |   | **36,901** |   |   | **55,351**  |   |
|--------------------------------------------------------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|-------------|--------|
| Increase        (decrease):                                                                            |   |       |   |   |       |   |   |        |   |
| - sales, net of production costs                                                                       |   | (12,172    | )      |   | (17,880    | )      |   | (21,739     | )      |
| - net        changes in sales and transfer prices, net of production        costs                      |   | 13,031     |   |   | 33,372     |   |   | 4,097       |   |
| - extensions, discoveries and improved recovery,        net of future production and development costs |   | 2,806      |   |   | 3,527      |   |   | 3,629       |   |
| -        abandonment costs                                                                             |   | (3,437     | )      |   | (3,654     | )      |   | (6,964      | )      |
| - future development costs                                                                             |   | 4,229      |   |   | 3,865      |   |   | 3,558       |   |
| -        revisions of quantity estimates                                                               |   | 1,658      |   |   | 47         |   |   | 383         |   |
| - accretion of discount                                                                                |   | 5,328      |   |   | 6,573      |   |   | 9,489       |   |
| - net        change in income taxes                                                                    |   | (4,805     | )      |   | (17,327    | )      |   | 3,060       |   |
| - purchase of reserves in-place                                                                        |   |       |   |   | 977        |   |   | 10          |   |
| - sale of        reserves in-place                                                                     |   | (727       | )      |   |       |   |   | (1,252      | )      |
| - changes in production rates (timing) and other        (a)                                            |   | 83         |   |   | 8,950      |   |   | (6,395      | )      |
| **Net        increase (decrease)**                                                                     |   | **5,994**  |   |   | **18,450** |   |   | **(12,124** | **)**  |
| **Standardized measure of discounted future net        cash flows consolidated**                       |   | **37,258** |   |   | **55,351** |   |   | **43,227**  |   |

|   |   |  |   |  |   |  |
|--------|--------|--|--------|--|--------|--|

|   |   |                                                                                                 |
|--------|--------|------------------------------------------------------------------------------------------------------|
| (a)    |   | This item        relates mainly to changes in production timing and        foreign exchange effects. |

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**EXHIBIT 1**

**Eni S.p.A. By-laws**

> 
***Part I - Establishment - Name -    Registered Office and Duration of the Company***

**ARTICLE 1**

| 1.1 |   | "Eni        S.p.A." resulting from the transformation of Ente        Nazionale Idrocarburi, a public law agency, established        by Law 136 of February 10, 1953, is regulated by these        by-laws. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE 2**

| 2.1 |   | The        registered head office of the company is located in Rome,        Italy and the company’s two branches in San Donato        Milanese (MI).   |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.2 |   | Main        representative offices, affiliates and branches may be        established and/or wound up in Italy or abroad in        compliance with the law. |

**ARTICLE 3**

| 3.1 |   | The company        is expected to exist until December 31, 2100. Its        duration may be extended one or more times by resolution        of the shareholders’ meeting. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

> 
***Part II - Company Objects***

**ARTICLE 4**

| 4.1    |   | The company        objects are the direct and/or indirect management, by way        of shareholdings in companies, agencies or businesses, of        activities in the field of hydrocarbons and natural        vapours, such as exploration and development of        hydrocarbon fields, construction and operation of        pipelines for transporting the same, processing,        transformation, storage, utilisation and trade of        hydrocarbons and natural vapours, all in respect of        concessions provided by law.                                                                                                                                                                                                                                                                           |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | The company        also has the object of direct and/or indirect management,        by way of shareholdings in companies, agencies or        businesses, of activities in the fields of chemicals,        nuclear fuels, geothermy and renewable energy sources, in        the sector of engineering and construction of industrial        plants, in the mining sector, in the metallurgy sector,        in the textile machinery sector, in the water sector,        including derivation, drinking water, purification,        distribution and reuse of waters; in the sector of        environmental protection and treatment and disposal of        waste, as well as in every other business activity that        is instrumental, supplemental or complementary with the        aforementioned activities. |
|   |   | The company        also has the object of managing the technical and        financial co-ordination of subsidiaries and affiliated        companies as well as providing financial assistance on        their behalf.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   | The company        may perform any operations necessary or useful for the        achievement of the company objects; by way of example, it        may initiate operations involving real estate, moveable        goods, trade and commerce, industry, finance and banking        asset and liability operations, as well as any action        that is in any way connected with the company objects        with the exception of public fund raising and the        performance of investment services as regulated by        Legislative Decree No. 58 of February 24, 1998.                                                                                                                                                                                                                                      |
|   |   | The company        may take shareholdings and interests in other companies        or businesses with objects similar, comparable or        complementary to its own or those of companies in which        it has holdings, either in Italy or abroad, and it may        provide real and or personal bonds for its own and        others’ obligations, especially guarantees.                                                                                                                                                                                                                                                                                                                                                                                                                                 |

> 
***Part III - Capital -    Shareholdings - Bonds***

**ARTICLE 5**

| 5.1 |   | The company        capital is euro 4,005,358,876.00 (four billion five        million three hundred and fifty-eight thousand eight        hundred and seventy-six) represented by 4,005,358,876        (four billion five million three hundred and fifty-eight        thousand eight hundred and seventy-six) shares of        ordinary stock with a nominal value of euro 1 (one) each. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 5.2 |   | Shares may        not be split up and each share is entitled to one vote.                                                                                                                                                                                                                                                                                                                 |
| 5.3 |   | The fact of        being a Shareholder in itself constitutes approval of        these by-laws.                                                                                                                                                                                                                                                                                            |

**ARTICLE 6**

| 6.1    |   | Pursuant to        Article 3 of Law Decree 332 of May 31, 1994, converted        with amendments into Law 474 of July 30, 1994, no one, in        any capacity, may own company shares that entail a        holding of more than 3 per cent of voting share capital.                                                                                                                                                                                                                          |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | Such maximum        shareholding limit is calculated by taking into account        the aggregate shareholding held by the controlling        entity, either a physical or legal person or company; its        directly or indirectly controlled entities, as well as        entities controlled by the same controlling entity;        affiliated entities as well as people related to the        second degree by blood or marriage, also in the case of a        legally separated spouse. |

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|   |   | Control        exists, with reference also to entities other than        companies, in the cases envisaged by Article 2359,        paragraphs 1 and 2 of the Civil Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | Affiliation        exists in the case set forth in Article 2359, paragraph        3, of the Civil Code as well as between entities that        directly or indirectly, by way of subsidiaries, other        than those managing investment funds, are bound, even        with third parties, in agreements regarding the exercise        of voting rights or the transfer of shares or portions of        third companies or, in any event, in agreements or pacts        as per Article 122 of Legislative Decree No. 58 of        February 24, 1998 regarding third party companies if said        agreements or pacts concern at least 10 per cent of the        voting capital, if they are listed companies, or 20 per        cent if they are unlisted companies.                                                                                                                 |
|   |   | The        aforementioned shareholding limit (3 per cent) is        calculated by taking into account shares held by any        fiduciary nominee or intermediary. Any voting rights        attributable to voting capital held or controlled in        excess of the maximum limit indicated in the foregoing        cannot be exercised and the voting rights of each entity        to whom such limit on shareholding applies are reduced in        proportion, unless otherwise jointly provided in advance        by the parties involved. In the event that shares        exceeding this limit are voted, any Shareholders’        resolution adopted pursuant to such a vote may be        challenged pursuant to Article 2377 of the Civil Code, if        the required majority had not been reached without the        votes exceeding the aforementioned maximum limit. |
|   |   | Shares not        entitled to vote are included in the determination of the        quorum at shareholders’ meetings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 6.2    |   | Pursuant to        Article 2, paragraph 1 of Law Decree 332 of May 31, 1994,        converted with amendments into Law 474 of July 30, 1994,        as modified by Article 4, paragraph 227, of Law December        24, 2003 No. 350, the Minister of Economy and Finance        retains the following special powers to be exercised in        agreement with the Minister of the Economic Development        and according to the criteria contained in the Decree        issued by the President of the Council of Ministers on        June 10, 2004:                                                                                                                                                                                                                                                                                                                                |

|   |   | a) |   | opposition        with respect to the acquisition of material shareholdings        by entities affected by the shareholding limit as set        forth in Article 3 of Law Decree 332 of May 31, 1994,        converted with amendments into Law 474 of July 30, 1994,        by which – as per Decree issued by the Minister of        Treasury on October 16, 1995 – are meant those        representing at least 3% of share capital with the right        to vote at the ordinary shareholders’ meeting. The        opposition is expressed within ten days of the date of        the notice to be filed by the Board of Directors at the        time request is made for registration in the        Shareholders’ Register if the Minister considers        that such an acquisition may prejudice the vital        interests of the Italian State. Until the ten-day term is        not lapsed, the voting rights and the non-asset linked        rights connected with the shares representing a material        shareholding may not be exercised. If the opposition        power is exercised, through a duly motivated act in        connection with the prejudice that may be caused by the        operation to the vital interests of the Italian State,        the transferee may not exercise the voting rights and the        other non-asset linked rights connected with the shares        representing a material shareholding and must sell said        shares within one year. Failing to comply, the law court,        upon request of the Minister of Economy and Finance, will        order the sale of the shares representing a material        shareholding according to the procedures set forth in        Article 2359-ter of the Civil Code. The act through which        the opposition power is exercised may be sued by the        transferee before the Regional Administrative Court of        Latium within sixty days as of its issue;                                                                                               |
|--------|--------|----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | b) |   | opposition        with respect to the subscription of Shareholders’        pacts or agreements as per Article 122 of Legislative        Decree No. 58 of February 24, 1998, involving – as        per Decree issued by the Minister of Treasury on October        16, 1995 – at least 3% of the share capital with the        right to vote at ordinary shareholders’ meetings. In        order to allow the exercise of the above mentioned        opposition power, Consob notifies the Minister of Economy        and Finance of the relevant pacts or agreements        communicated to it pursuant to the aforementioned Article        122 of Legislative Decree No. 58 of February 24, 1998.        The opposition power may be exercised within ten days as        of the date of the notice by Consob. Until the ten-day        term is not lapsed, the voting right and the other        non-asset linked rights connected with the shares held by        the shareholders who have subscribed the above mentioned        pacts or agreements may not be exercised. If the        opposition power is exercised through the issue of an act        that shall be duly motivated in consideration of the        prejudice that may be caused by said pacts or agreements        to the vital interests of the Italian State, the        shareholders pacts or agreements shall be null and void.        If in the shareholders’ meetings the shareholders        who have signed shareholders’ pacts or agreements        behave as if those pacts or agreements disciplined by        Article 122 of Legislative Decree No. 58 of February 24,        1998 were still in effect, the resolutions approved with        their vote, if determining for the approval, may be sued.        The act through which the opposition power is exercised        may be sued by the shareholders who joined the above        mentioned pacts or agreements before the Regional        Administrative Court of Latium within sixty days as of        its issue; |
|   |   | c) |   | veto power        with respect to resolutions to dissolve the company, to        transfer the business, to merge, to demerge, to transfer        the company’s registered office abroad, to change        the company objects and to amend the by-laws cancelling        or modifying the powers indicated in this Article. The        act through which the veto power is exercised shall be        duly motivated in consideration of the prejudice the        related resolution may cause to the vital interests of        the Italian State and may be sued by the dissenting        Shareholders before the Regional Administrative Court of        Latium within sixty days as of its issue;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

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|   |   | d) |   | appointment        of one Board member with no voting rights. Should such        appointed Director lapse, the Minister of Economy and        Finance in agreement with the Minister of the Economic        Development will appoint his substitute. |
|--------|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE 7**

| 7.1 |   | When shares        are fully paid, and if the law so allows, they may be        issued to the bearer. Bearer shares may be converted into        registered shares and vice-versa. Conversion operations        are performed at the Shareholder’s expense. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE 8**

| 8.1 |   | In the event,        and for whatever reason, a share belongs to more than one        person, the rights relating to said share may not be        exercised by other than one person or by a proxy for all        co-owners. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE 9**

| 9.1 |   | The        shareholders’ meeting may resolve to increase the        company capital and establish terms, conditions and means        thereof.                                                                                               |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 9.2 |   | The        shareholders’ meeting may resolve to increase the        company capital by issuing shares, including shares of        different classes, to be assigned for no consideration        pursuant to Article 2349 of the Civil Code. |

**ARTICLE 10**

| 10.1 |   | Payments on        shares are requested by the Board of Directors in one or        more times.                                                                                                                                         |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.2 |   | Shareholders        who are late in payment are charged an interest        calculated at the official discount rate established by        the Bank of Italy besides the provisions envisaged in        Article 2344 of the Civil Code. |

**ARTICLE 11**

| 11.1 |   | The company        may issue bonds, including convertibles and warrant bonds        in compliance with the law. |
|------|--------|-----------------------------------------------------------------------------------------------------------------|

> 
***Part IV - Shareholders’ Meeting***

**ARTICLE 12**

| 12.1 |   | Ordinary and        extraordinary shareholders’ meetings are usually        held at the company registered office unless otherwise        resolved by the Board of Directors, provided however they        are held in Italy.                 |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 12.2 |   | Ordinary        shareholders’ meetings must be called at least once        a year to approve the financial statements, within 180        days of the end of the business year, as the Company        approves the Group Financial Statements. |

**ARTICLE 13**

| 13.1   |   | Shareholders’        meetings are convened through a notice to be published on        the Italian Official Gazette or the following newspapers:        "Il Sole 24 Ore", "Corriere della        Sera" and "Financial Times", according to        the current legislation and in compliance with the rules        in force regulating the exercise of the vote by mail.                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | The        Shareholders that, severally or jointly, represent at        least one fortieth of Eni share capital, may ask, within        five days as of the date of publication of the        shareholders’ meeting notice, to add other items in        the agenda. The request shall contain the matters to be        proposed to the shareholders’ meeting. Said faculty        may not be exercised on the matters upon which, pursuant        to the applicable legislation, the shareholders’        meeting resolves on the basis of a proposal of the Board        of Directors or on the basis of a project or report of        the Board. The integrations accepted by the Board shall        be published at least ten days before the        shareholders’ meeting date, through a notice to be        published as indicated above. |
| 13.2   |   | Admission to        the shareholders’ meeting is subject to the        delivery, also for registered shares, of the        communication issued by financial intermediaries at least        two labour days before the date of the shareholders’        meeting on first call.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

**ARTICLE 14**

| 14.1 |   | Each        Shareholder entitled to attend the meeting may also be        represented in compliance with the law by a person        appointed by written proxy. Incorporated entities and        companies may attend the meeting by way of a person        appointed by written proxy. In order to simplify        collection of proxies issued by Shareholders who are        employees of the company or its subsidiaries and members        of Shareholders associations incorporated under and        managed pursuant to current legislation regulating        proxies collection, notice boards for communications and        rooms to allow proxies collection are made available to        said associations according to terms and conditions        agreed from time to time by the company with the        associations representatives. |
|------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 14.2 |   | The Chairman        of the meeting has to assure the regularity of written        proxies and, in general, the right to attend the meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 14.3 |   | The right to        vote may also be exercised by mail according to the laws        and regulations in force concerning this matter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 14.4 |   | Eni S.p.A.        shareholders’ meetings are disciplined by Eni        S.p.A.’s shareholders’ meeting Regulation        approved by the ordinary shareholders’ meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

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**ARTICLE 15**

| 15.1 |   | The meeting        is chaired by the Chairman of the Board of Directors, or        in the event of absence or impediment, by the Chief        Executive Officer; in absence of both, by another person,        duly delegated by the Board of Directors, failing which        the meeting may elect its own Chairman. |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 15.2 |   | The Chairman        of the meeting is assisted by a Secretary, who need not        be a Shareholder, to be designated by the Shareholders        present, and may appoint one or more scrutineers.                                                                                                                    |

**ARTICLE 16**

| 16.1 |   | The ordinary        shareholders’ meeting decides on all the matters for        which it is legally entitled and authorises the transfer        of the business.                   |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 16.2 |   | Resolutions        either at ordinary or extraordinary meetings, either on        first, second or third call, must be taken with the        majority required by the law in each case. |
| 16.3 |   | Resolutions        of the meeting taken in compliance with the law and these        by-laws are binding for all Shareholders even if absent        or dissenting.                       |
| 16.4 |   | The minutes        of ordinary meetings must be signed by the Chairman and        the Secretary.                                                                                        |
| 16.5 |   | The minutes        of extraordinary meetings must be drawn up by a notary        public.                                                                                                |

> 
***Part V - The Board of Directors***

**ARTICLE 17**

| 17.1   |   | The company        is managed by a Board of Directors consisting of no fewer        than three and no more than nine members. The        shareholders’ meeting determines the number within        these limits. The Minister of Economy and Finance in        agreement with the Minister of the Economic Development        may appoint another member, with no voting rights,        pursuant to Article 6, second paragraph, letter d), of        the by-laws.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 17.2   |   | The Board of        Directors is appointed for a period of up to three        financial years; this term lapses on the date of the        shareholders’ meeting convened to approve the        financial statements of the last year of their office.        They may be reappointed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 17.3   |   | The Board of        Directors, except for the member appointed pursuant to        Article 6.2, letter d) of these by-laws, is appointed by        the shareholders’ meeting on the basis of lists        presented by Shareholders and by the Board of Directors;        in such lists the candidates must be listed in numerical        order. Should the retiring Board of Directors present its        own candidate list, it must be deposited at the        company’s registered office****and published in        at least three Italian newspapers of general circulation,        two of them business dailies, at least twenty days before        the date set for the first call of the shareholders’        meeting. Candidate lists presented by Shareholders must        be deposited and published as indicated in the foregoing        at least ten days before the date set for the first call        of the shareholders’ meeting.                                                                                                                                                                                                                                                                                                                                                                    |
|   |   | Each        Shareholder may present or take part in the presenting of        only one candidate list and vote only one candidate list.        Those who are controlling or controlled entities or are        under common control, as defined by Article 93 of        Legislative Decree No. 58 issued on February 24, 1998, by        the same entity of the shareholder presenting a list        shall not present nor take part in the presentation of        another candidate list, nor vote them, also through        intermediaries or fiduciaries. Each candidate may appear        in one list only or he will be ineligible. Only those        Shareholders who, alone or together with other        Shareholders, represent at least 1 per cent****of        voting share capital at the ordinary shareholders’        meeting may present candidate lists. In order to        demonstrate the title on the number of shares necessary        to present candidate lists, the Shareholders must present        and/or deliver with****the company’s registered        office a copy of the communication issued by the        authorised financial intermediaries that are depositaries        of their shares at least five days prior to the date set        for the first call of the shareholders’ meeting. |
|   |   | At least one        Board member, if the Board members are no more than five,        or at least three Board members if the Board members****are        more than five, shall have the independence requirements        set for the Board of Statutory Auditors members of listed        companies. The independent candidates shall be expressly        indicated in each list.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |   | All        candidates shall also have the honorability        qualifications set forth by the applicable legislation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |   | Together with        the deposit of each list, in order to assure its        validity, the following documents shall be deposited: (i)        the curriculum of each candidate; (ii) statements of each        candidate to****accept his nomination and attest, in        his own responsibility, that causes for his ineligibility        and incompatibility are non existing and that he        possesses the aforementioned honorability and,****if        any, independence requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   | The Directors        appointed shall communicate to the Company if they have        lost the above mentioned independence and honorability        requirements and if situations of ineligibility or        incompatibility have arisen.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |   | The Board of        Directors evaluates periodically the independence and the        honorability of its members and if situations of        ineligibility or incompatibility have arisen.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   | If the        honorability or independence****requirements declared        and set forth by the legislation in force are not present        or elapse for a Board member or if situations of        ineligibility or incompatibility have arisen, the Board        of Directors removes said Board member and resolves upon        his substitution or invites him to remove the situation        of incompatibility within the term set by the Board        itself; if this last condition is not met, the Director        will be removed from office.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

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|   |   | Board members        will be elected in the following manner: |
|--------|--------|---------------------------------------------------------------|

|   |   | a)     |   | seven tenths        of the members to be elected will be drawn out from the        candidate list that receives the majority of votes        expressed by the Shareholders in the numerical order in        which they appear on the list, rounded off in the event        of a fractional number to the next lower number;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | b)     |   | the remaining        Board members will be drawn out from the other candidate        lists; said lists shall not be linked in any way, neither        indirectly, to the shareholders who have presented or        voted the list that has obtained the highest number of        votes; to this purpose the votes obtained by each        candidate list will be divided by one or two depending on        the number of the members to be elected. The quotients        thus obtained will be assigned progressively to        candidates of each said list in the order given in the        lists themselves. Quotients thus assigned to candidates        of said lists will be set in one decreasing numerical        order. Those who obtain the highest quotients will be        elected.                                                                                                                                                                                                                |
|   |   |   |   | In the event        that more than one candidate obtains the same quotient,        the candidate elected will be the one of the list that        has not hitherto had a Board member elected or that has        elected the least number of Board members.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |   |   |   | In the event        that none of the lists has yet elected a Board member or        that all of them have elected the same number of Board        members, the candidate from all such lists who has        obtained the largest number of votes will be elected. In        the event of equal list votes and equal quotient, a new        vote will be taken by the entire shareholders’        meeting and the candidate elected will be the one who        obtains a simple majority of the votes;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |   | c)     |   | if through        the procedure described above the minimum number of        independent Directors set by these by-laws is not        elected, the quotient is calculated according to letter        b) above in order to be assigned to the candidates        present in each list; the independent candidates not yet        drawn from the lists pursuant to letters a) and b) above,        who have got the highest quotients will be elected in        order to meet the provision of the by-laws on the number        of the independent Directors. The Directors so appointed        will replace the non independent Directors to whom the        lowest quotients have been assigned. If the number of        independent candidates is lower than the minimum limit        set by the by-laws, the shareholders’ meeting will        make a resolution with the majorities prescribed by the        law to substitute the not independent candidates who have        got the lowest quotients; |
|   |   | d)     |   | to appoint        Board members for any reason not covered by the terms of        the aforementioned procedure, the shareholders’        meeting will make a resolution with the majorities        prescribed by the law****in order, however, to assure        that the Board composition complies with the current        legislation and the by-laws.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

|   |   | The vote by        list procedure shall apply only in case of appointment of        the entire Board of Directors.                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 17.4   |   | The        shareholders’ meeting may, even during the        Board’s term of office, change the number of members        of the Board of Directors, always within the limits set        forth in paragraph 17.1 above, and make the relating        appointments. Board members so elected will expire at the        same time as the rest of the Board.                                                                                                           |
| 17.5   |   | If during the        term of office one or more members leave the Board,        action will be taken in compliance with Article 2386 of        the Civil Code with exception of the Board member        appointed pursuant to Article 6.2 letter d) of these        by-laws. If a majority of members leaves the Board, the        whole Board will be considered lapsed and the Board must        promptly call a shareholders’ meeting to appoint a        new Board. |
| 17.6   |   | The Board may        establish Board Committees that shall have advisory and        consulting tasks on specific items.                                                                                                                                                                                                                                                                                                                                                      |

**ARTICLE 18**

| 18.1 |   | If the        shareholders’ meeting has not appointed a Chairman,        the Board will elect one of its members. The Director        appointed pursuant to Article 6, second paragraph, letter        d) of the by-laws cannot be appointed as Chairman. |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 18.2 |   | The Board, at        the Chairman’s proposal, appoints a Secretary, who        need not belong to the company.                                                                                                                                            |

**ARTICLE 19**

| 19.1 |   | The Board        meets in the place indicated in the notice whenever the        Chairman or, in case of absence or impediment, the Chief        Executive Officer deems necessary, or when written        application has been made by the majority of the members.        The Board of Directors may be convened also pursuant to        Article 28.4 of the by-laws. The Board of Directors’        meetings may be held by video or teleconference if each        of the participants to the meetings may be identified and        if each is allowed to follow the discussion and take part        to it in real time. If said conditions are met, the        meeting is considered duly held in the place where the        Chairman and the Secretary are present. |
|------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 19.2 |   | Usually        notice is given at least five days in advance. In cases        of urgency notice may be sent earlier. The Board of        Directors decides on how to convene its meetings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 19.3 |   | The Board of        Directors must likewise be convened when so requested by        at least two Board members or by one member if the Board        consists of three members to decide on a specific matter        considered of particular importance, pertaining to        management, matter to be indicated in the request.                                                                                                                                                                                                                                                                                                                                                                                                                                             |

**ARTICLE 20**

| 20.1 |   | The Chairman        of the Board or, in his absence, the oldest Board member        in attendance chairs the meeting. |
|------|--------|-----------------------------------------------------------------------------------------------------------------------|

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##### Table of Contents

**ARTICLE 21**

| 21.1 |   | A majority of        members of the Board having a voting right must be        present for a Board meeting to be valid.                                                                                |
|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 21.2 |   | Resolutions        are taken with the majority of votes of the Board members        having a voting right present; should votes be equal, the        person who chairs the meeting has a casting vote. |

**ARTICLE 22**

| 22.1 |   | Resolutions        of the Board are entered in the minutes, which are        recorded in a book kept for that purpose pursuant to the        law, and said minutes are signed by the Chairman of the        meeting and by the Secretary. |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 22.2 |   | Copies of the        minutes are bona fide if they are signed by the Chairman        or the person acting for him and countersigned by the        Secretary.                                                                              |

**ARTICLE 23**

| 23.1   |   | The Board of        Directors is invested with the fullest powers for        ordinary and extraordinary management of the company and,        in particular, the Board has the power to perform all        acts it deems advisable for the implementation and        achievement of the company objects, except for the acts        that the law or these by-laws reserve for the        shareholders’ meeting.                                                                                                                                                                                                 |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 23.2   |   | The Board of        Directors is allowed to resolve on the following matters:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   | - the merger        and the demerger of at least 90% directly owned        subsidiaries;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   | - the        establishment and winding up of branches;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |   | - the        amendment to the by-laws in order to comply with the        current legislation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 23.3   |   | The Board of        Directors and the Chief Executive Officer report timely,        at least every three months and however in the Board of        Directors meetings, to the Board of Statutory Auditors on        the activities and on the most relevant operations        regarding the operational, economic and financial        management of the company and its subsidiaries; in        particular the Board of Directors and the Chief Executive        Officer report to the Board of Statutory Auditors on        operations entailing an interest on their behalf or on        behalf of third parties. |

**ARTICLE 24**

| 24.1   |   | The Board of        Directors delegates its powers to one of its members with        the exception of the Director appointed pursuant to        Article 6, second paragraph, letter d) of the by-laws, in        compliance with the limits set forth in Article 2381 of        the Civil Code. In addition the Board of Directors may        delegate powers to the Chairman for researching and        promoting integrated projects and strategic international        agreements. The Board of Directors may at any time        withdraw the delegations of powers hereon; if the Board        of Directors withdraws powers delegated to the Chief        Executive Officer, a new Chief Executive Officer is        simultaneously appointed. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | The Board of        Directors, upon proposal of the Chairman and in agreement        with the Chief Executive Officer, may confer powers for        single acts or categories of acts to other members of the        Board of Directors with the exception of the Director        appointed pursuant to Article 6, second paragraph, letter        d) of the by-laws. The Chairman and the Chief Executive        Officer, in compliance with the limits of their        delegations, may delegate and empower company employees        or persons not belonging to the company to represent the        company for single acts or specific categories of acts.                                                                                     |
|   |   | Further, upon        proposal of the Chief Executive Officer and in agreement        with the Chairman, the Board of Directors may also        appoint one or more General Managers and determines the        powers to be conferred to them. In order to make the        appointment effective, the Board of Directors shall        verify if the General Manager to be appointed has the        honorability requirements set by the current legislation.        The Board of Directors shall periodically verify said        honorability requirements. The General Managers without        said requirement shall be removed.                                                                                                                   |
|   |   | Upon proposal        of the Chief Executive Officer presented and in agreement        with the Chairman, the Board of Directors appoints the        Manager responsible for the preparation of financial        reporting documents. The appointment is subject to the        favourable opinion of the Board of Statutory Auditors.                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   | The Manager        responsible for the preparation of financial reporting        documents is chosen among people who, for at least three        years, have exercised:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

|   |   | a) |   | administration        or control activities or directive tasks in companies        listed on regulated stock exchanges in Italy or other        European Union countries or other countries member of        OECD with a share capital not less than two million euro        or |
|--------|--------|----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | b) |   | audit        activities in the companies mentioned in letter a) above,        or                                                                                                                                                                                                |
|   |   | c) |   | professional        activities or teaching activities in universities in the        financial or accounting sectors, or                                                                                                                                                         |
|   |   | d) |   | managerial        functions in public or private bodies in the financial,        accounting, or control sectors.                                                                                                                                                                |

|   |   | The Board of        Directors assures that the Manager responsible for the        preparation of financial reporting documents is given        adequate powers and means to execute his or her tasks and        to respect the administrative and accounting procedures. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE 25**

| 25.1 |   | Legal        representation towards any judicial or administrative        authority and towards third parties, together with the        company signature, are vested either onto the Chairman or        the Chief Executive Officer. |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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##### Table of Contents

**ARTICLE 26**

| 26.1 |   | The Chairman        and the members of the Board are remunerated in an amount        established by the ordinary shareholders’ meeting.        Said resolution, once taken, will remain valid for        subsequent business years until the shareholders’        meeting decides otherwise. |
|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE 27**

| 27.1 |   | The Chairman: |
|------|--------|---------------|

|   |   | a) |   | represents        the company according to the provisions of Article 25.1;                                               |
|--------|--------|----|--------|--------------------------------------------------------------------------------------------------------------------------|
|   |   | b) |   | chairs the        shareholders’ meeting pursuant to Article 15.1;                                                   |
|   |   | c) |   | convenes and        chairs meetings of the Board of Directors pursuant to        Articles 19.1 and 20.1;                 |
|   |   | d) |   | ascertains        whether Board resolutions have been implemented;                                                       |
|   |   | e) |   | exercises the        powers delegated to him by the Board of Directors        pursuant to Article 24.1 of these by-laws. |

> 
***Part VI - Board of Statutory Auditors***

**ARTICLE 28**

| 28.1   |   | The Board of        Statutory Auditors consists of five effective members and        two alternate members. The Auditors shall have the        professional and honour requirements set forth by the        Ministerial Decree No. 162, dated March 30, 2000 issued        by the Ministry of Justice.                                                                                                                                           |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | Pursuant to        the aforementioned Ministerial Decree, the matters        strictly connected to those of interest of the Company        are: companies law, business economics and corporate        finance.                                                                                                                                                                                                                                  |
|   |   | Pursuant to        said Ministerial Decree, the sectors strictly connected        with those of interest of the Company are the engineering        and geological sectors.                                                                                                                                                                                                                                                                       |
|   |   | The Statutory        Auditors may be appointed members of administration and        control bodies in other companies within the limits set        by Consob regulation.                                                                                                                                                                                                                                                                         |
|   |   | Until those        provisions do not come in force, those who are already        appointed effective auditor or supervisory board member        or audit committee member in at least five companies with        securities listed on regulated securities markets other****than Eni S.p.A. subsidiaries may not be appointed        Statutory Auditor; if elected, they will lapse.                                                             |
| 28.2   |   | The Board of        Statutory Auditors is appointed by the shareholders’        meeting on the basis of lists presented by the        Shareholders; in such lists candidates are listed in        numerical order.                                                                                                                                                                                                                          |
|   |   | For the        presentation, deposit and publication of candidate lists        the procedures set forth in Article 17.3 shall apply and        according to the rules set forth by Consob.                                                                                                                                                                                                                                                       |
|   |   | Lists shall        be divided into two sections: the first one for the        candidates to be appointed effective Auditors and the        second one for the candidates to be appointed alternate        Auditors. At least the first candidate of each section        shall be chartered accountant and have exercised audit        activities for not less than three years.                                                                  |
|   |   | Three        effective Auditors and one alternate Auditor will be        drawn from the list that obtains the majority of votes.        The other two effective Auditors and the other alternate        Auditor will be appointed pursuant to Article 17.3,        letter b) of the by-laws. The procedure described in this        last Article shall be applied to each section of the        lists involved separately.                       |
|   |   | The        shareholders’ meeting appoints the Chairman of the        Board of Statutory Auditors among the effective Auditors        appointed according to Article 17.3 letter b) of these        by-laws.                                                                                                                                                                                                                                 |
|   |   | To appoint        effective or alternate Auditors for any reason not        elected according to the terms of the aforementioned        procedure, the shareholders’ meeting will resolve        with the majorities prescribed by the law.                                                                                                                                                                                                 |
|   |   | The vote by        list procedure shall apply only in case of appointment of        the entire Board of Statutory Auditors.                                                                                                                                                                                                                                                                                                                      |
|   |   | Should an        effective Auditor drawn out from the candidate list that        receives the majority of votes expressed by the        Shareholders be replaced, he will be succeeded by the        alternate Auditor drawn out from the same candidate list;        should an effective Auditor drawn out from the other        candidate list be replaced, he will be substituted by the        Alternate Auditor drawn by those other lists. |
| 28.3   |   | Retiring        Auditors may be reelected.                                                                                                                                                                                                                                                                                                                                                                                                       |
| 28.4   |   | Subject to a        previous communication to the Chairman of the Board of        Directors, the Board of Statutory Auditors is empowered        to convene the shareholders’ meeting and the Board        of Directors. At least two effective Auditors are        empowered to convene the shareholders’ meetings and        at least one effective Auditor is empowered to convene        the Board meetings.                       |
|   |   | The Board of        Statutory Auditors’ meetings may be held by video or        teleconference if each of the participants to the        meetings may be identified and if each is allowed to        follow the discussion and take part to it in real time.        If said conditions are met, the Meeting is considered        duly held in the place where the Chairman and the        Secretary are present.                            |

> 
***Part VII - Financial Statements and    Profits***

**ARTICLE 29**

| 29.1 |   | The business        year ends on December 31 every year. |
|------|--------|----------------------------------------------------------|

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##### Table of Contents

| 29.2 |   | At the end of        each business year, the Board of Directors sees to the        preparation of the company financial statements in        conformity with the law. |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 29.3 |   | The Board of        Directors may, during the course of the business year,        pay interim dividends to the Shareholders.                                          |

**ARTICLE 30**

| 30.1 |   | Dividends not        collected within five years of the day on which they are        payable will be prescribed in favour of the company and        allocated to reserves. |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

> 
***Part VIII - Winding Up and    Liquidation of the Company***

**ARTICLE 31**

| 31.1 |   | In the event        the company is wound up, the shareholders’ meeting        will decide the manner of liquidation, appoint one or        more liquidators and determine their powers and        remuneration. |
|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

> 
***Part IX - General Provisions***

**ARTICLE 32**

| 32.1 |   | For matters        not expressly regulated by these by-laws, the norms of        the Civil Code and specific laws concerning these matters        will apply.                                                                                                                                 |
|------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 32.2 |   | The Ministry        of Economy and Finance may retain his shareholding in the        company share capital in excess of the limit set forth in        Article 6.1 of these by-laws and will not be subject to        the provisions of said Article 6.1 for the period set by        the law. |

**ARTICLE 33**

| 33.1 |   | The company        retains all assets and liabilities held before its        transformation by the public law agency Ente Nazionale        Idrocarburi. |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

 

 

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##### Table of Contents

**EXHIBIT 8**

**List of Eni’s fullyconsolidated subsidiaries for year 2006**

| Subsidiary                                             |   | Country        of Incorporation |   | Eni’s        interest (%)(1) |
|--------------------------------------------------------|--------|---------------------------------|--------|-----------------------------------|
|                                                   |   |                            |   |                              |
|                                                   |   |                            |   |                              |
| Exploration &        Production                    |   |                            |   |                              |
|                                                   |   |                            |   |                              |
| Agip Caspian Sea BV                                    |   | (the Netherlands)               |   | 100.00                            |
| Agip Energy and Natural        Resources (Nigeria) Ltd |   | (Nigeria)                       |   | 100.00                            |
| Agip Karachaganak BV                                   |   | (the Netherlands)               |   | 100.00                            |
| Agip Oil Ecuador BV                                    |   | (the Netherlands)               |   | 100.00                            |
| Eni A E P Ltd                                          |   | (the United Kingdom)            |   | 100.00                            |
| Eni Algeria Exploration        BV                      |   | (the Netherlands)               |   | 100.00                            |
| Eni Algeria Ltd Sàrl                              |   | (Luxembourg)                    |   | 100.00                            |
| Eni Algeria Production BV                              |   | (the Netherlands)               |   | 100.00                            |
| Eni Ambalat Ltd                                        |   | (the United Kingdom)            |   | 100.00                            |
| Eni America Ltd                                        |   | (USA)                           |   | 100.00                            |
| Eni Angola Exploration BV                              |   | (the Netherlands)               |   | 100,00                            |
| Eni Angola Production BV                               |   | (the Netherlands)               |   | 100.00                            |
| Eni Australia BV                                       |   | (the Netherlands)               |   | 100.00                            |
| Eni Australia Ltd                                      |   | (the United Kingdom)            |   | 100.00                            |
| Eni BB Petroleum Inc                                   |   | (USA)                           |   | 100.00                            |
| Eni Bukat Ltd                                          |   | (the United Kingdom)            |   | 100.00                            |
| Eni Bulungan BV                                        |   | (the Netherlands)               |   | 100.00                            |
| Eni China BV                                           |   | (the Netherlands)               |   | 100.00                            |
| Eni Congo Holding BV                                   |   | (the Netherlands)               |   | 100.00                            |
| Eni Congo SA                                           |   | (Congo)                         |   | 100.00                            |
| Eni Croatia BV                                         |   | (the Netherlands)               |   | 100.00                            |
| Eni Dación BV                                     |   | (the Netherlands)               |   | 100.00                            |
| Eni Denmark BV                                         |   | (the Netherlands)               |   | 100.00                            |
| Eni Elgin/Franklin Ltd                                 |   | (the United Kingdom)            |   | 100.00                            |
| Eni Energy Ltd (in        liquidation)                 |   | (the United Kingdom)            |   | 100.00                            |
| Eni Ganal Ltd                                          |   | (the United Kingdom)            |   | 100.00                            |
| Eni Gas & Power LNG                                |   | (the Netherlands)               |   | 100.00                            |
| Eni Grand Maghreb BV                                   |   | (the Netherlands)               |   | 100.00                            |
| Eni India Ltd                                          |   | (the United Kingdom)            |   | 100.00                            |
| Eni Indonesia Ltd                                      |   | (the United Kingdom)            |   | 100.00                            |
| Eni International NA NV        Sàrl               |   | (Luxembourg)                    |   | 100.00                            |
| Eni Investments Plc                                    |   | (the United Kingdom)            |   | 100.00                            |
| Eni Iran BV                                            |   | (the Netherlands)               |   | 100.00                            |
| Eni Ireland BV                                         |   | (the Netherlands)               |   | 100.00                            |
| Eni JPDA 03-13 Ltd                                     |   | (the United Kingdom)            |   | 100.00                            |
| Eni Krueng Mane Ltd                                    |   | (the United Kingdom)            |   | 100.00                            |
| Eni Lasmo Plc                                          |   | (the United Kingdom)            |   | 100.00                            |
| Eni LNS Ltd                                            |   | (the United Kingdom)            |   | 100.00                            |
| Eni Marketing Inc                                      |   | (USA)                           |   | 100.00                            |
| Eni Mediterranea        Idrocarburi SpA                |   | (Italy)                         |   | 100.00                            |
| Eni MHH Ltd (in        liquidation)                    |   | (the United Kingdom)            |   | 100.00                            |
| Eni Middle East BV                                     |   | (the Netherlands)               |   | 100.00                            |
| Eni Middle East Ltd                                    |   | (the United Kingdom)            |   | 100.00                            |
| Eni MOG Ltd (in        liquidation)                    |   | (the United Kingdom)            |   | 100.00                            |
| Eni Muara Bakau BV                                     |   | (the Netherlands)               |   | 100.00                            |
| Eni Norge AS                                           |   | (Norway)                        |   | 100.00                            |
| Eni North Africa BV                                    |   | (the Netherlands)               |   | 100.00                            |
| Eni Oil Algeria Ltd                                    |   | (the United Kingdom)            |   | 100.00                            |

----

| (1) |   | The        percentage relates to Eni's share of net profit of the        relevant subsidiary and coincides with the percentage of        ownership interest both direct and indirect in the vast        majority of cases. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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##### Table of Contents

| Eni Oil & Gas Inc                                                     |   | (USA)                 |   | 100,00 |
|---------------------------------------------------------------------------|--------|-----------------------|--------|--------|
| Eni Oil do Brasil SA                                                      |   | (Brazil)              |   | 100.00 |
| Eni Oil Holdings BV                                                       |   | (the Netherlands)     |   | 100.00 |
| Eni Pakistan Ltd                                                          |   | (the United Kingdom)  |   | 100.00 |
| Eni Pakistan (M) Ltd        Sàrl                                     |   | (Luxembourg)          |   | 100.00 |
| Eni Papalang Ltd                                                          |   | (the United Kingdom)  |   | 100.00 |
| Eni Petroleum Co Inc                                                      |   | (USA)                 |   | 100.00 |
| Eni Petroleum US Llc                                                      |   | (USA)                 |   | 100.00 |
| Eni Popodi Ltd                                                            |   | (the United Kingdom)  |   | 100.00 |
| Eni Rapak Ltd                                                             |   | (the United Kingdom)  |   | 100.00 |
| Eni Resources Ltd (in        liquidation)                                 |   | (the United Kingdom)  |   | 100.00 |
| Eni Russia BV                                                             |   | (the Netherlands)     |   | 100.00 |
| Eni Securities Ltd                                                        |   | (the United Kingdom)  |   | 100.00 |
| Eni TNS Ltd                                                               |   | (the United Kingdom)  |   | 100.00 |
| Eni Trading BV                                                            |   | (the Netherlands)     |   | 100.00 |
| Eni Trasportation Ltd (ex        Eni Birch Ltd)                           |   | (the United Kingdom)  |   | 100.00 |
| Eni Trinidad and Tobago        Exploration BV                             |   | (the Netherlands)     |   | 100.00 |
| Eni Trinidad and Tobago        Ltd                                        |   | (Trinidad and Tobago) |   | 100.00 |
| Eni TTO Ltd                                                               |   | (the United Kingdom)  |   | 100.00 |
| Eni Tunisia BEK BV                                                        |   | (the Netherlands)     |   | 100.00 |
| Eni Tunisia BV                                                            |   | (the Netherlands)     |   | 100.00 |
| Eni UFL Ltd (in        liquidation)                                       |   | (the United Kingdom)  |   | 100.00 |
| Eni UHL Ltd                                                               |   | (the United Kingdom)  |   | 100.00 |
| Eni UKCS Ltd                                                              |   | (the United Kingdom)  |   | 100.00 |
| Eni UK Ltd                                                                |   | (the United Kingdom)  |   | 100.00 |
| Eni ULT Ltd                                                               |   | (the United Kingdom)  |   | 100.00 |
| Eni ULX Ltd                                                               |   | (the United Kingdom)  |   | 100.00 |
| Eni USA Gas Marketing Llc                                                 |   | (USA)                 |   | 100.00 |
| Eni USA Inc                                                               |   | (USA)                 |   | 100.00 |
| Eni US Operating Co Inc                                                   |   | (USA)                 |   | 100.00 |
| Eni Venezuela BV                                                          |   | (the Netherlands)     |   | 100.00 |
| Eni Ventures Plc                                                          |   | (the United Kingdom)  |   | 100.00 |
| Ieoc Exploration BV                                                       |   | (the Netherlands)     |   | 100.00 |
| Ieoc Production BV                                                        |   | (the Netherlands)     |   | 100.00 |
| Ieoc SpA                                                                  |   | (Italy)               |   | 100.00 |
| Lasmo Sanga Sanga Ltd                                                     |   | (Bermuda)             |   | 100.00 |
| Nigerian Agip Exploration        Ltd                                      |   | (Nigeria)             |   | 100.00 |
| Nigerian Agip Oil Co Ltd                                                  |   | (Nigeria)             |   | 100.00 |
| Società Oleodotti        Meridionali - SOM SpA                       |   | (Italy)               |   | 70.00  |
| Società Petrolifera        Italiana SpA                              |   | (Italy)               |   | 99.96  |
| Stoccaggi Gas Italia SpA        - Stogit SpA                              |   | (Italy)               |   | 100.00 |
| Tecnomare - Società per        lo Sviluppo delle Tecnologie          |   |                  |   |   |
| Marine SpA                                                                |   | (Italy)               |   | 71.53  |
| OOO        "EniNeftegaz"                                        |   | (Russia)              |   | 100.00 |
|                                                                      |   |                  |   |   |
|                                                                      |   |                  |   |   |
| Gas & Power                                                           |   |                  |   |   |
|                                                                      |   |                  |   |   |
| Acqua Campania SpA                                                        |   | (Italy)               |   | 47.62  |
| Adriaplin Podjetje za        distribucijo zemeljskega plina doo Ljubljana |   | (Slovenia)            |   | 51.00  |
| Compagnia Napoletana di        Illuminazione e Scaldamento col Gas SpA    |   | (Italy)               |   | 99.69  |
| Distribuidora de Gas        Cuyana SA                                     |   | (Argentina)           |   | 45.60  |
| Eni G&P Trading BV                                                    |   | (the Netherlands)     |   | 100.00 |
| Eni Gas & Power CH SA                                                 |   | (Switzerland)         |   | 100.00 |
| Eni Gas & Power        Deutschland SpA                                |   | (Italy)               |   | 100.00 |
| Eni Gas & Power GmbH                                                  |   | (Germany)             |   | 100.00 |
| Eni Hellas SpA                                                            |   | (Italy)               |   | 100.00 |
| EniPower Mantova SpA                                                      |   | (Italy)               |   | 86.50  |
| EniPower SpA                                                              |   | (Italy)               |   | 100.00 |
| EniPower Trasmissione SpA                                                 |   | (Italy)               |   | 100.00 |
| Gas Brasiliano        Distribuidora SA                                    |   | (Brazil)              |   | 100.00 |

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##### Table of Contents

| GNL Italia SpA                                                                                                                                                                                           |   | (Italy)           |   | 53.39  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|
| Greenstream BV                                                                                                                                                                                           |   | (the Netherlands) |   | 75.00  |
| Inversora de Gas Cuyana        SA                                                                                                                                                                        |   | (Argentina)       |   | 76.00  |
| LNG Shipping SpA                                                                                                                                                                                         |   | (Italy)           |   | 100.00 |
| Napoletana Gas Clienti        SpA                                                                                                                                                                        |   | (Italy)           |   | 99.69  |
| Partecipazioni        Industriali SpA                                                                                                                                                                    |   | (Italy)           |   | 100.00 |
| Siciliana Gas Clienti SpA                                                                                                                                                                                |   | (Italy)           |   | 100.00 |
| Siciliana Gas SpA                                                                                                                                                                                        |   | (Italy)           |   | 100.00 |
| Siciliana Gas Vendite SpA                                                                                                                                                                                |   | (Italy)           |   | 100.00 |
| Snam Rete Gas SpA                                                                                                                                                                                        |   | (Italy)           |   | 53.39  |
| Società EniPower Ferrara        Srl                                                                                                                                                                 |   | (Italy)           |   | 51.00  |
| Società Italiana per il        Gas pA                                                                                                                                                               |   | (Italy)           |   | 100.00 |
| Société de Service du        Gazoduc Transtunisien SA - Sergaz SA                                                                                                                              |   | (Tunisia)         |   | 66.67  |
| Société pour la        Construction du Gazoduc Transtunisien SA - Scogat SA                                                                                                                    |   | (Tunisia)         |   | 100.00 |
| Tigáz Tiszántúli        Gázszolgáltató Zártkörûen Mûködõ        Részvénytársaság                                         |   | (Hungary)         |   | 50.08  |
| Toscana Energia Clienti        SpA (ex Toscana Gas Clienti SpA)                                                                                                                                          |   | (Italy)           |   | 79.22  |
| Trans Tunisian Pipeline        Co Ltd                                                                                                                                                                    |   | (Channel Island)  |   | 100.00 |
|                                                                                                                                                                                                     |   |              |   |   |
|                                                                                                                                                                                                     |   |              |   |   |
| Refining & Marketing                                                                                                                                                                                 |   |              |   |   |
|                                                                                                                                                                                                     |   |              |   |   |
| Agip Austria GmbH                                                                                                                                                                                        |   | (Austria)         |   | 100.00 |
| Agip Benelux BV                                                                                                                                                                                          |   | (the Netherlands) |   | 100.00 |
| Agip Ceská Republika Sro                                                                                                                                                                            |   | (Czech Republic)  |   | 100.00 |
| Agip Deutschland GmbH                                                                                                                                                                                    |   | (Germany)         |   | 100.00 |
| Agip Ecuador SA                                                                                                                                                                                          |   | (Ecuador)         |   | 100.00 |
| Agip España SA                                                                                                                                                                                      |   | (Spain)           |   | 100.00 |
| Agip France Sàrl                                                                                                                                                                                    |   | (France)          |   | 100.00 |
| Agip Hungaria Zrt                                                                                                                                                                                        |   | (Hungary)         |   | 99.40  |
| Agip Lubricantes SA                                                                                                                                                                                      |   | (Argentina)       |   | 100.00 |
| Agip Pannónia Kft                                                                                                                                                                                   |   | (Hungary)         |   | 99.40  |
| Agip Portugal -        Combustiveis SA                                                                                                                                                                   |   | (Portugal)        |   | 100.00 |
| Agip Romania Srl                                                                                                                                                                                         |   | (Romania)         |   | 100.00 |
| Agip Schmiertechnik GmbH                                                                                                                                                                                 |   | (Germany)         |   | 100.00 |
| Agip Slovenija doo                                                                                                                                                                                       |   | (Slovenia)        |   | 100.00 |
| Agip Slovensko Spol Sro                                                                                                                                                                                  |   | (Slovakia)        |   | 100.00 |
| Agip Suisse SA                                                                                                                                                                                           |   | (Switzerland)     |   | 100.00 |
| AgipFuel SpA                                                                                                                                                                                             |   | (Italy)           |   | 100.00 |
| AgipRete SpA                                                                                                                                                                                             |   | (Italy)           |   | 100.00 |
| American Agip Co Inc                                                                                                                                                                                     |   | (USA)             |   | 100.00 |
| Big Bon Distribuzione SpA                                                                                                                                                                                |   | (Italy)           |   | 100.00 |
| Costiero Gas Livorno SpA                                                                                                                                                                                 |   | (Italy)           |   | 65.00  |
| Ecofuel SpA                                                                                                                                                                                              |   | (Italy)           |   | 100.00 |
| Eni Portugal Investment        SpA                                                                                                                                                                       |   | (Italy)           |   | 100.00 |
| Esain SA                                                                                                                                                                                                 |   | (Ecuador)         |   | 100.00 |
| Petrolig Srl                                                                                                                                                                                             |   | (Italy)           |   | 70.00  |
| Petroven Srl                                                                                                                                                                                             |   | (Italy)           |   | 68.00  |
| Praoil Oleodotti Italiani        SpA                                                                                                                                                                     |   | (Italy)           |   | 100.00 |
| Raffineria di Gela SpA                                                                                                                                                                                   |   | (Italy)           |   | 100.00 |
|                                                                                                                                                                                                     |   |              |   |   |
|                                                                                                                                                                                                     |   |              |   |   |
| Petrochemicals                                                                                                                                                                                           |   |              |   |   |
|                                                                                                                                                                                                     |   |              |   |   |
| Dunastyr        Polisztirolgyártó Zártkoruen Mukodo        Részvénytársaság (ex Dunastyr Polisztirolgyártó        Részvénytársaság Ltd) |   | (Hungary)         |   | 100.00 |
| Polimeri Europa Benelux        SA                                                                                                                                                                        |   | (Belgium)         |   | 100.00 |
| Polimeri Europa        Elastomères France SA                                                                                                                                                        |   | (France)          |   | 100.00 |
| Polimeri Europa France        SAS                                                                                                                                                                        |   | (France)          |   | 100.00 |
| Polimeri Europa GmbH                                                                                                                                                                                     |   | (Germany)         |   | 100.00 |

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| Polimeri Europa Ibérica        SA                                                                     |   | (Spain)                |   | 100.00 |
|------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|
| Polimeri Europa SpA                                                                                        |   | (Italy)                |   | 100.00 |
| Polimeri Europa UK Ltd                                                                                     |   | (the United Kingdom)   |   | 100.00 |
|                                                                                                       |   |                   |   |   |
|                                                                                                       |   |                   |   |   |
| Engineering &        Construction                                                                      |   |                   |   |   |
|                                                                                                       |   |                   |   |   |
| Andromeda Consultoria        Tecnica e Representações Ltda                                       |   | (Brazil)               |   | 43.54  |
| BOSCONGO SA                                                                                                |   | (Congo)                |   | 43.54  |
| BOS Investment Ltd                                                                                         |   | (the United Kingdom)   |   | 43.54  |
| BOS - UIE Ltd                                                                                              |   | (the United Kingdom)   |   | 43.54  |
| Camom Gesellschaft fur        Instandhaltung und Montagen GmbH                                             |   | (Germany)              |   | 43.54  |
| Camom SA                                                                                                   |   | (France)               |   | 43.54  |
| CENMC Canada Inc                                                                                           |   | (Canada)               |   | 43.54  |
| Delong Hersent - Estudos,        Construções Maritimas e Participações, Unipessoal Lda |   | (Portugal)             |   | 43.54  |
| Energy Maintenance        Services SpA                                                                     |   | (Italy)                |   | 43.54  |
| Engineering &        Management Services SpA                                                           |   | (Italy)                |   | 43.54  |
| Entreprise Nouvelle        Marcellin SA                                                                    |   | (France)               |   | 43.54  |
| ER SAI Caspian Contractor        Llc                                                                       |   | (Kazakhstan)           |   | 21.77  |
| ERS - Equipment Rental        & Services BV                                                            |   | (the Netherlands)      |   | 43.54  |
| European Marine        Contractors Ltd                                                                     |   | (the United Kingdom)   |   | 43.54  |
| European Marine        Investments Ltd                                                                     |   | (the United Kingdom)   |   | 43.54  |
| European Maritime        Commerce BV                                                                       |   | (the Netherlands)      |   | 43.54  |
| Global Petroprojects        Services AG                                                                    |   | (Switzerland)          |   | 43.54  |
| Hazira Cryogenic        Engineering & Construction Management Private Ltd                              |   | (India)                |   | 23.89  |
| Hazira Marine Engineering        & Construction Management Private Ltd                                 |   | (India)                |   | 43.54  |
| Intermare Sarda SpA                                                                                        |   | (Italy)                |   | 43.54  |
| Katran-K Llc                                                                                               |   | (Russia)               |   | 43.54  |
| Moss Arctic Offshore AS                                                                                    |   | (Norway)               |   | 43.54  |
| Moss Maritime AS                                                                                           |   | (Norway)               |   | 43.54  |
| Moss Maritime Inc                                                                                          |   | (USA)                  |   | 43.54  |
| Moss Offshore AS                                                                                           |   | (Norway)               |   | 43.54  |
| Nigerian Services &        Supply Co Ltd                                                               |   | (Nigeria)              |   | 43.54  |
| North Caspian Service Co                                                                                   |   | (Kazakhstan)           |   | 43.54  |
| Petrex SA                                                                                                  |   | (Peru)                 |   | 43.54  |
| Petromar Lda                                                                                               |   | (Angola)               |   | 30.48  |
| PT Saipem Indonesia                                                                                        |   | (Indonesia)            |   | 43.54  |
| Saibos Construções        Maritimas Lda                                                          |   | (Portugal)             |   | 43.54  |
| Saibos Fze                                                                                                 |   | (United Arab Emirates) |   | 43.54  |
| Saigut SA De Cv                                                                                            |   | (Mexico)               |   | 34.83  |
| Saimexicana SA De Cv                                                                                       |   | (Mexico)               |   | 43.26  |
| Saipem America Inc                                                                                         |   | (USA)                  |   | 43.26  |
| Saipem Asia Sdn Bhd                                                                                        |   | (Malaysia)             |   | 43.26  |
| Saipem Contracting        Algerie SpA                                                                      |   | (Algeria)              |   | 43.24  |
| Saipem Contracting        (Nigeria) Ltd                                                                    |   | (Nigeria)              |   | 42.65  |
| Saipem do Brasil        Serviçõs de Petroleo Ltda                                                |   | (Brazil)               |   | 43.54  |
| Saipem Energy        International SpA                                                                     |   | (Italy)                |   | 43.54  |
| Saipem FPSO SpA                                                                                            |   | (Italy)                |   | 43.54  |
| Saipem Holding France SAS                                                                                  |   | (France)               |   | 43.54  |
| Saipem India Project        Services Ltd                                                                   |   | (India)                |   | 43.54  |
| Saipem International BV                                                                                    |   | (the Netherlands)      |   | 43.54  |
| Saipem Logistics Services        Ltd                                                                       |   | (Nigeria)              |   | 43.54  |
| Saipem Luxembourg SA                                                                                       |   | (Luxembourg)           |   | 43.54  |
| Saipem (Malaysia) Sdn Bhd                                                                                  |   | (Malaysia)             |   | 18.02  |
| Saipem Mediteran Usluge        doo                                                                         |   | (Croatia)              |   | 43.54  |
| Saipem Misr for Petroleum        Services SAE                                                              |   | (Egypt)                |   | 43.54  |
| Saipem (Nigeria) Ltd                                                                                       |   | (Nigeria)              |   | 38.93  |

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| Saipem - Perfurações e        Construções Petroliferas Lda (ex Saipem - Perfurações        e Construções Petroliferas America do Sul Lda) |   | (Portugal)             |   | 43.54  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|
| Saipem (Portugal) -        Comércio Marítimo, Sociedade Unipessoal Lda                                                                                                  |   | (Portugal)             |   | 43.54  |
| Saipem (Portugal) -        Gestão de Participações SGPS Sociedade Unipessoal SA                                                                                    |   | (Portugal)             |   | 43.54  |
| Saipem Projects SpA                                                                                                                                                               |   | (Italy)                |   | 43.54  |
| Saipem SA                                                                                                                                                                         |   | (France)               |   | 43.54  |
| Saipem Services México        SA De Cv                                                                                                                                       |   | (Mexico)               |   | 43.54  |
| Saipem Services SA                                                                                                                                                                |   | (Belgium)              |   | 43.54  |
| Saipem Singapore Pte Ltd                                                                                                                                                          |   | (Singapore)            |   | 43.54  |
| Saipem SpA                                                                                                                                                                        |   | (Italy)                |   | 43.54  |
| Saipem UK Ltd                                                                                                                                                                     |   | (the United Kingdom)   |   | 43.54  |
| SAIR Construções        Mecanicas de Estruturas Maritimas Lda                                                                                                           |   | (Portugal)             |   | 37.45  |
| SAS Port de Tanger                                                                                                                                                                |   | (France)               |   | 43.54  |
| Saudi Arabian Saipem Ltd                                                                                                                                                          |   | (Saudi Arabia)         |   | 26.12  |
| Services et Equipements        Gaziers et Petroliers SA                                                                                                                           |   | (France)               |   | 43.44  |
| Snamprogetti Canada Inc                                                                                                                                                           |   | (Canada)               |   | 43.54  |
| Snamprogetti France Sàrl                                                                                                                                                     |   | (France)               |   | 43.54  |
| Snamprogetti Ltd                                                                                                                                                                  |   | (the United Kingdom)   |   | 43.54  |
| Snamprogetti Lummus Gas        Ltd                                                                                                                                                |   | (Malta)                |   | 43.11  |
| Snamprogetti Management        Services SA                                                                                                                                        |   | (Switzerland)          |   | 43.54  |
| Snamprogetti Netherlands        BV                                                                                                                                                |   | (the Netherlands)      |   | 43.54  |
| Snamprogetti Saudi Arabia        Ltd                                                                                                                                              |   | (Saudi Arabia)         |   | 43.54  |
| Snamprogetti SpA                                                                                                                                                                  |   | (Italy)                |   | 43.54  |
| Snamprogetti Sud SpA                                                                                                                                                              |   | (Italy)                |   | 43.54  |
| Snamprogetti USA Inc                                                                                                                                                              |   | (USA)                  |   | 43.54  |
| Société de Construction        d’Oleoducs Snc                                                                                                                      |   | (France)               |   | 43.44  |
| Société Nouvelle        Technigaz SA                                                                                                                                    |   | (France)               |   | 43.52  |
| Sofresid Engineering SA                                                                                                                                                           |   | (France)               |   | 43.54  |
| Sofresid SA                                                                                                                                                                       |   | (France)               |   | 43.54  |
| Sonsub AS                                                                                                                                                                         |   | (Norway)               |   | 43.54  |
| Sonsub International Pty        Ltd                                                                                                                                               |   | (Australia)            |   | 43.54  |
| Sonsub Ltd                                                                                                                                                                        |   | (the United Kingdom)   |   | 43.54  |
| Star Gulf Free Zone Co                                                                                                                                                            |   | (United Arab Emirates) |   | 43.54  |
| TBE Ltd                                                                                                                                                                           |   | (Egypt)                |   | 30.47  |
|                                                                                                                                                                              |   |                   |   |   |
|                                                                                                                                                                              |   |                   |   |   |
| Other activities                                                                                                                                                                  |   |                   |   |   |
|                                                                                                                                                                              |   |                   |   |   |
| Ing. Luigi Conti Vecchi        SpA                                                                                                                                                |   | (Italy)                |   | 100.00 |
| Syndial SpA - Attività        Diversificate                                                                                                                                  |   | (Italy)                |   | 100.00 |
|                                                                                                                                                                              |   |                   |   |   |
|                                                                                                                                                                              |   |                   |   |   |
| Corporate and financial        companies                                                                                                                                          |   |                   |   |   |
|                                                                                                                                                                              |   |                   |   |   |
| Agenzia Giornalistica        Italia SpA                                                                                                                                           |   | (Italy)                |   | 100.00 |
| Banque Eni SA                                                                                                                                                                     |   | (Belgium)              |   | 100.00 |
| Eni Coordination Center        SA                                                                                                                                                 |   | (Belgium)              |   | 100.00 |
| Eni Corporate University        SpA                                                                                                                                               |   | (Italy)                |   | 100.00 |
| Eni Insurance Ltd                                                                                                                                                                 |   | (Ireland)              |   | 100.00 |
| Eni International Bank        Ltd                                                                                                                                                 |   | (Bahamas)              |   | 100.00 |
| Eni International BV                                                                                                                                                              |   | (the Netherlands)      |   | 100.00 |
| Eni International        Resources Ltd                                                                                                                                            |   | (the United Kingdom)   |   | 100.00 |
| EniServizi SpA                                                                                                                                                                    |   | (Italy)                |   | 100.00 |
| Padana Assicurazioni SpA                                                                                                                                                          |   | (Italy)                |   | 99.72  |
| Serfactoring SpA                                                                                                                                                                  |   | (Italy)                |   | 48.81  |
| Servizi Aerei SpA                                                                                                                                                                 |   | (Italy)                |   | 100.00 |
| Società Finanziamenti        Idrocarburi - Sofid - SpA                                                                                                                       |   | (Italy)                |   | 99.61  |
| Società Finanziaria Eni        SpA - Enifin                                                                                                                                  |   | (Italy)                |   | 100.00 |

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##### Table of Contents

**EXHIBIT 11**

**Code of Practice**

Approved by the Board of Directors of Eni SpAon October 21, 1998 and on July 31, 2003 (Addendum)

 

CONTENTS

Addendum

Foreword 

**1. General Principles**1.1 To whom the Code applies1.2 Duties of Eni1.3 Duties of Employees1.4 Additional Duties of Managers1.5 Applicability of the Code to Third Parties1.6 Reference, Implementation and Control Functions (Guarantors)1.7 Contractual Value of the Code

**2. Business Conduct**2.1 Relations with Customers2.2 Relations with Suppliers

**3. Transparency of Accounting and Internal Controls**3.1 Accounting Records3.2 Internal Controls

**4. Personnel Policies**4.1 Human Resources4.2 Harassment in the Workplace4.3 Abuse of Alcohol or Drugs4.4 Smoking

**5. Health, Safety and the Environment**

**6. Confidentiality**

**7. External Relations**7.1 Relations with Public Institutions7.2 Relations with Political Organizations and Trade Unions7.3 Relations with the Media7.4 Presentation of Eni Objectives, Activities, Results andPoints of View7.5 "Non Profit" Initiatives

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**ADDENDUM**

In conducting its activities as aninternational company, Eni refers to the protection of human andlabor rights, of safety and the environment, as well as to thesystem of values and principles concerning transparency andintegrity, energy efficiency and sustainable development, asoutlined by international institutions and conventions.

In this respect Eni reaffirms its commitment tooperate within the framework of the United Nations UniversalDeclaration of Human Rights, the Fundamental Conventions of theILO – International Labour Organization – and the OECDGuidelines on Multinational Enterprises, with particularreference to the areas concerning the protection of labor rights,freedom of association, the rejection of all forms ofdiscrimination, forced and child labor, corruption, thesafeguarding of dignity, health and safety at the workplace, therespect for natural biodiversities and the protection of theenvironment.

Moreover, Eni is committed to activelycontribute to promoting the quality of life and thesocio-economic development of the communities where the Groupoperates and to the development of their human resources andcapabilities, while conducting its business activities ininternal and external markets according to standards that arecompatible with fair commercial practice.

All of Eni’s activities are carried out inthe awareness of the Social Responsibility that the Group hastowards all of its stakeholders (employees, shareholders,customers, suppliers, communities, commercial and financialpartners, institutions, industry associations, tradeunions...), in the belief that the capacity for dialogue andinteraction with civil society constitutes an important asset forthe company.

Therefore, Eni is committed to spreading anawareness of its values and principles both within and outsidethe Group and to implementing adequate control procedures.

**FOREWORD**

Eni1 is an internationally orientedindustrial group which, because of its size and the importance ofits activities, plays a significant role in the marketplace andin the economic development and welfare of the communities whereit is present.

Eni operates in many institutional, economic,political, social and cultural environments in constant and rapiddevelopment. Eni’s activities must be performed in fullrespect of the law, in fair competition, with honesty, integrityand good faith, with due respect for the legitimate interests ofits customers, employees, shareholders, commercial and financialpartners and the communities where it is present. All those whowork in Eni are, without any distinction or exception whatsoever,committed to respecting these principles in performing theirroles and responsibilities and to making sure that others respectthem. The conviction that one is acting in favor or to theadvantage of Eni can never, in any way, justify acts or behaviorthat conflict with these principles.

Due to the complexity of the situations inwhich Eni operates, it is important to define clearly the valuesthat Eni accepts, acknowledges and shares as well as theresponsibilities assumed by Eni inside and outside Eni itself.For this reason the present Code of Practice (hereinafter calledthe "Code") has been produced. Respect of the Code byevery Eni employee is of paramount importance for the goodfunctioning, reliability and reputation of Eni; all of which arecrucial factors for its success.

Apart from fulfilling their general duties ofloyalty, fairness and the performance of their labor contract ingood faith, all Eni employees must refrain from acts that competewith Eni and they must respect company rules and comply with theCode; which compliance is also required under existing laws2.

Each employee is expected to have fullknowledge of the Code and to contribute actively to itsimplementation and to report any shortcomings.

Eni undertakes to facilitate and promoteknowledge of the Code among its employees and to accept theirconstructive contribution to the Code’s contents. Anybehavior violating the letter and the spirit of the Code will bepunished according to the rules herein defined.

----

| (1) |   | In the        present Code "Eni" or "Group" mean        Eni SpA and its subsidiaries as defined in Article 2359        of the Italian Civil Code as well as other subsidiaries        as defined in Article 26 of Legislative Decree No. 127 of        April 9, 1991.                                                                                                                                                       |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | "Article        2104. Diligence of workers. Workers are expected to        render diligently the services expected from them        according to the nature of such services, the interests        of the company and the higher interests of national        production. They must also comply with the rules for work        execution and discipline as set down by their employers        and the superiors to whom they report." |

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Eni will check compliance with the Code byproviding suitable information, prevention and controlinstruments and it shall ensure transparency in all operationsand conduct by taking corrective measures if and as required.

The Code shall be brought to the attention ofevery person or body having business relations with Eni.

 

**1. GENERAL PRINCIPLES**

**1.1 To whom the code applies**Moral integrity is a constant duty for any person working forEni and characterizes the conduct of its entire organization.

The rules of the Code are applicable to eachand every Eni employee without exception and to all those whowork for the achievement of Eni’s objectives.

Eni’s management has to comply with therules of the Code in the presentation of projects, and in actionsand investments aimed at increasing in the long-term the value ofEni assets, managerial capability, technology, the return oninvestment for shareholders, and the welfare of employees and thecommunity at large.

Members of the Board of Directors must bear inmind the principles contained in the Code when determiningcorporate objectives.

Company managers must be the first to giveconcrete form to the values and principles contained in the Code,by assuming responsibility for them both inside and outside theGroup, and by instilling trust, cohesion and a sense ofteam-work.

Eni employees shall not only respect existingapplicable laws but they are also expected to adjust theiractions and conduct so as to conform to the principles,objectives and commitments contemplated in the Code.

The general conduct and any action, operationand negotiation performed by Eni employees in the performance oftheir duties shall be inspired by the highest principles offairness, completeness and transparency of information andlegitimacy, both in form and substance, as well as in clarity andtruthfulness in all accounting matters, as per existing andapplicable laws and internal regulations.

Eni shall actively and fully cooperate withpublic Authorities, through its employees.

All in-house work shall be performed with theutmost care and professional skill. Each employee must bringadequate skills and expertise to the task assigned and always actin a way that shall protect Eni’s reputation.

Relationships between employees, at all levels,must be characterized by fairness, cooperation, loyalty andmutual respect.

In order to fully comply with the Code, eachemployee may refer not only to his or her superior but may alsocontact directly any internal body or office specificallydesignated for the purpose.

**1.2 Duties of Eni**Through the establishment of specific internal bodies("Guarantor" and "Committee for the Code ofPractice"), Eni will:

| • |   | ensure the        widest dissemination of the Code among its employees and        partners;                                                                                           |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | provide for        further analyses and updating of the Code as required to        meet evolving circumstances and laws;                                                              |
| • |   | make        available all the tools for understanding and clarifying        the interpretation and the implementation of the Code;                                                    |
| • |   | arrange for a        careful evaluation to be carried out on any instances        where the Code may have been violated;                                                              |
| • |   | in the event        of an acknowledged violation of the Code, it shall        provide for an evaluation of the facts and, if necessary,        the adoption of appropriate sanctions; |
| • |   | ensure that        no one may suffer any retaliation whatsoever for having        related laws.                                                                                       |

**1.3 Duties of employees**All employees are expected to know the regulations containedin the Code and the relevant rules governing activities performedin their respective functions.

Eni employees shall:

| • |   | refrain from        all conduct contrary to such rules and regulations;                                                                 |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
| • |   | consult their        superior, or the Guarantor, whenever clarifications        concerning the implementation of said rules are needed; |
| • |   | immediately        report to their superiors or to the Guarantor:                                                                       |
|   |   | - any fact        that comes to their direct, or indirect, knowledge        concerning a possible violation of such rules;              |
|   |   | - any request        they receive to violate such rules;                                                                                |
| • |   | cooperate        with the relevant office or department in ascertaining        any violations.                                          |

If, after notifying a supposed violation, anemployee should deem that the issue has not been fullyinvestigated or feels that he or she has been subject toretaliation, then the employee shall be entitled to make acomplaint to the Committee for the Code of Practice.

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##### Table of Contents

Employees are not allowed to conduct personalinvestigations, nor to exchange information, except to theirsuperiors, the Guarantor or the Committee for the Code ofPractice.

**1.4 Additional duties of managers**Each manager shall:

| • |   | act in a way        that shall serve as an example of good conduct to his or        her subordinates;                                                                                                                                                                                              |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | encourage        employees to respect the Code and to raise relevant        questions and issues relating to the Code;                                                                                                                                                                             |
| • |   | act in such a        way as to demonstrate to employees that respecting the        Code is an essential aspect of the quality of their work;                                                                                                                                                       |
| • |   | in so far as        it is possible, try to select employees and external        collaborators in such a way that will prevent assignments        being given to persons who cannot be relied upon to        implement the Code;                                                                    |
| • |   | immediately        report the discovery of any possible deviations from the        Code to a Senior Manager or to the Guarantor. Likewise,        any information on possible deviations that is received        from subordinates must also be passed on immediately to        Senior Management; |
| • |   | immediately        take corrective measures whenever necessary;                                                                                                                                                                                                                                    |

| • |   | prevent any        kind of retaliation. |
|--------|--------|-----------------------------------------|

**1.5 Applicability of the code to thirdparties**In dealing with third parties, Eni employees shall:

| • |   | properly        inform all third parties about the commitments and duties        contained in the Code;                                                                                                                                         |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | require the        third parties to respect the obligations in the Code        relevant to their activities;                                                                                                                                    |
| • |   | adopt proper        internal actions and, if the matter comes within the        limits of the employee’s own responsibilities, also        external actions, in the event that any third party        should fail to comply with the Code. |

**1.6 Reference, implementation and controlfunctions (guarantors)**Eni has established the function of "Guarantor of theCode of Practice" with the following proposes and once theoffice of the Guarantor has been established, all employees mustbe made aware of its purpose and of how they themselves cancommunicate directly with it (by telephone, fax, e-mail, etc.):

| • |   | to establish        criteria and procedure aimed at reducing the risk of        violations of the Code;                                                                 |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | to promote        the publication of guidelines and operational procedures        in cooperation with offices and departments responsible        for their preparation; |
| • |   | to organize        information and training programs for employees aimed at        providing a better knowledge of the Code’s        objectives;                   |
| • |   | to promote        and monitor knowledge of the Code inside and outside Eni        and its implementation;                                                               |
| • |   | to        investigate reports of any violation by initiating proper        inquiry procedures;                                                                          |
| • |   | to inform the        Personnel Department about the results of any inquiries        for the adoption of any sanctions;                                                  |

| • |   | to inform the        relevant departments of the results of any inquiries in        relation to the taking any further actions;                                                                                                                                                 |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | to present        the Chairman, in conjunction with the Committee for the        Code of Practice, with proposals for the further        dissemination and updating of the Code (the Chairman then        reports these to the Board of Directors);                             |
| • |   | to initiate        and then maintain a proper reporting and communication        flow with similar departments and bodies in Eni        subsidiaries;                                                                                                                           |
| • |   | to present        the Chairman, in conjunction with the Committee for the        Code of Practice, with a yearly report on the        implementation of the Code inside Eni SpA and its        subsidiaries (the Chairman then reports these to the        Board of Directors). |

In performing its duties, the Guarantor will beaided by the relevant structures within Eni SpA.

Eni has established the Committee for the Codeof Practice to carry out the following assignments:

| • |   | to express an        evaluation on the Guarantor’s proposals for the        dissemination and updating of the Code;                                                                                                                                                             |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | to analyze        the yearly report on the Code’s implementation and        suggest to the Chairman (who reports to the Board on such        matters), appropriate actions to prevent any recurrences        of violations;                                                     |
| • |   | to take        action at the request of employees in the event of        receiving reports that violations of the Code have not        been properly dealt with or in the event of being        informed of any retaliation against employees for having        reported violations. |

Similar structures will be created in all EniGroup companies.

The Eni SpA Guarantor coordinates theactivities of the Guarantors in subsidiaries. After review by theBoard of Directors of the respective sector head companies, acopy of the yearly report concerning each sector shall bepresented to the Eni SpA Guarantor. The Eni SpA Guarantor shallalso receive a copy of the yearly report of directly controlledcompanies not included in any sector.

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**1.7 Contractual value of the code**Respect of the Code’s rules is an essential part of thecontractual obligations of Eni employees as per Article 2104 ofthe Italian Civil Code.

Any violation of the Code’s rules may beconsidered as a violation of primary obligations under laborrelations or of the rules of discipline, and can entail theconsequences provided for by law, including termination of thework contract and reimbursement of damages arising from anyviolation therefrom.

 

**2. BUSINESS CONDUCT**

In conducting its business Eni is inspired bythe principles of fairness, loyalty, transparency, efficiency andan open market.

Eni employees, and external collaborators whoseactions may somehow be referred to Eni, must act correctly whenconducting business in Eni’s interest and in their relationswith the Public Administration, irrespective of the marketconditions and the importance of the business under negotiation.

Bribes, illegitimate favors, collusion,pressures, either direct or through third parties, requests ofpersonal benefits for oneself or others, are prohibited.

Eni acknowledges and respects the right ofemployees to take part in investments, businesses and other kindsof activities, provided that these are not related to theactivities that such employees perform in the interests of Eniand provided that such activities are permitted by law and arecompatible with the duties of being employees of Eni.

In any event, Eni employees shall avoid anysituation and activity where a conflict of interest may arise orwhich can interfere with their ability to make impartialdecisions in the best interests of Eni and in full accordancewith the Code. Any situation that may constitute or give rise toa conflict of interest shall be immediately reported toone’s superiors. In particular, all Eni employees shallavoid conflicts of interest between personal and family economicactivities and their tasks within their company. By way ofexample, conflicts of interest are determined by the followingsituations:

| • |   | economic and        financial interest of employee and/or his family in        activities of supplier, customer and competitor;                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | use of        one’s position in the company, or of information        acquired during one’s work, in such a way as to        create a conflict between one’s personal interests        and the interests of the company;                                                                                                                                                                                                                                                                                                                                            |
| • |   | performing        any type of work for suppliers, customers and        competitors;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • |   | accepting        money, favors or benefits from persons or firms that        have, or intend to have, business relationships with Eni;                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| • |   | buying or        selling of shares in Eni companies or in other        corporations on the basis of important information not in        the public domain and obtained because of one’s        position at Eni. In any case, transactions in securities        of Eni companies shall always be conducted with the        utmost transparency and fairness with respect to the        issuing company and its Group, as well as to investors        and shall always be such as not to generate any        expectations, alarm or errors in judgment in third        parties. |

It is prohibited to pay or offer, directly orindirectly, money and material benefits of any kind to thirdparties, whether public officers or private individuals, in orderto influence or remunerate the actions of their office.

Courtesy objects, such as small presents orhospitality gifts, are allowed only when the value of suchobjects is small and does not compromise the integrity andreputation of the partners and cannot be construed by animpartial observer as aimed at obtaining undue advantages. In anycase, these expenses must always be authorized by the designatedmanager as per existing rules and accompanied by appropriatedocumentation.

Employees receiving presents or specialtreatment that cannot be directly related to normal courteousrelations must inform their superior of the facts.

External collaborators (including consultants,representatives, agents, brokers etc.) are required to complywith the Code’s principles. To this purpose, in accordancewith their responsibilities, employees shall make sure that:

| • |   | code        principles and procedures are followed in the selection        of external collaborators and in relationships with them;                                           |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | only        qualified and reputable persons and companies are        selected;                                                                                                 |
| • |   | all        information relevant to the selection of particular        external collaborators be taken into proper account        regardless of the source of such information; |
| • |   | doubts on any        supposed violation of the Code by external collaborators        are immediately reported to one’s superior or the        Guarantor;                  |
| • |   | an explicit        commitment to respect the principles of the Code of        Practice be included in contracts with outside        collaborators.                             |

In any case, the remuneration to be paid shallbe exclusively commensurate with the services to be rendered anddescribed in the contract and payments shall be made only to thecontract partner and within the country indicated in thecontract.

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**2.1 Relations with customers**Eni pursues its business success on markets by offeringquality products and services under competitive conditions whilerespecting the rules protecting fair competition.

Eni knows that the esteem of those requestingproducts or services is of primary importance for success inbusiness. Therefore, Eni employees shall:

| • |   | follow        internal procedures on relations with customers;                                                                                                                                              |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | provide, with        courtesy and efficiency and within the limits set in the        contracts, high quality products that can meet or exceed        the customers’ reasonable expectations and needs; |
| • |   | provide        sufficient and accurate information about its products        and services so that customers can take reasoned        decisions;                                                             |
| • |   | be truthful        in all advertising and communications.                                                                                                                                                   |

**2.2 Relations with suppliers**In the case of tenders and contracts for the supply of goodsand services, Eni employees shall:

| • |   | follow        internal procedures concerning selection and relations        with suppliers;                                                                                                                                              |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | abstain from        the exclusion of suppliers that have the proper        requirements to bid for Eni’s orders, by adopting        appropriate and objective selection methods, based on        established, transparent criteria; |
| • |   | secure the        cooperation of suppliers in guaranteeing the continuous        satisfaction of Eni’s customers in terms of quality,        costs and delivery times, to the extent expected by        customers;                  |
| • |   | whenever        possible and in accordance with applicable laws, make use        of products and services supplied by other Eni Group        companies at arm’s length conditions;                                                  |
| • |   | respect all        conditions contained in contracts;                                                                                                                                                                                    |
| • |   | maintain a        frank and open dialogue with suppliers in line with good        commercial practice;                                                                                                                                   |

| • |   | inform Eni        SpA’s Department for Industrial Planning and        Development about any serious problems that may arise        with a particular supplier in order to evaluate the        possible consequences for Eni. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**3. TRANSPARENCY OF ACCOUNTING AND INTERNALCONTROLS**

**3.1 Accounting records**Accounting transparency is based on the use of true, accurateand complete information for construing entries in the books ofaccounts. Each employee shall cooperate in order to have eventsproperly and timely registered in the books of accounts.

For each transaction the proper supportingevidence has to be maintained in order to:

| • |   | facilitate        registration of the accounting; identify the different        degrees of responsibilities;                  |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|
| • |   | provide an        accurate representation of the transaction so as to avoid        any errors in interpretation of the facts. |

Each record shall reflect exactly what is shownby the supporting evidence.

Each employee shall make sure, through accuratefiling according to logical criteria, that the documentation canbe easily traced.

Eni employees who become aware of anyomissions, misrepresentations, negligence in the accounting or inthe documents on which accounting is based, shall bring the factsto the attention of his or her superior or to the Guarantor.

**3.2 Internal controls**It is Eni’s policy to disseminate, at every level of itsorganization, a culture characterized by an awareness of theexistence of controls and a control oriented mentality. Apositive attitude towards control is to be achieved in order toincrease its efficiency.

Internal controls are all those necessary oruseful tools for addressing, managing and checking activities inthe company; they aim at ensuring respect of corporate laws andprocedures, protecting corporate assets, efficiently managingoperations and providing precise and complete accountinginformation.

The responsibility for building an efficientinternal control system rests on all levels of the organization;therefore all Eni employees, in their respective functions, areresponsible for the definition and proper functioning of internalcontrols.

Within their areas of responsibility, managersshall be requested to become involved in the company’ssystem of internal controls and inform employees thereon. Eachemployee shall be held responsible for the corporate tangible andintangible assets relevant to his job. No employee can make, orlet others make, improper use of assets and equipment belongingto Eni.

Internal Auditors and appointed externalauditors shall have full access to all data, documents andinformation necessary to perform their audit activities.

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**4. PERSONNEL POLICIES**

**4.1 Human resources**Human resources are basic components in the company’slife. The dedication and professionalism of employees representfundamental values and conditions for reaching Eni’sobjectives.

Eni is committed to developing the abilitiesand skills of each employee so that his or her energy andcreativity can have full expression for the fulfillment of theirpotential.

Eni offers equal opportunities to all itsemployees, making sure that each of them receives fair treatmentbased on merit, without discrimination of any kind. Alldepartments therefore shall:

| • |   | adopt        criteria of merit, ability and professionalism in all        decisions concerning employees;     |
|--------|--------|---------------------------------------------------------------------------------------------------------------|
| • |   | select, hire,        train, compensate and manage employees without        discrimination of any kind;        |
| • |   | create a        working environment where personal characteristics do not        give rise to discrimination. |

Eni considers the protection of workingconditions and the protection of the mental and physical healthof workers to be part of its entrepreneurial activity, whilealways respecting their moral personality and avoiding any unduepressures. To this end, any personal conduct considered to beoffensive and liable to produce difficulties in relationshipswithin the working environment will be given due consideration.

Eni expects all its employees, at every level,to cooperate in maintaining a climate of reciprocal respect for aperson’s dignity, honor and reputation.

Eni shall do its best to prevent the emergenceof attitudes that can be considered offensive.

**4.2 Harassment in the workplace**Eni demands that there shall be no harassment in personalrelationships either inside or outside the company. Harassmentis:

| • |   | the creation        of an intimidating, hostile or isolating environment or        atmosphere for one or more employee;                                   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | unjustified        interference in the work performed by others;                                                                                          |
| • |   | the placing        of obstacles in the way of the work prospects and        expectations of others merely for reasons of personal        competitiveness. |

Eni does not tolerate sexual harassment, bywhich it means:

| • |   | the        subordinating of decisions on someone’s working life        to the acceptance of sexual attentions;                                                                                                                                                                                                          |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | proposals of        private interpersonal relations which are repeated        despite the recipient’s clear distaste and which,        because of the specific situation, can put the recipient        in a difficult situation because they entail direct        consequences on the recipient’s work and career. |

**4.3 Abuse of alcohol or drugs**Eni demands that each employee contribute to maintaining agood work environment in respect of the feelings of others. Eniwill therefore consider individuals who work under the effect ofalcohol or drug abuse; make use of or give to others any drug orsimilar substance during work; as being aware of the risk theybring to such environmental conditions, during the performance oftheir work activities and in the workplace.

Chronic addiction to such substances, when itaffects work performance, shall be considered similar to theabove mentioned events in terms of the contractual consequences.

Eni is committed to favor the social action inthis field as provided for by collective work contracts.

**4.4 Smoking**Without prejudice to the general prohibition on smoking inworkplaces where this is dangerous and where such prohibition isindicated, Eni, in its normal workplaces, will pay particularattention to the condition of those suffering physical discomfortfrom exposure to smoke and who request to be protected from"passive smoke" in their place of work.

 

**5. HEALTH, SAFETY AND THE ENVIRONMENT**

In its activities, Eni is committed tocontributing to the development and welfare of the communitieswhere it operates by pursuing the objective of ensuring thesafety and health of its employees, external collaborators,customers and local communities that may be affected byEni’s activities and to reducing the environmental impact ofsuch activities.

Eni actively contributes to the promotion ofresearch and development aimed at protecting the environment andnatural resources.

Eni’s industrial activities shall beperformed in full accordance with all applicable laws onprevention and protection.

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Operations shall be carried out according toadvanced criteria for the protection of the environment andenergy efficiency, with the aim of creating better workingconditions and protecting the health and safety of employees.

Research and technological development must beaimed in particular at promoting the use of products andprocesses that are as environmental friendly as possible andcharacterized by an ever-greater attention being paid to thesafety and health of employees.

Eni employees, within their areas ofresponsibility, participate in the process of risk prevention andenvironmental and health protection and safety, that is in theirown interest and in the interest also of third parties.

 

**6. CONFIDENTIALITY**

Eni’s activities require the constantacquisition, storage, handling, communication and diffusion ofnews, documents and other data relevant to negotiations,administrative procedures, financial transactions, know-how(contracts, deeds, reports, studies, drawings, photographs,software), etc.

Eni’s data bases may contain, among otherthings, personal data protected according to privacy laws, someof which cannot be made known outside Eni under contractualobligations and some of which cannot be improperly or untimelydisclosed on risk of harmful prejudice to Eni’s interest.

Employees shall guarantee the confidentialityof all information acquired in the performance of their work.

Eni is committed to protecting informationconcerning its employees and third parties, whether generated orobtained inside Eni or in the conduct of Eni’s business andto avoiding improper use of any such information.

Information, know-how and data that areacquired and processed by employees during their work at Eni orbecause of their responsibilities, all belong to Eni and cannotbe used, communicated to others or disclosed without specificauthorization of one’s superior.

Without prejudice to the prohibition todisclose information concerning the organization and methods ofproduction or to use such information in a way that could beharmful to Eni, each Eni employee shall:

| • |   | obtain and        handle only data that are necessary and adequate to the        aims of their work and strictly related to the tasks        being performed;                                                                                                      |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | obtain and        handle such data only within specified procedures;                                                                                                                                                                                               |
| • |   | store said        data in a way that avoids non-authorized persons having        access to it;                                                                                                                                                                     |
| • |   | disclose such        data only pursuant to specific procedures and/or subject        to specific authorization by one’s superior and, in        any case, only after having checked that such data are        available for disclosure;                       |
| • |   | make sure        that no relative or absolute constraint exists on the        disclosure of information concerning third parties        connected to Eni by any kind of relationship and,        whenever necessary, ensure that their consent is        obtained; |
| • |   | file said        data in such a way that any person authorized to access        them may do so with as much precision, clarity and        truthfulness as possible.                                                                                                |

**7. EXTERNAL RELATIONS**

**7.1 Relations with public institutions**Relations with Public Institutions that are aimed at theprotection of Eni’s interests and related to theimplementation of Eni’s programs, are to be maintained onlyby departments and persons specifically appointed to do so.

Specific departments in the Eni Group companiesshall coordinate their work with Eni SpA’s Department forRelations with Institutions in Italy, and in the European Union,so as to have a prior evaluation of the quality of the actions tobe taken for sharing, for implementation and for monitoring.

Small presents and courtesy gifts torepresentatives of Governments, public officers and civilservants are allowed provided that they are limited in value anddo not compromise the integrity or good name of either party norbe construed by impartial observers as aimed at obtaining undueadvantages. In any case this kind of expense must be authorizedby the person indicated in the procedures and must always be dulydocumented.

**7.2 Relations with political organizationsand trade unions**Eni does not give any direct or indirect contributions inwhatever form to political parties, organizations, committees ortrade unions, nor to their representatives and candidates, exceptthose specifically contemplated by applicable laws andregulations.

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**7.3 Relations with the media**Information provided to outside parties shall be truthful andtransparent.

In its communications with the media, Eni shallbe presented in an accurate and uniform way. Relations with themedia shall be maintained only by departments and managersspecifically appointed to do so and all communications shall beagreed upon beforehand with the Eni Unit responsible forRelations with the Media.

Eni employees may not give information to mediarepresentatives nor engage in providing any such informationunless they are duly authorized by the relevant Eni departments.

Eni employees are never entitled to offerpayments, gifts or other benefits aimed at influencing theprofessional activity of media representatives or that couldreasonably be construed as an attempt to do so.

**7.4 Presentation of Eni objectives,activities, results and points of view**Eni employees who are required to present information to thepublic concerning the objectives, activities, results andopinions of Eni on such occasions as:

| • |   | congresses,        meetings and seminars;            |
|--------|--------|------------------------------------------------------|
| • |   | essays,        articles and publications in general; |
| • |   | participation        to public events;               |

must be authorized by the highestorganizational authority within their own department for all thatrelates to texts, lectures and the lines of action which theyintend to make public; and they must also agree beforehand withEni SpA’s Unit for Relations with the Media on the actualcontent of their presentations.

**7.5 "Non profit" initiatives**Eni supports "non profit" activities as evidence ofits commitment to help meet the needs of those communities whereit operates.

Within the framework their respectiveresponsibilities, Eni employees shall participate in thedefinition of such single initiatives in full respect ofEni’s policies and programs, and they shall implement themaccording to criteria of absolute transparency and shall supportthem as an integral part of Eni’s objectives.

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Certifications as separate documents filedas exhibits

**EXHIBIT 12.1**

**Certification**

 

I, Paolo Scaroni, certify that:

|   | 1. |   | I have reviewed this annual        report on Form 20-F of Eni SpA; |
|--------|----|--------|--------------------------------------------------------------------|

|   | 2. |   | Based on my knowledge, this        report does not contain any untrue statement of a        material fact or omit to state a material fact necessary        to make the statements made, in light of the        circumstances under which such statements were made, not        misleading with respect to the period covered by this        report; |
|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. |   | Based on my knowledge, the        financial statements, and other financial information        included in this report, fairly present in all material        respects the financial condition, results of operations        and cash flows of the company as of, and for, the periods        presented in this report; |
|--------|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. |   | The company’s other        certifying officer and I are responsible for establishing        and maintaining disclosure controls and procedures (as        defined in Exchange Act Rules 13a-15(e) and 15d-15(e))        and internal control over financial reporting (as defined        in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the        company and have: |
|--------|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) |   | Designed such disclosure        controls and procedures, or caused such disclosure        controls and procedures to be designed under our        supervision, to ensure that material information relating        to the company, including its consolidated subsidiaries,        is made known to us by others within those entities,        particularly during the period in which this report is        being prepared; |
|--------|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) |   | Designed such internal        control over financial reporting, or caused such internal        control over financial reporting to be designed under our        supervision, to provide reasonable assurance regarding        the reliability of financial reporting and the        preparation of financial statements for external purposes        in accordance with generally accepted accounting        principles; |
|--------|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) |   | Evaluated the effectiveness        of the company’s disclosure controls and procedures        and presented in this report our conclusions about the        effectiveness of the disclosure controls and procedures,        as of the end of the period covered by this report based        on such evaluation; and |
|--------|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) |   | Disclosed in this report any        change in the company’s internal control over        financial reporting that occurred during the period        covered by the annual report that has materially        affected, or is reasonably likely to materially affect,        the company’s internal control over financial        reporting; and |
|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. |   | The company’s other        certifying officer and I have disclosed, based on our        most recent evaluation of internal control over financial        reporting, to the company’s auditors and the audit        committee of the company’s board of directors (or        persons performing the equivalent functions): |
|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) |   | All significant deficiencies        and material weaknesses in the design or operation of        internal control over financial reporting which are        reasonably likely to adversely affect the company’s        ability to record, process, summarize and report        financial information; and |
|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) |   | Any fraud, whether or not        material, that involves management or other employees who        have a significant role in the company’s internal        control over financial reporting. |
|--------|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Date: June 20, 2007

| /s/PAOLO SCARONI                                    |
|-----------------------------------------------------|
|                                                     |
| Paolo Scaroni        Title: Chief Executive Officer |

 

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**EXHIBIT 12.2**

**Certification**

 

I, Marco Mangiagalli, certify that:

|   | 1. |   | I have reviewed this annual        report on Form 20-F of Eni SpA; |
|--------|----|--------|--------------------------------------------------------------------|

|   | 2. |   | Based on my knowledge, this        report does not contain any untrue statement of a        material fact or omit to state a material fact necessary        to make the statements made, in light of the        circumstances under which such statements were made, not        misleading with respect to the period covered by this        report; |
|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. |   | Based on my knowledge, the        financial statements, and other financial information        included in this report, fairly present in all material        respects the financial condition, results of operations        and cash flows of the company as of, and for, the periods        presented in this report; |
|--------|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. |   | The company’s other        certifying officer and I are responsible for establishing        and maintaining disclosure controls and procedures (as        defined in Exchange Act Rules 13a-15(e) and 15d-15(e))        and internal control over financial reporting (as defined        in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the        company and have: |
|--------|----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) |   | Designed such disclosure        controls and procedures, or caused such disclosure        controls and procedures to be designed under our        supervision, to ensure that material information relating        to the company, including its consolidated subsidiaries,        is made known to us by others within those entities,        particularly during the period in which this report is        being prepared; |
|--------|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) |   | Designed such internal        control over financial reporting, or caused such internal        control over financial reporting to be designed under our        supervision, to provide reasonable assurance regarding        the reliability of financial reporting and the        preparation of financial statements for external purposes        in accordance with generally accepted accounting        principles; |
|--------|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) |   | Evaluated the effectiveness        of the company’s disclosure controls and procedures        and presented in this report our conclusions about the        effectiveness of the disclosure controls and procedures,        as of the end of the period covered by this report based        on such evaluation; and |
|--------|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) |   | Disclosed in this report any        change in the company’s internal control over        financial reporting that occurred during the period        covered by the annual report that has materially        affected, or is reasonably likely to materially affect,        the company’s internal control over financial        reporting; and |
|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. |   | The company’s other        certifying officer and I have disclosed, based on our        most recent evaluation of internal control over financial        reporting, to the company’s auditors and the audit        committee of the company’s board of directors (or        persons performing the equivalent functions): |
|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) |   | All significant deficiencies        and material weaknesses in the design or operation of        internal control over financial reporting which are        reasonably likely to adversely affect the company’s        ability to record, process, summarize and report        financial information; and |
|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) |   | Any fraud, whether or not        material, that involves management or other employees who        have a significant role in the company’s internal        control over financial reporting. |
|--------|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Date: June 20, 2007

 

| /s/MARCO MANGIAGALLI                                    |
|---------------------------------------------------------|
|                                                         |
| Marco Mangiagalli        Title: Chief Financial Officer |

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**EXHIBIT 13.1**

 

**Certification Pursuant to 18U.S.C. Section 1350**

 

For purposes of 18 U.S.C. Section 1350, the undersignedofficer of Eni SpA, a company incorporated under the laws ofItaly (the "Company"), hereby certifies, to suchofficer’s knowledge, that:

> 
(i) the Annual Report on Form 20-F of the Company for the    year ended December 31, 2006 (the "Report") fully    complies with the requirements of section 13(a) or 15(d) as    applicable, of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly    presents, in all material respects, the financial condition    and results of operations of the Company.

Date: June 20, 2007

 

| /s/PAOLO SCARONI                                    |
|-----------------------------------------------------|
|                                                     |
| Paolo Scaroni        Title: Chief Executive Officer |

 

The foregoing certification is not deemed filed for purpose ofSection 18 of the Exchange Act and not incorporated by referencewith any filing under the Securities Act.

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**EXHIBIT 13.2**

 

**Certification Pursuant to 18U.S.C. Section 1350**

 

For purposes of 18 U.S.C. Section 1350, the undersignedofficer of Eni SpA, a company incorporated under the laws ofItaly (the "Company"), hereby certifies, to suchofficer’s knowledge, that:

> 
(i) the Annual Report on Form 20-F of the Company for the    year ended December 31, 2006 (the "Report") fully    complies with the requirements of section 13(a) or 15(d) as    applicable, of the Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly    presents, in all material respects, the financial condition    and results of operations of the Company.

Date: June 20, 2007

 

| /s/MARCO MANGIAGALLI                                    |
|---------------------------------------------------------|
|                                                         |
| Marco Mangiagalli        Title: Chief Financial Officer |

 

The foregoing certification is not deemed filed for purpose ofSection 18 of the Exchange Act and not incorporated by referencewith any filing under the Securities Act.

 

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