##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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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, 2002

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
            
to             .

Commission file number: 1-14090

Eni SpA
(Exact name of Registrant as specified in its charter)

Republic of Italy
(Jurisdiction of Incorporation of Organization)

Piazzale Enrico Mattei 1, 00144 Rome, Italy
(Address of principal executive offices)



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Securities registered or to be registered pursuant to Section 12(b) of the Act:

Shares, nominal value euro 1 each, listed on the New York Stock
Exchange not for trading, but only in connection with the registration of
American Depositary Shares, pursuant to the requirements of the New York
Stock Exchange.

American Depositary Shares, each representing the right to receive five
Shares, listed on the New York Stock Exchange.



Securities registered or to be registered pursuant to Section 12(g) of the Act:

None.



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Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act:

None.



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Indicate the number of outstanding shares of each of the issuers
classes of capital or common stock as of the close of the period covered by
the annual report.

|                               |  |              
|------------------------------ |  | -------------
|Ordinary shares of euro 1 each |  | 4,001,814,026

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past
90 days:   Yes o    No o

Indicate by check mark which financial statement Item the Registrant
has elected to follow:

Item 17
o     Item 18 o





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TABLE OF CONTENTS



|                                                                                      |                                                                       |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------- | --------------------------------------------------------------------- |  |  |  |  |  |  | 
|CERTAIN DEFINED TERMS                                                                
|PRESENTATION OF FINANCIAL AND OTHER INFORMATION                                      
|STATEMENTS REGARDING COMPETITIVE POSITION                                            
|GLOSSARY                                                                             
|CONVERSION TABLE                                                                     
|PART I                                                                               
|Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS                        
|Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE                                      
|                                                                                      | Item 3. KEY INFORMATION                                              
|                                                                                      | Selected Financial Information                                       
|Selected Operating Information                                                       
|Exchange Rates                                                                       
|Risk Factors                                                                         
|Item 4. INFORMATION ON THE COMPANY                                                   
|                                                                                      | History and Development of the Company                               
|                                                                                      | BUSINESS OVERVIEW                                                    
|                                                                                      | Exploration & Production                                             
|                                                                                      | Refining & Marketing                                                 
|                                                                                      | Petrochemicals                                                       
|                                                                                      | Oilfield Services and Engineering                                    
|                                                                                      | Other Activities                                                     
|                                                                                      | Research and Development                                             
|                                                                                      | Insurance                                                            
|                                                                                      | Environmental Matters                                                
|                                                                                      | Regulation of Enis businesses                                       
|                                                                                      | Property, Plant and Equipment                                        
|                                                                                      | Organizational Structure                                             
|Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 
|                                                                                      | Critical Accounting Policies                                         
|                                                                                      | Background and Recent Developments                                   
|                                                                                      | Principles of Consolidation                                          
|                                                                                      | Results of Operations                                                
|                                                                                      | Liquidity and Capital Resources                                      
|                                                                                      | Management Expectations of Operations                                
|                                                                                      | Summary of Significant Differences Between Italian GAAP and U.S. GAAP
|Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   
|                                                                                      | Directors and Senior Management                                      
|                                                                                      | Compensation                                                         
|                                                                                      | Board Practices                                                      
|                                                                                      | Employees                                                            
|                                                                                      | Share Ownership                                                      
|Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            
|                                                                                      | Major Shareholders                                                   
|                                                                                      | Related Party Transactions                                           
|Item 8. FINANCIAL INFORMATION                                                        
|                                                                                      | Consolidated Statements and Other Financial Information              
|                                                                                      | Significant Changes                                                  
|Item 9. THE OFFER AND THE LISTING                                                    
|                                                                                      | Offer and Listing Details                                            
|                                                                                      | Markets                                                              
|Item 10. ADDITIONAL INFORMATION                                                      
|                                                                                      | Memorandum and Articles of Association                               
|                                                                                      | Material Contracts                                                   
|                                                                                      | Exchange Controls                                                    
|                                                                                      | Taxation                                                             
|                                                                                      | Documents on Display                                                 
|Item 11. QUALITATIVE AND QUANTITATIVE DISCLOSURES OF MARKET RISK                     
|Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                      
|PART II                                                                              
|Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                             
|Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|Item 15. CONTROLS AND PROCEDURES                                                     
|Item 16. [RESERVED]                                                                  
|PART III                                                                             
|Item 17. FINANCIAL STATEMENTS                                                        
|Item 18. FINANCIAL STATEMENTS                                                        
|Item 19. EXHIBITS                                                                    
|Exhibit 1                                                                            
|Exhibit 7                                                                            
|Exhibit 8                                                                            
|Exhibit 10.1                                                                         



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##### Table of Contents



TABLE OF CONTENTS

|                                                |  |                                                           |  |  |    |      |     | 
|----------------------------------------------- |  | --------------------------------------------------------- |  |  | -- | ---- | --- | 
|                                                |  |                                                           |  |  |    | Page
|                                                |  |                                                           |  |  |    |     
|Certain
Defined Terms                           |  |                                                           |  |  | i  |     
|Presentation
of Financial and Other Information |  |                                                           |  |  | i  |     
|Statements Regarding Competitive Position       |  |                                                           |  |  | i  |     
|Glossary                                        |  |                                                           |  |  |    |      | iii | 
|Conversion Table                                |  |                                                           |  |  | v  |     
|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                                |  |  | 9  |     
|                                                |  | History and Development of the Company                    |  |  | 9  |     
|                                                |  | Business Overview                                         |  |  | 12 |     
|                                                |  | Exploration & Production                                  |  |  | 12 |     
|                                                |  | Gas & Power                                               |  |  | 23 |     
|                                                |  | Refining & Marketing                                      |  |  | 32 |     
|                                                |  | Petrochemicals                                            |  |  | 39 |     
|                                                |  | Oilfield Services and Engineering                         |  |  | 41 |     
|                                                |  | Other Activities                                          |  |  | 45 |     
|                                                |  | Research and Development                                  |  |  | 45 |     
|                                                |  | Insurance                                                 |  |  | 47 |     
|                                                |  | Environmental Matters                                     |  |  | 47 |     
|                                                |  | Regulation of
Enis businesses                            |  |  | 49 |     
|                                                |  | Property, Plant and Equipment                             |  |  | 57 |     
|                                                |  | Organizational Structure                                  |  |  | 58 |     
|Item 5.                                         |  | OPERATING AND
FINANCIAL REVIEW AND PROSPECTS              |  |  | 59 |     
|                                                |  | Critical Accounting Policies                              |  |  | 59 |     
|                                                |  | Background and Recent Developments                        |  |  | 61 |     
|                                                |  | Principles of Consolidation                               |  |  | 63 |     





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|         |  |                                                            |  |  |     |      |  | 
|-------- |  | ---------------------------------------------------------- |  |  | --- | ---- |  | 
|         |  |                                                            |  |  |     | Page
|         |  |                                                            |  |  |     |     
|         |  | Results of Operations                                      |  |  | 64  |     
|         |  | Liquidity and Capital Resources                            |  |  | 75  |     
|         |  | Management Expectations of Operations                      |  |  | 80  |     
|         |  | Summary of Significant Differences                         |  |  | 83  |     
|         |  | Between Italian GAAP and U.S. GAAP                         |  |  |     |     
|Item 6.  |  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                 |  |  | 84  |     
|         |  | Directors and Senior Management Compensation               |  |  | 84  |     
|         |  | Board Practices                                            |  |  | 89  |     
|         |  | Employees                                                  |  |  | 93  |     
|         |  | Share Ownership                                            |  |  | 94  |     
|Item 7.  |  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS          |  |  | 95  |     
|         |  | Major Shareholders                                         |  |  | 95  |     
|         |  | Related Party Transactions                                 |  |  | 95  |     
|Item 8.  |  | FINANCIAL INFORMATION                                      |  |  | 95  |     
|         |  | Consolidated Statements and Other Financial Information    |  |  | 95  |     
|         |  | Significant Changes                                        |  |  | 96  |     
|Item 9.  |  | THE OFFER AND THE LISTING                                  |  |  | 96  |     
|         |  | Offer and Listing Details                                  |  |  | 96  |     
|         |  | Markets                                                    |  |  | 98  |     
|Item 10. |  | ADDITIONAL INFORMATION                                     |  |  | 98  |     
|         |  | Memorandum and Articles of Association                     |  |  | 98  |     
|         |  | Material Contracts                                         |  |  | 105 |     
|         |  | Exchange Controls                                          |  |  | 105 |     
|         |  | Taxation                                                   |  |  | 105 |     
|         |  | Documents on Display                                       |  |  | 109 |     
|Item 11. |  | QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK |  |  | 110 |     
|Item 12. |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES     |  |  | 112 |     





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|         |  |                                                                              |  |  |     |      |  | 
|-------- |  | ---------------------------------------------------------------------------- |  |  | --- | ---- |  | 
|         |  |                                                                              |  |  |     | Page
|         |  |                                                                              |  |  |     |     
|PART II  |  |                                                                              |  |  |     |      |  | 
|Item 13. |  | DEFAULTS, DIVIDEND
ARREARAGES AND DELINQUENCIES                              |  |  | 112 |     
|Item 14. |  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  |  |     |     
|         |  |                                                                              |  |  | 112 |     
|Item 15. |  | CONTROLS AND PROCEDURES                                                      |  |  | 112 |     
|Item 16. |  | RESERVED                                                                     |  |  | 112 |     
|PART III |  |                                                                              |  |  |     |      |  | 
|Item 17. |  | FINANCIAL STATEMENTS (**)                                                    |  |  | 113 |     
|Item 18. |  | FINANCIAL STATEMENTS (**)                                                    |  |  | 113 |     
|Item 19. |  | EXHIBITS                                                                     |  |  | 113 |     



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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.

Certain disclosures contained herein including, without limitation,
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 «Item 11. Quantitative and Qualitative
Disclosures of Market Risk» contain forward-looking statements regarding
future events and the future results of Eni that are based on current
expectations, estimates, forecasts, and projections about the industries in
which Eni operates and the beliefs and assumptions of the management of Eni.
Eni may also make forward-looking statements in other written materials,
including other documents filed with or furnished to the U.S. Securities and
Exchange Commission (the «SEC»). In addition, Enis senior management may
make forward-looking statements orally to analysts, investors,
representatives of the media and others. In particular, among other
statements, certain statements with regard to




CERTAIN DEFINED TERMS

In this Form 20-F, the term «Eni» refers to Eni SpA and its
consolidated subsidiaries and, unless the context otherwise requires, their
respective predecessor companies. All references to «Italy» or the «State»
are references to the Republic of Italy, all references to the «Government»
are references to the government of the Republic of Italy. For definitions
of certain oil and gas terms used herein and certain conversions, see
«Certain Oil and Gas Terms» and «Conversion Table».





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management objectives, trends
in results of operations, margins, costs, return on equity, risk management
and competition are forward looking in nature. Words such as expects,
anticipates, targets, goals, projects, intends, plans,
believes, seeks, estimates, variations of such words, and similar
expressions are intended to identify such forward-looking statements. These
forward-looking statements are only predictions and are subject to risks,
uncertainties, and assumptions that are difficult to predict because they
relate to events and depend on circumstances that will occur in the future.
Therefore, Enis actual results may differ materially and adversely from
those expressed or implied in any forward-looking statements. Factors that
might cause or contribute to such differences include, but are not limited
to, those discussed in this Report under the section entitled «Risk Factors»
and elsewhere. Any forward-looking statements made by or on behalf of Eni
speak only as of the date they are made. Eni does not undertake to update
forward-looking statements to reflect any changes in Enis expectations with
regard thereto or any changes in events, conditions or circumstances on
which any such statement is based. The reader should, however, consult any
further disclosures Eni may make in documents it files with the SEC.



CERTAIN DEFINED TERMS

In this Form 20-F, the term
«Eni» refers to Eni SpA and its consolidated subsidiaries
and, unless the context otherwise requires, their respective
predecessor companies. All references to «Italy» or the
«State» are references to the Republic of Italy, all
references to the «Government» are references to the
government of the Republic of Italy. For definitions of certain oil
and gas terms used herein and certain conversions, see «Certain
Oil and Gas Terms» and «Conversion Table».



PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Unless otherwise indicated, the financial information contained herein
has been prepared in accordance with Eni Group accounting policies which are
in accordance with principles prescribed by Italian law and supplemented by
the accounting principles issued by the Consiglio Nazionale dei Dottori
Commercialisti e dei Ragionierior, in the absence thereof and if
applicable, the International Accounting Standards Board (collectively,
«Italian GAAP»). For further details see Note 2 to the Consolidated
Financial Statements as described in Note 27 to the Consolidated Financial
Statements, Italian GAAP differ in certain significant respects from
accounting principles generally accepted in the United States («U.S. GAAP»).
Unless otherwise indicated,





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any reference herein to «Consolidated Financial
Statements» is to the Consolidated Financial Statements of Eni (including
the Notes thereto) included herein.

Starting from 1999, Eni published its Consolidated Financial Statements
in euro; prior to 1999 Eni published its Consolidated Financial Statements
in Italian lire. As of January 1, 1999, the lira became a sub-unit of the
euro which is now the official currency of Italy. The euro/lira exchange
rate was irrevocably fixed on December 31, 1998, at lire 1936.27 per euro.
Eni Consolidated Financial Statement for years prior to 1999 have been
translated into euro for a better comparison of data. See
«Item 3  Selected
Consolidated Financial Data». Unless otherwise specified or the context
otherwise requires, references herein to «dollars», «$», «U.S. dollars» and
«U.S.$» are to the currency of the United States and references to «euro»
and «E» are to the currency of the European Monetary Union.

Market share estimates contained in this document are based on
management estimates unless otherwise indicated.




STATEMENTS REGARDING COMPETITIVE POSITION

Statements
made in «Item 4  Information on the Company», referring to
Enis competitive position are based on the companys belief, and in some
cases rely on a range of sources, including investment analysts reports,
independent market studies and Enis internal assessment of market share
based on publicly available information about the financial results and
performance of market participants.




GLOSSARY

A glossary of financial and oil and gas terms is available on Enis web
page at the address www.eni.it/english/notizie/mediateca/glossario_eni.html.
Below is a selection of the most frequently used terms.

|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Financial Terms |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Leverage        |  | It is a measure of a companys debt, calculated as the ratio between net borrowings
and shareholders equity, including minority interests.                                                                                                                                                                                                                                                                                                                                      
|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Net borrowings  |  | Eni evaluates its financial condition by reference to «net borrowings», which it
calculates as total debt less: cash and cash equivalent securities not related to
operations, non-operating financing receivables, and other items, net. Non-operating
financing receivables consists of amounts due to Enis financing subsidiaries from
banks and other financing institutions and amounts due to other subsidiaries from
banks for investing purposes and deposits in escrow.





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|                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                           |  | Securities not related to operations consist primarily of government and corporate securities.                                                                                                                                                                                                                                                                                                                                                                      
|                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Roace                      |  | Return On Average Capital Employed, is the return on average capital invested,
calculated as the ratio between: (i) net income before minority interests, plus net
financial charges on net borrowings, on a post-tax basis using a deemed tax rate
equal to the Italian statutory tax rate; and (ii) net average capital employed.
Capital employed is defined as the sum of shareholders equity, minority interest and
net borrowings. Expressed as a percentage.
|                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|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                                                                                                                                                                                                                                                                                                                                                  
|                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Average reserve life index |  | Ratio between the amount of reserves at the end of the year and total production for
the year                                                                                                                                                                                                                                                                                                                                                                       
|                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Barrel                     |  | Volume unit corresponding to 159 liters. A barrel of oil corresponds to about 0.137
metric tons.                                                                                                                                                                                                                                                                                                                                                                    
|                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Boe                        |  | Barrel of Oil Equivalent. 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 coefficient equal to 0.0061 in the case of gas produced outside
Italy and 0.0063 in the case of gas produced in Italy due to their different
calorific values.                                                                                                                   
|                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Concession contracts       |  | Contracts currently applied mainly in Western countries regulating relationships
between States and oil companies with regards to hydrocarbon exploration and
production. The company holding the mining concession has an exclusive on mining
activities and for this reason it acquires a right on hydrocarbons extracted, against
the payment of royalties 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 heavy fractions that can be processed in certain dedicated
facilities of a refinery to obtain finished products.                                                                                                                                                                                                                                                                                                                                  
|                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Deep waters                |  | Waters deeper than 200 meters.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Development                |  | Drilling and other post-exploration activities aimed at the production of oil and gas.                                                                                                                                                                                                                                                                                                                                                                              
|                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|EPC                        |  | Engineering, Procurement, Construction.                                                                                                                                                                                                                                                                                                                                                                                                                             





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|                   |  |                                                                                                                                                                                                                                                                                                                                                                                              
|------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EPIC               |  | Engineering, Procurement, Installation, Construction.                                                                                                                                                                                                                                                                                                                                        
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                              
|Exploration        |  | Oil and natural gas exploration that includes land surveys, geological and
geophysical studies, seismic data gathering and analysis, and well drilling.                                                                                                                                                                                                                                      
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                              
|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.                                                                                                                                                                                                                     
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                              
|FPSO               |  | Floating Production Storage and Offloading System.                                                                                                                                                                                                                                                                                                                                           
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                              
|LNG                |  | Liquefied Natural Gas obtained through the cooling of natural gas to minus 160° C at
normal pressure. The gas is liquefied to allow transportation from the place of
extraction to the sites at which it is transformed and consumed. One ton of LNG
corresponds to 1,400 cubic meters of gas.                                                                                               
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                              
|LPG                |  | Liquefied Petroleum Gas, a mix of light petroleum fractions, gaseous at normal
pressure and easily liquefied at room temperature through limited compression.                                                                                                                                                                                                                                
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                              
|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 of demand.                                                                                                                                                                                                                                                            
|                   |  |                                                                                                                                                                                                                                                                                                                                                                                              
|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 different from the agreed ones
determine temporary Over/Under lifting situations.                                                                                                                                                                   





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|                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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,
regulating relationships between States and oil companies with regards to the
exploration and production of hydrocarbons. The mining concession is assigned to the
national oil company jointly with the foreign oil company who has exclusive right to
perform exploration, development and production activities and can enter 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, «profit oil»
is divided between contractor and national company according to variable schemes and
represents the profit deriving from exploration and production. Further terms and
conditions may vary from one country to the other.
|                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Proved reserves                      |  | Proved oil and gas reserves are 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 changes in existing prices provided
only by 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; (ii) non developed proved reserves: amounts of hydrocarbons that
are expected to be retrieved following new drilling, facilities and operating
methods. On these amounts the company has already defined a clear development
expenditure program which is an expression of the companys determination.                                                                          
|                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             





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##### Table of Contents



|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 the gas set in the contract also in case it is not collected by the purchaser. The
purchaser has the option of collecting the gas paid and not delivered at a price
equal to the residual fraction of the price set in the contract in subsequent
contract years.
|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Upstream/Downstream |  | The term upstream refers to all hydrocarbon exploration and production activities.
The term downstream includes all activities inherent to the oil sector that are
downstream of exploration and production activities.                                                                                                                                                                                                                       

ABBREVIATIONS

|       |  |                             
|------ |  | ----------------------------
|BCF    |  | = billion cubic feet        
|BOE    |  | = barrel of oil equivalent  
|mm/BBL |  | = million barrels           
|KBBL/d |  | = thousand barrels per day  
|mmCF/d |  | = million cubic feet per day




CONVERSION TABLE

|                              |  |                                                 |  |                                                                                                 
|----------------------------- |  | ----------------------------------------------- |  | ------------------------------------------------------------------------------------------------
|1 acre                        |  | = 0.405 hectares                                |  |                                                                                                 
|1 barrel                      |  | = 42 U.S. gallons                               |  |                                                                                                 
|1 barrel of oil equivalent    |  | = 1 barrel of crude oil                         |  | = 5,600 cubic feet
of natural gas in Italy(1)
= 5,800 cubic feet of natural gas outside
Italy(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             |  |                                                                                                 





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##### Table of Contents



|                             |  |                                                                   |  |                                                                                 
|---------------------------- |  | ----------------------------------------------------------------- |  | --------------------------------------------------------------------------------
|1 cubic meter of natural gas |  | = approximately 0.0063
barrels of oil equivalent
in Italy(1)      |  |                                                                                 
|                             |  | = approximately 0.0061
barrels of oil equivalent
outside Italy(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) |  | The conversion factors for Enis natural gas in Italy and outside
Italy differ due to the different product characteristics of such
varieties of natural gas.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### Table of Contents






PART I




Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

NOT APPLICABLE




Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE

NOT APPLICABLE




Item 3. KEY INFORMATION




Selected Financial Information

Financial information shown below has been extracted or derived from
the audited consolidated financial statements of Eni. Starting from 1999,
Eni publishes its consolidated financial statements in euro and has
translated all lire amounts relating to consolidated financial statements
for the year 1998 at the fixed official exchange rate of lire 1,936.27 = 1
euro. Although these statements depict the same trends as would have been
shown had they been presented in lire, they may not be directly comparable
to the financial statements of other companies that have also been restated
in euro. Prior to the adoption of the euro, the currencies of other
countries fluctuated against the lira, but as the euro did not exist prior
to January 1, 1999, actual historical exchange rates for the euro are not
available. A comparison of Enis financial statements for the year 1998 and
those of other companies that historically used a reporting currency other
than the lira that takes into account actual fluctuations in exchange rates
could give a different impression than a comparison of Enis financial
statements for the year 1998 and those of that company translated into euro.

|                                         |  |  |                                                                    |  |      |  |        |  |      |  |        |  |  |  |        |  |  |  |        |  | 
|---------------------------------------- |  |  | ------------------------------------------------------------------ |  | ---- |  | ------ |  | ---- |  | ------ |  |  |  | ------ |  |  |  | ------ |  | 
|                                         |  |  | Years ended December 31,                                          
|                                         |  |  |                                                                   
|                                         |  |  | 1998                                                               |  | 1999 |  | 2000   |  | 2001 |  | 2002  
|                                         |  |  |                                                                    |  |      |  |        |  |      |  |       
|                                         |  |  | (million
 except number of shares and per share and per ADS data)
|CONSOLIDATED INCOME STATEMENT DATA       |  |  |                                                                    |  |      |  |        |  |      |  |        |  |  |  |        |  |  |  |        | 
|Amounts in accordance with Italian GAAP: |  |  |                                                                    |  |      |  |        |  |      |  |        |  |  |  |        |  |  |  |        | 
|Net sales from operations (1)            |  |  | 28,341                                                             |  |      |  | 31,008 |  |      |  | 47,938 |  |  |  | 48,925 |  |  |  | 47,922 | 





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|                                                       |                                   |  |                                                                    |       |      |  |        |       |      |  |        |       |   |  |        |       |   |  |        |       |  
|------------------------------------------------------ | --------------------------------- |  | ------------------------------------------------------------------ | ----- | ---- |  | ------ | ----- | ---- |  | ------ | ----- | - |  | ------ | ----- | - |  | ------ | ----- | -
|                                                       |                                   |  | Years ended December 31,                                          
|                                                       |                                   |  |                                                                   
|                                                       |                                   |  | 1998                                                               |       | 1999 |  | 2000   |       | 2001 |  | 2002  
|                                                       |                                   |  |                                                                    |       |      |  |        |       |      |  |       
|                                                       |                                   |  | (million 5 except number of shares and per share and per ADS data)
|Operating income:                                      |                                   |  |                                                                    |       |      |  |        |       |      |  |        |       |   |  |        |       |   |  |        |      
|                                                       | Exploration & Production          |  |                                                                    | 594   |      |  |        | 2,834 |      |  |        | 6,603 |   |  |        | 5,984 |   |  |        | 5,175 |  
|                                                       | Gas & Power (2)                   |  |                                                                    | 2,513 |      |  |        | 2,580 |      |  |        | 3,178 |   |  |        | 3,672 |   |  |        | 3,244 |  
|                                                       | Refining & Marketing              |  |                                                                    | 730   |      |  |        | 478   |      |  |        | 986   |   |  |        | 985   |   |  |        | 321   |  
|                                                       | Petrochemicals                    |  |                                                                    |      |      |  |        | (362  | )    |  |        | 4     |   |  |        | (332  | ) |  |        | (347  | )
|                                                       | Oilfield Services and Engineering |  |                                                                    | 198   |      |  |        | 149   |      |  |        | 144   |   |  |        | 255   |   |  |        | 298   |  
|                                                       | Other activities                  |  |                                                                    | (168  | )    |  |        | (199  | )    |  |        | (143  | ) |  |        | (168  | ) |  |        | (189  | )
|                                                       | Activities to be divested         |  |                                                                    | (57   | )    |  |        |      |      |  |        |      |   |  |        |      |   |  |        |      |  
|Operating income                                       |                                   |  | 3,810                                                              |       |      |  | 5,480  |       |      |  | 10,772 |       |   |  | 10,396 |       |   |  | 8,502  |      
|Income before extraordinary items and income taxes (3) |                                   |  | 4,165                                                              |       |      |  | 5,579  |       |      |  | 10,869 |       |   |  | 9,921  |       |   |  | 8,378  |      
|Net income (2) (4)                                     |                                   |  | 2,328                                                              |       |      |  | 2,857  |       |      |  | 5,771  |       |   |  | 7,751  |       |   |  | 4,593  |      
|Data per ordinary share (5) (5):                       |                                   |  |                                                                    |       |      |  |        |       |      |  |        |       |   |  |        |       |   |  |        |      
|Operating income                                       |                                   |  | 0.96                                                               |       |      |  | 1.36   |       |      |  | 2.70   |       |   |  | 2.66   |       |   |  | 2.22   |      
|Income before extraordinary items and income taxes     |                                   |  | 1.04                                                               |       |      |  | 1.40   |       |      |  | 2.72   |       |   |  | 2.54   |       |   |  | 2.19   |      
|Net income                                             |                                   |  | 0.58                                                               |       |      |  | 0.71   |       |      |  | 1.44   |       |   |  | 1.98   |       |   |  | 1.20   |      
|Data per ADS ($) (5):                                  |                                   |  |                                                                    |       |      |  |        |       |      |  |        |       |   |  |        |       |   |  |        |      
|Operating income                                       |                                   |  | 5.57                                                               |       |      |  | 6.92   |       |      |  | 12.66  |       |   |  | 11.83  |       |   |  | 11.65  |      
|Income before extraordinary items and income taxes (3) |                                   |  | 6.09                                                               |       |      |  | 7.04   |       |      |  | 12.77  |       |   |  | 11.39  |       |   |  | 11.48  |      
|Net income                                             |                                   |  | 3.40                                                               |       |      |  | 3.61   |       |      |  | 6.79   |       |   |  | 8.82   |       |   |  | 6.29   |      
|Amounts in accordance with U.S. GAAP (5) (6):          |                                   |  |                                                                    |       |      |  |        |       |      |  |        |       |   |  |        |       |   |  |        |      
|Net sales from operations                              |                                   |  | 25,587                                                             |       |      |  | 28,369 |       |      |  | 45,488 |       |   |  | 45,848 |       |   |  | 43,632 |      
|Operating income (7)                                   |                                   |  | 3,409                                                              |       |      |  | 4,880  |       |      |  | 9,819  |       |   |  | 8,853  |       |   |  | 7,861  |      
|Income before extraordinary items and income taxes (3) |                                   |  | 3,617                                                              |       |      |  | 4,912  |       |      |  | 10,067 |       |   |  | 10,330 |       |   |  | 8,350  |      
|Net income                                             |                                   |  | 2,064                                                              |       |      |  | 2,873  |       |      |  | 5,758  |       |   |  | 6,317  |       |   |  | 5,292  |      
|Data per ordinary share (5) (5):                       |                                   |  |                                                                    |       |      |  |        |       |      |  |        |       |   |  |        |       |   |  |        |      
|Operating income                                       |                                   |  | 0.82                                                               |       |      |  | 1.18   |       |      |  | 2.42   |       |   |  | 2.21   |       |   |  | 2.00   |      
|Income before extraordinary items and income taxes (3) |                                   |  | 0.90                                                               |       |      |  | 1.22   |       |      |  | 2.52   |       |   |  | 2.64   |       |   |  | 2.18   |      
|Net income Basic                                       |                                   |  | 0.52                                                               |       |      |  | 0.72   |       |      |  | 1.44   |       |   |  | 1.62   |       |   |  | 1.38   |      
|Diluted                                                |                                   |  | 0.52                                                               |       |      |  | 0.72   |       |      |  | 1.44   |       |   |  | 1.62   |       |   |  | 1.38   |      
|Data per ADS ($) (5):                                  |                                   |  |                                                                    |       |      |  |        |       |      |  |        |       |   |  |        |       |   |  |        |      
|Operating income                                       |                                   |  | 4.77                                                               |       |      |  | 5.96   |       |      |  | 11.36  |       |   |  | 9.83   |       |   |  | 10.49  |      
|Income before extraordinary items and income taxes (3) |                                   |  | 5.29                                                               |       |      |  | 6.20   |       |      |  | 11.83  |       |   |  | 11.76  |       |   |  | 11.44  |      
|Net income Basic                                       |                                   |  | 3.02                                                               |       |      |  | 3.63   |       |      |  | 6.77   |       |   |  | 7.19   |       |   |  | 7.25   |      
|Diluted                                                |                                   |  | 3.02                                                               |       |      |  | 3.63   |       |      |  | 6.77   |       |   |  | 7.19   |       |   |  | 7.25   |      





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##### Table of Contents



|                                                                        |  |                                     |        |      |  |      |        |      |  |      |        |  |  |  |        |  |  |  |        | 
|----------------------------------------------------------------------- |  | ----------------------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------ |  |  |  | ------ | 
|                                                                        |  | As of December 31,                  |        |      |  |     
|                                                                        |  |                                    
|                                                                        |  | 1998                                |        | 1999 |  | 2000 |        | 2001 |  | 2002
|                                                                        |  |                                     |        |      |  |      |        |      |  |     
|                                                                        |  | (million 5 except number of shares)
|CONSOLIDATED BALANCE SHEET DATA                                         |  |                                     |        |      |  |      |        |      |  |      |        |  |  |  |        |  |  |  |        | 
|Amounts in accordance with Italian
GAAP:                                |  |                                     |        |      |  |      |        |      |  |      |        |  |  |  |        |  |  |  |        | 
|Total assets, net                                                       |  |                                     | 41,336 |      |  |      | 46,197 |      |  |      | 56,363 |  |  |  | 62,736 |  |  |  | 65,808 | 
|Short-term and long-term debt                                           |  |                                     | 9,465  |      |  |      | 9,551  |      |  |      | 11,044 |  |  |  | 12,819 |  |  |  | 15,420 | 
|Capital stock issued                                                    |  |                                     | 4,132  |      |  |      | 4,133  |      |  |      | 4,133  |  |  |  | 4,001  |  |  |  | 4,002  | 
|Amounts in accordance with U.S. GAAP:                                   |  |                                     |        |      |  |      |        |      |  |      |        |  |  |  |        |  |  |  |        | 
|Total assets, net                                                       |  |                                     | 42,562 |      |  |      | 47,612 |      |  |      | 57,257 |  |  |  | 64,976 |  |  |  | 66,122 | 
|Short-term and long-term debt                                           |  |                                     | 9,367  |      |  |      | 9,389  |      |  |      | 10,810 |  |  |  | 12,379 |  |  |  | 15,320 | 
|Capital stock issued                                                    |  |                                     | 4,132  |      |  |      | 4,133  |      |  |      | 4,133  |  |  |  | 4,001  |  |  |  | 4,002  | 
|Other Financial Information                                             |  |                                     |        |      |  |      |        |      |  |      |        |  |  |  |        |  |  |  |        | 
|Capital expenditure                                                     |  |                                     | 5,152  |      |  |      | 5,483  |      |  |      | 5,431  |  |  |  | 6,577  |  |  |  | 8,048  | 
|Investments (including net borrowings
of acquired companies)            |  |                                     | 413    |      |  |      | 114    |      |  |      | 4,384  |  |  |  | 4,664  |  |  |  | 1,366  | 
|Weighted average number outstanding of
ordinary shares (shares million) |  |                                     | 4,001  |      |  |      | 4,001  |      |  |      | 3,994  |  |  |  | 3,910  |  |  |  | 3,826  | 
|Dividend per share(E)                                                   |  |                                     | 0.310  |      |  |      | 0.362  |      |  |      | 0.424  |  |  |  | 0.750  |  |  |  | 0.750  | 
|Dividend per ADS($) (8)                                                 |  |                                     | 1.61   |      |  |      | 1.70   |      |  |      | 1.81   |  |  |  | 3.71   |  |  |  | 3.93   | 



---

|(1) |  | Eni is a party to certain Production Sharing Agreements (PSAs) whereby
a portion of Enis share of oil and gas production is withheld and sold
by its joint-venture partners which are state-owned entities, with
proceeds being remitted to the state in satisfaction of Enis
PSA-related tax liabilities. Revenue and income taxes include such
taxes owed by Eni but paid by state-owned entities out of Enis share
of oil and gas production. Without this specific provision in its PSAs,
Eni would otherwise be entitled to the sale proceeds of this portion of
oil and gas production withheld. Starting in 1999, in order to be
consistent with international practices, Eni began classifying the
value of production equivalent to such taxes as revenues and the
associated taxes in the appropriate income tax account. This had the
effect of increasing revenues and income taxes by euro 203 million in
1999, as well as oil and gas reserves. Prior year amounts have not been
reclassified since the effect of this change on net income is
immaterial. See «Item 4Information on the
CompanyExploration &
ProductionOil and Natural Gas ReservesNote 1 on
page 14».
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Legislative Decree No. 164 dated May 23, 2000, requires Eni to
unbundle its transmission and distribution activities from other
businesses in the Natural Gas segment. In connection with such decree,
Eni arranged for an independent appraisal of its transmission and
distribution assets which resulted in estimates of the useful lives of
such assets (40 years for pipelines and 50 for distribution networks).
Such useful lives have also been confirmed by various reports issued by
the Italian Authority for Electricity and Gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               





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##### Table of Contents



|    |  | Effective January 1,
2000, assets related to transmission and distribution activities are
now depreciated based on the useful lives established by the
aforementioned appraisal and no longer on the basis of useful lives
established by the Ministry of Economy and Finance based on technical
studies conducted for homogeneous industries (10 and 8% for pipelines
and distribution networks, respectively). This lower rate of
depreciation resulted in an increase in operating income amounting to
euro 663 million, an increase in income before minority interest
amounting to euro 396 million and an increase in net income amounting
to euro 312 million. Also note that effective from January 2002, the
new Gas & Power division is responsible for Enis natural gas and
electricity generation activities. For comparability, results of
operations and financial data of the Natural Gas and Electricity
Generation segments, which were reported separately until year 2001,
have been aggregated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(3) |  | Extraordinary income (expense) is as defined under Italian GAAP. These
items would not qualify as extraordinary under U.S. GAAP. See Notes 27
and 28 to the Consolidated Financial Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(4) |  | Net income for 1998 includes a deferred tax asset attributable to the
effect of initial application of a new accounting standard related to
income taxes amounting to euro 60 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(5) |  | Euro per Share or dollars per American Depositary Share (ADS), as the
case may be. Eni Shareholders Meeting held on June 1, 2001 resolved to
convert the nominal value of Eni Shares into euro by applying the fixed
exchange rate of 1936.27 lire per euro; reduce the resulting nominal
value of each share from euro 0.516 to euro 0.5; group two shares of
nominal value euro 0.5 into one share with nominal value of 1 euro. The
conversion, due to EU requirements, was effective from June 18, 2001.
Starting from the same date, each ADS represents five Eni Shares.
Consequently, all earnings per Share and earnings per ADS amounts in
this selected financial data corresponding to prior periods have been
restated to reflect the 2 for 1 reverse stock split. Earnings per share
is calculated by dividing net income by the weighted-average number of
shares issued and outstanding during the year, excluding treasury
shares. In order to compare earnings per share to previous years, the
number of shares issued through stock grants made in 2000, 2001 and
2002 has been added to the number of shares outstanding in previous
years. The dilutive effect of potential ordinary shares when converted
into ordinary shares on earnings per share is not material. At present,
only shares assigned for no consideration are considered, as the conditions have not yet been met for the stock options to be exercised.
See «Note 29 to the Consolidated Financial Statements  Stock
Compensation». Data per ADS were translated at the Noon Buying Rate of
December 31 for each year presented ($1.0485 = E1.00 at December 31,
2002). On June 20, 2003, the Noon Buying Rate was U.S. dollars 1.1616 =
euro 1.00.
|   
|(6) |  | For information concerning certain differences between Italian GAAP
and U.S. GAAP as applied to the Consolidated Financial Statements
included elsewhere herein, see Notes 27 and 28 to the Consolidated
Financial Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(7) |  | See Note 28 to the Consolidated Financial Statements for details of
operating income under U.S. GAAP by business segment for the last three
years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(8) |  | Except for year 2002, data have been translated into U.S. dollars
using for each year presented the noon buying rate of the payment date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     





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Selected Operating Information

The table below sets forth selected operating information with respect
to Enis proved reserves, developed and undeveloped, of crude oil (including
condensates and natural gas liquids) and natural gas, as well as other data,
for the years ended and at December 31, 1998, 1999, 2000, 2001 and 2002.
Such estimates of proved reserves have been prepared in accordance with
Statement of Financial Accounting Standards No. 69 («SFAS 69»). See the
unaudited supplemental oil and gas information on Note No. 29 to the
Consolidated Financial Statements.

|                                                                                    |                          |  |                            |        |      |  |        |        |      |  |        |        |  |  |        |        |  |  |        |        | 
|----------------------------------------------------------------------------------- | ------------------------ |  | -------------------------- | ------ | ---- |  | ------ | ------ | ---- |  | ------ | ------ |  |  | ------ | ------ |  |  | ------ | ------ | 
|                                                                                    |                          |  | Year ended at December 31,
|                                                                                    |                          |  |                           
|                                                                                    |                          |  | 1998                       |        | 1999 |  | 2000   |        | 2001 |  | 2002  
|                                                                                    |                          |  |                            |        |      |  |        |        |      |  |       
|Proved reserves at
period end of:                                                   |                          |  |                            |        |      |  |        |        |      |  |        |        |  |  |        |        |  |  |        |       
|                                                                                    | oil (mm/BBL)             |  |                            | 2,881  |      |  |        | 3,137  |      |  |        | 3,422  |  |  |        | 3,948  |  |  |        | 3,783  | 
|                                                                                    | natural gas (BCF)        |  |                            | 13,515 |      |  |        | 13,665 |      |  |        | 14,772 |  |  |        | 17,072 |  |  |        | 18,629 | 
|Proved reserves of
hydrocarbons in
mm/BOE at
period end (1)                         |                          |  | 5,255                      |        |      |  | 5,534  |        |      |  | 6,008  |        |  |  | 6,929  |        |  |  | 7,030  |       
|Finding and
development costs
per barrel of oil
equivalent
(three-year
average) (2) |                          |  | 5.16                       |        |      |  | 5.43   |        |      |  | 5.35   |        |  |  | 6.28   |        |  |  | 6.78   |       
|Reserve replacement
ratio (3)
(three-year
average)                                  |                          |  | 183                        |        |      |  | 174    |        |      |  | 173    |        |  |  | 226    |        |  |  | 204    |       
|Reserve life index
(4)                                                              |                          |  | 13.4                       |        |      |  | 14.0   |        |      |  | 14.0   |        |  |  | 13.7   |        |  |  | 13.2   |       
|Average daily
production of:                                                        |                          |  |                            |        |      |  |        |        |      |  |        |        |  |  |        |        |  |  |        |       
|                                                                                    | oil (KBBL/d)             |  |                            | 653    |      |  |        | 674    |      |  |        | 748    |  |  |        | 857    |  |  |        | 921    | 
|                                                                                    | natural gas
(mmCF/d) (5) |  |                            | 2,176  |      |  |        | 2,209  |      |  |        | 2,493  |  |  |        | 2,827  |  |  |        | 3,015  | 
|Average daily
production of
hydrocarbons in
KBOE/d (5)                              |                          |  | 1,038                      |        |      |  | 1,064  |        |      |  | 1,187  |        |  |  | 1,353  |        |  |  | 1,449  |       
|Oil and gas
production costs
per barrel of oil
equivalent (6)                       |                          |  | 3.56                       |        |      |  | 3.64   |        |      |  | 3.61   |        |  |  | 3.85   |        |  |  | 3.83   |       
|Profit per barrel
of oil equivalent
(7)                                             |                          |  | 0.13                       |        |      |  | 4.11   |        |      |  | 7.86   |        |  |  | 5.48   |        |  |  | 5.08   |       
|Natural gas sales
of primary
distribution in
Italy (8)                              |                          |  | 55.69                      |        |      |  | 60.24  |        |      |  | 59.92  |        |  |  | 58.89  |        |  |  | 52.56  |       
|Natural gas sales
of primary
distribution in
Europe (8)                             |                          |  |                           |        |      |  |       |        |      |  | 1.33   |        |  |  | 3.07   |        |  |  | 8.20   |       
|Third-party
transport of
natural gas in
Italy (8)                                   |                          |  | 6.07                       |        |      |  | 6.90   |        |      |  | 9.45   |        |  |  | 11.41  |        |  |  | 19.11  |       
|Length of natural
gas distribution
network in Italy
at
period end (9)               |                          |  | 28.7                       |        |      |  | 29.0   |        |      |  | 29.1   |        |  |  | 29.6   |        |  |  | 29.8   |       
|Electricity
production sold
(10)                                                    |                          |  |                            |        |      |  |        |        |      |  | 4,766  |        |  |  | 4,987  |        |  |  | 5,004  |       
|Refined products
production (11)                                                    |                          |  | 40.10                      |        |      |  | 38.31  |        |      |  | 38.89  |        |  |  | 37.78  |        |  |  | 35.55  |       
|Standard capacity
of wholly-owned
refineries (12)                                   |                          |  | 664                        |        |      |  | 664    |        |      |  | 664    |        |  |  | 664    |        |  |  | 504    |       
|Capacity
utilization of
wholly-owned
refineries (13)                                |                          |  | 103                        |        |      |  | 96     |        |      |  | 99     |        |  |  | 97     |        |  |  | 99     |       
|Service stations at
period end (in
Italy and outside
Italy)                         |                          |  | 12,984                     |        |      |  | 12,489 |        |      |  | 12,085 |        |  |  | 11,707 |        |  |  | 10,762 |       





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##### Table of Contents



|                                                                   |  |  |                            |  |      |  |        |  |      |  |        |  |  |  |        |  |  |  |        |  | 
|------------------------------------------------------------------ |  |  | -------------------------- |  | ---- |  | ------ |  | ---- |  | ------ |  |  |  | ------ |  |  |  | ------ |  | 
|                                                                   |  |  | Year ended at December 31,
|                                                                   |  |  |                           
|                                                                   |  |  | 1998                       |  | 1999 |  | 2000   |  | 2001 |  | 2002  
|                                                                   |  |  |                            |  |      |  |        |  |      |  |       
|Average throughput
per service station
(14)                        |  |  | 1,512                      |  |      |  | 1,543  |  |      |  | 1,555  |  |  |  | 1,621  |  |  |  | 1,674  | 
|Petrochemicals
production (15)                                     |  |  | 8.29                       |  |      |  | 8.30   |  |      |  | 8.53   |  |  |  | 7.83   |  |  |  | 9.58   | 
|Oilfield services
and engineering
order backlog at
period end (16) |  |  | 4,934                      |  |      |  | 4,439  |  |      |  | 6,638  |  |  |  | 6,937  |  |  |  | 10,065 | 
|Employees at period
end (units)                                    |  |  | 78,906                     |  |      |  | 72,023 |  |      |  | 69,969 |  |  |  | 70,948 |  |  |  | 80,655 | 



---

|(1)  |  | Includes approximately 782, 756, 783, 728 and 779 BCF of natural gas
held in storage in Italy at December 31, 1998, 1999, 2000, 2001 and
2002 respectively. See «Item 4. Information on the Company-Exploration
and Production-Storage». For 1999 data see «Item 4. Information on the
Company-Exploration & Production-Oil and Natural Gas reserves-Note 1 on
page 14».                                                                                                                                                                                                                                                                                                                                                  
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(2)  |  | Consists of (i) the sum of costs incurred in respect of (a)
acquisitions of unproved property and (b) exploration and development
activities, divided by (ii) the increase in proved reserves
attributable to (a) revisions of previous estimates, (b) improved
recovery and (c) extensions and discoveries, in each case prepared in
accordance with SFAS 69. In 2001 and 2002, excluding the purchase cost
of unproved property of Lasmo, as well as cost incurred in connection
with Iranian buy-back contract in year 2002, the indicator is 5.33 and
5.67 USD/boe respectively. See the unaudited supplemental oil and gas
information in Note No. 29 to the Consolidated Financial Statements.
Expressed in dollars.
|    
|(3)  |  | 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, 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 No. 29 to the
Consolidated Financial Statements. Expressed as a percentage.                                                                                                                                                                                                                                            
|    
|(4)  |  | 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 No. 29 to the Consolidated Financial Statements.
Expressed on a yearly basis.                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|(5)  |  | Natural gas production volumes exclude gas consumed in operations (94
mmCF/d and 132 mmCF/d in 2001 and 2002, respectively). See also «Item
4. Information on the Company-Exploration and
Production-Production-Note 1 and 3 on page 16».                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|(6)  |  | Consists of production costs (costs incurred to operate and maintain
wells and field equipment) prepared in accordance with SFAS 69 divided
by actual production net of production volumes of natural gas consumed
in operations. See the unaudited supplemental oil and gas information
in Note No. 29 to the Consolidated Financial Statements. Expressed in
dollars.                                                                                                                                                                                                                                                                                                                                                   
|    
|(7)  |  | 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 No. 29 to the Consolidated Financial Statements. for a calculation
of results of operations from oil and gas producing activities.
Expressed in dollars.                                                                                                                                                                                                                                                                                                                                                 
|    
|(8)  |  | Billions of cubic meters.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|(9)  |  | Thousands of kilometers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    
|(10) |  | Gigawatthour.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    
|(11) |  | Millions of tons.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|(12) |  | Thousands barrels/day.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|(13) |  | Production as a percentage of capacity taking into account scheduled
plant shutdowns.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     





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##### Table of Contents



|(14) |  | Thousands of liters per day.                                                                   
|---- |  | -----------------------------------------------------------------------------------------------
|    
|(15) |  | Millions of tons.                                                                              
|    
|(16) |  | The sum of the order backlog of Saipem SpA and Snamprogetti SpA,
expressed in millions of euro.




Exchange Rates

Italy is one of the eleven member states of the European Monetary Union
that entered the single European currency which became effective on January
1, 1999; the other countries are Austria, Belgium, Finland, France, Germany,
Ireland, Luxembourg, the Netherlands, Portugal and Spain. Greece entered the
single European currency on January 1, 2001. The official fixing rate of the
lira versus the euro is 1,936.27 lire per euro.

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: The Federal Reserve Board). Exchange rates
for the year 1998 are derived dividing the official fixing rate of the lira
versus the euro by the Noon Buying Rates of the lira versus the U.S. dollar.

|                       |  |                       |      |     |  |            |      |            |  |  |      |  |  |    |      | 
|---------------------- |  | --------------------- | ---- | --- |  | ---------- | ---- | ---------- |  |  | ---- |  |  | -- | ---- | 
|                       |  |                       |      |     |  |            |      |            |  |  |      |  |  | At
|                       |  | High                  |      | Low |  | Average(1) |      | Period End
|                       |  |                       |      |     |  |            |      |           
|                       |  | U.S. dollars per euro
|Year ended December 31 |  |                       |      |     |  |            |      |            |  |  |      |  |  |    |      | 
|1998                   |  |                       | 1.06 |     |  |            | 1.22 |            |  |  | 1.11 |  |  |    | 1.17 | 
|1999                   |  |                       | 1.18 |     |  |            | 1.00 |            |  |  | 1.06 |  |  |    | 1.01 | 
|2000                   |  |                       | 1.03 |     |  |            | 0.83 |            |  |  | 0.92 |  |  |    | 0.94 | 
|2001                   |  |                       | 0.95 |     |  |            | 0.84 |            |  |  | 0.90 |  |  |    | 0.89 | 
|2002                   |  |                       | 1.05 |     |  |            | 0.86 |            |  |  | 0.95 |  |  |    | 1.05 | 



---

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

|              |  |                       |        |     |  |            |        |  |  |    |        | 
|------------- |  | --------------------- | ------ | --- |  | ---------- | ------ |  |  | -- | ------ | 
|              |  |                       |        |     |  |            |        |  |  | At
|              |  | High                  |        | Low |  | Period End
|              |  |                       |        |     |  |           
|              |  | U.S. dollars per euro
|December 2002 |  |                       | 1.0485 |     |  |            | 0.9927 |  |  |    | 1.0485 | 
|January 2003  |  |                       | 1.0861 |     |  |            | 1.0361 |  |  |    | 1.0739 | 
|February 2003 |  |                       | 1.0875 |     |  |            | 1.0708 |  |  |    | 1.0779 | 
|March 2003    |  |                       | 1.1062 |     |  |            | 1.0545 |  |  |    | 1.0900 | 





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##### Table of Contents



|                                  |  |                       |        |     |  |            |        |  |  |    |        | 
|--------------------------------- |  | --------------------- | ------ | --- |  | ---------- | ------ |  |  | -- | ------ | 
|                                  |  |                       |        |     |  |            |        |  |  | At
|                                  |  | High                  |        | Low |  | Period End
|                                  |  |                       |        |     |  |           
|                                  |  | U.S. dollars per euro
|April 2003                        |  |                       | 1.1180 |     |  |            | 1.0621 |  |  |    | 1.1180 | 
|May 2003                          |  |                       | 1.1853 |     |  |            | 1.1200 |  |  |    | 1.1766 | 
|June 2003 (through June 20, 2003) |  |                       | 1.1870 |     |  |            | 1.1616 |  |  |    | 1.1616 | 

Fluctuations in the exchange rate between the euro and the dollar
affect the dollar equivalent of the euro price of the Shares on Telematico
and the dollar price of the ADSs on the NYSE. Cash dividends related to
fiscal year 2002 will be paid by Eni SpA in euro in 2003 and exchange rate
fluctuations will also affect the dollar amounts received by owners of ADSs
upon conversion by the Depository of cash dividends paid in euro on the
underlying Shares. The Noon Buying Rate on June 20, 2003 was U.S. dollars
1.1616 = euro 1.00.




Risk Factors

Competition

There is strong competition worldwide, both within the oil industry and
with other industries, in supplying energy to the industrial, commercial and
residential energy markets. A number of Enis competitors have merged or may
have the intention to merge and so lead to possibly stronger competition
from competitors with greater financial resources. In its Exploration &
Production business, particularly outside Italy, Eni encounters competition
from other major international oil companies for exploration and development
rights. In its natural gas business, Eni encounters increasingly strong
competition 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 entire Italian market to competition by
2003, limits to the size of gas companies relative to the market and third
parties access to transport infrastructure. In its electricity business, Eni
competes with other producers from Italy or outside Italy which sell
electricity on the Italian market. In addition an uncertain regulatory
framework and delays in the authorization process for the construction of
new power plants on the part of public administrations prevent operators,
amongst which Eni, from fully deploying their growth plans in the
electricity business according to scheduled time. Eni faces competition from
several major international oil companies in its refinery and refined
product marketing businesses. In the retail market, Eni competes with third
parties both in Italy and outside Italy (including major international oil
companies, companies owned by oil producing nations and local operators) to obtain concessions to establish and
operate service stations. Once established, Enis service stations compete
primarily on the basis of services and availability of non-petroleum
products. In Italy plans for the upgrading and efficiency improvement of a
service station network can advance only in accordance with the evolution of
the regulatory framework, which lags behind that of other major European
countries. Eni also faces significant competition from certain international
operators in the oilfield services contracting and engineering industries.
Such competition is primarily on the basis of technical expertise, quality





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##### Table of Contents



and number of services, availability of technologically advanced facilities
(for example vessels, drilling plants etc.) and price.

Cyclicality of Petrochemical Industry

The petrochemical industry is subject to cyclical fluctuations in
supply and demand, with consequent effects on prices and profitability
exacerbated by the highly competitive environment of the industry. Enis
petrochemicals operations, which are located mainly in Italy with certain
plants located also outside Italy, have been in the past and may in the
future be adversely affected by worldwide excess installed production
capacity, as well as by economic slowdowns in many industrialized countries.
The dislocation of petrochemical activities to geographical areas like the
Far East and oil producing countries which provides long term competitive
advantages has weakened the competitiveness of petrochemicals operations in
industrialized countries, amongst which Enis own petrochemical operations.
Petrochemicals operations in industrialized countries are also less
competitive than those in the above-mentioned areas due to stricter
regulatory frameworks and growing environmental concerns which prevail in
industrialized countries.

Political and Economic Considerations

The production of oil and natural gas requires high levels of capital
expenditure and entails particular economic risks and opportunities. It is
subject to natural hazards and other uncertainties including those relating
to the physical characteristics of oil or natural gas fields.

The production of oil and natural gas is highly regulated and is
subject to intervention by governments throughout the world in matters such
as the award of exploration and production interests, the imposition of
specific drilling and other work obligations, environmental protection
measures, control over the development and abandonment of fields and
installations, and restrictions on production. In addition, the oil and gas
industry is subject to the payment of royalties and excise duties, which
tend to be higher than those payable in respect of many other commercial
activities.

Crude oil prices are subject to international supply and demand and
other factors that are beyond Enis control. OPEC member countries control
production of a significant portion of the worldwide supply of oil and can
exercise substantial influence over its price levels. International
geopolitical tensions and political developments, including sanctions
imposed on certain oil-producing countries on the basis of resolutions of
the United Nations, can also affect world supply and prices of oil. Such
factors can also affect the prices of natural gas because such prices are
typically tied to the prices of certain refined petroleum products. Higher
crude oil prices have a favourable impact on Enis results of operations and
lower crude oil gives an adverse impact.





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##### Table of Contents



Substantial portions of Enis hydrocarbons reserves are located in
countries outside the EU and North America, certain of which may be
politically or economically less stable than EU or North American countries.
At December 31, 2002, approximately 69% of Enis proved hydrocarbons
reserves were located in such countries. See «Item 4  Exploration &
Production  Oil and Natural Gas Reserves». Similarly, a substantial portion
of Enis natural gas supply comes from countries outside the EU and North
America. In 2002, approximately 29% of Enis domestic supply of natural gas
came from such countries. See «Item 4  Gas &
Power  Natural Gas Supplies». In
August 1996, the United States adopted the Iran and Libya Sanctions Act (the
«Sanctions Act»). The Sanctions Act requires the President of the United
States to impose certain enumerated sanctions under certain circumstances on
companies which engage in trade with or investment activities in Libya.
Under the Sanctions Act, sanctions against Libya are expected to be applied
until the President of the United States decides that Libya has complied
with UN resolutions No. 731 of 1992 and No. 883 of 1993. Recent signs of a
new Libyan attitude to the solution of existing controversies have led the
UN to suspend Resolutions No. 731 and 883. Eni cannot predict
interpretations of, or the implementation policy of the U.S. Government with
respect to the Sanctions Act. However, Eni does not believe that the
Sanctions Act will have a material adverse effect on its financial condition
or results of operations. For a description of Enis operations in Libya and
Iran see «Item 4  Information on the Company  Exploration and
Production  North Africa and Rest of the World.»

Liberalization of the Italian Natural Gas Market

Legislative Decree n. 164 dated May 23, 2000 introduced rules for the
liberalization of the Italian natural gas market which management believes
will have a significant impact on Enis activity, as the company is present
in all the phases of the natural gas chain. The decree, among other things,
establishes:



| |  |  | opening of the entire market to competition by 2003; this means
that by then all customers are free to chose their supplier of
natural gas;                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | until December 31, 2010 antitrust thresholds to operators
calculated as a percentage share of national consumption set as
follows: (i) effective January 1, 2002 75% for imported or
domestically produced natural gas volumes input in the national
transport network and destined to sales; this percentage is to
decrease by 2 percentage points per year until it reaches 61% in
2009; (ii) effective January 1, 2003 50%
for sales to final customers. These ceilings are calculated on a
three-year base net of losses (in the case of sales) and own
consumption;
|
| |  |  | the Authority for Electricity and Gas determines criteria for
transport, dispatching, storage, use of LNG terminals and tariffs
for natural gas for distribution by means of local networks;                                                                                                                                                                                                                                                                                                                                                                            
|
| |  |  | third parties are allowed to access infrastructure according to
set conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

In order to meet the medium and long-term demand of natural gas in
particular of the Italian market, Eni entered into long-term purchase
contracts with producing countries that currently have a residual average
term of approximately 17 years. Existing contracts, which in general contain
take-or-pay clauses, will ensure a total of about





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##### Table of Contents



66 billion cubic meters of
natural gas per year (Russia 28.5, Algeria 21.5, Netherlands 10 and Norway
6) by 2008. The above quantities are based on the annual contract quantity
of the relevant contract. The average annual minimum quantity is
approximately 85% of said quantities. In order to comply with the above
mentioned regulatory thresholds relating to volumes input to the national
transport network, Eni signed multi-annual contracts with third party
importers to sell natural gas volumes exceeding said thresholds outside of
the Italian territory; in prior years these volumes were imported into Italy
and sold to Italian consumers by Eni. This change in the sale mix is
structural and will adversely affect Enis results of operations. Further,
management expects Enis margins on natural gas in Italy to come under
pressure in future years due to the entry into the market of new competitors
including the above mentioned third parties which purchase natural gas from
Eni outside the Italian territory and resell it to Italian customers.
Finally due to the antitrust threshold on direct sales in Italy, management
expects Enis natural gas sales in Italy to increase at a rate that cannot
exceed the growth rate of natural gas demand in Italy. Management believes
all these developments might have a material adverse impact on Enis results
of operations.

To date Enis natural gas supply contracts have not entailed the
application of take-or-pay clauses. Natural gas imports for the next few
years have been programmed based on the highest flexibility allowed by
longterm supply contracts, assuming that access capacity to the Italian
network will be available in accordance with said flexibility. However, this
assumption may be inconsistent with the current network code as established
by the Authority for Electricity and Gas with decision No. 137 of July 17,
2002, in implementation of article 24, line 5 of Legislative Decree No.
164/2000. Decision No. 137 established priority criteria for the entitlement
of transmission capacity at entry points from international networks into
the domestic network. Entitlement periods can last no longer than five years.
In particular it recognises priority access to take-or-pay contracts entered
into before 1998, within the limit of the average daily contractual
quantity. There is therefore no guaranteed access priority for the whole
contractual flexibility. In fact, take-or-pay contracts entered by Eni
before 1998 envisage Enis right to withdraw daily amounts larger than the
average daily contractual amount; this contractual flexibility provided by
the difference between the maximum daily amount Eni is entitled to and the
average contractual daily amount is used in particular in winter. In the
event of congestion at entry points, natural gas volumes not receiving a
priority are assigned available transmission capacity on a pro-rata basis.
Decision No. 137 establishes a transitional regime according to which for
thermal year 2002-2003 access priority is granted also for two thirds of the
difference between maximum contractual daily amounts and average daily
amounts. For the thermal year 2003-2004, priority will be granted for
only one third of that difference. On November 6, 2002 Eni filed a
claim with the Regional Administrative Court of Lombardia requesting the
annulment of decision No.137/2002 as Eni considers this decision non
consistent with the overall rationale of the European natural gas framework,
especially with reference to Directive 98/30/CE and Legislative Decree No.
164/2000. In case of an unfavourable outcome of this matter, management
believes that Enis results of operations could be negatively affected
should market conditions prevent Eni from selling its whole availability of
natural gas under take-or pay contract obligations. See
»Item 5Management
Expectations of Operations».

On November 21, 2002 the Italian Antitrust Authority concluded the
inquiry started on request of Blugas SpA concerning Enis alleged violation
of competition rules, and acquitted Eni for the specific case of Blugas
(deriving from the fact that in the spring-summer of 2001 Eni partially
accepted Blugass request to access the network) but judged that Eni had
abused of commanding position for having given, with the aim of respecting
binding market thresholds, priority access to Italian purchasers with which
Eni had entered supply contracts with volumes bought out of Italy supplied
at entry points into the Italian network. The Antitrust Authority considers
that these contracts infringe the rationale of article 19 of Legislative
Decree No. 164/2000 which defines the limits for volumes to be input by a
single operator into the national network. Given this infringing behavior
and the lack of clarity of Italian regulations and Enis availability to
increase the transmission capacity of gaslines outside Italy, the Antitrust
Authority imposed on Eni a symbolic fine amounting to euro 1,000 and
requested Eni to submit «a report indicating measures to be taken to
eliminate infringing behaviors with specific attention to the upgrading of
the transmission network or equivalent actions». Eni filed this report on
March 6, 2003. On February 5, 2003 Eni filed a claim with the Regional
Administrative Court of Lazio in Rome requesting the annulment of the
measures taken by the Authority.

Eni cannot predict the final outcome on this matter and future
developments in the more general institutional debate ongoing on the
liberalization of the natural gas market in Italy as confirmed by the joint
official inquiry regarding the Italian gas market started in March 2003 by
the Authority for electricity and gas and the Antitrust Authority with the
aim of acquiring elements and information useful to define actions to
improve competition. Management believes this is an area of concern and
cannot exclude negative impacts on Eni s results of operations in future
years.

Environmental Regulation

Together with other companies in the industries in which it operates,
Eni is subject to numerous EU, national, regional and local environmental
laws and regulations concerning its oil and gas operations, products and
other activities, including legislation that implements international
conventions or protocols. In particular, these laws and regulations require
the acquisition of a permit before drilling for hydrocarbons may commence,
restrict the types, quantities and concentration of various substances that
can be released into the environment in connection with exploration,
drilling and production activities, limit or prohibit drilling activities on
certain protected areas, and impose criminal or civil liabilities for pollution resulting from
oil, natural gas, refining and petrochemicals operations. These laws and
regulations may also restrict air emissions and discharges to surface and
subsurface water resulting from the operation of natural gas processing
plants, petrochemicals plants, refineries, pipeline systems and other
facilities that Eni owns. In addition, Enis operations are subject to laws
and regulations relating to the generation, handling, transportation,
storage, disposal and treatment of waste materials. Environmental laws and
regulations have a substantial impact on Enis operations. Some risk of
environmental costs and liabilities is inherent in particular operations and
products of Eni, as it is with other companies engaged in similar
businesses, and there can be no assurance that material costs and
liabilities will not be incurred. Although Eni, considering the





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actions already taken, the insurance policies to cover environmental risks and the
provisions for risks accrued, does not currently expect any material adverse
effect upon its results of operations and financial position as a result of
its compliance with such laws and regulations, there can be no assurance
that this will be the case due to: (i) the possibility of as yet unknown
contamination; (ii) the results of the on-going surveys and the other
possible effects of Decree No. 471/99 of the Ministry of
Environment (which implements Legislative Decree No. 22/97, the
Ronchi Decree); (iii)
the possible effect of future environmental legislation and rules; (iv) the
effect of possible technological changes relating to future remediation; and
(v) the possibility of litigation and the difficulty of determining Enis
liability, if any, as against other potentially responsible parties with
respect to such litigation and the possible insurance recoveries.

Risks deriving from changes in oil prices and in natural gas, refined
and petrochemical products prices and margins (1)

Operating results in certain of Enis businesses, particularly the
Exploration & Production, Refining & Marketing, Gas & Power and
Petrochemical segments are affected by changes in the price of oil and by
their impact on prices and margins of natural gas and refined and
petrochemical products. Overall, higher oil prices have a net positive
impact on Enis results of operations. The effect of higher oil prices on
Enis average realized price of oil is generally immediate. However Enis
average realized price for oil differs from the price of marker crude Brent
due primarily to the circumstance that Enis production slate, including
also heavy crudes, has a lower API gravity compared with Brent crude (when
processed the latter allows for higher yields of valuable products compared
to heavy crudes, hence higher market price). In addition changes in relative
prices of Brent crude oil and heavy crudes cause changes in the results of
operations of Enis Exploration & Production segment from one year to the
year.

A time lag exists between movements in oil prices and movements in the
prices and margins of natural gas and refined and petrochemical products. In
particular, the prices under natural gas purchase and sale contracts, which
generally are for multiyear terms, are typically updated automatically by
reference to the market prices of certain refined products and oil during a
prior period, and therefore tend to mitigate the impact of changes in oil
prices on Enis operating results. However, since Enis natural gas purchase
and sale contracts are indexed to different refined products and types of
oil, in different proportions and as measured over different reference
periods, and are denominated in different currencies, Enis unit margins for
natural gas may be significantly
affected in the short term by variations in refined product and oil
prices and exchange rates. In secondary distribution of natural gas, despite
the passage of all customers from non eligible to eligible from January 1,
2003, the Authority for Electricity and Gas still establishes reference sale
prices for non eligibile customers in order to allow for a gradual and
regular transition to a free market, in accordance with the provisions of a
Decree of the President of the Council of Ministers of October 31, 2002. In
this segment, sale prices can be affected by Government regulations aimed at
fighting inflation that limit the ability to transfer natural gas purchase
costs onto the final sale price.





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The results of operations of Enis Refining & Marketing segment are
substantially affected by changes in European refining margins which reflect
changes in relative prices of crude oil and refined products. Generally, a
time lag exists between changes in oil prices and movements in refined
products prices. In recent years the latter factor has more markedly
influenced the trends in refining margins.

Enis petrochemical products margins are affected by trends in demand
and changes in oil prices which influence changes in cost of petroleum-based
feedstock. Generally, an increase in oil price determines a decrease in
petrochemical products margins on the short term. Prolonged weakness of
international economy as well as Enis own structural weaknesses have
prevented Enis Petrochemical segment from returning to profitability in
recent years. Due to industry conditions and weak economic growth,
management does not expect any significant improvement in petrochemicals
segment profitability over the foreseeable future.

Weather in Italy and Seasonality.

Significant changes in weather conditions in Italy from year to year
may cause variations in demand for natural gas and some refined products; in
colder years, demand is higher. Accordingly, the results of operations of
the Gas & Power segment and, to a lesser extent, the Refining & Marketing
segment, may be affected by such variations in weather conditions. In
addition, Enis results of operations reflect the seasonality in demand for
natural gas and certain refined products used in residential space heating,
the demand for which is typically highest in the first quarter of the year,
which includes the coldest months, and lowest in the third quarter, which
includes the warmest months.

Exchange Rates.

Movements in the exchange rate of the euro against the U.S. dollar can
have a material impact on Enis results of operations. Prices of oil,
natural gas and refined products generally are denominated in, or linked to,
U.S. dollars, while a significant portion of Enis expenses is denominated
in euro. Similarly, prices of Enis petrochemical products generally are
denominated in, or linked to, euro, whereas expenses in the Petrochemicals
segment are denominated both in euro and U.S. dollars. Accordingly an
appreciation of the U.S. dollar versus the euro generally has a positive
effect on Eni results of operations, and vice-versa.

Interest Rates.

Interest on Enis debt is primarily indexed at a spread to benchmark
rates such as the Europe Interbank Offered Rate, «EURIBOR» and the London
Interbank Offered Rate, «LIBOR». As a consequence, movements in interest
rates can have a material impact on Enis financial expense in respect of
its net borrowings, which amounted to euro 11,141 million at December 31,
2002.





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Uncertainties in Estimates of Oil and Natural Gas Reserves

Numerous uncertainties are inherent in estimating quantities of proved
reserves and in projecting future rates of production and timing of
development expenditures. The accuracy of any reserve estimate is a function
of the quality of available data and engineering and geological
interpretation and judgement. Results of drilling, testing and production
after the date of the estimate may require substantial upward and downward
revision. In addition changes in oil and natural gas prices 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 addition the reserves estimates are subject to revision as prices
fluctuate due to the cost recovery feature under certain Production Sharing
Agreements (PSA). Accordingly, the estimated reserves could be materially
different from the quantities of oil and natural gas that ultimately will be
recovered.





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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 the oil and
gas, electricity generation, petrochemicals, oilfield services and
engineering industries. Eni has operations in about 70 countries and 80,655
employees as of December 31, 2002.

Eni, the former Ente Nazionale Idrocarburi, a public law agency,
established by Law 136 of February 10, 1953, was transformed into a joint
stock company by Law Decree 333 of July 11, 1992 published in the Official
Gazette of the Republic of Italy no. 162 of July 11, 1992 (converted into
law on August 8, 1992, by Law 359, published in the Official Gazette of the
Republic of Italy no. 190 of August 13, 1992). The shareholders meeting of
August 7, 1992 resolved that the company be called Eni SpA. Eni is
registered at the Companies Register of Rome, register tax identification
number 00484960588, VAT number 00905811006, R.E.A. Rome no. 756453. Eni is
expected to remain in existence until December 31, 2100; its duration can
however be extended by resolution of the shareholders.

Enis registered head office is located at Piazzale Enrico Mattei 1, Rome, Italy (telephone number:
+39-0659821). Eni branches are located in:



| |  |  | San Donato Milanese (Milan), Via Emilia, 1;        
| | - |  | ---------------------------------------------------
|
| |  |  | San Donato Milanese (Milan), Piazza Ezio Vanoni, 1;
|
| |  |  | Gela (Sicily), Strada Provinciale, 82.             

Internet address: www.eni.it

Enis principal segments of operations and subsidiaries are described
below.

Agip SpA was merged into Eni SpA effective as of January 1, 1997 to
become Enis Exploration & Production division. Eni conducts its exploration
and production activities through its Exploration & Production division and
certain operating subsidiaries. Enis exploration, development and
production activities commenced in 1926, when Agip was formed by the
Government with a mandate to explore for and develop oil and natural gas.
Exploration & Production operations are principally conducted in Italy,
North Africa, West Africa, the North Sea and the Gulf of Mexico; it also
operates in areas such as Latin America, Australia, the Middle and Far East
and the Caspian Sea where Eni has recently entered. In 2002, Eni produced
1,449,000 BOE/d of hydrocarbons and, at December 31, 2002, it had estimated
proved reserves of 7,030 mmBOE with a life index of 13.2 years. In 2002,
Enis Exploration & Production segment had net sales from operations
(including intersegment sales) of euro 12,877 million and operating income
of euro 5,175 million.

Snam SpA was merged into Eni SpA effective as of February 1, 2002 to
become Enis Gas & Power division. Eni now conducts its natural gas and
electricity generation activities through its Gas & Power division and
certain operating subsidiaries. Eni natural gas supply, transmission and
distribution activities commenced in the 1940s with the commercial sale of
natural gas to industrial users in Northern Italy. In 2002, Enis primary
distribution sales of natural gas totaled 52.56 billion cubic meters in
Italy and 8.2 billion cubic meters in Europe. Primary distribution sales
include sales to wholesalers, mainly local distribution companies, and large
industrial and thermoelectric users which are supplied by a high and medium
pressure gas pipeline network. Enis high and medium pressure gas pipeline
network for primary distribution is about 30,000-kilometres long in Italy,
while outside Italy Eni holds transmission rights on over 3,700 kilometers
of high pressure pipelines. Effective on July 1, 2001 Enis natural gas
transport network in Italy was conferred to Snam Rete Gas SpA. In December
2001 shares representing 40.24% of Snam Rete Gas capital were sold through
an initial public offering with proceeds of euro 2.2 billion. Snam Rete Gas
transports natural gas on behalf of Eni and third parties («shippers»); in
2002 transported volumes were 73.7 billion cubic meters, of which 19 billion
on behalf of third parties. Eni operates directly in retail distribution
(secondary distribution) of natural gas which includes almost
exclusively sales made by local distribution companies to commercial and
residential users through a low pressure gas pipeline network. Eni operates
in secondary distribution in Italy through Italgasthe largest local
distribution company in Italyof wholly owned by Eni following the tender
offer successfully closed in January 2003 and the subsequent squeeze-out of
remaining minority shareholders. Eni also operates in secondary distribution
activities outside Italy in Hungary through





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Tigaz, in Argentina through Distribuidora de Gas Cuyana and in Slovenia
through Adriaplin. In 2002, Enis secondary distribution sales were 7.84
billion cubic meters in Italy and 3.79 billion cubic meters outside Italy.
Enis secondary distribution network in Italy is over 46,000-kilometres long
and over 30,000-kilometres long outside Italy.

Eni conducts its electricity generation activities through Enipower SpA
which owns and manages Enis power stations of Livorno, Taranto, Mantova,
Ravenna and Brindisi with a total installed capacity of 1,000 megawatts and
annual production sold of about 5,000 gigawatthour. Eni owns other minor
power stations located in Enis petrochemical plants and refineries whose
production is mainly for internal consumption. The accounts of these power
stations are reported within Enis Refining & Marketing and Petrochemicals
segment.

In 2002, Enis Gas & Power segment had net sales from operations
(including intersegment sales) of euro 15,297 million and operating income
of euro 3,244 million.

AgipPetroli SpA was merged into Eni SpA effective January 1, 2003 to
become Enis Refining & Marketing division. Eni now conducts its refining
and marketing activities through the Refining & Marketing division and
certain operating subsidiaries. Activities commenced in the 1930s, when Eni
initiated the development of the industrial and retail markets for refined
products in Italy. Enis refining and marketing activities are located
primarily in Italy, Europe and Latin America. Eni has the largest retail
market share of refined products retail in Italy, equal to 37.5% of such
market; its brands are Agip and IP. In 2002, sales of refined products
totaled 52 million tons, of which 33 million in Italy. Enis total
processing capacity of wholly-owned refineries amounted to 504,000 barrels
per day at December 31, 2002. In 2002, Enis Refining & Marketing division
had net sales from operations (including intersegment sales) of euro 21,546
million and operating income of euro 321 million.

Enis petrochemical activities commenced in the 1950s, when it began
production of basic petrochemicals at its Ravenna industrial complex.
Through Polimeri Europa SpA and EniChem SpA (now Syndial SpA) and their
subsidiaries, Eni operates in olefins and aromatics, basic intermediate
products, chlorine derivatives, polyethylene, polystyrenes and elastomers.
Enis petrochemical operations are concentrated in Italy and in Western
Europe. In 2002, Eni sold 6.3 million tons of petrochemical products. In
2002, Enis Petrochemicals segment had net sales from operations (including
intersegment sales) of euro 4,781 million and an operating loss of euro 347
million.

Enis oilfield services and engineering activities commenced in the
late 1950s. Through Saipem SpA (a 43% owned subsidiary) and its
subsidiaries, Eni operates in offshore construction, in particular subsea
pipe laying and floating production systems. Eni owns and operates a fleet
of world class marine service vessels, able to drill wells 10,000 meters
deep in water depths of up to 3,000 meters and to lay pipelines up to 60
inches in diameter in water depths up to 2,150 meters. Through Snamprogetti
SpA (a wholly owned subsidiary) and its subsidiaries Eni is a provider of
engineering and project management services to the oil and petrochemical
industries. In 2002, Enis Oilfield Services and Engineering segment had net
sales from operations (including intersegment sales) of euro 4,546 million
and operating income of euro 298 million.

Strategy

Eni intends to maintain strong hydrocarbon production growth by
developing existing projects and continuing its program of rationalisation
of its mineral asset portfolio aimed at increasing its value by focusing on
strategic areas with sound growth potential and exiting marginal ones. In
gas activities Eni intends to increase sales in European markets and
maintain sale levels in Italy by leveraging on expected natural gas demand
growth, an effective marketing policy and the development of power
generation capacity in its industrial plants.

In the downstream oil segment Eni intends to reposition its activities
by completing the upgrading of its distribution network in Italy and
developing its presence in selected areas in Europe, where it can leverage
on operating synergies and a well established brand.

In oilfield services and engineering activities, Eni intends to
concentrate its presence in the strategic segments of: (i) large projects
for the development of offshore hydrocarbon reserves; (ii) construction of
industrial complexes based on the application technologies for hydrocarbon
production, treatment and transmission as well as the upgrading of natural
gas and heavy crudes.





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At the same time, Eni intends to reduce capital employed in non core
businesses and to integrate its core activities in order to support
international growth by means of integrated projects and improve its
competitive positioning. Management plans to continue improving efficiency
levels working on cost structure and capital expenditure processes.

Strong attention will be devoted to R&D, which management believe to be
the key factor for the future development of the oil industry. Eni intends
to increase financial resources dedicated to this activity; in addition,
management intends to focus resources on those strategic projects through
which Eni believes to achieve competitive advantages in the medium to long
term.

Eni intends to pursue its growth strategy by implementing a four-year
capital expenditure plan of euro 23 billion, about 80% of which in the
Exploration & Production and Gas & Power segments. Management expects cash
flow from operations to satisfy financial requirements related to new
capital expenditure, the payment of dividends and the share buy-back
program, while at the same time leaving enough resources to finance
additional growth options in core activities.

Recent developments

The most significant events in the development of Eni occurred during
2002 and to date in 2003 were the following:



| |  |  | Within its strategy of commercial policy integration and
development of its natural gas segment also at international level,
on November 25, 2002 Eni launched a public tender offer on all
Italgas SpA ordinary shares outstanding not owned directly or
indirectly by Eni, corresponding to approximately 56% of Italgas
share capital. Eni offered a price of euro 13 per share, to be fully
paid in cash. The public offering successfully closed on January 27,
2003 and Italgas shares were withdrawn from listing on the Italian
Stock Exchange effective on February 7, 2003. Following the
squeeze-out of the remaining minority shareholders, Eni now owns
100% of the share capital of Italgas. Total consideration paid
pursuant to the tender offer amounted to approximately euro 2.5
billion;                                                                                                                                                                                                                                                                                                                                        
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In March 2003 Eni completed the purchase of the Norwegian oil
company Fortum Petroleum AS, which in 2002 produced 39 KBOE/d and
held proved reserves of 159 mmBOE as of December 31, 2002. Total
consideration plus financial debt acquired amounted to U.S. dollar
975 million. Management expects this acquisition to increase Enis
hydrocarbon production in Norway in 2003 by approximately 40% from
current level (94 KBOE/d);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  |  | Eni is pursuing a program for the rationalization of its
portfolio of mineral assets aimed at concentrating its activities in
areas with significant growth potential where Eni is the operator:
in 2002 Eni sold 16 interests in fields in the North Sea, Italy and
Qatar, as well as exploration permits and other assets; total
proceeds amounted to euro 390 million. At the same time Eni acquired
interests in operated or partially held assets in Kazakhstan, the
United Kingdom, Norway and Australia for a total consideration of
euro 317 million;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  |  | Within the North Caspian Sea PSA (of which Eni is single
operator with a 16.67% interest) the importance of the Kashagan oil
field discovery in the Kazakh offshore of the Caspian Sea was
confirmed by the appraisal activities performed and underway in the
area. According to the management, this field represents the most
important discovery in the oil industry of the past thirty years;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  |  | In Libya, within the development (of which Eni is operator with
a 50% interest) of the natural gas, oil and condensates fields of
Wafa in the NC-169 A onshore permit and of Bahr Essalam (former
structure C) in the NC-41 offshore permit, EPIC/EPC contracts were
awarded for the construction of hydrocarbon treatment plants, an
offshore production platform and relevant infrastructure. Management
expects production to start in 2004 at Wafa and in 2005 at Bahr
Essalam. Natural gas produced from both fields is planned to be
transmitted to Italy trough an underwater pipeline linking Mellitah
on the Libyan coast to Gela in Sicily. Management expects the laying
of the pipeline to start in the second half of 2003 and transport
operations to start in 2005. Natural gas volumes are projected to
reach 8 billion cubic meters per year (Enis share is 4 billion).
Such volumes have already been booked by operators in the natural
gas sector under long-term supply contracts. Enis share of the
total capital expenditure for the whole project amounts to euro 3.8
billion; of which 3.2 billion for the upstream phase;





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| |  |  | In Angola, in Block 15 (Enis interest 20%) development is
ongoing of the oil fields discovered in the Kizomba area. This
project is going to be carried out in phases. The first one, under
completion, concerns the development of the Hungo and Chocalho
fields; management expects production to start in 2004. For the
purposes of the second phase, concerning the development of the
Kissanje and Dikanza fields expected to start up in 2005, in January
2003 an FPSO vessel with a 250,000 KBBL/d treatment capacity and
storage capacity of 2 million barrels was commissioned. Enis share
of capital expenditure for the two phases amounts to U.S. dollar
1.29 billion;               
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Eni and EnBW (Energie Baden-Württemberg AG, a German operator in
electricity) acquired through a 50/50 German joint venture (EnBW-Eni
Verwaltungsgesellschaft mbH) a 97.81% interest in GVS (Gasversorgung
Süddeutschland GmbH), a regional operator in natural gas
distribution in Germany GVS transports and sells approximately 7
billion cubic meters per year. The joint venture partners financed
the transaction through a capital increase of about euro 178 million
(Eni share is euro 89 million) as well as recourse to financial
markets. The acquisition of GVS marks Enis entrance in a large
natural gas market;                                                                   
|
| |  |  | Within its strategy of international expansion of gas
activities, on March 14, 2003 Eni reached a final agreement with
Spanish company Unión Fenosa SA for the purchase of a 50% interest
in its subsidiary Unión Fenosa Gas. This transaction will be
completed after the granting of authorizations by the relevant
antitrust authorities; management expects Eni to pay euro 440
million as consideration. The transaction when finalised represents
an important step in Enis strategy of international expansion and
will strengthen Enis presence in the Spanish natural gas market,
which management believes to have growth prospects and where Eni
intends to increase its market share;
|
| |  |  | The Blue Stream underwater pipeline linking Russia to Turkey
through the Black Sea for the transportation of natural gas from
Russia to the Turkish market was completed by the end of 2002.
Commercial operations started in February 2003; management plans to
supply the Turkish market with a maximum amount of 16 billion cubic
meters of natural gas per year (Enis share is 8 billion cubic
meters);                                                                                                                                                                                                                                                                                       
|
| |  |  | Eni transferred its Priolo Refinery in Sicily to a newly
established company in which Eni holds a minority stake (20%).
Management plans to reduce progressively Eni refinery intake for
its own account, targeting a reduction of 7.5 million tonnes per
year by year 2006. Accordingly this transaction represents an
important step in Enis strategy of downsizing its refining system,
aimed at better balancing its own production with demand and at
increasing supply flexibility;                                                                                                                                                                                                        
|
| |  |  | Eni continued its program for the restructuring of its
distribution network in Italy, aimed at reaching European standards
in terms of average throughput and services to customers. In 2002,
Eni sold 246 service stations, closed down 549 service stations and
upgraded its main network by building and purchasing about 150 owned
and leased service stations. Average throughput in Italy increased
by 3.9%. In 2003, management plans to sell further 330 service
stations following agreements already finalized;                                                                                                                                                                          
|
| |  |  | Eni, through its subsidiary Saipem, purchased 100% of share
capital of Bouygues Offshore through a public tender offer. Saipem
offered a price of euro 60.08 per share, to be fully paid in cash.
Total consideration amounted to euro 906 million (net of cash
acquired for euro 100 million). The combination of Saipems
construction capabilities supported by technologically advanced
vessels and Bouygues Offshores engineering and project management
expertise will strengthen Enis competitive position in the segment
of large EPIC projects for the development of hydrocarbon fields.                                                                                               

In 2002 Eni invested about euro 8 billion in new capital expenditure
and financial investments. Capital expenditure (euro 6.6 billion) referred
principally to the development of hydrocarbons reserves and exploration
expenditure, the development and upgrade of Enis natural gas transport
system, the expansion of power generation capacity, the maintenance of
refineries as well as the upgrading of Enis network of service stations.
Financial investments (euro 1.4 billion) referred in particular to the
acquisition of 100% of Bouygues Offshore.

In 2001 Eni invested about euro 11.3 billion in new capital expenditure
and financial investments. Capital expenditures (euro 6.6 billion) referred
principally to the development of hydrocarbons reserves and exploration
expenditure, the development and upgrade of Enis natural gas transport
system, the maintenance of refineries and petrochemicals plants as well as
the upgrading of Enis network of service stations. Financial investments
(euro 4.7 billion, including net borrowings) referred in particular to the
completion of the
acquisition of Lasmo for a total of euro 4,128 million (including net
borrowings for about euro 970 million)





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and the purchase of 50% of Polimeri Europa  the remaining 50% already
owned by Eni  (euro 204 million). Main divestment occurred in 2001
concerned: (i) 40.24% of share capital of Snam Rete Gas, a company
indirectly wholly-owned by Eni, through means of an initial public offering
and a private placement to foreign professional and institutional investors.
The offering price was set at euro 2.8 per share with. Total consideration
from the offering amounted to euro 2.2 billion in cash; (ii) 100% of share
capital of Immobiliare Metanopoli, a wholly owned Enis subsidiary, as well
as other Enis real estate for total consideration of euro 754 million in
cash; (iii) the polyurethane business to Dow Chemical for a consideration of
euro 428 million, of which euro 128 million in cash, euro 204 million
corresponding to a 50% interest in Polimeri Europa (of which Eni already
owns 50%) and euro 96 million of royalty rights for the use of Dow
proprietary technology.

In 2000, Eni invested about euro 9.8 billion in new capital
expenditures and financial investments. Capital expenditure in 2000 (euro
5.4 billion) referred principally to the development of hydrocarbon
reserves, exploration expenditure, the acquisition of proved and unproved
reserves of hydrocarbons, the development and upgrade of Enis natural gas
transport system, the maintenance of refineries and petrochemicals plants as
well as the upgrading of Enis network of service stations. Financial
investments (euro 4.4 billion, including net borrowings) referred in
particular to the purchase of 28% of the share capital of Lasmo Plc as a
result of a Public Offering launched by Eni on December 31, 2000 (euro 1,225
million), the acquisition of British-Borneo for euro 1,263 million (847 are
net borrowings) and of 33.34% of Galp (euro 964 million).




BUSINESS OVERVIEW




Exploration & Production

Eni operates in the exploration and production of hydrocarbons in
Italy, North Africa, West Africa, the North Sea and the Gulf of Mexico. It
also operates in areas with great development potential such as Latin
America, Australia, the Middle and Far East and the Caspian Sea.

In 2002, Enis Exploration & Production segment had net sales from
operations (including intersegment sales) of euro 12,877 million and
operating income of euro 5,175 million.

Eni is pursuing an aggressive production growth strategy aimed at
achieving a daily production target in excess of 1.8 million boe by 2006,
which corresponds to an annual increase of approximately 6% over the next
four years. Management plans to increase production by developing in areas
where Eni has a consolidated presence and through the start-up of important
projects in Libya, the deep offshore of West Africa, Iran and Kazakhstan.
Eni intends to continue the rationalization of its asset portfolio, started
after the purchase of British-Borneo Plc and Lasmo Plc, in order to increase
its value by focusing on strategic areas with the highest growth potential
and exiting marginal areas with limited growth prospects. Management plans
to concentrate exploration expenditure in areas with high mineral potential,
capable of providing the highest returns. In 2002, beside the successful
continuation of exploration activities in the Caspian Sea, Eni made
discoveries in Italy, Egypt, Angola and Nigeria. Eni will continue to
improve its performance by searching for operating solutions aimed at
reducing operating costs and increasing synergies.

Oil and Natural Gas Reserves

Enis proved reserves of hydrocarbons at December 31, 2002 totaled
7,030 mmBOE (oil and condensates 3,783 mmBBL; natural gas 18,629 BCF),
increasing by 101 million boe over 2001, due to: (i) new discoveries and
extensions (338 mmBOE), in particular in Nigeria, Kazakhstan, Australia and
Italy; (ii) revisions of previous estimates (337 mmBOE), in particular in
Kazakhstan, Angola and Nigeria; (iii) acquisitions (39 mmBOE), in particular
interests in fields in the British and Norwegian sections of the North Sea
and Australia; (iv) improved recovery (15 mmBOE) in particular in Algeria.
Increases in proved reserves were offset in part by production for the year
and the sale of interests in fields in Italy, Qatar and the British section
of the North Sea (96 mmBOE). The increase in proved reserves allowed to
replace 119% of production; this average was 129% without taking into
account the effect of rationalizations. The average reserve life index is
13.2 years (13.7 in 2001).





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##### Table of Contents



Proved developed reserves at December 31, 2002, amounted to 3,703 mmBOE
(2,241 mmBBL of oil and condensates and 8,354 BCF of natural gas)
representing 53% of total estimated proved reserves (54% and 50% at December
31, 2001 and 2000, respectively).

The table below sets forth a geographical breakdown of Enis estimated
proved reserves of hydrocarbons, on a barrel of oil equivalent basis, for
the periods indicated.

|              |  |                         |       |          |  |      |       |      |  |      |       |  |  |  |       |  |  |  |       | 
|------------- |  | ----------------------- | ----- | -------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  |  | ----- |  |  |  | ----- | 
|              |  | Year ended December 31,
|              |  |                        
|              |  | 1998                    |       | 1999 (1) |  | 2000 |       | 2001 |  | 2002
|              |  |                         |       |          |  |      |       |      |  |     
|              |  | (mmBOE)                
|Italy         |  |                         | 1,574 |          |  |      | 1,477 |      |  |      | 1,389 |  |  |  | 1,315 |  |  |  | 1,199 | 
|North Africa  |  |                         | 1,686 |          |  |      | 1,849 |      |  |      | 1,929 |  |  |  | 2,122 |  |  |  | 2,033 | 
|West Africa   |  |                         | 910   |          |  |      | 1,067 |      |  |      | 1,093 |  |  |  | 1,136 |  |  |  | 1,287 | 
|North Sea     |  |                         | 666   |          |  |      | 646   |      |  |      | 700   |  |  |  | 879   |  |  |  | 825   | 
|Rest of World |  |                         | 419   |          |  |      | 495   |      |  |      | 897   |  |  |  | 1,477 |  |  |  | 1,686 | 
|              |  |                         |       |          |  |      |       |      |  |      |       |  |  |  |       |  |  |  |       | 
|Total         |  |                         | 5,255 |          |  |      | 5,534 |      |  |      | 6,008 |  |  |  | 6,929 |  |  |  | 7,030 | 
|              |  |                         |       |          |  |      |       |      |  |      |       |  |  |  |       |  |  |  |       | 



---

|(1) |  | Eni is a party to certain Production Sharing Agreements (PSAs) whereby
a portion of Enis share of oil and gas production is withheld and sold
by its joint-venture partners which are state-owned entities, with
proceeds being remitted to the state in satisfaction of Enis
PSA-related tax liabilities. Revenue and income taxes include such
taxes owed by Eni but paid by state-owned entities out of Enis share
of oil and gas production. Without this specific provision in its PSAs,
Eni would otherwise be entitled to the sale proceeds of this portion of
oil and gas production withheld. Starting in 1999, in order to be
consistent with international practices, Eni began classifying the tax
oil withheld directly by its joint-venture partners which are
State-owned entities as an increase of revenues and income taxes (in
prior years such taxes were settled against revenues with respect to
such Agreements). This had the effect of increasing revenues and income
taxes by euro 203 million in 1999, as well as oil and gas reserves.
Prior year amounts have not been reclassified since the effect of this
change on net income is not significant. The application of this new
presentation resulted in an increase of 46,000 boe/day (41,000
barrels/day of oil; 29 mmCF/d of natural gas) in hydrocarbon production
and of 398 million boe in proved reserves (222 million barrels of oil;
1,021 BCF of natural gas) in 1999.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For additional information regarding Enis estimated proved reserves
and proved developed reserves of crude oil and natural gas, see the
unaudited supplemental oil and gas information on pages F-66 to F-73.

Exploration and Development

As of December 31, 2002, Enis portfolio of mineral rights consisted of
1,161 exclusive or shared rights for exploration and development in 37
countries on five continents, for a total net acreage of 281,682 square
kilometers (317,283 at December 31, 2001). Of these, 41,578 square
kilometers concerned production and development (41,841 at December 31,
2001). Net acreage decreased in Italy by 5,333 square kilometers, due to
releases, and outside Italy by 30,268 square kilometers, due to releases in
particular in Brazil, Pakistan, Egypt, Algeria and Guyana, and sales of
mineral rights in Italy and Qatar. Increases were registered in Australia,
Norway and Indonesia.

A total of 120 new exploratory wells were drilled (52 of which
represented Enis share), as compared to 110 exploratory wells completed in
2001 (47 of which represented Enis share).

Overall success rate was 38.6% (39.1% of which represented Enis share)
as compared to 36.5% (31.3% of which represented Enis share) in 2001.

Exploration expenditure amounted to euro 902 million, of which 93%
outside Italy, with a 19.2% increase over 2001. Outside Italy exploration
concerned mainly the United States, Kazakhstan, Egypt, Angola, Russia and
Brazil; in Italy mainly the deep waters of the Sicily Channel and areas in
central-southern Italy.

Capital expenditure for the purchase of mineral rights (euro 317
million) concerned primarily the purchase of: (i) a 2.39% interest in the
North Caspian Sea PSA, where the Kashagan field is located (Eni is the
single operator with a 16.67% interest in the PSA after the purchase) in
Kazakhstan; (ii) a 5.6% interest in the Bayu Undan field (Enis interest
12.32% after the purchase) in Australia; (iii) an 11.3% interest in the T-
Block fields (Eni is operator with an 88.7% share after the purchase)
in the British section of the North Sea;





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##### Table of Contents



(iv) a 7.9% interest in the Mikkel field in Norway; (v) an 8.9%
interest in the Liverpool Bay fields (Enis interest is 53.9% after the
purchase) in the Irish Sea.

Expenditure for development and capital goods totaled euro 4,396
million, of which 89% outside Italy, an increase of 27.3% over 2001.
Development expenditure outside Italy concerned fields in Nigeria, Iran,
Libya, Kazakhstan, Angola, Venezuela and the United Kingdom. Development
expenditure in Italy referred in particular to the continuation of
construction of plant and infrastructure in the Val dAgri. Total capital
expenditure in 2002 amounted to euro 5,615 million, increasing by euro 1,339
million over 2001, up 31.3%.

Production

The matters regarding future production, additions to reserves and
related production costs and estimated reserves discussed below and
elsewhere herein are forward-looking statements that involve risks and
uncertainties that could cause the actual results to differ materially from
those in such forward-looking statements. Such risks and uncertainties
relating to future production and additions to reserves include political
developments affecting the award of exploration or production interests or
world supply and prices for oil and natural gas, or changes in the
underlying economics of certain of Enis important hydrocarbons projects.
Such risks and uncertainties relating to future production costs include
delays or unexpected costs incurred in Enis production operations.

In 2002 hydrocarbon production amounted to 1,449 KBOE/d (oil and
condensates 921 KBBL/d; natural gas 3,015 mmCF/d) increasing by 96 KBOE/d
over 2001, up 7.1%, despite the 26 KBOE/d effect of production cuts decided
by OPEC and the 8 KBOE/d effect of the rationalization of Enis mineral
rights portfolio. The production increase was due to: (i) start-up of fields
mainly in Algeria, the United States, Nigeria, Iran, Trinidad & Tobago and
Pakistan; (ii) production increases recorded mainly in Algeria, Kazakhstan,
the United States, Egypt, Norway, the United Kingdom, Italy and Congo. These
increases were partly offset by the production decline of mature gas fields
in Italy. The share of production outside Italy reached 78.5% (77.5% in
2001).

Daily production of oil and condensates (921 KBBL/d) increased by 64
KBBL/d, up 7.5%, due to increases registered outside Italy (up 80 KBBL/d) in
particular in: (i) Algeria, due to the start-up of the HBNSE/BKNE/RBK fields
(Enis interest 12.25%) and the reaching of full production at the HBN field
(Enis interest 34.63%); (ii) Kazakhstan, due to the fact that in the third
quarter of 2001 production at the Karachaganak field (co-operated by Eni
with a 32.5% interest) was suspended due to a fiscal dispute between Russia
and Kazakhstan; (iii) Congo due to the start-up of the Foukanda and Mwafi
fields (Eni is operator with a 65% interest) in the second half of 2001;
(iv) the United Kingdom, due to the full operation of the Elgin/Franklin
fields (Enis interest 21.87%). In Italy production increased by 17 KBBL/d
due to the reaching of full operation of the Monte Alpi pipeline which
transports oil produced in the Val dAgri fields to Enis refinery in
Taranto. These increases were partly offset by a 33 KBBL/d reduction outside
Italy due mainly to production cuts decided by OPEC.

Production of natural gas (3,015 mmCF/d) increased by 188 mmCF/d, up
6.7%, due to increases registered outside Italy (up 241 mmCF/d), in
particular in Egypt, the United States (in connection with the start-up of
the King Kong/Yosemite field  Enis interest 50%), Kazakhstan (due to the
reasons mentioned above), the United Kingdom and Norway. These increases
were offset in part by the production decline of mature fields (down 53
mmCF/d) in Italy, in particular the Porto Garibaldi/Agostino and Luna
fields.

Hydrocarbon production sold amounted to 523.1 million boe. The 5.8
million boe decrease over production was due essentially to lower
withdrawals with respect to entitlements outside Italy (3.4 million boe) and
to production volumes of natural gas input to storage (1.8 million boe).
About 75% of oil and condensate production sold (333.4 million barrels) was
transferred to the Refining & Marketing division (68% in 2001). About 44% of
natural gas production sold (30.68 billion cubic meters) was transferred to
the Gas & Power division (47% in 2001).

The tables below set forth Enis production(1) of oil and condensates
and natural gas for the periods indicated.





---



##### Table of Contents



Production of oil and condensates

|                              |  |                         |     |      |  |      |     |      |  |          |     |  |  |  |     |  |  |  |     | 
|----------------------------- |  | ----------------------- | --- | ---- |  | ---- | --- | ---- |  | -------- | --- |  |  |  | --- |  |  |  | --- | 
|                              |  | Year ended December 31,
|                              |  |                        
|                              |  | 1998                    |     | 1999 |  | 2000 |     | 2001 |  | 2002    
|                              |  |                         |     |      |  |      |     |      |  |         
|                              |  |                         |     |      |  |      |     |      |  | (KBBL/d) |     |  |  |  |     |  |  | 
|Crude Oil and
Condensates (2) |  |                         |     |      |  |      |     |      |  |          |     |  |  |  |     |  |  |  |     | 
|Italy                         |  |                         | 100 |      |  |      | 88  |      |  |          | 76  |  |  |  | 69  |  |  |  | 86  | 
|North Africa                  |  |                         | 213 |      |  |      | 221 |      |  |          | 227 |  |  |  | 228 |  |  |  | 252 | 
|West Africa                   |  |                         | 194 |      |  |      | 202 |      |  |          | 213 |  |  |  | 219 |  |  |  | 222 | 
|North Sea                     |  |                         | 112 |      |  |      | 116 |      |  |          | 124 |  |  |  | 204 |  |  |  | 213 | 
|Rest of the World             |  |                         | 34  |      |  |      | 47  |      |  |          | 108 |  |  |  | 137 |  |  |  | 148 | 
|Total                         |  |                         | 653 |      |  |      | 674 |      |  |          | 748 |  |  |  | 857 |  |  |  | 921 | 

Natural gas production available for sale

|                    |  |                         |       |      |  |      |       |      |  |          |       |  |  |  |       |  |  |  |       | 
|------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- | ---- |  | -------- | ----- |  |  |  | ----- |  |  |  | ----- | 
|                    |  | Year ended December 31,
|                    |  |                        
|                    |  | 1998                    |       | 1999 |  | 2000 |       | 2001 |  | 2002    
|                    |  |                         |       |      |  |      |       |      |  |         
|                    |  |                         |       |      |  |      |       |      |  | (mmCF/d) |       |  |  |  |       |  |  | 
|Natural Gas (2) (3) |  |                         |       |      |  |      |       |      |  |          |       |  |  |  |       |  |  |  |       | 
|Italy               |  |                         | 1,648 |      |  |      | 1,511 |      |  |          | 1,438 |  |  |  | 1,313 |  |  |  | 1,260 | 
|North Africa        |  |                         | 132   |      |  |      | 278   |      |  |          | 454   |  |  |  | 497   |  |  |  | 560   | 
|West Africa         |  |                         | 14    |      |  |      | 21    |      |  |          | 67    |  |  |  | 82    |  |  |  | 87    | 
|North Sea           |  |                         | 254   |      |  |      | 222   |      |  |          | 258   |  |  |  | 450   |  |  |  | 516   | 
|Rest of the World   |  |                         | 128   |      |  |      | 177   |      |  |          | 276   |  |  |  | 485   |  |  |  | 592   | 
|Total               |  |                         | 2,176 |      |  |      | 2,209 |      |  |          | 2,493 |  |  |  | 2,827 |  |  |  | 3,015 | 



---

|(1) |  | Production information set forth above differs from production as
reported in the reserve tables in Note 29 to the Consolidated Financial
Statements  Supplemental oil and gas information (unaudited) because
yearly production presented in such reserve tables is based on
estimates taken in November of each year and the information above sets
forth actual production during the year. Furthermore, Enis production
of natural gas reported in such reserve tables includes, in addition to
sold production, production volumes of natural gas consumed in
operations. Natural gas produced and reinjected into storage fields in
Italy remains part of Enis reserves for each period.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | For 1999 data see note 1 on page 13.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(3) |  | Natural gas production consumed in operations in countries where an
alternative market exists is excluded from production. The effect was
of 94 mmCF/d and 132 mmCF/d in 2001 and 2002, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Storage

Enis storage system in Italy is made up of a number of depleted fields
used for the purposes of supply modulation in accordance with seasonal
swings in demand (natural gas is stored in the summer and used in the
winter), strategic reserve and mineral storage to ensure supply and to
support domestic production. The present storage system is made up of 9
fields, 8 of which are located in northern Italy (one of them is not yet
operational) and one in central Italy, on the basis of nine storage
concessions vested by the Minister of Productive Activities.

As provided for by article 21 of Legislative Decree No. 164/2000, which
imposed the separation of storage activities from natural gas production and
sale activities, on October 31, 2001 Eni SpA and Snam SpA contributed their
storage business units to Stoccaggi Gas Italia SpA, a company established
for this purpose in
November 2000 and wholly owned by Eni SpA. This contribution concerned,
among other assets, 749 BCF of natural gas, of which 378 BCF of so called
working gas, that can be withdrawn without prejudice to general field
performance, and 371 BCF representing the so called cushion gas necessary
for allowing working gas volumes to be withdrawn.

On February 27, 2002 the Italian Authority for Electricity and Gas (the
«Authority») issued decision No. 26 containing the criteria for the
determination of tariffs of natural gas storage for the first regulated
period (from April 1, 2002 to March 31, 2006) and, retroactively, from June
21, 2000. With reference to these criteria, on March 18, 2002 Stoccaggi Gas
Italia presented its suggested tariffs for supply modulation, mineral and
strategic storage services for the first regulatory period. The Authority
rejected Stoccaggi Gas Italias





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##### Table of Contents



proposal and, in order to enact its decision No. 26, set storage
tariffs for the thermal year 2002-2003 with its decision No. 49 of March 26,
2002. Stoccaggi Gas Italia currently applies the tariffs set by the
Authority, and appealed both Authority decisions against the Regional
Administrative Court of Lombardia in order to seek their repeal. The
proceeding is still pending.

In 2002, following optimization measures on existing fields that
increased capacity by 13% (from 6.3 to 7.1 billion cubic meters), higher
storage volumes have been made available for modulation services.

The table below sets forth certain information and operating data
regarding Enis principal oil and natural gas interests at and for the year
ended December 31, 2002.

|                  |  |               |      |           |  |            |     |                |  |        |        |           |  |                  |   |                |     |            |     |             |     |            |     |     |     |  |     |  |       |           |     |  |      |            |      | 
|----------------- |  | ------------- | ---- | --------- |  | ---------- | --- | -------------- |  | ------ | ------ | --------- |  | ---------------- | - | -------------- | --- | ---------- | --- | ----------- | --- | ---------- | --- | --- | --- |  | --- |  | ----- | --------- | --- |  | ---- | ---------- | ---- | 
|                  |  |               |      |           |  |            |     |                |  |        |        |           |  |                  |   |                |     |            |     |             |     |            |     |     |     |  |     |  |       |           |     |  |      | % of
Enis
|                  |  |               |      |           |  |            |     |                |  |        |        |           |  |                  |   |                |     | Number     |     | Number      |     |            |     |     |     |  |     |  |       | Total Oil
|                  |  |               |      |           |  | Number     |     |                |  |        |        |           |  |                  |   | of             |     | of         |     | Production  |     | Production |     | and
|                  |  | Commencement  |      | of        |  | Net        |     |                |  |        |        | producing |  | other            |   | of             |     | of         |     | Natural Gas
|                  |  | of operations |      | interests |  | acreage(1) |     | Type of fields |  | fields |        | fields(2) |  | Crude Oil(3)     |   | Natural Gas(4) |     | Production
|                  |  |               |      |           |  |            |     |                |  |        |        |           |  |                  |   |                |     |           
|Italy             |  |               | 1926 |           |  |            | 280 |                |  |        | 43,961 |           |  | Onshore/Offshore |   |                | 97  |            |     |             | 85  |            |     |     | 86  |  |     |  | 1,260 |           |     |  | 21.5 |           
|North Africa      |  |               |      |           |  |            |     |                |  |        |        |           |  |                  |   |                |     |            |     |             |     |            |     |     |     |  |     |  |       |           |     |  |      |            |      | 
|Algeria           |  |               | 1981 |           |  |            | 27  |                |  |        | 6,527  |           |  | Onshore          |   |                | 13  |            |     |             | 15  |            |     |     | 65  |  |     |  |      |           |     |  | 4.5  |           
|Egypt             |  |               | 1954 |           |  |            | 38  |                |  |        | 28,305 |           |  | Onshore/Offshore |   |                | 34  |            |     |             | 24  |            |     |     | 97  |  |     |  | 547   |           |     |  | 13.2 |           
|Libya             |  |               | 1959 |           |  |            | 7   |                |  |        | 21,268 |           |  | Onshore/Offshore |   |                | 8   |            |     |             | 10  |            |     |     | 79  |  |     |  |      |           |     |  | 5.5  |           
|Tunisia           |  |               | 1961 |           |  |            | 11  |                |  |        | 3,451  |           |  | Onshore/Offshore |   |                | 7   |            |     |             | 5   |            |     |     | 11  |  |     |  | 13    |           |     |  | 1.0  |           
|                  |  |               |      |           |  |            | 83  |                |  |        | 59,551 |           |  |                  |   |                |     |            | 62  |             |     |            | 54  |     |     |  | 252 |  |       |           | 560 |  |      |            | 24.1 | 
|West Africa       |  |               |      |           |  |            |     |                |  |        |        |           |  |                  |   |                |     |            |     |             |     |            |     |     |     |  |     |  |       |           |     |  |      |            |      | 
|Angola            |  |               | 1980 |           |  |            | 37  |                |  |        | 4,157  |           |  | Offshore         |   |                | 34  |            |     |             | 32  |            |     |     | 62  |  |     |  |      |           |     |  | 4.3  |           
|Congo             |  |               | 1968 |           |  |            | 17  |                |  |        | 7,507  |           |  | Offshore         |   |                | 16  |            |     |             | 8   |            |     |     | 75  |  |     |  |      |           |     |  | 5.2  |           
|Gabon             |  |               | 1981 |           |  |            | 4   |                |  |        | 11,297 |           |  | Offshore         |   |                | 1   |            |     |             |    |            |     |     | 2   |  |     |  |      |           |     |  | 0.1  |           
|Nigeria           |  |               | 1962 |           |  |            | 55  |                |  |        | 8,385  |           |  | Onshore/Offshore |   |                | 118 |            |     |             | 130 |            |     |     | 83  |  |     |  | 87    |           |     |  | 6.8  |           
|                  |  |               |      |           |  |            | 113 |                |  |        | 31,346 |           |  |                  |   |                |     |            | 169 |             |     |            | 170 |     |     |  | 222 |  |       |           | 87  |  |      |            | 16.4 | 
|North Sea         |  |               |      |           |  |            |     |                |  |        |        |           |  |                  |   |                |     |            |     |             |     |            |     |     |     |  |     |  |       |           |     |  |      |            |      | 
|Norway            |  |               | 1964 |           |  |            | 30  |                |  |        | 2,768  |           |  | Offshore         |   |                | 8   |            |     |             | 10  |            |     |     | 74  |  |     |  | 108   |           |     |  | 6.3  |           
|The Netherlands   |  |               | 2001 |           |  |            | 1   |                |  |        | 22     |           |  | Offshore         |   |                | 2   |            |     |             |    |            |     |     |    |  |     |  | 9     |           |     |  | 0.1  |           
|United Kingdom    |  |               | 1964 |           |  |            | 81  |                |  |        | 3,445  |           |  | Offshore         |   |                | 46  |            |     |             | 25  |            |     |     | 139 |  |     |  | 399   |           |     |  | 14.4 |           
|                  |  |               |      |           |  |            | 112 |                |  |        | 6,235  |           |  |                  |   |                |     |            | 56  |             |     |            | 35  |     |     |  | 213 |  |       |           | 516 |  |      |            | 20.8 | 
|Rest of World     |  |               |      |           |  |            |     |                |  |        |        |           |  |                  |   |                |     |            |     |             |     |            |     |     |     |  |     |  |       |           |     |  |      |            |      | 
|China             |  |               | 1983 |           |  |            | 4   |                |  |        | 7,327  |           |  | Onshore/Offshore |   |                | 6   |            |     |             | 6   |            |     |     | 10  |  |     |  |      |           |     |  | 0.7  |           
|Croatia           |  |               | 1996 |           |  |            | 2   |                |  |        | 3,018  |           |  | Offshore         |   |                | 1   |            |     |             | 6   |            |     |     |    |  |     |  | 32    |           |     |  | 0.3  |           
|Ecuador           |  |               | 1988 |           |  |            | 1   |                |  |        | 2,000  |           |  | Onshore          |   |                | 1   |            |     |             | 1   |            |     |     | 22  |  |     |  |      |           |     |  | 1.5  |           
|Indonesia         |  |               | 2001 |           |  |            | 9   |                |  |        | 15,187 |           |  | Onshore/Offshore |   |                | 8   |            |     |             | 9   |            |     |     | 5   |  |     |  | 191   |           |     |  | 2.6  |           
|Iran              |  |               | 1957 |           |  |            | 4   |                |  |        | 423    |           |  | Onshore/Offshore |   |                | 1   |            |     |             | 3   |            |     |     | 3   |  |     |  |      |           |     |  | 0.2  |           
|Kazakhstan        |  |               | 1995 |           |  |            | 2   |                |  |        | 1,030  |           |  | Onshore/Offshore |   |                | 1   |            |     |             | 1   |            |     |     | 32  |  |     |  | 147   |           |     |  | 4.0  |           
|Pakistan          |  |               | 2000 |           |  |            | 11  |                |  |        | 8,193  |           |  | Onshore          |   |                | 3   |            |     |             | 4   |            |     |     |    |  |     |  | 40    |           |     |  | 0.5  |           
|Qatar (5)         |  |               | 1992 |           |  |            |    |                |  |        |       |           |  |                  |  |                |     |            |    |             |     |            |    |     |     |  | 5   |  |       |           |    |  |      |            | 0.3  | 
|Trinidad
&
Tobago |  |               | 1970 |           |  |            | 2   |                |  |        | 621    |           |  | Offshore         |   |                | 1   |            |     |             | 3   |            |     |     |    |  |     |  | 13    |           |     |  | 0.1  |           
|United States     |  |               | 1968 |           |  |            | 488 |                |  |        | 3,196  |           |  | Offshore         |   |                | 15  |            |     |             | 5   |            |     |     | 29  |  |     |  | 169   |           |     |  | 4.0  |           





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##### Table of Contents



|                                               |  |               |      |           |  |            |       |                |  |        |         |           |  |                  |  |                |   |            |     |             |   |            |     |     |    |  |     |  |   |           |       |  |     |            |       | 
|---------------------------------------------- |  | ------------- | ---- | --------- |  | ---------- | ----- | -------------- |  | ------ | ------- | --------- |  | ---------------- |  | -------------- | - | ---------- | --- | ----------- | - | ---------- | --- | --- | -- |  | --- |  | - | --------- | ----- |  | --- | ---------- | ----- | 
|                                               |  |               |      |           |  |            |       |                |  |        |         |           |  |                  |  |                |   |            |     |             |   |            |     |     |    |  |     |  |   |           |       |  |     | % of Enis
|                                               |  |               |      |           |  |            |       |                |  |        |         |           |  |                  |  |                |   | Number     |     | Number      |   |            |     |     |    |  |     |  |   | Total Oil
|                                               |  |               |      |           |  | Number     |       |                |  |        |         |           |  |                  |  | of             |   | of         |     | Production  |   | Production |     | and
|                                               |  | Commencement  |      | of        |  | Net        |       |                |  |        |         | producing |  | other            |  | of             |   | of         |     | Natural Gas
|                                               |  | of operations |      | interests |  | acreage(1) |       | Type of fields |  | fields |         | fields(2) |  | Crude Oil(3)     |  | Natural Gas(4) |   | Production
|                                               |  |               |      |           |  |            |       |                |  |        |         |           |  |                  |  |                |   |           
|Venezuela                                      |  |               | 1998 |           |  |            | 2     |                |  |        | 630     |           |  | Onshore/Offshore |  |                | 6 |            |     |             | 1 |            |     |     | 42 |  |     |  |  |           |       |  | 2.9 |           
|                                               |  |               |      |           |  |            | 525   |                |  |        | 41,625  |           |  |                  |  |                |   |            | 43  |             |   |            | 39  |     |    |  | 148 |  |   |           | 592   |  |     |            | 17.3  | 
|Other countries with
only exploration
activity |  |               |      |           |  |            | 48    |                |  |        | 98,964  |           |  |                  |  |                |   |            |    |             |   |            | 6   |     |    |  |    |  |   |           |      |  |     |            |      | 
|Outside Italy                                  |  |               |      |           |  |            | 881   |                |  |        | 237,721 |           |  |                  |  |                |   |            | 330 |             |   |            | 304 |     |    |  | 835 |  |   |           | 1,755 |  |     |            | 78.5  | 
|                                               |  |               |      |           |  |            |       |                |  |        |         |           |  |                  |  |                |   |            |     |             |   |            |     |     |    |  |     |  |   |           |       |  |     |            |       | 
|Total                                          |  |               |      |           |  |            | 1,161 |                |  |        | 281,682 |           |  |                  |  |                |   |            | 427 |             |   |            | 389 |     |    |  | 921 |  |   |           | 3,015 |  |     |            | 100.0 | 
|                                               |  |               |      |           |  |            |       |                |  |        |         |           |  |                  |  |                |   |            |     |             |   |            |     |     |    |  |     |  |   |           |       |  |     |            |       | 



---

|(1) |  | Square kilometers.                                  
|--- |  | ----------------------------------------------------
|   
|(2) |  | Includes non producing fields.                      
|   
|(3) |  | KBBL/d Includes condensates and natural gas liquids.
|   
|(4) |  | mmCF/d.                                             
|   
|(5) |  | Assets in Qatar were sold effective from May 2002.  

Enis principal regions of operations are described below.

Italy

In 2002, Enis hydrocarbon production in Italy totaled 311,000 boe/day
and represented 21.5% of Enis total production. Enis exploration and
development interests in Italy are concentrated in the Po Valley, the
Adriatic Sea, the Central Southern Apennines, Sicily and the Sicilian
offshore.

Production of oil in Italy totaled 86 KBBL/d. Enis three major fields,
Val dAgri in Southern Italy, Villafortuna in the Po Valley and Aquila in
the southern Adriatic offshore, represented 72% of Enis total production in
Italy. In particular, the Val dAgri fields increased production from 12,000
barrels/day in 2001 to 37,000 in 2002, with a share of total production
increasing from 18.6% in 2001 to 42.6% in 2002, due to the entry into full
service of the Monte Alpi pipeline which carries oil from the Viggiano oil
center to Enis Taranto refinery. Other oil fields are Rospo in the Adriatic
Sea, Vega offshore southern Sicily, Gela and Ragusa in Sicily.

Natural gas production totaled 1,26 mmCF/d and represented
approximately 73% of Enis hydrocarbon production in Italy. Enis principal
natural gas fields are located in the Adriatic Sea (Barbara, Porto
Garibaldi/Agostino, Angela/Angelina, Cervia/Arianna and Bonaccia which
collectively accounted for 47% of Enis natural gas production in Italy) and
in the Ionian Sea (Luna, which accounted for 8.6%). In 2002 in the Adriatic
offshore, the Calipso gas field started production with an output of
approximately 4,000 boe/day.

Within its asset rationalization program, Eni sold its 25% interest in
the Gorgoglione concession in Basilicata, where the Tempa Rossa field is
located. The achievement of full production of the Val dAgri fields and the
development of the recent oil discoveries at Miglianico in the central
Apennines and of the Panda gas well in the deep offshore of Sicily will
partly offset declines of mature gas fields.

The achievement of full production of the Val dAgri fields and the
development of the recent oil discoveries at Miglianico in the central
Apennines and of the Panda gas well in the deep offshore of Sicily will
partly offset declines of mature gas fields.

With regards to the Alto Adriatico Project, which contemplated the
joint development of 15 offshore natural gas fields with proved reserves of
953 BCF, on December 3, 1999, the Ministry of the Environment, in
agreement with the Veneto Region, issued a decree prohibiting the
production of liquid or gaseous hydrocarbons in an area within 12 nautical
miles from the coastline. The decree defined also the conditions for
granting authorizations to exploit fields located beyond 12 nautical miles,
from the test phase until the final exploitation phase. After the issue of
this decree, natural gas reserves were reduced by the amount of proved





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reserves relating to the fields within the set limit (191 BCF), and the
relevant assets were written off (21 million euro). Eni filed an
extraordinary claim with the President of the Italian Republic against this
decree. The claim was rejected. Currently the Italian Parliament is
discussing a new law providing for the establishment of a technical
Commission assessing exploitation feasability.

North Africa

Enis operations in North Africa are conducted in Algeria, Egypt, Libya
and Tunisia. In 2002, North Africa accounted for 24,1% of Enis total
worldwide production of hydrocarbons.

Algeria.   Eni has been present in Algeria since 1981. Its principal oil
producing fields are located in the Bir Rebaa area in the south-eastern
desert, where Eni is operator with a 49% interest. Production from these
fields accounted for approximately 27% of Algerias annual production in
2002. In 2002 oil production reached full levels at the Hassi Berkine (HBN)
field (Enis interest is 34.63%) and the fourth oil treatment line in the
Hassi Berkine South oil center (HBNS, Enis interest is 12.25%) has started
operations. These events allowed to increase Enis production by 29,000
barrels/day.

According to managements industrial plans, the expected start-up in
late 2004 of production from the ROD and satellite fields (Enis share is
55%) and higher production from the HBN and HBNS fields will generate an
increase in daily oil production net to Eni from the present level of 65,000
barrels/day to over 100,000 by 2006.

Egypt.   Eni has been present in Egypt since 1954 and is the leading
international operator. In 2002, fields operated by Eni accounted for 34% of
Egypts total annual hydrocarbon production, which amounted to 410,000
boe/day (173,000 boe net to Eni). In 2002, oil and condensate production
amounted to 97,000 barrels/day net to Eni and came mainly from the Eni
operated Belayim and Ashrafi fields in the Gulf of Suez and from the Melehia
field located in the Western Desert.

In 2002, natural gas daily production amounted to 547 mmCF net to Eni.
The main natural gas producing interests operated by Eni are concentrated in
the Nile Delta, the Abu Madi and El Qara onshore fields and the El Temsah,
Port Fouad, Darfeel and Baltim offshore fields. In 2002 the Akhen field was
started up.

Eni successfully drilled the new exploration well Tennin 1 in the East
Delta Deep Marine permit (Eni is operator with a 50% interest) in the
Mediterranean offshore, before the Nile Delta, about 80-kilometer north of
Damietta. The well was drilled at water depth of approximately 300 meters,
reaching a total depth of over 2,000 meters encountering a gas sand interval
of about 60 meters. In test production the well yielded over 23 mmCF/d. A
pre-feasibility study is underway for the development of the field.
Management believes that this discovery is important both for the size of
its reserves and for the possibility to send its production to the Unión
Fenosa Gas liquefaction plant under construction at Damietta (See
Item 4  Gas & Power  Development projects).

According to managements industrial plans, in the medium term the
increase in gas production, while offsetting the natural decline of mature
oil producing fields, will allow to maintain the present level of about
190,000 boe/day.

Libya.   Eni started operations in Libya in 1959 and is the leading
international operator, with oil fields operated by Eni accounting for
approximately 14% of Libyas annual oil production. Enis principal
producing interests are located in two areas: onshore in the Bu-Attifel
field, where Eni is operator with a 50% interest, and offshore Tripoli in
the Bouri field, where Eni is operator with a 30% interest.

With a 50% interest Eni is operator in the development of the natural
gas, oil and condensates fields of Wafa, in onshore permit NC-169 A located
520 kilometers south of Tripoli, and Bahr Essalam, in the NC-41 permit in
the Mediterranean offshore located 110 kilometers north of Tripoli.





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Contracts were awarded for the construction of centers for hydrocarbon
treatment near Wafa and Mellitah on the Libyan coast, an offshore production
platform and production and transport infrastructure including an underwater
production system for a total value of euro 4.2 billion, of which 2.4 are
Enis share.

Development is ongoing at the Elephant oil field in the NC-174 permit
where Eni is operator with a 33.34% interest. Production is expected to
start in the first half of 2004 and to peak at 150,000 barrels/day (35,000
net to Eni) in 2007.

According to managements plans, the start-up of fields under
development will lead to an increase in daily hydrocarbon production from
the present level of 79,000 boe to approximately 260,000 in 2006.

Tunisia.  Eni has been present in Tunisia since 1961; its main
producing interests are in the El Borma oil field and in the oil and gas
Hammouda and Oued Zar fields, operated by Eni, which owns a 50% interest
therein.

A new oil discovery was made with the Baraka South East 1 exploration
well in the Tunisian offshore approximately 100-kilometers south-east of
Tunis. The well was drilled in waters approximately 90 meters deep and
reached a depth of over 2,300 meters. It yielded about 5,000 barrels/day of
high quality oil in test production. This is the highest flow rate ever
reached with a vertical well in the Tunisian offshore. Development studies
are ongoing. In the onshore Borj el Kadra concession (Eni is operator with a
50% interest) in southern Tunisia a new oil discovery was obtained by the
Adam 1 well, which is expected to start production in the second half of
2003.

According to managements plans, in the next four years hydrocarbon
production in Tunisia is expected to decline slightly from the present level
of 14,000 boe/day.





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##### Table of Contents



West Africa

Enis operations in West Africa are conducted in Angola, Congo, Gabon
and Nigeria. In 2002, West Africa accounted for 16.4% of Enis total
worldwide production of hydrocarbons.

Angola.Eni has been present in Angola since 1980. In 2002, Enis oil
production amounted to 62,000 barrels/day. Enis main oil producing
interests are the Takula, Nemba and Malongo fields located in Block 0 (Enis
interest is 9.8%) and the Kuito field in the deep offshore Block 14 (Enis
interest is 20%). Eni planned to develop the Benguela-Belize and
Lobito-Tomboco oil fields in Block 14 as well as the Sanha condensate field
in Block 0 (Cabinda B).

Eni participates with a 20% interest in the deep offshore Block 15,
where development of oil fields discovered in the Kizomba area has started.
The fields under development are Hungo and Chocalho (Kizomba A) and Kissanje
and Dikanza (Kizomba B); also the Xicomba field is under development.

In Block 14 two offshore oil discoveries were made. The Gabela 1 well
drilled at a water depth of over 320 meters, penetrating a 25-meter interval
of oil-bearing porous rock yielded over 1,000 barrels of oil per day in test
production. Geologic and engineering studies are planned in order to define
the fields reserves and the development scenario. The Negage 1 well drilled
at a water depth of 1,444 meters encountering a 30 meter thick layer of oily
sands at the depth of 2,990 meters yielded over 8,600 barrels/day during
test production. The Tombua 3 well was also drilled with its sidetracks, all
of which showed presence of hydrocarbons, maximum production was over 10,500
barrels of oil/day.

In Block 15, a new oil discovery was made. The Reco-Reco 1 well drilled
at a depth of 3,798 meters yielded about 3,000 barrels/day in test
production. Still in Block 15, the Mondo 2 and Mavacola 2 wells were
drilled. Mondo 2, drilled at a water depth of 748 meters allowed to discover
a 93 meter thick layer of mineral rich sandstones at a depth of 2,200
meters.

According to managements plans, the start-up of fields under
development will allow to double Enis 2002 production level from Angolas
operations (62,000 barrels/day) by 2006.

Congo.Eni has been present in Congo since 1968 and is Congos second
largest international oil producer, with oil fields operated by Eni
accounting for approximately 35% of Congos total oil production in 2002.
Enis principal oil producing interests operated in Congo are the Kitina
(Enis interest is 37.75%), Foukanda, Mwafi, Zatchi and Djambala (Enis
interest 65%) and Loango (Enis interest is 50%) fields located in the deep
offshore facing Pointe Noire. Other fields are the Pointe Noire Grand Fond
fields (Enis interest is 35%). In 2002, full production was reached at the
Foukanda and Mwafi fields, which accounted for 20% of Enis production in
Congo. The new thermoelectric power station at Djeno was inaugurated. The
plant has a 25 megawatt capacity and is located near the hydrocarbon
treatment terminal. It is fired with associated gas from





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##### Table of Contents



the offshore fields of Foukanda, Kitina and Djambala. The project,
which entails an investment of dollar 32 million (16 million is Enis share)
was completed in 13 months by Eni and Chevron Texaco. It represents the
first example of use and exploitation of associated gas otherwise flared in
Congo.

In Block Marine X, operated by Eni with a 90% interest, two appraisal
wells were drilled, Awa Marine 2 and Paloukou Sud Marine 5. In the Loango
concession, a seismic and reprocessing campaign was performed aimed at
better evaluating the fields potential and its nearby structures.

According to managements plans, in the next four years production from
Enis operations is expected to decline slightly from the present level of
75 KBBL/d.

Nigeria.Eni has been present in Nigeria since 1962. The fields
operated by Eni accounted for approximately 8% of Nigerias oil production
in 2002. Enis principal producing interests in Nigeria are in four onshore
Blocks (OML 60, 61, 62 and 63) in the Niger Delta, where it acts as operator
with a 20% interest, and in the offshore OML 116 Block (former OPL 472
Agbara) and OML 119 (former OPL 91) where it holds a 100% interest operated
through service contracts. In December 2001, oil production started at the
Okono oil field in Block OML 119 and in 2003 production is expected to start
in the Okpoho oil field in the same Block. In 2006 production of the two
fields is expected to peak at 16,000 barrels/day net to Eni. In April 2003,
production started at the Abo Central offshore oil field located in Block
OPL 316, operated by Eni with a 50.19% interest. The Bonga oil field,
located in Block OML 118, where Eni holds a 12.5% interest, is currently
being developed; production is expected to start in 2004.

Eni also has a 5% interest in Nase, the largest oil joint venture in
the country relating to hydrocarbon production from 43 onshore blocks.

Eni holds a 10.4% share in the Nigeria LNG Company, a consortium
managing the Bonny liquefaction plant for the treatment and export of LNG.
The plant is made up of three treatment trains (the third one started
operating in November 2002) with a total capacity of 402.5 BCF/year LNG. In
2002, the contracts for the fourth and fifth treatment trains were awarded
and these will increase the plants overall capacity to 769.8 BCF/year. Work
will be completed between the end of 2005 and early 2006. Enis share of gas
reserves committed to the liquefaction plant amounts to 1,553.6 BCF.

In the OML 118 deep offshore permit two appraisal wells were
successfully drilled in the Bonga SW oil field at a water depth of about
1,300 meters that allowed for the start of the pre-feasibility study for the
development of the field. The Bonga SW 2 well yielded 4,200 barrels/day up
to a maximum of 11,000 barrels/day in test production. In the OPL 316 deep
offshore permit while continuing the drilling of the ABO 4 development well,
new deep levels were discovered. The feasibility study is underway,
production from these new deep levels will entail synergies with the ABO
field.





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##### Table of Contents



In December 2002 the EA field in the OML 79 permit (Enis interest
12.86%) started production at a rate of 40,000 boe/day (5,000 net to Eni).
In the OML 63 onshore permit (Eni is operator with a 20% interest) the Obama
Deep appraisal well, drilled at a depth of over 5,300 meters, met a level
mineralized mainly with liquid hydrocarbons. The well yielded 4,170
barrels/day in test production and was completed and linked to the existing
Pirigbene facilities.

According to managements plans, the reaching of full production at
deep offshore Abo and Bonga fields and the increase in liquefied natural gas
volumes treated at Bonnys plant will lead to an increase in Enis
production from Nigerias operations from the present level of 98,000
boe/day to over 180,000 boe/day by 2006.

Mauritania.Eni holds a 35% interest in the area covered by A and B
PSAs (Blocks 3, 4 and 5) in the deep offshore of Mauritania at a water depth
from 200 to 2,600 meters. Within this area, Eni completed the appraisal
campaign for the Chinguetti discovery (Enis interest is 35%) with the
drilling of two appraisal wells and a new hydrocarbon discovery was also
made with the Banda 1 exploration well.

North Sea

Enis operations in the North Sea area are conducted in Norway and the
United Kingdom. In 2002, the North Sea accounted for 20.8% of Enis total
worldwide production of hydrocarbons.

Norway.Eni has operated in Norway since 1964. Enis principal
producing interests in the North Sea are located in the Ekofisk field
(12.39% interest) and in the Norwegian Sea in the Aasgard (7.9% interest)
and Norne (6.9% interest) fields. In 2002, production of the Ekofisk,
Aasgard and Norne fields accounted for 57% and 43% respectively of Enis
production in Norway (62 and 38% in 2001).

In March 2003, Eni concluded the purchase of Fortum Petroleum, the
Norwegian subsidiary of the Finnish company Fortum Oy. The acquisition
entailed a total investment of dollar 975 million (of which dollar 256
million were paid for its net equity and dollar 719 million for its net
borrowings assumed).

Fortum Petroleums main assets are located in the Norwegian section of
the North Sea. In particular they consist of interests in the Aasgard (7%),
Brage (12.26%) and Heidrun (5.12%) producing fields, in the Mikkel field (7%
in addition to Enis preexisting 7.9% interest in the same field) and
Goliath field (15% in addition to Enis preexisting 25% interest in the same
field). The Mikkel field is currently being developed, while the Goliath
field, which is operated by Eni, has not been developed yet. In addition,
Fortum Petroleum holds interests in important gas transmission
infrastructures such as Haltenpipe (5%), Heidrun Gas Export (5.12%) and
Aasgard Transport (5%) linking the Aasgard and Heidrun fields to the
Norwegian coast. The company also holds an interest in Franpipe (1.29%) and
the related Dunkerque terminal (0.84%) in France and in Europipe II (3.66%)
for natural gas transmission to the German coast.





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##### Table of Contents



At the end of 2002 Fortum Petroleum had proved reserves of
approximately 159 million boe, half of which were natural gas. In 2002 its
daily production amounted to 39,000 boe; in 2003, production is targeted to
over 40,000 boe/day. This transaction is part of Enis growth strategy in
the upstream sector by strengthening its presence in key areas and
increasing interests in already held assets in order to generate operational
synergies. According to managements plans, the purchase of Fortum Petroleum
and start-ups of fields under development will increase production from the
present level of 92,000 boe/day to a peak of over 140,000 boe/day in 2006.

United Kingdom.Eni has been present in the United Kingdom since 1964.
The main producing interests operated by Eni in the United Kingdom are
located in the operated B-Block (average interest of 60%) and in the T-Block
(which contains the Thelma, Tiffany and Tony fields), where Eni increased
its interest from 77.48% to 88.78% following a purchase. Other important
fields are those located in the Liverpool Bay (Hamilton, Lennox and
Douglas), where Eni increased its interest from 45 to 53.9% after a purchase
and the J-Block (33%), Hewett (27.35%), Ninian (12.94%), Magnus (5%), Thames
(23.3%), McCulloch (40%) and Andrew (16.21%). Within the rationalization
process of Enis asset portfolio following the purchase of British-Borneo
and Lasmo, interests were sold in 11 marginal fields, as well as in other
minor assets, such as transmission infrastructure, terminals and exploration
licenses.

According to managements plans, production from United Kingdom
operations is expected to decline in the next four years from the present
level of 208,000 boe/day due to the average maturity of producing fields.

Ireland.Eni holds 3 exploration permits in the Atlantic offshore of
Ireland at water depths ranging from 1,000 to 2,000 meters: permits 7/97 and
1/99 operated by Eni with a 100% interest and permit 2/94 (Enis interest
40%) where the Dooish well was successfully drilled at a water depth of
1,484 meters.

Rest of the World

In 2002, Enis operations in the rest of the world accounted for 17.3%
of its total worldwide production of hydrocarbons.

In Australia, Eni acquired two exploration permits WA-326-P, operated
by Eni with a 100% interest, and WA-328-P, operated by Eni with a 66.7%
interest. Eni will perform seismic surveys for 1,215 kilometers in the first
permit and for 3,015 kilometers in the second permit. Eni was also awarded
the WA-25-L production licence (where Eni is operator with a 65% interest)
where the Woollybutt offshore oil field is located. Production at this field
started in April 2003.

In Azerbaijan, in January 2002 Eni signed with the national company
Socar a sale and purchase agreement for the purchase of a 5% interest in the
project for the construction of the Baku-Tblisi-Ceyhan pipeline. At present
Enis interest concerns only the detailed engineering phase. The project
envisages the construction of a 1,740-kilometer long pipeline for the
transportation of oil from the Caspian Sea area to the Mediterranean by
linking





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##### Table of Contents



Baku to the Turkish port of Ceyhan through Georgia. The pipeline
transport capacity is projected to be of one million barrels/day.
Construction work started in September 2002. According to managements
plans, the pipeline is expected to start operating in 2005. In the Shakh
Deniz Block (Enis interest 5%), an area of approximately 860 square
kilometers, exploration contributed to the definition of the extension of
the natural gas and condensates field. The development project for this
field was approved and is in the starting phase after the conclusion of
agreements with the national company Socar and the Turkish company Botas for
the sale of natural gas produced.

Brazil.   Eni holds interests in 4 exploration licenses (with shares
from 20 to 100%) in two of which the second exploration phase has already
started.

China.   Eni has been present in China since 1983; it holds an
exploration permit in the Qaidam basin, in the central western part of China
where it signed a PSA with the national company CNPC, relating to a 7,000
square kilometer area.

Croatia.   Eni through a 50/50 joint venture with Ina, the State-owned
Croatian company, operates the Ivana natural gas field, located in the
Adriatic offshore. The field is operated through a main production platform,
called Ivana A, installed in 1999, and three satellite platforms, Ivana B, D
and E, installed between 2000 and 2001. In 2002 the development plan of
other fields discovered in the area  Ika, Ida, Annamaria and Marica  was
approved. Their development will entail the drilling of 18 directional
wells, the construction and installation of 9 platforms at a water depth of
60 meters and the laying of underwater sealines for a total length of 120
kilometers. Total capital expenditure in the project is about euro 320
million. In April 2003 contracts for the construction of the first
production platform were awarded. According to managements plans, start-up
of these four fields is expected in late 2004 and when fully operational
will allow to increase production net to Eni from the present level of 5,000
boe/day to over 10,000 boe/day by 2005. In the same concession a new gas
discovery was made with the Katarina 2 well.

Ecuador.   The Villano oil field, operated by Eni with a 100% interest,
is Enis first hydrocarbon producing field in Latin America. In 2002, this
field produced 31,000 barrels/day (22,000 net to Eni). This production level
is expected to increase in the next four years. Construction of the OCP
pipeline (Eni interest is 7.51%) is underway. This new pipeline will add to
the existent SOTE pipeline increasing transport capacity in Ecuador.

Indonesia.   Eni is present in Indonesia following the acquisition of
Lasmo since 2001. Its producing interests are located in the onshore area in
east Kalimantan, regulated by the Sanga Sanga PSA (Enis interest is 38%)
operated by Virginia Indonesia Company (VICO) in which Eni holds a 50%
interest. This area produces mainly natural gas (about 80% of areas total
production). This gas is treated at the Bontang liquefaction plant, the
largest in the world, and is exported to the Japanese, South Korean and
Taiwanese markets. Five wells were drilled in the fields of Ranggas, Gandang
and Gendalo, in the Rapak and Ganal area (Eni interest is 20%) in the
offshore east of Kalimantan. Three wells were drilled in the Ranggas oil and
gas field, the R4 well flowed at a daily rate of more than 8,000 barrels of
oil. The 2A well, drilled in the gas and condensates field of Gandang,





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##### Table of Contents



confirmed the extension of the field. In the gas and condensates field
of Gendalo, the G3 well, flowed at a daily rate of about 35,3 mmCF/d of gas
and about 2,000 barrels/day of condensates. According to managements
industrial plans, Enis daily hydrocarbon production in the next four years
is expected to remain at the present average level of 38,000 boe.

In Iran,in 2002 the Dorood oil field (Enis interest is 38.25%)
started production. This is Enis first producing asset in this country.
Located in the offshore of the Persian Gulf, the field produced 3,000
barrels/day net to Eni in 2002 and is expected to peak at 14,000 barrels net
to Eni in 2004 due to the expected start-up of 8 new producing wells in
addition to the existing two.

Within the development of phases 4 and 5 of the South Pars natural gas
field in the Persian Gulf (Eni is operator with a 60% interest), a dollar
1.2 billion contract for the construction of four natural gas treatment
plants with an overall capacity of 1,98 BCF/d of natural gas was awarded.
Construction of the plants is expected to be completed by 2005. Production
is expected to start in 2004. Eni is operator with a 60% interest of the
onshore Darquain oil field, located about 50 kilometer north east of Abadan.
Drilling and infrastructure construction are underway in order to start-up
production in late 2003. In January 2003, the Balal field started production
with an expected daily production of about 6,000 barrels in 2003.

Kazakhstan.Eni has been present in Kazakhstan since 1992. Eni is
co-operator of the Karachaganak field with British Gas with a 32.5%
interest. In 2002, production of oil and condensates from this field
amounted to 32,000 barrels/day (net to Eni), production of natural gas
amounted to 148 mmCF/d (net to Eni). The second development phase of this
field, which is currently underway, is aimed at increasing daily production
of liquids to 220,000 barrels/day (64,000 net to Eni) in 2004. The
subsequent development phase of the field will concern expansion of natural
gas sales.

Eni is single operator of the North Caspian Sea PSA in the Kazakh
offshore, where the Kashagan field is located. A consortium currently
comprised of six international oil companies, amongst which Eni, is
responsible for conducting exploration and development activities in the
contractual area. Enis interest in the PSA is going to become 20.372% from
an original 14.28% interest. The increase in Enis interest will follow the
closing of two Sale and Purchase Agreements under which the consortium
partners acquired a proportional share of the interests of BP and Statoil
and subsequently of British Gas that left the project in 2001 and 2003,
respectively. The contractual area is made up of 11 blocks covering a total
of over 5,500 square kilometers at a water depth of 2 to 10 meters. This
project, due to the mineral potential of existing structures and to the
operating and technological challenges it poses, resulting from the shallow
waters which are frozen for about six months a year, represents an extremely
important industrial feat in the oil industry. Eni intends to apply the most
advanced technologies and operational solutions in order to provide maximum
environmental protection to the North Caspian area. Management plans the
exploration campaign to last six years and to encompass the drilling of 6
exploration wells and the collection of seismic data. Six wells have been
already drilled, the first two, KE-1 and KW-1 about 40 kilometers from one
another, discovered a large reservoir in the Kashagan structure,
approximately 75 kilometers





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south-east of Atyrau. The appraisal wells KE-2, KE-3, KE-4 and KE-5
confirmed the importance of the discovery. Three wells are currently being
drilled, Kashagan South West 1 and Aktote 1 (exploration wells) and K-6
(appraisal well). On June 30, 2002 the consortium and the Kazakh authorities
declared the commercial discovery of this field. At the end of 2002 the
consortium filed the Kashagan development plan with the Kazakh authorities.
The front-end engineering for the first development phase is currently
underway.

In a block near the Kashagan field within the same contractual area and
under the same PSA, a new oil discovery was made in the Kalamkas structure.
The Kalamkas-1 exploration well was drilled to a depth of 2,360 meters and
yielded over 2,300 barrels/day in test production. Drilling was performed in
very shallow and extremely environmentally sensitive waters.

United States.Eni has been present in the United States since 1966
and holds several mineral rights in the Gulf of Mexico. Enis main producing
fields are located offshore in the Grand Isle 102, Green Canyon 254-297
(where the Allegheny field is located, Enis interest is 100%) and Ewing
Bank 921/964-5 (where the Morpeth field is located, Enis interest is 100%)
concessions; other fields in which Eni holds interests are located in the
Garden Banks 602/646 (where the Macaroni field is located, Enis interest is
34%), Mississippi Canyon 890-1/934-5 (where the Europa field is located,
Enis interest is 32%) and Mississippi Canyon 194-5/150-1 (where the Cognac
field is located, Enis interest is 16.5%) concessions.

Eni holds a 25% interest in the Mississippi Canyon 538-9/582-3
concession where the Medusa oil and gas field is under development. Start-up
is expected in 2003 with production peaking at 9,000 boe/day net to Eni by
2004.

Eni holds a 50% interest in the Atwater Valley 63-4 concession where
the appraisal phase of the Champlain oil field is ongoing and development is
being studied.

In the Green Canyon 472-3/516 Block (Enis interest is 50%), production
started at the King Kong/Yosemite natural gas fields only thirteen months
after the decision to develop these fields and eight months after the
discovery of Yosemite, reaching a peak of 145 mmCF/d (69.6 mmCF/d net to
Eni). The development of these two fields, operated by Eni, was obtained by
drilling at a water depth of 1,170 meters three subsea wells tied back to
the Allegheny platform (Enis interest 100%) located at a 25-kilometer
distance. Expenditure net to Eni amounts to approximately dollar 90 million.
In Green Canyon Block 562-3, the delimitation well K2 (operated by Eni with
an 18.17% interest) was successfully drilled. Production is expected to
start in 2004.

According to managements plans, the development of recently discovered
fields will increase hydrocarbon production from the present level of 58
KBOE/d to a peak of over 70 KBOE/d in 2005.

Venezuela.Eni is the operator with 100% of the Dacion oil field
regulated by a service contract with a 20 year term. In 2002 production from
this field amounted to 42 KBBL/d net to Eni. In addition Eni holds a 26%
interest in the Corocoro oil field, located in the West Paria Gulf at the
mouth of the Orinoco river. The fields





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development project started in April 2002 and will progress through
different phases. This field is expected to reach a production of 14 KBBL/d
in the first phase.

Pakistan.Eni has been present in Pakistan since 2000. Enis main
natural gas producing field is Kadanwari (Enis interest is 18.42%) and
Miano (Enis interest is 15.16%), the latter started production in 2002 at a
level of 17.4 mmCF/d net to Eni. In January 2003 the Bhit field (operated by
Eni with a 40% interest) was started up. According to managements plans, in
2003 it will reach a production level of 272.6 mmCF/d (110.2 mmCF/d net to
Eni) to be sold in Pakistan. Other natural gas fields are under development:
Zamzama (Enis interest is 17.75%) and Sawan (Enis interest is 23.7%).
Government authorized the development of the Zamzana natural gas field The
development project is well underway and startup is expected in the fourth
quarter of 2003.

In August 2002, Eni signed a production contract agreement with a
five-year term relating to the Khirtart Foldbelt area, within the Manchar
exploration license (Eni is the operator with a 55% interest). The Khirtart
Foldbelt area covers an area of 2,435 square kilometers.

In the Middle Indus Basin, Eni obtained a 33.33% interest in the SW
Miano (II) concession for a three-year term. Such concession covers an area
of 1,238 square kilometers.

According to managements plan, production of natural gas is expected
to increase in the next four years from the present level of 40.6 mmCF/d to
over 232 mmCF/d in 2004.

In Russia, Eni is the operator with a 50% interest of the Severo
Astrakhansky license, covering an area of 1,800 square kilometers situated
at the mouth of the Volga river, on the edges of the great pre-Caspian
sedimentary basin. The area is crossed by the Caspian Pipeline Consortium
oil pipeline, which started operations in 2002. Eni intends to continue
exploration activities in the area.

Natural Gas

Snam SpA was merged into Eni SpA effective as of February 1, 2002 to
become Enis Gas & Power division. Eni now conducts its natural gas and
electricity generation activities through its Gas & Power division and its
subsidiaries. In 2002, Enis primary distribution natural gas sales totaled
52.56 billion cubic meters in Italy and 8.2 billion cubic meters in Europe.
Primary distribution sales include sales to wholesalers, mainly local
distribution companies, and large industrial and thermoelectric users which
are supplied by a high and medium pressure gas pipeline network. Enis high
and medium pressure gas pipeline network for primary distribution is about
30,000-kilometres long in Italy, while outside Italy Eni holds transport
rights on over 3,700 kilometers of high pressure pipelines. Effective on
July 1, 2001 Enis natural gas transport network in Italy was contributed to
Snam Rete Gas SpA. In December 2001 shares representing 40.24% of the
companys capital were sold through a public offering with proceeds of euro
2.2 billion. Snam Rete Gas transports natural gas on behalf of Eni and third
parties («shippers»); in 2002 transported volumes were 73.7 billion cubic
meters,





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##### Table of Contents



of which 19 billion on behalf of third parties. Eni is also active in
retail distribution (secondary distribution) of natural gas, which
includes almost exclusively sales made by local distribution companies to
commercial and residential users through a low pressure gas pipeline
network. Eni operates in secondary distribution in Italy through Italgas 
the largest local natural gas distribution company in Italy  which is a
wholly-owned subsidiary of Eni following the public tender offer
successfully closed in January 2003. Eni also operates in secondary
distribution outside Italy: in Hungary through Tigaz, in Argentina through
Distribuidora de Gas Cuyana and in Slovenia through Adriaplin. In 2002,
Enis secondary distribution sales were 7.84 billion cubic meters in Italy
and 3.79 billion cubic meters outside Italy. Enis secondary distribution
network in Italy is over 46,000-kilometres long and over 30,000-kilometres
long outside Italy.

Eni conducts its electricity generation activities through Enipower SpA
which owns and manages Enis power stations of Livorno, Taranto, Mantova,
Ravenna and Brindisi with a total installed capacity of 1,000 megawatts and
annual production sold of about 5,000 gigawatthour. Eni owns other minor
power stations located in Enis petrochemical plants and refineries whose
production is mainly for internal consumption. The accounts of these power
stations are reported within Enis Refining and Marketing and Petrochemicals
segment.

In 2002, Enis Gas & Power segment had net sales from operations
(including intersegment sales) of euro 15,297 million and operating income
of euro 3,244 million.

Strategy

Eni is pursuing the development of international sales in order to
compensate the lower growth opportunities in the domestic market, which are
due to the limits imposed to operators by the applicable regulations. In
Italy, Eni intends to maintain sales volumes within the limits permitted by
the applicable regulation through the optimal allocation of supplies between
direct sales in Italy and sales to operators in the natural gas sector as
well as by using natural gas at its own electricity generation plants and,
at the same time, leveraging on the expected demand growth, in particular
for electricity generation. Enis commercial policy will aim at customer
satisfaction by means of an efficient management of the customer portfolio,
high flexibility in offers to customers and enhancement and integration of
services provided.

Outside Italy management plans to develop Enis presence in certain
European gas markets, in particular in countries with interesting growth and
profitability prospects (Iberian Peninsula, Turkey, Germany) where Eni can
make optimal use of its diversified portfolio of supply contracts and its
extensive gas pipeline network which allows the supply of natural gas from
several sources. In 2002 Eni completed its entry into those markets by means
of acquisitions and construction of infrastructure; in 2003 Eni started the
operational and commercial phase of this plant. Eni also intends to search
for market opportunities in order to sell the natural gas it produces in
certain European areas and to expand its presence in LNG activities. Based
on signed contracts and finalized transactions, Eni expects to increase
significantly sales of natural gas outside Italy by 2006. Eni will also
intensify its cost reduction actions especially in transport activities and
in secondary distribution activities in Italy.





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##### Table of Contents



The matters regarding future natural gas demand and sales target
discussed in this section and elsewhere herein are forward-looking
statements that involve risks and uncertainties that could cause the actual
results to differ materially from those in such forward-looking statements.
Such risks and uncertainties relating to future natural gas demand include
changes in underlying economic factors, changes in regulation, population
growth or shrinkage, changes in the relative mix of demand for natural gas
and its principal competing fuels, and unexpected developments in the
markets for natural gas and its principal competing fuels.

Demand for Natural Gas in Italy

With consumption amounting to about 70 billion cubic meters in 2002
(decreasing slightly over 2001), Italy is the third European market for
natural gas after Great Britain and Germany.

In 2002, about 20% of natural gas requirements were met through
domestic production, while imports covered 80% of demand.

In the next decade world consumption of natural gas is expected to
increase, due to the continuous improvement in technologies applicable to
all phases of natural gas production, the higher environmental compatibility
of natural gas as compared to other hydrocarbons, expected demographic,
economic and social developments and the steady increase in natural gas
reserves. According to managements own estimatees, Europe represents one of
the areas with the highest development rate and the average increase is
expected to be 2% per year.

According to managements own estimatees natural gas demand in Italy is
expected to increase at higher rates than the European average and than the
overall demand for energy in Italy. According to managements own estimatees
consumption is expected to reach about 90 billion cubic meters in 2010,
corresponding to an annual average increase of over 3%. The share of natural
gas on total domestic energy requirements is expected to reach nearly 40% in
2010.

Management believes that most of this increase will concern natural gas
used in electricity generation, because of the significant advantages of the
use of natural gas in combined cycle generation plants, thanks to its lower
investment cost, higher yields and reduced polluting emissions as compared
to other fuels. Demand is expected to increase also from residential and
commercial users, due to the further expansion of the natural gas
distribution network in southern Italy and the increased use of natural gas
for residential space heating in households and services. Many of the
factors that may influence future trends in natural gas demand in coming
years are, however, outside of managements control; among these there are
trends in the price of natural gas compared to other fuels, the development
of the electricity sector, the economic growth, climate fluctuations,
environmental laws and the continuing availability of natural gas imported
from foreign countries. If the growth of the Italian natural gas market were
to be lower than managements expectations, Enis results of operations
may not benefit from expected increase in volumes.





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##### Table of Contents



Natural Gas Purchases

About 80% of the natural gas requirements of Enis Natural Gas segment
are met by imports (mainly from Algeria, Russia and the Netherlands) under
long-term supply contracts, and the balance by purchases of gas produced in
Italy by Enis Exploration & Production division. In 2002, Enis Gas & Power
division supplied 62.33 billion cubic meters of natural gas, in line with
2001. Volumes of natural gas from domestic production accounted for 20% of
total supplies (23.3% in 2001) with a decrease of approximately 2 billion
cubic meters over 2001.

Natural gas volumes supplied outside Italy represented 79.7% of total
supplies (76.6% in 2001) with an increase of 1.87 billion cubic meters over
2001, up 3.9%, in particular due to higher purchases from Norway (3.73
billion cubic meters) and the Netherlands (0.55 billion cubic meters). This
is due to purchase contracts signed in 1997 with Norwegian and Dutch
suppliers (targeting approximately 6 and 4 billion cubic meters/year,
respectively) becoming operational in October 2001. Contracts with Norwegian
suppliers became fully operational in 2002, while those with Dutch suppliers
will reach full operation in 2003. These increases were offset in part by a
decrease in supplies from Algeria (2.04 billion cubic meters) and Russia
(0.89 billion cubic meters).

Eni is a party to import contracts with an average residual duration of
about 17 years which generally include take or pay provisions and will
provide a total of approximately 66 billion cubic meters of natural gas per
year (28.5 from Russia, 21.5 from Algeria, 10 from the Netherlands, 6 from
Norway) from 2008. Overall natural gas volumes under existing contracts
amount to approximately 1,118 billion cubic meters.

The table below sets forth Enis purchases of natural gas by source for
the periods indicated.

|                |                      |  |                            |       |      |  |       |       |      |  |       |       |  |  |       |       |  |  |       |       | 
|--------------- | -------------------- |  | -------------------------- | ----- | ---- |  | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | ----- |  |  | ----- | ----- | 
|                |                      |  | Year ended December 31,   
|                |                      |  |                           
|                |                      |  | 1998                       |       | 1999 |  | 2000  |       | 2001 |  | 2002 
|                |                      |  |                            |       |      |  |       |       |      |  |      
|                |                      |  | (billions of cubic meters)
|Italy           |                      |  | 17.72                      |       |      |  | 16.16 |       |      |  | 13.64 |       |  |  | 14.62 |       |  |  | 12.67 |      
|Algeria         |                      |  | 16.83                      |       |      |  | 20.40 |       |      |  | 21.56 |       |  |  | 18.39 |       |  |  | 16.35 |      
|Algeria (LNG)   |                      |  | 1.99                       |       |      |  | 2.06  |       |      |  | 2.01  |       |  |  | 1.79  |       |  |  | 1.92  |      
|Russia          |                      |  | 16.69                      |       |      |  | 19.09 |       |      |  | 21.03 |       |  |  | 19.51 |       |  |  | 18.62 |      
|The Netherlands |                      |  | 3.02                       |       |      |  | 2.87  |       |      |  | 6.09  |       |  |  | 7.00  |       |  |  | 7.55  |      
|Norway          |                      |  |                            |       |      |  |       |       |      |  |       |       |  |  | 1.10  |       |  |  | 4.83  |      
|Qatar (LNG)     |                      |  |                            |       |      |  |       |       |      |  |       |       |  |  |       |       |  |  | 0.24  |      
|Other           |                      |  |                            |       |      |  |       |       |      |  |       |       |  |  |       |       |  |  | 0.15  |      
|                | Primary distribution |  |                            | 56.25 |      |  |       | 60.58 |      |  |       | 64.33 |  |  |       | 62.41 |  |  |       | 62.33 | 





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|                                       |                                            |  |       |       |  |  |       |       |  |  |       |       |  |  |       |       |  |  |       |       | 
|-------------------------------------- | ------------------------------------------ |  | ----- | ----- |  |  | ----- | ----- |  |  | ----- | ----- |  |  | ----- | ----- |  |  | ----- | ----- | 
|Withdrawals
(inputs) from (to)
storage |                                            |  | 56.25 |       |  |  | 60.58 |       |  |  | (2.43 | )     |  |  | 0.13  |       |  |  | (1.43 | )    
|Internal consumption                   |                                            |  | (0.56 | )     |  |  | (0.34 | )     |  |  | (0.65 | )     |  |  | (0.58 | )     |  |  | (0.14 | )    
|                                       | Available
volumes for
primary
distribution |  |       | 55.69 |  |  |       | 60.24 |  |  |       | 61.25 |  |  |       | 61.96 |  |  |       | 60.76 | 

Natural Gas Sales in Italy and Europe

Natural gas sales relating to primary distribution totaled 60.76
billion cubic meters, in 2002 with a decrease of 1.20 billion cubic meters,
down 1.9%, over 2001, due to lower sales in Italy (6.33 billion cubic
meters, down 10.7%), offset in part by higher sales in Europe (5.13 billion
cubic meters, up 167.1%).

In a increasingly competitive market, the decrease in natural gas sales
in Italy was essentially due to a decline in sales to wholesalers (5.69
billion cubic meters, down 18.5% as compared to 2001) following the
progressive alignment to ceilings set by Legislative Decree No. 164/2000,
the concentration process ongoing in this segment and the mild weather of
November and December 2002. Also sales to industrial customers declined
(0.92 billion cubic meters, down 6.0% as compared to 2001) due to the weak
economic situation and the interruption of interruptible supplies due to
cold weather in early 2002. These declines were offset in part by increased
sales to thermoelectric customers (0.28 billion cubic meters, up 2.2%) due
to new supplies to power stations, whose effects were offset in part by
lower sales following interruptions of supplies to customers with
interruptible contracts.

The increase in sales in Europe was due to the progressive coming on
line of long-term supply contracts with operators of the natural gas market
(Plurigas, Edison, Dalmine and Cir Energia) and the start of LNG supplies to
the Spanish electric company Iberdrola (0.37 billion cubic meters) through a
15-year supplying contract of 1.2 billion cubic meters/year of LNG.

The table below sets forth Enis sales of natural gas by principal
market for the periods indicated.

|            |                        |  |                        |       |      |  |       |       |      |  |       |       |  |  |       |       |  |  |       |       | 
|----------- | ---------------------- |  | ---------------------- | ----- | ---- |  | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | ----- |  |  | ----- | ----- | 
|            |                        |  | 1998                   |       | 1999 |  | 2000  |       | 2001 |  | 2002 
|            |                        |  |                        |       |      |  |       |       |      |  |      
|            |                        |  | (billion cubic meters)
|Wholesalers |                        |  | 29.49                  |       |      |  | 30.85 |       |      |  | 30.26 |       |  |  | 30.83 |       |  |  | 25.14 |      
|End users   |                        |  | 26.15                  |       |      |  | 29.34 |       |      |  | 29.66 |       |  |  | 28.06 |       |  |  | 27.42 |      
|            |  industrial users     |  |                        | 15.66 |      |  |       | 16.33 |      |  |       | 16.79 |  |  |       | 15.25 |  |  |       | 14.33 | 
|            |  thermoelectric users |  |                        | 10.47 |      |  |       | 13.01 |      |  |       | 12.87 |  |  |       | 12.81 |  |  |       | 13.09 | 
|Italy       |                        |  | 55.64                  |       |      |  | 60.19 |       |      |  | 59.92 |       |  |  | 58.89 |       |  |  | 52.56 |      
|Europe      |                        |  | 0.05                   |       |      |  | 0.05  |       |      |  | 1.33  |       |  |  | 3.07  |       |  |  | 8.20  |      





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##### Table of Contents



|                                              |  |  |                        |  |      |  |       |  |      |  |       |  |  |  |       |  |  |  |       |  | 
|--------------------------------------------- |  |  | ---------------------- |  | ---- |  | ----- |  | ---- |  | ----- |  |  |  | ----- |  |  |  | ----- |  | 
|                                              |  |  | 1998                   |  | 1999 |  | 2000  |  | 2001 |  | 2002 
|                                              |  |  |                        |  |      |  |       |  |      |  |      
|                                              |  |  | (billion cubic meters)
|Sales in primary
distribution                 |  |  | 55.69                  |  |      |  | 60.24 |  |      |  | 61.25 |  |  |  | 61.96 |  |  |  | 60.76 | 
|Sales in secondary
distribution outside
Italy |  |  | 2.73                   |  |      |  | 2.67  |  |      |  | 3.48  |  |  |  | 3.91  |  |  |  | 3.79  | 
|                                              |  |  | 58.42                  |  |      |  | 62.91 |  |      |  | 64.73 |  |  |  | 65.87 |  |  |  | 64.55 | 

The Italian natural gas market is made up of three main segments:
residential and commercial, industrial and thermoelectric. Customers can be
divided into two groups: final users consuming natural gas and wholesalers
purchasing natural gas to sell it to other customers. According to the types
of distribution, natural gas sales are divided into: (i) large distribution
(primary distribution) which includes sales to wholesalers, mainly local
distribution companies, and large customers, mainly industrial and
thermoelectric customers; (ii) local distribution (secondary distribution)
represented almost exclusively by sales made by local distribution companies
to commercial and residential customers. From January 1, 2003, with the
complete opening of the natural gas market, pursuant to Legislative Decree
No. 164/2000, all customers are allowed to purchase natural gas at any
source and to enter into contracts with transport companies operating in the
national network and with distribution companies operating in local networks
for the transport to the delivery points.

In 2002 wholesalers, local distribution companies and automotive
natural gas sellers sold approximately 31.8 billion cubic meters to final
users (45% of total natural gas consumption), with a 3% decline over 2001.
The market of local distribution companies includes residential and
commercial users, large distribution and small enterprises located in urban
areas, whose supplies are provided through low pressure urban pipeline
networks. In Italy about 700 local distribution companies operate in over
5,700 municipalities with more than 16 million customers. These
municipalities account for approximately 89% of total population in Italy.
In 2002, Enis natural gas sales to local distribution companies and through
these to residential and commercial users amounted to 25.1 billion cubic
meters.

In 2002 natural gas consumption by final users of primary distribution
totaled 38.6 billion cubic meters (55% of total natural gas consumption), a
1.3% increase over 2001. Natural gas consumption in the industrial segment
of primary distribution amounted to over 16 billion cubic meters (22% of
total consumption), with a 1.2% decrease over 2001. In 2002, Enis sales of
natural gas to industrial users amounted to 14.3 billion cubic meters.

Natural gas consumption in the thermoelectric segment of primary
distribution amounted to 22.6 billion cubic meters (32% of total
consumption), with a 3.4% increase over 2001. This segment includes
electricity producers and distributors (Enel SpA and some municipal
utilities) and industrial producers of electricity. In 2002, Enis sales of
natural gas to thermoelectric users amounted to 13.1 billion cubic meters.





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##### Table of Contents



Eni reorganized its activities by creating six new branches in Italy in
order to react promptly and efficiently to market requirements, while paying
increasing attention to customers needs and applying the home working model
to all its sales personnel. The new marketing strategy is aimed at customer
satisfaction, through the setting of a new commercial offer tailored to
customers needs always in line with the rules and regulations introduced by
Legislative Decree No. 164/2000. In particular the customized commercial
offer includes a range of elements: from the standard to the modular profile
which supplies an optimal mix of options, such as, for example, various
price formulas and types of indexes aimed at controlling price volatility,
availability of services and technical assistance. At present Eni provides
its industrial customers with a wide range of high value added technical
services on the use of natural gas in particular in co-generation and
climatization. The main services provided in co-generation include: (i)
studies on co-generation and technical testing of the solutions suggested in
case of construction or upgrade of a co-generation plant; (ii) combustion
analysis and energy control of existing plants for evaluating their proper
use and efficiency; (iii) tests of compliance with safety regulations,
environmental impact. A toll-free telephone line is available and in the Gas
& Power section of Enis web site an area is dedicated to natural gas along
with a mail box. Eni also started projects aimed at providing new services
and offering them in innovative ways in particular as concerns direct
relations to customers.

Enis new commercial efforts were coupled with intense personnel
training activity aimed at developing the new skills required by the market,
at reinforcing direct relations with customers and supporting commercial
units.

Eni, through its subsidiary Italgas, is the Italian leader in the
retail sale of natural gas to residential and commercial users, as well as
small enterprises. In 2002, sales of natural gas in secondary distribution
in Italy (7.84 billion cubic meters) decreased by 0.28 billion cubic meters,
down 3.5% as compared to 2001, due mainly to mild weather, whose effects
were offset in part by the approximately 119,000 units increase in the
number of customers served (5.68 million as of December 31, 2002). Through
Italgas Eni owns a low pressure urban network in Italy consisting of over
46,000 kilometers of pipelines at December 31, 2002, and serving 1,197
municipalities (1,186 at December 31, 2001), among which Rome, Naples,
Turin, Florence and Venice with 5.68 million clients.

Within its strategy of rationalization and development of its natural
gas segment also at international level and in line with plans previously
announced, Enis Board of Directors in its meeting of November 25, 2002,
decided to launch a public tender offer on all Italgas SpA ordinary shares
outstanding not owned directly or indirectly by Eni, corresponding to
approximately 56% of Italgas capital. Eni offered a unit price of euro 13
per share, to be fully paid in cash and including a 25.7% premium over the
weighted average of the last month is price for Italgas publicly traded
shares and a 19.1% premium on the official price of the business day
preceding the day of the announcement of the offer.

The offer closed on January 27, 2003 with the purchase of 189,340,323
shares corresponding to 97.189% of the shares subject to the offer
(194,817,383) and 54.326% of Italgas SpAs share capital, represented by
348,523,506 shares. Payment of the price of shares tendered (euro 2,461
million) was effected on February 6, 2003. Italgas shares were withdrawn
from Telematico on February 7, 2003.





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##### Table of Contents



Eni now owns a total of 342,546,446 Italgas shares, representing
98.285% of share capital. As the conditions provided for by article 111 of
Legislative Decree No. 58 of February 24, 1998 met, with notice published on
February 4, 2003, Eni declared its willingness to squeeze-out the minority
share holders that did not tender their shares. Enis purchase right was
exercised on March 25, 2003 without residual offering at the price of euro
13 set by an expert named by the President of the Court of Torino. Enis
outlay is expected to amount to approximately euro 78 million.

In order to implement the regulations contained in Legislative Decree
No. 164/2000, Eni effected the separation of retail sales from its other
activities in secondary distribution of natural gas; in particular Italgas
SpA established Italgas Più SpA to which it contributed sales activities and
customer management services. Italgas Più is now present on the market with
a new and wider supply of services; in particular:



| |  |  | a post-counter service for extraordinary and planned maintenance
interventions on autonomous household heating systems, offered in
two forms: «Assistenza Italgas Più» concerning the planned
maintenance of heaters fired with any fuel that need to be
periodically monitored and subjected to combustion analysis and
«Pronto Assistenza» concerning fast interventions of skilled
technicians for repairing damages or checking heaters and other
parts of the heating plant;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a service of energy management addressed mainly to public
administrations, condominiums, the tertiary sector and industrial
enterprises supplying heat instead of just natural gas, design of
heating systems and consultancy services. This service provides
immediate solutions to problems of management, design and upgrade of
plants and frees customers from technical and organizational tasks
as wells as from responsibilities and administrative tasks.                

Italgas Più also improved its marketing channels by adding to the
traditional access point other specific channels:



| |  |  | an integrated toll-free call center system (located in Turin,
Rome, Florence, Naples, Chiavari) which customers can access for any
information concerning services provided: payment of bills,
information on consumption, requests for service and all related
matters;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a network of franchisors made up of 94 «shops» with flexible
opening hours available to customers for any request concerning
services provided. Italgas Più targets include the establishment of
460 franchised shops by 2005.                                          

The interactive web site www.italgaspiu.it represents a true online
shop where customers can find all information concerning services provided,
check their accounts, simulate consumption, change personal data and
organize payments through their bank account.

This business will be developed by entering new areas and promoting new
services such as air conditioning and co-generation for small enterprises,
in order to foster new forms of consumption.





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##### Table of Contents



Within its strategy of alliances with municipalities and with companies
managing multiservices for local governments, Eni acquired, in partnership
with Acea SpA, a 46.2% interest in Ages SpA, the municipal utilities company
operating in Pisa. Enis expenditure amounted to euro 42 million.

Outside Italy Eni is present in natural gas secondary distribution in:



| |  |  | Hungary through Tigaz (Enis share 27.59%), the largest regional
gas distribution company in the country, reaching 855 urban centers
through a network of about 21,000 kilometers of pipelines, and
serving about 1 million customers. In 2002, Tigaz sold 2.8 billion
cubic meters of natural gas. In 2003 Tigaz finalized the purchase
for approximately euro 80 million of 4 distribution companies active
in the central-northern areas of Hungary supplying an aggregate of
150,000 customers and distributing 400 million cubic meters of
natural gas;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Argentina, through Distribuidora de Gas Cuyana SA (Enis share
20.05%), which operates in the urban area of Mendoza, serving about
360,000 customers through a network of about 8,900 kilometers of
pipelines. In 2002, it handled 1.6 billion cubic meters of natural
gas; about 0.9 were sold to end users, while the rest was
transported on behalf of third parties;                                                                                                                                                                                    
|
| |  |  | Slovenia, through Adriaplin Doo (Enis share 22.42%), which
distributes natural gas to about 7,000 customers in 15 urban centers
through a network of about 332 kilometers of pipelines. In 2002, it
sold 30 million cubic meters.                                                                                                                                                                                                                                                                                                                          

Transmission, Dispatching and Regasification Assets

Transmission, dispatching and regasification activities in Italy are
carried out by Snam Rete Gas SpA, a company listed on the Italian Stock
Exchange and in which Eni holds a 59.76% interest. Enis primary
transmission network was transfered to Snam Rete Gas in July 2001 pursuant
to Legislative Decree No. 164/2000 concerning the Italian natural gas
market, which provided for the legal separation of transmission and
dispatching activities from all other activities in the natural gas segment,
exclusive of the storage that, in any case, has to be subjected to
accounting and management separation.

The Italian natural gas transmission system is made up of a national
network and a regional transmission network, as defined by the Decree of the
Ministry of Industry (now the Ministry of Productive Activities) of December
22, 2000, which implements Legislative Decree 164/2000. These networks
include pipelines, for a total length of about 31,200 kilometers, of which
29,795 kilometers are owned by Eni. The national network is composed 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
national natural gas fieldsto the linking points with the regional
transmission network. The national network also includes some interregional
lines reaching important local markets.





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The regional transmission network is composed of the remaining lines
and allows the transmission of natural gas to industrial user, power
stations and local distribution companies of the various local areas served.

At December 31, 2002 the national pipeline network owned by Eni
extended for 7,943 kilometers. Underground pipelines have a maximum diameter
of 48 inches and carry natural gas at a pressure of 24 to 75 bars.
Underwater pipelines (the only one is the pipeline crossing the Messina
Strait) have a diameter of 20 to 26 inches and carry natural gas at pressure
equal to or higher than 115 bars.

The major pipelines interconnected with import trunklines that are part of Enis national network are:



| |  |  | for natural gas imported from
Algeria:two lines with a 48/42-inch(1) diameter, each approximately
1,500-kilometer long, including the smaller pipes that cross underwater
the Messina strait, which link Mazara del Vallo (on the Southern coast
of Sicily) to Minerbio (near Bologna). These lines are linked to the
import pipelines that carry natural gas from Algeria through the Sicily
Channel. The pipeline transmission capacity amounts to approximately 87
million cubic meters/day;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | for natural gas imported from Russia:three lines with 48/42/36/34-inch(1) 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 transmission capacity amounts to
84.4 million cubic meters/day;                                                                                                                                       
|
| |  |  | for natural gas imported from the Netherlands and Norway:two 177-kilometer long lines, with a 48-inch diameter, extending from
the Italian border at Passo Gries (Verbania), the point of connection
with the Swiss network, to the node of Mortara, in the Po Valley. The
pipeline transmission capacity amounts to 60.7 million cubic
meters/day.                                                                                                                                            

As compared to 2001, in 2002 Enis national network increased by 47
kilometers. The national transmission network will be upgraded by means of:



| |  |  | the laying of a third line with a 48-inch diameter over 264
kilometers (124 of which already operational as of December 2002)
from Tarvisio (Udine) to Zimella (Verona) on the pipeline carrying
natural gas imported from Russia and the upgrade of the Malborghetto
station. Works are expected to be completed by 2007;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the laying of a pipeline (66-kilometer long with a 36-inch
diameter) from Gela to Enna (point of connection with the pipeline
importing gas from Algeria) to allow the transmission of natural gas
from Libya (up to 24 million cubic meters/day). This pipeline is
expected to start operations in 2004;                 
|
| |  |  | the laying a 70-kilometer long pipeline with a 30-inch diameter
(39 already operating in 2002) from Pontremoli to Parma, with
completion expected in 2004, to upgrade the connection of the
Panigaglia LNG terminal with the national network and local markets.                                                          





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Enis regional transmission network is composed of pipes with diameter
smaller than the national lines one and extends for a total length of
21,852 kilometers. These pipes carry natural gas at pressures lower than 5
bars, between 5 and 24 bars and between 24 and 75 bars.

As compared to 2001, in 2002 Enis regional network increased by 141
kilometers due to the construction of the Bolzano-Bressanone and
Maenza-Vitinia pipelines and of various connections to end users.

Enis system is completed by: (i) 11 compressor stations with a total
power of about 620 megawatts. In 2002, within the upgrading of import lines
from Northern Europe, the Masera (Verbania) compression station was
completed with the installation of 3 compressor units; and (ii) 4 marine
terminals linking underwater pipelines with the on-land network at Mazara
del Vallo and Messina in Sicily and Favazzina and Palmi in Calabria.

Enis dispatching system is located in San Donato Milanese and oversees
and monitors the whole transmission network in cooperation with local units.
Peripheral units are represented by 8 districts that monitor the
transmission network through 74 centers that guarantee operation,
maintenance and control of the whole system. Each unit is responsible for
operation in accordance with technical specifications and applicable laws
and regulations. Two new IT projects are underway: New dispatching and
Operating management of infrastructure, both aimed at upgrading information
systems and equipment supporting dispatching, beside optimizing operations
and maintenance of transmission infrastructure.

In addition to the international pipeline transmission system, natural
gas enters Enis system through the Panigaglia (Liguria) regasification
plant, which receives LNG carried by tanker ships. This terminal is the only
one of its kind in Italy, and has a maximum it can input approximately 3.5
billion cubic meters/year into the transmission network. LNG is downloaded
from tanker ships and stored, then vaporized in a regasification plant
composed of cryogenic pumps and submerged flame vaporizers. When it has
recovered the gaseous state, natural gas is input in the transmission
network. This terminal also regasifies LNG bought by Enel in Nigeria. In
2002, volumes of LNG regasified amounted to the equivalent of approximately
3.57 billion cubic meters of natural gas. Upgrading of this terminal is
underway by means of an enhancement of the boil-off gas recovery system.

In 2002,Eni transported 73.67 billion cubic meters of natural gas on
its primary transmission network in Italy (69.58 in 2001), of which 54.56
billion cubic meters were on behalf of Enis primary distribution. This
corresponds to an increase of 4.09 billion cubic meters, up 5.9% over 2001,
due to increased volumes transported on behalf of third parties (7.70
billion cubic meters, up 67.5%), offset in part by the decline in volumes
transported on behalf of Enis primary distribution (3.61 billion cubic
meters).

The Italian natural gas system is supplied for about 80% with imported
gas, received by Eni outside Italy and transmitted to Italy through a
network of international high pressure pipelines for a total of over 3,700
kilometers; in which Eni owns transportation rights, in particular:





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| |  |  | the 924-kilometer long TENP pipeline (composed of a
500-kilometer long simple line and a 424-kilometer long doubling
line) with transit capacity of 40.8 million cubic meters/day and
four compression stations, transports natural gas from the
Netherlands through Germany, from the German-Dutch border of
Bocholtz to Wallbach at the German-Swiss border;                                                                                                                                                                                                                              
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the 291-kilometer long Transitgas pipeline, with one compression
station, which 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
transit capacity of 60.6 million cubic meters/day. A new
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 Norwegian gas;
|
| |  |  | the 1,018-kilometer long TAG pipeline composed of two lines,
each about 380-kilometer long and a third line 258-kilometer long,
with a transit capacity of 81.2 million cubic meters/day and three
compression stations, which transports natural gas from Russia
across Austria from Baumgarten, the delivery point at the border of
Austria and Slovakia, to Tarvisio, point of entry into Italy;                                                                                                                                                                                         
|
| |  |  | the 742-kilometer long TTPC pipeline, composed of two lines each
371-kilometer long with a transit capacity of 78.2 million cubic
meters/day and three compression stations, which 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;                                                                                                                                                                                                                                
|
| |  |  | the 775-kilometer long TMPC pipeline for the import of Algerian
gas, composed of five lines each
155-kilometer long with a transit capacity of 100.8 million cubic
meters/day, which crosses underwater the Sicily Channel from Cap Bon to
Mazara del Vallo in Sicily, the point of entry into Italy.                                                                                                                                                                                                                                                                                       

Various development projects of the national and international network
are currently under way:



| |  |  | the upgrade of the TAG pipeline through the completion of a
third line 376-kilometer long in Austria (of which 258 kilometers
have already been laid). This project will increase transit capacity
by 25.1 million cubic meters/day, of which 13.3 are already
operational;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a pre-feasibility study is underway for the upgrade of the TTPC
import system from Algeria with an increase in compression capacity.
When the project is completed, the pipeline transit capacity will be
equal to that of the TMPC pipeline;                              
|
| |  |  | before the end of 2003 the upgrade of the TENP-Transitgas
pipeline will be completed with the starting of operations of a
further 44-kilometer doubling line with a 3.7 million cubic
meters/day increase in transit capacity.                                             

In the second half of 2003 works are going to start for the laying of
the Greenstream pipeline, an underwater 540-kilometer long pipe with a
32-inch diameter for the transport of natural gas from Mellitah in Libya to
Gela in





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Sicily for the transmission of Libyan natural gas from the Wafa and
Bahr Essalam fields (operated by Eni with a 50% interest), laid at a maximum
depth of 1,160 meters with a transit capacity of 24.4 million cubic
meters/day, capable of carrying 8 billion cubic meters/year, of which 4
billion is Enis share. The Greenstream will be connected to the Gela-Enna
pipeline on Enis national network. This project is scheduled to be
completed by the start of 2005 with an expenditure of euro 0.8 billion (0.6
billion is Enis share).

At the end of 2002 the Blue Stream underwater pipeline started
operating. This 774-kilometer long (on two lines) pipeline with a transit
capacity of 48.7 million cubic meters/day, linking the Russian and Turkish
coast of the Black Sea, will transport approximately 16 billion cubic meters
(Enis share 8 billion) of natural gas to be sold on the Turkish market.

Development Projects

Portugal.  Eni holds a 33.34% interest in Galp Energia («Galp»), a
Portuguese energy company operating in primary and secondary distribution of
natural gas and in downstream oil. This investment (made in 2000) is part of
Enis strategy of international growth in markets with interesting growth
prospects, such as the Iberian market. Galps interest in two import
infrastructures, the Transmaghreb pipeline and the Sines LNG terminal,
expected to start operations in late 2003, provides Eni with a basis to
access the Iberian market. In 2002 Galp, through its subsidiaries in the
field of natural gas, sold about 3.3 billion cubic meters of natural gas to
about 600,000 customers through a network of high, medium and low pressure
pipelines approximately 9,000-kilometer long. Eni signed an agreement with
the Portuguese government providing for the postponement of the IPO of Galp
Energia to December 31, 2003, thus postponing also to June 30, 2004 the
related six-month period available to Eni to exercise its option to purchase
a proportional number of Galp Energia shares (12.9% of its share capital) if
the IPO should not take place before December 31, 2003.

Spain.  Eni operates in Spain through España Comercializadora de Gas
SAU with the aim of seizing opportunities in the Spanish natural gas market.
The company will supply gas to large customers at the border and to eligible
customers requesting regasification and transmission of natural gas volumes
to their consumption sites in Spain. In April 2002 Eni started its supplies
of about 1.2 billion cubic meters per year of natural gas to Iberdrola, a
primary operator in electricity in Spain. The contract has a 15-year term.

Within its strategy of international expansion of gas activities on
March 14, 2003 Eni reached a final agreement with Spanish company Unión
Fenosa SA for the purchase of a 50% interest in its subsidiary Unión Fenosa
Gas. This transaction will be achieved through a capital increase of Unión
Fenosa Gas for euro 16 million (corresponding to 50% of its share capital
after the increase to be entirely financed by Eni) with a premium of euro
424 million, bringing Enis total consideration to euro 440 million after
the granting of authorizations by the relevant antitrust authority.





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Unión Fenosa Gas is active in natural gas supply and sale to final
users and to power generation companies. It holds a 25-year supply contract,
with an option for a 25 year extension, involving 4 billion cubic meters of
natural gas per year, with the Egyptian Natural Gas Holding Company (EGAS)
and is building a liquefaction plant with a capacity of over 7 billion cubic
meters per year near Damietta, on the Egyptian coast. In May 2002 Unión
Fenosa Gas signed an agreement with the Government of Oman to develop a
joint venture in the gas sector, including the participation in the
construction of a new liquefaction plant in Oman, which is expected to start
operations from 2006. From then onwards, a contract will guarantee 2.2
billion cubic meters per year for a 20-year period. In addition, Unión
Fenosa Gas has two LNG Time-Charters contracted for 25 years and holds a 19%
and a 45% interest in the Reganosa and Sagunto regasification plants,
respectively, which will start operations in 2005.

Management believes that Unión Fenosa Gas will benefit from the
liberalisation of the Spanish gas market, which, according to managements
own estimatees, is expected to increase by an average of over 10% per year
in the next five years to reach 42 billion cubic meters by 2010. The company
targets a 13% market share while also developing on international markets;
in particular it plans to sell approximately 2.5 billion cubic meters/year
to Unión Fenosa SAs combined cycle power plants.

Blue Stream.  Eni and Gazprom hold equal shares in Blue Stream Pipeline
Company BV, which operates the Blue Stream transport system, that links the
Russian coast (at Beregovaya) to the Turkish coast (at SamSun) of the Black
Sea for the transport of natural gas produced in Russia to be sold by Eni
and Gazprom in Turkey to the Turkish company Botas under a contract expiring
in 2026. The overall project costed about dollar 2.4 billion and is
comprised of two parallel underwater lines, each 380-kilometer long and a
compressor station at Beregovaya on the Russian coast of the Black Sea.
Laying, which reached a record depth of 2,150 meters, was completed in
February 2002 for the first line and in June 2002 for the second line; the
compressor station is expected to be completed in the second half of 2003.
The system was ready for operation by December 30, 2002. Commercial
operations started in February 2003. Volumes transported and sold are
expected to increase progressively from 2003 onwards to reach 16 billion
cubic meters (8 billion net to Eni).

Germany.  Eni and EnBW (Energie Baden-Württemberg AG, the third German
operator in electricity) acquired through a 50/50 German joint venture
(EnBW-Eni Verwaltungsgesellschaft mbH) a 97.81% interest in GVS
(Gasversorgung Süddeutschland GmbH), the fourth operator in the German gas
market. The remaining 2.19% interest is the object of a put option open to
minority shareholders, which can be exercised before September 30, 2004 at
the same price conditions of the purchase. The EnBW-Eni joint venture also
acquired a 47.57% interest in EBS, a company in which GVS holds a 51%
interest. EBS owns interests in companies in the area of natural gas
distribution and co-generation. GVS transports and markets about 7.4 billion
cubic meters of gas per year to local distribution companies serving about
750 municipalities in the south-western areas of the country through an
approximately 1,880-kilometer long gas pipeline network. In 2001-2002(1) it
generated
revenues of about euro 1.5 billion and net income of about euro 59
million. On December 17, 2002 the European





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Commission authorized the purchase of GVS by Eni-EnBW provided that the
parties accept to terminate in advance of maturity the long-term supply
contracts entered by local natural gas distributors and GVS; this right will
also be granted to any EnBW subsidiaries. In summary, Eni and EnBW are
expected to deploy their best efforts so that GVS offers a withdrawal right
to its customers (which they can exercise one time only in one of two
contract years of their choice  2004 or 2006 for the contracts expiring in
2008 and 2005 or 2007 for contracts expiring in 2015). The closing of the
GVS purchase took place on December 27, 2002 for a total amount of euro 704
million paid by the joint venture. The partners financed the transaction
through a capital increase of about euro 178 million (euro 89 million net to
Eni); for the remaining part EnBW-Eni made recourse to financial markets.
With this interest in GVS, Eni enters a large natural gas market.

Greece.Eni holds a 49% interest in the natural gas secondary
distribution companies (EPA) of Thessaloniki (about one and a half million
inhabitants) and Thessaly (about 500,000 inhabitants). The two companies
hold a 30-year concession for natural gas distribution to residential and
commercial users and enterprises consuming up to 10 million cubic meters per
year, as well as the right to use distribution networks. Eni will manage the
companies operations and will have an option on further offers of shares.
Both companies started to extend the distribution network in their areas.
Natural gas sales of the two companies are expected to exceed 800 million
cubic meters of natural gas per year and reach 375,000 customers served by
2005.

Brazil.Eni is engaged in natural gas distribution in Brazil through
its 88.79% owned subsidiary Gas Brasiliano Distribuidora, which holds a
concession for natural gas distribution in the north-western area of the
Brazilian State of São Paulo. Work is underway for the construction of a
distribution network.

Hungary.In January 2003, Tigaz (a subsidiary in which Eni holds a 50%
interest) further strengthened its position in the natural gas distribution
market by purchasing from the Hungarian national company MOL a majority
stake in four distribution companies (Mol-Gàz, Zsàmbèrkgàz, Gerecsegàz and
Turulgàz) active in the central-northern areas of Hungary for approximately
euro 80 million. These companies supply an aggregate of 150,000 customers
distributing a total 400 million cubic meters of natural gas to 407
municipalities. The purchase of these interests will be finalized after the
authorizations by relevant authorities.

Electricity Generation

Eni operates in power generation and electricity sale through EniPower
which owns five power stations with total installed capacity amounting to
approximately 1,000 megawatts located at Enis refineries in Livorno and
Taranto and at its petrochemical plants in Brindisi, Mantova and Ravenna. In
2002 electricity sales amounted to 6,748 gigawatthour (of these 5,004 were
produced electricity), corresponding to 2.1% of all volumes input in the
Italian network, also 9.3 million tonnes of steam were sold.





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Eni intends to develop its electricity generation capacity by
exploiting the advantages provided by the integration of natural gas and
electricity production, in order to reach by 2006 an installed capacity of
6,000 megawatts, corresponding to a consumption of about 7 billion cubic
meter/year of natural gas. This objective will be pursued by building new
capacity at Enis industrial sites, in particular 12 combined cycle gas
fired generators will be installed at Brindisi, Mantova, Ravenna, Ferrera
Erbognone and Ferrara, while 3 more groups are going to be installed at
other sites. High efficiency, low environmental impact, reduced expenditure
and construction times are the main features of these plants, which show
interesting profitability prospects due to the expected increase in demand
for electricity and the ability to operate in co-generation (combined
electricity and steam generation). The co-generation mode has been
acknowledged by the Italian Authority for Electricity and Gas as a
production mode that will be given priority on the national dispatching
network and will be exempted from the purchase of «green certificates» (1).
EniPower intends to become a cost leader in the Italian electricity industry
thanks to the high technology content and optimal size of the plants it is
building.

In 2002 the following projects started: (i) construction works for the
new combined cycle power station at Ferrera Erbognone (Pavia) that will have
a capacity of approximately 1,030 megawatt and will be fired mainly with
natural gas. When fully operational it will produce about 6.8 billion
kilowatthour/year. Expected expenditure amounts to euro 550 million. The
first 390 megawatt group is scheduled to start operating in late 2003; (ii)
construction works for 2 new gas fired combined cycle groups for a total
capacity of 780 megawatts at the Ravenna power station. The power station
will reach a total capacity of over 970 megawatts and when fully operational
will produce about 6.4 billion kilowatthour/year. The expected expenditure
amounts to about euro 380 million. Completion and start-up of the first unit
are scheduled by late 2003; (iii) in December 2002 construction works for 2
new combined cycle units for a total capacity of 780 megawatts at the
Mantova power station, which will reach a total capacity of 836 megawatts
and when fully operational will produce 5.3 billion kilowatthour/year.
Expected expenditure amounts to euro 430 million.

In 2002, sales of electricity amounted to 5,004 gigawatthour, of which
27% to other Eni segments. Sales of steam amounted to 9,302 million tons.
Through EniPower Trading, Eni sold 1,744 gigawatthour of purchased
electricity to eligible customers.




Refining & Marketing

AgipPetroli SpA was merged into Eni SpA effective January 1, 2003 to
become Enis Refining & Marketing division. Eni now conducts its refining
and marketing activities through the Refining & Marketing division and its
subsidiaries. Eni operates primarily in Italy, Europe and Latin America. Eni
has the largest retail market share in Italy, with a 37.5% market share; its
brands are Agip and IP. In 2002, sales of refined products totaled 52
million tons, of which 33 million in Italy. Enis total processing capacity
of wholly-owned refineries amounted to 504,000





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barrels per day at December 31, 2002. In 2002, Enis Refining &
Marketing division had net sales from operations (including intersegment
sales) of euro 21,546 million and operating income of euro 321 million.

Eni is implementing a rebalancing of its retail distribution activities
in Italy and outside Italy and intends to continue the upgrading of its
retail network in Italy by selling and closing marginal service stations and
developing the stronger part of its network (service stations with high
throughput and high non oil potential) and its non oil retail activities.
Enis objective is to reach European standards in terms of average
throughput, services to customers and automation. Outside Italy Eni intends
to strengthen its position in selected areas in Europe where it can obtain
logistical and operating synergies and exploit its well-known brand name.
Eni also intends to increase the flexibility of its refining system aimed at
optimizing its supply system and improving product quality, in line with the
expected trends of demand for fuels. Eni will intensify its efforts for
efficiency improvements in all its business lines.

The matters regarding future rationalization plans discussed in this
section and elsewhere herein are forward-looking statements that involve
risks and uncertainties that could cause the actual results to differ
materially from those in such forward-looking statements. Such risks and
uncertainties include difficulties in obtaining approvals from relevant
Antitrust Authorities and developments in the relevant market.

Supply and trading

In 2002, a total of 59.50 million tonnes of oil were purchased (58.51
in 2001), of which 34.04 million tonnes from Enis Exploration & Production
segment, 17.06 million tonnes under long-term contracts with producing
countries, and 8.40 million tonnes on the spot market. Some 25% of oil
purchased came from North Africa, 24% from West Africa, 17% from the North
Sea, 12% from the Middle East, 10% from countries of the former Soviet
Union, 8% from Italy, and 4% from other areas. Some 27.26 million tonnes
were resold, representing an increase of 4.56 million tonnes, up 20.1%, over
2001. In addition, 5.06 million tonnes of intermediate products were
purchased (4.18 in 2001) to be used as feedstocks in conversion plants and
16.57 million tonnes of refined products (15.23 in 2001) were sold on
markets outside Italy (10.16 million tonnes) and as a complement to own
production on the Italian market (6.41 million tonnes).

Refining

Enis refining system in Italy is composed of five wholly owned
refineries and a 50% interest in the Milazzo refinery in Sicily. At December
31, 2002, Enis wholly owned refineries in Italy had a balanced capacity of
504,000 barrels/day and conversion capacity of about 16.3 million
tonnes, with a 58.5% conversion equivalent rate, one of the highest in
Europe.





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Within Enis strategy of downsizing its refining system, aimed at
better balancing its own production with demand, Eni and Erg SpA conferred
the Priolo (owned by Eni) and Melilli (owned by Erg) refineries in Sicily,
as well as their related power stations to the newly established company Erg
Raffinerie Mediterranee Srl (Enis interest 28%). Eni and Erg hold put and
call options respectively on Enis interest expiring in 2006 at a set price.
This operation includes a four-year processing contract under which Erg
Raffinerie Mediterranee will process about 2 million tonnes/year of crudes
on account of Eni and will provide to Eni refined products obtained
therefrom at a set price. Following this agreement, Enis processing on its
own account is targeted to decline by about 7.5 million tonnes in 2006.

Eni is currently implementing a program for increasing refinery
performance aimed at: (i) reducing operating costs through energy saving,
more flexible operating structures and optimization of maintenance; and (ii)
increasing the conversion index from the present 58.5% to over 60% by 2006,
in order to improve product mix in line with the expected trends in fuel
consumption.

The table below sets forth certain statistics regarding Enis
refineries at December 31, 2002.

|                         |                             |                               |          |          |  |          |   |                |  |              |  |              |      |         |  |          |         | 
|------------------------ | --------------------------- | ----------------------------- | -------- | -------- |  | -------- | - | -------------- |  | ------------ |  | ------------ | ---- | ------- |  | -------- | ------- | 
|                         |                             |                               |          |          |  |          |   |                |  |              |  |              |      |         |  | Balanced
|                         |                             |                               |          |          |  |          |   |                |  |              |  |              |      |         |  | Primary 
|                         |                             |                               |          |          |  |          |   | Ownership      |  | Conversion   |  | Distillation
|                         |                             |                               |          | Location |  | Interest |   | Equivalent (1) |  | Capacity (2)
|                         |                             |                               |          |          |  |          |   |                |  |             
|Wholly-owned refineries: |                             |                               |          |          |  |          |   |                |  |              |  |              |      |         |  |         
|                         | Sannazzaro                  |                               | Lombardy |          |  | 100.0    | % |                |  | 42.0         |  |              |      | 160,000 | 
|                         | Gela                        |                               | Sicily   |          |  | 100.0    | % |                |  | 138.5        |  |              |      | 100,000 | 
|                         | Taranto                     |                               | Apulia   |          |  | 100.0    | % |                |  | 70.8         |  |              |      | 90,000  | 
|                         | Livorno                     |                               | Tuscany  |          |  | 100.0    | % |                |  | 11.4         |  |              |      | 84,000  | 
|                         | Porto Marghera              |                               | Veneto   |          |  | 100.0    | % |                |  | 22.8         |  |              |      | 70,000  | 
|                         |                             | Total wholly-owned refineries |          |          |  |          |   |                |  |              |  |              | 58.5 |         |  |          | 504,000 | 
|Partly-owned refineries: |                             |                               |          |          |  |          |   |                |  |              |  |              |      |         |  |         
|                         | Milazzo                     |                               | Sicily   |          |  | 50.0     | % |                |  | 69.6         |  |              |      | 80,000  | 
|                         | Ingolstadt/Vohburg/Neustadt |                               | Germany  |          |  | 20.0     | % |                |  | 30.0         |  |              |      | 52,000  | 
|                         | Schwedt                     |                               | Germany  |          |  | 8.0      | % |                |  | 33.0         |  |              |      | 18,000  | 
|                         |                             | Total partly-owned refineries |          |          |  |          |   |                |  |              |  |              | 40.9 |         |  |          | 150,000 | 
|                         |                             | Total Eni                     |          |          |  |          |   |                |  |              |  |              | 48,7 |         |  |          | 654,000 | 



---

|(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.





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##### Table of Contents



Each of Enis Italian refineries is specialized based on its logistical
configuration, geographic location and integration with other Eni business
segments.

Sannazzaro,with a balanced primary conversion capacity of 160,000
barrels/day, is one of the most modern and efficient refineries in Europe.
Located in the south-west of the Po Valley, at the confluence of the rivers
Po and Tessin, it produces mainly gasolines and other light products for the
supply of markets in Northwestern Italy, Austria, Switzerland and Bavaria.
Beside its primary distillation plants, this refinery contains two catalytic
reforming plants used to increase the octane number of gasolines, an
isomerization plant and three desulfurization plants, which allow a high
degree of flexibility of production related to market and environmental
conditions. The conversion plants are: a fluid catalytic cracker (FCC), a
HDCK middle distillate conversion, and a visbreaking thermal conversion.
This refinery processes mainly oil from Russia and Africa incoming at the
nearby Genoa harbor and oil from Enis nearby Villafortuna field. From a
logistical standpoint this refinery is located along the route of the
Central Europe Pipeline, which links the Genoa terminal with the
French-speaking part of Switzerland and Bavaria. In 2002 a turbo expander
was installed, that reduced energy consumption.

Gela,with a balanced primary refining capacity of 100,000 barrels/day,
represents an upstream integrated pole with the production of heavy crudes
obtained from nearby Eni fields offshore Sicily, while downstream it is
integrated with Enis nearby petrochemical plants. Located on the southern
coast of Sicily, it manufactures fuels for automotive use and residential
heating purposes, as well as petrochemical feedstocks. Its high conversion
level allows it to minimize the yield of fuel oil and semi-finished
products. Beside its primary distillation plants, this refinery contains
conversions plants such as a FCC and two coking plants. All these plants are
integrated in order to process heavy residues and manufacture valuable
products. Besides its primary distillation plants, this refinery contains
the following plants: an FCC reactor with advanced technology and two coking
plants for the conversion of low grade feedstocks and vacuum conversion of
heavy residues. All these plants are integrated in order to process heavy
residues and manufacture valuable products. This refinery also contains
modern residue and exhaust fume treatment plants which allow the refinery to
reduce the environmental impact of its operations.





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##### Table of Contents



Taranto,with a balanced primary conversion capacity of 90,000
barrels/day, can process a wide range of crudes and semi-finished products
with great operational flexibility. It mainly produces fuel for automotive
use and residential heating purposes for the southeastern Italian markets.
Beside its primary distillation plants, this refinery contains
desulfurization plants, and conversions plants such as: a two-stage thermal
conversion plant (visbreaking/thermal cracking) and an RHU conversion plant,
one of the most advanced plants in the world with high yield of valuable
products and low environmental impact. The plant is provided with a column
for amminic washing of the gas deriving from the RHU process, which extends
its useful life. This plant processes most of the oil produced in Enis Val
dAgri fields, carried to Taranto through the Monte Alpi pipeline which
started operations in late 2001.

Livorno,with a balanced primary refining capacity of 84,000
barrels/day, manufactures gasolines, specialty products and lubricant bases.
Besides its primary distillation plants, this refinery contains two gasoline
treatment plants, an isomerization plant and an octanization plant for the
manufacture of highly environmental friendly gasolines, as well as a
technologically advanced solvex cycle for lubricant manufacture. Its
pipeline links with the local harbor and with the Florence storage sites
allow the Livorno facility to operate with great efficiency with respect to
reception, handling and distribution of products.

Porto Marghera,with a balanced primary conversion capacity of 70,000
barrels/day, produces mainly gasolines and other light products for the
supply of markets in northeastern Italy, Austria, Slovenia and Croatia.
Beside its primary distillation plants, this refinery contains a gasoline
treatment plant, octanization plants and one two-stage thermal conversion
plant (visbreaking/thermal cracking) in order to increase yields of valuable
products and comply with applicable environmental requirements.

Milazzo(a joint venture in equal shares between Eni and Kuwait
Petroleum Italia) has a balanced primary refining capacity of 160,000
barrels/day and contains two primary distillation plants, one naphtha
treatment plant, one gasoil treatment plant and an octanization plant for
the manufacture of environmentally friendly gasolines. The refinery contains
also three conversion plants: one high capacity FCC for gasoline
manufacture, a HDCK middle distillate conversion plant for gasoil
manufacturing and one conversion plant for heavy residues with hydrogen (LC
finer) which allows manufacturing of environmentally friendly products. This
refinery also has two docks which allow the mooring of vessels with a
maximum dead weight of 104,000 and 420,000 tons respectively.

In Germany Eni holds an 8.3% interest in the Schwedt refinery and a 20%
interest in Bayernoil, an integrated industrial pole including the
Ingolstadt, Vohburg and Neustadt refineries. Enis refining capacity in
Germany amounts to approximately 70,000 barrels per day. Enis share of
production of the three integrated refineries of
Bayernoil and of the Schwedt refinery is mainly used to supply Enis
distribution network in Bavaria and eastern Germany.





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##### Table of Contents



Eni holds a 16.33% interest in Ceska Rafinerska (CRC) which owns and
manages two refineries, in the Czech Republic, Kralupy and Litvinov, with a
total refining capacity of about 8 million tonnes/year. In 2002 the CRC
partners approved a plan under which the refinery will supply services to
oil processing services to its partners in proportion to their respective
interests. This plan will be operational in the second half of 2003.
Previously CRC partners purchased refined products from the refinery in
proportion to their respective interests. Under the new plan CRC partners,
amongst which Eni, will earn the refining margin relating to oil processed
on their own account since the second half of 2003.

Within its strategy of selective development outside Italy, which
provides for Enis disengagement from marginal areas, in January 2002 Eni
sold its 50% share in the Indeni refinery located at Ndola in Zambia.





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##### Table of Contents



The table below sets forth Enis petroleum products availability
figures for the periods indicated.

|                                                         |  |                    |       |      |  |      |       |      |  |      |       |   |  |  |       |   |  |  |       |  
|-------------------------------------------------------- |  | ------------------ | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | - |  |  | ----- | -
|                                                         |  | 1998               |       | 1999 |  | 2000 |       | 2001 |  | 2002
|                                                         |  |                    |       |      |  |      |       |      |  |     
|                                                         |  | (millions of tons)
|Italy                                                    |  |                    |       |      |  |      |       |      |  |      |       |   |  |  |       |   |  |  |       |  
|Products processed in wholly-owned refineries            |  |                    | 34.05 |      |  |      | 32.00 |      |  |      | 32.93 |   |  |  | 32.24 |   |  |  | 30.09 |  
|Products processed for third parties                     |  |                    | (3.24 | )    |  |      | (2.78 | )    |  |      | (3.41 | ) |  |  | (1.45 | ) |  |  | (1.88 | )
|Products processed in non owned refineries               |  |                    | 7.90  |      |  |      | 8.08  |      |  |      | 8.41  |   |  |  | 5.92  |   |  |  | 6.27  |  
|Products consumed and lost                               |  |                    | (1.94 | )    |  |      | (2.07 | )    |  |      | (2.11 | ) |  |  | (1.95 | ) |  |  | (1.91 | )
|Products available                                       |  |                    | 36.77 |      |  |      | 35.23 |      |  |      | 35.82 |   |  |  | 34.76 |   |  |  | 32.57 |  
|Purchases of finished products and change in
inventories |  |                    | 5.74  |      |  |      | 5.45  |      |  |      | 4.30  |   |  |  | 5.19  |   |  |  | 6.06  |  
|Finished products transferred to foreign cycle           |  |                    | (6.51 | )    |  |      | (5.23 | )    |  |      | (4.58 | ) |  |  | (4.96 | ) |  |  | 5.56  |  
|Products sold                                            |  |                    | 36.00 |      |  |      | 35.45 |      |  |      | 35.54 |   |  |  | 34.99 |   |  |  | 33.07 |  
|Outside Italy                                            |  |                    |       |      |  |      |       |      |  |      |       |   |  |  |       |   |  |  |       |  
|Products available                                       |  |                    | 3.33  |      |  |      | 3.08  |      |  |      | 3.07  |   |  |  | 3.02  |   |  |  | 2.98  |  
|Purchases and change in inventories                      |  |                    | 8.35  |      |  |      | 8.06  |      |  |      | 10.27 |   |  |  | 10.27 |   |  |  | 10.41 |  
|Finished products transferred to Italian cycle           |  |                    | 6.51  |      |  |      | 5.23  |      |  |      | 4.58  |   |  |  | 4.96  |   |  |  | 5.56  |  
|Products sold                                            |  |                    | 18.19 |      |  |      | 16.37 |      |  |      | 17.92 |   |  |  | 18.25 |   |  |  | 18.95 |  
|Sales in Italy and outside Italy                         |  |                    | 54.19 |      |  |      | 51.82 |      |  |      | 53.46 |   |  |  | 53.24 |   |  |  | 52.02 |  

Logistics

Eni is the leading transporter of petroleum products in Italy. Its
logistical integrated infrastructure consists of
a network of petroleum product pipelines, 2,413-kilometer long (of
which Eni owns 1,476 kilometers). Included in this system is the Val dAgri
pipeline (which started operating in 2001) that links the Viggiano oil
center to the Taranto refinery over 136 kilometers.

Eni also owns storage facilities, tanker ships and a large fleet of
tanker trucks (some of which wholly owned by Eni). Eni intends to sell its
tanker ship fleet made up of four vessels. In October 2002 it published a
tender offer and is currently expecting the completion of the due diligence
phase from possible purchasers.

Eni also operates and owns an underground storage facility in Livorno
with the capacity to store 45,000 cubic meters of propane.

From 2000, three joint ventures with Italian oil companies are
operating wich provide services of handling and storage of refined products
and bunkering to their partners with the aim of reducing costs, increasing
efficiency and developing innovative integrated services to customers.

Distribution and 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 sets forth Enis sales of refined
products by distribution channel for the periods indicated.





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##### Table of Contents



|                               |  |                    |       |      |  |      |       |      |  |      |       |  |  |  |       |  |  |  |       | 
|------------------------------ |  | ------------------ | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- |  |  |  | ----- |  |  |  | ----- | 
|                               |  | 1998               |       | 1999 |  | 2000 |       | 2001 |  | 2002
|                               |  |                    |       |      |  |      |       |      |  |     
|                               |  | (millions of tons)
|Retail marketing               |  |                    | 12.02 |      |  |      | 11.85 |      |  |      | 11.57 |  |  |  | 11.64 |  |  |  | 11.14 | 
|Wholesale marketing            |  |                    | 11.73 |      |  |      | 11.42 |      |  |      | 11.10 |  |  |  | 11.24 |  |  |  | 10.64 | 
|                               |  |                    | 23.75 |      |  |      | 23.27 |      |  |      | 22.67 |  |  |  | 22.88 |  |  |  | 21.78 | 
|Petrochemicals                 |  |                    | 5.75  |      |  |      | 5.38  |      |  |      | 4.93  |  |  |  | 4.23  |  |  |  | 3.82  | 
|Other sales(1)                 |  |                    | 6.50  |      |  |      | 6.80  |      |  |      | 7.94  |  |  |  | 7.88  |  |  |  | 7.47  | 
|Sales in Italy                 |  |                    | 36.00 |      |  |      | 35.45 |      |  |      | 35.54 |  |  |  | 34.99 |  |  |  | 33.07 | 
|Retail sales rest of Europe    |  |                    | 2.35  |      |  |      | 2.36  |      |  |      | 2.35  |  |  |  | 2.47  |  |  |  | 2.57  | 
|Retail sales Africa and Brazil |  |                    | 1.11  |      |  |      | 1.54  |      |  |      | 1.43  |  |  |  | 1.71  |  |  |  | 1.44  | 
|                               |  |                    | 3.46  |      |  |      | 3.91  |      |  |      | 3.78  |  |  |  | 4.18  |  |  |  | 4.01  | 
|Wholesale marketing            |  |                    | 6.20  |      |  |      | 6.40  |      |  |      | 5.46  |  |  |  | 5.55  |  |  |  | 5.65  | 
|                               |  |                    | 9.66  |      |  |      | 10.31 |      |  |      | 9.24  |  |  |  | 9.73  |  |  |  | 9.66  | 
|Other sales(1)                 |  |                    | 8.53  |      |  |      | 6.06  |      |  |      | 8.68  |  |  |  | 8.52  |  |  |  | 9.29  | 
|Sales outside Italy            |  |                    | 18.19 |      |  |      | 16.37 |      |  |      | 17.92 |  |  |  | 18.25 |  |  |  | 18.95 | 
|                               |  |                    | 54.19 |      |  |      | 51.82 |      |  |      | 53.46 |  |  |  | 53.24 |  |  |  | 52.02 | 



---

|(1) |  | Includes bunkering, consumption for power production and sales to oil
companies.
|--- |  | --------------------------------------------------------------------------------

In 2002, sales of refined products (52.02 million tons) decreased by
1.22 million tons, down 2.3%, due mainly to sales and closures of service
stations in Italy (641 units) within the network streamlining process, to
the sale of Enis distribution network in Nigeria and to the streamlining of
the distribution network in Brazil.

Retail Marketing

Italy.At December 31, 2002, Enis retail distribution network in Italy
consisted of 7,710 service stations, of which approximately 61% under the
«Agip» brand name and 39% under the «IP» brand name. Eni continues the
requalification process of its (owned and leased) Italian retail network by
selling and closing down service stations that do not meet Enis target
standards and by developing the stronger part of its network (stations with
high throughput and high non oil retail potential). Enis objective is to
reach European standards in terms of throughput and services provided to
customers and automation. The development and upgrade of large service
stations will allow to better exploit the changes that are going to be
introduced in Italian regulations, such as non oil sales and longer opening
hours. Within this requalification project the new IP company was
established to which all leased service stations were transferred
(approximately 3,000 service stations), all of which with lower average
throughput than the European standard.

In 2002, the total number of Enis service stations decreased by 641
units, following the closing down of 549 stations and the sale of 246
stations, offset in part by the opening of 51 new service stations and the
positive balance of acquisitions and expirations of lease contracts (103
units). Eni also agreed to the sale of 330 service stations to be finalized
in 2003 within swap transactions on European markets.

The «Do-it-yourself» policy supported by the «High fidelity» campaign
continued its very successful course and was extended to more Agip-branded
service stations (approximately 64% of the Agip-branded network). Enis
average throughput increased by 3.9% over 2001, from 1,643,000 liters to
1,707,000 liters. Market share was 37.5% (39.7% in 2001). The aim to improve
the quality of service to customers led to a further expansion of the
automation process of the domestic network. At December 31, 2002
approximately 76% of Enis service
stations and 94% of Agip-branded service stations were provided with a
corporate credit card system (60% in 2001).





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##### Table of Contents



In line with the intent of improving the quality of products and
services, Eni started selling in its Agip-branded service stations in Italy
a new diesel fuel with low environmental impact named BluDiesel, containing
only 10 parts per million of sulphur (10 mg/kg) and allowing for cleaner
injection and protection of the fuel burning system in cars, better
combustion and faster start-up even at low temperatures, anticipating by
seven years the European regulations on this issue. The BluDiesel campaign
gives greater value to the potential of Enis integrated system (refining,
logistics and distribution) selling in a traditionally undifferentiated
market a well identifiable and branded product, aimed at meeting the
requirements of consumers that pay more attention to the environment and
greater care to their cars. Sales of BluDiesel started in November 2002 and
by year-end 1,500 service stations were selling the new product which was
well accepted by customers all over Italy. BluDiesel sales amounted to
35,000 tonnes in 2002. On the ordinary service stations network where
BluDiesel is sold, average sales amounted to 20-25% and peaked in some
instances at 50% of total gasoil sales.

Eni continued the development of its non oil retail activities aimed at
promoting the development of its network in line with European standards,
such as the diffusion of self-service and innovative commercial outlets. To
this end Eni owns: (i) 50% of Finifast, a restaurant and catering company
with a strong presence in highway outlets, which owns a 20-year license for
the Fini trademark; (ii) master franchisor rights with exclusive rights for
the oil sector for some international brands of the restaurant and catering
sector. In the next 8 to 10 years Eni plans to open 4-500 food outlets (200
of these in the next four years) with high visibility. In 2002, a total of
69 food outlets were opened under own brands (Agip Cafè and RistorAgip) and
also under the following trademarks: Fini, McDonalds and Pans & Co. The
program provides also for more service stations to be equipped with car wash
facilities and convenience stores.

Retail sales (11.14 million tons) decreased by 500,000 tonnes, down
4.3%, due mainly to sales and closures of service stations (641 units)
within the network streamlining process.

Outside Italy.As of December 31, 2002, Enis distribution network
outside Italy consisted of 3.052 service stations located mainly in Europe
and Brazil. Eni intends to increase its market share in selected areas in
Europe, where it can leverage on logistical and operational synergies and on
its well established brand name. In 2002 it acquired 61 service stations in
France with a total throughput of about 150 million liter/year and 40
service stations in central-eastern Europe (in particular 23 service
stations in the Czech Republic, 11 in Hungary and 6 in Slovakia) with a
total throughput of about 71 million liters/year. Still in 2002, Eni
purchased additional 313 service stations: in particular two agreements were
signed with respect to the Spanish market: (i) under the first one, in 2002,
Eni bought 92 service stations, with a total throughput of 300 million
liters/year, and a storage site with a capacity of about 50 million liters
located on the Spanish Mediterranean coast; (ii) under the second one, in
2003, Eni purchased 130 service stations with total throughput of about 320
million liters/year and a storage site with a capacity of about 56 million
liters, located in Gijon in northern Spain. A third agreement concerned 91
service stations in central Europe (56 in southern Germany and 35 in
central-eastern France) with a total throughput of 273 million liters/year.

As final step of its strategy of exiting the African market, Eni
finalized the sale of its distribution network in Nigeria (242 service
stations) and Zambia (20 service stations).

Galp (in which Eni has a 33.34% interest), through its subsidiary
Petrogal, is a leader in refining, distribution and sale of refined products
in Portugal. Petrogal owns two refineries with a total capacity of 15.2
million tons/year and a sale network made up of 965 service stations (1,082
in 2001) with a 45.6% market share (46.7% in 2001) and average throughput of
2.75 million liters (2.52 in 2001). Petrogal holds also a 42.9% market share
in LPG (44.6% in 2001). Galp controls 93% of the Portuguese logistics
assets. In Spain Galp has a network of 162 service stations (189 in 2001).

Retail sales in the rest of Europe amounted to 2.57 million tonnes and
increased by 100,000 tonnes, up 4.0% over 2001, due to the purchase of
service stations in France (following agreements signed in 2001 with
TotalFinaElf) and in central-eastern Europe. Retail sales in Africa and
Brazil (1.44 million tonnes) declined by 270,000 tonnes, down 15.8% over
2001, due mainly to the sale of Enis distribution network in Nigeria and to
the streamlining of the distribution network in Brazil.





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##### Table of Contents



Wholesale Marketing and Other Sales

Eni sells gasoline, gasoil, fuel oil, lubricants, petroleum coke and
LPG both directly to large customers and through independent distributors on
various wholesale markets. Major customers are the agricultural and
manufacturing industries, public utilities and transport companies. Eni also
sells jet fuel directly at 38 airports, of which 27 in Italy, and marine
fuel (bunkering) directly at 38 ports, of which 23 are in Italy. In
addition, it sells virgin naphtha and fuel oil to Enis Petrochemical
segment. Enel is the single largest customer of Enis Refining & Marketing
division, purchasing approximately 9% of its total refined products
requirements from Eni and accounting for approximately 6% of Enis total
revenues from wholesale sales in Italy in 2002.

Sales on wholesale markets in Italy (10.64 million tons) decreased by
600,000 tonnes, down 5.3%, due mainly to lower sales of gasoil for heating
purposes. Market share decreased by 1.7 percentage points from 25.6 in 2001
to 23.9% in 2002 due to the higher share of sales of fuel oil to the
thermoelectric segment in domestic consumption; Enis sales to this segment
were not material.

Eni concluded the reorganization of its wholesale activities by
concentrating all businesses into one company (Atriplex SpA) that integrates
in one central and peripheral commercial structure the segments of large and
small retailers and consumers. The business was transferred as of January 1,
2003.

Sales to Enis Petrochemical segment in Italy (3.82 million tonnes)
decreased by 410,000 tonnes, down 9.7%, due mainly to lower availability of
specific refinery products (transfer of the Priolo refinery and standstills
at the Gela refinery), while other sales (7.47 million tonnes) decreased by
410,000 tonnes, down 5.2%.

Outside Italy, wholesale sales (5.65 million tonnes) increased by
100,000 tonnes. Other sales (9.29 million tonnes) increased by 770,000
tonnes, up 9%, due mainly to higher sales to oil companies.

Other Activities

Eni manufactures MTBE, a gasoline additive, through its production
plant located in Ravenna, Italy (with a capacity of 120,000 tons/year), and
through plants operated by joint ventures in Venezuela and Saudi Arabia. Eni
is also a producer of methanol through a plant operated in a joint venture
in Venezuela. Additionally Eni produces and markets specialty products such
as solvents, paraffins, sulfur and aromatics.

LPG

Eni is a leader in Italy in the production, distribution and marketing
of LPG with a retail and wholesale market share of 20.9% in 2002, while
market share in LPG for automotive use was 23.8%. Eni also has a significant
presence in Brazil and Ecuador with market shares of 21.3% and 37.5%
respectively.

Enis main activities in Brazil concern the direct sale of LPG to
commercial and industrial users as well as the sale of bottled LPG, mainly
employed in household use. Eni owns 28 LPG storage facilities and 28
bottling facilities with a sales network composed of over 5,000 vendors.
Besides bottled LPG, Eni also sells LPG directly to over 16,000 customers,
provided with tanks of varying sizes under gratuitous loans. In the near
future capital expenditure will be aimed at expanding and upgrading its
bottle manufacturing activities (Brazilian laws allow bottlers to handle
only their own branded bottles), installing new LPG tanks and modernizing
bottling facilities.

Lubricants

Eni operates 13 (owned and co-owned) blending plants, in Italy, Europe,
North and South America and the Far East. Eni is a market leader in Italy in
lubricants with the manufacturing of base oils, primarily at its
refinery in Livorno, and in marketing. Eni owns a 33.33% share in
facilities in Italy for the reprocessing of used oils, for the manufacture
of base oils and greases, it also owns two facilities for the production of
additives and solvents. In 2002, retail and wholesale markets sales in Italy
amounted to 154,00 tonnes with a 26.7%





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##### Table of Contents



market share. Outside Italy sales amounted to approximately 130,000
tonnes, of these about 42% in Europe (mainly Germany and Spain) and 34% in
the Americas (Brazil and the United States).




Petrochemicals

Eni
operates in the businesses of olefins and aromatics, basic
intermediate products, chlorine derivatives, polystyrene, elastomers and
polyethylene. Its major production sites are located in Italy and in Western
Europe.

Effective from January 1, 2002 Eni transferred its Strategic Chemicals
businesses owned by Enichem SpA to Polimeri Europa Srl which (both
wholly-owned subsidiaries of Eni). These businesses includes EniChems core
activities in olefins and aromatics, intermediate products, styrene and
elastomers produced in Italy in Brindisi, Sarroch, Ferrara, Gela, Mantova,
Porto Marghera, Priolo, Ravenna and Settimo Milanese. Also the research
centers of Ferrara, Mantova, Porto Marghera, Ravenna and Novara were
transferred, as well as the interests in industrial and commercial companies
in Italy and outside Italy and about 6,100 employees. Certain plants were
not transferred. Assets transferred had a net value of euro 432 million
(determined by an independent expert named by the court). At the same time
Polimeri Europa Srl (now Polimeri Europa SpA), which produces and sells
mainly basic petrochemicals and polyethylene, increased its capital (fully
paid in by Enichem SpA), for a nominal value of euro 359 million and
additional-paid-in capital of euro 73 million. The transaction was entirely
inter-company and for purposes of legal re-organization only. Accordingly,
there was no effect on the consolidated financial statements. Despite the
fact that Eni owned 100% of Polimeri Europa Srl from April 2001, it
continued to account for this company under the equity method, in light of
the fact that it intended to sell it in 2002, after the transfer of the
above mentioned assets. This treatment is consistent with Enis principles
of consolidation. When the financial statements for the year 2001 were
approved by Enis Board of Directors, negotiations for a possible sale were
underway. During 2002 these negotiations failed and Eni began to consolidate
Polimeri Europa SpA.

The persistence of negative market conditions and the structural
problems of petrochemicals worldwide, related to overcapacity, made the need
for restructuring Enis petrochemical activities compelling. In November
2002 Eni started procedures for selling its elastomer business which
produces thermoplastic rubber, specialty rubber and latices in Ravenna and
Ferrara in Italy, Hythe and Grangemouth in the United Kingdom, Champagnier
in France and Baytown in the United States with a total of 1,895 employees.
In 2002 the elastomer division generated revenues of euro 581 million and
sales of 422,000 tonnes. The due diligence phase is underway. In 2002 Eni
shut down the Porto Torres soda-chlorine plant and the Porto Marghera
acetylene plant.

In 2002 the demand for petrochemical products was affected by the
slowdown of worldwide economy, whose effects were partly offset by the
build-up of stocks by end users. Margins of petrochemical products declined
significantly over 2001, in particular for olefins and elastomers, due to a
decrease in selling prices (down 8.1% on average) higher than the decline in
prices in euro of oil-based feedstocks (down 1.2% on average). Indications
of a return to profitability in 2003 are affected by the high risk of
further increases in oil-based feedstocks prices due to geo-political
tensions and uncertainties on the future recovery of world economy.

The prices of Enis principal petrochemical products decreased on
average by 8.1%; the main declines concerned polyethylene (down 13%, in
particular HDPE) and elastomers (down 9%, in particular BR and SBR general
purpose rubbers).

Sales of petrochemical products (6,307,000 tonnes) increased by 1,074
tonnes, up 20.5%, due mainly to the entry into scope of consolidation of
Polimeri Europa and to the building up of stocks by end users in the first
half of 2002, in particular of polyethylene and styrenic polymers. Sales of
intermediate products increased significantly.

Production (9,575,000 tonnes) increased by 1,745 tonnes, up 22.3%. The
increase in production of core business activities due also to the
consolidation of Polimeri Europa was offset by the decline in chlorine





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production, determined by the shutting down of the soda-chlorine Porto
Torres plant and by the sale of the polyurethane business (effective from
May 2001).

Total nominal production capacity declined by 1%, due to the shutting
down of the Porto Torres soda-chlorine plant and sale of the polyurethane
business. The average capacity utilization rate calculated on nominal
capacity was substantially stable (72.1%).

About 42% of total production was directed to Enis own production
cycle. Oil-based feedstocks supplied by Enis Refining & Marketing division
covered 52% of requirements in 2002.

The table below sets forth Enis main petrochemical products
availability for the periods indicated.

|                                    |                |  |                            |       |      |  |        |       |      |  |        |       |  |  |        |       |  |  |        |       | 
|----------------------------------- | -------------- |  | -------------------------- | ----- | ---- |  | ------ | ----- | ---- |  | ------ | ----- |  |  | ------ | ----- |  |  | ------ | ----- | 
|                                    |                |  | Year ended December 31,   
|                                    |                |  |                           
|                                    |                |  | 1998                       |       | 1999 |  | 2000   |       | 2001 |  | 2002  
|                                    |                |  |                            |       |      |  |        |       |      |  |       
|                                    |                |  | (thousands of metric tons)
|Basic petrochemicals                |                |  | 6,305                      |       |      |  | 6,354  |       |      |  | 6,475  |       |  |  | 6,119  |       |  |  | 6,634  |      
|Styrene and elastomers              |                |  | 1,629                      |       |      |  | 1,584  |       |      |  | 1,693  |       |  |  | 1,537  |       |  |  | 1,565  |      
|Polyethylene                        |                |  | 109                        |       |      |  | 109    |       |      |  | 108    |       |  |  | 84     |       |  |  | 1,376  |      
|Polyurethane                        |                |  | 247                        |       |      |  | 252    |       |      |  | 255    |       |  |  | 91     |       |  |  |        |      
|                                    |                |  | 8,291                      |       |      |  | 8,298  |       |      |  | 8,532  |       |  |  | 7,830  |       |  |  | 9,575  |      
|Internal consuption                 |                |  | (3,740                     | )     |      |  | (3,634 | )     |      |  | (3,674 | )     |  |  | (3,185 | )     |  |  | (3,979 | )    
|Purchases and change
in inventories |                |  | 981                        |       |      |  | 957    |       |      |  | 757    |       |  |  | 588    |       |  |  | 711    |      
|                                    | Total products |  |                            | 5,532 |      |  |        | 5,622 |      |  |        | 5,616 |  |  |        | 5,233 |  |  |        | 6,307 | 

The table below sets forth Enis sales of main petrochemical products
by volume for the periods indicated.

|                       |             |  |                            |       |      |  |       |       |      |  |       |       |  |  |       |       |  |  |       |       | 
|---------------------- | ----------- |  | -------------------------- | ----- | ---- |  | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | ----- |  |  | ----- | ----- | 
|                       |             |  | Year ended December 31,   
|                       |             |  |                           
|                       |             |  | 1998                       |       | 1999 |  | 2000  |       | 2001 |  | 2002 
|                       |             |  |                            |       |      |  |       |       |      |  |      
|                       |             |  | (thousands of metric tons)
|Basic petrochemicals   |             |  | 3,984                      |       |      |  | 4,029 |       |      |  | 4,002 |       |  |  | 3,928 |       |  |  | 3,681 |      
|Styrene and elastomers |             |  | 1,207                      |       |      |  | 1,241 |       |      |  | 1,253 |       |  |  | 1,138 |       |  |  | 1,178 |      
|Polyethylene           |             |  | 106                        |       |      |  | 115   |       |      |  | 107   |       |  |  | 84    |       |  |  | 1,448 |      
|Polyurethane           |             |  | 235                        |       |      |  | 236   |       |      |  | 253   |       |  |  | 83    |       |  |  |       |      
|                       | Total sales |  |                            | 5,532 |      |  |       | 5,622 |      |  |       | 5,616 |  |  |       | 5,233 |  |  |       | 6,307 | 




Oilfield Services and Engineering

Through Saipem SpA, Eni engages in the laying of underwater pipelines
and installation of offshore platforms and FPSO Systems, in onshore
construction (pipelaying and plant erection) and onshore and offshore
drilling. Through Snamprogetti SpA, Eni is an international operator in
engineering and contracting services, in particular for the oil and gas,
chemical and petrochemical industries. In 2002, Enis oilfield services
activities were positively affected by the upward trend of oil companies
demand for services which determined an increase in activity levels and in
unit margins in the offshore construction and offshore drilling activities.
The engineering activity too registered good signs of recovery in demand, in
particular in the area of upstream plants for hydrocarbon treatment, which
shows interesting growth prospects and where Eni has strong skills and
technical know-how.





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##### Table of Contents



In 2002 orders acquired (euro 7,852 million) increased by euro 4,136
million over 2001, up 111%, due to the good trend of marketing activities
and orders acquired following the purchase of Bouygues Offshore (euro 1,119
million). About 96% of new orders acquired was represented by work to be
carried out outside Italy, and 12% by work originated by Eni companies. In
light of the explain in the year, Enis order backlog reached euro 10,065
million at December 31, 2002, with an increase of euro 3,128 million, up 45%
as compared to December 31, 2001. Projects outside Italy represented 78% of
the total order backlog, while orders from Eni companies amounted to 13% of
the total.

Oilfield Services

Through Saipem (a listed company of which Eni currently owns
approximately 43% of the ordinary shares, with the balance publicly held),
Eni engages in the laying of underwater pipelines and the installation of
offshore platforms and FPSO Systems, onshore construction (pipelaying and
plant erection) and onshore and offshore drilling. Saipem owns a world-class
fleet of technologically advanced vessels.

Eni intends to develop its competitive position in the segment of large
EPIC (Engineering, Procurement, Installation, Commissioning) projects for
the development of offshore and deep offshore hydrocarbon fields by
leveraging on the strengthening of its role of global contractor following
the purchase of Bouygues Offshore and of its technological and operational
skills in the area of floating production systems. In particular Eni intends
to increase its know-how in floating oil production systems and in LNG
floating systems that integrate production, storage, transport and
regasification of natural gas. Eni intends to increase the relative
importance of offshore construction and floating production systems
expanding its presence in key areas in the Middle East, the Caspian Sea and
South East Asia, strengthening its position in the areas with the most
promising growth prospects (currently, West Africa).

In the field of drilling Eni intends to focus on strategic geographical
areas adopting long-term commercial policies that ensure high use of
facilities also in case of low economic activity. In the onshore
construction sector, Eni will focus on complex projects for the construction
of natural gas transmission infrastructure.

Eni intends to intensify efficiency improvements in all its activities
and in the management of working capital.

Among the most significant orders won in 2002 are:



| |  |  | In the Offshore construction area: (i) a turnkey contract for
dollar 662 million for Esso Exploration & Production Nigeria Ltd,
related to a floating production, storage and offloading (FPSO)
system for the development of the Erha field offshore Nigeria. The
project includes engineering, procurement, construction, towing and
commissioning of the FPSO, consisting of a 285-meter long, 63-meter
wide and 32-meter high hull and 24,000 tonnes of production modules.
The vessel will have a storage capacity of 2.2 million barrels and
an initial production capacity of 165,000 barrels/day. The FPSO is
scheduled to arrive on the Erha field in June 2005, in line with
planned start-up in late 2005; (ii) a turnkey contract, awarded by
Mobil Producing Nigeria Unlimited for dollar 345 million for the
development of the Yoho and Awawa offshore fields which includes
project management, engineering, procurement, construction,
transportation and installation, hook up and commissioning of one
production platform, underwater pipeline laying and the installation
of other facilities. The Castoro 8 vessel will install the platform
and lay the pipelines between late 2003 and early 2004, whereas the
Saipem 7000 vessel will install the deck during the second half of
2004. The project is expected to be completed by the end of 2004;
(iii) the EPSC2 turnkey contract for phase 4 of the Peciko Project
for TotalFinaElf for euro 149 million. The contract includes
engineering, procurement, transport and installation of two
platforms and six sealines, offshore east Kalimantan in Indonesia.
Marine activities performed by Castoro 2 and Maxita are expected to
be completed by July 2004; (iv) a contract for euro 63 million for
Shell for the Goldeneye Project in the North Sea, comprising the
laying of two sealines by Castoro 6; (v) in joint venture with the
Nigerian company Pelfaco a contract for the supply of the Okpoho
platform for the development of the Okpoho field offshore Nigeria
operated by Eni with a 100% interest. The contract (euro 53 million)
includes engineering, procurement, construction and start-up
activities.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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| |  |  | In the Offshore drilling area: a contract with Statoil for a
three-year lease of the Scarabeo 5 platform in the North Sea. The
contract (dollar 160 million) includes the option of a 16-month
extension.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | In the Onshore construction area: (i) a turnkey contract for the
construction of an oil treatment plant in the Rhourde Ouled Dejmaa
(ROD) field in Algeria with a capacity of 80,000 barrels/day for
Sonatrach/BHP for dollar 129 million representive Enis share. The
contract provides for the engineering, procurement and construction
of the treatment plant and its auxiliary installations (a network of
pipelines and some storage sites) and the provision of services for
the operation of the plant; (ii) a contract with the Nigerian
company NAOC for the upgrade of the gas plant at Obiafu/Obrikom and
the construction of a flow station near the Irri field in Nigeria.
The contract provides for the engineering, procurement and
construction of the plant for an amount of dollar 72 million.

At December 31, 2002, the order backlog of Saipem amounted to euro
5,158 million (compared with euro 2,853 million at December 31, 2001), of which approximately 96%
related to projects outside Italy and approximately 12% related to orders
from Eni group companies.

On July 9, 2002, Saipem completed the acquisition of Bouygues
Constructions 50.8% interest in Bouygues Offshore after receiving the
approval of the European Antitrust Authority. Bouygues Offshore is a French
company leader in the field of engineering services for the oil industry.
The cash offer price was euro 60.08 per share. Following approvals from the
French and USA market authorities Saipem launched a tender offer for the
remaining shares held by the public at the same price paid to Bouygues
Construction for its majority interest. This tender offer on the French
market was completed on September 6, 2002 with the purchase of a further 46%
interest in Bouygues Offshore (thus bringing Enis total amount of voting
rights to 96.8%). On September 23, 2002, Saipem performed a repurchase offer
followed by a squeeze-out of the minority shareholders. Such procedures were
closed on October 30 and Bouygues Offshore shares were withdrawn from the
Paris and New York Stock Exchanges. At the end of these procedures Saipem
owned 100% of the voting rights and 98.8% of the share capital, the
remaining 1.2% being represented by treasury shares held by Bouygues
Offshore for its stock option plans. The total cost of this transaction was
euro 906 million (net of cash acquired for euro 100 million).

The combination of Saipems construction capabilities supported by
technologically advanced vessels and Bouygues Offshores engineering and
project management expertise creates an operator able to compete in the
market of turnkey projects to the oil industry. With this acquisition Saipem
strengthens its competitive positioning in the provision of project
management, engineering, procurement and construction services for the
development of hydrocarbon fields, with a particular focus on challenging
projects in remote areas, deep-water environments and gas-related projects.
The new group will be a truly worldwide contractor, with strong local
presence in strategic and emerging areas such as West Africa, the former
Soviet Union, Central Asia, North Africa, Middle East and South East Asia.
Bouygues Offshore has a sound competitive position in the market of services
for onshore and offshore oil and gas production facilities. Other activities
include maintenance services, construction of port facilities, and LNG
supply. Bouygues Offshores main geographic areas of activity are Europe and
Africa. The company employs approximately 2,500 engineers.

In 2002 Eni purchased: (i) a 50% interest in European Marine
Contractors (EMC), operating in the laying of large diameter subsea
pipelines in the North Sea, in which it already held a 50% interest. Enis
outlay amounted to euro 122 million. With this acquisition Eni obtains full
availability of EMC vessels, among which the semisubmersible drilling rigs
Castoro 6 and Semac and consolidates its capability in the field of large
diameter pipelaying in deep waters: (ii) the whole share capital of SaiClo
Luxembourg for euro 23 million, owner of the Maxita multipurpose vessel
capable of laying flexible, umbilical lines and mooring systems in deep
waters.

Engineering

Eni, through Snamprogetti, is engaged in engineering and contracting,
in the area of plants for hydrocarbon production, refining, treatment and
enhancement of natural gas, fertilizers and petrochemicals, pipeline
transport systems, electricity generation and infrastructure.





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##### Table of Contents



Its firm standing on international markets as global contractor for
complex projects is ensured by various competitive advantages deriving from
its long track record in international contracting, its ability to supply
integrated packages and turn-key projects, a flexible organizational
structure and a continuous development of advanced proprietary technologies.
The services offered cover the whole cycle of investments: consulting,
feasibility studies, project financing assistance, basic and executive
engineering, project management, procurement, supervision and direction of
operations, testing and first operation of plant, personnel training.

In over forty years of activity, Eni has operated in more than 100
countries, building 70 industrial grass-root complexes, over 1,300 plants
(refineries, chemical and petrochemical plants, infrastructure, offshore
rigs, marine terminals) and engineering 66,000 kilometers of onshore (for
45,000 kilometers of these it also carried out construction works) and
12,000 kilometers of offshore pipelines, including deep waters and hostile
environments.

Eni intends to consolidate its competitive positioning in the market
segment of complex projects requiring a wide and integrated range of
services, flexible organization and a continuous development of new
technologies. It will therefore stress its role of global contractor based
on its distinctive operating skills, the level of services provided and
advanced proprietary technologies. It will focus its activity on market
segments characterized by high growth rates and by the development of
important technologies in strategic areas such as hydrocarbon production,
treatment and transmission as well as upgrading of natural gas (conversion
and liquefaction) and of heavy crudes. Eni intends to pursue a balance
between turn-key contracts and special services (such as conceptual, basic
FEED and PMC) as well as the participation in relevant projects. It will
also intensify actions for improving efficiency and operating flexibility.

In 1991, Enis Oilfield Services and Engineering segment, through its
interest in Cepav Uno and Cepav Due consortia, signed two conventions with
TAV SpA («TAV») to participate in the construction of the high speed railway
from Milan to Bologna and from Milan to Verona. Eni holds a majority stake
in both Cepav Uno (Enis interest 50.36%), in charge of building the track
from Milan to Bologna (currently under construction) and Cepav Due (Enis
interest 52%), in charge of building the track from Milan to Verona (for
which arbitration is under way against TAV due to the withdrawal of the
concession previously awarded to TAV itself from Ferrovie dello Stato).

Among the most significant orders won in 2002 are:



| |  |  | in the Oil & Gas and Refining area: (i) in joint venture in
equal shares with Technip-Coflexip, Kellog Brown & Root and JGC, a
turnkey contract for the expansion of the Bonny liquefaction plant
in Nigeria for Nigeria LNG. The «NLNGplus» project has a value of
over dollar 1.7 billion (25% is Enis share) and provides for the
construction of the fourth and fifth LNG production trains with a
capacity of approximately 5.2 billion cubic meters/year each. The
trains will produce also 1.1 million tonnes/year of LPG and 0.4
million tonnes/year of condensates. When the two trains are
completed in 2005, the Bonny plant will process 75 million cubic
meters of natural gas/day with a total production of 21.8 billion
cubic meters/year of LNG and 2.3 million tonnes/year of LPG; (ii) a
turnkey contract for the design, procurement and construction of an
industrial complex near Qatif, about 30 kilometers from Dhahran in
Saudi Arabia for Saudi Aramco. The complex includes two plants for
the separation of oil from gas (GOSP) and units for natural gas
treatment, oil stabilization and power generation with a treatment
capacity of 800,000 barrels/day. The work is expected to be
completed in 31 months; (iii) in joint venture with the Japanese
companies Chiyoda and Mitsui & Co Ltd, a turnkey contract to build
the fourth production line of liquefied natural gas at the Ras
Laffan complex for Ras Laffan Liquefied Gas Company in Qatar that
will produce approximately 4.7 million tonnes/year of LNG. The plant
will be completed before the end of 2005. The contract includes
engineering, procurement and construction. The Ras Laffan complex
produces 6.6 million tonnes/year of liquefied gas in two production
lines. Snamprogetti is working also on the design and construction
of the third line, with a capacity of 4.7 million tonnes/year under
a contract won in 2001;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | in the Chemicals and fertilizers area: a contract to build a
fertilizer complex in Oman. The project has a value of dollar 770
million (50% is Enis share) and will be carried out through a 50/50
joint venture with Technip-Coflexip for Oman-India Fertilizer
Company (OMIFCO) and will be the worlds largest grass-roots
fertilizer complex. It will consist of two 1,750 tonnes/day ammonia
plants and two 2,530
tonnes/day urea plants. The contract includes engineering, design,
materials, construction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  





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| |  |  | management, start-up supervision and training of OMIFCO personnel. All
these plants will use proprietary technologies of Snamprogetti and its
affiliate Haldor Topsøe, a Danish company (in which Eni holds a 50%
interest) operating in the provision of engineering services and the
manufacture and sale of catalysts for the chemical, petrochemical and
refining industries.
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

At December 31, 2002, the order backlog of Snamprogetti amounted to
4,907 million euro (compared with 4,084 million euro at December 31, 2001),
of which approximately 35% related to projects outside Italy.

Libya project

In Libya, within the joint development plan of the oil, gas and
condensates fields of Wafa and Bahz Essalam operated by Eni with a 50%
interest (the other partner being the Libyan national company NOC), Eni
companies were awarded five contracts:



| |  |  | in a consortium with Hyundai Heavy Industries, a turnkey
contract for the construction and installation of the Sabratha
production platform, offshore western Libya, about 100 kilometer
north of Tripoli, within the development of the offshore Structure C
fields in permit NC-41. The total value of the contract is estimated
at euro 620 million, of which Saipems share is euro 420 million and
includes project management, engineering, procurement, fabrication,
transportation and installation, hook-up and commissioning, start-up
and six month of operational assistance. The platform will be
installed during the first half of 2004 at a water depth of 190
meters using the Saipem 7000 vessel;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a turnkey contract to a consortium led by Snamprogetti (other
partners being ABB Lumus and Hyundai Engineering and Construction)
for the construction of a grass-root treatment plant for gas, crudes
and liquid hydrocarbons from the Libyan offshore at Mellitah. The
total value of the contract is euro 700 million. The consortium will
provide engineering, procurement and construction of the plant that
will have a capacity of 6.66 billion cubic meters/year. Work is
expected to be completed in 29 months;                                                                                                                                                                                            
|
| |  |  | the third contract to Saipem with a value of approximately euro
400 million, includes project management, engineering, procurement,
fabrication, transport and installation of two pipelines linking the
Sabratha offshore platform to Mellitah on the Libyan coast, in
addition to fabrication and installation of auxiliary facilities.
The project will be carried out by the Castoro 6 vessel during the
first half of 2004 and is expected to be completed in the spring of
2005;                                                                                                                                                                                                                             
|
| |  |  | a fourth contract awarded to Bouygues Offshore in joint venture
with Doris Engineering for euro 133 million includes design,
construction and installation of an underwater production system at
a water depth of 190 meters;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  |  | a fifth contract for approximately euro 285 million was awarded
to Saipem and involves the laying of the Green Stream pipeline
linking Mellitah on the Libyan coast about 80-kilometer west of
Tripoli to Gela in Sicily. The 540-kilometer long pipeline with a
32-inch diameter will be laid at a maximum water depth of 1,160
meters. Pipelaying activities will be carried out during the second
half of 2003 by the vessel Castoro 6. The project is scheduled to be
completed in June 2004.                                                                                                                                                                                                                  




Other Activities

Eni SpA engages in strategic planning, human resources management,
finance, administration, legal affairs, international affairs and corporate
research and development functions for the Company. Through Enifin SpA,
Societa Finanziamenti Idrocarburi-Sofid SpA and Eni International BV, Eni
carries out lending, factoring, leasing and insurance activities,
principally on an intercompany basis. Eni also engages in information
technology, communications, technology research and other activities.

Starting from January 2003 Enis non-core activities have been
reorganized as follows:



| |  |  | Syndial (former EniChem) was included in the «Other Activities»
segment, which includes all Eni companies not included in specific
segments (such as, among others, EniData, Sieco, Tecnomare,
EniTecnologie, Eni Corporate University, AGI);
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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| |  |  | the new «Corporate and financial companies» segment was created,
which includes Eni Corporate, Eni Servizi Amministrativi and the
financial companies formerly included in the «Other Activities»
segment.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Management does not consider Enis activities in these areas to be
material to its overall operations.




Research and Development

Eni conducts research and development activities within each of its
principal operating subsidiaries and through EniTecnologie SpA, which is
responsible for corporate research and development. Enis research and
development expenses amounted to euro 234 million, euro 203 million and euro
175 million in 2000, 2001 and 2002, respectively. In year 2002, 1,390
employees were involved in research and development activities. During the
year, 50 applications for patents were filed in Italy (65 in 2001).

Enis activity aims at extending the boundaries of knowledge and
promoting the exchange of experience, expertise and know-how, in the belief
that technological excellence is an essential factor in competition and
economic and industrial sustainability. To this end Eni is constantly
striving in the research and development of technologies, services and
products with a distinctively innovative character.

In 2002 Eni reviewed the role of research and development in the light
of the following guidelines: (i) to increase resources devoted to upstream
issues; (ii) to allocate more resources to the development of prototypes;
(iii) to support qualified laboratory research in order to direct it to
long-term radical innovation.

In accordance with these guidelines, the major turning points achieved
in 2002 have been: (i) the implementation of a new model of innovation which
integrates activities aimed at incremental improvement managed by business
units with the long-term innovative projects managed by Eni corporate
functions by means of a coordination center and the allocation of costs
directly to corporate functions for the most innovative projects; (ii) a
reorganization of R&D structures aimed at integrating all homogeneous skills
and knowledge centers, including the laboratories of the Refining &
Marketing division and of Snamprogetti.

In the course of 2002, many technologies were implemented at the
industrial level for the first time:

In the Exploration & Production division, an innovative technology
(Level 6 Junction) was developed and applied to a well in Nigeria that
allows to divide the well in a number of branches while maintaining safety
requirements and reducing operating costs and impact on the ground (Prime
flow).

Another innovative method was developed and applied. It does not
require invasive inspections of pipes, but is based on indirect measurements
capable of locating any obstructions, such as waxes and asphaltenic
deposits, within flowlines.

In the Refining & Marketing division, marketing of the new formula
gasoil «BluDiesel» started and certification was obtained from a major
German car manufacturer for an innovative «fuel economy» lubricant.

In Petrochemicals, improved performance polymers were developed such as
linear polyethylene for extensible films and thermoplastic elastomers for
the compound area. A new competitive process for the manufacture of
ethylbenzene was developed and tested as well as a new catalyst for the
manufacture of linear polyethylene.

Many technologies reached an advanced development stage.

In the Exploration & Production segment, initial applications are
underway based on original proprietary techniques of CRSS, a new method for
the elaboration of geophysical data, that allows a more accurate definition
of subsoil imaging. A new integrated IT application named SCREAM was
developed which allows for the search of analogue situations in carbonated
reservoirs, in existing database or reporting with a very fast access to
geomineral data and information with significant reductions of the time
necessary to start production. The corporate research function is
developing, among other things, technologies to reduce the density of
drilling fluids by means of hollow glass micro spheres and to stop water
infiltration by means of the RPM (Relative Permeability Modifier) polymer.





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In the Gas & Power division, the experimenting phase is nearly
completed for the «Synthesis of waxes by means of Fischer Tropsch»
technology used in a pilot plant built at Enis Sannazzaro refinery. Use in
a pilot plant confirmed the performance of the new partial catalytic
oxidation technology for the production of synthetic gas or hydrogen.

At the Taranto refinery construction started of the Eni Slurry (EST)
demonstration unit with a 1,200 barrels/day capacity for the upgrading of
heavy oils.

Various improvements were introduced in the designing and laying of
pipelines, with specific reference to the use of high and very high grade
(X-80 e X-100) steel and to advanced telecollection systems for the
definition of routes and for the optimization of deep water operations
(drilling, field development).

In the Refining & Marketing division, work continued on the quality
improvement of fuels, gasoline, gasoils and lubricants, fuels for special
use in turbines and oil drilling operations.

Work on environmental issues continued, focused in particular on the
reduction of polluting emissions by means of the optimization of the
vehicle/fuel ratio and the reclaiming of industrial sites also with
biological techniques.

Major research areas in 2002 were:

Reduction of exploration and development costs

Geosciences
High resolution prospecting techniques
Field simulation models
Field productivity enhancement methods
Advanced drilling systems
Production in hostile environments

Performance and product differentiation

Advanced process control
Innovative polymerization catalysis

Feedstocks enhancement

Long distance gaslines
Conversion of gas into liquid products
Conversion of heavy crudes into light products

Environmental protection

Hydrogen
New formulas for fuels and lubricants
«Clean» catalytic processes
Air quality monitoring
Reclaiming of polluted soil




Insurance

Eni constantly assess its exposure for the Italian and foreign
activities that are mainly covered through the Oil Insurance Limited
(«OIL»), a mutual insurance and reinsurance company that provides to its
members a broad coverage tailored to the specific requirements of oil/energy
companies. Eni makes use of a captive insurance company that covers the
risks and implements Enis Worldwide Insurance Program placed with
high-quality securities in order to integrate the terms and conditions of
the OIL coverage.

An insurance risk manager works in close contact with managers directly
involved in core business activities in order to evaluate potential risks
and their financial impact on the Group. This process allows to define a
constant level of risk retention and, conversely, the amount of risk to be
transferred to the market.

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





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Environmental Matters

Together with other companies in the businesses in which it operates,
Eni is subject to numerous EU, national, regional and local environmental
laws and regulations concerning its oil and gas operations, products and
other activities, including legislation that implements international
conventions or protocols. In particular, these laws and regulations require
the acquisition of a permit before drilling for hydrocarbons may commence,
restrict the types, quantities and concentration of various substances that
can be released into the environment in connection with exploration,
drilling and production activities, limit or prohibit drilling activities on
certain protected areas, and impose criminal or civil liabilities for
pollution resulting from oil, natural gas, refining and petrochemicals
operations. These laws and regulations may also restrict air emissions and
discharges to surface and subsurface water resulting from the operation of
natural gas processing plants, petrochemicals plants, refineries, pipeline
systems and other facilities that Eni owns. In addition, Enis operations
are subject to laws and regulations relating to the generation, handling,
transportation, storage, disposal and treatment of waste materials.

Environmental laws and regulations have a substantial impact on Enis
operations. Some risk of environmental costs and liabilities is inherent in
particular operations and products of Eni, as it is with other companies
engaged in similar businesses, and there can be no assurance that material
costs and liabilities will not be incurred. Although management, considering
the actions already taken, the insurance policies to cover environmental
risks and the provision for risks accrued, does not currently expect any
material adverse effect upon Enis results of operations and financial
position as a result of its compliance with such laws and regulations, there
can be no assurance that there will not be a material adverse impact on
Enis results of operations and financial position due to: (i) the
possibility of as yet unknown contamination; (ii) the results of the
on-going surveys and the other possible effects of Decree No. 471/99 of the
Ministry of Environment; (iii) the possible effect of future environmental
legislation and rules; (iv) the effect of possible technological changes
relating to future remediation; and (v) the possibility of litigation and
the difficulty of determining Enis liability, if any, as against other
potentially responsible parties with respect to such litigation and the
possible insurance recoveries.

The recently enacted environmental legislation includes improvements of
previous laws on operations, safety and waste waters, as well as regulations
on waste disposal and remediation or shutdown of industrial sites. Eni is
evaluating actions (such as voluntary agreements) and investments to comply
efficiently with new regulations. In accordance with European guidelines,
the protection from water pollution was strengthened with Legislative Decree
No. 152/99 as completed by Decree No. 258/00, which provide for an
integrated protection of water resources by extending control from each
discharge place to all the effects of accumulation and interactions of
various discharges into one single water course and set quality objectives
to be reached within 2008. All discharges require preventive authorization,
to be renewed every four years, and must lie below the thresholds set by
Regions. Legislative Decree No. 152/99 sets the term of June 2002 for the
upgrade of existing discharges to the new rules.

To date Eni cannot evaluate the possible impact of the application of
Decree No. 152/99, however there can be no assurance that there will not be
a material adverse impact on Enis operations due to measures adopted by
local authorities whenever the quality of a certain water source does not
comply with set standards due to the industrial activity of all plants
located above that water source. Legislative Decree No. 258 states that
production water discharges from oil activities performed in the sea shall
be progressively substituted by injection or reinjection in deep geological
strata. Previously such production water discharges were treated as waste
disposal. Eni expects that capital expenditure necessary to provide offshore
wells with reinjection facilities will be paid off by lower operating
expenses with respect to waste disposal costs.

Management of waste, toxic waste, packaging and packaging waste is
regulated by Legislative Decree No. 22 of February 5, 1997 which refers to
three European Directives (91/156/CEE, 91/689/CEE and 94/62/CE) and provided
incentives to clean technologies and recycling and reuse of waste. This
decree prohibits the uncontrolled disposal of waste underground and in the
water and obliges polluting entities to reclaim polluted areas. Whenever it
is not possible to identify one person or entity responsible for existing
pollution, the owner of the polluted area is expected to pay for its
reclamation. This decree became
operational with decree No. 471/99 of the Ministry of the Environment,
which also defined limits for the contamination of soils and underground
waters, the general guidelines for reclaiming and environmental recovery of
polluted areas, and the criteria for the identification of polluted areas of
national interest. For the storage of toxic waste, the decree favors
techniques avoiding transport of waste and their on-site treatment. Whoever
causes, wilfully or accidentally, pollution of an area or actual danger is
expected to react within 48





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hours according to the procedure set by the decree. At present Eni is
not yet able to evaluate the possible future consequences deriving from the
completion of on-going surveys and other possible effects of the application
of Decree No. 471/99 of the Ministry of Environment; however there can be no
assurance there will not be a material adverse impact on Enis results of
operations and financial position from the application of that decree. Law
388/00 changed the regulations concerning the reclamation of polluted sites,
easing the discipline of crimes related to events prior to Legislative
Decree No. 22/97 and imposing the reclamation of sites where industrial
activity is ongoing. However, the reclamation is to be carried out provided
that it does not involve a significant disruption in operations; reclamation
costs can be amortized in ten years.

In the next years Law 372/99 will gradually enter into force. This law,
which is related to the European Directive 96/61/CE (IPPC  Integrated
Pollution Prevention and Control), envisages that industrial installations
will apply for an integrated authorization concerning emissions, wastes and
water discharges. Before June 20, 2002 the competent authority is expected
to define a schedule for the filing of requests for IPPC authorization. Many
of Enis plants  refineries, chemical plants, power stations  will have to
comply with this law but Eni expects no adverse impact on its operations,
since the IPPC authorization intends to integrate and make compatible
authorizations which now are given separately.

In 2003, according to the IPPC Directive, the Member States must
communicate their 2001 national values of emissions into the atmosphere,
wastes produced and managed and, finally, discharges into water of some
compounds specified in the annexes of the directive relative to EPER
(European Pollutant Emission Register). The Directive applies to several Eni
plants, so the Eni divisions and/or companies which own these plants, are
going to report their data to the authority in charge of preparing the
Italian national communication.

To meet future environmental obligations, Eni is engaged in a
continuing program to develop effective measures for the protection of the
environment. This program includes research and capital expenditures related
to reducing sulphur levels in heavy fuel oils and diesel fuel, reducing
benzene and sulphur content in gasoline, improving the quality of emissions
and effluents from Enis refineries and petrochemical plants, developing and
installing monitoring systems at Enis facilities and developing
environmental impact assessments for major projects.

During 2002 the Kyoto Protocol has been ratified by the EU and also by
Italy, with Law 120/2002. After the Italian Government ratified the Kyoto
Protocol, Eni actively participated in the definition of the National Action
Plan for the reduction of greenhouse gas emissions. Eni companies are
engaged in a comprehensive plan aimed at:(i) improving and adopting an
advanced protocol for greenhouse gas emissions accounting and
certification; (ii) defining a portfolio of projects for emission reduction
in its own installations and a portfolio of ongoing and new projects
consistent with the Flexible Mechanisms of the Kyoto Protocol (Clean
Development Mechanism and Joint Implementation); (iii) participating to
international emission trading markets (EU is finalizing a directive for the
introduction of an emission trading scheme, by the year 2005; (iv) preparing
a medium-long term strategy for the sustainable management of greenhouse
gases.

A recent important development in the Italian environmental legal
system is the draft law for the restructuring of all environmental
legislation. The draft law has been firstly proposed at the end of 2001 and
is now being re-examined by the Italian Parliament after the adoption of
some amendments. The main target is to better coordinate and integrate
various environmental laws, in view of a more complete harmonization with EU
legislation. It is difficult to predict now the overall impact on Eni
operations, but certainly the present Italian environmental legislation in
some cases is stricter than the EU counterpart.

In order to more effectively respond to and anticipate the increasing
complexity of the international and national environmental legislation, to
better adapt to the international context where it operates and to increase
its effectiveness in the implementation of its Corporate HSE Guidelines,
during 2002 Eni created the HSE Corporate Department, with the following
tasks: (i) elaborating a plan consistent with Enis policies and guidelines;
(ii) defining a HSE management system model, to be used as reference by all
business units; (iii) responding to the increasing challenges of
sustainability by means of the design and the implementation of a
sustainable energy system.

In 2002, operating and capital expenditures in health, safety and
environment amounted to euro 887 million. Environmental expenditures
amounted to euro 590 million, of which euro 51 million related to air
emissions, euro 79 million to water, euro 88 million to waste and euro 147
million to soil. In addition to operating and capital expenditures, Eni also
creates provisions for future environmental remediation. Expenditures
against such provisions are normally incurred in subsequent periods and are
not included in





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environmental operating expenditure. Provisions for environmental
remediation are made when a clean-up is probable and the amount reasonably
determinable. Generally, their timing coincides with the commitment to a
formal plan of action or, if earlier, on divestment or closure of inactive
sites. In addition, Eni makes provisions against costs expected to be
incurred with respect to the abandonment of hydrocarbon-producing assets. In
2002, Eni accrued euro 184 million to the site restoration and abandonment
reserve. See Note 13 to the consolidated financial statements  Reserves
for contingencies and other deferred non-current tax liabilities for more
details regarding environmental and site restoration and abandonment
reserves.

In 2002, the equivalent of about 1,373 full time employees were
employed by the Group in the area of health, safety and environment.

The total certifications (ISO 14000, OHSAS, EMAS, ISM, etc.) obtained
in 2002 were 85, of which 7 in the Exploration & Production division, 18 in
the Gas & Power division, 24 in the Refining & Marketing division, 22 in the
Petrochemical segment and 14 in the Oilfield Services and Engineering
segment. To ensure operating efficiency of health, safety and environment
management systems, 501 internal auditors were available in 2002.

Training played a relevant role in the management of safety and
environmental issues, with a total of 279,466 hours of HSE training provided
to 68,155 participants in 2002.

In the area of health Eni employs a system of constant monitoring,
increasing the frequency of checks where risks are higher. In 2002, a total
of 34,086 medical examinations and 215,418 medical tests were performed in
the whole Eni Group.

Regarding Safety, in 2002 both accidents rates (frequency and
seriousness) showed a marked improvement compared with the values of the
previous year.

Regarding environmental issues, in 2002 greenhouse gas («GHGs»)
emissions from flaring (representing 37% of Eni total GHGs emissions)
decreased by 4,7% compared with the values of the previous year.

Pursuing the creation of a sustainable energy system, in 2002 Eni
further developed action plans for the reduction of greenhouse gas emissions
and the mitigation of the possible impact of climate changes. In this
perspective Eni continued its programs for the development of natural gas in
Italy and abroad by means of technologically advanced projects such as Blue
Stream (a gas pipeline from Russia to Turkey) and Greenstream (a gas
pipeline which allows to increase the Italian imports of natural gas).
Outside Italy Eni is also implementing a «Zero Gas Flaring Program», with
the development of projects in Nigeria and Congo (construction of new high
efficiency combined cycle power plants for the exploitation of associated
gas, coming from the near oilfields).

Furthermore, in 2002 Eni Refining & Marketing division launched a new
product: BluDiesel, a virtually sulphur free diesel fuel which anticipates
environmental regulations and ensures better engine performance. This
product is currently sold in 1,500 service stations with average sales
amounting to 20-25 % of total gasoil sales and in some cases peaking at 50%.




Regulation of Enis businesses

Regulation of exploration and production activities

Enis exploration and production activities are conducted in many
different countries and are therefore subject to a broad range of
legislation and regulations. These cover virtually all aspects of
exploration and production activities, including matters such as license
acquisition, production rates, royalties, pricing, environmental protection,
export, taxes and foreign exchange. The terms and conditions of the leases,
licenses and contracts under which these oil and gas interests are held vary
from country to country. These leases, licenses and contracts are generally
granted by or entered into with a government entity or state company and are
sometimes entered into with private property owners. These arrangements
usually take the form of licenses or production sharing agreements. See
«Regulation of the Italian Hydrocarbons industry» and «Environmental
Matters» for a description of the specific aspects of the Italian regulation
and of environmental regulation concerning Enis exploration and production
activities.





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Licenses (or concessions) give the holder the right to explore for and
exploit a commercial discovery. Under a license, the holder bears the risk
of exploration, development and production activities and provides the
financing for these operations. In principle, the license holder is entitled
to all production minus any royalties that are payable in kind. A license
holder is generally required to pay production taxes or royalties, which may
be in cash or in kind. Both exploration and production licenses are
generally for a specified period of time (except for production licenses in
the United States which remain in effect until production ceases). The term
of Enis licenses and the extent to which these licenses may be renewed vary
by area.

Production sharing agreements (PSAs) entered into with a government
entity or state company generally obligate Eni to provide all the financing
and bear the risk of exploration and production activities in exchange for a
share of the production remaining after royalties, if any.

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

Regulation of the Italian Hydrocarbons Industry

Overview

The matters regarding the effects of recent or proposed changes in
Italian legislation and regulations or EU directives discussed below and
elsewhere herein are forward-looking statements and involve risks and
uncertainties that could cause the actual results to differ materially from
those in such forward-looking statements. Such risks and uncertainties
include the precise manner of the interpretation or implementation of such
legal and regulatory changes or proposals, which may be affected by
political and other developments.

The Italian hydrocarbons industry is regulated by a combination of
constitutional provisions, statutes, governmental decrees and other
regulations that have been enacted and modified from time to time, including
legislation enacted to implement EU requirements (collectively, the
«Hydrocarbons Laws»).

In the early 1990s, the Government commenced the gradual liberalization
of the Italian hydrocarbons industry by implementing legislation that
provided for, among other things, (i) the elimination of price controls on
petroleum products, (ii) the abolition of Enis right of first refusal with
respect to the purchase of natural gas produced offshore Italy, (iii) the
implementation of a partial third-party access system for the transportation
of domestic natural gas, (iv) the establishment of a system for the updating
of on natural gas retail prices and (v) the establishment of a royalty
reduction program. Law No. 481 of November 14, 1995 (the «Authority Law»),
provided for the establishment of a new regulatory body, known as the
Autorità per lEnergia Elettrica e il Gas(the «Authority»), the Italian
Public body charged with, among other things, regulatory supervision of
electricity activities and natural gas distribution in order to guarantee
the promotion of competition and efficiency while providing for an adequate
level of service quality. As the latter is concerned, the Authority is
mainly responsible for the public service of natural gas distribution
through urban networks.

Decree No. 164, which enacted into Italian Legislation European
Directive on Natural Gas 98/30/CE, regulates the Italian natural gas market.
Prior to the implementation of Decree No. 164, the Italian natural gas
market lacked a legislative framework. See «Natural Gas».

Legislative Decree No. 32 of February 11, 1998 («Decree No. 32») as
amended by Legislative Decree

No. 346 of September 8, 1999 and Law Decree No. 383 of October 29,
1999, significantly changed Italian regulation of service stations. In
particular, the Decree replaced the process of concessions granted by the
Ministry of Industry, regional and local authorities with a license granted
by city authorities. See «Refining and Marketing of Petroleum Products».

Legislative Decree No. 443 of October 29, 1999 («Decree No. 443)
modified Legislative Decree No. 112 of March 31, 1998 («Decree No. 112»)
which attributed to Regions many responsibilities in the field of energy and
specifically in the sector of hydrocarbons. Decree No. 443 attributes to the
State administrative decisions





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concerning exploration and production of hydrocarbons in the Italian
offshore as well as natural gas storage in fields, whilst administrative
decisions concerning exploration and production of hydrocarbons on the
Italian mainland are made by the Government in agreement with Regions.

Exploration and Production of Hydrocarbons

Exploration Permits and Production Concessions.  Pursuant to the
Hydrocarbons Laws, all hydrocarbons existing in their natural condition in
strata in Italy or beneath its territorial waters (including its continental
shelf) are the property of the State. Exploration activities require an
exploration permit, while production activities require a production
concession, in each case granted by the Ministry of Industry. The initial
duration of an exploration permit is six years, with the possibility of
obtaining two three-year extensions and an additional one-year extension to
complete activities underway. Upon each of the three-year extensions, 25% of
the area under exploration must be relinquished to the State. The initial
duration of a production concession is 20 years, with the possibility of
obtaining one ten-year extension and additional five-year extensions.

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

Preferential Rights.  Until December 31, 1996, Eni was entitled to a
number of preferential rights, including, among other things, the exclusive
right to explore for and exploit, without permit or concession, hydrocarbon
deposits in the Exclusive Area.

In 1994, the EU enacted a licensing directive (the «Licensing
Directive»), which required member states to enact legislation eliminating,
by December 31, 1996, all laws that provided exclusive rights to a single
entity in a specific geographic area. Decree No. 625, which was adopted to
implement the Licensing Directive, eliminated the exclusivity of Enis
rights in the Exclusive Area. Decree No. 625 allows Eni to obtain upon
application exploration permits and production concessions having effect
from January 1, 1997 that would preserve such rights as have vested under
the regime of exclusivity (based on the activities that have been carried
out or are currently underway). As of December 31, 2002, Eni held 100
exploration permits and 180 production concessions for a total net acreage
of 43,961 square kilometers and 9 storage concessions.

Natural Gas

Legislative Decree No. 164 of May 23, 2000 for the Implementation of
the European Directive on Natural Gas 98/30/CE.  The European Directive on
natural gas was implemented into Italian 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 most
relevant aspects of the decree are as follows: (i) it defines until December
31, 2002 eligible customers (with access to the natural gas system) to be:
final customers consuming more than 200,000 cubic meters per year;
wholesalers and all distributing companies; electricity producers and
co-generators; consortia consuming more than 200,000 cubic meters per year
provided each partner consumes more than 50,000 cubic meters per year.
Starting in 2003 all customers are eligible customers; (ii) from January 1,
2003 to December 31, 2010 no single operators is allowed to hold a market
share higher than 50% of domestic sales to final customers. In addition, no
single operators is allowed to supply more than 75% of all natural gas
volumes introduced in the domestic transmission network by 2002, decreasing
by 2 percentage points per year until it reaches 61%. The two ceilings are
calculated net of losses (in the case of sales) and own consumption. A
three-year average mechanism is used to evaluate whether volumes introduced
in the domestic transmission network or sold to final customers are above
set ceilings. Those ceilings are considered exceeded if at the end of the
first three-year period, the average of volumes introduced in the domestic
transmission network or sold to final customers is higher than the allowed
average for that period. In subsequent years, the three-year average is
calculated on data of the most recent three years; (iii) imports from the
European Union are free, while natural gas imported from outside the
European Union is subject to an authorization of the Ministry of Productive
Activities. Subjects importing from countries outside the E.U. must secure a
certain availability of strategic storage. Such constraints applies also the
import contracts entered into before the coming into effect of Decree No.
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considered authorized since this date; (iv) from January 1, 2002,
natural gas transport and dispatching activities are to be carried out by a
separate company that is not allowed to carry out any other activity in the
natural gas field. By the same date distribution, which includes the
management of local networks, is to be carried out by a separate company
which may not perform other gas related activities. Sale activity to final
customers is compatible only with import, export and production activities
and is subject to an authorization from the Ministry of Productive
Activities). Concessions for the distribution of natural gas will be
assigned only through an auction procedure; (v) tariff criteria and return
on capital employed for transport, dispatching, storage, use of LNG
terminals and distribution are determined by the Authority. Third parties
are allowed to access transport infrastructure on the basis of criteria set
by the Authority. As provided for by the decree, a Network Code containing
norms and regulations for the operation of and access to infrastructure was
prepared by operators. Approval is still pending before the Authority.

On July 17, 2002, the Italian Authority for Electricity and Gas adopted
its Decision No. 137 concerning «guarantees regarding the free access of
operators to the natural gas transmission network and rules for the
preparation of network codes», in implementation of article 24, subsection 5
of Decree No. 164. Decision No. 137 established priority criteria for the
entitlement of transmission capacity at entry points from international
networks into the domestic network. Entitlement periods can last no longer
than five years. In particular it recognizes priority access to take-or-pay
contracts entered into before 1998, within the limit of the average daily
contractual quantity. There is therefore no guaranteed access priority for
the whole contractual flexibility. In fact, take-or-pay contracts entered by
Eni before 1998 envisage Enis right, in its quality of purchaser, to
withdraw daily amounts larger than the average daily contractual amount;
this contractual flexibility provided by the difference between the maximum
daily amount Eni is entitled to and the average contractual daily amount is
used in particular in winter. In the event of congestion at entry points,
natural gas volumes not receiving a priority are assigned available
transmission capacity on a pro-rata basis. Decision No. 137 establishes a
transitional regime according to which for thermal year 2002-2003 access
priority is granted also to two thirds of the difference between maximum
contractual daily amounts and average daily amounts. For thermal year
2003-2004, priority will be granted to only one third of that difference. On
November 6, 2002 Eni filed a claim with the Regional Administrative Court of
Lombardia requesting the annulment of decision No. 137/2002 as Eni considers
this decision non consistent with the overall European legislative
framework, especially with reference to Directive 98/30/CE and Legislative
Decree No. 164/2000.

On November 21, 2002 the Italian antitrust authority concluded the
inquiry started on request of Blugas SpA concerning Enis alleged violation
of competition rules, acquitted Eni for the specific claims brought by of
Blugas (deriving from the fact that in the spring-summer of 2001 Eni
partially accepted Blugass request to access the network) but judged that
Eni had abused of commanding position for having given, with the aim of
respecting binding market thresholds, priority access to Italian purchasers
with which Eni had entered supply contracts with volumes bought out of Italy
supplied at entry points into the Italian network. The Antitrust Authority
considers that these contracts infringe the rationale of article 19 of
Decree No. 164 which defines the limits for volumes to be input by a single
operator into the national network. Given this infringing behavior and the
lack of clarity of Italian regulations and Enis availability to increase
the transmission capacity of gaslines outside Italy, the Antitrust Authority
imposed on Eni a symbolic fine amounting to euro 1,000 and requested Eni to
submit «a report indicating measures to be taken to eliminate infringing
behaviors with specific attention to the upgrading of the transmission
network or equivalent actions». Eni filed this report on March 6, 2003. On
February 5, 2003 Eni filed a claim with the Regional Administrative Court of
Lazio in Rome requesting the annulment of the measures taken by the
Authority.

In order to meet the medium and long-term demand of natural gas in
particular of the Italian market, Eni entered into long-term purchase
contracts with operators in producing countries that have a residual average
term of approximately 17 years. Existing contracts, which in general contain
take-or-pay clauses, will ensure a total of about 66 billion cubic meters of
natural gas per year (Russia 28.5, Algeria 21.5, Netherlands 10 and Norway
6) by 2008. The above quantities are based on the annual contract quantity
of the relevant contract. The average annual minimum quantity is
approximately the 85% of said quantities. To date natural gas supply
contracts have not entailed the application of take-or-pay clauses. Natural
gas imports for the next few years have been programmed based on the highest
flexibility allowed by such contracts, assuming that access capacity to the
Italian network will be available in accordance with said flexibility.
However this assumption may be inconsistent with the current network code
(as established by the authority with decision No. 137), also taking into
account the claims filed by Eni and other operators.





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Based on the best estimates currently available despite regulatory
uncertainties, Eni does not consider it necessary to accrue a contingency
reserve for any possible penalty payment related to take-or-pay clauses in
supply contracts.

Transport and distribution tariffs.With decision No. 120 of May 30,
2001, the Authority published the criteria which transport companies have to
apply in determining natural gas transport and dispatching tariffs on
national and regional transportation networks, as provided for by Decree No.
164. Tariffs are subject to approval by the same Authority, which ensures
their compliance with preset criteria. Such tariffs are applicable to
eligible customers as defined by Decree No. 164 (approximately 11,000
entities, of which 3,200 are industries and thermoelectric power stations
linked to high pressure lines), the so called «shippers». The new tariff
system substituted preceding agreements between Eni and customers of any
category. The new tariff system is in force for the first regulatory period
including four thermal years and starting on October 1, 2001 (the so called
thermal year goes from October 1 to September 30). This regime also applies
retroactively to the period June 21, 2000 to September 30, 2001. At the
beginning of each the annual year transport companies submit the tariff
proposal to the Authority wich in turn approves or rejects the proposal of
transport companies.

Criteria established by the Authority provide for a cap on revenues
from transport and dispatching activity («allowed revenues») which is
adjusted annually; those criteria also provide for a separate treatment of
revenues on existing assets and on new capital expenditure on expansions and
extension of infrastructure. In the first thermal year allowed revenues are
calculated as the sum of: (i) operating costs including storage and
modulation costs; (ii) amortization and depreciation of transport assets;
and (iii) return on net capital employed. Net capital employed is calculated
by revaluating historic costs of transport infrastructure (pipelines,
compressor stations and other support equipment) on the basis of certain
inflationary indexes; resulting amounts are adjusted to take into account
the residual useful life of assets (pipelines are estimated to have a useful
life of 40 years) and also subtracting State grants. The application of this
methodology implies an estimated value of Enis transport assets of
approximately euro 9.6 billion. This, however, is a valuation for regulatory
purposes and should not be read as an indication of the market value of Snam
Rete Gas. The rate of return on capital employed set by the Authority is
7.94% (pre-tax). Once established, allowed revenues for the first year are
divided into two components: (i) capacity revenues equal to 70% of allowed
revenues which are the maximum amount of revenues collectable from the sale
of transport capacity to customers; (ii) commodity revenues equal to 30% of
allowed revenues which are the maximum amount of revenues collectable from
transported volumes. Starting from the second year these two components are
adjusted on a yearly basis to take into account inflation and certain
reduction factors (set at 2% and 4.5% for capacity revenues and commodity
revenues respectively); commodity revenues are also adjusted to transported
volumes of the current regulatory period. The 2% reduction factor on
capacity revenues provides scope for improving results of operations of the
transport company if cost reductions exceed the set amount, whereas the 4.5%
reduction factor on commodity revenues provides scope for improving results
of operations of the transport company if transported volumes grow more than
the reduction factor. Allowed revenues can also be increased to reflect
costs associated with exceptional events, quality improvement in service and
efficient utilization of resources; this increases have yet to be
established by the Authority. New capital expenditure in extension and
expansion enable transport companies to increase the capacity revenue by a
stated percentage in the regulatory period following the period in which new
capital expenditure is made. In addition, those capital expenditures give
rise to a 6 year fixed increase in allowed commodity revenues. This tariff
system will be in force for four years (first regulatory period). At the end
of the first regulatory period, all transport cost components will be
recalculated and 50% of higher cost reductions with respect to established
efficiency improvements will be recognized to transport companies and 50%
will be transferred to customers. Once the allowed revenues are established,
transport companies define individual tariffs to clients which are based on
a charge for the capacity used at the entry location (border, fields,
storage sites) and the capacity used at interconnection joint nodes with
regional networks (divided into 15 zones) and on a charge for the capacity
used at regional level, providing for discounts to those entering the
network at less than 15 kilometers from the interconnection point. A further
charge (commodity charge) is related to the amounts of gas transported plus
an annual fixed charge varying according to the delivery points.

With decision No. 237 dated December 28, 2000, the Authority determined
tariff criteria for natural gas distribution and supply to non eligible
customers as provided for by Decree No. 164. This tariff reform





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separates distribution from sale activities and links tariffs to costs
in order to provide safe and efficient services. Tariffs are determined so
that annual revenues from natural gas distribution and supply activities to
non eligible customers do not exceed the threshold on distribution and sale
revenues determined in order to cover operating costs and the remuneration
of capital employed and are adjusted according to the price cap method based
on parameters and formulas determined by the Authority. Provisional tariffs
were defined for the first six months of 2001. From July 2001 current
tariffs (varying according to type of usecooking, heating, small
enterprises) have been progressively substituted by tariffs varying
according to consumption levels and costs. Every three months the portion of
the tariff which relates to the cost of natural gas is adjusted to
international oil, home heating oil and low sulphur fuel oil prices as
measured over a nine-month period. On June 13, 2001, the Regional
Administrative Court of Lombardia accepted the claim of the Association of
natural gas distribution companies against the parameters used by the
Authority in determining the cost of capital employed in order to quantify
the revenue cap of said companies. As the Authority filed a claim with the
Council of State against the Regional Courts decision, Eni applied the
criteria suggested by the Authority to the determination of revenues of
natural gas distribution and supply activity in its 2001 financial
statements. With decision No. 122/2002, the Authority for Electricity and
Gas changed the tariff regime for natural gas distribution and supply to
eligible customers which had been defined in decision No. 237. Decision No.
122, which takes into account the decision of the Regional Administrative
Court of Lombardia, introduced the method of revaluated historical cost for
the determination of capital employed for those companies that are provided
with audited financial statements starting from the year closing before
January 1, 1991, (such as Italgas), as an alternative to the parameters
defined in decision No. 237/2000. In its financial statement for year 2002
Eni applied this new revised tariff regime which resulted in higher tariff
for Enis secondary distribution with respect to 2001. See Item 5 «Operating
financial review and prospectsResults of operationsOperating incomeGas &
Power».

Law Decree No. 193 of September 4, 2002, in force from September 5,
2002, and converted into Law No. 238/2002, among other things prevented any
increases in natural gas distribution tariffs to customers consuming less
than 200,000 cubic meters/year and in electricity tariffs to eligible
customers until November 30, 2002. Decree No. 193, while confirming tariffs
in force before August 2002, prohibited the application of tariff increases
set by the Authority for Electricity and Gas for the September-October 2002
period and suspended increases foreseen for the November-December period. As
concerns the September-October period in particular, the Authority had
confirmed the current tariff for natural gas distribution. On October 31,
2002, the Council of Ministers indicated to the Authority further criteria
for the determination of tariffs. Based on this Decree, the Authority will:
(i) define, calculate and update electricity and gas tariffs also after the
opening up of markets to eligible customers with consumption under 200,000
standard cubic meters, in order to ensure a regular and gradual access to
the free market of final users that are non eligible customers as well as
eligible customers who opt for this regime; (ii) define methods for updating
tariffs with reference to variable costs that minimize the impact of
inflation by providing for updating schedules adequate to the objective of
reducing the effects of energy prices on inflation, but safeguarding the
functioning of energy producing companies and the competitivity of the
producing system; (iii) define criteria for allocating the costs deriving
from social support measures, in order to reduce the aggregate net cost of
interventions as much as possible and to ensure neutrality in the
application of tariffs to the various groups of users. Consistently with
this decree, the Authority: (i) with Decision No. 195 of November 29, 2002
changed the methods for periodically updating the tariff components of
electricity and natural gas related to the changes in international prices
of fuels and raw materials. Such changes concern the schedules update
process (from every two months to every three), and the duration of the
reference period for the calculation of changes in average international
prices as compared to the application quarter (from the preceding six months
to the preceding nine months). The invariance threshold, beyond which
tariffs are updated, remained at 5%. These changes caused the confirmation
of tariffs defined in July until December 2002; (ii) with Decision No. 207
of December 12, 2002, it decided that companies selling natural gas through
local networks can maintain the conditions applied to non eligible customers
at December 31, 2002. In addition, the Authority decided that these
companies can propose their own new contract offers and offers determined
according to the criteria established by the Authority adequately
advertising them before March 31, 2003 (such offers must be published on the
companies web page, on at least one newspaper of general circulation and on
the Official Gazette of their region or autonomous province).

Natural Gas Prices.Before the coming into force of Decree No. 164,
the price of natural gas charged by Eni for primary sales, as well as the
terms of supply, were generally determined through arms-length negotiations
with associations representing major categories of customers, such as
industrial companies





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(Confindustria and Confapi), industrial electricity producers
(Unapace), electricity producers and distributors (Federelettrica) and local
distribution companies (ANCI, Federgasacqua and Gasit) as well as with Enel,
the former Italian national electricity utility, directly. Once established,
contractual terms, including the pricing provisions, were applied uniformly
to buyers in each category. Prices were generally updated by means of
indexation to certain parameters (such as the price of oil and certain
refined products). These contracts were also subject to supervision of the
Government. This framework has been changed by the liberalization of the
natural gas sector introduced by Decree No. 164 and the unbundling of the
several segments of the natural gas industry which highlights the revenues
and costs of each segment. Eni plans to re-formulate its commercial offer by
applying a multi-choice price structure to individual customers or groups of
customers who will be able to choose among various forms of price
indexation. This new price structure is offered to customers at the
expiration of existing contracts and aims at reducing the impact of the
volatility of raw material prices due to fluctuations in the prices of
energy parameters and in exchange rates by introducing mechanisms that
minimize commodity risks.

Storage of natural gas.  The right to store natural gas in depleted
fields in Italy is exercised pursuant to concessions granted by the Ministry
of Productive Activities (the former Ministry of Industry). Before Decree No.
164 came into force, only entities already holding a concession to exploit a
hydrocarbon deposit were entitled to receive a concession to store natural
gas, which is granted by the Ministry of Industry (now the Ministry of
Productive Activities). The initial duration of a concession is 20 years,
with the possibility of obtaining ten-year extensions. After the expiration
of a concession, new storage or production concessions on the same field may
be granted through competitive auctions. Pursuant to Decree No. 625, unused
storage capacity can be made available to third parties, subject to the
approval of the Ministry, on a negotiated basis. Until December 31, 1996,
Eni had the exclusive right to store natural gas in depleted fields in the
Exclusive Area. Decree No. 625 eliminated this exclusive right, while
granting Eni the right to obtain upon application storage concessions having
effect from January 1, 1997 that would preserve such rights as had vested
during the regime of exclusivity (based on current storage activities or
certain statutory conditions). Eni obtained the nine storage concessions
which it had applied for. In 1999, Eni applied for another concession.

The most important aspects of Decree No. 164 concerning production and
storage activities performed by Eni are the following: (i) it favors the
development of domestic natural gas reserves; (ii) effective January 1,
2002, storage can be carried out by a separate company non operating in
other gas activities (such as Stoccaggi Gas Italia SpA) or by companies
which only engage in transmission and dispatching, provided the accounts of
these two activities are clearly separated from the accounts of storage.
Existing storage concessions are subject to the Decree. Their original term
was confirmed and includes relevant production concessions: (iii) the need
for strategic storage in Italy is defined explicitly; the burden of
strategic storage is imposed upon companies importing from non-EU countries,
which have to provide a strategic storage capacity in Italy corresponding to
10% of the amount of natural gas imported each year; (iv) holders of storage
concessions are required to provide storage capacity for domestic
production, for strategic use and for modulation to eligible users without
discriminations, where technically and economically viable; (v) modulation
storage costs are charged to shippers which have to provide modulation
services adequate to the requirements of final customers; (vi) storage
tariffs criteria are determined by the Authority in order to ensure a proper
return on capital employed, taking into account the typical risk inherent in
upstream activities as well as volumes stored for ensuring peak supplies and
provides incentives to capital expenditure for the upgrading of the system;
and (vii) in the transitional period until the publication of the
Authoritys decision, storage companies determine and publish their own
tariffs, (viii) the Authority has to establish the criteria and priority of
access most storage operators have to include in their storage codes.

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

With decision No. 26 dated February 27, 2002 the Authority determined
tariff criteria for natural gas storage for the first regulated period (from
April 1, 2002 to March 31, 2006). The Authority determined criteria on the
basis of the costs of the service, plus a weighted average pre-tax rate of
return of 8.33%. Tariffs are adjusted through a price cap mechanism that
takes into account inflation and a productivity recovery of 2.75% per year.
The tariff structure for modulation consists of two fixed elements, one
based on the annual capacity used (space occupied in the reservoir) and one
based on maximum output capacity demand for one day in the year, as well as
a variable element calculated on the basis of the quantities entering and
leaving the field. On the basis of these criteria on March 18, 2002,
Stoccaggi Gas Italia SpA





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presented its suggested tariffs for cyclical modulation, mineral and
strategic storage services for the first regulatory period. The Authority
rejected Stoccaggi Gas Italia proposal and set storage tariffs for thermal
year 2002-2003 with decision No. 49 of March 26, 2002. Tariffs set by the
Authority are 50% lower than those applied by Eni. In 2002, Stoccaggi Gas
Italia SpA appealed against both Authority decisions to the Regional
Administrative Court of Lombardia in order to obtain their repeal.

Decree No. 625, as amended by Decree 164, provides for the holders of
storage concessions to keep storage capacity available for mineral,
strategic and modulation storage functions for the national natural gas
system.

In implementation of Decree 164, the Decree of the Minister of
Productive Activities of September 26, 2001 defined the criteria for the
determination and use of strategic storage. The utilization of natural gas
volumes held under strategic storage becomes mandatory in case of
interruption or reduction of imports from non-EU countries due to technical
and unpredictable causes, in case of emergency on the national gas network,
in case of colder winters than those expected by the Authority in its
periodic statements concerning the determination of modulation obligations
for seasonal consumption peaks.

On March 14, 2002, the Authority issued a consultation document
containing criteria relating the storage code that storage companies have to
propose. The consultation document, among other things, suggests: (i) a
preference order in assigning storage capacity which favours natural gas
transport companies, natural gas distribution companies as defined by Decree
No. 164 art. 18, eligible customers and other natural gas companies of
members States of the European Union and non members; (ii) mechanisms to
assign scarce storage capacity (competitive bid, pro quota or first come
first served); (iii) contents of the storage code, among which access
criteria to storage services and criteria of utilization of storage service.

Regional Law No. 2 of March 26, 2002.Under Regional Law No. 2 of
March 26, 2002, the Sicilia Region introduced an environmental tax on owners
of primary pipelines (operating at a maximum pressure of over 24 bar) in
Sicily. The purpose of the tax is «to finance investments aimed at reducing
and preventing potential environmental damage caused by pipelines containing
natural gas». The tax for 2002, based on the volume of the gas pipelines,
has been fixed at a rate of euro 153 per cubic meter for pipelines on public
land and euro 137.70 per cubic meter for pipelines on private land. The tax
is payable from April 2002 and the amount due by Snam Rete Gas SpA for 2002
totaled approximately euro 97 million. The amount of the tax can be changed
by the Region with special ruling before December 31 of each year. Otherwise
the tax is automatically adjusted according to the official rate of
inflation as published by ISTAT.

In order to protect its interests, Snam Rete Gas: (i) on July 30, 2002,
filed a claim with the European Commission commencing a proceeding against
the Italian Government, which may lead to a suspension of the regional law
pending a final ruling; (ii) notified the Sicilia Region of its request for
reimbursement of taxes paid, as a first step to the furthering of the
dispute and warned the Sicilia Region not to make use of those sums pending
final rulings; (iii) on October 18, 2002, as circumstances materialized
constituting tacit rejection of the request for reimbursement of the tax
paid, filed a claim with the Tax Commission of Palermo aimed at obtaining a
definitive and rapid decision against the legitimacy of the tax.

The Authority, although acknowledging that the tax burden is an
operating cost for the transmission activity, subjected its inclusion in
tariffs to the final ruling on its legitimacy by relevant authorities.
Therefore, with decision No. 146/2002 a the Authority published two sets of
tariffs: one, in force, that does not take into account the tax and a second
one including it, that will be automatically applied with retroactive effect
should the tax a be judged legitimate.

In September 2002 Snam Rete Gas filed a claim with the Regional
Administrative Court of Lombardia requesting the immediate application of
tariffs including the tax. With ruling of December 20, 2002, the Court
judged the tax at variance with European rules and therefore did not accept
Snam Rete Gass claim. In December 2002, Snam Rete Gas suspended payments of
the tax based on authoritative legal advise and said Court ruling. Payments
effected until November 2002 totaled euro 86.4 million.

In January 2003 the Sicilia Region presented an appeal to the Council
of State against the ruling of the Regional Administrative Court of
Lombardia for the part that states the variance of the regional law with
European rules. For cautionary reasons, Snam Rete Gas did not record the
recovery of costs incurred in its





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accounts, taking into account the uncertainties on the future evolution
of this dispute and the time necessary to reach a final judgement.

Refining and Marketing of Petroleum Products

Refining.  Under Decree No. 112, companies that seek to establish
refining operations in Italy or to expand the capacity of existing refining
operations must obtain an operating concession from the relevant Region,
while companies that seek to build or operate new plants that do not
increase refining capacity must obtain an authorization from the relevant
Region.

Service Stations.  Decree No. 32 of February 11, 1998 as amended by
Legislative Decree No. 348 of September 8, 1999 and Law Decree No. 383 of
October 29, 1999, significantly changed Italian regulation of service
stations. The Decree replaces the system of concessions granted by the
Ministry of Industry, regional and local authorities with an authorization
granted by city authorities. Legislative Decree No. 112/98 confers the power
to grant concessions for the construction and operation of service stations
on highways to Regions. Decree No. 32 also requires that contracts between
license holders and service station operators have a duration of not less
than six years and be drafted in accordance with arrangements agreed by the
relevant trade group of license holders and the union representatives for
the service station operators. Decree No. 32 also provides for: (i) the
testing of compatibility of existing service stations with local planning
and environmental regulations and with those concerning traffic safety to be
performed by city authorities; (ii) upon the closure of at least 7,000
service stations, the option to extend by 50% the opening hours (currently
52 hours per week) and a generally increased flexibility in scheduling
opening hours; (iii) simplification of regulations concerning the sale of
non-oil products and the permission to perform simple maintenance and repair
operations at service stations; (iv) establishment of a fund for the
restructuring of the sales network, in part financed through a contribution
of lire 4 per liter of fuel sold (lire 3 paid by licence holders and lire 1
paid by operators of service stations) in the 1998-2000 period; (v) the
opening up of the logistics segment by permitting third party access to
unused storage capacity for petroleum products; and (vi) measures designed
to increase competition on the market for LPG for residential, industrial
and agricultural users. With the goal of renewing the Italian distribution
network, Law no 57/2001 provides that the Ministry of Industry (now Ministry
for Productive Activities) is to prepare guidelines for the modernization of
the network, and the Regions shall follow those guidelines in the
preparation of regional plans. The Decree was issued on October 31, 2001 and
established the criteria for the closing down of incompatible stations, for
the approval of the plan for the renewal of the network, the opening up of
new ones and will regulate the operations of service stations on matters
such as automation, working hours and non oil activities.

Petroleum Product Prices.  Petroleum product prices were completely
deregulated in May 1994 and are now freely established by operators. Oil and
gas companies periodically report their recommended prices to the Ministry
of Productive Activities and service station operators, and such
recommendations are considered by service station operators in establishing
retail prices for petroleum products. With Ministerial Decree dated February
16, 2000 an entity was established that supports the Ministry of Industry in
monitoring trends in domestic and international prices of oil and oil
products. Furthermore, in order to avoid initiatives inhibiting competition,
Law No. 57/2001 provides the compliance with EU Regulation No. 2790/1999
concerning «vertical agreements» on economic relations between operators in
this area. Management believes that these developments will not have any
significant impact on Enis operations.

Compulsory Stocks.  Compulsory stocks imposed by the Ministry of
Productive Activity, in line with the European Directive 98/1993, must be at
their minimum level equal to the quantities required by 90 days of
consumption (net of oil products obtained by domestically produced oil).

In order to satisfy the agreement with the International Energy Agency
(Law No. 883/1997), the Minister of Productive Activity with Decree of
January 31, 2001, No. 22, increased the level of compulsory stocks by 10%
(this level to be reached in four years). The impact of the Decree on Enis
compulsory stocks is of approximately 700 thousands tons, of which 170
thousands tons in 2002.

Decree No. 32 of February 11, 1998 established an entity responsible
for the maintenance and management of this compulsory reserve whose main
tasks are to: (i) distribute stocks on the national territory according to
available storage sites and consumption levels; (ii) meet the demand for
refined products in case





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of crisis; (iii) guarantee storage volumes to operators; and (iv)
record demand for refined products in the various areas of Italy. The agency
is not yet operational.

In 2002 Eni owned on average 7.2 million tons of oil products
inventories, of which 5.1 millions relating to «compulsory stocks» as
required by Italian law. The balance is composed of oil products which
cannot be used to meet compulsory stock requirements; in particular 0.9
million tons relate to operating inventories (oil products contained in
facilities and pipelines), 0.7 millions relate to oil products contained in
ships and 0.5 millions relate to specialty products.

Enis compulsory stocks are in general composed of oil (35%),
distillates (45%) and fuel oil (20%). They are located throughout the
Italian territory in both refineries (75%) and storage sites (25%).

Eni also held natural gas for strategic reserves purposed in its
storage business, as established by the Legislative Decree No. 164 of May
23, 2000. The reserves of strategic gas are defined as «stock destined to
substitute situations of deficit/decrease of supply or crisis of the gas
system». The Ministry of Productive Activities determines quantities and
usage criteria of such reserves. As of December 31, 2002 Eni held
approximately 180 billion standard cubic feet of strategic reserves of
natural gas.

Competition

Like all Italian companies, Eni is subject to Italian and EU
competition rules. EU competition rules are set forth in Articles 81 and 82
of the Treaty of Rome as amended by the Treaty of Amsterdam 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 former Articles 85
and 86) and EU Merger Control Regulation No. 4064 of 1989 («EU Regulation
4064»). Article 81 prohibits collusion among competitors that may affect
trade among member states and that has the object or effect of restricting
competition within the EU. Article 82 prohibits any abuse of a dominant
position within a substantial part of the EU that may affect trade among
member states. EU Regulation 4064 sets certain limits for cross-border
transactions, above which enforcement authority rests with the European
Commission and below which enforcement is carried out by national
competition authorities, such as the Antitrust Authority in the case of
Italy. Eni is also subject to the competition rules established by the
Agreement on the European Economic Area (the «EEA Agreement»), which are
analogous to the competition rules of the Treaty of Rome and apply to
competition in the European Economic Area (which consists of the EU and
Norway, Iceland and Liechtenstein). These competition rules are enforced by
the European Commission and the European Free Trade Area Surveillance
Authority.

In addition, Enis activities are subject to Law No. 287 of October 10,
1990 (the «Antitrust Law»). In accordance with the EU competition rules, the
Antitrust Law prohibits collusion among competitors that restricts
competition within Italy and prohibits any abuse of a dominant position
within the Italian market or a significant part thereof. However, the
Antitrust Authority may exempt for a limited period agreements among
companies that otherwise would be prohibited by the Antitrust Law if such
agreements have the effect of improving market conditions and ultimately
result in a benefit for consumers. The Antitrust Authority has intervened on
the basis of the Antitrust Law in several instances, particularly in order
to prohibit the imposition of discriminatory tariffs in the
telecommunications, railway and air transport sectors, among others. In
addition, the Antitrust Authority has undertaken investigations regarding
the activities of certain oil and gas companies, including Eni. See «Note 21
to the Consolidated Financial StatementsLegal ProceedingsAntitrust
Proceedings.»




Property, Plant and Equipment

Eni has freehold and leasehold interests in real estate in numerous
countries throughout the world, but no one individual property is material
to Eni as a whole. See «Exploration & Production» above for a description of
Enis reserves and sources of crude oil and natural gas.





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Organizational Structure

The significant subsidiary and associated undertakings and joint
ventures of the Eni Group controlled directly or indirectly by Eni at
December 31, 2002 and included in the scope of consolidation as well as
Enis percentage of equity capital or joint venture interest (rounded to the
nearest whole number) are set forth in the table below. The principal
country of operation is generally indicated by the companys country of
incorporation or by its name.

|                                |                |                          |  |     |  |  |  | 
|------------------------------- | -------------- | ------------------------ |  | --- |  |  |  | 
|Company/Undertaking             |                | Country of Incorporation |  | %  
|                                |                |                          |  |    
|Exploration & Production        |                |                          |  |     |  |  | 
|Agip Algeria Production BV      | Netherlands    |                          |  | 100 | 
|Agip Angola Production BV       | Netherlands    |                          |  | 100 | 
|Agip Azerbaijan BV              | Netherlands    |                          |  | 100 | 
|Agip Caspian Sea BV             | Netherlands    |                          |  | 100 | 
|Agip Congo SA                   | Netherlands    |                          |  | 100 | 
|Agip Exploration BV             | Netherlands    |                          |  | 100 | 
|Agip Iran BV                    | Netherlands    |                          |  | 100 | 
|Agip Karachaganak BV            | Netherlands    |                          |  | 100 | 
|Lasmo Plc                       | United Kingdom |                          |  | 100 | 
|Agip North Africa BV            | Netherlands    |                          |  | 100 | 
|Agip North Sea Ltd              | United Kingdom |                          |  | 100 | 
|Agip Oil Ecuador BV             | Netherlands    |                          |  | 100 | 
|Agip Petroleum Co Inc           | USA            |                          |  | 100 | 
|Agip (UK) Ltd                   | United Kingdom |                          |  | 100 | 
|Brithish-Borneo Oil & Gas Plc   | United Kingdom |                          |  | 100 | 
|Ieoc Production BV              | Netherlands    |                          |  | 100 | 
|Lukagip NV                      | Netherlands    |                          |  | 50  | 
|Naoc  Nigerian Agip Oil Co Ltd | Nigeria        |                          |  | 100 | 
|Norsk Agip A/S                  | Norway         |                          |  | 100 | 
|Gas & Power                     |                |                          |  |     |  |  | 
|Greenstream SpA                 | Italy          |                          |  | 100 | 
|Snam Rete Gas SpA               | Italy          |                          |  | 60  | 
|Società Italiana per il Gas pA  | Italy          |                          |  | 44  | 
|Adriaplin Doo                   | Slovenia       |                          |  | 22  | 
|Distribuidora de Gas Cuyana SA  | Argentina      |                          |  | 20  | 
|Gas Brasiliano Distribuidora SA | Brazil         |                          |  | 89  | 
|Inversora de Gas Cuyana SA      | Argentina      |                          |  | 33  | 
|Tigaz                           | Hungary        |                          |  | 28  | 
|EniPower SpA                    | Italy          |                          |  | 100 | 
|Refining & Marketing            |                |                          |  |     |  |  | 
|AgipGas SpA                     | Italy          |                          |  | 100 | 
|Atriplex Srl                    | Italy          |                          |  | 100 | 
|Ecofuel SpA                     | Italy          |                          |  | 100 | 
|Eni Portugal Investment SpA     | Italy          |                          |  | 100 | 





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##### Table of Contents



|                                               |  |                          |  |   |     |  |  | 
|---------------------------------------------- |  | ------------------------ |  | - | --- |  |  | 
|Company/Undertaking                            |  | Country of Incorporation |  | %
|                                               |  |                          |  |  
|Agip Deutschland AG                            |  | Germany                  |  |   | 100 | 
|Agip Do Brasil SA                              |  | Brazil                   |  |   | 100 | 
|Agip Ecuador SA                                |  | Ecuador                  |  |   | 100 | 
|Agip Espana SA                                 |  | Spain                    |  |   | 100 | 
|Agip Française SA                              |  | France                   |  |   | 100 | 
|American Agip Co Inc                           |  | USA                      |  |   | 100 | 
|Petrochemicals                                 |  |                          |  |   |     |  |  | 
|EniChem SpA (now Syndial SpA)                  |  | Italy                    |  |   | 100 | 
|Polimeri Europa SpA                            |  | Italy                    |  |   | 100 | 
|Dunastyr Polystyrene Manufacturing Company Ltd |  | Hungary                  |  |   | 100 | 
|Polimeri Europa Americas Inc                   |  | USA                      |  |   | 100 | 
|Polimeri Europa Benelux SA                     |  | Belgium                  |  |   | 100 | 
|EniChem Deutschland GmbH                       |  | Germany                  |  |   | 100 | 
|Polimeri Europa Elastomères France SA          |  | France                   |  |   | 100 | 
|Polimeri Europa France Snc                     |  | France                   |  |   | 100 | 
|Polimeri Europa UK Ltd                         |  | United Kingdom           |  |   | 100 | 
|Oilfield Services and Engineering              |  |                          |  |   |     |  |  | 
|Saipem SpA                                     |  | Italy                    |  |   | 43  | 
|Snamprogetti SpA                               |  | Italy                    |  |   | 100 | 
|Consorzio Eni per lAlta Velocità  Cepav Uno  |  | Italy                    |  |   | 50  | 
|European Marine Contractors Ltd                |  | United Kingdom           |  |   | 75  | 
|Saipem SA                                      |  | France                   |  |   | 43  | 
|Other Activities                               |  |                          |  |   |     |  |  | 
|Società Finanziaria Eni SpAEnifin             |  | Italy                    |  |   | 100 | 
|Società Finanziamenti Idrocarburi  Sofid-Spa  |  | Italy                    |  |   | 100 | 
|EniData SpA                                    |  | Italy                    |  |   | 100 | 
|EniTecnologie SpA                              |  | Italy                    |  |   | 100 | 
|Eurosolare SpA                                 |  | Italy                    |  |   | 100 | 
|Sieco SpA                                      |  | Italy                    |  |   | 91  | 
|Tecnomare SpA                                  |  | Italy                    |  |   | 57  | 
|Eni International BV                           |  | Netherlands              |  |   | 100 | 
|Eni Coordination Center SA                     |  | Belgium                  |  |   | 100 | 




Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The information in this item should be read together with the Key
Information presented in Item 3 and the Consolidated Financial Statements
and related Notes thereto included in Item 18. The Consolidated Financial
Statements and the related Notes thereto have been prepared in accordance
with Italian GAAP, which differ in certain respects from generally accepted
accounting principles applied in the United States. For
a summary of the





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significant differences between Italian accounting principles and U.S.
GAAP that are relevant to Eni, see «Summary of Differences Between Italian
accounting principles and U.S. GAAP» and Notes 28, 29 and 30 to the
Consolidated Financial Statements. Note 30 to the Consolidated Financial
Statements provides certain additional disclosures required under U.S. GAAP.




Critical Accounting Policies

The consolidated financial statements of Eni have been prepared in
accordance with Eni Group accounting policies which are in accordance with
accounting principles prescribed by Italian law and supplemented by the
accounting principles issued by the Consiglio Nazionale dei Dottori
Commercialisti e dei Ragionieri (C.N.D.C.R.) or, in the absence thereof and
if applicable, the International Accounting Standards Committee (I.A.S.C.).
In the absence of indications in said principles, specific criteria for
hydrocarbon exploration and production applied internationally have been
followed (collectively «Italian GAAP»).

Italian GAAP differ in certain respects from generally accepted
accounting principles in the United States («U.S. GAAP»); a description of
these differences is set forth in Note 28 to Financial Statements.

Accounting policies affect the recognition of assets and liabilities in
the balance sheet and revenues and expenses on the income statement. The
accounting methods used can affect net income, stockholders equity and
various financial statement ratios. However, Enis accounting policies
generally do not change cash flows or liquidity.

Oil and Gas Activities

Costs associated with the acquisition of mineral rights, including
reserves purchased in connection with such acquisition, are capitalized.
Mineral rights can also include exploration permits, among other items.
Mineral rights are amortized on a straight-line basis over the expected
period of benefit. Capitalized costs associated with proved reserves are
amortized on a Unit-of-Production (UOP) basis, while capitalized costs
related to all other reserves are not amortized until classified as proved.
Capitalised costs related to abandoned drilling programs are expensed.

Costs associated with exploratory activities for oil and gas producing
properties incurred to obtain information in order to characterize fields
(such as acquisition of seismic data from third parties, test wells and
geophysical surveys) are expensed as incurred for financial reporting
purposes.

Costs incurred in development activities (acquisition of concessions,
drilling of wells and their completion before production, as well as plant
and equipment necessary for production, etc.) are capitalized and amortized
on a UOP basis. Costs related to unsuccessful developmental wells are
expensed immediately as loss on disposal.

Eni regularly accrues costs expected to be incurred with respect to
eventual well abandonment, including costs associated with site restoration,
on a UOP basis.

Engineering estimates of the Companys oil and gas reserves are
inherently uncertain; the accuracy of any reserve estimate is a function of
the quality of available data and engineering and geological interpretation
and judgement. There are authoritative guidelines regarding the engineering
criteria that have to be met before estimated oil and gas reserves can be
designated as «proved». Proved reserves are the estimated volumes of crude
oil, natural gas and gas condensates, liquids and associated substances
which geological and engineering data demonstrate with reasonable certainty
to be recoverable in future years from known reservoirs under existing
economic and operating conditions. Proved reserves include: (i) developed
proved reserves: amounts of hydrocarbons that are expected to be retrieved
through existing wells, facilities and operating methods; (ii) non developed
proved reserves: amounts of hydrocarbons that are expected to be retrieved
following new drilling and facilities. Proved reserves do not include
probable or possible reserves.





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##### Table of Contents



Results of drilling, testing and production after the date of the
estimate may require substantial upward and downward revision. In addition
changes in oil and natural gas prices could have an effect on the value of
Enis proved reserves. Accordingly, the estimated reserves could be
materially different from the quantities of oil and natural gas that
ultimately will be recorded.

Despite the inherent imprecision in these engineering estimates,
estimated reserves are used in determining depreciation expenses and
impairment expense. Depreciation rates on oil and gas assets using the UOP
basis are determined from the ratio between the amount of hydrocarbons
extracted in the year and proved developed reserves existing at the year-end
increased by the amounts extracted during the year. Therefore, assuming all
other variables are held constant, an increase in estimated proved reserves
decreases depreciation, depletion and amortization expense. On the contrary,
a decrease in estimated proved reserves increases depreciation, depletion
and amortization expense. The UOP rate is then applied to the costs
capitalized.

Also, estimated reserves are often used to calculate future cash flows
from oil and gas operations, which serve as an indicator in determining whether a property is impaired or
not. The larger the estimated reserves, the less likely the property is
impaired.

Impairment of Assets

Fixed assets are written down whenever events and changes in
circumstances indicate that the carrying amount may not be recoverable. Eni
calculates the writedown as the difference between the expected
accumulated discounted cash flow and the book value of the asset. According to
Italian GAAP, when the circumstances causing an impairment cease to exist, Eni reverses previously recorded
impairment charges net of depreciation.

For oil and natural gas properties, the expected future cash flows are
estimated based on developed and non developed proved reserves including,
among other elements, the cost for closure and abandonment of wells,
production taxes and the costs to be incurred for the reserves yet to be
developed. The estimated future level of production is based on assumptions
about future commodity prices, lifting and development costs, field decline
rates, market demand and supply, economic regulatory climates and other
factors.

Asset Retirement Obligations

Eni has significant obligations to remove tangible equipment and
restore land or seabed at the end of operations. Removal and restoration
obligations are primarily associated with plugging and abandoning wells and
removal and disposal of offshore oil and gas platforms around the world. The
estimated undiscounted costs, net of salvage value, of dismantling and
removing these facilities are accrued over the productive life of the asset.
Estimating the future asset removal costs is difficult and requires
management to make estimates and judgements because most of the removal
obligations are many years in the future and contracts and regulations often
have vague descriptions of what constitutes removal. Asset removal
technologies and costs are constantly changing, as well as political,
environmental, safety and public relations considerations.

Environmental Liabilities

Together with other companies in the industries in which it operates,
Eni is subject to numerous EU, national, regional and local environmental
laws and registrations concerning its oil and gas operations, productions
and other activities, including legislations that implements international
conventions or protocols.

Environmental expenditures are made in order to prevent, reduce, repair
or control the environmental impact





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##### Table of Contents



of production activities. Reserves for environmental contingencies are
established when it becomes probable or certain that a liability has been
incurred and the amount can be reasonably estimated.

Although management, considering the actions already taken, the
insurance policies to cover environmental risks and provision for risks
accrued, does not expect any material adverse effect upon Enis results of
operations and financial position as a result of its compliance with such
laws and regulations, there can be no assurance that there will not be a
material adverse impact on Enis results of operations and financial
position due to: (i) the possibility of as yet unknown contamination; (ii)
the results of the ongoing surveys; (iii) the possible effect of future
environmental legislations and rules; (iv) the effect of possible
technological changes relating to future remediation; and (v) the
possibility of litigation and the difficulty in determining Enis
liabilities, if any, as against other potentially responsible parties with
respect to such litigation and the possible insurance recoveries.

Contingencies

In addition to accruing the estimated costs for asset retirement
obligation and environmental liabilities, Eni accrues for all probable and
estimable contingencies. These other contingencies are primarily related to
litigation and tax issues. Determining appropriate amounts for accrual is a
complex estimation process that includes subjective judgements. Eni reviews
these contingencies on at least a quarterly basis to determine if new
accruals need to be recorded or if adjustments to existing accruals need to
be made.

Margin (1)

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.




Background and Recent Developments

Enis results of operations and the period-to-period comparability of
its financial results are affected by a number of external factors which
exist in the industry environment, including changes in oil, natural gas and
refined products prices, industry-wide movements in refining and
petrochemical margins and fluctuations in exchange rates and interest rates.
Changes in weather conditions from year to year can influence demand for
natural gas and some petroleum products, thus affecting results of
operations of the natural gas segment and, to a lesser extent, of the
refining and marketing segment. See Item 3. Risk
Factors. The trading
environment was mixed in 2002. Hydrocarbon prices were weak in the first
half of the year; then they began to increase due to geopolitical worries.
Refining margins were weak all year round due to sluggish demand for refined
products. Margins on distribution of refined products in Europe benefited
from higher levels of efficiency of distribution networks. Natural gas
demand in Italy was affected by unfavorable climatic conditions especially
in the fourth quarter of 2002 and by slow economic activity. Margins on
natural gas primary distribution in Italy were affected by increasing
competitive pressure in the domestic natural gas market and by the change in
sale mix due to compliance with regulatory thresholds provided for by
Legislative Decree no. 164/2000 (See «Item 3. Risk
Factors»). Petrochemical
product margins suffered from the weak economic environment and overcapacity
and came under pressure as decreases in selling prices were sharper than
those in the prices of oil-based feedstocks.

In the first quarter of 2003 oil prices continued their upward trends
with the spot price for Brent, a benchmark crude oil, above the key level of
30 dollar/barrel due to geopolitical developments. Refining margins
rebounded sharply due to higher demand for refined products as a consequence
of geopolitical factors, a colder winter in North America and Europe as well
as low inventory levels. Natural gas margins were higher due mainly to the
different trends in the reference parameters for the determination of
natural gas purchase and selling prices (related also to different
contractual intervals). Petrochemicals margins improved





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##### Table of Contents



slightly over the first quarter of 2002 but did not show any signs of a
sustained recovery. The euro appreciated markedly against the dollar.

Enis net income for the first quarter of 2003 increased by 45.2% over
the first quarter of 2002, due in particular to an increase in international
oil prices (prices realized on oil were up 55.4%; on natural gas 36.6%) and
in refining margins (Brent margin was up 3.60 dollar/barrel), these effects
were reduced by the appreciation of the euro over the dollar (up 22.5%),
higher margins on natural gas distribution and cost reductions. The increase
in net income was also determined by the recording of net extraordinary
income related to the settlement of a dispute concerning the EniMont joint
venture with Edison SpA and the decline in the share of net income
attributed to minorities resulting from the acquisition by way of tender
offer of the majority of outstanding Italgas shares. These positive factors
were partly offset by higher income taxes, due mainly to higher income
before income taxes.

Enis operating income for the first quarter of 2003 increased by 23.4%
over the first quarter of 2002, mainly due to increases recorded by:



| |  |  | the Exploration & Production segment (up 34.8%) related
essentially to higher international oil prices, whose effect was
partly offset by the appreciation of the euro over the dollar;                                                                                                                                                                                                                                                                                                                
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the Gas & Power segment (up 7.2%) related essentially to higher
margins and volumes sold in primary and secondary distribution of
natural gas, whose effect was offset in part by a change in the
sales and supply mix in primary distribution;                                                                                                                                                                                                                                                        
|
| |  |  | the Refining & Marketing segment (up 88.7%) essentially due to
an especially favorable refining scenario, whose effects were offset
in part by: (i) lower profitability of lubricant bases, kerosene and
petrochemical feedstocks related to lower demand, as well as lower
profitability of semi-finished products; (ii) the effect of plant
maintenance standstills that did not allow to take full advantage of
the favorable refining scenario; (iii) the appreciation of the euro
over the dollar.

In the first quarter of 2003, streamlining and efficiency improvement
continued and allowed cost savings, which offset almost entirely salary
increases and the effects of inflation.

Enis net sales from operations for the first quarter of 2003 increased
by 13% over the first quarter of 2002, due mainly to an increase in
international oil prices, in natural gas and main downstream product prices
and to the effect of the consolidation of Bouygues Offshore in the Oilfield
Services and Engineering segment, the effects of which were reduced by the
appreciation of the euro over the dollar.

Net borrowings at March 31, 2003 increased over December 31, 2002. See
«Glossary» for a definition of net borrowings. Increased financial
requirements for capital expenditure and investments and the buy-back of
Enis shares were covered for the most part by the cash flows generated from
operating activities. The positive effect of the appreciation of the euro
over the dollar contributed to the decline in net borrowings.

In the first quarter of 2003 hydrocarbon production increased by
approximately 4% as compared to the first quarter of 2002, due to: (i)
production of Fortum Petroleum, purchased in the first quarter of 2003; (ii)
start-ups of new fields mainly in Iran, Trinidad & Tobago, Egypt, the United
States, and Pakistan; (iii) production increases mainly in Nigeria and
Kazakhstan; (iv) the effect of the cancellation of production cuts by OPEC.
These increases were partly offset by: (i) lower entitlements in PSAs due
to the increase in oil prices; (ii) the effect of production standstills in
Venezuela due to a national strike; (iii) declines in mature fields.

Natural gas sales in primary distribution in Italy and Europe increased
6.3% as compared to the first quarter of 2002, due to higher sales in
Europe, offset in part by lower sales in Italy.

In the April-May 2003 two-month period the spot price of Brent crude
declined with respect to the first quarter and was also slightly below the
level achieved in the same period of 2002. This factor is expected to
adversly affect results of operations of Enis Exploration & Production
segment in 2003. Refining margins declined somewhat with respect to the
first quarter but were well above the level of the second quarter 2002.
Petrochemical margins improved slightly over the first quarter; however
based on economic and industry conditions management does not expect any
significant improvement in the near future. The euro continued to





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##### Table of Contents



appreciate against the dollar due to the process of adjustment of
structural imbalances of U.S. economy; management expects this movement in
exchange rates to characterize the rest of 2003 and to adversely impact
Enis results of operations in 2003.

The table below sets forth certain indicators of some of these external
factors for the periods indicated:

|                                          |  |                         |       |                 |  |            |       |      |  |      |       |      |  |              |       |            |  |  |       |  |  |  |       |  |  |  |       | 
|----------------------------------------- |  | ----------------------- | ----- | --------------- |  | ---------- | ----- | ---- |  | ---- | ----- | ---- |  | ------------ | ----- | ---------- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                          |  |                         |       |                 |  |            |       |      |  |      |       |      |  | Three months |       | Two months
|                                          |  | Year ended December 31, |       | ended March 31, |  | April-May,
|                                          |  |                         |       |                 |  |           
|                                          |  | 2000                    |       | 2001            |  | 2002       |       | 2002 |  | 2003 |       | 2002 |  | 2003        
|                                          |  |                         |       |                 |  |            |       |      |  |      |       |      |  |             
|Average price of
Brent dated crude
oil(1) |  |                         | 28.39 |                 |  |            | 24.46 |      |  |      | 24.98 |      |  |              | 21.14 |            |  |  | 31.51 |  |  |  | 25.50 |  |  |  | 25.29 | 
|Average European
refining margin(2)       |  |                         | 3.99  |                 |  |            | 1.97  |      |  |      | 0.80  |      |  |              | 0.21  |            |  |  | 3.81  |  |  |  | 0.56  |  |  |  | 2.33  | 
|Average EUR/USD
Exchange rate(3)          |  |                         | 0.924 |                 |  |            | 0.896 |      |  |      | 0.946 |      |  |              | 0.876 |            |  |  | 1,073 |  |  |  | 0.901 |  |  |  | 1.121 | 
|EURIBORthree-month
euro rate %           |  |                         | 4.4   |                 |  |            | 4.3   |      |  |      | 3.3   |      |  |              | 3.3   |            |  |  | 2.7   |  |  |  | 3.4   |  |  |  | 2.6   | 



---

|(1) |  | In U.S. dollars per barrel. Source: Platts Oilgram.                                                                        
|--- |  | ----------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | In U.S. dollars per barrel. FOB Mediterranean Brent dated crude oil.
Source: Eni calculations based on Platts Oilgram data.
|   
|(3) |  | Source: European Central Bank.                                                                                              

The most relevant recent developments occurred after December 31, 2002
are the following:



| |  |  | on January 27, 2003 the public tender offer on shares of Società
Italiana per il gas pA («Italgas») was successfully closed. The
tender offer, which was launched on November 25, 2002, concerned all
Italgas SpA ordinary shares outstanding not owned directly or
indirectly by Eni, corresponding to approximately 56% of share
capital. Eni offered a price of euro 13 per share, to be fully paid
in cash. Following the squeeze-out of the remaining minority
shareholders, Eni now owns 100% of share capital of Italgas. Total
consideration amounted to approximately euro 2.5 billion;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | on March 4, 2003 Eni completed the purchase of the Norwegian oil
company Fortum Petroleum AS, which in 2002 produced 39,000 boepd and
held proved reserves of hydrocarbons of 159 million boe as of
December 31, 2002. Total financial requirements for this purchase
amounted to dollar 975 million (of which a cash consideration of
dollar 256 million and net borrowings acquired of dollar 719
million);                                                                                                                                                                                   
|
| |  |  | on March 6, 2003 Eni and EniChem SpA (now Syndial SpA) accepted
the settlement proposal presented by Edison SpA for the closing of
an arbitration proceeding initiated by Eni and EniChem SpA in 1992
in relation to guarantees given by Montedison SpA and its
subsidiaries in connection with the establishment of a joint venture
in the petrochemicals sector between Eni and Montedison. Edison SpA
recognized euro 200 million to Enichem to be paid in four
instalments of euro 50 million each.                                                                                         
|
| |  |  | on April 16, 2003 Eni launched a fixed rate bond issue for a
notional amount of euro 1.5 billion. The transaction was placed in
the international Eurobond market. The bond has a 10 year maturity
and pays a fixed annual coupon of 4.625%. The reoffer price is
99.862 which implied, at the moment of pricing, a spread of 28 basis
points over the 10 year mid swap rate. The new security will be
listed on the Luxembourg Stock Exchange.                                                                                                                                                 




Principles of Consolidation

For a description of Enis principles of consolidation see Notes to the
Consolidated Financial StatementsNote 2 «Principles of consolidation».





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##### Table of Contents






Results of Operations

Three Years ended December 31, 2002

The table below sets forth a summary of Enis income statement for the
periods indicated.

|                                          |                                                     |  |                         |        |      |  |         |        |  |  |         |        | 
|----------------------------------------- | --------------------------------------------------- |  | ----------------------- | ------ | ---- |  | ------- | ------ |  |  | ------- | ------ | 
|                                          |                                                     |  | Year ended December 31,
|                                          |                                                     |  |                        
|                                          |                                                     |  | 2000                    |        | 2001 |  | 2002   
|                                          |                                                     |  |                         |        |      |  |        
|                                          |                                                     |  | (millions E)           
|Net sales from operations                 |                                                     |  | 47,938                  |        |      |  | 48,925  |        |  |  | 47,922  |       
|Other income and revenues(1)              |                                                     |  | 905                     |        |      |  | 921     |        |  |  | 1,080   |       
|                                          | Total revenues                                      |  |                         | 48,843 |      |  |         | 49,846 |  |  |         | 49,002 | 
|Operating expenses                        |                                                     |  | (34,228                 | )      |      |  | (34,679 | )      |  |  | (34,996 | )     
|Depreciation, amortization and writedowns |                                                     |  | (3,843                  | )      |      |  | (4,771  | )      |  |  | (5,504  | )     
|                                          | Operating income                                    |  |                         | 10,772 |      |  |         | 10,396 |  |  |         | 8,502  | 
|Net financial income (expense)            |                                                     |  | 64                      |        |      |  | (259    | )      |  |  | (167    | )     
|Net income (expense) from investments     |                                                     |  | 33                      |        |      |  | (216    | )      |  |  | 43      |       
|                                          | Income before extraordinary income and income taxes |  |                         | 10,869 |      |  |         | 9,921  |  |  |         | 8,378  | 
|Net extraordinary income (expense)(2)     |                                                     |  | (512                    | )      |      |  | 1,837   |        |  |  | (29     | )     
|                                          | Income before income taxes                          |  |                         | 10,357 |      |  |         | 11,758 |  |  |         | 8,349  | 
|Income taxes                              |                                                     |  | (4,335                  | )      |      |  | (3,530  | )      |  |  | (3,127  | )     
|                                          | Income before minority interest                     |  |                         | 6,022  |      |  |         | 8,228  |  |  |         | 5,222  | 
|Minority interest                         |                                                     |  | (251                    | )      |      |  | (477    | )      |  |  | (629    | )     
|                                          | Net income                                          |  |                         | 5,771  |      |  |         | 7,751  |  |  |         | 4,593  | 



---

|(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.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Gross of income tax.                                                                                                                                                                                        

The table below sets forth certain income statement items as a
percentage of net sales from operations for the periods indicated.

|                                          |  |                         |      |      |  |      |      |   |  |  |      |  
|----------------------------------------- |  | ----------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                          |  | Year ended December 31,
|                                          |  |                        
|                                          |  | 2000                    |      | 2001 |  | 2002
|                                          |  |                         |      |      |  |     
|Operating expenses                        |  |                         | 71.4 | %    |  |      | 70.9 | % |  |  | 66.6 | %
|Depreciation, amortization and
writedowns |  |                         | 8.0  | %    |  |      | 9.8  | % |  |  | 11.5 | %
|Operating income                          |  |                         | 22.5 | %    |  |      | 21.2 | % |  |  | 17.7 | %

Revenues from sales of products are recognized upon transfer of title.
In particular, revenues are recognized:



| | 1) |  | for natural gas, when the natural gas leaves Enis distribution
network and is delivered to the customer;                                                                                           
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2) |  | for crude oil, generally upon shipment;                                                                                                                                                             
|
| | 3) |  | for petroleum products sold to retail distribution networks,
generally upon delivery to the service stations, whereas all other
sales are generally recognized upon shipment from Enis plants; and,
|
| | 4) |  | for chemicals, generally upon shipment.                                                                                                                                                             

In all instances where revenue is recognized upon shipment, all risk of
loss is transferred to the buyer upon shipment.

Revenues from natural gas and crude oil production in which Eni has an
interest together with other producers are recognized based on actual
quantities produced and sold on Enis behalf (sales method). Differences
between Enis net working interest volume and actual production volumes are
not significant.





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##### Table of Contents



Revenues related to long-term construction contracts are recognized
using the percentage-of-completion method measured on the cost-to-cost
basis. Provisions for anticipated losses on long-term contracts are recorded
in full when such losses become evident. Revenues related to amounts in
excess of the original contract price due to the incurrence of unanticipated
additional costs (i.e. Eni claims against third parties), are recognized
when it is probable that the claim will result in additional contract
revenue and the amount of the claim can be reasonably estimated.

Eni is a party to certain Production Sharing Agreements (PSAs) whereby
Enis taxes are settled by its joint-venture partners which are state-owned
entities. A portion of Enis share of oil and gas production is withheld and
sold by the state-owned entities, with proceeds being remitted to the state
in satisfaction of Enis PSA-related tax liabilities. Without this specific
provision in its PSAs, Eni would otherwise be entitled to the sale proceeds
of this portion of oil and gas production withheld.

2002 compared to 2001. Enis a net income in 2002 was euro 4,593
million, with a decrease of euro 3,158 million over 2001, down 40.7%, due
to: (i) a euro 1,894 million decrease in operating income (down 18.2%)
related in particular to lower refining margins (Brent down 59.4%) and lower
natural gas realization prices, a change in the supply/sale mix and lower
volumes sold in natural gas primary distribution, as well as higher asset
impairment; these negative factors were offset in part by higher
international oil prices and improved oil production mix (overall oil
realization prices were up 5.2%), increased hydrocarbon production sold (up
4.7%) and lower costs; (ii) lower net extraordinary income (euro 1,766
million) due to lower gains on disposal of assets (down euro 3,216 million),
the effects of which were offset in part by lower restructuring charges, in
particular in Petrochemicals. These negative changes were partly offset by
lower income taxes (euro 402 million), due in particular to a decrease in
income before income taxes and lower net financial expense (euro 128
million).

Rationalization and improved efficiency actions led to cost savings
amounting to euro 523 million, offsetting almost entirely the effect of
salary increases and inflation, as well as increases related to higher
activity levels and acquisitions. Cost savings achieved in the 1999-2002
period amounted to approximately euro 1.7 billion, or 50% of the euro 3.4
billion target set for 2006.

Return on average capital employed «ROACE» was 13.7% (24% in 2001 which
included the effects of the significant gains on disposal recorded). See
«Glossary» for a definition of ROACE.

2001 compared with 2000.Enis consolidated financial statements at
December 31, 2001 showed a record net income of euro 7,751 million, with an
increase of euro 1,980 million over 2000, up 34.3%, mainly due to: (i) an
euro 2,349 million increase in net extraordinary income related to higher
gains on disposals (euro 3,387 million) generated in particular by the
offering of 40.24% of the share capital of Snam Rete Gas SpA, the sale of
part of Enis real estate portfolio and of the Polyurethane business in the
Petrochemical segment, offset in part by an euro 1,038 million increase in
extraordinary expense due to higher restructuring charges, in particular in
the Petrochemical segment; (ii) lower income taxes (euro 805 million) mainly
related to the effects of the voluntary revaluation of assets as per Law
342/2000 carried out by some of Enis subsidiaries in 2000. These positive
factors were offset in part by: (i) an euro 376 million decrease in
operating income (down 3.5%) due in particular to the decline in oil prices;
(ii) the negative change amounting to euro 323 million in the balance of
financial income/expense due to higher net borrowings; (iii) the negative
change amounting to euro 249 million in the balance of income/loss on
investments due mainly to higher losses recorded by subsidiaries and (iv)
the share of profits of Snam Rete Gas attributed to minorities following the
offering (euro 232 million).

Cost reduction and efficiency improvement actions allowed savings
amounting to euro 475 million (including Lasmo), offsetting almost
completely salary increases, inflation and the effect of the appreciation of
the dollar over the euro. Savings obtained in 2001 brought total savings in
the 1999-2001 period to euro 1,199 million, or 40% of the euro 3 billion target set for 2005 of
which 0.6 billion related to the planned divestment of the petrochemical
segment.

ROACE increased significantly to 24% (21.5% in 2001).

The table below shows significant non-recurring items in order to allow
a better understanding of trading performance for years 2000, 2001 and 2002
as was affected by significant impairments, net extraordinary income or
expense, change in fiscal regulations and other charges or credits.





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##### Table of Contents



|                                                                                   |                                                      |  |             |     |      |  |       |      |   |  |      |      |  
|---------------------------------------------------------------------------------- | ---------------------------------------------------- |  | ----------- | --- | ---- |  | ----- | ---- | - |  | ---- | ---- | -
|                                                                                   |                                                      |  | 2000        |     | 2001 |  | 2002 
|                                                                                   |                                                      |  |             |     |      |  |      
|                                                                                   |                                                      |  | (million E)
|Asset impairment                                                                   |                                                      |  | (55         | )   |      |  | (100  | )    |   |  | (542 | )   
|Environmental tax of the Sicilia Region                                            |                                                      |  |             |     |      |  |       |      |   |  | (86  | )   
|(Costs) revenues of previous years                                                 |                                                      |  |             |     |      |  |       |      |   |  | 61   |     
|Gains on disposals                                                                 |                                                      |  |             |     |      |  |       |      |   |  | 92   |     
|(Devaluation) revaluations of stocks                                               |                                                      |  | 80          |     |      |  | (69   | )    |   |  | 40   |     
|Other                                                                              |                                                      |  |             |     |      |  |       |      |   |  | (22  | )   
|Effect on operating income                                                         |                                                      |  | 25          |     |      |  | (169  | )    |   |  | (457 | )   
|of which:                                                                          |                                                      |  |             |     |      |  |       |      |   |  |      |     
|                                                                                   |  Exploration & Production                           |  |             |     |      |  |       | (88  | ) |  |      | (253 | )
|                                                                                   |  Gas & Power                                        |  |             | (5  | )    |  |       | (3   | ) |  |      | (129 | )
|                                                                                   |  Refining & Marketing                               |  |             | (45 | )    |  |       | 22   |   |  |      | 9    |  
|                                                                                   |  Petrochemicals                                     |  |             | 79  |      |  |       | (100 | ) |  |      | (78  | )
|                                                                                   |  Other segments                                     |  |             | (4  | )    |  |       |      |   |  |      | (6   | )
|Non-recurring expense on investments                                               |                                                      |  |             |     |      |  | (82   | )    |   |  | (36  | )   
|Net extraordinary income (expense)                                                 |                                                      |  | (512        | )   |      |  | 1,737 |      |   |  | (29  | )   
|Non-recurring items before taxes                                                   |                                                      |  | (487        | )   |      |  | 1,486 |      |   |  | (522 | )   
|Adjustment of reserve for deferred tax liabilities due to changes in UK
tax regime |                                                      |  |             |     |      |  |       |      |   |  | (215 | )   
|Release of reserve for anticipated amortization (ex art. 4 of Law 448/2001)        |                                                      |  |             |     |      |  |       |      |   |  | 95   |     
|Taxes (estimated)                                                                  |                                                      |  | 508         |     |      |  | 508   |      |   |  | 312  |     
|                                                                                   |  related to non-recurring items in operating income |  |             | 19  |      |  |       | 32   |   |  |      | 245  |  
|                                                                                   |  related to other non-recurring items               |  |             | 489 |      |  |       | 476  |   |  |      | 67   |  
|Minority interest                                                                  |                                                      |  | (54         | )   |      |  |       |      |   |  |      |     
|Non-recurring items after taxes                                                    |                                                      |  | (33         | )   |      |  | 1,994 |      |   |  | (330 | )   

Revenues

Enis total revenues were euro 49,002, 49,846 and 48,843 million in
2002, 2001 and 2000, respectively. Total revenues consist of net sales from
operations and other income and revenues. Enis net sales from operations
amounted to euro 47,922, 48,925 and 47,938 million in 2002, 2001 and 2000,
respectively, and its other income and revenues totalled euro 1,080, 921 and
905 million, respectively, in these periods.

The table below sets forth, for the periods indicated, the net sales
from operations generated by each of Enis business segments, together with consolidated net sales from
operations.

|                                       |  |                         |         |      |  |      |         |   |  |  |         |  
|-------------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                                       |  | Year ended December 31,
|                                       |  |                        
|                                       |  | 2000                    |         | 2001 |  | 2002
|                                       |  |                         |         |      |  |     
|                                       |  | (millions E)           
|Exploration & Production               |  |                         | 12,308  |      |  |      | 13,960  |   |  |  | 12,877  |  
|Gas & Power                            |  |                         | 14,427  |      |  |      | 16,098  |   |  |  | 15,297  |  
|Refining & Marketing                   |  |                         | 25,462  |      |  |      | 22,083  |   |  |  | 21,546  |  
|Petrochemicals                         |  |                         | 6,018   |      |  |      | 4,761   |   |  |  | 4,781   |  
|Oilfield Services and Engineering      |  |                         | 2,146   |      |  |      | 3,114   |   |  |  | 4,546   |  
|Other activities                       |  |                         | 608     |      |  |      | 695     |   |  |  | 897     |  
|Elimination of intersegment sales(1)   |  |                         | (13,031 | )    |  |      | (11,786 | ) |  |  | (12,022 | )
|Consolidated net sales from operations |  |                         | 47,938  |      |  |      | 48,925  |   |  |  | 47,922  |  





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---

|(1) |  | Intersegment 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 intersegment sales are recorded by the Exploration &
Production segment. See Note 24 to the Consolidated Financial
Statements for a breakdown of intersegment sales by segment for the
three years ended December 31.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2002 compared with 2001. Enis net sales from operations (revenues)
for 2002 amounted to euro 47,922 million, declining by euro 1,003 million,
down 2.1% over 2001, due mainly to lower natural gas realization prices and
lower prices for the main downstream products, the change in the sale mix
and lower volumes sold in natural gas primary distribution, as well as the
effects of the appreciation of the euro against the U.S. dollar. These
negative effects were offset in part by an increase in international oil
prices and improved oil production mix, higher hydrocarbon production sold
and higher activity levels in the Oilfield Services and Engineering segment.

Revenues generated by the Exploration & Production segment (euro 12,877
million) declined by euro 1,083 million, down 7.8%, due essentially to lower
natural gas realization prices (down 11.1%), the appreciation of the euro
over the dollar (up 5.6%) and lower volumes of purchased hydrocarbons
marketed (down 51 million boe) due mainly to the transfer of the natural gas
trading activity to the Gas & Power division. These negative factors were
partially offset by higher international oil prices and improved oil
production mix (overall oil realization prices were up 5.2%) and higher
hydrocarbon production sold (23.4 million boe, up 4.7%).

Revenues generated by the Gas & Power segment (euro 15,297 million)
declined by euro 801 million, down 5%, due essentially to lower prices for
natural gas, the effects of which were partially offset by the transfer of
the natural gas trading activity from the Exploration & Production division.

Revenues generated by the Refining & Marketing segment (euro 21,546
million) declined by euro 537 million, down 2.4%, essentially due to lower
prices for refined products (the retail prices of gasoline and diesel fuel
were down 5.9% and 8.7%, respectively) and to reduced sales volumes on both
the retail and wholesale market in Italy (overall 1.1 million tonnes, down
4.8%), due to the effect of closures/sales of service stations and lower
gasoil sales on wholesale markets.

Revenues generated by the Petrochemical segment (euro 4,781 million)
increased by euro 20 million, up 0.4%, due mainly to the consolidation of
Polimeri Europa, whose effect were almost entirely offset by an 8.1% fall in
the average selling prices of products.

Revenues from the Oilfield Services and Engineering segment (euro 4,546
million) increased by euro 1,432 million, up 46%, due to increased activity
levels also in connection with the purchase of Bouygues Offshore.

Revenues generated by the other activities segment (euro 897 million)
increased by euro 202 million, up 29.1% due mainly to higher insurance
premiums received by Padana Assicurazioni and by increased activity levels
at Sieco, a company performing general services for Eni Group companies.

2001 compared with 2000.Enis net sales from operations (revenues)
amounted to euro 48,925 million, representing an euro 987 million increase
over 2000, up 2.1%, due mainly to higher prices of natural gas, higher
hydrocarbon production sold, the appreciation of the dollar over the euro
and higher activity levels in the Oilfield Services and Engineering segment. These positive factors were offset in
part by the decline in international oil prices and in the prices of the
main downstream products, as well as in volumes of petrochemical products
sold.

Net sales from operations generated by the Exploration and Production
segment (euro 13,960 million) increased by euro 1,652 million, up 13.4%, due
mainly to: (i) an increase in hydrocarbon production sold (72 million boe,
up 17%) mainly related to the acquisition of Lasmo; (ii) the appreciation of
the dollar over the euro; (iii) higher prices realized by Eni on natural gas
(up 2%); (iv) increased resales of purchased hydrocarbons (39 million boe).
These positive factors were offset in part by lower selling prices realized
by Eni on oil (down 16%).

Net sales from operations generated by the Gas & Power segment (euro
16,098 million) increased by euro 1,671 million, up 11.6%, mainly due to
higher natural gas prices as well as higher sales in the electricity
generation activity due mainly to the fact that in 2001 Eni in addition to
selling internally produced electricity





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began to sell traded electricity mainly to industrial customers for use
in their business. Higher electricity prices also increased net sales from
operations.

Net sales from operations generated by the Refining and Marketing
segment (euro 22,083 million) decreased by euro 3,379 million, down 13.3%,
due to the decline in prices in euro of refined products (in Italy retail
diesel fuel and gasoline decreased by 9.1 and 8.2% respectively) and lower
resales of purchased crudes (3.6 million tons).

Net sales from operations generated by the Petrochemical segment (euro
4,761 million) decreased by euro 1,257 million, down 20.9%, due to a 13.9%
decrease in average selling prices of products and a 6.8% decrease in
volumes sold, due in part to the sale of the Polyurethane business.

Net sales from operations generated by the Oilfield Services and
Engineering segment (euro 3,114 million) increased by euro 968 million, up
45.1%, due to increased activities in particular in oilfield services.

Net sales from operations generated in the Oilfield Services and
Engineering segment (euro 2,146 million) decreased by euro 842 million, down
28.2%, essentially due to decreased activities, particularly in Chemicals
and fertilizers, Onshore and offshore construction activities.

Operating Expenses

The table below sets forth the components of Enis operating expenses
for the periods indicated.

|                              |                    |  |                         |        |      |  |        |        |  |  |        |        | 
|----------------------------- | ------------------ |  | ----------------------- | ------ | ---- |  | ------ | ------ |  |  | ------ | ------ | 
|                              |                    |  | Year ended December 31,
|                              |                    |  |                        
|                              |                    |  | 2000                    |        | 2001 |  | 2002  
|                              |                    |  |                         |        |      |  |       
|                              |                    |  | (millions E)           
|Purchases, services and other |                    |  | 31,442                  |        |      |  | 31,828 |        |  |  | 31,893 |       
|Payroll and related costs     |                    |  | 2,786                   |        |      |  | 2,851  |        |  |  | 3,103  |       
|                              | Operating expenses |  |                         | 34,228 |      |  |        | 34,679 |  |  |        | 34,996 | 

2002 compared with 2001. Operating expenses (euro 34,996 million)
increased by euro 317 million, or 0.9% over 2001 due to salary increases and
inflation as well as increases due to higher activity levels, acquisitions
and the consolidation of Polimeri Europa, this was partly offset by lower
supply costs for natural gas, cost reductions resulting from streamlining
and increased efficiency and the effect of the appreciation of the euro over
the dollar.

Payroll and related costs (euro 3,103 million) increased by euro 252
million, up 8.8%, mainly due to the consolidation of Polimeri Europa and
Saipem SA (the new name of Bouygues Offshore) in the Oilfield Services and
Engineering segment and an approximately 3.8% increase in unit labor cost in
Italy. These factors were offset in part by an approximately 2,400 decline
in the average number of employees in Italy resulting from the streamlining
initiatives undertaken.

2001 compared with 2000.Operating expenses in 2001 (euro 34,679
million) increased by euro 451 million over 2000, up 1.3%, due primarily to:
(i) increased purchase costs of natural gas; (ii) the inclusion of Lasmo in
the scope of consolidation; (iii) increased activity levels in the Oilfield
Services and Engineering segment; (iv) higher resales of purchased
hydrocarbons (13 million boe); (v) the appreciation of the dollar over the
euro. Such increases were offset in part by: (i) lower international prices
of oil-based raw materials and petrochemical feedstocks; (ii) lower
production in the Petrochemical segment (702,000 tons, down 8.2%) due in
part to the sale of the Polyurethane business; (iii) lower costs due to
streamlining and efficiency improvement actions which offset almost entirely
salary increases, the effects of inflation and the appreciation of the
dollar over the euro.

Payroll and related costs (euro 2,851 million) increased by euro 65
million, up 2.3%, due essentially to the consolidation of Lasmo, the effect
of new hiring on a temporary base in Oilfield Services and Engineering





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##### Table of Contents



segment, as a result of increased activity levels, and the 2.6%
increase in unit labor costs in Italy. These factors were offset in part by
a decline in Enis average workforce in Italy by approximately 2,800
employees related to streamlining.

Depreciation, Amortization and Writedowns

The table below sets forth a breakdown of depreciation, amortization
and writedowns by business segment for the periods indicated.

|                                  |                                        |                                           |       |                         |       |      |       |       |       |  |       |       |       | 
|--------------------------------- | -------------------------------------- | ----------------------------------------- | ----- | ----------------------- | ----- | ---- | ----- | ----- | ----- |  | ----- | ----- | ----- | 
|                                  |                                        |                                           |       | Year ended December 31,
|                                  |                                        |                                           |       |                        
|                                  |                                        |                                           |       | 2000                    |       | 2001 |       | 2002 
|                                  |                                        |                                           |       |                         |       |      |       |      
|                                  |                                        |                                           |       | (millions E)           
|Exploration & Production(1)       |                                        |                                           | 2,364 |                         |       |      | 3,163 |       |       |  | 3,552 |      
|Gas & Power                       |                                        |                                           | 474   |                         |       |      | 500   |       |       |  | 417   |      
|Refining & Marketing              |                                        |                                           | 502   |                         |       |      | 508   |       |       |  | 490   |      
|Petrochemicals                    |                                        |                                           | 273   |                         |       |      | 251   |       |       |  | 161   |      
|Oilfield Services and Engineering |                                        |                                           | 144   |                         |       |      | 203   |       |       |  | 267   |      
|Other activities                  |                                        |                                           | 31    |                         |       |      | 46    |       |       |  | 75    |      
|                                  | Total of depreciation and amortization |                                           |       | 3,788                   |       |      |       | 4,671 |       |  |       | 4,962 |      
|                                  | Writedowns                             |                                           |       | 55                      |       |      |       | 100   |       |  |       | 542   |      
|                                  |                                        | Depreciation, amortization and writedowns |       |                         | 3,843 |      |       |       | 4,771 |  |       |       | 5,504 | 



---

|(1) |  | Exploration expenditures of euro 744, 757 and 865 million are included
in these amounts relative to years 2000, 2001 and 2002, respectively.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------

2002 compared with 2001. Depreciation, amortization and writedown
charges (euro 5,504 million) increased by euro 733 million, up 15.4% over
2001, mainly due to the increases in the Exploration & Production segment,
resulting from increased production and higher exploration activity, and
higher asset impairment (euro 442 million). Asset impairment concerned in
particular mineral assets in the Exploration & Production segment (euro 332
million), petrochemical plants (euro 105 million) and natural gas
distribution assets in Brazil and Argentina (euro 93 million).

2001 compared with 2000.Depreciation, amortization and writedown
charges (euro 4,771 million) increased by euro 928 million over 2000, up
24.1%, in particular in the Exploration and Production segment, principally
due to the inclusion of Lasmo in the scope of consolidation (euro 810
million).

Operating Income

The table below sets forth Enis operating income by business segment
for the periods indicated.

|                                  |                  |  |                         |        |      |  |       |        |  |  |       |       | 
|--------------------------------- | ---------------- |  | ----------------------- | ------ | ---- |  | ----- | ------ |  |  | ----- | ----- | 
|                                  |                  |  | Year ended December 31,
|                                  |                  |  |                        
|                                  |                  |  | 2000                    |        | 2001 |  | 2002 
|                                  |                  |  |                         |        |      |  |      
|                                  |                  |  | (millions E)           
|Exploration & Production          |                  |  | 6,603                   |        |      |  | 5,984 |        |  |  | 5,175 |      
|Gas & Power                       |                  |  | 3,178                   |        |      |  | 3,672 |        |  |  | 3,244 |      
|Refining & Marketing              |                  |  | 986                     |        |      |  | 985   |        |  |  | 321   |      
|Petrochemicals                    |                  |  | 4                       |        |      |  | (332  | )      |  |  | (347  | )    
|Oilfield Services and Engineering |                  |  | 144                     |        |      |  | 255   |        |  |  | 298   |      
|Other activities                  |                  |  | (143                    | )      |      |  | (168  | )      |  |  | (189  | )    
|                                  | Operating income |  |                         | 10,772 |      |  |       | 10,396 |  |  |       | 8,502 | 





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##### Table of Contents



2002 compared with 2001.  Enis operating income (euro 8,502 million)
decreased by euro 1,894 or 18.2% over 2001 as a result of lower refining
margins (Brent down 59.4%) and lower natural gas realization prices, a
change in the supply/sale mix and lower volumes sold in natural gas primary
distribution, as well as higher asset impairment; these negative factors
were offset in part by higher international oil prices and improved oil
production mix (overall oil realization prices were up 5.2%), increased
hydrocarbon production sold (up 4.7%) and lower costs.

2001 compared with 2000.  Enis operating income (euro 10,396 million)
decreased by euro 376 million over 2000, down 3.5% due to:



| |  | a decrease in operating income generated by the Exploration &
Production segment (euro 619 million, down 9.4%), due to the decline
in selling prices realized by Eni on oil (down 16%), whose effects
were offset in part by the contribution of the acquisition of Lasmo
(euro 275 million), increased natural gas production sold in Italy
(30.24 BCF million boe, up 6.1%), higher selling prices realized by
Eni on natural gas (up 2%), the appreciation of the dollar over the
euro (up 3%) and lower operating expenses;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | an euro 332 million operating loss registered by the
Petrochemical segment compared to the operating income of euro 4
million generated in 2000, due mainly to a decline in product
margins (down 14%) and volumes sold (down 6.8%).                                                                                                                                                                                                                                                                                           

These decreases were offset in part by:



| |  | an increase in operating income generated by the Gas & Power
segment (euro 494 million, up 15.5%), due mainly to higher margins
on primary distribution, a decrease in costs, as well as higher
volumes sold in Italy and outside Italy in secondary distribution,
whose effects were offset in part by a change in the sale mix of
products sold in primary distribution and lower margins in secondary
distribution;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | an increase in operating income of the Oilfield Services and
Engineering segment (euro 111 million, up 77.1%), resulting from the
positive trend of the oilfield services activity;                                                                                                                                                                                                                                   

The table below sets forth, for each of Enis principal business
segments, operating income as a percentage of such segments net sales from
operations (including intersegment sales) for the periods indicated.

|                                  |  |                         |      |      |  |      |      |    |  |  |      |   
|--------------------------------- |  | ----------------------- | ---- | ---- |  | ---- | ---- | -- |  |  | ---- | --
|                                  |  | Year ended December 31,
|                                  |  |                        
|                                  |  | 2000                    |      | 2001 |  | 2002
|Exploration & Production          |  |                         | 53.6 | %    |  |      | 42.9 | %  |  |  | 40.2 | % 
|Gas & Power                       |  |                         | 22.0 | %    |  |      | 22.8 | %  |  |  | 21.2 | % 
|Refining & Marketing              |  |                         | 3.9  | %    |  |      | 4.5  | %  |  |  | 1.5  | % 
|Petrochemicals                    |  |                         | 0.1  | %    |  |      | (7.0 | %) |  |  | (7.3 | %)
|Oilfield Services and Engineering |  |                         | 6.7  | %    |  |      | 8.2  | %  |  |  | 6.6  | % 

Exploration & Production.   Operating income in 2002 totaled euro 5,175
million, representing a euro 809 million decrease over 2001, down 13.5%, due
mainly to: (i) lower natural gas realization prices (down 11.1%); (ii)
higher mineral asset impairment (euro 244 million) in particular in the
North Sea and in the Gulf of Mexico; (iii) the effect of the appreciation of
the euro over the dollar (up 5.6%); (iv) a decrease in storage and
modulation tariffs due to the effects of decision No. 49/2002 of the
Authority for Electricity and Gas (euro 144 million); and (v) higher
exploration costs (euro 94 million). These negative factors were offset in
part by: (i) higher international oil prices and improved oil production mix
(overall oil realization prices were up 5.2%); (ii) increased hydrocarbon
production sold (23.4 million boe, up 4.7%); (iii) gains on disposal of
assets (euro 92 million); and (iv) cost reductions related to synergies
deriving from the integration of purchased companies and streamlining (euro
154 million).

Operating income in 2001 totaled euro 5,984 million, a decrease of euro
619 million over 2000, down 9.4%, due mainly to: (i) lower selling prices
realized by Eni on oil (down 16%); (ii) lower oil production sold





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in Italy (3.5 million barrels, down 12.5%) and outside Italy (4 million
barrels, down 1.7%, excluding Lasmos contribution); (iii) writedowns of
assets (euro 88 million). These negative factors were offset in part by: (i)
the contribution of Lasmo which generated an operating income of euro 275
million; net sales from operations and operating income before the
amortization of the difference of purchase price over net equity amounted to
euro 1,586 and euro 553 million, respectively; (ii) increased natural gas
production sold in Italy (30.24 BCF million boe, up 6.1%) related to higher
withdrawals from storage; (iii) higher prices realized by Eni on natural gas
(up 2%); (iv) the appreciation of the dollar over the euro; (v) cost
reductions (approximately euro 137 million) related to synergies deriving
from the integration of purchased companies, the rationalization of
exploration expenditure and streamlining.

Gas & Power.   Operating income in 2002 amounted to euro 3,244 million,
a euro 428 million decrease over 2001, down 11.7%, due mainly to: (i) a
decline in results of primary distribution related to a change in the sales
mix with higher share of sales in Europe due to ceilings set by Legislative
Decree No. 164/2000, a change in the supply mix and lower sales (1.20
billion cubic meters, down 1.9%); (ii) asset impairment in the distribution
of natural gas in Brazil and Argentina (euro 93 million) due to lower
profitability prospects; (iii) the payment of the environmental tax
established by the Sicilia Region with Regional Law No. 21 of March 26, 2002
(euro 86 million); and (iv) lower results in the power generation activity
resulting from lower sale margins mainly due to the expiration of tax
incentives on certain sale contracts for the Livorno and Taranto power
stations. These negative factors were offset in part by the positive effect
of the application of decision No. 122/022 of the Authority for Electricity
and Gas (euro 74 million related to 2001) and lower costs (euro 58 million)
related to efficiency improvement actions, in particular in transport
activities in Italy, which were partly offset by salary increases and
inflation.

Operating income in 2001 amounted to euro 3,672 million with an
increase of euro 494 million, up 15.5% over 2000, due essentially to: (i)
higher margins on natural gas sold in primary distribution, related
to the appreciation of the dollar over the euro and to the pricing of
natural gas, as sales prices are linked to an index which moved favourably compared to the cost of supplies,
especially in the first half of 2001. See also «Item 4Information on the
company. Regulation of the Italian Hydrocarbon Industry. Natural Gas»; (ii)
lower costs (approximately euro 56 million) related to streamlining and
disposals which were partly offset by salary increases and inflation; (iii)
increased volumes sold in secondary distribution in Italy (0.21 billion
cubic meters, up 2.7%) and outside Italy (0.43 billion cubic meters, up
12.4%). These positive factors were offset in part by: (i) a change in the
sales mix in primary distribution, related to the higher share of volumes
sold in Europe for resale in Italy which bear a lower margin than direct
sales in Italy; (ii) lower margins in secondary distribution related to the
new tariff regime imposed by the Authority for Electricity and Gas with
decision No. 237 of December 28, 2001. See also «Item 4Information on the
company. Regulation of the Italian Hydrocarbon Industry. Natural Gas».
Operating income for electricity activities in 2001 amounted to euro 66
million, an euro 38 million increase, up 135.7%, due mainly to higher
margins on electricity sales, in particular in the fourth quarter, resulting
from the positive trend in fuel prices. The increase in electricity and
steam production sold and margins on trading activities (operational since
January 2001) also contributed to the increase in operating income.

Refining and Marketing.   Operating income in 2002 amounted to euro 321
million, a euro 664 million decrease over 2001, down 67.4%, due mainly to:
(i) a sharp decline in refining margins reflecting the unfavorable trading
environment (Brent margin was down 59.4%), related to weak demand, a
reduction in Fob/Cif differentials on products that reduced the advantage of
refineries based near end markets, and the appreciation of the euro over the
dollar; (ii) lower margins on oxygenates (MTBE and methanol) related
essentially to lower international prices of products; (iii) the fact that
in 2001 the positive effect of a decrease in stocks (valued at Lifo) was
recorded for euro 36 million as compared to a revaluation of euro 13 million
in 2002; (iv) lower volumes sold in wholesale markets in Italy due to a weak
economic situation. These negative factors were offset in part by (i) lower
costs (euro 60 million) related to streamlining and disposals, offset in
part by salary increases and inflation, (ii) higher retail margins in
Europe, and (iii) efficiency improvement, offset in part by lower retail
sales in Italy due to the the network restructuring process.

Operating income for 2001 amounted to euro 985 million, substantially
similar to 2000 levels, due to: (i) higher selling margins on European
retail markets and higher LPG margins; (ii) lower provisions to the
environmental risk reserve (euro 95 million), due to the fact that in year
2000 a significant charge was recorded in connection with the
rationalization process of the Italian network; (iii) lower costs
(approximately euro 100 million) related to streamlining that substantially
offset salary increases, inflation and the





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appreciation of the dollar over the euro; (iv) lower writedowns of
assets (euro 36 million); (v) a profit relating to withdrawals from
inventories (euro 36 million). These positive factors were offset by a
decline in refining results due to a price environment less positive than
the exceptionally favorable scenario of 2000, whose effects were offset in
part by higher margins for the refineries located on continental Italy
(resulting from increased CIF/ FOB differentials), higher processing yields
related also to the higher profitability of crudes supplied, and the
appreciation of the dollar over the euro.

Petrochemicals.   Operating losses in 2002 amounted to euro 347 million,
an increase of euro 15 million over 2001, up 4.5%, due mainly to: (i) a
decline in margins, especially in the first quarter of 2002, related to
lower selling prices of products (on average down 8.1%), as compared to a
slower decline in prices in euro of oil-based feedstocks (on average down
1.2%), and (ii) assets impairments (euro 105 million). These negative
factors were offset in part by: (i) lower depreciation and amortization
charges (euro 90 million) following plant writedowns recorded in 2001; (ii)
the fact that in 2001 the impact of price decreases on the evaluation of
stocks had been negative for euro 100 million (in 2002 this impact was
positive for euro 27 million); (iii) lower costs related to streamlining and
disposals (euro 70 million), offset in part by salary increases and
inflation; (iv) a 3.3% increase in volumes sold on a comparable basis.

In 2001 the Petrochemical segment recorded an operating loss amounting
to euro 332 million, as compared to an operating income of euro 4 million
generated in 2000. This euro 336 million decline was due to: (i) the
negative impact of the decline in prices on the evaluation of stocks (euro
100 million as compared to the positive effect of euro 80 million of 2000);
(ii) lower product margins (down in average 14%) due to a decline in selling
prices, only partly offset by the decline in prices in euro of oil-based
feedstocks; (iii) a 6.8% decline in volumes sold related to declining
demand, lower product availability and the sale of the Polyurethane
business. These negative factors were offset in part by lower costs related
to streamlining and divestments (approximately euro 92 million), only
partially offset by salary increases and inflation and by lower recurring
environmental charges.

Oilfield Services and Engineering.   Operating income totaled euro 298
million, of which euro 302 million related to oilfield services, with a euro
43 million increase over 2001, up 16.9%. Oilfield services recorded an
increase in operating income of euro 46 million due to the contribution of
the Blue Stream and Karachaganak projects and to the results obtained by
increased activities in West Africa, Saudi Arabia and the Far East, as well
as to the contribution of Bouygues Offshore (euro 35 million before the
allocation of euro 21 million for the amortization of the difference between
purchase price and net equity non attributable to fixed assets). These
positive factors were offset in part by the lower profitability of some
contracts in the Offshore drilling area. Engineering activities recorded an
operating loss of euro 4 million, with a euro 3 million decline, due
primarily to higher provisions to the reserve for risks and contingencies on
contracts nearing completion (euro 18 million) and the negative outcome of a
transaction (euro 8 million), offset in part by increased turnover for 2002,
in particular related to the contract for the construction of the
Milan-Bologna high speed train tracks. Note that income earned from joint
venture projects is accounted for as income on investments in Enis income
statement. Operating income calculated with the inclusion of this income
amounted to euro 23 million (euro 11 million in 2001 in comparable terms).

Operating income in 2001 amounted to euro 255 million, with an euro 111
million increase over 2000, up 77.1%. Operating income of oilfield services
amounted to euro 256 million, with an increase of euro 115 million, up
81.6%, due to the contribution of the Blue Stream contract, an increased use
of the Scarabeo 7 and Saipem 10000 vessels, the recovery of demand and
higher profitability of orders in the Onshore construction area, the effects
of which were offset in part by higher depreciation and amortization charges
related to the entry into service of new vessels and investments concerning
ongoing projects. Engineering activities recorded an operating break-even as
compared to the income of euro 3 million generated in 2000. This decline is
mainly due to the prudential provision to the reserve for contingencies on
nearly completed projects in the Chemicals and fertilizers area, offset in
part by the proceeds recorded after the payment of insurance damage,
improvements in the Field upstream facilities and pipelines and Energy areas
and the contribution of the contract for the construction of the high
capacity/high velocity train tracks from Milan to Bologna. The results
obtained from the completion of joint venture projects (euro 22 million in
2001 and euro 16 million in 2000) are recorded under investments.

Other Activities.   This area includes Enis corporate and financial
overhead costs as well as the operating results of insurance and service
businesses (administration, technical services and IT), in addition to those
of EniTecnologie SpA, Eurosolare SpA and Tecnomare SpA. Operating losses
amounted to euro 189 million (euro 168 million in year 2001).





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##### Table of Contents



Net Financial Expense

The table below sets forth a breakdown of Enis net financial (expense)
income for the periods indicated:

|                                                            |  |                         |      |      |  |      |      |   |  |  |      |  
|----------------------------------------------------------- |  | ----------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                                            |  | Year ended December 31,
|                                                            |  |                        
|                                                            |  | 2000                    |      | 2001 |  | 2002
|                                                            |  |                         |      |      |  |     
|                                                            |  | (millions E)           
|Net financial expense                                       |  |                         | (302 | )    |  |      | (433 | ) |  |  | (259 | )
|Income on receivables related to
operations and tax credits |  |                         | 201  |      |  |      | 184  |   |  |  | 122  |  
|Exchange difference, net                                    |  |                         | 165  |      |  |      | (10  | ) |  |  | (30  | )
|                                                            |  |                         | 64   |      |  |      | (259 | ) |  |  | (167 | )

2002 compared with 2001. Net financial expense (euro 167 million)
decreased by euro 92 million over 2001, due mainly to lower interest rates
(three-month Euribor down 1 percentage point) and lower average net
borrowings for about euro 950 million.

2001
compared with 2000. Net financial expense totaled euro 259
million, as compared to net financial income of euro 64 million in 2000. The
euro 323 million negative change is due to higher financial charges (euro
131 million), related to an increase in average net borrowings of
approximately euro 3,400 million, as well as to the fact that in year 2000 an euro 99 million exchange rate income was
recorded on dividend payment to Eni SpA from a foreign subsidiary due to the fact that a different exchange
rate was applied to net income and reserves in the years they were first recorded with respect to the exchange rate of
the year in which they were distributed.

Net Income from Investments

2002 compared with 2001. Net income from investments amounted to euro
43 million (net expense of euro 216 million in 2001) and represented the
balance of income of euro 288 million and expense of euro 245 million.
Income from investments concerned mainly: (i) Enis share of income on
investments accounted for with the equity method (euro 184 million) in
particular in the Gas & Power (euro 98 million), Oilfield Services and
Engineering (euro 38 million) and Refining & Marketing (euro 40 million)
segments; (ii) gains on disposal (euro 55 million) essentially on the
disposal of a 10% interest in Qatar Petrochemical Co in the Petrochemical
segment (euro 52 million); (iii) dividends from investments accounted for at
cost (euro 32 million).

Expense on investments (euro 247 million) concerned: (i) Enis share of
losses on investments accounted for with the equity method and at cost (euro
209 million), in particular Galp Energia SGPS SA (euro 85 million related to
the amortization of the euro 107 million difference between purchase price
and net equity); Albacom SpA (euro 37 million) and Inversora de Gas del
Centro SA and Distribuidora de Gas del Centro SA (euro 36 million), minor
interests in the Exploration & Production (euro 24 million), Oilfield
Services and Engineering (euro 8 million) and other segments (euro 25
million); (ii) losses on disposal of assets (euro 24 million, of which 20
related to the sale of Enis 7% interest in Blu SpA).

The positive change of euro 259 million in the balance of gains and
losses on investments as compared to 2001 was due mainly to the circumstance
that in 2001 a euro 209 million loss was recorded on Polimeri Europa, which
in 2001 was accounted for under the equity method, as well as a lower loss
recorded on Galp Energia SGPS SA (euro 59 million).

2001
compared with 2000. Net expense on investments amounted to euro
216 million (as compared to a net income of euro 33 million in 2000) and
represented the balance between euro 491 million expense on





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##### Table of Contents



investments and euro 275 million income on investments. Expense on
investments was primarily due to Enis share of losses on investments
accounted for under the equity method under the cost method (euro 486
million) and related to Polimeri Europa Srl (euro 209 million, including non
recurring items for euro 100 million), Galp Energia SGPS SA (euro 144
million, including goodwill amortization for euro 107 million and non
recurring items for euro 82 million), Blu SpA (euro 57 million) and Albacom
SpA (euro 42 million).

Income from investments (euro 275 million) was mainly related to: (i)
Enis share of income on investments accounted for under the equity method (euro 158 million) relating in
particular to the Natural Gas segment (euro 81 million), the Refining and
Marketing segment (euro 43 million), and the Oilfield Service and
Engineering segment (euro 21 million); (ii) gains on disposals (euro 76
million) related mainly to the sale of 15% of Saras SpA-Raffinerie Sarde
(euro 38 million) and 4.7% of Nuovo Pignone Holding SpA (euro 36 million);
(iii) dividends paid by affiliates accounted for under the cost method
(euro 40 million).

The euro 249 million negative change was mainly related to the euro 209
million losses of Polimeri Europa Srl (as compared to a net income of euro
35 million in 2000) and higher losses of Galp Energia SGPS SA (euro 99
million), whose effects were partially offset by increased gains on
disposals (euro 35 million) and lower losses of Albacom SpA (euro 39 million).

Net Extraordinary Expense

The table below sets forth Enis extraordinary income and extraordinary
expense for the periods indicated:

|                                   |                                       |  |                         |      |      |  |       |        |   |  |     |      |  
|---------------------------------- | ------------------------------------- |  | ----------------------- | ---- | ---- |  | ----- | ------ | - |  | --- | ---- | -
|                                   |                                       |  | Year ended December 31,
|                                   |                                       |  |                        
|                                   |                                       |  | 2000                    |      | 2001 |  | 2002 
|                                   |                                       |  |                         |      |      |  |      
|                                   |                                       |  | (millions E)           
|Gains on disposals                 |                                       |  | 86                      |      |      |  | 3,473 |        |   |  | 257 |     
|                                   | Gain on the offering of Snam Rete
Gas |  |                         |      |      |  |       | 2,453  |   |  |     |      |  
|                                   | Gain on the sale of real estate       |  |                         |      |      |  |       | 751    |   |  |     |      |  
|Other extraordinary income         |                                       |  | 146                     |      |      |  | 173   |        |   |  | 112 |     
|                                   | Extraordinary income                  |  |                         | 232  |      |  |       | 3,646  |   |  |     | 369  |  
|Restructuring costs:               |                                       |  |                         |      |      |  |       |        |   |  |     |     
|                                   | Provisions for risks                  |  |                         | (182 | )    |  |       | (885   | ) |  |     | (157 | )
|                                   | Writedowns of fixed assets            |  |                         | (34  | )    |  |       | (607   | ) |  |     | (55  | )
|                                   | Cost of redundancy incentives         |  |                         | (202 | )    |  |       | (237   | ) |  |     | (114 | )
|                                   | Total restructuring costs             |  |                         | (418 | )    |  |       | (1,729 | ) |  |     | (326 | )
|Other extraordinary expense        |                                       |  | (326                    | )    |      |  | (80   | )      |   |  | (72 | )   
|                                   | Extraordinary expense                 |  |                         | (744 | )    |  |       | (1,809 | ) |  |     | (398 | )
|Net extraordinary income (expense) |                                       |  | (512                    | )    |      |  | 1,837 |        |   |  | (29 | )   

2002 net extraordinary expense. Gains on disposals (euro 257 million)
related to the sale of investments, businesses and fixed assets as a result
of restructuring activities. In particular they concerned: (i) in the
Refining & Marketing segment, the sale of service stations in Italy to
Tamoil, TotalFinaElf and others (euro 127 million), the sale of Agip Nigeria
Ltd and other minor interests in Africa (euro 87 million) and logistic
assets, small businesses and minor assets (euro 11 million); and (ii) in the
Gas & Power segment, the sale of real estate (euro 21 million).

Other extraordinary income of euro 112 million concerned the reversal
of redundant funds, settlements of disputes and recovery of receivables in
the Petrochemicals (euro 72 million), Gas & Power (euro 23 million),
Refining & Marketing (euro 13 million) and other segments (euro 6 million).





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##### Table of Contents



Provisions for risks and contingencies of euro 157 million related
mainly the reserve for environmental risks and expense related to
streamlining and disposals in the Refining & Marketing (euro 79 million) and
Petrochemical (euro 71 million) segments.

Redundancy incentives of euro 114 million concerned primarily the
Petrochemical segment (euro 34 million), the Gas & Power division (euro 28
million), the Refining & Marketing division (euro 26 million), the Oilfield
Services and Engineering segment (euro 14 million) and the Exploration &
Production division (euro 9 million).

Writedowns and losses for euro 55 million concerned essentially assets
in the Petrochemical segment (euro 23 million) and a euro 22 million loss
related to the conferral of the Priolo refinery and of its power station to
Erg Raffinerie Mediterranee Srl, in which Eni holds a 28% interest after the
conferral.

Other extraordinary expense (euro 72 million) concerned essentially the
Refining & Marketing division (euro 49 million) mainly related to
restructuring and expense of previous years.

2001 net extraordinary income.Gains on disposals (euro 3,473 million)
related to the sale of investments, businesses and fixed assets as a result
of restructuring activities. In particular, gains on disposal were primarily
due to: (i) the public offering of 40.24% of the share capital of Snam Rete
Gas (euro 2,453 million); this gain derives from the difference between
proceeds from the sale of Snam Rete Gas shares and the corresponding stake
of consolidated equity, which does not include the voluntary revaluation of
assets, performed by Snam SpA in 2000 as per Law 342/2000, which is
eliminated in accordance with Italian GAAP; (ii) the sale of Enis interest
in Immobiliare Metanopoli (euro 348 million) and other real estate (euro 403
million) within Enis real estate divestment program; (iii) the sale of the
Polyurethane business in the Petrochemical segment (euro 211 million).

Other extraordinary income of euro 173 million relates primarily to the
release of the reserve for contingencies of euro 112 million which
AgipPetroli had accrued in fiscal 2000 on the basis of a ruling by the
Antitrust Authority, No. 8353 of June 8, 2000, for alleged horizontal cartel
with other oil companies. This ruling was appealed by the company and
definitively annulled by the Council of State on July 20, 2001 with decision
No. 359/2001. Accordingly, the accrual was reversed.

Provisions for risks of euro 885 million related to closing downs,
disposals and environmental remediation on plants still in operation as of
December 31, 2001 in the Petrochemical segment (euro 616 million, of which
euro 240 million related primarily to environmental remediation efforts at
plants that management has specifically identified to close down in the next
two-three years and euro 376 million related to environmental compliance
provisions on all operating plants made in application of Law 471/99), and
to environmental remediation on de-industrialized areas in the Petrochemical
(euro 91 million), Refining & Marketing (euro 77 million) and Gas & Power
(euro 44 million) segments.

Writedowns for euro 607 million concerned primarily the writedown of
fixed assets and investments in the Petrochemical segment (euro 574 million)
in order to align the book value of assets to both the results of the
impairment test made on the basis of estimated future cash flows in a
declining market scenario for petrochemical products margins and also to the
result of an asset valuation made by a court-appointed expert in connection
with the transfer of same to Polimeri Europa on January 1, 2002. These
write-downs relate primarily to olefins and aromatics plants, phenol plants
and various other petrochemicals assets.

Redundancy incentives of euro 237 million concerned primarily the
Exploration and Production segment (euro 101 million), the Gas & Power
segment (euro 44 million), the Refining & Marketing segment (euro 42
million), the Petrochemical segment (euro 39 million).

Other extraordinary expenses (euro 326 million) concern mainly the
provision to a reserve of euro 112 million relating to a fine imposed by the
Antitrust Authority on AgipPetroli SpA for the breach of art. 2 of Law
287/90 related to alleged cartel agreements with other oil companies, tax
loss carryforwards relating to Agip Angola Production BV (euro 90 million)
and the additional tariff on natural gas transmission (euro 72 million) paid
to Tenp, as mentioned among other extraordinary income, and expenses for
litigations (euro 40 million).





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##### Table of Contents



See Note 27 to the Consolidated Financial Statements for a discussion
of the different criteria used under Italian GAAP and U.S. GAAP for
determining extraordinary items.

Taxes

Under Italian tax law, Eni, like all other Italian groups, is unable to
offset fully income earned by certain subsidiaries with losses recognized by
other subsidiaries because each legal entity must pay income tax on the
basis of the results recorded by it rather than on the basis of consolidated
financial results.

2002 compared with 2001.   Income taxes (euro 3,127 million) decreased
by euro 402 million over 2001, due mainly to a decline in income before
taxes and the positive effect (euro 95 million) of the release of the
reserve for anticipated amortization as per Law 448/2001, offset in part by
the adjustment of the reserve for deferred tax liabilities due to a 10
percentage point increase in corporate taxes (from 30 to 40%) of oil
companies in the United Kingdom (euro 215 million).

The 7.5 percentage points increase in tax rate compared to 2001 (from
30 to 37.5%) was due mainly to the fact that the gains on the placement of
40.24% of Snam Rete Gas in 2001 were recorded net of substitute tax paid.

The 4.6 percentage point difference between effective tax rate (37.5%)
and statutory tax rate (42.1%) was due to: (i) for 5 percentage points the
effect of the application of a favorable tax regime as provided for by
certain Italian tax laws (such as the law on dual income tax, Law 383/2001
which provides for fiscal incentives to new investments and Law 448/2001);
(ii) the effect of a revaluation of assets in 2000 as per Law 342/2000 for
4.7 percentage points. These effects were partially offset by the higher
rate of taxes of foreign subsidiaries (2.7 percentage points) and other
factors (2.4 percentage points).

Income taxes of foreign subsidiaries in the Exploration & Production
division amounted to euro 2,093 million, representing a euro 28 million
decrease over 2001 reflecting lower income before taxes of foreign
subsidiaries with relatively higher tax rates and the recording of
anticipated taxes on tax loss carryforwards of Agip Petroleum Co Inc and
Agip Exploration & Production Ltd, partially offset by the adjustment of the
reserve for deferred tax liabilities of oil companies in the United Kingdom
(euro 215 million).

2001 compared with 2000.Income taxes (euro 3,530 million) decreased
by euro 805 million over 2000, due to: (i) the effect of the application in
2000 of the voluntary revaluation of assets as per Law 342/2000; (ii) a
higher taxable income at the reduced 19% rate as provided for by Legislative
Decree No. 466/97 related to dual income tax; (iii) a decrease in Irpeg rate
(from 37 to 36%). These positive factors were offset in part by increased
tax rates of foreign subsidiaries.

Effective tax rate was 30% as compared with a statutory tax rate of
40.9%. This 10.9 percentage point difference was due to: (i) permanent
timing differences for 7.6 percentage points, of which 7.2 related to the
gain recorded in Enis consolidated financial statements following the
offering of 40.24% of the share capital of Snam Rete Gas; this gain is not
subject to income taxes due to the fact the substitute tax paid on a 19%
basis in application of Law 342/2000 was recorded by increasing Eni
consolidated accounts of the book value of assets transferred to Snam Rete
Gas, consequently affecting the measure of the gain. Substitute taxes will
be charged to Eni consolidated income statements in line with the
amortization process of relevant assets; (ii) the effect of the application
in 2000 of the voluntary revaluation of assets as per Law 342/2000 for 4.6
percentage points; (iii) for 2.3 percentage points the effect of the
application of a favourable tax regime as provided for by certain Italian
tax laws (for example the law on dual income tax, Law 383/2001 which
provides for fiscal incentives to new investments, and substitute taxes
allowed on gains on disposals); (iv) for 1.4 percentage points for other
reasons. These effects were partially offset by the higher rate of taxes on
some foreign subsidiaries (5.0 percentage points).

Income taxes of foreign subsidiaries in the Exploration & Production
segment amounted to euro 2,028 million, representing a euro 84 million
increase over 2000 reflecting the acquisition of Lasmo partially offset by
lower oil prices.





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##### Table of Contents



Minority Interest

2002 compared with 2001.Minority interest (euro 629 million)
increased by euro 161 million over 2001, due mainly to the placement of
40.24% of Snam Rete Gas in late 2001 and higher net income earned by Saipem
SpA.

2001 compared with 2000.Minority interests (euro 477 million)
increased by euro 226 million over 2000, due in particular to the share of
profits of Snam Rete Gas SpA attributed to minorities and higher net income
earned by Saipem SpA, partially offset by lower net income earned by Italgas
SpA.




Liquidity and Capital Resources

The table below sets forth the principal components of Enis cash flow
for the periods indicated.

|                                                                                                          |                                                                                                     |  |        |                         |   |      |        |       |   |  |        |        |   | 
|--------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- |  | ------ | ----------------------- | - | ---- | ------ | ----- | - |  | ------ | ------ | - | 
|                                                                                                          |                                                                                                     |  |        | Year ended December 31,
|                                                                                                          |                                                                                                     |  |        |                        
|                                                                                                          |                                                                                                     |  |        | 2000                    |   | 2001 |        | 2002 
|                                                                                                          |                                                                                                     |  |        |                         |   |      |        |      
|                                                                                                          |                                                                                                     |  |        | (millions E)           
|Net income before minority interest                                                                       |                                                                                                     |  | 6,022  |                         |   |      | 8,228  |       |   |  | 5,222  |       
|                                                                                                          | Adjustments to reconcile to cash
generated from operating income
before changes in working capital: |  |        |                         |   |      |        |       |   |  |        |        |  
|                                                                                                          |  Amortization and depreciation and
other non-monetary items                                        |  |        | 4,307                   |   |      |        | 4,942 |   |  |        | 5,682  |  
|                                                                                                          |  Net gains on disposals of assets                                                                  |  |        | (82                     | ) |      |        | (170  | ) |  |        | (152   | )
|                                                                                                          |  Dividends, interest,
extraordinary income (expense) and
income taxes                              |  |        | 4,990                   |   |      |        | 2,038 |   |  |        | 3,305  |  
|Net cash generated from operating
income before changes in working
capital                                |                                                                                                     |  | 15,237 |                         |   |      | 15,038 |       |   |  | 14,057 |       
|Changes in working capital related to
operations                                                          |                                                                                                     |  | (1,592 | )                       |   |      | (197   | )     |   |  | (510   | )     
|Dividends received, taxes paid,
interest and extraordinary
income/expense (paid) received during
the year |                                                                                                     |  | (3,062 | )                       |   |      | (6,695 | )     |   |  | (2,969 | )     
|                                                                                                          | Net cash provided by operating
activities                                                           |  |        | 10,583                  |   |      |        | 8,146 |   |  |        | 10,578 |  
|Capital expenditures                                                                                      |                                                                                                     |  | (5,431 | )                       |   |      | (6,577 | )     |   |  | (8,048 | )     
|Investments                                                                                               |                                                                                                     |  | (3,483 | )                       |   |      | (3,082 | )     |   |  | (1,315 | )     
|Disposals                                                                                                 |                                                                                                     |  | 277    |                         |   |      | 2,114  |       |   |  | 935    |       
|Other cash flow related to capital
expenditure, investments and
divestments                               |                                                                                                     |  | (69    | )                       |   |      | (88    | )     |   |  | (319   | )     
|                                                                                                          | Free cash flow(1)                                                                                   |  |        | 1,877                   |   |      |        | 513   |   |  |        | 1,831  |  
|Dispositions (acquisitions) of highly
liquid investments                                                  |                                                                                                     |  | 111    |                         |   |      | 994    |       |   |  | (1,171 | )     
|Changes in short and long-term
financial debt                                                             |                                                                                                     |  | 121    |                         |   |      | (534   | )     |   |  | 3,736  |       
|Dividends paid and changes in
minority interests and reserves                                             |                                                                                                     |  | (2,118 | )                       |   |      | (950   | )     |   |  | (3,846 | )     
|Effect of change in consolidation
scope and exchange differences                                          |                                                                                                     |  | 41     |                         |   |      | 38     |       |   |  | (64    | )     
|                                                                                                          | Net cash flow for the year                                                                          |  |        | 32                      |   |      |        | 61    |   |  |        | 486    |  





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##### Table of Contents



The table below sets forth changes in Enis net borrowings for the
periods indicated.

|                                                              |  |                         |        |      |  |      |        |   |  |  |        |  
|------------------------------------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ | - |  |  | ------ | -
|                                                              |  | Year ended December 31,
|                                                              |  |                        
|                                                              |  | 2000                    |        | 2001 |  | 2002
|                                                              |  |                         |        |      |  |     
|                                                              |  | (millions E)           
|Free cash flow(1)                                             |  |                         | 1,877  |      |  |      | 513    |   |  |  | 1,831  |  
|Net borrowings of acquired companies                          |  |                         | (901   | )    |  |      | (1,582 | ) |  |  | (51    | )
|Net borrowings of divested companies                          |  |                         | 20     |      |  |      | 185    |   |  |  | 39     |  
|Exchange differences on net
borrowings and other changes      |  |                         | (353   | )    |  |      | (312   | ) |  |  | 990    |  
|Dividends paid and changes in
minority interests and reserves |  |                         | (2,118 | )    |  |      | (950   | ) |  |  | (3,846 | )
|Change in net borrowings                                      |  |                         | (1,475 | )    |  |      | (2,146 | ) |  |  | (1,037 | )



---

|(1) |  | Consists of the sum of (i) net cash provided by operating activities,
(ii) capital expenditures, (iii) financial investments (iv) disposals,
(v) other investments and divestments.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Cash generated from operating income before changes in working capital

Cash generated from operating income before changes in working capital
totaled euro 14,057 million, 15,038 million and euro 15,237 million in 2002,
2001 and 2000, respectively.

In 2002, income before minority interests has been adjusted to take
into account depreciation, amortization and other non-cash items (euro 5,682
million). Adjustments concerned primarily depreciation and amortization of
tangible and intangible assets (euro 4,962 million) and writedowns of fixed
assets and investments (euro 597 million).

In 2001, income before minority interests has been adjusted to take
into account depreciation, amortization and other non-cash items (euro 4,942
million). Adjustments concerned primarily depreciation and amortization of
tangible and intangible assets (euro 4,671 million), writedowns of fixed
assets and investments (euro 571 million) and a decrease in the reserve for
contingencies (euro 323 million) relating primarily to the reversal (euro
200 million) made in the Gas & Power segment of the provision recorded in
year 2000 in connection with Decision No. 193/1999 of the Authority for
Electricity and Gas relating to the price of natural gas, as well as to the
reversal of the loss adjustment and actuarial reserve made by Enis
insurance subsidiaries (euro 79 million).

Changes in working capital related to operations

Net working capital related to operations increased by euro 510
million, by euro 197 million and by euro 1,592 million in 2002, 2001 and
2000, respectively.

In 2002, the increase in net working capital (euro 510 million) was
mainly due to the anticipated payment of certain excise taxes due for year
2002, partly offset by decrease in trade accounts payable.

In 2001, the increase in net working capital (euro 197 million) was
mainly due to the decrease in trade accounts payable and other (euro 420
million) reflecting the deferral to year 2001 of the payment of excise taxes
due for year 2000, partly offset by a decrease in inventories (euro 179
million) due to withdrawals from inventories in particular of oil and
refined products in the Refining & Marketing segment.

Dividends, interest, taxes and extraordinary expense

Dividends, interest, taxes and extraordinary expense paid (which is net
of amounts received) totaled euro 2,969 million, euro 6,695 million and euro
3,062 in 2002, 2001 and 2000, respectively. In 2002, dividends received,
interest, extraordinary income (expense) and income taxes paid (euro 2,969
million) concerned primarily the payment of income taxes. In 2001, dividends
received, interest, extraordinary income (expense) and income taxes paid (euro 6,695 million) concerned primarily the
payment of income taxes for euro 6,189 million, of which euro 2,166 million
relating to the payment of the substitute tax due on the voluntary
revaluation of assets as per Law 342/2000 carried out by some of Enis
subsidiaries in year 2000.





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##### Table of Contents



Capital expenditures and Investing Activities

Capital expenditures totaled euro 8,048 million, euro 6,577 million and
euro 5,431 million in 2002, 2001 and 2000, respectively. The euro 1,471
million increase from 2002 to 2001 was due mainly to the euro 1,399 million
increase in the Exploration & Production segment and to the euro 250 million
in the Gas & Power segment, partly offset by decreases in all Eni other
segments.The euro 1,146 million increase from 2000 to 2001 was due mainly to
the euro 737 million increase in the Exploration & Production segment and to
the euro 271 million in the Gas & Power segment.

Investments (including net borrowings acquired) totaled euro 1,366
million, euro 4,664 million and euro 4,384 million in 2002, 2001 and 2000,
respectively. In 2002 investments (euro 1,366 million) related in particular
to the purchase of French company Bouygues Offshore (euro 906 million, net
of assets acquired of euro 100 million) and of other companies (euro 149
million) in the Oilfield services segment and the purchase of 97.81% of GVS
in joint venture with German company EnBW in the Gas & Power segment. The
joint venture paid for the purchase (euro 704 million) by increasing the
share capital for euro 178 million (Enis share was euro 89 million) and
raising finance debt for the remaining part. In 2001, investments (euro
4,664 million) referred in particular to the completion of the acquisition
of Lasmo for euro 4,128 million (including net borrowings for about euro 970
million, total investment for this operation amounted to euro 5,353 million
including euro 1,225 million paid in 2000), the purchase of 50% of Polimeri
Europa  the remaining 50% already owned by Eni  (euro 204 million), the
share capital increase related to the two telecoms affiliates Albacom SpA
(euro 53 million) and Blu SpA (euro 26 million), the purchase of three
engineering companies (for a total of euro 69 million) in the oilfield
services activity and the purchase of an interest in a company engaged in
the marketing of refined products in Brazil (euro 34 million). In its
cash-flow statement, Eni classifies as financial investments the cash used
for corporate acquisitions.

Disposals

Disposals (including net debt discharged) totaled euro 974 million,
euro 2,299 million and euro 297 million in 2002, 2001 and 2000,
respectively. Disposals (euro 974 million) concerned essentially: (i) the
Exploration & Production segment (euro 436 million) mainly relating to the
rationalization of Enis mineral asset portfolio; (ii) the Refining &
Marketing segment (euro 322 million) relating to the sale of service
stations in Italy (euro 160 million), the sale of Agip (Nigeria) Ltd and
other minor assets in Africa (euro 76 million) and logistical assets and
other minor assets (euro 86 million); (iii) the Petrochemical segment (euro
105 million) of which euro 81 million related to the sale Enis 10% interest
in Qatar Petrochemical Co; (iv) the Gas & Power segment (euro 59 million) of
which 17 million related to the sale of the water business of Fiorentina Gas
SpA. In 2001, disposals (euro 2,299 million, including net debt discharged
of euro 185 million) concerned: (i) the sale of the entire interest in
Immobiliare Metanopoli and of part of Enis real estate (for a total of
about euro 1,400 million, of which euro 60 million of transferred net debt);
(ii) the sale of the Polyurethane business in the Petrochemical segment
(euro 428 million); (iii) the sale of the 15% interest in Saras
SpA-Raffinerie Sarde (euro 59 million); (iv) the sale of the 4.7% interest
in Nuovo Pignone Holding SpA (euro 46 million).

Dispositions (acquisitions) of highly liquid investments

The table below sets forth the principal movements of the cash flow
from dispositions (acquisitions) of highly liquid investments.

|                       |                         |  |                        |        |      |  |      |      |   |  |        |        |  
|---------------------- | ----------------------- |  | ---------------------- | ------ | ---- |  | ---- | ---- | - |  | ------ | ------ | -
|                       |                         |  | Year ended December 31
|                       |                         |  |                       
|                       |                         |  | 2000                   |        | 2001 |  | 2002
|                       |                         |  |                        |        |      |  |     
|                       |                         |  | (millions E)          
|Financing investments: |                         |  |                        |        |      |  |      |      |   |  |        |       
|                       |  securities            |  |                        | (2,648 | )    |  |      | (291 | ) |  |        | (4     | )
|                       |  financing receivables |  |                        | (222   | )    |  |      | (8   | ) |  |        | (1,455 | )
|                       |                         |  | (2,870                 | )      |      |  | (299 | )    |   |  | (1,459 | )     





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##### Table of Contents



|                                    |                         |  |                        |       |      |  |       |     |  |  |        |     | 
|----------------------------------- | ----------------------- |  | ---------------------- | ----- | ---- |  | ----- | --- |  |  | ------ | --- | 
|                                    |                         |  | Year ended December 31
|                                    |                         |  |                       
|                                    |                         |  | 2000                   |       | 2001 |  | 2002 
|                                    |                         |  |                        |       |      |  |      
|                                    |                         |  | (millions E)          
|Disposals of financing investments: |                         |  |                        |       |      |  |       |     |  |  |        |    
|                                    |  investments           |  |                        | 8     |      |  |       |     |  |  |        |     | 
|                                    |  securities            |  |                        | 2,951 |      |  |       | 758 |  |  |        | 205 | 
|                                    |  financing receivables |  |                        | 22    |      |  |       | 535 |  |  |        | 83  | 
|                                    |                         |  | 2,981                  |       |      |  | 1,293 |     |  |  | 288    |    
|Net cash flows                      |                         |  | 111                    |       |      |  | 994   |     |  |  | (1,171 | )  

Dividends paid and changes in minority interests and reserves

In 2002, dividends paid and changes in minority interest and reserves
(euro 3,846 million) concerned mainly the payment of dividends for fiscal
year 2001 by Eni SpA for a total amount of euro 2,876 million corresponding
to euro 0.750 per share or U.S. dollar 3.71 per ADS (converted at the Noon
buying rate of the payment date 1 euro = 0.9885 U.S. dollar), the purchase
of 52.26 million Eni shares within the share buy-back program (euro 770
million), payment of dividends by Snam Rete Gas SpA (euro 74 million),
Italgas SpA (euro 37 million) and Saipem SpA (euro 32 million).

In 2001, dividends paid and changes in minority interests and reserves
(euro 950 million) consisted primarily of the distribution of dividends for
fiscal year 2000 by Eni SpA for a total amount of euro 1,664 million
corresponding to euro 0.424 per share or U.S. dollar 1.81 per ADS (converted
at the Noon buying rate of the payment date), as well as the purchase of
109,999,326 own shares for euro 1,494 million (at an average price per share
of euro 13.58). These outflows were partly offset by the euro 2,202 million
inflow generated by the offering of 40.24% of the share capital of Snam Rete
Gas.

Net borrowings

Eni evaluates its financial condition by reference to «net borrowings»,
which it calculates as total debt (short-term and long-term debt) less:
cash, and cash equivalent, securities not related to operations,
non-operating financing receivables and other items, net. In 2002, net
borrowings amounted to euro 11,141 million, a euro 1,037 million increase
over December 31, 2001. Debt and bonds increased by euro 2,872 million; cash
and cash equivalent increased by euro 1,875 million due to the fact that Eni
made a deposit of euro 1,447 million for the public tender offer of Italgas
SpA shares. In 2001, net borrowings amounted to euro 9,888 million, an
increase of euro 2,146 million over December 31, 2000. In 2001, cash and
cash equivalent and accounts receivable financing and securities decreased
by euro 642 million (from euro 3,302 million in 2000 to euro 2,660 million).
Debts and bonds were consequently increased by euro 1,504 million. Cash and
cash equivalent are denominated principally in euro and U.S. dollars.

The table below sets forth the calculations of net borrowings for the
periods indicated.

|                                     |  |                         |        |       |  |       |       |      |  |              |        |       |  |  |        |   |  |  |       |   |  |  |        |  
|------------------------------------ |  | ----------------------- | ------ | ----- |  | ----- | ----- | ---- |  | ------------ | ------ | ----- |  |  | ------ | - |  |  | ----- | - |  |  | ------ | -
|                                     |  | Year ended December 31,
|                                     |  |                        
|                                     |  | 2001                    |        | 2002 
|                                     |  |                         |        |      
|                                     |  | Short-                  |        | Long- |  |       |       |      |  | Short-       |        | Long- |  |  |        |  
|                                     |  | term                    |        | term  |  | Total |       | term |  | term         |        | Total
|                                     |  |                         |        |       |  |       |       |      |  |              |        |      
|                                     |  |                         |        |       |  |       |       |      |  | (millions E) |        |       |  |  |        |   |  | 
|Short-term and
long-term debt        |  |                         | 6,464  |       |  |       | 6,084 |      |  |              | 12,548 |       |  |  | 8,870  |   |  |  | 6,550 |   |  |  | 15,420 |  
|Cash and cash equivalent             |  |                         | (1,390 | )     |  |       |       |      |  |              | (1,390 | )     |  |  | (3,265 | ) |  |  |       |   |  |  | (3,265 | )
|Securities not related
to operations |  |                         | (929   | )     |  |       | (312  | )    |  |              | (1,241 | )     |  |  | (719   | ) |  |  | (290  | ) |  |  | (1,009 | )
|Non operating financing
receivables  |  |                         | 0      |       |  |       |       |      |  |              | 0      |       |  |  | (2     | ) |  |  |       |   |  |  | (2     | )
|Other, net                           |  |                         | (29    | )     |  |       |       |      |  |              | (29    | )     |  |  | (3     | ) |  |  |       |   |  |  | (3     | )
|                                     |  |                         | 4,116  |       |  |       | 5,772 |      |  |              | 9,888  |       |  |  | 4,881  |   |  |  | 6,260 |   |  |  | 11,141 |  





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Short-term and long-term debt outstanding at December 31, 2002,
amounted to euro 15,420 million, of which 8,870 were short-term (including
the share of long-term debts due within twelve months for euro 980 million)
and 6,550 were medium and long-term. Euro 5,152 million of Enis long-term
debt outstanding at December 31, 2002 is scheduled to mature after December
31, 2004. Of the total debt at December 31, 2002, euro 8,563 million was
denominated in euro and 6,857 million in other currencies (principally U.S.
dollar). The weighted average interest rate on Enis long-term debt
(including current maturities) at December 31, 2002 was approximately 5.48%.

Short-term and long-term debt outstanding at December 31, 2001,
amounted to euro 12,548 million, consisting of short-term debt (including
bonds and the current portion of long-term debt) of euro 6,464 million and
long-term debt of euro 6,084 million. Euro 4,368 million of Enis long-term
debt outstanding at December 31, 2001, is scheduled to mature after December
31, 2003. Of the total debt at December 31, 2001, euro 4,731 million was
denominated in euro and euro 7,817 million was denominated in other
currencies (principally U.S. dollars). The weighted average interest rate on
Enis long-term debt (including current maturities) at December 31, 2001,
was approximately 5.33%. The increase in long-term debt of euro 1,615
million, relates primarily to the change in the scope of consolidation (euro
1,683 million of which euro 1,846 million related to Lasmo Plc) and exchange
rate differences deriving from the translation into euro of financial
statements denominated in other currencies (euro 326 million). This increase
was offset in part by the net change in debt assumed and repaid in the year
(euro 394 million).

The amount of debt subject to restrictive covenants was not material.

Eni financial arrangements generally include customary cross default
provisions.

Capital expenditures by segment

The table below sets forth a breakdown, by segment, of capital
expenditures.

|                                  |       |  |                         |       |      |  |       |       |  |  |       |       | 
|--------------------------------- | ----- |  | ----------------------- | ----- | ---- |  | ----- | ----- |  |  | ----- | ----- | 
|                                  |       |  | Year ended December 31,
|                                  |       |  |                        
|                                  |       |  | 2000                    |       | 2001 |  | 2002 
|                                  |       |  |                         |       |      |  |      
|                                  |       |  | (millions E)           
|Exploration & Production          |       |  | 3,539                   |       |      |  | 4,276 |       |  |  | 5,615 |      
|Gas & Power                       |       |  | 794                     |       |      |  | 1,065 |       |  |  | 1,315 |      
|Refining & Marketing              |       |  | 533                     |       |      |  | 496   |       |  |  | 550   |      
|Petrochemicals                    |       |  | 265                     |       |      |  | 361   |       |  |  | 249   |      
|Oilfield Services and Engineering |       |  | 245                     |       |      |  | 304   |       |  |  | 233   |      
|Other activities                  |       |  | 55                      |       |      |  | 75    |       |  |  | 86    |      
|                                  | Total |  |                         | 5,431 |      |  |       | 6,577 |  |  |       | 8,048 | 

In 2002, capital expenditure in the Exploration & Production segment
amounted to euro 5,615 million, increasing by euro 1,339 million over 2001,
up 31.3%. Exploration expenditure amounted to euro 902 million, of which 93%
was outside Italy, with a 19.2% increase over 2001. Outside Italy
exploration concerned mainly the United States, Kazakhstan, Egypt, Angola,
Russia and Brazil; in Italy mainly the deep waters of the Sicily Channel and
areas in central-southern Italy. Investment in the purchase of proved and
unproved property (euro 317 million) concerned primarily the purchase of:
(i) a 2.39% interest in the North Caspian Sea PSA, where the Kashagan field
is located (Eni is single operator with a 16.67% interest after the
purchase) in Kazakhstan; (ii) a 5.6% interest in the Bayu Undan field (Enis
interest 12.32% after the purchase) in Australia; (iii) an 11.3% interest in
the T-Block fields (Eni is operator with an 88.7% share after the purchase)
in the British section of the North Sea; (iv) a 7.9% interest in the Mikkel
field in Norway; (v) an 8.9% interest in the Liverpool Bay fields (Enis
interest 53.9% after the purchase) in the Irish Sea. Expenditure for
development and capital goods totaled euro 4,396 million of which 89%
outside Italy, increasing by 27.3% over 2001. Development expenditure
outside Italy concerned fields in Nigeria, Iran, Libya, Kazakhstan, Angola,
Venezuela and the United Kingdom. Development expenditure in Italy referred
in particular to the continuation of construction of plant and
infrastructure in the Val dAgri.





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In the Exploration & Production segment, capital expenditure in 2001,
amounted to euro 4,276 million, increasing by euro 737 million over 2000, up
20.8%. Exploration expenditure amounted to euro 757 million (euro 811
million in 2000), of which 89% was directed outside Italy, representing a
6.7% decrease over 2000. Expenditure in Italy (euro 80 million as compared
to euro 156 million in 2000) concerned primarily areas in Northern Italy and
the Southern Apennines. Outside Italy, exploration expenditure amounted to
euro 677 million (euro 655 million in 2000) and concerned mainly core areas
in North Africa (in particular Algeria and Egypt), West Africa (Nigeria,
Congo and Angola), the North Sea (Norway), Latin America and the Caspian Sea
and recently acquired areas (those of Lasmo and British-Borneo and the
United States). Expenditure for the purchase of proved and unproved property
amounted to euro 67 million (euro 416 million in 2000), of which euro 34
million related to the purchase of a 30% interest in the T-Block fields in
the North Sea, in which Eni already held a 47.48% interest, allowing to
increase daily production for the year by 3,000 boe. Other expenditure
concerned mainly the acquisition of proved and unproved property in Italy
(euro 13 million) and the acquisition of a 35% interest in the Woollybutt
field in Australia (euro 13 million).

Expenditure for development and capital goods totaled euro 3,452
million (euro 2.312 million in 2000) of which 83% outside Italy, increasing
by 49.3% over 2000. Development expenditure in Italy amounted to euro 600
million and referred in particular to the continuation of construction of
plant and infrastructure in the Val dAgri. Development expenditure outside
Italy, amounting to euro 2,852 million, concerned mainly fields in
Kazakhstan, Nigeria, Congo, the United States, Egypt, Angola and the United
Kingdom. Development expenditure on Lasmos fields amounted to euro 649
million.

In 2002 capital expenditure in the Gas & Power segment amounted to euro
1,315 million, increasing by euro 250 million over 2001, up 23.5%, and
related to: (i) development and maintenance of Enis primary and secondary
natural gas transmission network in Italy (euro 606 million); (ii) the
program for expanding power generation capacity (euro 426 million), in
particular the Ferrera Erbognone and Ravenna power stations; (iii) the
construction of the Greenstream pipeline (euro 236 million) transporting
natural gas from Libyan fields in Wafa and Bahr Essalam operated by Eni to
Sicily.

In 2001 in the Gas & Power segment, capital expenditure totaled euro
1,065 million, increasing by euro 271 million over 2000, up 34.1%, relating
in particular to: (i) the upgrade of the import system from Russia (euro 103
million); (ii) development and maintenance of Enis primary transmission and
distribution network in Italy (euro 406 million); (iii) development and
expansion of urban networks in Italy (euro 233 million); (iii) the
commencement of the development plan of generation capacity by about 3,800
megawatts through the installation of 10 gas fired combined cycle generation
plants, nine with a 390 megawatt capacity and one with a 250 megawatt
capacity at the Ferrera Erbognone (near Sannazzaro), Ravenna, Mantova and
Brindisi plants. All these plants will be fired with natural gas, except the
250 megawatt group to be installed at AgipPetroli refinery in Sannazzaro,
fired in part with the syngas produced with refining residues.

In 2002 capital expenditure in the Refining & Marketing segment
amounted to euro 550 million, increasing by euro 54 million, up 10.7%, over
2001 and concerned: (i) refining and logistics in Italy (euro 203 million,
of which 44 in logistics) aimed in particular at maintaining plant
efficiency and measures taken to comply with health, safety and
environmental standards and regulations; (ii) distribution of refined
products in the Italian network (euro 168 million) in particular for the
reorganization, upgrade and construction of new service stations (euro 96
million) and measures taken to comply with safety, health and environmental
standards and regulations (euro 16 million); (iii) activities outside Italy
(euro 109 million) representing 19% of the total and concerning primarily
the purchase of service stations in France (euro 29 million) and the
maintenance of the LPG distribution network in Brazil (euro 26 million).
Total expenditure on compliance with regulations on health, safety and the
environment amounted to euro 87 million (16% of the total).

In 2001 in the Refining & Marketing segment, capital expenditure
amounted to euro 496 million, decreasing by euro 37 million, down 6.9%, over
2000 and concerned: (i) refining and logistics in Italy (euro 143 million,
of which 37 in logistics) aimed at maintaining plant efficiency and measures
taken to comply with health, safety and environmental standards and
regulations; (ii) distribution of refined products in the Italian network
(euro 131 million) in particular for the reorganization, upgrade and
construction of new service stations (euro 104 million) and measures taken
to comply with safety, health and environmental standards and regulations
(euro 20 million); (iii) outside Italy activities (euro 145 million)
representing 29.2% of the total and concerning primarily the purchase of
service stations in France and Slovakia and the upgrade of the LPG





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##### Table of Contents



distribution network in Brazil (euro 31 million). Expenditure on
compliance with regulations on health, safety and the environment amounted
to euro 76 million (15.3% of the total).

In 2002 capital expenditure in the Petrochemicals segment amounted to
euro 249 million, with a decrease of euro 112 million, down 31% over 2001
due mainly to the fact that in 2001 Eni purchased (euro 108 million) the
gasphase licence from Union Carbide in the Polimeri Europa Brindisi plant.
Capital expenditure concerned in particular actions for complying with
safety and environmental regulations (euro 135 million), actions for the
improvement of reliability and safety of plants.

In 2001 in the Petrochemicals segment, capital expenditure amounted to
euro 361 million, with an increase of euro 96 million over 2000, up 36.2%
and concerned mainly efficiency maintenance actions and safety and
environmental regulations. Other actions concerned the automation of the
cracker and the upgrade of the cumene-phenol plant in Porto Torres, new
plants for the production of CO/hydrogen in Porto Marghera and thermoplastic
rubber in Ravenna. Capital expenditure in intangible assets concerned mainly
the purchase from Union Carbide of the rights to use the license for the gas
phase at the Brindisi plant (euro 108 million).

In 2002 capital expenditure in the Oilfield services and Engineering
segment amounted to euro 233 million, decreasing by euro 71 million over
2001, down 23.4%, and concerned mainly: (i) the initial conversion phase of
Maxita aimed at increasing its flexibility and efficiency and seizing the
opportunities of a strongly developing market (the vessel will retain its
ability to lay flexible, umbilical lines and mooring systems in deep waters,
and will also be provided with equipment for «reel», «J» and «S» laying);
(ii) the conversion of the Mystras tanker ship purchased in 2001 into an
FPSO system; (iii) upgrade actions of the 5820 package plant employed in the
Libyan offshore; (iv) the preparation of the drilling plants operating in
Saudi Arabia for Aramco in 2002 and the purchase of equipment to be employed
in Astrakhan (Russia).

In 2001 in the Oilfield Services and Engineering segment, capital
expenditure amounted to euro 304 million, increasing by euro 59 million over
2000, up 24.1%, and concerned mainly: (i) the upgrade of equipment employed
in the Blue Stream project, both offshore and onshore; (ii) the purchase of
equipment for the Onshore construction area for the development of the
Karachaganak oil field; (iii) the completion of a new vessel for developing
underwater fields (Field Development Ship) provided with dynamic
positioning, a crane for lifting up to 600 tons, and a vertical pipe laying
system reaching water depths of up to 2,000 meters; (iv) the upgrade of
onshore drilling plants for work in Saudi Arabia and Kazakhstan.




Management Expectations of Operations

The trends in 2003 of the principal factors that influence Enis
results of operations are indicated below:



| |  | worldwide demand for oil is expected to increase slightly over
2002 (up 1.2%), at a lower pace than the trend registered in the
Nineties due to uncertainties that affect the recovery of world
economy. According to Enis forecasts, the price of Brent crude in
2003 is expected to reach an average of 26 dollars/barrel (up 4%
over 2002) reflecting the approximately 32 dollar/barrel price
registered in the first quarter and assuming that prices remain at
approximately 24 dollar/barrel for the rest of the year;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | the euro has strongly appreciated against the U.S. dollar in
both the first and second quarter of 2003. Should this trend
continue in the second half of the year, Enis results of operations
will be negatively affected;                                                                                                                                                                                                                                                                                                   
| 
| |  | assuming normal temperatures in the rest of 2003, management
expects demand for natural gas in Italy to increase by over 5%
compared to 2002, due to increased consumption for the production of
electricity;                                                                                                                                                                                                                                                                                                                 
| 
| |  | management expects refining margins in 2003 to reach higher
levels than the particularly low levels of 2002. Margins in the rest
of the year, however, are expected to be lower than that registered
in the first                                                                                                                                                                                                                                                                                                             





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##### Table of Contents





| |  |  | quarter due to the persistence of uncertainties on world economic
recovery and the end of the phenomena that favored the positive trend
of the first quarter (international tension, an extremely cold winter
in the Northern hemisphere).
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following are Enis forecasts for the production and sales
performance of its main activities in 2003:



| |  |  | management expects daily production of hydrocarbons, before the
effect of the rationalization of the portfolio of mineral assets, to
grow over 2002, in line with planned production growth for the
2002-2006 period (management plans a compounded average growth rate
of approximately 6% over the 2002-2006 four-year period);                                                         
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | management expects volumes of natural gas sold in primary
distribution in Italy and Europe to increase by approximately 4%
over 2002. Volumes transported on behalf of third parties in Italy
are expected to increase by about 25%;                                                                                                                                                      
|
| |  |  | electricity production sold is forecasted at approximately 5.4
terawatthour, increasing by 8% over 2002;                                                                                                                                                                                                                                                                                  
|
| |  |  | management expects total refinery processing intake on wholly
owned refineries in Italy and outside Italy to decline by
approximately 4% due to the progressive completion of agreements
concerning the sale of the Priolo refinery (a decline targeted to
7.5 million tonnes). The utilization rate of available capacity in
owned refineries is expected to increase over 2002 (to 99%);
|
| |  |  | management expects sales of refined products on retail markets
to increase in the rest of Europe due to the completion of
agreements for the purchase of service stations in Spain, France and
Germany (for a total of 313 stations); this change will be offset in
part by the expected decline in Italy, due to the downsizing
process.                                                 

In 2003 management expects capital expenditure to amount to about euro
8.8 billion; over 90% of this capital expenditure will be made in the
Exploration & Production, Gas & Power and Refining & Marketing segments.
Management expects to finance these capital expenditure as well as
requirements in connection with the public tender offer on Italgas shares,
amounting to approximately euro 2.5 billion, and the purchase of the
Norwegian oil company Fortum Petroleum AS, amounting to approximately dollar
975 million, through cash flow from operations and an increase in finance
debt under existing committed borrowings facilities. See «Background and
Recent Developments» for more details concerning these two transactions.

In order to meet the medium and long-term demand of natural gas in
particular of the Italian market, Eni entered long-term purchase contracts
with producing countries that have a residual average term of approximately
17 years. Existing contracts, which in general contain take-or-pay clauses,
will ensure a total of about 66 billion cubic meters of natural gas per year
(Russia 28.5, Algeria 21.5, Netherlands 10 and Norway 6) by 2008. The above
quantities are based on the annual contract quantity of the relevant
contract. The average annual minimum quantity is approximately the 85% of
said quantities. In order to comply with the above mentioned regulatory
thresholds relating to volumes input to the national transport network, Eni
signed multi-annual contracts with third party importers to sell natural gas
volumes exceeding said threshold limits outside the Italian territory; in
prior years these volumes were imported into Italy and sold to Italian
consumers by Eni. This change in the sale mix is structural and will
adversely affect Enis results of operations. Further, management expects
Enis margins on natural gas in Italy to come under pressure in future years
due to the entry into the market of new competitors including the above
mentioned third parties which purchase natural gas from Eni outside the
Italian territory and resell it to Italian customers. Finally due to the
antitrust threshold on direct sales in Italy, management expects Enis
natural gas sales in Italy to increase at no more than the same rate as
overall natural gas demand in Italy. Management believes all these
developments might have a material adverse impact on Enis results of
operations. However management believes that planned increase of natural gas
sales outside Italy and cost reduction measures will mitigate the above
mentioned adverse impact.

Until year 2002 Enis natural gas supply contracts have not entailed
the application of take-or-pay clauses. Due to a growth of the natural gas
market in Italy in the year 2003 lower than previously expected and to an
increase in the same year of the volumes of natural gas imported into Italy
by third parties, Eni offtake in 2003 may fall below its annual minimum
quantity (TOP) by approximately 1 billion cubic meters. However, Eni expects
to be able under its make up contractual provisions to offtake such gas in
the following two contractual years provided the natural gas market grows
according to managements expectations.





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##### Table of Contents



Eni maintains committed and uncommitted undrawn short term borrowing
facilities for euro 1,207 and 7,272 million as of December 31, 2002,
respectively (euro 1,632 and 6,625 million, respectively, at December 31,
2001) and committed undrawn long-term borrowings facilities for euro 364
million expiring in 2003 (euro 510 million at December 31, 2001, of which
euro 406 million expiring in 2002) with various domestic and foreign banks.
These agreements provide for interest charges based on prevailing market
conditions. Commission fees on undrawn lines of credit are not significant.

Management believes that, taking into account unutilized market
facilities, Eni has sufficient working capital for foreseeable requirements.

Commitment and Financial Obligations

The following table summarizes the principal financial obligations
which are described in Item 18 Financial StatementsNote 11 and 23.

|                                                             |             |                                                   |        |              |     |      |       |       |    |      |       |       |    |      |       |            |    |  |     |       |    |  |     |       |    |  |       |        |     | 
|------------------------------------------------------------ | ----------- | ------------------------------------------------- | ------ | ------------ | --- | ---- | ----- | ----- | -- | ---- | ----- | ----- | -- | ---- | ----- | ---------- | -- |  | --- | ----- | -- |  | --- | ----- | -- |  | ----- | ------ | --- | 
|                                                             |             |                                                   |        | Total        |     | 2003 |       | 2004  |    | 2005 |       | 2006  |    | 2007 |       | Thereafter
|                                                             |             |                                                   |        |              |     |      |       |       |    |      |       |       |    |      |       |           
|                                                             |             |                                                   |        | (millions E)
|Long term borrowings                                         |             |                                                   | 7,530  |              |     |      | 980   |       |    |      | 1,398 |       |    |      | 1,367 |            |    |  | 885 |       |    |  | 686 |       |    |  | 2,214 |       
|Short term
borrowings                                        |             |                                                   | 7,890  |              |     |      | 7,890 |       |    |      |       |       |    |      |       |            |    |  |     |       |    |  |     |       |    |  |       |       
|                                                             |             |                                                   | 15,420 |              |     |      | 8,870 |       |    |      | 1,398 |       |    |      | 1,367 |            |    |  | 885 |       |    |  | 686 |       |    |  | 2,214 |       
|Operating leases
relating to real
estate rental in
Italy (1) |             |                                                   | 368    |              |     |      | 56    |       |    |      | 56    |       |    |      | 54    |            |    |  | 53  |       |    |  | 52  |       |    |  | 97    |       
|Other committments
(off balance
sheet):                      |             |                                                   |        |              |     |      |       |       |    |      |       |       |    |      |       |            |    |  |     |       |    |  |     |       |    |  |       |       
|                                                             | Take or pay |                                                   |        | 81,004       |     |      |       | 6,025 |    |      |       | 5,169 |    |      |       | 4,608      |    |  |     | 4,488 |    |  |     | 4,461 |    |  |       | 56,253 |    
|                                                             | Ship or pay |                                                   |        | 12,270       |     |      |       | 520   |    |      |       | 610   |    |      |       | 610        |    |  |     | 610   |    |  |     | 620   |    |  |       | 9,300  |    
|                                                             | Others (2)  |                                                   |        | 607          |     |      |       | 233   |    |      |       | 51    |    |      |       | 43         |    |  |     | 43    |    |  |     | 43    |    |  |       | 194    |    
|                                                             |             |  Memorandum of
intent relating
to Porto
Marghera |        |              | 223 |      |       |       | 30 |      |       |       | 30 |      |       |            | 30 |  |     |       | 30 |  |     |       | 30 |  |       |        | 73  | 
|                                                             |             |  Memorandum of
intent relating
to Val DAgri     |        |              | 206 |      |       |       | 25 |      |       |       | 21 |      |       |            | 13 |  |     |       | 13 |  |     |       | 13 |  |       |        | 121 | 
|                                                             |             |                                                   | 607    |              |     |      | 233   |       |    |      | 51    |       |    |      | 43    |            |    |  | 43  |       |    |  | 43  |       |    |  | 194   |       



---

|(1) |  |  The amounts of rental outside Italy were not material.                                 
|--- |  | -----------------------------------------------------------------------------------------
|   
|(2) |  |  Purchase of Government Bonds from employees (in balance sheet as per U.S. GAAP) 178 178

Other commitments relating to natural gas «take or pay» and «ship or
pay» contracts were calculated by applying the forecasted prices of energy
or services in the medium term scenario used in Enis four-year plan to
minimum take or minimum ship quantities.

Liquidity Risk

Enis financial operations are managed according to a centralized model
where financial subsidiaries have specific roles and assignments. Enis
Treasury Department coordinates and controls all activities, defines
objectives and constraints in terms of financial structure, programs and
risk management.

Liquidity risk is the risk that suitable sources of funding for the
Groups business activities may not be available. The Group has access to a
wide range of funding at competitive rates through the capital markets and
banks. The Group believes it has access to sufficient funding and has also
both committed and uncommitted borrowing facilities to meet currently foreseeable borrowing
requirements. At December 31, 2002, Eni maintains committed and uncommitted
unused short term borrowing facilities for euro 1,207 and 7,272 million,
respectively (euro 1,632 and 6,625 million, respectively, at December 31,
2001) and committed unused long-term borrowings facilities for euro 364
million expiring in 2003 (euro 510 million at December 31, 2001, of which
euro 406 million expiring in 2002) with various domestic and foreign banks.
These agreements provide





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##### Table of Contents



for interest charges based on prevailing market conditions. Commission
fees on unused lines of credit are not significant.

Credit risk

Credit risk is the potential exposure of the Group to loss in the event
of non-performance by a counterparty. The credit risk arising from the
Groups normal commercial operations is controlled by individual operating
units within guidelines. In addition, as a result of its use of financial
and commodity instruments, including derivatives, to manage market risk, Eni
has credit exposures through its dealings in the financial and specialized
oil and gas markets. Eni controls the related credit risk by entering into
contracts only with highly credit-rated counterparties and through credit
approvals, limits and monitoring procedures, and does not usually require
collateral or other security. Counterparty credit validation, independent of
the dealers, is undertaken before contractual commitment. Eni has not
experienced material non-performance by any counterparty.

Hedging

The most important currencies for Eni are the euro and the U.S. dollar.
See «Item 3Risk FactorsExchange Rates». Enis hedging policy is to
minimize foreign exchange rate exposure through a policy of matching assets
and liabilities where appropriate. Eni also uses forward exchange contracts
to hedge existing receivables and payables, including deposits and
borrowings denominated in currencies other than the currency used in the
relevant financial statements. At December 31, 2002, the notional amount of
forward exchange contracts was euro 7,611 million and the notional amount of
purchased options was euro 348 million. Eni does not enter into derivative
transactions on a speculative basis.

Where appropriate, Eni enters into commodity hedging contracts for the
purpose of reducing its exposure to changes in commodity prices in
connection with specific transactions, including, to a limited extent, to
mitigate the effects of petroleum price fluctuations. At December 31, 2002,
Eni maintained for this purpose open derivative commodity contracts, the
amounts of which were not material.

The Company also enters into various types of interest rate contracts
(primarily interest rate swaps, forward rate agreements and interest rate
collars, to manage its interest rate risk, to lower its funding costs and
diversify its sources of funding and to alter interest rate exposures
arising from mismatches between assets and liabilities. At December 31,
2002, the notional amount of interest rate contracts was euro 5,555 million,
of which euro 5,206 million related to swaps, euro 220 million related to
forward rate agreements and euro 129 million related to collars. See Note 24
to the Consolidated Financial Statements.

Research and Development

For a description of Enis research and development operations in 2002,
see «Item 4 Research and Development».




Summary of Significant Differences Between Italian GAAP and U.S. GAAP

Enis Consolidated Financial Statements have been prepared in
accordance with Italian GAAP, which differ in certain material respects from
U.S. GAAP. The principal differences between Italian GAAP and U.S. GAAP, as
applied to Enis Consolidated Financial Statements, are (i) consolidation
policy, (ii) accounting for exploratory wells, exploration permits and
developmental expenditure of oil and natural gas activities, (iii) goodwill
amortization, (iv) valuation of assets and subsequent revaluation, (v)
monetary revaluation of assets, (vi) financing costs, (vii) marketable
securities; (viii) deferred tax assets liabilities, (ix) capitalized
interest expense, (x) derivatives, (xi) classification of revenues,
extraordinary income and extraordinary expense items, (xii) sale of
Government bonds, (xiii) reclassification of inventory, (xiv) stock
compensation, (xv) treasury shares, (xvi) depreciation rates. See Note 27 to
the Consolidated Financial Statements for a more detailed discussion of the
significant differences between Italian GAAP and U.S. GAAP that affect Enis





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##### Table of Contents



Consolidated Financial Statements, and Note 28 to the Consolidated
Financial Statements for a reconciliation of net income and shareholders
equity between Italian GAAP and U.S. GAAP.

Consolidated operating income reconciled to U.S. GAAP was euro 7,656
million, euro 8,642 million and euro 9,662 million in 2002, 2001 and 2000,
respectively, compared with consolidated operating income under Italian GAAP
of euro 8,502 million, 10,396 million and 10,772 million in those same
years. The principal effects on operating income by segment that arise from
a reconciliation to U.S. GAAP are as follows: (i) for the Exploration &
Production segment, the recapitalization of certain oil and natural gas
exploration and development costs that were fully or differently amortized
in the same period under Italian accounting principles, (ii) for all
segments the elimination of goodwill amortization, (iii) for all segments,
the reclassification of restructuring costs into operating expense as
required by U.S. GAAP, (iv) for all segments, the reclassification of
certain income and gains and other expenses, which would normally be
considered as net sales from operations and operating expenses, respectively
under Italian accounting principles, into other non operating income or
expense for purposes of U.S. GAAP, (v) for all segments, depreciation of
monetary revaluation of assets and use of different rates of depreciation,
(vi) for all segments, the recapitalization of interest on debt that was
incurred in order to bring qualified assets to their intended use and was
expensed in the year incurred and (vii) for the Oilfield Services and
Engineering and Gas & Power segments the accounting for Saipem Spa and
Società Italiana per il Gas pA, including their subsidiaries, under the
equity method for U.S. GAAP purposes, while the same entities are
consolidated for Italian accounting principles purposes, (viii) in 2000,
2001 and 2002 by the effect of stock grants awarded to employees which,
under Italian accounting principles, are treated as reclassification from
retained earnings to capital stock for the par value of the stock issued,
while under U.S. GAAP are treated as compensation expense (See Note 29 and
30 to the Consolidated Financial Statements); See Note 27 to the
Consolidated Financial Statements for the «Summary of Differences Between
Italian and U.S. GAAP and Note 28 for a breakdown of operating income by
segment under U.S. GAAP for the years 1999 through 2001.

Consolidated net income reconciled to U.S. GAAP was euro 5,292 million,
euro 6,317 million and 5,758 million in 2002, 2001 and 2000, respectively,
compared with consolidated net income under Italian accounting principles of
euro 4,593 million, euro 7,751 million and 5,771 million in those same
years. In addition to the effects discussed above, the reconciliation of
consolidated net income to U.S. GAAP was affected (i) in 2001 adjustment of
gains on disposals due to elimination of monetary revaluation, adjustment of
gains on disposals due to elimination of reversal of impairment charges and
adjustment of gains on the sale of an interest in a consolidated subsidiary
(Snam Rete Gas) and (ii) taxes on distributable reserve.





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##### Table of Contents






Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES




Directors and Senior Management

The Board of Directors of Eni SpAs currently in office consists of
eight members. The table below sets forth the names of the eight members of
the Board of Directors, their positions, the year when each was initially
appointed as a Director and their ages. This Board of Directors was
appointed by the Ordinary Shareholders Meeting held on May 30, 2002 for a
three-year period.

|                                  |  |                           |  |           |      |                      |  |  |    |  |  | 
|--------------------------------- |  | ------------------------- |  | --------- | ---- | -------------------- |  |  | -- |  |  | 
|                                  |  |                           |  |           |      | Year First Appointed |  |  |    | 
|                                  |  |                           |  |           |      | to Board of          |  |  |    | 
|Name                              |  | Position                  |  | Directors |      | Age                 
|                                  |  |                           |  |           |      |                     
|Roberto Poli                      |  | Chairman                  |  |           | 2002 |                      |  |  | 65 | 
|Vittorio Mincato                  |  | Managing Director and CEO |  |           | 1998 |                      |  |  | 67 | 
|Mario Giuseppe Cattaneo           |  | Director                  |  |           | 1998 |                      |  |  | 73 | 
|Alberto Clô                       |  | Director                  |  |           | 1999 |                      |  |  | 56 | 
|Umberto Colombo                   |  | Director                  |  |           | 1998 |                      |  |  | 76 | 
|Renzo Costi                       |  | Director                  |  |           | 1996 |                      |  |  | 66 | 
|Dario Fruscio                     |  | Director                  |  |           | 2002 |                      |  |  | 66 | 
|Guglielmo Antonio Claudio Moscato |  | Director                  |  |           | 2002 |                      |  |  | 67 | 
|Mario Resca                       |  | Director                  |  |           | 2002 |                      |  |  | 58 | 

While it remains a significant shareholder, the Ministry of Economy and
Finance intends to continue to participate in the nomination and election of
Enis Board of Directors in order to protect its investment as a
shareholder. During whatever period the Ministry of Economy and Finance
remains a majority shareholder, according to Italian law, as confirmed by
Decision No. 466/1993 of the Corte Costituzionale(Constitutional Court),
the Corte dei Conti(Court of Accounts) has the right and duty to exercise a
role as financial controller of Enis operations in order to protect the
interest of the State as a shareholder. In order for the Court of Accounts
to exercise such control, a representative of the Court of Accounts attends
the meetings of the Board of Directors and the Board of Statutory Auditors
of Eni without the right to vote and Eni has the obligation to send to the
Court of Accounts its financial statements together with the reports of the
Board of Directors, the Board of Statutory Auditors and its external
auditors. The representative of the Court of Accounts who attends the
meetings of the Board of Directors and Board of Statutory Auditors of Eni is
Michael Sciascia who replaced Nicola Soria, who died on April 17, 2003.

On the occasion of Enis Ordinary Shareholders Meeting held on May 30,
2002 which appointed the current Board of Directors, the Minister of Economy
and Finance decided not to exercise its power to appoint a member of the
Board. Therefore the number of members of the Board was set at eight versus
the preceding nine-member Board. The Board will expire at the date of the
General Shareholders Meeting approving Enis financial statements for the
financial year 2004.

On June 5, 2002 the new Board of Directors delegated to the Chairman,
Roberto Poli, powers for researching and promoting integrated projects and
strategic international agreements, and appointed Vittorio Mincato Managing
Director and CEO, confirming the powers already delegated to him by the
previous Board of Directors.

On November 14, 2000 the Board of Directors of Eni appointed Stefano
Cao as General Manager of the Exploration & Production division with those
powers as determined by the Board on the same date. Mr. Cao may be removed
by the Board of Directors of Eni without cause.





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##### Table of Contents



On January 30, 2001 the Board of Directors of Eni appointed Luciano
Sgubini as General Manager of the Gas & Power division with those powers as
defined by the Board on the same date. Mr. Sgubini may be removed by the
Board of Directors of Eni without cause.

On December 19, 2002 (effective from January 1, 2003) the Board of
Directors of Eni appointed Gilberto Callera as General Manager of the
Refining & Marketing division with those powers as defined by the Board on
the same date. Mr. Callera may be removed by the Board of Directors of Eni
without cause.

The table below sets forth Eni SpAs executive officers and the General
Managers of Enis three divisions, their positions within Eni, the year they
were appointed to such positions, their total years of service at Eni and
their ages. The executive officers of Eni are appointed by the Managing
Director of Eni and may be removed without cause.

|                    |  |                                                                            |  |                  |      |                |  |     |    |  |  |  |    | 
|------------------- |  | -------------------------------------------------------------------------- |  | ---------------- | ---- | -------------- |  | --- | -- |  |  |  | -- | 
|                    |  |                                                                            |  | Year First       |      | Total Number   |  |     |    | 
|                    |  |                                                                            |  | Appointed to     |      | of Years of    |  |     |    | 
|Name                |  | Management Position                                                        |  | Current Position |      | Service at Eni |  | Age
|                    |  |                                                                            |  |                  |      |                |  |    
|Stefano Cao         |  | General Manager for the Exploration
& Production division                  |  |                  | 2000 |                |  |     | 27 |  |  |  | 52 | 
|Luciano Sgubini     |  | General Manager for the Gas & Power
division                               |  |                  | 2001 |                |  |     | 35 |  |  |  | 63 | 
|Gilberto Callera    |  | General Manager for the Refining &
Marketing division                      |  |                  | 2002 |                |  |     | 28 |  |  |  | 64 | 
|Carlo Grande        |  | The Group Senior Vice President for
Legal Affairs                          |  |                  | 1986 |                |  |     | 25 |  |  |  | 62 | 
|Roberto Jaquinto    |  | The Group Senior Vice President for
Administration                         |  |                  | 1992 |                |  |     | 41 |  |  |  | 61 | 
|Marco Mangiagalli   |  | The Group Senior Vice President for
Finance                                |  |                  | 1993 |                |  |     | 25 |  |  |  | 54 | 
|Leonardo Maugeri    |  | The Group Senior Vice President for
Strategies and International Relations |  |                  | 2000 |                |  |     | 9  |  |  |  | 39 | 
|Renato Roffi        |  | The Group Senior Vice President for
Human Resources                        |  |                  | 2000 |                |  |     | 32 |  |  |  | 56 | 
|Vittorio Giacomelli |  | The Group Senior Vice President for
Supply Operations                      |  |                  | 2001 |                |  |     | 35 |  |  |  | 63 | 
|Eugenio Palmieri    |  | The Group Senior Vice President for
Public Affairs and Communication       |  |                  | 2001 |                |  |     | 12 |  |  |  | 56 | 
|Luigi Patron        |  | Chief Technology Officer                                                   |  |                  | 2001 |                |  |     | 43 |  |  |  | 63 | 
|Fabrizio DAdda     |  | The Group Senior Vice President for
Health Safety and the Environment(1)   |  |                  | 2002 |                |  |     | 34 |  |  |  | 61 | 



---

|(1) |  | Appointed on July 26, 2002.
|--- |  | ---------------------------

The biographies of Enis directors and executive officers are set out
below.

Roberto Poli was appointed Chairman of Eni SpA on May 30, 2002.
Recently he has founded and is currently President of Morelli & Partners
SpA, a consulting firm for corporate finance, mergers, acquisitions and
reorganisations. He is also President of Prof. Roberto Poli e Associati SpA.
From 1966 to 1998 he was Professor of Business Finance at the Università
Cattolica of Milan. He is Member of the Board of Directors of Fininvest SpA,
Mondadori SpA, Merloni Termosanitari SpA, G.D. SpA and general partner of
Brafin S.A.P.A.

Vittorio Mincato was appointed Chief Executive Officer of Eni SpA on
November 19, 1998. He was confirmed for a three-year term (2002-2005) by the
Board meeting held on June 5, 2002. This appointment capped an over
40-year-career with the Eni group. He is currently a Member of the
Management Board and of the Executive Committee of Confindustria (the
General Confederation of Italian Industry) where he is Director in charge of
the Centre of Studies. He is a Member of the General Confederation of
Management Committee of Assonime, the Association of Italian Public Limited
Companies and of CNEL (National





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##### Table of Contents



Committee for Economy and Labour). He is
Member of the Board of Directors of «Fondazione Teatro alla Scala».

Mario Giuseppe Cattaneo is a chartered accountant, public auditor and
Professor of Corporate Finance at the School of Business of Milans
Università Cattolica del Sacro Cuore. He is currently President of C.B.I.
Factor SpA, Member of the Board of Directors of Otis SpA, Unicredito
Italiano SpA, Unicredit Audit SpA and Banca Lombarda SpA and Vice President
of Euromobiliare Fondi SpA.

Alberto Clô was Minister of Industry and Minister of Foreign Trade ad
interim in 1995 and 1996. Since 1997 he has been President of the Scientific
Committee of the Scuola Enrico Mattei. He is Member of the Board of
Directors of GTP Holding SpA, Finmeccanica SpA, Sagat SpA and Chairman of
Aeroporto G. Marconi di Bologna SpA. He is also President of the Scientific
Committee of Eni Corporate University and in 2003 he was appointed Director
of ASM Brescia SpA.

Renzo Costi is an attorney and a consultant. He served as magistrate
from 1964-68 and is currently Professor of commercial law at the University
of Bologna. He was founder, and currently is co-director, of the magazines
«Giurisprudenza Commerciale», «Banca Impresa e Società» and «Banca, Borsa e
titoli di credito». He is member of the Board of Directors of Editrice Il
Mulino SpA.

Dario Fruscio is a chartered accountant, public auditor and consultant;
he is currently Professor of Economy and Management at the University of
Pavia and taught at the Accademia Nazionale della Guardia di Finanza of
Bergamo.

Guglielmo Antonio Claudio Moscato was President of Eni SpA from 1996 to
1999. He is currently President of the Fondazione Eni Enrico Mattei and
member of the Board of Directors of Trevi Fin SpA.

Mario Resca is Chairman and Managing Director of McDonalds Italia SpA
and Chairman of Italia Zuccheri SpA (formerly Eridania SpA), National Board
member of U.P.A. (Union of Associated Advertising Operators), Chairman of
Confimprese and Director of Mondadori SpA.

Stefano Cao joined the Eni group as a technical engineer active mainly
in offshore construction. He then became general manager, managing director
and chairman of Saipem SpA, and is at present General Manager of Exploration & Production division.

Luciano Sgubini, mining engineer, was involved in hydrocarbon
production activities of Agip SpA. He served various positions in the Eni
group such as Vice President of Agip SpA, Chairman and CEO of Saipem SpA and
Chairman of Snam SpA until he became General Manager of Enis Gas & Power
division. He is a member of the Board of Directors of many Eni group
companies.

Gilberto Callera, a chemical engineer, joined the Eni group in 1975. He
was Chairman of Agip Petroli SpA until he became General Manager of Enis
Refining & Marketing division. He is also Vice President of the Italian Oil
Industry Union and Vice President of the Industry Union of Rome.

Carlo Grande, attorney at law, joined the Eni group in 1977 and has
served as senior vice president for legal affairs since 1986. He is a member
of the Board of Directors of various Eni companies.

Roberto Jaquinto, a registered auditor, joined the Eni group in 1962
and served in various administrative management positions, until he became
senior vice president for administration and responsible for Eni financial
reporting and accounting. He is a member of the Board of Directors of many
Eni group companies.

Marco Mangiagalli worked for the Barclays Group and other Italian
merchant banks before joining the Eni group. He is a member of the Board of
Directors of various Eni companies. He is responsible, among other things,
for Enis treasury operations.

Leonardo Maugeri, after extensive academic experience acquired also
outside Italy, joined the Eni group in
1994, holding various positions mainly as counsel for strategic
decisions. He is a member of the executive council
of Censis and of the Commission on international relations at
Confindustria.





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##### Table of Contents



Renato Roffi joined the Eni Group in 1971 and held various positions in
Enis subsidiaries until he became the Groups senior vice president for
human resources in 2000. He is a member of the Board of Directors of various
Eni companies and Vice Chairman of ASIEP (the Italian association of energy
and petroleum companies).

Vittorio Giacomelli, a chemical engineer, started his career in
Germany, joined the Eni group in 1968 and held various positions in Enis
subsidiaries until he became the Groups senior vice president for
procurement.

Eugenio Palmieri qualified as journalist in 1971 and worked as
correspondent for «Il Sole 24-Ore», «Il Tempo», «La Stampa». In 1991 he was
appointed Head of Press Office and later also supervisor of External
Relations. In May 1995 he was appointed Managing Editor of Agi News Agency,
a subsidiary of Eni and the second largest Italian newswire.

Luigi Patron is Chief Technology Officer of Eni and Chairman of
Snamprogetti SpA, the engineering company of the Eni Group. Mr. Patrons
industrial career started with Montefibre SpA at Porto Marghera. In 1991, he
became Chairman of Montefibre SpA and Chairman of Enichem Fibre SpA. From
June 1993 to May 1996, Mr. Patron was Managing Director of EniChem SpA.

Fabrizio DAdda, mining engineer, joined the Eni group in 1968. He held
various positions such as Vice President of Snamprogetti SpA, Chairman of
Saipem SpA, Chairman of Enichem SpA and Chairman of Polimeri Europa SpA. He
is a member of the Board of Directors and of the Executive Committee of
Cefic and President of the Financial Committee of Cefic. He is also a member
of the Executive Committee of Confindustria.

Auditors

Statutory Auditors

The Italian legislation requires Italian listed corporations to have a
board of statutory auditors composed of independent experts in accounting
matters and in matters specified in such corporations by-laws. Eni SpAs
Board of Statutory Auditors is elected by the shareholders meeting, with the
exception of the Chairman thereof, who is appointed by the Ministry of
Economy and Finance. See «Item 10. Additional InformationMemorandum and
Articles of AssociationLimitations on Voting and ShareholdingsSpecial
Powers of the State». Eni SpAs by-laws currently provide that the Board of
Statutory Auditors consists of five effective statutory auditors and two
alternate auditors (each of them automatically substitutes an effective
auditor who resigns or is otherwise unable to serve as an auditor elected in
the same list).

The following table sets forth the names, positions and year of
appointment of the members of the Board of Statutory Auditors of Eni, who were elected on May 30, 2002.

|                                                                                                                       |  |                                                                              |  |                       |                                    | 
|---------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------- |  | --------------------- | ---------------------------------- | 
|                                                                                                                       |  |                                                                              |  | Year First Appointed 
|                                                                                                                       |  |                                                                              |  | to Board of Statutory
|Name                                                                                                                   |  | Position                                                                     |  | Auditors             
|                                                                                                                       |  |                                                                              |  |                      
|Andrea Monorchio
Luigi Biscozzi
Paolo Andrea Colombo
Filippo Duodo
Riccardo Perotta
Fernando Carpentieri
Giorgio Silva |  | Chairman
Auditor
Auditor
Auditor
Auditor
Alternate Auditor
Alternate Auditor |  |                       | 1995
1999
2002
1998
1999
1995
1999 | 

External Auditors

The Shareholders Meeting held on June 1, 2001 resolved to appoint
PricewaterhouseCoopers SpA as principal external auditors for the three-year
period 2001-2003 for both consolidated and non consolidated accounts.





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##### Table of Contents






Compensation

See Note 29 to the consolidated financial statements for a description
of stock grant and stock option plans.

Pursuant to Consob Decision No. 11971 of May 14, 1999, as amended,
compensation of Directors of Eni, statutory auditors and general managers of
Enis divisions is reported in the table below, which includes all the
persons who held a position in 2002, also for a fraction of the year.



| |  |  | The column «Compensation for positions held at Eni SpA» includes
compensation decided by the shareholders meeting and compensation
of the Chairman and the Managing Director set by the Board of
Directors, in agreement with the Board of Statutory Auditors,
pursuant to article 2389, subsection 2 of the Italian Civil Code;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the column «Non monetary benefits» indicates all fringe
benefits, including insurance policies;                                                                                                                                                                                                                                  
|
| |  |  | the column «Bonuses and other incentives» indicates the variable
part of the compensation of the chairman, the Managing Director and
General Managers of Enis divisions;                                                                                                                                                        
|
| |  |  | the column «Other compensation» indicates the salary of the
Managing Director and of the General Managers (employees of Eni), as
well as the compensation for positions held in other Eni companies.                                                                                                                             

|                             |  |                   |  |              |  |          |  |            |  |              |  |      
|---------------------------- |  | ----------------- |  | ------------ |  | -------- |  | ---------- |  | ------------ |  | -----
|                             |  |                   |  | Compensation |  |          |  | Bonuses    |  |              |  |      
|                             |  |                   |  | for          |  | Non cash |  | and other  |  | Other        |  |      
|Name                         |  | Position          |  | position     |  | benefits |  | incentives |  | compensation |  | Total
|                             |  |                   |  |              |  |          |  |            |  |              |  |      
|                             |  | (thousand E)     
|Board of Directors           |  |                   |  |              |  |          |  |            |  |              |  |      
|Gros-Pietro Gian Maria       |  | Chairman          |  | 302          |  | 3        |  | 289        |  |              |  | 594  
|Poli Roberto                 |  | Chairman          |  | 297          |  |          |  |            |  |              |  | 297  
|Mincato Vittorio             |  | Managing Director |  | 283          |  |          |  | 604        |  | 935          |  | 1.822
|Cattaneo Mario Giuseppe      |  | Director          |  | 74           |  |          |  |            |  |              |  | 74   
|Clô Alberto                  |  | Director          |  | 75           |  |          |  |            |  |              |  | 75   
|Colombo Umberto              |  | Director          |  | 27           |  |          |  |            |  |              |  | 27   
|Costi Renzo                  |  | Director          |  | 75           |  |          |  |            |  |              |  | 75   
|De Paoli Luigi               |  | Director          |  | 27           |  |          |  |            |  |              |  | 27   
|Fruscio Dario                |  | Director          |  | 46           |  |          |  |            |  |              |  | 46   
|Moscato Guglielmo            |  | Director          |  | 48           |  |          |  |            |  |              |  | 48   
|Resca Mario                  |  | Director          |  | 48           |  |          |  |            |  |              |  | 48   
|Sapelli Giulio Marcello      |  | Director          |  | 27           |  |          |  |            |  |              |  | 27   
|Siniscalco Domenico (1)      |  | Director          |  |              |  |          |  |            |  |              |  |      
|                             |  |                   |  |              |  |          |  |            |  |              |  |      
|Board of Statutory Auditors  |  |                   |  |              |  |          |  |            |  |              |  |      
|Monorchio Andrea (2)         |  | Chairman          |  | 60           |  |          |  |            |  |              |  | 60   
|Biscozzi Luigi               |  | Effective Auditor |  | 78           |  |          |  |            |  | 48 (3)       |  | 126  
|Colombo Paolo Andrea         |  | Effective Auditor |  | 49           |  |          |  |            |  | 10 (4)       |  | 59   
|Duodo Filippo                |  | Effective Auditor |  | 71           |  |          |  |            |  | 48 (5)       |  | 119  
|Perotta Riccardo             |  | Effective Auditor |  | 76           |  |          |  |            |  | 20 (6)       |  | 96   
|Sica Mario                   |  | Effective Auditor |  | 21           |  |          |  |            |  | 34 (7)       |  | 55   
|                             |  |                   |  |              |  |          |  |            |  |              |  |      
|General Manager E&P division |  |                   |  |              |  |          |  |            |  |              |  |      
|Cao Stefano                  |  |                   |  |              |  |          |  | 248        |  | 533          |  | 781  
|General Manager G&P division |  |                   |  |              |  |          |  |            |  |              |  |      
|Sgubini Luciano              |  |                   |  |              |  |          |  | 272        |  | 555          |  | 827  
|                             |  |                   |  |              |  |          |  |            |  |              |  |      
|                             |  |                   |  | 1.684        |  | 3        |  | 1.413      |  | 2.183        |  | 5.283
|                             |  |                   |  |              |  |          |  |            |  |              |  |      





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---

|(1) |  | Compensation for this position is paid to the Ministry of Economy and
Finance (euro 26,000).                                                                                               
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Compensation concerns the July 1-December 31, 2002 period, prior to
this compensation for this position is paid to the Ministry of Economy
and Finance (euro 46,000).                      
|   
|(3) |  | Includes compensation for the position of effective Statutory Auditor
of Enichem SpA and Polimeri Europa SpA.                                                                              
|   
|(4) |  | Includes compensation for the position of Director of Saipem SpA from
January 1 to May 31, 2002.                                                                                           
|   
|(5) |  | Includes compensation for the position of effective Statutory Auditor
of Snamprogetti SpA and Chairman of the Board of Statutory Auditors of
Consorzio Eni per lAlta Velocità  Cepav Uno.
|   
|(6) |  | Includes compensation for the position of effective Statutory Auditor
of Enifin SpA.                                                                                                       
|   
|(7) |  | Includes compensation for the position of Chairman of the Board of
Statutory Auditors of Snam SpA fro January 1 to February 1, 2002 and of
Snam Rete Gas SpA.                              

For the year ended December 31, 2002, the aggregate compensation paid
to or on behalf of the executive officers of Eni SpA was euro 6.06 million.
The foregoing amounts include salaries, fees for attending meetings, lump-sum amounts paid in lieu of expense
reimbursements, stock option and health and pension contributions. The
foregoing amounts do not include amounts accrued to the reserve for employee
termination indemnities, which is used to pay severance pay as required by
Italian law to employees upon termination of employment. The members of the
Board of Directors in their capacity as such are not entitled to receive
such severance pay. At December 31, 2002, the total amount accrued to the
reserve for employee termination indemnities with respect to members of the
Board of Directors who were also employees of Eni, with respect to two
General Managers and with respect to the executive officers of Eni SpA was
euro 3.35 million.




Board practices

Appropriate conduct

In September 2002, the German investment company DWS (Deutsche Bank
Group) in cooperation with the consulting company Déminor updated its
ratings of the degree of application of corporate governance principles in
50 European companies with the highest stock market capitalization included
in the Eurostoxx50 index. Eni ranked fifth in Europe (eleventh in 2001) and
first in Italy, same as in 2001.

In its meeting of January 20, 2000 Enis Board of Directors resolved to
adopt the Self-discipline Code of Listed Companies (the «Code») adopted on
Borsa Italiana SpA, the Italian Stock Exchange. On that occasion, the Board
 pursuant to a thorough review of the matter  underscored how Enis
organizational model is essentially in line with the principles expounded in
the Code, as well as with related recommendations issued by Consob.

In accordance with the request of Borsa Italiana SpA, in particular the
«Guidelines for the preparation of the yearly report on corporate
governance» of February 12, 2003. Information on Enis corporate governance
systems is set out below.

The Board of Directors: competencies, delegate powers and composition

The Board of Directors is the central element of Enis corporate
governance system. Its responsibilities include the definition, application
and updating of corporate governance rules and the determination of
strategic guidelines at the Company and Group level. In addition to
exclusive competencies entrusted to it by article 2381 of the Civil Code,
the Board makes decisions related to: (i) resolutions to be adopted in
Shareholders meetings of main subsidiaries; (ii) approval of major sale and
purchase transactions as well as conferral of real estate, investments,
businesses for amounts exceeding euro 26 million as proposed by the Managing
Director and examination of the instructions provided to Group companies on
these matters for their performance of such transactions.





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##### Table of Contents



The Board entrusted the Chairman with powers to conduct strategic
international relations and the Managing Director with all managing powers
except those that cannot be delegated and those reserved to the Board by
applicable law.

The appointment of the Board of Directors is regulated by article 17 of
Enis by-laws, which calls for a list vote in order to ensure presence of
representatives of minority equity interests on the Board of Directors. The
lists of candidates include a resume of each candidate. Board members must
comply with the honorability and independence requirements provided for by
applicable regulations, as well as possess the professionalism and
experience required for performing their duties to which they are expected
to dedicate adequate time and resources with efficacy and efficiency.

On December 18, 2002, Enis Board of Directors, in accordance with the
provisions of the Code evaluated the statements presented by Board members
and established that non-executive Board members meet the independence
requirements of the Code as they do not have any economic relationship with
Eni and Eni Group companies, the Managing Director and Enis major
shareholder such as to bias their autonomous judgment and are not close
relatives of the Managing Director.

Enis by-laws do not indicate a specific frequency of meetings. In 2002
the Board of Directors met 13 times. In the first half of 2003 the Board is
expected to meet seven times. The public is informed of the dates of
meetings convened for the approval of periodic reports as provided for by
applicable laws.

The Board of Directors defined the rules for the calling of its
meetings. In particular, the Chairman convenes Board of Directors meetings,
and, in concert with the Managing Director, defines agenda items. Notice is
sent by mail, fax or e-mail within five days of the meetings date, at least
24 hours in advance in case of urgency. Enis by-laws allow meetings held by
teleconference. Board members receive in advance adequate and thorough
information on all issues subject to Board evaluation and resolutions. In
2002 on average 91% of Board members and 93% of independent non executive
Board members participated to Board meetings.

Board member compensation is determined by the Shareholders Meeting,
while remuneration levels of the Chairman and Managing Director are
determined by the Board of Directors, based on proposals of the Compensation
Committee and after consultation with the Board of Statutory Auditors. In
line with Consob provisions, the Report of Directors included in Eni SpA
statutory financial statements indicates: (i) compensation paid to Board
members, Statutory Auditors and General Managers; (ii) subscription rights
for Eni shares assigned within three years for no consideration (stock
grant) and stock options attributed to the Managing Director (Eni employee)
and to General Managers; (iii) number of shares of Eni SpA and of Eni
companies held by Board members, Statutory Auditors and General Managers.

Information as per (i), (ii) and (iii) above are included in the notes
to Eni SpAs financial statements.

On May 30, 2002 the Shareholders Meeting determined the annual
compensation of the Chairman (euro 250,000 per year) and of Board members
(euro 68,000 per year). It also determined a variable compensation up to a
maximum of euro 80,000 per year for the Chairman and euro 20,000 per year
for each Board member to be paid in accordance with Enis positioning as
compared to such other seven major international oil companies selected
based on market capitalization in terms of total return to shareholders in
the reference year. The variable portion of compensation is paid to the
Chairman in the amount of euro 80,000 or euro 40,000 and to each Board
member in the amount of euro 20,000 or euro 10,000, respectively, if Enis
return to shareholders is rated first or second, or third or fourth in the
rating of return to shareholders of the seven major oil companies. If Eni
ranks below fifth no variable compensation is paid. In addition, Board
members receive euro 1,000 for the participation to each meeting of the
Board and of Board committees, along with any expense incurred for
performing their duties.

With reference to the powers delegated to the Chairman and Managing
Director, the Board of Directors determined a compensation composed of a
fixed and a variable part. The variable part of the compensation of Chairman
and Managing Director, as well as the variable part of the compensation of
Enis top management (General Managers of divisions and managers holding
positions directly reporting to the Chairman and the Managing Director) is
related to the achievement of specific economic and operating objectives
(profitability, efficiency, strategic projects) and share price objectives
(price of Eni shares, comparative total return to shareholders). With
reference to Enis performance in 2001, 47% of the remuneration of the
Chairman and of the Managing Director and 41% of that of the top management
was variable. The variable part of





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##### Table of Contents



compensation includes, beside the monetary component, Enis stock grant
plans (see specific information on stock options and stock grants in the
Report of Directors included in Eni SpAs statutory financial statements).

Board committees

In order to carry out its tasks more effectively, the Board of
Directors has instituted three committees: the Audit Committee and the
Compensation Committee, which are formed exclusively by independent,
non-executive Board members, and the Oil & Gas Committee.

The Audit Committee is composed of Mario Giuseppe Cattaneo, Alberto
Clô, Renzo Costi and Guglielmo Antonio Claudio Moscato; the Compensation
Committee is composed of Mario Giuseppe Cattaneo, Renzo Costi and Mario
Resca; the Oil & Gas Committee is composed of Alberto Clô, Dario Fruscio,
Vittorio Mincato and Guglielmo Antonio Claudio Moscato. Board members do not
receive additional compensation for performing their functions as members of
Board committees.

Audit Committee

The Audit Committee, based on the decision adopted by the Board of
Directors on October 18, 2000, holds functions of supervision and proposal
in the area of monitoring general management issues. In the course of 2002
the Audit Committee, convened 11 times and in the January 1 to March 27,
2003 period convened 5 times. In 2002, the Audit Committee has accomplished
the following: (i) reviewed the audit programs prepared by Eni SpAs and
Group companies internal audit functions; (ii) reviewed and evaluated
results of Eni SpAs and Group companies internal auditing procedures;
(iii) met with top level representatives of administrative functions in the
main subsidiaries, chairmen of boards of statutory auditors and partners of
external auditors responsible for auditing group companies to examine the
essential features of fiscal year 2001 and 2002 financial statements with
specific reference to extraordinary transactions and relations among
functions entrusted with controls in Eni SpA and its subsidiaries; (iv)
monitored the development of the operational model of the internal audit
function; (v) examined and expressed its opinion on the option of appointing
to additional services companies belonging to the network of the external
auditors; (vi) met with the Groups primary external auditor in order to
discuss the issues emerged during the audits performed, with particular
reference to the application of accounting standards to the preparation of
Enis financial statements under U.S. GAAP; (vii) examined and monitored the
activities devised by Eni for the compliance with rules introduced by
Legislative Decrees 231/2001 and 61/2002; (viii) examined the system devised
for the control of primary projects; (ix) examined the revised edition of
the Code of Self-Discipline presented by the Committee for corporate
governance of listed companies in July 2002 and expressed its opinion; (x)
reviewed the status of appointments of external auditors of main group
companies, the relevant accounts and the opinions contained in the reports
of external auditors of Enis Italian subsidiaries; (xi) met with the
Groups external auditor in order to discuss the issues related to the
Sarbanes-Oxley Act, presenting its decisions concerning the review of the
Committees functions to be made by the Board of Directors.

Compensation Committee

The Compensation Committee proposes incentive schemes and the yearly
remuneration of the Chairman and Managing Director to the Board of Directors
and overviews the criteria used in determining compensation of the Groups
top management. In 2002, the Committee met three times and accomplished the
following: (i) reviewed the objectives of the 2002 Group Incentive Plan and
the results of the 2001 Group Incentive Plan, with particular reference to
the proposed capital increase to offer free shares to managers; (ii)
presented a proposal concerning the fixed and variable remuneration of the
Chairman and the Managing Director; (iii) presented a proposal for the new
2002-2004 Stock Option Plan for managers in positions directly affecting
results or in strategic positions (see «Incentive plans for Eni managers
with Eni stock» in «Other Information» below); (iv) reviewed the guidelines
and criteria of the remuneration policy for Group managers.





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##### Table of Contents



Oil & Gas Committee

The Oil & Gas Committee is entrusted with monitoring and studying
trends in oil markets. In 2002 the Oil & Gas Committee, which was created on
June 5, 2002, met two times and examined the scenario of the major external
indicators (such as Brent price, refining margins, exchange rates, etc.) on
which Enis 2003-2006 four year plan is based.

Board of Statutory Auditors

The Board of Statutory Auditors, in accordance with article 149 of
Legislative Decree No. 58/1998, monitors the compliance with applicable
laws, Enis by-laws, principles of proper administration and the adequacy of
the companys organizational structure concerning administration and
accounting, internal controls and Enis administration and accounting
systems, as well as its reliability in presenting information properly.

The Board of Statutory Auditors comprises five effective auditors and
two alternate auditors, all appointed by the Shareholders Meeting of May
30, 2002, with the exception of the Chairman, who was appointed on May 29,
2002 with decree of the Minister of Economy and Finance in consultation with
the Minister for Productive Activities, in accordance with article 6 of
Enis by-laws. The Board of Statutory Auditors is appointed for a three-year
term and its mandate expires with the Meeting convened to examine financial
statements as of December 31, 2004. Articles 17 and 28 of Enis by-laws call
for a list vote in order to ensure presence of representatives of minority
equity interests on the Board of Statutory Auditors. Auditors are autonomous
and independent from the shareholders who elected them (article 14.1 of the
Code). The lists of candidates include a resume of each candidate.

The Board of Statutory Auditors is composed of the Chairman, Andrea
Monorchio, four auditors, Luigi Biscozzi, Paolo Andrea Colombo, Filippo
Duodo and Riccardo Perotta, and two substitute auditors, Fernando
Carpentieri and Giorgio Silva. Enis by-laws allow meetings held by
teleconference. Statutory auditors receive in advance adequate and thorough
information on all issues subject to Board evaluation and resolutions.

On December 19, 2001 Enis shareholders meeting modified article 28 of
Enis by-laws in order to include the provisions contained in the Decree of
the Minister of Justice No. 162 of March 30, 2000, concerning the
honorability and professional requirements of auditors of listed companies.
The by-laws state that at least two auditors and one alternate auditor are
chosen among chartered auditors and must have performed auditing activities
for at least three years prior to their appointment. Auditors not provided
with these requirements must be chosen among those meeting the requirements
professionalism described in Decree 162/2000. For the purposes of said
Decree, the by-laws define as related subjects commercial law, corporate
economy and finance, engineering and geology. Enis current statutory
auditors are all chartered auditors.

Special powers of the Stategolden share

Pursuant to article 2, subsection 1 of Law Decree No. 332 of May 31,
1994, modified and converted into Law No. 474 of July 30, 1994, article 6, 2
of Enis by-laws attributes to the Minister of Economy and Finance, in
agreement with the Minister for Productive Activities, the following special
powers: (a) approval or disapproval of the acquisition of material interests
representing at least 3% of the share capital of Eni SpA having the right to
vote at ordinary shareholders meetings; (b) approval or disapproval of
shareholders agreements or other arrangements (as defined by article 122 of
Legislative Decree No. 58 of February 24, 1998) involving 3% or more of the
share capital of Eni SpA having the right to vote at ordinary shareholders
meetings; (c) veto power with respect to shareholders resolutions to
dissolve Eni SpA, to cause a transfer, merger or demerger, of Eni SpA to
transfer its registered office outside Italy, to change the corporate
purposes or to amend or modify any of the special powers described in this
section; (d) appointment of a Board member and an auditor. The Italian
Government made use of the powers





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described under (a) in order to allow a merchant bank to own shares of
Eni SpA to be resold on the market following an IPO but it never made use of
the powers described under (b) and (c). The exercise of these special powers
is regulated by the above mentioned law and by a regulation published by the
Council of Ministers on February 11, 2000.

Investor relations and information processing

In concert with the launch of its privatization process, Eni adopted a
communication policy aimed at promoting an ongoing dialogue with
institutional investors, shareholders and the markets to ensure systematic
and prompt dissemination of exhaustive information on its activities, with
the sole limitation imposed by the confidential nature of certain
information. Information made available to investors, markets and the press
is provided in the form of press releases, regular meetings with
institutional investors and the financial community and the press, in
addition to general documentation released and constantly regularly on Enis
internet site and internet sites of the Groups main companies. Investor and
shareholder relations are handled by special Eni functions.

Information regarding periodic reports and major operations as well as
procedures concerning corporate governance is promptly released to the
public, also through publication on the Groups internet site. A specific
section of Enis internet site contains press releases, presentations
provided in meetings with the press and financial analysts, notices to
shareholders and bond holders and information concerning shareholders and
bond holders meetings, including proceeds thereof. Documents available to
the public are mailed free on charge upon request. Available to shareholders
are also a mailbox (segreteriasocietaria.azionisti@eni.it) and a toll-free
telephone number (800940924) for requesting information and documents.

Eni is aware that financial information plays a crucial role in the
functioning of capital markets and in the creation and maintenance of
satisfying relationships between the company and its increasingly wide area
of stakeholders. Eni is also aware that investors trust in listed companies
is one of the essential elements for the functioning of global economy.
Investors must be able to rely on the absolute moral integrity of persons
responsible of key positions in companies and on the respect of corporate
codes of conduct, procedures and rules. Enis commitment to provide
investors and markets with truthful, complete, transparent, timely and
selective financial information is confirmed by its Code of Conduct, that
identifies the fundamental values for the deployment of its activities in
the completeness and transparency of financial information, the formal and
substantial legitimacy of behaviour of its employees at any organizational
level and the clarity and truthfulness of its accounting, in accordance with
laws and regulations in force.

On December 18, 2002, Enis Board of Directors approved a «Procedure
for the disclosure of information to the market concerning Group activities»
published on Enis internet site. The procedure acknowledges the «Guidelines
for information to the market» issued in June 2002 by the Company
Information Forum, defines the requirements for disclosure to the public of
price sensitive events (materiality, clarity, homogeneity, information
symmetry, consistency and timeliness) and the information flows for
acquiring data from Group companies and providing adequate and timely
information to the Board and the market on price sensitive events.

Enis Code of Conduct also defines confidentiality duties upheld by
Group employees with respect to sensitive information.

Internal dealing

In compliance with the provisions contained in the Rules of the markets
organised and managed by Borsa Italiana SpA, as amended by Consob with
Resolution 13655 of July 9, 2002, on December 18, 2002 Enis Board of
Directors has approved the Code of Conduct for Internal Dealing (published
on Enis internet site) concerning transactions involving financial
instruments issued by Eni SpA and its listed subsidiaries. This Code, in
force from January 1, 2003, contains the provisions that govern public
disclosure obligations and limitations regarding the above transactions
executed on behalf of Eni and its listed subsidiaries by relevant





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persons. Relevant persons have been identified to be: (i) Board members
and statutory and external auditors of Eni, the Magistrate of the Court of
Accounts responsible for supervising Enis accounts; (ii) the managers
directly reporting to the Chairman and the Managing Director of Eni and the
managers directly reporting to the aforementioned first line of managers.

According to the Code, the market has to be informed at the end of each
calendar quarter about the operations carried out by relevant persons if
their amount in each calendar quarter exceeds euro 35,000 (the limit set by
the Rules of the Italian Stock Exchange is euro 50,000) while the market has
to be informed without delay of transactions if their amount exceeds euro
175,000 in each six-month calendar period (the limit set by the Rules of the
Italian Stock Exchange is euro 250,000). The stock options exercise in
connection with stock option plans and the sale of shares acquired in
connection with stock option and stock grant plans are to be taken into
account with reference to the above mentioned limits.

The Code on Internal Dealing prevents relevant persons from carrying
out transactions on the financial instruments issued by Eni SpA and its
listed subsidiaries in the fifteen working days preceding the meetings of
the Board of Directors of Eni SpA convened to review the financial
statements and the preliminary results as well as, if not discussed in such
meetings, the meeting of the Board resolving on the dividend proposal to the
Shareholders Meeting. This prohibition does not apply to the exercise of
stock options in connection with stock option and stock grant plans,
provided that shares acquired pursuant to such exchange are not sold in said
periods.




Employees

At December 31, 2002, Enis employees were 80,655 with an increase of
9,707 employees over December 31, 2001 (up 13.7%), as a result of the 10,403
persons increase outside Italy (up 39.2%) offset in part by the 1,610
persons decrease in Italy (down 1.6%).

Employees hired in Italy were 43,682 (54% of all Group employees), of
which 41,211 were working in Italy, 2,103 outside Italy and 368 on board of
vessels. As compared to 2001, the 696 unit decline in employees hired in
Italy was due to the balance of persons leaving their job and new hiring
(1,308) offset in part by the inclusion in consolidation of Polimeri Europa.

The process of efficiency improvement continued with the dismissal of
3,447 persons, of these 2,932 had an open-end contract and 515 a fixed-term
contract, and with the hiring of 2,139 employees, of which 936 persons with
a fixed-term contract and 1,203 with open-end contracts. Among the newly
hired person 599 persons had university qualifications (356 are engineers)
and 487 persons had a high school degree, working in operating jobs in order
to improve the qualitative mix of production units.

Employees hired and working outside Italy at December 31, 2002 were
36,973 (46% of all Group employees), with a 10,403 persons increase due
mainly to the acquisition of Saipem SA (formerly Bouygues Offshore), the
consolidation of foreign subsidiaries of Polimeri Europa and the hiring of
personnel on fixed-term contracts for Saipem in Kazakhstan.

At
December 31, 2002, Enis employees were 80,655 an increase of 9,707
employees over December 31, 2001, up 13.7%.

|                         |  |         |        |      |  |      |        |  |  |  |        | 
|------------------------ |  | ------- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|Employees at year end    |  | 2000    |        | 2001 |  | 2002
|                         |  |         |        |      |  |     
|                         |  | (units)
|Exploration & Production |  |         | 7,741  |      |  |      | 7,533  |  |  |  | 7,715  | 
|Gas & Power              |  |         | 16,100 |      |  |      | 14,286 |  |  |  | 13,317 | 
|Refining & Marketing     |  |         | 16,130 |      |  |      | 15,172 |  |  |  | 13,757 | 





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|                                  |  |         |        |      |  |      |        |  |  |  |        | 
|--------------------------------- |  | ------- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|Employees at year end             |  | 2000    |        | 2001 |  | 2002
|                                  |  |         |        |      |  |     
|                                  |  | (units)
|Petrochemicals                    |  |         | 12,857 |      |  |      | 11,022 |  |  |  | 11,691 | 
|Engineering and Oilfield Services |  |         | 13,217 |      |  |      | 18,632 |  |  |  | 29,091 | 
|Other activities                  |  |         | 3,924  |      |  |      | 4,303  |  |  |  | 5,084  | 
|                                  |  |         |        |      |  |      |        |  |  |  |        | 
|                                  |  |         | 69,969 |      |  |      | 70,948 |  |  |  | 80,655 | 
|                                  |  |         |        |      |  |      |        |  |  |  |        | 

The table below sets forth Enis employees at December 31, 2002 in
Italy and outside Italy:

|                                  |  |               |  |         |              |      |  |      |              |  |  |  |              | 
|--------------------------------- |  | ------------- |  | ------- | ------------ | ---- |  | ---- | ------------ |  |  |  | ------------ | 
|                                  |  |               |  | 2000    |              | 2001 |  | 2002
|                                  |  |               |  |         |              |      |  |     
|                                  |  |               |  | (units)
|Exploration & Production          |  | Italy         |  |         | 5,014        |      |  |      | 4,495        |  |  |  | 4,617        | 
|                                  |  | Outside Italy |  |         | 2,727        |      |  |      | 3,038        |  |  |  | 3,098        | 
|                                  |  |               |  |         |              |      |  |      |              |  |  |  |              | 
|                                  |  |               |  |         | 7,741        |      |  |      | 7,533        |  |  |  | 7,715        | 
|Gas & Power                       |  | Italy         |  |         | 13,175       |      |  |      | 11,704       |  |  |  | 10,852       | 
|                                  |  | Outside Italy |  |         | 2,925        |      |  |      | 2,582        |  |  |  | 2,465        | 
|                                  |  |               |  |         |              |      |  |      |              |  |  |  |              | 
|Refining & Marketing              |  | Italy         |  |         | 16,100
9,760 |      |  |      | 14,286
8,638 |  |  |  | 13,317
7,332 | 
|                                  |  | Outside Italy |  |         | 6,370        |      |  |      | 6,534        |  |  |  | 6,425        | 
|                                  |  |               |  |         |              |      |  |      |              |  |  |  |              | 
|                                  |  |               |  |         | 16,130       |      |  |      | 15,172       |  |  |  | 13,757       | 
|Petrochemicals                    |  | Italy         |  |         | 11,573       |      |  |      | 9,952        |  |  |  | 10,172       | 
|                                  |  | Outside Italy |  |         | 1,284        |      |  |      | 1,070        |  |  |  | 1,519        | 
|                                  |  |               |  |         |              |      |  |      |              |  |  |  |              | 
|                                  |  |               |  |         | 12,857       |      |  |      | 11,022       |  |  |  | 11,691       | 
|Oilfield Services and Engineering |  |               |  |         |              |      |  |      |              |  |  |  |              | 
|Oilfield Services                 |  | Italy         |  |         | 2,326        |      |  |      | 2,279        |  |  |  | 2,255        | 
|                                  |  | Outside Italy |  |         | 7,560        |      |  |      | 12,881       |  |  |  | 22,770       | 
|                                  |  |               |  |         |              |      |  |      |              |  |  |  |              | 
|                                  |  |               |  |         | 9,886        |      |  |      | 15,160       |  |  |  | 25,025       | 
|Engineering                       |  | Italy         |  |         | 3,001        |      |  |      | 3,055        |  |  |  | 3,433        | 
|                                  |  | Outside Italy |  |         | 330          |      |  |      | 417          |  |  |  | 633          | 
|                                  |  |               |  |         |              |      |  |      |              |  |  |  |              | 
|                                  |  |               |  |         | 3,331        |      |  |      | 3,472        |  |  |  | 4,066        | 
|Other activities                  |  | Italy         |  |         | 3,841        |      |  |      | 4,255        |  |  |  | 5,021        | 
|                                  |  | Outside Italy |  |         | 83           |      |  |      | 48           |  |  |  | 63           | 
|                                  |  |               |  |         |              |      |  |      |              |  |  |  |              | 
|                                  |  |               |  |         | 3,924        |      |  |      | 4,303        |  |  |  | 5,084        | 
|                                  |  |               |  |         |              |      |  |      |              |  |  |  |              | 
|Total                             |  | Italy         |  |         | 48,690       |      |  |      | 44,378       |  |  |  | 43,682       | 
|Total                             |  | Outside Italy |  |         | 21,279       |      |  |      | 26,570       |  |  |  | 36,973       | 
|                                  |  |               |  |         |              |      |  |      |              |  |  |  |              | 
|                                  |  |               |  |         | 69,969       |      |  |      | 70,948       |  |  |  | 80,655       | 
|                                  |  |               |  |         |              |      |  |      |              |  |  |  |              | 
|of which senior managers          |  |               |  |         | 1,683        |      |  |      | 1,438        |  |  |  | 1,537        | 





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Share Ownership

At April 30, 2003, the total number of Shares owned by the directors,
statutory auditors and executive officers of Eni SpA as a group was 215,484,
equal to approximately 0.005% of Enis share capital outstanding at December
31, 2002.




Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS




Major Shareholders

At April 30, 2003, the Ministry of Economy and Finance was the only
person known by Eni to own more than 5% of any class of Eni SpAs voting
securities. At such date, the total amount of Eni SpAs voting securities
owned by the Ministry was:

|                |  |           |               |            |  |  |       |  
|--------------- |  | --------- | ------------- | ---------- |  |  | ----- | -
|                |  | Number    |               |            |  | 
|                |  | of Shares |               | Percent of
|Title of Class  |  | Owned     |               | Class     
|                |  |           |               |           
|Ordinary Shares |  |           | 1,213,731,615 |            |  |  | 30.33 | %

The Ministry of Economy and Finance, in agreement with the Ministry of
Productive Activities, retains certain special powers over Eni. See «Item 6.
Directors, Senior Managers and EmployeesBoard PracticesBoard
CommitteesSpecial Powers of the StateGolden Share» and «Item 10.
Additional InformationMemorandum and Articles of Association Limitations
on Voting and ShareholdingsSpecial Powers of the State».




Related Party Transactions

In the ordinary course of its business, Eni enters into transactions
concerning the exchange of goods, provision of services and financing with
non consolidated subsidiaries and affiliates as well other companies owned
or controlled by the Italian Government. All such transactions are conducted
on an arms length basis and in the interest of Eni companies.

Amounts and types of trade and financial transactions with related
parties are described in Note 27 to the Financial Statements.




Item 8. FINANCIAL INFORMATION




Consolidated Statements and Other Financial Information

See Item 18Financial Statements.

Disclosure of Legal Proceedings





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For a description of legal proceedings in which Eni is involved and
which may affect Enis financial position or results of operations see Note
23 to the Financial Statements. Below is a description of previously
reported litigation that has been disposed of in the course of 2002.

On August 28, 2000, Enirisorse SpA (in liquidation) now Singea SpA (in
liquidation) and Zincocalabra SpA signed an agreement for the sale of the
whole share capital of Pertusola SudSpA (in liquidation), now merged in
Singea SpA in liquidation. This agreement was filed with the European
Commission within the procedure for monitoring the liquidation of Singeas
assets in the non ferrous metallurgy business, as per decision 98/212/CE of
April 16, 1997. With a letter dated September 26, 2000, the Commission
requested information from the Italian Government in order to appraise the
compatibility of this agreement with said decision. On February 13, 2001,
the Commission informed the Italian Government that it started the procedure
as per article 88 of the Union Treaty for alleged state aid in favor of
Pertusola Sud. This procedure has been started in the context of the above
mentioned decision for the following reasons: (i) aid given to Pertusola Sud
in relation to the Commissions decision could have been given unlawfully;
(ii) funds provided to Pertusola Sud in liquidation by Singea could be
considered as state aid, and in this case are not compatible with the
European single market concept; (iii) funds that Singea should provide to
Pertusola Sud for environmental charges may represent state aid , and if
this is the case they are not compatible with the single market concept. On
April 4, 2001, the Italian Government presented its report to
the Commission informing that Zincocalabra SpA was no longer interested
in an investment that seemed to require quite a long time to be completed
due to this procedure. In May 2001 The Commission started a proceeding
against the Italian Government, which in turn sent to Singea the
Commissions report in order to reply. In October 2001 the Italian
Government presented its observations to the Commission. With a decision of
the Commission dated November 13, 2002 the proceeding was dismissed.

In August 2000, the Ministry of Finance of Kazakhstan sent Agip
Karachaganak a formal assessment claiming that the company understated its
income for 1998 and 1999 by euro 52 million. The amount relates to the non
deductibility of overhead costs considered as cost recovery and to a
different criterion for the deduction of some other costs. In the first half
of 2001 Eni signed a protocol with Kazakh tax authorities which reduces the
disputed amount to euro 11 million. Legal proceedings related to Enis
counterclaim are however pending. No reserve has been set aside in Enis
consolidated financial statements for 2002, as the amount in question is not
material.

On March 6, 2003 Eni and EniChem SpA accepted the settlement proposal
presented by Edison SpA for the closing of an arbitration proceeding
initiated by Eni and EniChem SpA in 1992 in relation to guarantees given by
Montedison SpA and its subsidiaries in connection with the establishment of
Enimont. With this settlement Edison SpA accepted to pay EniChem euro 200
million to be paid in four instalments of euro 50 million each, the first
one paid on March 6, 2003 and the remaining to be paid each following year
with interests accrued; this delayed payment is supported by bank guarantees
payable on first request. This settlement concerns expense paid or accrued
by EniChem SpA in previous years. It does not include EniChems claim to be
indemnified by Edison SpA for any expense related to damage made to third
parties by the operation of plants and facilities before Montedisons
conferral, even if occurred later. These are environmental damages claimed
by the State and related to the Mantova site and any damage that could be
claimed by the State and/or other third parties as alleged consequence of
specific environmental damage situations in the Brindisi and Priolo sites.
The settlement of any dispute is entrusted to ordinary courts. In the first
quarter of 2003 the settlement determined extraordinary income of euro 200
million.

Dividends

Enis dividend policy in future periods, and the amount of future
dividends, will depend upon a number of factors including, but not limited
to, Enis capital expenditure and development plans, level of profitability
and ratio of debt to equity and the «Risk Factors» set out in Item 3.
However, consistent with such factors, the Board of Directors expects to
recommend to future meetings of shareholders a progressive increase in
dividend pay-out in line with the dividend policy followed by other major oil
and gas companies traded on international equity markets. Eni SpAs net
income and, therefore, the amounts available for payment of dividends
therefrom will also depend on the level of dividends received from Enis
subsidiaries. In 2002, the euro 0.75 dividend per share proposed by Enis
Board of Directors for fiscal year 2002 maintained the level of the 2001





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dividend while increasing the pay-out ratio to 62%. This dividend proposal
was approved by the general shareholders meeting on May 30, 2003.




Significant Changes

See «Item 5Background and Recent Developments» for a discussion of
Enis results of operations in the first quarter of 2003. No significant
change occurred after March 31, 2003.




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 of the Mercato Telematico
Azionarioor MTA(«Telematico»), the Italian screen-based dealer market,
which is the principal trading market for Italian shares. The Blue Chips
segment of Telematico includes shares of the companies whose market capitalization amounts to more than euro 800
million. American Depository Shares («ADSs»), each representing five Shares,
are listed on the New York Stock Exchange.





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The table below sets forth the reported high and low reference prices
of Shares on Telematico and of ADSs on the New York Stock Exchange,
respectively. See «Item 3Key InformationExchange Rates» regarding
applicable exchange rates during the periods indicated below.

|                                  |  |                  |        |                |  |      |        |     |  |          |        |  |  |  |        | 
|--------------------------------- |  | ---------------- | ------ | -------------- |  | ---- | ------ | --- |  | -------- | ------ |  |  |  | ------ | 
|                                  |  |                  |        |                |  |      |        |     |  | New York
|                                  |  | Telematico       |        | Stock Exchange
|                                  |  |                  |        |               
|                                  |  | High             |        | Low            |  | High |        | Low
|                                  |  |                  |        |                |  |      |        |    
|                                  |  | (euro per Share) |        | (US$per ADS)  
|1998                              |  |                  | 13.799 |                |  |      | 9.195  |     |  |          | 73.500 |  |  |  | 50.500 | 
|1999                              |  |                  | 12.608 |                |  |      | 10.184 |     |  |          | 69.000 |  |  |  | 52.375 | 
|2000                              |  |                  | 14.496 |                |  |      | 9.536  |     |  |          | 64.875 |  |  |  | 46.562 | 
|2001                              |  |                  | 15.598 |                |  |      | 11.564 |     |  |          | 69.700 |  |  |  | 52.500 | 
|2002                              |  |                  | 17.145 |                |  |      | 12.938 |     |  |          | 82.110 |  |  |  | 60.900 | 
|                                  |  |                  |        |                |  |      |        |     |  |          |        |  |  |  |        | 
|2001                              |  |                  |        |                |  |      |        |     |  |          |        |  |  |  |        | 
|First quarter                     |  |                  | 14.778 |                |  |      | 13.266 |     |  |          | 67.730 |  |  |  | 60.420 | 
|Second quarter                    |  |                  | 15.598 |                |  |      | 14.414 |     |  |          | 69.700 |  |  |  | 61.700 | 
|Third quarter                     |  |                  | 14.807 |                |  |      | 11.564 |     |  |          | 67.740 |  |  |  | 52.500 | 
|Fourth quarter                    |  |                  | 14.732 |                |  |      | 12.701 |     |  |          | 66.200 |  |  |  | 56.550 | 
|                                  |  |                  |        |                |  |      |        |     |  |          |        |  |  |  |        | 
|2002                              |  |                  |        |                |  |      |        |     |  |          |        |  |  |  |        | 
|First quarter                     |  |                  | 16.856 |                |  |      | 13.536 |     |  |          | 74.150 |  |  |  | 60.900 | 
|Second quarter                    |  |                  | 17.145 |                |  |      | 15.428 |     |  |          | 80.000 |  |  |  | 71.550 | 
|Third quarter                     |  |                  | 16.775 |                |  |      | 12.938 |     |  |          | 82.110 |  |  |  | 64.060 | 
|Fourth quarter                    |  |                  | 15.289 |                |  |      | 13.256 |     |  |          | 78.700 |  |  |  | 65.550 | 
|                                  |  |                  |        |                |  |      |        |     |  |          |        |  |  |  |        | 
|2003                              |  |                  |        |                |  |      |        |     |  |          |        |  |  |  |        | 
|First quarter                     |  |                  | 15.746 |                |  |      | 11.881 |     |  |          | 82.080 |  |  |  | 66.150 | 
|December 2002                     |  |                  | 15.289 |                |  |      | 14.026 |     |  |          | 78.700 |  |  |  | 70.720 | 
|January 2003                      |  |                  | 15.746 |                |  |      | 13.093 |     |  |          | 82.080 |  |  |  | 70.640 | 
|February 2003                     |  |                  | 14.185 |                |  |      | 13.244 |     |  |          | 75.600 |  |  |  | 71.500 | 
|March 2003                        |  |                  | 13.480 |                |  |      | 11.881 |     |  |          | 73.950 |  |  |  | 66.150 | 
|April 2003                        |  |                  | 13.654 |                |  |      | 12.490 |     |  |          | 73.800 |  |  |  | 68.100 | 
|May 2003                          |  |                  | 13.831 |                |  |      | 12.878 |     |  |          | 81.240 |  |  |  | 70.800 | 
|June 2003 (through June 16, 2003) |  |                  | 14.284 |                |  |      | 13.723 |     |  |          | 84.850 |  |  |  | 80.400 | 





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Morgan Guaranty Trust Company of New York (the «Depositary») functions
as Enis depositary bank issuing American Depositary Receipts («ADRs»)
pursuant to the Deposit Agreement among Eni, the depositary and the
beneficial owners («Beneficial Owners») and registered holders form time to
time of ADRs issued thereunder.

At June 16, 2003 there were 1,287,711 ADRs outstanding held by 38
holders of record (including The Depository Trust Company) in the United
States of America, 37 of which are U.S. residents. Since certain of such
ADRs are held by nominees, the number of holders may not be representative
of the number of Beneficial Owners in the United States or elsewhere.

The Shares are included in the MIB 30, the index of the 30 largest
companies by capitalization and initially listed on Telematico. The MIB 30
is the principal indicator used to track the performance of the Italian
stock market, and is the basis for the FIB 30 index of future contracts, as
well as the MIBO 30 option contracts traded in the Italian Derivatives
Market («IDEM»). The Shares are the largest component of the MIB 30, with a
weighting of approximately 15.1%, as established by Borsa Italiana SpA
(«Borsa Italiana») after its review of the composition of the MIB 30 on
March 24, 2003. In addition, options on the Shares are traded on IDEM. IDEM
facilitates the trading of call and put options on securities issued by
Italian companies that meet certain required capitalization and liquidity
thresholds.

Since January 14, 2002 the rule on the minimum lot of shares for
transactions on the Telematico has been eliminated. Outside Telematico,
block trading is permitted for orders that meet certain minimum size
requirements and must be notified to Consob and Borsa Italiana. Starting
from May 15, 2000 shares have been also trading on a special market, named
After Hours trading market or TAH («After Hours»), after the closure of the
day time of Telematico under special rules.




Markets

Telematico is organized and administered by Borsa Italiana subject to
the supervision and control of the Commissione Nazionale per le Società e la
Borsa(the National Commission for Companies and the Stock Exchange or
«Consob»), the public authority charged, inter alia, with regulating
investment companies, securities markets and public offerings of securities
in Italy to ensure the transparency and regularity of the dealings and
protect investors. Borsa Italiana is a joint stock company (Società per
Azioni) that was established to manage the Italian regulated financial
markets (including Telematico) as part of the implementation in Italy of the
EU Investment Services Directive, Borsa Italiana and has issued rules
governing the organization and the administration of the markets it
regulates, which are Telematico, Nuovo Mercato (high growth companies),
After Hours, Mercato Ristretto (over-the-counter), IDEM (index and stock
derivatives market), MIF (interest rate derivatives market), MOT and Euro
Mot (bond markets), MCW (covered warrants) and MPR (traditional options on
equities), as well as the admission to listing on and trading in these
markets. Since March 28, 2000, a three-day rolling cash settlement has been
applied to all trades of equity security in Italy, instead of the preceding
five-day settlement.

Any person, through an authorized intermediary, may purchase or sell
listed securities following (i) in the case of sales, deposit of the
securities or 100% of their value in cash, and (ii) in the case of
purchases, deposit of 100% of their value in cash. No «closing price» is reported for the
electronic trading system, but an «official price» calculated for each
security as a weighted average of all trades effected during the trading day
and a «reference price» calculated for each security on the basis of a
closing bid or, when such closing bid does not reach 10% of volumes traded
during the day, as a weighted average of the last 10% of the trades effected
during such day, are reported daily.

If the opening price of a security (established each trading day prior
to the commencement of trading based on bids received) differs by more than
10% (or such other amount established by Borsa Italiana) from the previous
days reference price, trading in that security will not be permitted until
Borsa Italiana authorizes the trading. If in the course of a trading day the
price of a security fluctuates by more than 5% from the last reported sale
price (or 10% from the previous days reference price), trading in that
security will be





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automatically suspended for a certain period of time. In the event of
such a suspension, effect is not given to trades agreed but not confirmed
before the suspension.

Effective July 1, 1998, the Italian financial markets are primarily
regulated by Legislative Decree No. 58 of February 24, 1998 («Decree No. 58»), which consolidated the previous
regulation primarily by restating the provisions of Legislative Decree No.
415 of July 23, 1996.

Decree No. 58 provides that trading of equity securities, as well as
any other investment services, may now be carried out on behalf of the
public by società di intermediazione mobiliare(securities dealing firms or
«SIMs»), which are authorized intermediaries, authorized banks and certain
types of finance companies. In addition, banks and investment firms
organized in a member nation of the EU are permitted to operate in Italy
provided that the intent of the bank or investment firm to operate in Italy
is communicated to Consob and the Bank of Italy by the competent authority
of the member state. Pursuant to Decree No. 58 the Bank of Italy, in
agreement with Consob, is responsible for regulating clearance and
settlement. Non-EU banks and non-EU investment firms may operate in Italy
subject to the specific authorization of Consob and the Bank of Italy.




Item 10. ADDITIONAL INFORMATION




Memorandum and Articles of Association

Eni is incorporated under the name «Eni SpA» resulting from the
transformation of Ente Nazionale Idrocarburi, a public law agency,
established by Law 136 of February 10, 1953. 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 compliance with
concessions required 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 Decree No. 58.

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.

Directors

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





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and achievement of the company objects, except for the acts that the
law or Enis by-laws reserve to the shareholders meeting.

For a complete description of the powers of the Board, the Managing
Director and the Chairman, appointments, role of the Board and rules and
procedures of the meetings of the Board see «Item 6.Board Practices».

The Board of Directors and the Managing Director 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 Managing Director report to
the Board of Statutory Auditors on operations entailing potential conflicts
of interest. Article 2391 of the Italian Civil Code applies in the case of
conflicts of interest.

On May 30, 2002, Enis ordinary Shareholders Meeting resolved to
delegate authority to the Board of Directors, pursuant to Article 2420-ter
of the Civil Code, to issue bonds, included bonds convertible into shares
issued by Eni SpA controlled subsidiaries and/or warrant bonds to purchase
or subscribe shares of Eni SpA controlled subsidiaries, up to the amount
equivalent to euro 4 billion for a five-year period commencing on May 30,
2002, in one or more times and in one or more tranches. The Board of
Directors is empowered to adopt any act, including but not limited to the
fixing of yield, duration and terms of the issues.

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.

There are no provisions as to retirement based on age-limit
requirements, or requirement of share ownership for a directors
qualification in Enis by-laws.

Limitations on Voting and Shareholdings

General

There are no limitations imposed by Italian law or by the by-laws of
Eni SpA on the rights of non-residents of Italy or foreign persons to hold
or vote the shares other than the limitations described below (which are
equally applicable to residents and non-residents of Italy).

The by-laws provide that no person, in any capacity, may own shares
amounting to more than 3% of Eni SpAs voting share capital. Such maximum
limit is calculated taking into account the aggregate shareholding of a
controlling entity, whether an individual or a legal entity (each a
«person»); its directly or indirectly controlled entities, as well as
entities controlled by the same controlling entity; affiliated entities, as
well as relatives within the second degree by blood or marriage (except for
a legally separated spouse). Affiliation exists as set forth in applicable
Italian legislation, as well as between entities that, directly or
indirectly, through controlled entities (other than those managing
investment funds) are bound, even with third parties, by agreements relating
to the exercise of voting rights or the transfer of shares or interests in
third-party companies or other agreements relating to third-party companies
as specified by applicable Italian legislation if such agreements relate to
at least 10% of the voting share capital of a listed company or 20% of the
voting share capital of a non-listed company. For purposes of calculating
the 3% limit, shares held through a fiduciary nominee or intermediary are
taken into account.

Any voting rights attributable to shares held or controlled in excess
of such 3% limit cannot be exercised, and the voting rights of each entity
to whom such limit on shareholding applies are reduced proportionately,
unless otherwise jointly disposed of in advance by the parties involved. In
the event that shares held or controlled in excess of the maximum limit are
voted, any shareholders resolution adopted pursuant to such a vote
may be challenged if the majority required to approve such resolution
would not have been reached without the vote of the Shares exceeding such
maximum limit. Shares not entitled to be voted are nevertheless counted for
the purpose of determining the quorum at a shareholders meeting.





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##### Table of Contents



Under the provisions of Law No. 602 of November 27, 1996, the 3% limit
does not apply to shareholdings in Eni SpA held by the Ministry of Economy and Finance; state-owned
entities controlled by other entities or by the State. The 3% limit does not
apply, in the event that such limit is exceeded as a result of the
acquisitions of shares pursuant to a mandatory tender offer (offerta
pubblica di acquisto totalitaria) or a preventative tender offer (offerta
pubblica di acquisto preventiva), each as provided for by Decree No. 58,
regardless of whether a majority of the voting rights is acquired thereby.
The approval of the Ministers as described below in «Special Powers of the
State» is however requested for Shares acquired pursuant to tender offers.

For other limitations that may affect voting rights, see «Reporting
Requirements and Restrictions on Acquisitions of Shares».

Special Powers of the State

Under Italian laws the State, acting through the Minister of Economy
and Finance, in agreement with the Minister of Productive Activities
(together with the Minister of Economy and Finance, the «Ministers»), holds
certain special powers in connection with any transfer of a controlling
interest in certain State-owned companies operating in public service
sectors, including Eni SpA. The law places no limit on the duration of such
special powers. Such powers are to be exercised in accordance with EU
principles. Specific guidelines have been introduced by the Decree of the
President of the Council of Ministers (DPCM), May 4, 1999, which sets forth
the conditions in which the Ministers can exercise their special veto over a
companys strategic decisions. According to article 66 of Law 488, dated
December 23, 1999, such guidelines have been confirmed by the DPCM dated
February 11, 2000.

The by-laws acknowledge that the Ministers possess the following
special powers:



| |  |  | Approval of Material Acquisitions of Shares.The Ministers have
the authority to approve or disapprove the acquisition of «material
interests» in the share capital of Eni SpA, defined as interests
representing at least 3% of the share capital having the right to
vote at an ordinary shareholders meeting. See
«General». Approval or disapproval must be given within 60 days from
the date of the notice to be filed by the Board of Directors at the
time a request is made for registration in the register of shareholders
by such a purchaser of a material interest. Until the approval is
granted or the 60-day period has expired without the approval having
been granted, the purchaser may not exercise the voting rights or any
rights other than economic rights pertaining to the Shares constituting
the material interest. In the event the approval is denied by the
Ministers or the 60-day period has expired without the approval having
been granted, the purchaser must sell the Shares constituting the
material interest within one year.
In the event of failure to comply with such requirement, the Ministry
of Economy and Finance shall petition the courts to order the forced
sale of the shares constituting such a material interest. With
reference to the ADR program established in respect of the shares, the
Ministers approved the acquisition of 3% or more of the voting share
capital of Eni SpA by the Depositary, considering the Depositary the
record holder and not the Beneficial Owner of Shares, represented by
ADSs and evidenced by ADRs. Each of the holders and Beneficial Owners
of ADSs are subject to the 3% limit.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Approval of Material Shareholders Agreements.The Ministers
have the authority to approve or disapprove shareholders agreements
or other arrangements involving 3% or more of the share capital of
Eni SpA having the right to vote at an ordinary shareholders
meeting. Such approval or disapproval must be given within 60 days
from the date of the notice to be provided to the Minister of
Economy and Finance by Consob following to the notifications of
shareholders agreements or other arrangements to Consob. Until such
approval is granted or the 60-day period has expired without the
approval having been granted, the shareholders participating in such
agreement or other arrangement may not exercise the voting rights or
any rights other than economic rights pertaining to the Shares
subject to such agreement or other arrangement. In the event the
approval is denied by the Ministers or the 60-day period has expired
without the approval having been granted, the agreement is
ineffective. In accordance with Italian laws, if the conduct of
shareholders during a shareholders meeting supports an inference
that there exists among such shareholders a shareholders agreement
or other arrangement to be notified to Consob and such agreement or
other arrangement has not been notified, then any resolutions
adopted at such meeting with the decisive vote of such shareholders
may be challenged and voided.                                                                                                                                                                                                                        





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| |  |  | Board of Directors and Board of Statutory Auditors Members.The
Ministers have the power to
appoint one Director to the Board of Directors and the Chairman of the
Board of Statutory Auditors. At Enis Ordinary Shareholders Meeting
held on May 30, 2002 which, among other things, appointed the new Board
of Directors, the Ministers decided not to exercise their power to
appoint a member of the Board. Therefore the number of members of the
Board was set at eight versus the preceding
nine-member Board.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Veto Power over Major Changes.The Ministers have veto power
with respect to shareholders resolutions to dissolve Eni SpA, to
cause a transfer, merger or demerger of Eni SpA, to transfer the
registered office of Eni SpA outside Italy, to change the corporate
purposes or to amend or modify any of the special powers described
in this section.                                                                                                                                                                 

With a decision published on May 23, 2000, the European Court of
Justice declared that Italy, in granting the Minister of Economy and Finance
«special powers» and introducing them in the by-laws of some privatized
companies, violated the obligations imposed by Articles 43 (former article
52, right of establishment), 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 Italian
legislation in force at the expiration of the terms defined in the European
Commissionss informed opinion, therefore it did not take into account DPCM
of May 4, 1999, article 66 of Law No. 488/99 and DPCM of February 11, 2000
which included provisions limiting those «special powers» of the Minister of
Economy and Finance. These are currently being analyzed by the European
Commission.

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 be held by any
shareholder must provide for the election of directors and statutory
auditors through the voto di lista(voting list) system, to ensure that
minority shareholders of a company are represented on its board of directors
and board of statutory auditors. Accordingly, Enis by-laws require that the
members of the Board of Directors and the Board of Statutory Auditors of Eni
SpA not directly appointed by the Ministers (see «Special Powers of the
State») be elected on the basis of candidate lists presented either by the
Board of Directors or by one or more shareholders (including the Minister of
Economy and Finance) representing in the aggregate at least 1% of the share
capital of Eni SpA having the right to vote at ordinary shareholders
meetings. Such candidate lists must be deposited at the registered office of
Eni SpA and published in at least three Italian newspapers having general
circulation in Italy (two of which must be business dailies). Publication of
the candidate list presented by the Board of Directors shall occur at least
20 days before the first call (as defined below) of the Shareholders
Meeting. Such term is reduced to 10 days in the case of candidate lists
proposed by shareholders. Each shareholder may present or participate in the
presentation of only one candidate list and each candidate may appear on
only one list.

Under Enis by-laws, the election of the members of the Board of
Directors will proceed as follows:



| | 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; to this purpose the votes obtained by each
candidate list will be divided by one or two or three 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 numerical order in which they
appear in each list. 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.

The election of members of the Board of Statutory Auditors is governed
by the same rules, except that the Board of Directors may not present a
candidate list to the Board of Statutory Auditors, and that, pursuant to
Decree No. 58, Enis by-laws provides that, in the event of a Board of
Statutory Auditors formed by more than three Auditors, at least two of them
be appointed by minority shareholders.





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Several provisions of Decree No. 58 are intended to increase the
protection of minority shareholders. In particular, (i) shareholders
meetings must be called also on request of holders of at least 10% of the
outstanding Shares (the Board of Directors, however, may refuse to call the
meeting when conflicting with the companys interests); (ii) at an
extraordinary shareholders meeting resolutions are passed with the approval
of at least two- thirds of the shares represented at the meeting, whether on
first, second or third call; (iii) shareholders actions against the Board
of Directors, the Statutory Auditors and the Managing Director may be
promoted by shareholders holding at least 5% of the outstanding shares
registered in the Companys Register of Shareholders since, at least, the
last six months; and (iv) collective shareholders complaints to the Board
of Statutory Auditors may be promoted by shareholders holding at least 2% of
the outstanding shares. The companys by-laws may further lower the
thresholds in (iii) and (iv) and increase the voting quorums under (ii). In
addition, Decree No. 58
modifies the responsibilities of Statutory Auditors. Effective from
July 1, 1998, accounting control functions are under the exclusive
competence of companys independent auditors, and the companys Board of
Statutory Auditors no longer carries out such functions.

Reporting Requirements and Restrictions on Acquisitions of Shares

Under Italian securities laws and Consob Regulation, any direct or
indirect participation in excess of 2%, 5%, 7.5%, 10% and subsequent
multiples of 5% in the voting shares of a listed company must be notified to
such
company and to Consob, within five open market days from the
effectiveness of the transaction triggering such
obligation to notify.

The obligation to notify also applies to any direct or indirect
participation owned through ADSs.

For listed companies, whose by-laws impose a maximum limit on the
number of shares that may be held by
any shareholder, Consob is entitled to fix different relevant
thresholds by decree.

Further, the reduction of the foregoing interest below the relevant
thresholds must be notified within the same terms.

Shares held in excess of any such threshold cannot be voted in the
event the above notices have not been provided. Any resolution violation of
such limitation can be voided if challenged in court by shareholders and
Consob, if the resolution would have not be adopted without the consent of
the shares in question.

The relevant thresholds noted above shall be calculated including (i)
shares registered in the name of the relevant reporting person whose
underlying voting rights are attributed to third parties, and viceversa; and
(ii) shares held through third parties and shares whose voting rights
are attributable to such third parties, excluding shares registered in the
name of, or endorsed to, fiduciaries as well as shares whose voting rights
are attributed to intermediaries for purposes of the management of mutual or
individual savings.

Furthermore, calculation of 5%, 10%, 25%, 50% and 75% thresholds shall
also take into account shares outstanding which the relevant reporting
person is entitled to purchase or to sell directly or through third parties.
Shares to be purchased through the exercise of conversion rights or warrants
shall be calculated only in the event the acquisition can take place within
a sixty days period.

In the event the same relevant participation is directly or indirectly
held by two or more entities, then obligation to notify may be satisfied by
one of such person, provided that completeness of information is guaranteed.

Any participation exceeding 10% of the voting capital of an unlisted
company, including any foreign company, owned by a listed company must be
notified to such non-listed company within seven days from reaching such
threshold. Similarly, the non-listed company must be notified about any
subsequent reduction of such participation below the 10% threshold.

Listed companies are also required to notify Consob of their
participation exceeding 10% of the voting capital of non-listed companies
owned at the end of the first six months and of the full year. Such
notification is due within 30 days from the date of approval of the Annual
Report and the Report on the First Six Months, respectively.





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In the event the same relevant participation is directly or indirectly
held by two or more entities, then the obligation to notify may be satisfied
by one of such entities, provided that completeness of information is
guaranteed.

The 10% threshold shall be calculated including (i) shares registered
in the name of the relevant listed company, even if voting rights are
attributable to third parties; (ii) shares whose voting rights are
attributable to the relevant listed company, in the event such voting rights
entitle such party to exercise a dominant or material influence at the
ordinary shareholders meeting; and (iii) shares registered in the name of
third parties and shares whose voting rights are attributable to third
parties.

In addition to the rules of article 2359 bis of the Italian civil code,
governing the acquisition of shares of the parent company by a controlled
subsidiary, Decree No. 58/98 regulates additional cross-ownership matters as
follows.

Cross-ownership between listed and non-listed companies may not exceed
2% of the shares of the listed company or 10% of the shares of the
non-listed company. For calculating these ownership thresholds, the rules
for calculations of interests in listed and non-listed companies apply.

The company ultimately exceeding the 2% or 10% interest in a listed or
unlisted company respectively may not exercise the voting 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 capital of a
listed company, such listed company or any entity controlling such listed
company may not acquire an interest exceeding 2% of the share capital of a
listed company controlled by said holder. If the foregoing limit is
exceeded, the holder who last exceeded the foregoing limit or both the
holders, if it is not possible to ascertain which holder exceeded such limit
last, may not
exercise the voting right related to the shares exceeding the foregoing
limit. Such limits are not applicable in case
of a tender offer for acquiring at least 60% of the ordinary shares of
a listed company. For a description of the limitation on 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, intended to
regulate the exercise of voting rights in
a listed company or in the companies controlling a listed company,
together with any of 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 ten days from
its execution; and (iii) deposited in the Companies Register of the place
where such listed company has its registered office within 15 days from its
execution.

The same requirements also apply to agreements, in whatever form, that
(a) impose an obligation of
prior consultation for the exercise of voting rights in a listed
company and in its controlling companies;
(b) contain undertakings limiting the transferability of shares and
other securities granting rights for the acquisition or subscription of
shares; (c) provide for the acquisition of the shares and securities; and
(d) contemplate or cause the exercise, also in association with other
persons, of dominant influence over the listed company that issued the
shares and its controlled entities.

In the event the obligations set out above are not completely
satisfied, then the agreement is ineffective and the voting rights connected
to the relevant shares may not be exercised. In case of violation of such
limitation imposed on the voting rights, a resolution can be challenged if
such resolution would have 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 agreement by giving a six month
notice.

In accordance with Law No. 287 of October 10, 1990, any acquisition of
sole or joint control over a company that would create or strengthen a
dominant position in the domestic market in a manner that eliminates or
significantly reduces competition is prohibited. However, if the acquiring
party and the company to be acquired operate in more than one EU member
state and together exceed certain revenue thresholds, the antitrust
approval of the acquisition falls within the exclusive jurisdiction of
the European Commission.





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Shareholders Meetings

Registered shareholders are entitled to attend and vote at ordinary and
extraordinary shareholders meetings.
Each holder is entitled to cast one vote for each share held. Votes may
be cast personally, by proxy or by mail, in
accordance with applicable regulations. Meetings are called by Eni
SpAs Board of Directors when required or
deemed necessary, or on request of shareholders representing at least
10% of outstanding shares, who must provide an agenda of the matters to be
discussed to the Chairman of the Board of Directors. Meetings may also be
called, (i) by the Board of Statutory Auditors or (ii) by two Auditors,
provided that such call has been notified in advance.

Ordinary shareholders meetings must be convened at least once a year.
At these ordinary meetings, shareholders approve the financial statements,
resolve upon dividend distribution, if any, may appoint Directors and
Statutory Auditors, determine their remuneration and vote on the liability
of Directors and Statutory Auditors and any business submitted by the
Directors. Extraordinary meetings of shareholders may be called to pass upon
proposed amendments to the by-laws, capital increases, mergers,
consolidations, demerger, issuance of debentures, appointment of liquidators
and similar extraordinary actions. The notice of a shareholders meeting
generally specifies two meeting dates («calls») and because Eni SpA is
listed such notice may specify three calls for extraordinary shareholders
meetings.

The attendance quorum required for a valid shareholder action at an
ordinary meeting on first call is 50% or
more of the outstanding shares, while on second call there is no
attendance quorum requirement. At a duly called ordinary meeting, in both
first and second calls, resolutions may be approved by a simple majority of
the shares represented at the meeting.

The attendance quorum required for a valid shareholder meeting at an
extraordinary meeting is more than 50% of the outstanding shares on first
call, while on second call the attendance quorum is more than 1/3 of the
Shares outstanding and on third call the attendance quorum is more than 1/5
of the shares outstanding. On first, second and third call, resolutions may
be approved by a majority of 2/3 of the Shares represented at the
shareholders meeting.

The financial statements of Eni SpA are submitted for approval to the
annual shareholders meeting, which must be convened within six months after
the end of the financial year. Shareholders are informed of all meetings to
be held by publication of a notice in the Gazzetta Ufficialeand in at least
one Italian newspaper of general circulation at least 30 days before the
date fixed for the meeting. Under current legislation, the reports and
proposals of the Board of Directors to the shareholders meeting for any item
on the agenda of the meeting and the financial statements to be submitted to
the shareholders approval, shall be deposited at the Shareholders disposal
at the Companys registered office and at Borsa Italiana. For a description
on new regulations regarding extraordinary shareholders meeting under
Decree No. 58, see «Minority Protection Provisions».

Admission to the meeting is granted to shareholders who requested the
notification of attendance pursuant to
article 34 of Consob Deliberation No. 11768 of December 23, 1998, at
least five days prior to the date of the meeting on first call. For a
description of the procedures to be followed by Beneficial Owners of ADRs to
attend shareholders meetings and exercise voting rights with respect to
underlying Shares, see «Description of American Depositary ReceiptsVoting
of Deposited Securities». Beneficial Owners of Shares held with Monte Titoli
need only to instruct the relevant banks associated with Monte Titoli which
hold their accounts to procure admission tickets and proxy forms.

Pursuant to Legislative Decree No. 213 dated June 24, 1998, Eni SpAs
shares have been «dematerialized» (the shares are not longer incorporated in
a certificate). Therefore for the exercise of the rights connected to
outstanding Shares not yet dematerialized, Shareholders must first deliver
such shares to a financial intermediary associated with Monte Titoli.

Shareholders may appoint proxies by completing the form attached to the
admission ticket. Directors, Statutory Auditors, auditors and employees of
Eni SpA or of controlled companies, as well as controlled companies, banks
and Monte Titoli may not be appointed proxies. Any one proxy may not
represent more than 200 shareholders of Eni SpA. A proxy may be appointed
for a single meeting, including the first, second and third call thereof.
The by-laws of Eni SpA provide for voting by mail. There are no limitations
arising under





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Italian law or the by-laws of Eni SpA on the right of non-resident or
foreign persons to hold or vote the Shares other than limitations that apply
generally to all shareholders.

Rules relating to proxies are established by Decree No. 58 and the
related Consob Regulation No. 11971 dated May 14, 1999. Accordingly whereby
(i) proxies may be solicited, collected or exercised by banks, investment
firms and shareholders associations, (ii) proxies may be granted only in
respect of shareholders meetings that have been called and (iii) proxies
may be limited to voting on particular proposals. Decree no. 58 also allows
companies to implement vote by mail procedures and establishes new
regulations relating to, among other things, takeovers, cross-shareholdings,
shareholders agreements and saving shares.

Meetings of Enis shareholders are conducted according to the «Eni
SpAs Shareholders Meeting Regulation» as approved by the Ordinary
Shareholders Meeting of Eni on December 4, 1998.

Subscription Rights

New shares may be issued pursuant to a resolution of shareholders at an
extraordinary meeting. Under Italian law, shareholders have a preemptive
right to subscribe for new issues of shares and debentures convertible
into shares in proportion to their respective shareholdings. Subject to
certain conditions principally designated to
prevent dilution of the rights of shareholders, this right may be
waived or limited by resolution taken by an extraordinary shareholders
meeting by the affirmative vote of more than 50% of the shares outstanding.
Such percentage applies to all calls of the meeting.

Liquidation Rights

Under Italian law, subject to the satisfaction of the claims of all
other creditors, shareholders are entitled to a
distribution of the remaining liquidated assets of Eni SpA in
proportion to the nominal value of their shares. Holders of savings shares
and preferred shares, if foreseen by the by-laws, in the event such shares
are issued by
Eni SpA, are entitled to a preferred right to distribution from
liquidation up to their nominal value. Thereafter, if there are surplus
assets, ordinary shareholders rank equally in the distribution of such
assets. Shares rank
pari passuamong ordinary shareholders in a liquidation.

Purchase by Eni SpA of its Own Shares

Pursuant to Italian law, a company may purchase its own shares only
pursuant to a prior authorization by a shareholders meeting, and must pay
for such shares only out of distributable earnings and distributable
reserves as reflected in the most recent financial statements approved by a
shareholders meeting. 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. In order to increase
shareholders value, Enis Ordinary Shareholders Meeting held on May 30,
2003 authorised the continuation of the share buy-back program for a period
of 18 months from such date and up to 400 million ordinary shares, nominal
value euro 1 each, for a total amount not exceeding 5.4 billion euro. The
400 million shares and the 5.4 billion thresholds take into account the
number and amount of Eni shares purchased from the beginning of the buy-back
program until May 29, 2003. At that date, Eni owned 224.2 million shares,
equal to approximately 5.60% of Enis share capital, for a total amount of
euro 3,082 million (corresponding to an average purchase price of euro 13.75
per share). 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.





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The following table summarizes the status of treasury shares held by Eni as of December 31, 2002:

|                        |  |           |       |         |  |              |       |         |  |       |       |  |  |  |      | 
|----------------------- |  | --------- | ----- | ------- |  | ------------ | ----- | ------- |  | ----- | ----- |  |  |  | ---- | 
|                        |  | Numbers   |       | Average |  |              |       |         |  | Share
|                        |  | of shares |       | price   |  | Total price  |       | capital
|Period                  |  | million   |       | euro    |  | million euro |       | %      
|                        |  |           |       |         |  |              |       |        
|2000                    |  |           | 44.4  |         |  |              | 12.92 |         |  |       | 574   |  |  |  | 1.11 | 
|2001                    |  |           | 110.0 |         |  |              | 13.58 |         |  |       | 1,494 |  |  |  | 2.75 | 
|2002                    |  |           | 52.2  |         |  |              | 14.74 |         |  |       | 770   |  |  |  | 1.30 | 
|As of December 31, 2002 |  |           | 206.6 |         |  |              | 13.74 |         |  |       | 2,838 |  |  |  | 5.16 | 




Material Contracts

None.




Exchange Controls

There are no exchange controls in Italy. Residents and non-residents of
Italy may effect any investments, divestments and other transactions that
entail a transfer of assets to or from Italy, subject only to the reporting,
record-keeping and disclosure requirements described below. In particular,
residents of Italy may hold foreign currency and foreign securities of any
kind, within and outside Italy, while non-residents may invest in Italian
securities without restriction and may export from Italy cash, instruments
of credit or payment and securities, whether in foreign currency or euro,
representing interest, dividends, other asset distributions and the proceeds
of dispositions.

Updated reporting and record-keeping requirements are contained in
recent Italian legislation which implements an EU directive regarding the
free movement of capital. Such legislation requires that transfers into or
out of Italy of cash or securities in excess of euro 10 thousand be reported
in writing to the Ufficio Italiano Cambi(the Italian Exchange Office) by
residents or non-residents that effect such transfers directly, or by banks,
securities dealers or Poste Italiane SpA(Italian Mail) that effect such
transactions on their behalf. In addition, banks, securities dealers or
Poste Italiane SpA effecting such transactions on behalf of residents or
non-residents of Italy are required to maintain records of such transactions
for five years, which records may be inspected at any time by Italian tax
and judicial authorities. Non-compliance with these reporting and record-
keeping requirements may result in administrative fines or, in the case of
false reporting and in certain cases of incomplete reporting, criminal
penalties. The Ufficio Italiano Cambi will maintain reports for a period of
ten years and may use them, directly or through other government offices, to
police money laundering, tax evasion and any other crime or violation.




Taxation

The information set forth below is a summary only, and Italian, United
States and other tax laws may change from time to time. Holders of shares
and ADSs should consult with their professional advisors as to the tax
consequences of their ownership and disposition of the shares and ADRs,
including, in particular, the effect of tax laws of any other jurisdiction.

Italian Taxation

The following is a summary of the material Italian tax consequences of
the ownership and disposition of shares or ADRs as at the date hereof and
does not purport to be a complete analysis of all potential tax effects
relevant to the ownership or disposition of shares or ADRs.

Income tax

The Italian tax system entitles domestic shareholders to benefit from a
dividend tax credit equal to 56.25% of the gross amount of the dividends
received. Pursuant to the reduction of income tax rate from 36% to 34%
coming into force from January 1, 2003, pursuant to Law No. 289/2002, the
tax credit will be equal to 51.51% of the gross amount of the dividend
received with respect to distributions deliberated as from January 1,
2002.

Both dividends and their related tax credit are included in the taxable
income and the latter reduces the tax due at the shareholders level.





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The other topics of the tax regime may be summarised as follows:



| |  | in principle, the dividend tax credit may not exceed the amount of
taxes paid at the distributing
company level;                                                                                                                                                                                              
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | in order to permit the transfer to the shareholder of some tax
incentives, avoiding at the same time possible distortions deriving
from the enjoyment of a full dividend tax credit at shareholder level,
a dual basket system has been introduced;                                                           
|
| |  | the distributing company must keep, in its tax return, formal record of
the tax effectively paid
basket A and of taxes deemed only virtually leviedbasket B. This
latter refers to taxes which, although
never paid, are considered under the new Italian provisions as having
been paid for special cases;
|
| |  | the distributing company is required to reduce the amounts recorded for
both baskets, upon dividend distribution, even if the recipient is not
entitled to take advantage from the dividend tax credit (i.e., foreign
shareholders);                                                                          
|
| |  | dividends derived from basket B entitles a shareholder to a limited
dividend tax credit that cannot be claimed for refund and/or carried
forward.                                                                                                                                                             

Resident individuals owning less than 2% of the outstanding shares not
related to the conduct of a business may elect for a substitute tax of 12.5%
withheld at the source by the dividend paying agent. This being the case,
the dividend is not to be included in the individuals tax return.

The same substitute tax is withheld when dividend is paid to pension
funds and to certain real estate investment funds. Entities exempt from
IRPEG (company income tax) are subject to the substitute tax at the rate of
27%.

Dividend paid to non residents are subject to the same substitute tax
levied at source by the dividend paying agent at the rate of 27%.

Up to four-ninths of the tax withheld might be recovered by a
non-resident shareholder from the Italian Tax Authorities upon provision of
evidence of full payment of income tax on such dividend in his country of
residence in an amount at least equal to the total refund claimed.

Such substitute tax may be reduced under the tax treaty in force
between Italy and the country of residence of the Beneficial Owner of the
dividend. In order to obtain the treaty benefit (reduced substitute tax
rate) at the same time of payment, the Beneficial Owner must file an
application to the dividend paying agent chosen by the
Depositary stating the existence of the conditions for the
applicability of the treaty benefit, together with a certification issued by
the foreign Tax Authorities stating that the shareholder is a resident of
that country for treaty purposes.

Based on the certification procedure required by the Italian Tax
Authorities, the shareholder must obtain from the U.S. Internal Revenue
Service (the «IRS») a certificate with respect to each dividend payment.

The request for that certificate must include a statement, signed under
penalties for perjury, to the effect that
the shareholder is a U.S. resident individual or corporation, and does
not maintain a permanent establishment in Italy, and must set forth other
required information. The normal time for processing requests for
certification by the IRS is normally about six to eight weeks.

As an alternative to the direct application of the treaty benefit at
the same time of payment, the foreign shareholder may provide for the filing
of specific forms (certificate) with the Italian Tax Authorities, in order
to obtain a refund of taxes withheld in excess of the withholding tax rate
as provided for by the Treaty.

It should be specified that Italy has concluded income tax treaties
with approximately 60 foreign countries, including all EU member states,
Argentina, Australia, Brazil, Canada, Japan, New Zealand, Norway,
Switzerland, the United States and some countries in Africa, the Middle
East, and the Far East. Generally speaking, it should be noted that tax
treaties are not applicable where the holder is a tax-exempt entity or, with
few exceptions, a partnership or a Trust. For further details please refer
to the relevant provisions set forth in the Italy-U.S. Tax Treaty.





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##### Table of Contents



Under the income tax convention between the United States and Italy,
dividends derived and beneficially owned by a U.S. resident who holds less
than 10% of Eni SpAs shares are subject to an Italian withholding or
substitute tax at a reduced rate of 15%, provided that the dividends
are not effectively connected with a permanent establishment in Italy
through which the U.S. resident carries on a business or a fixed
establishment in Italy through which such resident performs independent
personal services.

In the absence of such conditions, or where the mentioned documentation
has not been provided by the Beneficial Owner, the dividend paying agent
will deduct from the gross amount of the dividend the substitute tax
at the statutory rate of 27%. The recipient will then be entitled to
claim from the Italian Tax Authorities the difference («treaty refund»)
between the domestic rate and the treaty one.

With respect to any dividend declared by the Company on or after July
1, 1998, pursuant to a change in Italian tax law as reflected in the Deposit
Agreement, the Company will no longer be involved (i) in withholding amounts
due by holders of ADSs to relevant taxing authorities in connection with any
distributions relating to
ADSs or (ii) in the procedures through which certain holders of ADSs
may obtain tax rebates, credits, refunds or
other similar benefits. Pursuant to the Deposit Agreement, the
custodian and the Depositary have undertaken to use reasonable efforts to
make and maintain arrangements to enable persons that are considered United
States residents for purposes of applicable law to receive any rebates or
tax credits (pursuant to treaty or otherwise) relating to distributions on
the ADSs to which such persons are entitled. in addition, the Depositary has
agreed to
establish procedures to enable all holders to take advantage of any
rebates or tax credits (pursuant to treaty of otherwise) relating to
distributions on the ADSs to which such holders are entitled and to provide,
at least annually, a written notice, in a form previously agreed to by the
Company, to the holders of ADSs of any necessary actions to be undertaken by
such Holders.

Transfer tax

As of January 1, 1998, Legislative Decree No. 435/97 has changed the
previous rule introducing both new exemptions and new rates.

In general terms, no Italian transfer tax is payable in the following cases:



| |  |  | contracts executed on regulated financial markets;                                                                                                                                    
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | contracts concerning shares of non-listed companies, executed
between non-resident persons and banks or other authorised
intermediaries (provided that certain conditions are met);   
|
| |  |  | 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 the
application of stamp duty or registration tax.

To provide a more complete picture, transfer tax is currently payable
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.
|
| |  |  | 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.                                                                                                                   





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##### Table of Contents



Capital Gains Tax

Gains deriving from the sale of participations exceeding 2% of the
voting rights or 5% of the share capital i.e. «substantial participations»
are subject to a 27% substitute tax, while other gains are subject to a
substitute tax at a 12.5% rate.

For gains deriving from the sale of non substantial participations, two
different systems may be applied at the option of the shareholder as an
alternative to the filing of the tax return:



| |  |  | the so-called «indirectly managed investment» system (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 «directly managed investment» system (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 participations in
listed companies are deemed not to be
realized in Italy and consequently are not subject to the capital gains
tax.

On the contrary, gains realized by non-residents from substantial
participations even in listed companies are
deemed to be realized in Italy and consequently they are subject to the
capital gains tax.

However double taxation treaties may eliminate the capital gains tax.
Under the income tax convention between the United States and Italy, a U.S.
resident will not be subject to the capital gains tax unless the shares or
ADRs form part of the business property of a permanent establishment of the
holder in Italy or pertain to a fixed establishment available to a
shareholder in Italy for the purposes of performing independent personal
services. U.S. residents who sell shares may be required to produce
appropriate documentation establishing that the above-mentioned conditions
of non-taxability pursuant to the convention have been satisfied.

Inheritance and Gift Tax

Pursuant to Law No. 383 of October 18, 2001, Italian inheritance and
gift tax on transfer of shares or ADRs by reason of death or donation has
been abolished with respect to successions opened and to gifts made from
October 25, 2001. Transfer of shares or ADRs, even if held outside Italy, by
reason of donation are subject to the
ordinary Italian transfer tax on the value of the gift exceeding
180.759,91 euro, only if the donee is not the spouse, a direct descendant or
a relative up to the fourth degree of the donor.

An anti avoidance rule has been provided by Law 383 for gift of assets
(such as shares) which, if sold for consideration, would give rise to
capital gain subject to substitute tax as per Decree No. 461 of November 21,
1997. In particular if the donee sells the shares for consideration within
five years from the receipt thereof as gift,
the substitute tax will apply on the capital gain determined as if the
gift had never been given.

United States Taxation

The following is a summary of certain U.S. federal income tax
consequences to U.S. Holders (as defined below) of the ownership and
disposition of Shares or ADRs. This summary is addressed to U.S. Holders
that hold
Shares or ADSs as capital assets, and does not purport to address all
material tax consequences of the ownership of Shares or ADSs. The summary
does not deal with special classes of investors, such as tax-exempt
entities, dealers in securities, traders in securities that elect to mark to
market, certain insurance companies,
broker-dealers, investors liable for alternative minimum tax, investors
that actually or constructively own 10% or
more of Eni SpAs Shares, investors that hold Shares or ADSs as part of
a straddle or a hedging 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 proposed
regulations thereunder, published rulings





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##### Table of Contents



and court decisions) as in effect on the date hereof, and which are
subject to change (or changes in interpretation),
possibly with retroactive effect. The summary is based in part on
representations of the Depositary and assumes that each obligation in the
Deposit Agreement and any related agreement will be performed in accordance
with its
terms. U.S. Holders should consult their own tax advisors to determine
the U.S. federal, state and local and foreign tax consequences to them of
the ownership and disposition of Shares or ADSs.

As used in this section, the term «U.S. Holder» means a beneficial
owner of Shares or ADSs who or that is
(i) a citizen or resident of the United States, (ii) a domestic
corporation, (iii) an estate the income of which is subject to United States
federal income tax without regard to its source or (iv) a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust.

The discussion does not address any aspects of United States taxation
other than federal income taxation. In
particular, U.S. Holders are urged to confirm their eligibility for
benefits under the income tax convention between the United States and Italy
with their advisors and to discuss with their advisors any possible
consequences of their failure to qualify for such benefits.

In general, and taking into account the earlier assumptions, for the
United States federal income tax purposes, U.S. Holders who own ADRs
evidencing ADSs will be treated as owners of the underlying Shares.
Exchanges of Shares for ADRs, and ADRs for shares, generally will not be
subject to United States federal income tax.

Dividends

Distributions paid on the shares generally will be treated as dividends
for U.S. federal income tax purposes to the extent paid out of Eni SpAs
current or accumulated earnings and profits as determined for U.S. federal
income tax purposes, but will not be eligible for the dividends
received-deduction generally allowed to corporations. To the extent that a
distribution exceeds Eni SpAs earnings and profits, it will be treated,
first, as a non-taxable return of capital to the extent of the U.S. Holders
tax basis in the shares or ADSs, and thereafter as a taxable gain on the
sale or exchange of shares or ADSs. A U.S. Holder will be subject to U.S.
federal taxation, on the date of actual or constructive receipt by the U.S.
Holder (in the case of Shares) or by the Depositary (in the case of ADSs)
with respect to the gross amount of any dividends, including any Italian tax
withheld therefrom, without regard to whether any portion of such tax may be
refunded to the U.S. Holder by the Italian tax authorities. If you are a
noncorporate U.S. Holder, dividends paid to you after December 31, 2002 and
before January 1, 2009 that constitute qualified dividend income will be
taxable to you at a maximum tax rate of 15% provided that you hold the
Shares or ADSs for more than 60 days during the 120-day period beginning 60
days before the ex-dividend date and meet other holding period requirements.
Dividends we pay with respect to the shares or ADSs will be qualified
dividend income. The amount of any dividend (or treaty payment) paid in lire
will equal the U.S. dollar value of the lire received, calculated by
reference to the exchange rate in effect on the date the distribution is
includible in income, regardless of whether the lire are converted into U.S.
dollars and U.S. Holders may recognize foreign currency gain or loss upon
the disposition of such lire measured by the differences between such U.S.
dollar value and the amount realized on such disposition. Such gain or loss
will be treated as ordinary income or loss and will not be eligible for the
special tax rate applicable to qualified dividend income.

Subject to certain conditions and limitations, Italian tax withheld
from dividends will be treated as a foreign income tax eligible for credit
against the U.S. Holders U.S. federal income tax liability. Special rules
apply in determining the foreign tax credit limitation with respect to
dividends that are subject to the maximum 15% tax rate.To the extent a
refund of the tax withheld is available to a U.S. Holder under Italian law
or under the income tax convention, the amount of tax withheld that is
refundable will not be eligible for credit against your United States
federal income tax liability. See «Italian TaxationIncome Tax,» above, for
the procedures for obtaining a tax refund. For the purposes of computing the
foreign tax credit, dividends paid on the Shares will be treated as income
from sources outside the United States, but generally will be grouped
separately, together with other items of «passive» or «financial services»
income.





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##### Table of Contents



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 or ADSs equal to the
difference between the U.S. Holders adjusted basis in the shares or ADSs
(determined in U.S. dollars), as the case may be, and the amount realized on
the sale or exchange (or if the
amount realized is denominated in a foreign currency its U.S. dollar
equivalent, determined at the spot rate on the
date of disposition). Generally, such gain or loss will be treated as
capital gain or loss if the Shares or ADSs are held as capital assets and
will be a long-term capital gain or loss if the shares or ADSs have been
held for more than one year on the date of such sale or exchange. Long-term
capital gain of a non-corporate U.S. Holder that is recognized on or after
May 6, 2003 and before January 1, 2009 is generally subject to a maximum tax
rate of 15% in respect of property held for more than one year. In addition,
any such gain or loss realized by a U.S. Holder generally will be treated as
U.S. source income or loss for U.S. foreign tax credit purposes.




Documents on Display

It is possible to read and copy documents referred to in this annual
report on Form 20-F that have been filed with the SEC at the SECs public
reference room located at 450 Fifth Street, NW, Washington, DC 20549 and at
the SECs other public reference rooms in New York City and Chicago. Please
call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms and their copy charges. The SEC filings are also available
to the public from commercial document retrieval services and in the website
maintained by the SEC at www.sec.gov.




Item 11. QUALITATIVE AND QUANTITATIVE DISCLOSURES OF MARKET RISK

Eni operates internationally in the oil and natural gas, electricity
generation, petrochemicals and oilfield services and engineering industries
and is subject to exposure to market risks from changes in interest rates,
foreign exchange rates and commodity prices.

Derivative financial instruments are utilized by Eni to reduce these
risks, as explained below.

Enis treasury activities are managed primarily by two captive finance
companies, operating in the Italian and international financial markets.
Enis operating subsidiaries are required to reduce foreign exchange rate
risk
to a minimum level by coordinating their operations with such finance
companies.

Eni SpAs Board of Directors has defined a policy that requires the
Treasury Department of Eni SpA to determine the maximum level of foreign
exchange rate and interest rate risks that can be assumed by Enis finance
companies. Such policy also defines the eligible counterparties in
derivatives transactions. As far as interest rate and foreign exchange rate
risks are concerned, the calculation and measurement techniques followed
by Enis finance companies are in accordance with established banking
standards (such standards are established
by the Basel Committee). However, the tolerable level of risk adopted
by such companies is more conservative than that defined by the Basel
Committee.

Eni SpAs Treasury Department is responsible for monitoring compliance
with Enis policy, as well as the
correlation between the indicators adopted for measuring the tolerable
risk level, the portfolio of financial instruments and market conditions.

Eni does not enter into derivative transactions on a speculative basis.

The Company has estimated its market risk exposure using sensitivity
analysis. Market risk exposure has been defined as the change in fair value
of derivative financial and commodity instruments and other financial
instruments assuming a hypothetical 10 percent adverse change in market
prices or rates. Fair value was determined using dealer quotes or
appropriate pricing models. The interest rate used for periods shorter than
one year is LIBOR/EURIBOR.





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##### Table of Contents



The Company has applied the sensitivity analysis to derivative
financial and commodity instruments and other financial instruments that are
exposed to interest rate, foreign exchange rate and commodities price risk.

The results of the sensitivity analysis are summarized below.

Actual changes in market prices or rates may differ from hypothetical
changes.

Foreign Exchange Risks

Enis operations are denominated in various foreign currencies and
consequently Eni is exposed to exchange
rate fluctuations that have an impact on its cash flows and financing
activities. The Companys exposure to foreign currency rates exists
primarily with U.S. dollars versus euro.

Eni enters into various types of foreign exchange contracts in managing
its foreign exchange risk. The notional amount of these contracts is shown
in Note 23 to the Consolidated Financial Statements. Eni uses «forward
exchange contracts» primarily to hedge existing receivables and payables,
including deposits and borrowings denominated in foreign currencies, and
uses «currency options» to hedge expenses denominated in foreign currencies.
Currency options, purchased in the over-the-counter market for a premium,
provide Eni with the right to buy or sell an agreed amount of currency at a
specified exchange rate at the end of a specified period normally two years.

Based on the results of the sensitivity analysis, Enis estimated
foreign currency market risk exposure related to net income as of December
31, 2002, was euro 121 million (euro 191 million at December 31, 2001). The
sensitivity analysis excluded receivables, debt and securities which
have a high degree of inverse correlation with
the financial derivative instruments used to hedge them; these
derivative instruments are not, however, material.

Interest Rate Risk

Debt and the existence of mismatches between assets and liabilities
earning or paying fixed interests expose Eni to the risk of interest rate
fluctuations.

Eni enters into various types of interest rate contracts in managing
its interest rate risk. The notional amount of these contracts is shown in
Note 23 to the Consolidated Financial Statements.

Eni enters into interest rate derivatives, particularly «interest rate
swaps», to alter interest rate exposures arising from mismatches between
assets and liabilities, to lower funding costs and to diversify sources of
funding. Under interest rate swaps, Eni agrees with other parties to exchange,
at specified intervals, the difference between
interest amount calculated by reference to an agreed notional principal
amount and agreed fixed or floating interest rates.

Eni also uses «interest rate collars» to manage its interest rate risk.
An interest rate collar is a combination of options that enables a
predetermined interest rate band to be locked in. Eni also uses primarily
zero-cost collars
that do not require payment of an option premium. «Forward rate
agreements» are generally used by Eni to offset
changes in the rates of short and long-term floating-rate debt. Forward
rate agreements settle in cash at a specified
future date based on the differential between agreed interest rates
applied to a notional amount.

Based on the results of the sensitivity analysis, Enis estimated
interest market risk exposure related to net income as of December 31, 2002
was euro 72 million (euro 9 million at December 31, 2001).





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##### Table of Contents



Commodity Price Risk

Eni enters into commodity-based derivative contracts to minimize the
commodities price volatility in order to conform costs to revenues.

Commodity-based derivative contracts are primarily used by the Refining
and Marketing segment and consist of future contracts and over-the-counter
market swaps related to crude oil and petroleum products.

Futures contracts have little credit risk because they take place in
regulated markets. Swap agreements do not contain margin requirements and
are subject to the creditworthiness of counterparties, which are primarily
major financial institutions.

As shown in Note 23 to the Consolidated Financial Statements the
amounts of derivative commodity contracts is not material. Enis commodity
market risk exposure as of December 31, 2000, is also not material.




Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.




PART II




Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.




Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.




Item 15. CONTROLS AND PROCEDURES

Under the supervision and with the participation of the Companys
management, including the Companys Chief Executive Officer and Chief
Financial Officer, the Company has evaluated the effectiveness of the design
and operation of its disclosure controls and procedures pursuant to Exchange
Act Rule 13a-14(c) within 90 days of the filing date of this annual report.
Based on that evaluation, the Chief Executive Officer and Chief Financial
Officer have concluded that these disclosure controls and procedures are
effective.

In designing and evaluating our disclosure controls and procedures, our
management, including the Chief Executive Officer and Chief Financial
Officer,recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving
the desired control objectives, and our management necessarily was required
to apply its judgement in evaluating the cost-benefit relationship of
possible controls and procedures. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within the Company
have been detected.

There were no significant changes in the Companys internal controls or
in other factors that could significantly affect internal controls
subsequent to the date of their most recent evaluation.




Item 16. [RESERVED]





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##### Table of Contents






PART III




Item 17. FINANCIAL STATEMENTS

Not applicable.




Item 18. FINANCIAL STATEMENTS

See pages F-1 through F-79.

(a) Index to Financial Statements:

|                                                                                                                                                              |  |      |      | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | 
|                                                                                                                                                              |  | Page
|                                                                                                                                                              |  |     
|Report of Independent Auditors                                                                                                                                |  |      | F-1  | 
|Report of Independent Auditors (Arthur Andersen SpA for year 2000)                                                                                            |  |      | F-2  | 
|Other Auditors Reports on the consolidated financial statements of certain major subsidiaries of
Eni SpA (separate financial statements not included herein) |  |      | F-3  | 
|Consolidated Balance Sheets at December 31, 2001 and 2002                                                                                                     |  |      | F-8  | 
|Consolidated Statements of Income for the years ended December 31, 2000, 2001 and 2002                                                                        |  |      | F-9  | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2000, 2001 and 2002                                                                    |  |      | F-10 | 
|Supplemental Information for the years ended December 31, 2000, 2001 and 2002                                                                                 |  |      | F-12 | 
|Consolidated Statements of Changes in Shareholders Equity for the years ended December 31, 2000,
2001 and 2002                                               |  |      | F-13 | 
|Notes to the Consolidated Financial Statements                                                                                                                |  |      | F-14 | 




Item 19. EXHIBITS



|1. |  | By-laws as amended as of May 30, 2002
|-- |  | -------------------------------------
|  
|7. |  | Calculation of ROACE                 
|  
|8. |  | List of subsidiaries                 

10.1 Other Auditors Reports on the financial statements of certain other
subsidiaries of Eni SpA (separate financial statements not included herein)

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant certifies that it meets all of the requirements
for filing on Form 20-F and has duly caused this annual report to be signed
on its behalf by the undersigned, thereunto duly authorized.

Date: June 30, 2003

| |                                                                         
| | ------------------------------------------------------------------------
| | Eni SpA
/s/ FABRIZIO COSCOFabrizio Cosco
Title: Deputy Company Secretary





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##### Table of Contents



CERTIFICATION

I.     Vittorio Mincato, certify that:



|1. |  | I have reviewed this annual report on Form 20-F (the «annual
report») of Eni SpA, a company incorporated under the laws of
Italy;                                                                                                                                                                                       
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual 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 annual
report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the
periods presented in this annual report;                   
|  
|4. |  | The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and have:                                                                                                  



| | a) |  | Designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this annual report (the «Evaluation
Date»); and                                                                                                  
|
| | c) |  | Presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrants auditors and the audit committee of registrants
board of directors (or persons performing the equivalent
functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | All significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have
indicated in this annual report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: June 30, 2003

| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | /s/ VITTORIO MINCATOVittorio Mincato
Title: Managing Director and Chief Executive Officer





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##### Table of Contents



CERTIFICATION

I, Roberto Jaquinto, certify that:



|1. |  | I have reviewed this annual report on Form 20-F (the «annual
report») of Eni SpA, a company incorporated under the laws of
Italy;                                                                                                                                                                                       
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual 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 annual
report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the
periods presented in this annual report;                   
|  
|4. |  | The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and have:                                                                                                  



| | a) |  | Designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this annual report (the «Evaluation
Date»); and                                                                                                  
|
| | c) |  | Presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrants auditors and the audit committee of registrants
board of directors (or persons performing the equivalent
functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | All significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have
indicated in this annual report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: June 30, 2003

| |                                                                                               
| | ----------------------------------------------------------------------------------------------
| | /s/ ROBERTO JAQUINTORoberto Jaquinto
Title: The Group Senior Vice President for Administration





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##### Table of Contents



REPORT OF INDEPENDENT AUDITORS

To the Shareholders
of Eni SpA

We have audited the accompanying consolidated balance sheets of Eni SpA
and its subsidiaries as of December 31, 2002 and 2001, and the related
consolidated statements of income, changes in shareholders equity, and cash
flows for the years then ended, all expressed in euro. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based
on our audits. We did not audit the financial statements of Snam Rete Gas
SpA (60% owned), Italgas  Società Italiana per il Gas pA (44% owned),
Saipem SpA (43% owned) and Eni Portugal Investment SpA (100% owned) which
statements, in the aggregate, reflect total assets of 21 and 20 percent of
the related consolidated totals as of December 31, 2002 and 2001,
respectively, and total revenues of 13 and 11 percent of the related
consolidated totals for the years ended December 31, 2002 and 2001,
respectively. Those statements were audited by other auditors whose reports
thereon have been furnished to us, and our opinion expressed herein, insofar
as it relates to the amounts included for Snam Rete Gas SpA, Italgas 
Società Italiana per il Gas pA, Saipem SpA and Eni Portugal Investment SpA,
is based solely on the reports of the other auditors.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits and the reports of the other auditors provide a reasonable basis for
our opinion.

In our opinion, based on our audits and the reports of other auditors,
the consolidated financial statements referred to above present fairly, in
all material respects, the financial position of Eni SpA and its
subsidiaries at December 31, 2002 and 2001, and the results of their
operations and their cash flows for the years then ended in conformity with
the Italian law governing consolidated financial statements and generally
accepted accounting principles in Italy.

The consolidated statements of income, of cash flows and of
changes in shareholders equity of Eni SpA and its subsidiaries for the year ended December 31, 2000, were
audited by other independent accountants who have ceased operations. Those
independent accountants expressed an unqualified opinion on those
consolidated statements in their report dated April 6, 2001.

The accounting principles referred to above vary in certain significant
respects from accounting principles generally accepted in the United States.
The application of the latter would have affected the determination of
consolidated net income expressed in euro for the years ended December 31,
2002 and 2001, and the determination of consolidated shareholders equity
also expressed in euro at December 31, 2002 and 2001, to the extent
summarized in Note 28 to the consolidated financial statements.

PricewaterhouseCoopers SpA

Rome, April 29, 2003





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##### Table of Contents



THE FOLLOWING REPORT IS A COPY OF A REPORT PREVIOUSLY ISSUED BY
ARTHUR ANDERSEN SpA AND HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN SpA

REPORT OF INDEPENDENT AUDITORS

To the Shareholders of
Eni SpA:

We have audited the accompanying consolidated balance sheets of Eni SpA
(an Italian corporation) and subsidiaries (the «Company») as of December 31,
1999 and 2000, and the related consolidated statements of income, changes in
shareholders equity and cash flows for each of the years in the three-year
period ended December 31, 2000, expressed in million of Euro. These
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based
on our audits. We did not audit the financial statements of certain
subsidiaries, prepared in accordance with generally accepted accounting
principles in Italy, and which reflect total assets of 15% and 19% as of
December 31, 1999 and 2000, respectively, and revenues of 11%, 11% and 9%
for the years ended December 31, 1998, 1999 and 2000, respectively, of the
consolidated totals. Those statements were audited by other auditors whose
reports have been furnished to us and our opinion, insofar as it relates to
the amounts included for those entities, is based solely on the reports of
other auditors.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. Our audit included examining,
on a test basis, evidence supporting the amounts (including the conversion
of the financial statements of the subsidiaries referred to above to
generally accepted accounting principles in the United States) and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits and the reports of the other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors,
the consolidated financial statements referred to above present fairly, in
all material respects, the financial position of Eni SpA and subsidiaries as
of December 31, 1999 and 2000, and the results of their operations and their
cash flows for each of the years in the three-year period ended December 31,
2000 in conformity with accounting principles generally accepted in Italy.

The accounting practices of the Company used in preparing the
accompanying financial statements conform with accounting principles
generally accepted in Italy, but do not conform with accounting principles
generally accepted in the United States. A description of these differences
and a reconciliation of net income and shareholders equity to U.S.
generally accepted accounting principles are set forth in Notes 28, 29 and
30 of the Notes to the Consolidated Financial Statements.

Rome, Italy,
April 6, 2001

Arthur Andersen SpA





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##### Table of Contents



REPORT OF INDEPENDENT AUDITORS

To the Shareholders of
Snam Rete Gas SpA

We have audited the balance sheets of Snam Rete Gas SpA (an Italian
corporation) as of December 31, 2001 and 2002, and the related statements of
income, changes in shareholders equity and cash flows for each for the two
periods then ended, expressed in euro (which financial statements are not
included herein). Snam Rete Gas SpA, incorporated on November 15, 2000 and
operating since July 1, 2001, date of the contribution by Snam SpA (now Eni
SpA Divisione Gas & Power) of the business related to natural gas
transportation, dispatching and regasification services, has ended its first
financial period on December 31, 2001. These financial statements are the
responsibility of the Companys management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, based on our audits, the financial statements referred
to above present fairly, in all material respects, the financial position of
Snam Rete Gas SpA as of December 31, 2001 and 2002, and the results of their
operations, and their cash flows for each of the two periods then ended and
in conformity with generally accepted accounting principles in Italy.

In the current and past periods the Company has made certain
provisions, essentially related to depreciation exceeding that computed on
the basis of useful life of tangible assets, exclusively for tax purposes.
The effects originating from this accounting treatment are described in the
explanatory notes.

Milan, Italy
March 28, 2003

Deloitte & Touche Italia SpA
(A former member firm of Andersen Worldwide.
Deloitte & Touche Italia SpA has entered into an
agreement to associate with Deloitte & Touche SpA)
Piergiulio Bizioli
Partner





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##### Table of Contents



INDEPENDENT AUDITORS REPORT
Italian statutory consolidated financial statements

To the Stockholders
of Italgas  Società Italiana per il Gas p.A.

We have audited the Italian statutory consolidated balance sheet of
Italgas  Società Italiana per il Gas pA and subsidiaries (the «Group») as
of December 31, 2002 and 2001, and the related consolidated statements of
income, changes in shareholders equity and cash flows for each of the years
in the two-year period ended December 31, 2002. These financial statements
(not presented separately herein) are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of certain
subsidiaries which statements represent assets constituting respectively 16%
and 19% of the consolidated assets as of December 31, 2002 and 2001. Those
statements were audited by other auditors whose reports have been furnished
to us and our opinion, insofar as it relates to the amounts included for
these subsidiaries, is based solely on the reports of the other auditors.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits and the reports of other auditors provide a reasonable basis for our
opinion.

In our opinion, based on our audits and the reports of other auditors,
the Italian statutory consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Italgas  Società Italiana per il Gas pA and subsidiaries as of
December 31, 2002 and 2001, and the consolidated results of their operations
and their cash flows for each of the years in the two-year period ended
December 31, 2002, in conformity with the accounting principles governing
the presentation of the consolidated statutory financial statements in
Italy.

Turin, Italy
April 3, 2003

Reconta Ernst Young SpA

REPORT OF INDEPENDENT AUDITORS

To the Shareholders of
Saipem SpA

We have audited the consolidated balance sheets of Saipem SpA (an
Italian corporation) (the «company») and subsidiaries as of December 31,
1999 and 2000, and the related consolidated statements of income, changes in
shareholders equity and cash flows for each of the years in the three-year
period ended December 31, 2000, expressed in Euro (not presented separately
herein). These financial statements are the responsibility of the companys
management. Our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of
certain subsidiaries, which reflect total assets of 9% and 10% as of
December 31, 1999 and 2000, respectively, and revenues of 16%, 23% and 18%
for the years ended December 31, 1998, 1999 and 2000, respectively, of the
consolidated totals. Those financial statements were audited by other
auditors whose reports have been furnished to us and our opinion, insofar as
it relates to the amounts included for those entities, is based solely on
the reports of the other auditors.

We conducted our audits in accordance with auditing standards generally
accepted in Italy which are consistent with those in the United States of
America. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We
believe that our audits and the reports of the other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other
auditors, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Saipem SpA and
subsidiaries as of December 31, 1999 and 2000, and the results of their
operations and their cash flows for each of the years in the three-year
period ended December 31, 2000 in conformity with generally accepted
accounting principles in Italy.

Milan, Italy
April 11, 2001

KPMG SpA





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##### Table of Contents



INDEPENDENT AUDITORS REPORT
Italian statutory consolidated financial statements

To the Stockholders
Saipem SpA

We have audited the Italian statutory consolidated balance sheets of
Saipem SpA and subsidiaries (the «Group») as of December 31, 2002 and 2001,
and the related consolidated statements of income and retained earnings for
each of the years in the two-year period ended December 31, 2002. These
financial statements (not presented separately herein) are the
responsibility of the Companys management. Our responsibility is to express
an opinion on these financial statements based on our audits. We did not
audit the financial statements of certain subsidiaries, which represent
respectively 4% and 13% of the consolidated assets and net sales as of
December 31, 2002 and for the year then ended. Those statements were audited
by other auditors whose reports have been furnished to us and our opinion,
insofar as it relates to the amounts included for these subsidiaries, is
based solely on the reports of the other auditors.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits and the reports of other auditors provide a reasonable basis for our
opinion.

In our opinion, based on our audits and the reports of other auditors,
the Italian statutory consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Saipem SpA and subsidiaries as of December 31, 2002 and 2001,
and the consolidated results of their operations for each of the years in
the two-year period ended December 31, 2002, in conformity with the
accounting principles governing the presentation of consolidated statutory
financial statements in Italy.

Milan, Italy
April 4, 2003

Reconta Ernst Young SpA





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##### Table of Contents



REPORT OF THE INDEPENDENT AUDITORS

To the Shareholders of
Eni Portugal Investment SpA



| | 1. |  | We have audited the balance sheets of Eni Portugal Investment
SpA (an Italian corporation) as of December 31, 2001 and 2002, and
the related statements of income, changes in stockholders equity
and cash flows for each of the two periods then ended, expressed in
euro (which financial statements are not included herein). These
financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements based on our audits.                                                                                                                                                          
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
|
| | 3. |  | In our opinion, based on our audits, the financial statements
referred to above present fairly, in all material respects, the
financial position of Eni Portugal Investment SpA as of December 31,
2001 and 2002, the results of their operations, and their cash flows
for each of the two periods then ended in conformity with generally
accepted accounting principles in Italy.                                                                                                                                                                                                                                                                                     

Rome, Italy
May 8, 2003

Deloitte & Touche Italia SpA
(A former member firm of Andersen Worldwide.
Deloitte & Touche Italia SpA has entered into an
agreement to associate with Deloitte & Touche SpA)
Gabriele Rosa
Partner





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##### Table of Contents



BALANCE SHEETS
(Amounts stated in million
)

|                                     |                                                                                                                     |                           |   |      |  |               |     |               |        |   |     |        |        | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------- | ------------------------- | - | ---- |  | ------------- | --- | ------------- | ------ | - | --- | ------ | ------ | 
|                                     |                                                                                                                     |                           |   | Note |  | Dec. 31, 2001 |     | Dec. 31, 2002
|                                     |                                                                                                                     |                           |   |      |  |               |     |              
|                                     |                                                                                                                     |                           |   |      |  |               |     |              |        | 
|ASSETS                               |                                                                                                                     |                           |   |      |  |               |     |               |        |   |     |       
|Current assets:                      |                                                                                                                     |                           |   |      |  |               |     |               |        |   |     |       
|                                     | Cash and cash equivalents                                                                                           |                           |   |      |  |               |     | 1,390         |        |   |     | 3,265  |       
|                                     | Marketable securities                                                                                               |                           |   | 3    |  |               |     | 1,365         |        |   |     | 1,208  |       
|                                     | Receivables, net                                                                                                    |                           |   | 4    |  |               |     | 13,654        |        |   |     | 13,530 |       
|Inventories, net:                    |                                                                                                                     |                           | 5 |      |  |               |     |               |        |   |     |       
|                                     | Crude oil, natural gas and petroleum products                                                                       |                           |   |      |  |               |     | 1,638         |        |   |     | 1,821  |       
|                                     | Chemical products                                                                                                   |                           |   |      |  |               |     | 497           |        |   |     | 622    |       
|                                     | Work in progress on long-term contracts                                                                             |                           |   |      |  |               |     | 267           |        |   |     | 184    |       
|                                     | Other                                                                                                               |                           |   |      |  |               |     | 411           |        |   |     | 573    |       
|                                     |                                                                                                                     | Total inventories         |   |      |  |               |     |               | 2,813  |   |     |        | 3,200  | 
|Accrued interest and other           |                                                                                                                     |                           |   |      |  |               | 444 |               |        |   | 573 |       
|                                     |                                                                                                                     | Total current assets      |   |      |  |               |     |               | 19,666 |   |     |        | 21,776 | 
|Non-current assets:                  |                                                                                                                     |                           |   |      |  |               |     |               |        |   |     |       
|                                     | Fixed assets, net of accumulated depreciation, amortization and
writedowns                                          |                           |   | 6    |  |               |     | 33,314        |        |   |     | 33,693 |       
|                                     | Receivables, net                                                                                                    |                           |   | 4    |  |               |     | 2,678         |        |   |     | 2,500  |       
|                                     | Investments                                                                                                         |                           |   | 7    |  |               |     | 3,012         |        |   |     | 2,779  |       
|                                     | Intangible assets                                                                                                   |                           |   | 8    |  |               |     | 2,843         |        |   |     | 3,175  |       
|                                     | Other                                                                                                               |                           |   | 9    |  |               |     | 1,223         |        |   |     | 1,885  |       
|                                     |                                                                                                                     | Total non-current assets  |   |      |  |               |     |               | 43,070 |   |     |        | 44,032 | 
|                                     |                                                                                                                     | Total assets              |   |      |  |               |     |               | 62,736 |   |     |        | 65,808 | 
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                                     |                           |   |      |  |               |     |               |        |   |     |       
|Current liabilities:                 |                                                                                                                     |                           |   |      |  |               |     |               |        |   |     |       
|                                     | Short-term debt                                                                                                     |                           |   | 11   |  |               |     | 5,231         |        |   |     | 7,890  |       
|                                     | Current portion of long-term debt                                                                                   |                           |   | 11   |  |               |     | 1,233         |        |   |     | 980    |       
|                                     | Trade accounts payable                                                                                              |                           |   |      |  |               |     | 4,974         |        |   |     | 5,537  |       
|                                     | Advances                                                                                                            |                           |   |      |  |               |     | 1,035         |        |   |     | 1,457  |       
|                                     | Taxes payable                                                                                                       |                           |   | 10   |  |               |     | 2,355         |        |   |     | 1,791  |       
|                                     | Accrued expenses and other                                                                                          |                           |   |      |  |               |     | 3,624         |        |   |     | 3,937  |       
|                                     |                                                                                                                     | Total current liabilities |   |      |  |               |     |               | 18,452 |   |     |        | 21,592 | 
|Non-current liabilities:             |                                                                                                                     |                           |   |      |  |               |     |               |        |   |     |       
|                                     | Long-term debt                                                                                                      |                           |   | 11   |  |               |     | 6,084         |        |   |     | 6,550  |       
|                                     | Reserve for employee termination indemnities                                                                        |                           |   |      |  |               |     | 465           |        |   |     | 507    |       
|                                     | Reserves for contingencies                                                                                          |                           |   | 12   |  |               |     | 5,340         |        |   |     | 5,522  |       
|                                     | Deferred and other non-current income tax liabilities                                                               |                           |   | 12   |  |               |     | 2,621         |        |   |     | 2,611  |       
|                                     | Accrued expenses and other                                                                                          |                           |   |      |  |               |     | 585           |        |   |     | 675    |       
|                                     | Total non-current liabilities                                                                                       |                           |   |      |  |               |     | 15,095        |        |   |     | 15,865 |       
|                                     | Total liabilities                                                                                                   |                           |   |      |  |               |     | 33,547        |        |   |     | 37,457 |       
|                                     | Minority interests                                                                                                  |                           |   |      |  |               |     | 1,706         |        |   |     | 2,094  |       
|                                     | Shareholders equity:                                                                                               |                           |   | 13   |  |               |     |               |        |   |     |        |       
|                                     | Capital stock 4,001,814,026 fully paid shares nominal value 1 euro each
(4,001,259,476 shares at December 31, 2001) |                           |   |      |  |               |     | 4,001         |        |   |     | 4,002  |       
|                                     | Reserves                                                                                                            |                           |   |      |  |               |     | 17,799        |        |   |     | 20,500 |       
|                                     | Treasury shares                                                                                                     |                           |   |      |  |               |     | (2,068        | )      |   |     | (2,838 | )     
|                                     | Net income for the year                                                                                             |                           |   |      |  |               |     | 7,751         |        |   |     | 4,593  |       
|                                     | Total shareholders equity                                                                                          |                           |   |      |  |               |     | 27,483        |        |   |     | 26,257 |       
|                                     | Total liabilities and shareholders equity                                                                          |                           |   |      |  |               |     | 62,736        |        |   |     | 65,808 |       

(The accompanying notes are an integral part of these consolidated financial statements)





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##### Table of Contents



STATEMENTS OF INCOME
(Amounts stated in million
 except per Share and per ADS data)

|                                     |                                                                                                     |                |    |      |  |      |      |        |        |      |       |        |        |  |     |        |        | 
|------------------------------------ | --------------------------------------------------------------------------------------------------- | -------------- | -- | ---- |  | ---- | ---- | ------ | ------ | ---- | ----- | ------ | ------ |  | --- | ------ | ------ | 
|                                     |                                                                                                     |                |    | Note |  | 2000 |      | 2001   |        | 2002
|                                     |                                                                                                     |                |    |      |  |      |      |        |        |     
|                                     |                                                                                                     |                |    |      |  |      |      |       |        |     |       |      
|Revenues:                            |                                                                                                     |                |    |      |  |      |      |        |        |      |       |        |        |  |     |       
|                                     | Net sales from operations                                                                           |                |    | 14   |  |      |      | 47,938 |        |      |       | 48,925 |        |  |     | 47,922 |       
|                                     | Other income and revenues                                                                           |                |    |      |  |      |      | 905    |        |      |       | 921    |        |  |     | 1,080  |       
|                                     |                                                                                                     | Total revenues |    |      |  |      |      |        | 48,843 |      |       |        | 49,846 |  |     |        | 49,002 | 
|Operating expenses:                  |                                                                                                     |                |    |      |  |      |      |        |        |      |       |        |        |  |     |       
|                                     | Purchases, services and other                                                                       |                |    | 15   |  |      |      | 31,442 |        |      |       | 31,828 |        |  |     | 31,893 |       
|                                     | Payroll and related costs                                                                           |                |    | 16   |  |      |      | 2,786  |        |      |       | 2,851  |        |  |     | 3,103  |       
|                                     | Depreciation, amortization and writedowns                                                           |                |    | 17   |  |      |      | 3,843  |        |      |       | 4,771  |        |  |     | 5,504  |       
|                                     | Operating income                                                                                    |                |    |      |  |      |      | 10,772 |        |      |       | 10,396 |        |  |     | 8,502  |       
|Interest and other income (expense): |                                                                                                     |                |    |      |  |      |      |        |        |      |       |        |        |  |     |       
|                                     | Financial income (expense) and exchange differences, net                                            |                |    | 18   |  |      |      | 64     |        |      |       | (259   | )      |  |     | (167   | )     
|                                     | Other income (expense) from investments                                                             |                |    | 19   |  |      |      | 33     |        |      |       | (216   | )      |  |     | 43     |       
|                                     | Total interest and other income (expense)                                                           |                |    |      |  |      |      | 97     |        |      |       | (475   | )      |  |     | (124   | )     
|                                     | Income before extraordinary income (expense) and income taxes                                       |                |    |      |  |      |      | 10,869 |        |      |       | 9,921  |        |  |     | 8,378  |       
|Extraordinary income (expense) (a)   |                                                                                                     |                | 20 |      |  |      | (512 | )      |        |      | 1,837 |        |        |  | (29 | )     
|                                     | Income before income taxes                                                                          |                |    |      |  |      |      | 10,357 |        |      |       | 11,758 |        |  |     | 8,349  |       
|                                     | Income taxes                                                                                        |                |    | 21   |  |      |      | (4,335 | )      |      |       | (3,530 | )      |  |     | (3,127 | )     
|                                     | Income before minority interest                                                                     |                |    |      |  |      |      | 6,022  |        |      |       | 8,228  |        |  |     | 5,222  |       
|                                     | Minority interest in net income                                                                     |                |    |      |  |      |      | (251   | )      |      |       | (477   | )      |  |     | (629   | )     
|                                     | Net income                                                                                          |                |    |      |  |      |      | 5,771  |        |      |       | 7,751  |        |  |     | 4,593  |       
|                                     | Earnings per Share (based on the weighted-average number of shares
outstanding for each period) (b) |                |    | 22   |  |      |      | 1.44   |        |      |       | 1.98   |        |  |     | 1.20   |       
|                                     | Earnings per ADS (based on five Shares per ADS) (b)                                                 |                |    |      |  |      |      | 7.22   |        |      |       | 9.91   |        |  |     | 6.00   |       



---

|(a) |  | Before income taxes.
|--- |  | --------------------
|   
|(b) |  | Amount in euro.     

(The accompanying notes are an integral part of these consolidated financial statements)





---



##### Table of Contents



STATEMENTS OF CASH FLOWS
(Amounts stated in million
)

|                                                                       |                                                                                      |  |         |        |      |  |         |        |   |  |        |        |  
|---------------------------------------------------------------------- | ------------------------------------------------------------------------------------ |  | ------- | ------ | ---- |  | ------- | ------ | - |  | ------ | ------ | -
|                                                                       |                                                                                      |  | 2000    |        | 2001 |  | 2002   
|                                                                       |                                                                                      |  |         |        |      |  |        
|                                                                       |                                                                                      |  |        |        |     |  |       
|CASH FLOWS FROM OPERATING ACTIVITIES                                   |                                                                                      |  |         |        |      |  |         |        |   |  |        |       
|                                                                       | Net income                                                                           |  |         | 5,771  |      |  |         | 7,751  |   |  |        | 4,593  |  
|                                                                       | Minority interest in net income                                                      |  |         | 251    |      |  |         | 477    |   |  |        | 629    |  
|                                                                       | Depreciation and amortization                                                        |  |         | 3,788  |      |  |         | 4,671  |   |  |        | 4,962  |  
|                                                                       | Writedowns (revaluations), net                                                       |  |         | 130    |      |  |         | 571    |   |  |        | 591    |  
|                                                                       | Net change in other reserves                                                         |  |         | 344    |      |  |         | (323   | ) |  |        | 96     |  
|                                                                       | Net change in the reserve for employee termination indemnities                       |  |         | 45     |      |  |         | 23     |   |  |        | 33     |  
|                                                                       | Loss (gain) on disposal of assets, net                                               |  |         | (82    | )    |  |         | (170   | ) |  |        | (152   | )
|                                                                       | Dividend income                                                                      |  |         | (44    | )    |  |         | (40    | ) |  |        | (32    | )
|                                                                       | Interest income                                                                      |  |         | (535   | )    |  |         | (493   | ) |  |        | (322   | )
|                                                                       | Interest expense                                                                     |  |         | 674    |      |  |         | 811    |   |  |        | 568    |  
|                                                                       | Unrealized exchange differences                                                      |  |         | 48     |      |  |         | 67     |   |  |        | (65    | )
|                                                                       | Extraordinary expense (income), net                                                  |  |         | 512    |      |  |         | (1,837 | ) |  |        | 29     |  
|                                                                       | Income taxes                                                                         |  |         | 4,335  |      |  |         | 3,530  |   |  |        | 3,127  |  
|Cash generated from operating income before changes in working capital |                                                                                      |  | 15,237  |        |      |  | 15,038  |        |   |  | 14,057 |       
|(Increase) decrease:                                                   |                                                                                      |  |         |        |      |  |         |        |   |  |        |       
|                                                                       |  inventories                                                                        |  |         | (523   | )    |  |         | 179    |   |  |        | (209   | )
|                                                                       |  accounts receivable                                                                |  |         | (2,025 | )    |  |         | (21    | ) |  |        | (925   | )
|                                                                       |  accrued interest and other current assets                                          |  |         | (33    | )    |  |         | (89    | ) |  |        | 88     |  
|                                                                       |  trade and other accounts payable                                                   |  |         | 932    |      |  |         | (420   | ) |  |        | 555    |  
|                                                                       |  accrued expenses and other                                                         |  |         | 57     |      |  |         | 154    |   |  |        | (19    | )
|Cash from operations                                                   |                                                                                      |  | 13,645  |        |      |  | 14,841  |        |   |  | 13,547 |       
|                                                                       | Dividends received                                                                   |  |         | 154    |      |  |         | 129    |   |  |        | 147    |  
|                                                                       | Interest received                                                                    |  |         | 491    |      |  |         | 455    |   |  |        | 164    |  
|                                                                       | Interest paid                                                                        |  |         | (613   | )    |  |         | (790   | ) |  |        | (579   | )
|                                                                       | Net extraordinary expense paid                                                       |  |         | (177   | )    |  |         | (300   | ) |  |        | (162   | )
|                                                                       | Income taxes paid                                                                    |  |         | (2,917 | )    |  |         | (6,189 | ) |  |        | (2,539 | )
|                                                                       | Net cash provided from operating activities                                          |  |         | 10,583 |      |  |         | 8,146  |   |  |        | 10,578 |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                   |                                                                                      |  |         |        |      |  |         |        |   |  |        |       
|Investments:                                                           |                                                                                      |  |         |        |      |  |         |        |   |  |        |       
|                                                                       |  intangible assets                                                                  |  |         | (1,090 | )    |  |         | (1,304 | ) |  |        | (1,205 | )
|                                                                       |  fixed assets                                                                       |  |         | (4,341 | )    |  |         | (5,273 | ) |  |        | (6,843 | )
|                                                                       |  new consolidated subsidiaries and businesses                                       |  |         | (596   | )    |  |         | (2,662 | ) |  |        | (1,043 | )
|                                                                       |  investments                                                                        |  |         | (2,887 | )    |  |         | (420   | ) |  |        | (272   | )
|                                                                       |  securities                                                                         |  |         | (2,774 | )    |  |         | (441   | ) |  |        | (61    | )
|                                                                       |  financing receivables                                                              |  |         | (900   | )    |  |         | (684   | ) |  |        | (661   | )
|                                                                       |  change in accounts payable in relation to investments and depreciation
capitalized |  |         | 46     |      |  |         | (160   | ) |  |        | 193    |  
|                                                                       |                                                                                      |  | (12,542 | )      |      |  | (10,944 | )      |   |  | (9,892 | )     

(The accompanying notes are an integral part of these consolidated financial statements)





---



##### Table of Contents



STATEMENTS OF CASH FLOWS(Continued)
(Amounts stated in million
)

|                                     |                                                          |  |       |        |      |  |       |        |   |  |       |        |  
|------------------------------------ | -------------------------------------------------------- |  | ----- | ------ | ---- |  | ----- | ------ | - |  | ----- | ------ | -
|                                     |                                                          |  | 2000  |        | 2001 |  | 2002 
|                                     |                                                          |  |       |        |      |  |      
|                                     |                                                          |  |      |        |     |  |     
|Disposals:                           |                                                          |  |       |        |      |  |       |        |   |  |       |       
|                                     |  intangible assets                                      |  |       | 14     |      |  |       | 8      |   |  |       | 77     |  
|                                     |  fixed assets                                           |  |       | 149    |      |  |       | 882    |   |  |       | 475    |  
|                                     |  consolidated subsidiaries and businesses               |  |       | 94     |      |  |       | 1,084  |   |  |       | 270    |  
|                                     |  investments                                            |  |       | 28     |      |  |       | 140    |   |  |       | 113    |  
|                                     |  securities                                             |  |       | 2,970  |      |  |       | 978    |   |  |       | 194    |  
|                                     |  financing receivables                                  |  |       | 670    |      |  |       | 1,333  |   |  |       | 234    |  
|                                     |  change in accounts receivable in relation to disposals |  |       | 22     |      |  |       | (35    | ) |  |       |        |  
|                                     |                                                          |  | 3,947 |        |      |  | 4,390 |        |   |  | 1,363 |       
|                                     | Net cash used in investing activities                    |  |       | (8,595 | )    |  |       | (6,554 | ) |  |       | (8,529 | )
|CASH FLOWS FROM FINANCING ACTIVITIES |                                                          |  |       |        |      |  |       |        |   |  |       |       
|                                     | Proceeds from long-term debt                             |  |       | 3,184  |      |  |       | 636    |   |  |       | 2,145  |  
|                                     | Payments of long-term debt                               |  |       | (3,254 | )    |  |       | (1,311 | ) |  |       | (503   | )
|                                     | Additions to (reductions of) short-term debt             |  |       | 191    |      |  |       | 141    |   |  |       | 2,094  |  
|                                     |                                                          |  | 121   |        |      |  | (534  | )      |   |  | 3,736 |       
|                                     | Payments to (by) minority shareholders                   |  |       | (5     | )    |  |       | 1,337  |   |  |       | 62     |  
|                                     | Sale (purchase) of additional interests in subsidiaries  |  |       | (20    | )    |  |       | 943    |   |  |       | (103   | )
|                                     | Dividends to minority shareholders                       |  |       | (1,519 | )    |  |       | (1,736 | ) |  |       | (3,035 | )
|                                     | Other                                                    |  |       | (574   | )    |  |       | (1,494 | ) |  |       | (770   | )
|                                     | Net cash used in financing activities                    |  |       | (1,997 | )    |  |       | (1,484 | ) |  |       | (110   | )
|                                     | Effect of change in consolidation area                   |  |       | 2      |      |  |       | 25     |   |  |       | 57     |  
|                                     | Effect of exchange differences                           |  |       | 39     |      |  |       | 13     |   |  |       | (121   | )
|                                     | Net cash flows for the year                              |  |       | 32     |      |  |       | 146    |   |  |       | 1,875  |  
|                                     | Cash and cash equivalents at beginning of the year       |  |       | 1,212  |      |  |       | 1,244  |   |  |       | 1,390  |  
|                                     | Cash and cash equivalents at end of the year             |  |       | 1,244  |      |  |       | 1,390  |   |  |       | 3,265  |  

(The accompanying notes are an integral part of these consolidated financial statements)





---



##### Table of Contents



SUPPLEMENTAL INFORMATION
(Amounts stated in million
)

|                                                                      |  |      |       |      |  |      |        |   |  |  |       |  
|--------------------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ------ | - |  |  | ----- | -
|                                                                      |  | 2000 |       | 2001 |  | 2002
|                                                                      |  |      |       |      |  |     
|                                                                      |  |     |       |     |  |    
|Effect of investments in new consolidated subsidiaries and businesses |  |      |       |      |  |      |        |   |  |  |       |  
|Non-current assets                                                    |  |      | 1,978 |      |  |      | 7,262  |   |  |  | 1,245 |  
|Current assets                                                        |  |      | 103   |      |  |      | 504    |   |  |  | 697   |  
|Net borrowings                                                        |  |      | (888  | )    |  |      | (1,054 | ) |  |  | 125   |  
|Other liabilities                                                     |  |      | (413  | )    |  |      | (2,307 | ) |  |  | (844  | )
|Net effect of investments                                             |  |      | 780   |      |  |      | 4,405  |   |  |  | 1,223 |  
|Transferred from equity investment                                    |  |      | (36   | )    |  |      | (1,215 | ) |  |  | (4    | )
|Minority interest and reserves                                        |  |      | (135  | )    |  |      |        |   |  |  |       |  
|Purchase price                                                        |  |      | 609   |      |  |      | 3,190  |   |  |  | 1,219 |  
|less: cash acquired                                                   |  |      | (13   | )    |  |      | (528   | ) |  |  | (176  | )
|Cash from investments in consolidated subsidiaries                    |  |      | 596   |      |  |      | 2,662  |   |  |  | 1,043 |  
|Effect of disposal of consolidated subsidiaries and businesses        |  |      |       |      |  |      |        |   |  |  |       |  
|Non-current assets                                                    |  |      | 27    |      |  |      | 1,068  |   |  |  | 153   |  
|Current assets                                                        |  |      | 57    |      |  |      | 185    |   |  |  | 53    |  
|Net borrowings                                                        |  |      | (14   | )    |  |      | (184   | ) |  |  | (16   | )
|Other liabilities                                                     |  |      | (40   | )    |  |      | (562   | ) |  |  | (85   | )
|Net effect of disposal                                                |  |      | 30    |      |  |      | 507    |   |  |  | 105   |  
|Gain (loss) on disposal                                               |  |      | 70    |      |  |      | 597    |   |  |  | 194   |  
|Minority interest and reserves                                        |  |      |       |      |  |      | (19    | ) |  |  | (6    | )
|Selling price                                                         |  |      | 100   |      |  |      | 1,085  |   |  |  | 293   |  
|less: cash conferred                                                  |  |      | (6    | )    |  |      | (1     | ) |  |  | (23   | )
|Cash flow on disposal                                                 |  |      | 94    |      |  |      | 1,084  |   |  |  | 270   |  

(The accompanying notes are an integral part of these consolidated financial statements)





---



##### Table of Contents



STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Amounts stated in million E)

|                                                                                         |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|---------------------------------------------------------------------------------------- |  | ------- | ----- | ---------- |  | -------- | --- | ----------- |  | ---------- | ----- | ------------- |  | -------- | ----- | ------------- |  |  | ------ | - |  | ------ | --- |  |  |  | --- | - |  |  | -- | 
|                                                                                         |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  | Former |     |  |  |  |     |   |  | 
|                                                                                         |  |         |       |            |  | Legal    |     | Reserve for |  | Reserve    |       | Distributable |  | Agip SpA |       |               |  |  |        |   |  |       
|                                                                                         |  | Share   |       | reserve of |  | treasury |     | from        |  | reserve of |       | reserves      |  | State    |       | Consolidation
|                                                                                         |  | capital |       | Eni SpA    |  | shares   |     | mergers     |  | Eni SpA    |       | reconstituted |  | grants   |       | reserves     
|                                                                                         |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |              
|Balance at December 31,
1999                                                             |  |         | 4,133 |            |  |          | 278 |             |  |            |       |               |  |          |       |               |  |  | 1,265  |   |  |        | 103 |  |  |  | 65  |   |  |  | 6  | 
|Dividends distribution
(euro 0,181
per Share)                                            |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Allocation of 1999 net
income                                                            |  |         |       |            |  |          | 112 |             |  |            |       |               |  |          |       |               |  |  | 590    |   |  |        |     |  |  |  |     |   |  |  |    | 
|Increase in share capital                                                                |  |         |      |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|State grants                                                                             |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  | 4   |   |  |  |    | 
|Adjustment to legal
reserve to
one-fifth of share
capital                                |  |         |       |            |  |          | 437 |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Authorization to
repurchase of
shares                                                    |  |         |       |            |  |          |     |             |  |            | 3,400 |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  | (11 | ) |  |  |    | 
|Shares repurchased                                                                       |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Exchange differences
arising on the
translation of foreign
currency
financial statements |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Other changes                                                                            |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Net income for the year                                                                  |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Balance at December 31,
2000                                                             |  |         | 4,133 |            |  |          | 827 |             |  |            | 3,400 |               |  |          |       |               |  |  | 1,855  |   |  |        | 103 |  |  |  | 58  |   |  |  | 6  | 
|Dividends distribution
(euro 0.212
per Share)                                            |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Allocation of 2000 net
income                                                            |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  | 1,658  |   |  |        |     |  |  |  |     |   |  |  |    | 
|Shares repurchased                                                                       |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Conversion of the
share capital
from italian lire to euro                                |  |         | (132  | )          |  |          | 132 |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Excess of value of net
assets over
acquisition cost of
equity
investments                |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  | 25 | 
|State grants                                                                             |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  | 4   |   |  |  |    | 
|Exchange differences
arising on the
translation of foreign
currency
financial statements |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Other changes                                                                            |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Net income for the year                                                                  |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Balance at December 31,
2001                                                             |  |         | 4,001 |            |  |          | 959 |             |  |            | 3,400 |               |  |          |       |               |  |  | 3,513  |   |  |        | 103 |  |  |  | 62  |   |  |  | 31 | 
|Dividends distribution
(euro 0.75
per Share)                                             |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  | (757   | ) |  |        |     |  |  |  |     |   |  |  |    | 
|Allocation of 2001 net
income                                                            |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  | 3      |   |  |        |     |  |  |  |     |   |  |  |    | 
|Increase of reserve
for shares
granted to employees
article
2349 civil code              |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  | (2     | ) |  |        |     |  |  |  |     |   |  |  |    | 
|Authorization to
repurchase shares                                                       |  |         |       |            |  |          |     |             |  |            | 2,000 |               |  |          |       |               |  |  | (2,000 | ) |  |        |     |  |  |  |     |   |  |  |    | 
|Reserve from mergers                                                                     |  |         |       |            |  |          |     |             |  |            |       |               |  |          | 1,390 |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Share repurchased                                                                        |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Share issued under
stock grant
plan                                                      |  |         | 1     |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Exchange differences
arising on the
translation of foreign
currency
financial statements |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Other changes                                                                            |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Net income for the year                                                                  |  |         |       |            |  |          |     |             |  |            |       |               |  |          |       |               |  |  |        |   |  |        |     |  |  |  |     |   |  |  |    | 
|Balance at December 31,
2002                                                             |  |         | 4,002 |            |  |          | 959 |             |  |            | 5,400 |               |  |          | 1,390 |               |  |  | 757    |   |  |        | 103 |  |  |  | 62  |   |  |  | 31 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                                         |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  |        |  
|---------------------------------------------------------------------------------------- |  | ------------ | -- | ---------- |  | ---------- | - | ---------- |  | ---------- | ------ | ----------- |  | -------- | -- | ------------ |  | ----- | ------ | - |  |  | ------ | - |  |  | ------ | - |  |  | ------ | - |  |  | ------ | -
|                                                                                         |  | Reserve for  |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  | 
|                                                                                         |  | shares       |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  | 
|                                                                                         |  | granted to   |    | Reserve    |  |            |   |            |  | Loans      |        | Cumulative  |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |  
|                                                                                         |  | employees    |    | article 13 |  |            |   |            |  | serviced   |        | translation |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |  
|                                                                                         |  | article 2349 |    | Law Decree |  | Reserve    |   | by the     |  | adjustment |        | Treasury    |  | Retained |    | Net income   |  |       |        |  
|                                                                                         |  | civil code   |    | 124/1993   |  | Law 292/93 |   | Government |  | reserve    |        | shares      |  | earnings |    | for the year |  | Total
|                                                                                         |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |      
|Balance at December 31,
1999                                                             |  |              |   |            |  |            |   |            |  |            | 3,826  |             |  |          | 8  |              |  |       | 674    |   |  |  |        |   |  |  | 5,183  |   |  |  | 2,857  |   |  |  | 18,398 |  
|Dividends distribution
(euro 0,181
per Share)                                            |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  | (1,446 | ) |  |  | (1,446 | )
|Allocation of 1999 net
income                                                            |  |              | 2  |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  | 707    |   |  |  | (1,411 | ) |  |  |        |  
|Increase in share capital                                                                |  |              |    |            |  |            |   |            |  |            |       |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  |        |  
|State grants                                                                             |  |              |    |            |  |            |   |            |  |            |        |             |  |          | (4 | )            |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  |        |  
|Adjustment to legal
reserve to
one-fifth of share
capital                                |  |              |    |            |  |            |   |            |  |            | (437   | )           |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  |        |  
|Authorization to
repurchase of
shares                                                    |  |              |    |            |  |            |   |            |  |            | (3,389 | )           |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  |        |  
|Shares repurchased                                                                       |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  | (574   | ) |  |  |        |   |  |  |        |   |  |  | (574   | )
|Exchange differences
arising on the
translation of foreign
currency
financial statements |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       | 237    |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  | 237    |  
|Other changes                                                                            |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  | 15     |   |  |  |        |   |  |  | 15     |  
|Net income for the year                                                                  |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  | 5,771  |   |  |  | 5,771  |  
|Balance at December 31,
2000                                                             |  |              | 2  |            |  |            |   |            |  |            |        |             |  |          | 4  |              |  |       | 911    |   |  |  | (574   | ) |  |  | 5,905  |   |  |  | 5,771  |   |  |  | 22,401 |  
|Dividends distribution
(euro 0.212
per Share)                                            |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  | (1,664 | ) |  |  | (1,664 | )
|Allocation of 2000 net
income                                                            |  |              | 1  |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  | 2,448  |   |  |  | (4,107 | ) |  |  |        |  
|Shares repurchased                                                                       |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  | (1,494 | ) |  |  |        |   |  |  |        |   |  |  | (1,494 | )
|Conversion of the
share capital
from italian lire to euro                                |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  |        |  
|Excess of value of net
assets over
acquisition cost of
equity
investments                |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  | 25     |  
|State grants                                                                             |  |              |    |            |  |            |   |            |  |            |        |             |  |          | (4 | )            |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  |        |  
|Exchange differences
arising on the
translation of foreign
currency
financial statements |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       | 451    |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  | 451    |  
|Other changes                                                                            |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  | 13     |   |  |  |        |   |  |  | 13     |  
|Net income for the year                                                                  |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  | 7,751  |   |  |  | 7,751  |  
|Balance at December 31,
2001                                                             |  |              | 3  |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       | 1,362  |   |  |  | (2,068 | ) |  |  | 8,366  |   |  |  | 7,751  |   |  |  | 27,483 |  
|Dividends distribution
(euro 0.75
per Share)                                             |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  | (2,119 | ) |  |  | (2,876 | )
|Allocation of 2001 net
income                                                            |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  | 5,629  |   |  |  | (5,632 | ) |  |  |        |  
|Increase of reserve
for shares
granted to employees
article
2349 civil code              |  |              | 2  |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  |        |  
|Authorization to
repurchase shares                                                       |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  |        |  
|Reserve from mergers                                                                     |  |              |    |            |  |            | 1 |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  | (1,391 | ) |  |  |        |   |  |  |        |  
|Share repurchased                                                                        |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  | (770   | ) |  |  |        |   |  |  |        |   |  |  | (770   | )
|Share issued under
stock grant
plan                                                      |  |              | (1 | )          |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  |        |  
|Exchange differences
arising on the
translation of foreign
currency                      |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  |        |   |  |  |        |  
|financial statements                                                                     |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       | (2,125 | ) |  |  |        |   |  |  |        |   |  |  |        |   |  |  | (2,125 | )
|Other changes                                                                            |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  | (48    | ) |  |  |        |   |  |  | (48    | )
|Net income for the year                                                                  |  |              |    |            |  |            |   |            |  |            |        |             |  |          |    |              |  |       |        |   |  |  |        |   |  |  |        |   |  |  | 4,593  |   |  |  | 4,593  |  
|Balance at December 31,
2002                                                             |  |              | 4  |            |  |            | 1 |            |  |            |        |             |  |          |    |              |  |       | (763   | ) |  |  | (2,838 | ) |  |  | 12,556 |   |  |  | 4,593  |   |  |  | 26,257 |  

(The accompanying notes are an integral part of these consolidated financial
statements)





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##### Table of Contents



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1) General

Eni SpA and its subsidiaries («Eni») together constitute a fully
integrated company operating in the oil and gas, electricity generation,
petrochemicals, oilfield services and engineering industries. Eni SpA is the
successor entity to Ente Nazionale Idrocarburi, which was established in
1953 as public statutory body to act as Italys national oil and gas
company. In July 1992, in connection with the privatization program of the
Italian Government (the «Government»), the public statutory body was
converted into a joint stock company, with the Ministry of Economy and
Finance (previously Ministry of Treasury, Budget and Economic Planning) of
Italy as the sole shareholder. See Note14 «Shareholders equity» for further
information regarding share capital.

2) Summary of significant accounting and reporting policies

Basis of presentation

The consolidated financial statements of Eni have been prepared in
accordance with Enis group accounting policies which are in accordance with
principles prescribed by Italian law and supplemented by the accounting
principles issued by the Consiglio Nazionale dei Dottori Commercialisti e
dei Ragionieri or, in the absence thereof and if applicable, the
International Accounting Standards Board. In the absence of indications in
said principles, particularly related to the application of the Unit of
Production and Production Sharing Agreement methods of accounting, specific
criteria for hydrocarbons exploration and production applied internationally
have been followed (collectively, «Italian GAAP»). Italian GAAP differ in
certain respects from generally accepted accounting principles in the United
States («U.S. GAAP»). A description of these differences and their effects
on net income and shareholders equity is set forth in Notes 27 and 28. The
financial statements have been reformatted from the original Italian
statutory financial statement presentation and include certain additional
disclosures in order to conform more closely to the form and content of
financial statements required by the U.S. Securities and Exchange Commission
(the «SEC»). Reclassifications concerned essentially a different aggregation
of certain items that were distinguished between current and non-current, as
well as the recording as a decrease in net borrowings of implicit interests
and the reclassification as a decrease in net equity of treasury shares
purchased, items that in the original Italian statutory financial statements
are classified as current assets and fixed assets, respectively.

Principles of consolidation

The consolidated financial statements include the statutory accounts of
Eni SpA and all Italian and foreign companies controlled by Eni SpA,
directly or indirectly, either by holding the majority of the voting rights
or sufficient votes to enable it to exercise control at ordinary
shareholders meetings. The consolidated financial statements also include,
on a proportional basis, the accounts of companies controlled jointly with
other partners, except for joint ventures which are accounted for under the
equity method. The effects of proportionate consolidation are not material.
Insignificant subsidiaries, companies held exclusively for sale and
companies in liquidation, if their exclusion does not result in a
misrepresentation of the companys financial condition and consolidated
results, are not included in the scope of consolidation. The effects of
these exclusions on the whole, are not material. Companies excluded from
consolidation are accounted for under the equity method or cost basis as
described below under the heading Investments.

Investments

Investments in non-consolidated subsidiaries excluded from the
consolidation process and in companies where Eni SpA has a 20% to 50%
investment, if material, are accounted for using the equity method. Other
investments are recorded at cost, adjusted for permanent impairment in
value.

Sales of stakes in consolidated subsidiaries

Gains or losses on sales of stakes in consolidated subsidiaries are
recorded in the income statement for the amount corresponding to the
difference between proceeds from the sale and the divested stake of net
equity.

Fiscally driven entries and intercompany transactions

The statutory financial statements reflect certain tax-driven entries.
The effects of the tax-driven entries and all intercompany balances and
transactions have been eliminated in consolidation.

Foreign currency translation

Assets and liabilities of foreign consolidated companies have been
translated at exchange rates ruling at year-end. Equity accounts of foreign
consolidated companies are translated using the historic exchange rates.
Income statement accounts of foreign consolidated companies are translated
at the average rates for the period. Related translation adjustments are
reported as a component of shareholders equity. Financial





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##### Table of Contents



statements of foreign subsidiaries which are translated into euro are
denominated in their functional currencies.

Monetary assets and liabilities which are denominated in currencies
other than the functional currency are translated into euro using the
prevailing rate at the balance sheet date. All differences are recognized in
earnings in the period.

Accounting principles

Cash and cash equivalents

Eni considers cash and cash equivalents to be its cash on hand and on
deposit with banks and short-term investments with original maturities of
90 days or less.

Marketable securities

Marketable securities are stated at the lower of purchase cost or
market value and are usually available for sale.

Inventories

Inventories, except for those relating to contract work in progress,
are stated at the lower of cost or market value. The cost of inventories of
hydrocarbon (crude oil and natural gas) and petroleum products, representing
58%, and 57% of Enis inventories at December 31, 2001 and 2002,
respectively, is substantially determined by the last-in, first-out (LIFO)
method; the cost of inventories of the Petrochemicals segment, representing
18% and 19% of Enis inventories at December 31, 2001 and 2002,
respectively, is generally determined by the average cost method.

Contract work in progress, representing 9% and 6% of inventories at
December 31, 2001 and 2002, respectively, is recorded using the
percentage-of-completion method. Payments received in advance of
construction are subtracted from inventories and any excess of such advances
over the value of work performed is recorded as a liability. Contract work
in progress not yet invoiced, whose payment is agreed in a foreign currency,
is recorded at current exchange rates at year-end. Future losses that exceed
the revenues earned are accrued for when the company becomes aware such
losses will occur.

The remaining inventories are determined, generally, by the average
cost method.

Fixed assets

Fixed assets are stated at cost as adjusted by revaluations in
accordance with various Italian laws; revaluations are included in
consolidated shareholders equity. Eni capitalizes interest on debt incurred
in connection with specific projects. Cash requirements in excess of such
debts are satisfied primarily through funds generated and contributed in the
period of construction.

Investment grants from Government agencies are recorded in a contra
asset account when authorized, if all the required conditions have been
met.Such grants are amortized over the useful life of the assets.

Depreciation of fixed assets, except those related to exploration and
production activities, is computed on the revalued cost, using the
straight-line method by applying depreciation rates that are based on the
estimated remaining useful lives of the fixed assets.

Fixed assets are written down whenever events and changes in
circumstances indicate that the carrying amount may not be recoverable. Eni
calculates the writedown as the difference between the expected accumulated
discounted cash flow and the book value of the asset.

When the circumstances causing impairment cease to exist, Eni reverses
previously recorded impairment charges net of depreciation.

Renewals and improvements which extend asset lives are capitalized;
maintenance and ordinary repairs are expensed as incurred.





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##### Table of Contents



Intangible assets

Intangible assets are stated at cost, including interest on debt
incurred in connection with specific projects as indicated previously for
fixed assets.

Goodwill is recorded as an asset when acquired for consideration and is
amortized at constant rates in the periods of use, provided it is no longer
than 20 years from the year of recording.

Other intangible assets, except for those related to exploration and
production activities, are amortized over the period of expected benefit.
Intangibles are written down whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. Eni calculates the
writedowns as the difference between the expected accumulated discounted
cash flow and the book value of the intangible assets. When the
circumstances causing impairment cease to exist, Eni reverses previously
recorded impairment charges net of amortization. However, goodwill and
capitalized organizational costs are not revalued.

Exploration and Development activities

Acquisition of mineral rights

Costs associated with the acquisition of mineral rights, including
reserves purchased in connection with such acquisition, are capitalized.
Mineral rights can also include exploration permits, among other items.
Mineral rights are amortized on a straight-line basis over the expected
period of benefit. Capitalized costs associated with proved reserves are
amortized on a Unit-of-Production («UOP») basis, while capitalized costs
related to all other reserves are not amortized until classified as proved.
Capitalized costs related to abandoned drilling programs are expensed.

Exploration

Costs associated with exploratory activities for oil and gas producing
properties incurred to obtain information in order to characterize fields
(such as acquisition of seismic data from third parties, test wells and
geophysical surveys) are recorded as intangible assets and amortized in full
in the period incurred (i.e. expensed as incurred for financial reporting
purposes).

Development

Development costs are those costs incurred to obtain access to proved
reserves and to provide facilities for extracting, treating, gathering and
storing oil and gas and are capitalized and amortized on a UOP basis. Costs
related to unsuccessful developmental wells are expensed immediately as loss
on disposal.

Writedowns and revaluations of development costs are made on the same
basis as those for fixed assets.

Production

Production costs are costs to operate and maintain wells and field
equipment and are expensed as incurred.

Abandonment

Eni regularly accrues costs expected to be incurred with respect to
eventual well abandonment, including costs associated with site restoration,
on a unit of production basis.

Reserve for employee termination indemnities and other employee benefits

Enis employees are eligible, immediately upon termination, for
severance pay pursuant to Italian law. Eni accrues a reserve for such
employee termination liabilities over the period of employment. The amount
accrued at each balance sheet date reflects the aggregate liability for all
eligible employees if terminated, net of applicable advances.

In addition, Eni makes contributions to certain employee associations
that provide medical and various other employee benefits to current
employees. These plans are not administered by Eni and contributions are
determined in accordance with the provisions of negotiated contracts with
trade unions. Eni expenses the contributions to the associations in the
periods in which they are made. Such amounts are not significant.

Enis pension obligations relate only to operations outside Italy and
are not significant.





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##### Table of Contents



Treasury shares

Treasury shares are recorded at cost written-down for impairments in
value as a reduction of shareholders equity. When the reasons for the
impairment cease to exist, treasury shares can be revalued up to the
original cost basis.

Recognition of revenues and costs

Revenues from sales of products are recognized upon transfer of title.
In particular, revenues are recognized:



| | 1) |  | for natural gas, when the natural gas leaves Enis distribution
network and is delivered to the customer;                                                                                           
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2) |  | for crude oil, generally upon shipment;                                                                                                                                                             
|
| | 3) |  | for petroleum products sold to retail distribution networks,
generally upon delivery to the service stations, whereas all other
sales are generally recognized upon shipment from Enis plants; and,
|
| | 4) |  | for chemicals, generally upon shipment.                                                                                                                                                             

In all instances where revenue is recognized upon shipment, all risk of
loss has transferred to the buyer upon shipment.

Revenues from natural gas and crude oil production from properties in
which Eni has an interest together with other producers are recognized based
on actual quantities produced and sold on Enis behalf (sales method).
Differences between Enis net working interest volume and actual production
volumes are not significant.

Revenues related to long-term construction contracts are recognized
using the percentage-of-completion method measured on the cost-to-cost
basis. Provisions for anticipated losses on long-term contracts are recorded
in full when such losses become evident. Revenues related to amounts in
excess of the original contract price due to the incurrence of unanticipated
additional costs (i.e. Eni claims against third parties), are recognized
when it is probable that the claim will result in additional contract
revenue and the amount of the claim can be reasonably estimated.

Costs are recognized when the related goods and services are sold,
consumed or allocated, or when their future useful lives cannot be
determined.

Eni is
party to certain Production Sharing Agreements whereby taxes
are settled by joint venture partners which are state-owned entities in the
name and on behalf of Eni out of reserves produced. The Company records such
income taxes owed by Eni but paid on its behalf in revenues and income tax
expense.

Income taxes

Deferred tax assets or liabilities are recognized for differences
between the financial reporting and tax bases of assets and liabilities.
Deferred tax liabilities are not recognized if ultimate payment is not
deemed probable. Deferred tax assets are recognized when there is a
reasonable expectation of their realization. Deferred tax liabilities are
recorded in the «Non-current income tax liabilities» account, while deferred
tax assets are recorded in «Other» (non-current assets). Deferred tax assets
are offset against deferred tax liabilities if they relate to the same tax
paying entity.

Derivatives





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##### Table of Contents



With respect to interest rate, foreign exchange and price risks, Eni
enters into derivative transactions to hedge specific transactions as well
as net interest rate and foreign currency positions. See Note 23 for a
description of Enis overall strategy and description of financial
instruments utilized to mitigate market risk.

The interest differentials to be received or paid on interest rate
swaps, as well as interest differentials on interest rate collars, are
charged to the income statement on an accrual basis. The interest
differentials on forward rate agreements are recognized at the date of
settlement of the contract and charged to the income statement on an accrual
basis over the period hedged. Such interest rate differentials are recorded
in «Accrued interest and other current assets» or «Accrued expenses and
other» (current liabilities) as applicable until recognized in the income
statement as «Financial expense and exchange differences, net».

Foreign exchange hedge derivatives (swaps, futures, options, etc.) are
valued at the spot rate at year-end and the related gains and losses are
recorded in income as exchange gain and loss. Premiums or discounts are
accrued over the life of the contract and classified as exchange
differences. With reference to options, the premiums paid are recorded as
«Marketable securities» or «Other assets», depending on the maturity of the
contract.

The gains on price risk hedge derivatives (interest rate swaps, futures
and swaps) are recorded in income to the extent of writedowns of hedged
assets; losses are recorded in income if necessary to adjust the hedged
assets to the value attributed to it by the derivative when they are
incurred, consistent with the evaluation of the hedged assets. The gains and
losses are classified consistently with the classification of the sale of
the hedged asset.

Environmental expenditures

Environmental expenditures are made in order to prevent, reduce, repair
or control the environmental impact of production activities. Environmental
expenditures that improve or extend the useful lives and increase the
capacity or safety of fixed assets are capitalized in the appropriate fixed
asset accounts. Ongoing environmental compliance costs are expensed as
incurred. Reserves for environmental contingencies are established when it
becomes probable or certain that a liability has been incurred and the
amount can be reasonably estimated.

Restructuring costs

The costs of redundancy incentives are accrued when a workforce
reduction program is defined and the conditions precedent for its
implementation have been satisfied. Such charges are recorded as
extraordinary items. Restructuring charges also include the costs of
closures of facilities and asset impairments.

Research and development costs

Research and development costs are generally expensed as incurred.

For the years ended December 31, 2000, 2001 and 2002, total research
and development costs were euro 234 million, euro 203 million and euro 175
million, respectively.

Statements of cash flows

The cash flow statements are prepared in accordance with International
Accounting Standards, using the indirect method.





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##### Table of Contents



Unless otherwise indicated, all monetary amounts in the financial
statements and in these notes are presented in millions of euro, except share,
per share, ADS and per ADS data.

Reclassification of financial statements

Starting from 2002 the item «Cash» has been renamed «Cash and cash
equivalents», and includes cash and, in addition, marketable securities and
current financing receivables with original maturities of less than 90 days.
Accordingly, marketable securities and current financing receivables for the
year 2001 have been reclassified for euro 11 and 74 million, respectively.

3) Marketable securities

Marketable securities consist of the following:

|                         |  |               |       |               |  |  |       | 
|------------------------ |  | ------------- | ----- | ------------- |  |  | ----- | 
|                         |  | Net value at  |       | Net value at 
|                         |  | Dec. 31, 2001 |       | Dec. 31, 2002
|                         |  |               |       |              
|Investments              |  |               | 3     |               |  |  |       | 
|Other securities:        |  |               |       |               |  |  |       | 
| Italian treasury bonds |  |               | 1,035 |               |  |  | 907   | 
| other                  |  |               | 327   |               |  |  | 301   | 
|                         |  |               | 1,362 |               |  |  | 1,208 | 
|                         |  |               | 1,365 |               |  |  | 1,208 | 

Other securities of euro 1,208 million decreased by euro 154 million
primarily due to divestments by Eni SpA (euro 135 million). On December 31,
2002 the due dates of other securities is the following:

|                 |  |               |       |               |  |  |       | 
|---------------- |  | ------------- | ----- | ------------- |  |  | ----- | 
|                 |  | Net value at  |       | Net value at 
|                 |  | Dec. 31, 2001 |       | Dec. 31, 2002
|                 |  |               |       |              
|within 12 months |  |               | 208   |               |  |  | 141   | 
|within 5 years   |  |               | 965   |               |  |  | 882   | 
|beyond 5 years   |  |               | 189   |               |  |  | 185   | 
|                 |  |               | 1,362 |               |  |  | 1,208 | 

Securities for euro 489 million are considered coverage of technical
reserves of Padana Assicurazioni SpA (euro 436 million at December 31, 2001).

4) Receivables

Receivables by type and due date consist of the following:





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|            |  |         |        |             |  |               |       |         |  |             |        |       |  |  |        |               |  |  |       |  |  |  |        | 
|----------- |  | ------- | ------ | ----------- |  | ------------- | ----- | ------- |  | ----------- | ------ | ----- |  |  | ------ | ------------- |  |  | ----- |  |  |  | ------ | 
|            |  |         |        |             |  | Dec. 31, 2001 |       |         |  |             |        |       |  |  |        | Dec. 31, 2002 |  |  |       | 
|            |  | Current |        | Non-current |  | Total         |       | Current |  | Non-current |        | Total
|            |  |         |        |             |  |               |       |         |  |             |        |      
|            |  |         |        |             |  |               |       |         |  | (million E) |        |       |  |  |        |               |  | 
|Trade:      |  |         |        |             |  |               |       |         |  |             |        |       |  |  |        |               |  |  |       |  |  |  |        | 
| customers |  |         | 8,589  |             |  |               | 90    |         |  |             | 8,679  |       |  |  | 8,656  |               |  |  | 161   |  |  |  | 8,817  | 
| other     |  |         | 560    |             |  |               |       |         |  |             | 560    |       |  |  | 273    |               |  |  |       |  |  |  | 273    | 
|            |  |         | 9,149  |             |  |               | 90    |         |  |             | 9,239  |       |  |  | 8,929  |               |  |  | 161   |  |  |  | 9,090  | 
|Financing   |  |         | 1,221  |             |  |               | 1,638 |         |  |             | 2,859  |       |  |  | 1,340  |               |  |  | 1,286 |  |  |  | 2,626  | 
|Other       |  |         | 3,284  |             |  |               | 950   |         |  |             | 4,234  |       |  |  | 3,261  |               |  |  | 1,053 |  |  |  | 4,314  | 
|            |  |         | 13,654 |             |  |               | 2,678 |         |  |             | 16,332 |       |  |  | 13,530 |               |  |  | 2,500 |  |  |  | 16,030 | 

«Trade» receivables of euro 9,090 decreased by euro 149 million. This
decrease relates primarily to the effect of exchange rate differences on the
translation of financial statements prepared in foreign currencies (euro 228
million).

«Financing» receivables of euro 2,626 million are comprised almost
entirely of loans made for operating purposes of euro 2,624 million (euro 2,859
million at December 31, 2001 included only loans made for operating purposes).
Loans made to affiliates are granted primarily by the Exploration & Production
segment (euro 686 million) and Gas & Power segment (euro 1,744 million). The
euro 233 million decrease relates primarily to the effect of exchange rate
differences on the translation of financial statements prepared in foreign
currencies (euro 424 million) and to the consolidation of Polimeri Europa SpA
(euro 216 million); this decrease is offset in part by a loan made to an
affiliated company, EnBW Eni Verwaltungsgesellschaft mbH, for the acquisition
of Gasversorgung Süddeutschland GmbH (euro 264 million).

Repayment of financing receivables of euro 38 million (euro 267 million at
December 31, 2001) is contingent upon the outcome of financed activities, while
a portion of the loans may be converted into capital.

«Other» receivables of euro 4,234 and 4,314 as at December 31, 2001 and
2002, respectively, consist of the following:

|                                                                 |                           |  |               |       |               |  |       |     | 
|---------------------------------------------------------------- | ------------------------- |  | ------------- | ----- | ------------- |  | ----- | --- | 
|                                                                 |                           |  | Dec. 31, 2001 |       | Dec. 31, 2002
|                                                                 |                           |  |               |       |              
|Accounts receivable from:                                        |                           |  |               |       |               |  |       |    
| Italian tax authorities related to:                            |                           |  |               |       |               |  |       |    
|                                                                 |  income tax credits      |  |               | 1,435 |               |  |       | 973 | 
|                                                                 |  value added tax (VAT)   |  |               | 212   |               |  |       | 383 | 
|                                                                 |  interest on tax credits |  |               | 276   |               |  |       | 317 | 
|                                                                 |  other                   |  |               | 50    |               |  |       | 113 | 
| joint venture operating partners in exploration and production |                           |  | 602           |       |               |  | 758   |    
| foreign tax authorities                                        |                           |  | 176           |       |               |  | 314   |    
| insurance companies                                            |                           |  | 296           |       |               |  | 276   |    
| Italian governmental entities                                  |                           |  | 160           |       |               |  | 202   |    
| receivables from affiliates                                    |                           |  | 67            |       |               |  | 27    |    
|Prepayments for services                                         |                           |  | 95            |       |               |  | 174   |    
|Other receivables                                                |                           |  | 865           |       |               |  | 777   |    
|                                                                 |                           |  | 4,234         |       |               |  | 4,314 |    

Accounts receivable from Italian tax authorities for tax credits do not
include tax credits generated in 1988, and applicable interest, for which Eni
companies have filed formal appeals (mainly Eni SpA for euro 104 million and
euro 107 million at December 31, 2001 and 2002, respectively). These
receivables have been written-off pending the final outcome of the appeal. The
decrease in income tax credits of euro 462 million is directly attributable to
the use of such credits to offset current tax liabilities.

The interest rate applicable to tax credits has been 2.5% for each six month
period from January 1, 1997.





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##### Table of Contents



Approximately 45% of Enis non-current receivables at December 31, 2002
were denominated in currencies other than the euro (53% at December 31, 2000).

Eni did not have any significant concentration of credit risk as of December
31, 2001 and 2002.

The above amounts are net of the allowance for doubtful accounts, which
amounts to euro 875 million, 1,277 million and 928 million at December 31,
2002, 2001 and 2000, respectively. The evolution of the allowance in the past
three years is as follows:

|              |  |             |       |           |  |            |     |         |  |        |      |       |  |          |      |   |  |  |       | 
|------------- |  | ----------- | ----- | --------- |  | ---------- | --- | ------- |  | ------ | ---- | ----- |  | -------- | ---- | - |  |  | ----- | 
|              |  | Amount      |       |           |  |            |     |         |  |        |      |       |  |          |      |   |  | 
|              |  | at the      |       |           |  |            |     |         |  |        |      |       |  |          |      |   |  | 
|              |  | beginning   |       |           |  |            |     |         |  |        |      | Other |  | Year-end
|              |  | of the year |       | Additions |  | Deductions |     | changes |  | amount
|              |  |             |       |           |  |            |     |         |  |       
|              |  | (million
)
|Dec. 31, 2000 |  |             | 929   |           |  |            | 69  |         |  |        | (82  | )     |  |          | 12   |   |  |  | 928   | 
|Dec. 31, 2001 |  |             | 928   |           |  |            | 90  |         |  |        | (77  | )     |  |          | 336  |   |  |  | 1,277 | 
|Dec. 31, 2002 |  |             | 1,277 |           |  |            | 111 |         |  |        | (106 | )     |  |          | (407 | ) |  |  | 875   | 

Other changes for the year ended December 31, 2002 of euro 407 million
related primarily to the elimination of a portion of the allowance for doubtful
accounts, which was accrued by Enichem in relation to receivables from
previously unconsolidated investments, as a result of the mergers of these same
investments, which are Bormia SpA (in liquidation) (euro 203 million),
Pertusola Sud SpA (in liquidation) and Mineraria Campiano SpA (in liquidation)
(the latter two amounting to euro 177 million), into Enichem SpA.

5) Inventories

|                                                    |  |               |       |               |  |           |     |          |  |       |     |          |  |          |     |           |  |            |       |           |  |  |       |          |  |  |     |  |  |  |     |  |  |  |     |  |  |  |       | 
|--------------------------------------------------- |  | ------------- | ----- | ------------- |  | --------- | --- | -------- |  | ----- | --- | -------- |  | -------- | --- | --------- |  | ---------- | ----- | --------- |  |  | ----- | -------- |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | ----- | 
|                                                    |  | Dec. 31, 2001 |       | Dec. 31, 2002
|                                                    |  |               |       |              
|                                                    |  | Crude oil,    |       |               |  |           |     | Work in  |  |       |     |          |  |          |     |           |  | Crude oil, |       |           |  |  |       | Work in  |  |  |     |  |  |  |     | 
|                                                    |  | gas and       |       |               |  |           |     | progress |  |       |     |          |  |          |     |           |  | gas and    |       |           |  |  |       | progress |  |  |     |  |  |  |     | 
|                                                    |  | petroleum     |       | Chemical      |  | long-term |     |          |  |       |     |          |  |          |     | petroleum |  | Chemical   |       | long-term |  |  |       |          |  |  |     | 
|                                                    |  | products      |       | products      |  | contracts |     | Other    |  | Total |     | products |  | products |     | contracts |  | Other      |       | Total    
|                                                    |  |               |       |               |  |           |     |          |  |       |     |          |  |          |     |           |  |            |       |          
|                                                    |  | (million
)  
|Raw and auxiliary materials
and consumables         |  |               | 719   |               |  |           | 147 |          |  |       |     |          |  |          | 405 |           |  |            | 1,271 |           |  |  | 460   |          |  |  | 187 |  |  |  |     |  |  |  | 372 |  |  |  | 1,019 | 
|Products being processed and
semi-finished products |  |               | 57    |               |  |           | 18  |          |  |       |     |          |  |          | 2   |           |  |            | 77    |           |  |  | 64    |          |  |  | 17  |  |  |  |     |  |  |  | 4   |  |  |  | 85    | 
|Work in progress on long-term
contracts             |  |               |       |               |  |           |     |          |  |       | 152 |          |  |          |     |           |  |            | 152   |           |  |  |       |          |  |  |     |  |  |  | 184 |  |  |  |     |  |  |  | 184   | 
|Finished products and goods                         |  |               | 862   |               |  |           | 332 |          |  |       |     |          |  |          | 4   |           |  |            | 1,198 |           |  |  | 1,293 |          |  |  | 418 |  |  |  |     |  |  |  | 87  |  |  |  | 1,798 | 
|Advances                                            |  |               |       |               |  |           |     |          |  |       | 115 |          |  |          |     |           |  |            | 115   |           |  |  | 4     |          |  |  |     |  |  |  |     |  |  |  | 110 |  |  |  | 114   | 
|                                                    |  |               | 1,638 |               |  |           | 497 |          |  |       | 267 |          |  |          | 411 |           |  |            | 2,813 |           |  |  | 1,821 |          |  |  | 622 |  |  |  | 184 |  |  |  | 573 |  |  |  | 3,200 | 

Oil and petroleum products inventories of euro 595 million represent
certain minimum quantities required by law (euro 548 million at December 31,
2001) and natural gas inventories of euro 39 million represent strategic stock
(the same amount at December 31, 2001), both «compulsory stock».

Natural gas inventories valued at euro 571 million are used to satisfy
peak demand (euro 401 million at December 31, 2001).

The excess of market value over the book value of crude oil, petroleum
products and purchased natural gas at year-end is euro 1,375 million (euro 781
million at December 31, 2001). The euro 594 million increase is primarily due
to the recovery in international oil prices.

The above amounts are net of the valuation allowance amounting to euro 108
million, 159 million and 106 million at December 31, 2002, 2001 and 2000,
respectively. The evolution of the allowance in the past three years is as
follows:





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##### Table of Contents



|              |  |             |     |           |  |            |    |         |  |        |     |       |  |          |     |   |  |  |     | 
|------------- |  | ----------- | --- | --------- |  | ---------- | -- | ------- |  | ------ | --- | ----- |  | -------- | --- | - |  |  | --- | 
|              |  | Amount      |     |           |  |            |    |         |  |        |     |       |  |          |     |   |  | 
|              |  | at the      |     |           |  |            |    |         |  |        |     |       |  |          |     |   |  | 
|              |  | beginning   |     |           |  |            |    |         |  |        |     | Other |  | Year-end
|              |  | of the year |     | Additions |  | Deductions |    | changes |  | amount
|              |  |             |     |           |  |            |    |         |  |       
|              |  | (million
)
|Dec. 31, 2000 |  |             | 93  |           |  |            | 28 |         |  |        | (6  | )     |  |          | (9  | ) |  |  | 106 | 
|Dec. 31, 2001 |  |             | 106 |           |  |            | 61 |         |  |        | (1  | )     |  |          | (7  | ) |  |  | 159 | 
|Dec. 31, 2002 |  |             | 159 |           |  |            | 47 |         |  |        | (60 | )     |  |          | (38 | ) |  |  | 108 | 

6) Fixed assets

|                                      |  |               |        |           |  |              |       |            |  |               |        |             |  |         |      |               |  |               |     |          |  |              |        |               |  |  |        |   |  |                  |        |  |  |             |        | 
|------------------------------------- |  | ------------- | ------ | --------- |  | ------------ | ----- | ---------- |  | ------------- | ------ | ----------- |  | ------- | ---- | ------------- |  | ------------- | --- | -------- |  | ------------ | ------ | ------------- |  |  | ------ | - |  | ---------------- | ------ |  |  | ----------- | ------ | 
|                                      |  |               |        |           |  |              |       |            |  |               |        |             |  |         |      |               |  |               |     |          |  |              |        |               |  |  |        |   |  |                  |        |  |  | Accumulated
|                                      |  |               |        |           |  |              |       |            |  |               |        |             |  |         |      |               |  | Change        |     | Exchange |  |              |        |               |  |  |        |   |  | depreciation and
|                                      |  | Net value at  |        |           |  |              |       |            |  |               |        |             |  |         |      | in scope of   |  | rate          |     | Other    |  | Net value at |        | writedowns at
|                                      |  | Dec. 31, 2001 |        | Additions |  | Depreciation |       | Writedowns |  | consolidation |        | differences |  | changes |      | Dec. 31, 2002 |  | Dec. 31, 2002
|                                      |  |               |        |           |  |              |       |            |  |               |        |             |  |         |      |               |  |              
|                                      |  | (million
)  
|Buildings                             |  |               | 1,796  |           |  |              | 63    |            |  |               | (91    | )           |  |         | (19  | )             |  |               | 112 |          |  |              | (33    | )             |  |  | (67    | ) |  |                  | 1,761  |  |  |             | 1,543  | 
|Plant and machinery                   |  |               | 23,996 |           |  |              | 1,822 |            |  |               | (3,242 | )           |  |         | (195 | )             |  |               | 592 |          |  |              | (1,689 | )             |  |  | 2,781  |   |  |                  | 24,065 |  |  |             | 35,733 | 
|Industrial and commercial
equipment   |  |               | 481    |           |  |              | 124   |            |  |               | (120   | )           |  |         | (1   | )             |  |               | 6   |          |  |              | (52    | )             |  |  | 3      |   |  |                  | 441    |  |  |             | 1,194  | 
|Other assets                          |  |               | 232    |           |  |              | 79    |            |  |               | (90    | )           |  |         | (1   | )             |  |               | 24  |          |  |              | (13    | )             |  |  | 47     |   |  |                  | 278    |  |  |             | 781    | 
|Fixed assets in progress
and advances |  |               | 6,809  |           |  |              | 4,755 |            |  |               |        |             |  |         | (254 | )             |  |               | 30  |          |  |              | (823   | )             |  |  | (3,369 | ) |  |                  | 7,148  |  |  |             | 449    | 
|                                      |  |               | 33,314 |           |  |              | 6,843 |            |  |               | (3,543 | )           |  |         | (470 | )             |  |               | 764 |          |  |              | (2,610 | )             |  |  | (605   | ) |  |                  | 33,693 |  |  |             | 39,700 | 

Capital expenditures of euro 6,843 million (euro 5,273 million in 2001)
primarily relate to the Exploration & Production segment (euro 4,675 million),
Gas & Power segment (euro 1,185 million), Refining & Marketing segment (euro
476 million). Additional information on capital expenditures is included in the
«Operating Review» of the «Report of the Directors».

Depreciation rates used are as follows:

|                                                                   |  |     |       | 
|------------------------------------------------------------------ |  | --- | ----- | 
|                                                                   |  | (%)
|Buildings                                                          |  |     | 3-10  | 
|Plant and machinery:                                               |  |     |       | 
| pipelines, distribution networks and related plant and machinery |  |     | 2-5   | 
| other plant and machinery                                        |  |     | 4-25  | 
|Industrial and commercial equipment                                |  |     | 10-25 | 

Writedowns of euro 470 million concern primarily the Exploration &
Production segment (euro 332 million) and the Petrochemical segment (euro 128
million).

Writedowns in the Exploration & Production segment relate primarily to the
results of impairment tests performed on proved and unproved properties mainly
in fields in the North Sea, Venezuela and The Gulf of Mexico due to revisions
in estimates of reserves, while writedowns in the Petrochemicals segment relate
primarily to the results of impairment tests performed on fixed assets in
elastomer production plants mainly in Europe in light of expected decreases in
future returns on sales of elastomer products.

The changes in scope of consolidation related to the purchases and sales
of companies during the year as well as to the consolidation of previously
unconsolidated investments. The euro 764 million amount concerns in particular
the consolidation of Polimeri Europa SpA and its subsidiaries (euro 540
million) and the purchase of Bouygues Offshore SA (euro 183 million).

On
July 9, 2002, Eni, through its subsidiary Saipem SpA, purchased a
50.8% interest in the French company Bouygues Offshore from its parent company
Bouygues Construction. Subsequently Eni launched a





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public tender offer for the remaining shares held by the public which were
traded in the French and U.S. markets at the same cash price of 60.08 euro per
share paid to Bouygues Construction for its majority interest. The purchase
price paid for the acquisition of 100% of Bouygues amounted to euro 1,006
million. In conjunction with the purchase price allocation, Eni recorded
goodwill of euro 820 million.

Other changes of euro 605 million related in particular to: (i) the
divestment of assets in the amount of euro 401 million, which comprised
primarily Enis interests in certain hydrocarbons fields located mainly in the
North Sea, Italy and Qatar in accordance with the Companys strategy of
rationalization of its portfolio of mineral assets. Eni received cash
consideration of euro 390 million and recorded a net gain of euro 92 million;
and (ii) the divestment of certain businesses in the amount of euro 226
million, the most significant of which relates to the conferral of Enis Priolo
refinery in Sicily to the newly established Erg Raffinerie Mediterranee. Assets
with a net value of euro 100 million were conferred in exchange of a stake of
28% in Erg Raffinerie Mediterranee. Eni and Erg hold put and call options at a
set price expiring in 2006 on Enis 28% stake. See also Note No. 23 Commitments
and contingencies  Other commitments.

Monetary revaluations included in the gross and net value of fixed assets,
amount to euro 1,179 and 64 million, respectively (euro 1,295 million and 112
million respectively at December 31, 2001).

At December 31, 2002 fixed assets have been pledged for euro 489 million
primarily as collateral on debt incurred by Eni (euro 240 million at December
31, 2001). The euro 249 million increase relates primarily to the consolidation
of Polimeri Europa SpA (euro 219 million).

Fixed assets by segment

|                                                       |                                     |  |               |        |               |  |        |        | 
|------------------------------------------------------ | ----------------------------------- |  | ------------- | ------ | ------------- |  | ------ | ------ | 
|                                                       |                                     |  | Dec. 31, 2001 |        | Dec. 31, 2002
|                                                       |                                     |  |               |        |              
|Fixed assets, gross:                                   |                                     |  |               |        |               |  |        |       
|                                                       |  Exploration & Production          |  |               | 38,667 |               |  |        | 38,534 | 
|                                                       |  Gas & Power                       |  |               | 15,867 |               |  |        | 16,467 | 
|                                                       |  Refining & Marketing              |  |               | 9,083  |               |  |        | 8,172  | 
|                                                       |  Petrochemicals                    |  |               | 4,458  |               |  |        | 6,438  | 
|                                                       |  Oilfield Services and Engineering |  |               | 2,805  |               |  |        | 3,447  | 
|                                                       |  Other activities                  |  |               | 241    |               |  |        | 335    | 
|                                                       |                                     |  | 71,121        |        |               |  | 73,393 |       
|Accumulated depreciation, amortization and writedowns: |                                     |  |               |        |               |  |        |       
|                                                       |  Exploration & Production          |  |               | 17,939 |               |  |        | 18,672 | 
|                                                       |  Gas & Power                       |  |               | 9,269  |               |  |        | 9,276  | 
|                                                       |  Refining & Marketing              |  |               | 5,751  |               |  |        | 5,075  | 
|                                                       |  Petrochemicals                    |  |               | 3,369  |               |  |        | 4,784  | 
|                                                       |  Oilfield Services and Engineering |  |               | 1,338  |               |  |        | 1,689  | 
|                                                       |  Other activities                  |  |               | 141    |               |  |        | 204    | 
|                                                       |                                     |  | 37,807        |        |               |  | 39,700 |       
|Fixed assets, net:                                     |                                     |  |               |        |               |  |        |       
|                                                       |  Exploration & Production          |  |               | 20,728 |               |  |        | 19,862 | 
|                                                       |  Gas & Power                       |  |               | 6,598  |               |  |        | 7,191  | 
|                                                       |  Refining & Marketing              |  |               | 3,332  |               |  |        | 3,097  | 
|                                                       |  Petrochemicals                    |  |               | 1,089  |               |  |        | 1,654  | 
|                                                       |  Oilfield Services and Engineering |  |               | 1,467  |               |  |        | 1,758  | 
|                                                       |  Other activities                  |  |               | 100    |               |  |        | 131    | 
|                                                       |                                     |  | 33,314        |        |               |  | 33,693 |       





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7) Investments

|                                           |  |               |       |               |  |              |     |           |  |               |     |             |  |         |      |               |  |                  |      |   |  |  |      |   |  |  |     |             |  |  |       |  |  |  |       | 
|------------------------------------------ |  | ------------- | ----- | ------------- |  | ------------ | --- | --------- |  | ------------- | --- | ----------- |  | ------- | ---- | ------------- |  | ---------------- | ---- | - |  |  | ---- | - |  |  | --- | ----------- |  |  | ----- |  |  |  | ----- | 
|                                           |  |               |       |               |  | Acquisitions |     |           |  |               |     |             |  |         |      | Change        |  | Exchange         |      |   |  |  |      |   |  |  |     | Reserve for
|                                           |  | Net value at  |       | and           |  | Increase     |     | Reduction |  | in scope of   |     | rate        |  | Other   |      | Net value at  |  | contingencies at
|                                           |  | Dec. 31, 2001 |       | subscriptions |  | in value     |     | in value  |  | consolidation |     | differences |  | changes |      | Dec. 31, 2002 |  | Dec. 31, 2002   
|                                           |  |               |       |               |  |              |     |           |  |               |     |             |  |         |      |               |  |                 
|                                           |  | (million
)  
|Investments in
unconsolidated
subsidiaries |  |               | 526   |               |  |              | 15  |           |  |               | 30  |             |  |         | (45  | )             |  |                  | (257 | ) |  |  | (21  | ) |  |  | (1  | )           |  |  | 247   |  |  |  | 480   | 
|Investments in affiliates                  |  |               | 2,096 |               |  |              | 231 |           |  |               | 148 |             |  |         | (248 | )             |  |                  | 8    |   |  |  | (145 | ) |  |  | 150 |             |  |  | 2,240 |  |  |  | 602   | 
|Investments in other
companies             |  |               | 390   |               |  |              | 7   |           |  |               | 6   |             |  |         | (22  | )             |  |                  | 1    |   |  |  | (40  | ) |  |  | (50 | )           |  |  | 292   |  |  |  | 40    | 
|                                           |  |               | 3,012 |               |  |              | 253 |           |  |               | 184 |             |  |         | (315 | )             |  |                  | (248 | ) |  |  | (206 | ) |  |  | 99  |             |  |  | 2,779 |  |  |  | 1,122 | 

Acquisitions and subscriptions of euro 253 million related mainly to: (i)
the contribution of capital to EnBW Eni Verwaltungsgesellschaft mbH (euro 97
million), to Albacom SpA (euro 44 million) and to United Gas Derivatives Co
(UGDC) (euro 20 million); (ii) the purchase of 46.2% of the share capital of
Ages Pisa SpA (euro 49 million).

On December 27, 2002 Eni and EnBW (Energie Baden-Württemberg AG, the third
largest German operator in the electricity market) acquired through a 50/50
German joint venture (EnBW-Eni Verwaltungsgesellschaft mbH) a 97.81% interest
in GVS (Gasversorgung Süddeutschland GmbH), an operator in the German gas
market. Financial requirements of this transaction on part of the two
joint-venture partners amounted to euro 704 million. The two joint-venture
partners financed the transaction through a capital contribution of euro 178
million (euro 89 million net to Eni); for the remaining part the joint-venture
raised finance debt.

Increases and reductions in value include Enis portion of equity earnings
or losses on investments accounted for under the equity method and changes in
value of investments accounted for under the cost method. Specifically, the
increase of euro 184 million relates to Trans Austria Gasleitung GmbH (euro 34
million), TSKJ  Serviços de Engenharia Lda (euro 24 million),
Transmediterranean Pipeline Co Ltd (euro 23 million), Superoctanos CA (euro 18
million) and Azienda Energia e Servizi SpA (euro 15 million); reductions of
euro 315 million include primarily Galp Energia SGPS SA (euro 85 million),
Albacom SpA (euro 37 million), Distribuidora de Gas del Centro SA (euro 34
million) and also the decrease in the carrying value of companies valued under
the equity method for the receipt of dividends (euro 106 million).

Changes in the scope of consolidation relate to the exclusion of Polimeri
Europa SpA from investments following its consolidation (euro 257 million).

Other changes of euro 99 million relate primarily to the acquisition of
28% of Erg Raffinerie Mediterranee Srl in consideration for the transfer of
Enis refinery in Priolo, Sicily (euro 100 million) and to the conversion of a
receivable from Raffineria di Milazzo ScpA into a capital contribution (euro 36
million); this increase is partially offset by the sale of Qatar Petrochemical
Co Ltd (euro 29 million) and Blu SpA (euro 25 million).





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##### Table of Contents



|                                            |  |               |       |                |  |                   |        |           |  |                |  |                   |     |  |       |  |        |  |       |               |  |               |  | 
|------------------------------------------- |  | ------------- | ----- | -------------- |  | ----------------- | ------ | --------- |  | -------------- |  | ----------------- | --- |  | ----- |  | ------ |  | ----- | ------------- |  | ------------- |  | 
|                                            |  | Dec. 31, 2001 |       | Dec. 31, 2002 
|                                            |  |               |       |               
|                                            |  | Net value     |       | Eni's interest |  | Accounting method |        | Net value |  | Eni's interest |  | Accounting method
|                                            |  |               |       |                |  |                   |        |           |  |                |  |                  
|                                            |  | (million
)  
|Unconsolidated subsidiaries:                |  |               |       |                |  |                   |        |           |  |                |  |                   |     |  |       |  |        |  |       |               |  |               |  | 
|Polimeri Europa SpA                        |  |               | 257   |                |  |                   | 100.00 |           |  | equity method  |  |                   |     |  |       |  |        |  |       |               |  |              
| Transmediterranean
Pipeline Co Ltd        |  |               | 103   |                |  |                   | 50.00  |           |  | equity method  |  |                   | 83  |  |       |  | 50.00  |  |       | equity method
| Conserv Inc                               |  |               | 25    |                |  |                   | 100.00 |           |  | cost           |  |                   | 25  |  |       |  | 100.00 |  |       | cost         
| Other (*)                                 |  |               | 141   |                |  |                   |        |           |  |                |  |                   |     |  | 139   |  |        |  |       |               |  |               |  | 
|                                            |  |               | 526   |                |  |                   |        |           |  |                |  |                   |     |  | 247   |  |        |  |       |               |  |               |  | 
|Affiliates:                                 |  |               |       |                |  |                   |        |           |  |                |  |                   |     |  |       |  |        |  |       |               |  |               |  | 
| Galp Energia SGPS SA                      |  |               | 755   |                |  |                   | 33.34  |           |  | equity method  |  |                   | 659 |  |       |  | 33.34  |  |       | equity method
| Blue Stream Pipeline Co BV                |  |               | 214   |                |  |                   | 50.00  |           |  | equity method  |  |                   | 178 |  |       |  | 50.00  |  |       | equity method
| Eteria Parohis Aeriou
Thessaloniki SA     |  |               | 151   |                |  |                   | 49.00  |           |  | equity method  |  |                   | 151 |  |       |  | 49.00  |  |       | equity method
| Raffineria di Milazzo ScpA                |  |               | 82    |                |  |                   | 50.00  |           |  | equity method  |  |                   | 121 |  |       |  | 50.00  |  |       | equity method
| Albacom SpA                               |  |               | 108   |                |  |                   | 35.17  |           |  | equity method  |  |                   | 115 |  |       |  | 35.00  |  |       | equity method
| Erg Raffinerie Mediterranee Srl           |  |               |       |                |  |                   |        |           |  |                |  |                   |     |  | 100   |  |        |  | 28.00 |               |  | cost         
| Superoctanos CA                           |  |               | 90    |                |  |                   | 49.00  |           |  | equity method  |  |                   | 93  |  |       |  | 49.00  |  |       | equity method
| Azienda Energia e Servizi SpA             |  |               | 80    |                |  |                   | 49.00  |           |  | equity method  |  |                   | 92  |  |       |  | 49.00  |  |       | equity method
| EnBW Eni
Verwaltungsgesellschaft mbH      |  |               |       |                |  |                   |        |           |  |                |  |                   |     |  | 89    |  |        |  | 50.00 |               |  | equity method
| Fertilizantes Nitrogenados de
Oriente CEC |  |               | 81    |                |  |                   | 20.00  |           |  | equity method  |  |                   | 66  |  |       |  | 20.00  |  |       | equity method
| Supermetanol CA                           |  |               | 76    |                |  |                   | 34.51  |           |  | equity method  |  |                   | 66  |  |       |  | 35.19  |  |       | equity method
| Trans Austria Gasleitung
GmbH (**)        |  |               | 19    |                |  |                   | 89,00  |           |  | equity method  |  |                   | 55  |  |       |  | 89.00  |  |       | equity method
| Ages Pisa SpA                             |  |               |       |                |  |                   |        |           |  |                |  |                   |     |  | 49    |  |        |  | 46.18 |               |  | equity method
| Haldor Topsøe AS                          |  |               | 48    |                |  |                   | 50.00  |           |  | equity method  |  |                   | 43  |  |       |  | 50.00  |  |       | equity method
| Eteria Parohis Aeriou
Thessalia SA        |  |               | 39    |                |  |                   | 49.00  |           |  | equity method  |  |                   | 39  |  |       |  | 49.00  |  |       | equity method
| Siciliana Gas SpA                         |  |               | 32    |                |  |                   | 50.00  |           |  | equity method  |  |                   | 38  |  |       |  | 50.00  |  |       | equity method
| Transitgas AG                             |  |               | 33    |                |  |                   | 46.00  |           |  | equity method  |  |                   | 34  |  |       |  | 46.00  |  |       | equity method
| Carson Development General
Partenership   |  |               | 45    |                |  |                   | 50.00  |           |  | cost           |  |                   | 34  |  |       |  | 50.00  |  |       | cost         
| Distribuidora de Gas del
Centro SA        |  |               | 68    |                |  |                   | 31.35  |           |  | equity method  |  |                   | 12  |  |       |  | 31.35  |  |       | equity method
| Other (*)                                 |  |               | 175   |                |  |                   |        |           |  |                |  |                   |     |  | 206   |  |        |  |       |               |  |               |  | 
|                                            |  |               | 2,096 |                |  |                   |        |           |  |                |  |                   |     |  | 2,240 |  |        |  |       |               |  |               |  | 
|Other companies:                            |  |               |       |                |  |                   |        |           |  |                |  |                   |     |  |       |  |        |  |       |               |  |               |  | 
| Nigeria Lng Ltd                           |  |               | 129   |                |  |                   | 10.40  |           |  | cost           |  |                   | 111 |  |       |  | 10.40  |  |       | cost         
| Ceska Rafinerska AS                       |  |               | 42    |                |  |                   | 16.33  |           |  | cost           |  |                   | 39  |  |       |  | 16.33  |  |       | cost         
| Interconnector (UK) Ltd                   |  |               | 30    |                |  |                   | 5.02   |           |  | cost           |  |                   | 30  |  |       |  | 5.00   |  |       | cost         
| Discovery Producer Services Llc           |  |               | 37    |                |  |                   | 16.67  |           |  | cost           |  |                   | 16  |  |       |  | 16.67  |  |       | cost         
| Qatar Petrochemical Ltd                   |  |               | 29    |                |  |                   | 10.00  |           |  | cost           |  |                   |     |  |       |  |        |  |       |               |  |              
| Blu SpA                                   |  |               | 23    |                |  |                   | 7.00   |           |  | cost           |  |                   |     |  |       |  |        |  |       |               |  |              
| Other (*)                                 |  |               | 100   |                |  |                   |        |           |  |                |  |                   |     |  | 96    |  |        |  |       |               |  |               |  | 
|                                            |  |               | 390   |                |  |                   |        |           |  |                |  |                   |     |  | 292   |  |        |  |       |               |  |               | 
|                                            |  |               | 3,012 |                |  |                   |        |           |  |                |  |                   |     |  | 2,779 |  |        |  |       |               |  |               |  | 



---

| |  | (*) Each individual amount included herein does not exceed euro 25 million.
| |  | ---------------------------------------------------------------------------
|
| |  | (**) The company is a joint venture.                                       





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##### Table of Contents



The net value of investments in unconsolidated subsidiaries and
affiliates does not include significant differences between purchase price
and Enis equity in the investments, with the exception of the difference
related to Galp Energia SGPS SA which Eni has attributed to goodwill (euro
320 million and 214 million at December 31, 2001 and 2002, respectively).

The following are the amounts, according to Enis interest, from the
last available financial statements of unconsolidated subsidiaries and
affiliates:

|                          |  |                |       |            |  |  |       | 
|------------------------- |  | -------------- | ----- | ---------- |  |  | ----- | 
|                          |  | Unconsolidated |       |           
|                          |  | subsidiaries   |       | Affiliates
|                          |  |                |       |           
|                          |  | (million
)   
|Total assets              |  |                | 1,245 |            |  |  | 7,198 | 
|Total liabilities         |  |                | 1,126 |            |  |  | 5,203 | 
|Net sales from operations |  |                | 218   |            |  |  | 6,489 | 
|Operating income          |  |                | 40    |            |  |  | 239   | 
|Net income                |  |                | 36    |            |  |  | 88    | 

Data above do not include consolidation adjustments.

The reserve for losses related to investments, included in the reserve
for contingencies (Note 12) relates to the following companies:

|                                                                |  |               |     |               |  |  |     | 
|--------------------------------------------------------------- |  | ------------- | --- | ------------- |  |  | --- | 
|                                                                |  | Dec. 31, 2001 |     | Dec. 31, 2002
|                                                                |  |               |     |              
|                                                                |  | (million
)  
|Industria Siciliana
Acido Fosforico  ISAF
SpA (in liquidation) |  |               | 28  |               |  |  | 30  | 
|Snamprotechint -
Serviços e Gestão de
Projectos Lda             |  |               |     |               |  |  | 21  | 
|Agip Middle East BV                                             |  |               | 18  |               |  |  | 16  | 
|Fosfotec Srl (in
liquidation)                                   |  |               | 9   |               |  |  | 8   | 
|Bormia SpA (in
liquidation)                                     |  |               | 160 |               |  |  |     | 
|Pertusola Sud SpA (in
liquidation)                              |  |               | 131 |               |  |  |     | 
|Mineraria Campiano SpA
(in liquidation)                         |  |               | 17  |               |  |  |     | 
|Other companies                                                 |  |               | 21  |               |  |  | 31  | 
|                                                                |  |               | 384 |               |  |  | 106 | 

Bormia SpA (in liquidation) is now merged into EniChem SpA, Pertusola
Sud SpA (in liquidation) and Mineraria Campiano SpA (in liquidation) were
merged into Singea SpA (in liquidation) which was itself merged into
EniChem SpA.





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##### Table of Contents



8) Intangible assets

|                                                         |  |               |       |             |  |              |       |               |  |             |        |             |  |               |     |               |  |              |      |               |  |  |      |   |  |                  |       |  |  |             |       | 
|-------------------------------------------------------- |  | ------------- | ----- | ----------- |  | ------------ | ----- | ------------- |  | ----------- | ------ | ----------- |  | ------------- | --- | ------------- |  | ------------ | ---- | ------------- |  |  | ---- | - |  | ---------------- | ----- |  |  | ----------- | ----- | 
|                                                         |  |               |       |             |  |              |       |               |  |             |        |             |  |               |     |               |  |              |      |               |  |  |      |   |  |                  |       |  |  | Accumulated
|                                                         |  |               |       |             |  |              |       |               |  |             |        |             |  | Changes       |     | Exchange      |  |              |      |               |  |  |      |   |  | amortization and
|                                                         |  | Net value at  |       |             |  |              |       |               |  |             |        | in scope of |  | rate          |     | Other         |  | Net value at |      | writedowns at
|                                                         |  | Dec. 31, 2001 |       | Investments |  | Amortization |       | consolidation |  | differences |        | changes     |  | Dec. 31, 2002 |     | Dec. 31, 2002
|                                                         |  |               |       |             |  |              |       |               |  |             |        |             |  |               |     |              
|                                                         |  | (million
)  
|Organizational and
financing costs                       |  |               | 39    |             |  |              | 3     |               |  |             | (12    | )           |  |               |     |               |  |              | (1   | )             |  |  |      |   |  |                  | 29    |  |  |             | 60    | 
|Costs for research
and development                       |  |               | 510   |             |  |              | 914   |               |  |             | (1,066 | )           |  |               |     |               |  |              | (58  | )             |  |  | 3    |   |  |                  | 303   |  |  |             | 666   | 
|Industrial patent
right and
intellectual
property rights |  |               | 88    |             |  |              | 37    |               |  |             | (91    | )           |  |               | 1   |               |  |              |      |               |  |  | 114  |   |  |                  | 149   |  |  |             | 552   | 
|Concessions,
licences,
trademarks and
similar items      |  |               | 411   |             |  |              | 37    |               |  |             | (118   | )           |  |               | 4   |               |  |              | (50  | )             |  |  | 750  |   |  |                  | 1,034 |  |  |             | 1,097 | 
|Goodwill                                                 |  |               | 543   |             |  |              | 10    |               |  |             | (74    | )           |  |               | 845 |               |  |              | (87  | )             |  |  | 70   |   |  |                  | 1,307 |  |  |             | 240   | 
|Intangible assets
in progress and
advances               |  |               | 128   |             |  |              | 181   |               |  |             |        |             |  |               | 1   |               |  |              |      |               |  |  | (175 | ) |  |                  | 135   |  |  |             | 5     | 
|Other intangible
assets                                  |  |               | 1,124 |             |  |              | 23    |               |  |             | (62    | )           |  |               | 5   |               |  |              | (93  | )             |  |  | (779 | ) |  |                  | 218   |  |  |             | 427   | 
|                                                         |  |               | 2,843 |             |  |              | 1.205 |               |  |             | (1,423 | )           |  |               | 856 |               |  |              | (289 | )             |  |  | (17  | ) |  |                  | 3,175 |  |  |             | 3,047 | 

Organizational and financing costs of euro 29 million relate to costs
for extraordinary corporate operations, costs for setting up or expanding
production activities and costs for share capital increases.

Costs for research and development of euro 303 million relate mainly
to the purchase of mineral rights (euro 301 million). This item also
includes exploration expenditure amortized in the year of euro 865 million
(euro 757 million in 2001).

Concessions, licenses, trademarks and similar items of euro 1,034
million relate primarily to the transmission rights for natural gas
imported from Algeria (euro 754 million), concessions for mineral
exploration (euro 132 million), a concession for natural gas distribution
in the Brazilian state of Sao Paulo (euro 31 million) and know-how relating
to new projects (euro 30 million). Other changes of euro 750 million relate
to the reclassification from other intangible assets of the transmission
rights for natural gas imported from Algeria (euro 802 million).

Goodwill of euro 1,307 million relates primarily to the Oilfield
Services and Engineering segment (euro 880 million, of which euro 823
million relates to Saipem SA, former Bouygues Offshore SA), the Exploration
& Production segment (euro 250 million relates to Lasmo), the Refining &
Marketing segment (euro 93 million of which euro 65 million relates to Agip
Distribuidora SA, former Companhia Sao Paulo de Petròleo SA, now merged
into Agip do Brasil SA) and the Gas & Power segment (euro 77 million, of
which euro 58 million relates to Italgas SpA).

Other intangible assets of euro 218 million relate primarily to
royalties for the use of licenses by Polimeri Europa SpA (euro 98 million)
and investments on assets of third parties (euro 84 million).

9) Other non-current assets

Other non-current assets consist of the following:

|                                     |  |               |       |               |  |  |       | 
|------------------------------------ |  | ------------- | ----- | ------------- |  |  | ----- | 
|                                     |  | Dec. 31, 2001 |       | Dec. 31, 2002
|                                     |  |               |       |              
|                                     |  | (million
)  
|Securities held as
long-term assets: |  |               |       |               |  |  |       | 
| Italian treasury bonds             |  |               | 21    |               |  |  | 21    | 
| other securities                   |  |               | 312   |               |  |  | 290   | 
|Other                                |  |               | 114   |               |  |  | 117   | 
|Deferred tax assets                  |  |               | 776   |               |  |  | 1,457 | 
|                                     |  |               | 1,223 |               |  |  | 1,885 | 

Securities held as long-term assets are carried at cost, adjusted for
permanent impairment, and represent security deposits from customers euro
21 million (the same amount at December 31, 2001).

Other securities (euro 290 million) decreased by euro 22 million due
mainly to the effect of exchange rate differences on the translation of
financial statements prepared in foreign currencies (euro 21 million).

Deferred tax assets are described in Note 13 «Reserves for
contingencies and other deferred non-current tax liabilities».





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##### Table of Contents



10) Taxes payable

Taxes payable include the following:

|                          |  |               |       |               |  |  |       | 
|------------------------- |  | ------------- | ----- | ------------- |  |  | ----- | 
|                          |  | Dec. 31, 2001 |       | Dec. 31, 2002
|                          |  |               |       |              
|                          |  | (million
)  
|Customs and excise
duties |  |               | 693   |               |  |  | 406   | 
|Income taxes payable      |  |               | 912   |               |  |  | 810   | 
|Other                     |  |               | 750   |               |  |  | 575   | 
|                          |  |               | 2,355 |               |  |  | 1,791 | 

Taxes payable of euro 1,791 million decreased by euro 564 million due
to the implementation of a new system of payment of customs excise taxes,
which has advanced the required payment date of excise on products that are
put on the market in the second half of December (euro 404 million) from
January to the end of December.

11) Debt

Short-term debt

Enis short-term debt is comprised of the following:

|                               |  |               |       |               |  |  |       | 
|------------------------------ |  | ------------- | ----- | ------------- |  |  | ----- | 
|                               |  | Dec. 31, 2001 |       | Dec. 31, 2002
|                               |  |               |       |              
|                               |  | (million
)  
|Due to:                        |  |               |       |               |  |  |       | 
| banks                        |  |               | 1,972 |               |  |  | 4,583 | 
| other financing institutions |  |               | 25    |               |  |  | 16    | 
| commercial paper             |  |               | 3,032 |               |  |  | 3,128 | 
| unconsolidated subsidiaries  |  |               | 52    |               |  |  | 68    | 
| affiliates                   |  |               | 150   |               |  |  | 95    | 
|                               |  |               | 5,231 |               |  |  | 7,890 | 

Short-term debt by currency is as follows:

|                 |  |               |       |               |  |  |       | 
|---------------- |  | ------------- | ----- | ------------- |  |  | ----- | 
|                 |  | Dec. 31, 2001 |       | Dec. 31, 2002
|                 |  |               |       |              
|                 |  | (million
)  
|Euro             |  |               | 1,314 |               |  |  | 4,155 | 
|U.S. dollar      |  |               | 2,197 |               |  |  | 1,674 | 
|British pound    |  |               | 1,271 |               |  |  | 1,674 | 
|Swiss franc      |  |               | 170   |               |  |  | 117   | 
|Norwegian kroner |  |               | 30    |               |  |  | 101   | 
|Other            |  |               | 249   |               |  |  | 169   | 
|                 |  |               | 5,231 |               |  |  | 7,890 | 

The average interest rate of Enis short-term debt was 4.45% and 3.82%
for the years ended December 31, 2001 and 2002, respectively.

Short-term debt of euro 7,890 million increased by euro 2,659 million.
The increase relates primarily to the Public Offering of Italgas shares,
which required a time deposit of euro 1,447 million, such increase has been
partially offset by the effect of exchange rate differences on the
translation of financial statements prepared in foreign currencies (euro
694 million).





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##### Table of Contents



On December 31, 2002 Eni maintains committed and uncommitted unused
lines of credit with various domestic and foreign banks for euro 1,207 and
7,272 million, respectively (euro 1,632 and 6,625 million, respectively, at
December 31, 2001). These agreements provide for interest charges based on
prevailing market conditions. Commission fees on unused lines of credit are
not significant.

Long-term debt

Enis long-term debt, including current maturities, as of December 31,
2001 and 2002, and the related maturity schedules are as follows:

|                               |  |                |           |         |  |          |       |                    |  |             |       |      |  |         |     |      |  |       |       |       |  |  |       |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 
|------------------------------ |  | -------------- | --------- | ------- |  | -------- | ----- | ------------------ |  | ----------- | ----- | ---- |  | ------- | --- | ---- |  | ----- | ----- | ----- |  |  | ----- |  |  |  | --- |  |  |  | --- |  |  |  | ----- |  |  |  | ----- | 
|                               |  |                |           |         |  |          |       |                    |  |             |       |      |  | Current |     |      |  |       |       |       |  |  |       |  |  |  |     |  |  |  |     |  |  |  |       |  |  | 
|Type of debt                   |  |                |           | Dec. 31 |  | maturity |       | Long-term maturity
|instrument                     |  | Maturity range |           | 2001    |  | 2002     |       | 2003               |  | 2004        |       | 2005 |  | 2006    |     | 2007 |  | After |       | Total
|                               |  |                |           |         |  |          |       |                    |  |             |       |      |  |         |     |      |  |       |       |      
|                               |  |                |           |         |  |          |       |                    |  | (million
) |       |      |  |         |     |      |  |       |       |       |  |  |       |  |  |  |     |  |  |  |     |  |  | 
|Due to banks:                  |  |                |           |         |  |          |       |                    |  |             |       |      |  |         |     |      |  |       |       |       |  |  |       |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 
| ordinary loans               |  |                | 2002-2017 |         |  |          | 2,800 |                    |  |             | 3,028 |      |  |         | 682 |      |  |       | 717   |       |  |  | 733   |  |  |  | 378 |  |  |  | 262 |  |  |  | 256   |  |  |  | 2,346 | 
| interest rate
assisted loans |  |                | 2002-2008 |         |  |          | 296   |                    |  |             | 251   |      |  |         | 30  |      |  |       | 82    |       |  |  | 83    |  |  |  | 42  |  |  |  | 6   |  |  |  | 8     |  |  |  | 221   | 
| exchange rate
assisted loans |  |                | 2002-2006 |         |  |          | 14    |                    |  |             | 40    |      |  |         | 35  |      |  |       | 2     |       |  |  | 1     |  |  |  | 2   |  |  |  | 5   | 
| ordinary export
credit       |  |                | 2002-2006 |         |  |          | 14    |                    |  |             | 8     |      |  |         | 3   |      |  |       | 3     |       |  |  | 1     |  |  |  | 1   |  |  |  | 5   |  |  |  |       |  |  |  |       | 
| other financings             |  |                | 2002-2006 |         |  |          | 121   |                    |  |             | 311   |      |  |         | 2   |      |  |       | 306   |       |  |  | 1     |  |  |  | 2   |  |  |  | 309 |  |  |  |       |  |  |  |       | 
|                               |  |                |           |         |  |          | 3,245 |                    |  |             | 3,638 |      |  |         | 752 |      |  |       | 1,110 |       |  |  | 819   |  |  |  | 425 |  |  |  | 268 |  |  |  | 264   |  |  |  | 2,886 | 
|Ordinary bonds                 |  |                | 2003-2027 |         |  |          | 3,222 |                    |  |             | 3,169 |      |  |         | 196 |      |  |       | 203   |       |  |  | 508   |  |  |  | 437 |  |  |  | 394 |  |  |  | 1,431 |  |  |  | 2,973 | 
|Others                         |  |                | 2002-2019 |         |  |          | 850   |                    |  |             | 723   |      |  |         | 32  |      |  |       | 85    |       |  |  | 40    |  |  |  | 23  |  |  |  | 24  |  |  |  | 519   |  |  |  | 691   | 
|                               |  |                |           |         |  |          | 7,317 |                    |  |             | 7,530 |      |  |         | 980 |      |  |       | 1,398 |       |  |  | 1,367 |  |  |  | 885 |  |  |  | 686 |  |  |  | 2,214 |  |  |  | 6,550 | 

Eni entered into a financing arrangement, relating to bank debt that
requires the maintenance of certain financial ratios generally based on Eni
SpAs statutory and consolidated financial statements. At December 31, 2001
and 2002, the amount of short and long-term debt subject to restrictive
covenants was euro 563 million and euro 992 million, respectively. Eni is
in compliance with the covenants contained in its financing arrangements.

The exchange rate assisted loans of euro 40 million relate to
borrowings from European organizations, such as the European Investment
Bank, for the purpose of economic development whereby the Italian
Government partially absorbs foreign exchange gains and losses related to
such loans.

Ordinary bonds of euro 3,169 million relate primarily to notes issued
by Eni under its Medium Term Notes program for a total of euro 1,561
million (of which euro 500 million have a fixed rate of 6.125% and mature
in 2010 euro 1,061 million have fixed and variable rates and mature before
2010), seven series of notes issued by Lasmo for a total of euro 1,453
million with fixed rates from 6.7% to 10.375% and maturities between 2003
and 2027, and an Enifin SpA loan 1997-2005 with variable rate interest
amounting to euro 129 million. Eni SpA bonds 1993-2003 with variable rate
amounting to euro 516 million have been paid in advance on December 1,
2002.





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##### Table of Contents



Long-term debt, including current maturities and average interest
rates, by currency, is as follows:

|              |  |               |       |               |  |               |       |               |  |  |       |         |  |  |       | 
|------------- |  | ------------- | ----- | ------------- |  | ------------- | ----- | ------------- |  |  | ----- | ------- |  |  | ----- | 
|              |  |               |       |               |  | Average       |       |               |  |  |       | Average
|              |  | Dec. 31, 2001 |       | interest rate |  | Dec. 31, 2002 |       | interest rate
|              |  |               |       |               |  |               |       |              
|              |  | (million
)   |       | (million
)  
|Euro          |  |               | 3,417 |               |  |               | 5.7   |               |  |  | 4,408 |         |  |  | 4.6   | 
|U.S. dollar   |  |               | 3,510 |               |  |               | 4.8   |               |  |  | 2,614 |         |  |  | 6.8   | 
|British pound |  |               | 280   |               |  |               | 9.2   |               |  |  | 257   |         |  |  | 10.7  | 
|Japanese yen  |  |               | 104   |               |  |               | 0.65  |               |  |  | 93    |         |  |  | 1.3   | 
|Other         |  |               | 6     |               |  |               | 7.8   |               |  |  | 158   |         |  |  | 2.3   | 
|              |  |               |       |               |  |               | 7,317 |               |  |  |       |         |  |  | 7,530 | 

On December 31, 2002 Eni maintains committed unused long-term lines of
credit with various domestic and foreign banks of euro 364 million expiring
in 2003 (euro 510 million at December 31, 2001, of which euro 406 million
expiring in 2002). These agreements provide for interest charges based on
prevailing market conditions. Commission fees on unused lines of credit are
not significant.

In the normal course of business, Eni utilizes various derivative
contracts to reduce risks arising from interest rate and foreign currency
exchange rate fluctuations, both for long and short-term debt. See Note 23
for a more detailed discussion.

Certain debt, in the amount of euro 115 million and euro 409 million
at December 31, 2001 and 2002, respectively, is guaranteed by mortgages and
liens on the fixed assets of consolidated companies and by pledges on
marketable securities.

Enis debt arrangements generally include customary
cross-default provisions.





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##### Table of Contents



12) Reserves for contingencies and other deferred non-current tax
liabilities

|                                            |                                                                         |  |               |       |           |  |            |     |         |  |        |        |       |  |          |       |   |  |       |       | 
|------------------------------------------- | ----------------------------------------------------------------------- |  | ------------- | ----- | --------- |  | ---------- | --- | ------- |  | ------ | ------ | ----- |  | -------- | ----- | - |  | ----- | ----- | 
|                                            |                                                                         |  | Amount at     |       |           |  |            |     |         |  |        |        |       |  |          |       |   |  |      
|                                            |                                                                         |  | the beginning |       |           |  |            |     |         |  |        |        | Other |  | Year-end
|                                            |                                                                         |  | of the year   |       | Additions |  | Deductions |     | changes |  | amount
|                                            |                                                                         |  |               |       |           |  |            |     |         |  |       
|                                            |                                                                         |  | (million E)  
|December 31, 2001                           |                                                                         |  |               |       |           |  |            |     |         |  |        |        |       |  |          |       |   |  |       |      
|Employee retirement and similar obligations |                                                                         |  | 76            |       |           |  | 13         |     |         |  | (6     | )      |       |  | 3        |       |   |  | 86    |      
|Other reserves for contingencies:           |                                                                         |  |               |       |           |  |            |     |         |  |        |        |       |  |          |       |   |  |       |      
|                                            |  site restoration and abandonment                                      |  |               | 1,698 |           |  |            | 125 |         |  |        | (74    | )     |  |          | 214   |   |  |       | 1,963 | 
|                                            |  environmental risks                                                   |  |               | 542   |           |  |            | 262 |         |  |        | (158   | )     |  |          | 208   |   |  |       | 854   | 
|                                            |  loss adjustments and actuarial reserves
for Enis insurance companies |  |               | 604   |           |  |            | 103 |         |  |        | (182   | )     |  |          | 10    |   |  |       | 535   | 
|                                            |  restructuring or decommissioning of
production facilities             |  |               | 126   |           |  |            | 581 |         |  |        | (24    | )     |  |          | 140   |   |  |       | 823   | 
|                                            |  reserve for contract penalties and disputes                           |  |               | 344   |           |  |            | 41  |         |  |        | (233   | )     |  |          | 61    |   |  |       | 213   | 
|                                            |  losses related to investments                                         |  |               | 566   |           |  |            | 51  |         |  |        | (34    | )     |  |          | (199  | ) |  |       | 384   | 
|                                            |  other (*)                                                             |  |               | 393   |           |  |            | 193 |         |  |        | (146   | )     |  |          | 42    |   |  |       | 482   | 
|                                            |                                                                         |  | 4,273         |       |           |  | 1,356      |     |         |  | (851   | )      |       |  | 476      |       |   |  | 5,254 |      
|Non-current income tax liabilities:         |                                                                         |  |               |       |           |  |            |     |         |  |        |        |       |  |          |       |   |  |       |      
|                                            |  deferred taxation                                                     |  |               | 982   |           |  |            | 737 |         |  |        | (1,083 | )     |  |          | 1,731 |   |  |       | 2,367 | 
|                                            |  other tax reserves                                                    |  |               | 371   |           |  |            | 35  |         |  |        | (147   | )     |  |          | (5    | ) |  |       | 254   | 
|                                            |                                                                         |  | 1,353         |       |           |  | 772        |     |         |  | (1,230 | )      |       |  | 1,726    |       |   |  | 2,621 |      
|                                            |                                                                         |  | 5,702         |       |           |  | 2,141      |     |         |  | (2,087 | )      |       |  | 2,205    |       |   |  | 7,961 |      
|December 31, 2002                           |                                                                         |  |               |       |           |  |            |     |         |  |        |        |       |  |          |       |   |  |       |      
|Employee retirement and similar obligations |                                                                         |  | 86            |       |           |  | 15         |     |         |  | (9     | )      |       |  | 36       |       |   |  | 128   |      
|Other reserves for contingencies:           |                                                                         |  |               |       |           |  |            |     |         |  |        |        |       |  |          |       |   |  |       |      
|                                            |  site restoration and abandonment                                      |  |               | 1,963 |           |  |            | 184 |         |  |        | (86    | )     |  |          | (81   | ) |  |       | 1,980 | 
|                                            |  environmental risks                                                   |  |               | 854   |           |  |            | 101 |         |  |        | (171   | )     |  |          | 824   |   |  |       | 1,608 | 
|                                            |  loss adjustments and actuarial reserves
for Enis insurance companies |  |               | 535   |           |  |            | 63  |         |  |        |        |       |  |          | (5    | ) |  |       | 593   | 
|                                            |  restructuring or decommissioning of
production facilities             |  |               | 823   |           |  |            | 10  |         |  |        |        |       |  |          | (529  | ) |  |       | 304   | 
|                                            |  contract penalties and disputes reserve                               |  |               | 213   |           |  |            | 29  |         |  |        | (36    | )     |  |          | 5     |   |  |       | 211   | 
|                                            |  losses related to investments                                         |  |               | 384   |           |  |            | 11  |         |  |        | (75    | )     |  |          | (214  | ) |  |       | 106   | 
|                                            |  other (*)                                                             |  |               | 482   |           |  |            | 329 |         |  |        | (214   | )     |  |          | (5    | ) |  |       | 592   | 
|                                            |                                                                         |  | 5,254         |       |           |  | 727        |     |         |  | (582   | )      |       |  | (5       | )     |   |  | 5,394 |      
|Non-current income tax liabilities:         |                                                                         |  |               |       |           |  |            |     |         |  |        |        |       |  |          |       |   |  |       |      
|                                            |  deferred taxation                                                     |  |               | 2,367 |           |  |            | 318 |         |  |        | (301   | )     |  |          | 2     |   |  |       | 2,386 | 
|                                            |  other tax reserves                                                    |  |               | 254   |           |  |            | 8   |         |  |        | (3     | )     |  |          | (34   | ) |  |       | 225   | 
|                                            |                                                                         |  | 2,621         |       |           |  | 326        |     |         |  | (304   | )      |       |  | (32      | )     |   |  | 2,611 |      
|                                            |                                                                         |  | 7,961         |       |           |  | 1,068      |     |         |  | (895   | )      |       |  | (1       | )     |   |  | 8,133 |      



---

| |  | (*) Each individual amount included herein does not exceed euro 50
million.
| |  | ---------------------------------------------------------------------------

Deductions in reserves not corresponding to cash expenditures amounted
to euro 106 million and euro 98 million for the years ended December 31,
2002 and 2001, respectively. The most significant deductions in 2002
primarily relate to a reversal of the item «Contract penalties and disputes
reserve» (euro 31 million) due
to: (i) the fact that previously Eni had accrued for the estimated
selling price of natural gas which was





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##### Table of Contents



supplied in accordance with the terms of existing contracts under
renegotiation. When the contracts with clients were ultimately finalized the
actual price was higher than expected, and consequently the excess accrual
reversed; and (ii) the fact that previously Eni had accrued for the
estimated impact of a new tariff regime for natural gas transported on
behalf of third parties. When the new tariff regime was ultimately finalized
the actual impact was lower than expected, and consequently the excess
accrual reversed. Other deductions not corresponding to cash expenditures
relate to various immaterial items.

The most significant deductions in reserves not corresponding to cash
expenditures in 2001 related to a reversal of the items «loss adjustments
and actuarial reserves» (euro 22 million), due to overestimates of insurance
payments to third parties, and «losses related to investments» (euro 10
million), due to the fact that Eni had previously impaired an investment
which was subsequently sold at a premium on its carrying value post
impairment.

The «Site restoration and abandonment» reserve of euro 1,980 million
represents primarily the estimated costs for well-plugging, abandonment and
site restoration of euro 1,917 million. Other changes of euro 81 million
relate primarily to exchange rate loss from the translation of financial
statements denominated in currencies other than the euro (euro 92 million).
The total estimated future site restoration and abandonment costs for Enis
worldwide oil and gas properties aggregated approximately euro 2,700 million
and euro 2,800 million at December 31, 2002 and 2001, respectively.

The «Environmental risks» reserve of euro 1,608 million represents,
primarily, the estimated costs of remediation, in accordance with existing
laws and regulations, of active production facilities in the Petrochemicals
segment (euro 1,320 million) and the Refining & Marketing segment (euro 241
million). Additions for euro 101 million relate to the Petrochemical (euro
68 million), Refining & Marketing (euro 18 million) and Gas & Power (euro 15
million) segments. Other changes of euro 824 million are comprised in
particular of the reclassification of a portion of the reserve for
«Restructuring or decommissioning of production facilities» which relates
specifically to environmental clean-up of EniChem SpA (euro 450 million) and
the merger of Bormia SpA (in liquidation), previously not consolidated, into
EniChem SpA (euro 363 million).

The reserve for «Loss adjustments and actuarial reserves for Enis
insurance companies» of euro 593 million represents the liabilities accrued
for claims on insurance policies underwritten by Enis captive insurance
company.

The «Restructuring or decommissioning of production facilities» reserve
of euro 304 million mainly represents the estimated costs
related to divestments and facilities closures in the
Petrochemicals segment (euro 273 million). Other changes of euro 529 million relate in particular to the
reclassification of the Environmental risks reserve of EniChem SpA (euro 450
million).

Contingent liabilities are included primarily under the caption
«Contract penalties and disputes reserve». The balances of euro 211 million
and of euro 213 million at December 31, 2002 and 2001, respectively are
comprised of numerous matters of differing natures. Accruals have been based
on Enis best estimate of the expected probable liability.

The «Reserve for losses on investments» of euro 106 million represents
losses on investments incurred to date in excess of their carrying value
(see Note 7 Investments for further details) and decreased by euro 278
million following the merger of Bormia SpA (in liquidation) into EniChem SpA
(euro 160 million), of Pertusola Sud SpA (in liquidation) and Mineraria
Campiano SpA (in liquidation) into Singea SpA (in liquidation), now merged
with EniChem SpA (euro 148 million).

With respect to the foregoing liabilities, Eni does not expect any
material, reasonably possible, additional loss beyond those amounts accrued
above.

«Deferred income tax liabilities net» of euro 2,386 million (euro 2,367
million at December 31, 2001) have already been netted with deferred tax
assets for which Eni possesses the legal right of offset. A description
follows of net deferred tax liabilities, determined by subtracting from the
reserve for taxes the deferred income tax assets that may not be offset and
are included in the item «Other non-current assets».





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Net deferred income tax liabilities

|                                           |  |               |        |               |  |  |        |  
|------------------------------------------ |  | ------------- | ------ | ------------- |  |  | ------ | -
|                                           |  | Dec. 31, 2001 |        | Dec. 31, 2002
|                                           |  |               |        |              
|Deferred income taxes                      |  |               | 4,064  |               |  |  | 4,224  |  
|Deferred tax assets that may be offset     |  |               | (1,697 | )             |  |  | (1,838 | )
|                                           |  |               | 2,367  |               |  |  | 2,386  |  
|Deferred tax assets that may not be offset |  |               | (776   | )             |  |  | (1,457 | )
|                                           |  |               | 1,591  |               |  |  | 929    |  

The most significant temporary differences giving rise to the net
deferred tax liabilities are as follows:

|                             |                                                                                                                                                  |  |        |               |   |               |        |        |   | 
|---------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------ | ------------- | - | ------------- | ------ | ------ | - | 
|                             |                                                                                                                                                  |  |        | Dec. 31, 2001 |   | Dec. 31, 2002
|                             |                                                                                                                                                  |  |        |               |   |              
|Deferred tax liabilities:    |                                                                                                                                                  |  |        |               |   |               |        |       
|                             |  anticipated and accelerated depreciation                                                                                                       |  |        | 2,954         |   |               |        | 3,133  |  
|                             |  differences between purchase cost and net book value of acquired
consolidated companies                                                        |  |        | 591           |   |               |        | 457    |  
|                             |  reserve for uncollectible receivables                                                                                                          |  |        | 127           |   |               |        | 134    |  
|                             |  excess provision for contingencies according to fiscal law                                                                                     |  |        | 88            |   |               |        | 104    |  
|                             |  distributable reserves subject to taxes                                                                                                        |  |        | 105           |   |               |        | 94     |  
|                             |  gains taxable in the future                                                                                                                    |  |        | 76            |   |               |        | 92     |  
|                             |  other                                                                                                                                          |  |        | 123           |   |               |        | 210    |  
|                             |                                                                                                                                                  |  | 4,064  |               |   |               | 4,224  |       
|Deferred tax assets:         |                                                                                                                                                  |  |        |               |   |               |        |       
|                             |  accruals for doubtful accounts and reserve for contingencies                                                                                   |  |        | (1,919        | ) |               |        | (1,909 | )
|                             |  tax loss carryforwards                                                                                                                         |  |        | (1,132        | ) |               |        | (1,539 | )
|                             |  assets revaluations as per Law 342/2000                                                                                                        |  |        | (1,136        | ) |               |        | (939   | )
|                             |  investments revaluation in accordance with Law 292/93 and allocation of
the merger difference arising from the merger of Agip SpA into Eni SpA |  |        | (892          | ) |               |        | (843   | )
|                             |  losses on investments and subsidiaries in excess of currently allowable tax
deductions                                                         |  |        | (236          | ) |               |        | (565   | )
|                             |  future deductible amortization                                                                                                                 |  |        | (355          | ) |               |        | (387   | )
|                             |  writeoffs of fixed assets, intangible assets and or inventories deductible in
the future                                                       |  |        | (269          | ) |               |        | (337   | )
|                             |  other                                                                                                                                          |  |        | (347          | ) |               |        | (457   | )
|                             |                                                                                                                                                  |  | (6,286 | )             |   |               | (6,976 | )     
|Less:                        |                                                                                                                                                  |  |        |               |   |               |        |       
|Valuation allowance          |                                                                                                                                                  |  | 3,813  |               |   |               | 3,681  |       
|                             |                                                                                                                                                  |  | (2,473 | )             |   |               | (3,295 | )     
|Net deferred tax liabilities |                                                                                                                                                  |  | 1,591  |               |   |               | 929    |       

The valuation allowance for deferred tax assets (euro 3,813 and 3,681
million for the years ending December 31, 2001 and 2002 respectively) mainly
relates to consolidated companies with accumulated fiscal losses which are
not expected to be recovered against future fiscal profits and to temporary
differences which the company does not expect will be utilized





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##### Table of Contents



Tax loss carryforwards

Under Italian tax regulations, losses may be carried forward for up to
five years; for non-Italian tax loss carryforwards the period generally
ranges from 5 to 15 years, with a significant portion having no expiration
date. Tax loss carryforwards reverse at a rate of 34% for Italian companies
and an average rate of 36% for foreign companies.

Gross tax loss carryforwards of euro 4,395 million expire as follows:

|                   |  |          |       |         |  |  |       | 
|------------------ |  | -------- | ----- | ------- |  |  | ----- | 
|                   |  | Domestic |       | Foreign
|                   |  |          |       |        
|2003               |  |          | 282   |         |  |  | 8     | 
|2004               |  |          | 630   |         |  |  | 27    | 
|2005               |  |          | 45    |         |  |  | 30    | 
|2006               |  |          | 565   |         |  |  | 73    | 
|2007               |  |          | 1,022 |         |  |  | 29    | 
|over 2007          |  |          |       |         |  |  | 557   | 
|without expiration |  |          |       |         |  |  | 1,127 | 
|                   |  |          | 2,544 |         |  |  | 1,851 | 

Tax loss carryforwards expected to be utilized amount to euro 1,054
million and relate primarily to foreign companies (euro 876 million). The
tax effect of such tax loss carryforwards is euro 383 million.

Other tax reserves include estimated charges of euro 225 million for
unsettled tax claims. All tax years prior to 1996 have been settled, for
direct taxes, with Italian tax authorities, by Eni SpA and most of its
Italian subsidiaries. The situation for foreign companies is more complex,
however all tax years have been primarily settled between 1996 and 2001.

13) Shareholders equity

Share capital

On June 1, 2001 the General Shareholders Meeting approved the
conversion of Enis share capital from lira into euro and the grouping of
shares where for two shares with nominal value 0.5 euro each shareholder
receives one share nominal value 1 euro, and cancelling the sole remaining
share.

Eni SpA had 4,001,814,026 shares (nominal value euro 1 each) fully
paid-up as of December 31, 2002, of which: 2,581,444,850 shares,
corresponding to 64.51% are publicly (1) held, 1,213,731,615, corresponding
to 30.33% are held by the Ministry of Economy and Finance and 206,637,561,
corresponding to 5.16% are held by Eni SpA (4,001,259,476 shares at December
31, 2001, of which 2,633,147,035, corresponding to 65.81% are publicly
held,1,213,731,615, corresponding to 30.33% are held by the Ministry of
Economy and Finance and 154,380,826, corresponding to 3.86% are held by Eni
SpA). The increase of 554,550 shares nominal value 1 euro results from the
issuance of shares under the stock grant plan.

Reserves

The legal reserve of Eni SpA represents earnings restricted from the
payment of dividends pursuant to the Italian Civil Code (the «Civil Code»).
Under the Civil Code, with respect to income of any year, an amount equal to
5% of the net income of Eni SpA, as recorded in Eni SpAs statutory
financial statements for such year, must be set aside until the cumulative
legal reserve is equal to one-fifth of the nominal value of Eni SpAs issued and outstanding share capital. Such dividend restriction
also applies to each Italian subsidiary of Eni.

The «Reserve for the issue of shares in accordance with art. 2349 of
the Italian Civil Code» contains earnings destined to increase share capital
under the stock grant plan. On December 31, 2002 the number of





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##### Table of Contents



shares to assign for no consideration is 3,559,850 shares nominal value
1 euro (3,079,500 shares at December 31, 2001).

Reserves include amounts received from the Ministry of Economy and
Finance to reimburse Eni SpA for principal and interest payments on loans
obtained and bonds issued in prior years, which under laws 730/83, 749/85
and 41/86, were obligations of the Government.

Other changes of euro 48 million include the adjustment to realized
gains on intercompany transaction between consolidated companies in which
Enis percentage equity interest differs.

Exchange rate differences due to the translation of financial
statements prepared in foreign currencies amounted to euro 2,125 million, of
which euro 1,700 million related to companies whose functional currency is
the U.S. dollar.

As provided by Italian law, dividends may be paid by Eni SpA only out
of retained earnings plus distributable reserves and statutory net income
for the current year net of the amount to be allocated to the legal reserve
in the subsequent year.

Approximately euro 21,900 million was unrestricted as to payment of
dividends at December 31, 2002, a portion of which is subject to taxation
upon distribution. Deferred tax liabilities of euro 94 million have been
recorded in relation to the reserves expected to be distributed.

Treasury shares

Treasury shares amount to euro 2,838 million (euro 2,068 million at
December 31, 2001) and consist of 206,637,561 ordinary shares nominal value
1 euro owned by Eni SpA (154,380,826 ordinary shares nominal value euro 1 as
of December 31, 2001). Such shares are valued at cost and have been
repurchased to increase shareholders value in accordance with the decision
of Enis shareholders meetings of June 6, 2000, June 1, 2001 and May 30,
2002.

Reconciliation of statutory net income and shareholders equity to
consolidated net income and shareholders equity

The statutory financial statements of subsidiaries reflect certain
tax-driven entries. In addition, Eni SpAs statutory financial statements do
not reflect the consolidation of subsidiary companies.

Adjustments are made in consolidating the statutory accounts of Eni SpA
and subsidiary companies to reflect the consolidation principles described
in Note 2. In addition, adjustments are made to eliminate the effects of
certain tax-driven entries applied by subsidiary companies in their
respective statutory accounts.

The reconciliation of net income and shareholders equity as reported
in Eni SpAs statutory financial statements to those reported in the
consolidated financial statements is as follows:

|                                                                                                                                                                                    |                                                          |  |            |     |                      |  |       |     |               |  |               |     |               |  |             |     |  |  |        |     |  |  |        |       | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- |  | ---------- | --- | -------------------- |  | ----- | --- | ------------- |  | ------------- | --- | ------------- |  | ----------- | --- |  |  | ------ | --- |  |  | ------ | ----- | 
|                                                                                                                                                                                    |                                                          |  | Net income |     | Shareholders' equity
|                                                                                                                                                                                    |                                                          |  |            |     |                     
|                                                                                                                                                                                    |                                                          |  | 2000       |     | 2001                 |  | 2002  |     | Dec. 31, 2000 |  | Dec. 31, 2001 |     | Dec. 31, 2002
|                                                                                                                                                                                    |                                                          |  |            |     |                      |  |       |     |               |  |               |     |              
|                                                                                                                                                                                    |                                                          |  |            |     |                      |  |       |     |               |  |               |     |               |  | (million E) |     |  |  |        |     |  |  |       
|As recorded in Eni SpAs financial statements                                                                                                                                       |                                                          |  | 3,426      |     |                      |  | 2,250 |     |               |  | 3,880         |     |               |  | 14,785      |     |  |  | 15,375 |     |  |  | 26,498 |      
|Loans serviced by the Government                                                                                                                                                    |                                                          |  |            |     |                      |  |       |     |               |  |               |     |               |  | 4           |     |  |  |        |     |  |  |        |      
|Treasury shares                                                                                                                                                                     |                                                          |  |            |     |                      |  |       |     |               |  |               |     |               |  | (574        | )   |  |  | (2,068 | )   |  |  | (2,838 | )    
|Difference between the equity value and
result of consolidated companies and the
equity value and result of consolidated
companies as accounted for in Eni SpA
financial statements |                                                          |  | 390        |     |                      |  | 2,990 |     |               |  | 1,049         |     |               |  | 15,712      |     |  |  | 18,741 |     |  |  | 7,118  |      
|Consolidation adjustments:                                                                                                                                                          |                                                          |  |            |     |                      |  |       |     |               |  |               |     |               |  |             |     |  |  |        |     |  |  |        |      
|                                                                                                                                                                                    |  difference between cost and underlying
value of equity |  |            | (22 | )                    |  |       | (49 | )             |  |               | (83 | )             |  |             | 203 |  |  |        | 459 |  |  |        | 1,131 | 





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|                                                 |                                                                          |  |            |       |                      |  |       |       |               |  |               |        |               |  |             |        |   |  |        |        |   |  |        |        |  
|------------------------------------------------ | ------------------------------------------------------------------------ |  | ---------- | ----- | -------------------- |  | ----- | ----- | ------------- |  | ------------- | ------ | ------------- |  | ----------- | ------ | - |  | ------ | ------ | - |  | ------ | ------ | -
|                                                 |                                                                          |  | Net income |       | Shareholders' equity
|                                                 |                                                                          |  |            |       |                     
|                                                 |                                                                          |  | 2000       |       | 2001                 |  | 2002  |       | Dec. 31, 2000 |  | Dec. 31, 2001 |        | Dec. 31, 2002
|                                                 |                                                                          |  |            |       |                      |  |       |       |               |  |               |        |              
|                                                 |                                                                          |  |            |       |                      |  |       |       |               |  |               |        |               |  | (million E) |        |   |  |        |        |   |  |       
|                                                 |  elimination of tax adjustments and
compliance with accounting policies |  |            | 1,846 |                      |  |       | 420   |               |  |               | 1,261  |               |  |             | (4,378 | ) |  |        | (1,945 | ) |  |        | (1,218 | )
|                                                 |  elimination of unrealized intercompany
(profits) losses                |  |            | (72   | )                    |  |       | (130  | )             |  |               | (1,024 | )             |  |             | (437   | ) |  |        | (1,493 | ) |  |        | (2,777 | )
|                                                 |  deferred taxation                                                      |  |            | 313   |                      |  |       | 258   |               |  |               | 120    |               |  |             | (1,241 | ) |  |        | (127   | ) |  |        | 120    |  
|                                                 |  other adjustments                                                      |  |            | 141   |                      |  |       | 2,489 |               |  |               | 19     |               |  |             | (1     | ) |  |        | 247    |   |  |        | 317    |  
|                                                 |                                                                          |  | 6,022      |       |                      |  | 8,228 |       |               |  | 5,222         |        |               |  | 24,073      |        |   |  | 29,189 |        |   |  | 28,351 |       
|Minority interest                                |                                                                          |  | (251       | )     |                      |  | (477  | )     |               |  | (629          | )      |               |  | (1,672      | )      |   |  | (1,706 | )      |   |  | (2,094 | )     
|As recorded in consolidated financial statements |                                                                          |  | 5,771      |       |                      |  | 7,751 |       |               |  | 4,593         |        |               |  | 22,401      |        |   |  | 27,483 |        |   |  | 26,257 |       

Other adjustments related to income of 2001 include euro 2,352 million
related to the realized gain in the consolidated financial statements for
the public offering of 40.24% of the share capital of Snam Rete Gas SpA.

14) Net sales from operations

Net sales from operations are as follows:

|                                    |                                             |  |             |         |      |  |        |         |   |  |        |         |  
|----------------------------------- | ------------------------------------------- |  | ----------- | ------- | ---- |  | ------ | ------- | - |  | ------ | ------- | -
|                                    |                                             |  | 2000        |         | 2001 |  | 2002  
|                                    |                                             |  |             |         |      |  |       
|                                    |                                             |  | (million E)
|Gross sales from operations         |                                             |  | 62,985      |         |      |  | 63,094 |         |   |  | 61,500 |        
|Change in contract work in progress |                                             |  | (1,054      | )       |      |  | 88     |         |   |  | 1,127  |        
|Less:                               |                                             |  |             |         |      |  |        |         |   |  |        |        
|                                    |  excise tax                                |  |             | (13,126 | )    |  |        | (13,068 | ) |  |        | (13,139 | )
|                                    |  services billed to joint venture
partners |  |             | (867    | )    |  |        | (1,189  | ) |  |        | (1,566  | )
|                                    |                                             |  | 47,938      |         |      |  | 48,925 |         |   |  | 47,922 |        

15) Purchases, services and other

Purchases, services and other include the following:

|                                                                   |                                                                    |  |             |      |      |  |        |        |   |  |        |        |  
|------------------------------------------------------------------ | ------------------------------------------------------------------ |  | ----------- | ---- | ---- |  | ------ | ------ | - |  | ------ | ------ | -
|                                                                   |                                                                    |  | 2000        |      | 2001 |  | 2002  
|                                                                   |                                                                    |  |             |      |      |  |       
|                                                                   |                                                                    |  | (million E)
|Production costs-raw, ancillary and consumable materials and goods |                                                                    |  | 23,691      |      |      |  | 23,711 |        |   |  | 22,658 |       
|Production costs-services                                          |                                                                    |  | 6,513       |      |      |  | 7,507  |        |   |  | 8,614  |       
|Lease, rental and royalty expenses                                 |                                                                    |  | 1,203       |      |      |  | 1,242  |        |   |  | 1,454  |       
|Other expenses                                                     |                                                                    |  | 1,518       |      |      |  | 1,302  |        |   |  | 1,575  |       
|                                                                   |                                                                    |  | 32,925      |      |      |  | 33,762 |        |   |  | 34,301 |       
|Less:                                                              |                                                                    |  |             |      |      |  |        |        |   |  |        |       
|                                                                   |  services billed to joint venture partners                        |  |             | (867 | )    |  |        | (1,189 | ) |  |        | (1,566 | )
|                                                                   |  capitalized direct costs associated with self-constructed assets |  |             | (616 | )    |  |        | (745   | ) |  |        | (842   | )
|                                                                   |                                                                    |  | 31,442      |      |      |  | 31,828 |        |   |  | 31,893 |       





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Lease, rentals and royalty expense include royalties on hydrocarbons
extracted of euro 552 million, 517 and 508 in 2000, 2001 and 2002,
respectively.

16) Payroll and related costs

Payroll and related costs are analyzed as follows:

|                                 |                                                                    |  |             |      |      |  |       |      |   |  |       |      |  
|-------------------------------- | ------------------------------------------------------------------ |  | ----------- | ---- | ---- |  | ----- | ---- | - |  | ----- | ---- | -
|                                 |                                                                    |  | 2000        |      | 2001 |  | 2002 
|                                 |                                                                    |  |             |      |      |  |      
|                                 |                                                                    |  | (million E)
|Wages and salaries               |                                                                    |  | 2,175       |      |      |  | 2,271 |      |   |  | 2,441 |     
|Social security contributions    |                                                                    |  | 627         |      |      |  | 602   |      |   |  | 650   |     
|Employee termination indemnities |                                                                    |  | 117         |      |      |  | 114   |      |   |  | 121   |     
|Pensions and similar obligations |                                                                    |  | 11          |      |      |  | 12    |      |   |  | 15    |     
|Other costs                      |                                                                    |  | 57          |      |      |  | 83    |      |   |  | 119   |     
|                                 |                                                                    |  | 2,987       |      |      |  | 3,082 |      |   |  | 3,346 |     
|Less:                            |                                                                    |  |             |      |      |  |       |      |   |  |       |     
|                                 |  revenues related to personnel costs                              |  |             | (40  | )    |  |       | (51  | ) |  |       | (53  | )
|                                 |  capitalized direct costs associated with self-constructed assets |  |             | (161 | )    |  |       | (180 | ) |  |       | (190 | )
|                                 |                                                                    |  | 2,786       |      |      |  | 2,851 |      |   |  | 3,103 |     

17) Depreciation, amortization and writedowns

Depreciation, amortization and writedowns consist of the following:

|                               |                                                        |  |             |       |      |  |       |       |   |  |       |       |  
|------------------------------ | ------------------------------------------------------ |  | ----------- | ----- | ---- |  | ----- | ----- | - |  | ----- | ----- | -
|                               |                                                        |  | 2000        |       | 2001 |  | 2002 
|                               |                                                        |  |             |       |      |  |      
|                               |                                                        |  | (million E)
|Depreciation and amortization: |                                                        |  |             |       |      |  |       |       |   |  |       |      
|                               |  intangible assets                                    |  |             | 1,122 |      |  |       | 1,370 |   |  |       | 1,423 |  
|                               |  fixed assets                                         |  |             | 2,678 |      |  |       | 3,310 |   |  |       | 3,543 |  
|                               |                                                        |  | 3,800       |       |      |  | 4,680 |       |   |  | 4,966 |      
|Writedowns:                    |                                                        |  |             |       |      |  |       |       |   |  |       |      
|                               |  intangible assets                                    |  |             |       |      |  |       |       |   |  |       | 95    |  
|                               |  fixed assets                                         |  |             | 55    |      |  |       | 100   |   |  |       | 447   |  
|                               |                                                        |  | 55          |       |      |  | 100   |       |   |  | 542   |      
|Less:                          |                                                        |  |             |       |      |  |       |       |   |  |       |      
|                               |  direct costs associated with self-constructed assets |  |             | (12   | )    |  |       | (9    | ) |  |       | (4    | )
|                               |                                                        |  | 3,843       |       |      |  | 4,771 |       |   |  | 5,504 |      

18) Financial income (expense) and exchange differences, net

Financial expense and exchange differences, net, consist of the
following:

|                                     |  |  |             |   |      |  |      |   |  |  |      |   | 
|------------------------------------ |  |  | ----------- | - | ---- |  | ---- | - |  |  | ---- | - | 
|                                     |  |  | 2000        |   | 2001 |  | 2002
|                                     |  |  |             |   |      |  |     
|                                     |  |  | (million E)
|Interest and other financial income  |  |  | 501         |   |      |  | 539  |   |  |  | 513  |  
|Gains on securities                  |  |  | 116         |   |      |  | 95   |   |  |  | 44   |  
|Interest and other financial expense |  |  | (791        | ) |      |  | (932 | ) |  |  | (737 | )
|Exchange differences, net            |  |  | 165         |   |      |  | (10  | ) |  |  | (30  | )





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|      |                        |  |             |    |      |  |      |    |  |  |      |    | 
|----- | ---------------------- |  | ----------- | -- | ---- |  | ---- | -- |  |  | ---- | -- | 
|      |                        |  | 2000        |    | 2001 |  | 2002
|      |                        |  |             |    |      |  |     
|      |                        |  | (million E)
|Less: |                        |  |             |    |      |  |      |    |  |  |      |   
|      |  interest capitalized |  |             | 73 |      |  |      | 49 |  |  |      | 43 | 
|      |                        |  | 64          |    |      |  | (259 | )  |  |  | (167 | ) 

19) Other income (expense) from investments

Other income (expense) from investments consists of the following:

|                                 |  |             |      |      |  |      |      |   |  |  |      |  
|-------------------------------- |  | ----------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                 |  | 2000        |      | 2001 |  | 2002
|                                 |  |             |      |      |  |     
|                                 |  | (million E)
|Gains on disposals               |  |             | 19   |      |  |      | 76   |   |  |  | 55   |  
|Dividends                        |  |             | 44   |      |  |      | 40   |   |  |  | 32   |  
|Income from equity investments   |  |             | 137  |      |  |      | 151  |   |  |  | 178  |  
|Other revaluation of investments |  |             | 10   |      |  |      | 7    |   |  |  | 6    |  
|Writedown of investments         |  |             | (178 | )    |  |      | (491 | ) |  |  | (245 | )
|Other                            |  |             | 1    |      |  |      | 1    |   |  |  | 17   |  
|                                 |  |             | 33   |      |  |      | (216 | ) |  |  | 43   |  

20) Extraordinary income (expense)

Extraordinary income (expense) consists of the following:

|                                                     |  |             |      |      |  |      |        |   |  |  |      |  
|---------------------------------------------------- |  | ----------- | ---- | ---- |  | ---- | ------ | - |  |  | ---- | -
|                                                     |  | 2000        |      | 2001 |  | 2002
|                                                     |  |             |      |      |  |     
|                                                     |  | (million E)
|Extraordinary income                                 |  |             |      |      |  |      |        |   |  |  |      |  
|Gains on disposals                                   |  |             | 86   |      |  |      | 3,473  |   |  |  | 257  |  
|Other extraordinary income                           |  |             | 146  |      |  |      | 173    |   |  |  | 112  |  
|                                                     |  |             | 232  |      |  |      | 3,646  |   |  |  | 369  |  
|Extraordinary expense                                |  |             |      |      |  |      |        |   |  |  |      |  
|Restructuring cost:                                  |  |             |      |      |  |      |        |   |  |  |      |  
| provisions for risks                               |  |             | (182 | )    |  |      | (885   | ) |  |  | (157 | )
| cost of redundancy incentives                      |  |             | (202 | )    |  |      | (237   | ) |  |  | (114 | )
| writedowns and losses on disposals of fixed assets |  |             | (34  | )    |  |      | (607   | ) |  |  | (55  | )
|                                                     |  |             | (418 | )    |  |      | (1,729 | ) |  |  | (326 | )
|Other extraordinary expenses                         |  |             | (326 | )    |  |      | (80    | ) |  |  | (72  | )
|                                                     |  |             | (744 | )    |  |      | (1,809 | ) |  |  | (398 | )
|                                                     |  |             | (512 | )    |  |      | 1,837  |   |  |  | (29  | )

2002 Extraordinary items

Gains on disposals relate to sales of investments, businesses and fixed
assets as a result of restructuring activities. In particular disposal gains
of euro 257 million are primarily due to: (i) the sale of service stations
in the Refining & Marketing segment in Italy (euro 127 million); (ii) the
sale of the share capital of Agip Nigeria Ltd (euro 87 million); (iii) the
sale of fixed assets (euro 28 million, of which euro 21 million related to
the Gas & Power segment); (iv) the sale of consolidated businesses (euro 15
million).

Other extraordinary income of euro 112 million relates primarily to the
release of excess reserves, the conclusion of legal proceedings and the
collection of receivables previously reserved for essentially in the
Petrochemicals (euro 72 million), Gas & Power (euro 23 million) and Refining
& Marketing (euro 13 million) segments.





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Provisions for risks of euro 157 million relate primarily to
environmental restoration and to charges for restructuring and divestments
in the Refining & Marketing (euro 79 million) and Petrochemicals (euro 71
million) segments.

Redundancy incentives of euro 114 million concern primarily the
Petrochemicals segment (euro 34 million), Gas & Power segment (euro 27
million), Refining & Marketing segment (euro 25 million) and the Oilfield
Services and Engineering segments (euro 14 million).

Writedowns and losses of euro 55 million include the writedown of fixed
assets in the Petrochemical segment (euro 23 million), the loss on the sale
of the Priolo refinery to Erg Raffinerie Mediterranee Srl (euro 22 million)
and the loss on the disposal of consolidated businesses and fixed assets
(euro 10 million, of which euro 9 million relate to the Gas & Power
segment).

2001 Extraordinary items

Gains on disposals relate to sale of investments, businesses and fixed
assets as a result of restructuring activities. In particular, disposal
gains of euro 3,473 million are primarily the result of: (i) the public
offering of 40.24% of the share capital of Snam Rete Gas (euro 2,453
million); (ii) the sale of the share capital of Immobiliare Metanopoli (euro
348 million) and other real estate (euro 406 million) within Enis real
estate divestment program; (iii) the sale of the Polyurethane Division (euro
211 million).

Between November 26 and 30, 2001, Snam Rete Gas, a company indirectly
wholly-owned by Eni, completed an initial public offering of its shares of
stock in Italy relating to 171 million shares. Contemporaneously, the
company completed a private placement to foreign professional and
institutional investors, including those of the United States for 513
million shares. The global offering amounted to 684 million shares,
corresponding to 35% of Enis investment in Snam Rete Gas. Subsequently, the
Joint Lead Managers exercised their green shoe option for an additional
102.6 million shares, increasing the total share capital of Snam Rete Gas
sold to 40.24%. The offering price was set at euro 2.8 per share with a 3%
premium on the Regulatory Asset Base set by the Authority for Electricity
and Gas and a 12% premium on the companys net equity (share capital and
premium-price reserve). Total proceeds from the offering amounted to euro
2,202 million in cash and a net gain of euro 2,453 million was recognized.
The gain results from the fact that the amount of Snam Rete Gass equity as
per Enis consolidated financial statements was a negative euro 624 million
(of which euro 251 million corresponding to 40.24% of the equity sold), due
to the elimination in consolidation of a previous asset revaluation made in
accordance with Italian Law 342/2000.

On April 30, 2001, following the authorization from the relevant
European antitrust authorities, Eni sold its polyurethane business to Dow
Chemical for consideration of euro 428 million, of which euro 128 million in
cash, euro 204 million corresponding to a 50% interest in Polimeri Europa
(of which Eni already owns 50%) and euro 96 million of royalty rights for
the use of Dow proprietary technology. Eni recognized a gain on this
transaction of euro 211 million.

The disposal of Immobiliare Metanopoli and real estate resulted in cash
consideration of euro 1,374 million.

Other extraordinary income of euro 173 million relates primarily to the
release of the reserve for contingencies of euro 112 million which
AgipPetroli had accrued in fiscal 2000 on the basis of a ruling by the
Antitrust Authority, No. 8353 of June 8, 2000, for alleged horizontal cartel
with other oil companies. This ruling was appealed by the company and
definitively annulled by the Council of State on July 20, 2001 with sentence
No. 359/2001. Accordingly, the accrual was reversed.

Provisions for risks of euro 885 million related to closingdowns,
disposals and environmental remediation on plants still in operation as of
December 31, 2001 in the Petrochemical segment (euro 616 million, of which
euro 240 million related primarily to environmental remediation efforts at
plants that management has specifically identified to close down in the next
two-three years and euro 376 million related to environmental compliance
provisions on all operating plants made in application of Law 471/99), and
to environmental remediation on de-industrialized areas in the Petrochemical
(euro 91 million), Refining & Marketing (euro 77 million) and Gas & Power
(euro 44 million) segments.

Writedowns of euro 607 million related primarily to the writedown of
fixed assets and investments in the Petrochemical segment (euro 574 million)
in order to align the book value of assets to the results of the impairment
test made on the basis of estimated future cash flows in a declining market
scenario for petrochemical products margins and also to the asset evaluation
made by a court-appointed expert in





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connection with the transfer to Polimeri Europa on January 1, 2002.
These write-downs relate primarily to olefins and aromatics plants, phenol
plants and various other petrochemicals assets.

21) Income tax expense

|                |                                                                                     |  |             |        |      |  |       |       |   |  |       |       |  
|--------------- | ----------------------------------------------------------------------------------- |  | ----------- | ------ | ---- |  | ----- | ----- | - |  | ----- | ----- | -
|                |                                                                                     |  | 2000        |        | 2001 |  | 2002 
|                |                                                                                     |  |             |        |      |  |      
|                |                                                                                     |  | (million E)
|Current taxes:  |                                                                                     |  |             |        |      |  |       |       |   |  |       |      
|                |  Italian subsidiaries                                                              |  |             | 3,584  |      |  |       | 1,093 |   |  |       | 1,451 |  
|                |  Foreign subsidiaries operating in the Exploration & Production segment            |  |             | 1,944  |      |  |       | 2,028 |   |  |       | 2,040 |  
|                |  Other foreign subsidiaries                                                        |  |             | 40     |      |  |       | 175   |   |  |       | 163   |  
|                |                                                                                     |  | 5,568       |        |      |  | 3,296 |       |   |  | 3,654 |      
|Less:           |                                                                                     |  |             |        |      |  |       |       |   |  |       |      
|                |  Tax credits on distribution of dividends not used to offset current
tax liability |  |             | (2     | )    |  |       | (1    | ) |  |       |       |  
|                |                                                                                     |  | 5,566       |        |      |  | 3,295 |       |   |  | 3,654 |      
|Deferred taxes: |                                                                                     |  |             |        |      |  |       |       |   |  |       |      
|                |  Italian subsidiaries                                                              |  |             | (1,478 | )    |  |       | 158   |   |  |       | (542  | )
|                |  Foreign subsidiaries operating in the Exploration & Production segment            |  |             | 247    |      |  |       | 93    |   |  |       | 53    |  
|                |  Other foreign subsidiaries                                                        |  |             |        |      |  |       | (16   | ) |  |       | (38   | )
|                |                                                                                     |  | (1,231      | )      |      |  | 235   |       |   |  | (527  | )    
|                |                                                                                     |  | 4,335       |        |      |  | 3,530 |       |   |  | 3,127 |      

Income taxes due relate to Irpeg (National income tax) for euro 1,156
million and Irap (Regional income tax) for euro 252 million and foreign
income taxes of euro 43 million.

The effective tax rate is 37.5% compared with a statutory tax rate of
42.1%, calculated by applying a 36% tax rate (Irpeg) to income before taxes
and 4.25% tax rate (Irap) to the net value of production as provided for by
Italian laws.

The difference between the statutory and effective tax rate is due to
the following factors:

|                                              |  |      |      |      |  |      |       |   |  |  |      |  
|--------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ----- | - |  |  | ---- | -
|                                              |  | 2000 |      | 2001 |  | 2002
|                                              |  |      |      |      |  |     
|                                              |  | (%) 
|Statutory tax rate                            |  |      | 42.7 |      |  |      | 40.9  |   |  |  | 42.1 |  
|Higher (lower) foreign subsidiaries tax rate |  |      | 2.5  |      |  |      | 5.0   |   |  |  | 2.7  |  
|Permanent differences                         |  |      | 0.5  |      |  |      | (7.6  | ) |  |  | 0.8  |  
|Effect of the application of Law No. 342/2000 |  |      | (4.9 | )    |  |      | (4.6  | ) |  |  | (4.7 | )
|Effects of tax credits                        |  |      | (0.3 | )    |  |      | (2.3  | ) |  |  | (4.9 | )
|Other                                         |  |      | 1.4  |      |  |      | (1.4  | ) |  |  | 1.5  |  
|                                              |  |      | (0.8 | )    |  |      | (10.9 | ) |  |  | (4.6 | )
|Effective tax rate                            |  |      | 41.9 |      |  |      | 30.0  |   |  |  | 37.5 |  

Permanent timing differences in year 2001 concern mainly the gain
recorded in the consolidated financial statements due to the public offering
of 40.24% of the share capital of Snam Rete Gas SpA (7.2%).

22) Earnings per share

Earnings per share («EPS») for the year 2000 have been restated to
reflect the conversion of the share capital from Italian lire to euro.





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Earnings per share is calculated by dividing net income by the
weighted-average number of shares issued and outstanding during the year,
excluding treasury shares.

In order to compare earnings per share in the years presented, the
number of shares issued through stock grants made in 2001 and 2002 has been
added to the number of shares outstanding in previous years. Based on this
criterion, the number of shares outstanding was 3,995,126,901, 3,910,798,299
and 3,825,837,521, in the year 2000, 2001 and 2002, respectively.

The dilutive effect of potential ordinary shares, in the form of stock
options and stock grants, when converted into ordinary shares, on earnings
per share is not material. At present, only stock grants not yet vested are
considered in the calculation of diluted EPS as the effect of stock options
to be exercised on EPS at December 31, 2002 is anti-dilutive. The exercise
price of outstanding stock options (euro 15.216) is higher than the quoted
stock market value of Enis stock at December 31, 2002 (euro 14.509).

23) Commitments and contingencies

Derivative financial instruments

Eni operates internationally in the oil and natural gas, electricity
generation, petrochemicals and oilfield services and engineering industries
and is subject to exposure to market risks from changes in interest rates,
foreign exchange rates and commodity prices.

Derivative financial instruments are utilized by Eni to reduce these
risks, as explained below.

Enis treasury activities are managed primarily by two captive finance
companies operating in the Italian and international financial markets.
Enis operating subsidiaries are required to reduce foreign exchange rate
risk to a minimum level by coordinating their operations with such finance
companies.

Eni SpAs Board of Directors has defined a policy that requires the
Treasury Department of Eni SpA to determine the maximum level of foreign
exchange rate and interest rate risks that can be assumed by Enis finance
companies. Such policy also defines the eligible counterparties in
derivative transactions. As far as interest rate and foreign exchange rate
risks are concerned, the calculation and measurement techniques followed by
Enis finance companies are in accordance with established banking standards
(such standards are established by the Basel Committee). However, the
tolerable level of risk adopted by such companies is more conservative than
that defined by the Basel Committee. Eni SpAs Treasury Department is
responsible for monitoring compliance with Enis policy, as well as the
correlation between the indicators adopted for measuring the tolerable risk
level, the portfolio of financial instruments and market conditions.

Eni does not enter into derivative transactions on a speculative basis.

(a) Notional amounts and credit exposures of derivatives

The notional value of a derivative is the contractual amount on the
basis of which the differentials are exchanged; this amount can be expressed
either on a value basis or on a physical quantities basis (such as barrels,
tonnes, etc.). The amounts expressed in foreign currency are converted into
euro applying the exchange rate at year-end.

The notional amounts of derivatives summarized in the sections that
follow do not represent amounts exchanged by the parties and, thus, are not
a measure of the credit exposure of Eni. The amounts exchanged are
calculated on the basis of the notional amounts and the other terms of the
derivatives, which relate to interest rates, exchange rates and commodity
prices. Therefore, the credit exposure of interest rate, foreign exchange
and commodity contracts is represented by the fair value of contracts with a
positive fair value at year-end, reduced by the effects of master netting
agreements. Eni SpAs Board of Directors has approved policies which provide
guidelines related to the criteria of eligible counterparties in derivative
transactions and permissible financing investments, including purchases of
securities. Although Eni is exposed to credit-related losses in the event of
non-performance by counterparties to derivative financial instruments, it
does not expect any counterparties to fail to meet their obligations given
the high credit standings of such counterparties.





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(b) Interest rate risk management

Eni enters into various types of interest rate contracts in managing
its interest rate risk, as indicated in the following table:

|                        |  |                 |       |                 |  |  |       | 
|----------------------- |  | --------------- | ----- | --------------- |  |  | ----- | 
|                        |  | Dec. 31, 2001   |       | Dec. 31, 2002  
|                        |  | Notional amount |       | Notional amount
|                        |  |                 |       |                
|Interest rate swaps     |  |                 | 3,208 |                 |  |  | 5,206 | 
|Forward rate agreements |  |                 | 168   |                 |  |  | 220   | 
|Interest rate collars   |  |                 | 134   |                 |  |  | 129   | 
|                        |  |                 | 3,510 |                 |  |  | 5,555 | 

Eni enters into interest rate derivatives, particularly interest rate
swaps («IRS»), to alter interest rate exposures arising from mismatches
between assets and liabilities, to lower funding costs and to diversify
sources of funding. Under interest rate swaps, Eni agrees with other parties
to exchange, at specified intervals, the difference between interest amounts
calculated by reference to an agreed notional principal amount and agreed
fixed or floating interest rates. The euro 1,998 million increase in IRS is
primarily due to Enifins transactions in order to hedge financial payables
granted to Snam Rete Gas SpA and to hedge financial receivables and payables
of Eni Coordination Center SA.

The following table indicates the types of interest rate swaps used and
their weighted-average interest rates and maturities. Average variable rates
are based on rates at year-end and may change significantly, affecting
future cash flows.

The comparison between the weighted-average receive rate and the
weighted-average pay rate does not represent the result of derivatives: such
result is calculated on the basis of the underlying hedged operation.

|                                                                   |                                     |  |               |      |               |  |       |      |  
|------------------------------------------------------------------ | ----------------------------------- |  | ------------- | ---- | ------------- |  | ----- | ---- | -
|                                                                   |                                     |  | Dec. 31, 2001 |      | Dec. 31, 2002
|                                                                   |                                     |  |               |      |              
|Receive-fixed/Pay-floating swaps-notional amount (million euro)    |                                     |  | 1,202         |      |               |  | 1,201 |     
|                                                                   |  weighted average receive rate     |  |               | 6.99 | %             |  |       | 6.42 | %
|                                                                   |  weighted average pay rate         |  |               | 3.50 | %             |  |       | 2.77 | %
|                                                                   |  weighted average maturity (years) |  |               | 3.93 |               |  |       | 3.74 |  
|Receive-floating/Pay-floating swaps-notional amount (million euro) |                                     |  | 813           |      |               |  | 1,802 |     
|                                                                   |  weighted average receive rate     |  |               | 4.17 | %             |  |       | 3.32 | %
|                                                                   |  weighted average pay rate         |  |               | 4.21 | %             |  |       | 3.95 | %
|                                                                   |  weighted average maturity (years) |  |               | 4.13 |               |  |       | 4.49 |  
|Pay-fixed/Receive-floating swaps-notional amount (million euro)    |                                     |  | 1,193         |      |               |  | 2,203 |     
|                                                                   |  weighted average pay rate         |  |               | 4.84 | %             |  |       | 4.73 | %
|                                                                   |  weighted average receive rate     |  |               | 3.31 | %             |  |       | 2.43 | %
|                                                                   |  weighted average maturity (years) |  |               | 2.97 |               |  |       | 6.15 |  

Forward rate agreements are generally used by Eni to offset changes in
the rates of short floating-rate debt. Forward rate agreements settle in
cash at a specified future date based on the differential between agreed
interest rates applied to a notional amount. Forward contracts at year-end
are related to contracts whereby Eni pays a fixed rate for euro 220 million
(received a fix rate for euro 5 million and paid a fix rate for euro 163
million at December 31, 2001). These contracts have terms of less than one
year. Gains and losses estimated at December 31, 2002, are not material.

Eni also uses interest rate collars to manage its interest rate risk.
An interest rate collar is a combination of options that enable a
predetermined interest rate band to be locked in. Eni also uses zero-cost
collars that do not require payment of an option premium. Interest rate collar
contracts at year-end have terms of up to five years.





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(c) Foreign exchange risk management

Eni enters into various types of foreign exchange contracts in managing
its foreign exchange risk, as indicated in the following table:

|                           |  |                 |       |                 |  |  |       | 
|-------------------------- |  | --------------- | ----- | --------------- |  |  | ----- | 
|                           |  | Dec. 31, 2001   |       | Dec. 31, 2002  
|                           |  | Notional amount |       | Notional amount
|                           |  |                 |       |                
|Forward exchange contracts |  |                 | 5,172 |                 |  |  | 7,611 | 
|Purchased options          |  |                 | 538   |                 |  |  | 348   | 
|                           |  |                 | 5,710 |                 |  |  | 7,959 | 

Eni uses forward exchange contracts primarily to hedge existing
receivables and payables, including deposits and borrowings denominated in
foreign currencies. Some of the contracts involve the exchange of currencies
other than the local currency, according to the needs of foreign
consolidated subsidiaries. Both buy and sell amounts of such contracts are
indicated at the notional value. The term of forward exchange contracts is
normally one year. The euro 2,439 million increase in forward exchange
contracts is primarily due to Enifin SpAs transactions in order to hedge
financial short-term payables (expressed in pound sterling and changed in
U.S. dollar) of Eni Coordination Center SA.

Eni also uses currency options to hedge expenses denominated in foreign
currencies. Currency options, purchased in the over-the-counter market for a
premium, provide Eni with the right to buy or sell an agreed amount of
currency at a specified exchange rate at the end of a specified period,
normally two years.

The table below summarizes, by major currency, the contractual amounts
of Enis forward exchange and option contracts.

|                 |  |               |       |               |  |     |       |      |  |  |       |  |  |  |       | 
|---------------- |  | ------------- | ----- | ------------- |  | --- | ----- | ---- |  |  | ----- |  |  |  | ----- | 
|                 |  | Dec. 31, 2001 |       | Dec. 31, 2002
|                 |  |               |       |              
|                 |  | Buy           |       | Sell          |  | Buy |       | Sell
|                 |  |               |       |               |  |     |       |     
|                 |  | (million E)  
|U.S. dollar      |  |               | 1,429 |               |  |     | 2,480 |      |  |  | 1,290 |  |  |  | 3,515 | 
|Pound sterling   |  |               | 776   |               |  |     | 177   |      |  |  | 2,225 |  |  |  | 92    | 
|Swiss franc      |  |               | 4     |               |  |     | 434   |      |  |  | 32    |  |  |  | 392   | 
|Japanese yen     |  |               | 124   |               |  |     | 27    |      |  |  | 183   |  |  |  | 50    | 
|Norwegian kroner |  |               | 39    |               |  |     | 95    |      |  |  | 68    |  |  |  | 37    | 
|Euro             |  |               | 73    |               |  |     | 2     |      |  |  | 43    |  |  |  | 12    | 
|Other            |  |               | 4     |               |  |     | 46    |      |  |  | 9     |  |  |  | 11    | 
|                 |  |               | 2,449 |               |  |     | 3,261 |      |  |  | 3,850 |  |  |  | 4,109 | 

(d) Commodity price risk management

Exchange traded crude oil and petroleum product futures contracts and
over-the-counter market swaps are primarily used by the Refining & Marketing
segment to minimize commodity price volatility. Futures contracts have
little credit risk because they take place in regulated markets. Swap
agreements do not contain margin requirements and are subject to the
creditworthiness of counterparties, which are principally major financial
institutions. At December 31, 2001 and 2002 the notional amounts of open
contracts are not material.

(e) Sales of government bonds

Eni sold Italian Government bonds to investors, primarily employees,
and simultaneously entered into interest rate swaps with such investors
wherein Eni receives the rate of interest on such Italian Government bonds
and pays a floating rate of interest linked to the Euribor (Europe Interbank
Offered Rate). Such investors may sell their securities back to Eni at any
time for par value plus related interest with the





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simultaneous cancellation of the related swaps. Eni also entered into
an interest rate swap with a financial institution wherein it receives a
floating rate which is considered more favorable for its floating rate
commitment to its investors. At December 31, 2001 and 2002, euro 150 million
and euro 178 million, respectively, worth of such securities remained in the
hands of employees. For accounting purposes, this transaction was treated as
a sale of the bonds with gains recognized currently in income.

Guarantees

Guarantees have been given by Eni to third parties. At December 31,
2001 and 2002, these guarantees were as follows:

|                            |  |                  |       |                  |  |            |       |       |  |            |     |            |  |            |        |         |  |  |       |  |  |  |       |  |  |  |    |  |  |  |        | 
|--------------------------- |  | ---------------- | ----- | ---------------- |  | ---------- | ----- | ----- |  | ---------- | --- | ---------- |  | ---------- | ------ | ------- |  |  | ----- |  |  |  | ----- |  |  |  | -- |  |  |  | ------ | 
|                            |  | At Dec. 31, 2001 |       | At Dec. 31, 2002
|                            |  |                  |       |                 
|                            |  | Unsecured        |       | Other            |  | Secured    |       |       |  |            |     | Unsecured  |  | Other      |        | Secured |  |  |       | 
|                            |  | guarantees       |       | guarantees       |  | guarantees |       | Total |  | guarantees |     | guarantees |  | guarantees |        | Total  
|                            |  |                  |       |                  |  |            |       |       |  |            |     |            |  |            |        |        
|                            |  | (million E)     
|Unconsolidated
subsidiaries |  |                  | 126   |                  |  |            | 277   |       |  |            |     |            |  |            | 403    |         |  |  | 117   |  |  |  | 640   |  |  |  |    |  |  |  | 757    | 
|Affiliated companies        |  |                  | 65    |                  |  |            | 1,220 |       |  |            | 78  |            |  |            | 1,363  |         |  |  | 55    |  |  |  | 1,020 |  |  |  | 77 |  |  |  | 1,152  | 
|Consolidated
companies      |  |                  | 4,800 |                  |  |            | 5,287 |       |  |            | 85  |            |  |            | 10,172 |         |  |  | 4,800 |  |  |  | 5,506 |  |  |  |    |  |  |  | 10,306 | 
|Others                      |  |                  | 18    |                  |  |            | 220   |       |  |            |     |            |  |            | 238    |         |  |  | 9     |  |  |  | 202   |  |  |  |    |  |  |  | 211    | 
|                            |  |                  | 5,009 |                  |  |            | 7,004 |       |  |            | 163 |            |  |            | 12,176 |         |  |  | 4,981 |  |  |  | 7,368 |  |  |  | 77 |  |  |  | 12,426 | 

Guarantees given on behalf of unconsolidated subsidiaries and
affiliated companies of euro 1,832 million (euro 1,688 million as of
December 31, 2001) consist primarily of: (i) unsecured guarantees and
letters of patronage given to banks in relation to loans and lines of credit
received for euro 1,028 million (euro 1,495 million at December 31, 2001),
of which euro 826 million related to a contract released by Snam SpA (now
merged into Eni SpA) on behalf of Blue Stream Pipeline Co BV to a consortium
of financing institutions (euro 983 million as of December 31, 2001). The
euro 467 million decrease regards essentially guarantees given on behalf of
unconsolidated subsidiaries that are now consolidated or reclassified to
consolidated companies (euro 306 million) and to exchange rate differences
of unsecured guarantees given on behalf of Blue Stream Pipeline Co BV (euro
157 million); (ii) unsecured guarantees given to third parties in relation
to the construction of a hydrocarbon treatment plant in Libya (euro 412
million); (iii) unsecured guarantees and letters of patronage given to
customers in relation to contractual performance and bid bonds of euro 324
million (euro 68 million as of December 31, 2001). The increase of euro 256
million regards primarily unsecured guarantees given to third parties in
order to cover the construction of an oil pipeline in Azerbaijan (euro 206
million). As of December 31, 2002 the underlying commitment covered by such
guarantees was euro 1,661 million (euro 998 million as of December 31,
2001).

Guarantees given on behalf of consolidated companies of euro 10,306
million (euro 10,087 million as of December 31, 2001) consist primarily of:
(i) a guarantee of euro 4,800 million (the same as in 2001) given by Eni SpA
to Treno Alta Velocità  TAV  SpA for the proper and timely completion of a
project relating to the Milano-Bologna train link by the Consorzio Cepav
Uno; in exchange consortium members issued to Eni surety letters and bank
guarantees amounting to 10% of their respective portion of the work; (ii)
guarantees given to third parties relating to bid bonds and performance
bonds of euro 1,853 million (euro 1,450 million as of December 31, 2001).
The increase of euro 403 million regards primarily the consolidation of
Bouygues Offshore SA, of euro 360 million; insurance risk of euro 1,049
million reinsured by Eni (euro 1,248 million as of December 31, 2001); the
decrease of euro 199 million regards essentially the effect of exchange rate
differences on the translation of financial statements prepared in foreign
currencies into euro 181 million). Hydrocarbon development activities of
euro 1,139 million (euro 1,375 million as of December 31, 2001); VAT
recoverable from tax authorities of euro 1,062 million (euro 764 million as
of December 31, 2001). The underlying commitment covered by such guarantees
was euro 8,795 million as of December 31, 2002 (euro 8,613 million as of
December 31, 2001).

Secured guarantees of euro 77 million, relate to pledges of securities
given to banks in connection with loans to affiliated and consolidated
companies (euro 163 million as of December 31, 2001). As of December
31, 2002 the underlying obligation covered by such guarantees was euro
77 million (euro 107 million as of December 31, 2001).





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Other commitments

Other commitments and potential risks consist primarily of:



| |  |  | Obligations for purchases and sales of fixed assets of euro 146
million and euro 3,596 million as of December 31, 2001 and 2002,
respectively. The euro 3,450 million increase is primarily related
to: (i) the Public Offering of Italgas shares and the following
buy-out transaction (euro 2,550 million); (ii) commitments to Union
Fenosa SA for the acquisition of 50% of Union Fenosa Gas SA through
a capital contribution of euro 440 million; (iii) obligation for the
purchase of 100% of the Norwegian company Fortum Petroleum AS (euro
400 million); (iv) obligation related to a call option for the
purchase by ERG SpA of a 28% share of Erg Raffinerie Mediterranee
Srl (euro 100 million).                                                                                                                                                                                                                                                                                          
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Commitments of euro 441 million (euro 508 million as of December
31, 2001) primarily related to: (i) agreements related to the area
of Porto Marghera between EniChem and various government entities,
employee and trade groups whereby EniChem has committed to invest
approximately euro 223 million (euro 272 million as of December 31,
2001) in order to further develop the chemical segment and protect
the environment with respect to the Porto Marghera plant; (ii) a
memorandum of intent signed with the Basilicata Region whereby Eni
has agreed to invest in the future, also on behalf of Enterprise
SpA, euro 206 million in connection with Enis development plan of
oil fields in Val dAgri (euro 222 million as of December 31, 2001).                                                                                                                                                                                                                                           
|
| |  |  | Risks of euro 1,015 million (euro 905 million as of December 31,
2001) are primarily associated with: (i) potential risks associated
with the value of assets of third parties in Enis custody of euro
431 million (euro 159 million as of December 31, 2001). The euro 272
million increase regards primarily the increase in volumes of
natural gas stored by Stoccaggi Gas Italia SpA (euro 262 million);
(ii) contractual assurances given to acquirors of certain
investments and businesses of Eni of euro 393 million (euro 508
million as of December 31, 2001); the euro 115 million decrease
concerns absolved obligations, in particular obligations of Singea
SpA (in liquidation), now merged into EniChem SpA, for the transfer
of the integrated centre of Porto Vesme and San Gavino (euro 96
million); (iii) environmental damages of euro 137 million (euro 136
million as of December 31, 2001); (iv) tax proceedings of euro 44
million (euro 48 million as of December 31, 2001).
|
| |  |  | Obligations for certain long-term gas supply or ship agreements
entered into by Eni. Such agreements contain take-or-pay or
ship-or-pay provisions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  |  | Non-quantifiable risks related to contractual assurances given
to acquirors of investments against certain unforeseeable
liabilities attributable to tax, state welfare contributions and
environmental matters applicable to periods during which such
investments were owned by Eni. Eni believes such matters will not
have a material adverse effect on its consolidated financial
statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     





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Legal proceedings

Eni is a party to a number of civil actions and administrative
proceedings arising in the ordinary course of business. Based on information
available to date, and taking into account the existing provisions, Eni
believes that these matters will not have a material adverse effect on Enis
consolidated financial statements.

The following is a summary of significant legal matters in which Eni is
involved. Unless otherwise indicated, no provisions have been made for the
following proceedings as Eni believes that losses are not probable.

Judicial or Arbitration Proceedings

In 1991, Agrifactoring SpA commenced proceedings against Serfactoring
SpA a company 49% owned by the former Serfi SpA now Sofid SpA, which is
controlled by Eni SpA. The claim relates to euro 182 million of receivables
for fertilizer sales (plus interest and compensation for inflation),
originally owed by Federconsorzi to EniChem Agricoltura SpA (later
Agricoltura SpA (in liquidation) now merged into EniChem SpA) and Terni
Industrie Chimiche SpA (merged into Agricoltura SpA (in liquidation) that
has been merged into EniChem SpA). Such receivables were transferred by
Agricoltura and Terni Industrie Chimiche to Serfactoring, which appointed
Agrifactoring as its agent to collect payment of the receivables.
Agrifactoring guaranteed to pay the amount of such receivables to
Serfactoring, regardless of whether or not it received payment at 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 brought counterclaims against
Agrifactoring for damages amounting to euro 97 million relating to acts
carried out by Agrifactoring SpA as agent. 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
other offsets. In January 2000, the technical opinion requested by
Agrifactoring was completed. According to this opinion, the balance of the
account between Agrifactoring and Federconsorzi, for which Agrifactoring is
claiming payment of euro 182 million, amounts to approximately euro 40
million. Judgment on these proceedings, which have all been joined, is
currently still pending.

Tax Proceedings

Agip SpA (now merged into Eni SpA) received four formal assessments
from the Italian tax authorities that claimed that its income in 1989, 1990,
1991 and 1992 had been understated for income tax purposes. These
assessments concern an alleged global understated amount of euro 196
million, determined by making downward and upward adjustments to the prices
of certain petroleum products that Agip sold to or bought from other Eni
companies. All these assessments were judged as unfounded by the Provincial
Tax Commission of Milan. The appeal of the tax authorities against the first
three assessments was rejected by the Regional Tax Commission of Milan. The
appeal of the tax authorities against the fourth decision, related to 1992,
has not yet been discussed. In December 2000 the tax authorities notified
Eni SpA of a formal assessment concerning income understatement in 1994, for
an improper use of euro 20 million tax loss carryforwards. The Provincial
Tax Commission of Milan accepted Enis challenges against this assessment
with decision issued on May 7, 2001. On June 26, 2002 the tax authorities
appealed to the Regional Tax Commission.

With a decree dated December 6, 2000 the Lombardia Region decided that
natural gas used for electricity generation is subject to an additional
regional excise tax in relation to which Snam SpA (now merged into Eni SpA)
will withhold the appropriate amount in its collections from customers, for
future payment to the tax authorities. Given uncertainties in
interpretation, the same decree provides the terms within which distribution
companies are expected to pay this excise tax without paying any penalty.
Snam SpA and the other distribution companies of Eni believe that natural
gas used for electricity generation is not subject to this additional excise
tax and therefore appealed this decree to the relevant jurisdictional
bodies. With respect to this matter an official interpretation was requested
from the Ministry of Economy and Finance. With its





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decision of May 29, 2001 the Ministry confirmed that the additional
excise tax cannot be applied. However, the Region decided not to revoke its
decree and consequently Snam took appropriate legal action. On the basis of
action carried out by Snam, the Council of State decided on March 18, 2002
that the Administrative Court is not entitled to express judgment on this
issue. Therefore, if the Region should request payment, Snam will challenge
this request in Court. At a later date the Lombardia Region decided with
regional law 27/2001 that no additional tax is due from January 1, 2002
onwards, but still requested the payment of the additional taxes due before
that date.

Environment

In 1992, the Minister of Environment filed an action against EniChem
SpA and other parties to recover between euro 135 million and euro 870
million in damages relating to the discharge of effluents by the Mantua
plant. This plant was owned by a former subsidiary of Montedison SpA that
was conferred to Enimont SpA in connection with the formation of the Enimont
joint venture. In September 1999, the State attorney requested that all the
parties be condemned by the Court of Brescia to pay compensatory damages
resulting from the proceeding of not less than euro 135 million.

An action was started in 1997 concerning the criminal charges brought
by the Venice public prosecutor against 28 persons, including 12 former and
current managers of subsidiaries of Eni(1), for alleged mismanagement of the
Porto Marghera plant starting in the 1970s and for the alleged pollution and
health damage resulting therefrom. In most cases such charges relate to a
period in time when the plant was managed by companies not owned by Eni.
With reference to the 25 year period examined in the proceeding (1971-1995)
EniChem managed the CVM-PVC plant from 1987 to 1993, while land parcels and
other plants were managed by EniChem only from 1990 onwards. The inclusion
of Eni SpA as defendant for environmental damage and crimes related to
injuries and death of persons that had worked near the Porto Marghera
petrochemical plant is based on the fact that Eni SpA is a shareholder of
companies operating in Porto Marghera, rather than on Enis participation in
managing such companies. Plaintiffs are both institutions (Italian
Government, Veneto Region, Venice Province and some municipalities) and 69
persons and entities. Damage payments were requested for a total amount of
euro 511 million, but a request of euro 2,035 million was presented in case
the judge should not identify evidence for each specific case. The state
attorney estimated the cost of environmental remediation in euro 36,952
million and the illicit profit of defendants of euro 5,970 million. Damage
payment has been requested jointly of all defendants. Only for the
environmental damage did the State Attorney request individual payment of
each defendant found guilty. Another party which was a principal defendant
together with Eni has reached an agreement with the plaintiff agreeing to a
payment of approximately euro 260 million. Subsequently, on November 2, 2001
the Court of Venice acquitted all defendants. On May 3, 2002 the judgment
was deposited. The State attorney has proposed appeal, but the date for the
debate has not been fixed. Eni has made a provision for this matter.

In 1999, the public prosecutor of Gela started an investigation against
a former manager of the Gela refinery in order to ascertain alleged soil and
sea pollution caused by the discharge of effluents by the refinery. On
November 2002, «Italia Nostra», and «Friends of the Earth», two
environmental NGOs, filed civil claims within this proceeding and requested
the payment of compensatory damage from AgipPetroli SpA (now merged into Eni
SpA) for a total of euro 15,050 million. The judge for preliminary
investigations rejected the public prosecutors request to extend the
deadline for further investigations, as the related request has been
untimely filed. As a result, only the evidence arising from the
investigations completed within the original deadline will be admitted.

In 2000, the public prosecutor of Brindisi commenced a criminal action
against 68 employees or former employees of various companies that owned and
managed plants for the manufacture of dichloroethane, vinyl chloride monomer
and vinyl polychloride from the early 1960s to date. Among the defendants,
20 are former employees or former directors of EniChem SpAs subsidiaries
that managed these plants from 1983 to 1993. The preliminary stage of the
proceeding is closed with a request by the public prosecutor of dismissal
for EniChems employees. The judge for preliminary investigations still has
to decide on the dismissal.

In 2000, the public prosecutor of Gela started an investigation on
prohibited emissions from AgipPetroli SpAs refinery (now merged into Eni
SpA) (as per art. 674 of the Criminal Code), which are purported to have had
negative effects on the health of a number of citizens of Gela, and on
AgipPetrolis lack of declaration of such emissions in violation of
Presidential Decree No. 203 of 1998. The investigation brought an action
against some former managers of the refinery for events registered from
1997. The Municipality of





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Gela, the Province of Caltanissetta and others filed civil claims in
this proceeding and requested the payment of compensatory damage from
AgipPetroli for a total of euro 878 million.

Under Regional Law No. 2 of March 26, 2002, the Sicilia Region
introduced an environmental tax on owners of primary pipelines (operating at
a maximum pressure of over 24 bar) in Sicily. The purpose of the tax is «to
finance investments aimed at reducing and preventing potential environmental
damage caused by pipelines containing natural gas». The tax for 2002, based
on the volume of the gas pipelines, has been fixed at a rate of euro 153 per
cubic meter for pipelines on public land and euro 137.70 per cubic meter for
pipelines on private land. The tax is payable from April 2002 and the amount
due by Snam Rete Gas SpA for 2002 totaled approximately euro 97 million. The
amount of the tax can be changed by the Region with special ruling before
December 31 of each year. Otherwise the tax is deemed to remain the same
plus the official rate of inflation as published by ISTAT.

In order to protect its interests, Snam Rete Gas: (i) on July 30, 2002,
filed a claim with the European Commission aimed at opening a proceeding
against the Italian Government, with the further option that the European
Commission after the first inquiry phase, can request the Court of Justice
to suspend the application of the regional law with an urgent ruling; (ii)
notified the Sicilia Region its request for reimbursement of taxes paid, as
a first step to the furthering of the dispute and warned the Sicilia Region
not to make use of those sums expecting final rulings; (iii) on October 18,
2002, as circumstances materialized constituting tacit rejection of the
request for reimbursement, filed a claim with the Tax Commission of Palermo
aimed at obtaining a definitive and rapid decision ascertaining the
legitimacy of the tax.

The Authority for Electricity and Gas, although acknowledging that the
tax burden is an operating cost for the transmission activity, subjected its
inclusion in tariffs to the final ruling on its legitimacy by relevant
authorities. Therefore, with decision No. 146/2002 the Authority published
two sets of tariffs: one, in force, that does not take into account the tax
and the second one including it, that will be automatically applied with
retroactive effect should the tax be judged legitimate.

In September 2002 Snam Rete Gas filed a claim with the Regional
Administrative Court of Lombardia requesting the immediate application of
tariffs including the tax. With ruling of December 20, 2002, the Court
judged the tax at variance with European rules and therefore did not accept
Snam Rete Gass claim. In December 2002, Snam Rete Gas suspended payments
based on authoritative legal counsel and of said Court ruling. Payments
affected until November 2002 totaled euro 86.4 million.

In January 2003 the Sicilia Region presented an appeal to the Council
of State against the ruling of the Regional Administrative Court of
Lombardia for the part that states the variance of the regional law with
European rules. For cautionary reasons, Snam Rete Gas did not record the
recovery of costs borne in its accounts, taking into account the
uncertainties on the future evolution of this dispute and the time necessary
to reach a final judgment.

On January 16, 2003 the court of Siracusa ordered the imprisonment of 7
employees of Enichem SpA and Polimeri Europa SpA and house arrest for
another 10 employees of the same companies. Those persons are accused of
criminal association in the mismanagement relating to the production,
disposal and treatment of liquid and solid waste materials, obtaining an
illicit income in violation of Decree No. 417/1999 (which
implemented the Ronchi Decree) of the
Ministry of Environment and article 416 of the penal code. In September 2001
the Public Prosecutor of Siracusa started an inquiry to investigate the
mismanagement of the (liquid and solid) waste materials in Enichems plant
of Priolo, the inquiry involves also the chlorine soda plant. On February 6,
2003 the Court of Reviews decided to transform the imprisonments into house
arrest and cancelled the detention of the other employees subject to the
investigation.

Antitrust, EU Proceedings, and actions of the Authority for Electricity
and Gas

In March 1999, the Antitrust Authority concluded its investigation and:
(i) verified that Snam SpA (now merged into Eni SpA) abused its dominant
position in the market for the transportation and distribution of natural
gas; (ii) fined Snam SpA 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. On May 26, 1999 stating that these decisions
are against law No. 9/1991 and





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the European Directive 98/30/CE, that Court granted the suspension of
the decision. The Antitrust Authority did not appeal against the suspension.
The decision of the merits of the dispute is still pending.

On November 21, 2002 the Italian Antitrust Authority concluded the
investigation which was commenced on the request of Blugas SpA concerning
Enis alleged violation of competition rules, and acquitted Eni for the
specific case of Blugas (in light of the fact that in the spring-summer of
2001 Eni partially accepted Blugass request to access the network) but
decided that Eni had violated access rules by giving priority access to
Italian purchasers with which Eni had entered into supply contracts; Eni
supplies volumes of natural gas to those purchasers at the entry points into
the Italian network. The Antitrust Authority considers that these contracts
infringe the rationale of article 19 of Legislative Decree No. 164/2000
which provides for limitations on the volumes to be input by any single
operator into the national network. Given this infringing behavior and the
lack of clarity of Italian regulations and Enis availability to increase
the transmission capacity of gas lines outside Italy, the Antitrust
Authority imposed on Eni a symbolic fine amounting to euro 1,000 and
requested Eni to submit «a report indicating measures to be taken to
eliminate infringing behaviors with specific attention to the upgrading of
the transmission network or equivalent actions». Eni filed this report on
March 6, 2003. On February 5, 2003 Eni filed a claim with the Regional
Administrative Court of Lazio in Rome requesting the annulment of the
measures taken by the Authority.

With its decision of June 5, 2001 the Antitrust Authority started an
inquiry against AgipPetroli SpA, Atriplex SpA and other companies for
alleged limitations of competition within the tenders offered by public
transportation companies in the urban areas of Naples, Turin and Milan for
the supply of gas oil for automotive use in the period 1996-2000. This
proceeding intends to ascertain if the alleged agreements could be the
expression of a more general arrangement among companies for dividing among
themselves the mentioned fuel supplies. The Authority has postponed the
closing date of the proceeding from October 11, 2002 to February 24, 2003.
On December 10, 2002 the parties had their last hearing. On March 4, 2003
the Authoritys decision has been presented, that has confermed violations
for all companies involved and has fined AgipPetroli and Atriplex euro
118,000. In May 2003, Eni appealed the decision with the Regional
Administrative Court of Lazio.

Environmental Regulations

Together with other companies in the industries in which it operates,
Eni is subject to numerous EU, national, regional and local environmental
laws and regulations concerning its oil and gas operations, products and
other activities, including legislation that implements international
conventions or protocols. In particular, these laws and regulations require
the acquisition of a permit before drilling for hydrocarbons may commence,
restrict the types, quantities and concentration of various substances that
can be released into the environment in connection with exploration,
drilling and production activities, limit or prohibit drilling activities on
certain protected areas, and impose criminal or civil liabilities for
pollution resulting from oil, natural gas, refining and petrochemical
operations. These laws and regulations may also restrict air emission and
discharges to surface and subsurface water resulting from the operation of
natural gas processing plants, petrochemicals plants, refineries, pipeline
systems and other facilities that Eni owns. In addition, Enis operations
are subject to laws and regulations relating to the generation, handling,
transportation, storage, disposal and treatment of waste materials.
Environmental laws and regulations have a substantial impact on Enis
operations. Some risk of environmental costs and liabilities is inherent in
particular operations and products of Eni, as it is with other companies
engaged in similar businesses, and there can be no assurance that material
costs and liabilities will not be incurred. Although Eni, considering the
actions already taken, the insurance policies to cover environmental risks
and the provision for risks accrued, does not currently expect any material
adverse effect on its consolidated financial statements as a result of its
compliance with such laws and regulations, there can be no assurance that
this will be the case due to: (i) the possibility of as yet unknown
contamination; (ii) the results of the on-going characterizations and the
other possible effects of decree No. 471/99 of the Ministry of Environment;
(iii) the possible effect of future environmental legislation and rules;
(iv) the effect of possible technological changes relating to future
remediation; (v) the possibility of litigation and the difficulty of
determining Enis liability, if any, as against other potentially
responsible parties with respect to such litigation and the possible
insurance recoveries.





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24) Segment information

Segment information is presented in accordance with the revised IAS 14.
Intersegment sales are conducted on an arms length basis.

Information by industry segment

|                                          |  |             |        |       |  |           |        |                |  |             |        |              |  |            |       |   |  |  |       |   |  |  |       |   |  |  |        |  
|----------------------------------------- |  | ----------- | ------ | ----- |  | --------- | ------ | -------------- |  | ----------- | ------ | ------------ |  | ---------- | ----- | - |  |  | ----- | - |  |  | ----- | - |  |  | ------ | -
|                                          |  | Exploration |        | Gas   |  | Refining  |        |                |  |             |        | Oilfield     |  | Other      |       |   |  | 
|                                          |  | &           |        | &     |  | &         |        |                |  |             |        | Services and |  | activities |       |   |  | 
|                                          |  | Production  |        | Power |  | Marketing |        | Petrochemicals |  | Engineering |        | (a)          |  | Total     
|                                          |  |             |        |       |  |           |        |                |  |             |        |              |  |           
|                                          |  | (million E)
|2000                                      |  |             |        |       |  |           |        |                |  |             |        |              |  |            |       |   |  |  |       |   |  |  |       |   |  |  |        |  
|Net sales from operations (b)             |  |             | 12,308 |       |  |           | 14,427 |                |  |             | 25,462 |              |  |            | 6,018 |   |  |  | 2,146 |   |  |  | 608   |   |  |  |        |  
|Less: intersegment sales                  |  |             | (9,384 | )     |  |           | (713   | )              |  |             | (1,549 | )            |  |            | (570  | ) |  |  | (384  | ) |  |  | (431  | ) |  |  |        |  
|Net sales to customers                    |  |             | 2,924  |       |  |           | 13,714 |                |  |             | 23,913 |              |  |            | 5,448 |   |  |  | 1,762 |   |  |  | 177   |   |  |  | 47,938 |  
|Operating income                          |  |             | 6,603  |       |  |           | 3,178  |                |  |             | 986    |              |  |            | 4     |   |  |  | 144   |   |  |  | (143  | ) |  |  | 10,772 |  
|Identifiable assets (c)                   |  |             | 15,170 |       |  |           | 12,927 |                |  |             | 8,257  |              |  |            | 3,559 |   |  |  | 2,890 |   |  |  | 867   |   |  |  | 43,670 |  
|Unallocated assets                        |  |             |        |       |  |           |        |                |  |             |        |              |  |            |       |   |  |  |       |   |  |  |       |   |  |  | 12,693 |  
|Identifiable liabilities (d)              |  |             | 4,408  |       |  |           | 2,954  |                |  |             | 4,048  |              |  |            | 1,223 |   |  |  | 1,854 |   |  |  | 1,018 |   |  |  | 15,505 |  
|Unallocated liabilities                   |  |             |        |       |  |           |        |                |  |             |        |              |  |            |       |   |  |  |       |   |  |  |       |   |  |  | 16,785 |  
|Capital expenditures                      |  |             | 3,539  |       |  |           | 794    |                |  |             | 533    |              |  |            | 265   |   |  |  | 245   |   |  |  | 55    |   |  |  | 5,431  |  
|Depreciation, amortization
and writedowns |  |             | (2,364 | )     |  |           | (479   | )              |  |             | (547   | )            |  |            | (274  | ) |  |  | (148  | ) |  |  | (31   | ) |  |  | (3,843 | )
|Interest income                           |  |             | 89     |       |  |           | 36     |                |  |             | 36     |              |  |            | 24    |   |  |  | 18    |   |  |  | 332   |   |  |  | 535    |  
|Interest expense                          |  |             | (140   | )     |  |           | (92    | )              |  |             | (37    | )            |  |            | (9    | ) |  |  | (28   | ) |  |  | (368  | ) |  |  | (674   | )
|2001                                      |  |             |        |       |  |           |        |                |  |             |        |              |  |            |       |   |  |  |       |   |  |  |       |   |  |  |        |  
|Net sales from operations (b)             |  |             | 13,960 |       |  |           | 16,098 |                |  |             | 22,083 |              |  |            | 4,761 |   |  |  | 3,114 |   |  |  | 695   |   |  |  |        |  
|Less: intersegment sales                  |  |             | (8,430 | )     |  |           | (668   | )              |  |             | (1,202 | )            |  |            | (471  | ) |  |  | (509  | ) |  |  | (506  | ) |  |  |        |  
|Net sales to customers                    |  |             | 5,530  |       |  |           | 15,430 |                |  |             | 20,881 |              |  |            | 4,290 |   |  |  | 2,605 |   |  |  | 189   |   |  |  | 48,925 |  
|Operating income                          |  |             | 5,984  |       |  |           | 3,672  |                |  |             | 985    |              |  |            | (332  | ) |  |  | 255   |   |  |  | (168  | ) |  |  | 10,396 |  
|Identifiable assets (c)                   |  |             | 24,261 |       |  |           | 12,860 |                |  |             | 7,420  |              |  |            | 2,488 |   |  |  | 3,136 |   |  |  | 789   |   |  |  | 50,954 |  
|Unallocated assets                        |  |             |        |       |  |           |        |                |  |             |        |              |  |            |       |   |  |  |       |   |  |  |       |   |  |  | 11,782 |  
|Identifiable liabilities (d)              |  |             | 5,098  |       |  |           | 3,037  |                |  |             | 3,345  |              |  |            | 1,312 |   |  |  | 1,927 |   |  |  | 1,145 |   |  |  | 15,864 |  
|Unallocated liabilities                   |  |             |        |       |  |           |        |                |  |             |        |              |  |            |       |   |  |  |       |   |  |  |       |   |  |  | 17,683 |  
|Capital expenditures                      |  |             | 4,276  |       |  |           | 1,065  |                |  |             | 496    |              |  |            | 361   |   |  |  | 304   |   |  |  | 75    |   |  |  | 6,577  |  
|Depreciation, amortization
and writedowns |  |             | (3,251 | )     |  |           | (503   | )              |  |             | (517   | )            |  |            | (251  | ) |  |  | (203  | ) |  |  | (46   | ) |  |  | (4,771 | )
|Interest income                           |  |             | 75     |       |  |           | 32     |                |  |             | 37     |              |  |            | 23    |   |  |  | 10    |   |  |  | 316   |   |  |  | 493    |  
|Interest expense                          |  |             | (272   | )     |  |           | (74    | )              |  |             | (33    | )            |  |            | (6    | ) |  |  | (17   | ) |  |  | (409  | ) |  |  | (811   | )
|2002                                      |  |             |        |       |  |           |        |                |  |             |        |              |  |            |       |   |  |  |       |   |  |  |       |   |  |  |        |  
|Net sales from operations (b)             |  |             | 12,877 |       |  |           | 15,297 |                |  |             | 21,546 |              |  |            | 4,781 |   |  |  | 4,546 |   |  |  | 897   |   |  |  |        |  
|Less: intersegment sales                  |  |             | (8,795 | )     |  |           | (623   | )              |  |             | (1,037 | )            |  |            | (406  | ) |  |  | (479  | ) |  |  | (682  | ) |  |  |        |  
|Net sales to customers                    |  |             | 4,082  |       |  |           | 14,674 |                |  |             | 20,509 |              |  |            | 4,375 |   |  |  | 4,067 |   |  |  | 215   |   |  |  | 47,922 |  
|Operating income                          |  |             | 5,175  |       |  |           | 3,244  |                |  |             | 320    |              |  |            | (347  | ) |  |  | 298   |   |  |  | (188  | ) |  |  | 8,502  |  
|Identifiable assets (c)                   |  |             | 23,686 |       |  |           | 12,482 |                |  |             | 7,634  |              |  |            | 3,580 |   |  |  | 5,026 |   |  |  | 469   |   |  |  | 52,877 |  
|Unallocated assets                        |  |             |        |       |  |           |        |                |  |             |        |              |  |            |       |   |  |  |       |   |  |  |       |   |  |  | 12,931 |  
|Identifiable liabilities (d)              |  |             | 4,764  |       |  |           | 2,969  |                |  |             | 2,861  |              |  |            | 2,714 |   |  |  | 2,741 |   |  |  | 1,025 |   |  |  | 17,074 |  
|Unallocated liabilities                   |  |             |        |       |  |           |        |                |  |             |        |              |  |            |       |   |  |  |       |   |  |  |       |   |  |  | 20,383 |  
|Capital expenditures                      |  |             | 5,615  |       |  |           | 1,313  |                |  |             | 545    |              |  |            | 249   |   |  |  | 232   |   |  |  | 94    |   |  |  | 8,048  |  
|Depreciation, amortization
and writedowns |  |             | (3,884 | )     |  |           | (512   | )              |  |             | (494   | )            |  |            | (266  | ) |  |  | (267  | ) |  |  | (81   | ) |  |  | (5,504 | )
|Interest income                           |  |             | 59     |       |  |           | 14     |                |  |             | 64     |              |  |            | 5     |   |  |  | 7     |   |  |  | 173   |   |  |  | 322    |  
|Interest expense                          |  |             | (185   | )     |  |           | (37    | )              |  |             | (26    | )            |  |            | (13   | ) |  |  | (10   | ) |  |  | (297  | ) |  |  | (568   | )





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---

|(a) |  | Other activities include Eni-Corporate financial data which is not
significant.
|--- |  | -------------------------------------------------------------------------------
|   
|(b) |  | Before elimination of intersegment sales.                                      
|   
|(c) |  | Includes assets directly related to the generation of operating
income.        
|   
|(d) |  | Includes liabilities directly related to the generation of operating
income.   

Geographic financial information

Assets and Investments by geographic area of origin

|                                           |  |             |        |    |  |        |       |         |  |          |       |      |  |       |       |       |  |  |       |  |  |       |       |  |  |  |     |  |  |  |        | 
|------------------------------------------ |  | ----------- | ------ | -- |  | ------ | ----- | ------- |  | -------- | ----- | ---- |  | ----- | ----- | ----- |  |  | ----- |  |  | ----- | ----- |  |  |  | --- |  |  |  | ------ | 
|                                           |  |             |        |    |  | Other  |       | Rest of |  |          |       |      |  |       |       |       |  |  |       |  |  | Other |       |  |  | 
|                                           |  | Italy       |        | EU |  | Europe |       | Africa  |  | Americas |       | Asia |  | Areas |       | Total
|                                           |  |             |        |    |  |        |       |         |  |          |       |      |  |       |       |      
|                                           |  | (million E)
|2000                                       |  |             |        |    |  |        |       |         |  |          |       |      |  |       |       |       |  |  |       |  |  |       |       |  |  |  |     |  |  |  |        | 
|Identifiable assets (a)                    |  |             | 24,554 |    |  |        | 4,851 |         |  |          | 2,177 |      |  |       | 6,651 |       |  |  | 3,859 |  |  |       | 1,570 |  |  |  | 8   |  |  |  | 43,670 | 
|Investments in fixed
and intangible
assets |  |             | 2,206  |    |  |        | 439   |         |  |          | 283   |      |  |       | 1,186 |       |  |  | 753   |  |  |       | 562   |  |  |  | 2   |  |  |  | 5,431  | 
|2001                                       |  |             |        |    |  |        |       |         |  |          |       |      |  |       |       |       |  |  |       |  |  |       |       |  |  |  |     |  |  |  |        | 
|Identifiable assets (a)                    |  |             | 23,513 |    |  |        | 7,546 |         |  |          | 2,721 |      |  |       | 8,653 |       |  |  | 4,552 |  |  |       | 3,958 |  |  |  | 11  |  |  |  | 50,954 | 
|Investments in fixed
and intangible
assets |  |             | 2,407  |    |  |        | 595   |         |  |          | 249   |      |  |       | 1,405 |       |  |  | 923   |  |  |       | 923   |  |  |  | 75  |  |  |  | 6,577  | 
|2002                                       |  |             |        |    |  |        |       |         |  |          |       |      |  |       |       |       |  |  |       |  |  |       |       |  |  |  |     |  |  |  |        | 
|Identifiable assets (a)                    |  |             | 24,524 |    |  |        | 6,806 |         |  |          | 3,863 |      |  |       | 9,122 |       |  |  | 3,432 |  |  |       | 4,385 |  |  |  | 745 |  |  |  | 52,877 | 
|Investments in fixed
and intangible
assets |  |             | 2,396  |    |  |        | 546   |         |  |          | 305   |      |  |       | 2,497 |       |  |  | 721   |  |  |       | 1,333 |  |  |  | 250 |  |  |  | 8,048  | 



---

|(a) |  | Includes assets directly related to the generation of operating
income.
|--- |  | -----------------------------------------------------------------------

Sales from operations by geographic area of destination

|                     |  |             |        |      |  |      |        |  |  |  |        | 
|-------------------- |  | ----------- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                     |  | 2000        |        | 2001 |  | 2002
|                     |  |             |        |      |  |     
|                     |  | (million E)
|Italy                |  |             | 27,184 |      |  |      | 27,244 |  |  |  | 23,797 | 
|Other European Union |  |             | 6,944  |      |  |      | 8,226  |  |  |  | 8,450  | 
|Rest of Europe       |  |             | 2,711  |      |  |      | 3,136  |  |  |  | 4,712  | 
|Africa               |  |             | 2,083  |      |  |      | 2,180  |  |  |  | 2,478  | 
|Americas             |  |             | 6,034  |      |  |      | 6,169  |  |  |  | 5,317  | 
|Asia                 |  |             | 2,959  |      |  |      | 1,949  |  |  |  | 3,154  | 
|Other areas          |  |             | 23     |      |  |      | 21     |  |  |  | 14     | 
|                     |  |             | 47,938 |      |  |      | 48,925 |  |  |  | 47,922 | 

25) Fair value of financial instruments

In the normal course of its business, Eni utilizes various types of
financial instruments. These instruments include recorded assets and
liabilities, as well as items that principally involve off-balance sheet
risk. Information about the fair value of Enis financial instruments is
presented below.



| |  |  | Marketable securities: the fair values of marketable securities
are based upon market value.
| | - |  | --------------------------------------------------------------------------------------------





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##### Table of Contents





| |  |  | Non-current investments carried at cost: such investments are
not publicly traded and do not have quoted market prices. An
estimate of fair value has not been made because the amount of the
investment is not significant and the estimation of fair value would
require incurring excessive costs.                                                                                                                                                                                                                                                                        
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Current investments: such investments are publicly traded and
their fair value is represented by their quoted market price.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  |  | Non-current receivables: the fair values of non-current
receivables are estimated based on the discounted value of future
cash flows expected to be paid, considering rates of interest which
Eni could earn on similar credit. The differences between the
carrying and market values of non-current receivables at December
31, 2001 and 2002, excluding tax credits with Italian tax
authorities, were not significant and are not included below. In
relation to tax credits the interest rate (2.5% on a six-month
basis) is aligned with the average market rate trend.
|
| |  |  | Current receivables: the fair values of current receivables are
not included below because they are approximated by their carrying
values.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  |  | Bonds payable, current portion of long-term debt and long-term
debt: the fair values of bonds payable and long-term debt, including
current maturities, are based on discounted cash flow analyses.                                                                                                                                                                                                                                                                                                                                                                          
|
| |  |  | Short-term debt: the carrying value of short-term debt
approximates fair value because of the short period of time between
the origination and maturity of the borrowings.                                                                                                                                                                                                                                                                                                                                                                                                   

Non-current payables: the fair values of non-current payables are
estimated based on the discounted value of future cash flows. The
differences between the carrying and market values of non-current payables
at December 31, 2001 and 2002, were not significant and are not included
below.

|                                                           |  |               |       |               |  |          |       |       |  |  |       |  |  |  |       | 
|---------------------------------------------------------- |  | ------------- | ----- | ------------- |  | -------- | ----- | ----- |  |  | ----- |  |  |  | ----- | 
|                                                           |  | Dec. 31, 2002 |       | Dec. 31, 2001
|                                                           |  |               |       |              
|                                                           |  | Carrying      |       | Fair          |  | Carrying |       | Fair 
|                                                           |  | Value         |       | Value         |  | Value    |       | Value
|                                                           |  |               |       |               |  |          |       |      
|                                                           |  | (million E)  
|Marketable securities and
current investments              |  |               | 1,709 |               |  |          | 1,736 |       |  |  | 1,530 |  |  |  | 1,549 | 
|Bonds and long-term debt,
including current
maturities (1) |  |               | 7,317 |               |  |          | 7,641 |       |  |  | 7,530 |  |  |  | 8,002 | 



---

|(1) |  | The carrying value is increased by the market value of the acquired
interest rate financial debts which are recorded under «Accrued
expenses and deferred income» of balance sheet liabilities and it is
decreased by implicit interest under «Accrued expenses and deferred
income» of balance sheet assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   |  | Derivative financial instruments: the fair value of derivatives
generally reflects the estimated amounts that Eni would pay or
receive to terminate the contracts at the reporting date, thereby
taking into account the current unrealized gains or losses of open
contracts. Dealer quotes or appropriate pricing models have been
used to estimate the fair value of Enis derivatives. The carrying
value, compared with the fair value, represents the amount of
interest rate and exchange rate differentials recognized but not yet
paid at year-end. For foreign exchange derivatives related to
monetary assets and liabilities, the carrying value also represents
the adjustment using current exchange rates at year-end. The
difference between carrying value and fair value is therefore not
significant.

|                              |               |  |               |     |               |  |          |     |       |  |  |      |   |  |  |      |  
|----------------------------- | ------------- |  | ------------- | --- | ------------- |  | -------- | --- | ----- |  |  | ---- | - |  |  | ---- | -
|                              |               |  | Dec. 31, 2001 |     | Dec. 31, 2002
|                              |               |  |               |     |              
|                              |               |  | Carrying      |     | Fair          |  | Carrying |     | Fair 
|                              |               |  | Value         |     | Value         |  | Value    |     | Value
|                              |               |  |               |     |               |  |          |     |      
|                              |               |  | (million E)  
|Interest rate derivatives:    |               |  |               |     |               |  |          |     |       |  |  |      |   |  |  |     
|                              |  assets      |  |               | 9   |               |  |          | 91  |       |  |  | 12   |   |  |  | 101  |  
|                              |  liabilities |  |               | (27 | )             |  |          | (33 | )     |  |  | (18  | ) |  |  | (129 | )
|Foreign exchange derivatives: |               |  |               |     |               |  |          |     |       |  |  |      |   |  |  |     
|                              |  assets      |  |               | 208 |               |  |          | 53  |       |  |  | 333  |   |  |  | 244  |  
|                              |  liabilities |  |               | (87 | )             |  |          | (56 | )     |  |  | (298 | ) |  |  | (74  | )





---



##### Table of Contents



26) Transactions with related parties

In accordance with rules issued by Consob the Italian Stock Exchange
Commission on February 20, 1997 No. 97001574 and subsequent amendments, the
following is a description of transactions with related parties.

In the ordinary course of its business Eni enters into transactions
concerning the exchange of goods, provision of services and financing with
affiliated companies and non-consolidated subsidiaries as well as with
entities owned or controlled by the Government. All such transactions are
conducted in the interest of Eni companies.

Relevant transactions effected with entities controlled by the Italian
government are only those with Enel, the Italian National Electric Utility.

The following is a description of trade and financing transactions with
related parties.

Trade transactions

|                                                                          |  |               |     |          |  |            |     |             |  |       |     |          |  |            |   |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  |     | 
|------------------------------------------------------------------------- |  | ------------- | --- | -------- |  | ---------- | --- | ----------- |  | ----- | --- | -------- |  | ---------- | - | -------- |  | ----- | --- | -------- |  |  | ----- |  |  |  | ----- |  |  |  | --- | 
|                                                                          |  | Dec. 31, 2000 |     | 2000    
|                                                                          |  |               |     |         
|                                                                          |  |               |     |          |  |            |     |             |  |       |     |          |  |            |   |          |  | Costs |     | Revenues
|                                                                          |  |               |     |          |  |            |     |             |  |       |     |          |  |            |   |          |  |       |     |         
|Name                                                                      |  | Receivables   |     | Payables |  | Guarantees |     | Commitments |  | Goods |     | Services |  | Guarantees |   | Services
|                                                                          |  |               |     |          |  |            |     |             |  |       |     |          |  |            |   |         
|                                                                          |  | (million E)  
|Affiliated companies                                                      |  |               |     |          |  |            |     |             |  |       |     |          |  |            |   |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  |     | 
|Polimeri Europa Srl                                                       |  |               | 99  |          |  |            | 91  |             |  |       |     |          |  |            |   |          |  |       | 204 |          |  |  | 1     |  |  |  | 797   |  |  |  | 227 | 
|Sares SpA Raffinerie Sarde                                                |  |               | 42  |          |  |            | 106 |             |  |       |     |          |  |            |   |          |  |       | 277 |          |  |  | 146   |  |  |  | 425   |  |  |  | 24  | 
|Blue                      Stream                      Pipeline
Company BV |  |               | 71  |          |  |            | 84  |             |  |       | 623 |          |  |            |   |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  | 198 | 
|Bayernoil
Raffineriegesellschaft mbH                                      |  |               |     |          |  |            | 30  |             |  |       |     |          |  |            |   |          |  |       |     |          |  |  | 576   |  |  |  |       |  |  |  |     | 
|Petrobel Belayim
Petroleum Co                                             |  |               | 16  |          |  |            | 148 |             |  |       |     |          |  |            |   |          |  |       |     |          |  |  | 296   |  |  |  |       |  |  |  |     | 
|Promgas SpA                                                               |  |               | 15  |          |  |            | 21  |             |  |       |     |          |  |            |   |          |  |       | 152 |          |  |  |       |  |  |  | 150   |  |  |  |     | 
|Raffineria di Milazzo ScpA                                                |  |               | 28  |          |  |            | 18  |             |  |       |     |          |  |            |   |          |  |       |     |          |  |  | 164   |  |  |  | 70    |  |  |  | 24  | 
|Superoctanos CA                                                           |  |               | 8   |          |  |            | 14  |             |  |       |     |          |  |            |   |          |  |       | 230 |          |  |  |       |  |  |  | 6     |  |  |  |     | 
|Agip Oil Company Ltd                                                      |  |               | 4   |          |  |            | 53  |             |  |       |     |          |  |            |   |          |  |       |     |          |  |  | 154   |  |  |  |       |  |  |  |     | 
|Serfactoring SpA                                                          |  |               | 1   |          |  |            | 169 |             |  |       |     |          |  |            |   |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  | 1   | 
|Inca International SpA                                                    |  |               | 12  |          |  |            |     |             |  |       | 5   |          |  |            |   |          |  |       |     |          |  |  |       |  |  |  | 79    |  |  |  | 6   | 
|Gruppo Distribuzione
Petroli
Srl                                          |  |               | 17  |          |  |            |     |             |  |       |     |          |  |            |   |          |  |       |     |          |  |  | 1     |  |  |  | 72    |  |  |  |     | 
|Supermetanol Ca                                                           |  |               |     |          |  |            | 5   |             |  |       |     |          |  |            |   |          |  |       | 53  |          |  |  |       |  |  |  |       |  |  |  | 12  | 
|Transitgas AG                                                             |  |               | 1   |          |  |            | 11  |             |  |       |     |          |  |            |   |          |  |       |     |          |  |  | 13    |  |  |  |       |  |  |  |     | 
|Other                                                                     |  |               | 145 |          |  |            | 100 |             |  |       | 55  |          |  |            | 6 |          |  |       | 37  |          |  |  | 243   |  |  |  | 360   |  |  |  | 70  | 
|                                                                          |  |               | 459 |          |  |            | 790 |             |  |       | 683 |          |  |            | 6 |          |  |       | 953 |          |  |  | 1,594 |  |  |  | 1,959 |  |  |  | 562 | 
|Non consolidated
subsidiaries                                             |  |               |     |          |  |            |     |             |  |       |     |          |  |            |   |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  |     | 
|Enirisorsa SpA (in
liquidation)                                           |  |               | 1   |          |  |            | 7   |             |  |       | 522 |          |  |            |   |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  |     | 
|Transmediterranean
Pipeline
Co Ltd                                        |  |               |     |          |  |            | 9   |             |  |       |     |          |  |            |   |          |  |       |     |          |  |  | 145   |  |  |  |       |  |  |  | 1   | 
|Agricoltura SpA (in
liquidation)                                          |  |               | 4   |          |  |            | 1   |             |  |       | 30  |          |  |            |   |          |  |       |     |          |  |  |       |  |  |  | 5     |  |  |  | 3   | 





---



##### Table of Contents



|                                               |  |               |     |          |  |            |     |             |  |       |       |          |  |            |   |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  |       | 
|---------------------------------------------- |  | ------------- | --- | -------- |  | ---------- | --- | ----------- |  | ----- | ----- | -------- |  | ---------- | - | -------- |  | ----- | --- | -------- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                               |  | Dec. 31, 2000 |     | 2000    
|                                               |  |               |     |         
|                                               |  |               |     |          |  |            |     |             |  |       |       |          |  |            |   |          |  | Costs |     | Revenues
|                                               |  |               |     |          |  |            |     |             |  |       |       |          |  |            |   |          |  |       |     |         
|Name                                           |  | Receivables   |     | Payables |  | Guarantees |     | Commitments |  | Goods |       | Services |  | Guarantees |   | Services
|                                               |  |               |     |          |  |            |     |             |  |       |       |          |  |            |   |         
|                                               |  | (million E)  
|Other (*)                                      |  |               | 68  |          |  |            | 62  |             |  |       | 140   |          |  |            |   |          |  |       | 3   |          |  |  | 58    |  |  |  | 46    |  |  |  | 17    | 
|                                               |  |               | 73  |          |  |            | 79  |             |  |       | 692   |          |  |            |   |          |  |       | 3   |          |  |  | 203   |  |  |  | 51    |  |  |  | 21    | 
|Entities owned or
controlled
by the Government |  |               | 532 |          |  |            | 869 |             |  |       | 1,375 |          |  |            | 6 |          |  |       | 956 |          |  |  | 1,797 |  |  |  | 2,010 |  |  |  | 583   | 
|Enel SpA                                       |  |               | 334 |          |  |            | 9   |             |  |       |       |          |  |            |   |          |  |       | 22  |          |  |  | 11    |  |  |  | 1,517 |  |  |  | 509   | 
|                                               |  |               | 866 |          |  |            | 878 |             |  |       | 1,375 |          |  |            | 6 |          |  |       | 978 |          |  |  | 1,808 |  |  |  | 3,527 |  |  |  | 1,092 | 



---

| |  | (*) Each individual amount included herein does not exceed euro 50
million.
| |  | ---------------------------------------------------------------------------

|                                                                         |  |             |     |          |  |               |     |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  |     | 
|------------------------------------------------------------------------ |  | ----------- | --- | -------- |  | ------------- | --- | ----------- |  | ----- | --- | -------- |  | ---------- |  | -------- |  | ----- | --- | -------- |  |  | ----- |  |  |  | ----- |  |  |  | --- | 
|                                                                         |  |             |     |          |  | Dec. 31, 2001 |     | 2001       
|                                                                         |  |             |     |          |  |               |     |            
|                                                                         |  |             |     |          |  |               |     |             |  |       |     |          |  |            |  |          |  | Costs |     | Revenues
|                                                                         |  |             |     |          |  |               |     |             |  |       |     |          |  |            |  |          |  |       |     |         
|Name                                                                     |  | Receivables |     | Payables |  | Guarantees    |     | Commitments |  | Goods |     | Services |  | Guarantees |  | Services
|                                                                         |  |             |     |          |  |               |     |             |  |       |     |          |  |            |  |         
|                                                                         |  | (million E)
|Affiliated companies                                                     |  |             |     |          |  |               |     |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  |     | 
|Blue Stream Pipeline
Company BV                                          |  |             | 146 |          |  |               | 84  |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  | 471 | 
|Bayernoil
Raffineriegesellschaft mbH                                     |  |             | 15  |          |  |               | 27  |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  | 612   |  |  |  | 1     |  |  |  |     | 
|Promgas SpA                                                              |  |             | 21  |          |  |               | 21  |             |  |       |     |          |  |            |  |          |  |       | 267 |          |  |  |       |  |  |  | 302   |  |  |  |     | 
|Petrobel Belayim Petroleum
Co                                            |  |             | 21  |          |  |               | 116 |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  | 296   |  |  |  |       |  |  |  |     | 
|Raffineria di Milazzo ScpA                                               |  |             | 7   |          |  |               | 6   |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  | 151   |  |  |  | 57    |  |  |  |     | 
|Superoctanos CA                                                          |  |             | 9   |          |  |               | 7   |             |  |       |     |          |  |            |  |          |  |       | 191 |          |  |  | 1     |  |  |  |       |  |  |  | 1   | 
|Agip Oil Company Ltd                                                     |  |             | 16  |          |  |               | 47  |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  | 130   |  |  |  |       |  |  |  |     | 
|Trans Austria Gasleitung
GmbH                                            |  |             |     |          |  |               | 89  |             |  |       | 118 |          |  |            |  |          |  |       |     |          |  |  |       |  |  |  | 34    |  |  |  |     | 
|Serfactoring SpA                                                         |  |             | 1   |          |  |               | 142 |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  |     | 
|Bronberger
&
Kessler
Handelsgesellschaft U
Gilg
& Schweiger GmbH &
Co Kg |  |             | 8   |          |  |               |     |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  |       |  |  |  | 92    |  |  |  |     | 
|Bernhard Rosa Inh
Ingeborg
Plochinger GmbH                               |  |             | 7   |          |  |               |     |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  |       |  |  |  | 85    |  |  |  |     | 
|Gruppo Distribuzione
Petroli
Srl                                         |  |             | 17  |          |  |               |     |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  |       |  |  |  | 68    |  |  |  |     | 
|Inca International SpA                                                   |  |             | 6   |          |  |               |     |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  |       |  |  |  | 53    |  |  |  | 9   | 
|Saccne Rete Srl                                                          |  |             | 4   |          |  |               |     |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  | 2     |  |  |  | 53    |  |  |  |     | 
|Supermetanol CA                                                          |  |             |     |          |  |               | 2   |             |  |       |     |          |  |            |  |          |  |       | 50  |          |  |  |       |  |  |  |       |  |  |  | 1   | 
|Transitgas AG                                                            |  |             | 2   |          |  |               | 17  |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  | 25    |  |  |  |       |  |  |  |     | 
|Other (*)                                                                |  |             | 134 |          |  |               | 29  |             |  |       | 31  |          |  |            |  |          |  |       | 63  |          |  |  | 166   |  |  |  | 154   |  |  |  | 29  | 
|                                                                         |  |             | 503 |          |  |               | 616 |             |  |       | 31  |          |  |            |  |          |  |       | 571 |          |  |  | 1,417 |  |  |  | 865   |  |  |  | 511 | 
|Non consolidated
subsidiaries                                            |  |             |     |          |  |               |     |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  |     | 
|Polimeri Europa Srl                                                      |  |             | 47  |          |  |               | 19  |             |  |       |     |          |  |            |  |          |  |       | 185 |          |  |  | 1     |  |  |  | 677   |  |  |  | 92  | 
|Transmediterranean
Pipeline
Co Ltd                                       |  |             |     |          |  |               | 10  |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  | 142   |  |  |  |       |  |  |  |     | 
|Hotel Assets Ltd                                                         |  |             |     |          |  |               |     |             |  |       | 51  |          |  |            |  |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  |     | 
|Other (*)                                                                |  |             | 77  |          |  |               | 138 |             |  |       | 111 |          |  |            |  |          |  |       | 9   |          |  |  | 44    |  |  |  | 59    |  |  |  | 4   | 
|                                                                         |  |             | 124 |          |  |               | 167 |             |  |       | 162 |          |  |            |  |          |  |       | 194 |          |  |  | 187   |  |  |  | 736   |  |  |  | 961 | 
|                                                                         |  |             | 627 |          |  |               | 783 |             |  |       | 193 |          |  |            |  |          |  |       | 765 |          |  |  | 1,604 |  |  |  | 1,601 |  |  |  | 607 | 





---



##### Table of Contents



|                                               |  |             |     |          |  |               |     |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  |     | 
|---------------------------------------------- |  | ----------- | --- | -------- |  | ------------- | --- | ----------- |  | ----- | --- | -------- |  | ---------- |  | -------- |  | ----- | --- | -------- |  |  | ----- |  |  |  | ----- |  |  |  | --- | 
|                                               |  |             |     |          |  | Dec. 31, 2001 |     | 2001       
|                                               |  |             |     |          |  |               |     |            
|                                               |  |             |     |          |  |               |     |             |  |       |     |          |  |            |  |          |  | Costs |     | Revenues
|                                               |  |             |     |          |  |               |     |             |  |       |     |          |  |            |  |          |  |       |     |         
|Name                                           |  | Receivables |     | Payables |  | Guarantees    |     | Commitments |  | Goods |     | Services |  | Guarantees |  | Services
|                                               |  |             |     |          |  |               |     |             |  |       |     |          |  |            |  |         
|                                               |  | (million E)
|Entities owned or
controlled
by the Government |  |             |     |          |  |               |     |             |  |       |     |          |  |            |  |          |  |       |     |          |  |  |       |  |  |  |       |  |  |  |     | 
|Enel SpA                                       |  |             | 70  |          |  |               | 9   |             |  |       |     |          |  |            |  |          |  |       | 20  |          |  |  | 23    |  |  |  | 1.512 |  |  |  | 226 | 
|                                               |  |             | 697 |          |  |               | 792 |             |  |       | 193 |          |  |            |  |          |  |       | 785 |          |  |  | 1,627 |  |  |  | 3,113 |  |  |  | 833 | 



---

| |  | (*) Each individual amount included herein does not exceed euro 50
million.
| |  | ---------------------------------------------------------------------------

|                                                                          |  |               |     |          |  |            |     |       |  |          |     |       |  |          |     |          |  |  |       |  |  |  |       |  |  |  |       | 
|------------------------------------------------------------------------- |  | ------------- | --- | -------- |  | ---------- | --- | ----- |  | -------- | --- | ----- |  | -------- | --- | -------- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                                                          |  | Dec. 31, 2002 |     | 2002    
|                                                                          |  |               |     |         
|                                                                          |  |               |     |          |  |            |     |       |  |          |     |       |  | Costs    |     | Revenues
|                                                                          |  |               |     |          |  |            |     |       |  |          |     |       |  |          |     |         
|Name                                                                      |  | Receivables   |     | Payables |  | Guarantees |     | Goods |  | Services |     | Goods |  | Services
|                                                                          |  |               |     |          |  |            |     |       |  |          |     |       |  |         
|                                                                          |  | (million E)  
|Affiliated companies                                                      |  |               |     |          |  |            |     |       |  |          |     |       |  |          |     |          |  |  |       |  |  |  |       |  |  |  |       | 
|Bayernoil
Raffineriegesellschaft mbH                                      |  |               |     |          |  |            |     |       |  |          | 28  |       |  |          |     |          |  |  |       |  |  |  | 652   |  |  |  | 1     | 
|Promgas SpA                                                               |  |               | 23  |          |  |            | 25  |       |  |          |     |       |  |          | 212 |          |  |  |       |  |  |  | 227   |  |  |  |       | 
|Erg Raffinerie
Mediterranee Srl                                           |  |               | 27  |          |  |            | 30  |       |  |          |     |       |  |          |     |          |  |  | 14    |  |  |  | 137   |  |  |  | 69    | 
|Petrobel Belayim
Petroleum Co                                             |  |               |     |          |  |            | 86  |       |  |          |     |       |  |          |     |          |  |  | 164   |  |  |  |       |  |  |  |       | 
|Raffineria di
Milazzo ScpA                                                |  |               | 6   |          |  |            | 6   |       |  |          |     |       |  |          |     |          |  |  | 159   |  |  |  | 55    |  |  |  | 1     | 
|Superoctanos CA                                                           |  |               | 4   |          |  |            | 18  |       |  |          |     |       |  |          | 181 |          |  |  |       |  |  |  |       |  |  |  |       | 
|Trans Austria
Gasleitung GmbH                                             |  |               |     |          |  |            | 12  |       |  |          |     |       |  |          |     |          |  |  | 176   |  |  |  |       |  |  |  |       | 
|Bronberger
& Kessler
Handelsgesellschaft
U. Gilg & Schweiger GmbH & Co
Kg |  |               | 10  |          |  |            |     |       |  |          |     |       |  |          |     |          |  |  | 60    |  |  |  | 117   |  |  |  |       | 
|Albacom SpA                                                               |  |               | 22  |          |  |            | 12  |       |  |          |     |       |  |          | 2   |          |  |  | 53    |  |  |  | 1     |  |  |  | 8     | 
|Serfactoring SpA                                                          |  |               | 2   |          |  |            | 94  |       |  |          |     |       |  |          |     |          |  |  |       |  |  |  |       |  |  |  |       | 
|Bernhard Rosa
Inh. Ingeborg
Plochinger GmbH                               |  |               | 8   |          |  |            |     |       |  |          |     |       |  |          |     |          |  |  | 35    |  |  |  | 84    |  |  |  |       | 
|Azienda Energia e
Servizi SpA                                             |  |               | 2   |          |  |            | 22  |       |  |          |     |       |  |          |     |          |  |  | 55    |  |  |  | 2     |  |  |  | 2     | 
|Gruppo
Distribuzione
Petroli Srl                                          |  |               | 16  |          |  |            |     |       |  |          |     |       |  |          |     |          |  |  |       |  |  |  | 66    |  |  |  |       | 
|Karachaganak
Petroleum Operating
BV                                       |  |               | 40  |          |  |            | 13  |       |  |          |     |       |  |          |     |          |  |  | 52    |  |  |  |       |  |  |  | 214   | 
|Transitgas AG                                                             |  |               |     |          |  |            | 7   |       |  |          |     |       |  |          |     |          |  |  | 56    |  |  |  |       |  |  |  |       | 
|Trans Europa
Naturgas Pipeline
GmbH                                       |  |               |     |          |  |            |     |       |  |          | 9   |       |  |          |     |          |  |  |       |  |  |  | 43    |  |  |  |       | 
|Blue Stream
Pipeline Company BV                                           |  |               | 50  |          |  |            |     |       |  |          |     |       |  |          |     |          |  |  |       |  |  |  |       |  |  |  | 489   | 
|Agip Oil Company Ltd                                                      |  |               | 27  |          |  |            | 12  |       |  |          |     |       |  |          |     |          |  |  | 83    |  |  |  |       |  |  |  |       | 
|Other (*)                                                                 |  |               | 32  |          |  |            | 67  |       |  |          | 147 |       |  |          | 55  |          |  |  | 57    |  |  |  | 105   |  |  |  | 14    | 
|                                                                          |  |               | 269 |          |  |            | 441 |       |  |          | 147 |       |  |          | 464 |          |  |  | 1,782 |  |  |  | 727   |  |  |  | 728   | 
|Non consolidated
subsidiaries                                             |  |               |     |          |  |            |     |       |  |          |     |       |  |          |     |          |  |  |       |  |  |  |       |  |  |  |       | 
|AgipGas BV                                                                |  |               | 13  |          |  |            | 94  |       |  |          | 412 |       |  |          |     |          |  |  | 3     |  |  |  |       |  |  |  |       | 
|Agip (Btc)                                                                |  |               |     |          |  |            |     |       |  |          | 206 |       |  |          |     |          |  |  |       |  |  |  |       |  |  |  |       | 
|Transmediterranean
Pipeline Co Ltd                                        |  |               | 6   |          |  |            | 1   |       |  |          |     |       |  |          |     |          |  |  | 122   |  |  |  |       |  |  |  |       | 
|Other (*)                                                                 |  |               | 26  |          |  |            | 18  |       |  |          | 39  |       |  |          | 7   |          |  |  | 35    |  |  |  | 8     |  |  |  | 32    | 
|                                                                          |  |               | 45  |          |  |            | 113 |       |  |          | 657 |       |  |          | 7   |          |  |  | 160   |  |  |  | 8     |  |  |  | 32    | 
|                                                                          |  |               | 314 |          |  |            | 554 |       |  |          | 804 |       |  |          | 471 |          |  |  | 1,942 |  |  |  | 735   |  |  |  | 760   | 
|Entities owned or
controlled by the
Government                            |  |               |     |          |  |            |     |       |  |          |     |       |  |          |     |          |  |  |       |  |  |  |       |  |  |  |       | 
|Enel Group                                                                |  |               | 42  |          |  |            | 5   |       |  |          |     |       |  |          |     |          |  |  | 76    |  |  |  | 1,475 |  |  |  | 308   | 
|                                                                          |  |               | 356 |          |  |            | 559 |       |  |          | 804 |       |  |          | 471 |          |  |  | 2,018 |  |  |  | 2,210 |  |  |  | 1,068 | 



---

| |  | (*) Each individual amount included herein does not exceed euro 50
million.
| |  | ---------------------------------------------------------------------------





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##### Table of Contents



Financing transactions

|                                     |  |               |       |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  |    | 
|------------------------------------ |  | ------------- | ----- | -------- |  | ----------- | --- | ------- |  | ----- | ----- |  |  |  | -- |  |  |  | -- | 
|                                     |  | Dec. 31, 2000 |       | 2000    
|                                     |  |               |       |         
|Name                                 |  | Receivables   |       | Payables |  | Guarantees  |     | Charges |  | Gains
|                                     |  |               |       |          |  |             |     |         |  |      
|                                     |  |               |       |          |  | (million E) |     |         |  |       |       |  |  | 
|Affiliated companies                 |  |               |       |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  |    | 
|Blue Stream Pipeline
Company BV      |  |               |       |          |  |             |     |         |  |       | 931   |  |  |  |    |  |  |  | 8  | 
|Transitgas AG                        |  |               | 493   |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  | 16 | 
|Polimeri Europa Srl                  |  |               | 259   |          |  |             |     |         |  |       | 60    |  |  |  |    |  |  |  | 18 | 
|Supermetanol CA                      |  |               | 20    |          |  |             |     |         |  |       | 129   |  |  |  |    |  |  |  | 2  | 
|Superoctanos CA                      |  |               | 4     |          |  |             |     |         |  |       | 126   |  |  |  |    |  |  |  |    | 
|Raffineria di Milazzo SpA            |  |               | 11    |          |  |             |     |         |  |       | 66    |  |  |  |    |  |  |  |    | 
|Serfactoring SpA                     |  |               | 70    |          |  |             |     |         |  |       |       |  |  |  | 1  |  |  |  | 1  | 
|Bayernoil
Raffineriegesellschaft mbH |  |               | 13    |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  | 1  | 
|Other (*)                            |  |               | 46    |          |  |             | 66  |         |  |       | 17    |  |  |  | 1  |  |  |  | 2  | 
|                                     |  |               | 916   |          |  |             | 66  |         |  |       | 1,329 |  |  |  | 2  |  |  |  | 48 | 
|Non consolidated
subsidiaries        |  |               |       |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  |    | 
|Transmediterranean
Pipeline Co Ltd   |  |               | 431   |          |  |             |     |         |  |       | 152   |  |  |  |    |  |  |  | 41 | 
|Agricoltura SpA (in
liquidation)     |  |               |       |          |  |             | 215 |         |  |       |       |  |  |  | 9  |  |  |  |    | 
|Enirisorse (in liquidation)          |  |               | 19    |          |  |             | 34  |         |  |       | 44    |  |  |  | 1  |  |  |  | 1  | 
|Other (*)                            |  |               | 53    |          |  |             | 60  |         |  |       | 23    |  |  |  | 16 |  |  |  | 4  | 
|                                     |  |               | 503   |          |  |             | 309 |         |  |       | 219   |  |  |  | 26 |  |  |  | 46 | 
|                                     |  |               | 1,419 |          |  |             | 375 |         |  |       | 1,548 |  |  |  | 28 |  |  |  | 94 | 

|                                     |  |               |       |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  |    | 
|------------------------------------ |  | ------------- | ----- | -------- |  | ----------- | --- | ------- |  | ----- | ----- |  |  |  | -- |  |  |  | -- | 
|                                     |  | Dec. 31, 2001 |       | 2001    
|                                     |  |               |       |         
|Name                                 |  | Receivables   |       | Payables |  | Guarantees  |     | Charges |  | Gains
|                                     |  |               |       |          |  |             |     |         |  |      
|                                     |  |               |       |          |  | (million E) |     |         |  |       |       |  |  | 
|Affiliated companies                 |  |               |       |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  |    | 
|Blue Stream Pipeline
Company BV      |  |               |       |          |  |             | 49  |         |  |       | 983   |  |  |  | 1  |  |  |  | 21 | 
|Transitgas AG                        |  |               | 608   |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  | 19 | 
|Trans Austria Gasleitung
GmbH        |  |               | 469   |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  | 2  | 
|Superoctanos CA                      |  |               | 3     |          |  |             |     |         |  |       | 130   |  |  |  |    |  |  |  |    | 
|Supermetanol CA                      |  |               | 16    |          |  |             |     |         |  |       | 134   |  |  |  |    |  |  |  | 1  | 
|Serfactoring SpA                     |  |               | 77    |          |  |             | 21  |         |  |       |       |  |  |  |    |  |  |  | 1  | 
|Raffineria di Milazzo ScpA           |  |               | 21    |          |  |             |     |         |  |       | 66    |  |  |  |    |  |  |  |    | 
|Bayernoil
Raffineriegesellschaft mbH |  |               |       |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  | 1  | 
|Other (*)                            |  |               | 56    |          |  |             | 80  |         |  |       | 19    |  |  |  | 7  |  |  |  | 3  | 
|                                     |  |               | 1,250 |          |  |             | 150 |         |  |       | 1,332 |  |  |  | 8  |  |  |  | 48 | 
|Non consolidated
subsidiaries        |  |               |       |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  |    | 
|Transmediterranean
Pipeline Co Ltd   |  |               | 429   |          |  |             |     |         |  |       | 113   |  |  |  |    |  |  |  | 32 | 
|Polimeri Europa Srl                  |  |               | 306   |          |  |             |     |         |  |       | 120   |  |  |  |    |  |  |  | 17 | 
|Other (*)                            |  |               | 59    |          |  |             | 52  |         |  |       | 8     |  |  |  | 4  |  |  |  | 2  | 
|                                     |  |               | 794   |          |  |             | 52  |         |  |       | 241   |  |  |  | 4  |  |  |  | 51 | 
|                                     |  |               | 2,044 |          |  |             | 202 |         |  |       | 1,573 |  |  |  | 12 |  |  |  | 99 | 



---

| |  | (*) Each individual amount included herein does not exceed euro 50
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| |  | ---------------------------------------------------------------------------





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##### Table of Contents



|                                       |  |               |       |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  |    | 
|-------------------------------------- |  | ------------- | ----- | -------- |  | ----------- | --- | ------- |  | ----- | ----- |  |  |  | -- |  |  |  | -- | 
|                                       |  | Dec. 31, 2002 |       | 2002    
|                                       |  |               |       |         
|Name                                   |  | Receivables   |       | Payables |  | Guarantees  |     | Charges |  | Gains
|                                       |  |               |       |          |  |             |     |         |  |      
|                                       |  |               |       |          |  | (million E) |     |         |  |       |       |  |  | 
|Affiliated companies                   |  |               |       |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  |    | 
|Blue Stream Pipeline Company
BV        |  |               |       |          |  |             | 15  |         |  |       | 874   |  |  |  |    |  |  |  | 30 | 
|Transitgas AG                          |  |               | 655   |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  | 10 | 
|Trans Austria Gasleitung GmbH          |  |               | 448   |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  | 15 | 
|EnBW  Eni
Verwaltungsgesellschaft mbH |  |               | 264   |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  |    | 
|Serfactoring SpA                       |  |               | 46    |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  | 2  | 
|Superoctanos CA                        |  |               | 2     |          |  |             |     |         |  |       | 40    |  |  |  |    |  |  |  |    | 
|Bayernoil
Raffineriegesellschaft mbH   |  |               | 24    |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  |    | 
|Other (*)                              |  |               | 72    |          |  |             | 80  |         |  |       | 91    |  |  |  | 9  |  |  |  | 7  | 
|                                       |  |               | 1,511 |          |  |             | 95  |         |  |       | 1,005 |  |  |  | 9  |  |  |  | 64 | 
|Non consolidated subsidiaries          |  |               |       |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  |    | 
|Transmediterranean Pipeline
Co Ltd     |  |               | 326   |          |  |             |     |         |  |       | 95    |  |  |  |    |  |  |  | 18 | 
|Agip (Btc)                             |  |               | 27    |          |  |             |     |         |  |       |       |  |  |  |    |  |  |  |    | 
|Other (*)                              |  |               | 47    |          |  |             | 68  |         |  |       | 5     |  |  |  | 7  |  |  |  | 2  | 
|                                       |  |               | 400   |          |  |             | 68  |         |  |       | 100   |  |  |  | 7  |  |  |  | 20 | 
|                                       |  |               | 1,911 |          |  |             | 163 |         |  |       | 1,105 |  |  |  | 16 |  |  |  | 84 | 

In 2000, trade transactions with Polimeri Europa related to the sale of
basic petrochemical products and engineering services, financing
transactions related to conditioned financing for operations, while
guarantees were provided to banks in relation to loans. Transactions with
Saras Raffinerie Sarde, Bayernoil Raffineriegesellschaft and raffineria di
Milazzo related to the refining of crude oil, and only with Saras Raffinerie
Sarde and Raffineria di Milazzo the sale of crude oil, the purchase of
petroleum products and engineering services, and guarantees given on behalf
of Raffineria di Milazzo to banks in relation to loans. Trade and financial
transactions with Blue Stream Pipeline Company related to the construction
of a pipeline between Turkey and the Russian Federation. Transactions with
Petrobel Belayim Petroleum and Agip Oil Company related to services for
exploration and production. Trade transactions with Promgas concern the sale
of natural gas. Transactions with Superoctanos and Supermetanol concern the
purchase of fuel additives and guarantees provided to banks in relation to
lendings. Trade transactions with Inca International concern the sale of
petrochemical products. Transactions with Serfactoring concern factoring
activities and financing. Transactions with Gruppo Distribuzione Petroli
concern sales of petroleum products. Receivables with Transitgas relate to
the financing of the doubling of the Italy/Netherlands pipeline in the Swiss
section and transport services.

Guarantees given by Enirisorse (in liquidation) relate to the
commitments given to acquirors of divested activities. Transactions with
Transmediterranean Pipeline related to financings and guarantees given to
banks in relation to loans and lines of credit for the construction of
natural gas transmission facilities and transport services. Borrowings to
Agricoltura (in liquidation) and Enirisorse (in liquidation) related to
temporary cash deposits with Enis financing subsidiaries.

Transactions with Enel related to the sale and transportation of
natural gas, sale of fuel oil and sale and purchase of electricity.





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##### Table of Contents



In 2001, trade and financial transactions with Blue Stream Pipeline
Company related to the construction of a pipeline that will link the Russian
Federation to Turkey. Transactions with Bayernoil Raffineriegessellschaft
and Raffineria di Milazzo related to the refining of crude oil, and only
with Raffineria di Milazzo the sale of crude oil, the purchase of petroleum
products, and guarantees given on behalf of Raffineria di Milazzo to banks
in relation to loans. Trade transactions with Promgas related to the sale of
natural gas. Transactions with Petrobel Belayim Petroleum and Agip Oil
Company concern services for exploration and production. Transactions with
Superoctanos and Supermetanol related to the purchase of fuel additives and
guarantees provided to banks in relation to lendings. Financial transactions
with Trans Austria Gasleitung GmbH related to the financing of the Austrian
section of the gasline from the Russian Federation to Italy as well as
transmission of natural gas. Transactions with Serfactoring related to
factoring activities and financing. Trade transactions with Bronberger &
Kessler Handelsgesellschaft U. Gilg & Schweiger GmbH Co Kg, Bernhard Rosa
Inh. Ingeborg Plochinger GmbH and Saccne Rete related to the sale of refined
products on wholesale markets. Transactions with Gruppo Distribuzione
Petroli related to sales of petroleum products. Trade transactions with Inca
International related to the sale of petrochemical products. Receivables
with Transitgas related to the financing of the doubling of the
Italy/Netherlands pipeline in the Swiss section and natural gas transport
services.

Transactions with Transmediterranean Pipeline related to financings and
guarantees given to banks in relation to loans and lines of credit for the
construction of natural gas transmission facilities and transport services.
Trade transactions with Polimeri Europa related to the sale of basic
petrochemicals and electricity, financial transactions related to financings
for operating activities and guarantees given to banks. Guarantees given to
Hotel Assets Ltd related to tax payments.

Transactions with Enel related to the sale and transportation of
natural gas, sale of fuel oil and sale and purchase of electricity.

2002 Trade transactions

Engineering, construction and maintenance services were acquired from
the Cosmi Holding Group, related to Eni through a member of the Board of
Directors for a total of approximately euro 18 million in 2002.

The most significant transactions related to:



| |  |  | Acquisition of natural gas transport services outside Italy from
Trans Austria Gasleitung GmbH, Transitgas AG, Trans Europa Naturgas
Pipeline GmbH e Transmediterranean Pipeline Co Ltd, transactions are
regulated on the basis of tariffs, which permit the recovery of
operating expenses and employed capital.            
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Sale of natural gas outside Italy with Promgas SpA.                                                                                                                                                                                                                                                                           
|
| |  |  | Specialized services in upstream activities to Petrobel Belayim
Petroleum Co, Karachaganak Petroleum Operating BV, Agip Oil Co Ltd
and AgipGas BV; services are invoiced on the basis of incurred
costs; and exclusively with Karachaganak Petroleum Operating BV,
services are provided by Enis oilfield services;          
|
| |  |  | Acquisition of refining services from Raffineria di Milazzo ScpA
and Erg Raffinerie Mediterranee Srl on the basis of incurred costs
for Raffineria di Milazzo ScpA, and general conditions applied to
third parties for Erg Raffinerie Mediterranee Srl.                                                                      
|
| |  |  | Sale of petrochemical products, supplying of crude oil refining
activities and fuel additive purchases from Bronberger & Kessler
Handelsgesellschaft U. Gilg & Schweiger GmbH Co Kg, Bernhard Rosa
Inh. Ingeborg Plochinger GmbH, Gruppo Distribuzione Petroli Srl,
Bayernoil Raffineriegesellschaft GmbH and Superoctanos CA.
|
| |  |  | Communication services, data transmission and concessions of
optical fibres with Albacom SpA.                                                                                                                                                                                                                                 
|
| |  |  | The construction of a pipeline between Turkey and the Russian
Federation for Blue Stream Pipeline Co BV.                                                                                                                                                                                                                      
|
| |  |  | Factoring activities with Serfactoring SpA.                                                                                                                                                                                                                                                                                   
|
| |  |  | Transportation and distribution activities with Azienda Energia e Servizi SpA.                                                                                                                                                                                                                                                
|
| |  |  | Guarantees given in relation to the construction of an oil pipeline by Agip (Btc).                                                                                                                                                                                                                                            

Transactions with Enel concern the sale and transportation of natural
gas, sale of fuel oil and sale and purchase of electricity.





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##### Table of Contents



2002 Financing transactions

The most significant transactions related to:



| |  |  | Guarantees provided to banks and related fees to Turkey, the
financing of the doubling of the Italy/Netherlands pipeline in the
Swiss section and 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 Blue
Stream Pipeline Co BV, Transitgas AG, Trans Austria Gasleitung GmbH
and Transmediterranean Pipeline Co Ltd.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Concessions of loans to En-BW-Eni Verwaltungsegesellschaft mbH
for the acquisition of Gasversorgung Süddeutschland GmbH;                                                                                                                                                                                                                                                                                                                            
|
| |  |  | Concessions and guarantees provided to banks in relation to
lendings to Serfactoring SpA, Bayernoil Raffineriegesellschaft mbH,
Superoctanos CA and Agip (Btc).                                                                                                                                                                                                                                                                                     

27) Summary of significant differences between Italian accounting principles
and U.S. GAAP

Enis financial statements have been prepared in accordance with
Italian GAAP, which differs in certain respects from U.S. GAAP. A
description of the significant differences and their effects on net income
and shareholders equity is set forth in the following notes. Those
differences described below that are not included in the reconciliations of
net income or net equity (see note 28), either had no effect, or their
effect was not significant. See also note 2) Summary of significant
accounting and reporting policies for additional information on the
accounting principles that Eni follows.

A) Consolidation Policy

Enis consolidation policy is described on page F-14 under the heading
«Principles of Consolidation». In particular, under Italian GAAP the
consolidated financial statements include also companies in which Eni holds
less than 50% of the voting rights, but over which it exercises control in
shareholders meetings.

Under U.S. GAAP investments of less than 50% are accounted for by
applying the equity method. Saipem SpA (43.0%) and Società Italiana per il
Gas pA (40.9%), including the subsidiaries of such entities which are
controlled by Eni without holding the majority of voting rights, have been
consolidated under the equity method for U.S. GAAP purposes.

B) Exploration and Development activities

Exploration

Under Italian GAAP, exploration costs, including successful exploratory
wells, are recorded as intangible assets and are amortized in full in the
period incurred (i.e. expensed as incurred for financial reporting
purposes). Costs for the acquisition of exploration permits and for the
extension of existing permits are capitalized and amortized over the
expected period of benefit.

Under U.S. GAAP, costs relating to exploratory wells are initially
capitalized as «incomplete wells and other» until it is determined if
commercial quantities of reserves have been discovered («successful efforts
method»). That determination is made after completion of drilling the well,
and the capitalized costs are either charged to expense or reclassified as
part of Enis proved mineral interests. Exploratory well costs are generally
expensed upon the earlier of determining that proved reserves have not been
found, or within one year of completing drilling if such a determination
cannot be made, unless the well is drilled in an area requiring a major
capital expenditure before production could begin. Capitalized well costs
related to proved properties are amortized over proved developed reserves on
the basis of units of production. Other exploration costs, including
geological and geophysical, are expensed when incurred.





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##### Table of Contents



Development

Development costs are those costs incurred to obtain access to proved
reserves and to provide facilities for extracting, treating, gathering and
storing oil and gas. Costs to operate and maintain wells and field equipment
are expensed as incurred.

Under Italian GAAP, development costs of unsuccessful wells are
expensed immediately. Development costs of successful wells are capitalized
and amortized on the basis of units of production.

Under U.S. GAAP, development costs are accounted for using the
successful efforts method described above.

C) Valuation of Assets and subsequent revaluation

Both Italian and U.S. GAAP require that assets which are impaired be
written down to their fair value. However, under Italian GAAP, in order to
determine whether an impairment exists the book value of an asset in
question is compared to the sum of the discounted cash flows expected to be
generated by such asset. If the sum of such discounted cash flows is less
than the carrying value of the asset, an impairment exists.

Under U.S. GAAP, SFAS No. 144 requires the performance of the same
analysis using undiscounted cash flows.

In addition, under Italian GAAP impairment charges are reversed when
the situation giving rise to an impairment ceases to exist.

Under U.S. GAAP reversals of impairment charges are not permitted.

D) Monetary revaluation of assets

Under Italian GAAP, certain assets have been revalued at various times
in accordance with various Italian laws.

Under U.S. GAAP, such revaluations are not permitted.

The adjustments provided in Note 30 below include the effect of the
recomputation of depreciation expense and of gains/(losses) on disposals on
a historical cost basis, as well as the elimination of these revaluations
and the related accumulated depreciation.

E) Deferred tax assets and liabilities

Under Italian GAAP deferred taxes are recorded if recoverable with
reasonable certainty. Taxes payable relating to certain potential
distributions from shareholders equity or upon liquidation of a company are
accrued only to the extent such distributions are planned. Any timing
difference between purchase price and tax basis of an individual asset
acquired does not result in the recording of an adjustment to the carrying
value of such asset.

Under U.S. GAAP, deferred tax assets are recorded if their recovery is
more likely than not. The potential taxes on equity reserves are considered
deferred tax liabilities and are accrued accordingly. Deferred income taxes
have not been provided on undistributed earnings of foreign subsidiaries as
such earnings are expected to be permanently reinvested. In addition, under
U.S. GAAP in situations where the purchase price of such assets purchased is
not equal to the tax basis, deferred taxes must be provided for such
differences and recorded as part of the acquisition.

The adjustments included below take into account the realizability of
deferred tax assets, based on the more likely than not criteria rather than
the certainty of their recovery, deferred taxes on undistributed
earnings of subsidiaries and deferred taxes on acquired temporary
differences. The adjustments also include the deferred tax effect of U.S.
GAAP adjustments.





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##### Table of Contents



F) Depreciation

For Italian GAAP purposes, until 1999, in accordance with Italian
practice, depreciation of natural gas pipelines, natural gas distribution
networks and related plant and machinery, was accounted for by applying
rates on a straight-line basis established by Italian tax authorities on the
basis of technical studies conducted for homogeneous industries.

Under U.S. GAAP, depreciation expense is recognized based on the
economic useful life of the assets.

The publication of Legislative Decree No. 164 of May 23, 2000, which
imposed the separation of transmission and distribution activities from
other natural gas activities and the criteria set for the determination of
transport and distribution tariffs by the Authority for Electricity and Gas
led companies operating in this segment to re-evaluate the useful lives of
the assets. The useful lives calculated by Eni (40 years for pipelines and
50 for distribution networks) were confirmed by an independent appraisal and
by the documents issued by the Authority. Therefore, from 2000 assets
related to transmission and distribution activities are amortized, both
under Italian GAAP and U.S. GAAP, based on these new useful lives.

G) Amortization of intangible assets

Under Italian GAAP, goodwill is amortized on a straight-line basis in
the utilization period, over a maximum period of twenty years. Other
intangible assets are amortized systematically in relation to their residual
useful life.

Under U.S. GAAP goodwill and the intangible assets with an indefinite
useful life cannot be amortized; these assets are subject to a yearly
evaluation in order to define the relevant writedown if needed.

H) Capitalized interest expense

Under Italian GAAP, Eni capitalizes interest expense only if certain
conditions are met in the self-construction of assets.

Under U.S. GAAP, actual interest costs incurred to bring qualified
assets to their intended use, that theoretically could have been avoided if
the expenditures for the assets had not been made, must be capitalized.

The adjustment to U.S. GAAP under «Capitalized interest» included below
represent the capitalization difference, based upon actual interest costs
incurred during each period, as well as subsequent depreciation effect of
the additional capitalized interest.

I) Derivatives

Under Italian GAAP, derivative conctracts are evaluated differently if
they are used as hedging or as speculative instruments. Eni values
derivatives that are used for hedging purposes, but that are not designated
against specific transactions, according to the nature of the hedged assets.
In particular, interest differences on derivatives hedging interest rates
and premiums and discounts on exchange rate risk hedging contracts are
recorded in the income statement over the term of the contracts. The
currency component of exchange rate risk hedging is recorded in the income
statement in the year in which the hedged asset/liability is first recorded.
Profits on derivative contracts on price risks are recored in the income
statement as offsetting the depreciation of the hedged asset. Losses are
recorded when incurred. Derivative contracts used as speculative instruments
are recorded at fair value and the related effects are recorded in the
income statement.

Under U.S. GAAP, SFAS 133 «Accounting for Derivative Instruments and
Hedging Activities» establishes accounting and reporting for derivative
instruments and hedging activities. In general SFAS 133 requires that
companies recognize all derivatives as either assets or liabilities on the
balance sheet and measure those instruments at fair value. Eni adopted SFAS
133 for U.S. reporting purposes on January 1, 2001. Eni uses derivative instruments to manage the risk of
fluctuations in commodity prices, interest rates and foreign currencies (see
note 24 for information regarding the instruments). SFAS 133 requires that





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##### Table of Contents



derivative instruments that hedge the variability of expected cash
flow, the fair value of an unduerlying, or foreign currencies related to a
specific risk are designated as a cash flow hedge, fair value hedge, or
fereign currency hedge, respectively. Changes in fair value of derivative
instruments designated and effective as fair value hedges are recognized
through earnings and changes in fair value of cash flow hedges are
recognized through equity as a component of other comprehensive income.

For U.S. GAAP purposes, on adoption of SFAS 133, the current U.S. GAAP
hedging relationships for Enis existing derivative instrument were
de-designated. The financial statement effect of this de-designation was not
significant in 2001. Subsequent to adoption, movements in the fair value of
the derivative instruments have been recorded as adjustments to U.S. GAAP
net income as reflected in Note 28.

J) Stock Compensation

Under Italian GAAP stock grants and options offered to employees for no
consideration are recorded within the equity accounts when the shares are
issued. In particular, stock grants made for no cash consideration are
recorded at nominal value as a debit against a specific equity reserve,
while shares issued after exercise of options are recorded as a capital
increase for the nominal value and as an increase in the special reserve for
the difference between amounts paid for exercising the options and the
nominal value of issued shares. No compensation expense is recorded.

Under U.S. GAAP stock grants and options offered to employees are
recorded as compensation expense for the excess of the market value over the
exercise price of the stock on the measurement date. Such compensation
expense is recorded over the period of benefit.

Eni has granted shares and options only to employees for no
consideration. The compensation costs related to these instruments have been
included below.

Eni does not give stock compensation in exchange for goods and services
from non-employees.

K) Financing costs

Under Italian GAAP, direct financing costs related to issuances of
equity are capitalized by Eni in the account «Intangible
assetsorganizational and financing costs» and amortized over their economic
useful lives, not to exceed 5 years.

Under U.S. GAAP, direct financing costs related to issuances of equity
are netted against related proceeds.

L) Marketable securities

Under Italian GAAP, marketable securities are carried at the lower of
purchase cost or market value.

Under U.S. GAAP, the accounting for investments in marketable
securities uses a fair market value methodology. Enis marketable securities
would be classified as available-for-sale with changes in market value
recorded as a component of shareholders equity.

M) Treasury shares

Under Italian GAAP, treasury shares, acquired as long-term investments,
are recorded at cost adjusted for impairment. When the reasons for the
impairment cease to exist, treasury shares are revalued.

Under U.S. GAAP, treasury shares are recorded at cost regardless of
their purpose. At December 31, 2000 and 2001, such difference had no effect
on net income and shareholders equity under U.S. GAAP.





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##### Table of Contents



N) Extraordinary income and expense

All items recorded by Eni as extraordinary under Italian GAAP in the
periods presented herein would not qualify as extraordinary under U.S. GAAP.
Such items have been reclassified to the appropriate income statement
captions as determined by U.S. GAAP, certain of which have been included in
the determination of operating income by segment. In addition, under U.S.
GAAP, extraordinary items are presented net of tax.

O) Sales of government bonds

Eni accounted for government bonds transferred primarily to employees
at par value, with the repurchasing commitment at the same value, as sales
of bonds, and recognized the related gains in current income. For U.S. GAAP
purposes, the terms of these transactions would result in their treatment as
financing transactions and consequently in cash flow statement prepared
under U.S. GAAP these cash flows would be included in financing activities.
Under this method, the bonds would remain as assets and the proceeds from
the «sales» would be treated as obligations. Gains and losses from such
sales are not significant.

P) Reclassification of inventory

Eni compulsory stock relates primarily to our Italian operations. Under
Italian law Eni is required to retain certain strategic quantities of
natural gas and petroleum products («compulsory stock») in its storage
facilities at all times. Eni values natural gas and petroleum products held
as compulsory stock as inventories that are subject to lower of cost or
market valuations annually.

Under U.S. GAAP, current assets, such as inventories, are reasonably
expected to be realized in cash or sold or consumed during the normal
operating cycle of the business, which for Eni is twelve months. As Enis
compulsory stock is not expected to be sold or consumed within the next
twelve months, compulsory stock amounts are recorded, for U.S. GAAP balance
sheet purposes, in non-current assets under the caption Non-current
Inventories (Compulsory Stock).

Q) Comprehensive Income

Under Italian GAAP, Comprehensive Income does not exist.

U.S. GAAP requires the reporting and display of comprehensive income
and its components in accordance with Statement of Financial Standard No.
130, «Reporting Comprehensive Income» («SFAS 130»).

Components of other comprehensive income include variations in equity
accounts not attributable to transactions already recorded in income or
transactions with shareholders. The required information pursuant to SFAS
130 is presented in the reconciliation that follows. Deferred tax effects of
exchange differences from the translation of functional currency financial
statements have not been recorded as provided for by SFAS 109, which permits
the exclusion of the calculation of taxes on equity reserves of foreign
subsidiaries when the reserves are not expected to be released.

R) Earnings per share

Under Italian GAAP prior year earnings per share is recalculated each
year to include in the weighted-average number of shares the number of
shares issued through stock grants made in 2002.

Under U.S. GAAP prior year earnings per share is not adjusted for the
exercise of stock grants in 2002. This difference did not result in a
quantitative difference between U.S. GAAP and Italian GAAP.

28) Reconciliations between net income and shareholders equity determined
under Italian GAAP to U.S. GAAP

The following is a summary of the significant adjustments to net income
for the years ended December 31, 2000, 2001 and 2002 and to shareholders
equity as of December 31, 2001 and 2002 that would be required if U.S. GAAP
had been applied instead of Italian GAAP in the consolidated financial
statements.





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##### Table of Contents



Also net comprehensive income is reported in accordance with Statement
of Financial Accounting Standards No. 130 («SFAS 130»).

|                                                                                                                                     |                                                                                                                |  |             |       |      |  |       |        |   |  |       |        |  
|------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------- |  | ----------- | ----- | ---- |  | ----- | ------ | - |  | ----- | ------ | -
|                                                                                                                                     |                                                                                                                |  | 2000        |       | 2001 |  | 2002 
|                                                                                                                                     |                                                                                                                |  |             |       |      |  |      
|                                                                                                                                     |                                                                                                                |  | (million E)
|Net income according to the financial statements prepared under Italian
GAAP                                                         |                                                                                                                |  | 5,771       |       |      |  | 7,751 |        |   |  | 4,593 |       
|Items increasing (decreasing) reported net income:                                                                                   |                                                                                                                |  |             |       |      |  |       |        |   |  |       |       
|A. Effect of the differences related to companies consolidated under Italian
GAAP but carried at equity method   under U.S. GAAP (a) |                                                                                                                |  | (33         | )     |      |  | (69   | )      |   |  | 56    |       
|A. Effect of the differences related to companies carried at equity method                                                           |                                                                                                                |  |             |       |      |  |       |        |   |  | 106   |       
|B. Successful-efforts accounting                                                                                                     |                                                                                                                |  | 137         |       |      |  | 265   |        |   |  | 222   |       
|C. Asset impairments and revaluations                                                                                                |                                                                                                                |  | (19         | )     |      |  | 17    |        |   |  | 71    |       
|D. Elimination of monetary revaluation                                                                                               |                                                                                                                |  | 30          |       |      |  | 33    |        |   |  | 37    |       
|D. Adjustment of gains on disposals due to elimination of monetary
revaluation                                                       |                                                                                                                |  |             |       |      |  |       |        |   |  | 227   |       
|E. Deferred taxes                                                                                                                    |                                                                                                                |  | (20         | )     |      |  | (499  | )      |   |  | (16   | )     
|F. Use of different depreciation rates                                                                                               |                                                                                                                |  | (120        | )     |      |  | (115  | )      |   |  | (67   | )     
|G. Adjustment of amortization of goodwill (b)                                                                                        |                                                                                                                |  |             |       |      |  |       |        |   |  | 29    |       
|H. Capitalized interest expense                                                                                                      |                                                                                                                |  | 15          |       |      |  | (7    | )      |   |  | (33   | )     
|I. Derivatives contracts                                                                                                             |                                                                                                                |  |             |       |      |  | 52    |        |   |  | 54    |       
|J. Stock grants and options awarded to employees                                                                                     |                                                                                                                |  | (3          | )     |      |  | (22   | )      |   |  | (9    | )     
|K. Adjustment of financing costs                                                                                                     |                                                                                                                |  |             |       |      |  |       |        |   |  | 6     |       
|                                                                                                                                     |  adjustment of gains on the sale of an interest in consolidated
subsidiary (c)                                |  |             |       |      |  |       |        |   |  |       | (1,385 | )
|                                                                                                                                     |  other changes                                                                                                |  |             |       |      |  |       |        |   |  |       | 60     |  
|                                                                                                                                     |  effect of U.S. GAAP adjustments on minority interest (d)                                                     |  |             |       |      |  |       | 69     |   |  |       | 183    |  
|                                                                                                                                     | Net adjustments                                                                                                |  |             | (13   | )    |  |       | (1,434 | ) |  |       | 699    |  
|                                                                                                                                     | Net income in accordance with U.S GAAP                                                                         |  |             | 5,758 |      |  |       | 6,317  |   |  |       | 5,292  |  
|                                                                                                                                     | Net income per share (based on the weighted-avarage number of ordinary
shares outstanding for each period) (e) |  |             | 1.44  |      |  |       | 1.62   |   |  |       | 1.38   |  
|                                                                                                                                     | Net income per ADS (based on five shares per ADS) (e)                                                          |  |             | 7.21  |      |  |       | 8.08   |   |  |       | 6.92   |  



---

|(a) |  | Adjustment includes the aggregate effect of all differences between
Italian GAAP and U.S. GAAP related to companies fully consolidated
under Italian GAAP but accounted for under the equity method under U.S.
GAAP; specifically, this refers to Saipem SpA and Società Italiana per
il Gas pA.                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Had SFAS 142 been adopted for years 2000 and 2001, its effects would
have been to increase net income by euro 26 and 44 million,
respectively and to increase earnings per share by euro 0.01 in both
years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(c) |  | Adjustment made to determine the gain under U.S. GAAP on the sale of
stock in Snam Rete Gas, due to the fact that Enis net equity in the
subsidiary is different under U.S. GAAP and Italian GAAP, mainly owing
to differences in depreciation rates of fixed assets as the
depreciation rates applied under Italian GAAP were more accelerated
than those applied under U.S. GAAP, as more fully described in Note 27
F. The carrying value of the sold portion of Enis investment in Snam
Rete Gas (40.24%) under
U.S. GAAP immediately prior to its sale was euro 1,134 million, thus
resulting in a net gain on sale of euro 1,068 million on proceeds from
sale of euro 2,202 million.
|   
|(d) |  | Adjustment to account for minority interest portion of differences B
through K, which include 100% of the effect of differences between
Italian GAAP and U.S. GAAP on less than wholly-owned subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(e) |  | Amounts in euro.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             





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|                                                                                                                                   |                                                              |  |               |        |               |  |        |        |  
|---------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ |  | ------------- | ------ | ------------- |  | ------ | ------ | -
|                                                                                                                                   |                                                              |  | Dec. 31, 2001 |        | Dec. 31, 2002
|                                                                                                                                   |                                                              |  |               |        |              
|Shareholders equity according to the financial statements prepared under
Italian GAAP                                             |                                                              |  | 27,483        |        |               |  | 26,257 |       
|                                                                                                                                   | Items increasing (decreasing) reported shareholders equity: |  |               |        |               |  |        |        |  
|A. Effect of the differences related to companies consolidated under Italian
GAAP but carried at equity method under U.S. GAAP (a) |                                                              |  | 55            |        |               |  | 131    |       
|A. Effect of the differences related to companies corried at equity method                                                         |                                                              |  |               |        |               |  | 106    |       
|B. Successful-efforts accounting                                                                                                   |                                                              |  | 2,621         |        |               |  | 2,543  |       
|C. Assets impairments and revalutations                                                                                            |                                                              |  | (79           | )      |               |  | 28     |       
|D. Elimination of monetary revaluations                                                                                            |                                                              |  | (137          | )      |               |  | (115   | )     
|E. Deferred taxes                                                                                                                  |                                                              |  | (3,420        | )      |               |  | (3,347 | )     
|F. Use of different depreciation rates                                                                                             |                                                              |  | 2,477         |        |               |  | 2,409  |       
|G. Goodwill                                                                                                                        |                                                              |  |               |        |               |  | 29     |       
|H. Capitalized interest expense                                                                                                    |                                                              |  | 686           |        |               |  | 648    |       
|I. Derivatives contracts                                                                                                           |                                                              |  | 52            |        |               |  | 106    |       
|K. Financing costs                                                                                                                 |                                                              |  | (28           | )      |               |  | (20    | )     
|L. Fair value of marketable securities                                                                                             |                                                              |  | 27            |        |               |  | 19     |       
|                                                                                                                                   |  other changes                                              |  |               |        |               |  |        | 60     |  
|                                                                                                                                   |  effect of U.S. GAAP adjustments on minority interest (b)   |  |               | (1,297 | )             |  |        | (1,118 | )
|                                                                                                                                   | Net adjustments                                              |  |               | 957    |               |  |        | 1,479  |  
|                                                                                                                                   | Shareholders equity in accordance with U.S. GAAP            |  |               | 28,440 |               |  |        | 27,736 |  



---

|(a) |  | Adjustment includes the aggregate effect of all differences between
Italian GAAP and U.S. GAAP related specifically to Saipem, Società
Italiana per il Gas pA.                                        
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Adjustment to account for minority interest portion of differences B
through L, which include 100% of effect of differences between Italian
GAAP and U.S. GAAP on less than wholly-owned subsidiaries.

Shareholders equity under U.S. GAAP includes other comprehensive
income of euro 1,389 million, in positive, and, in negative, of euro 744
million as of December 31, 2001 and 2002, respectively. Such other
comprehensive income relates to exchange rate differences resulting from the
translation of financial statements of foreign companies (cumulative
translation adjustment) and to the fair value of marketable securities gross
of deferred income taxes. The decrease of the other comprehensive income of
euro 2,133 regards essentially exchange rate differences due to the
translation of financial statements prepared in foreign currencies (euro
2,125 million; of which euro 1,700 million related to companies whose
functional currency is the U.S. dollar.

Comprehensive income

U.S. GAAP requires the reporting and display of comprehensive income
and its components in accordance with Statement of Financial Standard No.
130, «Reporting Comprehensive Income» («SFAS 130»). Components of other
comprehensive income include variations in equity accounts not attributable
to transactions already recorded in income or transactions with
shareholders. Deferred tax effects of exchange differences from the
translation of functional currency financial statements have not been
recorded as provided for by SFAS 109, which permits the exclusion of the
calculation of taxes on equity reserves of foreign subsidiaries when the
reserves are not expected to be released.





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##### Table of Contents



|                                                                 |                                                                                                         |  |             |     |      |  |       |     |  |  |        |        |  
|---------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- |  | ----------- | --- | ---- |  | ----- | --- |  |  | ------ | ------ | -
|                                                                 |                                                                                                         |  | 2000        |     | 2001 |  | 2002 
|                                                                 |                                                                                                         |  |             |     |      |  |      
|                                                                 |                                                                                                         |  | (million E)
|Net income in accordance with U.S. GAAP                          |                                                                                                         |  | 5,758       |     |      |  | 6,317 |     |  |  | 5,292  |       
|Other comprehensive income for the period
gross of income taxes: |                                                                                                         |  |             |     |      |  |       |     |  |  |        |       
|                                                                 |  fair value of marketable securities                                                                   |  |             |     |      |  |       | 27  |  |  |        | 19     |  
|                                                                 |  exchange differences from translation of
financial statements denominated
in currency other than euro |  |             | 331 |      |  |       | 439 |  |  |        | (2,001 | )
|                                                                 |  exchange differences from translation in
the period                                                   |  |             | (94 | )    |  |       | 12  |  |  |        | (124   | )
|                                                                 |                                                                                                         |  | 237         |     |      |  | 478   |     |  |  | (2,106 | )     
|Net comprehensive income for the period
according to U.S. GAAP   |                                                                                                         |  | 5,995       |     |      |  | 6,795 |     |  |  | 3,186  |       





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##### Table of Contents



The consolidated balance sheets, if determined under U.S. GAAP would
have been as follows:

|                                                                                                                               |                                                       |                               |                                            |        |               |        |               |        |        |        | 
|------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------- | ----------------------------- | ------------------------------------------ | ------ | ------------- | ------ | ------------- | ------ | ------ | ------ | 
|                                                                                                                               |                                                       |                               |                                            |        | Dec. 31, 2001 |        | Dec. 31, 2002
|                                                                                                                               |                                                       |                               |                                            |        |               |        |              
|ASSETS                                                                                                                         |                                                       |                               |                                            |        |               |        |               |       
|Current assets:                                                                                                                |                                                       |                               |                                            |        |               |        |               |       
|                                                                                                                               | Cash                                                  |                               |                                            | 1,120  |               |        |               | 2,892  |       
|                                                                                                                               | Marketable securities                                 |                               |                                            | 1,526  |               |        |               | 1,390  |       
|                                                                                                                               | Accounts receivable trade, financing and other        |                               |                                            | 12,836 |               |        |               | 12,655 |       
|                                                                                                                               | Inventories                                           |                               |                                            | 2,092  |               |        |               | 2,376  |       
|                                                                                                                               | Accrued interest and other                            |                               |                                            | 333    |               |        |               | 251    |       
|                                                                                                                               |                                                       | Total current assets          |                                            |        | 17,907        |        |               |        | 19,564 |       
|Non-current assets:                                                                                                            |                                                       |                               |                                            |        |               |        |               |       
|                                                                                                                               | Fixed assets, net                                     |                               |                                            | 32,683 |               |        |               | 32,935 |       
|                                                                                                                               | Non-current inventories (Compulsory stock)            |                               |                                            | 587    |               |        |               | 634    |       
|                                                                                                                               | Receivables                                           |                               |                                            | 3,304  |               |        |               | 2,863  |       
|                                                                                                                               | Investments                                           |                               |                                            | 3,767  |               |        |               | 3,900  |       
|                                                                                                                               | Intangible assets                                     |                               |                                            | 5,459  |               |        |               | 4,787  |       
|                                                                                                                               | Other                                                 |                               |                                            | 1,269  |               |        |               | 1,439  |       
|                                                                                                                               |                                                       | Total non-current assets      |                                            |        | 47,069        |        |               |        | 46,558 |       
|                                                                                                                               |                                                       |                               | Total assets                               |        |               | 64,976 |               |        |        | 66,122 | 
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                           |                                                       |                               |                                            |        |               |        |               |       
|Current liabilities:                                                                                                           |                                                       |                               |                                            |        |               |        |               |       
|                                                                                                                               | Short-term debt                                       |                               |                                            | 5,259  |               |        |               | 8,216  |       
|                                                                                                                               | Current portion of long-term debt                     |                               |                                            | 1,172  |               |        |               | 935    |       
|                                                                                                                               | Trade accounts payable                                |                               |                                            | 4,391  |               |        |               | 4,720  |       
|                                                                                                                               | Advances                                              |                               |                                            | 814    |               |        |               | 947    |       
|                                                                                                                               | Taxes payable                                         |                               |                                            | 1,962  |               |        |               | 1,272  |       
|                                                                                                                               | Accrued expenses and other                            |                               |                                            | 3,150  |               |        |               | 3,069  |       
|                                                                                                                               |                                                       | Total current liabilities     |                                            |        | 16,748        |        |               |        | 19,159 |       
|Non-current liabilities:                                                                                                       |                                                       |                               |                                            |        |               |        |               |       
|                                                                                                                               | Long-term debt                                        |                               |                                            | 5,948  |               |        |               | 6,169  |       
|                                                                                                                               | Reserve for employee termination indemnities          |                               |                                            | 365    |               |        |               | 395    |       
|                                                                                                                               | Reserves for contingencies                            |                               |                                            | 5,196  |               |        |               | 5,268  |       
|                                                                                                                               | Deferred and other non-current income tax liabilities |                               |                                            | 6,400  |               |        |               | 5,441  |       
|                                                                                                                               | Accrued expenses and other                            |                               |                                            | 388    |               |        |               | 521    |       
|                                                                                                                               |                                                       | Total non-current liabilities |                                            |        | 18,297        |        |               |        | 17,794 |       
|                                                                                                                               |                                                       |                               | Total liabilities                          |        |               | 35,045 |               |        |        | 36,953 | 
|Minority interests                                                                                                             |                                                       |                               | 1,491                                      |        |               |        | 1,433         |       
|Shareholders equity:                                                                                                          |                                                       |                               |                                            |        |               |        |               |       
|Capital stock 4,001,814,026 fully paid shares nominal value 1 euro
each (4,001,259,476 fully paid shares at December 31, 2001) |                                                       |                               | 4,001                                      |        |               |        | 4,002         |       
|Reserves                                                                                                                       |                                                       |                               | 20,190                                     |        |               |        | 21,280        |       
|Treasury shares                                                                                                                |                                                       |                               | (2,068                                     | )      |               |        | (2,838        | )     
|Net income for the year                                                                                                        |                                                       |                               | 6,317                                      |        |               |        | 5,292         |       
|                                                                                                                               |                                                       |                               | Total shareholders equity                 |        |               | 28,440 |               |        |        | 27,736 | 
|                                                                                                                               |                                                       |                               | Total liabilities and shareholders equity |        |               | 64,976 |               |        |        | 66,122 | 





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##### Table of Contents



The fixed assets as determined under U.S. GAAP would have been as
follows:

|                                                            |                                     |  |               |        |               |  |        |        | 
|----------------------------------------------------------- | ----------------------------------- |  | ------------- | ------ | ------------- |  | ------ | ------ | 
|                                                            |                                     |  | Dec. 31, 2001 |        | Dec. 31, 2002
|                                                            |                                     |  |               |        |              
|Fixed asset, gross:                                         |                                     |  |               |        |               |  |        |       
|                                                            |  Exploration & Production          |  |               | 37,793 |               |  |        | 37,393 | 
|                                                            |  Gas & Power                       |  |               | 10,715 |               |  |        | 11,825 | 
|                                                            |  Refining & Marketing              |  |               | 8,326  |               |  |        | 7,779  | 
|                                                            |  Petrochemicals                    |  |               | 3,606  |               |  |        | 5,237  | 
|                                                            |  Oilfield Services and Engineering |  |               | 80     |               |  |        | 100    | 
|                                                            |  Other activities                  |  |               | 229    |               |  |        | 323    | 
|                                                            |                                     |  | 60,749        |        |               |  | 62,657 |       
|Less accumulated depreciation, amortization and writedowns: |                                     |  |               |        |               |  |        |       
|                                                            |  Exploration & Production          |  |               | 16,750 |               |  |        | 17,044 | 
|                                                            |  Gas & Power                       |  |               | 3,643  |               |  |        | 4,184  | 
|                                                            |  Refining & Marketing              |  |               | 4,970  |               |  |        | 4,654  | 
|                                                            |  Petrochemicals                    |  |               | 2,519  |               |  |        | 3,587  | 
|                                                            |  Oilfield Services and Engineering |  |               | 54     |               |  |        | 61     | 
|                                                            |  Other activities                  |  |               | 130    |               |  |        | 192    | 
|                                                            |                                     |  | 28,066        |        |               |  | 29,722 |       
|Fixed assets, net:                                          |                                     |  |               |        |               |  |        |       
|                                                            |  Exploration & Production          |  |               | 21,043 |               |  |        | 20,349 | 
|                                                            |  Gas & Power                       |  |               | 7,072  |               |  |        | 7,641  | 
|                                                            |  Refining & Marketing              |  |               | 3,356  |               |  |        | 3,125  | 
|                                                            |  Petrochemicals                    |  |               | 1,087  |               |  |        | 1,650  | 
|                                                            |  Oilfield Services and Engineering |  |               | 26     |               |  |        | 39     | 
|                                                            |  Other activities                  |  |               | 99     |               |  |        | 131    | 
|                                                            |                                     |  | 32,683        |        |               |  | 32,935 |       

With regard to the statements of income, operating income (loss) by
industry segment and income before income taxes, as determined under U.S.
GAAP, would have been as follows:

|                                                              |  |             |        |      |  |      |        |   |  |  |       |  
|------------------------------------------------------------- |  | ----------- | ------ | ---- |  | ---- | ------ | - |  |  | ----- | -
|                                                              |  | 2000        |        | 2001 |  | 2002
|                                                              |  |             |        |      |  |     
|                                                              |  | (million E)
|Operating income (loss) by industry
segment:                  |  |             |        |      |  |      |        |   |  |  |       |  
|Exploration & Production                                      |  |             | 6,728  |      |  |      | 6,208  |   |  |  | 5,494 |  
|Gas & Power                                                   |  |             | 2,507  |      |  |      | 3,037  |   |  |  | 2,666 |  
|Refining & Marketing                                          |  |             | 860    |      |  |      | 872    |   |  |  | 303   |  
|Petrochemicals                                                |  |             | (92    | )    |  |      | (1,069 | ) |  |  | (344  | )
|Oilfield Services and Engineering                             |  |             | (13    | )    |  |      | (10    | ) |  |  | (14   | )
|Other activities                                              |  |             | (171   | )    |  |      | (185   | ) |  |  | (244  | )
|                                                              |  |             | 9,819  |      |  |      | 8,853  |   |  |  | 7,861 |  
|Income before income taxes and
extraordinary income (expense) |  |             | 10,067 |      |  |      | 10,330 |   |  |  | 8,350 |  

Certain gains and miscellaneous income, deriving primarily from rental
income, gains on sales of fixed assets and royalties income have been
classified within operating income beginning in the 2002 financial
statements. Prior year amounts of euro 157 million and euro 211 million for
the years ended December 31,





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##### Table of Contents



2000 and 2001, respectively, have been reclassified from the
presentation made in the prior year accounts when such amounts were excluded
from operating income.

29) Additional financial statement disclosures required by U.S. GAAP and the
SEC

Stock compensation

With the aim of improving motivation and loyalty of Eni managers Eni
approved plans for the grant of Eni shares and stock options to Eni
managers. The relevant costs are recorded in income for U.S. GAAP purposes.
The disclosure requirements of SFAS No. 123, Accounting for Stock-Based
Compensation (SFAS 123) and a description of Enis stock grant and stock
option plans are included below. As permitted under SFAS 123, Eni has
adopted APB 25 and related interpretations in accounting for shares and
options issued to employees in its reconciliation to U.S. GAAP. The
application of SFAS 123 instead of APB 25 does not result in a significant
difference.

Stock grant

With the aim of improving motivation and loyalty of Eni managers
through the linking of compensation to the attainment of preset individual
and corporate objectives, making management participate in corporate risk
and motivating it towards the creation of shareholders value, increasing at
the same time their contribution to the management of the Company, starting
in 2000 Eni created stock grant plans offering shares for no consideration
to those managers of Eni SpA and its subsidiaries as defined in art. 2359 of
the Civil Code (1) who have achieved corporate and individual objectives.
Shares vest within one month after the end of the third year from the date
of the offer or, if earlier, within one month after the agreed termination
of employment or death of the assignee. Stock rights may not be transferred
by the assignee to other persons or entities, and their assignment is firm
and irrevocable while they automatically expire in case the assignee decides
to terminate employment at Eni within three years from the date the share
rights were granted.

In application of the 2000-2001 Incentive Plan, Enis Shareholders
Meeting of June 6, 2000 delegated to the Board of Directors, in accordance
with art. 2443 of the Civil Code, the power to increase capital stock up to
a maximum of euro 3.5 million (or about 0.0875% of current capital stock) by
issuing 3.5 million shares, nominal value euro 1 per share for no
consideration before July 31, 2001 by withdrawing from the «Reserve for the
issue of shares in accordance with art. 2349 of the Civil Code». On June 21,
2000 and June 7, 2001 the Board of Directors resolved to increase Enis
share capital by issuing up to a maximum of 2 and 1.5 million ordinary
shares respectively, to be offered for no consideration to those managers
that achieved preset individual and corporate targets in 1999 and 2000.

In application of the 2002 Incentive Plan, Enis Shareholders Meeting
of May 30, 2002 delegated to the Board of Directors, in accordance with art.
2443 of the Civil Code, the power to increase the capital stock up to a
maximum of euro 1.5 million for no consideration (or about 0.0375% of
current capital stock) before December 31, 2002 by issuing up to 1.5 million
ordinary shares nominal value euro 1 per share, by withdrawing from the
«Reserve for the issue of shares in accordance with art. 2349 of the Civil
Code». On July 2, 2002 the Board of Directors resolved to increase Enis
share capital by issuing up to a maximum of 1.5 million ordinary shares to
be offered for no consideration to those managers that achieved preset
individual and corporate targets in 2001.

Eni granted 4,317,500 shares of stock (equal to 0.1079% of current
capital stock) subdivided as follows: (i) in 2000 a total of 1,428,550
shares (fair value of euro 10.38); (ii) in 2001 a total of 1,851,750 shares
(fair value of euro 13.71); (iii) in 2002 a total of 1,037,200 shares (fair
value of euro 15.96).

Stock Option Plans

2000-2001

The 2000-2001 Stock Option Plan provided for the exercise of options
for the underwriting of Eni shares to be issued by means of the capital
stock increase approved by Enis Shareholders Meeting of August 2, 2000,
provided that the arithmetic average of Eni share prices recorded in July
2002 is equal to or higher than euro 16.8. In light of Enis share price
trend in July 2002, options offered for the subscription of 14,369,500





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##### Table of Contents



Eni shares to 180 Eni Group managers at the price of euro 12.992 (the
arithmetic average of official prices recorded on the Mercato Telematico
Azionario in the month preceding the date of the Boards resolution of
September 26, 2000 to increase capital) are no longer exercisable and
consequently were cancelled.

2002

Enis Shareholders Meeting of May 30, 2002 delegated to the Board of
Directors the power to increase the capital stock up to a maximum of 15
million shares (or about 0.375% of current capital stock) for Enis
2002-2004 Stock Option Plan to be sold at an exercise price corresponding to
the arithmetic average of official prices recorded on the Mercato Telematico
Azionario in the month preceding the date of their granting to those
managers of Eni SpA and its subsidiaries, as defined in art. 2359 of the
Civil Code, who are in the positions that most contribute to the Groups
performance and are of strategic interest for the Group (314 persons).

On July 2, 2002 the Board of Directors approved the Stock Option Plan
for 2002 which provides for the grant of options for the purchase of a
maximum of 5 million of Eni shares. Grantees are provided the option to
purchase Eni shares at the above mentioned exercise price after three years
from the option grant. In case of agreed termination of employment or
retirement or death, the grantee maintains the right to exercise vested
options within six months from termination of employment, whereas residual
unvested options expire. The sole exception is Eni SpAs Managing Director
who maintains the right to exercise options assigned to him until July 31,
2010. In case of termination decided by the assignee or by the company
within three years from grant, all options expire. Option rights not
exercised before July 31, 2010 expire.

At December 31, 2002, a total of 3,518,500 options were granted for the
purchase of 3,518,500 shares at the price of euro 15.216 per share.

The weighted-average remaining contractual life of options outstanding
at December 31, 2002 is 7.5 years. All stock options granted in 2002 are
considered fixed.

The following is a summary of stock option activity for years 2000,
2001 and 2002:

|                                      |  |           |            |           |  |           |        |           |  |           |            |           |  |  |        |  |  |          |             |     |  |  |        | 
|------------------------------------- |  | --------- | ---------- | --------- |  | --------- | ------ | --------- |  | --------- | ---------- | --------- |  |  | ------ |  |  | -------- | ----------- | --- |  |  | ------ | 
|                                      |  | 2000      |            | 2001      |  | 2002     
|                                      |  |           |            |           |  |          
|                                      |  |           |            |           |  | Weighted  |        |           |  |           |            | Weighted  |  |  |        |  |  | Weighted
|                                      |  |           |            |           |  | Average   |        |           |  |           |            | Average   |  |  |        |  |  | Average 
|                                      |  | Number of |            | Exercise  |  | Number of |        | Exercise  |  | Number of |            | Exercise 
|                                      |  | Shares    |            | Price (E) |  | Shares    |        | Price (E) |  | Shares    |            | Price (E)
|                                      |  |           |            |           |  |           |        |           |  |           |            |          
|Options as of January 1               |  |           |           |           |  |           |       |           |  |           | 14,369,500 |           |  |  | 12.992 |  |  |          | 12,032,000  |     |  |  | 12.992 | 
|New options granted                   |  |           | 14,369,500 | (1)       |  |           | 12.992 |           |  |           |           |           |  |  |       |  |  |          | 3,518,500   | (2) |  |  | 15.216 | 
|Options exercised in the
period       |  |           |           |           |  |           |       |           |  |           |           |           |  |  |       |  |  |          |            |     |  |  |       | 
|Options cancelled in the
period       |  |           |           |           |  |           |       |           |  |           | (2,337,500 | )         |  |  |       |  |  |          | (12,032,000 | )   |  |  | 12.992 | 
|Options outstanding as of
December 31 |  |           | 14,369,500 |           |  |           | 12.992 |           |  |           | 12,032,000 |           |  |  | 12.992 |  |  |          | 3,518,500   |     |  |  | 15.216 | 
|Of which exercisable at
December 31   |  |           |           |           |  |           |       |           |  |           |           |           |  |  |       |  |  |          | 42,000      |     |  |  |       | 



---

|(1) |  | Above quoted market price.
|--- |  | --------------------------
|   
|(2) |  | Below quoted market price.





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##### Table of Contents



The fair value of stock options granted during the years ended December
31, 2000 and 2002 of euro 1.54 and 5.39 respectively, were calculated
applying the Black-Scholes method and using the following assumptions:

|                        |  |            |    |         |  |  |     |  
|----------------------- |  | ---------- | -- | ------- |  |  | --- | -
|                        |  | 2000       |    | 2002   
|                        |  |            |    |        
|Risk-free interest rate |  |            | 5  | %       |  |  | 3.5 | %
|Expected life           |  | 4.85 years |    | 8 years
|Expected volatility     |  |            | 28 | %       |  |  | 43  | %
|Expected dividends      |  |            | 3  | %       |  |  | 4.5 | %

The following is a summary of the effect of stock compensation, as
required under FAS 123:

|                                                                                                                        |  |                                   |       |      |  |      |       |   |  |  |       |  
|----------------------------------------------------------------------------------------------------------------------- |  | --------------------------------- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                                                                                                        |  | For the year ended               
|                                                                                                                        |  | December 31,                     
|                                                                                                                        |  | (million E except per share data)
|                                                                                                                        |  | 2000                              |       | 2001 |  | 2002
|                                                                                                                        |  |                                   |       |      |  |     
|Net income as reported                                                                                                  |  |                                   | 5,758 |      |  |      | 6,317 |   |  |  | 5,292 |  
|Pro Forma fair value expense, net of
APB 25 expense of euro (1), (7)
million and
0 in 2000, 2001 and 2002, respectively |  |                                   | 0     |      |  |      | (3    | ) |  |  | (3    | )
|Pro Forma net income                                                                                                    |  |                                   | 5,758 |      |  |      | 6,314 |   |  |  | 5,289 |  
|Pro Forma Earnings per Share                                                                                            |  |                                   | 1.44  |      |  |      | 1.61  |   |  |  | 1.38  |  

Income taxes

The following information is presented according to Statement of
Financial Accounting Standards No. 109 «Accounting for Income Taxes».

Domestic and foreign components of pre-tax income are as follows:

|         |  |             |        |      |  |      |        |  |  |  |       | 
|-------- |  | ----------- | ------ | ---- |  | ---- | ------ |  |  |  | ----- | 
|         |  | 2000        |        | 2001 |  | 2002
|         |  |             |        |      |  |     
|         |  | (million E)
|Domestic |  |             | 5,591  |      |  |      | 6,614  |  |  |  | 4,592 | 
|Foreign  |  |             | 4,476  |      |  |      | 3,716  |  |  |  | 3,758 | 
|         |  |             | 10,067 |      |  |      | 10,330 |  |  |  | 8,350 | 

The provisions for income taxes are as follows:

|         |  |             |        |      |  |      |       |  |  |  |       |  
|-------- |  | ----------- | ------ | ---- |  | ---- | ----- |  |  |  | ----- | -
|         |  | 2000        |        | 2001 |  | 2002
|         |  |             |        |      |  |     
|         |  | (million E)
|Current  |  |             | 5,367  |      |  |      | 3,128 |  |  |  | 3,461 |  
|Deferred |  |             | (1,054 | )    |  |      | 742   |  |  |  | (602  | )
|         |  |             | 4,313  |      |  |      | 3,870 |  |  |  | 2,859 |  

The reconciliation of the income tax provision calculated under Italian
tax regulation by applying a 36% rate (Irpeg) to pre-tax income and 4.25%
(Irap) to net value of production, to the provision for income taxes
recorded on a U.S. GAAP basis in the consolidated statements of income is as
follows:





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##### Table of Contents



|                                                                                         |                                                                                     |  |             |      |      |  |        |      |   |  |       |      |  
|---------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- |  | ----------- | ---- | ---- |  | ------ | ---- | - |  | ----- | ---- | -
|                                                                                         |                                                                                     |  | 2000        |      | 2001 |  | 2002  
|                                                                                         |                                                                                     |  |             |      |      |  |       
|                                                                                         |                                                                                     |  | (million E)
|Income before income tax in accordance
with U.S. GAAP                                    |                                                                                     |  | 10,067      |      |      |  | 10,330 |      |   |  | 8,350 |     
|Italian statutory tax rate (state and
local)                                             |                                                                                     |  | 42.3        | %    |      |  | 41.1%  |      |   |  | 41.4  | %   
|Expected income tax provision in
accordance with U.S. GAAP at Italian
statutory
tax rate |                                                                                     |  | 4,261       |      |      |  | 4,242  |      |   |  | 3,453 |     
|Effect of items increasing (decreasing)
the Italian statutory tax rate:                  |                                                                                     |  |             |      |      |  |        |      |   |  |       |     
|                                                                                         |  taxation of foreign operations at
rates different from Italian statutory
tax rate |  |             | 378  |      |  |        | 609  |   |  |       | 194  |  
|                                                                                         |  permanent differences                                                             |  |             | 52   |      |  |        | (394 | ) |  |       | 64   |  
|                                                                                         |  devaluation/revaluation of deferred
tax assets                                    |  |             | 29   |      |  |        | 15   |   |  |       | (1   | )
|                                                                                         |  taxes on distributable reserves                                                   |  |             | (51  | )    |  |        | 169  |   |  |       | (75  | )
|                                                                                         |  effects of tax credits                                                            |  |             | (52  | )    |  |        | (240 | ) |  |       | (420 | )
|                                                                                         |  other                                                                             |  |             | 31   |      |  |        | (156 | ) |  |       | (356 | )
|                                                                                         |  net tax effects due to the
applications of Law 342/2000                           |  |             | (335 | )    |  |        | (375 | ) |  |       |      |  
|                                                                                         |                                                                                     |  | 52          |      |      |  | (372   | )    |   |  | (594  | )   
|Income taxes in accordance with U.S. GAAP                                                |                                                                                     |  | 4,313       |      |      |  | 3,870  |      |   |  | 2,859 |     

Other changes of euro 356 million relate for euro 190 million to the
effect of the adjustment to the newly enacted tax rate of 34%, instead of
36%.

Permanent differences represent mainly the gain recorded in the
consolidated financial statements due to the public offering of 40.24% of
the share capital of Snam Rete Gas SpA (euro 348 million).

Net deferred tax liabilities

Net deferred tax liabilities under U.S. GAAP, represented by net
deferred taxes recorded under «Reserve for taxes» (euro 5,248 million), less
deferred tax assets recorded under «Other assets» (euro 1,188 million)
amounted to euro 4,060 million (euro 4,889 million as of December 31, 2001).

The tax effects of significant temporary differences which give rise to
the deferred tax liabilities are as follows:

|                          |                                                                    |  |               |        |               |  |       |        |  
|------------------------- | ------------------------------------------------------------------ |  | ------------- | ------ | ------------- |  | ----- | ------ | -
|                          |                                                                    |  | Dec. 31, 2001 |        | Dec. 31, 2002
|                          |                                                                    |  |               |        |              
|Deferred tax liabilities: |                                                                    |  |               |        |               |  |       |       
|                          |  accelerated depreciation                                         |  |               | 3,380  |               |  |       | 3,710  |  
|                          |  distributable reserves subject to taxes in case of distribution  |  |               | 2,554  |               |  |       | 2,236  |  
|                          |  excess cost paid for the acquisition of consolidated investments |  |               | 1,381  |               |  |       | 847    |  
|                          |  successful-efforts accounting                                    |  |               | 737    |               |  |       | 626    |  
|                          |  capitalization of interest expense                               |  |               | 322    |               |  |       | 248    |  
|                          |  reserves for uncollectible receivables                           |  |               | 127    |               |  |       | 134    |  
|                          |  gains taxable in the future                                      |  |               | 69     |               |  |       | 82     |  
|                          |  other                                                            |  |               | 441    |               |  |       | 607    |  
|                          |                                                                    |  | 9,011         |        |               |  | 8,490 |       
|Deferred tax assets:      |                                                                    |  |               |        |               |  |       |       
|                          |  revaluation of assets in accordance with Law 342/2000            |  |               | (2,332 | )             |  |       | (1,840 | )
|                          |  accruals for doubtful accounts and reserves for contingencies    |  |               | (1,873 | )             |  |       | (1,837 | )
|                          |  tax loss carryforwards                                           |  |               | (1,116 | )             |  |       | (1,502 | )





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|                             |                                                                                                                                                         |  |               |       |               |  |        |       |  
|---------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----- | ------------- |  | ------ | ----- | -
|                             |                                                                                                                                                         |  | Dec. 31, 2001 |       | Dec. 31, 2002
|                             |                                                                                                                                                         |  |               |       |              
|                             |  revaluation of investments in accordance with Law 292/93 and
the allocation
of the merger difference arising from the merger of Agip SpA into
Eni SpA |  |               | (892  | )             |  |        | (843  | )
|                             |  losses of investments and subsidiaries in excess of currently
allowable tax
deductions                                                                |  |               | (220  | )             |  |        | (559  | )
|                             |  future deductible amortization                                                                                                                        |  |               | (353  | )             |  |        | (383  | )
|                             |  writeoffs of assets deductible in the future                                                                                                          |  |               | (258  | )             |  |        | (337  | )
|                             |  revaluation of fixed assets                                                                                                                           |  |               | (31   | )             |  |        | (14   | )
|                             |  other                                                                                                                                                 |  |               | (306  | )             |  |        | (438  | )
|                             |                                                                                                                                                         |  | (7,381        | )     |               |  | (7,753 | )    
|Less:                        |                                                                                                                                                         |  |               |       |               |  |        |      
|                             |  valuation allowance                                                                                                                                   |  |               | 3,259 |               |  |        | 3,323 |  
|                             |                                                                                                                                                         |  | (4,122        | )     |               |  | (4,430 | )    
|Net deferred tax liabilities |                                                                                                                                                         |  | 4,889         |       |               |  | 4,060  |      

The valuation allowance relates to deferred tax assets (euro 3,259 and
3,323 million for the years ending December 31, 2001 and 2002 respectively)
of consolidated companies whose expected future fiscal profits are not
considered sufficient for the utilization of these assets.

Tax loss carryforwards

The difference in gross tax loss carryforwards relates to the companies
which are consolidated under Italian GAAP, but excluded from consolidation
according to U.S. GAAP.

Acquisition of Lasmo Plc

On February 2, 2001, Eni completed the acquisition of the outstanding
shares of Lasmo Plc for approximately euro 4,381 million in cash plus euro
972 million in assumed liabilities. Prior to the acquisition, Lasmo Plc was a
UK based independent exploration and production company with primary
operations in the North Sea, Indonesia, Venezuela, Pakistan, Libya and
Algeria. Lasmo was acquired to further strengthen the companys position in
two of its core geographic areas  North Africa and the North Sea  and also
to gain entry into the Asian gas market, as well as to establish an
operating presence in Venezuela.

The following table shows the calculation and allocation of the
purchase price of the assets acquired and liabilities assumed based on their
relative fair values:

|                                                  |                               |  |       |       | 
|------------------------------------------------- | ----------------------------- |  | ----- | ----- | 
|Cash paid for stock purchased                     |                               |  | 4,336 |      
|Merger costs incurred                             |                               |  | 45    |      
|                                                  |                               |  | 4,381 |      
|Plus: fair value of net liabilities assumed:      |                               |  |       |      
|Long-term debt                                    |                               |  | 972   |      
|Total purchase price for assets acquired          |                               |  | 5,353 |      
|Allocation of purchase price for assets acquired: |                               |  |       |      
|                                                  |  fixed and intangible assets |  |       | 6,068 | 
|                                                  |  goodwill                    |  |       | 858   | 





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##### Table of Contents



|                                   |                                |  |       |        |  
|---------------------------------- | ------------------------------ |  | ----- | ------ | -
|                                   |  deferred tax                 |  |       | (1,448 | )
|                                   |  other assets and liabilities |  |       | (125   | )
|Total allocation of purchase price |                                |  | 5,353 |       

The euro 1,448 million of deferred taxes recorded represent the
deferred tax effect of the differences between the fair values assigned by
Eni for financial reporting purposes to the assets and liabilities acquired
and their tax bases. Goodwill as calculated under U.S. GAAP of euro 858
million is greater than goodwill as calculated under Italian GAAP by euro
557 million, due primarily to provisions for restructuring costs, which are
expensed as incurred under Italian GAAP, and undiscounted deferred taxes,
which are discounted under Italian GAAP. The difference in amortization
expense resulting from difference in goodwill is included in the adjustment
for «Successful efforts accounting» in the reconciliation in Note 30.

The effects of the Lasmo acquisition on Eni consolidated results of
operations is not significant.

Investments

Investments of euro 3,767 million and euro 3,900 million as of December
31, 2001 and 2002, respectively, include shares of Società Italiana per il
Gas pA and Saipem SpA, which are publicly listed on the Italian Stock
Exchange.

|                               |  |              |             |          |  |       |       |        |  |             |       |  |  |  |       | 
|------------------------------ |  | ------------ | ----------- | -------- |  | ----- | ----- | ------ |  | ----------- | ----- |  |  |  | ----- | 
|                               |  | Eni's number |             | Eni's    |  | Share |       | Market
|                               |  | of shares    |             | interest |  | price |       | value 
|                               |  |              |             |          |  |       |       |       
|                               |  |              |             |          |  | (%)   |       | (E)    |  | (million E)
|December 31, 2002              |  |              |             |          |  |       |       |        |  |             |       |  |  |  |       | 
|Società Italiana per il Gas pA |  |              | 153,236,124 |          |  |       | 43.97 |        |  |             | 12.96 |  |  |  | 1,986 | 
|Saipem SpA                     |  |              | 189,423,307 |          |  |       | 43.00 |        |  |             | 6.35  |  |  |  | 1,203 | 
|                               |  |              |             |          |  |       |       |        |  |             |       |  |  |  | 3,189 | 
|December 31, 2001              |  |              |             |          |  |       |       |        |  |             |       |  |  |  |       | 
|Società Italiana per il Gas pA |  |              | 142,538,826 |          |  |       | 40.90 |        |  |             | 10.53 |  |  |  | 1,501 | 
|Saipem SpA                     |  |              | 189,206,919 |          |  |       | 43.00 |        |  |             | 5.49  |  |  |  | 1,039 | 
|                               |  |              |             |          |  |       |       |        |  |             |       |  |  |  | 2,540 | 

In the Italian GAAP financial statements, Società Italiana per il Gas
pA and Saipem SpA are consolidated while under U.S. GAAP they are considered
equity investees as shown in the reconciliations presented in Note 28.
Summarized financial information about these investments as determined under
U.S. GAAP and representing a 100% share of the companies is shown below:

|                  |  |               |       |               |  |  |        | 
|----------------- |  | ------------- | ----- | ------------- |  |  | ------ | 
|                  |  | Dec. 31, 2001 |       | Dec. 31, 2002
|                  |  |               |       |              
|Total assets      |  |               | 8,723 |               |  |  | 10,234 | 
|Total liabilities |  |               | 5,730 |               |  |  | 6,886  | 

|                          |  |               |       |               |  |               |       |  |  |  |       | 
|------------------------- |  | ------------- | ----- | ------------- |  | ------------- | ----- |  |  |  | ----- | 
|                          |  | Dec. 31, 2000 |       | Dec. 31, 2001 |  | Dec. 31, 2002
|                          |  |               |       |               |  |              
|Net sales from operations |  |               | 4,417 |               |  |               | 5,533 |  |  |  | 6,385 | 
|Operating income          |  |               | 591   |               |  |               | 714   |  |  |  | 835   | 
|Net income                |  |               | 326   |               |  |               | 227   |  |  |  | 587   | 

Concentrations and certain significant estimates

The following information is presented according to Statement of
Position 94-6 «Disclosures of Certain Significant Risks and Uncertainties».





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##### Table of Contents



Nature of operations

Eni is an integrated energy company operating in the oil and gas,
electricity generation, petrochemicals and oilfield services and engineering
industries.

Exploration & Production:through Eni SpAs Agip Division and
subsidiaries, Eni engages in hydrocarbon exploration and production in
Italy, North Africa (Algeria, Egypt, Libya, and Tunisia), West Africa
(Angola, Congo, Gabon and Nigeria), the North Sea (Norway and the United
Kingdom), Latin America (Venezuela and Ecuador), the former Soviet Union
countries, mainly Kazakhstan, the United States (mainly in the Gulf of
Mexico) and Asia (mainly Iran, Indonesia, Pakistan and China). In 2002
approximately 70% of oil production sold was supplied to Enis Refining &
Marketing segment and approximately 40% of natural gas production sold was
supplied to Enis Gas & Power segment.

Eni owns a storage system made up of a number of depleted fields used
for the modulation of supply in accordance with seasonal swings in demand,
(natural gas is stored in the summer and used in the winter), as strategic
reserves to ensure supply and to support domestic production through mineral
storage. Storage assets are owned by Stoccaggi Gas Italia (Eni 100%), a
company constituted in accordance with Law Decree No. 164 of May 23, 2000
that introduced laws for the liberalization of the Italian natural gas
market.

Gas & Power:Eni is engaged in the supply, transmission and sale of
natural gas in Italy and outside Italy through its Gas & Power Division,
which was created following the incorporation of Snam SpA into Eni SpA in
2002, and through certain subsidiaries. Approximately 80% of total purchases
for primary distribution are purchased from foreign sources (primarily
Algeria, Russia, The Netherlands and Norway) under long-term contracts,
which contain take-or-pay provisions, and transported to Italy through a
network of over 3,700 thousand kilometers of international pipelines for
which Eni owns the transmission rights. The remaining purchases for primary
distribution in Italy are obtained principally from domestic gas from Enis
Exploration & Production segment. Through an approximately 30,000-kilometer
long network (corresponding to 96% of the Italian domestic natural gas
network), Eni supplies natural gas to residential and commercial users
(civil market), industrial users and the thermoelectric segment. Snam Rete
Gas (Eni 59,76%), that was constituted in accordance with Law Decree No.
164/2000, owns the pipelines network used by Eni. Snam Rete Gas, a company
listed on the Italian stock exchange, engages in natural gas transportation
activities. Through Italgas, the largest retail gas distribution company in
Italy, Eni engages in local gas distribution  retail supply and urban
civil and commercial distribution. Eni owns 100% of Italgas following the
conclusion of the public tender offer of Italgas shares. Eni also
participates in local distribution outside Italy, in Argentina through
Distribuidora de Gas Guyana, in Hungary through Tigaz and in Slovenia
through Adriaplin Doo.

Legislative Decree No. 164 of May 23, 2000 introduced laws for the
liberalization of the Italian natural gas market with significant impact on
Enis activities, as the company is present in all phases of the natural gas
chain. The most important aspects of the decree are the following:



| |  |  | total market opening after 2003;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | until December 31, 2010 the imposition of thresholds for
operators in relation to the percentage share of domestic
consumption set as follows: (i) 75%, by 2002, for imported or
domestically produced natural gas volumes introduced in the domestic
transmission network. This percentage decreases by 2 percentage
points per year until it reaches 61% in 2009; (ii) 50% from January
1, 2003 for sales to final customers. These ceilings are calculated
on a three-year basis net of losses and own consumption;
|
| |  |  | tariffs for transportation, dispatching, storage, use of LNG
terminals and local network distribution are set by the Authority
for Electricity and Gas;                                                                                                                                                                                                                                                                                                                                                               
|
| |  |  | third parties are allowed to access infrastructure according to
set conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                       

In order to meet the medium and long-term demand of natural gas of the
Italian market, Eni entered into long-term purchase contracts with producing
countries that have a residual average term of approximately 17 years.
Existing contracts, which contain take-or-pay clauses, will ensure a total
of about 66 billion cubic meters of natural gas per year (Russia 28.5,
Algeria 21.5, Netherlands 10 and Norway 6) by 2008. The above quantities are
based on the annual contract quantity of the relevant contract. The average
annual minimum quantity is approximately 85% of said quantities. In order to
comply with the above mentioned mandated thresholds relating to volumes
input to the national transportation network, Eni signed multi-annual
contracts with third party importers to sell natural gas volumes exceeding
said threshold limits outside the Italian
territory; in prior years these volumes were imported into Italy and
sold to Italian consumers by Eni. This change in the sales mix is structural
and will adversely affect Enis results of operations. Further, management
expects Enis margins on natural gas in Italy to come under pressure in
future years due to the





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##### Table of Contents



entry into the market of new competitors including the above mentioned
third parties which purchase natural gas from Eni outside the Italian
territory and resell it to Italian customers. Finally due to the antitrust
threshold on direct sales in Italy, management expects Enis natural gas
sales in Italy to increase at a rate which is no higher than the growth rate
of natural gas demand in Italy. Management believes all these developments
might have a material adverse impact on Enis results of operations. However
management believes that the planned increase of natural gas sales outside
Italy and cost reduction measures will mitigate the above mentioned adverse
impact.

Eni through EniPower SpA (Eni 100%) and subsidiaries is engaged in the
generation and sale of electricity with a capacity of 1,000 megawatts
through its power plants in Livorno, Taranto, Mantova, Ravenna and Brindisi
and a generation of about 5 thousand gigawatts/hour and approximately 30% of
this is used for internal consumption. Enipower manages the electrical
development opportunities. The demand for gas and fuel oils of EniPowers
stations is met by Eni supplies.

Refining & Marketing:Eni, through its Refining & Marketing Division,
which was constituted by the incorporation of AgipPetroli SpA into Eni SpA
in 2002 and certain subsidiaries, engages in petroleum refining and
marketing activities primarily in Italy, in Europe and South America. Eni is
the largest refiner of petroleum products in Italy in terms of overall
refining capacity. Approximately 40% of crude oil sold is purchased from
producing countries pursuant to purchase contracts (28%) and in
international spot markets (12%), while the remainder is obtained from Enis
Exploration & Production segment. Approximately 45% of the purchased crude
oil is traded.

Petrochemicals:through Polimeri Europa SpA and subsidiaries (Eni
100%), which own Enis principal petrochemical businesses, and EniChem SpA,
which owns the residual petrochemical businesses, Eni engages in
manufacturing of olefins, aromatics, intermediate products, styrene and
elastomers. Enis petrochemicals production is concentrated in Italy, the
other operations primarily in Western Europe. Approximately 50% of the
oil-based feedstock requirements used by petrochemical plants are supplied
by Enis Refining & Marketing segment.

Oilfield Services and Engineering:through Saipem SpA (Eni 43%), a
company listed on the Italian stock exchange, and its subsidiaries, Eni is
engaged in construction and drilling services for customers in the oil and
gas industries. Through Snamprogetti SpA (Eni 100%) and subsidiaries, Eni is
a leading provider of engineering and project management services to
customers in the oil and gas and petrochemical industries. At December 31,
2002 approximately 13% of the order backlog of Enis Oilfield Services and
Engineering segment related to orders from Eni Group companies.

Certain significant estimates

The preparation of the financial statements in conformity with Italian
GAAP, along with the reconciliation to U.S. GAAP, requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

Recent accounting pronouncements

In June 2001 and in April and June 2002, the Financial Accounting
Standards Board («FASB») issued Statement of Financial Accounting Standards
No. 143 «Accounting for Assets Retirement Obligations» («SFAS 143»), No. 145
«Rescission of FASB Statement No. 4, 44 and 64, amendment of FASB Statement
No. 13 and technical corrections» («SFAS 145») and No. 146 «Accounting for
cost associated with exit and disposal activities» («SFAS 146»).

SFAS 143 «Accounting for Asset Retirement Obligation» provides the
evaluation and recording criteria for liabilities arising from the disposal
of tangible long-lived assets and associated asset retirement obligation be
recognized in the period in which it is incurred, if estimable, concurrent
with an increase in the related assets carrying value. The increase in the
related assets carrying value is amortised to income over its useful life.
Upon initial adoption, a liability is recognized for existing asset
retirement obligations and the associated asset retirement cost is
capitalized as an increase to the carrying value of the assets. The
recognized liability and asset are adjusted for cumulative accretion and
accumulated depreciation, respectively, from the time period when the asset
retirement obligation would have originally been recognized had this
statement been in effect to the date of adoption. Eni will adopt the
standard beginning January, 2003.





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##### Table of Contents



SFAS 145 supersedes SFAS 4 «Reporting gains and losses from
extinguishment of debt», SFAS 44 «Accounting for intangible assets of motor
carriers» and SFAS 64 «Extinguishment of debt made to satisfy sinking-fund
requirements». This statement establishes that gains and losses due to the
extinguishment of debts can be recorded under extraordinary items only in
case they are neither non-usual nor non-recurring items. In addition the
statement modifies the provision of SFAS 13 «Accounting for leases»,
establishing that conversion of finance leases made after May 15, 2002, are
recorded under the provisions for leaseback; such change has no effect. The
remaining provisions of the statement are effective for all the fiscal
quarters starting after May 15, 2002. Eni shall apply them beginning in
2003.

SFAS 146 supersedes Emerging Issues Task Force («EITF») Issue No. 94-3
«Liability recognition for certain employee termination benefits and other
cost to exit an activity (including certain costs incurred in a
restructuring)» and provides the criteria for recognition and measurement of
costs associated with exit or disposal activities, including restructuring,
establishing that liabilities can be recorded only in the case of the
existence of a present obligation for the company. At the beginning
liabilities are recorded at their fair value. In following periods such
value can be modified to take into consideration new estimates and changes
related to time. This statement is effective for years starting after
December 31, 2002. Eni shall apply it beginning in 2003.

In November 2002, the FASB issued Interpretation No. 45 «Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others» («FIN 45»), which provides the
recording criteria for guarantees issued or modified after December 31,
2002. Eni has adopted the disclosure provisions of this standard in its
Financial Statements as of December 31, 2002.

In January 2003, the FASB issued Interpretation No. 46 «Consolidation of
Variable Interest Entities» («FIN 46»), which modifies Accounting Research
Bulletin No. 51 «Consolidated Financial Statements» and provides standards
for determining under what circumstances a variable interest entity should
be consolidated. Variable interest entities are companies in which another
has an ownership, a contractual or financial relation that changes with
changes in the equitys net asset value. The requirements of FIN 46 apply
immediately to variable interest entities created after January 31, 2002;
the requirements apply to older entities that satisfies the provisions of
FIN 46, in the first fiscal year or interim period beginning after June 15,
2003. Eni shall apply it beginning in 2004.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under
FASB Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities. This statement is effective prospectively for contracts entered
into or modified after June 30, 2003 and prospectively for hedging
relationships designated after June 30, 2003. Eni shall apply this SFAS
starting in fiscal year 2003.

In May 2003, the FASB issued SFAS No. 150, Accounting For Certain
Financial Instruments with Characteristics of both Liabilities and Equity.
The statement improves the accounting for certain financial instruments
that, under previous guidance, issuers could account for as equity and
requires that these instruments be classified as liabilities in statements
of financial position. This Statement is effective prospectively for
financial instruments entered into or modified after May 31, 2003 and
otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. This statement shall be implemented by
reporting the cumulative effect of a change in an accounting principle for
financial instruments created before the issuance date of the statement and
still existing at the beginning of the interim period of adoption. Eni shall
apply this SFAS starting in fiscal year 2003.

Eni is presently evaluating these statements and cannot predict whether
their application will have a material impact on Enis financial position or
operating result.

International Accounting Standards

In June 2002, the Council of Ministers of the European Union adopted a
Regulation which will require the Group to prepare its primary consolidated
financial statements in accordance with International Accounting Standards
(IAS) beginning January 1, 2005, with restatement of prior periods
presented. IAS differ in several respects from Italian and U.S. GAAP. In
addition, significant revisions to IAS are currently being contemplated and
other revisions may be adopted prior to January 1, 2005. The Group has not
determined the effects of adopting IAS.





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##### Table of Contents



Subsequent events (unaudited)

The main subsequent events occurred are as follows:



| |  |  | on January 27, 2003 the public tender offer on shares of Societa
Italiana per il Gas pA («Italgas») successfully closed. The tender
offer, which was launched on November 25, 2002, concerned all
Italgas SpA ordinary shares outstanding not owned directly or
indirectly by Eni, corresponding to approximately 56% of share
capital. Eni offered a price of euro 13 per share, to be fully paid
in cash. from. Following the squeeze-out of the remaining minority
shareholders, Eni now owns 100% of share capital of Italgas. Total
consideration amounted to approximately euro 2.5 billion;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | on March 4, 2003 Eni completed the purchase of the Norwegian oil
company Fortum Petroleum AS, which in 2002 produced 39,000 boepd and
held proved reserves of hydrocarbon of 159 million boe as of
December 31, 2002. Total financial requirements for this purchase
amounted to dollar 975 million (of which a cash consideration of
dollar 256 million and net borrowings acquired of dollar 719
million);                                                                                                                                                                                      
|
| |  |  | on March 6, 2003 Eni and EniChem SpA (now Syndial SpA) accepted
the settlement proposal presented by Edison SpA for the closing of
an arbitration proceeding initiated by Eni and EniChem SpA in 1992
in relation to guarantees given by Montedison SpA and its
subsidiaries in connection with the establishment of a joint venture
in the petrochemicals sector between Eni and Montedison. Edison SpA
recognized euro 200 million to Enichem to be paid in four
instalments of euro 50 million each.                                                                                           
|
| |  |  | on April 16, 2003 Eni launched a fixed rate bond issue for a
notional amount of euro 1.5 billion. The transaction was placed in
the international Eurobond market. The bond has a 10 year maturity
and pays a fixed annual coupon of 4.625%. The reoffer price is
99.862 which implied, at the moment of pricing, a spread of 28 basis
points over the 10 year mid swap rate. The new security will be
listed on the Luxembourg Stock Exchange.                                                                                                                                                   

Supplemental oil and gas information (unaudited)

The following information is presented in accordance with Statement of
Financial Accounting Standards No. 69, «Disclosures about Oil & Gas
Producing Activities». Amounts related to minority interests are not
significant.

Capitalized costs

Capitalized costs represent the total expenditures for proved and
unproved mineral interests and related support equipment and facilities
utilized in oil and gas exploration and production activity, together with
related accumulated depreciation, depletion and amortization.

|                                                     |  |       |        |        |  |        |        |      |  |             |        |         |  |  |        |   |  |  |        |   |  |  |         |  
|---------------------------------------------------- |  | ----- | ------ | ------ |  | ------ | ------ | ---- |  | ----------- | ------ | ------- |  |  | ------ | - |  |  | ------ | - |  |  | ------- | -
|                                                     |  |       |        |        |  | North  |        | West |  | North       |        | Rest of |  |  |        |  
|                                                     |  | Italy |        | Africa |  | Africa |        | Sea  |  | World       |        | Total  
|                                                     |  |       |        |        |  |        |        |      |  |             |        |        
|                                                     |  |       |        |        |  |        |        |      |  | (million E) |        |         |  |  |        |   |  | 
|At December 31, 2001                                 |  |       |        |        |  |        |        |      |  |             |        |         |  |  |        |   |  |  |        |   |  |  |         |  
|Proved mineral interests                             |  |       | 7,645  |        |  |        | 7,624  |      |  |             | 6,723  |         |  |  | 7,986  |   |  |  | 5,382  |   |  |  | 35,360  |  
|Unproved mineral interests                           |  |       |        |        |  |        | 672    |      |  |             | 238    |         |  |  | 811    |   |  |  | 1,913  |   |  |  | 3,634   |  
|Support equipment and facilities                     |  |       | 295    |        |  |        | 56     |      |  |             | 191    |         |  |  | 52     |   |  |  | 47     |   |  |  | 641     |  
|Incomplete wells and other                           |  |       | 845    |        |  |        | 508    |      |  |             | 501    |         |  |  | 225    |   |  |  | 1,718  |   |  |  | 3,797   |  
|Gross Capitalized Costs                              |  |       | 8,785  |        |  |        | 8,860  |      |  |             | 7,653  |         |  |  | 9,074  |   |  |  | 9,060  |   |  |  | 43,432  |  
|Accumulated depreciation, depletion and
amortization |  |       | (5,109 | )      |  |        | (4,333 | )    |  |             | (4,378 | )       |  |  | (3,612 | ) |  |  | (1,894 | ) |  |  | (19,326 | )





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##### Table of Contents



|                                                     |  |       |        |        |  |        |        |      |  |             |        |         |  |  |        |   |  |  |        |   |  |  |         |  
|---------------------------------------------------- |  | ----- | ------ | ------ |  | ------ | ------ | ---- |  | ----------- | ------ | ------- |  |  | ------ | - |  |  | ------ | - |  |  | ------- | -
|                                                     |  |       |        |        |  | North  |        | West |  | North       |        | Rest of |  |  |        |  
|                                                     |  | Italy |        | Africa |  | Africa |        | Sea  |  | World       |        | Total  
|                                                     |  |       |        |        |  |        |        |      |  |             |        |        
|                                                     |  |       |        |        |  |        |        |      |  | (million E) |        |         |  |  |        |   |  | 
|Net Capitalized Costs(a)                             |  |       | 3,676  |        |  |        | 4,527  |      |  |             | 3,275  |         |  |  | 5,462  |   |  |  | 7,166  |   |  |  | 24,106  |  
|At December 31, 2002                                 |  |       |        |        |  |        |        |      |  |             |        |         |  |  |        |   |  |  |        |   |  |  |         |  
|Proved mineral interests                             |  |       | 8,030  |        |  |        | 6,782  |      |  |             | 6,377  |         |  |  | 8,112  |   |  |  | 5,638  |   |  |  | 34,939  |  
|Unproved mineral interests                           |  |       |        |        |  |        | 527    |      |  |             | 130    |         |  |  | 684    |   |  |  | 1,593  |   |  |  | 2,934   |  
|Support equipment and facilities                     |  |       | 251    |        |  |        | 43     |      |  |             | 174    |         |  |  | 49     |   |  |  | 51     |   |  |  | 568     |  
|Incomplete wells and other                           |  |       | 773    |        |  |        | 889    |      |  |             | 795    |         |  |  | 147    |   |  |  | 1,958  |   |  |  | 4,562   |  
|Gross Capitalized Costs                              |  |       | 9,054  |        |  |        | 8,241  |      |  |             | 7,476  |         |  |  | 8,992  |   |  |  | 9,240  |   |  |  | 43,003  |  
|Accumulated depreciation, depletion and
amortization |  |       | (5,427 | )      |  |        | (4,090 | )    |  |             | (4,048 | )       |  |  | (4,192 | ) |  |  | (2,262 | ) |  |  | (20,019 | )
|Net Capitalized Costs(a)                             |  |       | 3,627  |        |  |        | 4,151  |      |  |             | 3,428  |         |  |  | 4,800  |   |  |  | 6,978  |   |  |  | 22,984  |  



---

|(a) |  | Amounts do not include «non oil assets» of euro 50 million in 2001 and
73 million in 2002.
|--- |  | ------------------------------------------------------------------------------------------





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##### Table of Contents



Cost incurred

Costs incurred represent amounts both capitalized and expensed as
incurred in connection with oil and gas producing activities.

|                                    |  |             |     |        |  |        |       |      |  |       |       |         |  |  |       |  |  |  |       |  |  |  |       | 
|----------------------------------- |  | ----------- | --- | ------ |  | ------ | ----- | ---- |  | ----- | ----- | ------- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                    |  |             |     |        |  | North  |       | West |  | North |       | Rest of |  |  |       | 
|                                    |  | Italy       |     | Africa |  | Africa |       | Sea  |  | World |       | Total  
|                                    |  |             |     |        |  |        |       |      |  |       |       |        
|                                    |  | (million E)
|Year ended December 31, 2000        |  |             |     |        |  |        |       |      |  |       |       |         |  |  |       |  |  |  |       |  |  |  |       | 
|Proved property acquisitions        |  |             |     |        |  |        | 8     |      |  |       | 32    |         |  |  | 443   |  |  |  | 880   |  |  |  | 1,363 | 
|Unproved property acquisitions      |  |             |     |        |  |        | 30    |      |  |       | 11    |         |  |  | 67    |  |  |  | 149   |  |  |  | 257   | 
|Exploration                         |  |             | 155 |        |  |        | 151   |      |  |       | 174   |         |  |  | 86    |  |  |  | 326   |  |  |  | 892   | 
|Development (a)                     |  |             | 567 |        |  |        | 415   |      |  |       | 372   |         |  |  | 346   |  |  |  | 617   |  |  |  | 2,317 | 
|Total costs incurred(b)             |  |             | 722 |        |  |        | 604   |      |  |       | 589   |         |  |  | 942   |  |  |  | 1,972 |  |  |  | 4,829 | 
|Year ended December 31, 2001        |  |             |     |        |  |        |       |      |  |       |       |         |  |  |       |  |  |  |       |  |  |  |       | 
|Proved property acquisitions (c1)   |  |             | 14  |        |  |        | 503   |      |  |       |       |         |  |  | 1,411 |  |  |  | 1,254 |  |  |  | 3,182 | 
|Unproved property acquisitions (c2) |  |             |     |        |  |        | 438   |      |  |       |       |         |  |  | 495   |  |  |  | 704   |  |  |  | 1,637 | 
|Exploration (c3)                    |  |             | 89  |        |  |        | 139   |      |  |       | 97    |         |  |  | 166   |  |  |  | 598   |  |  |  | 1,089 | 
|Development (a)                     |  |             | 600 |        |  |        | 498   |      |  |       | 698   |         |  |  | 328   |  |  |  | 1,337 |  |  |  | 3,461 | 
|Total costs incurred(b)             |  |             | 703 |        |  |        | 1,578 |      |  |       | 795   |         |  |  | 2,400 |  |  |  | 3,893 |  |  |  | 9,369 | 
|Year ended December 31, 2002        |  |             |     |        |  |        |       |      |  |       |       |         |  |  |       |  |  |  |       |  |  |  |       | 
|Proved property acquisitions        |  |             |     |        |  |        |       |      |  |       |       |         |  |  | 104   |  |  |  | 24    |  |  |  | 128   | 
|Unproved property acquisitions      |  |             |     |        |  |        |       |      |  |       |       |         |  |  | 22    |  |  |  | 167   |  |  |  | 189   | 
|Exploration                         |  |             | 69  |        |  |        | 116   |      |  |       | 203   |         |  |  | 84    |  |  |  | 430   |  |  |  | 902   | 
|Development (a)                     |  |             | 440 |        |  |        | 724   |      |  |       | 986   |         |  |  | 316   |  |  |  | 1,622 |  |  |  | 4,088 | 
|Total costs incurred                |  |             | 509 |        |  |        | 840   |      |  |       | 1,189 |         |  |  | 526   |  |  |  | 2,243 |  |  |  | 5,307 | 



---

|(a)  |  | Amounts include capitalized interest of euro 94 million in 2000, 71
million in 2001 and 57 million in 2002, and other fixed assets of euro
98 million in 2000, 48 million in 2001.                     
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(b)  |  | The amounts exclude deferred income taxes of euro 165 million in 2000
(British Borneo Plc) and 974 in 2001 (Lasmo Plc) related to the
respective acquisitions.                                         
|    
|(c1) |  | Acquisition costs per geographic area related to the Lasmo acquisition
of euro 3,115 million were for North Africa euro 503 million, North Sea
euro 1,371 million and Rest of World euro 1,241 million.
|    
|(c2) |  | Acquisition costs per geographic area related to the Lasmo acquisition
of euro 1,637 million were for North Africa euro 438 million, North Sea
euro 495 million and Rest of World euro 704 million.    
|    
|(c3) |  | Acquisition costs per geographic area related to the Lasmo acquisition
of euro 332 million were for North Africa euro 13 million, North Sea
euro 81 million and Rest of World euro 238 million.        

Results of operations from oil and gas producing activities

Results of operations from oil and gas producing activities represent
only those revenues and expenses directly associated with Enis oil and gas
production. These amounts do not include any allocation of interest expense
or corporate overhead or amortization of goodwill and, therefore, are not
necessarily indicative of the contributions to consolidated net earnings of
Eni. Revenues and income tax expense include taxes owed by Eni but paid by
government-owned entities on its behalf. Related income taxes are computed
by applying the local income tax rates to the pre-tax income from producing
activities. Eni is a party to certain Production Sharing Agreements (PSAs)
whereby a portion of Enis share of oil and gas production is withheld and
sold
by its joint-venture partners which are state-owned entities, with
proceeds being remitted to the state in





---



##### Table of Contents



satisfaction of Enis PSA-related tax liabilities. Revenue and income
taxes include such taxes owed by Eni but paid by state-owned entities out of
Enis share of oil and gas production. Without this specific provision in
its PSAs, Eni would otherwise be entitled to the sale proceeds of this
portion of oil and gas production withheld.

|                                                            |                                  |  |             |       |        |  |        |       |      |  |       |       |         |  |       |       |  |  |       |       |  |  |        |       | 
|----------------------------------------------------------- | -------------------------------- |  | ----------- | ----- | ------ |  | ------ | ----- | ---- |  | ----- | ----- | ------- |  | ----- | ----- |  |  | ----- | ----- |  |  | ------ | ----- | 
|                                                            |                                  |  |             |       |        |  | North  |       | West |  | North |       | Rest of |  |       |       | 
|                                                            |                                  |  | Italy       |       | Africa |  | Africa |       | Sea  |  | World |       | Total  
|                                                            |                                  |  |             |       |        |  |        |       |      |  |       |       |        
|                                                            |                                  |  | (million E)
|Year ended December 31, 2000                                |                                  |  |             |       |        |  |        |       |      |  |       |       |         |  |       |       |  |  |       |       |  |  |        |      
|Revenues:                                                   |                                  |  |             |       |        |  |        |       |      |  |       |       |         |  |       |       |  |  |       |       |  |  |        |      
|                                                            |  sales to affiliates            |  |             | 3,336 |        |  |        | 1,748 |      |  |       | 2,114 |         |  |       | 1,205 |  |  |       | 531   |  |  |        | 8,934 | 
|                                                            |  sales to unaffiliated entities |  |             | 136   |        |  |        | 1,134 |      |  |       | 190   |         |  |       | 373   |  |  |       | 660   |  |  |        | 2,493 | 
|Total revenues                                              |                                  |  | 3,472       |       |        |  | 2,882  |       |      |  | 2,304 |       |         |  | 1,578 |       |  |  | 1,191 |       |  |  | 11,427 |      
|Production costs                                            |                                  |  | (399        | )     |        |  | (459   | )     |      |  | (517  | )     |         |  | (238  | )     |  |  | (125  | )     |  |  | (1,738 | )    
|Exploration expenses                                        |                                  |  | (192        | )     |        |  | (84    | )     |      |  | (60   | )     |         |  | (45   | )     |  |  | (180  | )     |  |  | (561   | )    
|D.D. & A                                                    |                                  |  | (407        | )     |        |  | (393   | )     |      |  | (327  | )     |         |  | (358  | )     |  |  | (375  | )     |  |  | (1,860 | )    
|Other income and (expenses), net                            |                                  |  | (30         | )     |        |  | (196   | )     |      |  | (132  | )     |         |  | (55   | )     |  |  | (117  | )     |  |  | (530   | )    
|Pretax income from producing activities                     |                                  |  | 2,444       |       |        |  | 1,750  |       |      |  | 1,268 |       |         |  | 882   |       |  |  | 394   |       |  |  | 6,738  |      
|Related income taxes                                        |                                  |  | (986        | )     |        |  | (877   | )     |      |  | (678  | )     |         |  | (479  | )     |  |  | (78   | )     |  |  | (3,098 | )    
|Results of operations from oil and gas
producing activities |                                  |  | 1,458       |       |        |  | 873    |       |      |  | 590   |       |         |  | 403   |       |  |  | 316   |       |  |  | 3,640  |      
|Year ended December 31, 2001                                |                                  |  |             |       |        |  |        |       |      |  |       |       |         |  |       |       |  |  |       |       |  |  |        |      
|Revenues:                                                   |                                  |  |             |       |        |  |        |       |      |  |       |       |         |  |       |       |  |  |       |       |  |  |        |      
|                                                            |  sales to affiliates            |  |             | 3,160 |        |  |        | 1,440 |      |  |       | 1,807 |         |  |       | 1,265 |  |  |       | 322   |  |  |        | 7,994 | 
|                                                            |  sales to unaffiliated entities |  |             | 140   |        |  |        | 1,181 |      |  |       | 169   |         |  |       | 1,250 |  |  |       | 1,271 |  |  |        | 4,011 | 
|Total revenues                                              |                                  |  | 3,300       |       |        |  | 2,621  |       |      |  | 1,976 |       |         |  | 2,515 |       |  |  | 1,593 |       |  |  | 12,005 |      
|Production costs                                            |                                  |  | (479        | )     |        |  | (461   | )     |      |  | (477  | )     |         |  | (522  | )     |  |  | (306  | )     |  |  | (2,245 | )    
|Exploration expenses                                        |                                  |  | (77         | )     |        |  | (104   | )     |      |  | (70   | )     |         |  | (51   | )     |  |  | (326  | )     |  |  | (628   | )    
|D.D. & A                                                    |                                  |  | (474        | )     |        |  | (417   | )     |      |  | (315  | )     |         |  | (704  | )     |  |  | (612  | )     |  |  | (2,522 | )    
|Other income and (expenses), net                            |                                  |  | (87         | )     |        |  | (129   | )     |      |  | (129  | )     |         |  | (79   | )     |  |  | (214  | )     |  |  | (638   | )    
|Pretax income from producing
activities(a)                  |                                  |  | 2,183       |       |        |  | 1,510  |       |      |  | 985   |       |         |  | 1,159 |       |  |  | 135   |       |  |  | 5,972  |      
|Related income taxes                                        |                                  |  | (877        | )     |        |  | (605   | )     |      |  | (628  | )     |         |  | (672  | )     |  |  | (136  | )     |  |  | (2,918 | )    
|Results of operations from oil and gas
producing activities |                                  |  | 1,306       |       |        |  | 905    |       |      |  | 357   |       |         |  | 487   |       |  |  | (1    | )     |  |  | 3,054  |      
|Year ended December 31, 2002                                |                                  |  |             |       |        |  |        |       |      |  |       |       |         |  |       |       |  |  |       |       |  |  |        |      
|Revenues:                                                   |                                  |  |             |       |        |  |        |       |      |  |       |       |         |  |       |       |  |  |       |       |  |  |        |      
|                                                            |  sales to affiliates            |  |             | 2,871 |        |  |        | 1,673 |      |  |       | 1,856 |         |  |       | 1,748 |  |  |       | 281   |  |  |        | 8,429 | 
|                                                            |  sales to unaffiliated entities |  |             | 253   |        |  |        | 1,226 |      |  |       | 186   |         |  |       | 695   |  |  |       | 1,414 |  |  |        | 3,774 | 
|Total revenues                                              |                                  |  | 3,124       |       |        |  | 2,899  |       |      |  | 2,042 |       |         |  | 2,443 |       |  |  | 1,695 |       |  |  | 12,203 |      
|Production costs                                            |                                  |  | (356        | )     |        |  | (462   | )     |      |  | (527  | )     |         |  | (510  | )     |  |  | (284  | )     |  |  | (2,139 | )    
|Exploration expenses                                        |                                  |  | (80         | )     |        |  | (71    | )     |      |  | (116  | )     |         |  | (117  | )     |  |  | (294  | )     |  |  | (678   | )    





---



##### Table of Contents



|                                                            |  |  |             |   |        |  |        |   |      |  |       |   |         |  |      |   |  |  |      |   |  |  |        |   | 
|----------------------------------------------------------- |  |  | ----------- | - | ------ |  | ------ | - | ---- |  | ----- | - | ------- |  | ---- | - |  |  | ---- | - |  |  | ------ | - | 
|                                                            |  |  |             |   |        |  | North  |   | West |  | North |   | Rest of |  |      |   | 
|                                                            |  |  | Italy       |   | Africa |  | Africa |   | Sea  |  | World |   | Total  
|                                                            |  |  |             |   |        |  |        |   |      |  |       |   |        
|                                                            |  |  | (million E)
|D.D. & A. (b)                                               |  |  | (528        | ) |        |  | (532   | ) |      |  | (390  | ) |         |  | (863 | ) |  |  | (758 | ) |  |  | (3,071 | )
|Other income and (expenses), net                            |  |  | (258        | ) |        |  | (186   | ) |      |  | (122  | ) |         |  | (47  | ) |  |  | (183 | ) |  |  | (796   | )
|Pretax income from producing
activities(a)                  |  |  | 1,902       |   |        |  | 1,648  |   |      |  | 887   |   |         |  | 906  |   |  |  | 176  |   |  |  | 5,519  |  
|Related income taxes                                        |  |  | (751        | ) |        |  | (852   | ) |      |  | (578  | ) |         |  | (445 | ) |  |  | (83  | ) |  |  | (2,709 | )
|Results of operations from oil and gas
producing activities |  |  | 1,151       |   |        |  | 796    |   |      |  | 309   |   |         |  | 461  |   |  |  | 93   |   |  |  | 2,810  |  



---

|(a) |  | Results of operations from oil and gas producing activities include
revenues and costs related to the «gas storage and modulation»
activity. These revenues are estimated according to Decisions No. 26/02
and No. 49/02 issued by the Authority for Electricity and Gas on
February 27, 2002.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | It includes asset impairments amounting to euro 227 million.                                                                                                                                                                                                                                  

Average sales prices and production costs per unit of production

|                                      |  |       |       |        |  |        |       |      |  |       |       |         |  |   |       |  |  |   |       |  |  |   |       | 
|------------------------------------- |  | ----- | ----- | ------ |  | ------ | ----- | ---- |  | ----- | ----- | ------- |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                      |  |       |       |        |  | North  |       | West |  | North |       | Rest of |  |   |       | 
|                                      |  | Italy |       | Africa |  | Africa |       | Sea  |  | World |       | Total  
|                                      |  |       |       |        |  |        |       |      |  |       |       |        
|2002                                  |  |       |       |        |  |        |       |      |  |       |       |         |  |   |       |  |  |   |       |  |  |   |       | 
|Average sales prices:                 |  |       |       |        |  |        |       |      |  |       |       |         |  |   |       |  |  |   |       |  |  |   |       | 
|Oil and condensates, per BBL          |  | $     | 22.39 |        |  | $      | 23.49 |      |  | $     | 23.62 |         |  | $ | 23.97 |  |  | $ | 18.90 |  |  | $ | 22.81 | 
|Natural gas, per kCF                  |  |       | 3.73  |        |  |        | 2.83  |      |  |       | 0.42  |         |  |   | 2.46  |  |  |   | 2.90  |  |  |   | 3.08  | 
|Average production costs, per BOE (1) |  |       | 2.97  |        |  |        | 3.44  |      |  |       | 5.75  |         |  |   | 4.37  |  |  |   | 2.94  |  |  |   | 3.83  | 
|2001                                  |  |       |       |        |  |        |       |      |  |       |       |         |  |   |       |  |  |   |       |  |  |   |       | 
|Average sales prices:                 |  |       |       |        |  |        |       |      |  |       |       |         |  |   |       |  |  |   |       |  |  |   |       | 
|Oil and condensates, per BBL          |  | $     | 19.78 |        |  | $      | 22.39 |      |  | $     | 22.34 |         |  | $ | 23.87 |  |  | $ | 17.86 |  |  | $ | 21.81 | 
|Natural gas, per kCF                  |  |       | 4.06  |        |  |        | 2.80  |      |  |       | 0.51  |         |  |   | 2.60  |  |  |   | 3.24  |  |  |   | 3.39  | 
|Average production costs, per BOE (1) |  |       | 2.87  |        |  |        | 3.65  |      |  |       | 5.10  |         |  |   | 4.45  |  |  |   | 3.50  |  |  |   | 3.85  | 
|2000                                  |  |       |       |        |  |        |       |      |  |       |       |         |  |   |       |  |  |   |       |  |  |   |       | 
|Average sales prices:                 |  |       |       |        |  |        |       |      |  |       |       |         |  |   |       |  |  |   |       |  |  |   |       | 
|Oil and condensates, per BBL          |  | $     | 24.51 |        |  | $      | 25.82 |      |  | $     | 27.05 |         |  | $ | 27.89 |  |  | $ | 22.64 |  |  | $ | 25.91 | 
|Natural gas, per kCF                  |  |       | 3.98  |        |  |        | 3.16  |      |  |       | 0.41  |         |  |   | 2.42  |  |  |   | 2.09  |  |  |   | 2.11  | 
|Average production costs, per BOE (1) |  |       | 2.63  |        |  |        | 3.82  |      |  |       | 5.79  |         |  |   | 3.64  |  |  |   | 2.04  |  |  |   | 3.61  | 



---

|(1) |  | Calculated net of volumes of natural gas consumed in operations.
Natural gas was converted to oil-equivalent at 5,800 CF = 1 BBL for
natural gas produced outside Italy and at 5,600 CF = 1 BBL for natural
gas produced in Italy.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Oil and natural gas reserves

Proved oil and gas reserves are the estimated quantities of crude oil
(including condensate and natural gas liquids) and natural gas which on the
basis of geological and engineering data will be able to be recovered with
reasonable certainty in future years from known reservoirs under technical,
contractual, economic and operating conditions existing at the time. Prices
include consideration of changes in existing prices provided only by
contractual arrangements, but not on escalations based upon future
conditions. Proved reserves exclude royalties and interests owned by others.

Proved developed oil and gas reserves are proved reserves that can be
estimated to be recovered through existing wells, facilities and operating
methods. Proved undeveloped oil and gas reserves are reserves that are
expected to be recovered from new wells on undrilled acreage, or from
existing wells a relatively major expenditure is required for completion.
Additional oil and gas reserves expected to be obtained through the





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##### Table of Contents



application of fluid injection or other improved recovery techniques
for supplementing natural forces and mechanisms of primary recovery are
included as proved developed or proved undeveloped reserves only after
testing by a pilot project or after the operation of an installed program
has confirmed through production response that increased recovery will be
achieved.

The definitions used for proved oil and gas reserves are in accordance
with applicable U.S. Securities and Exchange Commission regulation. The
estimates of proved reserves, developed and undeveloped, at December 31,
1999, 2000, 2001 and 2002 are based on reports prepared by Eni.

Numerous uncertainties are inherent in estimating quantities of proved
reserves and in projecting future rates of production and timing of
development expenditures. The accuracy of any reserve estimate is a function
of the quality of available data and engineering and geological
interpretation and judgement. Results of drilling, testing and production
after the date of the estimate may require substantial upward and downward
revision. In addition changes in oil and natural gas prices 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 addition the reserves estimates are subject to revision as prices
fluctuate due to the cost recovery feature under certain Production Sharing
Agreements (PSA). Accordingly, the estimated reserves could be materially
different from the quantities of oil and natural gas that ultimately will be
recovered.

Eni operates under PSA in several of the foreign jurisdictions where it
has oil and gas exploration and production activities. In countries where
Eni operates under PSAs, proved reserves are shown in accordance with Enis
economic interest (pursuant to PSA contract terms) in the oil and gas
reserve quantities estimated to be recoverable in future years.Such reserves
include estimated quantities allocated to Eni for recovery of costs, income
taxes owed by Eni but settled by its joint-venture partners which are
state-owned entities out of Enis share of production, and Enis net equity
share after cost recovery.

Estimated reserves include the volume of natural gas withdrawn from
certain Eni Italian fields and contained in Enis gas storage reservoirs in
Italy used for responding to variations in gas demand due to seasonality
(gas is usually stored during summer months for use during winter months,
when demand typically peaks).

The following table presents yearly changes in estimated proved
reserves, developed and undeveloped, of crude oil (including condensate and
natural gas liquids) and natural gas for the years 2000, 2001 and 2002.

Crude oil (Including Condensates and Natural Gas Liquids)

|                                                                                                    |  |          |     |        |  |        |       |      |  |       |     |         |  |  |     |   |  |  |     |   |  |  |       |  
|--------------------------------------------------------------------------------------------------- |  | -------- | --- | ------ |  | ------ | ----- | ---- |  | ----- | --- | ------- |  |  | --- | - |  |  | --- | - |  |  | ----- | -
|                                                                                                    |  |          |     |        |  | North  |       | West |  | North |     | Rest of |  |  |     |  
|Proved oil Reserves                                                                                 |  | Italy    |     | Africa |  | Africa |       | Sea  |  | World |     | Total  
|                                                                                                    |  |          |     |        |  |        |       |      |  |       |     |        
|                                                                                                    |  | (mm/BBL)
|Reserves at December 31, 1999                                                                       |  |          | 328 |        |  |        | 1,071 |      |  |       | 900 |         |  |  | 417 |   |  |  | 421 |   |  |  | 3,137 |  
|Purchase of Minerals in Place                                                                       |  |          |     |        |  |        | 3     |      |  |       | 12  |         |  |  | 46  |   |  |  | 133 |   |  |  | 194   |  
|Revisions of Previous Estimates                                                                     |  |          | (13 | )      |  |        | 42    |      |  |       | 59  |         |  |  | 36  |   |  |  | 166 |   |  |  | 290   |  
|Improved Recovery                                                                                   |  |          |     |        |  |        | 2     |      |  |       | 9   |         |  |  |     |   |  |  |     |   |  |  | 11    |  
|Extensions and Discoveries                                                                          |  |          | 9   |        |  |        | 6     |      |  |       | 32  |         |  |  | 1   |   |  |  | 17  |   |  |  | 65    |  
|Production                                                                                          |  |          | (28 | )      |  |        | (84   | )    |  |       | (78 | )       |  |  | (45 | ) |  |  | (39 | ) |  |  | (274  | )
|Sales of Minerals in Place                                                                          |  |          |     |        |  |        | (1    | )    |  |       |     |         |  |  |     |   |  |  |     |   |  |  | (1    | )
|Reserves at December 31, 2000(1)                                                                    |  |          | 296 |        |  |        | 1,039 |      |  |       | 934 |         |  |  | 455 |   |  |  | 698 |   |  |  | 3,422 |  
|(1) Enis share of equity method
investees proved
oil reserves as at December 31,
2000 (Lasmo Plc) |  |          |     |        |  |        |       |      |  |       |     |         |  |  |     |   |  |  |     |   |  |  | 131   |  
|Purchase of Minerals in Place                                                                       |  |          |     |        |  |        | 118   |      |  |       |     |         |  |  | 120 |   |  |  | 248 |   |  |  | 486   |  
|Revisions of Previous Estimates                                                                     |  |          | 29  |        |  |        | 79    |      |  |       | 91  |         |  |  | 37  |   |  |  | 20  |   |  |  | 256   |  
|Improved Recovery                                                                                   |  |          |     |        |  |        | 11    |      |  |       | 16  |         |  |  | 6   |   |  |  |     |   |  |  | 33    |  
|Extensions and Discoveries                                                                          |  |          | 9   |        |  |        | 8     |      |  |       | 21  |         |  |  | 8   |   |  |  | 24  |   |  |  | 70    |  
|Production                                                                                          |  |          | (25 | )      |  |        | (84   | )    |  |       | (81 | )       |  |  | (74 | ) |  |  | (50 | ) |  |  | (314  | )
|Sales of Minerals in Place                                                                          |  |          |     |        |  |        |       |      |  |       | (5  | )       |  |  |     |   |  |  |     |   |  |  | (5    | )





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##### Table of Contents



|                                |  |          |     |        |  |        |       |      |  |       |       |         |  |  |     |   |  |  |     |   |  |  |       |  
|------------------------------- |  | -------- | --- | ------ |  | ------ | ----- | ---- |  | ----- | ----- | ------- |  |  | --- | - |  |  | --- | - |  |  | ----- | -
|                                |  |          |     |        |  | North  |       | West |  | North |       | Rest of |  |  |     |  
|Proved oil Reserves             |  | Italy    |     | Africa |  | Africa |       | Sea  |  | World |       | Total  
|                                |  |          |     |        |  |        |       |      |  |       |       |        
|                                |  | (mm/BBL)
|Reserves at December 31, 2001   |  |          | 309 |        |  |        | 1,171 |      |  |       | 976   |         |  |  | 552 |   |  |  | 940 |   |  |  | 3,948 |  
|Purchase of Minerals in Place   |  |          |     |        |  |        |       |      |  |       |       |         |  |  | 13  |   |  |  | 12  |   |  |  | 25    |  
|Revisions of Previous Estimates |  |          | 2   |        |  |        | (31   | )    |  |       | 112   |         |  |  | 4   |   |  |  | (33 | ) |  |  | 54    |  
|Improved Recovery               |  |          |     |        |  |        | 14    |      |  |       | 1     |         |  |  |     |   |  |  |     |   |  |  | 15    |  
|Extensions and Discoveries      |  |          | 11  |        |  |        | 10    |      |  |       | 14    |         |  |  | 18  |   |  |  | 104 |   |  |  | 157   |  
|Production                      |  |          | (30 | )      |  |        | (92   | )    |  |       | (81   | )       |  |  | (77 | ) |  |  | (54 | ) |  |  | (334  | )
|Sales of Minerals in Place      |  |          | (37 | )      |  |        |       |      |  |       |       |         |  |  | (12 | ) |  |  | (33 | ) |  |  | (82   | )
|Reserves at December 31, 2002   |  |          | 255 |        |  |        | 1,072 |      |  |       | 1,022 |         |  |  | 498 |   |  |  | 936 |   |  |  | 3,783 |  

|                                                                                                              |  |          |     |        |  |        |     |      |  |       |     |         |  |  |     |  |  |  |     |  |  |  |       | 
|------------------------------------------------------------------------------------------------------------- |  | -------- | --- | ------ |  | ------ | --- | ---- |  | ----- | --- | ------- |  |  | --- |  |  |  | --- |  |  |  | ----- | 
|                                                                                                              |  |          |     |        |  | North  |     | West |  | North |     | Rest of |  |  |     | 
|Proved Developed Oil Reserves                                                                                 |  | Italy    |     | Africa |  | Africa |     | Sea  |  | World |     | Total  
|                                                                                                              |  |          |     |        |  |        |     |      |  |       |     |        
|                                                                                                              |  | (mm/BBL)
|Reserves at December 31, 1999                                                                                 |  |          | 172 |        |  |        | 681 |      |  |       | 473 |         |  |  | 276 |  |  |  | 148 |  |  |  | 1,750 | 
|Reserves at December 31, 2000 (1)                                                                             |  |          | 144 |        |  |        | 650 |      |  |       | 487 |         |  |  | 303 |  |  |  | 189 |  |  |  | 1,773 | 
|Reserves at December 31, 2001                                                                                 |  |          | 171 |        |  |        | 685 |      |  |       | 539 |         |  |  | 476 |  |  |  | 443 |  |  |  | 2,314 | 
|Reserves at December 31, 2002                                                                                 |  |          | 168 |        |  |        | 610 |      |  |       | 554 |         |  |  | 426 |  |  |  | 483 |  |  |  | 2,241 | 
|(1) Enis share of equity method
investees proved
developed oil reserves as at
December 31, 2000
(Lasmo Plc) |  |          |     |        |  |        |     |      |  |       |     |         |  |  |     |  |  |  |     |  |  |  | 56    | 

Natural gas

|                                                                                                            |  |       |       |        |  |        |       |       |  |         |     |       |  |  |       |   |  |  |       |   |  |  |        |  
|----------------------------------------------------------------------------------------------------------- |  | ----- | ----- | ------ |  | ------ | ----- | ----- |  | ------- | --- | ----- |  |  | ----- | - |  |  | ----- | - |  |  | ------ | -
|                                                                                                            |  | Italy |       | North  |  | West   |       | North |  | Rest of |     |       |  | 
|Proved Natural Gas Reserves                                                                                 |  | (a)   |       | Africa |  | Africa |       | Sea   |  | World   |     | Total
|                                                                                                            |  |       |       |        |  |        |       |       |  |         |     |      
|                                                                                                            |  | (BCF)
|Reserves at December 31, 1999                                                                               |  |       | 6,439 |        |  |        | 4,504 |       |  |         | 964 |       |  |  | 1,331 |   |  |  | 427   |   |  |  | 13,665 |  
|Purchase of Minerals in Place                                                                               |  |       |       |        |  |        |       |       |  |         |     |       |  |  | 195   |   |  |  | 150   |   |  |  | 345    |  
|Revisions of Previous Estimates                                                                             |  |       | 156   |        |  |        | 255   |       |  |         | (19 | )     |  |  | (23   | ) |  |  | 379   |   |  |  | 748    |  
|Improved Recovery                                                                                           |  |       |       |        |  |        | 2     |       |  |         |     |       |  |  |       |   |  |  |       |   |  |  | 2      |  
|Extensions and Discoveries                                                                                  |  |       | 40    |        |  |        | 546   |       |  |         |     |       |  |  | 8     |   |  |  | 299   |   |  |  | 893    |  
|Production                                                                                                  |  |       | (510  | )      |  |        | (155  | )     |  |         | (23 | )     |  |  | (93   | ) |  |  | (100  | ) |  |  | (881   | )
|Reserves at December 31, 2000(1)                                                                            |  |       | 6,125 |        |  |        | 5,152 |       |  |         | 922 |       |  |  | 1,418 |   |  |  | 1,155 |   |  |  | 14,772 |  
|(1) Enis share of equity method
investees proved
natural gas reserves as at
December 31, 2000
(Lasmo Plc) |  |       |       |        |  |        |       |       |  |         |     |       |  |  |       |   |  |  |       |   |  |  | 501    |  
|Purchase of Minerals in Place                                                                               |  |       | 17    |        |  |        |       |       |  |         |     |       |  |  | 501   |   |  |  | 1,093 |   |  |  | 1,611  |  
|Revisions of Previous Estimates                                                                             |  |       | (37   | )      |  |        | 539   |       |  |         | 12  |       |  |  | 148   |   |  |  | 833   |   |  |  | 1,495  |  
|Improved Recovery, Extensions
and Discoveries                                                               |  |       | 66    |        |  |        | 1     |       |  |         | 18  |       |  |  | 4     |   |  |  | 202   |   |  |  | 291    |  
|Production (b)                                                                                              |  |       | (531  | )      |  |        | (183  | )     |  |         | (27 | )     |  |  | (175  | ) |  |  | (177  | ) |  |  | (1,093 | )
|Sales                                                                                                       |  |       |       |        |  |        |       |       |  |         |     |       |  |  | (4    | ) |  |  |       |   |  |  | (4     | )





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##### Table of Contents



|                                              |  |       |       |        |  |        |       |       |  |         |       |       |  |  |       |   |  |  |       |   |  |  |        |  
|--------------------------------------------- |  | ----- | ----- | ------ |  | ------ | ----- | ----- |  | ------- | ----- | ----- |  |  | ----- | - |  |  | ----- | - |  |  | ------ | -
|                                              |  | Italy |       | North  |  | West   |       | North |  | Rest of |       |       |  | 
|Proved Natural Gas Reserves                   |  | (a)   |       | Africa |  | Africa |       | Sea   |  | World   |       | Total
|                                              |  |       |       |        |  |        |       |       |  |         |       |      
|                                              |  | (BCF)
|Reserves at December 31, 2001                 |  |       | 5,640 |        |  |        | 5,509 |       |  |         | 925   |       |  |  | 1,892 |   |  |  | 3,106 |   |  |  | 17,072 |  
|Purchase of Minerals in Place                 |  |       |       |        |  |        |       |       |  |         |       |       |  |  | 87    |   |  |  |       |   |  |  | 87     |  
|Revisions of Previous Estimates               |  |       | 21    |        |  |        | 257   |       |  |         | 8     |       |  |  | 115   |   |  |  | 1,238 |   |  |  | 1,639  |  
|Improved Recovery, Extensions
and Discoveries |  |       | 105   |        |  |        | 9     |       |  |         | 636   |       |  |  | 74    |   |  |  | 223   |   |  |  | 1,047  |  
|Production (b)                                |  |       | (456  | )      |  |        | (212  | )     |  |         | (36   | )     |  |  | (201  | ) |  |  | (228  | ) |  |  | (1,133 | )
|Sales                                         |  |       | (15   | )      |  |        |       |       |  |         |       |       |  |  | (68   | ) |  |  |       |   |  |  | (83    | )
|Reserves at December 31, 2002                 |  |       | 5,295 |        |  |        | 5,563 |       |  |         | 1,533 |       |  |  | 1,899 |   |  |  | 4,339 |   |  |  | 18,629 |  

|                                                                                                                      |  |       |       |        |  |        |       |       |  |         |     |       |  |  |       |  |  |  |       |  |  |  |       | 
|--------------------------------------------------------------------------------------------------------------------- |  | ----- | ----- | ------ |  | ------ | ----- | ----- |  | ------- | --- | ----- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                                                                                                      |  | Italy |       | North  |  | West   |       | North |  | Rest of |     |       |  | 
|Proved Developed Natural Gas Reserves                                                                                 |  | (a)   |       | Africa |  | Africa |       | Sea   |  | World   |     | Total
|                                                                                                                      |  |       |       |        |  |        |       |       |  |         |     |      
|                                                                                                                      |  | (BCF)
|TotalReserves at December 31, 1999                                                                                    |  |       | 4,201 |        |  |        | 668   |       |  |         | 653 |       |  |  | 811   |  |  |  | 311   |  |  |  | 6,644 | 
|Reserves at December 31, 2000 (1)                                                                                     |  |       | 4,012 |        |  |        | 1,009 |       |  |         | 595 |       |  |  | 810   |  |  |  | 649   |  |  |  | 7,075 | 
|Reserves at December 31, 2001                                                                                         |  |       | 3,665 |        |  |        | 1,103 |       |  |         | 584 |       |  |  | 1,721 |  |  |  | 1,221 |  |  |  | 8,294 | 
|Reserves at December 31, 2002                                                                                         |  |       | 3,397 |        |  |        | 1,084 |       |  |         | 863 |       |  |  | 1,727 |  |  |  | 1,283 |  |  |  | 8,354 | 
|(1) Enis share of equity method
investees proved
developed natural gas reserves as at
December
31, 2000 (Lasmo Plc) |  |       |       |        |  |        |       |       |  |         |     |       |  |  |       |  |  |  |       |  |  |  | 329   | 



---

|(a) |  | Including approximately 756, 783, 728 and 779 BCF of natural gas held
in storage at December 31, 1999, 2000, 2001 and 2002 respectively.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Including production volumes of natural gas consumed in operations (34
BCF and 48 BCF in 2001 and 2002, respectively).                  

Standardized measure of discounted future net cash flows

Estimated future cash inflows represent the revenues that would be
received from production and are determined by applying year-end prices of
oil and gas to the estimated future production of proved reserves. Future
price changes are considered only to extent provided by contractual
arrangements. Estimated future development and production costs are
determined by estimating the expenditures to be incurred in developing and
producing the proved reserves at the end of the year. Neither the effects of
future pricing nor expected future changes in technology and operating
practices have been considered.

The standardized measure is calculated as the excess of future cash
inflows from proved reserves less future costs of producing and developing
the reserves, future income taxes and a yearly 10% discount factor.

Future cash flows as of December 31, 2000, 2001 and 2002 include annual
payments from Enis Gas & Power segment and other transport and distribution
gas companies which represent payments for providing specified peak demand
delivery capability. Such capability is provided through utilization of: (i)
gas withdrawn from producing fields and injected into depleted gas fields as
storage; and to (ii) gas acquired.

Future production costs include the estimated expenditures related to
production of the proved reserves plus any production taxes without
consideration of future inflation. Future development costs include the
estimated costs of drilling development wells and installation of production
facilities, plus the net costs associated with dismantlement and abandonment
of wells and facilities, assuming year-end costs continue without
considering future inflation. Future income taxes were calculated in
accordance with the tax laws of the countries in which Eni operates.

The standardized measure of discounted future net cash flows, related
to the preceding proved oil and gas reserves, is calculated in accordance
with the requirements of Statement of Financial Accounting Standard No. 69.
The standardized measure does not purport to reflect realizable values or
fair market value of Enis proved reserves. An estimate of fair value would
also take into account, among other things, the expected recovery of
reserves in excess of proved reserves, anticipated changes in future prices
and costs and a discount factor representative of the risks inherent in
producing oil and gas.





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##### Table of Contents



|                                                                                                             |  |             |         |        |  |        |         |      |  |       |        |         |  |  |        |   |  |  |        |   |  |  |         |  
|------------------------------------------------------------------------------------------------------------ |  | ----------- | ------- | ------ |  | ------ | ------- | ---- |  | ----- | ------ | ------- |  |  | ------ | - |  |  | ------ | - |  |  | ------- | -
|                                                                                                             |  |             |         |        |  | North  |         | West |  | North |        | Rest of |  |  |        |  
|                                                                                                             |  | Italy       |         | Africa |  | Africa |         | Sea  |  | World |        | Total  
|                                                                                                             |  |             |         |        |  |        |         |      |  |       |        |        
|                                                                                                             |  | (million E)
|At December 31, 2000                                                                                         |  |             |         |        |  |        |         |      |  |       |        |         |  |  |        |   |  |  |        |   |  |  |         |  
|Future cash inflows                                                                                          |  |             | 50,505  |        |  |        | 39,551  |      |  |       | 22,057 |         |  |  | 16,761 |   |  |  | 17,778 |   |  |  | 146,652 |  
|Future production costs                                                                                      |  |             | (6,310  | )      |  |        | (9,770  | )    |  |       | (5,875 | )       |  |  | (3,349 | ) |  |  | (2,999 | ) |  |  | (28,303 | )
|Future development and abandonment
costs                                                                     |  |             | (2,310  | )      |  |        | (4,981  | )    |  |       | (2,708 | )       |  |  | (860   | ) |  |  | (2,504 | ) |  |  | (13,363 | )
|Future net inflow before income tax                                                                          |  |             | 41,885  |        |  |        | 24,800  |      |  |       | 13,474 |         |  |  | 12,552 |   |  |  | 12,275 |   |  |  | 104,986 |  
|Future income tax                                                                                            |  |             | (15,627 | )      |  |        | (11,524 | )    |  |       | (7,938 | )       |  |  | (6,365 | ) |  |  | (2,835 | ) |  |  | (44,289 | )
|Future net cash flows                                                                                        |  |             | 26,258  |        |  |        | 13,276  |      |  |       | 5,536  |         |  |  | 6,187  |   |  |  | 9,440  |   |  |  | 60,697  |  
|10% discount factor                                                                                          |  |             | (12,203 | )      |  |        | (7,146  | )    |  |       | (2,370 | )       |  |  | (1,867 | ) |  |  | (4,410 | ) |  |  | (27,996 | )
|Standardized measure of discounted
future net cash flows                                                     |  |             | 14,055  |        |  |        | 6,130   |      |  |       | 3,166  |         |  |  | 4,320  |   |  |  | 5,030  |   |  |  | 32,701  |  
|Enis share of equity
method investees
standardized measure of discounted
future net
cash flows (Lasmo Plc) |  |             |         |        |  |        |         |      |  |       |        |         |  |  |        |   |  |  |        |   |  |  | 1,058   |  
|At December 31, 2001                                                                                         |  |             |         |        |  |        |         |      |  |       |        |         |  |  |        |   |  |  |        |   |  |  |         |  
|Future cash inflows (a)                                                                                      |  |             | 32,310  |        |  |        | 37,780  |      |  |       | 20,154 |         |  |  | 17,444 |   |  |  | 20,715 |   |  |  | 128,403 |  
|Future production costs                                                                                      |  |             | (5,344  | )      |  |        | (10,941 | )    |  |       | (5,779 | )       |  |  | (4,466 | ) |  |  | (5,073 | ) |  |  | (31,603 | )
|Future development and abandonment
costs                                                                     |  |             | (2,577  | )      |  |        | (5,284  | )    |  |       | (3,194 | )       |  |  | (1,593 | ) |  |  | (2,607 | ) |  |  | (15,255 | )
|Future net inflow before income tax                                                                          |  |             | 24,389  |        |  |        | 21,555  |      |  |       | 11,181 |         |  |  | 11,385 |   |  |  | 13,035 |   |  |  | 81,545  |  
|Future income tax                                                                                            |  |             | (8,918  | )      |  |        | (9,258  | )    |  |       | (6,374 | )       |  |  | (5,584 | ) |  |  | (3,119 | ) |  |  | (33,253 | )
|Future net cash flows                                                                                        |  |             | 15,471  |        |  |        | 12,297  |      |  |       | 4,807  |         |  |  | 5,801  |   |  |  | 9,916  |   |  |  | 48,292  |  
|10% discount factor                                                                                          |  |             | (6,925  | )      |  |        | (6,612  | )    |  |       | (1,992 | )       |  |  | (1,611 | ) |  |  | (4,381 | ) |  |  | (21,521 | )
|Standardized measure of discounted
future net cash flows                                                     |  |             | 8,546   |        |  |        | 5,685   |      |  |       | 2,815  |         |  |  | 4,190  |   |  |  | 5,535  |   |  |  | 26,771  |  
|At December 31, 2002                                                                                         |  |             |         |        |  |        |         |      |  |       |        |         |  |  |        |   |  |  |        |   |  |  |         |  
|Future cash inflows (a)                                                                                      |  |             | 32,809  |        |  |        | 41,797  |      |  |       | 29,242 |         |  |  | 19,645 |   |  |  | 26,500 |   |  |  | 149,993 |  
|Future production costs                                                                                      |  |             | (4,367  | )      |  |        | (10,354 | )    |  |       | (6,795 | )       |  |  | (4,748 | ) |  |  | (4,310 | ) |  |  | (30,574 | )
|Future development and abandonment
costs                                                                     |  |             | (2,755  | )      |  |        | (3,880  | )    |  |       | (2,706 | )       |  |  | (1,523 | ) |  |  | (2,459 | ) |  |  | (13,323 | )
|Future net inflow before income tax                                                                          |  |             | 25,687  |        |  |        | 27,563  |      |  |       | 19,741 |         |  |  | 13,374 |   |  |  | 19,731 |   |  |  | 106,096 |  





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##### Table of Contents



|                                                         |  |             |        |        |  |        |         |      |  |       |         |         |  |  |        |   |  |  |        |   |  |  |         |  
|-------------------------------------------------------- |  | ----------- | ------ | ------ |  | ------ | ------- | ---- |  | ----- | ------- | ------- |  |  | ------ | - |  |  | ------ | - |  |  | ------- | -
|                                                         |  |             |        |        |  | North  |         | West |  | North |         | Rest of |  |  |        |  
|                                                         |  | Italy       |        | Africa |  | Africa |         | Sea  |  | World |         | Total  
|                                                         |  |             |        |        |  |        |         |      |  |       |         |        
|                                                         |  | (million E)
|Future income tax                                        |  |             | (8,885 | )      |  |        | (12,164 | )    |  |       | (11,320 | )       |  |  | (7,598 | ) |  |  | (5,593 | ) |  |  | (45,560 | )
|Future net cash flows                                    |  |             | 16,802 |        |  |        | 15,399  |      |  |       | 8,421   |         |  |  | 5,776  |   |  |  | 14,138 |   |  |  | 60,536  |  
|10% discount factor                                      |  |             | (7,471 | )      |  |        | (7,411  | )    |  |       | (3,534  | )       |  |  | (1,577 | ) |  |  | (6,063 | ) |  |  | (26,056 | )
|Standardized measure of discounted
future net cash flows |  |             | 9,331  |        |  |        | 7,988   |      |  |       | 4,887   |         |  |  | 4,199  |   |  |  | 8,075  |   |  |  | 34,480  |  



---

|(a) |  | Standardized measure of discounted future net cash flows from oil and
gas producing activities in Italy include revenues and costs related to
the «gas storage and modulation» activity. These revenues and costs are
estimated according to Decisions No. 26/02 and 49/02 issued by the
Authority for Electricity and Gas on February 27 and March 26, 2002.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Changes in standardized measure of discounted future net cash flows

The following table reflects the changes in standardized measure of
discounted future net cash flows for the years 2000, 2001 and 2002.

|                        |                                                                                                 |  |             |        |      |  |        |         |   |  |        |         |  
|----------------------- | ----------------------------------------------------------------------------------------------- |  | ----------- | ------ | ---- |  | ------ | ------- | - |  | ------ | ------- | -
|                        |                                                                                                 |  | 2000        |        | 2001 |  | 2002  
|                        |                                                                                                 |  |             |        |      |  |       
|                        |                                                                                                 |  | (million E)
|Beginning of year       |                                                                                                 |  | 22,753      |        |      |  | 32,701 |         |   |  | 26,771 |        
|Increase (Decrease):    |                                                                                                 |  |             |        |      |  |        |         |   |  |        |        
|                        |  sales, net of production costs                                                                |  |             | (9,689 | )    |  |        | (9,760  | ) |  |        | (10,064 | )
|                        |  net changes in sales and transfer prices, net of production costs                             |  |             | 11,889 |      |  |        | (16,754 | ) |  |        | 18,936  |  
|                        |  extensions, discoveries and improved recovery, net of future
production and development costs |  |             | 1,623  |      |  |        | 1,027   |   |  |        | 1,810   |  
|                        |  changes in estimated future development and abandonment costs                                 |  |             | (1,061 | )    |  |        | (2,527  | ) |  |        | (2,697  | )
|                        |  development costs incurred during the period that reduced
future development costs            |  |             | 2,125  |      |  |        | 3,342   |   |  |        | 4,287   |  
|                        |  revisions of quantity estimates                                                               |  |             | 2,736  |      |  |        | 3,397   |   |  |        | 1,715   |  
|                        |  accretion of discount                                                                         |  |             | 4,226  |      |  |        | 5,628   |   |  |        | 4,279   |  
|                        |  net change in income taxes                                                                    |  |             | (4,102 | )    |  |        | 5,618   |   |  |        | (9,318  | )
|                        |  purchase of reserves in-place                                                                 |  |             | 3,052  |      |  |        | 4,443   |   |  |        | 387     |  
|                        |  sale of reserves in-place                                                                     |  |             | (7     | )    |  |        | (34     | ) |  |        | (646    | )
|                        |  changes in production rates (timing) and other                                                |  |             | (844   | )    |  |        | (310    | ) |  |        | (980    | )
|Net increase (decrease) |                                                                                                 |  | 9,948       |        |      |  | (5,930 | )       |   |  | 7,709  |        
|End of year             |                                                                                                 |  | 32,701      |        |      |  | 26,771 |         |   |  | 34,480 |        

30) Other Audit Reports not included herein

Eni, as a state owned company, was required by law to have each of its
subsidiaries examined by independent auditors each year through 1992.
Thereafter, Eni continued with the procedure as a matter of corporate
policy. Eni has engaged a principal auditor for the Consolidated Group
accounts.





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##### Table of Contents



The audit reports of the principal auditor and the audit reports of
certain major subsidiaries (i.e. Snam Rete Gas SpA, 59.8% owned, audited by
Deloitte & Touche Italia SpA in 2002 and by Arthur Andersen in 2001; the
Company was incorporated on November 15, 2000 and began its operations on
July 1, 2001; Saipem SpA, 43.0% owned, audited by Reconta Ernst&Young SpA in
2002 and 2001 and by KPMG SpA in 2000; Società Italiana per il Gas pA, 40.9%
owned as of December 31, 2002 and now 100% owned after the public tender
offer, audited by Reconta Ernst&Young SpA in 2002 and 2001, Arthur Andersen
SpA in 2000 and Eni Portugal Investments SpA audited by Deloitte and Touche
Italia SpA in 2001 and 2002) are included herein.

For 2000, the other subsidiaries of Eni not audited by the principal
auditor and whose audit reports are not included herein, are summarized
below (none of these subsidiaries represented more than 4% of Enis
consolidated assets at December 31, 2002 or 6% of Enis consolidated
revenues for the year 2000). The list below includes the names of the
auditors of Enis subsidiaries not audited by Enis principal auditor in
2000, including those audited by other auditors who are referred to in the
reports of the auditors of Società Italiana per il Gas pA and Saipem SpA.

|                                               |  |                                                     
|---------------------------------------------- |  | ----------------------------------------------------
|Name of subsidiary                             |  | Audit firm                                          
|                                               |  |                                                     
|Società Petrolifera Italiana                   |  | Grant Thornton                                      
|Somicem                                        |  | Mazars & Guerard                                    
|Sitep  Société Italo Tunisienne dExploration |  | KPMG Rached Fourati & Pétrolière SA Co International
|Acquedotto Vesuviano                           |  | Consulaudit                                         
|Eni Acqua Campania                             |  | HLB Ria & Partners                                  
|Fiorentina Gas                                 |  | Bompani Audit                                       
|Italgas Hellas                                 |  | Consulaudit                                         
|Distribuidora De Gas Cuyana SA                 |  | Ernst & Young                                       
|Inversora De Gas Cuyana SA                     |  | Ernst & Young                                       
|Trans Austria Gasline Finance Co Ltd           |  | Rawlinson & Hunter                                  
|Trans Tunisian Pipeline Co Ltd                 |  | PricewaterhouseCoopers                              
|EniPower                                       |  | PricewaterhouseCoopers                              
|Agip Gas                                       |  | Consulaudit                                         
|Atriplex                                       |  | Consulaudit                                         
|Big Bon Distribuzione                          |  | S.G.R.C.                                            
|Costiero Gas Livorno                           |  | PricewaterhouseCoopers                              
|Ecofuel                                        |  | Consulaudit                                         
|Eni Portugal Investment                        |  | Deloitte & Touche Italia                            
|Mixoil                                         |  | PricewaterhouseCoopers                              
|Petrolig                                       |  | PricewaterhouseCoopers                              
|Petroven                                       |  | Consulaudit                                         
|Praoil Oleodotti Italiani                      |  | Reconta Ernst & Young                               
|Agip Benelux BV                                |  | Deloitte & Touche                                   
|Agip (Zambia) Ltd                              |  | KPMG                                                
|Ambiente                                       |  | Consulaudit                                         
|Ing. Luigi Conti Vecchi                        |  | HLB Ria & Partners                                  
|Intermare Sarda                                |  | Bompani Audit                                       
|SASP Offshore Engineering                      |  | Grant Thornton                                      
|Sonsub                                         |  | Deloitte & Touche                                   
|Aquater                                        |  | Consulaudit                                         
|Consorzio Eni Per LAlta Velocità (Cepav Uno)  |  | Deloitte & Touche                                   
|Consorzio Snamprogetti Foster Wheeler          |  | Deloitte & Touche                                   
|Snamprogetti Sud                               |  | Grant Thornton                                      
|EMC Netherlands BV                             |  | Moret Ernst & Young                                 
|European Marine Contractors Ltd                |  | Ernst & Young                                       
|Saipem Aban Drilling Co Private Ltd            |  | PricewaterhouseCoopers                              





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##### Table of Contents



|                                               |  |                                   
|---------------------------------------------- |  | ----------------------------------
|Name of subsidiary                             |  | Audit firm                        
|                                               |  |                                   
|Saipem Argentina S.A.M.I.C. YF                 |  | Henry M. Lisdero Y Asociados (E&Y)
|Saudi Arabian Saipem Ltd                       |  | Whinney Murray & Co (E&Y)         
|Snamprotechint Serv. e Gestao de Projectos Lda |  | PricewaterhouseCoopers            
|Padana Assicurazioni                           |  | PricewaterhouseCoopers            
|Agenzia Giornalistica Italia                   |  | HLB Ria & Partners                
|EniComunicazione                               |  | HLB Ria & Partners                
|EniData                                        |  | Serca                             
|EniTecnologie                                  |  | Neutra                            
|Eurosolare                                     |  | HLB Ria & Partners                
|Servizi Aerei                                  |  | Consulaudit                       
|Servizi Turistici Grantour                     |  | S.G.R.C.                          
|Tecnomare                                      |  | Deloitte & Touche                 
|Territorio e Impresa (ex EniSud)               |  | Horwath & Horwath Italia          
|Eni International Bank Ltd                     |  | PricewaterhouseCoopers